As
filed with the Securities and Exchange Commission on July 5,
2007
File
No. 333-143098
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
AMENDMENT
NO. 1 TO
FORM
S-1
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
CAMDEN
LEARNING CORPORATION
(Exact
name of registrant as specified in its charter)
Delaware
|
|
6770
|
|
83-0479936
|
(State
or other jurisdiction of
incorporation
or organization)
|
|
(Primary
Standard Industrial
Classification
Code Number)
|
|
(I.R.S.
Employer
Identification
Number)
|
500
East Pratt Street
Suite
1200
Baltimore,
MD 21202
(410)
878-6800
(Address,
including zip code, and telephone number, including
area
code, of registrant’s principal executive offices)
David
L. Warnock
President
and Chief Executive Officer
500
East Pratt Street
Suite
1200
Baltimore,
MD 21202
(410)
878-6800
(Name,
address, including zip code, and telephone number,
including
area code, of agent for service)
Copies
to:
Douglas
S. Ellenoff, Esq.
|
Joel
L. Rubinstein, Esq.
|
Stuart
Neuhauser, Esq.
|
Morgan
Fox Walbridge, Esq.
|
Adam
Mimeles, Esq.
|
McDermott
Will & Emery LLP
|
Ellenoff
Grossman & Schole LLP
|
340
Madison Avenue
|
370
Lexington Avenue, 19th Floor
|
New
York, New York 10173
|
New
York, New York 10017
|
(212)
547-5400
|
(212)
370-1300
|
|
Approximate
date of commencement of proposed sale to the public: As soon as practicable
after the effective date of this registration statement.
If
any of
the securities being registered on this Form are to be offered on a delayed
or
continuous basis pursuant to Rule 415 under the Securities Act of 1933 check
the
following box. x
If
this
Form is filed to register additional securities for an offering pursuant to
Rule
462(b) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. ¨
If
this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. ¨
If
this
Form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. ¨
CALCULATION
OF REGISTRATION FEE CHART
Title
of Each Class of Security to be Registered
|
|
Amount to
be Registered
|
|
Proposed
Maximum
Offering
Price
Per
Unit(1)
|
|
Proposed
Maximum
Aggregate
Offering
Price(1)
|
|
Amount
of
Registration
Fee
|
|
|
|
|
|
|
|
|
|
|
|
Units,
each consisting of one share of Common Stock, $.0001 par value,
and one
Warrant (2)
|
|
|
5,175,000
|
|
$
|
8.00
|
|
$
|
41,400,000
|
|
$
|
1,270.98
|
|
Shares
of Common Stock included as part of the Units (2)
|
|
|
5,175,000
|
|
|
—
|
|
|
—
|
|
|
—
|
(3) |
Warrants
included as part of the Units (2)
|
|
|
5,175,000
|
|
|
—
|
|
|
—
|
|
|
—
|
(3) |
Shares
of Common Stock underlying the Warrants included in the Units
(2)(4)
|
|
|
5,175,000
|
|
$
|
6.00
|
|
$
|
31,050,000
|
|
$
|
953.24
|
|
Representative’s
Unit Purchase Option
|
|
|
1
|
|
$
|
100
|
|
$
|
100
|
|
$
|
0
|
|
Units
underlying the Representative’s Unit Purchase Option (“Representative’s
Units”)(4)
|
|
|
450,000
|
|
$
|
8.80
|
|
$
|
3,960,000
|
|
$
|
121.57
|
|
Shares
of Common Stock included as part of the Representative’s
Units(4)
|
|
|
450,000
|
|
|
—
|
|
|
—
|
|
|
—
|
(3) |
Warrants
included as part of the Representative’s Units(4)
|
|
|
450,000
|
|
|
—
|
|
|
—
|
|
|
—
|
(3) |
Shares
of Common Stock underlying the Warrants included in the Representative’s
Units (4)
|
|
|
450,000
|
|
$
|
6.00
|
|
$
|
2,700,000
|
|
$
|
82.89
|
|
Total
|
|
|
|
|
|
|
|
$
|
79,110,100
|
|
$
|
2,428.68
|
(5) |
(1)
|
Estimated
solely for the purpose of calculating the registration
fee.
|
(2)
|
Includes
675,000 Units, 675,000 shares of Common Stock, 675,000 Warrants underlying
such Units and 675,000 shares of Common Stock underlying the Warrants
included in such Units, which may be issued upon exercise of a 45-day
option granted to the Underwriters to cover over-allotments, if
any.
|
(3)
|
No
fee pursuant to Rule 457(g).
|
(4)
|
Pursuant
to Rule 416, there are also being registered such indeterminable
additional securities as may be issued to prevent dilution as a result
of
stock splits, stock dividends or similar
transactions.
|
The
registrant hereby amends this registration statement on such date or dates
as
may be necessary to delay its effective date until the registrant shall file
a
further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
The
information in this prospectus is not complete and may be changed. We may not
sell these securities until the registration statement filed with the Securities
and Exchange Commission is effective. This prospectus is not an offer to sell
these securities and it is not soliciting an offer to buy these securities
in
any state where the offer or sale is not permitted.
PRELIMINARY
PROSPECTUS
|
SUBJECT
TO COMPLETION, JULY 5,
2007
|
$36,000,000
CAMDEN
LEARNING CORPORATION
4,500,000
units
Camden
Learning Corporation is a blank check company recently incorporated for the
purpose of merging with, engaging in a capital stock exchange with, purchasing
all or substantially all of the assets of, or engaging in any other similar
business combination with one or more operating businesses in the education
industry focusing on early childcare, K-12 or post-secondary education or
corporate training and related businesses. We do not have any specific business
combination under consideration or contemplation and we have not, nor has
anyone
on our behalf, contacted any potential target business or had any discussions,
formal or otherwise, with respect to such a transaction.
This
is
an initial public offering of our securities. Each unit is being sold at a
purchase price of $8.00 per unit and consists of:
· one
share
of our common stock; and
· one
warrant.
Each
warrant entitles the holder to purchase one share of our common stock at a
price
of $6.00. Each warrant will become exercisable on the later of our completion
of
a business combination or _____, 2008 [one
year from the date of this prospectus],
and
will expire on _____, 2011 [four
years from the date of this prospectus],
or
earlier upon redemption.
Our
sponsor, Camden Learning, LLC, a limited liability company indirectly controlled
and partially owned by certain of our officers and directors, owns 1,025,000
shares of our common stock, and will purchase an aggregate of 2,500,000
warrants, or insider warrants, from us at a price of $1.00 per warrant in
a
private placement to be completed immediately prior to this offering. All
of the
proceeds received from the sale of the insider warrants (an aggregate of
$2,500,000) will be placed in the trust account described below. The insider
warrants will be identical to those sold in this offering but (i) will not
be
subject to redemption, (ii) may be exercised on a “cashless” basis, in each case
if held by our sponsor or its permitted assigns and (iii) may not be sold,
assigned or transferred prior to the 90th
day
following consummation of a business combination. The holders of insider
warrants will not have any right to any liquidation distributions with respect
to the shares underlying such insider warrants in the event we fail to
consummate a business combination, in which event the insider warrants will
expire worthless.
We
have
granted Morgan Joseph & Co. Inc., the representative of the underwriters, a
45-day option to purchase up to 675,000 additional units (over and above the
4,500,000 units referred to above) solely to cover over-allotments, if any.
We
have also agreed to sell to Morgan Joseph & Co. Inc. for $100, as additional
compensation, an option to purchase up to 450,000 units at a per unit price
of
$8.80. The units issuable upon exercise of this option are identical to those
offered by this prospectus. The purchase option and its underlying securities
have been registered under the registration statement of which this prospectus
forms a part.
There
is
presently no public market for our units, common stock or warrants. We
anticipate that our units will be quoted on the OTC Bulletin Board under the
symbol [“
”]
on or
promptly after the date of this prospectus. Each of the common stock and
warrants shall trade separately on the 90th day after the date of this
prospectus, unless Morgan Joseph & Co. Inc. determines an earlier date is
acceptable. Once the securities comprising the units begin separate trading,
we
expect that the common stock and warrants will be quoted on the OTC Bulletin
Board under the symbols [“
”]
and
[“
”],
respectively. We cannot assure you, however, that our securities will continue
to be quoted on the OTC Bulletin Board in the future.
Investing
in our securities involves a high degree of risk. See “Risk Factors” beginning
on page 13 of this prospectus for a discussion of information that should be
considered in connection with an investment in our
securities.
Neither
the Securities and Exchange Commission nor any state securities commission
has
approved or disapproved of these securities or determined if this prospectus
is
truthful or complete. Any representation to the contrary is a criminal
offense.
|
|
Public
offering
price
|
|
Underwriting
discount
and
commissions(1)
|
|
Proceeds, before
expenses, to
us
|
|
Per
unit
|
|
$
|
8.00
|
|
$
|
0.56
|
|
$
|
7.44
|
|
Total
|
|
$
|
36,000,000
|
|
$
|
2,520,000
|
|
$
|
33,480,000
|
|
(1) |
Includes
deferred underwriting discount and commissions in the amount of $720,000,
or $0.16 per unit, payable to the underwriters only upon consummation
of a
business combination and then only with respect to those units as
to which
the component shares have not been redeemed for cash by those stockholders
who voted against the business combination and exercised their redemption
rights.
|
Of
the
proceeds we receive from this offering and the private placement to be made
prior to the effective date of this offering to our sponsor, $35,550,000
($7.90 per unit) will be deposited into a trust account at Lehman Brothers,
Inc.
maintained by Continental Stock Transfer & Trust Company
acting as trustee. This amount includes deferred underwriting discount and
commissions in the amount of $720,000, or $0.16 per unit, payable
to the underwriters only upon consummation of a business combination and then
only with respect to those units as to which the component shares
have not been redeemed for cash by those stockholders who voted against the
business combination and exercised their redemption rights.
We
are offering the units for sale on a firm-commitment basis. Morgan Joseph &
Co. Inc., acting as representative of the underwriters, expects to deliver
our
securities to investors in the offering on or about [____], 2007.
|
The
date of this prospectus is ____________,
2007.
|
PROSPECTUS
SUMMARY
This
summary highlights certain information appearing elsewhere in this prospectus.
For a more complete understanding of this offering, you should read the entire
prospectus carefully, including the risk factors and the financial
statements.
Unless
otherwise stated in this prospectus:
|
·
|
references
to “we,” “us” or “our company” are to Camden Learning
Corporation;
|
|
·
|
references to the “Camden III Funds” are to Camden
Partners Strategic Fund III, L.P. and Camden Partners Strategic Fund
III-A, L.P., collectively; |
|
·
|
references
to a “business combination” are to a merger, capital stock exchange, asset
acquisition or other similar business combination between us and
one or
more operating businesses in the education
industry;
|
|
·
|
references
to “existing stockholders” are to all of our stockholders before this
offering;
|
|
·
|
references
to “private placement” are to the sale of 2,500,000 warrants to our
sponsor at a price of $1.00 per warrant, for an aggregate purchase
price
of $2,500,000, in a private placement that will occur immediately
prior to
the closing of this offering;
|
|
·
|
references
to “public stockholders” are to the holders of common stock sold as part
of the units in this offering or acquired in the aftermarket, including
any existing stockholders to the extent they acquire such shares
(and
solely with respect to such
shares);
|
|
·
|
references
to our “sponsor” are to Camden Learning, LLC, a limited liability company
owned by
Camden Partners Strategic Fund III, L.P. (96.01%) and Camden Partners
Strategic Fund III-A, L.P. (3.99%), each of which
are indirectly controlled and partially owned by David L. Warnock,
our
Chairman, President and Chief Executive Officer, and Donald W.
Hughes, our
Chief Financial Officer and Secretary. The
general partner of each limited partnership is Camden Partners
Strategic
III, LLC. Messrs. Warnock and Hughes are two of the four managing
members
of Camden Partners Strategic III, LLC;
|
|
·
|
references
to a “target business” are to one or more operating businesses which,
after completion of this offering, we may target for a potential
business
combination; and
|
|
·
|
the
information in this prospectus assumes that the representative of
the
underwriters will not exercise its over-allotment option and that
no
stockholder exercises its right of redemption as described elsewhere
in
this prospectus.
|
The
Company
We
are a
blank check company organized under the laws of the State of Delaware on
April
10, 2007. We were formed for the purpose of merging with, engaging in a capital
stock exchange with, purchasing all or substantially all of the assets of,
or
engaging in any other similar business combination with one or more operating
businesses in the education industry focusing on early childcare, K-12 or
post-secondary education or corporate training and related businesses. As
used
throughout this prospectus, the term “education industry” refers broadly to the
operation or management of learning facilities, the provision of educational
instruction or training or the provision of education-related services. To
date,
our efforts have been limited to organizational activities and activities
relating to this offering. We do not have any specific business combination
under consideration or contemplation and we have not, nor has anyone on our
behalf, contacted any potential target business or had any discussions, formal
or otherwise, with respect to such a transaction.
Education
Industry
The
U.S.
education industry has continued to show substantial growth in the past decade,
due to what we believe to be the importance of developing a skilled workforce.
A
skilled workforce is increasingly reliant on intellectual capital as the
U.S.
economy continues its shift to become focused on services rather than
manufacturing. While post-secondary graduates constitute approximately 30%
of
the U.S. population, more than 85% of the U.S. population has completed its
K-12
(kindergarten through twelfth grade) education. International competition,
especially in math and science, has driven education legislation, requiring
minimum performance levels and allocating funding for supplemental services
in
underperforming schools. In addition to state and government spending, the
U.S.
has the second highest level of education funding from private sources in
the
world at 28%, led only by Korea. These factors have led to an overall increase
in education spending in the two largest sectors of the market, K-12 and
post-secondary, and are expected to continue to drive growth across all sectors
of the education industry. Post-secondary education is broadly defined as
a
formal
instructional program whose curriculum is designed for students who have
completed the requirements for a high school diploma or its equivalent. This
includes programs whose purpose is academic, vocational and continuing
professional education and excludes adult basic education
programs.
Our
Management
Our
management and board of directors have established an extensive network of
relationships from which to identify and generate acquisition opportunities
within the education industry. David L. Warnock, our President, Chairman
and
Chief Executive Officer, has over 24 years of investment experience in the
education and business and financial services industries. Mr. Warnock serves
on
the boards of directors of American Public Education, Inc., New Horizons
Worldwide, Inc., Nobel Learning Communities, Inc., Primo Water Corporation
and
Questar Assessment, Inc., formerly Touchstone Applied Science Associates.
Mr.
Hughes also serves on the boards of directors of New Horizons Worldwide,
Inc.
and Questar Assessment, Inc. Jack Brozman, our director, has been President
and
Chief Executive Officer of Concorde Career Colleges and La Petite Academy,
Inc.
Dr. Therese Crane, our director, was previously President of Jostens Learning
Corporation and its successor, Compass Learning and previously was Vice
President of Information and Education Products at America Online. Ronald
Tomalis, our director, was previously counselor to the US Secretary of Education
and Acting Assistant Secretary of Elementary and Secondary Education. William
Jews, our director, is a former governor of the Federal Reserve Bank and
was the
President and Chief Executive Officer of CareFirst Inc./CareFirst Blue Cross
Blue Shield from 1993 through 2006, an organization with more than $5 billion
in
annual revenues. Mr. Jews has previously been a director of MBNA, MuniMae
Inc.,
Nations Bank, Ecolab, Inc. and Crown Central Petroleum, and currently serves
on
the boards of directors of The Ryland Group, a national home builder and
mortgage provider, Choice Hotels International, a worldwide lodging franchisor
and Fortress International Group, Inc., the parent company of Total Site
Solutions, which supplies industry and government with secure data centers
and
other facilities designed to survive terrorist attacks, natural disasters
and blackouts. In addition, we believe the experience of our officers and
directors in private equity and investment banking investments will be
beneficial in structuring and consummating a business combination.
To
date,
none of our officers or directors has approached their contacts to identify
potential target businesses, and no such contacts have presented or identified
potential target businesses to any of our officers or directors. We expect,
from
time to time, after the offering is completed, that these contacts or sources
will advise either our management team or directors of the existence of one
or
more potential acquisition candidates or that potential acquisition candidates
will become known to our management team or directors through their other
business activities. Our management will evaluate these leads and determine
whether to pursue discussions with any of these candidates.
Business
Combination
We
have
until ____, 2009 [24 months from the date of this prospectus] to consummate
a
business combination. If we are unable to consummate a business combination
by
such date, our corporate existence will cease, except for the purpose of
winding
up our affairs and liquidating. We will not pursue a business combination
with
any company that is a portfolio company of, or otherwise affiliated with,
or has
received financial investment from, any of the private equity firms with
which
our existing stockholders, executive officers or directors are affiliated.
Our
initial business combination must be with a target business or businesses
whose
aggregate fair market value
is
at least equal to 80% of the
amount in our trust account (less the deferred underwriting discount and
commissions and taxes payable)
at the
time of such transaction. Consequently, it is likely we will have the ability
to
effect only a single business combination, although this may entail the
simultaneous acquisitions of several assets or closely related operating
businesses at the same time. Should we elect to pursue more than one acquisition
of target businesses simultaneously, we 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. Even
if we
complete the acquisition of more than one target business at the same time,
there can be no assurance we will be able to integrate the operations of
such
target businesses. In no instance will we acquire less than majority voting
control of a target business. However, in the case of a reverse merger or
other
similar transaction in which we issue a substantial number of new shares,
our
stockholders immediately prior to such transaction may own less than a majority
of our shares subsequent to such transaction. Even if we acquire less than
100%
of one or more target businesses in our initial business combination, the
aggregate fair market value of the interests we acquire must equal at least
80%
of the amount held in the trust account (less the deferred underwriting discount
and commissions and taxes payable) at the time of such transaction(s), with
such
interests being evaluated based upon generally accepted financial
standards.
In
seeking a business combination, we intend to utilize cash derived from the
proceeds of this offering and the private placement, as well as our capital
stock, debt, or a combination of cash, capital stock and debt, and there is
no
limit on the issuance of capital stock or incurrence of debt we may undertake
in
effecting a business combination. This may allow us to acquire a target business
or businesses with an aggregate fair market value in excess of 80% of the amount
in our trust account (less the deferred underwriting discount and commissions
and taxes payable) at the time of the transaction. If we were to seek such
additional funds, any such arrangement would only be consummated simultaneously
with our consummation of a business combination. 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. In the event a business combination is consummated,
all
sums remaining in the trust account will be released to us immediately
thereafter, and there will be no restriction on our use of such
funds.
Our
officers and directors will not receive any compensation in this offering or
for
services rendered to us prior to, or in connection with, the consummation of
a
business combination. Our officers and directors will be entitled to
reimbursement for out-of-pocket expenses incurred by them or their affiliates
on
our behalf.
We
maintain executive offices at 500 East Pratt Street, Suite 1200, Baltimore,
MD
21202 and our telephone number is (410) 878-6800.
Private
Placement
Prior
to
the closing of this offering, our sponsor will purchase an aggregate of
2,500,000 warrants, which we refer to as the insider warrants, from us at a
price of $1.00 per warrant in a private placement pursuant to Regulation D
of
the Securities Act of 1933, as amended.
The
insider warrants will be identical to those sold in this offering but (i) will
not be subject to redemption, (ii) may be exercised on a “cashless” basis, in
each case if held by our sponsor or its permitted assigns and (iii) may not
be
sold, assigned or transferred prior to the 90th
day
following consummation of a business combination. The holders of insider
warrants will not have any right to any liquidation distributions with respect
to the shares underlying such insider warrants in the event we fail to
consummate a business combination, in which event the insider warrants will
expire worthless. No commissions, fees or other compensation will be payable
in
connection with such private placement.
All
of
the gross proceeds from the sale of the 2,500,000 warrants in the private
placement, or $2,500,000, will be deposited into the trust account. Until the
90th day following consummation of a business combination, the insider warrants
may only be transferred in certain limited circumstances, and the transferees
receiving such insider warrants will be subject to the same sale restrictions
imposed on the initial purchaser and its member transferees. If the holders
of
the insider warrants acquire warrants for their own account in the open market,
any such warrants will be redeemable. If our other outstanding warrants are
redeemed (including the warrants subject to the underwriters’ unit purchase
option) and the market price of a share of our common stock rises following
such
redemption, holders of the insider warrants could potentially realize a larger
gain on exercise or sale of those warrants than is available to other warrant
holders, although we do not know if the price of our common stock would increase
following a warrant redemption. If our share price declines in periods
subsequent to a warrant redemption and the insiders continue to hold the insider
warrants, the value of those warrants still held by such persons may also
decline. The insider warrants will be differentiated from warrants, if any,
purchased in or following this offering by any holder of insider warrants
through the legends contained on the certificates representing the insider
warrants indicating the restrictions and rights specifically applicable to
such
warrants as are described in this prospectus.
Additional
Purchases by Our Sponsor
Our
sponsor has informed us it intends to purchase 250,000 units in this offering,
although it is under no obligation to do so. Our sponsor has also entered
into
an agreement with the representative of the underwriters pursuant to which
it
will place limit orders to purchase up to $4,000,000 of our common stock
in the
open market commencing ten business days after we file our current report
on
Form 8-K announcing our execution of a definitive agreement for a business
combination and ending on the business day immediately preceding the date
of the
meeting of stockholders at which a business combination is to be approved.
Such
open market purchases will be made in accordance with Rule 10b-18 under the
Securities Exchange Act of 1934, as amended, at a price per share of not
more
than the per share amount held in the trust account (less taxes payable)
as
reported in such 8-K and will be made by a broker-dealer mutually agreed
upon by
our sponsor and the representative of the underwriters in such amounts and
at
such times as such broker-dealer may determine, in its sole discretion, so
long
as the purchase price does not exceed the above-referenced per share purchase
price. Our
sponsor has agreed to vote all such shares of common stock purchased in the
open
market in favor of our initial business combination. Unless a business
combination is approved by our stockholders, our sponsor has agreed not to
sell
such shares, provided it will be entitled to participate in any liquidating
distributions with respect to the shares purchased in the open market.
In
the
event our sponsor does not purchase $4,000,000 of our common stock through
those
open market purchases, our sponsor has agreed to purchase from us in a private
placement, which we may refer to as the co-investment, a number of units
identical to the units offered hereby at a purchase price of $8.00 per unit
until it has spent an aggregate of $4,000,000 in the open market purchases
described above and this co-investment. This co-investment will occur
immediately prior to our consummation of a business combination, which will
not
occur until after the signing of a definitive business combination agreement
and
the approval of that business combination by a majority of our public
stockholders.
Our
sponsor, whose sole owners are the Camden III Funds, has agreed to such
purchases because the managing members of the general partner of the Camden
III Funds, including David L. Warnock, our Chairman, President and Chief
Executive Officer and Donald W. Hughes, our Chief Financial Officer and
Secretary, want the Camden III Funds to have
a substantial cash investment in us, including any target business we may
acquire.
The Offering
Securities
offered:
|
|
4,500,000
units, at $8.00 per unit, each unit consisting of:
· one
share of common stock; and
· one
warrant
The
units will begin trading on or promptly after the date of this prospectus.
Each of the common stock and warrants shall trade separately on the
90th
day after the date of this prospectus unless Morgan Joseph & Co. Inc.
determines that an earlier date is acceptable, based on its assessment
of
the relative strengths of the securities markets and small capitalization
companies in general, and the trading pattern of, and demand for,
our
securities in particular. However, Morgan Joseph & Co. Inc. may decide
to allow continued trading of the units following such separation,
in
which case holders of units will be required to have their brokers
contact
our transfer agent in order to separate the units into common stock
and
warrants. In no event will Morgan Joseph & Co. Inc. allow separate
trading of the common stock and warrants until (i) we file an audited
balance sheet reflecting our receipt of the gross proceeds of this
offering and the private placement, including any proceeds we receive
from
the exercise of the over-allotment option, if such option is exercised
on
the date of this prospectus, (ii) we file a Current Report on Form
8-K and
issue a press release announcing when such separate trading will
begin and
(iii) the expiration of the underwriters over-allotment option or
its
exercise in full. We will file a Current Report on Form 8-K, including
an
audited balance sheet, upon the consummation of this offering, which
is
anticipated to take place three business days from the date of this
prospectus. The audited balance sheet will include proceeds we receive
from the exercise of the over-allotment option if the over-allotment
option is exercised on the date of this prospectus. If the over-allotment
option is exercised following the date of this prospectus, an additional
Current Report on Form 8-K will be filed to disclose the exercise
and
closing of the over-allotment option.
If
you are not an institutional investor, you may purchase securities
in this
offering only if you reside within the states in which we have applied
to
have the securities registered. We have registered the securities
in:
Colorado, Delaware, the District of Columbia, Florida, Georgia, Hawaii,
Illinois, Louisiana, New York, Rhode Island and
Wyoming.
|
Additional
Purchases by our Sponsor:
|
|
Our sponsor
will
purchase an aggregate of 2,500,000 warrants, or insider warrants, from
us
at a price of $1.00 per warrant in a private placement to be completed
immediately prior to this offering, All of the proceeds received from
the
sale of the insider warrants (an aggregate of $2,500,000) will be placed
in the trust account described below. The insider warrants will be
identical to those sold in this offering but (i) will not be subject
to
redemption, (ii) may be exercised on a “cashless” basis, in each case if
held by our sponsor or its permitted assigns and (iii) may not be sold,
assigned or transferred prior to the 90th
day following the consummation of a business combination. The holders
of
the insider warrants will not have any rights to any liquidation
distributions with respect to the shares underlying such insider warrants
in the event we fail to consummate a business combination, in which
event
the insider warrants will expire
worthless. |
|
|
Our
sponsor has informed us it intends to purchase 250,000 units in
this
offering, although it is under no obligation to do so. In addition,
our
sponsor has entered into an agreement with the representative of
the
underwriters pursuant to which it will place limit orders to purchase
up
to $4,000,000 of our common stock in the open market commencing
ten
business days after we file our current report on Form 8-K announcing
our
execution of a definitive agreement for a business combination
and ending
on the business day immediately preceding the date of the meeting
of
stockholders at which a business combination is to be approved.
Such open
market purchases will be made in accordance with Rule 10b-18 under
the
Securities Exchange Act of 1934, as amended, at a price per share
of not
more than the per share amount held in the trust account (less
taxes
payable) as reported in such 8-K and will be made by a broker-dealer
mutually agreed upon by our sponsor and the representative of the
underwriters in such amounts and at such times as such broker-dealer
may
determine, in its sole discretion, so long as the purchase price
does not
exceed the above-referenced per share purchase price. Our
sponsor has agreed to vote all such shares of common stock purchased
in
the open market in favor of our initial business combination. Unless
a
business combination is approved by our stockholders, our sponsor
has
agreed not to sell such shares, provided it will be entitled to
participate in any liquidating distributions with respect to the
shares
purchased in the open market. In
the event our sponsor does not purchase $4,000,000 of our common
stock
through those open market purchases, our sponsor has agreed to
purchase
from us in a private placement a number of units identical to the
units
offered hereby at a purchase price of $8.00 per unit until it has
spent an
aggregate of $4,000,000 in the open market purchases described
above and
this co-investment. This co-investment will occur immediately prior
to our
consummation of a business combination, which will not occur until
after
the signing of a definitive business combination agreement and
the
approval of that business combination by a majority of our public
stockholders. The private placement units may not be sold, assigned
or
transferred unless and until our stockholders approve a business
combination.
|
|
|
No
commissions, fees or other compensation will be payable in connection
with
the private placement or the co-investment.
|
|
|
|
Common
stock:
|
|
|
Number
outstanding before this offering:
|
|
1,125,000
shares
|
Number
to be outstanding after this offering:
|
|
5,625,000
shares
|
Warrants:
|
|
|
Number
outstanding before this offering and private placement:
|
|
None
|
Number
to be outstanding after this offering and private
placement:
|
|
7,000,000
warrants
|
|
|
|
Exercisability:
|
|
Each
warrant is exercisable for one share of common stock.
|
|
|
|
Exercise
price:
|
|
$6.00
per share
|
|
|
|
Exercise
period:
|
|
The
warrants sold in the offering will become exercisable on the later
of:
· the
completion of a business combination, or
· _______________,
2008 [one
year from the date of this prospectus]
The
warrants held by public stockholders will only be exercisable if
a
registration statement covering the common stock issuable upon exercise
of
the warrants is effective and current. The warrants included in the
units
sold in this offering will expire at 5:00 p.m., New York City time,
on
______________, 2011 [four
years from the date of this prospectus]
or
earlier upon redemption.
|
|
|
|
Redemption:
|
|
We
may redeem the outstanding warrants included in the units sold in
this
offering and the warrants issued upon exercise of the representative’s
unit purchase option:
· in
whole and not in part,
· at
a price of $0.01 per warrant at any time while the warrants are
exercisable,
· at
any time while the warrants are exercisable,
· upon
a minimum of 30 days’ prior written notice of redemption, and
· if,
and only if, the last closing sales price of our common stock equals
or
exceeds $11.50 per share for any 20 trading days within a 30 trading
day
period ending three business days before we send the notice of
redemption.
We
have established this last criterion to provide warrant holders with
a
premium to the initial warrant exercise price as well as a degree
of
liquidity to cushion the market reaction, if any, to our redemption
call.
If the foregoing conditions are satisfied and we call the warrants
for
redemption, each warrant holder shall 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 our common stock will exceed the
call
trigger price ($11.50) or the warrant exercise price after the redemption
call is made.
None
of the warrants issued in the private placement are redeemable while
held
by the initial purchasers or their permitted
assigns.
|
Limited
Payments to Insiders:
|
|
There
will be no fees, reimbursements or cash payments made to our existing
stockholders and/or officers and directors other than:
·
repayment
of the $200,000 promissory note bearing interest at a rate of 4.9%
per
annum made by our sponsor, to fund organizational and offering expenses,
prior to the closing date of this offering;
·
reimbursement
of any expenses incident to finding a suitable business combination;
and
·
payment
to Camden Learning, LLC of $7,500 per month for certain general
and administrative services, including but not limited to receptionist,
secretarial and general office services.
|
|
|
|
Certificate
of Incorporation:
|
|
As
discussed below, there are specific provisions in our amended and
restated
certificate of incorporation that may not be amended prior to our
consummation of a business combination without the prior consent
of
holders of 95% of the shares purchased in this offering, including
our
requirements to seek stockholder approval of such a business combination
and to allow our stockholders to seek redemption of their shares
if they
do not approve of such a business combination. We view these provisions,
which are contained in Article Third and Sixth of our amended and
restated
certificate of incorporation, as obligations to our stockholders
and will
not take any action to amend or waive these provisions unless we
obtain
the consent of holders of 95% of the shares purchased in this offering.
Our
amended and restated certificate of incorporation also provides we
will
continue in existence only until ____________, 2009 [twenty
four months from the date of this prospectus].
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 and 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). In connection
with any
proposed business combination we submit to our stockholders for approval,
we will also submit to our 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
only consummate a business combination if stockholders vote both
in favor
of such business combination and our amendment to provide for our
perpetual existence. The approval of the proposal to amend our amended
and
restated certificate of incorporation to provide for our perpetual
existence would require the affirmative vote of a majority of our
outstanding shares of common stock. We view this provision terminating
our
corporate life by _____________, 2009 [twenty
four months from the date of this prospectus] as
an obligation to our stockholders and 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
or
unless we obtain the written consent of holders of 95% of the shares
purchased in this
offering.
|
Proposed
OTC Bulletin Board symbols for our:
Units:
Common
Stock:
Warrants:
|
|
“[ ]”
“[ ]”
“[
]”
|
|
|
|
Offering
and private placement proceeds to be held in
trust:
|
|
$35,550,000
of the proceeds from this offering and the private placement will
be
placed in a trust account at Lehman Brothers, Inc. maintained
by Continental
Stock Transfer & Trust Company, pursuant to an investment management
trust agreement to be signed on the date of this prospectus. Of this
amount, up to $34,830,000 may be used by us for the purpose of effecting
a
business combination and up to $720,000 will be paid to Morgan Joseph
& Co. Inc. if a business combination is consummated (less $0.16 for
each share redeemed for cash in connection with our business combination),
but will be forfeited by Morgan Joseph & Co. Inc. if a business
combination is not consummated. These funds will not be released
until the
earlier of the completion of a business combination or our liquidation;
provided, however, there can be released to us from the interest
income,
after taxes, accrued on the trust account prior to, or upon the
consummation of, a business combination or our liquidation, amounts
for
payment of taxes on interest earned and up to $750,000 to fund our
expenses relating to investigating and selecting a target business,
other
working capital requirements and expenses incurred in connection
with our
dissolution if we fail to consummate a business combination. Other
than as
described above, the funds 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
and the negotiation of an agreement to acquire a target business,
unless
and until a business combination is consummated. The $720,000 of
the funds
attributable to Morgan Joseph & Co. Inc.’s deferred underwriting
discount and commissions in connection with this offering will be
released
to Morgan Joseph & Co. Inc., less $0.16 per share for any public
stockholders exercising their redemption rights, upon completion
of a
business combination on the terms described in this prospectus, or
to our
public stockholders upon liquidation of the trust account as part
of our
plan of dissolution and liquidation, but will in no event be available
for
use by us in a business combination. Expenses we may incur prior
to
consummation of a business combination may only be paid from the
net
proceeds of this offering and the private placement not held in the
trust
account, and any interest earned and released to us as provided
above.
In
the event a business combination is consummated, all sums remaining
in the
trust account will be released to us and there will be no restriction
on
our use of such funds, which shall be available for working capital
to pay
officer and director salaries, make change of control payments, pay
fees
to affiliates or for any other uses as we may
determine.
|
Stockholders
must approve business combination:
|
|
We
will seek stockholder approval before we effect any business combination,
even if the nature of the acquisition would not ordinarily require
stockholder approval under applicable state law. In connection with
the
vote required for any business combination, all of our existing
stockholders, including all of our officers and directors, have agreed
to
vote the shares of common stock owned by them immediately before
this
offering in accordance with the majority of the shares of common
stock
voted by the public stockholders. Any shares acquired in this offering
or
in the aftermarket by existing stockholders and their designees will
be
voted in favor of the business combination. Accordingly, our existing
stockholders will not be able to exercise redemption rights with
respect
to a potential business combination.
|
|
|
|
|
|
We
will proceed with a business combination only if a majority of
the shares
of our common stock cast at the meeting are voted in favor of the
business
combination and public stockholders owning less than 30% of the
shares
sold in this offering vote against the business combination and
exercise
their redemption rights described below. Our threshold for redemption
rights has been established at 30% in order for this offering to
be
competitive with other offerings by blank check companies currently
in the
market. However, a 20% threshold is more typical in offerings of
this
type. We have selected the higher threshold to reduce the risk
of a small
group of stockholders exercising undue influence on the stockholder
approval process. We will not propose a business combination that
is
conditioned on less than 29.99% of the public stockholders exercising
their conversion rights. However, the 30% threshold entails certain
risks
described under the heading “Risk Factors - The fact we will proceed with
the business combination if public stockholders holding less than
30% of
shares sold in this offering exercise their redemption rights,
rather than
the 20% threshold of most other blank check companies, may hinder
our
ability to consummate a business combination in the most efficient
manner
to optimize our capital
structure.”
|
|
|
|
Redemption
rights for stockholders voting to reject a business
combination:
|
|
Public
stockholders voting against a business combination will be entitled
to
redeem their common stock for a pro rata share of the trust account
including $0.16 per share being held in the trust account attributable
to
the deferred underwriting discount and commissions and any interest
earned
on the portion of the trust account, excluding up to $750,000 of
interest
income (after taxes) previously released to us to fund our working
capital
requirements and amounts released to us for payment of taxes on interest
earned. Public stockholders that redeem their stock for their pro
rata
share of the trust account will continue to have the right to exercise
any
warrants they may hold. Stockholders will not be requested to tender
their
shares of common stock before a business combination is consummated.
If a
business combination is consummated, redeeming stockholders will
be sent
instructions on how to tender their shares of common stock and when
they
should expect to receive the redemption amount. In order to ensure
accuracy in determining whether or not the redemption threshold has
been
met, each redeeming stockholder must continue to hold their shares
of
common stock until the consummation of the business combination.
We will
not charge redeeming stockholders any fees in connection with the
tender
of shares for redemption. Because our existing stockholders have
agreed to
vote any shares acquired by them in this offering or the aftermarket
in
favor of a business combination negotiated by our executive officers,
they
are not entitled to redemption rights with respect to any such shares
if
the business combination is approved and
completed.
|
Liquidation
if no business
combination:
|
|
As
described above, if we have not consummated a business combination
by______________, 2009 [twenty
four months from the date of this prospectus],
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 any accrued interest, after taxes payable
on such
interest) plus any remaining net assets. At that time, pursuant
to Section
281 of the Delaware General Corporation Law, we will 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 10
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 10 years
prior to
distributing the funds held in the trust to our public stockholders.
We
cannot assure you that we will properly assess all claims that
may be
potentially brought against us or that distributions
from the trust account, if we liquidate, will not be reduced by
such
claims.
As such, our stockholders could potentially be liable for any claims
of
creditors to the extent of distributions received by them (but
no more).
Furthermore,
we will use our reasonable best efforts 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. We may elect to forego obtaining
waivers
only if we receive the approval of our Chief Executive Officer
and the
approving vote or written consent of at least a majority of our
board of
directors. However, there is no guarantee these third parties will
execute
such waivers, or even if they execute such waivers, that they will
not
seek recourse against the trust account or that a court would not
conclude
that such waivers are not legally enforceable. In order to protect
the
amounts held in the trust account, our sponsor has agreed to indemnify
us
for claims of creditors, vendors, service providers and target
businesses
that have not executed a valid and binding waiver of their right
to seek
payment of amounts due to them out of the trust account. As
further assurance our sponsor will have the necessary funds required
to
meet these indemnification obligations, (i) the sole owners and
members of
our sponsor, Camden Partners Strategic Fund III, L.P. (96.01% ownership
of
the sponsor) and Camden Partners Strategic Fund III-A, L.P. (3.99%),
have
agreed, under our sponsor’s limited liability company agreement, to make
capital contributions to our sponsor as and when required in order
for the
sponsor to fulfill its indemnification obligations and (ii) our
sponsor
has agreed to take all such action reasonably necessary to request
its
members make such capital contributions. Additionally, in the event
either
of the Camden III Funds undertakes a liquidating distribution while
the
indemnification obligations of the sponsor are outstanding, they
have
agreed, in our sponsor’s limited liability company agreement, to use
reasonable efforts to set aside from such distribution, adequate
reserves
to cover the reasonably anticipated liabilities which may be incurred
by
our sponsor. We and the representative of the underwriters are
named as
express third party beneficiaries in and with respect to the provisions
of
our sponsor’s limited liability company agreement which require the Camden
III Funds to make such capital contributions and establish such
reserves.
Despite these obligations, we cannot assure you the sponsor or
the Camden
III Funds will be able to satisfy those obligations, if required
to do
so.
The Camden III Funds are exempt from registration under the Investment
Company Act of 1940
pursuant to either Section 3(c)(1) or Section 3(c)(7) of such Act
and
have informed us they expect to continue to qualify for such exemption
following this offering.
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|
|
Our
existing stockholders have agreed to waive their respective rights
to
participate in any liquidation as part of our plan of dissolution
and
liquidation with respect to those shares of common stock acquired
by them
prior to this offering. They will participate in any liquidation
distribution with respect to any shares of common stock acquired
as part
of this offering or in the aftermarket. In addition, Morgan Joseph
&
Co. Inc. has agreed to waive its right to the $720,000 ($828,000
if the
underwriters’ over-allotment option is exercised in full) of deferred
compensation deposited in the trust account if a business combination
is
not consummated. We anticipate the distribution of the funds in the
trust
account to our public stockholders will occur within 10 business
days from
the date our corporate existence
ceases.
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|
|
Accordingly,
in the event we liquidate the trust account, our public stockholders
will
receive $7.90 per share (plus a portion of the interest on the trust
account, but net of: (i) taxes payable on the interest income earned
and
(ii) up to $750,000 of interest income released to us to fund our
working
capital requirements) subject to reduction by claims of creditors
as
described above.
|
|
|
|
Escrow
of existing stockholders’ securities:
|
|
On
the date of this prospectus, all of our existing stockholders,
including
all of our officers and directors, will place the shares they owned
before
this offering into an escrow account maintained by Continental
Stock
Transfer & Trust Company acting as escrow agent. Subject to certain
limited exceptions, such as transfers to family members and trusts
for
estate planning purposes and upon death while remaining subject
to the
escrow agreement, these shares will not be transferable and will
not be
released from escrow until one year after consummation of a business
combination, unless we were to consummate a transaction after the
consummation of the initial business combination that results in
all of
our stockholders having the right to exchange their shares of common
stock
for cash, securities or other property. If we are forced to dissolve
and
liquidate, these shares will be cancelled. Additionally, on the
date of
this prospectus, the insider warrants will be placed into the escrow
account maintained by Continental Stock Transfer & Trust Company,
acting as escrow agent. Subject to certain limited exceptions,
the insider
warrants will not be transferable and will not be released from
escrow
until the 90th day after the completion of our business
combination.
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|
|
|
|
|
If
holders of more than 20% of the shares sold in this offering vote
against
a proposed business combination and seek to exercise their redemption
rights and such business combination is consummated, our existing
stockholders have agreed to forfeit, on a pro rata basis, and return
to us
for cancellation, a number of the initial 1,125,000 shares of our
common
stock purchased, up to a maximum of 140,625 shares, so that the existing
stockholders will collectively own no more than 23.81% (without regard
to
any purchase of units in this offering, any open market purchases
or
private purchases of units by the sponsor directly from us, as set
forth
elsewhere herein) of our outstanding common stock immediately prior
to the
consummation of such business
combination.
|
Risks
We
are a
newly formed company and until we complete a business combination, we will
have
no operations and will generate no operating revenues. In making your decision
on whether to invest in our securities, you should take into account not only
the backgrounds of our management team, but also the special risks we face
as a
blank check company, as well as the fact that this offering is not being
conducted in compliance with Rule 419 promulgated under the Securities Act
of
1933, as amended, and, therefore, you will not be entitled to protections
normally afforded to investors in Rule 419 blank check offerings. Additionally,
our existing stockholders’ initial equity investment is below that which is
required under the guidelines of the North American Securities Administrators’
Association, Inc. and we do not satisfy such association’s policy regarding
unsound financial condition. You should carefully consider these and the other
risks set forth in the section entitled “Risk Factors” beginning on page 13 of
this prospectus.
SUMMARY
FINANCIAL DATA
The
following table summarizes the relevant financial data for our business and
should be read with our financial statements, which are included in this
prospectus. We have not had any significant operations to date, so only balance
sheet data is presented.
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|
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|
|
Actual
|
|
As
Adjusted(1)
|
|
|
|
|
|
|
|
Balance
Sheet Data:
|
|
|
|
|
|
Working
capital
|
|
$
|
113,000
|
|
$
|
774,000
|
|
Total
assets
|
|
|
335,000
|
|
|
36,324,000
|
|
Total
liabilities
|
|
|
112,000
|
|
|
720,000
|
|
Value
of common stock which may be redeemed for an interest in the trust
account
|
|
|
—
|
|
|
10,661,445
|
|
Stockholders’
equity
|
|
|
223,000
|
|
|
24,942,555
|
|
(1) The
“as
adjusted” information gives effect to the sale of the units in this offering and
the sale of warrants in the private placement, including the application of
the
related gross proceeds and the payment of the estimated remaining costs from
such transactions.
The
“actual” information for working capital excludes $110,000 of costs related to
this offering and the private placement which were incurred or paid prior
to
April 26, 2007. These deferred offering costs have been recorded as a long-term
asset and are reclassified against stockholders’ equity in the “as adjusted”
information. The “actual” information for working capital also excludes the
$199,000 excess of the face amount of a $200,000 note payable to an affiliate
over the nominal recorded liability of $1,000. The “as adjusted” information
gives effect to the payment of this note at its full face
amount.
The
total
assets amount, as adjusted, includes the $35,550,000 ($7.90 per share) to be
held in the trust account, $34,830,000 of which will be available to us to
consummate a business combination within the time period described in this
prospectus, with the balance of $720,000 ($0.16 per share) to be used to pay
the
deferred underwriting discount and commissions payable to Morgan Joseph &
Co. Inc., less amounts payable to redeeming stockholders, upon consummation
of a
business combination. If a business combination is not so consummated, we will
be dissolved and the proceeds held in the trust account (including $720,000
of
deferred compensation to be held for the benefit of Morgan Joseph & Co.
Inc.) will be distributed solely to our public stockholders (subject to our
obligations under Delaware law to provide for claims of creditors).
We
will
not proceed with a business combination if public stockholders owning more
than
29.99% of the shares sold in this offering vote against the business combination
and exercise their redemption rights. Accordingly, we may effect a business
combination only if stockholders owning less than 30% of the shares sold in
this
offering exercise their redemption rights. If this occurred, we would be
required to redeem for cash up to approximately 29.99% of the 4,500,000 shares
of common stock sold in this offering, or 1,349,550 shares of common stock,
at a
per-share redemption price of $7.90 (plus a portion of the interest earned
on
the trust account, but net of (i) taxes payable on interest earned and (ii)
up
to $750,000 of interest income released to us to fund our working capital),
which includes $0.16 per share of deferred underwriting discount and commissions
which Morgan Joseph & Co. Inc. has agreed to forfeit to pay redeeming
stockholders. The actual per-share redemption price will be equal
to:
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· |
the
initial amount in the trust account ($7.90 per share) which includes
the
amount attributable to deferred underwriting discounts and commissions
and
including all accrued interest (after taxes payable and up to $750,000
of
interest income released to us to fund our working capital), as of
two
business days prior to the proposed consummation of the business
combination, divided
by
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|
· |
the
number of shares of common stock sold in the
offering.
|
In
the
event holders of more than 20% of the shares sold in this offering elect to
redeem their shares, our existing stockholders have agreed to forfeit a number
of the initial 1,125,000 shares of our common stock purchased, up to a maximum
of 140,625 shares, so that the existing stockholders will collectively own
no
more than 23.81% (without regard to any purchase of units in this offering,
any
open market purchases or private purchases of units by the sponsor directly
from
us, as set forth elsewhere herein) of our outstanding common stock immediately
prior to the consummation of such business combination after giving effect
to
the redemption.
RISK
FACTORS
An
investment in our securities involves a high degree of risk. You should consider
carefully all of the material risks described below, together with the other
information contained in this prospectus before making a decision to invest
in
our securities. If any of the following events occur, our business, financial
condition and results of operations may be materially adversely affected. In
such event, the trading price of our securities could decline and you could
lose
all or part of your investment.
Risks
Associated With Our Business
We
are a recently formed development stage company with no operating history and
no
revenues and, accordingly, you will not have any basis on which to evaluate
our
ability to achieve our business objective.
We
are a
recently formed 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,
merge with, engage in a capital stock exchange with, purchase all or
substantially all of the assets of, or engage in any other similar business
combination with, a single operating entity, or one or more related or unrelated
operating entities with a business in the education industry. We do not have
any
specific merger, capital stock exchange, asset acquisition or other business
combination under consideration or contemplation and we have not, nor has
anyone
on our behalf, contacted any potential target business or had any discussions,
formal or otherwise, with respect to such a transaction. Moreover, we have
not
engaged or retained any agent or other representative to identify or locate
any
suitable acquisition candidate for us. We cannot assure you as to when or
if a
business combination will occur. We have no present revenue and will not
generate any revenues until, at the earliest, after the completion of a business
combination. The report of our independent registered public accountants
on our
financial statements includes an explanatory paragraph stating that our ability
to continue as a going concern is dependent on the consummation of this
offering. The financial statements do not include any adjustments that might
result from our inability to consummate this offering or our ability to continue
as a going concern.
If
we are unable to complete a business combination and are forced to liquidate,
our public stockholders will receive less than $8.00 per share upon distribution
of the trust account and our warrants will expire
worthless.
If
we are
unable to complete a business combination within 24 months from the date of
this
prospectus and are forced to liquidate our assets, the per share liquidation
proceeds will be less than $8.00 because of the expenses incurred in connection
with this offering, our general and administrative expenses and the anticipated
costs of seeking a business combination. The per share liquidation value will
be
$7.90 per share, plus interest earned thereon (after taxes payable and up to
$750,000 of interest income released to us), which includes the net proceeds
of
this offering and the private placement of the insider warrants and $720,000
($0.16 per share) of deferred underwriting discount and commissions. While
we will pay, or reserve for payment, from funds not held in trust, our
liabilities and obligations, and our sponsor has agreed to indemnify us under
certain circumstances for such liabilities and obligations, we cannot assure
you, where it is subsequently determined that the reserve for liabilities is
insufficient, that stockholders will not be liable for such amounts to
creditors. Furthermore, there will be no distribution with respect to our
outstanding warrants and, accordingly, the warrants will expire worthless if
we
liquidate before the completion of a business combination. 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 “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 the full 24 months before receiving liquidation distributions.
We
have
24 months 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
redemption 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.
You
will not be entitled to protections normally afforded to investors of blank
check companies, including the ability to receive all interest earned on the
amount held in trust.
Since
the
net proceeds of this offering are intended to be used to complete a business
combination with a target business which has not been identified, we may be
deemed to be a “blank check” company under the United States securities laws.
However, since we will have net tangible assets in excess of $5,000,000 upon
the
consummation of this offering and will file a Current Report on Form 8-K with
the Securities and Exchange Commission, or 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 into the trust account. Because we are not subject
to Rule 419, a portion of the interest earned on the funds deposited in the
trust account will be released to us to fund our working capital and will not
be
available at all to those public stockholders redeeming in connection with
a
business combination. For a more detailed comparison of our offering to
offerings under Rule 419, see the section entitled “Comparison to Offerings of
Blank Check Companies” below.
Because
there are numerous companies with a business plan similar to ours seeking to
effectuate a business combination, it may be more difficult for us to complete
a
business combination.
Based
upon publicly available information, we have identified approximately 101
similarly structured blank check companies which have completed initial public
offerings since August 2003 and 41 others with registration statements currently
pending before the SEC. Of the blank check companies which have completed their
public offerings, only 24 companies have consummated a business combination,
21
other companies have announced they have entered into a definitive agreement
for
a business combination but have not consummated such business combination and
five have liquidated or will be liquidating. Accordingly, there are
approximately 51 blank check companies with approximately $5.0 billion in trust
seeking to carry out a business plan similar to our business plan. While many
of
these companies are targeted towards specific industries in which they must
complete a business combination, certain of these companies may consummate
a
business combination in any industry they choose. As a result, there may be
significant demand for the types of privately-held companies we target, which
demand may limit the number of potential acquisition targets for
us.
Further,
because only 45 of such companies have either consummated a business combination
or entered into a definitive agreement for a business combination, it may
indicate there are fewer attractive target businesses available to such entities
or that many privately-held target businesses are not inclined to enter into
these types of transactions with publicly-held blank check companies like ours.
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.
The
terms on which we may effect a business combination can be expected to become
less favorable as we approach our twenty four month
deadline.
Pursuant
to our amended and restated certificate of incorporation, we must adopt a
plan
of dissolution and liquidation and initiate procedures for our dissolution
and
liquidation and the distribution of our assets, including the funds held
in the
trust account, if we do not effect a business combination within 24 months
after
the completion of this offering. We have agreed with the trustee to promptly
adopt a plan of dissolution and liquidation and initiate procedures for our
dissolution and liquidation and the distribution of our assets, including
the
funds held in the trust account, upon expiration of the time periods set
forth
above unless
we
obtain the written consent of holders of 95% of the shares purchased in
this
offering.
Any
entity with which we negotiate, or attempt to negotiate, a business combination,
will be aware of this time limitation and can be expected to negotiate
accordingly. In such event, we may not be able to reach an agreement with any
proposed target prior to such period and any agreement that is reached may
be on
terms less favorable to us than if we did not have the time period restrictions
set forth above. Additionally, as the 24 month time period draws closer, we
may
not have the desired amount of negotiating leverage in the event any new
information comes to light after entering into definitive agreements with any
proposed target but prior to consummation of a business
transaction.
The
fact we will proceed with the business combination if public stockholders
holding less than 30% of the shares sold in this offering exercise their
redemption rights, rather than the 20% threshold of most other blank check
companies, may hinder our ability to consummate a business combination in the
most efficient manner or to optimize our capital
structure.
Unlike
most other blank check offerings which have a 20% redemption threshold, we
will
proceed with the business combination if public stockholders holding less than
30% of the shares sold in this offering exercise their redemption rights. As
a
result of our higher redemption threshold, we may have less cash available
to
complete a business combination. Because we will not know how many stockholders
may exercise such redemption rights, we will need to structure a business
combination meeting the 80% of our net assets test that requires less cash,
or
we may need to arrange third party financing to help fund the transaction in
case a larger percentage of stockholders exercise their redemption rights than
we expect. Alternatively, to compensate for the potential shortfall in cash,
we
may be required to structure the business combination, in whole or in part,
using the issuance of our stock as consideration. Accordingly, this increase
in
redemption threshold to 30% may hinder our ability to consummate a business
combination in the most efficient manner or to optimize our capital
structure.
If
third parties bring claims against us, the proceeds held in trust could be
reduced and the per-share liquidation price received by stockholders from the
trust account will be less than $7.90 per share.
Our
placing of funds in trust may not protect those funds from third party claims
against us. Although we will use our reasonable best efforts to have all
vendors, 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 they will execute such waivers, or even if they execute
such waivers that they would be prevented from bringing claims against the
trust
account including but not limited to fraudulent inducement, breach of fiduciary
responsibility and 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. We may elect to forego obtaining waivers only
if
we receive the approval of our Chief Executive Officer and the approving vote
or
written consent of at least a majority of our board of directors. 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 addition, there is no guarantee 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 $7.90 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 and net of any amounts released to us as working capital),
due
to claims of such creditors. If we are unable to complete a business combination
and are forced to dissolve and liquidate, our sponsor will be liable to ensure
the proceeds in the trust account are not reduced by the claims of various
vendors, prospective target businesses or other entities owed money by us for
services rendered or products sold to us, to the extent necessary to ensure
such
claims do not reduce the amount in the trust account. In order to protect the
amounts held in the trust account, our sponsor has agreed to indemnify us for
claims of any vendors, service providers, prospective target businesses or
creditors that
have
not executed a valid and binding waiver of amounts due to them out of the trust
account. As further assurance our sponsor will have the necessary funds required
to meet these indemnification obligations, (i) the Camden III Funds have agreed,
under our sponsor’s limited liability company agreement, to make capital
contributions to our sponsor as and when required in order for the sponsor
to
fulfill its indemnification obligations and (ii) our sponsor has agreed to
take
all such action reasonably necessary to request its members make such capital
contributions. Additionally, in the event either of the Camden III Funds
undertakes a liquidating distribution while the indemnification obligations
of
the sponsor are outstanding, they have each agreed, in our sponsor’s limited
liability company agreement, to use reasonable efforts to set aside from such
distribution adequate reserves to cover the reasonably anticipated liabilities
which may be incurred by our sponsor. We and the representative of the
underwriters are named as express third party beneficiaries in and with respect
to the provisions of our sponsor’s limited liability company agreement which
require the Camden III Funds to make such capital contributions and establish
such reserves. Despite these obligations, we cannot assure you the sponsor
or
the Camden III Funds will be able to satisfy those obligations, if required
to
do so.
Our
officers and directors may in the future become affiliated with entities engaged
in business activities similar to those intended to be conducted by us, and,
accordingly, may have conflicts of interest in determining which entity a
particular business opportunity should be presented
to.
None
of
our directors or officers has been a principal of, or affiliated with, a “blank
check” company that executed a business plan similar to our business plan and
none of such individuals is currently affiliated with any such entity. However,
our officers and directors may in the future become affiliated with entities,
including other “blank check” companies, engaged in business activities similar
to those intended to be conducted by us. While our officers and directors have
agreed to present business opportunities first to the company, subject to any
pre-existing duty they may have, they may become aware of business opportunities
which may be appropriate for presentation to us, as well as the other entities
to which they owe fiduciary duties. Accordingly, they may have conflicts of
interest in determining to which entity a particular business opportunity should
be presented.
Each
of
our officers and directors has pre-existing fiduciary obligations to other
businesses of which they are officers or directors. To the extent they identify
business opportunities which may be suitable for the entities to which they
owe
a pre-existing fiduciary obligation, our officers and directors will honor
those
fiduciary obligations, subject to the “right of first refusal” described below.
Accordingly, they may not present opportunities to us that otherwise may
be
attractive to us unless the entities to which they owe a pre-existing fiduciary
obligation (and any successors to such entities) have declined to accept
such
opportunities.
David
L.
Warnock serves on the boards of directors of American Public Education, Inc.
and
Nobel Learning Communities, Inc., and both he and Mr. Hughes serve on the
boards
of directors of New Horizons Worldwide, Inc. and Questar Assessment, Inc.,
formerly Touchstone Applied Science Associates, all of which are portfolio
companies of one or both of the Camden III Funds in the education industry.
Both
Messrs. Warnock and Hughes have a pre-existing fiduciary duty to each of
these
companies and may
not
present opportunities to us that otherwise may be attractive to us unless
these
entities have declined to accept such opportunities.
Messrs.
Warnock and Hughes also have fiduciary obligations to the Camden III Funds.
The
Camden III Funds are private equity funds focused on investing in micro-cap
public and, to a lesser extent, late stage private companies, in the business
and financial services, healthcare and education industries. In order to
minimize potential conflicts, or the appearance of conflicts, which may arise
from the affiliations that Messrs. Warnock and Hughes have with the Camden
III
Funds, the Camden III Funds have granted us a "right of first refusal" with
respect to an acquisition of voting control of any company or business in
the
education industry whose aggregate fair market value is at least equal to
80% of
the balance of the trust account (less the deferred underwriting discounts
and
commissions and taxes payable), which is the minimum size of a target business
for our initial business combination. Pursuant to this right of first refusal,
each of the Camden III Funds has agreed to present any investment or purchase
opportunity in a company meeting these criteria to a committee of our
independent directors for our review and that it will not enter into any
agreement to purchase or invest in such company until our committee of
independent directors has had a reasonable period of time to determine whether
or not to pursue such opportunity. This right of first refusal will expire
upon
the earlier of (i) our consummation of an initial business combination or
(ii)
24 months after the consummation of this offering. Furthermore, we have agreed
with the representative of the underwriters that any target company with
respect
to which either of the Camden III Funds has initiated any contacts or entered
into any negotiations or discussions, formal or informal, will not be a
potential acquisition target for us.
Jack
L.
Brozman is President and Chief Operating Officer of Concorde Career Colleges.
Therese Kreig Crane, Ed.D, currently serves as Chairman of the Board of
Directors of Nobel Learning Communities Inc. and as a director of Questia
Inc.
and Tutor.com. Ronald Tomalis is a director and owner of The Chartwell
Educational Group. While we do not know if any of these entities will be
competitive with us, each of these directors has a pre-existing fiduciary
duty
to each of these companies and may
not
present opportunities to us that otherwise may be attractive to us unless
these
entities have declined to accept such opportunities.
For
a
more complete discussion of our management's affiliations and the potential
conflicts of interest that you should be aware of, see the sections below
entitled “Management — Directors and Executive Officers” and “Management —
Conflicts of Interest.” We cannot assure you these conflicts will be resolved in
our favor.
Our
stockholders may be held liable for claims by third parties against us to the
extent of distributions received by them.
We
will
dissolve and liquidate if we do not complete a business combination within
24
months after the consummation of this offering. In the event of a dissolution,
stockholders may be held liable under the Delaware General Corporation Law
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 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 within 10 business days after
the
24 month period and, therefore, we do not intend to comply with these
procedures. Because we will not be complying with Section 280, we will comply
with Section 281(b) of the Delaware General Corporation Law, requiring us to
adopt a plan of dissolution 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 10 years. However, because we are a blank check company, rather
than
an operating company, and our operations will be limited to searching for
prospective target businesses to acquire, the only likely claims to arise would
be from our vendors (such as accountants, lawyers, investment bankers, etc.)
or
potential target businesses. As described above, we will use our reasonable
best
efforts to have all vendors and prospective target businesses execute agreements
with us waiving any right, title, interest or claim of any kind in or to any
monies held in the trust account. As a result, the claims that could be made
against us are significantly limited and the likelihood any claim would result
in any liability extending to the trust is minimal. However, because we will
not
be complying with Section 280, our public stockholders could potentially be
liable for any claims to the extent of distributions received by them in a
dissolution, and any such liability of our stockholders will likely extend
beyond the third anniversary of such dissolution. Accordingly, we cannot assure
you that third parties will not seek to recover from our public stockholders
amounts owed to them by us.
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 in our dissolution. Furthermore, because we intend to distribute
the proceeds held in the trust account to our public stockholders promptly
after
[ ], 2009, 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. Additionally, our board may be viewed as having
breached their fiduciary duties 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.
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 of 1933 with
respect to the shares of common stock issuable upon exercise of the warrants,
we
may redeem the warrants issued as a part of our units at any time while the
warrants are exercisable in whole and not in part, at a price of $0.01 per
warrant, upon a minimum of 30 days’ prior written notice of redemption, if and
only if, the last sales price of our common stock equals or exceeds $11.50
per
share for any 20 trading days within a 30 trading day period ending three
business days before we send the notice of redemption. Redemption of the
warrants could force the warrant holders (i) to exercise the warrants and pay
the exercise price thereafter at a time when it may be disadvantageous for
the
holders to do so, (ii) to sell the warrants at the then current market price
when they might otherwise wish to hold the warrants, or (iii) to 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. The foregoing does not apply to the warrants included as part of
the
2,500,000 insider warrants purchased prior to this offering, as such warrants
are not subject to redemption while held by the initial holder or any permitted
transferee of such initial holder.
Although
we are required to use our best efforts to have an effective registration
statement covering the issuance of the shares underlying the warrants at the
time that our warrant holders exercise their warrants, we cannot guarantee
a
registration statement will be effective, in which case our warrant holders
may
not be able to exercise our warrants.
Holders
of our warrants will be able to exercise the warrant only if (i) a current
registration statement under the Securities Act of 1933 relating to the shares
of our common stock underlying the warrants is then effective and (ii) such
shares are qualified for sale or exempt from qualification under the applicable
securities laws of the states in which the various holders of warrants reside.
Although we have undertaken in the warrant agreement, and therefore have
a
contractual obligation, to use our best efforts to maintain a current
registration statement covering the shares underlying the warrants following
completion of this offering to the extent required by federal securities
law,
and we intend to comply with such undertaking, we cannot assure you we will
be
able to do so. At the time the warrants become exercisable (following our
completion of a business combination), we expect to be listed on a national
securities exchange, which would provide an exemption from registration in
every
state, but we cannot assure you this will be the case. Accordingly, we believe
holders in every state will be able to exercise their warrants as long as
our
prospectus relating to the common stock issuable upon exercise of the warrants
is current. However, we cannot assure you of this fact. The value of the
warrants may be greatly reduced if a registration statement covering the
shares
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. For example, some states may not permit
us
to register the shares issuable on exercise of our warrants for sale. We
are not
obligated to pay cash or other consideration to the holders of the warrants
in
such situations. Holders of warrants who reside in jurisdictions in which
the
shares underlying the warrants are not qualified and in which there is no
exemption will be unable to exercise their warrants and would either have
to
sell their warrants in the open market or allow them to expire worthless.
In the
event the warrants expire worthless or we choose to redeem the warrants at
a
time when the holders of such warrants are unable to exercise them, the
purchasers of units will have effectively paid the full purchase price of
the
units solely for the common stock underlying such units. If and when the
warrants become redeemable by us, we may exercise our redemption right even
if
we are unable to qualify the underlying securities for sale under all applicable
state securities laws.
Because
the warrants sold in the private placement were originally issued pursuant
to an
exemption from the registration requirements under the federal securities laws,
holders of such warrants 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.
We
may issue shares of our capital stock or debt securities 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 20,000,000 shares of common stock, par value $.0001 per share, and 1,000,000
shares of preferred stock, par value $.0001 per share. Immediately after this
offering, there will be 6,475,000 authorized but unissued shares of our common
stock available for issuance (after appropriate reservation for the issuance
of
shares upon full exercise of our outstanding warrants and underwriter’s unit
purchase option) and all of the 1,000,000 shares of preferred stock available
for issuance. Although we have no commitments as of the date of this offering
to
issue our securities, we may issue a substantial number of additional shares
of
our common stock 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:
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may
significantly reduce the equity interest of investors in this
offering;
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|
will
likely cause a change in control if a substantial number of our shares
of
common stock are issued, which may affect, among other things, our
ability
to use our net operating loss carry forwards, if any, and most likely
also
result in the resignation or removal of our present officers and
directors;
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may
adversely affect prevailing market prices for our common stock;
and
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may
subordinate the rights of holders of our common stock if preferred
stock
is issued with rights senior to those afforded to the common
stock.
|
If
we
finance the purchase of assets or operations through the issuance of debt
securities, it could result in:
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default
and foreclosure on our assets if our operating cash flow after a
business
combination were insufficient to pay our debt
obligations;
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acceleration
of our obligations to repay the indebtedness even if we have made
all
principal and interest payments when
due, if the
debt security
contained covenants that required the maintenance of
certain financial ratios or reserves and any such covenant were breached
without a waiver or renegotiation of that
covenant;
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our
immediate payment of all principal and accrued interest, if any,
if the
debt security was payable on
demand;
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covenants
that limit our ability to acquire capital assets or make additional
acquisitions; and
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our
inability to obtain additional financing, if necessary, if the debt
security contained covenants restricting our ability to obtain additional
financing while such security was
outstanding.
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We
are
not currently able to assess the likelihood we will need to finance a business
combination through the issuance of debt securities. However, since we will
proceed with the business combination if public stockholders holding less
than
30% of the shares sold in this offering exercise their redemption rights,
unlike
the 20% threshold adopted by many companies similar to ours, we may have
less
cash available to complete a business combination. Because we will not know
how
many stockholders may exercise such redemption rights, we will need to structure
a business combination meeting the 80% of our net assets test that requires
less
cash, or we may need to arrange third party financing to help fund the
transaction in case a larger percentage of stockholders exercise their
redemption rights than we expect. For a more complete discussion of the possible
structure of a business combination, see the section below entitled “Effecting a
business combination—Selection of a target business and structuring of a
business combination.”
Substantial
resources could be expended in researching business combinations that are not
consummated, which could materially adversely affect subsequent attempts to
locate and consummate a business combination.
We
anticipate the investigation of each specific target business and the
negotiation, drafting, and execution of relevant agreements, disclosure
documents and other instruments will require substantial management time and
attention and substantial costs for accountants, attorneys and other third
party
fees and expenses. If we decide not to enter into an agreement with respect
to a
specific proposed business combination we have investigated, the costs incurred
up to that point for the proposed transaction likely would not be recoverable.
Furthermore, even if an agreement is reached relating to a specific target
business, we may fail to consummate the business combination for any number
of
reasons including those beyond our control, such as public stockholders holding
30% or more of the shares sold in this offering voting against the business
combination and opting to have us redeem their stock into a pro rata share
of
the trust account even if a majority of our stockholders approve the business
combination. Any such event will result in a loss to us of the related costs
incurred which could materially adversely affect subsequent attempts to locate
and consummate a business combination.
We
may have insufficient resources to cover our operating expenses and the expenses
of consummating a business combination.
We
have
reserved approximately $750,000 from the proceeds of this offering and the
private placement held outside the trust account and up to $750,000 of interest,
after taxes, we may earn on funds in the trust account to cover our operating
expenses for the next 24 months, to cover the expenses incurred in connection
with a business combination and to cover expenses in connection with our
dissolution if we do not complete a business combination in the allowed time.
This amount is based on management’s estimates of the costs needed to fund our
operations for the next 24 months, to consummate a business combination or
dissolve. Those estimates may prove inaccurate, especially if a portion of
the
available proceeds 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 proceeds in pursuit of a business combination that
is
not consummated. In addition, the amounts available from interest earned on
the
proceeds held in the trust account will be dependent on the length of time
since
our initial public offering and prevailing interest rates. If we do not have
sufficient proceeds available to fund our expenses, we may be forced to obtain
additional financing, either from our management or the existing stockholders
or
from third parties. We may not be able to obtain additional financing and our
existing stockholders and management are not obligated to provide any additional
financing. If we do not have sufficient proceeds and cannot find additional
financing, we may be forced to dissolve and liquidate prior to consummating
a
business combination.
Our
ability to effect a business combination and to execute any potential business
plan afterwards will be dependent upon the efforts of our key personnel, some
of
whom may join us following a business combination and whom we would have only
a
limited ability to evaluate.
Our
ability to effect a business combination will be dependent upon the efforts
of
our key personnel. The future role of our key personnel following a business
combination, however, cannot presently be fully ascertained. Although we expect
most of our management and other key personnel to remain associated with us
following a business combination, we may employ other personnel following the
business combination. While we intend to closely scrutinize any additional
individuals we engage after a business combination, we cannot assure you our
assessment of these individuals will prove to be correct. Moreover, our current
management will only be able to remain with the combined company after the
consummation of a business combination if they are able to negotiate terms
with
the combined company as part of any such combination. If we acquired a target
business in an all-cash transaction, it would be more likely that current
members of management 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 management would remain with the combined company unless
it was negotiated as part of the transaction via the acquisition agreement,
an
employment or consulting agreement or other arrangement. The determination
to
remain as officers of the resulting business will be determined prior to the
completion of the transaction and will depend upon the appropriateness
or necessity of current management to remain. In making the determination as
to
whether current management should remain with us following the business
combination, management will analyze the experience and skill set of the target
business’ management, and negotiate as part of the business combination that
certain members of current management remain if it is believed to be in the
best
interests of the combined company post-business combination. If management
negotiates to be retained post-business combination as a condition to any
potential business combination, such negotiations may result in a conflict
of
interest.
None
of our officers or directors has ever been associated with a blank check
company, which could adversely affect our ability to consummate a business
combination.
None
of
our officers or directors has ever 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 and the private placement. Our management’s
lack of experience in operating a blank check company could adversely affect
our
ability to consummate a business combination and force us to dissolve and
liquidate the trust account to our public stockholders as part of our
stockholder-approved plan of dissolution and liquidation.
Our
officers and directors may allocate their time to other businesses thereby
causing conflicts of interest in their determination as to how much time to
devote to our affairs. This 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 may result in a conflict of interest in allocating their time
between our operations and other businesses. We do not intend to have any full
time employees prior to the consummation of a business combination. Each of
our
officers are engaged in several other business endeavors and are not obligated
to contribute any specific number of hours per week to our affairs. If our
officers’ other business affairs require them to devote more substantial amounts
of time to such 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. For a discussion of potential conflicts of interest that you should
be aware of, see the section below entitled “Management—Conflicts of Interest.”
We cannot assure you these conflicts will be resolved in our favor.
Certain
directors and officers of ours own, directly and indirectly, shares of our
common stock and our sponsor, which is indirectly controlled and partially
owned
by, certain of our officers and directors, will own warrants purchased in the
private placement, which will not participate in liquidation distributions
and
therefore our management may have a conflict of interest in determining whether
a particular target business is appropriate for a business combination.
Certain
directors and officers of ours, as well as our sponsor, own shares of our
common
stock, and our sponsor will own the warrants purchased in the private placement.
Our sponsor is owned 96.01% by Camden
Partners Strategic Fund III, L.P. and 3.99% by Camden Partners Strategic
Fund
III-A, L.P., each of which
are
indirectly controlled and partially owned by David L. Warnock, our Chairman,
President and Chief Executive Officer, and Donald W. Hughes, our Chief Financial
Officer and Secretary. The
general partner of each limited partnership is Camden Partners Strategic
III,
LLC, an entity of which Messrs. Warnock and Hughes are two of the four managing
members. Our
sponsor, as well as those officers and directors that own our common stock,
have
each waived their right to the liquidation of the trust account if we are
unable
to complete a business
combination. The shares and warrants owned by our sponsor and officers and
directors will be worthless if we do not consummate a business combination.
The
personal and financial interests of our sponsor and officers and directors
may
influence their motivation in identifying and selecting a target business
and
completing a business combination in a timely manner. Consequently, our
officers’ and directors’ discretion in identifying and selecting a suitable
target business may result in a conflict of interest when determining whether
the terms, conditions and timing of a particular business combination are
appropriate and in our stockholders’ best interest.
Our
existing stockholders will not receive reimbursement for any out-of-pocket
expenses incurred by them to the extent such expenses exceed the amount
available outside the trust account (plus a portion of the interest earned
on
the amounts in the trust account) unless the business combination is
consummated, and therefore they may have a conflict of
interest.
Our
existing stockholders will not receive reimbursement for any out-of-pocket
expenses incurred by them to the extent such expenses exceed the amount
available outside the trust account (plus a portion of the interest earned
on
the amounts in the trust account), unless the business combination is
consummated. The amount of available proceeds is based on management estimates
of the capital needed to fund our operations for the next 24 months and to
consummate a business combination. Those estimates may prove to be inaccurate,
especially if a portion of the available proceeds 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 in pursuit of an acquisition which is not
consummated. The financial interests of such persons could influence their
motivation in selecting a target business and thus, there may be a conflict
of
interest when determining whether a particular business combination is in the
stockholders’ best interest.
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
at any
time we have net tangible assets of less than $5,000,000 and our common stock
has a market price per share of less than $5.00, transactions in our common
stock may be subject to the “penny stock” rules promulgated under the Securities
Exchange Act of 1934, as amended. Under these rules, broker-dealers who
recommend such securities to persons other than institutional accredited
investors must:
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make
a special written suitability determination for the
purchaser;
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receive
the purchaser’s written agreement to a transaction prior to
sale;
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provide
the purchaser with risk disclosure documents which identify certain
risks
associated with investing in “penny stocks” and which describe the market
for these “penny stocks” as well as a purchaser’s legal remedies;
and
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obtain
a signed
and dated acknowledgment from the purchaser demonstrating the purchaser
has actually received the required risk disclosure document before
a
transaction in a “penny stock” can be
completed.
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If
our
common stock becomes subject to these rules, 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.
It
is probable our initial business combination will be with a single target
business, which may cause us to be solely dependent on a single business and
a
limited number of products or services. Additionally, we may face obstacles
to
completing simultaneous acquisitions.
Our
initial business combination must be with a business or businesses with an
aggregate fair market value of at least 80% of the amount in our trust account
(less the deferred underwriting discount and commissions and taxes payable)
at
the time of such transaction, which amount is required as a condition to the
consummation of our initial business combination. We may not be able to acquire
more than one target business because of various factors, including the amount
of funds available to consummate a business combination, possible complex
accounting issues, which would include generating pro forma financial statements
reflecting the operations of several target businesses as if they had been
combined, and numerous logistical issues, which could include attempting to
coordinate the timing of negotiations, proxy statement disclosure and closings
with multiple target businesses. In addition, we may not have sufficient
management, financial or other resources to effectively investigate the business
and affairs of multiple acquisition candidates simultaneously or to negotiate
the terms of multiple acquisition agreements at the same time, which could
result in a failure to properly evaluate multiple acquisitions.
Further, we would also be exposed to the risk that conditions to closings with
respect to the acquisition of one or more of the target businesses would not
be
satisfied, bringing the aggregate fair market value of the initial business
combination below the required fair market value of 80% of the amount in our
trust account (less the deferred underwriting discount and commissions and
taxes
payable). Accordingly, while it is possible we may attempt to effect our initial
business combination with more than one target business, we are more likely
to
choose a single target business if deciding between one target business meeting
such 80% threshold and comparable multiple target business candidates
collectively meeting the 80% threshold. Consequently, it is probable that,
unless the purchase price consists substantially of our equity, we will have
the
ability to complete only a single initial business combination with the proceeds
of this offering and the private placement. Accordingly, the prospects for
our
success may be:
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solely
dependent upon the performance of a single business;
or
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dependent
upon the development or market acceptance of a single or limited
number of
products or services.
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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.
The
ability of our stockholders to exercise their redemption rights may not allow
us
to effectuate the most desirable business combination or optimize our capital
structure.
At
the
time we seek stockholder approval of any business combination, we will offer
each public stockholder the right to have such stockholder's shares of common
stock redeemed for cash if the stockholder votes against the business
combination and the business combination is approved and completed. 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 redemption rights, we may either need to reserve part of the
trust
account for possible payment upon such redemption, or we may need to arrange
third party financing to help fund our business combination in case a larger
percentage of stockholders exercise their redemption rights than we expected.
Therefore, we may not be able to consummate a business combination that requires
us to use all of the funds held in the trust account as part of the purchase
price, or we may end up having a leverage ratio not optimal for our business
combination. This may limit our ability to effectuate the most attractive
business combination available to us.
We
will not be required to obtain an opinion from an investment banking firm as
to
the fair market value of a proposed business combination if our board of
directors independently determines the target business has sufficient fair
market value.
The
initial target business or businesses we acquire must have an aggregate fair
market value equal to at least 80% of the amount in our trust account (less
the
deferred underwriting discount and commissions and taxes payable) at the time
of
such transaction. There is no limitation on our ability to raise funds privately
or through loans that would allow us to acquire a target business or businesses
with an aggregate fair market value in an amount considerably greater than
80%
of the amount in our trust account (less the deferred underwriting discount
and
commissions and taxes payable) at the time of such transaction. We have not
had
any preliminary discussions, or made any agreements or arrangements, with
respect to financing arrangements with any third party. The fair market value
of
such business 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, and the price for which
comparable
businesses have recently been sold. If our board is not able to independently
determine whether the target business has a sufficient fair market value, we
will obtain an opinion from an unaffiliated, independent investment banking
firm
which is a member of the National Association of Securities Dealers, Inc. with
respect to the satisfaction of such criteria.
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 the net proceeds of this offering and the private placement will
be
sufficient to allow us to consummate a business combination, in as much as
we
have not yet identified any prospective target business, we cannot ascertain
the
capital requirements for any particular transaction. If the net proceeds of
this
offering and the private placement prove to be insufficient, either because
of
the size of the business combination or the depletion of the available net
proceeds in search of a target business, or because we become obligated to
redeem for cash a significant number of shares from dissenting stockholders,
we
will be required to seek additional financing. We cannot assure you such
financing would be available on acceptable terms, if at all. To the extent
additional financing proves to be unavailable when needed to consummate a
particular business combination, we would be compelled to restructure the
transaction or abandon that particular business combination and seek an
alternative target business candidate. In addition, if we consummate a business
combination, we may require additional financing to fund the operations or
growth of the target business. The failure to secure additional financing could
have a material adverse effect on the continued development or growth of the
target business. None of our officers, directors or stockholders is required
to
provide any financing to us in connection with or after a business
combination.
Our
existing stockholders, including our officers and directors, control a
substantial interest in us and thus may influence certain actions requiring
stockholder vote.
Upon
consummation of this offering, our existing stockholders (including all of
our
officers and directors) will collectively own approximately 20% of our issued
and outstanding shares of common stock (not including the purchase of 2,500,000
warrants in the private placement by our sponsor, and assuming no additional
purchases by our existing stockholders in the offering). Our sponsor has
informed us it intends to purchase 250,000 units in this offering, although
it
is under no obligation to do so. Assuming only these securities are purchased,
immediately after this offering, our existing stockholders, collectively,
will
beneficially own 24.4% of the then issued and outstanding shares of common
stock. Assuming the 250,000 units are purchased in the offering and the
$4,000,000 of common stock are purchased by our sponsor in the open market,
and
further assuming such open market purchases of stock occur at the initial
trust
amount per share of $7.90 per unit, our existing stockholders, collectively,
will beneficially own 33.4% of the then issued and outstanding shares of
common
stock. As
a
result
of this
ownership block, our current stockholders may be able to effectively influence
the outcome of any matters requiring approval by our stockholders, including
the
election of directors and approval of significant corporate transactions,
other
than approval of a business combination or amending those provisions of our
amended certificate of incorporation which require the affirmative vote of
at
least 95% of the stockholders. None of our other existing stockholders, officers
and directors has indicated to us they intend to purchase units in this
offering, or units or warrants on the open market following the offering.
For a
more complete discussion, please see the section of this prospectus entitled
“Principal Stockholders.”
In
addition, our sponsor has entered into an agreement with the representative
of
the underwriters pursuant to which it will place limit orders to purchase
up to
$4,000,000 of our common stock in the open market commencing ten business
days
after we file our current report on Form 8-K announcing our execution of
a
definitive agreement for a business combination and ending on the business
day
immediately preceding the date of the meeting of stockholders at which a
business combination is to be approved. Such open market purchases will be
made
in accordance with Rule 10b-18 under the Securities Exchange Act of 1934,
as
amended, at a price per share of not more than the per share amount held
in the
trust account (less taxes payable) as reported in such 8-K and will be made
by a
broker-dealer mutually agreed upon by our sponsor and the representative
of the
underwriters in such amounts and at such times as such broker-dealer may
determine, in its sole discretion, so long as the purchase price does not
exceed
the above-referenced per share purchase price. Unless
a
business combination is approved by our stockholders, our sponsor has agreed
not
to sell such shares, provided it will be entitled to participate in any
liquidating distributions with respect to the shares purchased in the open
market. Our sponsor has agreed to vote all such shares of common stock purchased
in the open market in favor of our initial business combination. Accordingly,
these purchases will have the effect of increasing the percentage of shares
owned by our sponsor and make it more likely the stockholder vote to approve
the
business combination or amend or waive any provision of our amended certificate
of incorporation, or any other matter for which stockholder approval is sought,
will be successful.
In
the
event our sponsor does not purchase $4,000,000 of our common stock through
those
open market purchases, our sponsor has agreed to purchase from us in a private
placement a number of units identical to the units offered hereby at a purchase
price of $8.00 per unit until it has spent an aggregate of $4,000,000 in the
open market purchases described above and this co-investment. This co-investment
will occur immediately prior to our consummation of a business combination,
which will not occur until after the signing of a definitive business
combination agreement and the approval of that business combination by a
majority of our public stockholders.
Our
board
of directors is divided into two classes, each of which will generally serve
for
a term of two years, with only one class of directors being elected in each
year. It is unlikely there will be an annual meeting of stockholders to elect
new directors prior to the consummation of a business combination, in which
case
all of the current directors will continue in office at least until the
consummation of the business combination. If there is an annual meeting, as
a
consequence of our “staggered” board of directors, initially only a minority of
the board of directors will be considered for election and our existing
stockholders, because of their ownership position, will have considerable
influence regarding the outcome.
Accordingly,
our existing stockholders will continue to exert control at least until the
consummation of a business combination. In addition, our existing stockholders
and their affiliates and relatives are not prohibited from purchasing additional
units in this offering or in the open market. If they do, we cannot assure
you
our existing stockholders will not have considerable influence upon the vote
in
connection with a business combination.
Our
existing stockholders paid an aggregate of $25,000, or approximately $.02 per
share, for their shares 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 of our common stock
and
the pro forma net tangible book value per share of our common stock after this
offering and the private placement constitutes the dilution to you and the
other
investors in this offering. The fact our existing stockholders acquired their
shares of common stock at a nominal price has significantly contributed to
this
dilution. Assuming the offering and the private placement are completed, you
and
the other new investors will incur an immediate and substantial dilution of
approximately 27.1% or $2.17 per share (the difference between the pro forma
net
tangible book value per share of $5.83, and the initial offering price of $8.00
per unit).
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 as part of the units, and the private placement,
we will be issuing warrants to purchase up to 7,000,000 shares (7,675,000 if
the
underwriters’ over-allotment option is exercised in full) of our common stock.
To the extent we issue shares of common stock to effect a business combination,
the potential for the issuance of substantial numbers of additional shares
upon
exercise of these warrants could make us a less attractive acquisition vehicle
in the eyes of a target business as such securities, when exercised, will
increase the number of issued and outstanding shares of our common stock and
reduce the value of the shares issued to complete the business combination.
Accordingly, our warrants may make it more difficult to effectuate a business
combination or increase the cost of the target business. Additionally, the
sale,
or even the possibility of sale, of the shares underlying the warrants could
have an adverse effect on the market price for our securities or on our ability
to obtain future public financing. If and to the extent these warrants are
exercised, you may experience dilution to your holdings.
If
our existing stockholders exercise their registration rights, it may have an
adverse effect on the market price of our common stock and the existence of
these rights may make it more difficult to effect a business
combination.
Our
existing stockholders, including our sponsor, which purchased warrants in the
private placement, are entitled to require us to register the resale of their
shares of common stock and warrants (as well as the shares of common stock
issuable upon exercise of warrants included as part of the insider warrants)
at
any time after the date on which their securities are released from escrow.
If
such existing security holders exercise their registration rights with respect
to all of their securities,
there will be an additional 1,125,000 shares of common stock and 2,500,000
warrants (as well as 2,500,000 shares of common stock issuable upon exercise
of
the warrants) eligible for trading in the public market and we will bear the
costs of registering such securities. The presence of this additional number
of
shares of common stock eligible for trading in the public market may have an
adverse effect on the market price of our common stock. In addition, the
existence of these rights may make it more difficult to effectuate a business
combination or increase the cost of the target business, as the stockholders
of
the target business may be discouraged from entering into a business combination
with us or will request a higher price for their securities as a result of
these
registration rights and the potential future effect their exercise may have
on
the trading market for our common stock.
There
is currently no market for our securities and a market for our securities may
not develop, which could adversely affect the liquidity and price of our
securities.
As
of the
date of this prospectus there is no market for our securities. Therefore,
stockholders should be aware they cannot benefit from information about prior
market history as to their decisions to invest, which means they are at further
risk if they invest. In addition, the price of the securities, after the
offering, can vary due to general economic conditions and forecasts, our general
business condition and the release of our financial reports.
If
you are not an institutional investor, you may purchase securities in this
offering only if you reside within the states in which we will apply to have
the
securities registered. Although the states are preempted from regulating the
resales of our securities, state securities regulators who view blank check
offerings unfavorably could use or threaten to use their investigative or
enforcement powers to hinder resales in their states.
We
have
applied to register our securities, or have obtained or will seek to obtain
an
exemption from registration, in Colorado, Delaware, the District of Columbia,
Florida, Georgia, Hawaii, Illinois, Louisiana, New York, Rhode Island and
Wyoming. If you are not an “institutional investor,” you must be a resident of
these jurisdictions to purchase our securities in the offering. The definition
of an “institutional investor” varies from state to state but generally includes
financial institutions, broker-dealers, banks, insurance companies and other
qualified entities. Institutional investors in every state except in Idaho
may
purchase the units in this offering pursuant to exemptions provided to such
entities under the Blue Sky laws of various states. Under the National
Securities Market Improvement Act of 1996, the states are pre-empted from
regulating transactions in covered securities. We will file periodic and annual
reports under the Securities Exchange Act of 1934, as amended, and our
securities will be considered covered securities. Therefore, the states will
be
pre-empted from regulating the resales of the units, from and after the
effective date, and the common stock and warrants comprising the units, once
they become separately transferable. However, the states retain the jurisdiction
to investigate and bring enforcement actions with respect to fraud or deceit,
or
unlawful conduct by a broker or dealer, in connection with the sale of
securities. Although we are not aware of a state having used these powers to
prohibit or restrict resales of securities issued by blank check companies
generally, certain state securities commissioners view blank check companies
unfavorably and might use these powers, or threaten to use these powers, to
hinder the resale of securities of blank check companies in their states. For
a
more complete discussion of the state securities laws and registrations
affecting this offering, please see “Underwriting—State Blue Sky Information”
below.
We
intend to have our securities quoted on the OTC Bulletin Board, which will
limit
the liquidity and price of our securities more than if our securities were
quoted or listed on the Nasdaq Stock Market or a national
exchange.
We
anticipate our securities will be traded in the over-the-counter market. It
is
anticipated they will be quoted on the OTC Bulletin Board, an NASD-sponsored
and
operated inter-dealer automated quotation system for equity securities not
included in the Nasdaq Stock Market. Quotation of our securities on the OTC
Bulletin Board will limit the liquidity and price of our securities more than
if
our securities were quoted or listed on The Nasdaq Stock Market or a national
exchange. Lack of liquidity will limit the price at which you may be able to
sell our securities or your ability to sell our securities at all.
If
we are deemed to be an investment company, 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.
We
do not
plan to operate as an investment fund or investment company, or to be engaged
in
the business of investing, reinvesting or trading in securities. Our plan is
to
acquire, hold, operate and grow for the long term one or more operating
businesses in the education industry. We do not plan to operate as a passive
investor or as a merchant bank seeking dividends or gains from purchases and
sales of securities.
Companies
that fall within the definition of an “investment company” set forth in
Section 3 of the Investment Company Act of 1940, as amended, and the
regulations thereunder, which we refer to as the 1940 Act, are subject to
registration and substantive regulation under the 1940 Act. Companies that
are
subject to the 1940 Act that do not become registered are normally required
to
liquidate and are precluded from entering into transactions or enforceable
contracts other than as an incident to liquidation. The basic definition of
an
“investment company” in the 1940 Act and related SEC rules and interpretations
includes a company (1) that is, proposes to be, or holds itself out as
being engaged primarily in investing, reinvesting or trading in securities;
or
(2) that has more than 40% of its assets (exclusive of U.S. government
securities and cash items) in “investment securities,” or (3) that is a
“special situation investment company” (such as a merchant bank or private
equity fund).
For
example, if we were deemed to be an investment company under the 1940 Act,
we
would be required to become registered under the 1940 Act (or liquidate) and
our
activities would be subject to a number of restrictions, including, among
others:
|
· |
corporate
governance requirements and requirements regarding mergers and
share
exchanges;
|
|
· |
restrictions
on the nature of our investments;
|
|
· |
restrictions
on our capital structure and use of multiple classes of securities;
and
|
|
· |
restrictions
on our use of leverage and collateral;
|
each
of
which may make it difficult for us to consummate an initial business
combination.
In
addition, we may have imposed upon us burdensome requirements, including:
|
· |
registration
as an investment company;
|
|
· |
adoption
of a specific form of corporate structure; and
|
|
· |
reporting,
record keeping, voting, proxy, and disclosure requirements, and other
rules and regulations;
|
compliance
with which would reduce the funds we have available outside the trust account
to
consummate an initial business combination.
In
order
not to be regulated as an investment company under the 1940 Act, unless we
can
qualify for an exclusion, we must ensure that we are engaged primarily in an
initial business other than investing, reinvesting or trading of securities
and
that our activities do not include investing, reinvesting, owning, holding
or
trading “investment securities.” Our business will be to identify and consummate
a business combination and thereafter to operate the acquired business or
businesses for the long term. We do not plan to buy companies with a view to
resale or profit from sale of the businesses. We do not plan to buy unrelated
businesses or to be a passive investor. We do not believe that our anticipated
principal activities will subject us to the 1940 Act. To this end, the proceeds
held in the trust account may only be invested by the trustee in U.S. government
securities and in assets that are considered “cash items” for purposes of
Section 3(a)(2) of the 1940 Act. Pursuant to the trust agreement, the
trustee is not permitted to invest in securities or assets that are considered
“investment securities” within the meaning of Section 3(a) of the 1940 Act.
By restricting the investment of the proceeds to these instruments, and by
having a business plan targeted at acquiring, growing and operating a business
or businesses for the long term in the education industry (rather than on buying
and selling companies in the manner of a merchant bank or private equity fund)
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 or investment 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, our dissolution and
return of the funds held in the trust account to our public stockholders as
part
of our plan of dissolution and liquidation. If we do not invest the proceeds
as
discussed above, we may be deemed to be subject to the 1940 Act. If we were
deemed to be subject to the 1940 Act, compliance with these additional
regulatory burdens would require additional expense for which we have not
accounted.
Our
directors may not be considered “independent” under the policies of the North
American Securities Administrators Association, Inc. and, therefore, may take
actions or incur expenses not deemed to be independently approved or
independently determined to be in our best interest.
Under
the
policies of the North American Securities Administrators Association, Inc.,
an
international organization devoted to investor protection, because each of
our
directors own shares of our common stock and may receive reimbursement for
out-of-pocket expenses incurred by them in connection with activities on our
behalf, such as identifying potential target businesses and performing due
diligence on suitable business combinations, state securities administrators
could take the position such individual is not “independent.” If this were the
case, they would take the position that we would not have the benefit of
independent directors examining the propriety of expenses incurred on our behalf
and subject to reimbursement. Additionally, there is no limit on the amount
of
out-of-pocket expenses that could be incurred and there will be no review of
the
reasonableness of the expenses by anyone other than our board of directors,
which would include persons who may seek reimbursement, or a court of competent
jurisdiction if such reimbursement is challenged. To the extent such
out-of-pocket expenses exceed the available proceeds not deposited in the trust
account, such out-of-pocket expenses would not be reimbursed by us unless we
consummate a business combination, in which event this reimbursement obligation
would in all likelihood be negotiated with the owners of a target business.
Although we believe all actions taken by our directors on our behalf will be
in
our best interests, whether or not they are deemed to be “independent” under the
policies of the North American Securities Administrator Association, we cannot
assure you this will actually be the case. If actions are taken, or expenses
are
incurred that are actually not in our best interests, it could have a material
adverse effect on our business and operations and the price of our stock held
by
the public stockholders.
Because
our existing stockholders’ initial equity investment was only $25,000, our
offering may be disallowed by state administrators that follow the North
American Securities Administrators Association, Inc. Statement of Policy on
promotional or development stage companies.
Pursuant
to the Statement of Policy Regarding Promoter’s Equity Investment promulgated by
The North American Securities Administrators Association, Inc., an international
organization devoted to investor protection, any state administrator may
disallow an offering of a promotional or development stage company if the
initial equity investment by a company’s promoters does not equal a certain
percentage of the aggregate public offering price. Our existing stockholders’
initial investment of $25,000 is less than the required minimum amount pursuant
to this policy (assuming non-exercise of the overallotment option). Accordingly,
a state administrator would have the discretion to disallow our offering if
it
wanted to, in which case we would be prohibited from conducting this offering
in
that state. We cannot assure you our offering would not be disallowed pursuant
to this policy.
Because
of our current financial condition, our offering may be disallowed by state
administrators following the North American Securities Administrators
Association, Inc. Statement of Policy Regarding Unsound Financial
Condition.
Pursuant
to the Statement of Policy Regarding Unsound Financial Condition promulgated
by
North American Securities Administrators Association, Inc., any state
administrator may disallow an offering if the financial statements of a company
contain a footnote or the independent auditor’s report contains an explanatory
paragraph regarding that company’s ability to continue as a going concern and
that company has, among other things, an accumulated deficit and no revenues
from operations. The report of Eisner LLP, our independent registered accounting
firm, contains a going concern explanatory paragraph and we have no revenues
from our operations and an accumulated deficit. Accordingly, a state
administrator would have the discretion to disallow our offering if it wanted
to, in which case we would be prohibited from conducting this offering in that
state. We cannot assure you our offering would not be disallowed pursuant to
this policy.
Since
we have not currently selected a prospective target business with which to
complete a business combination, investors in this offering are unable to
currently ascertain the merits or risks of the target business’
operations.
Since
we
have not yet identified a prospective target, investors in this offering
have no
current basis to evaluate the possible merits or risks of the target business’
operations. Accordingly, we may be affected by numerous risks inherent in
the
business operations of those entities. Although our management will endeavor
to
evaluate the risks inherent in a particular target business, we cannot assure
you we will properly ascertain or assess all of the significant risk factors.
We
also cannot assure you an investment in our units will not ultimately prove
to
be less favorable to investors in this offering than a direct investment,
if an
opportunity were available, in a target business. For a more complete discussion
of our selection of a target business, see the section below entitled “Effecting
a business combination—We have not identified a target
business.”
Your
only opportunity to evaluate and affect the investment decision regarding a
potential business combination will be limited to voting for or against the
business combination submitted to our stockholders for approval.
At
the
time of your investment in us, you will not be provided with an opportunity
to
evaluate the specific merits or risks of one or more target businesses.
Accordingly, your only opportunity to evaluate and affect the investment
decision regarding a potential business combination will be limited to voting
for or against the business combination submitted to our stockholders for
approval. In addition, a proposal you vote against could still be approved
if a
sufficient number of public stockholders vote for the proposed business
combination. Alternatively, a proposal you vote for could still be rejected
if a
sufficient number of public stockholders vote against the proposed business
combination.
Our
determination of the offering price of our units and of the aggregate amount
of
proceeds we are raising in this offering was more arbitrary than would typically
be the case if we were an operating company rather than a blank check
company.
There
was
no public market for any of our securities prior to this offering. The public
offering price of the units, the terms of the warrants, the aggregate proceeds
we are raising and the amount to be placed in trust were the products of a
negotiation between the underwriters and us. Factors that were considered in
making these determinations included: management’s perception of the number of
potential competitors that exist to acquire businesses we may find
attractive, the
financial resources of those potential competitors and, therefore, the potential
target size of the businesses they may seek to acquire, as well as management’s
belief as to the capital required to facilitate a combination with one or more
viable target businesses with sufficient scale to operate as a stand-alone
public entity. However, although these factors were considered, the
determination of our per unit offering price and the aggregate proceeds we
are
raising in this offering 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 that could provide a basis for such
determination. There can be no assurance management’s perceptions accurately
reflect the actual facts with respect to any of the factors
considered.
Risks
Associated with the Our Acquisition of a Target Business in the Education
Industry
We
intend
to seek a business combination with a company in the education industry. The
following risk factors address issues that may arise in connection with the
purchase of such a company. Because we have not yet identified a target
business, there are likely to be additional risks applicable to any particular
target business, and some of the following risks may be inapplicable. Therefore,
you should bear in mind that the following risks are illustrative
only.
Failure
of any acquired schools to comply with the extensive regulatory requirements
for
school operations could result in financial penalties, restrictions on
operations and loss of external financial aid funding, which could affect
revenues and impose significant operating restrictions on any business we
acquire.
Whether
the school has a central location where all students attend classes or whether
the curriculum is provided via the Internet, telephone or other remote access,
any school we acquire can be expected to be subject to extensive regulation
by
federal and state governmental agencies and by accrediting commissions. In
particular, the Higher Education Act of 1965, as amended, and the regulations
promulgated thereunder by the Department of Education, or DOE, set forth
numerous standards schools must satisfy to participate in various federal
student financial assistance programs under Title IV Programs. To
participate in Title IV Programs, schools must receive and maintain
authorization by the applicable education agencies in the state in which
each
school is physically located, be accredited by an accrediting commission
recognized by the DOE and be certified as an eligible institution by the
DOE.
These regulatory requirements can be expected to cover the vast majority
of
operations of any business we acquire in the education services market,
including educational programs, facilities, instructional and administrative
staff, administrative procedures, marketing, recruiting, financial operations
and financial condition. These regulatory requirements may also affect our
ability to acquire or open additional schools, add new educational programs,
expand existing educational programs, and change our corporate structure
and
ownership.
If
any
acquired schools fails to comply with applicable regulatory requirements, the
school and its related main campus and/or additional locations, if any, could
be
subject to the loss of state licensure or accreditation, the loss of eligibility
to participate in and receive funds under the Title IV Programs, the loss
of the ability to grant degrees, diplomas and certificates, provisional
certification, or the imposition of liabilities or monetary penalties, each
of
which could adversely affect our revenues and impose significant operating
restrictions upon us. The various regulatory agencies periodically revise their
requirements and modify their interpretations of existing requirements and
restrictions. We cannot predict with certainty how any of these regulatory
requirements will be applied or whether each of our schools will be able to
comply with these requirements or any additional requirement instituted in
the
future. Additionally, Congress
may change the law or reduce funding for Title IV Programs, which could
reduce student population, revenues or profit margin of any business we
acquire.
Our
success depends in part on the ability of any business we acquire to update
and
expand the content of existing programs and develop new programs in a
cost-effective manner and on a timely basis.
Prospective
employers demand that employees possess appropriate technological skills. These
skills are becoming more sophisticated in line with technological advancements
across all industries. Accordingly, educational programs must keep pace with
those technological advancements. The expansion of our existing programs and
the
development of new programs may not be accepted by our students, prospective
employers or the education market. Even if we are able to develop acceptable
new
programs, we may not be able to introduce these new programs as quickly as
our
competitors or as quickly as employers demand. If we are unable to adequately
respond to changes in market requirements due to financial constraints,
unusually rapid technological changes or other factors, our ability to attract
and retain students could be impaired, our placement rates could suffer and
our
revenues could be adversely affected.
We
may not be able to retain our key personnel or hire and retain the personnel
needed to sustain and grow our business.
The
success of any business we acquire will depend largely on the skills, efforts
and motivation of our executive officers who generally have significant
experience within the education industry. Our success also depends in large
part
upon our ability to attract and retain highly qualified faculty, school
directors, administrators and corporate management. Due to the nature of the
business, we expect to face significant competition in the attraction and
retention of personnel who possess the skill sets we seek. In addition, key
personnel may leave and subsequently compete against us. The loss of the
services of any of our key personnel, or our failure to attract and retain
other
qualified and experienced personnel on acceptable terms, could have an adverse
effect on our ability to operate our business efficiently and execute our growth
strategy.
Competition
could decrease the market share of any business we acquire, causing it to lower
tuition rates and negatively impact our results.
The
education market is highly competitive, as we expect any business we acquire
to
compete for students and faculty with colleges, universities and providers
of
specialized vocational training and
continuing professional education,
many of
which have greater financial and other resources than we expect to have,
which
may, among other things, allow our competitors to secure strategic relationships
with some or all of our existing strategic partners or develop other high
profile strategic relationships or devote more resources to expanding their
programs and their school network, all of which could affect the success
of our
marketing programs. If any business we acquire is unable to compete effectively
for students, our student enrollments and revenues will be adversely
affected.
Any
business we acquire may be required to reduce tuition or increase spending
in
response to competition in order to retain or attract students or pursue new
market opportunities. As a result, its market share, revenues and operating
margin may be decreased. We cannot be sure any business we acquire will be
able
to compete successfully against current or future competitors or that the
competitive pressures of such target business will not adversely affect our
revenues and profitability.
An
increase in interest rates could adversely affect the ability of any business
we
acquire to attract and retain students.
Interest
rates have reached historic lows in recent years, creating a favorable borrowing
environment for students. Much of the financing students receive is tied to
floating interest rates. However, interest rates have increased recently,
resulting in a corresponding increase in the cost to students of financing
their
education. Higher interest rates can also contribute to higher default rates
with respect to student repayment of education loans. Higher default rates
may
in turn adversely impact eligibility for Title IV Program participation or
the willingness of private lenders to make private loan programs available
to
students who attend any schools we may acquire, which could result in a
reduction in student population.
FORWARD-LOOKING
STATEMENTS
This
prospectus includes forward-looking statements regarding, among other things,
our plans, strategies and prospects, both business and financial. All statements
other than statements of current or historical fact contained in this prospectus
are forward-looking statements. The words “believe,” “expect,” “anticipate,”
“should,” “would,” “could,” “plan,” “will,” “may,” “intend,” “estimate,”
“potential,” “continue” or similar expressions or the negative of these terms
are intended to identify forward-looking statements. Forward-looking statements
in this prospectus may include, for example, statements about our:
|
·
|
ability
to complete a business combination;
|
|
·
|
success
in retaining or recruiting, or changes required in, our officers,
key
employees or directors following the consummation of a business
combination;
|
|
·
|
officers
and directors allocating their time to other businesses and potentially
having conflicts of interest with our business or in approving a
business
combination as a result of which they would then receive expense
reimbursements;
|
|
·
|
potential
ability to obtain additional financing to complete a business
combination;
|
|
·
|
pool
of prospective target businesses;
|
|
·
|
the
ability of our officers and directors to generate a number of potential
investment opportunities;
|
|
·
|
potential
change in control of we acquire one or more target businesses for
stock;
|
|
·
|
our
public securities’ potential liquidity and
trading;
|
|
·
|
use
of proceeds not held in the trust account or available to us from
interest
income on the trust account balance;
or
|
|
·
|
financial
performance following this
offering.
|
We
have
based these forward-looking statements largely on our current expectations
and
projections about future events and financial trends that we believe may affect
our financial condition, results of operations and business strategy. They
can
be affected by inaccurate assumptions, including the risks, uncertainties and
assumptions described in “Risk Factors” (some of which are beyond our control).
In light of these risks, uncertainties and assumptions, the forward-looking
statements in this prospectus may not occur and actual results could differ
materially from those anticipated or implied in the forward-looking statements.
When you consider these forward-looking statements, you should keep in mind
the
risk factors and other cautionary statements in this prospectus.
Our
forward-looking statements speak only as of the date they are made. Neither
we
nor any other person assumes responsibility for the future accuracy or
completeness of these forward- looking statements. Except as required by
applicable law, we have no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise,
except as may be required under applicable securities laws.
USE
OF PROCEEDS
We
estimate that the net proceeds of this offering and the private placement and
our expected uses will be as set forth in the following table:
|
|
Without
Over-Allotment Option
|
|
Over-Allotment
Option
Exercised
|
|
Gross
proceeds
|
|
|
|
|
|
Gross
proceeds from units offered to the public
|
|
$
|
36,000,000
|
|
$
|
41,400,000
|
|
Gross
proceeds from units offered in the private placement
|
|
$
|
2,500,000
|
|
$
|
2,500,000
|
|
|
|
|
|
|
|
|
|
Offering
expenses (1)
|
|
|
|
|
|
|
|
Underwriting
discount (2)
|
|
$
|
1,800,000
|
|
$
|
2,070,000
|
|
Deferred
underwriting compensation (3)
|
|
$
|
720,000
|
|
$
|
828,000
|
|
Legal
fees and expenses (including blue sky services and expenses)
|
|
$
|
250,000
(4
|
)
|
$
|
250,000(4
|
)
|
Printing
and engraving expenses
|
|
$
|
40,000
|
|
$
|
40,000
|
|
Accounting
fees and expenses
|
|
$
|
50,000
|
|
$
|
50,000
|
|
SEC
registration fee
|
|
$
|
2,428.68
|
|
$
|
2,428.68
|
|
NASD
registration fee
|
|
$
|
8,411.00
|
|
$
|
8,411.00
|
|
Miscellaneous
expenses
|
|
$
|
24,030.00
|
|
$
|
24,030.00
|
|
|
|
|
|
|
|
|
|
Net
Proceeds
|
|
|
|
|
|
|
|
Held
in trust for our benefit
|
|
$
|
34,830,000
|
|
$
|
39,852,000
|
|
Not
held in trust
|
|
$
|
750,000
|
|
$
|
750,000
|
|
Total
net proceeds
|
|
$
|
35,580,000
|
|
$
|
40,602,000
|
|
|
|
|
|
|
|
|
|
Use
of net proceeds not held in trust and up to $750,000 of after tax
interest
earned on the trust account that may be released to
us
|
|
|
|
|
|
|
|
Legal,
accounting and other expenses attendant to the structuring and negotiation
of a business combination (5)
|
|
$
|
150,000
|
|
|
10
|
%
|
Due
diligence, identification and research of prospective target businesses
and reimbursement of out of pocket expenses of management
|
|
$
|
300,000
|
|
|
20
|
%
|
Payment
to Camden Learning, LLC for administrative services and support ($7,500
per month for 2 years)
|
|
$
|
180,000
|
|
|
12
|
%
|
Legal
and accounting fees relating to SEC reporting obligations
|
|
$
|
150,000
|
|
|
10
|
%
|
Working
capital to cover miscellaneous expenses, D&O insurance and
reserves
|
|
$
|
720,000
|
|
|
48
|
%
|
Total
|
|
$
|
1,500,000
|
|
|
100
|
%
|
(1)
|
As
of April 26, 2007, $37,500 of the offering expenses have already
been paid
from loans to us described below, including legal
fees.
|
(2)
|
Represents
5% of the gross proceeds from the sale of the units in this
offering.
|
(3)
|
Represents
2% of the gross proceeds from the sale of the units in this offering
that
will be paid to the underwriters only upon consummation of a business
combination, less $0.16 for each share redeemed for cash in connection
with our business combination. If a business combination is not
consummated and we are liquidated, such amounts will be distributed
among
our public stockholders.
|
(4)
|
A
portion of the legal fees payable to Ellenoff Grossman & Schole LLP,
our legal counsel, has been deferred and is contingent on our consummating
a business combination.
|
(5)
|
These
amounts are expected to be paid to legal, accounting and other outside
professional firms to assist in negotiating, structuring and documenting
a
business combination and the preparation and filing of the related
proxy
statement.
|
$35,550,000,
or $40,680,000 if the underwriters’ over-allotment option is exercised in full,
of the proceeds of the offering and the private placement will be placed
in a
trust account at Lehman Brothers, Inc. maintained by Continental Stock Transfer
& Trust Company, as trustee. Of this amount, up to $720,000 ($828,000 if the
underwriters’ over-allotment option is exercised in full) will be paid to Morgan
Joseph & Co. Inc. as deferred underwriting compensation in connection with
this offering, if and only if a business combination is consummated, leaving
us
with $34,830,000 ($39,852,000 if the over-allotment option is exercised in
full)
with which to consummate a business combination. Other than interest income
earned on the trust account, which may be released to us as described in
the
table above, the proceeds of this offering and the private placement held
in the
trust account will not be released until the earlier of the completion of
a
business combination or the liquidation of our trust account to our public
stockholders as part of our plan of dissolution and liquidation. The
proceeds held in the trust account (exclusive of any funds held for the benefit
of the Morgan Joseph & Co. Inc., or used to pay public stockholders who have
exercised their redemption rights) may be used as consideration to pay the
sellers of a target business with which we ultimately complete a business
combination or, if there are insufficient funds not held in trust, to pay
other
expenses relating to such transaction such as reimbursement to insiders for
out-of-pocket expenses, third party due diligence expenses or potential finders
fees, in each case only upon the consummation of a business combination.
In the
event there are funds remaining in the trust account after satisfaction of
all
of such obligations, such funds may be used to finance operations of the
target
business or to effect other acquisitions, as determined by our board of
directors at that time.
We
intend
to fund our working capital needs as described below, as well as to pay the
costs associated with our plan of dissolution and liquidation including reserves
for creditors, if we do not consummate a business combination, from the $750,000
held outside of the trust account and up to $750,000 of interest earned on
the
proceeds being held in the trust account (after taxes payable) which may be
released to us.
We
have
agreed to pay a monthly fee of $7,500 to Camden Learning, LLC, our sponsor,
for
general and administrative services, including but not limited to receptionist,
secretarial and general office services. This agreement commences on the date
of
this prospectus and shall continue until the earliest to occur of: (i) the
consummation of a business combination, (ii) [__________________,
2009] [24
months from the date of this prospectus]
and
(iii) the date on which we cease our corporate existence in accordance with
our
amended and restated certificate of incorporation.
Prior
to
the closing of a business combination, we have agreed to obtain key man life
insurance, of which we will be the sole beneficiary, in the amount of $2,000,000
on the life of David L. Warnock, our President, Chief Executive Officer and
Chairman, for a three year period.
We
estimate the costs to identify and research prospective target businesses and
the costs related to the business combination, including legal and accounting
expenses to structure the transaction, prepare the transaction documents and
file the related proxy statement, will be approximately $400,000.
We
expect
due diligence of prospective target businesses will be performed by some or
all
of our officers and directors, and may include engaging market research firms
and/or third party consultants. Our officers and directors will not receive
any
compensation for their due diligence of prospective target businesses, but
will
be reimbursed for any out-of-pocket expenses (such as travel expenses) incurred
in connection with such due diligence activities.
It
is
also possible we could use a portion of such working capital to make a deposit,
down payment or fund a “no-shop” provision with respect to a particular proposed
business combination, although we do not have any current intention to do so.
In
the event 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
another suitable business combination without securing additional financing.
Thus, if we were unable to secure additional financing, we would most likely
fail to consummate a business combination in the allotted time and would be
forced to liquidate.
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 that event, the
proceeds held in the trust account as well as any other net proceeds not
expended will be released to us and used to finance the operations of the target
businesses, which may include subsequent acquisitions.
As
of the
date of this prospectus, our sponsor has loaned us a total of $200,000, which
was used to pay a portion of the expenses of this offering, such as SEC
registration fees, NASD registration fees, blue sky fees and certain legal
and
accounting fees and expenses. This loan is payable, with annual interest equal
to 4.9%, on the earlier of April 26, 2008 or the consummation of this offering.
The loan will be repaid out of the net proceeds of this offering not being
placed in trust.
The
net
proceeds of this offering and the private placement held in the trust account
and not immediately required for the purposes set forth above will be invested
only in United States “government securities,” defined as any Treasury Bill
issued by the United States having a maturity of one hundred and eighty days
or
less or in money market funds meeting certain conditions under Rule 2a-7
promulgated under the 1940 Act so that we are not deemed to be an investment
company under the 1940 Act.
Other
than the $7,500 aggregate per month general and administrative service fees
described above, no compensation of any kind (including finder’s and consulting
fees) will be paid by us or any person or entity to any of our existing
stockholders, or any of their affiliates, for services rendered to us prior
to
or in connection with the consummation of the business combination. However,
our
existing stockholders will receive reimbursement for any out-of-pocket expenses
incurred by them in connection with activities on our behalf, such as
identifying potential target businesses and performing due diligence on suitable
business combinations. Because 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 after a business combination.
A
public
stockholder will be entitled to receive funds from the trust account (including
interest earned on his, her or its portion of the trust account, but net of:
(i)
taxes paid or payable, if any, on interest income earned on the trust account
and (ii) up to an aggregate of $750,000 of interest income released to us to
fund our working capital requirements) in the event of the liquidation of our
trust account to our public stockholders or in the event a public stockholder
were to seek to redeem such shares for cash in connection with a business
combination which 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.
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 redeemed for cash if voted against the business combination),
by the number of outstanding shares of our common stock.
At
April
26, 2007, our net tangible book value was $113,000 or approximately $0.10 per
share of common stock. After giving effect to the sale of shares of common
stock
included in the units sold in the offering and the proceeds of the private
placement, the deduction of underwriting discounts and estimated expenses of
this offering and the private placement, our pro forma net tangible book value
(as decreased by the value of 1,349,550 shares of common stock which may be
redeemed for cash) net of underwriting costs waived by Morgan Joseph & Co.
Inc. related to the 1,349,550 shares that may be redeemed for cash, as of April
26, 2007 would have been $24,942,555 or $5.83 per share, representing an
immediate increase in net tangible book value of $5.73 per share to the existing
stockholders and an immediate dilution of $2.17 per share, or 27.1%, to new
investors not exercising their redemption rights.
Our
pro
forma net tangible book value after this offering has been reduced by
approximately $10,661,445 because if we effect a business combination, the
redemption rights to the public stockholders may result in the redemption for
cash of up to approximately 29.99% of the aggregate number of the shares sold
in
this offering (1,349,550 shares) at a per-share redemption price equal to $7.90
(plus a portion of the interest earned on the trust account, but net of (i)
taxes payable on interest earned and (ii) up to $750,000 of interest income
released to us to fund our working capital).
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:
Public
offering price
|
|
|
|
|
$
|
8.00
|
|
Net
tangible book value before this offering
|
|
$
|
0.10
|
|
|
|
|
Increase
attributable to new investors
|
|
|
5.73
|
|
|
|
|
Pro
forma net tangible book value after this offering
|
|
|
|
|
|
5.83
|
|
Dilution
to new investors
|
|
|
|
|
$
|
2.17
|
|
The
following table sets forth information with respect to our existing stockholders
prior to and after the private placement and the new investors:
|
|
Shares
Purchased (1)
|
|
Total
Consideration
|
|
Average
Price
|
|
|
|
Number
|
|
Percentage
|
|
Amount
|
|
Percentage
|
|
Per Share
|
|
Existing
stockholders
|
|
|
1,125,000
|
|
|
20
|
%
|
$
|
25,000
|
|
|
0.0006
|
%
|
$
|
0.02
|
|
New
investors (2)
|
|
|
4,500,000
|
|
|
80
|
%
|
$
|
36,000,000
|
|
|
99.9994
|
%
|
$
|
8.00
|
|
Total
|
|
|
5,625,000
|
|
|
100
|
%
|
$
|
36,025,000
|
|
|
100
|
%
|
|
|
|
(1) |
Assumes
(i) the sale of 4,500,000 units in this offering but not the exercise
of
4,500,000 warrants to purchase shares of our common stock sold as
part of
such units and (ii) no exercise of the underwriters’ over-allotment
option.
|
(2) |
Does
not include 2,500,000 share of common stock issuable upon exercise
of the
warrants issued in the private
placement.
|
The
pro
forma net tangible book value after the offering is calculated as
follows:
Numerator:
|
|
|
|
Net
tangible book value before the offering and private
placement
|
|
$
|
113,000
|
|
Payment
of note payable in excess of amount included above
|
|
|
(199,000
|
)
|
Net
proceeds from this offering and the private placement
|
|
|
35,580,000
|
|
Offering
costs excluded from tangible book value before this offering and
the
private placement
|
|
|
110,000
|
|
Less:
Proceeds held in trust subject to redemption for cash at $7.90 per
share
(1)
|
|
|
(10,661,445
|
)
|
|
|
$
|
24,942,555
|
|
Denominator:
|
|
|
|
|
Shares
of common stock outstanding prior to the offering
|
|
|
1,125,000
|
|
Shares
of common stock included in the units offered
|
|
|
4,500,000
|
|
Less:
Shares subject to redemption (4,500,000 x 29.99%)
|
|
|
(1,349,550
|
)
|
|
|
|
4,275,450
|
|
|
(1)
|
Does
not reflect deferred underwriting discount and commissions ($0.16
per
share) that may be distributed to public
stockholders.
|
|
(2)
|
Does
not reflect the possible forfeiture of up to 140,625 shares by our
existing stockholders in the event, and to the extent, holders of
more
than 20% of the shares sold in this offering exercise their redemption
rights in connection with a business combination.
|
CAPITALIZATION
The
following table sets forth our capitalization at April 26, 2007 and as adjusted
to give effect to the sale of our units in this offering and the application
of
the estimated net proceeds derived from the sale of our units:
|
|
April
26, 2007
|
|
|
|
Actual
|
|
As
Adjusted
|
|
|
|
|
|
|
|
Notes
payable(1)
|
|
$
|
1,000
|
|
$
|
—
|
|
Common
stock, $.0001 par value, -0- and 1,349,550 shares which are subject
to
possible redemption, shares at redemption value (2)
|
|
$
|
—
|
|
$
|
10,661,445
|
|
Stockholders’
equity:
|
|
|
|
|
|
|
|
Preferred
stock, $.0001 par value, 1,000,000 shares authorized; none issued
or
outstanding
|
|
$
|
—
|
|
$
|
—
|
|
Common
stock, $.0001 par value, 20,000,000 shares authorized; 1,125,000
shares
issued and outstanding; 4,275,450 shares issued and outstanding (excluding
1,349,550 shares subject to possible redemption), as adjusted
|
|
$
|
113
|
|
$
|
428
|
|
Additional
paid-in capital
|
|
$
|
223,887
|
|
$
|
25,142,127
|
|
Deficit
accumulated during the development stage
|
|
$
|
(1,000
|
)
|
$
|
(200,000
|
)
|
|
|
|
|
|
|
|
|
Total
stockholders’ equity
|
|
$
|
223,000
|
|
$
|
24,942,555
|
|
|
|
|
|
|
|
|
|
Total
capitalization
|
|
$
|
224,000
|
|
$
|
35,604,000
|
|
(1)
|
The
note payable is due on the earlier of April 26, 2008 or the consummation
of this offering. The note, in the face amount of $200,000, was recorded
as of April 26, 2007 at the nominal amount of $1,000 because of the
below
market stated interest rate. The “As Adjusted” capitalization reflects the
payment of the note at its $200,000 face
amount.
|
(2)
|
If
we consummate a business combination, the redemption rights afforded
to
our public stockholders may result in the redemption for cash of
approximately $10,661,445 for up to approximately 29.99% of the aggregate
number of shares sold in this offering, or approximately 1,349,550
shares
at a per-share redemption price equal to $7.90 per share (plus a
portion
of the interest earned on the trust account, but net of (i) taxes
payable
on interest earned and (ii) up to $750,000 of interest income released
to
us to fund our working capital), which amount includes $0.16 per
share of
deferred underwriting discount and commissions. However, in the event
holders of more than 20% of the shares sold in this offering elect
to
redeem their shares, our existing stockholders have agreed to forfeit
a
number of the initial 1,125,000 shares of our common stock purchased,
up
to a maximum of 140,625 shares, so that the existing stockholders
will
collectively own no more than 23.81% (without regard to any purchase
of
units in this offering, any open market purchases or private purchases
of
units by the sponsor directly from us, as set forth elsewhere herein)
of
our outstanding common stock immediately prior to the consummation
of such
business combination after giving effect to the
redemption.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF
FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Camden
Learning Corporation is a newly organized blank check company formed for the
purpose of merging with, engaging in a capital stock exchange with, purchasing
all or substantially all of the assets of, or engaging in any other similar
business combination with one or more operating businesses in the education
industry.
We
intend
to utilize cash derived from the proceeds of this offering and the private
placement, our capital stock, debt or a combination of cash, capital stock
and
debt, in effecting a business combination. The issuance of additional capital
stock, including upon conversion of any convertible debt securities we may
issue, or the incurrence of debt could have material consequences on our
business and financial condition. The issuance of additional shares of our
capital stock (including upon conversion of convertible debt
securities):
|
·
|
may
significantly reduce the equity interest of our
stockholders;
|
|
·
|
will
likely cause a change in control if a substantial number of our shares
of
common stock are issued, which may affect, among other things, our
ability
to use our net operating loss carry forwards, if any, and may also
result
in the resignation or removal of one or more of our present officers
and
directors;
|
|
·
|
may
adversely affect prevailing market prices for our common stock;
and
|
|
·
|
may
subordinate the rights of holders of our common stock if preferred
stock
is issued with rights senior to those afforded to the common
stock.
|
Similarly,
if we issued debt securities, it could result in:
|
·
|
default
and foreclosure on our assets if our operating revenues after a business
combination were insufficient to pay our debt
obligations;
|
|
·
|
acceleration
of our obligations to repay the indebtedness even if we have made
all
principal and interest payments when due if the debt security contained
covenants that required the maintenance of certain financial ratios
or
reserves and any such covenant were breached without a waiver or
renegotiation of that covenant;
|
|
·
|
our
immediate payment of all principal and accrued interest, if any,
if the
debt security was payable on
demand;
|
|
·
|
covenants
that limit our ability to acquire capital assets or make additional
acquisitions; and
|
|
·
|
our
inability to obtain additional financing, if necessary, if the debt
security contained covenants restricting our ability to obtain additional
financing while such security was
outstanding.
|
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 the net proceeds from the sale of the units in this offering and the
warrants in the private placement will be $35,580,000 ($40,602,000 if the
over-allotment option is exercised in full), after deducting offering expenses
of approximately $2,920,000 including underwriting discount and commissions
of
approximately $2,520,000 (or $2,898,000 if the over-allotment option is
exercised in full). Of this amount, $34,860,000, or $39,774,000 if the
underwriters’ over-allotment option is exercised in full, will be available to
consummate a business combination.
We
will
use substantially all of the net proceeds of this offering and the private
placement, as well as interest on the funds in the trust account available
to
us, after taxes and net of up to $750,000 that may be released to us to fund
our
working capital, to acquire a target business, including identifying and
evaluating prospective acquisition candidates, selecting the target business,
and structuring, negotiating and consummating the business combination. The
proceeds held in the trust account (exclusive of the deferred underwriting
fees
payable to Morgan Joseph & Co. Inc., and interest thereon, or used to pay
public stockholders who have exercised their redemption rights) may be used
as
consideration to pay the sellers of a target business with which we ultimately
complete a business combination or, if there are insufficient funds not held
in
trust, to pay other expenses relating to such transaction such as reimbursement
to insiders for out-of-pocket expenses, third party due diligence expenses
or
potential finders fees, in each case only upon the consummation of a business
combination. Any amounts not paid as consideration to the sellers of the target
business may be used to finance
operations of the target business or to effect other acquisitions, as determined
by our board of directors at that time. To the extent our capital stock is
used
in whole or in part as consideration to effect a business combination, the
proceeds held in the trust account as well as any other net proceeds not
expended will be released to us and will be used to finance the operations
of
the target business. We believe that, upon consummation of this offering and
the
private placement, the $750,000 available to us outside of the trust account
and
the $750,000 of the interest earned on funds in the trust account which may
be
released to us, will be sufficient to allow us to operate for at least the
next
24 months, assuming that a business combination is not consummated during that
time. Over this time period, we anticipate approximately $400,000 of expenses
for legal, accounting and other expenses attendant to the due diligence
investigations, structuring and negotiating of a business combination, $180,000
for administrative services and support payable to an affiliated third party
(up
to $7,500 per month for 24 months), $150,000 of expenses in legal and accounting
fees relating to our SEC reporting obligations and $720,000 for general working
capital that will be used for miscellaneous expenses and reserves including
the
costs associated with a plan of dissolution and liquidation if we do not
consummate a business combination. Although the rate of interest to be earned
on
the trust account will fluctuate through the duration of the trust account,
and
although we are unable to state the exact amount of time it will take to
complete a business combination, we anticipate the interest that will accrue
on
the trust account during the time it will take to identify a target and complete
an acquisition, together with up to $750,000 available to us outside the trust
account, will be sufficient to fund our working capital requirements. While
we
cannot assure you the trust account will yield this rate, we believe such rate
is representative of that which we may receive.
We
believe there should be sufficient funds available either outside of the trust
account or made available to us out of the net interest earned on the trust
account and released to us as working capital, to fund the costs and expenses
associated with a plan of dissolution and liquidation, although we cannot give
any assurances thereof. Our sponsor has agreed to indemnify us for these
expenses to the extent there are insufficient funds available from the proceeds
not held in the trust account and interest released to us, and its members
have
agreed to make capital contributions to it in order for it to meet this
obligation, as described above under “The Offering - Liquidation If No Business
Combination.”
We
do not
believe we will need to raise additional funds following this offering and
the
private placement in order to meet the expenditures required for operating
our
business prior to a business combination. 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. We would only
consummate such a fundraising simultaneously with the consummation of a business
combination.
In
seeking a business combination, we intend to utilize cash derived from the
proceeds of this offering and the private placement, as well as our capital
stock or debt, or a combination of cash, capital stock and debt, and there
is no
limit on the issuance of capital stock or incurrence of debt we may undertake
in
effecting a business combination. In the event a business combination is
consummated, all sums remaining in the trust account will be released to us
immediately thereafter, and there will be no restriction on our use of such
funds.
As
of the
date of this prospectus, our sponsor has loaned us a total of $200,000, which
was used to pay a portion of the expenses of this offering, such as SEC
registration fees, NASD registration fees, blue sky fees and certain legal
and
accounting fees and expenses. This loan is payable, with annual interest equal
to 4.9%, on the earlier of April 26, 2008 or the consummation of this offering.
The loan will be repaid out of the net proceeds of this offering not being
placed in trust.
We
have
agreed to sell to the representative of the underwriters, for $100, an option
to
purchase up to a total of 450,000 units. The representative’s unit purchase
option is exercisable on a cashless basis at $8.80 per unit commencing one
year
from the date of the prospectus and it expires five years from the date of
the
prospectus. The units issuable upon exercise of this option are identical to
those being sold in this offering. If the option is exercised at any time after
the fourth anniversary of the date of this prospectus, the holder will only
receive the shares comprising the 450,000 units since the warrants will have
expired. The option may only be exercised by the option holder and cannot be
redeemed for cash by us or the option holder.
The
sale
of the option will be accounted for as a cost attributable to the proposed
offering. Accordingly, there will be no net impact on our financial position
or
results of operations, except for the recording of the $100 proceeds from
the
sale. We have estimated, based upon a Black-Scholes model, that the fair
value
of the option on the date of sale would be approximately $2,000,000, using
an
expected life of five years, volatility of 63.5%, and a risk-free interest
rate
of 4.86%. However, because our units do not have a trading history, the
volatility assumption is based on information currently available to management.
We believe the volatility estimate calculated is a reasonable benchmark to
use
in estimating the expected volatility of our units. The volatility calculation
is based on the most recent trading day average volatility of publicly traded
companies providing educational services with market capitalizations less
than
$500 million. Although an expected life of five years was used in the
calculation, if we do not consummate a business combination within the
prescribed time period and we automatically dissolve and subsequently liquidate
our trust account, the option will become worthless.
We
will
seek stockholder approval before we effect any business combination, even if
the
nature of the acquisition would not ordinarily require stockholder approval
under applicable state law. In connection with the vote required for any
business combination, all of our existing stockholders, including all of our
officers and directors, have agreed to vote the shares of common stock owned
by
them immediately before this offering in accordance with the majority of the
shares of common stock voted by the public stockholders. Any shares acquired
in
the aftermarket by existing stockholders and their designees will be voted
in
favor of the business combination. We will proceed with a business combination
only if a majority of the shares of common stock cast at the meeting are voted
in favor of the business combination and public stockholders owning less than
30% of the shares sold in this offering exercise their redemption rights
described herein. Voting against the business combination alone will not result
in redemption of a stockholder’s shares into a pro rata share of the trust
account. Such stockholder must have also exercised its redemption rights
described below. Even if less than 30% of the stockholders exercise their
redemption rights, we may be unable to consummate a business combination if
such
redemption leaves us with funds less than an aggregate fair market value equal
to at least 80% of the amount in our trust account (less the deferred
underwriting discount and commissions and taxes payable) at the time of such
transaction which amount is required for our initial business combination.
In
such event, we may be forced to either find additional financing to consummate
such a business combination, consummate a different business combination or
liquidate and dissolve.
PROPOSED
BUSINESS
Introduction
We
are a
blank check company organized under the laws of the State of Delaware on
April
10, 2007. We were formed for the purpose of merging with, engaging in a capital
stock exchange with, purchasing all or substantially all of the assets of,
or
engaging in any other similar business combination with one or more operating
businesses in the education industry. To date, our efforts have been limited
to
organizational activities and activities relating to this offering and we
have
not acquired any business operations. Further, we do not have any specific
business combination under consideration or contemplation and we have not,
nor
has anyone on our behalf, contacted any potential target business or had
any
discussions, formal or otherwise, with respect to such a transaction. At
the
first meeting of the board of directors promptly following the closing of
this
offering, we intend to establish policies and procedures for seeking appropriate
business acquisition candidates. As part of our intended processes, we may
create a contact database indicating the materials received by any potential
target candidates, when such materials were evaluated, the parties primarily
responsible for such evaluation and the reasons such candidate was either
rejected or the issues that, upon initial evaluation, require further
investigation. As the evaluation process progresses, numerous other factors,
which are expected to vary with each potential candidate we evaluate, are
expected to be relevant to a final determination of whether to proceed with
any particular acquisition candidate.
We
believe the experience of our officers and directors in the education industry,
investment banking and private equity investments will be beneficial in
structuring and consummating a business combination. Our management and board
of
directors have established an extensive network of relationships from which
to
identify and generate acquisition opportunities within the education industry.
David L. Warnock, our President, Chairman and Chief Executive Officer, has
over
24 years of investment experience in the education and business and financial
services industries. Mr. Warnock serves on the boards of directors of American
Public Education, Inc., New Horizons Worldwide, Inc., Nobel Learning
Communities, Inc., Primo Water Corporation and Questar Assessment, Inc.,
formerly Touchstone Applied Science Associates. Mr. Hughes also serves on
the
boards of directors of New Horizons Worldwide, Inc. and Questar Assessment,
Inc.
Jack Brozman, our director, has been President and Chief Executive Officer
of
Concorde Career Colleges and La Petite Academy, Inc. Dr. Therese Crane, our
director, was previously President of Jostens Learning Corporation and its
successor, Compass Learning and previously was Vice President of Information
and
Education Products at America Online. Ronald Tomalis, our director, was
previously counselor to the US Secretary of Education and Acting Assistant
Secretary of Elementary and Secondary Education. William Jews is a former
governor of the Federal Reserve Bank and was the President and Chief Executive
Officer of CareFirst Inc./CareFirst Blue Cross Blue Shield from 1993 through
2006, an organization with more than $5 billion in annual revenues. Mr. Jews
has
previously been a director of MBNA, MuniMae Inc., Nations Bank, Ecolab, Inc.
and
Crown Central Petroleum, and currently serves on the boards of directors
of The
Ryland Group, a national home builder and mortgage provider, Choice Hotels
International, a worldwide lodging franchisor and Fortress International
Group,
Inc., the parent company of Total Site Solutions, which supplies industry
and
government with secure data centers and other facilities designed to
survive terrorist attacks, natural disasters and blackouts. In addition,
we
believe the experience of our officers and directors in investment banking
and
private equity investments will be beneficial in structuring and consummating
a
business combination.
Investment
Approach and Focus
Our
executive officers and directors have a broad range of education industry
experience to assist them in sourcing, evaluating and executing a proposed
business combination. We anticipate our search for potential target businesses
will involve making contacts with targets through our executive officers and
directors; seeking referrals from our professional network of contacts,
including management groups, corporations, banks, private equity funds,
consultants, investment bankers and business brokers active in the education
industry, in addition to contacting owners of education companies we
identify.
Education
Industry
The
U.S.
education industry has continued to show substantial growth in the past decade,
due to what we believe to be the importance of developing a skilled workforce.
A
skilled workforce is increasingly reliant on intellectual capital as the
U.S.
economy continues its shift to become focused on services rather than
manufacturing. While post-secondary graduates are approximately 30% of the
U.S.
population, more than 85% of them have completed their K-12 education.
International competition, especially in math and science, has driven education
legislation, requiring minimum performance levels and allocating funding
for
supplemental services in underperforming schools. In addition to state and
government spending, the U.S. has the second highest level of education funding
from private sources in the world at 28%, led only by Korea. These factors
have
led to an overall increase in education spending in the two largest sectors
of
the market, K-12 and post-secondary, and are expected to continue to drive
growth across all sectors of the education industry. The data included in
this
prospectus is derived from information of the U.S. Department of Education
set
forth in its report which is available at http://nces.ed.gov: “Digest of
Education Statistics: 2005,” Dated July 2006.
We
believe this growth has created significant opportunities for companies engaged
in the for-profit education industry serving these students. In addition
to
enrollment in K-12 and post-secondary education, corporate training and early
childcare have shown recent growth, after slowdowns following 2000-2001.
The
for-profit education sector has grown its share of overall industry spending
in
recent years and now represents approximately $88 billion of the $1.4 trillion
estimated to have been spent on education in the U.S. in 2006, or approximately
6.2% of that amount. We believe the growth rate in the for-profit sector
will
outpace non-profit providers.
Although
we may consider a target business in any sector of the education industry,
we
intend to concentrate our search for a business combination in the following
target sectors:
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Early
Childcare (pre-school programs and/or day care facilities for pre-school
aged children);
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K-12
(kindergarten through twelfth grade);
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Post-secondary
(a
formal instructional program for students who have completed the
requirements for a high school diploma or its equivalent, including
programs whose purpose is academic, vocational and continuing professional
education);
and
|
While
we
may need to effect a business combination with more than one target business,
which may be in different sectors of the education industry, our initial
business acquisition must be with one or more operating businesses the aggregate
fair market value of which is, either individually or collectively, at least
equal to 80% of our net assets at the time of such transaction (less the
deferred underwriting discount and commissions and taxes payable). We do
not
have any specific business combination under consideration, and we have not
had
any preliminary contacts or discussions with any target businesses regarding
a
business combination. At
the
first meeting of the board of directors following the closing of this offering,
we intend to establish policies and procedures for seeking appropriate business
acquisition candidates.
Prior
to
completion of a business combination, we will use our reasonable best efforts
to
have all vendors, prospective target businesses or other entities that 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. In the event a vendor, prospective target business or other entity
were to refuse to execute such a waiver, we will execute an agreement with
that
entity only if our management first determines that we would be unable to
obtain, on a reasonable basis, substantially similar services or opportunities
from another entity willing to execute such a waiver. In addition, we may elect
to forego obtaining waivers only if we receive the approval of our Chief
Executive Officer and the approving vote or written consent of at least a
majority of our board of directors. 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.
Competitive
Advantages
We
believe the experience and contacts of our directors, officers will give us
an
advantage in sourcing, structuring and consummating a business combination.
The
future role of our key personnel following a business combination, however,
cannot presently be fully ascertained. Specifically, the members of our current
management are not obligated to remain with us subsequent to a business
combination, and we cannot assure you that the resignation or retention of
our
current management will be included as a term or condition in any agreement
relating to a business combination. In addition, despite the competitive
advantages we believe we enjoy, we remain subject to significant competition
with respect to identifying and executing a business combination.
Established
Deal Sourcing Network
Through
our management team and our directors, we believe we have extensive contacts
and
sources from which to generate acquisition opportunities within the education
sector. These contacts and sources include those in government, private and
public companies within the education industry, private equity and venture
capital funds, investment bankers, attorneys and accountants.
For
more
information regarding our executive officers and directors, please refer to
the
more detailed disclosure set forth under the heading “Management”
below.
Effecting
a Business Combination
General
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 and the private
placement, 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 generally applied toward effecting a business
combination as described in this prospectus, the proceeds are not otherwise
being designated for any more specific purposes. Accordingly, prospective
investors will invest in us without an opportunity to evaluate the specific
merits or risks of any one or more business combinations. A business combination
may be with a company which does not need substantial additional capital but
which desires to establish a public trading market for its shares, while
avoiding what it may deem to be adverse consequences of undertaking a public
offering itself. These include time delays, significant expense, loss of voting
control and compliance with various federal and state securities laws. In the
alternative, we may seek to consummate a business combination with a company
that may be financially unstable or in its early stages of development or
growth.
We
have not identified a target business
To
date,
we have not selected a specific target business on which to concentrate our
search for a business combination. None of our officers, directors, promoters
or
other affiliates have had any preliminary contact or discussions on our behalf
with representatives of any prospective target business regarding the
possibility of a potential merger, capital stock exchange, asset acquisition
or
other similar business combination with us. Neither we nor any of our agents
or
affiliates has yet taken any measure, directly or indirectly, to locate a target
business. There has been no due diligence, investigation, discussions,
negotiations and/or other similar activities undertaken, directly or indirectly,
by us, our affiliates or representatives, or by any third party, with respect
to
a business combination transaction with us.
Sources
of target businesses
We
anticipate target business candidates will be brought to our attention from
various unaffiliated sources, including education industry executives, private
equity funds, venture capital funds, investment bankers, attorneys and
accountants and other members of the financial community, who may present
solicited or unsolicited proposals. We expect such sources to become aware
that
we are seeking a business combination candidate by a variety of means, such
as
publicly available information relating to this offering, public relations
and
marketing efforts, articles that may be published in industry trade papers
discussing our intent on making acquisitions, and/or direct contact by
management to be commenced following the completion of this offering. Our
existing stockholders, officers and directors as well as their affiliates may
also bring to our attention target business candidates. While our officers
and
directors make no commitment as to the amount of time they will spend trying
to
identify or investigate potential target businesses, they believe that the
various relationships they have developed over their careers together with
their
direct inquiry of their contacts will generate a number of potential target
businesses that will warrant further investigation. While we do not presently
anticipate engaging the services of professional firms that specialize in
business acquisitions on any formal basis, we may engage these firms in the
future, in which event we may pay a finder’s fee or other compensation. The
terms of any such arrangements will be negotiated with such persons on arm’s
length basis and disclosed to our stockholders in the proxy materials we provide
in connection with any proposed business combination. In no event, however,
will
we pay any of our existing officers, directors or stockholders or any entity
with which they are affiliated any finder’s fee or other compensation for
services rendered to us prior to or in connection with the consummation of
a
business combination. In addition, none of our officers, directors or existing
stockholders will receive any finder’s fee, consulting fees or any similar fees
or other compensation from any other person or entity in connection with any
business combination other than any compensation or fees to be received for
any
services provided following such business combination.
Selection
of a target business and structuring of a business combination
Subject
to the requirement that our initial business combination must be with a target
business with an aggregate fair market value that is at least 80% of the amount
in our trust account (less the deferred underwriting discount and commissions
and taxes payable) at the time of such transaction, our management will have
virtually unrestricted flexibility in identifying and selecting a prospective
target business in the education industry. In evaluating a prospective target
business, our management will consider, among other factors, the
following:
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financial
condition and results of operation;
|
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·
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the
value and extent of intellectual
property;
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·
|
stage
of development of the products, processes or
services;
|
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·
|
degree
of current or potential market acceptance of the products, processes
or
services;
|
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·
|
proprietary
features and degree of protection of the products, processes or services;
and
|
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costs
associated with effecting the business
combination.
|
These
criteria are not intended to be exhaustive. Additionally, at the first meeting
of the board of directors promptly following the closing of this offering,
we
intend to establish policies and procedures for seeking appropriate business
acquisition candidates. As part of our intended processes, we may create
a
contact database indicating the materials received by any potential target
candidates, when such materials were evaluated, the parties primarily
responsible for such evaluation and the reasons such candidate was either
rejected or the issues that, upon initial evaluation, require further
investigation. As the evaluation process progresses, numerous other factors,
which are expected to vary with each potential candidate we evaluate, are
expected to be relevant to a final determination of whether to proceed with
any particular acquisition candidate. 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 business, we will conduct an extensive due
diligence review which will encompass, among other things, meetings with
incumbent management, where applicable, and inspection of facilities, as
well as
review of financial and other information which will be made available to
us.
In
seeking a business combination, we intend to utilize cash derived from the
proceeds of this offering and the private placement, as well as our capital
stock or debt, or a combination of cash, capital stock and debt, and there
is no
limit on the issuance of capital stock or incurrence of debt we may undertake
in
effecting a business combination. In the event a business combination is
consummated, all sums remaining in the trust account will be released to us
immediately thereafter, and there will be no restriction on our use of such
funds.
We
will
endeavor to structure a business combination so as to achieve the most favorable
tax treatment to us, the target business and both companies’ stockholders. We
cannot assure you, however, that the Internal Revenue Service or appropriate
state tax authorities will agree with our tax treatment of the business
combination.
The
time
and costs required to select and evaluate a target business 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 business 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, in no event, however, will we pay any of our existing
officers, directors or stockholders or any entity with which they are affiliated
any finder’s fee or other compensation for services rendered to us prior to or
in connection with the consummation of a business combination, other than the
$7,500 payable monthly in the aggregate to Camden Learning, LLC, one of our
affiliates, for certain general
and administrative services, including but not limited to receptionist,
secretarial and general office services.
In
addition, none of our officers, directors or existing stockholders will receive
any finder’s fee, consulting fees or any similar fees from any other person or
entity in connection with any business combination involving us other than
any
compensation or fees that may be received for any services provided following
such business combination.
Fair
market value of target business
The
initial target business that we acquire must have an aggregate fair market
value
equal to at least 80% of the amount in our trust account (less the deferred
underwriting discount and commissions and taxes payable) at the time of such
transaction. There is no limitation on our ability to raise funds privately
or
through loans that would allow us to acquire a target business or businesses
with an aggregate fair market value in an amount greater than
80%
of the amount in our trust account (less the deferred underwriting discount
and
commissions and taxes payable) at the time such transaction. We have not
had any
preliminary discussions, or made any agreements or arrangements, with respect
to
financing arrangements with any third party. The fair market value of such
business 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, and the price for which comparable
businesses have recently been sold. If our board is not able to independently
determine the target business has a sufficient fair market value, we will
obtain
an opinion from an unaffiliated, independent investment banking firm which
is a
member of the National Association of Securities Dealers, Inc. with respect
to
the satisfaction of such criteria. We will not be required to obtain an opinion
from an investment banking firm as to the fair market value of a proposed
business combination if our board of directors independently determines the
target business has sufficient fair market value. We will not pursue a business
combination with any company that is a portfolio company of, or otherwise
affiliated with, or has received financial investment from, any of the private
equity firms with which our existing stockholders, executive officers or
directors are affiliated.
Probable
lack of business diversification
While
we
may seek to effect business combinations with more than one target business,
our
initial business combination must be with a target business or target businesses
which satisfy the minimum valuation standard at the time of such acquisition, as
discussed above. Consequently, it is probable we will have the ability to effect
only a single business combination, although this may entail the simultaneous
acquisition of several compatible operating businesses or assets. Unlike other
entities which may have the resources to complete several business combinations
of entities operating in multiple industries or multiple areas of a single
industry, it is probable 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 limited number of
entities, our lack of diversification may:
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leave
us solely dependent upon the performance of a single business;
and
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result
in our dependency upon the development or market acceptance of a
single or
limited number of products or
services.
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Additionally,
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 closely related businesses is contingent upon the
simultaneous closings of the other acquisitions.
Limited
ability to evaluate the target business’ management
Although
we intend to closely scrutinize the management of prospective target businesses
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
help
manage a public company. Furthermore, the future role of our officers and
directors, in any, in the target businesses cannot presently be stated with
any
certainty. While it is possible that one or more of our officers and directors
will remain associated with us in some capacity following a business
combination, it is unlikely that any of them will devote their full efforts
to
our affairs subsequent to a business combination. Moreover, we cannot assure
you
that our officers and directors will have significant experience or knowledge
relating to the operations of the particular target business
acquired.
Opportunity
for stockholder approval of business combination
Prior
to
the completion of a 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 Securities Exchange Act of 1934, which, among other matters,
will include a description of the operations of the target business and certain
required financial information regarding the business.
In
connection with the vote required for any business combination, all of our
existing stockholders, including all of our officers and directors, have agreed
to vote their respective shares of common stock owned by them immediately prior
to this offering in accordance with the majority of the shares of common stock
voted by the public stockholders. Existing stockholders who purchase shares
of
common stock in this offering or after this offering have agreed to vote such
shares in favor of any proposed business combination. Accordingly, they will
not
be able to exercise redemption rights with respect to a potential business
combination. We will proceed with the business combination only if a majority
of
the shares of common stock cast at the meeting are voted
in
favor of the business combination, and public stockholders owning less than
30%
of the shares sold in this offering exercise their redemption rights. As a
result of our higher redemption threshold, we may have less cash available
to
complete a business combination. Because we will not know how many stockholders
may exercise such redemption rights, we will need to structure a business
combination that requires less cash, or we may need to arrange third party
financing to help fund the transaction in case a larger percentage of
stockholders exercise their redemption rights than we expect. Alternatively,
to
compensate for the potential shortfall in cash, we may be required to structure
the business combination, in whole or in part, using the issuance of our stock
as consideration. Accordingly, this increase in the customary redemption
threshold may hinder our ability to consummate a business combination in the
most efficient manner or to optimize our capital structure. Voting against
the
business combination alone will not result in redemption of a stockholder’s
shares into a pro rata share of the trust account. Such stockholder must have
also exercised its redemption rights described below.
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 the limitation on our corporate life to [24
months from the date of this prospectus].
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. The approval of the proposal to amend our amended and restated
certificate of incorporation to provide for our perpetual existence would
require the affirmative vote of a majority of our outstanding shares of common
stock.
Redemption
rights
At
the
time we seek stockholder approval of any business combination, we will offer
each public stockholder the right to have such stockholder’s shares of common
stock redeemed for cash if the stockholder votes against the business
combination and the business combination is approved and completed. The actual
per-share redemption price will be equal to $7.90 (plus the interest earned
on
the trust account, net of (i) taxes payable on interest earned and (ii) up
to
$750,000 of interest income released to us to fund our working capital). An
eligible stockholder may request redemption 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, but the
request will not be granted unless the stockholder votes against the business
combination and the business combination is approved and completed. A
stockholder who requests redemption of his or her shares must hold these shares
from the record date through the closing date of the business combination.
Stockholders will not be requested to tender their shares of common stock before
a business combination is consummated. If a business combination is consummated,
redeeming stockholders will be sent instructions on how to tender their shares
of common stock and when they should expect to receive the redemption amount.
In
order to ensure accuracy in determining whether or not the redemption threshold
has been met, each redeeming stockholder must continue to hold their shares
of
common stock until the consummation of the business combination. We will not
charge redeeming stockholders any fees in connection with the tender of shares
for redemption. If a stockholder votes against the business combination but
fails to properly exercise his or her redemption rights, such stockholder will
not have his or her shares of common stock redeemed for his or her pro rata
distribution of the trust account. Any request for redemption, once made, may
be
withdrawn at any time up to the date of the meeting. It is anticipated the
funds
to be distributed to stockholders entitled to redeem their shares who elect
redemption will be distributed promptly after completion of a business
combination. Public stockholders who redeem their stock into their share of
the
trust account still have the right to exercise the warrants they received as
part of the units. We will not complete any business combination if public
stockholders owning 30% or more of the shares sold in this offering exercise
their redemption rights. Our existing stockholders are not entitled to redeem
any shares of common stock held by them whether acquired by them prior to or
after this offering. Even if less than 30% of the stockholders, as described
above, exercise their redemption rights, we may be unable to consummate a
business combination if such redemption leaves us with funds less than an
aggregate fair market value equal to at least 80% of the amount in our trust
account (less the deferred underwriting discount and commissions and taxes
payable) at the time of such transaction, which amount is required for our
initial business combination. In such event, we may be forced to either find
additional financing to consummate such a business combination, consummate
a
different business combination or dissolve, liquidate and wind up.
Liquidation
if no business combination
Our
amended and restated certificate of incorporation also provides that we will
continue in existence only until ____________, 2009 [twenty
four months from the date of this prospectus].
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 and 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).
If
we are
unable to consummate a business combination by _________________,
2009
[24
months from the date of this prospectus],
we will
distribute to our public stockholders, in proportion to their respective equity
interests, an aggregate sum equal to the amount in the trust account, inclusive
of any interest plus any remaining net assets (subject to our obligations under
Delaware law to provide for claims of creditors as described below). We
anticipate notifying the trustee of the trust account to begin liquidating
such
assets promptly after such date and anticipate it will take [no
more than 10 business days to effectuate such distribution].
Our
existing stockholders have waived their rights to participate in any liquidation
of our trust account or other assets with respect to shares of common stock
owned by them prior to this offering. In addition, Morgan Joseph & Co. Inc.
has agreed to waive their rights to the $720,000 ($828,000 if the underwriters’
over-allotment option is exercised in full) of deferred underwriting discount
and commissions deposited in the trust account for their benefit. There will
be
no distribution from the trust account or otherwise in connection with
dissolution with respect to our warrants, which will expire worthless. We
estimate our total costs and expenses for implementing and completing our
liquidation and dissolution will be between $25,000 and $40,000. This amount
includes all costs and expenses relating to filing our dissolution in the State
of Delaware and the winding up of our company. We believe there should be
sufficient funds available, outside of the trust account as well as from the
interest earned on the trust account and released to us as working capital,
to
fund the $25,000 to $40,000 in costs and expenses.
If
we are
unable to consummate a business combination and expend all of the net proceeds
of this offering and the private placement, 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 to the public
stockholders would be equal to $7.90 per share. The proceeds deposited in the
trust account could, however, become subject to the claims of our creditors,
which could be prior to the claims of our public stockholders. Although we
will
use our reasonable best efforts to have all vendors, 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. We may elect to forego obtaining waivers only
if
we receive the approval of our Chief Executive Officer and the approving vote
or
written consent of at least a majority of our board of directors. 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 order to protect the amounts held in the trust account,
our sponsor has agreed to indemnify us for claims of any vendors, service
providers, prospective target businesses or creditors that have not executed
a
valid and binding waiver of any right or claim to the amounts in trust account.
As
further assurance our sponsor will have the necessary funds required to meet
these indemnification obligations, (i) the Camden III Funds have agreed, under
our sponsor’s limited liability company agreement, to make capital contributions
to our sponsor as and when required in order for the sponsor to fulfill its
indemnification obligations and (ii) our sponsor has agreed to take all such
action reasonably necessary to request its members make such capital
contributions. Additionally, in the event either of the Camden III Funds
undertakes a liquidating distribution while the indemnification obligations
of
the sponsor are outstanding, they have each agreed, in our sponsor’s limited
liability company agreement, to use reasonable efforts to set aside from such
distribution adequate reserves to cover the reasonably anticipated liabilities
which may be incurred by our sponsor. We and the representative of the
underwriters are named as express third party beneficiaries in and with respect
to the provisions of our sponsor’s limited liability company agreement which
require the Camden III Funds to make such capital contributions and establish
such reserves. Despite these obligations, we cannot assure you the sponsor
or
the Camden III Funds will be able to satisfy those obligations, if required
to
do so.
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, it is our intention to make liquidating
distributions to our stockholders as soon as reasonably possible after
[
],
2009
[24
months from the date of the prospectus]
and,
therefore, we do not intend to comply with those procedures. As such, our
stockholders potentially could be liable for any claims to the extent of
distributions received by them and 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 of dissolution 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 10 years. However, because we are a blank check company, rather
than
an operating company, and our operations will be limited to searching for
prospective target businesses to acquire, the only likely claims to arise would
be from our vendors (such as accountants, lawyers, investment bankers, etc.)
or
potential target businesses. As described above, we intend to have all vendors
and prospective target businesses execute agreements with us waiving any right,
title, interest or claim of any kind in or to any monies held in the trust
account. As a result, the claims which could be made against us are
significantly limited and the likelihood any claim that would result in any
liability extending to the trust is minimal.
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 in our dissolution. Furthermore, because we intend to distribute
the proceeds held in the trust account to our public stockholders promptly
after
[ ], 2009, 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. Additionally, our board may be viewed as having
breached their fiduciary duties 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 redeem their respective
shares for 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.
Certificate
of Incorporation
Our
amended and restated certificate of incorporation requires that we obtain
the
affirmative vote of holders of 95% of the
shares purchased in this offering
to amend
certain provisions of our amended and restated certificate of incorporation.
However, the validity of such supermajority voting provisions under Delaware
law
has not been settled. A court could conclude that such supermajority voting
consent requirement constitutes a practical prohibition on amendment in
violation of the stockholders’ implicit rights to amend the corporate charter.
In that case, certain provisions of the certificate of incorporation would
be
amendable without such supermajority consent and any such amendment could
reduce
or eliminate the protection afforded to our stockholders. However, we view
the
foregoing provisions as obligations to our stockholders, and we will not
take
any action to waive or amend any of these provisions unless we obtain the
consent of holders of 95% of the shares purchased in this
offering.
Competition
for Target Businesses
In
identifying, evaluating and selecting a target business, we may encounter
intense competition from other entities having a business objective similar
to
ours. Currently, there are approximately 51 blank check companies with more
than
$5.0 billion in trust that are seeking to carry out a business plan similar
to our business plan and there are likely to be more blank check companies
filing registration statements for initial public offerings after the date
of
this prospectus and prior to our completion of a business combination.
Additionally, we may be subject to competition from other companies looking
to
expand their operations through the acquisition of a target business. Many
of
these entities are well established and have extensive experience identifying
and effecting business combinations directly or through affiliates. Many of
these competitors possess greater technical, human and other resources than
us
and our financial resources will be relatively limited when contrasted with
those of many of these competitors. While we believe there are numerous
potential target businesses we could acquire with the net proceeds of this
offering and the private placement, our ability to compete in acquiring certain
sizable target businesses will be limited by our available financial resources.
This inherent competitive limitation gives others an advantage in pursuing
the
acquisition of a target business. Further:
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our
obligation to seek stockholder approval of a business combination
or
obtain the necessary financial information to be included in the
proxy
statement to be sent to stockholders in connection with such business
combination may delay or prevent the completion of a
transaction;
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our
obligation to redeem for cash shares of common stock held by our
public
stockholders in certain instances may reduce the resources available
to us
for a business combination;
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our
outstanding warrants and options, and the future dilution they potentially
represent, may not be viewed favorably by certain target businesses;
and
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the
requirement to acquire assets or one or more operating businesses
that has
an aggregate fair market value equal to at least 80% of the amount
in our
trust account (less the deferred underwriting discount and commissions
and
taxes payable) at the time of such transaction may require us to
acquire
several assets or closely related operating businesses at the same
time,
all of which sales would be contingent on the closings of the other
sales,
which could make it more difficult to consummate the business
combination.
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Any
of
these factors may place us at a competitive disadvantage in negotiating a
business combination. Our management believes, however, our status as a public
entity and potential access to the United States public equity markets may
give
us a competitive advantage over privately-held entities having a similar
business objective as us in acquiring a target business with significant growth
potential on favorable terms.
If
we
effect a business combination, there will be, in all likelihood, intense
competition from competitors of the target business. We cannot assure you that,
subsequent to a business combination, we will have the resources or ability
to
compete effectively.
Facilities
We
maintain executive offices at 500 East Pratt Street, Suite 1200, Baltimore,
MD
21202 and our telephone number is (410) 878-6800. The cost for this space is
included in the $7,500 per-month fee Camden Learning, LLC charges us for
general
and administrative services, including but not limited to receptionist,
secretarial and general office services,
pursuant to a letter agreement between us and Camden Learning, LLC. This
agreement commences on the date of this prospectus and shall continue until
the
earliest to occur of: (i) consummation of a business combination, (ii)
[ ]
[24 months from the date of this prospectus],
and
(iii) the date on which we cease our corporate existence in accordance with
our
amended and restated certificate of incorporation. We believe, based on fees
for
similar services in the greater Baltimore, Maryland metropolitan area, that
the
fee charged by Camden Learning, LLC is at least as favorable as we could have
obtained from an unaffiliated person.
We
consider our current office space adequate for our current
operations.
Employees
We
have
two executive officers, one of whom is also a member of our Board of Directors.
These individuals are not obligated to contribute any specific number of hours
per week and intend to devote only as much time as they deem necessary to our
affairs. The amount of time they will devote in any time period will vary based
on the availability of suitable target businesses to investigate, although
we
expect such individuals to devote an average of approximately ten hours per
week
to our business. We do not intend to have any full time employees prior to
the
consummation of a business combination.
Periodic
Reporting and Financial Information
We
will
register our units, common stock and warrants under the Securities Exchange
Act
of 1934, as amended, and have reporting obligations, including the requirement
that we file annual and quarterly reports with the SEC. In accordance with
the
requirements of the Securities Exchange Act of 1934, as amended, our annual
reports will contain financial statements audited and reported on by our
independent accountants.
We
will
not acquire an operating business if audited financial statements based on
United States generally accepted accounting principles cannot be obtained for
such target business. Alternatively, we will not acquire assets if the financial
information called for by applicable law cannot be obtained for such assets.
Additionally, our management will provide stockholders with the foregoing
financial information as part of the proxy solicitation materials sent to
stockholders to assist them in assessing each specific target business or assets
we seek to acquire. Our management believes that the requirement of having
available financial information for the target business or assets may limit
the
pool of potential target businesses or assets available for
acquisition.
Legal
Proceedings
To
the
knowledge of our management, there is no litigation currently pending or
contemplated against us or any of our officers or directors in their capacity
as
such.
Comparison
to Offerings of Blank Check Companies
The
following table compares and contrasts the terms of our offering and the terms
of an offering of blank check companies under Rule 419 promulgated by the SEC
assuming that the gross proceeds, underwriting discounts and underwriting
expenses for the Rule 419 offering are the same as this offering and that the
underwriters will not exercise their over-allotment option. None of the terms
of
a Rule 419 offering will apply to this offering.
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Terms
of Our Offering
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Terms
Under a Rule 419 Offering
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Escrow
of offering proceeds
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$35,550,000
of the net offering proceeds and private placement proceeds (including
up
to $720,000 of deferred underwriting discount and commissions payable
to
Morgan Joseph & Co. Inc. upon consummation of a business combination)
will be deposited into a trust account at Lehman Brothers, Inc. maintained
by Continental Stock Transfer & Trust Company.
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$28,800,000
of the offering proceeds would be required to be deposited into either
an
escrow account with an insured depositary institution or in a separate
bank account established by a broker-dealer in which the broker-dealer
acts as trustee for persons having the beneficial interests in the
account.
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Investment
of net proceeds
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The
$35,550,000 of net offering proceeds and the private placement proceeds
held in trust will only be invested in U.S. “government securities,”
within the meaning of Section 2(a)(16) of the Investment Company
Act of
1940 with a maturity of one hundred and eighty days or less or money
market funds meeting certain criteria.
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Proceeds
could be invested only in specified securities such as a money market
fund
meeting conditions of the Investment Company Act of 1940 or in securities
that are direct obligations of, or obligations guaranteed as to principal
or interest by, the United States.
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Limitation
on fair value or net assets of
target business
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The
initial target business or businesses that we acquire must have an
aggregate fair market value equal to at least 80% of the amount in
our
trust account (less the deferred underwriting discount and commissions
and
taxes payable) at
the time of such transaction.
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We
would be restricted from acquiring a target business unless the fair
value
of such business or net assets to be acquired represent at least
80% of
the maximum offering proceeds.
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Trading
of securities issued
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The
units shall commence trading on or promptly after the date of this
prospectus. The common stock and warrants comprising the units shall
begin
to trade separately on the 90th day after the date of this prospectus
unless Morgan Joseph & Co. Inc. informs us of its decision to allow
earlier separate trading, provided, however, that in no event will
Morgan
Joseph & Co. Inc. allow separate trading of the common stock and
warrants until the business day after (i) we have filed with the
SEC a
Current Report on Form 8-K, which includes an audited balance sheet
reflecting our receipt of the proceeds of this offering and the private
placement, including any proceeds we receive from the exercise of
the
over-allotment option, if such option is exercised on the date of
this
prospectus, (ii) we file a Current Report on Form 8-K and issue a
press
release announcing when such separate trading will begin and (iii)
the
underwriters’ over-allotment option has either expired or been exercised
in full. Morgan Joseph & Co. Inc. may decide to allow continued
trading of the units following such separation.
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No
trading of the units or the underlying common stock and warrants
would be
permitted until the completion of a business combination. During
this
period, the securities would be held in the escrow or trust
account.
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Exercise
of the warrants
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The
warrants cannot be exercised until the later of the completion of
a
business combination or one year from the date of this prospectus
and,
accordingly, will only be exercised after the trust account has been
terminated and distributed.
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The
warrants could be exercised prior to the completion of a business
combination, but securities received and cash paid in connection
with the
exercise would be deposited in the escrow or trust
account.
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Election
to remain an
investor
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We
will give our stockholders the opportunity to vote on the business
combination. In connection with seeking stockholder approval, we
will send
each stockholder a proxy statement containing information required
by the
SEC. A stockholder following the procedures described in this prospectus
is given the right to redeem his or her shares for $7.90 per share
(plus a
portion of the interest earned on the trust account, but net of (i)
taxes
payable on interest earned and (ii) up to $750,000 of interest income
released to us to fund our working capital). However, a stockholder
who
does not follow these procedures or a stockholder who does not take
any
action would not be entitled to the return of any funds. Interest
will be
payable to public stockholders redeeming in connection with a business
combination pro rata, net of amounts previously released to us and
taxes
payable.
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A
prospectus containing information required by the SEC would be sent
to
each investor. Each investor would be given the opportunity to notify
the
company, in writing, within a period of no less than 20 business
days and
no more than 45 business days from the effective date of the
post-effective amendment, to decide whether he or she elects to remain
a
stockholder of the company or require the return of his or her investment.
If the company has not received the notification by the end of the
45th
business
day, funds and interest or dividends, if any, held in the trust or
escrow
account would automatically be returned to the stockholder. Unless
a
sufficient number of investors elect to remain investors, all of
the
deposited funds in the escrow account must be returned to all investors
and none of the securities will be issued.
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Business
combination deadline
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A
business combination must occur within 24 months after the date of
this
prospectus. If a business combination does not occur in such timeframe,
we
will liquidate and return the amounts in trust to our public
stockholders.
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If
a business combination has not been consummated within 18 months
after the
effective date of the initial registration statement, funds held
in the
trust or escrow account would be returned to investors.
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Release
of funds
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The
proceeds held in the trust account will not be released until the
earlier
of the completion of a business combination or upon our failure to
complete a business combination within the allotted time except that
to
the extent the trust account earns interest we are permitted from
time to
time to receive disbursements of that interest for the purposes of
(i) paying taxes on interest earned and (ii) funding working
capital up to $750,000.
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The
proceeds held in the trust account, including all of the interest
earned
thereon (after taxes payable) would not be released until the earlier
of
the completion of a business combination or the failure to effect
a
business combination within 18 months. See “Risk Factors—Risks associated
with our business—You will not be entitled to protections normally
afforded to investors of blank check companies.” In the event a business
combination was not consummated within 18 months, proceeds held in
the
trust account would be returned within 5 business days of such
date.
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Interest
earned on funds in trust
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Up
to $750,000 of the interest earned on the trust account may be released
to
us to fund our working capital requirements. In addition, interest
earned
may be disbursed for the purpose of paying taxes on interest
earned.
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The
interest earned on proceeds held in trust (after taxes payable) would
be
held for the sole benefit of investors, and we would be unable to
access
such interest for working capital
purposes.
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MANAGEMENT
Directors
and Executive Officers
Our
current directors and executive officers are listed below. None of such persons
are, or have been, involved with any other blank check companies.
Name
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Age
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Position
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David
L. Warnock
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49
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President,
Chief Executive Officer and Chairman
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Donald
W. Hughes
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56
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Chief
Financial Officer, Secretary
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Jack
L. Brozman
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57
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Director
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Therese
Kreig Crane, Ed.D
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57
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Director
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Ronald
Tomalis
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44
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Director
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William
Jews
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55
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Director
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David
L. Warnock
is a
partner with Camden Partners and co-founded the firm in 1995. He has over 24
years of investment experience and focuses on investments in the education
and
business and financial services sectors. He serves on the boards of directors
of
American Public Education, Inc., a regionally accredited online post-secondary
university, New Horizons Worldwide, Inc., one of the largest global IT training
companies, Nobel Learning Communities, Inc., a nationwide provider of pre-K
through 8th
grade
private schools and Questar Assessment, Inc., formerly Touchstone Applied
Science Associates which provides testing and assessment services for
standardized testing, all of which are Camden Partners’ portfolio companies. Mr.
Warnock served as the Chairman of Nobel from September 2003 through February
2004. Mr. Warnock has previously served on the boards of Concord Career Colleges
from 1997 thru 2006 and Children’s Comprehensive Services, Inc. from 1993 to
2000. Previously, Mr. Warnock was President of T. Rowe Price Strategic Partners
and T. Rowe Price Strategic Partners II. He was also co-manager of the T. Rowe
Price New Horizons Fund. Mr. Warnock was employed by T. Rowe Price Associates
from 1983 to 1995. Upon forming Camden Partners (formerly known as Cahill,
Warnock & Company) and until December 31, 1997, Mr. Warnock served as a
consultant to the advisory committees of T. Rowe Price Strategic Partners and
T.
Rowe Price Strategic Partners II.
Mr.
Warnock is also involved with numerous non-profit organizations. He is the
Chairman of the Center for Fathers, Families, and Workforce Development, as
well
as Calvert Education Services, the nation's largest non-sectarian home-schooling
organization. He also serves on the board of the National Alliance to End
Homelessness and the University of Wisconsin Applied Security Analysis Program
and is a trustee on the board of the Baltimore Museum of Art. Mr. Warnock earned
a B.A. degree from the University of Delaware and a M.S. (in Finance) from
the
University of Wisconsin. He is a CFA Charterholder.
Donald
W. Hughes
has been
our Chief Financial Officer and Secretary since inception. Since February 1997,
Mr. Hughes has served as Executive Vice President and Chief Financial Officer
of
Camden Partners, Inc. and a member of and Chief Financial Officer of Camden
Partners Holdings, LLC, each of which is an affiliate of Camden Learning, LLC,
Camden Partners Strategic Fund III, L.P. and Camden Partners Strategic Fund
III-A, L.P. Prior to joining Camden in February 1997, Mr. Hughes served as
Vice
President, Chief Financial Officer and Secretary of Capstone Pharmacy Services,
Inc. from December 1995 and as Executive Vice President and Chief Financial
Officer of Broventure Company, Inc., a closely-held investment management
company, from July 1984 to November 1995. Mr. Hughes serves on the boards of
directors of Questar Assessment, Inc., New Horizons Worldwide, Inc. and the
Maryland Food Bank. Mr. Hughes received a B.A. from Lycoming College and an
M.S.F. from Loyola College in Maryland, and is a Certified Public Accountant.
Jack
L. Brozman
was
President, Chief Executive Officer and Chairman of the Board of Directors of
Concorde Career Colleges, a for-profit post-secondary education company, from
June 1991 until its acquisition by Liberty Partners in September 2006.
Currently, he is Concorde’s President and Chief Operating Officer. Additionally,
he has been Chairman of the Board of Directors of First State Bank since
February 1994. Mr. Brozman was Chairman of the Board of Directors of Lawrence
Bank from August 2000 until January 2006. Mr. Brozman was President and Chief
Executive Officer of La Petite Academy, Inc., a group of over 700 child care
centers located throughout the United States, from 1979 to 1993, and was
Chairman of Board from 1991 to 1993. From June 1991 until June 1998, Mr. Brozman
was Chairman of the Board of Directors, Chief Executive Officer and President
of
Cencor, Inc., a consumer finance company. Mr. Brozman holds a BSBA and MBA
from
Washington University.
Therese
Kreig Crane, Ed.D, currently
serves in various leadership capacities within the education industry, including
as a trustee for the National Education Association Foundation and the Western
Governors University, as Chairman of the Board of Directors of Nobel Learning
Communities Inc. and as a director of Questia Inc. and Tutor.com. Until June
2005, Dr. Crane served on the board of AlphaSmart, a provider of affordable,
portable personal learning solutions for the K-12 classroom. Dr. Crane serves
as
the Senior Education Advisor to Infotech Strategies educational technology
consulting practice. From 2000 to 2003, Dr. Crane was Vice President,
Information and Education Products at America Online. Prior to that, she was
President of Jostens Learning Corporation and its successor company, Compass
Learning. Dr. Crane also held various positions with Apple Computer, including
Senior Vice President, Education of Americas, and was a corporate officer as
Apple Computer’s Senior Vice President, Worldwide Strategic Market Segments. Dr.
Crane started her career as an elementary school classroom teacher. Dr. Crane
has a B.S. in elementary education and mathematics from the University of Texas
at Austin, an M.Ed. in early childhood education, and an Ed.D. in administrative
leadership from the University of North Texas.
Ronald
Tomalis is
a
director and owner of The Chartwell Educational Group, an international
education consulting firm that serves private, non profit and governmental
organizations focusing on pre-K, K-12 and post-secondary education. He has
served as a director since July, 2005. Mr. Tomalis also served as a director
of
ELLIS, Inc from 2005 through 2006. From August 2004 to July 2005, Mr. Tomalis
was an independent consultant. From June 2001 to August 2004 Mr. Tomalis held
various senior positions in the United States Department of Education, including
managing the implementation of the No Child Left Behind Law as well as the
$25
billion Title I/II programs. Mr. Tomalis also served as counselor to the United
States Secretary of Education and as Acting Assistant Secretary of Elementary
and Secondary Education. For six years prior to joining the United States
Department of Education, Mr. Tomalis was the Executive Deputy Secretary of
Education for the Commonwealth of Pennsylvania. He was appointed to the position
by Governor Tom Ridge in December of 1995. As Executive Deputy Secretary for
Education for the Commonwealth of Pennsylvania, he took on the role of Chief
Operating Officer for that department. He was also the principal policy advisor
to the Pennsylvania Secretary of Education and spearheaded many of the reform
initiatives proposed by Governor Ridge. Mr. Tomalis graduated from Dickinson
College with a degree in political science.
William
Jews
was the
President and Chief Executive Officer of CareFirst Inc./CareFirst Blue Cross
Blue Shield from 1993 through 2006. With more than $5 billion in annual
revenues, CareFirst and its affiliates and subsidiaries are a combination
of
not-for-profit and for-profit entities with nearly 3 million customers,
including the nation's largest federal health program, served by 6,300
associates in five states and the District of Columbia. From 1990 through
1993,
Mr. Jews was the President and Chief Executive Officer of Dimensions Health
Corporation, a multi-faceted health care corporation which included two acute
care hospitals, a for-profit and not-for-profit nursing home and an emergency
ambulatory/surgical center. Mr. Jews currently serves on the boards of directors
of The Ryland Group, a national home builder and mortgage provider and Fortress
International Group, Inc., the parent company of Total Site Solutions, which
supplies industry and government with secure data centers and
other facilities designed to survive terrorist attacks, natural disasters
and blackouts. He also serves on the board of Choice Hotels International,
a
worldwide lodging franchisor, including serving on the Nominating/Governance
and
Diversity committees. He has previously been a director of Ecolab, Inc.,
MBNA,
MuniMae Inc., Nations Bank and Crown Central Petroleum and is a former governor
of the Federal Reserve Bank. Mr. Jews received a B.A. in Social and Behavioral
Science from The Johns Hopkins University and a Masters in Urban Planning
and
Policy Analysis, with Health Administration emphasis from Morgan State
University, Baltimore, MD.
Our
board
of directors is divided into two classes with only one class of directors
being
elected in each year and each class serving a two-year term. The term of
office
of the first class of directors, consisting of Messrs. Warnock, Tomalis and
Jews, will expire at our first annual meeting of stockholders. The term of
office of the second class of directors, consisting of Ms. Crane and Mr.
Brozman, will expire at the second annual meeting.
These
individuals will play a key role in identifying and evaluating prospective
acquisition candidates, selecting the target business and structuring,
negotiating and consummating its acquisition. None of these individuals has
been
a principal of or affiliated with a public company or blank check company that
executed a business plan similar to our business plan and none of these
individuals is currently affiliated with such an entity. However, we believe
the
skills and expertise of these individuals, their collective access to
acquisition opportunities and ideas, their contacts, and their transaction
expertise with public and private companies should enable them to identify
and
effect an acquisition although we cannot assure you that they will, in fact,
be
able to do so.
In
addition, for a period of no less than two years after the date of the
prospectus, we have granted Morgan Joseph & Co. Inc. the right to have an
observer present at all meetings of our board of directors until we consummate
a
business combination. The observer shall be entitled to attend meetings of
the
board, receive all notices and other correspondence and communications sent
by
us to members of our board of directors. In addition, such observer shall be
entitled to receive, as his/her sole compensation, reimbursement for all costs
incurred in attending such meetings.
In
order
to protect the amounts held in the trust account, our sponsor has agreed
to
indemnify us for claims of creditors that have not executed a valid and binding
waiver of their right to seek payment of amounts due to them out of the trust
account. The
sole
owners and members of our sponsor are Camden Partners Strategic Fund III,
L.P.
(96.01% ownership of the sponsor) and Camden Partners Strategic Fund III-A,
L.P.
(3.99% ownership of the sponsor). As further assurance our sponsor will have
the
necessary funds required to meet these indemnification obligations, (i) the
Camden III Funds have agreed, under our sponsor’s limited liability company
agreement, to make capital contributions to our sponsor as and when required
in
order for the sponsor to fulfill its indemnification obligations and (ii)
our
sponsor has agreed to take all such action reasonably necessary to request
its
members make such capital contributions. Additionally, in the event either
of
the Camden III Funds undertakes a liquidating distribution while the
indemnification obligations of the sponsor are outstanding, they have agreed,
in
our sponsor’s limited liability company agreement, to use reasonable efforts to
set aside from such distribution, adequate reserves to cover the reasonably
anticipated liabilities which may be incurred by our sponsor. We and the
representative of the underwriters are named as express third party
beneficiaries in and with respect to the provisions of our sponsor’s limited
liability company agreement which require the Camden III Funds to make such
capital contributions and establish such reserves. Despite these obligations,
we
cannot assure you the sponsor or the Camden III Funds will be able to satisfy
those obligations, if required to do so.
The
Camden III Funds were formed in February 2004 and do not terminate until
February 2014, unless earlier dissolved. The Camden III Funds are required
by
their terms to act together with respect to, among other things, dissolution.
The Camden III Funds may be dissolved upon any of the following events: (i)
at
any time limited partners representing 80% in interest of the Camden III
Funds
taken together vote to dissolve the Camden III Funds upon 90 days prior written
notice, (ii) the general partner and a majority in interest of the limited
partners of the Camden III Funds vote to dissolve the Camden III Funds upon
90
days prior written notice or (iii) 66-2/3% in interest of the limited partners
of the Camden III Funds vote to dissolve the partnership after the general
partner or any principal of either partnership (A) is convicted of a felony
or
securities law violation or has entered into a plea agreement for a securities
law violation, in each case in connection with the activities of such
partnership or (B) commits an act of bad faith, fraud or gross negligence
in
connection with the activities of such partnership or breaches a material
term
of such partnership agreement and such breach is not remedied within 30 days
after receipt of notice of such breach. At dissolution, the Camden III Fund’s
business shall be liquidated in an orderly and timely manner.
Each
of
the Camden III Funds is owned directly by their respective general and limited
partners. The general partner of each Camden III Fund is Camden Partners
Strategic III, LLC and the managing member of Camden Partners Strategic III,
LLC
is Camden Partners Strategic Manager, LLC. David L. Warnock, Donald W. Hughes,
Richard M. Johnston and Richard M. Berkeley are the managing members of Camden
Partners Strategic Manager, LLC. The limited partners of each Camden III
Fund
are numerous institutional investors and high net worth individuals. Dispositive
and voting power of our securities held by each Camden III Fund is vested
solely
in its general partner. The Camden III Funds are exempt from registration
under
the Investment Company Act of 1940
pursuant
to either Section 3(c)(1) or 3(c)(7) of such Act and
have
informed us they expect to continue to qualify for such exemption following
this
offering.
Additionally,
our sponsor has agreed to indemnify and hold us harmless against any and all
loss, liability, damage and expense whatsoever (including, but not limited
to,
any and all legal or other expenses) reasonably incurred in our dissolution
and
liquidation, and in investigating, preparing or defending against any
litigation, whether pending or threatened, or any claim whatsoever) to which
we
may become subject as a result of our liquidation and dissolution, but only
to
the extent there are not available funds outside of the trust account sufficient
to consummate our dissolution and liquidation.
Board
Committees
Our
board
of directors intends to establish an audit committee and a compensation
committee upon consummation of a business combination. At that time our board
of
directors intends to adopt charters for these committees.
Code
of Conduct
We
have
adopted a code of conduct and ethics applicable to our directors, officers
and
employees in accordance with applicable federal securities laws.
Executive
Compensation
No
executive officer has received any cash compensation for services rendered.
No
compensation of any kind, including finder’s and consulting fees, will be paid
to any of our existing stockholders, including our officers and directors,
or
any of their respective affiliates, for services rendered prior to or in
connection with a business combination. However, these individuals will be
reimbursed for any out-of-pocket expenses incurred in connection with activities
on our behalf such as identifying potential target businesses and performing
due
diligence on suitable business combinations. There is no limit on the amount
of
these out-of-pocket expenses and there will be no review of the reasonableness
of the expenses by anyone other than our board of directors, which includes
persons who may seek reimbursement, or a court of competent jurisdiction if
such
reimbursement is challenged. If all of our directors are not deemed
“independent,” we will not have the benefit of independent directors examining
the propriety of expenses incurred on our behalf and subject to
reimbursement.
We
maintain executive offices at 500 East Pratt Street, Suite 1200, Baltimore,
MD
21202 and our telephone number is (410) 878-6800. The costs for this space
is
included in the $7,500 per-month fee Camden Learning, LLC charges us for
general
and administrative services, including but not limited to receptionist,
secretarial and general office services,
pursuant to a letter agreement between us and Camden Learning, LLC. We believe,
based on fees for similar services in the greater Baltimore, Maryland
metropolitan area, that the fee charged by Camden Learning, LLC is at least
as
favorable as we could have obtained from an unaffiliated person.
Conflicts
of Interest
Potential
investors should be aware of the following potential conflicts of
interest:
|
·
|
None
of our officers or directors is required to commit their full time
to our
affairs and, accordingly, they may have conflicts of interest in
allocating management time among various business
activities.
|
|
·
|
In
the course of their other business activities, our officers and directors
may become aware of investment and business opportunities which may
be
appropriate for presentation to us as well as the other entities
with
which they are affiliated. They may have conflicts of interest in
determining to which entity a particular business opportunity should
be
presented. For a complete description of our management’s other
affiliations, see the previous section entitled “Directors and Executive
Officers.”
|
|
·
|
Our
officers and directors may in the future become affiliated with entities,
including other blank check companies, engaged in business activities
similar to those intended to be conducted by
us.
|
|
·
|
Since
our directors own shares of our common stock which will be released
from
escrow only in certain limited situations, and certain of them and
their
designees are purchasing warrants in the private placement as to
which
they (as well as our existing stockholders) are waiving their redemption
and liquidation rights, our board may have a conflict of interest
in
determining whether a particular target business is appropriate to
effect
a business combination. The personal and financial interests of our
directors and officers may influence their motivation in identifying
and
selecting a target business and completing a business combination
timely.
|
|
·
|
Our
sponsor has informed us it intends to purchase 250,000 units in
this
offering, although it is under no obligation to do so. Our sponsor
has
entered into an agreement with the representative of the underwriters
pursuant to which it will place limit orders to purchase up to
$4,000,000
of our common stock in the open market commencing ten business
days after
we file our current report on Form 8-K announcing our execution
of a
definitive agreement for a business combination and ending on the
business
day immediately preceding the date of the meeting of stockholders
at which
a business combination is to be approved. Such open market purchases
will
be made in accordance with Rule 10b-18 under the Securities Exchange
Act
of 1934, as amended, at a price per share of not more than the
per share
amount held in the trust account (less taxes payable) as reported
in such
8-K and will be made by a broker-dealer mutually agreed upon by
our
sponsor and the representative of the underwriters in such amounts
and at
such times as such broker-dealer may determine, in its sole discretion,
so
long as the purchase price does not exceed the above-referenced
per share
purchase price. Our
sponsor has agreed to vote all such shares of common stock purchased
in
the open market in favor of our initial business combination. Unless
a
business combination is approved by our stockholders, our sponsor
has
agreed not to sell such shares, provided it will be entitled to
participate in any liquidating distributions with respect to the
shares
purchased in the open market. In
the event our sponsor does not purchase $4,000,000 of our common
stock
through those open market purchases, our sponsor has agreed to
purchase
from us in a private placement a number of units identical to the
units
offered hereby at a purchase price of $8.00 per unit until it has
spent an
aggregate of $4,000,000 in the open market purchases described
above and
this co-investment. This co-investment will occur immediately prior
to our
consummation of a business combination, which will not occur until
after
the signing of a definitive business combination agreement and
the
approval of that business combination by a majority of our public
stockholders.
|
In
general, officers and directors of a corporation incorporated under the laws
of
the State of Delaware are required to present business opportunities to a
corporation if:
|
·
|
the
corporation could financially undertake the
opportunity;
|
|
·
|
the
opportunity is within the corporation’s line of business;
and
|
|
·
|
it
would not be fair to the corporation and its stockholders for the
opportunity not to be brought to the attention of the
corporation.
|
As
a
result of multiple business affiliations, our officers and directors may
have
similar legal obligations relating to presenting business opportunities meeting
the above-listed criteria to multiple entities. In addition, conflicts of
interest may arise when our board evaluates a particular business opportunity
with respect to the above-listed criteria. We cannot assure you any of the
above
mentioned conflicts will be resolved in our favor.
Each
of
our officers and directors has pre-existing fiduciary obligations to other
businesses of which they are officers or directors. To the extent they identify
business opportunities which may be suitable for the entities to which they
owe
a pre-existing fiduciary obligation, our officers and directors will honor
those
fiduciary obligations, subject to the “right of first refusal” described below.
Accordingly, they may not present opportunities to us that otherwise may
be
attractive to us unless the entities to which they owe a pre-existing fiduciary
obligation and any successors to such entities have declined to accept such
opportunities.
As
set
forth herein, certain of our directors and officers are directors of companies,
both public and private, which may perform business activities in the education
industry similar to those which we may perform after consummating a business
combination. In
order
to minimize potential conflicts of interest which may arise from these
multiple entity affiliations, each of our officers and directors has agreed,
until the earlier of a business combination, our dissolution and liquidation
to
our public stockholders of the trust account or such time as he or she ceases
to
be an officer or director, to present to us for our consideration, prior
to
presentation to any other entity, any business opportunity which may reasonably
be required to be presented to us under Delaware law (as described above),
subject to any pre-existing fiduciary or contractual obligations he or she
has
and the “right of first refusal” described below. We have also adopted a code of
ethics that obligates our directors, officers and employees to disclose
potential conflicts of interest and prohibits those persons from engaging
in
such transactions without our consent. At
the
first meeting of the board of directors promptly following the closing of
this
offering, we intend to establish policies and procedures for seeking appropriate
business acquisition candidates. As part of our intended processes, we may
create a contact database indicating the materials received by any potential
target candidates, when such materials were evaluated, the parties primarily
responsible for such evaluation and the reasons such candidate was either
rejected or the issues that, upon initial evaluation, require further
investigation. As the evaluation process progresses, numerous other factors,
which are expected to vary with each potential candidate we evaluate, are
expected to be relevant to a final determination of whether to move forward
with
any particular acquisition candidate.
David
L.
Warnock serves on the boards of directors of American Public Education, Inc.
and
Nobel Learning Communities, Inc., and both he and Mr. Hughes serve on the
boards
of directors of New Horizons Worldwide, Inc. and Questar Assessment, Inc.,
formerly Touchstone Applied Science Associates, all of which are portfolio
companies of one or both of the Camden III Funds in the education industry.
Both
Messrs. Warnock and Hughes have a pre-existing fiduciary duty to each of
these
companies and may
not
present opportunities to us that otherwise may be attractive to us unless
these
entities have declined to accept such opportunities.
Messrs.
Warnock and Hughes also have fiduciary obligations to the Camden III Funds.
The
Camden III Funds are private equity funds focused on investing in micro-cap
public and, to a lesser extent, late stage private companies, in the business
and financial services, healthcare and education industries. In order to
minimize potential conflicts, or the appearance of conflicts, which may arise
from the affiliations that Messrs. Warnock and Hughes have with the Camden
III
Funds, the Camden III Funds have granted us a "right of first refusal" with
respect to an acquisition of voting control of any company or business in
the
education industry whose aggregate fair market value is at least equal to
80% of
the balance of the trust account (less the deferred underwriting discounts
and
commissions and taxes payable), which is the minimum size of a target business
for our initial business combination. Pursuant to this right of first refusal,
each of the Camden III Funds has agreed that it will present any investment
or
purchase opportunity in a company meeting these criteria to a committee of
our
independent directors for our review and that it will not enter into any
agreement to purchase or invest in such company until our committee of
independent directors has had a reasonable period of time to determine whether
or not to pursue such opportunity. This right of first refusal will expire
upon
the earlier of (i) our consummation of an initial business combination or
(ii)
24 months after the consummation of this offering. Furthermore, we have agreed
that any target company with respect to which either of the Camden III Funds
has
initiated any contacts or entered into any discussions, formal or informal,
or
negotiations regarding such company's acquisition prior to the completion
of
this offering will not be a potential acquisition target for us, unless such
Camden III Fund declines to pursue an investment in such
company.
Jack
L.
Brozman is President and Chief Operating Officer of Concorde Career Colleges.
Therese Kreig Crane, Ed.D, currently serves as a trustee for the National
Education Association Foundation and the Western Governors University, as
Chairman of the Board of Directors of Nobel Learning Communities Inc. and
as a
director of Questia Inc. and Tutor.com. Ronald Tomalis is a director and
owner
of The Chartwell Educational Group. While we do not know if any of these
entities will be competitive with us because we do not know if any of these
entities would consider the business combination we would seek, each of these
directors has a pre-existing fiduciary duty to each of these companies and
may
not
present opportunities to us that otherwise may be attractive to us unless
these
entities have declined to accept such opportunities.
We
will
not pursue a business combination with any company that is a portfolio company
of, or otherwise affiliated with, or has received financial investment from,
any
of the private equity firms with which our existing stockholders, executive
officers or directors are affiliated.
In
connection with the vote required for any business combination, all of our
existing stockholders, including all of our officers and directors, have agreed
to vote their respective shares of common stock in the same manner as a majority
of the public stockholders who vote at the special or annual meeting called
for
the purpose of approving a business combination. In addition, all of our
existing stockholders, and the purchasers of our securities in the private
placement, have agreed to waive their respective rights to participate in any
liquidation of our trust account (except with respect to shares of our common
stock acquired by them in connection with this offering or in the aftermarket)
in connection with a dissolution occurring upon our failure to consummate a
business combination.
PRINCIPAL
STOCKHOLDERS
The
following table sets forth information as of the date of this prospectus
regarding the beneficial ownership of our common stock: (a) before the offering
and after the private placement and (b) after the offering and private
placement, to reflect the sale of warrants sold in the private placement and
the
units offered by this prospectus for:
|
·
|
each
person known by us to be the beneficial owner of more than 5% of
our
outstanding shares of common stock;
|
|
·
|
each
of our officers and directors; and
|
|
·
|
all
our officers and directors as a
group.
|
Unless
otherwise indicated, we believe that all persons named in the table have sole
voting and investment power with respect to all shares of common stock
beneficially owned by them.
|
|
|
|
Approximate Percentage
of Outstanding Common Stock
|
|
Name
and Address of Beneficial Owner (1)
|
|
Amount and Nature
of Beneficial
Ownership (2)
|
|
Before the
Offering
|
|
|
After
the Offering (3)
|
|
|
|
|
|
|
|
|
|
|
Camden
Learning, LLC (4)
|
|
1,025,000
|
|
91.1
|
%
|
|
18.22
|
%(5)
|
David
L. Warnock, President, Chief Executive Officer and
Chairman
|
|
0
|
|
—
|
|
|
|
|
Donald
W. Hughes, Chief Financial Officer and Secretary (4)
|
|
0
|
|
|
|
|
|
|
Jack
L. Brozman, Director
|
|
25,000
|
|
2.22
|
%
|
|
.444
|
%
|
Therese
Kreig Crane, Ed.D, Director
|
|
25,000
|
|
2.22
|
%
|
|
.444
|
%
|
Ronald
Tomalis, Director
|
|
25,000
|
|
2.22
|
%
|
|
.444
|
%
|
William
Jews, Director
|
|
25,000
|
|
2.22
|
%
|
|
.444
|
%
|
|
|
|
|
|
|
|
|
|
All
directors and executive officers as a group (6
individuals)
|
|
1,125,000
|
|
100
|
%
|
|
20
|
%
|
(1) |
Unless
otherwise indicated, the business address of each of the individuals
is 500
East Pratt Street, Suite 1200, Baltimore, MD 21202 and our telephone
number is (410) 878-6800.
|
(2) |
The
percentage ownership before and after the offering for all executive
officers and directors does not include the shares of common stock
underlying the insider warrants sold in the private
placement.
|
(3)
|
Assumes
the sale of 4,500,000 units in this offering but not: (a) the exercise
of
the 4,500,000 warrants to purchase shares of our common stock included
in
such units, (b) the exercise of the 2,500,000 warrants sold to our
sponsor
as described herein, (c) the units underlying the purchase option
granted
to Morgan Joseph & Co. Inc.
|
(4)
|
Camden
Learning, LLC is the sponsor, as described herein. The
sole owners and members of our sponsor are Camden Partners Strategic
Fund
III, L.P. (96.01% ownership of the sponsor) and Camden Partners
Strategic
Fund III-A, L.P. (3.99% ownership of the sponsor). The general
partner of
each limited partnership is Camden Partners Strategic III, LLC
and the
managing member of such entity is Camden Partners Strategic Manager,
LLC.
David
L. Warnock, our President, Chief Executive Officer and Chairman,
and
Donald W. Hughes, our Chief Financial Officer and Secretary are
among the
four managing members of Camden
Partners Strategic Manager, LLC, which has sole power to direct
the vote
and disposition of our securities held by the sponsor.
Each of Mr. Warnock and Mr. Hughes disclaims beneficial ownership
of all
shares owned by Camden Learning, LLC.
|
(5)
|
If
our sponsor purchases an additional 250,000 units in the offering,
this
percentage will increase to
22.66%.
|
Our
sponsor has informed us that it intends to purchase 250,000 units in this
offering, although it is under no obligation to do so. Assuming the 250,000
units are purchased in the offering and the $4,000,000 of common stock are
purchased by our sponsor in the open market, and further assuming such open
market purchases of stock occur at the initial trust amount per share of
$7.90
per unit, our existing stockholders, collectively, will beneficially own
33.4%
of the then issued and outstanding shares of common stock. Assuming
neither the 250,000 units nor the $4,000,000 worth of units are purchased,
immediately
after
this offering, our existing stockholders, collectively, will beneficially
own
approximately 20% of the then issued and outstanding shares of our common
stock.
Because of this ownership block, these stockholders may be able to effectively
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.
If
holders of more than 20% of the shares sold in this offering vote against a
proposed business combination and seek to exercise their redemption rights
and
such business combination is consummated, our existing stockholders have agreed
to forfeit, on a pro rata basis, and return to us for cancellation, a number
of
the initial 1,125,000 shares of our common stock purchased, up to a maximum
of
140,625 shares, so that the existing stockholders will collectively own no
more
than 23.81% (without regard to any purchase of units in this offering, any
open
market purchases or private purchases of units by the sponsor directly from
us,
as set forth elsewhere herein) of our outstanding common stock immediately
prior
to the consummation of such business combination after giving effect to the
redemption.
In
addition, if we take advantage of increasing the size of the offering pursuant
to Rule 462(b) under the Securities Act, we may effect a stock dividend in
such
amount to maintain the existing stockholders’ collective ownership at 20% of our
issued and outstanding shares of common stock upon consummation of the offering.
If we decrease the size of the offering we will effect a reverse split of our
common stock in such amount to maintain the existing stockholders allocated
ownership at 20% of our issued and outstanding common stock upon the
consummation of this offering.
Subject
to the possible forfeiture of shares described above, all of the shares of
our
common stock outstanding prior to the date of this prospectus will be placed
in
escrow with Continental Stock Transfer & Trust Company, as escrow agent,
until the earlier of:
|
·
|
one
year following consummation of a business combination;
or
|
|
·
|
the
consummation of a liquidation, merger, stock exchange or other similar
transaction which results in all of our stockholders having the right
to
exchange their shares of common stock for cash, securities or other
property subsequent to our consummating a business combination with
a
target business.
|
During
the escrow period, the holders of these shares will not be able to sell or
transfer their securities except to their spouses and children or trusts
established for their benefit, but will retain all other rights as our
stockholders including, without limitation, the right to vote their shares
of
common stock 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
placed in escrow. If we are unable to effect a business combination and
liquidate, none of our existing stockholders will receive any portion of the
liquidation proceeds with respect to common stock owned by them prior to the
date of this prospectus or purchased in the private placement.
The
warrants to be purchased by our sponsor in the private placement will contain
restrictions prohibiting their transfer until the earlier of the 90th day
following consummation of a business combination or our liquidation and will
be
held in escrow by Morgan Joseph & Co. Inc. until such time.
In
addition to the 250,000 units our sponsor has indicated it intends to purchase
in the offering, our sponsor has entered into an agreement with the
representative of the underwriters pursuant to which it will place limit
orders
to purchase up to $4,000,000 of our common stock in the open market commencing
ten business days after we file our current report on Form 8-K announcing
our
execution of a definitive agreement for a business combination and ending
on the
business day immediately preceding the date of the meeting of stockholders
at
which a business combination is to be approved. Such purchases will be made
in
accordance with Rule 10b-18 under the Securities Exchange Act of 1934, as
amended, at a price per share of not more than the per share amount held
in the
trust account (less taxes payable) as reported in such 8-K and will be made
by a
broker-dealer mutually agreed upon by our sponsor and the representative
of the
underwriters in such amounts and at such times as such broker-dealer may
determine, in its sole discretion, so long as the purchase price does not
exceed
the above-referenced per share purchase price. Our
sponsor has agreed to vote all such shares of common stock purchased in the
open
market in favor of our initial business combination. Unless a business
combination is approved by our stockholders, our sponsor has agreed not to
sell
such shares, provided it will be entitled to participate in any liquidating
distributions with respect to the shares purchased in the open market.
In
the
event our sponsor does not purchase $4,000,000 of our common stock through
those
open market purchases, our sponsor has agreed to purchase from us in a private
placement a number of units identical to the units offered hereby at a purchase
price of $8.00 per unit until it has spent an aggregate of $4,000,000 in
the
open market purchases described above and this co-investment. This co-investment
will occur immediately prior to our consummation of a business combination,
which will not occur until after the signing of a definitive business
combination agreement and the approval of that business combination by a
majority of our public stockholders. Our
sponsor, whose sole owners are the Camden III Funds, has agreed to such
purchases because the managing members of the general partner of the Camden
III Funds, including David L. Warnock, our Chairman, President and Chief
Executive Officer and Donald W. Hughes, our Chief Financial Officer and
Secretary, want the Camden III Funds to have
a substantial cash investment in us, including any target business we may
acquire.
All
of
our directors will be deemed to be our “parents” and “promoters” as these terms
are defined under the federal securities laws.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
In
April,
2007, we issued 1,125,000 shares of our common stock as set forth below for
an
aggregate amount of $25,000 in cash, at an average purchase price of
approximately $0.02 per share, as follows:
Name
|
|
Number
of Shares
|
|
Relationship
to Us
|
Camden
Learning, LLC
|
|
1,000,000
|
|
Sponsor.
Donald W. Hughes and David L. Warnock are among the four managing
members
of the managing member of Camden Learning, LLC.
|
Jack
L. Brozman
|
|
25,000
|
|
Director
|
Therese
Kreig Crane, Ed.D
|
|
25,000
|
|
Director
|
Ronald
Tomalis
|
|
25,000
|
|
Director
|
William
Jews
|
|
25,000
|
|
Director
|
Harry
T. Wilkins
|
|
25,000
|
|
Director
|
On
July
3, 2007, Mr. Wilkins resigned as a director and transferred, for a purchase
price of $.02 per share, an aggregate of 25,000 shares of common stock to
Camden
Learning, LLC such that our current share ownership is as reflected in the
section entitled “Principal Stockholders.”
In
addition, if we take advantage of increasing the size of the offering pursuant
to Rule 462(b) under the Securities Act, we may effect a stock dividend in
such
amount to maintain the existing stockholders’ collective ownership at 20% of our
issued and outstanding shares of common stock upon consummation of the offering.
If we reduce the size of the offering we may effect a reverse stock split of
our
common stock in order to maintain the existing stockholders allocated ownership
at 20% of our issued and outstanding common stock upon the consummation of
this
offering.
The
holders of the majority of these shares will be entitled to require us, on
up to
two occasions, to register these shares pursuant to an agreement to be signed
prior to or on the date of this prospectus. The holders of the majority of
these
shares may elect to exercise these registration rights at any time after the
date on which these shares of common stock are released from escrow, which,
except in limited circumstances, is not before one year from the consummation
of
a business combination. In addition, these stockholders have certain
“piggy-back” registration rights on registration statements filed subsequent to
the date on which these shares of common stock are released from escrow. We
will
bear the expenses incurred in connection with the filing of any such
registration statements.
Our
sponsor has agreed to purchase 2,500,000 warrants from us at a purchase price
of
$1.00 per warrant in a private placement pursuant to Regulation D of the
Securities Act that will occur immediately prior to this offering. We have
granted the holders of such warrants demand and “piggy-back” registration rights
with respect to the warrants and shares of common stock underlying such warrants
at any time commencing on the date we announce we have entered into a letter
of
intent with respect to a proposed business combination, provided, however,
any
such registration will not become effective prior to completion of our initial
business combination. The demand registration may be exercised by the holders
of
a majority of such warrants. We will bear the expenses incurred in connection
with the filing of any such registration statements. The insider warrants will
not be subject to redemption and may be exercised on a "cashless" basis if
held
by the initial holder thereof or its permitted assigns.
Our
sponsor has informed us it intends to purchase 250,000 units in this offering,
although it is under no obligation to do so. Our sponsor has entered into
an
agreement with the representative of the underwriters pursuant to which it
will
place limit orders to purchase up to $4,000,000 of our common stock in the
open
market commencing ten business days after we file our current report on Form
8-K
announcing our execution of a definitive agreement for a business combination
and ending on the business day immediately preceding the date of the meeting
of
stockholders at which a business combination is to be approved. Such open
market
purchases will be made in accordance with Rule 10b-18 under the Securities
Exchange Act of 1934, as amended, at a price per share of not more than the
per
share amount held in the trust account (less taxes payable) as reported in
such
8-K and will be made by a broker-dealer mutually agreed upon by our sponsor
and
the representative of the underwriters in such amounts and at such times
as such
broker-dealer may determine, in its sole discretion, so long as the purchase
price does not exceed the above-referenced per share purchase price. Our
sponsor has agreed to vote all such shares of common stock purchased in the
open
market in favor of our initial business combination. Unless a business
combination is approved by our stockholders, our sponsor has agreed not to
sell
such shares, provided it will be entitled to participate in any liquidating
distributions with respect to the shares purchased in the open market.
In
the
event our sponsor does not purchase $4,000,000 of our common stock through
those
open market purchases, our sponsor has agreed to purchase from us in a private
placement a number of units identical to the units offered hereby at a purchase
price of $8.00 per unit until it has spent an aggregate of $4,000,000 in
the
open market purchases described above and this co-investment. This co-investment
will occur immediately prior to our consummation of a business combination,
which will not occur until after the signing of a definitive business
combination agreement and the approval of that business combination by a
majority of our public stockholders. The co-investment units may not be sold,
assigned or transferred unless and until our stockholders approve a business
combination.
In
order
to protect the amounts held in the trust account, our sponsor has agreed to
indemnify us for claims of any vendors, service providers, prospective target
businesses or creditors that have not executed a valid and binding waiver of
any
right or claim to the amounts in trust account. As
further assurance our sponsor will have the necessary funds required to meet
these indemnification obligations, (i) the Camden III Funds have agreed, under
our sponsor’s limited liability company agreement, to make capital contributions
to our sponsor as and when required in order for the sponsor to fulfill its
indemnification obligations and (ii) our sponsor has agreed to take all such
action reasonably necessary to request its members make such capital
contributions. Additionally, in the event either of the Camden III Funds
undertakes a liquidating distribution while the indemnification obligations
of
the sponsor are outstanding, they have agreed, in our sponsor’s limited
liability company agreement, to use reasonable efforts to set aside from such
distribution, adequate reserves to cover the reasonably anticipated liabilities
which may be incurred by our sponsor. We and the representative of the
underwriters are named as express third party beneficiaries in and with respect
to the provisions of our sponsor’s limited liability company agreement which
require the Camden III Funds to make such capital contributions and establish
such reserves. Despite these obligations, we cannot assure you the sponsor
or
the Camden III Funds will be able to satisfy those obligations, if required
to
do so.
As
of the
date of this prospectus, our sponsor has loaned us a total of $200,000, which
was used to pay a portion of the expenses of this offering, such as SEC
registration fees, NASD registration fees, blue sky fees and certain legal
and
accounting fees and expenses. This loan will be payable, with interest on the
earlier of April 26, 2008 or the consummation of this offering. The
loan
will be repaid out of the net proceeds of this offering not being placed in
trust.
We
maintain executive offices at 500 East Pratt Street, Suite 1200, Baltimore,
MD
21202 and our telephone number is (410) 878-6800. The costs for this space
is
included in the $7,500 per month fee Camden Learning, LLC charges us for
general
and administrative services, including but not limited to receptionist,
secretarial and general office services, pursuant to a letter agreement between
us and Camden Learning, LLC. This agreement commences on the date of this
prospectus and shall continue until the earliest to occur of: (i) consummation
of a business combination, (ii) 24 months after the completion of this offering
if no business combination has been consummated and (iii) the date on which
we
cease our corporate existence in accordance with our amended and restated
certificate of incorporation. We believe, based on fees for similar services
in
the greater Baltimore, Maryland metropolitan area, that the fee charged by
Camden Learning, LLC is at least as favorable as we could have obtained from
an
unaffiliated person.
We
will
reimburse our officers and directors 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 businesses and business
combinations. There is no limit on the amount of accountable out-of-pocket
expenses reimbursable by us, which will be reviewed only by our board or a
court
of competent jurisdiction if such reimbursement is challenged.
Other
than the reimbursable out-of-pocket expenses payable to our officers and
directors, no compensation or fees of any kind, including finders and consulting
fees, will be paid to any of our existing stockholders, officers or directors
who owned our common stock prior to this offering, or to any of their respective
affiliates for services rendered to us prior to or with respect to the business
combination.
Our
existing stockholders will not receive reimbursement for any out-of- pocket
expenses incurred by them to the extent that such expenses exceed the amount
in
the trust account unless the business combination is consummated and there
are
sufficient funds available for reimbursement after such consummation. The
financial interest of such persons could influence their motivation in selecting
a target business and thus, there may be a conflict of interest when determining
whether a particular business combination is in the stockholders’ best
interest.
After
the
consummation of a business combination, if any, to the extent our management
remains as officers of the resulting business, we anticipate that our officers
and directors may enter into employment or consulting agreements, the terms
of
which shall be negotiated and which we expect to be comparable to employment
or
consulting agreements with other similarly-situated companies in the industry
in
which we consummate a business combination. 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 industry
in
which we consummate a business combination.
All
ongoing and future transactions between us and any of our officers and directors
or their respective affiliates, including loans by our officers and directors,
will be on terms believed by us to be no less favorable than are available
from
unaffiliated third parties and such transactions or loans, including any
forgiveness of loans, will require prior approval in each instance by a majority
of our uninterested “independent” directors (to the extent we have any) 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.
DESCRIPTION
OF SECURITIES
General
We
are
authorized to issue 20,000,000 shares of common stock, par value $.0001, and
1,000,000 shares of preferred stock, par value $.0001. As of the date of this
prospectus, 1,125,000 shares of common stock are outstanding, held by six record
holders. No shares of preferred stock are currently outstanding.
Units
Each
unit
consists of one share of common stock and one warrant. Each warrant entitles
the
holder to purchase one share of common stock. The common stock and warrants
shall begin to trade separately on the 90th day
after
the date of this prospectus unless Morgan Joseph & Co. Inc. informs us of
its decision to allow earlier separate trading, provided that in no event may
the common stock and warrants be traded separately until the business day after
(i) we file an audited balance sheet reflecting our receipt of the gross
proceeds of this offering and the private placement, including any proceeds
we
receive from the exercise of the over-allotment option, if such option is
exercised on the date of this prospectus, (ii) we file a Current Report on
Form
8-K and issue a press release announcing when such separate trading will begin
and (iii) the expiration of the underwriters over-allotment option or its
exercise in full. We will file a Current Report on Form 8-K which includes
this
audited balance sheet upon the consummation of this offering. The audited
balance sheet will reflect proceeds we receive from the exercise of the
over-allotment option, if the over-allotment option is exercised on the date
of
this prospectus. In the event all or any portion of the over-allotment option
is
exercised after the date of this prospectus, we will file an additional Current
Report on Form 8-K to disclose our receipt of the net proceeds from any such
exercise.
Common
Stock
Our
stockholders are entitled to one vote for each share held of record on all
matters to be voted on by stockholders. In connection with the vote required
for
any business combination, all of our existing stockholders, including all of
our
officers and directors, have agreed to vote their respective shares of common
stock owned by them immediately prior to this offering in accordance with the
vote of the public stockholders owning a majority of the shares of our common
stock cast at the meeting. Our existing stockholders have agreed to vote all
the
shares of our common stock acquired in this offering or in the aftermarket
in
favor of any transaction our officers negotiate and present for approval to
our
stockholders. Our existing stockholders have also agreed to waive their rights
to participate in any liquidation occurring upon our failure to consummate
a
business combination, but only with respect to those shares of common stock
acquired by them prior to this offering. Our existing stockholders, officers
and
directors will vote all of their shares in any manner they determine, in their
sole discretion, with respect to any other items that come before a vote of
our
stockholders.
We
will
proceed with a business combination only if a majority of the shares of common
stock cast at the meeting are voted in favor of the business combination, and
public stockholders owning less than 30% of the shares sold in this offering
exercise their redemption rights discussed below. Voting against the business
combination alone will not result in redemption of a stockholder’s shares into a
pro rata share of the trust account. Such stockholder must have also exercised
its redemption rights described below. Our threshold for redemption has been
established at 30% in order for our offering to be competitive with other blank
check company offerings. However, to date a 20% threshold has been more typical
for offerings of this type. We have selected the higher threshold to reduce
the
risk of a small group of stockholders exercising undue influence on the
stockholder approval process.
Our
board
of directors is divided into two classes, each of which will generally serve
for
a term of two years with only one class of directors being elected in each
year.
There is no cumulative voting with respect to the election of directors, with
the result that the holders of more than 50% of the shares voted for the
election of directors can elect all of the directors.
If
we are
forced to liquidate our trust account, our public stockholders are entitled
to
share ratably in the trust account, inclusive of any interest, if any, not
previously paid to us, after taxes, if any. The term public stockholders means
the holders of common stock sold as part of the units in this offering or
acquired in the open market, but excludes our officers and directors or their
nominees or designees with respect to the shares owned by them prior to this
offering since they have waived their redemption and right to liquidation
distributions from our trust account in connection with our dissolution as
part
of our plan of dissolution and liquidation with respect to these
shares.
Our
existing stockholders have also agreed to waive their respective rights to
participate in any liquidation of the trust account in connection with our
dissolution occurring upon our failure to consummate a business combination
as
well as to vote for any plan of dissolution and liquidation submitted to our
stockholders with respect to those shares of common stock acquired by them
prior
to this offering.
Our
stockholders have no redemption, preemptive or other subscription rights and
there are no sinking fund or redemption provisions applicable to the common
stock, except that public stockholders have the right to have their shares
of
common stock redeemed for 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. Public stockholders who redeem their
shares of common stock into their share of the trust account still have the
right to exercise the warrants that they received as part of the
units.
Due
to
the fact that we currently have 20,000,000 shares of common stock authorized,
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 or other
rights of the holders of common stock, although 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 the preferred stock to effect a business combination. In
addition, the preferred stock could be utilized as a method of discouraging,
delaying or preventing a change in control of us. 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
No
warrants are currently outstanding. Each warrant included in the units sold
in
this offering and the private placement entitles the registered holder to
purchase one share of our common stock at a price of $6.00 per share, subject
to
adjustment as discussed below, at any time commencing on the later
of:
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·
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the
completion of a business combination;
or
|
|
·
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one
year from the date of this
prospectus.
|
However,
the warrants will be exercisable only if a registration statement relating
to
the common stock issuable upon exercise of the warrants is effective and
current. The warrants will expire on [ ], 2011 at 5:00 p.m., New York City
time.
The
warrants may trade separately on the 90th trading day after the date of this
prospectus, unless Morgan Joseph & Co. Inc. determines that an earlier date
is acceptable; provided, however, that in no event may the common stock and
warrants be traded separately until we have filed a Current Report on Form
8-K
which includes an audited balance sheet reflecting our receipt of the proceeds
of this offering and the private placement, including any proceeds we receive
from the exercise of the over-allotment option if such option is exercised
on
the date of this prospectus. In the event all or any portion of the
over-allotment option is exercised after the date of this prospectus, we will
file an additional Current Report on Form 8-K to disclose our receipt of the
net
proceeds from any such exercise.
The
warrants comprising part of the units (including any warrants issued to Morgan
Joseph & Co. Inc. as part of its unit purchase option) may be
redeemed:
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·
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in
whole and not in part;
|
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·
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at
a price of $0.01 per warrant
|
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·
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at
any time while the warrants are
exercisable;
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·
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upon
not less than 30 days’ prior written notice of redemption to each warrant
holder; and
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·
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if,
and only if, the last closing sales price of our Common Stock equals
or
exceeds $11.50 per share for any 20 trading days within a 30 trading
day
period ending three business days before we send the notice of
redemption.
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We
have
established this last criterion to provide warrant holders with a premium to
the
initial warrant exercise price as well as a degree of liquidity to cushion
the
market reaction, if any, to our redemption call. If the foregoing conditions
are satisfied and we call the warrants for redemption, each warrant holder
shall
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, 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
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 and we will not be obligated to issue shares of
common stock thereunder unless, at the time a holder seeks to exercise such
warrant, a registration statement relating to common stock issuable upon
exercise of the warrants is effective and 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 meet these conditions and use our best 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 until the expiration of the
warrants or if the common stock is not qualified or exempt from qualification
in
the jurisdictions in which the holders of the warrants reside, and therefore
are
unable to deliver registered shares, holders of warrants will not be able to
exercise their warrants, the market for the warrants may be limited, and the
warrants may expire worthless. In no event will the holder 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 warrants sold in the private placement were originally issued pursuant
to an
exemption from the registration requirements under the federal securities laws,
the holders of the warrants purchased in the 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, holders of the warrants purchased in this offering will not
be
able to exercise them unless we have a current registration statement covering
the shares issuable upon their exercise.
No
fractional shares will be issued upon exercise of the warrants. If, upon
exercise of the warrants, a holder would be entitled to receive a fractional
interest in a share, we will, upon exercise, round up to the nearest whole
number the number of shares of common stock to be issued to the warrant
holder.
Unit
Purchase Option
We
have
agreed to issue to Morgan Joseph & Co. Inc., as additional compensation, an
option to purchase up to 10% of the number of units sold in the offering, up
to
a maximum of 450,000 units. The units are identical to those offered by this
prospectus. For a more complete description of the purchase option, see the
section entitled “ Underwriting --
Purchase
Option.”
Dividends
We
have
not paid any dividends on our common stock to date and do not intend to pay
dividends prior to the completion of a business combination. The payment of
dividends in the future will be contingent 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.
Our
Transfer Agent and Warrant Agent
The
transfer agent for our securities and warrant agent for our warrants is
Continental Stock Transfer & Trust Company.
Shares
Eligible for Future Sale
Immediately
after this offering, we will have 5,625,000 shares of common stock outstanding,
or 6,300,000 shares if the underwriters’ over-allotment option is exercised in
full. Of these shares, the 4,500,000 shares sold in this offering, or 5,175,000
shares if the over-allotment option is exercised in full, will be freely
tradable without restriction or further registration under the Securities Act,
except for any shares purchased by one of our affiliates within the meaning
of
Rule 144 under the Securities Act. All of the remaining 1,125,000 shares are
restricted securities under Rule 144, in that they were issued in private
transactions not involving a public offering, and will not be eligible for
sale
under Rule 144. Notwithstanding this, all of those shares have been placed
in
escrow and will not be transferable until one year from the date of consummation
of a business combination, and will only be released prior to that date subject
to certain limited exceptions such as our liquidation prior to a business
combination (in which case the certificate representing such shares will be
destroyed), and the consummation of a liquidation, merger, stock exchange or
other similar transaction which results in all of our stockholders having the
right to exchange their shares of common stock for cash, securities or other
property subsequent to our consummating a business combination with a target
business.
Rule
144
In
general, under Rule 144 as currently in effect, a person who has beneficially
owned restricted shares of our common stock for at least one year would be
entitled to sell within any three-month period a number of shares that does
not
exceed the greater of either of the following:
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·
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1%
of the number of shares of common stock then outstanding, which will
equal
56,250 shares immediately after this offering (or 63,000 if the
underwriters’ exercise their over-allotment option in full);
and
|
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·
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the
average weekly trading volume of the common stock during the four
calendar
weeks preceding the filing of a notice on Form 144 with respect to
the
sale.
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Sales
under Rule 144 are also limited by manner of sale provisions and notice
requirements and to the availability of current public information about
us.
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 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 without complying with the manner of sale,
public information, volume limitation or notice provisions of Rule
144.
SEC
Position on Rule 144 Sales
The
Securities and Exchange Commission has taken the position that promoters or
affiliates of a blank check company and their transferees, both before and
after
a business combination, would act as an “underwriter” under the Securities Act
when reselling the securities of a blank check company. Accordingly, the
Securities and Exchange Commission 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.
Registration
Rights
The
holders of our 1,125,000 issued and outstanding shares of common stock on the
date of this prospectus will be entitled to registration rights pursuant to
an
agreement to be signed prior to or on the effective date of this offering.
The
holders of the majority of these shares are entitled to require us, on up to
two
occasions, to register these shares. The holders of the majority of these shares
can elect to exercise these registration rights at any time after the date
on
which these shares of common stock are released from escrow. In addition, these
stockholders have certain “piggy-back” registration rights on registration
statements filed subsequent to the date on which these shares of common stock
are released from escrow. We will bear the expenses incurred in connection
with
the filing of any such registration statements.
Our
sponsor has agreed to purchase 2,500,000 warrants from us at a purchase price
of
$1.00 per warrant in a private placement that will occur immediately prior
to
this offering. We have granted the holders of such warrants demand and
“piggy-back” registration rights with respect to the 2,500,000 warrants and
shares of common stock underlying the warrants at any time commencing on the
date we announce that we have entered into a letter of intent with respect
to a
proposed business combination, provided, however, any such registration shall
not become effective until our business combination has been completed. The
demand registration may be exercised by the holders of a majority of such
warrants. We will bear the expenses incurred in connection with the filing
of
any such registration statements. The insider warrants will not be subject
to
redemption and may be exercised on a "cashless" basis if held by the initial
holder thereof or its permitted assigns.
Our
Amended and Restated Certificate of Incorporation
Our
amended and restated certificate of incorporation 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:
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·
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requirement
that all proposed business combinations be presented to stockholders
for
approval regardless of whether or not Delaware law requires such
a
vote;
|
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·
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prohibition
against completing a business combination if 30% or more of our
stockholders exercise their redemption rights in lieu of approving
a
business combination;
|
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·
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the
right of stockholders voting against a business combination to surrender
their shares for a pro rata portion of the trust account in lieu
of
participating in a proposed business
combination;
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· |
a
requirement that in the event we do not consummate a business combination
by _________________[24
months from
the date of this prospectus],
the company will dissolve, at which point our purpose and powers
will be
limited to dissolving, liquidating and winding up; provided, however,
that
we will reserve our rights under Section 278 of the Delaware General
Corporation Law to bring or defend any action, suit or proceeding
brought
by or against us;
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requirement
that our management take all actions necessary to liquidate our trust
account to our public stockholders as part of our plan of dissolution
and
liquidation in the event we do not consummate a business combination
by
________________[24
months after the consummation of this offering];
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·
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limitation
on stockholders’ rights to receive a portion of the trust account so that
they may only receive a portion of the trust account upon liquidation
of
our trust account to our public stockholders as part of our plan
of
dissolution and liquidation or upon the exercise of their redemption
rights; and
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·
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the
bifurcation of our board of directors into two classes and the
establishment of related procedures regarding the standing and election
of
such directors.
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Our
amended and restated certificate of incorporation and the underwriting agreement
we will enter into with Morgan Joseph & Co. Inc. in connection with the
consummation of this offering prohibit the amendment or modification of any
of
the foregoing provisions prior to the consummation of a business combination
without the prior approval of 95% of the
shares purchased in this offering.
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 the 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 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, 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
to 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 without the prior approval of
95%
of the
shares purchased in this offering.
UNDERWRITING
Underwriters
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Number of Units
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Morgan
Joseph & Co. Inc.
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Total
|
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4,500,000
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A
copy of
the underwriting agreement has been filed as an exhibit to the registration
statement of which this prospectus forms a part.
The
underwriters may deliver prospectuses via e-mail both as a PDF document and
by a
link to the Securities and Exchange Commission’s website and websites hosted by
the underwriters and other parties, and the prospectus may also be made
available on websites maintained by selected dealers and selling group members
participating in this offering. The underwriters may agree to allocate a number
of units to underwriters and selling group members for sale to their online
brokerage account holders. Internet distributions may be allocated by the
representative to underwriters and selling group members that may make Internet
distributions on the same basis as other allocations.
State
Blue Sky Information
We
will
offer and sell the units to retail customers only in Colorado, Delaware, the
District of Columbia, Florida, Georgia, Hawaii, Illinois, Louisiana, New York,
Rhode Island and Wyoming. We have applied to have the units registered for
sale,
or we are relying on exemptions from registration in the states mentioned above.
In states that require registration, we will not sell the units to retail
customers in these states until such registration is effective in each of these
states (including in Colorado, pursuant to 11-51-302(6) of the Colorado Revised
Statutes).
If
you
are not an institutional investor, you may purchase our securities in this
offering only in the jurisdictions described directly above. Institutional
investors in every state except in Idaho may purchase the units in this offering
pursuant to exemptions provided to such entities under the Blue Sky laws of
various states. The definition of an “institutional investor” varies from state
to state but generally includes financial institutions, broker-dealers, banks,
insurance companies and other qualified entities.
The
National Securities Markets Improvement Act of 1996 (“NSMIA”), which is a
federal statute, prevents or preempts the states from regulating transactions
in
certain securities, which are referred to as “covered securities”. This federal
statute does allow the states to investigate companies if there is a suspicion
of fraud, and if there is a finding of fraudulent activity, then the states
can
regulate or bar the sale of covered securities in a particular
case.
State
securities laws either require that a company’s securities be registered for
sale or that the securities themselves or the transaction under which they
are
issued, are exempt from registration. When a state law provides an exemption
from registration, it is excusing an issuer from the general requirement to
register securities before they may be sold in that state. States, may by rule
or regulation, place conditions on the use of exemptions, so that certain
companies may not be allowed to rely on the exemption for the sale of their
securities. If an exemption is not available and the securities the company
wishes to sell are not covered securities under the federal statute, then the
company must register its securities for sale in the state in
question.
We
will
file periodic and annual reports under the Securities Exchange Act of 1934,
as
amended. Therefore, under NSMIA, the states and territories of the United States
are preempted from regulating the resale by stockholders of the units, from
and
after the effective date, and the common stock and warrants comprising the
units, once they become separately transferable, because our securities will
be
covered securities. However, NSMIA does allow states and territories of the
United States to require notice filings and collect fees with regard to these
transactions and a state may suspend the offer and sale of securities within
such state if any such required filing is not made or fee is not paid. As of
the
date of this prospectus, the following states do not require any notice filings
or fee payments and stockholders may resell the units, and the common stock
and
warrants comprising the units, once they become separately
transferable:
Alaska,
Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida,
Georgia, Hawaii, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine,
Massachusetts, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, New
Mexico, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina,
South Dakota, Utah, Virginia, Virgin Islands, Washington, West Virginia,
Wisconsin and Wyoming.
Additionally,
the stockholders may resell the units, and the common stock and warrants
comprising the units, once they become separately transferable, if the proper
notice filings have been made and fees paid in the following states: District
of
Columbia, Illinois, Maryland, Michigan, Montana, New Hampshire, North Dakota,
Oregon, Puerto Rico, Rhode Island, Tennessee, Texas and Vermont.
As
of the
date of this prospectus, we have not determined in which, if any, of these
states we will submit the required filings or pay the required fee.
Additionally, if any of the states that have not yet adopted a statute, rule
or
regulation relating to the National Securities Markets Improvement Act adopts
such a statute in the future requiring a filing or fee or if any state amends
its existing statutes, rules or regulations with respect to its requirements,
we
would need to comply with those new requirements in order for the securities
to
continue to be eligible for resale in those jurisdictions.
In
addition, we believe that the units, from and after the effective date, and
the
common stock and warrants comprising the units, once they become separately
transferable, may be eligible for sale on a secondary market basis in various
states, without any notice filings or fee payments, based upon the availability
of an applicable exemption from the state’s registration
requirements.
|
·
|
commencing
90 days after the date of this prospectus in Nevada;
and
|
|
·
|
commencing
180 days from the date of this prospectus in
Alabama.
|
Despite
the exemption from state registration provided by the National Securities
Markets Improvement Act described above, the state of Idaho has advised us
that
it does not recognize this act as a basis for exempting registration of resales
therein of securities issued in blank check offerings.
We
do not
intend to register the resale of the securities sold in this offering in these
states.
We
have
been advised by the representative that the underwriters propose to offer the
units to the public at the initial offering price set forth on the cover
page of this prospectus. It may allow some dealers concessions not in
excess of $[ ] per unit.
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. Factors considered in determining the prices
and terms of the units, including the common stock and warrants underlying
the
units, include:
·
the
history and prospects of companies whose principal business is the acquisition
of other companies;
·
prior
offerings of those companies;
·
our
prospects for acquiring one or more operating businesses at attractive
values;
·
our
capital structure;
·
an
assessment of our management and their experience in identifying operating
companies;
·
general
conditions of the securities markets at the time of the offering;
and
·
other
factors as were deemed relevant.
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.
We
have
granted to the representative of the underwriters an option, exercisable during
the 45-day period commencing on the date of this prospectus, to purchase from
us
at the offering price, less underwriting discounts, up to an aggregate of
675,000 additional units for the sole purpose of covering over-allotments,
if
any. The over-allotment option will only be used to cover the net syndicate
short position resulting from the initial distribution.
The
representative of the underwriters may exercise the over-allotment option if
the
underwriters sell more units than the total number set forth in the table
above.
Commissions
and Discounts
The
following table shows the public offering price, underwriting discount to be
paid by us to the underwriters and the proceeds, before expenses, to us. This
information assumes either no exercise or full exercise by the underwriters
of
their over-allotment option. This information does not reflect the private
placement proceeds to be received by us.
|
|
Per Unit
|
|
Without
Option
|
|
With
Option
|
|
Public
offering price
|
|
$
|
8.00
|
|
$
|
36,000,000
|
|
$
|
41,400,000
|
|
Discount
(1)
|
|
$
|
0.40
|
|
$
|
1,800,000
|
|
$
|
2,070,000
|
|
Deferred
discount
(2)
|
|
$
|
0.16
|
|
$
|
720,000
|
|
$
|
828,000
|
|
Proceeds
before expenses (3)
|
|
$
|
7.44
|
|
$
|
33,480,000
|
|
$
|
38,502,000
|
|
(1)
|
Based
upon the underwriters’ discount of 5% per unit. Does not include an
additional 2% of the gross proceeds from the sale of the units in
this
offering paid to Morgan Joseph & Co. Inc. only upon the consummation
of a business combination (and then only with respect to those units
as to
which the component shares have not been redeemed for cash) which
amounts
are reflected in this table as deferred discount. If a business
combination is not consummated and we automatically dissolve and
subsequently liquidate our trust account, such amounts will not be
paid to
the underwriters, but rather will be distributed among our public
stockholders.
|
(2) |
The
underwriters have agreed to forfeit their deferred underwriting discount
with respect to those units as to which the underlying shares are
redeemed
into cash by those stockholders who voted against the business combination
and exercised their redemption rights upon consummation of a business
combination.
|
(3) |
The
offering expenses are estimated at
$400,000.
|
The
underwriters will initially offer the units to be sold in this offering directly
to the public at the initial public offering price set forth on the cover of
this prospectus and to selected dealers at the initial public offering price
less a selling concession not in excess of
$ per unit. The underwriters may
allow, and the selected dealers may reallow, a concession not in excess of
$ per unit on
sales to brokers and dealers. After the offering, the underwriters may change
the offering price and other selling terms, provided, however, upon execution
of
the underwriting agreement, there will be no changes to the price and terms
of
the sale between the underwriters and us. No change in those terms will change
the amount of proceeds to be received by us as set forth on the cover of this
prospectus.
We
have
agreed to sell to the representative, for $100, an option to purchase up to
a
total of 450,000 units.
The
units
issuable upon exercise of this option are identical to those offered by this
prospectus. This option is exercisable on a cashless basis at $8.80 per unit
commencing on the later of the consummation of a business combination and one
year from the date of this prospectus, and expiring five years from the date
of
this prospectus. The option and the 450,000 units, the 450,000 shares of common
stock and the 450,000 warrants underlying such units, and the 450,000 shares
of
common stock underlying such warrants, have been deemed to be underwriting
compensation by the NASD and are therefore subject to a 180-day lock-up pursuant
to Rule 2710(g)(1) of the NASD Conduct Rules. Morgan Joseph &
Co. Inc. will not sell, transfer, assign, pledge, or hypothecate this option
or
the securities underlying this option, nor will it engage in any hedging, short
sale, derivative, put, or call transaction that would result in the effective
economic disposition of this option or the underlying securities for a period
of
180 days from the effective date of this prospectus.
Additionally,
the option may not be sold, transferred, assigned, pledged or hypothecated
for a
one-year period (including the foregoing 180 day period) following the date
of
this prospectus except to any underwriter and selected dealer participating
in
the offering and their bona fide officers or partners. Although the purchase
option and its underlying securities have been registered on the registration
statement of which this prospectus forms a part, the option grants holders
demand and “piggy back” registration rights for periods of five and seven years,
respectively, from the date of this prospectus. These rights apply to all of
the
securities directly and indirectly issuable upon exercise of the option. We
will
bear all fees and expenses attendant to registering the securities issuable
on
exercise of the option, other than underwriting commissions incurred and payable
by the holders. The exercise price and number of units issuable upon exercise
of
the option may be adjusted in certain circumstances including in the event
of a
share dividend, or our recapitalization, reorganization or
consolidation.
However,
the option exercise price or underlying units will not be adjusted for issuances
of shares of common stock at a price below the option exercise
price.
We
have
estimated, based upon a Black-Scholes model, that the fair value of the option
on the date of sale would be approximately $2,000,000, using an expected
life of
five years, volatility of 63.5%, and a risk-free interest rate of 4.86%.
However, because our units do not have a trading history, the volatility
assumption is based on information currently available to management. We
believe
the volatility estimate calculated is a reasonable benchmark to use in
estimating the expected volatility of our units. Although an expected life
of
five years was used in the calculation, if we do not consummate a business
combination within the prescribed time period and we automatically dissolve
and
subsequently liquidate our trust account, the option will become
worthless.
Regulatory
Restrictions on Purchase of Securities
Rules of
the SEC may limit the ability of the underwriters to bid for or purchase our
securities before the distribution of the securities is completed. However,
the
underwriters may engage in the following activities in accordance with the
rules:
|
· |
Stabilizing
Transactions. The
underwriters may make bids or purchases for the purpose of pegging,
fixing
or maintaining the price of our
securities.
|
|
· |
Over-Allotments
and Syndicate Coverage Transactions. The
underwriters may create a short position in our securities by selling
more
of our securities than are set forth on the cover page of this
prospectus. If the underwriters create a short position during the
offering, the representative may engage in syndicate covering transactions
by purchasing our securities in the open market. The representative
may
also elect to reduce any short position by exercising all or part
of the
over-allotment option.
|
|
· |
Penalty
Bids. The
representative may reclaim a selling concession from a syndicate
member
when the units originally sold by the syndicate member are purchased
in a
stabilizing or syndicate covering transaction to cover syndicate
short
positions.
|
Stabilization
and syndicate covering transactions may cause the price of the securities to
be
higher than they would be in the absence of these transactions. The imposition
of a penalty bid may also have an effect on the prices of the securities if
it
discourages resales.
Neither
we nor the underwriters make any representation or prediction as to the effect
the transactions described above may have on the prices of our securities.
These
transactions may occur on the OTC Bulletin Board, in the over-the-counter market
or on any trading market. If any of these transactions are commenced, they
may
be discontinued without notice at any time.
The
distribution of our securities will end upon the underwriters’ cessation of
selling efforts and stabilization activities, provided, however, in the event
the underwriters were to exercise their over-allotment option to purchase
securities in excess of their actual syndicate short position, the distribution
will not be deemed to have been completed until all of the securities have
been
sold.
In
connection with this offering, the underwriters may distribute prospectuses
electronically. No forms of prospectus other than printed prospectuses and
electronically distributed prospectuses that are printable in Adobe PDF format
will be used in connection with this offering.
For
a
period of no less than two years after the date of the prospectus, we have
granted Morgan Joseph & Co. Inc. the right to have an observer present at
all meetings of our board of directors until we consummate a business
combination. The observer shall be entitled to attend meetings of the board,
receive all notices and other correspondence and communications sent by us
to
members of our board of directors, but will not have voting rights. In addition,
such observer shall be entitled to receive, as his/her sole compensation,
reimbursement for all costs incurred in attending such meetings. Morgan
Joseph & Co. Inc. has not named its observer as of the date of this
prospectus.
Although
they are not obligated to do so, any of the underwriters may introduce us to
potential target businesses or assist us in raising additional capital, as
needs
may arise in the future, but there are no preliminary agreements or
understandings between any of the underwriters and any potential targets. We
are
not under any contractual obligation (oral or written) and have no agreement
or
understanding to engage any of the underwriters to provide any services for
us
after this offering, but if we do engage any of them in the future we may pay
the underwriters a finder’s fee or advisory fee for services that would be
determined at that time in an arm’s length negotiation where the terms would be
fair and reasonable to each of the interested parties; provided that no
agreement will be entered into and no fee will be paid within 90 days following
the date of this prospectus.
We
have
agreed to indemnify the underwriters against some liabilities, including civil
liabilities under the Securities Act of 1933, as amended, or to contribute
to
payments the underwriters may be required to make in this respect.
LEGAL
MATTERS
The
validity of the securities offered in this prospectus is being passed upon
for
us by Ellenoff Grossman & Schole LLP, New York, New York. Such firm has
previously represented Morgan Joseph & Co. Inc. on matters unrelated to this
offering and expects to do so again in the future. McDermott Will & Emery
LLP, New York, New York,
is
acting
as counsel for the underwriters in this offering.
EXPERTS
The
financial statements included in this prospectus and in the registration
statement have been audited by Eisner LLP, an independent registered public
accounting firm, to the extent and for the period set forth in their report
(which contains an explanatory paragraph regarding our ability to continue
as a
going concern) appearing elsewhere in this prospectus and in the registration
statement. The financial statements and the report of Eisner LLP are included
in
reliance upon their report given upon the authority of Eisner LLP as experts
in
auditing and accounting.
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
We
have
filed with the SEC a registration statement on Form S-1, which includes
exhibits, schedules and amendments, under the Securities Act of 1933, as
amended, with respect to this offering of our securities. Although this
prospectus, which forms a part of the registration statement, contains all
material information included in the registration statement, parts of the
registration statement have been omitted as permitted by rules and regulations
of the SEC. We refer you to the registration statement and its exhibits for
further information about us, our securities and this offering. The registration
statement and its exhibits, as well as our other reports filed with the SEC,
can
be inspected and copied at the SEC’s public reference room at 100 F Street,
N.E., Room 1580, Washington, D.C. 20549. The public may obtain information
about
the operation of the public reference room by calling the SEC at 1-800-SEC-0330.
In addition, the SEC maintains a web site at http://www.sec.gov which contains
the Form S-1 and other reports, proxy and information statements and information
regarding issuers that file electronically with the SEC.
CAMDEN
LEARNING CORPORATION
(a
corporation in the development stage)
Index
to
Financial Statements
|
Page
|
Report
of Independent Registered Public Accounting Firm
|
F-2
|
|
|
Financial
Statements:
|
|
|
|
Balance
Sheet as of April 26, 2007
|
F-3
|
|
|
Statement
of Operations for the period from April 10, 2007 (inception) to
April 26,
2007
|
F-4
|
|
|
Statement
of Stockholders' Equity for the period from April 10, 2007 (inception)
to
|
|
April
26, 2007
|
F-5
|
|
|
Statement
of Cash Flows for the period from April 10, 2007 (inception) to
April 26,
2007
|
F-6
|
|
|
|
|
April
26 2007
|
F-7
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the
Directors and Stockholders
Camden
Learning Corporation
We
have
audited the accompanying balance sheet of Camden Learning Corporation, a
corporation in the development stage (the "Company"), as of April 26 2007,
and the related statements of operations, stockholders' equity and cash flows
for the period from April 10, 2007 (inception) through April 26, 2007.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining,
on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In
our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Camden Learning Corporation as
of
April 26, 2007, and the results of its operations and its cash flows for
the period from April 10, 2007 (inception) through April 26, 2007 in
conformity with accounting principles generally accepted in the United States
of
America.
The
accompanying financial statements have been prepared assuming the Company will
continue as a going concern. The Company has generated a net loss, has
liabilities coming due within one year in excess of current assets, and has
no
operations. These factors raise substantial doubt about the Company's ability
to
continue as a going concern. As discussed in Notes 1 and 4, the Company is
in
the process of raising capital through both a proposed public offering and
a
private placement. The financial statements do not include any adjustments
that
might result from the outcome of this uncertainty.
Eisner
LLP
/s/
Eisner LLP
New
York,
New York
April
30,
2007
Camden
Learning Corporation
(a
corporation in the development stage)
Balance
Sheet
April
26, 2007
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash
|
|
$
|
224,444
|
|
Subscription
receivable
|
|
|
556
|
|
Total
current assets
|
|
|
225,000
|
|
|
|
|
|
|
Deferred
offering costs
|
|
|
110,000
|
|
Total
assets
|
|
$
|
335,000
|
|
Liabilities
and Stockholders’ Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accrued
expenses
|
|
$
|
73,500
|
|
Due
to affiliates
|
|
|
37,500
|
|
Note
payable to affiliate (face amount $200,000)
|
|
|
1,000
|
|
Total
current liabilities
|
|
|
112,000
|
|
Commitments
and contingencies
|
|
|
|
Stockholders’
equity
|
|
|
|
Preferred
Stock, $.0001 par value, 1,000,000 shares
|
|
|
|
authorized;
none issued or outstanding
|
|
|
—
|
|
Common
Stock, $.0001 par value, 20,000,000 shares
|
|
|
|
|
authorized;
1,125,000 shares issued and outstanding
|
|
|
113
|
|
Additional
paid-in capital
|
|
|
223,887
|
|
Deficit
accumulated during the development stage
|
|
|
(1,000
|
)
|
Total
stockholders’ equity
|
|
|
223,000
|
|
Total
liabilities and stockholders’ equity
|
|
$
|
335,000
|
|
The
accompanying notes are an integral part of the financial
statements.
Camden
Learning Corporation
(a
corporation in the development stage)
Statement
of Operations
For
the period from April 10, 2007 (inception) to April 26,
2007
Formation
and operating costs
|
|
$
|
1,000
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(1,000
|
)
|
|
|
|
|
|
Basic
and diluted net loss per share
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
Weighted
average shares outstanding - basic and diluted
|
|
|
1,125,000
|
|
The
accompanying notes are an integral part of the financial
statements.
Camden
Learning Corporation
(a
corporation in the development stage)
Statement
of Stockholders’ Equity
For
the period from April 10, 2007 (Inception) to April 26,
2007
|
|
Common
Stock
|
|
Additional
Paid-In
|
|
Deficit
Accumulated
During
the
|
|
Stockholders’
|
|
|
|
|
|
Amount
|
|
Capital
|
|
Development
Stage
|
|
Equity
|
|
Initial
capital from founding stockholders
|
|
|
1,125,000
|
|
$
|
113
|
|
$
|
24,887
|
|
$
|
—
|
|
$
|
25,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount
on note payable to affiliate
|
|
|
|
|
|
|
|
|
199,000
|
|
|
|
|
|
199,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss during the development stage
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,000
|
)
|
|
(1,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at April 26, 2007
|
|
|
1,125,000
|
|
$
|
113
|
|
$
|
223,887
|
|
$
|
(1,000
|
)
|
$
|
223,000
|
|
The
accompanying notes are an integral part of the financial
statements.
Camden
Learning Corporation
(a
corporation in the development stage)
Statement
of Cash Flows
For
the period from April 10, 2007 (inception) to April 26,
2007
Cash
flows from operating activities:
|
|
|
|
Net
loss
|
|
$
|
(1,000
|
)
|
Adjustments
to reconcile net loss to net cash used in operating
activities
|
|
|
|
|
Increase
in accrued expenses
|
|
|
1,000
|
|
Net
cash used in operating activities
|
|
|
—
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
Proceeds
from sale of stock
|
|
|
24,444
|
|
Proceeds
from note payable to affiliate
|
|
|
200,000
|
|
Net
cash provided by financing activities
|
|
|
224,444
|
|
|
|
|
|
|
Net
increase in cash
|
|
|
224,444
|
|
|
|
|
|
|
Cash
at beginning of period
|
|
|
—
|
|
Cash
at end of period
|
|
$
|
224,444
|
|
|
|
|
|
|
Supplemental
Disclosures:
|
|
|
|
|
Non-cash
financing activities:
|
|
|
|
|
Increase
in deferred offering costs and related accrued expenses
|
|
|
|
|
and
due to affiliates
|
|
$
|
110,000
|
|
Additional
paid-in capital from discount on note payable to affiliate
|
|
$
|
199,000
|
|
The
accompanying notes are an integral part of the financial
statements.
Camden
Learning Corporation
(a
corporation in the development stage)
Notes
to Financial Statements
Note
1 - Organization and Nature of Business Operations
Camden
Learning Corporation (the “Company”) is a blank check company incorporated in
the state of Delaware on April 10, 2007 for the purpose of effecting a merger,
capital stock exchange, stock purchase, asset acquisition or other similar
business combination with one or more operating businesses in the education
industry. The Company is majority owned by Camden Learning, LLC, whose members
are Camden Partners Strategic Fund III, LP and Camden Partners Strategic Fund
III-A, LP (see Note 4).
At
April
26, 2007, the Company had not commenced any operations. All activity through
April 26, 2007 relates to the Company’s formation and to the proposed public
offering described below. The Company has selected December 31 as its fiscal
year end.
The
Company’s ability to commence operations is contingent upon obtaining adequate
financial resources through a proposed public offering (“Proposed Offering”)
which is discussed in Note 3. The Company’s management has broad discretion with
respect to the specific application of the net proceeds of this Proposed
Offering, although substantially all of the net proceeds of the Proposed
Offering are intended to be applied toward effecting a merger, capital stock
exchange, stock purchase, asset acquisition or other similar business
combination with one or more operating businesses in the education industry.
As
used herein, a “Business Combination” shall mean the merger, capital stock
exchange, asset acquisition or other similar business combination with one
or
more operating businesses in the education industry having, collectively, a
fair
market value of at least 80.0% of the amount in the Company’s trust account,
less the deferred underwriting discount and commissions and taxes payable at
the
time of such transaction. The trust account will be maintained by Continental
Stock Transfer & Trust Company pursuant to an investment management trust
agreement to be signed upon the date of the prospectus for the Proposed
Offering.
Upon
closing of the Proposed Offering, approximately 98.8% of the proceeds ($35.55
million, or $40.60 million if the over-allotment option is exercised in full)
of
this offering will be placed in a trust account invested until the earlier
of
(i) the consummation of the Company’s first Business Combination or (ii) the
dissolution of the Company. The proceeds in the trust account include the
deferred underwriting discount of $720,000 ($828,000 if the over-allotment
option is exercised in full) that will be released to the underwriter if a
Business Combination is completed (subject to a $0.16 per share reduction for
public stockholders who exercised their conversion rights). Interest (after
taxes) earned on assets held in the trust account will remain in the trust.
However, up to $750,000 of the interest earned on the trust account, and amounts
required for payment of taxes on interest earned, may be released to the Company
to cover a portion of the Company’s operating expenses and expenses incurred in
connection with the Company’s dissolution and liquidation if a business
combination is not consummated.
The
Company will seek stockholder approval before it will effect any Business
Combination. In connection with the stockholder vote required to approve any
Business Combination, the Company’s existing stockholders including all of the
Company’s officers, directors and advisors have agreed to vote the shares of
common stock then-owned by them in accordance with the majority of the shares
of
common stock voted by the Public Stockholders. “Public Stockholders” is defined
as the holders of common stock sold as part of the units in the Proposed
Offering or in the aftermarket. The Company will proceed with a 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 sold in the Public Offering exercise their right to convert their
shares into a pro rata share of the aggregate amount then on deposit in the
trust account. If a majority of the shares of common stock voted by the Public
Stockholders are not voted in favor of a proposed initial Business Combination
but 24 months has not yet passed since closing of the Proposed Offering, the
Company may combine with another Target Business meeting the fair market value
criterion described above.
The
Company’s certificate of incorporation filed with the State of Delaware includes
a requirement that all proposed business combinations be presented to
stockholders for approval; a prohibition against completing a business
combination if 30% or more of the Company’s stockholders exercise their
redemption rights in lieu of approving a business combination; a provision
giving stockholders who vote against a business combination the right to redeem
their shares for a pro rata portion of the trust account in lieu of
participating in a proposed business combination; and a requirement that if
the
Company does not consummate a business combination within 24 months from the
date of the prospectus for the Proposed Offering, the Company will dissolve
and
liquidate, including liquidation of the trust account for the benefit of the
public stockholders.
Public
Stockholders voting against a Business Combination will be entitled to redeem
their stock for a pro rata share of the total amount on deposit in the trust
account including the $0.16 per share deferred underwriter’s discount, and
including any interest earned net of income taxes on their portion of the trust
account, net of up to $750,000 of the interest less income taxes thereon earned
on the trust account which may be released to the Company to cover a portion
of
the Company’s operating expenses if a Business Combination is approved and
completed. Public Stockholders who convert their stock into their share of
the
trust account will continue to have the right to exercise any Warrants they
may
hold.
The
Company will dissolve and promptly distribute only to its Public Stockholders
the amount in the trust account, less any income taxes payable on interest
income, plus any remaining net assets if the Company does not effect a Business
Combination within 24 months after consummation of the Proposed Offering. In
the
event of dissolution, it is likely that the per share value of the residual
assets remaining available for distribution (including trust account assets)
will be less than the initial public offering price per share in the Proposed
Offering (assuming no value is attributed to the Warrants contained in the
units
to be offered in the Proposed Offering discussed in Note 3).
The
Company’s existing stockholders have agreed that, on the date of the prospectus
for the Public Offering, they would place the shares they owned before the
Public Offering into an escrow account, and with limited exceptions, these
shares will not be transferable and will not be released from escrow until
one
year after consummation of a business combination. If the Company is forced
to
dissolve or liquidate, these shares will be cancelled. Additionally, the insider
warrants (see Note 4) will be placed into the escrow account, and subject to
limited exceptions, will not be transferable and will not be released from
escrow until the 90th
day
following the completion of a business combination.
If
holders of more than 20% of the shares sold in the Public Offering vote against
a proposed business combination and seek to exercise their redemption rights
and
the business combination is consummated, the Company’s existing stockholders
have agreed to forfeit, on a pro rata basis, a number of the initial 1,125,000
shares of the Company’s common stock purchased, up to a maximum of 140,625
shares, so that the existing stockholders will collectively own no more than
23.81% (without regard to any purchase of units in the Proposed Offering, any
open market purchases or private purchases of units directly from the Company)
of the Company’s outstanding common stock immediately prior to the consummation
of the business combination.
Note
2 - Summary of Significant Accounting Policies
Loss
per Common Share
Basic
and
diluted net loss per share is computed by dividing net loss by the weighted
average number of common shares outstanding for the
period.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of
the financial statements and the reported amounts of expenses during the
reporting period. Actual results could differ from those estimates.
Income
Taxes
Deferred
income taxes are provided for the differences between the bases of assets and
liabilities for financial reporting and income tax purposes. A valuation
allowance is established when necessary to reduce deferred tax assets to the
amount expected to be realized.
The
Company recorded a deferred income tax asset for the tax effect of net operating
loss carry forwards and temporary differences, aggregating approximately $340.
In recognition of the uncertainty regarding the ultimate amount of income tax
benefits to be derived, the Company has recorded a full valuation allowance
at
April 26, 2007.
The
effective tax rate differs from the statutory rate of 34% due to the increase
in
the valuation allowance.
Deferred
offering costs
The
costs
associated with the Company’s proposed initial public offering have been
recorded as deferred offering costs and will reduce additional paid in capital
if the offering is successful. Should the offering not be consummated, the
deferred offering costs will be recognized as an expense of the
Company.
Recently
issued accounting pronouncements
In
July
2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation
No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”), which addresses
the accounting for uncertainty in income taxes recognized in the financial
statements in accordance with FASB Statement No. 109, “Accounting for Income
Taxes.” FIN 48 provides guidance on the financial statement recognition and
measurement of a tax position taken on the Company’s tax return. FIN 48 also
provides guidance on classification, interest and penalties, accounting in
interim periods, disclosure and transition. FIN 48 is effective for interim
periods of fiscal years beginning after December 15, 2006. Adoption of FIN
48
did not have a material impact on the Company’s financial position or results of
operations.
In
September 2006, the FASB issued Statement of Financial Accounting Standards
No.
157, “Fair Value Measurements” (“SFAS No. 157”). SFAS No. 157 clarifies the
principle that fair value should be based on the assumptions market participants
would use when pricing an asset or liability and establishes a fair value
hierarchy that prioritizes the information used to develop those assumptions.
Under the standard, fair value measurements would be separately disclosed by
level within the fair value hierarchy. SFAS No. 157 is effective for financial
statements issued for fiscal years beginning after November 15, 2007, and
interim periods within those fiscal years, with early adoption permitted. The
Company does not believe that SFAS No. 157 would have a material effect on
the
accompanying financial statements.
In
February 2007, FASB issued SFAS No. 159, “The Fair Value Option for Financial
Assets and Financial Liabilities” including an amendment of FASB Statement 115.
This statement provides companies with an option to report selected financial
assets and liabilities at fair value. This statement is effective for fiscal
years beginning after November 15, 2007 with early adoption permitted. The
company is assessing SFAS No. 159 and has not yet determined the impact that
the
adoption of SFAS No. 159 will have on its results of operations or financial
position.
Note
3 - Proposed Public Offering
The
Proposed Offering calls for the Company to offer for public sale 4,500,000
units
(“Units”) at a price of $8.00 per unit (5,175,000 units if the over-allotment
option is exercised in full). Each Unit consists of one share of the Company’s
common stock, $.0001 par value, and one warrant. Each warrant will entitle
the
holder to purchase from the Company one share of common stock at an exercise
price of $6.00 commencing the later of the completion of a Business Combination
with a Target Business or one year from the date of the prospectus for the
Public Offering and expiring four years from the date of the prospectus, unless
earlier redeemed. The warrants will be redeemable at the Company’s option, at a
price of $0.01 per warrant upon 30 days’ written notice after the warrants
become exercisable, only in the event that the last price of the common stock
is
at least $11.50 per share for any 20 trading days within a 30 trading day period
ending on the third business day prior to the date on which notice of redemption
is given.
In
accordance with the Warrant Agreement related to the warrants (the “Warrant
Agreement”), the Company is only required to use its best efforts to effect the
registration of the shares of common stock underlying the Warrants. The Company
will not be obligated to deliver securities, and there are no contractual
penalties for failure to deliver securities, if a registration statement is
not
effective at the time of exercise. Additionally, in the event that a
registration statement is not effective at the time of exercise, the holder
of a
warrant shall not be entitled to exercise such warrant and in no event (whether
in the case of a registration statement not being effective or otherwise) will
the Company be required to net cash settle the warrant exercise. Consequently,
the warrants may expire unexercised.
Note
4 - Note Payable to Affiliate and Related Party
Transactions
The
Company issued an aggregate $200,000 unsecured promissory note to Camden
Learning, LLC, an affiliate, on April 26, 2007. The note is interest bearing
at
an annual rate of 4.9% and both principal and interest are payable on the
earlier of April 26, 2008 or the consummation of the Public Offering of the
Company.
The
note
has been recorded as a liability in the nominal amount of $1,000, with the
$199,000 balance credited to additional paid in capital. The $199,000 discount
will be accreted by charges to interest expense over the term of the note
using
the interest method. In its computation of the discount on the note, the
Company
considered that the loan is unsecured, the Company has no operations and
the
Company will be able to repay the loan only in the event of a successful
public
offering, as to which there can be no assurance. In making its computation,
the
Company also considered the related party nature of the note, the below-market
stated interest rate, the equity-like risks associated with the note and
the
high interest rates commonly associated with bridge
financing.
As
of
April 26, 2007, the Company owes affiliates, Camden Partners Strategic Fund III,
LP and Camden Partners
Strategic Fund III-A, LP, (collectively “Fund III”), an amount totaling $37,500
for initial payments of deferred offering costs. Fund III is an investment
partnership formed to make direct negotiated investments primarily in smaller
capitalization public companies and late stage private companies. Fund III
is
the sole member of Camden Learning, LLC, the Company’s principal
stockholder.
The
Company has agreed to sell to the underwriters, for $100, an option to purchase
up to a total of 450,000 units exercisable on a cashless basis at $8.80 per
unit
commencing one year from the date of the prospectus and expiring five years
from
the date of the prospectus. The sale of the option will be accounted for
as a
cost attributable to the proposed offering. Accordingly, there will be no
net
impact on the Company’s financial position or results of operations, except for
the recording of the $100 proceeds from the sale. The Company has estimated,
based upon a Black-Scholes model, that the fair value of the option on the
date
of sale would be approximately $2,000,000, using an expected life of five
years,
volatility of 63.5%, and a risk-free interest rate of 4.86%. However, because
the units do not have a trading history, the volatility assumption is based
on
information currently available to the Company. The Company believes the
volatility estimate calculated is a reasonable benchmark to use in estimating
the expected volatility of the units. The volatility calculation is based
on the
most recent trading day average volatility of publicly traded companies
providing educational services with market capitalizations less than $500
million. Although an expected life of five years was used in the calculation,
if
the Company does not consummate a business combination within the prescribed
time period and automatically dissolves and subsequently liquidates the trust
account, the option will become worthless.
As
of
April 26, 2007, the Company is due payment from one of the Initial Stockholders
in an amount of $556 for the issuance of 25,000 shares of common
stock.
The
Company has agreed to pay up to $7,500 a month in total for certain general
and administrative services, including but not limited to receptionist,
secretarial and general office services, to
Camden
Learning, LLC. Services will commence on the effective date of the offering
and
will terminate upon the earlier of (i) the completion of the Company’s Business
Combination or (ii) the Company’s dissolution.
Camden
Learning, LLC has agreed to acquire warrants to purchase 2,500,000 shares of
Common Stock from the Company at a price of $1.00 per warrant for a total of
$2,500,000 in a private placement prior to the completion of the offering.
The
terms of these warrants are identical to the terms of the warrants to be issued
in the Proposed Offering, except that these insider warrants will not be subject
to redemption and may be exercised on a cashless basis, in each case if held
by
the initial holder thereof or its permitted assigns, and may not be sold,
assigned or transferred prior to the 90th
day
following consummation of a business combination. The holder of these insider
warrants will not have any right to any liquidation distributions with respect
to shares underlying these warrants if the Company fails to consummate a
business combination, in which event these warrants will expire
worthless.
Camden
Learning, LLC has agreed to indemnify the Company for claims of creditors that
have not executed a valid and binding waiver of their rights to seek payments
of
amounts due to them out of the trust account. The Company believes the
likelihood of Camden Learning, LLC having to indemnify the trust account is
minimal.
The
Company’s principal stockholder has entered into an agreement with the
underwriter pursuant to which it will place limit orders to purchase up to
an
additional $4,000,000 of the Company’s common stock in the open market
commencing ten business days after the Company files its current report on
Form
8-K announcing its execution of a definitive agreement for a business
combination and ending on the business day preceding the stockholders’ meeting
at which a business combination is to be approved. In the event the Company’s
principal stockholder does not purchase $4,000,000 of the Company’s common stock
in the open market, the stockholder has agreed to purchase from the Company
in a
private placement a number of units identical to the units to be sold in the
Proposed Offering at a purchase price of $8.00 per unit until it has spent,
together with the aforementioned open market purchases, an aggregate of
$4,000,000 for purchase of the Company’s common stock.
Note
5 - Common Stock
In
April
2007, the Company issued 1,125,000 shares of common stock to the Initial
Stockholders for an aggregate amount of $25,000, of which $24,444 was received
by April 26, 2007, and the balance shortly thereafter.
Note
6 - Preferred Stock
The
Company is authorized to issue 1,000,000 shares of preferred stock with such
designations, voting and other rights and preferences as may be determined
from
time to time by the Board of Directors.
Until
[ ], 2007, all
dealers that effect transactions in these securities, whether or not
participating in this offering, may be required to deliver a prospectus.
This is
in addition to the dealers’ obligation to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.
No
dealer, salesperson or any other person is authorized to give any information
or
make any representations in connection with this offering other than those
contained in this prospectus and, if given or made, the information or
representations must not be relied upon as having been authorized by us.
This
prospectus does not constitute an offer to sell or a solicitation of an offer
to
buy any security other than the securities offered by this prospectus, or
an
offer to sell or a solicitation of an offer to buy any securities by anyone
in
any jurisdiction in which the offer or solicitation is not authorized or
is
unlawful.
Prospectus
Summary
|
1
|
Summary
Financial Data
|
13
|
Risk
Factors
|
14
|
Use
of Proceeds
|
33
|
Dilution
|
36
|
Capitalization
|
38
|
Management’s
Discussion and Analysis of Financial Condition and Results
of
Operations
|
39
|
Proposed
Business
|
42
|
Management
|
54
|
Principal
Stockholders
|
61
|
Certain
Relationships and Related Transactions
|
63
|
Description
of Securities
|
66
|
Underwriting
|
72
|
Legal
Matters
|
76
|
Experts
|
76
|
Where
You Can Find Additional Information
|
76
|
Index
to Financial Statements
|
F-1
|
$36,000,000
CAMDEN
LEARNING
CORPORATION
4,500,000
Units
PROSPECTUS
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
13. Other Expenses of Issuance and Distribution.
The
estimated expenses payable by us in connection with the offering described
in
this registration statement (other than the underwriting discount and
commissions) will be as follows:
Initial
Trustees’ fee
|
|
$
|
1,000.00
|
|
SEC
Registration Fee
|
|
$
|
2,428.68
|
|
NASD
filing fee
|
|
$
|
8,411.00
|
|
Accounting
fees and expenses
|
|
|
50,000.00
|
|
Printing
and engraving
expenses
|
|
|
40,000.00
|
|
Legal
fees and expenses
|
|
|
250,000.00
|
|
Blue
sky services and expenses
|
|
|
40,000.00
|
|
Miscellaneous
|
|
|
8,060.32
|
|
Total
|
|
$
|
399,900.00
|
|
(1)
|
In
addition to the initial acceptance fee that is charged by Continental
Stock Transfer & Trust Company, as trustee following the offering, the
registrant will be required to pay to Continental Stock Transfer
&
Trust Company annual fees of approximately $3,000 for acting as trustee,
approximately $4,800 for acting as transfer agent of the registrant’s
common stock, approximately $2,400 for acting as warrant agent for
the
registrant’s warrants and approximately $2,400 for acting as escrow
agent.
|
(2)
|
A
portion of the legal fees payable to Ellenoff Grossman & Schole LLP,
our legal counsel, has been deferred and is contingent on our consummating
a business combination.
|
(3) |
This
amount represents additional expenses that may be incurred by us
in
connection with the offering over and above those specifically listed
above, including distribution and mailing
costs.
|
Item
14. Indemnification of Directors and Officers.
Our
amended and restated certificate of incorporation provides that all of our
directors, officers, employees and agents shall be entitled to be indemnified
by
us to the fullest extent permitted by Section 145 of the Delaware General
Corporation Law.
Section
145 of the Delaware General Corporation Law concerning indemnification of
officers, directors, employees and agents is set forth below.
“Section
145. Indemnification of officers, directors, employees and agents;
insurance.
(a) A
corporation shall have power to indemnify any person who was or is a party
or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that the person is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys’
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with such action, suit or proceeding if
the
person acted in good faith and in a manner the person reasonably believed to
be
in or not opposed to the best interests of the corporation, and, with respect
to
any criminal action or proceeding, had no reasonable cause to believe the
person’s conduct was unlawful. The termination of any action, suit or proceeding
by judgment, order, settlement, conviction, or upon a plea of nolo contendere
or
its equivalent, shall not, of itself, create a presumption that the person
did
not act in good faith and in a manner which the person reasonably believed
to be
in or not opposed to the best interests of the corporation, and, with respect
to
any criminal action or proceeding, had reasonable cause to believe that the
person’s conduct was unlawful.
(b) A
corporation shall have power to indemnify any person who was or is a party
or is
threatened to be made a party to any threatened, pending or completed action
or
suit by or in the right of the corporation to procure a judgment in its favor
by
reason of the fact that the person is or was a director, officer, employee
or
agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust
or
other enterprise against expenses (including attorneys’ fees) actually and
reasonably incurred by the person in connection with the defense or settlement
of such action or suit if the person acted in good faith and in a manner the
person reasonably believed to be in or not opposed to the best interests of
the
corporation and except that no indemnification shall be made in respect of
any
claim, issue or matter as to which such person shall have been adjudged to
be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of
all
the circumstances of the case, such person is fairly and reasonably entitled
to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
(c) To
the
extent that a present or former director or officer of a corporation has been
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in subsections (a) and (b) of this section, or in defense
of any claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys’ fees) actually and reasonably incurred by such
person in connection therewith.
(d) Any
indemnification under subsections (a) and (b) of this section (unless ordered
by
a court) shall be made by the corporation only as authorized in the specific
case upon a determination that indemnification of the present or former
director, officer, employee or agent is proper in the circumstances because
the
person has met the applicable standard of conduct set forth in subsections
(a)
and (b) of this section. Such determination shall be made, with respect to
a
person who is a director or officer at the time of such determination, (1)
by a
majority vote of the directors who are not parties to such action, suit or
proceeding, even though less than a quorum, or (2) by a committee of such
directors designated by majority vote of such directors, even though less than
a
quorum, or (3) if there are no such directors, or if such directors so direct,
by independent legal counsel in a written opinion, or (4) by the
stockholders.
(e) Expenses
(including attorneys’ fees) incurred by an officer or director in defending any
civil, criminal, administrative or investigative action, suit or proceeding may
be paid by the corporation in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of such
director or officer to repay such amount if it shall ultimately be determined
that such person is not entitled to be indemnified by the corporation as
authorized in this section. Such expenses (including attorneys’ fees) incurred
by former directors and officers or other employees and agents may be so paid
upon such terms and conditions, if any, as the corporation deems
appropriate.
(f) The
indemnification and advancement of expenses provided by, or granted pursuant
to,
the other subsections of this section shall not be deemed exclusive of any
other
rights to which those seeking indemnification or advancement of expenses may
be
entitled under any bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in such person’s official capacity and
as to action in another capacity while holding such office.
(g) A
corporation shall have power to purchase and maintain insurance on behalf of
any
person who is or was director, officer, employee or agent of the corporation,
or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust
or
other enterprise against any liability asserted against such person and incurred
by such person in any such capacity, or arising out of such person’s status as
such, whether or not the corporation would have the power to indemnify such
person against such liability under this section.
(h) For
purposes of this section, references to “the corporation” shall include, in
addition to the resulting corporation, any constituent corporation (including
any constituent of a constituent) absorbed in a consolidation or merger which,
if its separate existence had continued, would have had power and authority
to
indemnify its directors, officers, and employees or agents, so that any person
who is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall stand in the same position
under
this section with respect to the resulting or surviving corporation as such
person would have with respect to such constituent corporation if its separate
existence had continued.
(i) For
purposes of this section, references to “other enterprises” shall include
employee benefit plans; references to “fines” shall include any excise taxes
assessed on a person with respect to any employee benefit plan; and
references to “serving at the request of the corporation” shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee
or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner such person
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner “not
opposed to the best interests of the corporation” as referred to in this
section.
(j) The
indemnification and advancement of expenses provided by, or granted pursuant
to,
this section shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director, officer, employee
or
agent and shall inure to the benefit of the heirs, executors and administrators
of such a person.
(k) The
Court
of Chancery is hereby vested with exclusive jurisdiction to hear and determine
all actions for advancement of expenses or indemnification brought under this
section or under any bylaw, agreement, vote of stockholders or disinterested
directors, or otherwise. The Court of Chancery may summarily determine a
corporation’s obligation to advance expenses (including attorneys’
fees).”
Insofar
as indemnification for liabilities arising under the Securities Act of 1933,
as
amended, may be permitted to our directors, officers, and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that
in
the opinion of the SEC such indemnification is against public policy as
expressed in the Securities Act of 1933, as amended, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment of expenses incurred or paid by a director,
officer or controlling person in a successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, we will, unless in the opinion
of its counsel the matter has been settled by controlling precedent, submit
to
the court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Securities Act of 1933,
as
amended, and will be governed by the final adjudication of such
issue.
Paragraph
B of Article Eighth of our amended and restated certificate of incorporation
provides:
“The
Corporation, to the full extent permitted by Section 145 of the GCL, as amended
from time to time, shall indemnify all persons whom it may indemnify pursuant
thereto. Expenses (including attorneys’ fees) incurred by an officer or director
in defending any civil, criminal, administrative, or investigative action,
suit
or proceeding for which such officer or director may be entitled to
indemnification hereunder shall be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount
if
it shall ultimately be determined that he is not entitled to be indemnified
by
the Corporation as authorized hereby.”
Pursuant
to the Underwriting Agreement filed as Exhibit 1.1 to this Registration
Statement, we have agreed to indemnify the underwriters, and the underwriters
have agreed to indemnify us, against certain civil liabilities that may be
incurred in connection with this offering, including certain liabilities under
the Securities Act of 1933, as amended.
Item
15. Recent Sales of Unregistered Securities.
(a) During
the past three years, we sold the following shares of common stock without
registration under the Securities Act of 1933, as amended:
Stockholders
|
|
Number
of Shares
|
|
Camden
Learning, LLC
|
|
|
1,000,000
|
|
Jack
L. Brozman
|
|
|
25,000
|
|
Therese
Kreig Crane, Ed.D
|
|
|
25,000
|
|
Ronald
Tomalis
|
|
|
25,000
|
|
Harry
T. Wilkins
|
|
|
25,000
|
|
William
Jews
|
|
|
25,000
|
|
Such
shares were issued on April 10, 2007 in connection with our organization
pursuant to the exemption from registration contained in Section 4(2) of the
Securities Act of 1933, as amended, as they were sold to sophisticated, wealthy
non “U.S. Person” individuals. The shares issued to the individuals and entities
above were sold for an aggregate offering price of $25,000 at an average
purchase price of approximately $0.02 per share. No underwriting discounts
or
commissions were paid with respect to such sales.
Our
sponsor has agreed to purchase an aggregate of 2,500,000 warrants from us
at a
purchase price of $1.00 per warrant in a private placement that will occur
immediately prior to this offering in a transaction pursuant to, and in
accordance with, Regulation D under the Securities Act of 1933, as amended.
The
obligation to purchase the warrants undertaken by the sponsor was made pursuant
to a Subscription Agreement, dated as of May 16, 2007 (the form of which
was
filed as Exhibit 4.4 to the Registration Statement on Form S-1). Such obligation
was made prior to the filing of the Registration Statement, and was undertaken
by the sponsor, an institutional investor. Consequently, it is a separate
private placement that is not integrated with our public offering. We have
granted the holders of such warrants demand and “piggy-back” registration rights
with respect to the 2,500,000 shares underlying the warrants at any time
commencing on the date we announce that we have entered into a letter of
intent
with respect to a proposed business combination. The demand registration
may be
exercised by the holders of a majority of such warrants. We will bear the
expenses incurred in connection with the filing of any such registration
statements.
In
addition, if we take advantage of increasing the size of the offering pursuant
to Rule 462(b) under the Securities Act of 1933, as amended, we may effect
a
stock dividend in such amount to maintain the existing stockholders’ collective
ownership at 20% of our issued and outstanding shares of common stock upon
consummation of the offering. If we decrease the size of the offering we will
effect a reverse split of our common stock in such amount to maintain the
existing stockholders allocated ownership at 20% of our issued and outstanding
common stock upon the consummation of this offering.
Item
16. Exhibits and Financial Statement Schedules.
(a) The
following exhibits are filed as part of this Registration
Statement:
Exhibit
No.
|
|
Description
|
|
|
|
1.1
|
|
Form
of Underwriting Agreement.
|
3.1
|
|
Certificate
of Incorporation. *
|
3.2
|
|
Form
of Amended and Restated Certificate of Incorporation.
|
3.3
|
|
By-laws.
*
|
4.1
|
|
Specimen
Unit Certificate.
|
4.2
|
|
Specimen
Common Stock Certificate.
|
4.3
|
|
Specimen
Warrant Certificate.
|
4.4
|
|
Form
of Warrant Agreement between Continental Stock Transfer & Trust
Company and the Registrant. *
|
4.5
|
|
Form
of Unit Option Purchase Agreement between the Registrant and Morgan
Joseph
& Co. Inc. *
|
5.1
|
|
Opinion
of Ellenoff Grossman & Schole LLP.
|
10.1.1
|
|
Letter
Agreement among the Registrant, Morgan Joseph & Co. Inc. and Camden
Learning, LLC. *
|
10.1.2
|
|
Letter
Agreement among the Registrant, Morgan Joseph & Co. Inc. and Donald W.
Hughes. *
|
10.1.3
|
|
Letter
Agreement among the Registrant, Morgan Joseph & Co. Inc. and David L.
Warnock. *
|
10.1.4
|
|
Letter
Agreement among the Registrant, Morgan Joseph & Co. Inc. and Jack L.
Brozman. *
|
10.1.5
|
|
Letter
Agreement among the Registrant, Morgan Joseph & Co. Inc. and Therese
Kreig Crane, Ed.D.*
|
10.1.6
|
|
Letter
Agreement among the Registrant, Morgan Joseph & Co. Inc. and Ronald
Tomalis. *
|
10.1.7
|
|
Letter
Agreement among the Registrant, Morgan Joseph & Co. Inc. and William
Jews. *
|
10.2
|
|
Form
of Investment Management Trust Agreement between Continental Stock
Transfer & Trust Company and the Registrant. *
|
10.3
|
|
Form
of Securities Escrow Agreement between the Registrant, Continental
Stock
Transfer & Trust Company and the Initial Stockholders.
*
|
10.4
|
|
Form
of Registration Rights Agreement among the Registrant and the Initial
Stockholders. *
|
10.5
|
|
Lease/Office
Services Agreement dated May 16, 2007 by and among the Registrant
and
Camden Learning, LLC. *
|
10.6
|
|
Subscription
Agreement between the Registrant and Sponsor. *
|
10.7
|
|
Promissory
Note in the amount of $200,000 dated April 26, 2007 issued in favor
of
Camden Learning, LLC. *
|
10.8
|
|
Right
of First Refusal Agreement by and among Camden Learning, LLC, Camden
Partners Strategic Fund III, L.P. and Camden Partners Strategic
Fund
III-A, L.P.
|
23.1
|
|
Consent
of Eisner LLP.
|
23.2
|
|
Consent
of Ellenoff Grossman & Schole LLP (included in Exhibit 5.1).
|
99.1
|
|
Code
of Ethics.
|
*
Previously filed
Item
17. Undertakings.
(a) The
undersigned registrant hereby undertakes:
|
(1) |
To
file, during any period in which offers or sales are being made,
a
post-effective amendment to this registration
statement:
|
|
i.
|
To
include any prospectus required by Section 10(a)(3) of the Securities
Act
of 1933, as amended;
|
|
ii.
|
To
reflect in the prospectus any facts or events arising after the effective
date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent
a
fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease
in
volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation
from
the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant
to
Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than 20 percent change in the maximum aggregate
offering
price set forth in the “Calculation of Registration Fee” table in the
effective registration statement.
|
|
iii.
|
To
include any material information with respect to the plan of distribution
not previously disclosed in the registration statement or any material
change to such information in the registration
statement.
|
|
(2) |
That,
for the purpose of determining any liability under the Securities
Act of
1933, as amended, each such post-effective amendment shall be deemed
to be
a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed
to be the
initial bona
fide offering
thereof.
|
|
(3) |
That,
for the purpose of determining liability under the Securities Act
of 1933,
as amended, to any purchaser:
|
|
i.
|
If
the registrant is subject to Rule 430C, each prospectus filed pursuant
to
Rule 424(b) as part of a registration statement relating to an offering,
other than registration statements relying on Rule 430B or other
than
prospectuses filed in reliance on Rule 430A, shall be deemed to be
part of
and included in the registration statement as of the date it is first
used
after effectiveness. Provided, however, that no statement made in
a
registration statement or prospectus that is part of the registration
statement or made in a document incorporated or deemed incorporated
by
reference into the registration statement or prospectus that is part
of
the registration statement will, as to a purchaser with a time of
contract
of sale prior to such
first use, supersede or modify any statement that was made in the
registration statement or prospectus that was part of the registration
statement or made in any such document immediately prior to such
date of
first use.
|
|
(4) |
That,
for the purpose of determining liability of the registrant under
the
Securities Act of 1933, as amended, to any purchaser in the initial
distribution of the securities: The undersigned registrant undertakes
that
in a primary offering of securities of the undersigned registrant
pursuant
to this registration statement, regardless of the underwriting method
used
to sell the securities to the purchaser, if the securities are offered
or
sold to such purchaser by means of any of the following communications,
the undersigned registrant will be a seller to the purchaser and
will be
considered to offer or sell such securities to such
purchaser:
|
|
i.
|
Any
preliminary prospectus of the undersigned registrant relating to
the
offering required to be filed pursuant to Rule
424;
|
|
ii.
|
Any
free writing prospectus relating to the offering prepared by or
on behalf
of the undersigned registrant or used or referred to by the undersigned
registrant;
|
|
iii.
|
The
portion of any other free writing prospectus relating to the offering
containing material information about the undersigned registrant
or its
securities provided by or on behalf of the undersigned registrant;
and
|
|
iv.
|
Any
other communication that is an offer in the offering made by the
undersigned registrant to the
purchaser.
|
|
(5) |
To
remove from registration by means of a post-effective amendment any
of the
securities being registered which remain unsold at the termination
of the
offering.
|
(b) The
undersigned hereby undertakes to provide to the underwriter at the closing
specified in the underwriting agreements, certificates in such denominations
and
registered in such names as required by the underwriter to permit prompt
delivery to each purchaser.
(c) Insofar
as indemnification for liabilities arising under the Securities Act of 1933,
as
amended, may be permitted to directors, officers and controlling persons of
the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication
of
such issue.
(d) The
undersigned registrant hereby undertakes that:
|
(1) |
For
purposes of determining any liability under the Securities Act of
1933, as
amended, the information omitted from the form of prospectus filed
as part
of this registration statement in reliance upon Rule 430A and contained
in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1)
or
(4) or 497(h) under the Securities Act of 1933, as amended, shall
be
deemed to be part of this registration statement as of the time it
was
declared effective.
|
|
(2) |
For
the purpose of determining any liability under the Securities Act
of 1933,
as amended, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating
to
the securities offered therein, and the offering of such securities
at
that time shall be deemed to be the initial bona
fide offering
thereof.
|
SIGNATURE
Pursuant
to the requirements of the Securities Act of 1933, the registrant has duly
caused this registration statement on Form S-1 to be signed on its behalf
by the
undersigned, thereunto duly authorized, in Baltimore, Maryland, on the 5th
day
of July, 2007.
|
CAMDEN
LEARNING CORPORATION
|
|
|
|
By:
|
/s/
David L. Warnock
|
|
|
Name:
David L. Warnock
Title:
Chief Executive Officer
(Principal
Executive Officer)
|
Pursuant
to the requirements of the Securities Act of 1933, this Registration Statement
has been signed by the following persons in the capacities and on the dates
indicated.
Name
|
|
Position
|
|
Date
|
/s/
David L. Warnock
|
|
President,
Chief Executive Officer and Chairman
|
|
July
5, 2007
|
David
L. Warnock
|
|
(Principal
Executive Officer)
|
|
|
|
|
|
|
|
/s/
Donald W. Hughes
|
|
Chief
Financial Officer, Secretary
(Principal
Financial and Accounting Officer)
|
|
July
5, 2007
|
Donald
W. Hughes
|
|
|
|
|
|
|
|
|
/s/
Jack L. Brozman
|
|
Director
|
|
July
5, 2007
|
Jack
L. Brozman
|
|
|
|
|
|
|
|
|
/s/
Therese Kreig Crane
|
|
Director
|
|
July
5, 2007
|
Therese
Kreig Crane, Ed.D
|
|
|
|
|
|
|
|
|
/s/
Ronald Tomalis
|
|
Director
|
|
July
5, 2007
|
Ronald
Tomalis
|
|
|
|
|
|
|
|
|
/s/
William Jews
|
|
Director
|
|
July
5, 2007
|
William
Jews
|
|
|
|