“SPAC” – Special Purpose
Acquisition Corporation
About The Panelists

Joel Kanter
President and Secretary, has served as President of Windy City, Inc., a privately-held investment firm,
since 1986. From 1995 to 1999, Mr. Kanter served as the Chief Executive Officer and President of
Walnut Financial Services, Inc., a publicly traded company (formerly listed on Nasdaq). Walnut
Financial’s primary business focus was the provision of different forms of financing to small businesses.
Walnut Financial accomplished this objective by providing equity financing to start-up and early stage
development companies, bridge financing and factoring services to small and medium-sized companies,
and by providing later stage institutional financing to more mature enterprises through an institutional
fund it ran for the Teachers Retirement System of Illinois.
Over the course of its 13 year history, Walnut Financial provided financing to over 300 companies,
including many that became well known ventures including Plax Mouthwash (Oral Research
Laboratories), Sonicare Toothbrushes (Optiva Corp.), the first manufacturer of Global Positioning
System devices (Magellan Corp.), the largest and only nationwide Preferred Provider Organization (First
Health), what became the country’s fifth largest nursing home company (GranCare), and the third
largest U.S. institutional pharmacy company (Vitalink Pharmacy Services, Inc.). Walnut Financial was
acquired by THCG, Inc. in 1999.
From 1985 through 1986, Mr. Kanter served as Managing Director of The Investors’ Washington
Service, an investment advisory company specializing in providing advice to large institutional clients
regarding the impact of federal legislative and regulatory decisions on debt and equity markets. Clients
included Amoco Oil, AT&T, Bankers Trust, Chase Manhattan Bank, General Motors and J.C. Penney.
Mr. Kanter serves on the Board of Directors of several public companies including Encore Medical
Corporation (Nasdaq: ENMC), I-Flow Corporation (Nasdaq:IFLO), Logic Devices, Inc. (Nasdaq:LOGC)
Magna-Lab, Inc. (OTC Bulletin Board:MAGLA.OB) Nesco Industries, Inc. (OTCBB:NESK.OB), a
manufacturer of aqueous polymer Hydrogel used for wound care and transdermal drug delivery
systems; and Prospect Medical Holdings, Inc. (AMEX:PZZ), a provider of management services to
affiliated independent physician associations.
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Mr. Kanter also serves on the board of directors of several private companies, including BioHorizons
Implant Systems, Inc., a provider of dental implants and related products; Med Images, Inc., a
provider of integrated documentation services to surgeons and hospitals through multimedia
technology; Marina Medical, Inc., a provider of medical billing and accounts receivable management
services to hospital based physicians; Modigene Inc., a life sciences company that is developing
technology to extend the life of proteins; MathMastery, Inc., a company that develops homework
help products for the educational market; and Prescient Medical, Inc. an early stage company
seeking methods to identify and treat vulnerable plaque in cardiology patients. He is the past
President of the Board of Trustees of The Langley School in McLean Virginia and a current Trustee
at the Georgetown Day School in Washington, D.C. Mr. Kanter graduated from Tulane University in
1978 with a Bachelor of Science in Psychology and a Bachelor of Arts in Political Science.
3

Mr. Ferrari
Co-founder of RPCP and has been a partner of RPCP since July 2002 and as vice president and
director of Royal Palm Capital Management, Inc., since February 2005. He has also served as a
director of Devcon International Corp. since July 2004 and as vice chairman of Sunair Electronics,
Inc. since February 2005. From June 2000 to June 2002, he was an investment banker with Morgan
Stanley & Co., where he helped start the firm’s private equity placement group. Previously, Mr.
Ferrari co-founded PowerUSA, LLC, a retail renewable energy services company, in October 1997
and was a managing member until September 1999. Mr. Ferrari graduated from Georgetown
University, where he received his B.S., magna cum laude, in Finance and International Business.

Steven Slawson-Principal
TCMP3 Partners/Titan Capital Management
Steven Slawson has over 35 years of experience in the investment business. Since June 1999,
when he co-founded TCMP3 Partners (the investment entity of Titan Capital Management) he has
functioned as co-principal and Co-General Partner. TCMP3 is a $50 million value oriented hedge
fund which focuses on capital preservation. Its three principal strategies are investing in micro caps
(often well under $200 million), as a PIPE investor and an active participant in SPACs. Since its
inception in June 1999, the fund is up 122% versus a gain in the S&P 500 of 4%, a decline in the
NASDAQ Composite of 22%, and a rise in the Russell 2000 of 67%. The fund uses no financial
leverage and emphasizes tax efficiency. TCMP3 Partners has had no down years, a relatively low
maximum drawdown, and sharply lower volatility than most indices.
4

John Dalfonsi, Managing Director – Roth Capital Partners, LLC
Mr. Dalfonsi is a managing director in the investment banking department at Roth
Capital Partners. During his career, Mr. Dalfonsi has closed over 150 financings and
advised companies on mergers and acquisitions totaling over $6 billion in value. Mr.
Dalfonsi has worked in an investment banking capacity at firms including William Blair &
Company, Friedman Billings Ramsey and The Sakura Bank Limited over the last ten
years. Mr. Dalfonsi received his B.S in Industrial Engineering from Northwestern
University and has MBA from the University of Chicago Graduate School of Business.
Mr. Dalfonsi currently serves on the board of Mazda Motor Funding.

Douglas S. Ellenoff
A member of Ellenoff Grossman & Schole LLP, is a corporate and securities attorney
with a specialty in business transactions and corporate financings. During his career, he
has represented numerous broker-dealers (underwriters and placement agents),
venture capital investor groups and many corporations involved in the capital formation
process. In the last few years, he has been involved in over 20 registered public
offerings and over 100 private placements into public companies (PIPEs). As a result
of his firm's recognition within the SPAC program, Mr. Ellenoff has been involved at
various stages with over 30 SPACs.
He also provides counsel with regard to their
respective ongoing (SEC, AMEX and NASD) regulatory compliance. Mr. Ellenoff has
represented public companies in connection with their initial public offerings, secondary
public offerings, regulatory compliance as well as general corporate governance
matters.
What is a SPAC?

Newly formed corporation by prominent and qualified sponsor/management team
for the purpose of raising capital in an IPO in anticipation of identifying and
consummating a business combination

SPAC seeks to leverage the strength and recognition of the management team
within an industry or geographic location to secure propriety deal flow and identify
attractive acquisition candidates

Provides public company transparency to investors with full disclosure and voting
rights with respect to approving the proposed business combination

Public shareholders are able to sell their securities in the open market

Structure permits an investor to:


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Approve the business combination
Reject the business combination and elect to receive pro rata portion of the amount held in the
trust account (even if the majority of holders approve the business combination)
What are the Advantages to the Investor?
 Access to investments in acquisitions and buy-outs typically restricted to
private equity funds
 Investing with Sponsor (investing their own capital-up to 5% of IPO) who
have industry expertise
 Structure and Limited Risk
 Capital held in a trust account pending approval of business combination
 Benefits from liquidity of publicly-traded security and ability to control timing
of exit
 Pending business combination, no cash compensation to
Sponsor/Management Team
 Warrants included in Units offered in IPO enable holder to invest more capital
at a pre-determined price and leverage initial investment
 Grants investors voting rights to approve or reject the business combination
 Provider a minimum liquidation value per share in the event no business
combination is effected
6
What Are Advantages To
Sponsor/Management?
7

Pre-funding an acquisition strategy

Greater flexibility than with traditional private equity

Better economics for sponsor/management

More credibility with seller with cash in trust
Offered Securities*
Offerings consist of units comprised of common shares and warrants
that are registered with the SEC and trade freely
Traditional SPAC Structure
$8.00 Unit
1 common share
 1 warrant
 Trade separately

Composition of Units


Warrant Strike Price

$6.00

Warrant Exercise Period

4 year life from the date of the IPO

Call Provision

≥ $11.50 for any 20 trading days
within a 30 day period

Liquidation Value per Share

$7.60+
*This structure may not be indicative of all structures and is intended for illustrative purposes only.
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Features
Feature
Significance

Third Party Escrow

95% + of cash held in trust

Target Enterprise Value must be 80%
of net assets

Ensures that only targets of a
minimum size are proposed

Shareholder Approval

Only well-received transactions get
approved

Management Ownership and
Concurrent Investment

Incentivizes management to find and
close a deal

Escrow of Insider’s Shares

Insiders do not participate in a
liquidating distribution for interests
held prior to IPO

Deal Deadline

Limits the time capital is invested
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SPAC Regulatory History – Disruptive Events
10

Concern with identification of deal prior to IPO - International Shipping
(February - July 2005)

Warrant Purchase Obligation/Regulation M - Key Hospitality (EGS/Underwriter
Counsel) (November 2005)

Amending Charter-Great Wall Acquisition (January 2006)

Delaware Dissolution-HD Partners (EGS - Issuer Counsel) (May 2006)

Warrant EITF 0019 Cash Settlement Value of Warrants - Energy Infrastructure
(EGS - Underwriters Counsel) (July 2006)
Trends
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
Concurrent Private Placement/Sponsor Loan

AIM SPAC’s

Private SPAC’s

Business Combinations with Simultaneous PIPE’s
Timing and Responsibilities
Month 1
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Sponsor Team
Company Counsel
Underwriters
Underwriter’s Counsel
S
CC
U
UC
Week
1
12
Objectives
Primary Responsibility

Organizational Meeting

S, CC, U, UC

Complete working group list

All

Execute Engagement

All

Engage Underwriter Counsel and Issuers Counsel

S, U

Set up corporation

CC
Timing and Responsibilities
Month 1
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Month 2
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Begin first draft of registration statement

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
Finalize Board of Directors positions

S

Commence Blue Sky qualification and NASD approval process

UC

Finalize registration statement

All
3

4

Begin preparation of management presentations

S, U
5-6

Plan road show and management presentations (chose cities)
Distribute draft of underwriting agreement

All
UC
7-8
M
Primary Responsibility

File registration statement
 Apply to Exchange NASDAQ Bulletin Board
Receive comments from the SEC
Respond to comments from the SEC
Preliminary Blue Sky Memorandum (if applicable)
Print preliminary prospectus (“red herring”)
S
1
Objectives

13
S
Month 4
TH
Week
W
Month 3
All
 All


All
All
UC
Printer




Timing and Responsibilities
Month 1
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Month 2
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Week
9-10
11-12
[Day before
Closing Date]
[Closing
Date=
3 days after
pricing or
next business
day]
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Objectives
Primary Responsibility

Underwriters’ sales force meeting (“teach in”)
 Company presentation to institutional sales force
 Finalize road show presentation schedule
 Company presentation to retail sales force
 Send out red herrings


Institutional meetings (Domestic and European)
Negotiate underwriting agreement
 Agree on final terms of offering
 Price offering, sign underwriting agreement
 Go effective (delivery of comfort letter and CC opinion)
 File final prospectus
 Print and distribute final prospectus
 Closing. Securities delivered and payment is made to the Company minus the
underwriters’ discounts
Closing documents exchanged



UC, CC
 S, U
 S, U
 S, U
 S, U, CC
S, U
UC, CC
 S, U
 S, U
 All
 All
 All
 All
About
Ellenoff Grossman & Schole LLP
Ellenoff Grossman & Schole LLP is a New York-based law firm with over 35 professionals offering its clients
legal services in a broad range of business related matters. The Firm specializes in many areas of commercial law:
Corporate, Securities, Broker-Dealer Regulations, Hedge Funds, Real Estate, Litigation, Tax and Estate
Planning. The philosophy of the Firm is to provide the highest quality legal advice and counsel, dedicating
consistent, personalized attention to each client at a reasonable price.
The Firm has nearly 20 securities professionals specializing in a range of activities, including:
• Public Offerings (IPOs and Secondaries)
• PIPEs
• Mergers and Acquisitions
• Exchange Act reporting (Form 10-Ks, 10-Qs and Proxies)
• NASD, AMEX, NASDAQ and OTC compliance
• Broker-dealer regulations
• Rule 144 transactions
• Section 16 compliance
Douglas S. Ellenoff
Adam Mimeles
Leslie A. Martey
Barry I. Grossman
Martin R. Bring
Joan Adler
Christopher E. Celano
Debra M. Burg
C. David Selengut
Michael Midura
Phi H. D. Nguyen
Lawrence A. Rosenbloom
Sarah E. Williams
Brian Lee
Brian C. Daughney
Stuart Neuhauser
Eden Rohrer
15
Annie Y. Wong
Steven Saide
Tamar Donikyan
SPAC PRACTICE
Ellenoff Grossman & Schole LLP
During the course of the last two year, Ellenoff Grossman & Schole LLP has been involved
at various stages in over 30 proposed SPACs. 7 of those financings were successfully
consummated and resulted in the raising of over $650,000,000. We have several others on file
with the Securities and Exchange Commission awaiting their road shows and numerous others in
the pre-filing preparation stages. At present, we have 8 securities professional who are engaged
in our SPAC practice. Ellenoff Grossman & Schole represented 3 of the issuers listed below and
4 underwriters (Roth Capital Partners, Maxim Group, Citigroup Capital Markets and Morgan
Joseph).
16
Healthcare Acquisition Corp.
($ 75,200,000)
Key Hospitality Acquisition Corp.
($ 48,000,000)
Boulder Specialty Brands, Inc.
($102,086,720)
Echo Healthcare Acquisition Corporation
($ 50,000,000)
HD Partners Acquisition Corp.
($150,000,000)
Affinity Media International Corp.
($ 18,975,000)
Energy Infrastructure Acquisition Corp.
($202,500,000)
17

This information may answer some questions, but is not intended as a comprehensive
analysis of the topic. In addition, this information should not be relied upon as the only
source of information.

This information is supplied from sources we believe to be reliable but we cannot
guarantee its accuracy.

This document and the information contained herein is confidential. This document has
been furnished to you solely for your information and neither this document nor the
information contained herein my be reproduced, disclosed or redistributed, in whole or
in part, by mail, facsimile, electronic or computer transmission or by any other means to
any other person, except with the prior written consent of the Ellenoff Grossman &
Schole LLC.

The material has been prepared or is distributed solely for information purposes and is
not a solicitation or an offer to buy any security or instrument or to participate in any
trading strategy.

This presentation is made solely for the interest of friends and clients of Ellenoff
Grossman & Schole LLP and should in no way be relied upon or construed as legal
advice. For specific information on particular factual situations, an opinion of legal
counsel should be sought.