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
1. Filed by
the Registrant x
2. Filed by
a Party other than the Registrant o
3. Check the
appropriate box:
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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 Section 240.14a-12
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STONELEIGH PARTNERS ACQUISITION
CORP.
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(Name
of Registrant as Specified In Its Charter)
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(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
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Payment
of Filing Fee (Check the appropriate box):
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x
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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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STONELEIGH
PARTNERS ACQUISITION CORP.
20
Marshall Street, #104
Norwalk,
CT 06854
NOTICE
OF SPECIAL MEETING OF STOCKHOLDERS
TO
BE HELD MAY 29, 2009
TO THE
STOCKHOLDERS OF STONELEIGH PARTNERS ACQUISITION CORP.:
You are
cordially invited to attend the special meeting of stockholders of Stoneleigh
Partners Acquisition Corp. (“Stoneleigh”) to be held at 11:00 a.m. EDT on
May 29, 2009 at the offices of Stoneleigh’s counsel Blank Rome LLP, 405
Lexington Avenue, New York, New York 10174, for the sole purpose of considering
and voting upon the following proposals:
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a
proposal to amend the amended and restated Stoneleigh certificate of
incorporation (the “Extension Amendment”) to extend the date on which
Stoneleigh’s corporate existence terminates from May 31, 2009 to December
31, 2009; and
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a
proposal to allow the holders of shares of common stock issued in
Stoneleigh’s initial public offering (the “IPO”, and such shares sold in
the IPO are referred to as the “public shares”) to elect to convert their
public shares into their pro rata portion of the funds held in the trust
account established at the time of the IPO (the “trust account”) if the
Extension Amendment is approved (the
“Conversion”).
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The
Stoneleigh board of directors has fixed the close of business on April 15, 2009
as the date for determining Stoneleigh stockholders entitled to receive notice
of and vote at the special meeting and any adjournment thereof. Only
holders of record of Stoneleigh common stock on that date are entitled to have
their votes counted at the special meeting or any adjournment
thereof.
We have
entered into a letter of intent with Realty Finance Corporation, referred to as
RFC, for the completion of a business combination and expect to complete a
business combination on the terms contemplated by the prospectus dated
May 31, 2007 relating to our IPO. Our board of directors
has determined that it would be in the best interests of our stockholders to
permit Stoneleigh to continue its corporate existence beyond the time
established in our certificate of incorporation in order to complete the
business combination with RFC or another business combination.
As a
result, our board of directors has determined that it is in the best interests
of our stockholders to continue Stoneleigh’s existence until December 31,
2009. Our board of directors recognizes the importance of the rights
afforded to the holders of the public shares (the “public stockholders”) at the
time of the IPO to receive their pro rata portion of the trust account in
connection with a liquidation of Stoneleigh if its corporate existence were to
terminate on May 31, 2009. Accordingly, Stoneleigh is offering
holders of public shares the opportunity to participate in the Conversion
proposal regardless of whether the holder votes for or against the Extension
Amendment. In order to convert your public shares, you must vote in
favor of the Conversion proposal; however, if you vote in favor of the
Conversion proposal, you are not required to convert your public shares.
Approval
of the Conversion proposal is a condition to the implementation of the Extension
Amendment.
There is
no limit on the number of public shares that may be converted.
If the
Extension Amendment and Conversion proposal are approved by the stockholders,
and holders of a majority of the public shares elect to participate in the
Conversion and convert their shares into their pro rata portion of the trust
account, the distribution of funds from the trust account resulting from the
Conversion will constitute a statutory distribution of substantially all of
Stoneleigh’s assets under Section 271 of the Delaware General Corporation Law
(“GCL”). Accordingly, stockholder approval of the removal of funds
from the trust account in connection with the Conversion proposal will
constitute stockholder approval of a distribution of substantially all of
Stoneleigh’s assets for purposes of Section 271 of the GCL. Any such
distribution will be a withdrawal of cash from the trust fund to the holders of
the public shares that have exercised their rights to convert public shares but
shall not require us to abandon the Extension Amendment or liquidate or dissolve
the remainder of the trust account or our corporation.
If the
Extension Amendment and Conversion proposal are not approved and we do not
complete a business combination as contemplated by our IPO prospectus and in
accordance with our certificate of incorporation by May 31, 2009, our corporate
existence will terminate except for the purposes of winding up our affairs and
liquidating, pursuant to Section 278 of the GCL. This has the same
effect as if our board of directors and stockholders had formally voted to
approve our dissolution pursuant to Section 275 of the
GCL. Accordingly, limiting our corporate existence to a specified
date as permitted by Section 102(b)(5) of the GCL removed the necessity to
comply with the formal procedures set forth in Section 275 (which would have
required our board of directors and stockholders to formally vote to approve our
dissolution and liquidation and to have filed a certificate of dissolution with
the Delaware Secretary of State). In any liquidation, the funds held
in the trust account will be distributed pro rata to the holders
of the public shares. In such case, Stoneleigh anticipates notifying
the trustee of the trust account to begin liquidating such assets promptly after
May 31, 2009 and anticipates it will take no more than 10 business days to
effectuate such distribution. Stoneleigh’s initial stockholders have
waived their rights to participate in any liquidation distribution with respect
to their initial shares. There will be no distribution from the trust
account with respect to our warrants, which will expire
worthless. Stoneleigh will pay the costs of liquidation from its
remaining assets outside of the trust account. If such funds are
insufficient, Stoneleigh’s management has agreed to advance it the funds
necessary to complete such liquidation (currently anticipated to be no more than
approximately $15,000) and has agreed not to seek repayment of such
expenses.
Stoneleigh’s
IPO prospectus stated that Stoneleigh would not take any action to amend or
waive Article Sixth (except in connection with, and to be effective upon, a
business combination) to allow it to survive for a longer period of time if it
did not appear it would be able to consummate a business combination by
May 31, 2009. Since the completion of its IPO, Stoneleigh has
been dealing with many of the practical difficulties associated with the
identification of a business combination target, negotiating business terms with
potential targets and conducting related due diligence. Commencing
promptly upon completion of its IPO, Stoneleigh began to search for an
appropriate business combination target. During the process, it
relied on numerous business relationships and contacted investment bankers,
private equity funds, consulting firms, and legal and accounting
firms. As a result of these efforts, Stoneleigh identified and
reviewed information with respect to over 50 possible target
companies. As of April 7, 2009, Stoneleigh entered into a letter of
intent with RFC. The letter of intent provides that Stoneleigh will
purchase approximately 31,000,000 shares of common stock (or a lesser amount, in
Stoneleigh’s discretion), referred to as the RFC common stock, and $31,250,000
principal amount of senior secured note of RFC.
You
are not being asked to pass on the proposed business combination at this time.
If you are a public stockholder, you will have the specific right to vote on the
proposed business combination with RFC, or another business combination if and
when it is submitted to stockholders.
As
currently contemplated by Stoneleigh’s amended and restated certificate of
incorporation, if Stoneleigh does not complete a business combination on or
prior to May 31, 2009, Stoneleigh’s corporate existence shall terminate,
Stoneleigh shall liquidate the trust account for the benefit of the public
stockholders and the public stockholders shall receive liquidating
distributions. As a result of the matters proposed to the
stockholders in the proxy statement, our board of directors proposes to extend
the date on which Stoneleigh’s existence will automatically terminate until
December 31, 2009. All stockholders, including those who vote in
favor of the Extension Amendment, shall be entitled to elect, in connection with
this proxy statement, to convert their shares into their pro rata portion of the
trust account. In order to convert your public shares, you must vote
in favor of the Conversion proposal; however, if you vote in favor of the
Conversion proposal, you are not required to convert your public
shares. If the public stockholders so elect, Stoneleigh anticipates
notifying the trustee promptly after the stockholder meeting, which is scheduled
for May 29, 2009 to liquidate the trust account in an amount equal to the total
pro rata portion of the converting shares. Stoneleigh estimates that
the per share pro rata portion of the trust account will be approximately $8.04
at the time of the special meeting.
Subject
to the foregoing, the affirmative vote of a majority of Stoneleigh’s outstanding
common stock voting for the Extension Amendment and Conversion proposal will be
required to approve the Extension Amendment and the Conversion
proposal.
In
considering the Extension Amendment, Stoneleigh’s stockholders should be aware
that because Stoneleigh’s IPO prospectus stated that Stoneleigh would not take
any action to amend or waive any provision of its certificate of incorporation
(except in connection with a business combination), including to allow it to
survive for a longer period of time except in connection with, and to be
effective upon, the consummation of a business combination, such stockholders
may have securities law claims against Stoneleigh. Even if you do not
pursue such claims, others may do so. The Extension Amendment will
also result in Stoneleigh incurring additional transaction expenses, and may
also result in securities law and other claims against Stoneleigh whose holders
might seek to have the claims satisfied from funds in the trust
account. If proposing the Extension Amendment results in Stoneleigh
incurring material liability as a result of potential securities law claims, the
trust account could be depleted to the extent of any judgments arising from such
claims, together with any expenses related to defending such claims, if the
resources of Gary D. Engle and James A. Coyne, who have certain indemnification
obligations with respect to the trust account, are insufficient or unavailable
to indemnify Stoneleigh for the full amount. You should read the
proxy statement carefully for more information concerning the consequences of
the adoption of the Extension Amendment.
After
careful consideration of all relevant factors, Stoneleigh’s board of directors
has determined that the Extension Amendment and Conversion proposal is fair to
and in the best interests of Stoneleigh and its stockholders, has declared it
advisable and recommends that you vote or give instruction to vote “FOR”
it.
Under
Delaware law and Stoneleigh’s bylaws, no other business may be transacted at the
special meeting.
Enclosed
is the proxy statement containing detailed information concerning the Extension
Amendment, the Conversion and the special meeting. Whether or not you
plan to attend the special meeting, we urge you to read this material carefully
and vote your shares.
I look
forward to seeing you at the meeting.
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Dated:
April
29, 2009
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By
Order of the Board of Directors
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/s/ Gary D.
Engle
Gary
D. Engle
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Chairman
of the Board and Chief Executive Officer
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Your
vote is important. Please sign, date and return your proxy card as
soon as possible to make sure that your shares are represented at the special
meeting. If you are a stockholder of record, 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 must instruct your broker or bank how
to vote your shares, or you may cast your vote in person at the special meeting
by obtaining a proxy from your brokerage firm or bank. Your failure
to vote or instruct your broker or bank how to vote will have the same effect as
voting against each of the proposals.
Important Notice Regarding the
Availability of Proxy Materials for the Special Meeting of Stockholders to be
held on May 29, 2009. This Proxy Statement to Stockholders is available at:
http://www.cstproxy.com/stoneleighpartnersacquisition/2009
STONELEIGH
PARTNERS ACQUISITION CORP.
20
Marshall Street, #104
Norwalk,
Connecticut 06854
SPECIAL
MEETING OF STOCKHOLDERS
TO
BE HELD MAY 29, 2009
PROXY
STATEMENT
The
special meeting of stockholders of Stoneleigh Partners Acquisition Corp.
(“Stoneleigh”), a Delaware corporation, will be held at 11:00 a.m. EDT on May
29, 2009, at the offices of Stoneleigh’s counsel Blank Rome, 405 Lexington
Avenue, New York, New York 10174, for the sole purpose of considering and voting
upon the following proposals:
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a
proposal to amend the amended and restated Stoneleigh certificate of
incorporation (the “Extension Amendment”) to extend the date on which
Stoneleigh’s corporate existence terminates from May 31, 2009 to December
31, 2009; and
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a
proposal to allow the holders of shares of common stock issued in
Stoneleigh’s initial public offering (the “IPO”, and such shares sold in
the IPO are referred to as the “public shares”) to elect to convert their
public shares into their pro rata portion of the funds held in the trust
account established at the time of the IPO (the “trust account”) if the
Extension Amendment is approved (the
“Conversion”).
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The
Extension Amendment and the Conversion proposal are essential to the overall
implementation of the board of directors’ plan to continue Stoneleigh’s
corporate existence until December 31, 2009 to allow Stoneleigh more time to
complete a business combination. Approval
of the Conversion proposal is a condition to the implementation of the Extension
Amendment.
As of
April 7, 2009 Stoneleigh entered into a letter of intent with Realty Finance
Corporation, or RFC, a commercial real estate specialty finance company focused
on originating and acquiring whole loans, bridge loan, subordinate interests in
whole loans, commercial mortgage-backed securities and mezzanine loans,
primarily in the United States. If the Extension Amendment proposal
is not approved by the stockholders, Stoneleigh’s corporate existence will
terminate on May 31, 2009 and Stoneleigh will be unable to complete a business
combination.
There is
no limit on the number of public shares that may be converted.
If the
Extension Amendment and the Conversion proposal are approved by the
stockholders, and holders of a majority of the public shares elect to
participate in the Conversion and convert their shares into their pro rata
portion of the trust account, the withdrawal of funds from the trust account in
connection with the Conversion will constitute a statutory distribution of
substantially all of Stoneleigh’s assets under Section 271 of the Delaware
General Corporation Law (“GCL”). Accordingly, stockholder approval of
the withdrawal of funds from the trust account in connection with the Conversion
will constitute stockholder approval of a distribution of substantially all of
Stoneleigh’s assets for purposes of Section 271 of the GCL. Any such
distribution will be a withdrawal of cash from the trust fund to the holders of
the public shares that have exercised their rights to convert public shares but
shall not require us to abandon the Extension Amendment or liquidate or dissolve
the remainder of the trust account or our corporation.
The
withdrawal of funds from the trust account in connection with the Conversion
will reduce the amount held in the trust account and Stoneleigh’s net asset
value following the Conversion and the
amount remaining in the trust account may be only a small fraction of the
approximately $224 million that was in the trust account as of March 31,
2009.
If the
Extension Amendment is not approved and we do not complete a business
combination as contemplated by our IPO prospectus and in accordance with our
certificate of incorporation by May 31, 2009, our corporate existence will
terminate except for the purposes of winding up our affairs and liquidating,
pursuant to Section 278 of the GCL. This has the same effect as if
our board of directors and stockholders had formally voted to approve our
dissolution pursuant to Section 275 of the GCL. Accordingly, limiting
our corporate existence to a specified date as permitted by Section 102(b)(5) of
the GCL removed the necessity to comply with the formal procedures set forth in
Section 275 (which would have required our board of directors and stockholders
to formally vote to approve our dissolution and liquidation and to have filed a
certificate of dissolution with the Delaware Secretary of State). In
any liquidation, the funds held in the trust account will be distributed, pro
rata, to the holders of the public shares. In such case, Stoneleigh
anticipates notifying the trustee of the trust account to begin liquidating such
assets promptly after the stockholder meeting, which is scheduled for May 29,
2009 and anticipates it will take no more than 10 business days to effectuate
such distribution. Stoneleigh’s initial stockholders have waived
their rights to participate in any liquidation distribution with respect to
their initial shares. There will be no distribution from the trust
account with respect to our warrants, which will expire
worthless. Stoneleigh will pay the costs of liquidation from its
remaining assets outside of the trust account. If such funds are
insufficient, Stoneleigh’s management has agreed to advance it the funds
necessary to complete such liquidation (currently anticipated to be no more than
approximately $15,000) and has agreed not to seek repayment of such
expenses.
If the
Extension Amendment and the Conversion proposal are approved, the stockholders’
approval of the Conversion will constitute consent for Stoneleigh to (i) remove
from the trust account an amount (the “Withdrawal Amount”) equal to the pro rata
portion of funds available in the trust account relating to the converted public
shares and (ii) deliver to the holders of such converting public shares their
pro rata portion of the Withdrawal Amount. The remainder of such
funds shall remain in the trust account and be available for use by Stoneleigh
to complete a business combination on or before December 31,
2009. Holders of public shares who do not convert their public shares
now, will retain their conversion rights and their ability to vote on a business
combination through December 31, 2009 if the Extension Amendment is approved.
At the
time the Extension Amendment becomes effective, Stoneleigh will also amend the
trust account agreement to (i) permit the withdrawal of the Withdrawal Amount
from the trust account; (ii) extend the date on which to liquidate the trust
account to December 31, 2009; and (iii) prohibit any further changes in the
distribution of the trust account funds, including the date of liquidation,
unless each and every Stoneleigh common stockholder specifically agrees in
writing to such change. This amendment will make extensions difficult
for Stoneleigh to effect as Stoneleigh believes that obtaining a unanimous vote
of its stockholders is highly unlikely due to the diverse interests of its
public stockholders, although it should be noted that there may be fiduciary
duty considerations that would outweigh the contractual obligations to observe
the unanimous vote provision that may render adhering to its strict requirements
problematic for the Stoneleigh board of directors. As a result, the
attempt to prohibit any further changes in the distribution of trust account
funds described above may not be effective or otherwise be enforceable against
Stoneleigh.
The
record date for the special meeting is April 15, 2009. Record holders
of Stoneleigh common stock at the close of business on the record date are
entitled to vote or have their votes cast at the special meeting. On
the record date, there were 34,097,500 outstanding shares of Stoneleigh common
stock including 27,847,500 outstanding shares of Stoneleigh public common
stock. Stoneleigh’s warrants do not have voting rights.
This
proxy statement contains important information about the special meeting and the
proposals. Please read it carefully and vote your
shares.
This
proxy statement is dated April 29, 2009 and is first being mailed to
stockholders on or about that date.
QUESTIONS
AND ANSWERS ABOUT THE SPECIAL MEETING
These
Questions and Answers are only summaries of the matters they
discuss. They do not contain all of the information that may be
important to you. You should read carefully the entire document,
including the annexes to this proxy statement.
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Q.
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Why
am I receiving this proxy statement?
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A. Stoneleigh
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 an operating
business. In May 2007, Stoneleigh consummated its IPO from
which it derived gross proceeds of $222,780,000, including proceeds from
the partial exercise of the underwriters’ over-allotment
option. 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 on or before May 31,
2009. Stoneleigh’s certificate of incorporation provides that Stoneleigh’s
corporate existence shall automatically terminate on May 31, 2009 if
we have not completed a business combination. The board of
directors believes that it is in the best interests of the stockholders to
continue Stoneleigh’s existence until December 31, 2009 in order to
complete a business combination and is submitting these proposals to the
stockholders to vote upon.
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Q.
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What
is being voted on?
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A. You
are being asked to vote on:
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a
proposal to amend the amended and restated Stoneleigh certificate of
incorporation (the “Extension Amendment”) to extend the date on which
Stoneleigh’s corporate existence terminates from May 31, 2009 to December
31, 2009; and
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a
proposal to allow the holders of shares of common stock issued in
Stoneleigh’s initial public offering (the “IPO”, and such shares sold in
the IPO are referred to as the “public shares”) to elect to convert their
public shares into their pro rata portion of the funds held in the trust
account established at the time of the IPO (the “trust account”) if the
Extension Amendment is approved (the “Conversion”).
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The
Extension Amendment and the Conversion proposals are essential to the
overall implementation of the board of directors’ plan to continue
Stoneleigh’s corporate existence until December 31, 2009 to allow
Stoneleigh more time to complete a business combination. Approval
of the Conversion proposal is a condition to the implementation of the
Extension Amendment.
Stoneleigh
has entered into a letter of intent with RFC, and, therefore, if the
Extension Amendment and Conversion proposals are not approved by the
stockholders, Stoneleigh’s corporate existence will terminate on May 31,
2009 and Stoneleigh will be unable to complete a transaction with RFC.
If
the Extension Amendment and the Conversion proposal are approved, the
stockholder’s approval of the Conversion proposal will constitute consent
for Stoneleigh to remove from the trust account an amount (the “Withdrawal
Amount”) equal to the pro rata portion of funds available in the trust
account relating to the public shares converted into such portion of the
funds available in the trust account, deliver to the holders of such
converting public shares the pro rata portion of the Withdrawal Amount and
retain the remainder in the trust account for Stoneleigh’s use in
connection with consummating a business combination on or before December
31, 2009.
There
is no limit on the number of public shares that may be converted.
If the Extension Amendment and the Conversion proposal are approved
by the stockholders, and holders of a majority of the public shares elect
to participate in the Conversion and convert their shares into their pro
rata portion of the trust account, the removal of the Withdrawal Amount in
connection with the Conversion proposal will constitute a statutory
distribution of substantially all of Stoneleigh’s assets under Section 271
of the GCL. Accordingly, stockholder approval of the removal of
the Withdrawal Amount from the trust account in connection with the
Conversion will constitute stockholder approval of a distribution of
substantially all of Stoneleigh’s assets for
purposes of Section 271 of the GCL. Any
such distribution will be a withdrawal of cash from the trust fund to the
holders of the public shares that have exercised their rights to convert
public shares but shall not require us to abandon the Extension Amendment
or liquidate or dissolve the remainder of the trust account or our
corporation
Approval of the Conversion proposal is a
condition to the implementation of the Extension Amendment. If
the Extension Amendment and Conversion proposal are approved, the removal
of the withdrawal of funds from the trust account in connection with the
Conversion will reduce the amount held in the trust account and
Stoneleigh’s net asset value following the
Conversion. Stoneleigh cannot predict the amount that will
remain in the trust account if the Extension Amendment and Conversion
proposal are approved and
the amount remaining in the trust account may be only a small fraction of
the approximately $224 million that was in the trust account as of March
31, 2009.
Stoneleigh’s
IPO prospectus stated that the target business or businesses, or the
controlling interest therein that Stoneleigh may acquire, must have a fair
market value of at least equal to 80% of Stoneleigh’s net assets.
Accordingly,
the 80% threshold for the fair market value of a target business will be
reduced proportionately to the extent of the withdrawals from the trust
account in connection with Conversions. For example, at March
31, 2009, Stoneleigh’s net assets were approximately $226.7 million, which
would require a target business to have a fair market value of at least
$181.36 million to be acquired by Stoneleigh. If one-half of
the public shares are converted, Stoneleigh’s net asset value would be
reduced by $112 million to approximately $114.7 million and the 80%
threshold for a business combination would be approximately $91.75
million. As a further illustration, if public shares converted
into $200 million of cash in the trust account, Stoneleigh’s net asset
value would be reduced to approximately $26.7 million and the threshold
for a target business fair market value would be reduced to approximately
$21.36 million.
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If
the Extension Amendment and Conversion proposal are not approved and we do
not complete a business combination as contemplated by our IPO prospectus
and in accordance with our certificate of incorporation by May 31, 2009,
our corporate existence will terminate except for the purposes of winding
up our affairs and liquidating, pursuant to Section 278 of the
GCL. This has the same effect as if our board of directors and
stockholders had formally voted to approve our dissolution pursuant to
Section 275 of the GCL. Accordingly, limiting our corporate
existence to a specified date as permitted by Section 102(b)(5) of the GCL
removed the necessity to comply with the formal procedures set forth in
Section 275 (which would have required our board of directors and
stockholders to formally vote to approve our dissolution and liquidation
and to have filed a certificate of dissolution with the Delaware Secretary
of State). In any liquidation the funds held in the trust
account will be distributed, pro rata, to the holders of the public
shares. In such case, Stoneleigh anticipates notifying the
trustee of the trust account to begin liquidating such assets promptly
after the stockholder meeting, which is scheduled for May 29, 2009 and
anticipates it will take no more than 10 business days to effectuate such
distribution. Stoneleigh’s initial stockholders have waived
their rights to participate in any liquidation distribution with respect
to their initial shares. There will be no distribution from the
trust account with respect to our warrants, which will expire
worthless. Stoneleigh will pay the costs of liquidation from
its remaining assets outside of the trust account. If such
funds are insufficient, Stoneleigh’s management has agreed to advance it
the funds necessary to complete such liquidation (currently anticipated to
be no more than approximately $15,000) and has agreed not to seek
repayment of such expenses.
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Q.
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Why
is the Company proposing the Extension Amendment and the Conversion
proposal?
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A. Stoneleigh
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. Stoneleigh signed a letter of intent with RFC as of
April 7, 2009. Under the terms of the transaction, if approved,
Stoneleigh will acquire a controlling interest in
RFC. Stoneleigh will receive 31,000,000 shares of newly issued
RFC common stock and a $31,250,000 principal amount senior secured note of
RFC for which Stoneleigh will pay to RFC $25,000,000 in
cash. Stoneleigh will have the option to adjust its investment
to any amount between $20,000,000 and $150,000,000. The number
of shares of common stock and principal amount of the note will be
adjusted proportionately. The note will be secured by a first priority
senior secured position in all of the assets of RFC, including the capital
stock of RFC’s subsidiaries, and bear interest at the rate of
8%. Additionally, Stoneleigh will have the right to appoint
three of six members to RFC’s board of directors upon the closing of the
transaction. Stoneleigh intends for the transaction to constitute a
business combination as provided in its certificate of
incorporation.
If,
after the execution of a definitive agreement between RFC and Stoneleigh
either (i) Stoneleigh has demonstrated that it is ready to close the
transaction and RFC has not consummated the transaction within 60 days of
Stoneleigh demonstrating it can close or (ii) RFC signs a definitive
agreement for a transaction other than the transaction with Stoneleigh,
RFC must pay Stoneleigh the sum of $800,000 as liquidated damages for the
damages incurred by Stoneleigh as a result of such actions and, in
addition, shall reimburse Stoneleigh for all of its reasonable
out-of-pocket expenses incurred in connection with the letter of intent
and the RFC
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transaction. Additionally,
if the deposit described below has been paid, RFC must also return such
deposit. Stoneleigh has until May 30, 2009 to consummate a
transaction with RFC, subject to extension by Stoneleigh to August 31,
2009, with delivery by Stoneleigh of a $1,000,000 deposit. In
the event that a definitive agreement is not executed by August 31, 2009,
RFC shall return the $1,000,000 deposit.
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As
a result, Stoneleigh believes that a business combination with RFC will
provide Stoneleigh stockholders with an opportunity to participate in a
combined company with significant growth potential.
Stoneleigh’s
business combination with RFC is intended to be a “business combination”
under Stoneleigh’s charter. The charter currently provides that if
Stoneleigh’s corporate existence shall terminate on May 31, 2009, and that
such provision may only be amended in connection with, and become
effective upon, the consummation of a business combination. As
we explain below, Stoneleigh will not be able to complete the business
combination by that date.
Our
board of directors believes that decisions regarding Stoneleigh’s future,
such as whether to continue its existence or have its existence terminate,
should be determined by Stoneleigh’s current stockholders and they should
not be bound by the restrictions implemented by the stockholders at the
time of the IPO. The current stockholders should not be
prohibited from amending the amended and restated certificate of
incorporation to allow Stoneleigh to continue its existence, especially
since all holders of public shares are being offered the opportunity to
convert their public shares and receive their pro rata portion of the
trust account in connection with the approval of the proposals which will
occur close in time to May 31, 2009 as contemplated in the IPO
prospectus.
Since
the completion of its IPO, Stoneleigh has been dealing with many of the
practical difficulties associated with the identification of a business
combination target, negotiating the attendant business terms, conducting
the related due diligence and obtaining the necessary audited financial
statements of the business combination target. During the course of its
search for a candidate, commencing promptly upon completion of its IPO,
Stoneleigh identified, evaluated and entered into discussions with over 50
companies. In particular, after closing the IPO in May 2007, Stoneleigh
identified over 50 candidates for a potential transaction, however,
discussions with those candidates never progressed beyond the preliminary
stages. The Company first met with management of RFC in December 2008 and
entered into a letter of intent on April 7, 2009 with respect to a
business combination. From December 2008 until April 7, 2009, Stoneleigh
has focused on a possible transaction with RFC. The parties
believe that they will enter into a definitive purchase agreement in May
2009 and can complete the business combination on or before December 31,
2009.
As
Stoneleigh believes the RFC transaction to be in the best interests of its
stockholders, and because Stoneleigh will not be able to conclude the
business combination with RFC by May 31, 2009, Stoneleigh has determined
to seek stockholder approval to extend Stoneleigh’s corporate existence
until December 31, 2009. If the Extension Amendment is
approved, Stoneleigh expects to seek stockholder approval of the business
combination with RFC in the near
future.
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Stoneleigh’s
board of directors believes stockholders will benefit from Stoneleigh’s
transaction with RFC, and is proposing the Extension Amendment to extend
Stoneleigh’s corporate existence until December 31, 2009 and to allow for
the Conversion.
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The
Extension Amendment would give Stoneleigh the opportunity to complete a
business combination. Stockholder approval of the Conversion
proposal will constitute stockholder approval of a statutory distribution
of substantially all of Stoneleigh’s assets under Section 271 of the GCL,
which will occur under Section 271 of the GCL if the holders of a majority
of the public shares elect to participate in the Conversion proposal and
convert their shares into their pro rata portion of the trust account.
In
addition, the removal of the Withdrawal Amount from the trust account in
connection with the Conversion will reduce the amount remaining in the
trust account and Stoneleigh’s net asset value and increase the percentage
interest of Stoneleigh’s common stock held by Stoneleigh’s directors,
officers and senior advisors through the insider
shares. Although Stoneleigh cannot predict the amount that will
remain in the trust account if the Extension Amendment and Conversion
proposal are approved, such
amount may be only a fraction of the approximately $224 million that was
in the trust account as of March 31, 2009.
Stoneleigh’s IPO prospectus stated that the
target business or businesses, or the controlling interest therein that
Stoneleigh may acquire, must have a fair market value of at least equal to
80% of Stoneleigh’s net assets. Accordingly,
the 80% threshold for the fair market value of a target business will be
reduced proportionately to the extent of the withdrawals from the trust
account in connection with Conversions. For example, at March
31, 2009, Stoneleigh’s net assets were approximately $226.7 million, which
would require a target business to have a fair market value of at least
$181.36 million to be acquired by Stoneleigh. If one-half of
the public shares are converted, Stoneleigh’s net asset value would be
reduced by $112 million to approximately $114.7 million and the 80%
threshold for a business combination would be approximately $91.75
million. As a further illustration, if public shares converted
into $200 million of cash in the trust account, Stoneleigh’s net asset
value would be reduced to approximately $26.7 million and the threshold
for a target business fair market value would be reduced to approximately
$21.36 million.
We
are not asking you to pass on the proposed RFC business combination at
this time. If you vote in favor of the Extension Amendment and do not
elect to convert your public shares, you will retain the right to vote on
the proposed RFC business combination, which we expect to submit to
stockholders for approval in the near
future.
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Q.
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Why
should I vote for the Extension Amendment?
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A. Stoneleigh’s
IPO prospectus stated that Stoneleigh would not take any action to amend
or waive Article Sixth of its certificate of incorporation to allow it to
continue its corporate existence beyond May 31, 2009, except in connection
with, and to be effective upon, the consummation of a business
combination. Since the completion of its IPO, Stoneleigh has
been dealing with many of the practical difficulties associated with the
identification of a business combination target, negotiating business
terms with potential targets and conducting related due
diligence. Commencing promptly upon completion of its IPO,
Stoneleigh began to search for an appropriate business combination
target. During the process, it relied on numerous business
relationships and contacted investment bankers, private equity funds,
consulting firms, and legal and accounting firms. As a result of these
efforts, Stoneleigh identified and reviewed information with respect to
over 50 possible target companies. Primarily as a result of the
difficult and deteriorating economic climate since its IPO, Stoneleigh has
been dealing with significant challenges to identify suitable target
business to present to its stockholders. As stated above in
“Why is the Company
proposing the Extension Amendment and the
Conversion proposal?”, Stoneleigh identified
RFC. As Stoneleigh believes the RFC transaction to be in the
best interests of its stockholders, and because Stoneleigh will not be
able to conclude the business combination with RFC by May 31, 2009,
Stoneleigh has determined to seek stockholder approval to extend
Stoneleigh’s corporate existence from May 31, 2009 until December 31, 2009
to allow Stoneleigh the opportunity to complete a business combination
with RFC or another business combination. If the Extension
Amendment is approved, Stoneleigh expects to seek stockholder approval of
a business combination in the near
future.
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Stoneleigh’s
charter purports to prohibit amendment to certain of its provisions,
including any amendment that would extend its corporate existence beyond
May 31, 2009, except in connection with, and effective upon consummation
of, a business combination. Stoneleigh’s IPO prospectus did not suggest in
any way that this charter provision, or the charter’s other business
combination procedures, were subject to change. We believe that these
charter provisions were included to protect Stoneleigh stockholders from
having to sustain their investments for an unreasonably long period, if
Stoneleigh failed to find a suitable business combination in the timeframe
contemplated by the charter, and the application of those investments
without the stockholder review customarily provided for them. We also
believe, however, that given Stoneleigh’s expenditure of time, effort and
money on several possible business combinations, including the RFC
business combination, circumstances warrant providing those who believe
they might find RFC to be an attractive investment an opportunity to
consider the RFC transaction, inasmuch as Stoneleigh is also affording
stockholders who wish to convert their public shares as originally
contemplated the opportunity to do so as well. Accordingly, we believe
that the Extension Amendment is consistent with the spirit in which
Stoneleigh offered its securities to the public.
Stoneleigh
has received an opinion from special Delaware counsel, Blank Rome LLP,
concerning the validity of the Extension Amendment. Stoneleigh did not
request Blank Rome to opine on whether the clause currently contained in
Article Sixth of our charter prohibiting amendment of Article Sixth prior
to consummation of a business combination was valid when
adopted. Blank Rome 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 proposed Amendment, if duly approved by
our board of directors (by vote of the majority of the directors present
at a meeting at which a quorum is present or, alternatively, by unanimous
written consent) and by the holders of a majority of the outstanding stock
of Stoneleigh entitled to vote thereon, all in accordance with Section
242(b) of the GCL, would be valid and effective when filed with the
Secretary of State in accordance with Sections 103 and 242 of the GCL.” A
copy of Blank Rome’s opinion is included as Annex B to this proxy
statement, and stockholders are urged to review it in its
entirety.
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Q.
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Should
I vote for the Conversion Proposal?
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A.
Approval
of the Conversion proposal is a condition to the implementation of the
Extension Amendment.
Whether
a holder of public shares votes in favor of or against the Extension
Amendment, the holder may, but is not required to, convert all or a
portion of its public shares into the pro rata portion of the trust
account represented by the converted shares. In order to
convert your public shares, you must vote in favor of the Conversion
proposal; however, if you vote in favor of the Conversion proposal, you
are not required to convert your public shares. There
is no limit on the number of public shares that may be
converted. If
at least a majority of the outstanding shares of common stock on the
record date vote in favor of the Extension Amendment and Conversion
proposal, and holders of a majority of the public shares elect to
participate in the Conversion and convert their shares into their pro rata
portion of the trust account, the stockholder approval of the Conversion
will constitute stockholder approval of a distribution of substantially
all of Stoneleigh’s assets for purposes of Section 271 of the GCL.
Any
such distribution will be a withdrawal of cash from the trust fund to the
holders of the public shares that have exercised their rights to convert
public shares but shall not require us to abandon the Extension Amendment
or liquidate or dissolve the remainder of the trust account or our
corporation.
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Liquidation
of the trust account is a fundamental obligation of Stoneleigh to the
public stockholders and Stoneleigh is not proposing and will not propose
to change that obligation to the public stockholders. If
holders of public shares do not elect to convert their public shares, such
holders shall retain conversion rights in connection with a business
combination. Assuming the Extension Amendment is approved,
Stoneleigh’s corporate existence shall be extended until December 31,
2009, and, therefore, Stoneleigh will have until December 31, 2009 to
complete a business combination.
Stoneleigh’s
board of directors recommends that you vote in favor of the Conversion
proposal, but expresses no opinion as to whether you should convert your
public shares.
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Q.
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How
do the Stoneleigh insiders intend to vote their shares?
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A. All
of Stoneleigh’s directors, executive officers, senior advisors and their
respective affiliates are expected to vote any common stock over which
they have voting control (including any public shares owned by them) in
favor of the Extension Amendment and Conversion
proposal. Stoneleigh’s directors, executive officers, senior
advisors and their respective affiliates are not entitled to convert their
insider shares. With respect to shares purchased on the open market by
Stoneleigh’s directors, executive officers, senior advisors and their
respective affiliates, such public shares may be converted. On
the record date, directors, executive officers and senior advisors of
Stoneleigh and their affiliates beneficially owned and were entitled to
vote 6,250,000 insider shares of Stoneleigh common stock, representing
approximately 18.33% of Stoneleigh’s issued and outstanding common stock
and 1,240,200 public shares of Stoneleigh common stock, representing
approximately an additional 3.62% of Stoneleigh’s issued and outstanding
stock.
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In
addition, affiliates may choose to buy public shares in the open
market and/or through negotiated private purchases. In the
event that purchases do occur, the purchasers may seek to purchase shares
from stockholders who would otherwise have voted against the Extension
Amendment. Any public shares held by or subsequently purchased
by affiliates of Stoneleigh may be voted in favor of the Extension
Amendment and the Conversion
proposal.
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Q.
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What
vote is required to adopt the Extension Amendment?
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A. Approval
of the Extension Amendment will require the affirmative vote of holders of
a majority of Stoneleigh’s outstanding common stock on the record date.
Approval
of the Conversion proposal is a condition to the implementation of the
Extension Amendment.
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Our
board of directors believes that decisions regarding Stoneleigh’s future,
such as whether to continue its existence or have its existence terminate,
should be determined by Stoneleigh’s current stockholders and they should
not be bound by the restrictions implemented by the stockholders at the
time of the IPO. The current stockholders should not be
prohibited from amending the certificate of incorporation to allow
Stoneleigh to continue its existence, especially since all holders of
public shares are being offered the opportunity to convert their public
shares and receive their pro rata portion of the trust account in
connection with the approval of the proposals which will occur close in
time to May 31, 2009 as contemplated in the IPO
prospectus.
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Q.
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What
vote is required to approve the Conversion proposal?
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A. Any
holder of public shares that votes in favor of the Conversion may convert
all of a portion of their public shares into their pro rata portion of the
trust account. In order to convert your public shares, you must
vote in favor of the Conversion proposal; however, if you vote in favor of
the Conversion proposal, you are not required to convert your public
shares. If a majority of the outstanding shares of common stock
are voted in favor of the Conversion proposal, and holders of a majority
of the public shares elect to participate in the Conversion proposal and
convert their shares into their pro rata portion of the trust account, the
stockholder approval of the Conversion proposal will constitute
stockholder approval of a distribution of substantially all of
Stoneleigh’s assets for purposes of Section 271 of the GCL. Any
holder of public shares who votes against the Conversion shall retain his,
her or its conversion rights in connection with a future business
combination. Holders of public shares who elect to convert
their public shares shall receive their pro rata portion of the trust
account shortly after the stockholder meeting which is scheduled for May
29, 2009 as set forth in the IPO prospectus and the remainder of the trust
account shall remain in the trust account until the earlier to occur of
(i) the approval of a business combination or (ii) December 31,
2009. If the Conversion proposal is not approved by the
affirmative vote of holders of a majority of Stoneleigh’s outstanding
common stock on the record date, or holders of a majority of the public
shares do not elect to participate in the Conversion proposal the
stockholder approval of a statutory distribution of substantially all of
Stoneleigh’s assets under Section 271 of the GCL will not occur.
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Q.
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Since
Stoneleigh’s IPO prospectus states that Stoneleigh would not amend Article
Sixth except in connection with a business combination, what are my legal
rights?
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A.
You should be aware that Stoneleigh’s IPO prospectus stated that
Stoneleigh would not take any action to amend or waive Article Sixth of
its certificate of incorporation (except in connection with, and upon the
effectiveness of, a business combination), including, to allow it to
survive for a longer period of time. As a result, each
stockholder may have securities law claims against Stoneleigh for
rescission (under which a successful claimant has 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 a security).
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Such
claims may entitle stockholders asserting them to up to $8.00 per share,
based on the initial offering price of the IPO units comprised of stock
and warrants, less any amount received from the sale of the original
warrants purchased with them, plus interest from the date of Stoneleigh’s
IPO (which, in the case of public stockholders, may be more than the pro
rata share of the trust account to which they are entitled on conversion
or liquidation).
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In
general, a person who purchased shares pursuant to a defective prospectus
or other representation, must make a claim for rescission within the
applicable statute of limitations period, which, for claims made under
Section 12 of the Securities Act and some 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. Rescission and damages claims may not be
extinguished by liquidation of the trust
account.
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Even
if you do not pursue such claims, others may. If they do,
holders of such claims, who may include all stockholders who own shares
issued in Stoneleigh’s IPO, might seek to have the claims satisfied from
funds in the trust account. A consequence might be that
Stoneleigh’s assets following the Extension Amendment could be
significantly reduced or depleted entirely. In addition, the
pro rata portion of the trust account payable to holders of public shares
will be less than they would otherwise have been entitled, or such amount
might be insufficient to fully satisfy a rescission or damages
award. Stoneleigh cannot predict whether stockholders will
bring such claims, how many might bring them or the extent to which they
might be successful. Moreover, such litigation could result in
the delay of any payments to public stockholders of trust account funds
upon conversion or liquidation.
Aside
from possible securities law claims against Stoneleigh, you should also be
aware that if the Extension Amendment is approved, Stoneleigh will incur
substantial additional expenses in seeking to identify and complete a
business combination or commence operations, in addition to expenses
incurred in proposing the Extension Amendment. Stoneleigh has
sufficient funds outside of the trust account to pay these
obligations.
You
should read the proxy statement carefully for more information concerning
these possibilities and other consequences of adoption of the Extension
Amendment.
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Q.
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What
if I don’t want to vote for the Extension Amendment or Conversion
proposal?
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A.
If you do not want the Extension Amendment or Conversion proposal to be
approved, you must abstain, not vote, or vote against the
proposals. If the Extension Amendment is approved, then
Extension Amendment will be effected by Stoneleigh. If the
Extension Amendment and Conversion proposal are approved, the Withdrawal
Amount will be withdrawn from the trust account and paid to the converting
holders. However, as explained in “Possible Claims Against and Impairment
of the Trust Account” below, the Extension Amendment may result in claims
against Stoneleigh whose holders might seek to have the claims satisfied
from funds in the trust account, which could result in depletion of the
trust account and in turn reduce a public stockholder’s pro rata portion
of the funds available in the trust account upon the completion of a
business combination or upon
liquidation.
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Q.
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Will
you seek any further extensions to liquidate the trust
account?
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A. No,
other than the extension until December 31, 2009 as described in this
proxy statement, Stoneleigh will not seek any further extension to
liquidate the trust account. Stoneleigh’s board of directors
recognizes that Stoneleigh’s IPO prospectus stated that Stoneleigh would
not take any action allowing it to survive for a longer period of time
except in connection with, and effective upon, the consummation of a
business combination. Stoneleigh has provided that all holders
of public shares, including those who vote against the Extension
Amendment, but not those who vote against the Conversion, may elect to
convert their public shares into their pro rata portion of the trust
account and should receive the funds shortly after the stockholder meeting
which is scheduled for May 29, 2009. Those
holders of public shares who elect
not to convert their shares now shall retain conversion
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rights
with respect to future business combinations, or, if no future business
combination is brought to a vote of the shareholders, such holders shall
be entitled to the pro rata portion of the trust account on December 31,
2009. To further minimize the deviation from Stoneleigh’s plans
as described in the IPO prospectus, Stoneleigh will, at the time the
Extension Amendment becomes effective, amend the trust account agreement
to (i) permit the withdrawal of the Withdrawal Amount from the trust
account, (ii) extend the date on which to liquidate the trust account to
December 31, 2009 and (iii) prohibit any further changes in the
distribution of trust account funds, including the date of liquidation,
unless each and every
Stoneleigh common stockholder specifically agrees in writing to such
change. This amendment will make extensions to liquidate
the trust account difficult for Stoneleigh to effect as Stoneleigh
believes that obtaining a unanimous vote of its common stockholders is
highly unlikely due to the diverse interests of its public
stockholders.
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Q.
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What
happens if the Extension Amendment is not approved?
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A. Because
Stoneleigh will not have sufficient time to submit for approval a suitable
target business opportunity to the stockholders prior to May 31, 2009, if
the Extension Amendment is not approved, our corporate existence will
terminate on May 31, 2009, except for the purposes of winding up our
affairs and liquidating, pursuant to Section 278 of the
GCL. This has the same effect as if our board of directors and
stockholders had formally voted to approve our dissolution pursuant to
Section 275 of the GCL. Accordingly, limiting our corporate
existence to a specified date as permitted by Section 102(b)(5) of the GCL
removed the necessity to comply with the formal procedures set forth in
Section 275 (which would have required our board of directors and
stockholders to formally vote to approve our dissolution and liquidation
and to have filed a certificate of dissolution with the Delaware Secretary
of State). In any liquidation, the funds held in the trust
account will be distributed, pro rata, to the
holders of the public shares. Stoneleigh anticipates
notifying the trustee of the trust account to begin liquidating such
assets promptly after such date and anticipates it will take no more than
10 business days to effectuate such distribution. Stoneleigh’s
initial stockholders waived their rights to participate in any liquidation
distribution with respect to their initial shares. There will
be no distribution from the trust account with respect to our warrants
which will expire worthless. Stoneleigh will pay the costs of
liquidation from its remaining assets outside of the trust account, which
it believes are sufficient for such purposes. If such funds are
insufficient, Stoneleigh’s management has agreed to advance it the funds
necessary to complete such liquidation (currently anticipated to be no
more than approximately $15,000) and has agreed not to seek repayment of
such expenses.
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Q.
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If
the Extension Amendment is approved, what happens next?
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A. Upon
approval by a majority of the common stock outstanding as of the record
date of the Extension Amendment and Conversion proposal, Stoneleigh will
file an amendment to the amended and restated certificate of
incorporation with the Secretary of State of the State of Delaware in the
form of Annex A hereto. Stoneleigh will remain a reporting
company under the Securities Exchange Act of 1934 and its units, common
stock and warrants will remain publicly traded. Stoneleigh will
then continue to work to consummate a business combination until its
corporate existence terminates on December 31,
2009.
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Stoneleigh
will continue to seek to consummate a business combination, which,
depending on how many holders of public shares elect to convert their
public shares, may be considerably smaller in size than contemplated in
the IPO.
If
the Extension Amendment and Conversion proposal are approved, the removal
of this Withdrawal Amount from the trust account will significantly reduce
the amount remaining in the trust account and Stoneleigh’s net asset value
and increase the percentage interest of Stoneleigh’s common stock held by
Stoneleigh’s directors, officers and senior advisors through the insider
shares. Stoneleigh’s IPO prospectus stated that the target
business or businesses, or the controlling interest therein, that
Stoneleigh may acquire must have a fair market value of at least equal to
80% of Stoneleigh’s net assets.
Additionally,
Stoneleigh’s certificate of incorporation provides that Stoneleigh shall
not consummate any business combination if the holders of 30% or more of
the public shares, contemporaneously with voting against such business
combination, exercise their rights to convert such shares into their pro
rata portion of the trust account. Because stockholders are not
being asked to vote on a business combination at this meeting, public
shares which are converted into a pro rata portion of the trust account in
connection with the Conversion will not count towards such 30%
threshold. The 30% threshold will continue to apply in
connection with a vote for approval of a business combination, including
the RFC transaction, but will be based upon the number of public shares
outstanding at the time of such vote, which may be significantly less than
the number of public shares outstanding on the record
date.
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Q.
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How
do I change my vote?
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A. If
you have submitted a proxy to vote your shares and wish to change your
vote, you may do so by delivering a later-dated, signed proxy card to
Stoneleigh’s secretary prior to the date of the special meeting or by
voting in person at the special meeting. Attendance at the
special meeting alone will not change your vote. You also may
revoke your proxy by sending a notice of revocation to Stoneleigh located
at 20 Marshall Street – Suite 104, Norwalk, Connecticut 06854, Attn:
Corporate Secretary.
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Q.
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How
are votes counted?
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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 Extension Amendment and
Contribution proposal must be approved by the affirmative vote of a
majority of the outstanding shares as of the record date of Stoneleigh’s
common stock, voting together as a single class.
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With
respect to the Extension Amendment and Conversion 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 New York Stock Exchange 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.
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Q.
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If
my shares are held in “street name,” will my broker automatically vote
them for me?
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A. No.
Your broker can vote your shares only if you provide instructions on how
to vote. You should instruct your broker to vote your
shares. Your broker can tell you how to provide these
instructions.
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Q.
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What
is a quorum requirement?
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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.
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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.
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Q.
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Who
can vote at the special meeting?
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A. Only
holders of record of Stoneleigh’s common stock at the close of business on
April 15, 2009 are entitled to have their vote counted at the special
meeting and any adjournments or postponements thereof. On this
record date, 34,097,500 shares of common stock were outstanding and
entitled to vote.
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Stockholder
of Record: Shares Registered in Your Name. If on April 15, 2009
your shares were registered directly in your name with Stoneleigh’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.
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Beneficial
Owner: Shares Registered in the Name of a Broker or Bank. If on
April 15, 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.
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Q.
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What
vote is required in order to adopt the Extension Amendment and the
Conversion proposal?
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A. The
adoption of the Extension Amendment and the Conversion 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. Any holder who votes in favor of the
Conversion, may elect to convert all or a portion
of his, her or its public shares and shall be entitled to their pro rata
portion
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of
the trust account. In order for the approval of the Conversion
to constitute the approval of a distribution of all or substantially all
of Stoneleigh’s assets for purposes of Section 271 of the GCL, a majority
of the holders of the outstanding shares of common stock must approve the
Conversion and holders of a majority of the public shares must elect to
participate in the Conversion and convert their shares into their pro rata
portion of the trust account. If you vote in favor of the
Conversion, you are not required to convert your public
shares. If you vote against the Conversion, you may not convert
your public shares. Whether you vote for or against the
Extension Amendment, you may vote in favor of the
Conversion. 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.
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Q.
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Does
the board recommend voting for the approval of the Extension
Amendment and the Conversion proposal?
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A. Yes. After
careful consideration of the terms and conditions of these proposals, the
board of directors of the Company has determined that the Extension
Amendment and the Conversion proposal are fair to and in the best
interests of Stoneleigh and its stockholders. The board of
directors recommends that Stoneleigh’s stockholders vote “FOR” the
Extension Amendment and the Conversion.
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Q.
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What
interests do the Company’s directors and officers have in the approval of
the proposals?
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A. Stoneleigh’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 insider
shares and 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
“The Extension Amendment and Conversion Proposal-Interests of Stoneleigh’s
Directors and Officers.”
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Q.
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What
if I object to the Extension Amendment and the Conversion
proposal? Do I have appraisal rights?
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A. Stoneleigh
stockholders do not have appraisal rights in connection with the Extension
Amendment or the Conversion proposal under the GCL.
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Q.
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What
happens to the Stoneleigh warrants if the Extension Amendment is not
approved?
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A. If
the Extension Amendment is not approved, our corporate existence will
terminate on May 31, 2009, Stoneleigh will be required to liquidate
the trust account on May 31, 2009 and your warrants will become
worthless.
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Q.
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What
happens to Stoneleigh warrants if the Extension Amendment and Conversion
proposal are approved?
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A. If
the Extension Amendment is approved, Stoneleigh will continue its
corporate existence until December 31, 2009, and will retain the blank
check company restrictions previously applicable to it. The
warrants will remain outstanding in accordance with their
terms. It is Stoneleigh’s position that the warrants will
become exercisable upon the consummation of any business combination
following stockholder approval of the proposals. For more
information, see the sections entitled “Description of Securities” and
“Background Information-Status of Outstanding Warrants Following the
Special Meeting of Stockholders.” The approval of the
Conversion proposal and holders of a majority of the public shares
electing to participate in the Conversion and convert their shares into
their pro rata portion of the trust account, will constitute stockholder
approval of the Conversion as a statutory distribution of substantially
all of Stoneleigh’s assets for purposes of Section 271 of the
GCL.
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Q.
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What
do I need to do now?
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A. Stoneleigh
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 Stoneleigh stockholder. You should then
vote as soon as possible in accordance with the instructions provided in
this proxy statement and on the enclosed proxy card.
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Q.
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How
do I vote?
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A. If
you are a holder of record of Stoneleigh 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.
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Q.
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What
should I do if I receive more than one set of voting
materials?
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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 Stoneleigh shares.
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Q.
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Who
is paying for this proxy solicitation?
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A. Stoneleigh
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.
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Q.
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Who
can help answer my questions?
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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:
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Stoneleigh
Partners Acquisition Corp.
20
Marshall Street, #104
Norwalk,
Connecticut 06854
Attn:
James Coyne
Telephone:
(203) 663-4200
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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.”
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We
believe that some of the information in this proxy statement constitutes
forward-looking statements within the definition of the Private Securities
Litigation Reform Act of 1995. You can identify these statements by
forward-looking words such as “may,” “expect,” “anticipate,” “contemplate,”
“believe,” “estimate,” “intends,” and “continue” or similar
words. You should read statements that contain these words carefully
because they:
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discuss
future expectations;
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contain
projections of future results of operations or financial condition;
or
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state
other “forward-looking”
information.
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We
believe it is important to communicate our expectations to our
stockholders. However, there may be events in the future that we are
not able to predict accurately or over which we have no control. The
cautionary language discussed in this proxy statement provide examples of risks,
uncertainties and events that may cause actual results to differ materially from
the expectations described by us in such 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 Stoneleigh and Stoneleigh’s ability to finance
and consummate acquisitions following the distribution of funds from the trust
account. You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this proxy
statement.
All
forward-looking statements included herein attributable to Stoneleigh or any
person acting on Stoneleigh’s behalf are expressly qualified in their entirety
by the cautionary statements contained or referred to in this
section. Except to the extent required by applicable laws and
regulations, Stoneleigh undertakes no obligation to update these forward-looking
statements to reflect events or circumstances after the date of this proxy
statement or to reflect the occurrence of unanticipated events.
BACKGROUND
Stoneleigh
Stoneleigh
is a blank check company organized as a corporation under the laws of the State
of Delaware on September 9, 2005. It was formed to effect a business
combination with an unidentified operating business. In May 2007, it
consummated its IPO from which it derived gross proceeds of $222,780,000,
including proceeds from the partial exercise of the underwriters’ over-allotment
option. Prior to our IPO, our officers, directors and senior
advisors, and certain of their affiliates (collectively, the “insiders”)
purchased an aggregate of 6,250,000 shares, referred to as the “initial shares”
or the “insider shares”, from us for $1,550,000 and, simultaneously with the
consummation of the IPO, certain of the insiders purchased 5,975,000 warrants
referred to as the “insider warrants” for $4,450,000. The net
proceeds of the IPO plus the proceeds of the sale of the initial shares and
insider warrants were deposited in the trust account. Stoneleigh has
been permitted to withdraw (i) interest income earned on the trust account to
pay tax obligations and (ii) up to $3,000,000 of interest income earned on the
trust account to fund expenses. As of March 31, 2009, Stoneleigh had
approximately $224,078,057 of cash in the trust account and $2,342,964 of cash
outside of the trust account. The cash outside of the trust account
has been and will continue to be, reduced by expenses incurred by Stoneleigh,
including expenses in connection with the RFC transaction.
The
mailing address of Stoneleigh principal executive office is 20 Marshall Street,
Suite 104, Norwalk, CT 06854, and its telephone number is (203)
663-4200.
Business
Combination Activity
Since the
completion of its IPO, Stoneleigh has been dealing with many of the practical
difficulties associated with the identification of a business combination
target, negotiating business terms with potential targets and conducting related
due diligence. Commencing promptly upon completion of its IPO,
Stoneleigh began to search for an appropriate business combination
target. During the process, it relied on numerous business
relationships and contacted investment bankers, private equity funds, consulting
firms, and legal and accounting firms. As a result of these efforts, Stoneleigh
identified and reviewed information with respect to over 50 possible target
companies. Primarily as a result of the difficult and deteriorating
economic climate since its IPO, Stoneleigh has been dealing with significant
challenges to identify suitable target businesses to present to its
stockholders. Stoneleigh believes that the RFC transaction is in
the best interests of its stockholders.
The
RFC Transaction
RFC was
organized in Maryland on May 10, 2005, as a commercial real estate
specialty finance company focused on originating and acquiring whole loans,
bridge loans, subordinate interests in whole loans, commercial mortgage-backed
securities and mezzanine loans, primarily in the United States. Under
the terms of the transaction, if approved, Stoneleigh will acquire a controlling
interest in RFC. Stoneleigh will receive 31,000,000 shares of newly
issued RFC common stock and a $31,250,000 principal amount senior secured note
of RFC for which Stoneleigh will pay to RFC $25,000,000 in
cash. Stoneleigh will have the option to adjust its investment to any
amount between $20,000,000 and $150,000,000. The number of shares of
common stock and principal amount of the note will be adjusted proportionately.
The note will be secured by a first priority senior secured position in all of
the assets of RFC, including the capital stock of RFC's subsidiaries, and bear
interest at the rate of 8%. Additionally, Stoneleigh will have the
right to appoint three of six members to RFC's board of directors upon the
closing of the transaction.
If, after
the execution of a definitive agreement between RFC and Stoneleigh either (i)
Stoneleigh has demonstrated that it is ready to close the transaction and RFC
has not consummated the transaction within 60 days of Stoneleigh demonstrating
it can close or (ii) RFC signs a definitive agreement for a transaction other
than the transaction with Stoneleigh, RFC must pay Stoneleigh the sum of
$800,000 as liquidated damages for the damages incurred by Stoneleigh as a
result of such actions and, in addition, shall reimburse Stoneleigh for all of
its reasonable out-of-pocket expenses incurred in connection with the letter of
intent and the RFC transaction. Additionally, if the deposit
described below has been paid, RFC must also return such
deposit. Stoneleigh has until May 30, 2009 to consummate with a
transaction with RFC, subject to extension by Stoneleigh to August 31, 2009,
with delivery by Stoneleigh of a $1,000,000 deposit. In the event
that a definitive agreement is not executed by August 31, 2009, RFC shall return
the $1,000,000 deposit.
THE
EXTENSION AMENDMENT AND CONVERSION PROPOSAL
The
Extension Amendment
Stoneleigh
is proposing to amend its amended and restated certificate of incorporation to
extend that date on which Stoneleigh’s corporate existence terminates from May
31, 2009 to December 31, 2009.
The
Extension Amendment and the Conversion proposal are essential to the overall
implementation of the board of directors’ plan to continue Stoneleigh’s
corporate existence until December 31, 2009 to allow Stoneleigh more time to
complete a business combination. Approval
of the Conversion proposal is a condition to the implementation of the Extension
Amendment.
Stoneleigh
has entered into a letter of intent with RFC, and, therefore, if the Extension
Amendment proposal is not approved by the stockholders, Stoneleigh’s corporate
existence will terminate on May 31, 2009 without Stoneleigh’s consummation of a
business combination.
The board
of directors believes that decisions regarding Stoneleigh’s future, such as
whether to continue its existence or have its existence terminate, should be
determined by Stoneleigh’s current stockholders and they should not be bound by
the restrictions implemented by the stockholders at the time of the
IPO. The current stockholders should not be prohibited from amending
the amended and restated certificate of incorporation to allow Stoneleigh to
continue its existence, especially since all holders of public shares are being
offered the opportunity to convert their public shares and receive their pro
rata portion of the trust account in connection with the approval of the
proposals which will occur close in time to May 31, 2009 as contemplated in the
IPO prospectus. Additionally, given Stoneleigh’s expenditure of time,
effort and money on several possible business combinations, including the RFC
business combination, circumstances warrant providing those who believe they
might find RFC to be an attractive investment, the opportunity to approve such
business combination.
In
connection with the IPO, the insiders entered into letter agreements pursuant to
which, among other things, they agreed not to propose or vote in favor of, or
amend the certificate of incorporation to extend the period of time in which
Stoneleigh must consummate a business combination prior to its
liquidation. The underwriting agreement between Stoneleigh and the
underwriters of the IPO provided that Stoneleigh will not allow any amendments
or waivers of the letter agreements without the consent of the representative of
the underwriters of the IPO.
In
connection with IPO, the underwriters are entitled to a cash fee of $7,400,000
at the consummation of a business combination if at least 80% of the proceeds of
the trust account established at the time of the IPO are released to
Stoneleigh. If at least 80% of the proceeds of the trust account are
not released to Stoneleigh, such $7,400,000 is not payable to the
underwriters.
A copy of
the proposed amendment to the amended and restated certificate of incorporation
of Stoneleigh is attached to this proxy statement as Annex A.
Conversion
Proposal
The
Conversion proposal allows the holders of public shares to elect to convert
their public shares into their pro rata portion of the funds held in the trust
account if the Extension Amendment is approved. There is
no limit on the number of public shares that may be converted.
Stockholder approval of the Conversion and holders of a majority of the
public shares electing to participate in the Conversion and converting their
shares into their pro rata portion of the trust account, will constitute
stockholder approval of the Conversion as a statutory distribution of
substantially all of Stoneleigh’s assets for purposes of Section 271
of the GCL. Any such
distribution will be a withdrawal of cash from the trust fund to the holders of
the public shares that have exercised their rights to convert public shares but
shall not require us to abandon the Extension Amendment or liquidate or dissolve
the remainder of the trust account or our corporation.
All
holders of Stoneleigh’s public shares who vote in favor of the Conversion,
whether they vote for or against the Extension Amendment, are entitled to
convert all or a portion of their public shares into their pro rata portion of
the trust account, provided that the Extension Amendment is
approved. Voting in favor of the Conversion does not require you to
convert your public shares. You must, however, vote in favor of the
Conversion in order to convert your public shares.
A public
stockholder’s election to convert shall constitute consent for Stoneleigh to
remove the Withdrawal Amount from the trust account relating to converted public
shares, deliver to the holders of such shares so tendered such pro rata portion
of the trust account and leave the remainder of the funds in the trust account
until the earlier to occur of (y) the completion of a business combination or
(z) December 31, 2009. Stoneleigh estimates that the per share pro
rata portion of the trust account will be approximately $8.04 at the time of the
special meeting.
At the
time the Extension Amendment becomes effective, Stoneleigh will also amend the
trust account agreement to (i) permit the withdrawal of the Withdrawal Amount
from the trust account, (ii) extend the date on which to liquidate the trust
account to December 31, 2009 and (iii) prohibit any further changes in the
distribution of trust account funds, including the date of liquidation, unless each and every Stoneleigh common stockholder
specifically agrees in writing to such change. This amendment
to the trust account agreement will make extensions to liquidate the trust
account difficult for Stoneleigh to effect, as Stoneleigh believes that
obtaining a unanimous vote of its stockholders is highly unlikely due to the
diverse interests of its public common stockholders.
Reasons
for the Proposals
Stoneleigh’s
certificate of incorporation purports to prohibit amendment to certain of its
provisions, including any amendment that would continue Stoneleigh’s existence
beyond May 31, 2009 except in connection with, and upon completion of, a
business combination. Stoneleigh’s IPO prospectus stated that
Stoneleigh would not take any action to amend or waive Article Sixth of its
certificate of incorporation to allow it to continue its corporate existence
beyond May 31, 2009, except in connection with, and to be effective upon, the
consummation of a business combination. Since the completion of its
IPO, Stoneleigh has been dealing with many of the practical difficulties
associated with the identification of a business combination target, negotiating
business terms with potential targets and conducting related due
diligence. Commencing promptly upon completion of its IPO, Stoneleigh
began to search for an appropriate business combination
target. During the process, it relied on numerous business
relationships and contacted investment bankers, private equity funds, consulting
firms, and legal and accounting firms. As a result of these efforts, Stoneleigh
identified and reviewed information with respect to over 50 possible target
companies. Primarily as a result of the difficult and deteriorating
economic climate since its IPO, Stoneleigh has been dealing with significant
challenges to identify suitable target business to present to its
stockholders.
As stated
above in “Why is the Company proposing the
Extension Amendment and the Conversion proposal?”, Stoneleigh identified
RFC. As Stoneleigh believes the RFC transaction to be in the best
interests of its stockholders, and because Stoneleigh will not be able to
conclude the business combination with RFC by May 31, 2009, Stoneleigh has
determined to seek stockholder approval to extend Stoneleigh’s corporate
existence from May 31, 2009 until December 31, 2009 to allow Stoneleigh the
opportunity to complete a business combination with RFC or another business
combination. If the Extension Amendment is approved, Stoneleigh
expects to seek stockholder approval of a business combination in the near
future.
Stoneleigh’s
charter purports to prohibit amendment to certain of its provisions, including
any amendment that would extend its corporate existence beyond May 31, 2009,
except in connection with, and effective upon consummation of, a business
combination. Stoneleigh’s IPO prospectus did not suggest in any way that this
charter provision, or the charter’s other business combination procedures, were
subject to change. We believe that these charter provisions were included to
protect Stoneleigh stockholders from having to sustain their investments for an
unreasonably long period, if Stoneleigh failed to find a suitable business
combination in the timeframe contemplated by the charter, and the application of
those investments without the stockholder review customarily provided for them.
We also believe, however, that given Stoneleigh’s expenditure of time, effort
and money on several possible business combinations, including the RFC business
combination, circumstances warrant providing those who believe they might find
RFC to be an attractive investment, an opportunity to consider the RFC
transaction, inasmuch as Stoneleigh is also affording stockholders who wish to
convert their public shares as originally contemplated, the opportunity to do so
as well. Accordingly, we believe that the Extension Amendment and Conversion
proposal are consistent with the spirit in which Stoneleigh offered its
securities to the public.
Stoneleigh’s
charter also provides that Stoneleigh shall not consummate any business
combination if the holders of 30% or more of the public shares,
contemporaneously with voting against such business combination, exercise their
rights to convert such shares into their pro rata portion of the trust
account. Because stockholders are not being asked to vote on a
business combination at this meeting, public shares which are converted into a
pro rata portion of the trust account in connection with the Conversion will not
count towards such 30% threshold. The 30% threshold will continue to
apply in connection with a vote for approval of a business combination,
including the RFC transaction, but will be based upon the number of public
shares outstanding at the time of such vote, which may be significantly less
than the number of public shares outstanding on the record date.
Stoneleigh
has received an opinion from special Delaware counsel, Blank Rome LLP,
concerning the validity of the Extension Amendment. Stoneleigh did not request
Blank Rome to opine on whether the clause currently contained in Article Sixth
of our charter prohibiting amendment of Article Sixth prior to consummation of a
business combination was valid when adopted. Blank Rome 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 proposed Amendment, if duly
approved by our board of directors (by vote of the majority of the directors
present at a meeting at which a quorum is present or, alternatively, by
unanimous written consent) and by the holders of a majority of the outstanding
stock of Stoneleigh entitled to vote thereon, all in accordance with Section
242(b) of the GCL, would be valid and effective when filed with the Secretary of
State in accordance with Sections 103 and 242 of the GCL.” A copy of Blank
Rome’s opinion is included as Annex B to this proxy statement, and stockholders
are urged to review it in its entirety.
The
removal of the Withdrawal Amount from the trust account in connection with the
Conversion will reduce the amount remaining in the trust account and
Stoneleigh’s net asset value and increase the percentage interest of
Stoneleigh’s common stock held by Stoneleigh’s directors, officers and senior
advisors through the insider shares. Stoneleigh cannot predict the
amount that will remain in the trust account if the Extension Amendment and
Conversion proposal are approved. If the Extension Amendment and
Conversion proposal are approved, the removal of this Withdrawal Amount from the
trust account will significantly reduce the amount remaining in the trust
account and Stoneleigh’s net asset value. Stoneleigh’s IPO prospectus
stated that the target business or businesses, or the controlling interest
therein, that Stoneleigh may acquire, must have a fair market value of at least
equal to 80% of Stoneleigh’s net assets.
If
the Extension Amendment and Conversion Proposal Are Not Approved
If the
Extension Amendment is not approved, Stoneleigh’s corporate existence will
terminate except for the purposes of winding up its affairs and liquidating,
pursuant to Section 278 of the GCL. This has the same effect as if
its board of directors and stockholders had formally voted to approve its
dissolution pursuant to Section 275 of the GCL. Accordingly,
limiting its corporate existence to a specified date as permitted by Section
102(b)(5) of the GCL removed the necessity to comply with the formal procedures
set forth in Section 275 of the GCL (which would have required its board of
directors and stockholders to formally vote to approve its dissolution and
liquidation and to have filed a certificate of dissolution with the Delaware
Secretary of State). In any liquidation, the funds held in the trust
account will be distributed, pro rata to the holders of
Stoneleigh’s public shares. In such case, Stoneleigh anticipates
notifying the trustee of the trust account to begin liquidating such assets
promptly after such date and anticipates it will take no more than 10 business
days to effectuate such distribution. Stoneleigh’s initial
stockholders have waived their rights to participate in any liquidation
distribution with respect to their initial shares. There will be no
distribution from the trust account with respect to Stoneleigh’s warrants which
will expire worthless. Stoneleigh will pay the costs of liquidation
from its remaining assets outside of the trust account. If such funds
are insufficient, Stoneleigh’s management has agreed to advance it the funds
necessary to complete such liquidation (currently anticipated to be no more than
approximately $15,000) and has agreed not to seek repayment of such expenses.
Additionally,
if the Extension Amendment is not approved, the holders of the public shares
will not vote on the Conversion proposal, as Stoneleigh’s existence will
terminate on May 31, 2009 and the trust account will be liquidated as
described above. If the Conversion proposal is not approved, the Company will
not effect the Extension Amendment.
If
the Extension Amendment Is Approved
If the
Extension Amendment is approved, Stoneleigh will file an amendment to the
amended and restated certificate of incorporation with the Secretary of State of
the State of Delaware in the form of Annex A hereto to extend its corporate
existence until December 31, 2009. Stoneleigh will remain a reporting
company under the Securities Exchange Act of 1934 and its units, common stock
and warrants will remain publicly traded. Stoneleigh will then
continue to work to consummate a business combination until its corporate
existence terminates on December 31, 2009.
Stoneleigh
will continue to seek to consummate the RFC business combination or another
business combination, which, depending on how many holders of public shares
participate in the Conversion, may be considerably smaller in size than
contemplated in the IPO. You are not being asked to pass on
the proposed business combination at this time. If you are a public
stockholder, you will have the specific right to vote on the proposed business
combination with RFC, or another business combination if and when it is
submitted to stockholders.
If the
Extension Amendment and conversion proposal are approved, the removal of the
Withdrawal Amount from the trust account in connection with the Conversion
will reduce the amount held in the trust account and Stoneleigh’s net asset
value following the Conversion. Stoneleigh cannot predict the amount
that will remain in the trust account if the Extension Amendment and Conversion
proposal are approved. Stoneleigh’s IPO prospectus stated that the
target business or businesses, or the controlling interest therein that
Stoneleigh may acquire, must have a fair market value of at least equal to 80%
of Stoneleigh’s net assets.
Stoneleigh’s
charter also provides that Stoneleigh shall not consummate any business
combination if the holders of 30% or more of the public shares,
contemporaneously with voting against such business combination, exercise their
rights to convert such shares into their pro rata portion of the trust
account. Because stockholders are not being asked to vote on a
business combination at this meeting, public shares which are converted into a
pro rata portion of the trust account in connection with the Conversion will not
count towards such 30% threshold. The 30% threshold will continue to
apply in connection with a vote for approval of a business combination,
including the RFC transaction, but will be based upon the number of public
shares outstanding at the time of such vote, which may be significantly less
than the number of public shares outstanding on the record date.
If
the Conversion Proposal Is Approved
Approval
of the Conversion proposal is a condition to the implementation of the Extension
Amendment.
If the
Extension Amendment and Conversion proposal are approved, the removal of the
withdrawal of funds from the trust account in connection with the Conversion
will reduce the amount held in the trust account and Stoneleigh’s net asset
value following the Conversion. Stoneleigh cannot predict the amount
that will remain in the trust account if the Extension Amendment and Conversion
proposal are approved and the
amount remaining in the trust account may be only a small fraction of the
approximately $224 million that was in the trust account as of March 31,
2009.
Stoneleigh’s
IPO prospectus stated that the target business or businesses, or the controlling
interest therein that Stoneleigh may acquire, must have a fair market value of
at least equal to 80% of Stoneleigh’s net assets. Accordingly,
the 80% threshold for the fair market value of a target business will be reduced
proportionately to the extent of the Withdrawal Amount from the trust
account in connection with Conversions. For example, at March 31,
2009, Stoneleigh’s net assets were approximately $226.7 million, which would
require a target business to have a fair market value of at least $181.36
million to be acquired by Stoneleigh. If one-half of the public
shares are converted, Stoneleigh’s net asset value would be reduced by $112
million to approximately $114.7 million and the 80% threshold for a business
combination would be approximately $91.75 million. As a further
illustration, if public shares converted into $200 million of cash in the trust
account, Stoneleigh’s net asset value would be reduced to approximately $26.7
million and the threshold for a target business fair market value would be
reduced to approximately $21.36 million.
Stoneleigh’s
charter also provides that Stoneleigh shall not consummate any business
combination if the holders of 30% or more of the public shares,
contemporaneously with voting against such business combination, exercise their
rights to convert such shares into their pro rata portion of the trust
account. Because stockholders are not being asked to vote on a
business combination at this meeting, public shares which are converted into a
pro rata portion of the trust account in connection with the Conversion will not
count towards such 30% threshold. The 30% threshold will continue to
apply in connection with a vote for approval of a business combination,
including the RFC transaction, but will be based upon the number of public
shares outstanding at the time of such vote, which may be significantly less
than the number of public shares outstanding on the record date.
The
Special Meeting
Date, Time and
Place. The special meeting of Stoneleigh’s stockholders will
be held at 11:00 a.m., EDT on May 29, 2009, at the offices of Stoneleigh’s
counsel, Blank Rome LLP, at 405 Lexington Avenue, New York, NY
10174.
Voting Power; Record
Date. You will be entitled to vote or direct votes to be cast
at the special meeting, if you owned Stoneleigh common stock at the close of
business on April 15, 2009, the record date for the special
meeting. You will have one vote per proposal for each Stoneleigh
common share you owned at that time. Stoneleigh warrants do not carry
voting rights.
Votes
Required. Approval of the Extension Amendment and Conversion
proposal will require the affirmative vote of holders of a majority of
Stoneleigh’s common stock outstanding on the record date. If you do
not vote (i.e. you “Abstain” from voting on a proposal), your action will have
the same effect as an “AGAINST” vote. Broker non-votes will have the
same effect as “AGAINST” votes.
At the
close of business on April 15, 2009, there were 34,097,500 outstanding shares of
Stoneleigh common stock each of which entitles its holder to cast one vote per
proposal.
If you do
not want the Extension Amendment approved, you must abstain, not vote, or vote
against the Extension Amendment. If you want to obtain
your pro rata portion of the trust account shortly after the
stockholder meeting which is scheduled for May 29, 2009, you must vote for the
Conversion. Holders of public shares who vote against the Conversion may
not convert their public shares.
Proxies; Board
Solicitation. Your proxy is being solicited by the Stoneleigh
board of directors on the proposal to approve the Extension Amendment and the
Conversion being presented to stockholders at the special meeting. No
recommendation is being made as to whether you should elect to convert your
shares. Proxies may be solicited in person or by
telephone. If you grant a proxy, you may still revoke your proxy and
vote your shares in person at the special meeting.
Possible
claims against and Impairment of the Trust Account
You
should be aware that because Stoneleigh’s IPO prospectus stated that Stoneleigh
would not take any action allowing it to survive for a longer period of time
except in connection with, and effective upon, the consummation of a business
combination, as required by its certificate of incorporation, you may have
securities law claims against Stoneleigh for rescission (under which a
successful claimant has the right to receive the total amount paid for his or
her shares pursuant to an allegedly deficient prospectus, plus interest and less
any income earned on the shares, in exchange for surrender of the shares) or
damages (compensation for loss on an investment caused by alleged material
misrepresentations or omissions in the sale of the
security). Rescission and damages claims would not necessarily be
finally adjudicated by the time the trust account is
liquidated. Such claims may entitle public stockholders
asserting them to more than the pro
rata share of the trust account to which they are entitled upon
conversion or liquidation, as well as punitive damages.
Even if
you do not pursue such claims, others may. If they do, holders of
such claims, who may include all stockholders who own shares issued in
Stoneleigh’s IPO, might seek to have the claims satisfied from funds in the
trust account. Stoneleigh cannot predict whether stockholders will
bring such claims, how many might bring them or the extent to which they might
be successful. Moreover, attendant litigation could result in delay
in payments to public stockholders of trust account funds on
liquidation.
In
general under U.S. federal and state securities laws, material misstatements and
omissions in a prospectus may give rise to rights of rescission in favor of, or
claims for damages by, persons who purchased securities pursuant to the
prospectus. As a result, it is possible that adopting the Extension
Amendment may result in claims being made against Stoneleigh whose holders might
seek to have the claims satisfied from funds in the trust
account. Stoneleigh has not made or requested of its advisors a
formal comprehensive analysis of its potential liability for any such
misstatements or omissions. Since rescission generally provides
successful claimants with the right to recover the entire purchase price of
their securities, holders of Stoneleigh common stock who successfully claim
rescission could be awarded up to approximately $8.00 per share, based on the
initial offering price of the units issued in Stoneleigh’s IPO, which were
comprised of stock and warrants, less any amount received from the sale of the
original warrants included in the units, plus interest from the date of
Stoneleigh’s IPO. In general, a person who purchased shares pursuant
to a defective prospectus or other representation must make a claim for
rescission within the applicable statute of limitations period, which, for
claims made under federal law and some 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. Rescission and damages claims
would not necessarily be finally adjudicated by the time the trust account is
liquidated, claims would not be extinguished by consummation of that
transaction.
If
Stoneleigh were to become subject to such claims as a result of the Extension
Amendment, Stoneleigh’s assets following the Extension Amendment could be
significantly reduced or depleted entirely and the trust account could be
depleted by those claims to the extent of any judgments arising from such
claims, together with any expenses related to defending such claims if the
resources of Gary D. Engle and James A. Coyne, who have certain indemnification
obligations with respect to the trust account, are insufficient or unavailable
to indemnify Stoneleigh for the full amount. A consequence might be
that the amount being held in the trust account is diminished and holders of
public shares who do not convert their public shares now may receive a lesser
amount as their pro rata portion of the
trust account.
Depletion
of the trust account as a result of claims being made against it as described
above could have the consequence of holders of public shares not receiving the
same amount in the distribution to them of the pro
rata portion of the trust account if no such claims had been
made. This could happen if liabilities to which Stoneleigh becomes
subject as a result of the Extension Amendment or otherwise are satisfied from
funds in the trust account and the resources of Gary Engle and James Coyne, who
agreed to certain indemnification obligations with respect to the trust account,
are insufficient or unavailable to indemnify Stoneleigh for the full amount
thereof on liquidation.
If
Stoneleigh’s trust account is not depleted by liabilities for securities law
claims or other expenses, Stoneleigh estimates that all public stockholders
would receive as of December 31, 2009, upon liquidation, approximately $8.06 per
share. This per share amount may be less than the possible per-share
amount of a successful rescission claim, which could be approximately $8.00,
based on the initial offering price of the IPO units comprised of stock and
warrants, less any amount received from sale of the originally-attached
warrants, plus interest from the date of the IPO. A rescission award
may also bear interest at a higher rate than that earned on trust account
funds. Public stockholders would also incur costs in prosecuting such
claims, which would reduce the per-share amount they realize.
Stoneleigh
has attempted to structure the Extension Amendment and the Conversion proposal
to preserve the investment proposition set forth in the IPO prospectus for
public stockholders, specifically, by giving them their right to convert on the
date of the stockholder meeting, which is scheduled for May 29, 2009 and
receive their pro rata portion of the trust account shortly
thereafter. This is designed to limit the potential damages, but it
is impossible to predict how courts would rule in such a case. A
further deterrent to the bringing of a rescission claim is the significant costs
that stockholders would incur in prosecuting those claims.
In view
of the foregoing, Stoneleigh’s board of directors believes it in the best
interests of Stoneleigh’s stockholders to approve the Extension Amendment and
the Conversion proposal.
Possible
Status as “Shell Company” under the Federal Securities Laws
Following
stockholder approval of the proposals, 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 law, 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 of 1933, as amended (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 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 Securities Exchange Act
of 1934, as amended.
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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 Stoneleigh 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.
Forced
Liquidation
If the
Extension Amendment is not approved and we do not complete a business
combination as contemplated by our IPO prospectus and in accordance with our
certificate of incorporation, by May 31, 2009, our corporate existence will
terminate except for the purposes of winding up our affairs and liquidating,
pursuant to Section 278 of the GCL. This has the same effect as if
our board of directors and stockholders had formally voted to approve our
dissolution pursuant to Section 275 of the GCL. Accordingly, limiting
our corporate existence to a specified date as permitted by Section 102(b)(5) of
the GCL removes the necessity to comply with the formal procedures set forth in
Section 275 (which would have required our board of directors and stockholders
to formally vote to approve our dissolution and liquidation and to have filed a
certificate of dissolution with the Delaware Secretary of State). In
any liquidation the funds held in the trust account will be
distributed, pro rata, to the holders of the public
shares. In such case, Stoneleigh anticipates notifying the
trustee of the trust account to begin liquidating such assets promptly after
such date and anticipates it will take no more than 10 business days to
effectuate such distribution. Stoneleigh’s initial stockholders have
waived their rights to participate in any liquidation distribution with respect
to their initial shares. There will be no distribution from the trust
account with respect to our warrants which will expire
worthless. Stoneleigh will pay the costs of liquidation from its
remaining assets outside of the trust account. If such funds are
insufficient, Stoneleigh’s management has agreed to advance it the funds
necessary to complete such liquidation (currently anticipated to be no more than
approximately $15,000) and has agreed not to seek repayment of such
expenses.
Required
Vote
The
affirmative vote by holders of a majority of Stoneleigh’s outstanding common
stock voting for the Extension Amendment and the Conversion proposal is required
to approve the Extension Amendment and the Conversion proposal. In
order to qualify as a Section 271 distribution of all or substantially all of
Stoneleigh’s assets, a majority of the outstanding shares of common stock must
vote in favor of the Conversion and holders of a majority of the public shares
must elect to participate in the Conversion and convert their shares into their
pro rata portion of the trust account. However, Stoneleigh’s board of
directors will abandon the Conversion proposal if the Extension Amendment is not
approved. In that case, Stoneleigh will be required by its
certificate of incorporation to liquidate and distribute the trust account
proceeds to the holders of public shares as contemplated by the IPO
prospectus.
All of
Stoneleigh’s directors, executive officers and their affiliates are expected to
vote any common stock owned by them in favor of the Extension Amendment and the
Conversion proposal. On the record date, directors and executive
officers of Stoneleigh and their affiliates beneficially owned and were entitled
to vote 4,715,458 shares of Stoneleigh common stock representing approximately
13.83% of Stoneleigh’s issued and outstanding common stock.
In
addition, affiliates of Stoneleigh may choose to buy shares of Stoneleigh
public common stock in the open market and/or through negotiated private
purchases. In the event that purchases do occur, the purchasers may
seek to purchase shares from stockholders who would otherwise have voted against
the Extension Amendment and Conversion proposal and elected to convert their
shares into a portion of the trust account. Any shares of Stoneleigh
public common stock purchased by affiliates will be voted in favor of the
Extension Amendment and Conversion proposal.
Interests
of Stoneleigh’s Directors and Officers
When you
consider the recommendation of the Stoneleigh board of directors, you should
keep in mind that Stoneleigh’s executive officers and members of Stoneleigh’s
board of directors have interests that may be different from, or in addition to,
your interests as a stockholder. These interests include, among other
things:
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If
the Extension Amendment is not approved and we do not complete a business
combination as contemplated by our IPO prospectus and in accordance with
our certificate of incorporation, by May 31, 2009, our corporate existence
will terminate except for the purposes of winding up our affairs and
liquidating, pursuant to Section 278 of the GCL. In such event,
the 6,250,000 shares of common stock held by Stoneleigh officers,
directors, senior advisors, affiliates and their permitted transferees,
which were acquired prior to the IPO for an aggregate purchase price of
$1,550,000, will be worthless, as will the 5,957,000 warrants that were
acquired prior to the IPO for an aggregate purchase price of
$4,550,000. Such common stock and warrants had an aggregate
market value of approximately $49,747,250 based on the last sale price of
$7.95 and $.01, respectively, on the NYSE Alternext on April 8,
2009;
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Because
the initial shares do not have the benefit of the liquidation rights of
the trust account, insiders will not receive any cash in the exchange for
their initial shares. An affiliate of Mr. Engle acquired 1,240,200 public
shares and 9,300 warrants in open market purchases. Such common stock and
warrants had an aggregate market value of approximately $9,859,683 based
on the last sale price of $7.95 and $.01, respectively, on the American
Stock Exchange, now known as NYSE Alternext, on April 8,
2009;
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In
connection with the IPO, Gary D. Engle and James A. Coyne each agreed to
indemnify Stoneleigh for debts and obligations to vendors that are owed
money by Stoneleigh, but only to the extent necessary to ensure that
certain liabilities do not reduce funds in the trust
account. If Stoneleigh were to be liquidated, Messrs. Engle and
Coyne will not have to perform such obligations as of May 31, 2009,
because, as of March 31, 2009, Stoneleigh had cash of $2,342,964 available
to it out of the trust, which is significantly greater than the amount
payable to creditors;
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The
5,975,000 insider warrants to purchase Stoneleigh common stock held by
Stoneleigh’s officers, directors and senior advisors and their affiliates
are exercisable only upon consummation of a business
combination;
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All
rights specified in Stoneleigh’s certificate of incorporation relating to
the right of officers and directors to be indemnified by Stoneleigh, and
of Stoneleigh’s officers and directors to be exculpated from monetary
liability with respect to prior acts or omissions, will continue after a
business combination. If the business combination is not
approved and Stoneleigh liquidates, Stoneleigh will not be able to perform
its obligations to its officers and directors under those
provisions;
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None
of Stoneleigh’s executive officers or directors has received any cash
compensation for services rendered to Stoneleigh. All of the
current members of Stoneleigh’s board of directors are expected to
continue to serve as directors at least through the date of the special
meeting. Stoneleigh currently has made no determinations
regarding the compensation it will pay its directors or officers following
stockholder approval of the Extension Amendment; and
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In
connection with our IPO, each of our officers and directors entered into a
letter agreement which provided, among other things, that Stoneleigh would
not consummate a business combination with an affiliated entity without an
opinion from an independent investment banking firm reasonably acceptable
to the representative of the underwriters of the IPO that the business
combination is fair to Stoneleigh’s stockholders from a financial
perspective. Stoneleigh believes the continued applicability of
this provision following the stockholder approval of the Extension
Amendment is unclear. In such circumstances, we would
anticipate that our board of directors will take such action as is
consistent with its fiduciary duties to
stockholders.
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The
Board’s Reasons for the Extension Amendment and Conversion proposal, its
Conclusion, and its Recommendation
As
discussed below, after careful consideration of all relevant factors,
Stoneleigh’s board of directors has determined that the Extension Amendment and
Conversion proposal are fair to, and in the best interests of, Stoneleigh and
its stockholders. The board of directors has approved and declared
advisable adoption of the Extension Amendment and Conversion proposal, and
recommends that you vote “FOR” such adoption. The board expresses no
opinion as to whether you should convert your public shares.
Stoneleigh
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. Stoneleigh signed a
letter of intent with RFC as of April 7, 2009. As a result
of the pending transaction with RFC, if approved, Stoneleigh will acquire
control of RFC.
RFC was
organized in Maryland on May 10, 2005, as a commercial real estate
specialty finance company focused on originating and acquiring whole loans,
bridge loans, subordinate interests in whole loans, commercial mortgage-backed
securities and mezzanine loans, primarily in the United States. Under
the terms of the transaction, if approved, Stoneleigh will acquire a controlling
interest in RFC. Stoneleigh will receive 31,000,000 shares of newly
issued RFC common stock and a $31,250,000 principal amount senior secured note
of RFC for which Stoneleigh will pay to RFC $25,000,000 in
cash. Stoneleigh will have the option to adjust its investment to any
amount between $20,000,000 and $150,000,000. The number of shares of
common stock and principal amount of the note will be adjusted proportionately.
The note will be secured by a first priority senior secured position in all of
the assets of RFC, including the capital stock of RFC's subsidiaries, and bear
interest at the rate of 8%. Additionally, Stoneleigh will have the
right to appoint three of six members to RFC's board of directors upon the
closing of the transaction.
If, after
the execution of a definitive agreement between RFC and Stoneleigh either (i)
Stoneleigh has demonstrated that it is ready to close the transaction and RFC
has not consummated the transaction within 60 days of Stoneleigh demonstrating
it can close or (ii) RFC signs a definitive agreement for a transaction other
than the transaction with Stoneleigh, RFC must pay Stoneleigh the sum of
$800,000 as liquidated damages for the damages incurred by Stoneleigh as a
result of such actions and, in addition, shall reimburse Stoneleigh for all of
its reasonable out-of-pocket expenses incurred in connection with the letter of
intent and the RFC transaction. Additionally, if the deposit
described below has been paid, RFC must also return such
deposit. Stoneleigh has until May 30, 2009 to consummate with a
transaction with RFC, subject to extension by Stoneleigh to August 31, 2009,
with delivery by Stoneleigh of a $1,000,000 deposit. In the event
that a definitive agreement is not executed by August 31, 2009, RFC shall return
the $1,000,000 deposit.
Stoneleigh
believes that a business combination with RFC will provide Stoneleigh
stockholders with an opportunity to participate in a combined company with
significant growth potential.
Stoneleigh’s
business combination with RFC is intended to be a “business combination”
under Stoneleigh’s charter. The charter currently provides that if Stoneleigh’s
corporate existence shall terminate on May 31, 2009, and that such provision may
only be amended in connection with, and become effective upon, the consummation
of a business combination. As we explain below, Stoneleigh will not
be able to complete the business combination by that date.
Stoneleigh’s
board of directors believes that decisions regarding Stoneleigh’s future, such
as whether to continue its existence or have its existence terminate, should be
determined by Stoneleigh’s current stockholders and they should not be bound by
the restrictions implemented by the stockholders at the time of the
IPO. The current stockholders should not be prohibited from amending
the amended and restated certificate of incorporation to allow Stoneleigh to
continue its existence, especially since all holders of public shares are being
offered the opportunity to convert their public shares and receive their pro
rata portion of the trust account in connection with the approval of the
proposals which will occur close in time to May 31, 2009 as contemplated in the
IPO prospectus.
Since the completion of its IPO, Stoneleigh has been dealing with many of the
practical difficulties associated with the identification of a business
combination target, negotiating the attendant business terms, conducting the
related due diligence and obtaining the necessary audited financial statements
of the business combination target. During the course of its search for a
candidate, commencing promptly upon completion of its IPO, Stoneleigh
identified, evaluated and entered into discussions with several companies. In
particular, after closing the IPO in May 2007, Stoneleigh identified over 50
candidates for a potential transaction, however, discussions with those
candidates never progressed beyond the preliminary stages. The Company first met
with management of RFC in December 2008 and entered into a letter of intent as
of April 7, 2009 with respect to a business combination. The Company first met
with management of RFC in December 2008 and entered into a letter of intent on
April 7, 2009 with respect to a business combination. From December 2008 until
April 7, 2009, Stoneleigh has focused on a possible transaction with
RFC. The parties believe that they will enter into a definitive
purchase agreement in May 2009 and can complete the business combination on or
before December 31, 2009.
As
Stoneleigh believes the RFC transaction to be in the best interests of its
stockholders, and because Stoneleigh will not be able to conclude the business
combination with RFC by May 31, 2009, Stoneleigh has determined to seek
stockholder approval to extend Stoneleigh’s corporate existence until December
31, 2009. If the Extension Amendment is approved, Stoneleigh expects
to seek stockholder approval of the business combination with RFC in the near
future.
Stoneleigh’s
board of directors believes stockholders will benefit from Stoneleigh’s
transaction with RFC and is proposing the Extension Amendment to
extend Stoneleigh’s corporate existence until December 31, 2009 and to allow for
the Conversion.
The
Extension Amendment would give Stoneleigh the opportunity to complete a business
combination. Stockholder approval of the Conversion will and holders of a
majority of the public shares electing to participate in the Conversion and
convert their shares into their pro rata portion of the trust account, will
constitute stockholder approval of the Conversion as a statutory distribution of
substantially all of Stoneleigh’s assets for purposes of Section 271 of the GCL.
Stoneleigh
is not asking you to pass on the RFC business combination at this time. If you
vote in favor of the Extension Amendment and do not elect to convert your public
shares, you will retain the right to vote on the proposed RFC business
combination, which Stoneleigh expects to submit to stockholders for approval in
the near future.
Stoneleigh’s
IPO prospectus stated that Stoneleigh would not take any action to amend or
waive Article Sixth of its certificate of incorporation to allow it to continue
its corporate existence beyond May 31, 2009, except in connection with, and to
be effective upon, the consummation of a business combination. Since
the completion of its IPO, Stoneleigh has been dealing with many of the
practical difficulties associated with the identification of a business
combination target, negotiating business terms with potential targets and
conducting related due diligence. Commencing promptly upon completion
of its IPO, Stoneleigh began to search for an appropriate business combination
target. During the process, it relied on numerous business
relationships and contacted investment bankers, private equity funds, consulting
firms, and legal and accounting firms. As a result of these efforts, Stoneleigh
identified and reviewed information with respect to over 50 possible target
companies. Primarily as a result of the difficult and deteriorating
economic climate since its IPO, Stoneleigh has been dealing with significant
challenges to identify suitable target business to present to its
stockholders. As stated above in “Why is the Company proposing the
Extension Amendment and the Conversion proposal?”, Stoneleigh
identified RFC. As Stoneleigh believes the RFC transaction to be in
the best interests of its stockholders, and because Stoneleigh will not be able
to conclude the business combination with RFC by May 31, 2009, Stoneleigh has
determined to seek stockholder approval to extend Stoneleigh’s corporate
existence from May 31, 2009 until December 31, 2009 to allow Stoneleigh the
opportunity to complete a business combination with RFC , or another business
combination. If the Extension Amendment is approved, Stoneleigh
expects to seek stockholder approval of a business combination in the near
future.
Stoneleigh’s
charter purports to prohibit amendment to certain of its provisions, including
any amendment that would extend its corporate existence beyond May 31, 2009,
except in connection with, and effective upon consummation of, a business
combination. Stoneleigh’s IPO prospectus did not suggest in any way that this
charter provision, or the charter’s other business combination procedures, were
subject to change. We believe that these charter provisions were included to
protect Stoneleigh stockholders from having to sustain their investments for an
unreasonably long period, if Stoneleigh failed to find a suitable business
combination in the timeframe contemplated by the charter, and the application of
those investments without the stockholder review customarily provided for them.
We also believe, however, that given Stoneleigh’s expenditure of time, effort
and money on several possible business combinations, including the RFC business
combination, circumstances warrant providing those who believe they might find
RFC to be an attractive investment an opportunity to consider the RFC
transaction, inasmuch as Stoneleigh is also affording stockholders who wish to
convert their public shares as originally contemplated the opportunity to do so
as well. Accordingly, we believe that the Extension Amendment is consistent with
the spirit in which Stoneleigh offered its securities to the
public.
Stoneleigh
has received an opinion from special Delaware counsel, Blank Rome LLP,
concerning the validity of the Extension Amendment. Stoneleigh did not request
Blank Rome to opine on whether the clause currently contained in Article Sixth
of our charter prohibiting amendment of Article Sixth prior to consummation of a
business combination was valid when adopted. Blank Rome 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 proposed Amendment, if duly
approved by our board of directors (by vote of the majority of the directors
present at a meeting at which a quorum is present or, alternatively, by
unanimous written consent) and by the holders of a majority of the outstanding
stock of Stoneleigh entitled to vote thereon, all in accordance with Section
242(b) of the GCL, would be valid and effective when filed with the Secretary of
State in accordance with Sections 103 and 242 of the GCL.” A copy of Blank
Rome’s opinion is included as Annex B to this proxy statement, and stockholders
are urged to review it in its entirety.
Stoneleigh’s
board of directors has unanimously approved the Extension Amendment and
Conversion proposal. Accordingly, if the Extension Amendment is
approved by the holders of a majority of Stoneleigh’s outstanding common stock,
in accordance with Delaware law, Stoneleigh believes the Extension Amendment
will be valid and effective when filed with the Secretary of State of the State
of Delaware in accordance with the applicable statutory provisions,
notwithstanding the provision in the current certificate of incorporation
purporting to prohibit certain amendments prior to consummation of a business
combination.
After
careful consideration of all relevant factors, Stoneleigh’s board of directors
determined that the Extension Amendment is fair to and in the best interests of
Stoneleigh and its stockholders.
The
Board of Directors recommends that you vote “FOR” the Extension Amendment and
Conversion proposal. The Board of Directors expresses no opinion as
to whether you should convert your public shares.
BENEFICIAL
OWNERSHIP OF SECURITIES
The
following table sets forth certain information regarding the beneficial
ownership of Stoneleigh’s common stock as of April 15, 2009 by:
|
|
·
|
each
person known by us to be the beneficial owner of more than 5% of our
outstanding shares of common stock;
|
|
|
·
|
each
of our officers, directors and senior advisors; and
|
|
|
·
|
all
our officers and directors as a group.
|
|
|
|
|
As of
April 15, 2009 there were a total of 34,097,500 shares of common stock
(including 27,847,500 public shares). Unless otherwise indicated, all
persons named in the table have sole voting and investment power with respect to
all shares of common stock beneficially owned by them.
|
|
Amount
and Nature of
|
Approximate
Percentage of
|
|
Name and
Address of Beneficial Owner(1)
|
Beneficial
Ownership
|
Outstanding Common
Stock
|
|
|
|
|
|
Gary
D. Engle(2)
|
2,244,074(3)
|
6.6%
|
|
Gary
D. Engle 2008 GRAT(4)
|
2,342,370(5)
|
6.9%
|
|
James
A. Coyne(2)
|
2,107,422(6)
|
6.2%
|
|
Brian
Kaufman(7)
|
307,335(8)
|
*
|
|
Jonathan
Davidson(7)
|
307,335(8)
|
*
|
|
Milton
J. Walters
|
125,037(9)
|
*
|
|
Geoffrey
A. Thompson
|
39,203
|
*
|
|
Michael
Clayton(10)
|
17,424
|
*
|
|
Fir
Tree, Inc.(11)
|
1,780,350
|
5.2%
|
|
QVT
Financial LP(12)
|
3,065,600
|
9.0%
|
|
HBK
Investments L.P. (13)
|
2,317,300
|
6.8%
|
|
President
and Fellows of
|
|
|
|
Harvard
College (14)
|
2,626,300
|
7.7%
|
|
All
directors and executive
|
|
|
|
officers
as a group (five individuals)
|
4,715,458(15)
|
13.8%
|
_____________________
* Less than 1%.
|
|
(1) Unless
otherwise noted, the business address of each of the following is 20
Marshall Street, South Norwalk, CT
06854.
|
|
|
(2) The
business address of this individual is c/o PLM International, Inc., 20
Marshall Street, Suite 104, South Norwalk, CT
06854.
|
|
|
(3) Includes
1,240,200 shares of common stock owned by Hera Financial LLC, an entity
which Mr. Engle and his affiliates control. Does not include
(i) 3,273,434 shares of common stock issuable upon exercise of insider
warrants held by Mr. Engle or (ii) 6,800 shares of common stock issuable
upon exercise of warrants held by Hera Financial, none of which are
currently exercisable and none of which will become exercisable within 60
days.
|
|
|
(4) The
business address of this entity is Gary D. Engle 2008 GRAT, c/o Wayne
Engle, 398 Highland Avenue, Winchester, MA
01890.
|
|
|
(5) These
shares are held by Wayne E. Engle as Trustee of the Gary D. Engle 2008
GRAT. The beneficiaries of the GRAT are members of Gary D.
Engle’s immediate family.
|
|
|
(6) These
shares are held by JAC Opportunity Fund I, LLC, a family-held entity of
which Mr. Coyne is the sole manager. Does not include 2,061,567 shares of
common stock issuable upon exercise of insider warrants held by JAC
Opportunity Fund I, LLC which are not currently exercisable and will not
become exercisable within 60 days.
|
|
|
(7) The
business address of this individual is 11150 Santa Monica Boulevard, Suite
700, Los Angeles, California 90025.
|
|
|
(8) Does
not include 300,648 shares of common stock issuable upon exercise of
insider warrants held by such individual which are not currently
exercisable and will not become exercisable within 60
days.
|
|
|
(9) Does
not include 38,703 shares of common stock issuable upon exercise of
insider warrants held by Mr. Walters which are not currently exercisable
and will not become exercisable within 60
days.
|
|
|
(10) The
business address of this individual is 3030 Blackthorn Road, Riverwoods,
Illinois 60015.
|
|
|
(11)
Based on a Schedule 13G/A filed with the Securities and Exchange
Commission on February 11, 2009 on behalf of Fir Tree SPAC Holdings 1, LLC
(“SPAC Holdings 1”), Fir Tree SPAC Holdings 2, LLC (“SPAC Holdings 2”) and
Fir Tree, Inc. (“Fir Tree”). Such filing indicates that (a)
SPAC Holdings 1 has shared voting and dispositive power with respect to
1,704,850 shares, (b) SPAC Holdings 2 has shared voting and dispositive
power with respect to 75,500 shares and (c) Fir Tree has shared and
dispositive power with respect to 1,780,350 shares. Fir Tree is
the investment manager for each of SPAC Holdings 1 and SPAC Holdings 2 and
has been granted investment discretion over portfolio investments,
including the common stock, held by each of them. The business
addresses for each entity above is 505 Fifth Avenue, 23rd
Floor, New York, NY 10017.
|
|
|
(12) Based
on a Schedule 13G/A filed with the Securities and Exchange Commission on
February 6, 2009 on behalf of QVT Financial LP, QVT Financial GP LLC, QVT
Fund LP and QVT Associates GP LLC. QVT Financial LP is the
investment manager for QVT Fund LP (the “Fund”), which beneficially owns
2,500,386 shares of common stock, and for Quintessence Fund L.P.
(“Quintessence”), which beneficially owns 272,587 shares of common
stock. QVT Financial LP is also the investment manager for a
separate discretionary account managed for Deutsche Bank AG (the “Separate
Account”), which beneficially holds 292,627 shares of common
stock. Accordingly, QVT Financial LP may be deemed to
beneficially own an aggregate of 2,689,000 shares consisting of the shares
owned by the Fund and Quintessence and the shares held in the Separate
Account. QVT Financial GP LLC, as General Partner of QVT
Financial LP may be deemed to beneficially own the shares of common stock
reported by QVT Financial LP. The business addresses are as
follows: QVT Financial LP, QVT Financial GP LLC, QVT Associates
GP LLC, 1177 Avenue of the Americas, 9th Floor, New York, NY 10036, QVT
Fund LP, Walkers SPV, Walkers House, Mary Street, George Town, Grand
Cayman KY1-9002, Cayman Islands.
|
|
|
(13) Based
on a Schedule 13G/A filed with the Securities and Exchange Commission on
February 6, 2009 on behalf of HBK Investments L.P., HBK Services LLC, HBK
New York LLC, HBK Partners II L.P., HBK Management LLC and HBK Master Fund
L.P. The business addresses are as follows: HBK
Investments L.P., HBK Services LLC, HBK Partners II L.P. and HBK
Management LLC, 300 Crescent Court, Suite 700, Dallas, Texas 75201, HBK
Master Fund L.P. is c/o HBK Services LLC, 300 Crescent Court, Suite 700,
Dallas, Texas 75201 and HBK New York LLC is 250 Park Avenue, 20th
Floor, New York, New York 10022.
|
|
|
(14) Based
on a Schedule 13G/A filed with the Securities and Exchange Commission on
February 17, 2009 on behalf of President and Fellows of Harvard
College. The business address is c/o Harvard Management
Company, Inc., 600 Atlantic Avenue, Boston, MA
02210.
|
|
|
(15) Does
not include 5,635,649 shares of common stock issuable upon exercise of
insider warrants held by such individuals which are not currently
exercisable and will not become exercisable within 60
days.
|
All of
the 6,250,000 shares of our outstanding common stock owned by our stockholders
prior to our IPO have been placed in escrow with Continental Stock Transfer
& Trust Company, as escrow agent, pursuant to an escrow
agreement.
STOCKHOLDER
PROPOSALS
If the
Extension Amendment and Conversion proposal are approved, Stoneleigh’s 2009
annual meeting of stockholders will be held on or about August 31, 2009, unless
the date is changed by the Stoneleigh’s board of directors. If you
are a stockholder and you want to include a proposal in the proxy statement for
the year 2009 annual meeting, you need to provide it to Stoneleigh by no later
than June 1, 2009. You should direct any proposals to Stoneleigh’s
secretary at Stoneleigh’s principal office.
If
Stoneleigh is liquidated on May 31, 2009, there will be no annual meeting in
2009.
DELIVERY
OF DOCUMENTS TO STOCKHOLDERS
Pursuant
to the rules of the SEC, Stoneleigh and its agents that deliver communications
to its stockholders are permitted to deliver to two or more stockholders sharing
the same address a single copy of Stoneleigh’s proxy statement. Upon
written or oral request, Stoneleigh will deliver a separate copy of the proxy
statement to any stockholder at a shared address who wishes to receive separate
copies of such documents in the future. Stockholders receiving
multiple copies of such documents may likewise request that Stoneleigh deliver
single copies of such documents in the future. Stockholders may
notify Stoneleigh of their requests by calling or writing Stoneleigh at
Stoneleigh’s principal executive offices at 20 Marshall Street, #104, Norwalk,
Connecticut 06854.
WHERE
YOU CAN FIND MORE INFORMATION
Stoneleigh
files reports, proxy statements and other information with the SEC as required
by the Securities Exchange Act of 1934, as amended. You may read and
copy reports, proxy statements and other information filed by Stoneleigh with
the SEC at its public reference room located at 100 F Street, N.E., Washington,
D.C. 20549-1004. 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 SEC, Public Reference Section, 100 F Street, N.E., Washington,
D.C. 20549-1004. Stoneleigh files its reports, proxy statements and
other information electronically with the SEC. You may access
information on Stoneleigh at the SEC website containing reports, proxy
statements and other information at http://www.sec.gov. This proxy
statement describes the material elements of relevant contracts, exhibits and
other information attached as annexes to this proxy
statement. Information and statements contained in this proxy
statement are qualified in all respects by reference to the copy of the relevant
contract or other document included as an annex to this document.
This
proxy statement contains important business and financial information about us
that is not included in or delivered with this document. You may
obtain this additional information, or additional copies of this proxy
statement, at no cost, and you may ask any questions you may have about the
Extension Amendment or the Distribution proposal by contacting us at the
following address, telephone number or email address:
Stoneleigh
Partners Acquisition Corp.
20
Marshall Street, #104
Norwalk,
Connecticut 06854
In order
to receive timely delivery of the documents in advance of the special meeting,
you must make your request for information no later than May 18,
2009.
ANNEX
A
PROPOSED
AMENDMENT TO THE AMENDED AND RESTATED
CERTIFICATE
OF INCORPORATION
OF
STONELEIGH
PARTNERS ACQUISITION CORP.
Pursuant
to Section 245 of the
Delaware
General Corporation Law
The undersigned, being a duly
authorized officer of STONELEIGH PARTNERS ACQUISITION
CORP. (the “Corporation”), a corporation existing under the laws of the
State of Delaware, does hereby certify as follows:
1. The
name of the Corporation is Stoneleigh Partners Acquisition Corp.
2. The
Corporation’s Certificate of Incorporation was filed in the office of the
Secretary of State of the State of Delaware on September 9, 2005, and Amended
and Restated Certificates of Incorporation were filed in the office of the
Secretary of State of the State of Delaware on April 3, 2007 and May 30,
2007.
3. This
Amendment to the Amended and Restated Certificate of Incorporation amends the
Amended and Restated Certificate of Incorporation of the Corporation.
4. This
Amendment to the Amended and Restated Certificate of Incorporation was duly
adopted by the affirmative vote of the holders of a majority of the stock
entitled to vote at a meeting of stockholders in accordance with the provisions
of Sections 242 and 245 the General Corporation Law of the State of Delaware
(the “GCL”).
5. The
text of ARTICLE SIXTH is hereby amended and restated to read in full as
follows:
The
Corporation’s existence shall terminate on December 31, 2009 (the “Termination
Date”). This provision may only be amended in connection with, and become
effective upon, the consummation of a Business Combination (defined below). A
proposal to so amend this section shall be submitted to stockholders in
connection with any proposed Business Combination pursuant to Article Seventh
(A) below.
IN
WITNESS WHEREOF, I have signed this Amendment to the Amended and Restated
Certificate of Incorporation this _____ day of ____, 2009.
Name:
______________________
Title:
_______________________
ANNEX
B
(BLANK ROME
LETTERHEAD)
OPINION
OF BLANK ROME LLP
April 7,
2009
Stoneleigh
Partners Acquisition Corp.
555 Fifth
Avenue
New York,
NY 10017
Attention: Gary
D. Engle, Chief Executive Officer
Re: Enforceability of
Certificate of Incorporation Provision
Ladies
and Gentlemen:
We have
acted as special Delaware counsel to Stoneleigh Partners Acquisition Corp., 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 (“Secretary of State”) on September
9, 2005, as amended and restated by the Company’s Amended and Restated
Certificate of Incorporation, as filed with the Secretary of State on April 3,
2007 and May 30, 2007 (the “Amended and Restated Certificate of Incorporation”),
which 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 that connection, you have
requested our opinion as to the enforceability under Delaware law of a 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. 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, as adopted on September 9, 2005 (the “By-laws”), which we
assume constitute the entire bylaws of the Company as currently in
effect;
(c) The
Amendment;
(d) The
prospectus of the Company (the “Prospectus”), as filed with the Securities and
Exchange Commission (the “SEC”) pursuant to Rule 424(b)(4) on May 31, 2007 in
connection with Registration No. 333-133235;
(e) The Proxy
Statement proposed to be filed with the SEC in connection with the Amendment
(the “Proxy Statement”); and
(f) A
certificate of good standing for the Company obtained from the Secretary of
State, dated in April, 2009 (the “Good Standing Certificate”).
For
purposes of this letter, we have not reviewed any documents other than the
documents referenced in paragraphs (a) through (f) 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 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 and none of which we have investigated or verified.
BACKGROUND
Pursuant
to Article SIXTH of the Certificate of Incorporation, the Company’s existence
shall terminate on May 31, 2009 (the “Termination
Date”). Furthermore, Article SIXTH provides (i) this provision may
only be amended in connection with, and become effective upon, the consummation
of a Business Combination and (ii) a proposal to so amend this section shall be
submitted to stockholders in connection with any proposed Business Combination
pursuant to Article SEVENTH.
The
Certificate of Incorporation defines a “Business Combination” as the acquisition
by the Corporation, whether by merger, capital stock exchange, asset or stock
acquisition or other similar type of transaction, of an operating
business.
The Proxy
Statement states, and we have assumed as true for purposes of this opinion, that
as of the date of the Proxy Statement, the Company has entered into a letter of
intent that would constitute a Business Combination within the meaning of the
Amended and Restated Certificate of Incorporation but has not consummated a
Business Combination. Further, the Company expects this Business
Combination to be completed by May 31, 2009; however, the Company’s Board of
Directors has determined that it would be in the best interests of its
stockholders to permit the Company to continue its corporate existence beyond
May 31, 2009 in order to complete this Business Combination or another Business
Combination.
The
Company is considering amending Article SIXTH even though a Business Combination
may not be consummated as contemplated by Article SIXTH.
The
Amendment, would extend the Termination Date to December 31, 2009 and allow
those Company’s public shares who vote against the Amendment to elect to
convert1 their shares into a portion of the funds
available in the trust account (the “Trust Fund”) established in connection with
the IPO.
We
further understand that even if the Amendment is duly approved and becomes
effective, any holder of the Company’s public shares who has voted against the
Amendment will have the opportunity to demand a cash conversion (i.e., a
redemption) of his, her, or its shares, such that the holder will receive for
those shares his, her, or its pro rata share of the funds
available in the Trust Fund.
Article
SIXTH of the Certificate of Incorporation purport to divest the Company (and
consequently its directors and stockholders) of the power to amend Article SIXTH
prior to the consummation of a Business Combination.
DISCUSSION
May
Article SIXTH be amended as provided in the Amendment?
Section
242(a) of the GCL provides, in pertinent part:
After 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) provides that “[e]very amendment
authorized by subsection (a) of this section shall be made and effected
[as provided therein].” 8 Del. C. § 242(b)
(emphasis added). Subsection (b)(1) of Section 242 applies to
corporations having capital stock and provides that to approve an amendment, a
company’s “board of directors shall adopt a resolution setting forth the
amendment proposed, declaring its advisability,” and directing that the
amendment be considered by stockholders either at the next annual meeting or at
a special meeting called for such purpose. 8 Del. C. § 242(b)(1 ).2 Subsection (b)(l) further provides
that “[i]f 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 of amendment
“shall” be executed and filed and “shall” become effective. Id.3
By its
terms, Section 242 contemplates that Delaware corporations have broad power and
authority to amend their certificates of incorporation in any of the respects
permitted by the statute, including in the respects contemplated by the
Amendment, subject to obtaining the requisite board and stockholder
approvals. The statutory language itself suggests that the power to
amend the certificate of incorporation is an important and fundamental right
vested in the directors and stockholders, and nothing in Section 242 suggests
that such right may be eliminated or fundamentally restricted by a provision in
the certificate of incorporation. Indeed, the statute provides that
upon receipt of the requisite board and stockholder approvals, absent express
authority in the approving resolutions permitting the board to abandon a
proposed charter amendment, a corporation “shall” execute and file a certificate
of amendment and such certificate of amendment “shall” become
effective.
We note
that Section 102(b)(4) of the GCL 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, or
a larger number of directors, than is required by this chapter[.]
8 Del. C. §
102(b)(4). While Section 102(b)(4) expressly permits charter
provisions requiring a greater vote of directors or stockholders than is
otherwise required by Section 242 and other provisions of the GCL, nothing in
Section 102(b)(4) purports to authorize a provision in a certificate of
incorporation that eliminates, for a period of time or otherwise, the right and
power of directors and stockholders to authorize amendments to the certificate
of incorporation as expressly permitted by Section 242.
We
further note that Section 102(b)(1) of the GCL 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 this State.
8 Del. C. §
102(b)(1). In our view, Section 102(b)(1) does not provide authority
for a charter provision that eliminates the power of a corporation’s directors
and stockholders to amend the certificate of incorporation or particular
provisions thereof. First, Section 102(b)(1) does not authorize
charter provisions that eliminate or prohibit the exercise of rights and powers,
it merely provides for the limitation and regulation of such
powers. See Gotham
Partners, L.P. v. Hallwood Realty Partners, L.P., 817 A.2d 160, 167-68
(Del. 2002) (noting the “dubious” validity of the trial court’s statement in
dicta that a statute allowing a partnership agreement to restrict a partner’s
fiduciary duties permitted a partnership agreement to eliminate a partner’s
duties. The Court declined to rule on the issue, however, because it
was not properly before the Court on appeal).
Second,
we believe a Delaware court would find that a certificate of incorporation
provision that purports to eliminate the right and power to amend the
certificate of incorporation, or particular portions thereof, unless and until a
condition precedent is satisfied, is “contrary to the laws of [Delaware].” 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.” Sterling v. Mayflower Hotel
Corp., 93 A.2d 107, 118 (Del. 1952). For the reasons discussed
above, we believe the fundamental importance of the amendatory power as a matter
of Delaware public policy is implicit in the language of Section
242. Moreover, the Delaware case law discussed below further confirms
the importance of the power to amend as a core right of directors and
stockholders. A charter provision purporting to divest the directors
and stockholders of that important right, we believe, would be viewed by a
Delaware court as “contrary to the laws of [Delaware].”
Although
we are not aware of any Delaware case law directly addressing the enforceability
under Section 102(b)(1) or otherwise of a charter provision prohibiting
amendment to portions of a certificate of incorporation unless and until a
condition precedent is satisfied, we are aware of several decisions suggesting
that a certificate of incorporation provision eliminating the right and power of
directors and stockholders to amend the certificate of incorporation might be
unenforceable. In Sellers v. Joseph Bancroft &
Sons Co., 2 A.2d 108, 112-13 (Del.Ch. 1938), the Court of Chancery upheld
a certificate of incorporation provision requiring a supermajority vote to
change the designations, preferences, and rights of preferred
stock. Although the Court was not called upon to decide the validity
of another provision requiring a 100% vote to reduce the dividend rate and
liquidation value of the preferred stock, the Court suggested the possible
invalidity of such a provision, observing with suspicion that such a provision
would make a charter provision “practically irrepealable.” Id. at 114.
In Triplex Shoe Co. v. Rice &
Hutchins, Inc., 152 A. 342 (Del. 1930), the certificate of incorporation
provided that the common stock had “sole” power to vote, but the common stock
had been invalidly issued. Even though there was no valid common
stock with power to vote, including power to vote on an amendment to the
certificate of incorporation, the Court assumed that an amendment to the
certificate of incorporation nonetheless had been validly approved by the
holders of preferred stock. Id. at 347. The
Supreme Court held that, by the “very necessities of the case,” the holders of
preferred stock had the power to vote where no common stock had been validly
issued, emphasizing that otherwise the corporation would be “unable to
function.” Id. at
351. Although Triplex dealt primarily with
the proposition that a corporation cannot function properly unless at least one
class or series of outstanding stock has power to vote on the election of
directors, we believe the Supreme Court’s general observations about stockholder
voting rights, coupled with its assumption that the charter amendment had been
validly approved by the holders of preferred stock, which under the terms of the
certificate of incorporation had no voting rights, provide strong support for
the proposition that at least one class or series of outstanding stock must have
power at all times to approve or authorize fundamental corporate actions for
which the GCL requires a stockholder vote, including the election of directors
and amendments to the certificate of incorporation. For the same
reasons articulated by the Supreme Court in Triplex, we believe a
Delaware court would conclude that a certificate of incorporation provision
purporting to divest all stockholders of the power to approve amendments to the
certificate of incorporation leaves the corporation unable to function in a core
area of its governance and, therefore, is unenforceable.4
More
recently, in Jones Apparel
Group, Inc. v. Maxwell Shoe Co., 883 A.2d 837 (Del. Ch. 2004), the Court
of Chancery addressed whether a charter provision eliminating the power of a
board of directors to fix record dates was permitted by Section
102(b)(1). The Court held that the provision at issue was valid, but
was careful to note that other charter provisions purporting to eliminate
director or stockholder rights and powers with respect to other matters might
not be enforceable:
[T]o rule
for [plaintiff] in this situation does not mean that every statutory grant of
authority to directors or stockholders may be altered by
charter. Rather, it is to say that the court must determine, based on
careful, context-specific review in keeping with Sterling, whether a particular
certificate provision contravenes Delaware public policy, i.e., our law, whether
it be in the form of statutory or common law.
Id. at 848. The
Court referred to several statutory rights under the GCL that could not be
modified or eliminated by a charter provision. See id. at 848-849 & nn.
29, 30.5 The Court also indicated, in dicta,
but without ruling on the issue, that a provision of a certificate of
incorporation depriving directors of power to approve and propose to
stockholders amendments to the certificate of incorporation likely would be
invalid. Defendants had argued that statutory rights of directors
could be eliminated by the certificate of incorporation only if the statute
establishing such rights contained the phrase “unless otherwise provided by the
certificate of incorporation.” Defendants asserted that if the Court were to
hold otherwise, then Delaware corporations presumably could adopt charter
provisions divesting directors of any number of fundamental powers, including
the power to approve and recommend to stockholders charter amendments and
mergers. In rejecting that argument, the Court observed:
[Sections]
242(b)(1) and 251 do not contain the magic words [─ “unless otherwise provided
by 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 of 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].
Jones Apparel, 883 A.2d at
852.
As
suggested by the Court in Jones Apparel, the rights of
directors and stockholders to amend the certificate of incorporation are core
rights of fundamental importance under the GCL. We believe that the
fundamental nature of those rights is implicit in the statutory language itself,
as discussed above. The case law further supports our conclusion that
the right to amend is a fundamental right of central importance under the
statutory scheme of the GCL. For example, in Lions Gate Entertainment Corp. v.
Image Entertainment Inc., the Court of Chancery invalidated a provision
in a certificate of incorporation that purported to permit the board or the
stockholders to amend the certificate. 2006 WL 1668051 (Del. Ch. June
5, 2006). The Chancellor observed:
Under §
242 of the DGCL, after a corporation has received payment for its capital stock,
an amendment to a certificate of incorporation requires both (i) a resolution
adopted by the board of directors setting forth the proposed amendment and
declaring its advisability and (ii) the approval of a majority of the
outstanding stock entitled to vote on the amendment. Because the
Charter Amendment Provision purports to give the Image board the power to amend
the Charter unilaterally without a shareholder vote, it contravenes Delaware law
and is invalid ....
Id., at *7. Lions
Gate supports our conclusion that the rights of directors and stockholders to
approve amendments to the certificate of incorporation are “core” or
“fundamental” rights that cannot be altered by a provision in the certificate of
incorporation. Moreover, Delaware cases often have emphasized that
all rights of stockholders set forth in a certificate of incorporation remain
subject to amendment, even if the certificate of incorporation does not
expressly reserve such a right. See, e.g., Maddock v. Vorclone
Corp., 147 A. 255 (Del. Ch. 1929) (holding that all the provisions of the
General Corporation Law are incorporated into a corporation’s charter, and
therefore a corporation has the power to amend its charter, without expressly
reserving that right in its charter); Peters v. US. Mortgage Co.,
114 A. 598, 600 (Del. Ch. 1921) (holding that a corporate charter impliedly
incorporates every pertinent provision in the Delaware Constitution and
statutes, and, accordingly, a corporation has the power to amend its
certificate).
In Davis v. Louisville Gas &
Electric Co., 142 A. 654 (Del. Ch. 1928), a landmark decision on the
permissibility of charter amendments, the Court of Chancery addressed an
argument that an amendment to a certificate of incorporation was invalid because
it sought to amend the certificate in a manner that was permitted by a recent
amendment to the GCL but that was not permitted at the time the corporation was
organized. In the course of rejecting that argument, the Court
observed that by granting power to amend the certificate of incorporation, the
legislature “recognized the unwisdom of casting in an unchanging mould the
corporate powers which it conferred touching these [internal] questions so as to
leave them fixed for all time.” Id. at 657. The
Court further 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
intercorporate and in a sense private powers ...,” i.e., alteration of the terms
of the certificate of incorporation? Id. Davis confirms the important
public policy underlying the reservation of the right of directors and
stockholders to amend the certificate of incorporation, as set forth in Section
242.
In view
of the fundamental importance of the power and right of directors and
stockholders to amend the certificate of incorporation, as reflected in the
statutory language of Section 242 and expressed in the case law, it is our
opinion that a charter provision purporting to eliminate the right and power of
directors and stockholders to approve and implement amendments to the
certificate of incorporation is not permitted by Section 102(b)(1) or any other
provision of the GCL, even if such right and power is eliminated only as to
particular provisions and only unless and until a condition precedent is
satisfied. We believe that such a provision is contrary to the laws
and public policy of Delaware and, therefore, invalid and unenforceable.6
What
votes of the directors and stockholders are required to approve the
Amendment?
Given our
conclusion that Article SIXTH may permissibly be amended, you also have
requested our opinion as to the votes of the Company’s directors and
stockholders that would be required to approve the proposed
Amendment.
The
statutory default votes for approving an amendment to a corporation’s
certificate of incorporation are (i) approval (and declaration of advisability)
by the board of directors by the affirmative vote of a majority of the directors
present at a meeting at which a quorum is present or, alternatively, the
unanimous written consent of all directors (8 Del. C. §§ 141(b), 141(f),
242(b)); and (ii) votes or written consents in favor of the amendment by the
holders of a majority of the outstanding stock entitled to vote thereon, and the
holders of a majority of the outstanding stock of each class entitled to vote
thereon as a class (8 Del. C. §§ 228, 242(b)).7
The
default director and stockholder votes required by the GCL may be increased to
require a greater vote of the board or stockholders by a provision in the
certificate of incorporation or, in the case of the board vote, the
bylaws. See
8 Del. C. §§ 102(b)(4),
141(b), 216, 242(b). Delaware case law makes clear, however, that any
charter or bylaw provision purporting to impose a supermajority or unanimous
voting requirement must be “clear and unambiguous” and “positive, explicit,
clear and readily understandable” because such provisions give a minority the
power to veto the will of the majority, thus effectively disenfranchising the
majority. See
Centaur Partners, IV v. National Intergroup, Inc., 582 A.2d 923, 926-27
(Del. 1990) (quoting Standard
Power & Light Corp. v. Inv. Assocs., Inc., 51 A.2d 572, 576 (Del.
1947)); In re Explorer
Pipeline Co., 781 A.2d 705, 714 (Del. Ch. 2001); Rainbow Navigation, Inc. v.
Yonge, 1989 Del. Ch. LEXIS 41, at *13-14 (Del. Ch. Apr. 24,
1989). Such provisions should be “strictly construed” and “should not
be extended by liberal interpretation.” Cinerama, Inc. v. Technicolor,
Inc., 663 A.2d 1134, 1155 (Del. Ch. 1994), aff’d, 663 A.2d 1156 (Del.
1995). There is no provision in the Company’s Certificate of
Incorporation or By-laws purporting to impose a different or greater vote of
directors or stockholders for approval of an amendment to the Certificate of
Incorporation.
We have
considered whether a Delaware court, rather than declaring the prohibition on
amendment in Article SIXTH of the Certificate of Incorporation invalid and
unenforceable, might instead interpret the provisions of Article SIXTH and
Article SEVENTH as requiring a supermajority or unanimous vote of the directors
and/or the stockholders to approve any amendments purportedly prohibited
thereby. We do not believe, however, that a Delaware court would
interpret such provisions in that manner. Nothing in the language of
Article SIXTH and Article SEVENTH suggests that the drafter’s intent was to
impose supermajority or unanimous voting requirements; rather, such language
purports to be an outright prohibition on the power to amend, divesting both the
board and stockholders of their statutory rights to amend such Article as
specified. For the reasons set forth above, we believe such Article
is invalid and unenforceable, and does not contain a sufficient level of clarity
to be re-interpreted as supermajority or unanimity provision. Nor do
we believe that a Delaware court would engage in “liberal interpretation” to
effectively reform the provision to say something not intended by the
drafters. See
Cinerama, 663 A.2d at 1155; see also Hob Tea Room v.
Miller, 89 A.2d 851, 856-57 (Del. 1952) (reformation is appropriate only
where an instrument fails to reflect actual intent); 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 provisions to be included within the certificate ....” (citing
Waggoner v. Laster, 581
A.2d 1127,1136 (Del. 1990)).8
For the
reasons discussed above, it is our view that the Amendment may be approved by
board and stockholder action at the statutory default levels and that Article
SIXTH does not impose a supermajority or unanimous voting requirement for
amending any of the provisions of such Article.
CONCLUSION
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 proposed Amendment, if duly approved by the Board of
Directors (by vote of the majority of the directors present at a meeting at
which a quorum is present or, alternatively, by unanimous written consent) and
by the holders of a majority of the outstanding stock of the Company entitled to
vote thereon, all in accordance with Section 242(b) of the GCL, would be valid
and effective when filed with the Secretary of State in accordance with Sections
103 and 242 of the GCL.
The
foregoing opinion is limited to the laws of the State of Delaware and we express
no opinion as to the laws of any other jurisdiction, including, without
limitation, federal laws and rules and regulations relating
thereto. In addition, we express no opinion as to the securities laws
of the State of Delaware and the rules and regulations relating
thereto.
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 they purport to eliminate the power to amend such Article prior to
the consummation of a Business Combination. For the avoidance of
doubt, we express no opinion as to the validity, enforceability, or
effectiveness of the provisions set forth in the Amendment (or the Certificate
of Incorporation as amended thereby) to the extent that such provisions may be
deemed to require dissolution and liquidation of the Company under circumstances
not contemplated or permitted by Section 102(b)(5) and/or Section 275 of the GCL
and to the extent that such provisions provide for disparate treatment of
stockholders in connection with liquidating distributions. We also
note that the conversion of shares to cash, as provided in the Certificate of
Incorporation, as amended by the Amendment, likely would be construed as a
redemption provision for purposes of the GCL and any conversion or redemption of
shares thereunder might be subject to the restrictions on redemption set forth
in Section 160 of the GCL
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. 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 might be furnished or quoted to the Securities and Exchange Commission
in connection with the Proxy Statement.
Very
truly yours,
/s/ Blank
Rome LLP
1 Although
such right is called a “conversion” right in the Certificate of Incorporation,
we note that it technically would be deemed a redemption right under Delaware
law, subject to the requirements of Section 160 of the GCL.
2 Stockholder
approval also may be obtained by written consent pursuant to Section 228 of the
GCL. 8 Del.
C. § 228.
3 We
note that Section 303 of the GCL provides an alternative means of authorizing
amendments to the certificate of incorporation in connection with Federal
bankruptcy proceedings. Section 303 provides that a Delaware
corporation may carry out an order for relief entered in a Federal bankruptcy
proceeding and may take any corporate action required by such an order,
including, specifically, amendments to its certificate of incorporation, without
any further action by directors and stockholders. See 8 Del. § 303. A
charter amendment pursuant to Section 303 specifically requires action pursuant
to the Federal Bankruptcy Code and the statute provides that such action will
have the same effect as unanimous director and stockholder
approval. Id. To the extent Article
SIXTH purports to divest the Company of the power to carry out an order or
decree of a Federal bankruptcy court requiring amendment of the Certificate of
Incorporation, as required by Section 303 of the GCL, unless and until a
Business Combination has been consummated or during the Business Target
Acquisition Period, respectively, it is our view that such Article is invalid
and unenforceable for the same reasons expressed herein with respect to the
provision’s purported elimination of director and stockholder rights and
powers.
4 Our
conclusion in this regard is bolstered by Section 151 (b) of the GCL, which
authorizes a corporation to include in its certificate of incorporation
provisions for the redemption of any class or series of stock, but requires that
immediately after any redemption “the corporation shall have outstanding 1 or
more shares of 1 or more classes or series of stock, which share, or shares
together, shall have full voting powers.” Section 151(b) is a further reflection
of the important statutory policy requiring that at least one class or series of
outstanding stock, or classes or series together, must have full voting powers
with respect to fundamental corporate actions. We note that Section 151(a)
provides that any of the voting powers of any class or series of stock “may be
made dependent upon facts ascertainable outside the certificate of
incorporation.” 8 Del. C. § 151(a). In our
view, Section 151(a) does not authorize certificate of incorporation provisions
that purport to divest all stockholders of the power
to vote on fundamental corporate actions, such as amendments to the certificate
of incorporation. See 8 Del. C. § 151 (b); Triplex, 152 A. at 347, 351
(discussed above).
5 Specifically,
the Court discussed Rohe v.
Reliance Training Network 2000 WL 1038190 (Del. Ch. Jun. 21, 2000) (in
which the Court of Chancery invalidated a charter provision purporting to
eliminate the right of stockholders to elect directors annually in violation of
the statutory scheme providing for one year terms in the case of non-staggered
boards) and Loews Theatres,
Inc. v. Comm. Credit Co., 243 A.2d 78 (Del. Ch. 1968) (in which the Court
invalidated a charter provision purporting to impose ownership limits on the
right of stockholders to inspect books and records pursuant to 8 Del. C. § 220). In the Loews decision, the Court
observed that “a charter provision that seeks to waive a statutory right or
requirement is unenforceable.” Loews, 243 A.2d at 81. The
Jones Apparel Court
further observed that “[i]t would also be doubtful whether a certificate
provision could set a minimum notice requirement for stockholder meetings that
was greater than the minimum of the range mandated by Section 222(b)” of the
GCL. Jones
Apparel, 883 A.2d at 851.
6 Our
opinion is not changed by dicta in Boesky v. CX Partners, L.P.,
1988 WL 42250 (Del. Ch. Apr. 28, 1988), suggesting that Delaware law might not
require that a corporation have the power to amend its certificate of
incorporation after dissolution. In Boesky, a limited partnership agreement
vested certain powers in the liquidating partner upon dissolution, but no
partner had the power to amend the limited partnership agreement following
dissolution. Relying on Triplex, 152 A. 342 (Del.
1930), the liquidating partner argued that Delaware law required that someone be
empowered to amend the limited partnership agreement. The Court rejected the
argument, noting that “I do not read Triplex as recognizing the
rule that the power to amend a corporate charter or an agreement of limited
partnership must always be deemed to exist someplace, even when the entity is in
liquidation.” 1988 WL 42250, at *9. Boesky did not discuss the
statutory language or case law discussed above (other than the Triplex decision), its
observations about corporate charter amendments were dicta, and the actual
holding was limited to a finding that Delaware law does not require that a
limited partnership agreement be amendable following dissolution of the limited
partnership. Indeed, the Court’s dicta regarding corporate charter amendments
was similarly limited to the dissolution context, with the Court emphasizing
that “Triplex, unlike
the present case, involved a continuing entity, not one whose affairs are being
wound up.” Id. We express no view on
whether the GCL permits a corporate certificate of incorporation to be amended
after a corporation has dissolved and note that the law might require a
corporation to revoke its voluntary dissolution pursuant to Section 311 of the
GCL before effectuating an amendment to the certificate of
incorporation. See 8 Del. C. §§ 278,
311.
7 The
Certificate of Incorporation does not contain any provision requiring a separate
class vote to amend Article SIXTH.
8 Even
if a Delaware court were inclined to liberally interpret or reform Article SIXTH
in the manner suggested, a charter provision requiring a unanimous vote of
stockholders is of questionable validity under Delaware law. See 8 Del. C. § 102(b)(4) (which
authorizes provisions requiring the vote of a “larger portion” of stock); New
Webster’s Concise Dictionary of the English Language 566 (2003) (defining
“portion” as “[a] part of a whole”); Sellers, 2 A.2d at 114 (Del.
Ch. 1938) (suggesting possible invalidity of a unanimity provision because it
would render provisions of charter “practically
irrepealable”).
Exhibit
A
The text
of ARTICLE SIXTH is hereby amended and restated to read in full as
follows:
The
Corporation’s existence shall terminate on December 31, 2009 (the “Termination
Date”). This provision may only be amended in connection with, and become
effective upon, the consummation of a Business Combination (defined below). A
proposal to so amend this section shall be submitted to stockholders in
connection with any proposed Business Combination pursuant to Article Seventh
(A) below.
PROXY
Stoneleigh
Partners Acquisition Corp.
20
Marshall Street, #104
Norwalk,
Connecticut 06854
SPECIAL
MEETING OF STOCKHOLDERS
May
29, 2009
YOUR
VOTE IS IMPORTANT
FOLD
AND DETACH HERE
STONELEIGH
PARTNERS ACQUISITION CORP.
THIS
PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR
THE SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON
May
29, 2009
The
undersigned, revoking any previous proxies relating to these shares, hereby
acknowledges receipt of the Notice and Proxy Statement, dated April 29, 2009, in
connection with the Special Meeting to be held at 11:00 a.m. EDT on May 29, 2009
at the offices of Blank Rome LLP, 405 Lexington Avenue, New York, NY 10174, and
hereby appoints Gary D. Engle and James A. Coyne, and each of them (with full
power to act alone), the attorneys and proxies of the undersigned, with power of
substitution to each, to vote all shares of the common stock, of Stoneleigh
Partners Acquisition Corp. (the “Corporation”) registered in the name provided,
which the undersigned is entitled to vote at the Special Meeting of
Stockholders, and at any adjournments thereof, with all the powers the
undersigned would have if personally present. Without limiting the
general authorization hereby given, said proxies are, and each of them is,
instructed to vote or act as follows on the proposals set forth in this Proxy
Statement.
THIS
PROXY, WHEN EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF
NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED “FOR” THE PROPOSALS CONSTITUTING
THE EXTENSION AMENDMENT AND DISTRIBUTION PROPOSAL CONSISTING OF PROPOSALS
1 AND 2.
IF
YOUR SHARES ARE HELD IN AN ACCOUNT AT A BROKERAGE FIRM OR BANK, YOU MUST
INSTRUCT YOUR BROKER OR BANK ON HOW TO VOTE YOUR SHARES. IF YOU DO
NOT PROVIDE SUCH INSTRUCTIONS, YOUR SHARES WILL NOT BE VOTED ON ANY OF THE
PROPOSALS.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSALS 1 AND 2.
Important Notice Regarding the
Availability of Proxy Materials for the Special Meeting of Stockholders to be
held on May 29, 2009. This Proxy Statement to Stockholders is available at:
http://www.cstproxy.com/stoneleighpartnersacquisition/2009
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Proposal
1 –Extension of Corporate Life
Amend
the Corporation’s Amended and Restated Certificate of Incorporation to
permit the continuance of the existence of the Corporation until December
31, 2009 by amending Article Sixth of the certificate of
incorporation.
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FOR
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AGAINST
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ABSTAIN
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Proposal
2 – Approve the Conversion
Allow
the holders of shares of common stock issued in the Corporation’s initial
public offering to elect to convert such shares sold in the initial public
offering into their pro rata portion of the funds held in the trust
account established at the time of the Corporation’s initial public
offering.
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Only
if you vote “FOR” proposal Number 2 and you hold shares of the Corporation’s
common stock issued in the Corporation’s initial public offering, or public
shares, may you exercise your conversion rights with respect to all or a portion
of your public shares by marking the “Exercise Conversion Right” box below and
indicating how many public shares for which you are exercising such conversion
rights in the space provided. If you exercise your conversion rights,
then you will be exchanging the indicated number of your public shares for cash
and you will no longer own such public shares. You will only be
entitled to receive cash for those public shares if you tender your stock
certificates representing such converted public shares to the Corporation’s duly
appointed agent.
EXERCISE
CONVERSION RIGHTS ¨
CONVERT _____________ PUBLIC SHARES OF
THE CORPORATION
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Dated:
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_________________________
2009
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______________________________________________
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Stockholder’s
Signature
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______________________________________________
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Stockholder’s
Signature
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Signature
should agree with name printed hereon. If stock is held in the name
of more than one person, EACH joint owner should sign. Executors,
administrators, trustees, guardians, and attorneys should indicate the capacity
in which they sign. Attorneys should submit powers of
attorney.
PLEASE SIGN, DATE AND RETURN THE
PROXY IN THE ENVELOPE ENCLOSED TO CONTINENTAL STOCK TRANSFER & TRUST
COMPANY. THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED “FOR” THE PROPOSALS SET FORTH IN PROPOSALS 1 AND 2 AND WILL
GRANT DISCRETIONARY AUTHORITY TO VOTE UPON SUCH OTHER MATTERS AS
MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS
THEREOF. THIS PROXY WILL REVOKE ALL PRIOR PROXIES SIGNED BY
YOU.