UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
Check the
appropriate box:
x
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Preliminary
Proxy Statement
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Confidential,
For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to
§240.14a-12
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SANTA MONICA MEDIA
CORPORATION
(Name
of Registrant as Specified in Its Charter)
(Name
of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
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No
fee required.
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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(1)
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Title
of each class of securities to which transaction applies:
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(2)
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Aggregate
number of securities to which transaction applies:
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(3)
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Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined)
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(4)
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Proposed
maximum aggregate value of transaction:
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(5)
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Total
fee paid:
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Fee
paid previously with preliminary materials:
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Check
box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
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(1)
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Amount
previously paid:
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(2)
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Form,
Schedule or Registration Statement No.:
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(3)
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Filing
Party:
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(4)
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Date
Filed:
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SANTA
MONICA MEDIA CORPORATION
12121
Wilshire Boulevard, Suite 1001
Los
Angeles, CA 90025
To All
Stockholders of
Santa
Monica Media Corporation (the “Company”):
The
Company did not consummate a business combination transaction prior to the date
required by our certificate of incorporation (the “Termination Date”) and trust
agreement governing the trust account. As a result of the preceding,
our board of directors has determined it would be in the best interests of our
stockholders to distribute now to stockholders holding shares of our common
stock (“IPO Shares”) issued in our initial public offering (“IPO”) all amounts
in the trust account established by us at the consummation of the IPO and into
which a certain amount of the net proceeds of the IPO were deposited (the “Trust
Account”). As of March 31, 2009, approximately $100.7 million
(approximately $8.05 per IPO Share) was in the Trust
Account. Further, our board of directors also determined that it
would be in the best interests of our stockholders for our company to continue
its corporate existence after the distribution of the Trust Account, rather than
dissolve as required by our certificate of incorporation, and to do so with a
new certificate of incorporation that would be suitable for our company as a
non-blank check company.
Accordingly,
we have called a special meeting of Stockholders to be held at the offices of
Loeb & Loeb LLP, 345 Park Avenue, New York, NY 10154 on Friday, May 22, 2009
at 9:00 a.m., New York time;
To
consider and vote on the following three proposals (the “Amendment and
Distribution”):
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·
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To
consider and vote on a proposal to amend our certificate of incorporation
to permit the continuance of our company as a corporation beyond the time
currently specified in our certificate of incorporation without the
limitations imposed at the time of our IPO (the “Certificate of
Incorporation Amendment Proposal”) – Specifically, this proposal would (i)
remove the provision from the second sentence of the Third Article from
our certificate of incorporation which limits the powers and privileges
conferred upon the Company to effecting and implementing the dissolution
and liquidation of the Company in the event a business combination is not
consummated prior to the Termination Date and (ii) remove the Sixth
Article from our certificate of incorporation, which, among other blank
check company-related restrictions, requires us to dissolve following
distribution of the Trust Account. If this proposal is
approved, our stockholders will not have the right to receive a
liquidating distribution of any net assets outside of the Trust
Account. However, there are no assets outside of the Trust
Account available for distribution to stockholders at this
time. We expect to receive tax refunds later in 2009 of
approximately $168,000 which we expect will be used to pay down
the liabilities of the Company which as of March 31, 2009 were
approximately $1,263,000. Our liabilities include indebtedness
to Santa Monica Capital Partners II, LLC, an affiliate, of approximately
$310,000 for funds advanced to the Company. This proposal will
be acted upon following, and will be conditioned upon, the approval of the
Trust Agreement Amendment Proposal
below.
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·
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To
consider and vote on a proposal to authorize the Company and Continental
Stock Transfer & Trust Company (the “Trustee”) to enter into an
amendment to the Investment Management Trust Agreement dated April 2, 2007
(the “trust agreement”) which would permit the distribution of assets to
holders of the IPO Shares pursuant to the Distribution Proposal described
below (the “Trust Agreement Amendment
Proposal”).
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·
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To
consider and vote on a proposal to permit the Company to distribute the
assets of the Trust Account to the holders of the IPO Shares (the
“Distribution Proposal”). This proposal will be acted upon
following, and will be conditioned upon, the approval of the Certificate
of Incorporation Amendment Proposal and the Trust Agreement Amendment
Proposal.
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and a
proposal to:
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·
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To
consider and vote on a proposal to adjourn the special meeting to a later
date or dates, if necessary, to permit further solicitation of proxies in
the event there are insufficient votes at the time of the special meeting
to approve the Certificate of Incorporation Amendment Proposal, the Trust
Agreement Amendment Proposal and/or the Distribution Proposal (the
“Adjournment Proposal”).
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The Board
of Directors has fixed the close of business on May 4, 2009 as the record date
for determining the stockholders entitled to notice of and to vote at the
special meeting and any adjournment thereof. Holders of our common
stock will be entitled to vote on each of the proposals set forth above, and
will be each entitled to one vote for each share of record. Each
proposal of the Amendment and Distribution is essential to its implementation,
and, therefore, the Board of Directors will abandon the Amendment and
Distribution unless each of the above proposals are approved by
stockholders.
The
Distribution Proposal will not be presented for a vote at the special meeting
unless and until our stockholders have approved the Certificate of Incorporation
Amendment Proposal and the Trust Agreement Amendment Proposal. The
Adjournment Proposal may be presented at the meeting, at the discretion of our
board of directors, but only if the Certificate of Incorporation Amendment
Proposal, the Trust Agreement Amendment Proposal and/or the Distribution
Proposal fail to receive the required number of votes and our board of directors
believes that additional votes constituting the required approval may be
obtained by adjourning the meeting.
The
Company does not expect be able to satisfy its liabilities to creditors
concurrently with the payment of the distribution of assets pursuant to the
Distribution Proposal due to the fact that, as of March 31, 2009, the Company
had no assets outside of the Trust Account as it has expended all its funds that
had been released to it. As of that date, the Company had liabilities
to creditors of approximately $1,263,000. The liabilities include
indebtedness to Santa Monica Capital Partners II, LLC of approximately $310,000
for funds advanced to the Company.
Our board
of directors recommends that you vote, or give instruction to vote, “FOR” the
adoption of each of the Amendment and Distribution
proposals. Enclosed is a notice of special meeting and proxy
statement containing detailed information concerning each of the
proposals. We urge you to read the proxy statement and attached
annexes carefully.
All
stockholders are cordially invited to attend the special
meeting. Whether or not you plan to attend the special meeting, it is
important that your shares be represented. Accordingly, please sign
and date the enclosed Proxy Card and return it promptly in the envelope provided
herewith. Even if you return a Proxy Card, you may revoke the proxies
appointed thereby at any time prior to the exercise thereof by filing with our
Corporate Secretary a written revocation or duly executed Proxy Card bearing a
later date or by attendance and voting at the special
meeting. Attendance at the special meeting will not, in itself,
constitute revocation of the proxies.
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By
order of the Board of Directors
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Los
Angeles, California
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April 21,
2009
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David
M. Marshall
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Chairman
of the Board
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and
Chief Executive Officer
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PLEASE
MARK, SIGN AND DATE THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN
THE
ENCLOSED POSTAGE-PAID ENVELOPE.
SANTA
MONICA MEDIA CORPORATION
12121
Wilshire Boulevard, Suite 1001, Los Angeles, CA 90025
NOTICE
OF SPECIAL MEETING OF STOCKHOLDERS
TO
BE HELD MAY 22, 2009
NOTICE IS
HEREBY GIVEN that a special meeting of stockholders, including any adjournments
or postponements thereof, of Santa Monica Media Corporation, a Delaware
corporation (the “Company”), will be held at the offices of Loeb & Loeb LLP,
345 Park Avenue, New York, NY 10154, on Friday, May 22, 2009, at 9:00 a.m. New
York time to:
To
consider and vote on the following three proposals (the “Amendment and
Distribution”):
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·
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To
consider and vote on a proposal to amend our certificate of incorporation
to permit the continuance of our company as a corporation beyond the time
currently specified in our certificate of incorporation without the
limitations imposed at the time of our IPO (the “Certificate of
Incorporation Amendment Proposal”) – Specifically, this proposal would (i)
remove the provision from the second sentence of the Third Article from
our certificate of incorporation which limits the powers and privileges
conferred upon the Company to effecting and implementing the dissolution
and liquidation of the Company in the event a business combination is not
consummated prior to the Termination Date and (ii) remove the Sixth
Article from our certificate of incorporation, which, among other blank
check company-related restrictions, requires us to dissolve following
distribution of the Trust Account. If this proposal is
approved, our stockholders will not have the right to receive a
liquidating distribution of any net assets outside of the Trust
Account. However, there are no assets outside of the Trust
Account available for distribution to stockholders at this
time. We expect to receive tax refunds later in 2009 of
approximately $168,000 which we expect will be used to pay down
the liabilities of the Company which as of March 31, 2009 were
approximately $1,263,000. Our liabilities include indebtedness
to Santa Monica Capital Partners II, LLC, an affiliate, of approximately
$310,000 for funds advanced to the Company. This proposal will
be acted upon following, and will be conditioned upon, the approval of the
Trust Agreement Amendment Proposal
below.
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·
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To
consider and vote on a proposal to authorize the Company and Continental
Stock Transfer & Trust Company (the “Trustee”) to enter into an
amendment to the Investment Management Trust Agreement dated April 2, 2007
(the “trust agreement”) which would permit the distribution of assets to
holders of the IPO Shares pursuant to the Distribution Proposal described
below (the “Trust Agreement Amendment
Proposal”).
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·
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To
consider and vote on a proposal to permit the Company to distribute the
assets of the Trust Account to the holders of the IPO Shares (the
“Distribution Proposal”). This proposal will be acted upon
following, and will be conditioned upon, the approval of the Certificate
of Incorporation Amendment Proposal and the Trust Agreement Amendment
Proposal.
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and a
proposal to:
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·
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To
consider and vote on a proposal to adjourn the special meeting to a later
date or dates, if necessary, to permit further solicitation of proxies in
the event there are insufficient votes at the time of the special meeting
to approve the Certificate of Incorporation Amendment Proposal, the Trust
Agreement Amendment Proposal and/or the Distribution Proposal (the
“Adjournment Proposal”).
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Each
proposal of the Amendment and Distribution is essential to its implementation,
and, therefore, the Board of Directors will abandon the Amendment and
Distribution unless each of the above proposals are approved by
stockholders.
These
items of business are more fully described in this proxy statement, which we
encourage you to read in its entirety before voting. The Company will
not transact any other business at the special meeting except for business
properly brought before the special meeting or any adjournment or postponement
thereof by the Company’s board of directors.
Holders
of our common stock as of the record date for the special meeting are each
entitled to one vote for each share of record and vote together as a single
class with respect to each of Certificate of Incorporation Amendment Proposal,
the Trust Agreement Amendment Proposal, the Distribution Proposal and (if
presented to them) the Adjournment Proposal. However, (i) the
Certificate of Incorporation Amendment Proposal will not be presented to our
stockholders for a vote at the special meeting (i.e., the polls will not be
opened for voting on the Certificate of Incorporation Amendment Proposal) unless
and until our stockholders have approved the Trust Agreement Amendment Proposal;
and (ii) the Distribution Proposal will not be presented to our stockholders for
a vote at the special meeting (i.e., the polls will not be opened for voting on
the Distribution Proposal) unless and until our stockholders have approved the
Certificate of Incorporation Amendment Proposal and the Trust Agreement
Amendment Proposal. Holders of our common stock as of the record date
for the special meeting are each entitled to vote together as a single class
with respect to the Adjournment Proposal if it is presented.
The
record date for the special meeting is May 4, 2009. Only holders of
record of the Company’s common stock at the close of business on May 4, 2009 are
entitled to notice of the special meeting and to have their vote counted at the
special meeting and any adjournments or postponements thereof. A
complete list of the Company stockholders of record entitled to vote at the
special meeting will be available for inspection by stockholders for 10 days
prior to the date of the special meeting at the principal executive offices of
the Company during ordinary business hours for any purpose germane to the
special meeting.
Your vote
is important regardless of the number of shares you own. The
Certificate of Incorporation Amendment Proposal must be approved by the
affirmative vote of a majority of the outstanding shares as of the record date
of the Company’s common stock. The Trust Agreement Amendment Proposal
must be approved by the affirmative vote of 70% or more of the outstanding
shares as of the record date of the Company’s common stock. The Distribution
Proposal must be approved by the affirmative vote of a majority of the
outstanding shares as of the record date of the Company’s common
stock. The adoption of the Adjournment Proposal requires the
affirmative vote of a majority of the shares of common stock represented in
person or by proxy and voting at the special meeting, if the Adjournment
Proposal is presented.
All the
Company stockholders are cordially invited to attend the special meeting in
person. However, to ensure your representation at the special
meeting, you are urged to complete, sign, date and return the enclosed proxy
card as soon as possible. If you are a stockholder of record of the
Company’s common stock, you may also cast your vote in person at the special
meeting. If your shares are held in an account at a brokerage firm or
bank, you may be required to instruct your broker or bank on how to vote your
shares. If you do not vote or do not instruct your broker or bank how
to vote, your action may have the same effect as voting “AGAINST” approval of
the Certificate of Incorporation Amendment Proposal, the Trust Agreement
Amendment Proposal and the Distribution Proposal, but will have no effect on the
vote with respect to the Adjournment Proposal. Abstentions will count
towards the vote total for approval of the Certificate of Incorporation
Amendment Proposal, the Trust Agreement Amendment Proposal and the Distribution
Proposal and will have the same effect as “AGAINST” votes for each such
proposal. An abstention or failure to vote will have no effect on any
vote to adjourn the special meeting.
The board
of directors of the Company recommends that you vote “FOR” each of the proposals
which are described in detail in this proxy statement.
Table of
Contents
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Page
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QUESTIONS
AND ANSWERS ABOUT THE PROPOSALS
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3
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FORWARD-LOOKING
STATEMENTS
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9
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SPECIAL
MEETING OF THE COMPANY STOCKHOLDERS
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9
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General
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9
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Date,
Time and Place
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10
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Purpose
of the Company Special Meeting
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10
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Recommendation
of the Company Board of Directors
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10
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Record
Date; Who is Entitled to Vote
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10
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Quorum
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11
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Abstentions
and be Non-Votes
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11
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Vote
of Our Stockholders Required
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11
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Voting
Your Shares
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11
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Revoking
Your Proxy
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12
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Who
Can Answer Your Questions About Voting Your Shares
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12
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No
Additional Matters May Be Presented at the Special Meeting
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12
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Proxies
and Proxy Solicitation Costs
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12
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Possible
Claims Against the Company
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12
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BACKGROUND
INFORMATION
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13
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General
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13
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Initial
Public Offering
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13
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Distribution
of the Trust Account
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13
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Continuation
of the Company Following the Distribution of the Trust
Account
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14
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General
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14
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Future
Acquisition Plans
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14
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Need
for Additional Capital
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14
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Possible
Status as “Shell Company” under the Federal Securities
Laws
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15
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Potential
Application of Rule 419 under the Securities Act to Future Public
Offerings
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15
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Quotation
on the NYSE Amex
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16
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Status
of Outstanding Warrants Following the Special Meeting of
Stockholders
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16
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Interests
of the Company Directors and Officers in the Proposals
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16
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Certain
Other Interests in the Proposals
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18
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PROPOSAL
ONE – THE CERTIFICATE OF INCORPORATION AMENDMENT PROPOSAL
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18
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PROPOSAL
TWO – THE TRUST AGREEMENT AMENDMENT PROPOSAL
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18
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PROPOSAL
THREE – THE DISTRIBUTION PROPOSAL
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19
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THE
ADJOURNMENT PROPOSAL
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21
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SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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21
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PRICE
RANGE OF SECURITIES AND DIVIDENDS
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23
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DESCRIPTION
OF SECURITIES
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24
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General
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24
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Common
stock
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24
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Preferred
stock
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24
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Warrants
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25
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Shares
eligible for future sale
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25
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Registration
Rights
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26
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Table of
Contents
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Page
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Delaware Anti-Takeover Law.
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26
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WHERE
YOU CAN FIND MORE INFORMATION
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26
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STOCKHOLDER
PROPOSALS
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Annex
I
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I-1
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Annex II
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II-1
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Annex
III
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III-1
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QUESTIONS
AND ANSWERS ABOUT THE PROPOSALS
Q.
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Why
am I receiving this proxy
statement?
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A.
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Santa
Monica Media Corporation (the “Company”) is a blank check company formed
in 2005 to serve as a vehicle for the acquisition, through a merger,
capital stock exchange, asset acquisition or other similar business
combination with a then unidentified operating business. On
April 2, 2007, we completed our IPO of equity securities, raising gross
proceeds of $100.0 million. Like most blank check companies,
our certificate of incorporation provides for the return of the IPO
proceeds held in trust to the holders of shares of common stock sold in
the IPO if there is no qualifying business combination(s) consummated
before the termination date as defined in the certificate of
incorporation. Our certificate of incorporation provides that,
upon the termination date, the Company will cause its officers to
distribute the amounts in the Trust Account (inclusive of interest) to the
holders of IPO Shares as soon as reasonably practicable after the
termination date. Further, our certificate of incorporation
requires that after the distribution of the amounts in the Trust Account,
the officers of the Company shall take such action necessary to dissolve
and liquidate the Company as soon as reasonably
practicable.
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Specifically,
our certificate of incorporation defines the “Termination Date” as the later of
the following dates: 18 months after the consummation of the IPO or 24 months
after the consummation of the IPO in the event that either a letter of intent,
an agreement in principle or a definitive agreement to complete a Business
Combination was executed but was not consummated within such 18-month
period. The Company did not consummate a qualifying business
combination prior to the Termination Date. Consequently, our board of
directors believes it is in the best interests of our stockholders to take the
necessary actions to return to the holders of our IPO Shares the amounts held in
the Trust Account with interest (net of applicable taxes, if any). As
of March 31, 2009, approximately $100.7 million (approximately $8.05 per IPO
Share) was in the Trust Account. Following the Trust Account
distribution, the Company intends to continue as a corporate entity, rather than
dissolve, and pursue the acquisition of one or more operating companies in one
or more industries not now identified.
Q.
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Why
is the Company proposing the Certificate of Incorporation Amendment
Proposal, the Trust Agreement Amendment Proposal and the Distribution
Proposal?
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A.
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The
Company was organized to serve as a vehicle for the acquisition, through a
merger, capital stock exchange, asset acquisition or other similar
business combination with a then unidentified operating
business. Once our board of directors determined it was no
longer possible to fulfill this purpose within the timeframe required by
our certificate of incorporation, our board of directors determined that
it was in the best interests of our stockholders to distribute the funds
in our Trust Account (net of taxes) to the holders of the IPO
Shares. In order to distribute the funds in our Trust Account,
the Company and the Trustee must be authorized to enter into an amendment
to the trust agreement. Further, our board of directors also
determined that it would be in the best interests of our stockholders for
our company to continue its corporate existence after the distribution of
the Trust Account, rather than dissolve as required by our certificate of
incorporation, and to do so with a new certificate of incorporation that
would be suitable for our company as a non-blank check
company.
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The
Company’s stockholders are being asked to approve the amendment of our
certificate of incorporation to permit the Company to continue its corporate
existence (rather than dissolving, as currently required by our certificate of
incorporation following the distribution of the amounts in the Trust Account)
and to do so with a corporate charter that does not contain blank check
company-related provisions and other restrictions. Specifically, the
Certificate of Incorporation Amendment Proposal involves removing the
restrictive provisions relating to the operations of the Company as a blank
check company and limiting the powers and privileges conferred upon the company
in the event a business combination is not consummated prior to the Termination
Date. If the Certificate of Incorporation Amendment Proposal is
approved, the Company may pursue one or more operating companies in one or more
industries not now identified. See the section entitled “Background
Information-Continuation of the Company Following the Distribution of the Trust
Account.” The Company’s amended and restated certificate of
incorporation, as it will be filed with the Secretary of State of Delaware if
each of the Certificate of Incorporation Amendment Proposal and the Trust
Agreement Amendment Proposal are approved, is attached as Annex I
hereto.
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The
Company has received an opinion from special Delaware counsel, Morris
James LLP, concerning the validity of the Certificate of Incorporation
Amendment. Morris James concluded in its opinion, based upon
the analysis set forth therein and its examination of Delaware law, and
subject to the assumptions, qualifications, limitations and exceptions set
forth in its opinion, that “the Amendment, if duly adopted by the Board of
Directors of the Company and duly approved by the holders of a majority of
the outstanding shares of capital stock of the Company in accordance with
the General Corporation Law, would be valid under the General Corporation
Law.” A copy of Morris James’s opinion is included as Annex II
to this proxy statement, and stockholders are urged to review it in its
entirety.
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Q.
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If
approved by stockholders, when will the Certificate of Incorporation
Amendment Proposal, the Trust Agreement Amendment Proposal and the
Distribution Proposal become
effective?
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A.
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If
approved by the stockholders of the Company, the Certificate of
Incorporation Amendment Proposal, the Trust Agreement Amendment Proposal
and the Distribution Proposal will become effective upon the filing of a
Certificate of Amendment of the Certificate of Incorporation with the
Secretary of State of Delaware, which is expected to occur shortly after
stockholder approval. Such Certificate of Amendment will not
implement any proposal not approved by the
stockholders.
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Q.
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What
is being voted on?
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A.
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There
are four proposals on which the Company’s stockholders are being asked to
vote. The first proposal involves amendments to our certificate
of incorporation to (a) remove from the Third Article limitation on the
powers and privileges conferred upon the Company to effecting and
implementing the dissolution and liquidation of the Company, in the event
a business combination is not consummated prior to the Termination Date
and (b) remove the Sixth Article from the certificate of incorporation,
which, among other blank check company-related restrictions, requires the
Company to dissolve following distribution of the IPO Trust Account (the
Certificate of Incorporation Amendment Proposal). The second
proposal involves the authorization for the Company and the Trustee to
enter into an amendment to the trust agreement which would permit the
distribution of assets to holders of the IPO shares (the Trust Agreement
Amendment Proposal) and the third proposal is to permit the Company to
distribute the assets of the Trust Account to the holders of the IPO
Shares (the Distribution Proposal). The Certificate of
Incorporation Amendment Proposal will not be presented to stockholders at
the special meeting unless the Trust Agreement Amendment Proposal has
already been approved. The Distribution Proposal will not be
presented to stockholders at the special meeting unless the Certificate of
Incorporation Amendment Proposal and the Trust Agreement Amendment
Proposal have already been
approved.
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The
final proposal, the Adjournment Proposal, is to approve the adjournment of
the special meeting to a later date or dates, if necessary, to permit
further solicitation and vote of proxies in the event there are
insufficient votes at the time of the special meeting to approve the
Certificate of Incorporation Amendment Proposal, the Trust Agreement
Amendment Proposal and/or the Distribution
Proposal.
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Q.
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What’s
the relationship between (i) the Certificate of Incorporation Amendment
Proposal and the Trust Agreement Amendment Proposal, on the one hand and
(ii) the Distribution Proposal on the other
hand?
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A.
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(i)
The Certificate of Incorporation Amendment Proposal will not be presented
to our stockholders for a vote at the special meeting (i.e., the polls
will not be opened for voting on the Certificate of Incorporation
Amendment Proposal) unless and until our stockholders approve the Trust
Agreement Amendment Proposal; (ii) The Distribution Proposal
will not be presented to stockholders for a vote at the special meeting
unless and until our stockholders approve the Certificate of Incorporation
Amendment Proposal and the Trust Agreement Amendment
Proposal.
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Q.
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How
are votes counted?
|
A.
|
Votes
will be counted by the inspector of election appointed for the meeting,
who will separately count “FOR” and “AGAINST” votes, abstentions and
broker non-votes. Each of the Certificate of Incorporation
Amendment Proposal and the Distribution Proposal, must be approved by the
affirmative vote of a majority of the outstanding shares as of the record
date of the Company’s common stock, voting together as a single
class. The Trust Agreement Amendment Proposal must be approved
by the affirmative vote of 70% or more of the outstanding shares as of the
record date of the Company’s common stock, voting together as a single
class. The adoption of the Adjournment Proposal requires the
affirmative vote of a majority of the shares of common stock represented
in person or by proxy and voting at the special meeting, if the
Adjournment Proposal is presented.
|
With
respect to the Certificate of Incorporation Amendment Proposal, the Trust
Agreement Amendment Proposal and the Distribution Proposal, abstentions and
broker non-votes will have the same effect as “AGAINST” votes. An
abstention or failure to vote will have no effect on any vote to adjourn the
special meeting. If your shares are held by your broker as your
nominee (that is, in “street name”), you may need to obtain a proxy form from
the institution that holds your shares and follow the instructions included on
that form regarding how to instruct your broker to vote your
shares. If you do not give instructions to your broker, your broker
can vote your shares with respect to “discretionary” items, but not with respect
to “non-discretionary” items. Discretionary items are proposals
considered routine under the rules of the NYSE Amex applicable to member
brokerage firms. These rules provide that for routine matters your
broker has the discretion to vote shares held in street name in the absence of
your voting instructions. On non-discretionary items for which you do
not give your broker instructions, the shares will be treated as broker
non-votes. The Certificate of Incorporation Amendment Proposal, the
Trust Agreement Amendment Proposal and the Distribution Proposal may be
characterized as discretionary items, although such characterization is beyond
our control. The Adjournment Proposal is definitely a discretionary
item.
Q.
|
What
is the quorum requirement?
|
A.
|
A
quorum of stockholders is necessary to hold a valid meeting. A
quorum will be present if at least a majority of the outstanding shares of
common stock on the record date are represented by stockholders present at
the meeting or by proxy.
|
Your
shares will be counted towards the quorum only if you submit a valid proxy (or
one is submitted on your behalf by your broker, bank or other nominee) or if you
vote in person at the special meeting. Abstentions and broker
non-votes will be counted towards the quorum requirement. If there is
no quorum, a majority of the votes present at the special meeting may adjourn
the special meeting to another date.
Q.
|
Who
can vote at the special meeting?
|
A.
|
Only
holders of record of the Company’s common stock at the close of business
on May 4, 2009 are entitled to have their vote counted at the special
meeting and any adjournments or postponements thereof. On the
record date, 16,038,125 shares of common stock were outstanding and
entitled to vote.
|
Stockholder
of Record: Shares Registered in Your Name. If on May 4, 2009 your
shares were registered directly in your name with the Company’s transfer agent,
Continental Stock Transfer & Trust Company, then you are a stockholder of
record. As a stockholder of record, you may vote in person at the
special meeting or vote by proxy. Whether or not you plan to attend
the special meeting in person, we urge you to fill out and return the enclosed
proxy card to ensure your vote is counted.
Beneficial
Owner: Shares Registered in the Name of a Broker or Bank. If on May
4, 2009 your shares were held, not in your name, but rather in an account at a
brokerage firm, bank, dealer, or other similar organization, then you are the
beneficial owner of shares held in “street name” and these proxy materials are
being forwarded to you by that organization. The organization holding
your account is considered to be the stockholder of record for purposes of
voting at the special meeting. As a beneficial owner, you have the
right to direct your broker or other agent on how to vote the shares in your
account. You are also invited to attend the special
meeting. However, since you are not the stockholder of record, you
may not vote your shares in person at the special meeting unless you request and
obtain a valid proxy from your broker or other agent.
Q.
|
What
vote is required in order to adopt the Certificate of Incorporation
Amendment Proposal and the Distribution
Proposal?
|
A.
|
The
adoption of each of the Certificate of Incorporation Amendment Proposal
and the Distribution Proposal will require the affirmative vote of the
holders of a majority of the outstanding shares of our common stock on the
record date, voting together as a single class. If you do not
vote (i.e. you “Abstain” from voting on this proposal), your action will
have the same effect as an “AGAINST” vote. Broker non-votes
will have the same effect as “AGAINST”
votes.
|
Q.
|
What
vote is required in order to adopt the Trust Agreement Amendment
Proposal?
|
A.
|
Pursuant
to the terms of the trust agreement, the adoption of the Trust Agreement
Amendment Proposal requires the affirmative vote of 70% or more of the
outstanding shares of our common stock on the record
date.
|
Q.
|
What
vote is required in order to adopt the Adjournment
Proposal?
|
A.
|
The
adoption of the Adjournment Proposal requires the affirmative vote of a
majority of the shares of common stock represented in person or by proxy
and voting at the special meeting, if the Adjournment Proposal is
presented.
|
Q.
|
Does
the Company board recommend voting for the approval of the Certificate of
Incorporation Amendment Proposal, the Trust Agreement Amendment Proposal,
the Distribution Proposal and the Adjournment Proposal (in the event it is
presented)?
|
A.
|
Yes. The
Company board of directors recommends that the Company stockholders vote
“FOR” each of these proposals.
|
Q.
|
How
do the Company’s directors and officers intend to vote their
shares?
|
A.
|
The
Company’s directors and officers have advised the Company that they
support the Certificate of Incorporation Amendment Proposal, the Trust
Agreement Amendment Proposal and the Distribution Proposal and will vote
any shares held by them “FOR” them, together with the Adjournment
Proposal. Currently, the directors and officers of the Company
hold 3,192,573 shares of common
stock.
|
Q.
|
What
interests do the Company’s directors and officers have in the approval of
the proposals?
|
A.
|
The
Company’s directors and officers have interests in the proposals that may
be different from, or in addition to, your interests as a
stockholder. These interests include ownership of warrants that
may become exercisable in the future, the possibility of future
compensatory arrangements, and the possibility of participation in future
financings. See the section entitled “Background
Information-Interests of the Company Directors and Officers in the
Proposals.”
|
Q.
|
Since
our IPO prospectus said that neither the Company nor its board of
directors will propose or seek stockholder approval to amend the
requirements to distribute the amount in the Trust Account and any
remaining net assets and then liquidate and dissolve if we do not complete
an acquisition within the time period required, what are my legal
rights?
|
A.
|
You
should be aware that because we stated in the IPO prospectus and the
Company filings that we would not propose or seek stockholder approval to
amend the requirements to distribute the amount in the Trust Account and
the remaining net assets of the Company and then liquidate and dissolve if
we did not complete an acquisition within the required time period, you
may have securities law claims against the Company for rescission (under
which a successful claimant would have the right to receive the total
amount paid for his or her securities pursuant to an allegedly deficient
prospectus, plus interest and less any income earned on the securities, in
exchange for surrender of the securities) or damages (compensation for
loss on an investment caused by alleged material misrepresentations or
omissions in the sale of the security). In general, a claim for
rescission must be made by a person who purchased shares pursuant to a
defective prospectus or other representation, and within the applicable
statute of limitations period, which, for claims made under federal law
(Section 12 of the Securities Act) and most state statutes, is one year
from the time the claimant discovered or reasonably should have discovered
the facts giving rise to the claim, but not more than three years from the
occurrence of the event giving rise to the claim. A successful claimant
for damages under federal or state law could be awarded an amount to
compensate for the decrease in value of his or her shares caused by the
alleged violation (including, possibly, punitive damages), together with
interest, while retaining the shares. Claims under the anti-fraud
provisions of the federal securities laws must generally be brought within
two years of discovery, but not more than five years after
occurrence.
|
Q.
|
What
if I object to the Certificate of Incorporation Amendment Proposal, the
Trust Agreement Amendment Proposal and/or the Distribution
Proposal? Do I have appraisal
rights?
|
A.
|
The
Company stockholders do not have appraisal rights in connection with the
Certificate of Incorporation Amendment Proposal, the Trust Agreement
Amendment Proposal, the Distribution Proposal or the Adjournment Proposal
under the Delaware General Corporation Law
(“DGCL”).
|
Q.
|
What
happens to the Company warrants if the Certificate of Incorporation
Amendment Proposal is not approved?
|
A.
|
If
the Certificate of Incorporation Amendment Proposal is not approved, the
Company will be required to commence proceedings to dissolve and liquidate
following distribution of the amounts in the Trust Account and your
warrants will become worthless.
|
Q.
|
What
happens to the Company warrants if the Certificate of Incorporation
Amendment Proposal and the Trust Agreement Amendment Proposal are
approved?
|
A.
|
If
the Certificate of Incorporation Amendment Proposal and the Trust
Agreement Amendment Proposal are approved, the Company will continue its
corporate existence without any of the blank check company restrictions
previously applicable to it and the warrants will remain outstanding in
accordance with their terms. For more information, see the
sections entitled “Description of Securities” and “Background
Information-Status of Outstanding Warrants Following the Special Meeting
of Stockholders.”
|
Q.
|
If
the Certificate of Incorporation Amendment Proposal and the Trust
Agreement Amendment Proposal are approved, what happens
next?
|
A.
|
If
the Certificate of Incorporation Amendment Proposal and Trust Agreement
Amendment Proposal are approved, the Company expects to continue its
existence as a corporate entity and may pursue the acquisition of one or
more operating companies in one or more industries not identified in its
IPO prospectus, subject to several important factors, including the
availability of financing and the role and level of involvement of the
Company’s current management in the Company’s post-blank check company
operations. Following the approval of the Certificate of
Incorporation Amendment Proposal and Trust Agreement Amendment Proposal,
we cannot assure you that we will be able to acquire an operating business
or have sufficient funds to operate. Moreover, we expect that
our common stock, warrant and units will no longer be listed on the NYSE
Amex, and we have no assurance that our common stock will be able to trade
in any other established market.
|
Q.
|
What
do I need to do now?
|
A.
|
The
Company urges you to read carefully and consider the information contained
in this proxy statement, including the annexes, and to consider how the
proposals will affect you as a stockholder of the Company. You
should then vote as soon as possible in accordance with the instructions
provided in this proxy statement and on the enclosed proxy
card.
|
A.
|
If
you are a holder of record of the Company common stock, you may vote in
person at the special meeting or by submitting a proxy for the special
meeting. Whether or not you plan to attend the special meeting
in person, we urge you to vote by proxy to ensure your vote is
counted. You may submit your proxy by completing, signing,
dating and returning the enclosed proxy card in the accompanying
pre-addressed postage paid envelope. You may still attend the
special meeting and vote in person if you have already voted by
proxy.
|
If you
hold your shares in “street name,” which means your shares are held of record by
a broker, bank or nominee, you must provide the record holder of your shares
with instructions on how to vote your shares if you are not in favor of any of
the proposals. You should have received a proxy card and voting
instructions with these proxy materials from that organization rather than from
the Company. Simply complete and mail the proxy card to ensure that
your vote is counted. To vote in person at the special meeting, you
must obtain a valid proxy from your broker, bank or other
agent. Follow the instructions from your broker or bank included with
these proxy materials, or contact your broker or bank to request a proxy
form.
Q.
|
Can
I change my vote after I have mailed my signed proxy or direction
form?
|
A.
|
Yes. You
can revoke your proxy at any time prior to the final vote at the special
meeting. If you are the record holder of your shares, you may
revoke your proxy in any one of three ways: (i) you may submit another
properly completed proxy card with a later date; (ii) you may send a
written notice that you are revoking your proxy to the Company’s corporate
secretary at the address listed at the end of this section; or (iii) you
may attend the special meeting and vote in person. Simply
attending the special meeting will not, by itself, revoke your
proxy.
|
If your
shares are held by your broker or bank as a nominee or agent, you should follow
the instructions provided by your broker or bank.
Q.
|
What
should I do if I receive more than one set of voting
materials?
|
A.
|
You
may receive more than one set of voting materials, including multiple
copies of this proxy statement and multiple proxy cards or voting
instruction cards, if your shares are registered in more than one name or
are registered in different accounts. For example, if you hold
your shares in more than one brokerage account, you will receive a
separate voting instruction card for each brokerage account in which you
hold shares. Please complete, sign, date and return each proxy
card and voting instruction card that you receive in order to cast a vote
with respect to all of your the Company
shares.
|
Q.
|
Who
is paying for this proxy
solicitation?
|
A.
|
The
Company will pay for the entire cost of soliciting proxies. In
addition to these mailed proxy materials, our directors and officers may
also solicit proxies in person, by telephone or by other means of
communication. These parties will not be paid any additional
compensation for soliciting proxies. We may also reimburse
brokerage firms, banks and other agents for the cost of forwarding proxy
materials to beneficial owners.
|
Q.
|
Who
can help answer my questions?
|
A.
|
If
you have questions about the proposals or if you need additional copies of
the proxy statement or the enclosed proxy card you should
contact:
|
Santa
Monica Media Corporation
12121
Wilshire Boulevard, Suite 1001
Los
Angeles, CA 90025
Attn:
Corporate Secretary
Telephone:
310-526-3222
You may
also obtain additional information about the Company from documents filed with
the U.S. Securities and Exchange Commission (“SEC”) by following the
instructions in the section entitled “Where You Can Find More
Information.”
FORWARD-LOOKING
STATEMENTS
We
believe that some of the information in this proxy statement includes
“forward-looking statements” within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”). Our forward-looking statements
include, but are not limited to, statements regarding our expectations, hopes,
beliefs, intentions or strategies regarding the future. In addition,
any statements that refer to protections, forecasts or other characterizations
of future events or circumstances, including any underlying assumptions, are
forward-looking statements. The words “anticipate,” “believe,”
“continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,”
“possible,” “potential,” “predict,” “project,” “should,” “would” and similar
expressions may identify forward-looking statements, but the absence of these
words does not mean that a statement is not
forward-looking. Forward-looking statements in this report may
include, for example, statements about our:
|
·
|
Ability
to complete a combination with one or more target
businesses;
|
|
·
|
Public
securities’ limited liquidity and
trading;
|
|
·
|
The
delisting of our securities from the NYSE Amex or an inability to have our
securities listed on the NYSE Amex;
|
|
·
|
Use
of proceeds not in trust or available to us from interest income on Trust
Account balance; or
|
The
forward-looking statements contained or incorporated by reference in this proxy
statement are based on our current expectation and beliefs concerning future
developments and their potential effects on us and speak only as of the date of
such statement. There can be no assurance that future developments
affecting us will be those that we have anticipated. These
forward-looking statements involve a number of risks, uncertainties (some of
which are beyond our control) or other assumptions that may cause actual results
or performance to be materially different from those expressed or implied by
these forward-looking statements, including, among other things, claims by third
parties against the Trust Account, unanticipated delays in the distribution of
the funds from the Trust Account, the application of Rule 419 or other
restrictions to future financings or business combinations involving the Company
and the Company’s ability to finance and consummate acquisitions following the
distribution of the funds from the Trust Account. Should one or more
of these risks or uncertainties materialize, or should any of our assumptions
prove incorrect, actual results may vary in material respects from those
projected in these forward-looking statements. We undertake no
obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as may be required
under applicable securities laws.
SPECIAL
MEETING OF THE COMPANY STOCKHOLDERS
General
We are
furnishing this proxy statement to the Company stockholders as part of the
solicitation of proxies by our board of directors for use at the special meeting
of the Company stockholders to be held on May 22, 2009, and at any adjournment
or postponement thereof. This proxy statement is first being
furnished to our stockholders on or about May 1, 2009 in connection with the
vote on the Certificate of Incorporation Amendment Proposal, the Trust Agreement
Amendment Proposal, the Distribution Proposal and the Adjournment
Proposal. This document provides you with the information you need to
know to be able to vote or instruct your vote to be cast at the special
meeting. Unless the context requires otherwise, the terms “the
Company,” “we,” “us,” and “our” refer to Santa Monica Media
Corporation.
Date,
Time and Place
The
special meeting will be held at the offices of Loeb & Loeb LLP, 345 Park
Avenue, New York, NY 10154, on Friday, May 22, 2009, at 9:00 a.m. New York
time.
Purpose
of the Company Special Meeting
At this
special meeting, you will be asked to consider and vote upon the following three
proposals (the “Amendment and Distribution”):
|
·
|
The
Certificate of Incorporation Amendment Proposal – proposal to amend the
certificate of incorporation of the Company to permit the continuance of
our company as a corporation beyond the time currently specified in our
certificate of incorporation without the limitations imposed at the time
of its IPO, specifically, to (i) remove the proviso from the Third Article
which limits the powers and privileges conferred upon the Company to
effecting and implementing the dissolution and liquidation of the Company
in the event a business combination is not consummated prior to the
termination date and (ii) remove the Sixth Article from the certificate of
incorporation, which, among other blank check company-related
restrictions, requires the Company to dissolve following the distribution
of the Trust Account.
|
|
·
|
The
Trust Agreement Amendment Proposal – a proposal to authorize the Company
and the trustee to enter into an amendment to the trust agreement which
would permit the distribution of all of the assets of the Trust Account to
the holders of the IPO Shares pursuant to the Distribution
Proposal.
|
|
·
|
The
Distribution Proposal – a proposal to authorize the distribution of all of
the assets of the Trust Account to the holders of the IPO
Shares.
|
and
|
·
|
The
Adjournment Proposal - a proposal to authorize the adjournment of the
special meeting to a later date or dates, if necessary, to permit further
solicitation and vote of proxies in the event there are insufficient votes
at the time of the special meeting to adopt the Certificate of
Incorporation Amendment Proposal, the Trust Agreement Amendment Proposal
and/or the Distribution Proposal.
|
Recommendation
of the Company Board of Directors
Our board
of directors:
|
·
|
has
approved each of the Certificate of Incorporation Amendment Proposal, the
Trust Agreement Amendment Proposal, the Distribution Proposal and the
Adjournment Proposal; and
|
|
·
|
recommends
that our common stockholders vote “FOR” each of the Certificate of
Incorporation Amendment Proposal, the Trust Agreement Amendment Proposal,
the Distribution Proposal and the Adjournment Proposal (in the event it is
presented).
|
Record
Date; Who is Entitled to Vote
The
record date is May 4, 2009. On this record date, there were
16,038,125 shares of common stock outstanding and entitled to
vote. Holders of warrants are not entitled to vote at the special
meeting.
The Trust
Agreement Amendment Proposal will be submitted to the holders of the outstanding
shares as of the record date of the Company’s common stock. Neither
of the Certificate of Incorporation Amendment Proposal or the Distribution
Proposal will be presented to our stockholders for a vote at the special meeting
(i.e., the polls will not be opened for voting on the Certificate of
Incorporation Amendment Proposal or the Distribution Proposal) unless and until
our stockholders have approved the Trust Agreement Amendment
Proposal. Depending on our ability to obtain the requisite number of
votes for the Trust Agreement Amendment Proposal, the Certificate of
Incorporation Amendment Proposal and the Distribution Proposal, the adoption of
the Adjournment Proposal may be submitted to the holders of our common
shares.
The
Company’s officers and directors have advised us that they support each of the
proposals and intend to vote their shares “FOR” each of the Certificate of
Incorporation Amendment Proposal, the Trust Agreement Amendment Proposal, the
Distribution Proposal and the Adjournment Proposal at the special
meeting. As of the record date, the Company’s officers and directors
owned, either directly or beneficially, and were entitled to vote 3,192,573
shares, or 19.9%, of the Company’s outstanding common stock.
Quorum
A quorum
will be present if at least a majority of the outstanding shares of common stock
on the record date are represented by stockholders present at the meeting or by
proxy.
Abstentions
and Non-Votes
Proxies
that are marked “abstain” and proxies relating to “street name” shares that are
returned to us but marked by brokers as “not voted” will be treated as shares
present for purposes of determining the presence of a quorum on all
matters. The latter will not be treated as shares entitled to vote on
the matter as to which authority to vote is withheld by the
broker. If you do not give the broker voting instructions, your
broker may not be able to vote your shares on the Certificate of Incorporation
Amendment Proposal, the Trust Agreement Amendment Proposal and the Distribution
Proposal.
Vote
of Our Stockholders Required
The
affirmative vote of a majority of the outstanding shares of the Company’s common
stock is required to adopt each of the Certificate of Incorporation Amendment
Proposal or the Distribution Proposal. The affirmative vote of 70% or
more of the outstanding shares of the Company’s common stock is required to
adopt the Trust Agreement Amendment Proposal. If you do not vote
(i.e. you “Abstain” from voting on these proposals), your action will have the
same effect as an “AGAINST” vote. Broker non-votes will have the same
effect as “AGAINST” votes.
If the
affirmative vote of a majority of the outstanding shares of the Company’s common
stock is not obtained for the approval of the Certificate of Incorporation
Amendment Proposal, and the affirmative vote of 70% or more of the outstanding
shares of the Company’s common stock is not obtained for the Trust Agreement
Amendment Proposal, the Distribution Proposal will not be presented at the
special meeting for approval.
The
adoption of the Adjournment Proposal requires the affirmative vote of a majority
of the shares of common stock represented in person or by proxy and voting at
the special meeting, if the Adjournment Proposal is presented.
Voting
Your Shares
Each
share of the Company common stock that you own in your name entitles you to one
vote. Your one or more proxy cards show the number of shares of our
common stock that you own. There are two ways to vote your shares of
the Company common stock at the special meeting: You can vote by signing and
returning the enclosed proxy card. If you vote by proxy card, your
“proxy,” whose name is listed on the proxy card, will vote your shares as you
instruct on the proxy card. If you sign and return the proxy card but
do not give instructions on how to vote your shares, your shares will be voted,
as recommended by our board, “FOR” the adoption of the Certificate of
Incorporation Amendment Proposal, the Trust Agreement Amendment Proposal, the
Distribution Proposal and the Adjournment Proposal. Votes received
after a matter has been voted upon at the special meeting will not be
counted.
You can
attend the special meeting and vote in person. We will give you a
ballot when you arrive. However, if your shares are held in the name
of your broker, bank or another nominee, you must get a proxy from the broker,
bank or other nominee. That is the only way we can be sure that the
broker, bank or nominee has not already voted your shares.
Revoking
Your Proxy
If you
give a proxy, you may revoke it at any time before it is exercised by doing any
one of the following:
|
·
|
you
may send another proxy card with a later
date;
|
|
·
|
you
may notify our corporate secretary in writing before the special meeting
that you have revoked your proxy;
or
|
|
·
|
you
may attend the special meeting, revoke your proxy, and vote in person, as
indicated above.
|
Who
Can Answer Your Questions About Voting Your Shares
If you
have any questions about how to vote or direct a vote in respect of your shares
of our common stock, you may call our corporate secretary at (310)
526-3222.
No
Additional Matters May Be Presented at the Special Meeting
This
special meeting has been called only to consider the adoption of the Certificate
of Incorporation Amendment Proposal, the Trust Agreement Amendment Proposal, the
Distribution Proposal and the Adjournment Proposal. Under our
by-laws, other than procedural matters incident to the conduct of the special
meeting, no other matters may be considered at the special meeting if they are
not included in the notice of the special meeting.
Proxies
and Proxy Solicitation Costs
We are
soliciting proxies on behalf of our board of directors. This
solicitation is being made by mail but also may be made by telephone or in
person. The Company will pay for the entire cost of soliciting
proxies. In addition to these mailed proxy materials, our directors
and officers may also solicit proxies in person, by telephone or by other means
of communication. These parties will not be paid any additional
compensation for soliciting proxies.
We will
ask banks, brokers and other institutions, nominees and fiduciaries to forward
their proxy materials to their principals and to obtain their authority to
execute proxies and voting instructions. We will reimburse them for
their reasonable expenses.
If you
grant a proxy, you may still vote your shares in person if you revoke your proxy
before the special meeting.
Possible
Claims Against the Company
You
should be aware that because we stated in the IPO prospectus and the Company
filings that we would not propose or seek stockholder approval to amend the
requirements to distribute the amount in the Trust Account and the remaining net
assets of the Company and then liquidate and dissolve if we did not complete an
acquisition within the required time period, you may have securities law claims
against the Company for rescission (under which a successful claimant would have
the right to receive the total amount paid for his or her securities pursuant to
an allegedly deficient prospectus, plus interest and less any income earned on
the securities, in exchange for surrender of the securities) or damages
(compensation for loss on an investment caused by alleged material
misrepresentations or omissions in the sale of the security). In
general, a claim for rescission must be made by a person who purchased shares
pursuant to a defective prospectus or other representation, and within the
applicable statute of limitations period, which, for claims made under federal
law (Section 12 of the Securities Act) and most state statutes, is one year from
the time the claimant discovered or reasonably should have discovered the facts
giving rise to the claim, but not more than three years from the occurrence of
the event giving rise to the claim. A successful claimant for damages under
federal or state law could be awarded an amount to compensate for the decrease
in value of his or her shares caused by the alleged violation (including,
possibly, punitive damages), together with interest, while retaining the shares.
Claims under the anti-fraud provisions of the federal securities laws must
generally be brought within two years of discovery, but not more than five years
after occurrence.
BACKGROUND
INFORMATION
General
We were
incorporated in Delaware on June 24, 2005, as a blank check company formed to
serve as a vehicle for the acquisition, through a merger, capital stock
exchange, asset acquisition or other similar business combination with a then
unidentified operating business.
Initial
Public Offering
A
registration statement for our initial public offering was declared effective on
March 27, 2007. On April 2, 2007, we completed the IPO, consisting of
12,500,000 units at a price of $8.00 per unit. Each unit consists of
one share of common stock and one warrant. Each warrant entitles the
holder to purchase one share of common stock at a price of $6.00, exercisable on
the later of our completion of a business combination or March 27,
2008. The warrants expire on March 27, 2011, or earlier upon
redemption.
We
received total net proceeds of $95,400,000 from the IPO, taking into account
$4,600,000 of underwriting fees and other offering
expenses. Simultaneously with the consummation of the IPO, we
privately sold an aggregate of 413,125 units to Santa Monica Capital Partners,
LLC (the “pre-IPO stockholder”), at a price of $8.00 per unit, for an aggregate
purchase price of $3,305,000, which includes the cancellation of the $305,000
loan made to us by the pre-IPO stockholder.
The IPO
generated total gross proceeds of $100,000,000 to us, excluding the proceeds
from the offering of the 413,125 units on a private basis to the pre-IPO
stockholder. The aggregate net proceeds of the IPO and the sale of
units on a private basis to our pre-IPO stockholders was $98,705,000, of
which $98,605,000 were placed in the Trust Account. In addition, the
underwriters of the IPO agreed to defer payment of a portion of the underwriting
discount equal to 4% of the gross proceeds, or $4,000,000. This
deferred amount was to be held in trust and not released until the earlier to
occur of (i) the completion of our initial business combination or (ii) our
liquidation, in which case such proceeds will be distributed to the public
stockholders, together with all other funds held in the Trust
Account. We have asked the representatives of the underwriters to
confirm that they will have no right to receive any of these deferred amounts
after distribution of the Trust Account to the holders of IPO
Shares.
Our
certificate of incorporation requires that we take all actions necessary to
liquidate in the event that we do not consummate a business combination within
18 months from the date of the consummation of our initial public offering
(November 2, 2008), or 24 months from the consummation of our IPO (April 2,
2009) if certain criteria have been satisfied.
Distribution
of the Trust Account
If the
Distribution Proposal is approved, we will distribute to the holders of the IPO
Shares, in proportion to their respective equity interests, an aggregate sum
equal to the amount in the Trust Account (including the amount representing the
$4,000,000 deferred portion of the underwriters’ fees, plus any interest), net
of taxes payable pursuant to the trust agreement. See “Certain Other Interests
in the Proposals.” The holders of the Company’s common stock that
were not issued in the Company’s IPO, including purchasers in our private
placement offering, have waived their rights to participate in any distribution
out of the Trust Account, but only with respect to those shares of common stock
owned by them prior to the IPO.
The
Company does not expect to be able to satisfy its liabilities to creditors
concurrently with the payment of the distribution of assets pursuant to the
Distribution Proposal due to the fact that, as of March 31, 2009, the Company
had no assets outside of the Trust Account as it has expended all of its funds
that had been released to it. As of that date, the Company had
liabilities to creditors of approximately $1,263,000.
While the
Company believes that all outstanding liabilities will be paid or compromised
after the distribution of the assets of the Trust Account, no assurance can be
made that additional liabilities will not arise in the future.
Under
federal or state fraudulent transfer laws and the voidable preference provisions
of the federal bankruptcy code, if a court were to find that, at the time the
distribution was effected, we paid the amounts from the Trust Account either (i)
with the intent of hindering, delaying or defrauding current or future
creditors, or (ii) at a time when we were insolvent and within 90 days prior to
a filing of a bankruptcy petition against the Company, such court could require
the repayment of such amounts to the Company. While we do not believe
that the funds in the Trust Account are generally available to the creditors of
the Company and therefore would not be considered to be assets of the Company in
any bankruptcy or insolvency proceeding, there can be no assurance that any
creditor of ours or a court considering the matter would agree with this
position. In addition, the payment of such amounts are clearly within
the ordinary course of our business and do not involve any discretionary action
on our part. Nevertheless, there is a risk that the fact that
the liabilities of the Company at the time of the distribution exceed its assets
could lead to a court subsequently requiring all or a portion of
such distribution to be returned to the Company.
Continuation
of the Company Following the Distribution of the Trust Account
General
The
purpose of the Certificate of Incorporation Amendment Proposal is to permit the
Company to continue its corporate existence (rather than dissolving, as
currently required by our certificate of incorporation following the
distribution of the amounts in the Trust Account) and to do so with a corporate
charter that does not contain blank check company-related provisions and other
restrictions. Specifically, the Certificate of Incorporation
Amendment Proposal includes removing the restrictive provisions relating to the
operations of the Company as a blank check company.
Future
Acquisition Plans
If the
Certificate of Incorporation Amendment Proposal is approved, the Company intends
to pursue the acquisition of one or more operating companies in one or more
industries not now identified, subject to several important factors, including
the availability of financing and the role and level of involvement of the
Company’s current board of directors and management in the Company’s post-blank
check company operations. We cannot assure you that we will be able
to acquire an operating business. As an alternative, the Company
might seek to obtain value from its status as a public shell through a sale to
or combination with an operating company seeking such status as a means of
“going public.” As of the date of this proxy statement, the Company
has no arrangements in place with any acquisition candidates and will not engage
in more active identification and pursuit of potential acquisitions unless and
until our stockholders approve the Certificate of Incorporation Amendment
Proposal at the special meeting.
In the
event that the Company enters into a definitive agreement to acquire an
operating company, we believe the acquisition would not necessarily require
stockholder approval, even if it constituted a change in control of the Company,
provided that the Company’s common stock is not then listed on a national
exchange and the acquisition is structured so as not to require a stockholder
vote under the Delaware General Corporation Law
(“DGCL”). Accordingly, you may not be entitled to vote on any future
acquisitions by the Company.
Need
for Additional Capital
The board
of directors anticipates that the Company will need to raise capital to fund
ongoing operations, repay its current liabilities, including the compliance cost
of continuing to remain a public reporting company, and to fund the acquisition
of an operating business in the event the proposals in this proxy statement are
approved. The Company expects to receive later in 2009 tax refunds of
approximately $168,000, which will be used to pay down the liabilities of the
Company.
The
Company does not currently have any specific capital-raising
plans. We may seek to issue debt or equity securities, including
preferred securities for which we may determine the rights and designations,
common stock, warrants, equity rights, convertibles notes and any combination of
the foregoing. Any such offering may take the form of a private
placement, public offering, rights offering, other offering or any combination
of the foregoing at fixed or variable market prices or discounts to prevailing
market prices. We cannot assure you that we will be able to raise
sufficient capital on favorable, or any, terms. The issuance of debt
securities will not be, and we believe that the issuance of equity securities in
such a financing will not be, subject to stockholder approval if the Company’s
common stock is not then listed on a national exchange. Accordingly,
you may not be entitled to vote on any future financing by the
Company. Moreover, stockholders have no preemptive or other rights to
acquire any securities that the Company may issue in the future.
If the
Company is deemed to be “blank check company” for the purposes of the federal
securities laws, regulatory restrictions that are more restrictive than those
currently set forth in the Company’s certificate of incorporation may apply to
any future public offerings by the Company. For more information, see
the section below entitled “-Potential Application of Rule 419 under the
Securities Act to Future Public Offerings.”
Possible
Status as “Shell Company” under the Federal Securities Laws
Following
stockholder approval of the Certificate of Incorporation Amendment Proposal and
the Trust Account distribution, we may be deemed a “shell company” under the
federal securities laws. A “shell company” is a public reporting
company that has no or nominal assets (other than cash), and no or nominal
operations. Shell companies are subject to certain special rules
under the federal securities laws, including:
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specific
disclosure requirements on Form 8-K upon the consummation of a transaction
that effects a change in control or changes the shell company into a
non-shell company, as discussed further
below;
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limitations
in the use of certain short-form registration statements under the
Securities Act while a shell company, including Form S-8 registration
statements used in connection with employee benefit
plans;
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ineligibility
for certain streamlined procedures and publicity rules in connection with
public offerings while a shell company and for a period of three years
thereafter; and
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unavailability
of the resale provisions of Rule 144 of the Securities Act until one year
following the Form 8-K disclosure described
above.
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In
addition, we may be deemed a “blank check company” under the federal securities
laws, which could result in restrictions on any future public offerings of our
securities, as further described below.
Potential
Application of Rule 419 under the Securities Act to Future Public
Offerings
Depending
on the timing and nature of our future capital-raising activities, we could
become subject to even more onerous restrictions regarding the handling of any
future public offering proceeds than those set forth in our current certificate
of incorporation regarding the proceeds of our IPO. Following the
amendment of our certificate of incorporation and the distribution of the
amounts in the Trust Account, we may be deemed a “blank check company” for the
purposes of Rule 419 promulgated under the Securities Act of 1933 (the
“Securities Act”). Rule 419 imposes strict restrictions on the
handling of the proceeds received, and securities issued, in an offering
registered under the Securities Act by a “blank check company” as defined in
Rule 419, including a mandatory escrow of the offering proceeds, a process of
stockholder “reconfirmation” when a business combination is announced and a ban
on the trading of the securities sold, pending the consummation of a business
combination, which must occur within 18 months of the offering. Rule
419 defines a “blank check company” as:
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a
development stage company that has no specific business plan or purpose or
has indicated that its business plan is to engage in a merger or
acquisition with an unidentified company or companies, or other entity or
person; and
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issuing
“penny stock,” as defined in Rule 3a51-1 under the Exchange
Act.
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There are
several bases on which exemptions from the application of Rule 419 exist,
including raising capital through a private offering exempt from registration
under the Securities Act, raising net proceeds in excess of $5 million in a
public offering that is a firm commitment underwritten offering and raising
capital in a public offering in connection with the acquisition of an identified
company. Although the Company intends to conduct any future capital
raising in a manner that is exempt from Rule 419, there can be no assurances
that any future capital raising transactions will qualify for such an
exemption.
Quotation
on the NYSE Amex
The
Company’s outstanding common stock, warrants and units are currently quoted on
the NYSE Amex. Following stockholder approval of the distribution of the amounts
in the Trust Account, we believe that our common stock, warrant and units will
no longer be listed on the NYSE Amex. In such event, we will try to have them
quoted on the OTC Bulletin Board. However, we have no certainty that we will be
able to accomplish this. To trade on the OTC Bulletin Board, the Company must
continue to timely file public reports. Concurrent with the IPO, the Company
filed a registration statement on Form 8-A with the SEC registering the units,
the common stock, and the warrants under Section 12(b) of the Exchange Act.
While such registration is in effect, the Company is a reporting company under
the federal securities laws. At this time, the Company has no intention of
seeking to deregister its common stock, warrant or units under the Exchange Act
and plans to continue to file public reports as long as such registration is in
effect. Nonetheless, we cannot assure you that our common stock, warrants or
units will remain listed on the NYSE Amex or be eligible for quotation on the
OTC Bulletin Board.
Status
of Outstanding Warrants Following the Special Meeting of
Stockholders
If the
Certificate of Incorporation Amendment Proposal is not approved, the Company
will be required to commence proceedings to dissolve and liquidate following
distribution of the amounts in the Trust Account, and your warrants will become
worthless. If the Certificate of Incorporation Amendment Proposal is
approved, the Company will continue its corporate existence without any of the
blank check company restrictions contained in its certificate of incorporation
that were previously applicable to it and the warrants will remain outstanding
in accordance with their terms. It is the Company’s position that the
outstanding warrants become exercisable upon the consummation of a business
combination, as described in the Company’s IPO registration statement, but that
because the time period to consummate such a business combination has expired,
the warrants are no longer exercisable. Outstanding warrants may
adversely affect the ability of the Company to attract new investors or
otherwise obtain financing and may make it more difficult to effect future
acquisitions. For information about the warrants, see the section
entitled “Description of Securities.”
Interests
of the Company Directors and Officers in the Proposals
When you
consider the recommendations of the Company’s board of directors in favor of the
proposals, you should keep in mind that the Company’s pre-IPO stockholders
directors and officers (“the Company Inside Stockholders”) have interests in the
proposals that may be different from, or in addition to, your interests as a
stockholder.
Shares
Held by the Company Inside Stockholders
If the
Certificate of Incorporation Amendment Proposal is not approved, the Company
will be required to commence proceedings to dissolve and liquidate following
distribution of the amounts in the Trust Account. There will be no
distribution from the Trust Account with respect to the Company’s pre-IPO
stockholder’s securities, which would expire worthless if the Certificate of
Incorporation Amendment Proposal in not approved. For more
information about the outstanding warrants, see the sections entitled
“Description of Securities” and “- Status of Outstanding Warrants Following the
Special Meeting of Stockholders.”
Compensatory
Arrangements for Board of Directors and Management
At this
time, the board of directors has not determined the initial composition of the
board or management following stockholder approval of the Certificate of
Incorporation Amendment Proposal and the Trust Account
distribution. The Company currently has made no determinations
regarding the compensation it will pay its directors or officers following
stockholder approval of the Certificate of Incorporation Amendment Proposal and
the Trust Account distribution.
Officer
and Director Liability
Messrs.
Marshall, Brendlinger and Pulier have each agreed, pursuant to a letter
agreement with us and the representatives, that if we liquidate prior to the
consummation of a business combination, they will be personally liable for
claims brought by a provider of services or products, a lender or a prospective
target business if such person or entity does not provide a valid and
enforceable waiver to rights or claims to the Trust Account so as to ensure that
the proceeds in the Trust Account are not reduced by the claims of such persons
that are owed money by us. In addition, our board, would have a
fiduciary obligation to our stockholders to bring a claim against Messrs.
Marshall, Brendlinger and Pulier to enforce their liability
obligation. None of these three individuals will be personally liable
to pay any of our debts and obligations except as provided
above. Accordingly, the actual per-share amount distributed following
approval of the Distribution Proposal could be less than the pro rata share of
the Trust Account otherwise payable to holders of IPO Shares ($7.89 per unit, or
$0.11 less than the per-unit offering price of $8.00) due to claims of
creditors.
The
Company does not expect to be able to satisfy its liabilities to creditors
concurrently with the payment of the distribution of assets pursuant to the
Distribution Proposal due to the fact that, as of March 31, 2009, the Company
had no assets outside of the Trust Account as it has expended all of its funds
that had been released to it. As of that date, the Company had
liabilities to creditors of approximately $1,263,000.
Potential
Interests of the Company Inside Stockholders in Future Financings and
Acquisitions
Following
stockholder approval of the Certificate of Incorporation Amendment Proposal and
the Trust Account distribution, the Company will operate without the blank check
company restrictions that are currently set forth in our certificate of
incorporation. The board of directors anticipates that the Company
will need to raise capital to fund ongoing operations, including the compliance
cost of continuing to remain a public reporting company, and to fund the
acquisition of an operating business. Such a financing may involve
existing investors and/or new investors, including officers and directors of the
Company. Further, any operating business which the Company may
acquire following stockholder approval of the Certificate of Incorporation
Amendment Proposal, may be affiliated, or have some relationship with, one of
our existing officers and directors.
In
connection with the IPO, each of our officers and directors signed an agreement
with Citigroup Global Markets Inc. and Ladenberg Thalmann & Co., the
representatives of the underwriters in our IPO (the “Representatives”), that the
Company would not consummate a business combination with an affiliated entity
without an opinion from an independent investment banking firm reasonably
acceptable to the Representatives that the business combination is fair to the
Company’s stockholders from a financial perspective. The continued
applicability of this provision following the stockholder approval of the
Certificate of Incorporation Amendment Proposal and the Trust Account
distribution is unclear, but we have asked the Representatives to confirm that
such provision would not apply following stockholder approval of the Certificate
of Incorporation Amendment Proposal. In such circumstances, we would
anticipate that the board of directors will take such action as is consistent
with its fiduciary duties to stockholders.
Other
Agreements of the Company Inside Stockholders
Our
pre-IPO stockholder and our officers and directors are confirming with the
Company and the representatives of the underwriters in the IPO the termination
and inapplicability after distribution of the Trust Account contemplated by the
Distribution Proposal of their agreements not to (i) transfer any of the
securities of the Company they acquired prior to the IPO until one year after
the Company completes its initial business combination, and (ii) to vote in the
Company’s initial business combination the shares of common stock they acquired
prior to the IPO in accordance with the majority of the IPO
Shares.
Certain
Other Interests in the Proposals
In
addition to the interests of our directors and officers in the proposals, you
should keep in mind that certain individuals promoting the proposals and/or
soliciting proxies on behalf of the Company have interests in the proposals that
may be different from, or in addition to, your interests as a
stockholder. The underwriters in the IPO agreed to defer payment of a
portion of the underwriting discount equal to 4% of the gross proceeds, or
$4,000,000. This amount will be held in trust and not released until
the earlier to occur of (i) the completion of our initial business combination
or (ii) our liquidation, in which case such proceeds will be distributed to the
public stockholders, together with all other funds held in the Trust Account. We
have asked the underwriter to forfeit any rights to or claims against such
proceeds because a business combination was not timely completed.
PROPOSAL
ONE – THE CERTIFICATE OF INCORPORATION AMENDMENT PROPOSAL
The
Company is proposing to eliminate the blank check company-related provisions,
including the Sixth Article of the Company’s certificate of incorporation and
the limitation on the powers and privileges of the Company if a business
combination is not consummated prior to the Termination Date in the Third
Article of the Company’s certificate of incorporation.
The
Company’s certificate of incorporation requires us to dissolve and liquidate the
Company as soon as reasonably practicable after the Trust Account
distribution. In the judgment of our board of directors, the
elimination of blank check company restrictions proposal is desirable because it
removes the requirement to dissolve the Company and allows it to continue as a
corporate entity. Additionally, the Sixth Article relates to the
operation of the Company as a blank check company prior to the Trust Account
distribution or consummation of a qualifying business
combination. Among the Sixth Article’s sections, it requires that IPO
proceeds be held in the Trust Account until a business combination or
liquidation of the Company has occurred and also requires that the terms of a
proposed business combination be submitted for approval by the Company’s
stockholders. These provisions would restrict the Company’s ability
to pursue the acquisition of one or more operating companies and related
financings after the distribution of the Trust Account to the holders of the
Common stock. See “SPECIAL MEETING OF THE COMPANY STOCKHOLDERS —
Possible Claims Against the Company.”
The
adoption of the Certificate of Incorporation Amendment Proposal will require the
affirmative vote of a majority of the outstanding shares of the Company’s common
stock on the record date.
The
Company has received an opinion from special Delaware counsel, Morris James LLP,
concerning the validity of the Certificate of Incorporation
Amendment. Morris James concluded in its opinion, based upon the
analysis set forth therein and its examination of Delaware law, and subject to
the assumptions, qualifications, limitations and exceptions set forth in its
opinion, that “the Amendment, if duly adopted by the Board of Directors of the
Company and duly approved by the holders of a majority of the outstanding shares
of capital stock of the Company in accordance with the General Corporation Law,
would be valid under the General Corporation Law.” A copy of Morris
James’s opinion is included as Annex II to this proxy statement, and
stockholders are urged to review it in its entirety.
The Board
of Directors recommends a vote FOR approval of the adoption of the Certificate
of Incorporation Amendment Proposal.
PROPOSAL
TWO – THE TRUST AGREEMENT AMENDMENT PROPOSAL
General
The
Company is proposing to authorize the Company and the Trustee to enter into an
amendment to the trust agreement which would permit the distribution of assets
to holders of the IPO Shares pursuant to the Distribution Proposal. A
copy of the proposed amendment to the trust agreement appears as Annex III to
this Proxy Statement.
The trust
agreement currently provides that no distribution may be made from the Trust
Account except in accordance with paragraphs 1(i), 1(j), 1(k) and 4(a) of the
trust agreement. Paragraph 1(i) relates to payment of any income tax
obligation relating to the income of the property in the Trust Account,
paragraph 1(j) relates to the distribution of up to $1,600,000 in permissible
payments to cover a portion of our operating expenses and paragraph 4(a) relates
to the transfer of management of the Trust Account in the event the Trustee
resigns under the trust agreement. Paragraph 1(k) of the trust
agreement relates to the liquidation of the Trust Account promptly after receipt
of and only in accordance with the terms of a termination letter in a form
substantially similar to that attached as either Exhibit A or Exhibit B to the
trust agreement. We propose to amend Exhibit B to provide for the
distribution of assets to holders of the IPO Shares pursuant to the Distribution
Proposal.
Exhibit B
may not be amended without the consent of 70% of the public stockholders of
record on the record date. As such, the adoption of the Trust
Agreement Amendment Proposal will require the affirmative vote of 70% or more of
the outstanding shares of the Company’s common stock on the record
date.
The Board
of Directors recommends a vote FOR approval of the adoption of the Trust
Agreement Amendment Proposal.
PROPOSAL
THREE – THE DISTRIBUTION PROPOSAL
General
The
Company is proposing to distribute all of the assets of the Trust Account of the
Company to the holders of the IPO Shares.
The
Company’s trust agreement contemplates that the Company will be dissolved and
liquidated as soon as practicable after distribution of the Trust
Account. In the judgment of our board of directors, the authorization
of the distribution of Trust Account assets together with the approval of the
Certificate of Incorporation Amendment Proposal and Trust Agreement Amendment
Proposal is desirable because it permits the Company to distribute the assets of
the Trust Account and then continue operating the Company without any
requirement to liquidate or dissolve the Company.
As of
March 31, 2009, approximately $100.7 million (approximately $8.05 per IPO Share)
was in the Trust Account. Distribution of the Trust Account to the
holders of IPO Shares following approval of the Distribution Proposal would
provide such holders with all amounts in the Trust Account, but would not give
them any other assets of the Company that would be available to them after
satisfaction of all of the Company’s obligations upon a liquidation and
dissolution. The Company does not expect to be able to satisfy its
liabilities to creditors concurrently with the payment of the distribution of
assets pursuant to the Distribution Proposal due to the fact that, as of March
31, 2009, the Company had no assets outside of the Trust Account as it has
expended all of its funds that had been released to it. The Company
expects to receive tax refunds later in 2009 of approximately $168,000 which
will be used to pay down the liabilities of the Company which as of
March 31, 2009 were approximately $1,263,000. Our liabilities include
indebtedness to Santa Monica Capital Partners II, LLC, an affiliate, of
approximately $310,000 for funds advanced to the Company.
The
adoption of the Distribution Proposal will require the affirmative vote of a
majority of the outstanding shares of the Company’s common stock on the record
date.
The Board
of Directors recommends a vote FOR approval of the adoption of
the Distribution Proposal.
Material
U.S. Federal Income Tax Consequences of the Distribution Proposal
The
following discussion is a general summary of the material U.S. federal income
tax consequences of the distribution of the assets of the Trust Account to U.S.
stockholders pursuant to the Distribution Proposal. This discussion applies only
to stockholders (referred to herein as “U.S. stockholders”) who are “United
States persons,” as defined in the Internal Revenue Code of 1986, as amended
(the “Code”), and who hold each of their shares of stock in the Company as a
“capital asset,” as defined in Section 1221 of the Code. This discussion does
not purport to be a complete analysis of all of the potential tax effects of the
Distribution Proposal. This discussion does not address the tax considerations
applicable to particular stockholders based on their individual circumstances,
or to particular categories of stockholders subject to special treatment under
certain U.S. federal income tax laws (such as dealers in securities, banks,
insurance companies, tax-exempt entities, mutual funds, and foreign persons). In
addition, this discussion does not consider the tax treatment of partnerships or
other pass-through entities or persons who hold stock through such entities.
This discussion also does not address any aspect of U.S. federal non-income tax
laws, such as gift or estate tax laws, or state, local or non-U.S. tax
laws.
The
discussion is based upon the Code, U.S. Treasury Department regulations
promulgated thereunder, published rulings of the Internal Revenue Service
(“IRS”), and judicial decisions now in effect. These authorities are subject to
change or differing interpretations, possibly on a retroactive
basis.
The
Company has not sought, and will not seek, a ruling from the IRS or an opinion
of counsel as to any U.S. federal income tax consequence described herein. The
IRS may disagree with the discussion herein, and its determination may be upheld
by a court. Moreover, there can be no assurance that future legislation,
regulations, administrative rulings or court decisions will not adversely affect
the accuracy of the statements in this discussion.
Because of the complexity of the tax
laws and because the tax consequences to the Company or any particular
stockholder may be affected by matters not discussed herein, each stockholder is
urged to consult with its tax advisors with respect to the specific tax
consequences to such stockholder in connection with the Distribution Proposal,
including tax reporting requirements, the applicability and effect of federal,
state, local, non-U.S. and other tax laws and the effect of any proposed changes
in the tax laws.
Tax
Consequences to U.S. Stockholders Who Receive Distributions from the Trust
Account
The
distribution of the assets of the Trust Account pursuant to the Distribution
Proposal likely will be treated as a non-liquidating distribution for U.S.
federal income tax purposes. In such event, any such distribution to the U.S.
stockholders should be treated as a dividend for U.S. federal income tax
purposes to the extent paid from the current or accumulated earnings and profits
of the Company. The portion of such distribution in excess of such current and
accumulated earnings and profits should constitute a return of capital that will
be applied against and reduce (but not below zero) the U.S. stockholder’s
adjusted tax basis in the shares of our common stock held by such stockholder.
Any remaining excess should be treated as gain from the sale or other taxable
disposition of the common stock. In general, a U.S. stockholder should treat any
gain recognized upon a sale or other taxable disposition of our common stock as
capital gain. Any such capital gain should be long-term capital gain if the U.S.
stockholder’s holding period for the common stock so disposed of exceeds one
year. Long-term capital gain recognized by a non-corporate U.S. stockholder
generally should be subject to a maximum tax rate of 15% for tax years beginning
before January 1, 2011, after which the maximum long-term capital gains tax rate
is scheduled to increase to 20%.
Any
dividends we pay to a U.S. stockholder that is treated as a taxable corporation
for U.S. federal income tax purposes generally should qualify for the
dividends-received deduction if the applicable holding period and other
requirements are satisfied. If any such dividend were characterized as an
“extraordinary dividend” for U.S. federal income tax purposes, a portion of such
dividend may result in a reduction of the adjusted tax basis of such corporate
stockholder in its shares of our common stock (or possibly gain to such
stockholder). With certain exceptions, if the applicable holding period and
other requirements are satisfied, dividends we pay to a non-corporate U.S.
stockholder should constitute “qualified dividends” that should be subject to
tax at the maximum tax rate accorded to long-term capital gains for tax years
beginning before January 1, 2011, as discussed above. It is not entirely
clear, however, whether the conversion rights with respect to our common stock,
as described in the Company’s IPO registration statement, may suspend the
running of the applicable holding period of a U.S. stockholder in its common
stock for the purposes of the dividends-received deduction or the capital gains
tax rate on qualified dividends. As a result, U.S. stockholders are urged to
consult their own tax advisors on this issue.
Backup
Withholding
Unless a
U.S. stockholder complies with certain reporting and/or Form W-9 certification
procedures or is an exempt recipient under applicable provisions of the Code and
Treasury Regulations, such stockholder may be subject to backup withholding tax
with respect to any cash distributions received from the Company. The backup
withholding tax is currently imposed at a rate of 28%. If backup withholding
applies, the amount withheld is not an additional tax, but generally should be
allowed as a credit against the stockholder’s U.S. federal income tax liability
and may entitle the stockholder to a refund, provided that certain required
information is timely furnished to the IRS. Stockholders are urged to consult
with their own tax advisors regarding the application of backup withholding and
the availability of and procedure for obtaining an exemption from backup
withholding in their particular circumstances.
THE
ADJOURNMENT PROPOSAL
In the
event there are not sufficient votes at the time of the special meeting to adopt
the Certificate of Incorporation Amendment Proposal, the Trust Agreement
Amendment Proposal and/or the Distribution Proposal, the Board of Directors may
submit a proposal to adjourn the special meeting to a later date, or dates, if
necessary, to permit further solicitation of proxies.
The
adoption of the Adjournment Proposal requires the affirmative vote of a majority
of the shares of common stock represented in person or by proxy and voting at
the special meeting, if the Adjournment Proposal is presented.
The Board
of Directors recommends a vote FOR adoption of the Adjournment
Proposal.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth information regarding the beneficial ownership of our
common stock as of April 15, 2009, by:
|
·
|
each person known by us, as a
result of such person’s public filings with the SEC and the information
contained therein, to be the beneficial owner of more than 5% of our
outstanding shares of common
stock;
|
|
·
|
each of our officers and
directors; and
|
|
·
|
all of our officers and directors
as a group.
|
Unless
otherwise indicated, we believe that all persons named in the table have sole
voting and investment power with respect to all shares of common stock
beneficially owned by them. The following table does not reflect record or
beneficial ownership of the sponsor warrants or our other outstanding warrants,
as we do not believe that these warrants will become exercisable within 60 days
of April 15, 2009.
Name
|
|
Number of Shares
|
|
|
Percentage
of Class
(1)
|
|
Relationship to Us
|
David
Marshall
(2)
(3)
12121
Wilshire Boulevard
Suite
1001
Los
Angeles, CA 90025
|
|
|
3,079,893
|
|
|
|
19.2
|
%
|
Chairman
of the Board, Chief Executive Officer
|
Kurt
Brendlinger (2) (4)
12121
Wilshire Boulevard
Suite
1001
Los
Angeles, CA 90025
|
|
|
3,079,893
|
|
|
|
19.2
|
%
|
Director,
Chief Financial Officer
|
Eric
Pulier (2) (5)
12121
Wilshire Boulevard
Suite
1001
Los
Angeles, CA 90025
|
|
|
3,079,893
|
|
|
|
19.2
|
%
|
Director,
Chief Technology Officer, Secretary
|
Dallas
Clement
1400
Lake Hearn Drive
Atlanta,
GA 90319
|
|
|
37,560
|
|
|
|
*
|
|
Director
|
Robert
Schultz
1140
Black Birch Drive
Aspen,
CO 81611
|
|
|
37,560
|
|
|
|
*
|
|
Director
|
Sharyar
Baradaran (6)
414
North Camden Drive
Beverly
Hills, CA 90210
|
|
|
3,117,453
|
|
|
|
19.4
|
%
|
Director
|
Santa
Monica Capital Partners, LLC (7)
12121
Wilshire Boulevard
Suite
1001
Los
Angeles, CA 90025
|
|
|
3,079,893
|
|
|
|
19.2
|
%
|
Stockholder
|
All
directors and executive officers as a group (6
individuals)
|
|
|
3,192,573
|
|
|
|
19.9
|
%
|
|
Fir
Tree, Inc. (8)
505
5
th
Avenue
23
rd
Floor
New
York, New York 10017
|
|
|
1,587,300
|
|
|
|
9.9
|
%
|
Stockholder
|
QVT
Financial LP (9)
1177
Avenue of the Americas
9
th
Floor
New
York, New York 10036
|
|
|
1,388,851
|
|
|
|
8.7
|
%
|
Stockholder
|
Millenium
Management, LLC (10)
666
Fifth Avenue
New
York, New York 10103
|
|
|
992,800
|
|
|
|
6.2
|
%
|
Stockholder
|
Aldebaran
Investments, LLC (11)
500
Park Avenue
5
th
Floor
New
York, New York 10022
|
|
|
950,900
|
|
|
|
5.9
|
%
|
Stockholder
|
HBK
Investments, LP (12)
2101
Cedar Springs Road
Suite
700
Dallas,
Texas 75201
|
|
|
860,450
|
|
|
|
5.4
|
%
|
Stockholder
|
|
(1)
|
Based on a total of 16,038,125
shares of the Company’s common stock issued and outstanding on April 15,
2009.
|
|
(2)
|
These shares are owned of record
by Santa Monica Capital Partners, LLC. Messrs. Marshall, Brendlinger,
Pulier and Baradaran beneficially own 28.8%, 28.8%, 28.8% and 13.6%,
respectively. Each of Messrs. Marshall, Brendlinger, Pulier and
Baradaran disclaims beneficial ownership of shares of our common stock in
excess of his percentage ownership of Santa Monica Capital Partners, LLC.
Santa Monica Capital Partners, LLC does not conduct any business other
than serving as a holding company for our securities that are beneficially
owned by these four
individuals.
|
|
(3)
|
Mr. Marshall’s interest in
Santa Monica Capital Partners, LLC is held indirectly by Santa Monica
Capital LLC, of which he is the sole
member.
|
|
(4)
|
Mr. Brendlinger’s interest
in Santa Monica Capital Partners, LLC is held indirectly by E’s Holdings,
Inc. of which he is the sole
shareholder.
|
|
(5)
|
Mr. Pulier’s interest in
Santa Monica Capital Partners, LLC is held indirectly by New Vision
Ventures LLC of which he is
Manager.
|
|
(6)
|
Mr. Baradaran is the record
owner of 37,560 shares of our common stock and the beneficial owner
of the shares of Santa Monica Media Corporation that are owned by
Santa Monica Capital Partners, LLC, as described in note (2).
Mr. Baradaran possesses sole voting and dispositive authority over
550,150 shares of our common stock owned by Santa Monica Capital Partners,
LLC.
|
|
(7)
|
Santa Monica Capital Partners,
LLC is the record owner of the shares of our common stock listed opposite
its name in the above table. As described above in notes (2) and (6),
Messrs. Marshall, Brendlinger, Pulier and Baradaran beneficially own
shares of our common stock by reason of their ownership of Santa Monica
Capital Partners, LLC.
|
|
(8)
|
Based on the Schedule 13G/A filed
with the Securities and Exchange Commission by Fir Tree, Inc. on February
10, 2009.
|
|
(9)
|
Based on the Schedule 13G/A filed
with the Securities and Exchange Commission by QVT Financial LP on
February 2, 2009.
|
|
(10)
|
Based on the Schedule 13G/A filed
with the Securities and Exchange Commission by Millenium Management, LLC
on February 3, 2009.
|
|
(11)
|
Based on the Schedule 13G filed
with the Securities and Exchange Commission by Aldebaran Investments, LLC
on February 17, 2009.
|
|
(12)
|
Based on the Schedule 13G/A filed
with the Securities and Exchange Commission by HBK Investments, LP on
February 3, 2009.
|
PRICE
RANGE OF SECURITIES AND DIVIDENDS
Our
equity securities trade on the NYSE Amex. Each of our units consists
of one share of common stock and one warrant and trades on the NYSE Amex under
the symbol “MEJ.U.” On April 18, 2007, the common stock and warrants
included in the units began to trade separately. Those units not separated will
continue to trade on the NYSE Amex under the symbol “MEJ.U,” and each of the
common stock and warrants trade on the NYSE Amex under the symbols “MEJ” and
“MEJ.WS,” respectively. We expect that our securities would be de-listed if the
Distribution Proposal is approved. See “BACKGROUND INFORMATION —
Quotation on the NYSE Amex.”
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 March 27, 2008 and will expire on March
27, 2011, or earlier upon redemption.
The
following table sets forth, for the periods indicated, the high and low closing
sales prices of our units and common stock as reported on the NYSE
Amex. Prior to March 27, 2007, there was no established trading
market for our securities.
Quarter Ended
|
|
Units
|
|
|
Common Stock
|
|
|
|
High
|
|
|
Low
|
|
|
High
|
|
|
Low
|
|
June
30, 2009 (through April 17)
|
|
$
|
7.90
|
|
|
$
|
7.90
|
|
|
$
|
8.01
|
|
|
$
|
7.94
|
|
March
31, 2009
|
|
$
|
7.92
|
|
|
$
|
7.74
|
|
|
$
|
7.97
|
|
|
$
|
7.80
|
|
December
31, 2008
|
|
$
|
7.75
|
|
|
$
|
6.91
|
|
|
$
|
7.80
|
|
|
$
|
7.45
|
|
September
30, 2008
|
|
$
|
8.15
|
|
|
$
|
7.80
|
|
|
$
|
7.97
|
|
|
$
|
7.55
|
|
June
30, 2008
|
|
$
|
8.00
|
|
|
$
|
7.68
|
|
|
$
|
7.75
|
|
|
$
|
7.55
|
|
March
31, 2008
|
|
$
|
8.08
|
|
|
$
|
7.74
|
|
|
$
|
7.65
|
|
|
$
|
7.45
|
|
Quarter Ended
|
|
Units
|
|
|
Common Stock
|
|
|
|
High
|
|
|
Low
|
|
|
High
|
|
|
Low
|
|
December
31, 2007
|
|
$
|
8.18
|
|
|
$
|
7.85
|
|
|
$
|
7.46
|
|
|
$
|
7.29
|
|
September
31, 2007
|
|
$
|
8.25
|
|
|
$
|
7.94
|
|
|
$
|
7.70
|
|
|
$
|
7.41
|
|
June
30, 2007 (1)
|
|
$
|
8.20
|
|
|
$
|
7.90
|
|
|
$
|
7.62
|
|
|
$
|
7.42
|
|
(1)
Represents the high and low sale prices for our units from our initial public
offering on April 2, 2007 through June 30, 2007.
Holders
of Common Equity
On March
31, 2009, there was one holder of record of our units, two holders of record of
our warrants and 18 holders of record of our common stock. Such
numbers do not include beneficial owners holding shares, warrants or units
through nominee names.
Dividends
We have
not paid any dividends on our common stock to date and we do not intend to pay
cash dividends prior to the consummation of a business combination (however, we
do expect to distribute proceeds of the Trust Account if the Distribution
Proposal is approved). After we complete a business combination, the
payment of dividends will depend on our revenues and earnings, if any, capital
requirements and general financial condition. The payments of
dividends after a business combination will be within the discretion of our
then-board of directors. Our board of directors currently intends to
retain any earnings for use in our business operations, and, accordingly, we do
not anticipate the board declaring any dividends in the foreseeable future
(however, we do expect to distribute proceeds of the Trust Account if the
Distribution Proposal is approved).
DESCRIPTION
OF SECURITIES
General
We are
authorized to issue 200,000,000 shares of common stock, par value $.001 per
share, and 25,000,000 shares of preferred stock, par value $.001 per
share. As of the Record Date, 16,038,125 shares of common stock are
outstanding, held by 18 record holders. No shares of preferred stock
are currently outstanding.
Common
stock
As of the
Record Date, we have 16,038,125 shares of common stock
outstanding. Our stockholders are entitled to one vote for each share
held of record on all matters to be voted on by stockholders.
Preferred
stock
Our
certificate of incorporation, as amended, authorizes the issuance of 25,000,000
shares of blank check preferred stock with such designation, rights and
preferences as our Board may determine from time to time. No shares
of preferred stock have been issued or registered. Accordingly, our
Board 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. 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
We
currently have 12,913,125 outstanding warrants. 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 March 27, 2008 and will expire on March 27, 2011, or earlier upon
redemption. The warrants are redeemable by us, at a price of $.01 per
warrant upon 30 days’ notice after the warrants become exercisable, only in the
event that the last sale 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 day
prior to the date on which notice of redemption is given.
The
warrants were issued in registered form under a warrant agreement between
Continental Stock Transfer & Trust Company, as warrant agent, and
us. We may not call the warrants for redemption at any time an
effective registration statement covering the warrant exercise is
unavailable. You are urged to review a copy of the warrant agreement,
which was filed as an exhibit to the registration statement in connection with
our initial public offering, 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,
including any voting rights until they exercise their warrants and receive
shares of common stock. After the issuance of shares of common stock
upon exercise of the warrants, each holder will be entitled to one vote for each
share held of record on all matters to be voted on by stockholders.
No
warrants will be exercisable unless at the time of exercise a prospectus
relating to common stock issuable upon exercise of the warrants is current and
the common stock has been registered or qualified or deemed to be exempt under
the securities laws of the state of residence of the holder of the
warrants. Under the terms of the warrant agreement, we have agreed to
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. However, we cannot assure you that we
will be able to do so. The warrants may be deprived of any value and
the market for the warrants may be limited if the prospectus relating to the
common stock issuable upon the exercise of the warrants is not current or if the
common stock is not qualified for sale as a result of the Company’s registering
such shares, or unless the shares are exempt from qualification in the
jurisdictions in which the holders of the warrants reside.
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 or down to the
nearest whole number the number of shares of common stock to be issued to the
warrant holder.
Shares
eligible for future sale
As of the
record date, we had 16,038,125 shares of common stock outstanding. Of
these shares, 12,500,000 shares are 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 3,538,125 shares are restricted securities
under Rule 144, in that they were issued in private transactions not involving a
public offering. None of those will be eligible for sale under Rule
144.
“Restricted”
shares must generally be sold in accordance with the requirements of Rule 144
under the Act. Effective February 14, 2008, the SEC revised Rule
144. In general, under Rule 144 as revised, six months must have
elapsed since the later of the date of acquisition of restricted shares from the
Company or any affiliate of the Company. After the six-month holding
period has run, holders who are not affiliates of the Company may sell all or
any portion of their shares so long as the Company is current in its SEC
filings, and after the running of a one-year holding period, they may sell
regardless of whether or not the Company is current in its SEC
filings. After the six-month holding period has run, holders of
restricted securities who are affiliates of the Company are entitled to sell
within any three-month period such number of restricted or control shares that
does not exceed the greater of 1% of the then outstanding shares or (so long as
the Company’s securities are still listed on a national exchange, and if
greater) the average weekly trading volume of shares during the four calendar
weeks preceding the date on which notice of the sale is filed with the
Commission. Sales by affiliates under Rule 144 are also subject to
certain restrictions on the manner of selling, notice requirements and the
availability of current public information about the
Company. Notwithstanding the preceding, based on possible
interpretations of the revised Rule 144, the Company believes that, because the
Company is a “shell” company, all of the Company’s currently outstanding shares
held by affiliates must be held for a period of one year after the filing with
the SEC of extensive information that the Company is no longer a “shell” company
before these shares may be sold pursuant to Rule 144.
Registration
Rights
The
holders of our 3,538,125 issued and outstanding shares of common stock prior to
the IPO are entitled to registration rights covering the resale of their shares
and the resale of their warrants and shares acquired upon exercise of their
warrants. The holders of the majority of these shares are entitled to
make up to two demands that the Company register these shares. In
addition, our pre-IPO stockholders have certain “piggy-back” registration rights
on registration statements filed subsequent to the date on which these
securities are released from the restrictions imposed by the lock-up
agreements. We will bear the expenses incurred in connection with the
filing of any such registration statements.
Delaware
Anti-Takeover Law
We are
subject to the provisions of Section 203 of the Delaware General Corporation Law
regulating corporate takeovers. This section prevents certain
Delaware corporations, under certain circumstances, from engaging in a “business
combination” with:
|
·
|
a
stockholder who owns 15% or more of our outstanding voting stock
(otherwise known as an “interested
stockholder”);
|
|
·
|
an
affiliate of an interested stockholder;
or
|
|
·
|
an
associate of an interested
stockholder,
|
for three
years following the date that the stockholder became an interested
stockholder. A “business combination” includes a merger or sale of
more than 10% of our assets. However the above provisions of Section
203 do not apply if:
|
·
|
our
Board approves the transaction that made the stockholder an “interested
stockholder,” prior to the date of the
transaction;
|
|
·
|
after
the completion of the transaction that resulted in the stockholder
becoming an interested stockholder, that stockholder owned at least 85% of
our voting stock outstanding at the time the transaction commenced, other
than statutorily excluded shares;
or
|
|
·
|
on
or subsequent to the date of the transaction, the business combination is
approved by our Board and authorized at a meeting of our stockholders, and
not by written consent, by an affirmative vote of at least two-thirds of
the outstanding voting stock not owned by the interested
stockholder.
|
This
statute could prohibit or delay mergers or other change in control attempts, and
thus may discourage attempts to acquire us.
WHERE
YOU CAN FIND MORE INFORMATION
The
Commission allows the Company to “incorporate by reference” information into its
Proxy Statement, which means that the Company can disclose certain important
information by referring you to another document that is sent to you with this
Proxy Statement. The following document is incorporated by reference
in this Proxy Statement and are deemed to be a part hereof:
(1)
|
The
Company’s Annual Report for the fiscal year ended December 31,
2008.
|
Any
statement contained in a document incorporated by reference is deemed to be
modified or superseded for all purposes to the extent that a statement contained
in this Proxy Statement modifies or replaces such statement.
The
Company files reports, proxy statements and other information with the SEC as
required by the Exchange Act. You may read and copy reports, proxy
statements and other information filed by The Company with the SEC at the SEC
public reference room located at 100 F Street, N.E., Washington, D.C.
20549. You may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. You may also
obtain copies of the materials described above at prescribed rates by writing to
the Securities and Exchange Commission, Public Reference Section, 100 F Street,
N.E., Washington, D.C. 20549. You may access information regarding
The Company at the SEC web site containing reports, proxy statements and other
information at: http://www.sec.gov. Information and statements
contained in this proxy statement are qualified in all respects by reference to
the relevant annex to this proxy statement. Only one proxy statement
is being delivered to multiple security holders who share an
address. However, if you would like an additional separate copy,
please contact us at the address set forth below and an additional copy will be
sent to you free of charge. If you would like additional copies of
this document or if you have questions about the proposals, you should contact
via phone or in writing:
Santa
Monica Media Corporation
12121
Wilshire Boulevard, Suite 1001
Los
Angeles, CA 90025
Attn:
Corporate Secretary
Telephone:
310-526-3222
STOCKHOLDER
PROPOSALS
Stockholders
wishing to submit proposals for consideration by the Company’s Board of
Directors at the Company’s next Annual Meeting of Stockholders should submit
them in writing to the attention of the President of the Company a reasonable
time before the Company begins to print and mail its proxy materials, so that
the Company may consider such proposals for inclusion in its proxy statement and
form of proxy for that meeting. The Company does not now have any
definitive plans regarding the possible date of its next Annual
Meeting.
|
By
order of the Board of Directors
|
Los
Angeles, California
|
|
April 21,
2009
|
David
M. Marshall
|
|
Chairman
of the Board
|
|
and
Chief Executive Officer
|
Annex
I
CERTIFICATE
OF AMENDMENT
OF
AMENDED
AND RESTATED CERTIFICATE OF INCORPORATION
OF
SANTA
MONICA MEDIA CORPORATION
PURSUANT
TO SECTION 242 OF THE
DELAWARE
GENERAL CORPORATION LAW
SANTA
MONICA MEDIA CORPORATION, a corporation existing under the laws of the State of
Delaware (the “Corporation”) hereby certifies as follows:
1. The
name of the Corporation is “Santa Monica Media Corporation”.
2. The Corporation’s Certificate of
Incorporation was filed in the office of the Secretary of State of the State of
Delaware on June 24, 2005 as Santa Monica Technology Corporation, amended on
July 7, 2005, amended and restated on August 5, 2005 and September 6, 2005,
amended on April 19, 2006 and amended and restated on April 25, 2006, June 5,
2006, February 15, 2007 and March 9, 2007.
3. This
Amendment was duly approved by the Board of Directors and stockholders of the
Corporation in accordance with the applicable provisions of Section 242 of
the General Corporation Law of the State of Delaware (“DGCL”).
4.
Article THIRD is hereby amended and restated in its entirety as
follows:
THIRD:
Subject to the immediately succeeding sentence, the purpose of the Corporation
is to engage in any lawful act or activity for which corporations may now or
hereafter be organized under the GCL. In addition to the powers and privileges
conferred upon the Corporation by law and those incidental thereto, the
Corporation shall possess and may exercise all the powers and privileges which
are necessary or convenient to the conduct, promotion or attainment of the
business or purposes of the Corporation.
5.
Article SIXTH is hereby deleted in its entirety.
IN
WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be
signed by David Marshall, its Chief Executive Officer, as of the
day of
,
2009.
By:
|
|
|
David
Marshall
|
|
Chief
Executive Officer
|
Annex
II
OPINION
OF MORRIS JAMES LLP
April 21,
2009
Santa
Monica Media Corporation
12121
Wilshire Boulevard, Suite 1001
Los
Angeles, CA 90025
Re:
Enforceability of
Certificate of Incorporation Provisions
Ladies
and Gentlemen:
We have acted as special Delaware
counsel to Santa Monica Media Corporation , a Delaware corporation (the
“Company”), in connection with a proposed amendment, in the form attached hereto
as Exhibit A (the “Amendment”), to the Company’s Certificate of Incorporation,
as initially filed with the Office of the Secretary of State of the State of
Delaware (the “Secretary of State”) on June 24, 2005, as amended by the
Company’s Amended Certificate of Incorporation filed with the Secretary of State
on July 7, 2005, as amended and restated by the Company’s Amended and
Restated Certificate of Incorporation filed with the Secretary of State on
August 5, 2005, as further amended and restated by the Company’s Amended and
Restated Certificate of Incorporation filed with the Secretary of State on
September 6, 2005, as amended by the Certificate of Amendment to the Company’s
Amended and Restated Certificate of Incorporation filed with the Secretary of
State on April 19, 2006, as amended and restated by the Company’s
Amended and Restated Certificate of Incorporation filed with the Secretary of
State on April 25, 2006, as amended and restated by the Company’s
Amended and Restated Certificate of Incorporation filed with the Secretary of
State on June 5, 2006, as further amended and restated by the Company’s Amended
and Restated Certificate of Incorporation filed with the Secretary of State on
February 15, 2007, as further amended and restated by the Company’s Amended and
Restated Certificate of Incorporation filed with the Secretary of State on March
9, 2007 (the “March 9, 2007 Amended and Restated Certificate of Incorporation”)
, which March 9, 2007 Amended and Restated Certificate of Incorporation we
assume constitutes the entire certificate of incorporation of the Company as
currently in effect (the “Certificate of Incorporation”). In this
connection, you have requested our opinion as to the enforceability under the
General Corporation Law of the State of Delaware (the “General Corporation Law”)
of that certain provision in Article SIXTH (“Article SIXTH”) of the Certificate
of Incorporation which purports to prohibit certain amendments to the
Certificate of Incorporation intended to be effected by the Amendment without
the vote or written consent of holders of not less than 100% of the outstanding
shares of common stock of the Company. Capitalized terms used but not defined
herein are used as defined in the Certificate of Incorporation.
For
purposes of this letter, our review of documents has been limited to the review
of originals or copies furnished to us of the following documents, all of which
have been supplied to us by the Company or obtained from publicly available
records:
(a) The
Certificate of Incorporation;
(b) The
Bylaws of the Company, in the form filed by the Company with the Securities and
Exchange Commission (the “SEC”) as an Exhibit to the Company’s S-1 Registration
Statement in connection with the Company’s initial public offering of its shares
(the “IPO”), which Bylaws we assume constitute the entire bylaws of the Company
as currently in effect;
Santa
Monica Media Corporation.
April 21,
2009
Page 2 of
7
(c) The
Amendment;
(d) The
Proxy Statement of the Company (the “Proxy Statement”) proposed to be filed with
the SEC on or about the date hereof; and
(e) A
certificate of good standing for the Company obtained from the Secretary of
State, dated April 20, 2009 (the “Good Standing Certificate”).
With
respect to the foregoing documents, we have assumed: (i) the genuineness of
all signatures, and the incumbency, authority, legal right and power and legal
capacity under all applicable laws and regulations, of each of the officers and
other persons and entities signing or whose signatures appear upon each of said
documents as or on behalf of the parties thereto; (ii) the conformity to
authentic originals of all documents submitted to us as certified, conformed,
photostatic, electronic or other copies; and (iii) that the foregoing
documents, in the forms submitted to us for our review, have not been and will
not be altered or amended in any respect material to our opinion as expressed
herein. For purposes of rendering our opinion as expressed herein, we have not
reviewed any document other than the documents referenced in paragraphs (a)
through (e) above and certain written statements of governmental authorities and
others referenced in this paragraph. In particular, we have not
reviewed and express no opinion as to any other document that is referred to in,
incorporated by reference into, or attached (as an exhibit, schedule, or
otherwise) to any of the documents reviewed by us. The opinions in
this letter relate only to the documents specified in such opinions, and not to
any exhibit, schedule, or other attachment to, or any other document referred to
in or incorporated by reference into, any of such documents. We have
assumed that there exists no provision in any document that we have not reviewed
that bears upon or is inconsistent with or contrary to the opinions in this
letter. We have conducted no independent factual investigation of our
own, and have relied solely upon the documents reviewed by us, the statements
and information set forth in such documents, certain statements of governmental
authorities and others (including, without limitation, the Good Standing
Certificate), and the additional matters recited or assumed in this letter, all
of which we assume to be true, complete, and accurate in all material
respects.
BACKGROUND
The Proxy
Statement states, and we have assumed as true for purposes of this opinion, that
the Company did not consummate a business combination
transaction prior to the “Termination Date” of April 2, 2009 referred to in
the Certificate of Incorporation.
The
Company is concerned that under Article THIRD (“Article THIRD”) of the
Certificate of Incorporation, a failure to consummate such transactions by April
2, 2009 would result in the mandatory dissolution and liquidation of the Company
and, under Article SIXTH (“Article SIXTH”) of the Certificate of Incorporation,
obligate the directors and officers of the Company to take certain actions to
effectuate such dissolution and liquidation. Accordingly, the Company has
proposed the Amendment, which would,
inter alia
, eliminate (i) the
provisions of Article THIRD that would result in the mandatory dissolution and
liquidation of the Company and (ii) the provisions of Article SIXTH
in their entirety.
Article SIXTH provides,
inter alia
, that
“[p]aragraphs (A) through (D) of this Article SIXTH shall apply during the
period commencing upon the initial closing of the Corporation’s [IPO] and
terminating upon the consummation of any “Business Combination,” and may not be
amended prior to the consummation of any Business Combination without the vote
or written consent of holders of not less than 100% of the outstanding shares of
Common Stock of the Company.” Thus, Article SIXTH purports to divest the
Company’s Board of Directors, the Company and its stockholders of the power to
amend such Article prior to the consummation of a Business Combination except
pursuant to the affirmative vote of not less than
all
of the Company’s
outstanding shares of common stock.
Santa
Monica Media Corporation.
April 21,
2009
Page 3 of
7
DISCUSSION
Section 242(a)
of the General Corporation Law provides, in pertinent part, that
[a]fter a
corporation has received payment for any of its capital stock, it may amend its
certificate of incorporation, from time to time, in any and as many respects as
may be desired, so long as its certificate of incorporation as amended would
contain only such provisions as it would be lawful and proper to insert in an
original certificate of incorporation filed at the time of the filing of the
amendment … In particular, and without limitation upon such general power of
amendment, a corporation may amend its certificate of incorporation, from time
to time, so as … (2) To change, substitute, enlarge or diminish the nature
of its business or its corporate powers and purposes … or (6) To change the
period of its duration.
8
Del. C.
§ 242(a). In
addition, Section 242(b) of the General Corporation Law provides
that
[e]very
amendment [to the Certificate of Incorporation] …
shall
be made and
effected in the following manner: (1) if the corporation has capital stock,
its board of directors
shall
adopt a
resolution setting forth the amendment proposed, declaring its advisability, and
either calling a special meeting of the stockholders entitled to vote in respect
thereof for consideration of such amendment or directing that the amendment
proposed be considered at the next annual meeting of the stockholders.… If a
majority of the outstanding stock entitled to vote thereon, and a majority of
the outstanding stock of each class entitled to vote thereon as a class has been
voted in favor of the amendment, a certificate setting forth the amendment and
certifying that such amendment has been duly adopted in accordance with this
section
shall
be executed, acknowledged and filed and
shall
become
effective in accordance with § 103 of this title.
8
Del. C.
§ 242(b)
(emphasis added). Thus, Section 242(a) grants Delaware corporations broad
statutory power to amend their certificates of incorporation to the extent
permitted under Delaware law, including to the extent contemplated by the
Amendment, subject to compliance with the amendatory procedures set forth in
Section 242(b). Implicit in the language of Section 242 is that the
power to amend the certificate of incorporation is a fundamental power of
Delaware corporations vested in directors and stockholders of a corporation.
Indeed, the mandatory language in Section 242(b) supports the proposition
that the corporation’s broad power to amend the certificate of incorporation
cannot be eliminated. Section 242(b) mandates that, absent a provision
permitting the board to abandon a proposed amendment, “a certificate setting
forth the amendment …
shall
be executed,
acknowledged and filed and
shall
become
effective” upon obtaining the requisite board and stockholder approvals. 8
Del. C.
§ 242(b)(1)
(emphasis added).
We note
that Section 102(b)(4) of the General Corporation Law expressly permits a
Delaware corporation to include in its certificate of incorporation provisions
that modify the voting rights of directors and stockholders set forth in other
provisions of the GCL. Specifically, Section 102(b)(4) provides that a
certificate of incorporation may contain:
Provisions
requiring for any corporate action, the vote of a
larger portion
of the
stock or any class or series thereof, or of any other securities having voting
power…. (emphasis added)
8
Del.
C. § 1 02(b)( 4). While
Section 102(b)(4) expressly permits charter provisions requiring the vote of the
holders of a greater portion of the stock or any class or series thereof than is
otherwise required by Section 242 of the General Corporation Law, nothing in
Section 102(b)(4) purports to authorize a provision in a certificate of
incorporation requiring the vote of
all
of the outstanding
stock or any class or series thereof.
1
1
New
Webster’s Concise Dictionary of the English Language 566 (2003) defines
“portion” as “[ a] part of a whole”. Accordingly no matter how much greater the
“portion”, it will, by definition, always be less than 100%.
Santa
Monica Media Corporation.
April 21,
2009
Page 4 of
7
Although we are not aware of any
Delaware case law directly addressing the enforceability of a charter provision
requiring a 100% vote for the amendment of a charter, the Court of Chancery in
Sellers v. Joseph Bancroft
&
Sons Co.,
2 A.2d 108, 112-13 (Del. Ch. 1938), in upholding a charter provision
requiring a supermajority vote to change the designations, preferences, and
rights of preferred stock, suggested that a separate charter provision requiring
a 100% vote to reduce the dividend rate and liquidation value of the preferred
stock, might be invalid, observing with suspicion that such a provision would
make a charter provision “practically irrepealable.”
Id.
at 114.
Similarly, the Court of Chancery in
Chesapeake Corp. v.
Shore
, 771 A.2d 293 (Del. Ch. 2000) recognized that as a practical matter
it was impossible to obtain even a 88% vote in a publicly traded company
due to voter turnout issues, stating that “[t]he required … majorities are more
commonly associated with sham elections in dictatorships than contested
elections in genuine republics. While I recognize that the board wanted a
“focused consensus” of disinterested stockholders to decide key issues, they set
the required majority at an unattainably high level.” Id. at 342. Further, after
considering the testimony of expert witnesses as to what level of voter turnout
could be expected for the publicly held company, the Court found that “the board
has been unable to demonstrate that [an 88% vote] can be achieved”.
Id at
343.
Section 102(b)(1)
provides that a certificate of incorporation may contain:
Any
provision for the management of the business and for the conduct of the affairs
of the corporation, and any provision creating, defining, limiting and
regulating the powers of the corporation, the directors, and the stockholders,
or any class of the stockholders . . . ;
if such provisions are not
contrary to the laws of [the State of Delaware]
.
8
Del. C.
§ 102(b)(1)
(emphasis added). Thus, the ability to curtail the powers of the corporation,
the directors and the stockholders through the certificate of incorporation is
not without limitation. Any provision in the certificate of incorporation that
is contrary to Delaware law is invalid.
See
Lions Gate Entm’t Corp. v.
Image Entm’t Inc.
, 2006 WL 1668051, at *7 (Del. Ch. June 5, 2006)
(footnote omitted) (noting that a charter provision “purport[ing] to give the
Image board the power to amend the charter unilaterally without a shareholder
vote” after the corporation had received payment for its stock “contravenes
Delaware law [
i.e.
,
Section 242 of the General Corporation Law] and is invalid.”). In
Sterling v. Mayflower Hotel
Corp.
, 93 A.2d 107, 118 (Del. 1952), the Court found that a charter
provision is “contrary to the laws of [Delaware]” if it transgresses “a
statutory enactment or a public policy settled by the common law or implicit in
the General Corporation Law itself.” The Court in
Loew’s Theatres, Inc. v.
Commercial Credit Co.
, 243 A.2d 78, 81 (Del. Ch. 1968), adopted this
view, noting that “a charter provision which seeks to waive a statutory right or
requirement is unenforceable.”
Santa
Monica Media Corporation.
April 21,
2009
Page 5 of
7
That the
statutory power to amend the certificate of incorporation is a fundamental power
of Delaware corporations is supported by Delaware case law. Delaware courts have
repeatedly held that a reservation of the right to amend the certificate of
incorporation is a part of any certificate of incorporation, whether or not such
reservation is expressly included therein.
2
See
,
e.g.
,
Maddock v. Vorclone
Corp.
, 147 A. 255 (Del. Ch. 1929);
Coyne v. Park &
Tilford Distillers Corp.
, 154 A.2d 893 (Del. 1959);
Weinberg v. Baltimore Brick
Co.
, 114 A.2d 812, 814 (Del. 1955);
Morris v. American Public
Utilities Co.
, 122 A. 696, 701 (Del. Ch. 1923).
See also
Drexler,
Black & Sparks,
Delaware Corporation Law and
Practice
, § 32.02 (2005) (“No case has ever questioned the
fundamental right of corporations to amend their certificates of incorporation
in accordance with statutory procedures. From the earliest decisions, it has
been held that every corporate charter implicitly contains as a constituent part
thereof every pertinent provision of the corporation law, including the
provisions authorizing charter amendments.”); 1 R. Franklin Balotti &
Jesse A. Finkelstein,
The Delaware Law of
Corporations & Business Organizations
§ 8.1 (2007 Supp.) (“The
power of a corporation to amend its certificate of incorporation was granted by
the original General Corporation Law and has continued to this day.”) (footnotes
omitted); 1 Rodman Ward, Jr., Edward P. Welch, Andrew J. Turezyn,
Folk on the Delaware General
Corporation Law
§ 242.2.2, GCL-VIII-13 (2007-1 Supp.) (“A
corporation may … do anything that section 242 authorizes because the grant of
amendment power contained in section 242 and its predecessors is itself a part
of the charter.”) (citing
Goldman v. Postal Tel.,
Inc.,
52 F.Supp. 763, 769 (D.Del. 1943);
Davis v. Louisville
Gas & Electric Co.
, 142 A. 654, 656-58 (Del. Ch. 1928);
Morris
, 122 A. at
701;
Peters v. United
States Mortgage Co.,
114 A. 598, 600 (Del. Ch. 1921));
Peters
, 114 A. at 600
(“There is impliedly written into every corporate charter in this state, as a
constituent part thereof, every pertinent provision of our Constitution and
statutes. The corporation in this case was created under the General Corporation
Law … That law clearly reserves to this corporation the right to amend its
certificate in the manner proposed.”).
In
Davis v. Louisville
Gas & Electric Co.,
142 A. 654 (Del. Ch. 1928), the Court of
Chancery interpreted this reserved right to amend the certificate of
incorporation broadly and observed that the legislature, by granting broad
powers to the stockholders to amend the certificate of incorporation,
“recognized the unwisdom of casting in an unchanging mould the corporate powers
which it conferred touching these questions so as to leave them fixed for all
time.”
Id.
at
657. Indeed, the Court queried, “[m]ay it not be assumed that the Legislature
foresaw that the interests of the corporations created by it might, as
experience supplied the material for judgment, be best subserved by an
alteration of their intracorporate and in a sense private powers,”
i.e.
, alteration of
the terms of the certificate of incorporation?
Id.
The Court further
confirmed the important public policy underlying the reservation of the right to
amend the certificate of incorporation stating,
The very
fact that the [General Corporation Law]…deals in great detail with innumerable
aspects of the [certificate of incorporation] in what upon a glance would be
regarded as relating to its private as distinguished from its public character,
has some force to suggest that the state, by dealing with such subjects in the
statute rather than by leaving them to be arranged by the corporate membership,
has impliedly impressed upon such matters the quality of public interest and
concern.
Id
.
While we
have found no definitive case law addressing the enforceability or validity
under Delaware law of a certificate of incorporation provision of a publicly
held corporation that requires a 100% vote for the amendment of a provision of
such corporation’s charter, in our view, such a provision would be invalid
because such a provision would, as a practical matter, effectively prohibit any
such amendments. Indeed, in confirming the fundamental importance of a
corporation’s power to amend the certificate of incorporation, Delaware courts
have suggested, in
dicta
, that a provision
prohibiting the amendment of a charter provision might be unenforceable.
See
,
e.g., Jones Apparel Group,
Inc. v. Maxwell Shoe Co.,
883 A.2d 837 (Del. Ch. 2004) (The Court
suggested that the statutory power to recommend to stockholders amendments to
the certificate of incorporation is a core duty of directors and noted that a
certificate of incorporation provision purporting to eliminate a core duty of
the directors would likely contravene Delaware public policy.);
Triplex Shoe Co. v.
Rice & Hutchins, Inc.
, 152 A. 342, 347, 351 (Del. 1930) (Despite
the absence of common stockholders who held the “sole” power to vote on
amendments to the certificate of incorporation, the Court assumed that an
amendment to the certificate of incorporation nonetheless had been validly
approved by the preferred stockholders noting that, by “the very necessity of
the case,” the holders of preferred stock had the power to vote where no common
stock had been validly issued because otherwise the corporation would be “unable
to function.”).
More
recently, the Court in
Jones Apparel
suggested that the right of directors to recommend to stockholders
amendments to the certificate of incorporation is a “core” right of fundamental
importance under the General Corporation Law. In
Jones Apparel,
the
Delaware Court of Chancery examined whether a certificate of incorporation
provision eliminating the power of a board of directors to fix record dates was
permitted under Section 102(b)(1) of the General Corporation Law. While the
Court upheld the validity of the record date provision, it was quick to point
out that not all provisions in a certificate of incorporation purporting to
eliminate director rights would be enforceable.
Id.
at 848. Rather,
the Court suggested that certain statutory rights involving “core” director
duties may not be modified or eliminated through the certificate of
incorporation. The
Jones Apparel
Court
observed:
2
This
principle is also codified in Section 394 of the General Corporation Law.
See
8
Del.C.
§
394.
Santa
Monica Media Corporation.
April 21,
2009
Page 6 of
7
[Sections]
242(b)(1) and 251 do not contain the magic words [“unless otherwise provided in
the certificate of incorporation”] and they deal respectively with the
fundamental subjects of certificate amendments and mergers. Can a certificate
provision divest a board of its statutory power to approve a merger? Or to
approve a certificate amendment? Without answering those questions, I think it
fair to say that those questions inarguably involve far more serious intrusions
on core director duties than does [the record date provision at issue]. I also
think that the use by our judiciary of a more context- and statute-specific
approach to police “horribles” is preferable to a sweeping rule that denudes §
102(b)(1) of its utility and thereby greatly restricts the room for private
ordering under the DGCL.
Id.
at 852. While the
Court in
Jones
Apparel
recognized that certain provisions for the regulation of the
internal affairs of the corporation may be made subject to modification or
elimination through the private ordering system of the certificate of
incorporation and bylaws, it suggested that other powers vested in directors —
such as the power to amend the certificate of incorporation — are so fundamental
to the proper functioning of the corporation that they cannot be so modified or
eliminated.
Id.
As set
forth above, the statutory language of Section 242 and Delaware case law
confirm that the statutory power to amend the certificate of incorporation is a
fundamental power of Delaware corporations as a matter of Delaware public
policy. Moreover, Delaware case law also suggests that the fundamental power to
amend the certificate of incorporation is a core right of the directors of a
Delaware corporation. The provisions in Article SIXTH purport to eliminate the
fundamental power of the Company (and the “core” right of the Company’s
directors) to amend certain provisions of the Certificate of Incorporation by
requiring a vote which, although theoretically possible, is as a practical
matter unattainable. As a result, such provisions are contrary to the laws of
the State of Delaware and, therefore, are invalid.
Given our conclusion that Articles
THIRD and SIXTH may be amended as provided in the Amendment subject to
compliance with the amendatory procedures set forth in Section 242(b) of
the General Corporation Law, you have asked our opinion as to the vote required
for approval of the Amendment. Section 242(b) of the General Corporation
Law provides the default voting requirements for an amendment to certificate of
incorporation. Under Section 242(b)(1), the Board of Directors of the
Company (the “Board”) would be required to adopt a resolution setting forth the
amendment proposed (i.e., the Amendment) and declaring its advisability prior to
submitting the Amendment to the stockholders entitled to vote on amendments to
the Certificate of Incorporation. The Board may adopt such resolution by the
affirmative vote of a majority of the directors present at a meeting at which a
quorum is present, or, alternatively, by unanimous written consent of all
directors.
See
8
Del.C.
§§
141(b), 141(f). After the Amendment has been duly approved by the Board, it must
then be submitted to the stockholders of the Company for a vote thereon. The
affirmative vote (or written consent) of a majority of the outstanding stock
entitled to vote thereon would be required for approval of the Amendment.
See
8
Del.C.
§§ 242(b)(1),
228(a). The default voting requirements set forth above may be increased to
require a greater vote of the directors or stockholders by a valid provision in
the certificate of incorporation or the bylaws (in the case of the Board).
See
8
Del.C.
§§ 102(b)(4),
141(b), 216, 242(b)(4). However, there is no provision in the Certificate of
Incorporation or Bylaws purporting to impose a different or greater vote of the
directors or stockholders for the approval of an amendment to the Certificate of
Incorporation other than the provisions of Article SIXTH discussed above which
are invalid. Accordingly, in our view, the statutory default voting requirements
would apply to the approval of the Amendment by the directors and stockholders
of the Company.
Moreover,
in our view, a Delaware court would not reform the provisions of Article THIRD
or Article SIXTH to provide for a voting requirement not intended by the
drafters.
See
Lions Gate
,
2006 WL 1668051 at *8 (holding that reformation of a certificate of
incorporation is unavailable where the proponent fails to demonstrate that all
present and past shareholders intended the reformed provision to be included
within the certificate) (citing
Waggoner v. Laster
,
581 A.2d 1127,1135 (Del. 1990)).
Santa
Monica Media Corporation.
April 21,
2009
Page 7 of
7
CONCLUSION
While the
matter has not been settled as a matter of Delaware law and, accordingly, is not
entirely free from doubt, based upon the foregoing and upon an examination of
such questions of law of the State of Delaware as we have considered necessary
or appropriate, and subject to the assumptions, qualifications, limitations, and
exceptions set forth herein, it is our opinion that the Amendment, if duly
adopted by the Board of Directors of the Company and duly approved by the
holders of a majority of the outstanding shares of capital stock of the Company
in accordance with the General Corporation Law, would be valid under the General
Corporation Law.
The
foregoing opinion is limited to the General Corporation Law and we express no
opinion on any other laws or the laws of any other state or jurisdiction,
including, without limitation, federal laws regulating securities or any other
federal laws, or the rules and regulations of stock exchanges or of any other
regulatory body.
We
express no opinion regarding any rights, claims, or remedies that might or might
not be available to stockholders in connection with the Company’s public
disclosures relating to the dissolution and liquidation of the Company in the
event a Business Combination has not been consummated within a specified time
after the consummation of the IPO. We also express no opinion as to the
enforceability, validity, or effectiveness of any of the provisions of the
Company’s Certificate of Incorporation, except to the extent expressly set forth
in our opinion above with respect to the provisions of Article SIXTH to the
extent that such provisions purport to prohibit the amendment of such Article
without the vote or written consent of holders of not less than 100% of the
outstanding shares of the Company’s common stock. We have assumed that the
Company will remain in good standing in the State of Delaware and will remain
current on any franchise taxes or other fees owing to the State of Delaware
until such time as the Amendment is filed with the Secretary of
State.
The
opinion expressed herein is rendered as of the date hereof and is based on our
understandings and assumptions as to present facts as stated herein, and on the
application of Delaware law as the same exists on the date hereof. The opinion
expressed here is not a guaranty as to what any particular court would actually
hold, but a reasoned opinion as to the decision a Delaware court would reach if
the issues were properly presented to it and such court followed existing
precedent as to legal and equitable principles applicable to the issues
discussed herein.
We assume
no obligation to update or supplement this opinion letter after the date hereof
with respect to any facts or circumstances that may hereafter come to our
attention or to reflect any changes in the facts or law that may hereafter’
occur or take effect.
This
opinion is rendered solely for your benefit in connection with the matters set
forth herein and, without our prior written consent, may not be furnished or
quoted to, or relied upon by, any other person or entity for any purpose, except
that it may be furnished or quoted to the SEC in connection with the matters
addressed herein and you may refer to it in the Proxy Statement, and we consent
to your doing so, and it may be furnished or quoted to Loeb & Loeb LLP, the
Company’s outside counsel, and relied upon by Loeb & Loeb LLP in connection
with any correspondence or communications with the SEC.
Very truly yours,
MML
Exhibit
A
CERTIFICATE
OF AMENDMENT
OF
AMENDED
AND RESTATED CERTIFICATE OF INCORPORATION
OF
SANTA
MONICA MEDIA CORPORATION
PURSUANT
TO SECTION 242 OF THE
DELAWARE
GENERAL CORPORATION LAW
SANTA
MONICA MEDIA CORPORATION, a corporation existing under the laws of the State of
Delaware (the “Corporation”) hereby certifies as follows:
1. The
name of the Corporation is “Santa Monica Media Corporation”.
2. The Corporation’s Certificate of
Incorporation was filed in the office of the Secretary of State of the State of
Delaware on June 24, 2005 as Santa Monica Technology Corporation, amended on
July 7, 2005, amended and restated on August 5, 2005 and September 6, 2005,
amended on April 19, 2006 and amended and restated on April 25, 2006, June 5,
2006, February 15, 2007 and March 9, 2007.
3. This
Amendment was duly approved by the Board of Directors and stockholders of the
Corporation in accordance with the applicable provisions of Section 242 of
the General Corporation Law of the State of Delaware (“DGCL”).
4.
Article THIRD is hereby amended and restated in its entirety as
follows:
THIRD:
Subject to the immediately succeeding sentence, the purpose of the Corporation
is to engage in any lawful act or activity for which corporations may now or
hereafter be organized under the GCL. In addition to the powers and privileges
conferred upon the Corporation by law and those incidental thereto, the
Corporation shall possess and may exercise all the powers and privileges which
are necessary or convenient to the conduct, promotion or attainment of the
business or purposes of the Corporation.
5.
Article SIXTH is hereby deleted in its entirety.
IN
WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be
signed by David Marshall, its Chief Executive Officer, as of the
day of
,
2009.
By:
|
|
|
David
Marshall
|
|
Chief
Executive Officer
|
Annex
III
AMENDMENT
TO INVESTMENT MANGEMENT TRUST AGREEMENT
This
Amendment (this “Amendment”), dated as of ______, 2009, to the Investment
Management Trust Agreement (as defined below) is made by and among Santa Monica
Media Corporation, a Delaware corporation (including its successors and assigns,
“
SMMC
”) and
Continental Stock Transfer & Trust Company (“Trustee”). All terms
used but not defined herein shall have the meanings assigned to them in the
Agreement (as defined below).
WHEREAS
, SMMC and the Trustee
entered into an Investment Management Trust Agreement dated as of April 2, 2007
(the “Agreement”); and
WHEREAS,
Section 1(k) of the
Agreement sets forth the terms that govern the liquidation of the Trust Account
under the circumstances described therein; and
WHEREAS,
SMMC has sought the
approval of the Public Stockholders of a resolution to amend its certificate of
incorporation (the “Certification of Incorporation Amendment Proposal”) to
eliminate all provisions therein relating to its status as a blank check
company, to enter into this Amendment (the “Trust Agreement Amendment Proposal”)
and to distribute all funds held pursuant to the Investment Management Trust
Agreement to the public stockholders of the Company (the “Distribution
Proposal”).
NOW THEREFORE,
in
consideration of the foregoing and the representations, warranties, covenants
and agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:
1. Section
1(k) shall be amended and restated in its entirety as follows:
“(k) Commence liquidation of
the Trust Account promptly after receipt of and only in accordance with the
terms of a letter (the “Termination Letter”), in a form substantially similar to
that attached hereto as either Exhibit A or Exhibit B, signed on behalf of the
Company by its Chief Executive Officer and Secretary and affirmed by its entire
Board of Directors, or disburse funds only in accordance with the terms of a
disbursal letter, in the form substantially similar to that attached hereto as
Exhibit D signed on behalf of the Company, and complete the liquidation of the
Trust or disburse the Property in the Trust Account only as directed in the
Termination Letter or the Disbursal Letter and the other documents referred to
therein; and”
2. All
other provisions of the Agreement shall continue in full force and effect from
date hereof until terminated in accordance with the terms of the
Agreement.
3. This
Amendment may be signed in any number of counterparts, each of which shall be an
original and all of which shall be deemed to be one and the same instrument,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. A facsimile signature shall be deemed to be an original
signature for purposes of this Amendment.
4. This
Amendment is intended to be in full compliance with the requirements for an
Amendment to the Agreement as required by Section 5(d) of the Agreement, and
every defect in fulfilling such requirements for an effective amendment to the
Agreement is hereby ratified, intentionally waived and relinquished by all
parties hereto.
5. This
Amendment shall be governed by and construed and enforced in accordance with the
laws of the State of New York, without giving effect to conflicts of law
principles that would result in the application of the substantive laws of
another jurisdiction.
[Remainder
of page intentionally left blank]
IN WITNESS WHEREOF
, the
parties hereto have duly executed this Amendment as of the day and year first
above written.
SANTA
MONICA MEDIA CORPORATION
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By:
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Name:
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CONTINENTAL
STOCK TRANSFER & TRUST COMPANY
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By:
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Name:
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Exhibit
D
[Letterhead
of Company]
[____________],
2009
Continental
Stock Transfer & Trust Company
17
Battery Place
New York,
New York 10004
Attn:
Re:
Trust Account No.
[ ] – Disbursal Letter
Gentlemen:
Pursuant
to paragraph 2(g) of the Investment Management Trust Agreement between Santa
Monica Media Corporation (“Company”) and Continental Stock Transfer & Trust
Company (“Trustee”), dated as of April 2, 2007, as amended by the Amendment
thereto dated as of
[ ], 2009
(“Trust Agreement”), this is to advise you that the Company has held a meeting
of stockholders at which the Certificate of Incorporation Amendment, Trust
Agreement Amendment and Distribution proposals were approved.
In
accordance with the terms of the Trust Agreement, we hereby authorize you, to
liquidate all investments in the Trust Account promptly distribute all cash
proceeds as described in the Trust Agreement. You shall commence
distribution of such funds in accordance with the terms of the Trust Agreement
and the Certificate of Incorporation of the Company and you shall oversee the
distribution of the funds.
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Very
truly yours,
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SANTA
MONICA MEDIA CORPORATION
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By:
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SANTA
MONICA MEDIA CORPORATION
PROXY
SOLICITED BY THE BOARD OF DIRECTORS
FOR
THE SPECIAL MEETING OF STOCKHOLDERS
TO
BE HELD ON MAY 22, 2009
The
undersigned hereby appoints David Marshall and Kurt Bredlinger, and each of
them, as proxies of the undersigned, with full power of substitution, to vote
all of the shares of stock of Santa Monica Media Corporation (hereinafter, the
“company”) that the undersigned may be entitled to vote at the company’s Special
Meeting to be held to be held at the offices of Loeb & Loeb LLP, 345 Park
Avenue, New York, NY 10154 on Friday, May 22, 2009 at 9:00 a.m., New York time,
and at any and all postponements, continuations and adjournments thereof, with
all powers that the undersigned would possess if personally present, upon and in
respect of the following matters and in accordance with the following
instructions.
IF YOU DO
NOT RETURN YOUR PROXY CARD WITH AN INDICATION OF HOW YOU WISH TO VOTE, IT WILL
HAVE THE SAME EFFECT AS A VOTE “AGAINST” THE PROPOSED AMENDMENTS TO OUR
CERTIFICATE OF INCORPORATION, THE TRUST AGREEMENT AMENDMENT PROPOSAL AND THE
DISTRIBUTION PROPOSAL. FAILURE TO VOTE WITH RESPECT TO THE
ADJOURNMENT PROPOSAL WILL HAVE NO EFFECT ON THIS PROPOSAL, AS MORE SPECIFICALLY
DESCRIBED IN THE PROXY STATEMENT.
IF
SPECIFIC INSTRUCTIONS ARE INDICATED, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH
YOUR INSTRUCTIONS. IF NO DIRECTIONS ARE GIVEN, THIS PROXY WILL BE
VOTED “FOR” EACH OF THE PROPOSALS. EACH OF THE DIRECTORS AND OFFICERS
OF SANTA MONICA MEDIA CORPORATION WILL RETURN AN UNMARKED PROXY WITH DIRECTIONS
TO VOTE THEIR RESPECTIVE SHARES “FOR” ALL OF THE PROPOSALS.
(continued
and to be signed on reverse)
THE
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” EACH OF THE PROPOSALS
BELOW.
1.
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Proposal
to amend the company’s certificate of
incorporation.
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FOR
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AGAINST
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ABSTAIN
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2.
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Proposal
to authorize the entry into an amendment to the trust agreement by the
Company and Continental Stock Transfer & Trust
Company.
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o
FOR
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o
AGAINST
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o
ABSTAIN
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3.
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Proposal
to approve the distribution of the assets of the Trust Account to the
holders of the IPO Shares.
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o
FOR
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AGAINST
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o
ABSTAIN
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ADJOURNMENT
PROPOSAL
Proposal
to the adjournment of the special meeting to a later date or dates, if
necessary, to permit further solicitation of proxies in the event there
are insufficient votes at the time of the special meeting to approve any
or all of the other four proposals.
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FOR
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AGAINST
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ABSTAIN
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DATE: ___________________,
2009
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Signature
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PLEASE
MARK SIGN DATE AND RETURN THE PROXY
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CARD
PROMPTLY USING THE ENCLOSED ENVELOPE
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Signature
if held jointly
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Please
sign exactly as your name appears hereon. If the stock is registered
in the names of two or more persons, each should sign. Executors,
administrators, trustees, guardians and attorneys-in-fact should add their
titles. If signer is a corporation, please give full corporate name
and have a duly authorized officer sign, stating title. If signer is
a partnership, please sign in partnership name by authorized
person.
Please
vote, date and promptly return this proxy. Any votes received after a
matter has been voted upon will not be counted.
This
Proxy is Solicited on Behalf of the Board of Directors.
Santa Monica Media Corp. (AMEX:MEJ)
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