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
(Amendment No. 1)
Filed by the Registrant
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Filed by a Party other than the Registrant
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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 §240.14a-12
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COLUMBUS ACQUISITION CORP.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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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
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Proposed maximum aggregate value of transaction:
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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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TABLE OF CONTENTS
Preliminary
Proxy Statement Subject to Completion, dated April 17, 2009
COLUMBUS ACQUISITION CORP.
153 E. 53rd Street, 58th Floor
New York, New York 10022
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY , 2009
TO THE STOCKHOLDERS OF COLUMBUS ACQUISITION CORP.:
You are cordially invited to attend a special meeting of stockholders of Columbus Acquisition
Corp. (Columbus, we, us or
our) to be held
at a.m. Eastern Time, on May , 2009 for the sole purpose of
considering and voting upon two proposals to amend Columbuss
amended and restated certificate of incorporation (collectively, the
Extension Amendment) to:
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extend the date by which Columbus must complete a business combination from
May 18, 2009 to July 15, 2009, to avoid being required to liquidate (and in
connection with such proposal, the stockholders are authorizing Columbus to amend
the trust agreement (the trust agreement) established in connection with
Columbuss initial public offering (the IPO) to extend the date by which the
trust account (the trust account) established in
connection with the IPO
must be liquidated from May 18, 2009 to July 15, 2009); and
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allow public holders of less than 50% of Columbuss
outstanding common stock, par value $0.0001
per share (common stock), who vote against the Extension Amendment and elect
conversion to convert their common stock into a portion of the funds available in
the trust account.
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Each proposal of the Extension Amendment is essential to its implementation, and, therefore,
Columbuss board of directors will abandon the Extension Amendment unless each of the above
proposals is approved by stockholders.
The Columbus board of directors has fixed the close of business on April 20, 2009 as the
date for determining Columbus stockholders entitled to receive notice of and vote at the special
meeting and any adjournment thereof. Only holders of record of Columbus common stock on that date
are entitled to have their votes counted at the special meeting or any adjournment.
The purpose of the Extension Amendment is to allow Columbus more time to complete its proposed
business combination with Integrated Drilling Equipment Company, a Delaware corporation, pursuant
to the Agreement and Plan of Merger, dated as of December 15, 2008, as amended (the Merger
Agreement). This transaction is referred to as the business combination, and Integrated Drilling
Equipment Company and certain of its direct and indirect subsidiaries are referred to collectively
as IDE.
If the Extension Amendment is not approved and the proposed business combination is not
consummated by May 18, 2009, our corporate existence will cease except for the purposes of winding
up our affairs and liquidating, pursuant to Section 278 of the Delaware General Corporation Law.
This has the same effect as if our board of directors and stockholders had formally voted to
approve our dissolution pursuant to Section 275 of the Delaware General Corporation Law.
Accordingly, limiting our corporate existence to a specified date as permitted by Section 102(b)(5)
of the Delaware General Corporation Law removes the necessity to comply with the formal
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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. Columbus
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. Pursuant to letter agreements (the Letter
Agreements) between Columbus and each of
Ladenburg Thalmann & Co. Inc. and Lazard Capital Markets LLC
(the Underwriters), our founding
stockholders have waived their right to receive distributions with respect to their founding shares
upon the Columbuss liquidation. There will be no distribution from the Trust Account with respect
to our warrants which will expire worthless. Columbus will pay the costs of liquidation from its
remaining assets outside of the trust fund. Columbus currently expects that the costs associated
with the implementation and completion of the plan of dissolution and liquidation would not be more
than approximately $50,000. Andrew Intrater has personally agreed that, if we liquidate prior to
the consummation of a business combination, he will be personally liable to pay debts and
obligations to target businesses or vendors or other entities that are owed money by us for
services rendered or contracted for or products sold to us in excess of the net proceeds of our IPO
not held in the trust account; however, there is no guarantee that the assets of Mr. Intrater will
be sufficient to satisfy our dissolution and/or liquidation expenses.
Columbus
has filed a preliminary proxy statement, as amended, for a meeting of Columbus
stockholders to vote on the business combination. Preliminary copies
of this document have been
filed with the U.S. Securities and Exchange Commission (the SEC).
The transaction with IDE is considered a business combination under Columbuss certificate
of incorporation, which currently provides that if Columbus does not consummate a business
combination by May 18, 2009, Columbus will dissolve and distribute to its stockholders the funds
available in the trust account established in Columbuss IPO. As explained below, there is a
possibility that Columbus will be unable to complete the business combination by that date.
Columbuss board of directors believes that stockholders will benefit from Columbuss business
combination with IDE and is, therefore, proposing a one-time amendment to Columbuss certificate of
incorporation to extend that date to July 15, 2009, and to make other corresponding changes in the
certification of incorporation.
You are not being asked to pass on the proposed business combination at this time. If you are
a stockholder, you will have the specific right to vote on the proposed business combination with
IDE if and when it is submitted to stockholders, and Columbus expects to present the business
combination for your vote in the near future.
Columbuss IPO prospectus stated that Columbus would not take any action allowing it to
survive for a longer period of time if it did not appear it would be able to consummate a business
combination within the time allotted in its certificate of incorporation. Commencing promptly upon
completion of its IPO, Columbus 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, Columbus initiated contact, either directly or through a third party intermediary, with
over 100 potential targets. Columbus signed non-disclosure agreements relating to approximately 80
of these potential business combination opportunities. In addition, Columbus received business
plans, financial summaries or presentation books of at least 75 potential target companies.
Columbus also had discussions with several target companies with which a non-disclosure agreement
was not signed. The current market environment has made it difficult for Columbus to take
appropriate actions to complete the business combination on a timely basis.
Columbus first met with IDE management in July 2008 and entered into a non-binding letter of
intent with respect to a business combination in September 2008. From July 2008 until December 15,
2008,
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Columbus, while also involved in due diligence activities, engaged in negotiations with IDE
and its stockholders on the terms of the agreement to govern the business combination. The parties
entered into the Merger Agreement on December 15, 2008.
As Columbus believes the IDE business combination to be in the best interests of Columbuss
stockholders, and because Columbus may not be able to conclude the business combination with IDE by
May 18, 2009, Columbus has determined to seek stockholder approval to extend the time for closing
the business combination to July 15, 2009. If the Extension Amendment is
approved, Columbus expects to seek stockholder approval of the business combination with IDE in the
near future.
The existing conversion rights of Columbuss common stock provide that if holders of 4,312,500
or more shares (which number represents 30% or more of the shares of Columbus common stock issued
in our IPO) vote against the proposed business combination with IDE and elect to convert their
common stock into a portion of the funds available in the trust account, Columbus will not complete
the business combination, and Columbus will be liquidated. Columbus believes that these conversion
rights were included to protect Columbuss stockholders from having to sustain their investments
for an unreasonably long period if Columbus failed to find a suitable acquisition in the timeframe
contemplated by the certificate of incorporation. However, Columbus also believes that, given
Columbuss expenditure of time, effort and money on the proposed business combination with IDE,
circumstances warrant providing those stockholders who might find IDE to be an attractive
investment an opportunity to consider the business combination with IDE. Columbus estimates that
the per share liquidation value of the trust account as of December 31, 2008 is approximately $8.01
(the Trust Value Per Share). The closing price of Columbuss common stock on March 25, 2009 was
$7.91.
If
holders of fewer than 8,750,000 shares vote against the Extension Amendment and elect to
convert their shares into a portion of the funds available in the trust account, such stockholders
will have the opportunity to receive, at the time the amendment becomes effective, and in exchange
for the surrender of their shares, a
pro rata
portion of the trust account, as if they had voted
against a business combination proposal. Stockholders may elect to convert their common stock into
a portion of the funds available in the trust account only if they vote against
all
the proposals
included in the Extension Amendment. The remaining holders of shares will retain their right to
convert their shares into a portion of the funds available in the trust account upon consummation
of a business combination, provided that they vote against such business combination in accordance
with the procedures described in the Proxy statement filed with the SEC in connection with the
business combination.
As previously disclosed, any business acquired by
Columbus will have a fair market value of at least 80% of the value of Columbuss net assets, including the funds held in the trust account
that holds Columbuss IPO proceeds (excluding the deferred underwriting discounts and commissions from its IPO). Columbus will only
pursue and present for stockholder approval an acquisition that meets this 80% Test as applied to the size of its trust account as
of the consummation of its IPO, including any interest earned thereon and less amounts allowed to be withdrawn for working capital
or amounts to pay accrued income and franchise taxes, but not taking into account any reduction for any conversions effected in connection with the Extension
Amendment.
The Columbus board of directors has determined that the fair market value of IDE is
equal to or greater than 80% of the value of Columbuss net assets, including the funds held in the trust account that holds Columbuss
IPO proceeds (excluding the deferred underwriting discounts and commissions from our IPO), before giving effect to any conversions that
may be effected in connection with the Extension Amendment.
As of December 31, 2008, the amount satisfying the 80% Test equaled approximately $115.1 million
multiplied by 80%, or approximately $92.1 million.
In addition to using a portion of the funds remaining in the trust account after giving effect to any conversions
effected in connection with the Extension Amendment, Columbus intends to issue shares of its common stock as consideration to complete a business combination with a target whose
value meets the 80% Test.
Subject to the foregoing, the affirmative vote of a majority of Columbuss outstanding common
stock, voting for all proposals contained in the Extension Amendment, will be required to approve
the Extension Amendment.
Columbus will only ask you once to extend the period during which a business combination may
be completed. If the Extension Amendment is approved, Columbus will amend the trust
agreement to prohibit any further changes in the distribution of trust account funds unless each
and every stockholder specifically agrees in writing to such change. This amendment would
effectively preclude any additional extension of the period in which Columbus is permitted to
consummate a business combination.
In considering the Extension Amendment, Columbuss stockholders should be aware that because
the Columbus IPO prospectus did not contemplate the possibility of extending the date by which
Columbus must complete a business combination to avoid liquidation, such stockholders may have
securities law claims against Columbus. Even if you do not pursue such claims, others may do so.
The Extension Amendment will also result in Columbus incurring additional transaction expenses, and
may also result in securities law and other claims against
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Columbus whose holders might seek to
have the claims satisfied from funds in the trust account. If proposing the Extension Amendment
results in Columbus 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, that are not fully indemnified by
Andrew Intrater. A consequence might be that holders of shares who do not elect conversion at the
time of the Extension Amendment vote but elect to convert their shares in connection with the
proposed business combination vote will receive a lesser amount in respect to their
pro rata
share
of the trust account. You should read the proxy statement carefully for more
information concerning this possibility and other consequences of the adoption of the
Extension Amendment.
If the Extension Amendment is approved and becomes effective and a business combination is
subsequently consummated, then the Underwriters will receive the portion of the underwriting commissions that was deferred and is
currently held in the trust account. The Underwriters will probably not receive this portion of the
commission unless the Extension Amendment is approved and becomes effective because Columbus
believes it is unlikely it will be able to complete a business combination before its May 18, 2009
termination date.
After careful consideration of all relevant factors, Columbuss board of directors has
determined that the Extension Amendment is fair to and in the best interests of Columbus and its
stockholders, has declared it advisable and recommends that you vote or give instruction to vote
FOR it.
Under Delaware law and Columbuss bylaws, no other business may be transacted at the special
meeting.
Enclosed is the proxy statement containing detailed information concerning the Extension
Amendment 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.
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Andrew Intrater
Chairman of the Board and
Chief Executive Officer
Columbus Acquisition Corp.
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This proxy statement is dated , 2009 and is first being mailed to Columbus
stockholders on or about , 2009.
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.
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COLUMBUS ACQUISITION CORP.
153 E. 53rd Street, 58th Floor
New York, New York 10022
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD
, 2009
PROXY STATEMENT
A
special meeting of stockholders of Columbus Acquisition Corp., a
Delaware corporation(Columbus, we,
us or our), will
be held at a.m. Eastern Time, on May , 2009, at , for the sole purpose of considering
and voting upon two proposals to amend Columbuss amended and
restated certificate of incorporation (collectively, the Extension
Amendment) to:
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extend the date before by Columbus must complete a business combination from
May 18, 2009 to July 15, 2009, before it is required to liquidate (and in
connection with such proposal, the stockholders are authorizing Columbus to amend
the trust agreement (the trust agreement) established in connection with
Columbuss initial public offering (the IPO) to extend the date by which the
trust account (the trust account) established in
connection with the IPO
must be liquidated from May 18, 2009 to July 15, 2009); and
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allow public holders of less than 50% of Columbuss outstanding
common stock, who vote against the
Extension Amendment and elect conversion, to convert their common stock into a
portion of the funds available in the trust account.
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Each proposal of the Extension Amendment is essential to its implementation, and, therefore,
Columbuss board of directors will abandon the Extension Amendment unless each of the above
proposals is approved by stockholders.
Stockholders may, in connection with this special meeting, demand conversion of their common
stock into a
pro rata
share of the trust account provided they check the Exercise Conversion
Rights box on the proxy card and follow all other procedures described in this proxy statement.
A
stockholders approval of the second proposal of the Extension Amendment will constitute
consent to the use of Columbuss trust account proceeds to pay, at the time the Extension Amendment
becomes effective, and in exchange for surrender of their shares,
pro rata
portions of the funds
available in the trust account to the stockholders voting against the Extension Amendment in lieu
of later conversion or liquidation proceeds to which they would otherwise be entitled.
At the time the Extension Amendment becomes effective, Columbus will also amend the trust
agreement to prohibit any further changes in the distribution of the trust account funds
unless each and every Columbus stockholder specifically agrees in writing to such change. This
amendment effectively precludes any additional extension of the period in which Columbus is
permitted to consummate a business combination. See Will you seek any further extensions of the
deadline for consummation of a business combination? in Questions and Answers for more
information about amending the trust agreement.
If the Extension Amendment is approved, Columbus could use the extended period to complete a
transaction with a company other than IDE, but will not do so.
Under Delaware law and Columbuss bylaws, no other business may be transacted at the special
meeting.
The record date for the special meeting is April 20, 2009. Record holders of Columbus
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 17,500,000 outstanding shares of
Columbus common stock. Columbuss warrants do not have voting rights.
This proxy statement contains important information about the meeting and the proposal. Please
read it carefully and vote your shares.
This proxy statement is dated , 2009 and is first being mailed to Columbus
stockholders on or about , 2009.
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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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What is being voted on?
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A. You are being asked to vote on two proposals to amend Columbuss
certificate of incorporation to:
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extend the date by which Columbus must
complete a business combination from May
18, 2009 to July 15, 2009, before it is
required to liquidate (and in connection
with such proposal, the stockholders are
authorizing us to amend the trust agreement
to extend the date by which the trust
account must be liquidated from May 18,
2009 to July 15, 2009); and
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allow public holders of less than 50% of
Columbuss outstanding common stock, who vote against
the Extension Amendment and elect
conversion, to convert their common stock
into a portion of the funds available in
the trust account.
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Each proposal of the Extension Amendment is essential to its
implementation, and, therefore, Columbuss board of directors will
abandon the Extension Amendment unless each such proposal is approved by
stockholders.
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Your approval of the
second proposal of the Extension Amendment will
constitute your consent to the use of funds held in Columbuss trust
account to pay, at the time the amendment becomes effective, and in
exchange for surrender of their common stock,
pro rata
portions of the
funds available in the trust account to stockholders voting against all
two proposals contained in the Extension Amendment. This use requires
amendment of the trust agreement governing the trust account.
At the time the Extension
Amendment becomes effective, Columbus will also amend the trust agreement to prohibit any further changes in the distribution of the
trust account funds unless each and every Columbus stockholder
specifically agrees in writing to such change. This amendment would
effectively preclude any additional extension of the period in which
Columbus is permitted to consummate a business combination.
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Holders of shares will retain the right to convert such shares into the
funds available in the trust account upon consummation of a business
combination, provided that they vote against such business combination
in accordance with the procedures described in the proxy statement filed
with the U.S. Securities and Exchange Commission (the SEC) in
connection with the business combination.
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Under Delaware law and Columbuss bylaws, no other business may be
transacted at the special meeting.
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Q.
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Why is Columbus
proposing to amend its
certificate of
incorporation?
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A. Columbus was organized to serve as a vehicle to effect a merger,
capital stock exchange, asset acquisition or other similar business
combination with one or more operating businesses that we believe have
significant growth potential.
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On December 15, 2008, Columbus entered into an Agreement and Plan of
Merger, as amended (the Merger Agreement) by and among Columbus, IDE
Acquisition, LLC, a wholly owned subsidiary of Columbus (IDE
Acquisition), IDE, and, for limited purposes, Stephen D. Cope, as
escrow representative, pursuant to which IDE will be merged with and
into IDE Acquisition, with IDE Acquisition as the surviving entity in
the merger (the merger).
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IDE, through its subsidiaries, is an established participant in the
business of manufacturing new and refurbishing existing land-based
drilling rigs, rig components and rig electrical systems and providing
related services to the oil and gas drilling equipment industry on a
global basis. The principal customers for IDEs products and services
are land-based drilling contractors in North America, South America,
Central America, the Middle East, Africa, Eurasia and Russia. IDEs
product and service lines are organized into two business segments:
drilling rig products and services and rig-related electrical products
and services. Columbus believes that a business combination with IDE
will provide Columbus stockholders with an opportunity to invest in a
company with significant growth potential.
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Columbuss proposed business combination with IDE qualifies as a
business combination under Columbuss certificate of incorporation.
The certificate of incorporation currently provides that if the business
combination is not completed by May 18, 2009, Columbus will be
liquidated.
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Columbus is requesting its stockholders to approve an amendment to its certificate
of incorporation that would provide it an extension until July 15, 2009 to complete a business combination. Columbus believes
that the extension will afford it and IDE additional time, in light
of the challenging market conditions that have existed since the
fourth quarter of 2008, to seek to raise additional capital prior to completion of the proposed
business combination. The additional capital, if raised, would provide the combined company with additional
liquidity and resources to support its ongoing operations and growth strategy, to fund future acquisitions, and to repay any obligations
incurred in connection with the merger, including those that may be incurred in connection with the put and call option agreement that may be entered into with Victory
Park and certain other investors relating to the purchase by Victory
Park and the investors of an aggregate of up to 10,062,501 shares of
our outstanding common stock, as described more fully on page 7. There can be no assurance that Columbus and IDE will be successful in their efforts to raise additional
capital. Columbus also believes that the proposed extension of time to complete a business combination would benefit Columbus by providing
additional time to solicit stockholder approval of the proposed
business combination with IDE, thereby making completion of the business
combination more likely.
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Columbus believes the business combination with IDE to be in the best
interests of Columbuss stockholders, and because there is a possibility
that Columbus will not be able to conclude the business combination with
IDE by May 18, 2009, Columbus has determined to seek stockholder
approval to extend the time for completion of the business combination
from May 18, 2009 to July 15, 2009. If the extension is approved,
Columbus could seek stockholder approval after May 18, 2009 of a
business combination with any company other than IDE, but will not do
so.
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Columbuss certificate of incorporation purports to prohibit amendment
to certain of its provisions, including any amendment that would extend
the May 18, 2009 deadline. Columbuss IPO prospectus did not suggest
that this provision, or the certificate of incorporations other
business combination procedures, were subject to change. Columbus
believes that these provisions were included to protect Columbus
stockholders from having to sustain their investments for an
unreasonably long period if Columbus failed to find a suitable
acquisition in the timeframe contemplated by the certificate of
incorporation. However, the board of directors also believes that the
proposed business combination is in the best interest of stockholders
and that the stockholders should be afforded an opportunity to consider
the business combination with IDE.
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Columbus is under no contractual or legal obligation to liquidate if
holders of 50% or more of the common stock outstanding as of the date
of the special meeting to consider the Extension Amendment, vote against
the Extension Amendment and exercise their conversion rights. However,
Columbuss board of directors believes that such liquidation is
consistent with the majority approval required to amend its certificate
of incorporation.
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You are not being asked to pass on the proposed business combination at
this time. If you are a stockholder, you will have the specific right to
vote on the proposed business combination with IDE if and when it is
submitted to stockholders, and Columbus expects to present the business
combination for your vote 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. Columbuss IPO prospectus stated that Columbus would not take any
action allowing it to survive for a longer period of time if it did not
appear it would be able to consummate a business combination within the
time allotted in its certificate of incorporation. Commencing promptly
upon completion of its IPO, Columbus 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, Columbus initiated contact, either directly or through a
third party intermediary, with over 100 potential targets. Columbus
signed non-disclosure agreements relating to approximately 80 of these
potential business combination opportunities. In addition, Columbus
received business plans, financial summaries or presentation books of at
least 75 potential target companies. Columbus also had discussions with
several target companies with which a non-disclosure agreement was not
signed.
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Columbus first met with IDE management in July 2008 and entered into a
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non-binding letter of intent with respect to a business combination in
September 2008. From July 2008 until December 15, 2008, Columbus, while
also involved in due diligence activities, engaged in negotiations with
IDE and its stockholders on the terms of the agreement to govern the
business combination. The parties entered into the Merger Agreement on
December 15, 2008.
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As Columbus believes the IDE business combination to be in the best
interests of Columbuss stockholders, and because Columbus may not be
able to conclude the business combination with IDE by May 18, 2009,
Columbus has determined to seek stockholder approval to extend the time
for closing the business combination beyond May 18, 2009 to July 15,
2009. If the Extension Amendment is approved, Columbus expects to seek
stockholder approval of the business combination with IDE in the near
future.
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Columbus has received an opinion from special Delaware counsel, Morris
James LLP, concerning the validity of the Extension Amendment. Columbus
did not request Morris James to opine on whether the clause currently
contained in its charter prohibiting amendment of Article Sixth prior to
consummation of a business combination was valid when adopted. Morris
James concluded in its opinion, based upon the analysis set forth
therein and its examination of Delaware law, and subject to the
assumptions, qualifications, limitations and exceptions set forth in its
opinion, that the proposed Extension 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 Columbus entitled to vote thereon, all in accordance with
Section 242(b) of the DGCL, would be valid and effective when filed with
the Secretary of State in accordance with Sections 103 and 242 of the
DGCL. A copy of Morris James opinion is included as Annex B to this
proxy statement, and stockholders are urged to review it in its
entirety.
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If a court disagrees with Morris James opinion prior to Columbuss
consummation of a business combination, it is likely that Columbus would
not be able to complete a business combination and would be required to
liquidate. If a court disagrees with Morris James opinion subsequent to
Columbuss consummation of a business combination, it may be subject to
liability for rescission.
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Columbuss board of directors believes that it is in the best interests
of Columbuss stockholders to propose extending that deadline.
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Q.
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How do the Columbus
insiders intend to vote
their shares?
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A. All of Columbuss directors, executive officers and their affiliates
are expected to vote any common stock owned by them in favor of the
Extension Amendment. On the record date, directors and executive
officers of Columbus and their affiliates beneficially owned and were
entitled to vote 3,125,000 shares of common stock, representing
approximately 17.9% of Columbuss issued and outstanding common stock.
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If, following the date of the proxy statement, it is anticipated that
the Extension Amendment may not receive sufficient votes at the special
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meeting, Columbus, its officers and directors and/or their affiliates, or IDE or its officers and directors and/or their affiliates,
may
enter into negotiations of one or more transactions with existing
stockholders or other third parties that would be designed to
incentivize stockholders who have indicated, or are believed to have
indicated, an intention to vote against the Extension Amendment to
either vote in favor of, or to sell their shares to one or more parties
who would vote in favor of, the Extension Amendment. Columbus will not
compensate or provide financing or reimbursement to its officers
and directors and/or their affiliates (other than Columbus) or IDEs
officers and directors and/or their affiliates (other than IDE) in
connection with such purchases. To the extent any such
purchases are made by Columbus or IDE, Columbus or IDE may access its existing cash on hand,
cash generated from its operations or capital raising transactions, and
cash on the balance sheet of the combined company following the merger to fund such purchases.
In the event of such purchases by Columbus or IDE, the amount of funds available
for use by the combined company following the merger for working
capital and other purposes may be reduced.
There can be no certainty that any such transactions would in fact be
sought to be negotiated or, if negotiations are commenced, would be
consummated.
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On April 17, 2009, Columbus entered into a non-binding letter agreement with Victory
Park Capital Advisors, LLC (Victory Park) under which it is contemplated that Columbus
would enter into a put and call option agreement (the Option Agreement)
with Victory Park and certain other investors (collectively, the Investors) with
respect to an aggregate of up to 10,062,501 shares of our outstanding common stock that may
be purchased by
the Investors (the Put/Call Shares). It is anticipated
that the Investors would effect purchases of shares of our outstanding common stock
through independent, privately negotiated transactions with third parties who are
institutions or other sophisticated investors that have voted against or indicated
an intention to vote against the Extension Amendment. Pursuant to the Option Agreement, if
the merger is completed, the Investors would be obligated to sell to Columbus or IDE, and
Columbus and IDE would be obligated to purchase from the Investors, upon the request of any
party, the Put/Call Shares at a price of $8.01 per share. If such arrangements are consummated,
Columbus would pay certain fees and deliver, or cause to be delivered, a certain number of
shares of our common stock to Victory Park. The foregoing arrangement is subject to the
execution of a definitive agreement between Victory Park and Columbus and certain other
customary conditions, and there can be no assurance that an agreement will be reached or
that any such purchases will be made. Such purchases, if made, would increase the likelihood
that a majority of our shares will be voted in favor of the Extension Amendment.
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If any purchases are entered into or consummated by
Columbus, its officers and directors and/or their affiliates, or IDE or its
officers and directors and/or their affiliates, the applicable party
will promptly disclose such purchases to the extent required by, and
in accordance with, applicable law.
In addition, we will file a Current Report on Form 8-K to disclose any acquisition of
more than five percent (5%) of outstanding Columbus common stock by
Columbus, its officers and
directors and/or their affiliates, or IDE or its officers and directors and/or their affiliates.
Any such Form 8-K will be filed within four business days of our becoming aware of any such
purchases.
The purchasers will not convert any
shares that they purchase in the open market, provided, however, that in
the event the business combination with IDE is not consummated and
Columbus is forced to liquidate, the purchasers (other than
Columbus) will be able
to receive liquidation distributions for such shares. Any purchases are expected
in all cases to be made in compliance with all applicable laws, including
Section 10(b) of the Securities Exchange Act of 1934, as amended, and
Rule 10b-5 promulgated thereunder.
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Purchases by Columbus,
its officers and directors and/or their affiliates, or IDE or its officers and directors and/or their
affiliates may occur at any time subsequent to the filing of the
preliminary proxy statement filed with the SEC in connection with the
special meeting to consider the Extension Amendment (subject to such
purchasers not having material non-public information) and continue up
through or following the Columbus special meeting date, including any
adjournments. See The Special MeetingVote Required
for further information regarding such potential purchases.
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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 Columbuss outstanding common stock on the
record date, voting for all proposals contained in the Extension
Amendment.
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Columbus believes that the conversion rights afforded stockholders in
its IPO prospectus were included to protect such stockholders from
having to sustain their investments for an unreasonably long period if
Columbus failed to find a suitable acquisition in the timeframe
contemplated by the certificate of incorporation. However, the board of
directors also believes that the proposed business combination is in the
best interest of stockholders and that the stockholders should be
afforded an opportunity to consider the business combination with IDE.
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If the Extension Amendment is abandoned, Columbus will then determine
whether there is any possibility of completing the IDE business
combination by May 18, 2009. If not, Columbuss board of directors would
commence liquidation proceedings.
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Q.
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Since Columbuss IPO prospectus doesnt say
that the company could
change the period within
which it had to complete
a business combination to
avoid liquidation, what
are my legal rights?
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A. Columbuss IPO prospectus stated that Columbus would not take any action allowing it to survive for a longer period of time if it did not
appear it would be able to consummate a business combination within the
time allotted in its certificate of incorporation. Therefore, you should
be aware that each stockholder may have securities law claims against
Columbus 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 sale of the
originally-attached warrants plus interest from the date of Columbuss
IPO (which, in the case of 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 would not
necessarily be finally adjudicated by the time the IDE business
combination may be completed, and such claims would not be extinguished
by consummation of that transaction.
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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 Columbuss IPO, might seek to have the claims satisfied from funds in
the trust account. If proposing the Extension Amendment results in
Columbus 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 that are not fully indemnified. A
consequence might be that the
pro rata
portion of the trust account
payable to holders of common stock who do not elect conversion at the
Extension Amendment vote but elect conversion at the proposed IDE
business combination vote will be less than they would otherwise have
been entitled, or such amount might be insufficient to fully satisfy a
rescission or damages award. Columbus 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 stockholders of trust
account funds upon conversion or liquidation.
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Aside from possible securities law claims against Columbus, you should
also be aware that if the Extension Amendment is approved, Columbus will
incur substantial additional expenses in seeking to complete the
business
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combination with IDE, in addition to expenses incurred in
proposing the Extension Amendment. Columbus does not have sufficient
funds outside of the trust account to pay these obligations. Columbus
expects the combined company would ultimately bear these expenses if the
proposed business combination is completed. If the business combination
is not completed and these obligations are not met, fully or at all, it
is possible that vendors that have not waived their right to funds held
in the trust account could seek to recover these expenses from the trust
account, which could ultimately deplete the trust account and reduce a
stockholders current
pro rata
portion of the trust account upon
liquidation. In connection with the IPO, Andrew Intrater has personally
agreed that, if we liquidate prior to the consummation of a business
combination, he will be personally liable to pay debts and obligations
to target businesses or vendors or other entities that are owed money by
us for services rendered or contracted for or products sold to us in
excess of the net proceeds of our IPO not held in the trust account;
however, there is no guarantee that the assets of Mr. Intrater will be
sufficient to satisfy our dissolution and/or liquidation expenses.
Despite this agreement by Mr. Intrater, the amounts in trust could be
reduced by claims by Columbuss directors and officers for
indemnification under the amended and restated certificate of
incorporation and their indemnification agreements with Columbus. Mr.
Intrater is not obligated to indemnify the trust for any liabilities
arising under the federal securities laws.
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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 dont want to
vote for the Extension
Amendment?
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A. If you do not want the Extension Amendment to be approved, you must
abstain, not vote, or vote against it. If the Extension Amendment is
approved (and not abandoned), you will be entitled to convert your
shares into cash only if you vote against each proposal of the Extension
Amendment, elect conversion and deliver your shares by the day prior to
the special meeting. If you are a stockholder and you vote
FOR
the
Extension Amendment, abstain or do not vote, or if you are a stockholder
and vote
AGAINST
the Extension Amendment and do not elect to convert
your common stock, you will retain your right to convert your shares
into a
pro rata
portion of the funds available in the trust account if
the business combination with IDE is approved and completed and you vote
against the business combination and then elect conversion. However, as
explained in Summary The Extension Amendment Possible Claims
Against and Impairment of the Trust Account below, the Extension
Amendment may result in claims against Columbus 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
stockholders
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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If the Extension Amendment is approved, but you voted against it,
exercised your conversion right with respect to your common stock,
including the delivery of your common stock by the day prior to the
special meeting, you will no longer own them as of the effective date of
the Extension Amendment.
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A conversion demand may be made by checking the box on the proxy card
provided for that purpose and returning the proxy card in accordance
with
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the instructions provided, and, at the same time, ensuring your
bank or broker complies with the requirements identified elsewhere
herein. You will only be entitled to receive cash in connection with a
conversion of these shares if you do not dispose of your shares (other
than in accordance with the conversion procedure) prior to the effective
date of the Extension Amendment.
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In connection with tendering your common stock for conversion, you must
elect either to physically deliver your stock certificates to Columbuss
transfer agent prior to the special meeting or to deliver your shares to
the transfer agent electronically using The Depository Trust Companys
DWAC (Deposit/Withdrawal At Custodian) System, which election would
likely be determined based on the manner in which you hold your shares.
The requirement for physical or electronic delivery prior to the special
meeting ensures that a converting holders election to convert is
irrevocable once the Extension Amendment is approved. In furtherance of
such irrevocable election, stockholders electing to convert will not be
able to deliver their common stock at the annual meeting.
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If holders of less than 50% of the common stock outstanding as of the
date of the special meeting to consider the Extension Amendment vote
against the Extension Amendment and exercise their conversion rights and
the Extension Amendment is approved, Columbus will afford the
stockholders voting against the Extension Amendment and exercising their
conversion rights, including the delivery of their common stock no later
than the day prior to the special meeting, the opportunity to receive,
as of the time the Extension Amendment becomes effective, a
pro rata
portion of the funds available in the trust account, as if they had
voted against a business combination proposal. If Columbuss trust
account is not depleted by liabilities for securities law claims or
other expenses, stockholders exercising their conversion rights in
connection with the Extension Amendment would receive, as of December
31, 2008, approximately $8.01 per share. The rights of stockholders
voting
FOR
the Extension Amendment (or those stockholders abstaining,
not voting or voting
AGAINST
the Extension Amendment but not electing
to convert their shares) to exercise their conversion rights in
connection with their vote against a business combination will remain
unchanged.
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Q.
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Will you seek any
further extensions of the
deadline for consummation
of a business combination?
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A. No. Columbuss board of directors recognizes that its IPO prospectus
stated that Columbus would not take any action allowing it to survive
for a longer period of time if it did not appear it would be able to
consummate a business combination within the time allotted in its
certificate of incorporation. To minimize the deviation from Columbuss
plans as described in that document, Columbus will, at the time the
Extension Amendment becomes effective, amend the trust agreement
to prohibit any further changes in the distribution of trust account
funds, including the date of such distribution, unless each and every
Columbus stockholder specifically agrees in writing to such change. This
amendment would effectively preclude any additional extension of the
period in which Columbus is permitted to consummate a business
combination. In practical terms, this means a further extension will not
happen.
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Q.
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What happens if the
Extension Amendment isnt
approved?
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A. If the Extension Amendment is not approved and the proposed business
combination is not consummated by May 18, 2009, our corporate existence
will cease except for the purposes of winding up our affairs and
liquidating, pursuant to Section 278 of the Delaware General Corporation
Law. This
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has the same effect as if our board of directors and
stockholders had formally voted to approve our dissolution pursuant to
Section 275 of the Delaware General Corporation Law. Accordingly,
limiting our corporate existence to a specified date as permitted by
Section 102(b)(5) of the Delaware General Corporation Law removes the
necessity to comply with the formal procedures set forth in Section 275
(which would have required our board of directors and stockholders to
formally vote to approve our dissolution and liquidation and to have
filed a certificate of dissolution with the Delaware Secretary of
State). In any liquidation the funds held in the Trust Account will be
distributed, pro rata, to the holders of the public shares. Columbus
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.
Pursuant to the Letter Agreements with Columbus and Ladenburg
Thalmann & Co. Inc. and Lazard Capital Markets LLC (the Underwriters),
the initial stockholders have waived their right to receive
distributions with respect to their founding shares upon the Columbuss
liquidation. There will be no distribution from the Trust Account with
respect to our warrants which will expire worthless. Columbus will pay
the costs of liquidation from its remaining assets outside of the trust
fund. Columbus currently expects that the costs associated with the
implementation and completion of the plan of dissolution and liquidation
would not be more than approximately $50,000. Andrew Intrater has
personally agreed that, if we liquidate prior to the consummation of a
business combination, he will be personally liable to pay debts and
obligations to target businesses or vendors or other entities that are
owed money by us for services rendered or contracted for or products
sold to us in excess of the net proceeds of our IPO not held in the
trust account; however, there is no guarantee that the assets of Mr.
Intrater will be sufficient to satisfy our dissolution and/or
liquidation expenses.
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Q.
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If the Extension
Amendment is approved,
what happens next?
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A. Columbus is continuing its efforts to complete the proxy statement
relating to the proposed business combination with IDE, which will
involve:
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finalizing the proxy materials
which were submitted
to the SEC with respect to the business combination;
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establishing a meeting date and record date for considering the proposed business
combination, and distributing proxy materials to stockholders; and
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holding an annual meeting to consider the proposed business combination.
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This timetable is independent of the Extension Amendment (although there
is a substantial possibility that Columbus will not be able to complete
all of these tasks prior to Columbuss liquidation date unless the
Extension Amendment is approved), and Columbus expects to submit the
proposed business combination to stockholders for their approval
in the near future. If
stockholders approve the proposed business combination, Columbus expects
to consummate the business combination as soon as possible following
stockholder approval.
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You are not being asked to pass on the proposed business combination at
this time. If you are a stockholder, you will have the specific right to
vote on the proposed business combination with IDE if and when it is
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submitted to stockholders, and Columbus expects to present the business
combination for your vote in the near future.
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Q.
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Would I still be able
to exercise my conversion
rights if I vote against
the business combination
with IDE?
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A. Unless you vote against the Extension Amendment and exercise your
conversion rights, you will be able to vote on the business combination
with IDE when it is submitted to stockholders. If you do not approve of the
business combination, you will be entitled to exercise your conversion
right if you:
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vote against the business combination;
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do not dispose of your common stock (other than in accordance with the conversion
procedure) prior to the consummation of the business combination;
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elect to convert your common stock; and then
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deliver your stock certificate(s).
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As explained in The Extension Amendment Possible Claims Against and
Impairment of the Trust Account below, the Extension Amendment will
result in Columbus incurring substantial additional transaction
expenses, and may also result in claims against Columbus whose holders
might seek to have the claims satisfied from funds in the trust account,
both of which could result in depletion of the trust account, thereby
reducing a stockholders
pro rata
portion of the trust account upon a
conversion in connection with the business combination or a liquidation.
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Q.
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If I am not going to
attend the special meeting
in person, should I return
my proxy card instead?
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A. Yes. After carefully reading and considering the information in this
document, please fill out and sign your proxy card. Then return it in
the enclosed envelope as soon as possible, so that your shares may be
represented at the special meeting.
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Q.
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What will happen if I
abstain from voting or
fail to vote?
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A. Abstaining or failing to vote will have the same effect as a vote
against the Extension Amendment, and you would be unable to exercise any
conversion rights upon approval of the Extension Amendment (although you
would retain the right to exercise conversion rights if the business
combination with IDE is approved, and you voted against it).
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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 Columbuss secretary prior to the date of the special meeting or by
voting in person at the meeting. Attendance at the meeting alone will
not change your vote. You also may revoke your proxy by sending a notice
of revocation to Columbus located at 153 E. 53rd Street, 58th Floor, New
York, New York 10022, Attn: Michael Sloan.
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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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Who can help answer my
questions?
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If you have questions, you may write or call:
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Morrow & Co., LLC
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470 West Avenue 3rd Floor
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Stamford, CT 06902
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(800) 658-9400.
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12
SUMMARY
This section summarizes information related to the proposals to be voted on at the special
meeting. These matters are described in greater detail elsewhere in this proxy statement. You
should carefully read this entire proxy statement and the other documents to which it refers you.
See Where You Can Find More Information.
Columbus
Columbus was incorporated in Delaware on August 1, 2006 as a blank check company formed to
serve as a vehicle to effect a merger, capital stock exchange, asset acquisition or similar
business combination with one or more operating businesses that we believe has significant growth
potential. In May 2007, it consummated its IPO from which it derived net proceeds of approximately
$109,750,000, including proceeds from the partial exercise of the
Underwriters over-allotment
option. The entirety of the net proceeds of the IPO plus amounts raised in a private placement
completed prior to the IPO, or $113,400,000, were deposited in a trust account. Except as discussed
in the Extension Amendment, such funds and a portion of the interest earned thereon will be
released upon consummation of the business combination and used to pay any amounts payable to
Columbus stockholders that vote against the business combination and exercise their conversion
rights. Other than its IPO and the pursuit of a business combination, Columbus has not engaged in
any business to date.
The mailing address of Columbuss principal executive office is 153 E. 53rd Street, 58th
Floor, New York, New York 10022, and its telephone number is (404) 257-9150.
The Proposed Business Combination
On December 15, 2008, Columbus, IDE Acquisition, IDE, and, for limited purposes, Stephen D.
Cope, as escrow representative, entered into the Merger Agreement. Pursuant
to the Merger Agreement, Columbus will acquire 100% of the issued and outstanding securities of
IDE. IDE will merge with and into IDE Acquisition with IDE Acquisition remaining as the surviving
entity and a wholly owned subsidiary of Columbus.
Pursuant to the Merger Agreement, Columbus will, in exchange for all of the outstanding shares
of capital stock of IDE:
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pay $43 million in cash;
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issue shares of Columbus common stock having a value (based on the Trust Value Per
Share) equal to $50 million; and
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issue additional shares of Columbus common stock having a value (based on the Trust
Value Per Share) of up to $156 million, subject to certain adjustments based on the net
debt and net working capital of IDE at closing, divided into two tranches, the first of
which will consist of $50 million divided by the Trust Value Per Share of the total earnout shares and the second of which will consist of $106 million divided by the Trust Value Per Share of the total earnout shares, subject to the
following:
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if Columbuss net income reflected in its consolidated audited financial
statements for the relevant period, plus any expenses incurred for interest, income taxes,
depreciation and amortization, in each case in accordance with GAAP (EBITDA) for
the relevant period, excluding any expenses incurred in connection with the transactions
contemplated by the Merger Agreement and excluding any EBITDA contributions from, and
any corresponding costs, including acquisition costs, associated with, any acquisitions
consummated by Columbus or any of its subsidiaries following the closing date (the earnout
EBITDA) for the year ended December 31, 2009 is equal to or
greater than $55,000,000, then Columbus will issue the first tranche of the earnout shares;
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in addition to the foregoing, if Columbuss earnout EBITDA for the year ended
December 31, 2009 is greater than $55,000,000, then for every dollar by which such
earnout EBITDA exceeds $55,000,000 up to a maximum of $80,000,000 of such earnout
EBITDA, Columbus shall issue additional first target shares equal to (i) $1 divided
by (ii) the Trust Value Per Share;
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if both Columbuss earnout EBITDA for the year ended December 31, 2010 is equal
to or greater than $78,000,000, then Columbus will issue the second tranche of the
earnout shares (less any additional first tranche earnout shares issued); and
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notwithstanding the foregoing, if the first target is not met and if Columbus
has cumulative earnout EBITDA for the fiscal years ending December 31, 2009 and
2010, as calculated above, equal to or greater than $133,000,000, Columbus will
issue the first target shares, which shares will be allocated among the former
holders of IDE preferred stock and IDE common stock as of the effective time.
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You are not being asked to pass on the proposed business combination at this time. If you are
a stockholder, you will have the specific right to vote on the proposed business combination with
IDE if and when it is submitted to stockholders, and Columbus expects to present the business
combination for your vote in the near future.
The Extension Amendment
The Amendment
Columbus is proposing to amend its certificate of incorporation to:
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extend the date by which Columbus must complete a business combination from
May 18, 2009 to July 15, 2009, before it is required to liquidate (and in
connection with such proposal the stockholders are authorizing us to amend the
trust agreement to extend the date by which the trust account must be liquidated
from May 18, 2009 to July 15, 2009); and
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allow public holders of less than 50% of Columbuss outstanding common stock, who vote against the
Extension Amendment and elect conversion, to convert their common stock into a
portion of the funds available in the trust account.
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A stockholders approval of the second proposal of the Extension Amendment will constitute
consent to the use of Columbuss trust account proceeds to pay, at the time the Extension Amendment
becomes effective, and in exchange for surrender of their common stock,
pro rata
portions of the
funds available in the trust account to the stockholders voting against the Extension Amendment in
lieu of conversion or liquidation proceeds to which they would otherwise be entitled.
14
At the time the Extension Amendment becomes effective, Columbus will also amend the trust
agreement to prohibit any further changes in the distribution of trust account funds unless
each and every Columbus stockholder specifically agrees in writing to such change. This amendment would
effectively preclude any additional extension of the period in which Columbus is permitted to
consummate a business combination.
If the Extension Amendment Is Not Approved
If the Extension Amendment is not approved and the proposed business combination is not
consummated by May 18, 2009, our corporate existence will cease except for the purposes of winding
up our affairs and liquidating, pursuant to Section 278 of the Delaware General Corporation Law.
This has the same effect as if our board of directors and stockholders had formally voted to
approve our dissolution pursuant to Section 275 of the Delaware General Corporation Law.
Accordingly, limiting our corporate existence to a specified date as permitted by Section 102(b)(5)
of the Delaware General Corporation Law removes the necessity to comply with the formal procedures
set forth in Section 275 (which would have required our board of directors and stockholders to
formally vote to approve our dissolution and liquidation and to have filed a certificate of
dissolution with the Delaware Secretary of State). In any liquidation the funds held in the Trust
Account will be distributed, pro rata, to the holders of the public shares. Columbus 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.
Pursuant to the Letter Agreements with Columbus and the Underwriters, the initial stockholders have
waived their right to receive distributions with respect to their founding shares upon the
Columbuss liquidation. There will be no distribution from the Trust Account with respect to our
warrants which will expire worthless. Columbus will pay the costs of liquidation from its remaining
assets outside of the trust fund. Columbus currently expects that the costs associated with the
implementation and completion of the plan of dissolution and liquidation would not be more than
approximately $50,000. Andrew Intrater has personally agreed that, if we liquidate prior to the
consummation of a business combination, he will be personally liable to pay debts and obligations
to target businesses or vendors or other entities that are owed money by us for services rendered
or contracted for or products sold to us in excess of the net proceeds of our IPO not held in the
trust account; however, there is no guarantee that the assets of Mr. Intrater will be sufficient to
satisfy our dissolution and/or liquidation expenses.
If the Extension Amendment Is Approved
If the Extension Amendment is approved, Columbus expects to call an annual meeting of
stockholders to approve the business combination with IDE in the near future. Under the requirements of the NYSE Amex and our
amended and restated certificate of incorporation, approval of the proposed business combination
will require: (i) the affirmative vote of a majority of votes cast by holders of our common stock
entitled to vote at the annual meeting, (ii) the affirmative vote of a majority of the shares of
Columbus common stock issued in our IPO that are present and entitled to vote at the annual
meeting, and (iii) that fewer than 30% of the shares of Columbus common stock issued in our IPO
vote against the business combination and demand a cash conversion of their shares. Upon receipt of
the foregoing approvals, unless the aggregate number of shares of common stock voted against the proposed
business combination with IDE (and converted into a portion of the funds available in the trust
account) is 30% or more of the shares of Columbus common stock issued in our IPO, Columbus will
consummate the business combination pursuant to the terms of the Merger Agreement.
Under the terms of the proposed Extension Amendment, public stockholders holding less than 50% of
our outstanding common stock may vote against the Extension Amendment and elect to convert their shares into a
pro rata
portion of the funds available in the trust account.
If the Extension Amendment is approved and becomes effective and a business combination is
subsequently consummated, then the Underwriters will receive the portion of the underwriting commissions that was deferred and is
currently held in
15
the trust account. The Underwriters will probably not receive this portion of the
commission unless the Extension Amendment is approved and becomes effective because Columbus believes it is unlikely it will
be able to complete a business combination before its May 18, 2009 termination date.
Possible Claims Against and Impairment of the Trust Account
Columbuss IPO prospectus stated that Columbus would not take any action allowing it to
survive for a longer period of time if it did not appear it would be able to consummate a business
combination within the time allotted in its certificate of incorporation. Therefore, you should be
aware that you may have securities law claims against Columbus 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). Such claims may
entitle stockholders asserting them to more than the
pro rata
share of the trust account to which
they are entitled on conversion or liquidation.
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 Columbuss IPO, might seek to have the claims
satisfied from funds in the trust account. If proposing the Extension Amendment results in Columbus
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 that are not fully indemnified. A consequence might be
that the amount being held in the trust account is diminished and holders of common stock who do
not elect conversion at the Extension Amendment vote but elect conversion at the business
combination vote would receive a lesser amount than their
pro rata
portion of the trust account.
Columbus 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 payments to stockholders of trust account funds upon conversion or liquidation. See The
Extension Amendment Possible Claims Against and Impairment of the Trust Account.
Aside from possible securities law claims against Columbus, you should also be aware that if
the Extension Amendment is approved, Columbus will incur substantial expenses in seeking to
complete the business combination with IDE, in addition to expenses incurred in proposing the
Extension Amendment. Columbus does not have sufficient funds outside of the trust account to pay
these expenses. If the business combination is not completed and the expenses are not satisfied,
they would be subject to the indemnification obligations that Andrew Intrater has to Columbus only
if the vendors were to successfully recover any amounts from the trust account. If these
indemnification obligations are not performed or are inadequate, it is possible that vendors or
service providers could seek to recover these expenses from the trust account, which could
ultimately deplete the trust account and reduce a stockholders current
pro rata
portion of the
funds available in the trust account upon liquidation. Mr. Intrater is not obligated to indemnify
the trust for any liabilities arising under the federal securities laws. Moreover, attendant
litigation could result in a delay in payments to stockholders of trust account funds on conversion
or liquidation. This could result in further depletion of the trust account, which would further
reduce a stockholders
pro rata
portion of the funds available in the trust account upon
liquidation.
The Special Meeting
Date, Time and Place
. The special meeting of Columbuss stockholders
will be held at a.m. Eastern Time, on
May , 2009, at .
Voting Power; Record Date
. You will be entitled to vote or direct votes to be cast at the
special meeting, if you owned Columbus common stock at the close of business on April 20, 2009,
the record date for the
16
special meeting. You will have one vote per proposal for each Columbus common share you owned
at that time. Columbus warrants do not carry voting rights.
Votes Required
. Approval of the Extension Amendment will require the affirmative vote of
holders of a majority of Columbuss common stock outstanding on the record date for all proposals
contained in the Extension Amendment.
At the close of business on April 20, 2009, there were 17,500,000 outstanding shares of
Columbus common stock, each of which entitles its holder to cast one vote per proposal.
If you do not want the Extension Amendment to be approved, you must abstain, not vote, or vote
against each proposal. If the Extension Amendment is approved (and not abandoned), you will be
entitled to convert your common stock into trust account proceeds only if you voted against the
Extension Amendment (or if you subsequently exercise your conversion rights after voting against
the IDE business combination).
If you are a stockholder and you vote FOR the Extension Amendment, abstain or do not vote,
or if you are a stockholder and vote AGAINST the Extension Amendment but do not elect to convert
your common stock, you will retain your right to convert your common stock into a
pro rata
portion
of the funds available in the trust account in connection with the vote on a business combination
if the business combination is approved and you elect conversion at such vote.
Whether or not the Extension Amendment is approved, if the business combination is not
completed by the date specified in Columbuss certificate of incorporation (including any later
date if the Extension Amendment is approved), all stockholders will be entitled to share in the
liquidation of the trust account.
Conversion
. If you are a public stockholder, you may demand conversion of your common stock by
checking the box on the proxy card provided for that purpose and returning the proxy card in
accordance with the instructions provided, and, at the same time, ensuring your bank or broker
complies with the requirements identified under the section entitled The Extension
AmendmentConversion Procedure. You will only be entitled to receive cash for these shares if you
do not dispose of your common stock (other than in accordance with the conversion procedure) prior
to the effective date of the Extension Amendment.
See the section entitled The Extension Amendment Conversion Procedure for more
information on how to demand conversion of your common stock.
Proxies; Board Solicitation
. Your proxy is being solicited by the Columbus board of directors
on the proposal to approve the Extension Amendment being presented to stockholders at the special
meeting. 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.
Columbus has retained Morrow & Co., LLC to aid in the solicitation of proxies. Morrow & Co.,
LLC will receive a fee of approximately $25,000, as well as reimbursement for certain
costs and out-of-pocket
17
expenses incurred by them in connection with their services, all of which will be paid by
Columbus. In addition, officers and directors of Columbus may solicit proxies by mail, telephone,
facsimile, and personal interview, for which no additional compensation will be paid, though they
may be reimbursed for their out-of-pocket expenses. Columbus will bear the cost of preparing,
assembling and mailing the enclosed form of proxy, this proxy statement and other material which
may be sent to stockholders in connection with this solicitation. Columbus may reimburse brokerage
firms and other nominee holders for their reasonable expenses in sending proxies and proxy material
to the beneficial owners of our shares.
Columbuss Recommendation to Stockholders
After careful consideration of all relevant factors, Columbuss board of directors has
determined that the Extension Amendment is fair to, and in the best interests of, Columbus and its
stockholders. The board of directors has approved and declared advisable the Extension Amendment,
and recommends that you vote FOR the adoption of the Extension Amendment. See the section
entitled The Extension Amendment The Boards Reasons for the Extension Amendment, its
Conclusion, and its Recommendation.
Columbus has received an opinion from special Delaware counsel, Morris James, concerning the
validity of the Extension Amendment. Columbus did not request Morris James to opine on whether the
clause currently contained in its charter prohibiting amendment of Article Sixth prior to
consummation of a business combination was valid when adopted, and in light of its current
financial condition, Columbus has not sought advice of counsel on that question from any other
source. Morris James concluded in its opinion, based upon the analysis set forth therein and its
examination of Delaware law, and subject to the assumptions, qualifications, limitations and
exceptions set forth in its opinion, that the proposed Extension 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 Columbus entitled to vote thereon, all in accordance with Section
242(b) of the DGCL, would be valid and effective when filed with the Secretary of State in
accordance with Sections 103 and 242 of the DGCL. Morris James has consented to Columbuss use of
its opinion in this proxy statement. A copy of Morris James opinion is included as Annex B to this
proxy statement, and stockholders are urged to review it in its entirety.
Stockholders are advised that pursuant to the terms of the Morris James opinion only Columbus
and its board of directors may rely upon such opinion, and Columbuss stockholders are not
permitted to rely upon such opinion to support any claims against Morris James arising under
applicable state law. Columbus is not aware of any Delaware law stating that stockholders may not
rely upon the opinion, and the availability of such a defense by Morris James would need to be
resolved by a court of competent jurisdiction. Columbus believes that the resolution of the
question of the availability of such a defense will have no effect on the rights and
responsibilities of its board of directors under applicable state law, and that the availability of
such a state-law defense to counsel would have no effect on the rights and responsibilities of
either Morris James or Columbuss board of directors under the federal securities laws.
Interests of Columbuss Officers and Directors
When you consider the recommendation of the Columbus board of directors, you should keep in
mind that Columbuss executive officers and members of Columbuss board of directors have interests
that may be different from, or in addition to, your interests as a stockholder. See the section
entitled The Extension Amendment Interests of Columbuss Officers and Directors.
Stock Ownership
Information concerning the holdings of Columbus stockholders is set forth below under
Beneficial Ownership of Securities.
18
THE SPECIAL MEETING
Columbus is furnishing this proxy statement to its stockholders as part of the solicitation of
proxies by the Columbus board of directors for use at the special meeting in connection with the
proposed Extension Amendment. This proxy statement provides you with the information you need to
know to be able to vote or instruct your vote to be cast at the special meeting.
Date,
Time and Place
. The special meeting will be held
at a.m. Eastern Time, on May,
2009, at the offices of Columbus located at 153 E. 53rd Street, 58th Floor, New York, New York
10022, to vote on the proposals to approve the Extension Amendment.
Purpose
. At the special meeting, holders of Columbus common stock will be asked to approve the
Extension Amendment consisting of the following two amendments to Columbuss certificate of
incorporation:
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to extend the date by which Columbus must complete a business combination
from May 18, 2009 to July 15, 2009, before it is required to liquidate (and in
connection with such proposal the stockholders are authorizing us to amend the
trust agreement to extend the date by which the trust account must be liquidated
from May 18, 2009 to July 15, 2009); and
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to allow public holders of less than 50% of Columbuss
outstanding common stock, who vote against
the Extension Amendment and elect conversion, to convert their common stock into a
portion of the funds available in the trust account.
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Each proposal of the Extension Amendment is essential to its implementation, and, therefore,
Columbuss board of directors will abandon the Extension Amendment unless each of the above
proposals is approved by stockholders.
Your
approval of the second component of the Extension Amendment will constitute your consent
to use of the trust account proceeds to pay, at the time the Extension Amendment becomes effective,
and in exchange for surrender of their common stock,
pro rata
portions of the funds available in
the trust account to stockholders voting against the Extension Amendment in lieu of conversion or
liquidation proceeds to which they would otherwise be entitled. This use requires amendment of the
trust agreement governing the trust account. At the
time the Extension Amendment becomes effective, Columbus will also amend the trust
agreement to prohibit any further changes in the distribution of trust account funds unless each
and every Columbus stockholder specifically agrees in writing to such change. The purpose of this
amendment is to effectively preclude any additional extension of the period in which Columbus is
permitted to consummate a business combination.
If the Extension Amendment is approved and becomes effective and a business combination is
subsequently consummated, then the Underwriters will receive the portion of the underwriting
commissions that was deferred and is currently held in the trust account. The Underwriters will
probably not receive this portion of the commission unless the Extension Amendment is approved and
becomes effective because Columbus believes it is unlikely it will be able to complete a business
combination before its May 18, 2009 termination date.
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After careful consideration of all relevant factors, Columbuss board of directors has
determined that the Extension Amendment is fair to, and in the best interests of, Columbus and its
stockholders. The board of directors has approved and declared advisable the Extension Amendment,
and recommends that you vote FOR the adoption of the Extension Amendment.
Because of the business combination provisions of Columbuss certificate of incorporation, if
the proposed business combination with IDE is not completed by May 18, 2009, Columbus will dissolve
and return the funds in the trust account,
pro rata
, to holders of its common stock, unless
stockholders approve all proposals of the Extension Amendment.
The special meeting has been called only to consider approval of the Extension Amendment.
Under Delaware law and Columbuss bylaws, no other business may be transacted at the special
meeting.
You are not being asked to pass on the proposed business combination at this time. If you are
a stockholder, you will have the specific right to vote on the proposed business combination with
IDE if and when it is submitted to stockholders, and Columbus expects to present the business
combination for your vote in the near future.
Record Date; Who is Entitled to Vote
. The record date for the special meeting is April 20,
2009. Record holders of Columbus common stock at the close of business on the record date are
entitled to vote or have their votes cast at the special meeting. At the close of business on the
record date, there were 17,500,000 outstanding shares of Columbus common stock, each of which
entitles its holder to cast one vote per proposal.
Vote Required
. Approval of the Extension Amendment will require the affirmative vote of
holders of a majority of Columbuss outstanding common stock on the record date, voting for all
proposals contained in the Extension Amendment.
The existing conversion rights of Columbuss common stock provide that if holders of 4,312,500
or more shares (which number represents 30% or more of the shares of Columbus common stock issued
in our IPO) vote against the proposed business combination with IDE and elect to convert their
common stock into a portion of the funds available in the trust account, Columbus will not complete
the business combination, and Columbus will be liquidated. Columbus believes that these conversion
rights were included to protect Columbuss stockholders from having to sustain their investments
for an unreasonably long period if Columbus failed to find a suitable acquisition in the timeframe
contemplated by the certificate of incorporation. However, Columbus also believes that, given
Columbuss expenditure of time, effort and money on the proposed business combination with IDE,
circumstances warrant providing those stockholders who might find IDE to be an attractive
investment an opportunity to consider the business combination with IDE. Columbus estimates that
the per share liquidation value of the trust account as of December 31, 2008 is approximately $8.01
(the Trust Value Per Share). The closing price of Columbuss common stock on March 25, 2009 was
$7.91.
If
holders of fewer than 8,750,000 shares vote against the Extension Amendment and elect to
convert their common stock into a portion of the funds available in the trust account, such
stockholders will have the opportunity to receive, at the time the amendment becomes effective, and
in exchange for the surrender of their common stock, a pro rata portion of the trust account, as if
they had voted against a business combination proposal. Common stockholders may elect to convert
their common stock into a portion of the funds available in the trust account only if they vote
against all the proposals included in the Extension Amendment. Your
approval of the second component
of the Extension Amendment will constitute your consent to the use of trust account proceeds to pay
such amounts to stockholders in lieu of conversion or liquidation proceeds to which they would
otherwise be entitled.
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This use requires amendment of the trust agreement governing the
trust account, which Columbus will complete if the Extension Amendment is approved. The remaining
holders of common stock will retain their right to convert their common stock into a portion of the
funds available in the trust account upon consummation of a business combination, provided that
they vote against such business combination in accordance with the procedures described in the
Proxy statement filed with the SEC in connection with the business combination.
Abstaining from voting or not voting, either in person or by proxy or by voting instruction,
will have the same effect as a vote against the Extension Amendment, and stockholders would be
unable to exercise any conversion rights upon approval of the Extension Amendment (although
stockholders would retain the right to exercise conversion rights if the IDE business combination
is approved, and they voted against the business combination).
All of Columbuss directors, executive officers and their affiliates are expected to vote any
common stock owned by them in favor of the Extension Amendment. On the record date, directors and
executive officers of Columbus and their affiliates beneficially owned and were entitled to vote
3,125,000 shares of Columbus common stock, representing approximately 17.9% of Columbuss issued
and outstanding common stock, as a group.
If, following the date of the proxy statement, it is anticipated that the Extension Amendment
may not receive sufficient votes at the special meeting, Columbus, its officers and directors and/or their
affiliates, or IDE or its officers and directors and/or their affiliates, may enter into negotiations of one or
more transactions with existing stockholders or other third parties that would be designed to
incentivize stockholders who have indicated, or are believed to have indicated, an intention to
vote against the Extension Amendment to either vote in favor of, or to sell their shares to one or
more parties who would vote in favor of, the Extension Amendment. Columbus will not compensate or
provide financing or reimbursement to its officers and directors
and/or their affiliates (other than Columbus) or IDEs
officers and directors and/or their affiliates (other than IDE) in connection with such purchases. To
the extent any such purchases are made by Columbus or IDE, Columbus
or IDE may access its existing cash on hand, cash
generated from its operations or capital raising transactions, and cash on the balance sheet of the
combined company following the merger to fund such purchases.
In the event of such purchases by Columbus or IDE, the amount of funds available
for use by the combined company following the merger for working
capital and other purposes may be reduced. There can be no certainty that any such transactions would
in fact be sought to be negotiated or, if negotiations are commenced, would be consummated.
In this regard, Stephen D. Cope, IDEs Chairman, Chief Executive Officer,
President and Secretary, and certain other IDE shareholders have agreed,
to the extent that
the proposed business combination may not receive sufficient votes at the annual meeting, to purchase shares of
Columbus common stock (with the purchase of such shares not being
required to be consummated and paid for until the
consummation of the merger) through privately
negotiated transactions with one or more third parties who are institutions or other sophisticated
investors that have voted against or indicated an intention to
vote against the proposed business combination at the annual meeting.
Notwithstanding the foregoing, Mr. Cope and certain other IDE shareholders will not be required to purchase shares for proceeds of
more than $10,000,000 and $4,500,000, respectively, provided that
none of Mr. Cope or such other IDE shareholders will be required to make such purchases if the price per
share of any such purchases exceeds the Trust Value Per Share.
On
April 17, 2009, Columbus entered into a non-binding letter agreement with Victory
Park under which it is contemplated that
Columbus would enter into the Option Agreement with
Victory Park and the Investors with
respect to the Put/Call Shares. It is anticipated that
the Investors would effect purchases of shares of our outstanding common
stock through independent, privately negotiated transactions with third parties
who are institutions or other sophisticated investors that have voted against or
indicated an intention to vote against the Extension Amendment. Pursuant to the Option
Agreement, if the merger is completed, the Investors would be obligated to sell to Columbus
or IDE, and Columbus and IDE would be obligated to purchase from the Investors, upon the
request of any party, the Put/Call Shares at a price of $8.01 per share. If such arrangements
are consummated, Columbus would pay certain fees and deliver, or cause to be delivered,
a certain number of shares of our common stock to Victory Park. The foregoing arrangement
is subject to the execution of a definitive agreement between Victory Park and Columbus and
certain other customary conditions, and there can be no assurance that an agreement will be
reached or that any such purchases will be made. Such purchases, if made, would increase the likelihood that a majority of our shares will be voted in favor of the Extension Amendment.
If any purchases are entered into or consummated by Columbus, its officers and directors and/or their
affiliates, or IDE or its officers and directors and/or their affiliates, the applicable party will
promptly disclose such purchases to the extent required by, and in accordance with, applicable
law. In addition, Columbus has taken certain precautions to minimize the risk under Section 10(b) of the Securities
and Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder, including adopting an
Insider Trading Policy that requires pre-clearance of all trades by
its officers and directors.
Columbus has been informed by IDE that it has instructed its officers and directors not to enter into
any such purchases while in possession of material non-public information. Furthermore, we will file a Current Report on Form 8-K to disclose any
acquisition of more than five percent (5%) of outstanding Columbus common stock by Columbus, its officers and
directors and/or their affiliates, or IDE or its officers and directors and/or their affiliates.
Any such Form 8-K will be filed within four business days of our becoming aware of any such
purchases.
The purchasers will not convert any shares that they purchase in the open market, provided,
however, that in the event the business combination with IDE is not consummated and Columbus is
forced to liquidate, the purchasers (other than Columbus) will be able to receive liquidation distributions for
such shares. Any purchases are expected in all cases to be made in compliance with all applicable laws,
including Section 10(b) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5
promulgated thereunder. However, to the extent that a court were to
conclude that Columbus or its officers and directors and/or their
affiliates or IDE or its officers and directors and/or their affiliates did possess material
non-public information regarding Columbus at the time of their respective purchases of securities
of Columbus, they could potentially be subject to claims that they violated Rule 10b-5.
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To the extent that IDE or its officers and directors and/or their affiliates acquire a significant
number of shares of our common stock prior to the consummation of the merger, Columbus may be
deemed to be an affiliate (within the meaning of the United States federal securities laws)
following such acquisition and IDE or its officers or directors will comply with the securities
laws applicable to affiliates of Columbus, including Section 10(b) of the Securities and Exchange Act of 1934, as amended, and Rule 10b-5
promulgated thereunder.
Columbus believes that any purchases by Columbus, IDE or its officers and directors and/or their affiliates
are consistent with disclosure previously provided in Columbuss registration statement on Form S-1
in connection with our IPO, because any such purchases would have the same effect on a potential
business combination as purchases that may be effected by Columbuss officers and directors and/or
their affiliates, which were fully disclosed in our Form S-1. However, to the extent a court of
competent jurisdiction were to determine that such purchases are not consistent with the disclosure
in our Form S-1, stockholders could potentially have an argument that the disclosure in the IPO on this
particular point was not completely accurate. Columbus believes that any such purchases are consistent with the fiduciary duties of Columbuss
directors and officers as they would be made, if at all, to facilitate a transaction that such
directors and officers believe is in the best interests of all stockholders of Columbus, and
because Columbus stockholders have the right to vote against the transaction with IDE and exercise
their conversion rights if they do not approve of the Extension Amendment or the IDE transaction. However, stockholders should be aware that Columbuss directors and officers have interests that
are different from, or in addition to, your interests as a stockholder. See Summary Interests
of Columbuss Officers and Directors.
Any purchases may occur at any time subsequent to the filing of the preliminary proxy
statement filed with the SEC in connection with the special meeting (subject to such purchasers not
having material non-public information) and continue up through or
following the Columbus special meeting date,
including any adjournments. It is anticipated that any purchases (should they occur at all) would be independent, privately
negotiated transactions with stockholders who have voted against or indicated
an intention to vote against the proposed business combination and elected or indicated their intention to elect
to exercise their conversion rights. Such privately negotiated purchases, which would not involve
active and widespread solicitation of public stockholders and would not be conditioned on a fixed maximum or minimum
number of shares being purchased, are not anticipated to be the types of activities governed by the
tender offer rules under the federal securities laws. To the extent any such purchases are deemed
to implicate the tender offer rules, such purchases would need to comply with the applicable tender
offer rules, including, among others, the obligation to offer all stockholders the same price and
the obligation to keep the tender offer outstanding for a period of at least twenty (20) business
days.
Voting Your Shares
. Each share of common stock that you own in your name entitles you to one
vote per proposal. Your proxy card shows the number of shares you own.
There are three ways for holders of record to have their shares represented and voted at the
special meeting:
By signing and returning the enclosed proxy card
. If you duly sign and return a proxy card,
your proxy, whose name is listed on the proxy card, will vote your shares as you instruct on the
card. If you sign and return the proxy card, but do not give instructions on how to vote your
shares, your shares will be voted as recommended by the Columbus board of directors, which is FOR
the Extension Amendment.
By telephone or on the internet
. You can submit a proxy to vote your shares by following the
telephone or internet voting instructions included with your proxy card. If you do, you should not
return the proxy card. If you vote this way, however, you will not be able to exercise conversion
rights.
You can attend the special meeting and vote in person
. You will receive a ballot when you
arrive. However, if your shares are held in the street name of your broker, bank or another
nominee, you must obtain a proxy from the broker, bank or other nominee to vote in person at the
meeting. That is the only way we can be sure that the broker, bank or nominee has not already voted
your shares.
Revoking Your Proxy and Changing Your Vote
. If you give a proxy, you may revoke it or change
your voting instructions at any time before it is exercised by:
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Delivering another proxy card with a later date;
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Notifying Columbus, located at 153 E. 53rd Street, 58th Floor, New York, New
York 10022, Attention: Michael Sloan, in writing before the special meeting that
you have revoked your proxy; or
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Attending the special meeting, revoking your proxy and voting in person.
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If your shares are held in street name, consult your broker for instructions on how to
revoke your proxy or change your vote.
Broker Non-Votes
. If your broker holds your shares in its name and you do not give the broker
voting instructions, your broker will not be permitted to vote your shares on the Extension
Amendment. This is known as a broker non-vote. Abstentions or broker non-votes will have the same
effect as a vote against the Extension Amendment.
Questions About Voting
. Columbus has retained Morrow & Co., LLC to assist it in the
solicitation of proxies. If you have any questions about how to vote or direct a vote in respect of
your shares, you may call Morrow & Co., LLC at (206) 870-8565. You may also want to consult your
financial and other advisors about the vote.
Solicitation Costs
. Columbus has retained Morrow & Co., LLC to aid in the solicitation of
proxies. Morrow & Co., LLC will receive a fee of approximately $25,000, as well as
reimbursement for certain costs and out-of-pocket expenses incurred by them in connection with
their services, all of which will be paid by Columbus.
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In addition, officers and directors of
Columbus may solicit proxies by mail, telephone, facsimile, and personal interview, for which no
additional compensation will be paid, though they may be reimbursed for their out-of-pocket
expenses. Columbus will bear the cost of preparing, assembling and mailing the enclosed form of
proxy, this proxy statement and other material which may be sent to stockholders in connection with
this solicitation. Columbus may reimburse brokerage firms and other nominee holders for their
reasonable expenses in sending proxies and proxy material to the beneficial owners of our shares.
Columbus will ask banks, brokers and other institutions, nominees and fiduciaries to forward
its proxy materials to their principals and to obtain their authority to execute proxies and voting
instructions. Columbus will reimburse them for their reasonable expenses.
Stock Ownership
. Information concerning the holdings of certain Columbus stockholders is set
forth below under Beneficial Ownership of Securities.
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THE EXTENSION AMENDMENT
Columbus is proposing to amend its certificate of incorporation to:
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extend the date by which Columbus must complete a business combination from
May 18, 2009 to July 15, 2009, to avoid being required to liquidate (and in
connection with such proposal the stockholders are authorizing us to amend the
trust agreement to extend the date by which the trust account must be liquidated
from May 18, 2009 to July 15, 2009); and
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allow public holders of less than 50% of Columbuss outstanding
common stock, who vote against
the Extension Amendment and elect conversion, to convert their common stock into a
portion of the funds available in the trust account.
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Each proposal of the Extension Amendment is essential to its implementation, and, therefore,
Columbuss board of directors will abandon the Extension Amendment unless each of the above
proposals is approved by stockholders.
Your
approval of the second component of the Extension Amendment will constitute your consent
to use of the trust account proceeds to pay, at the time the Extension Amendment becomes effective,
and in exchange for surrender of their common stock,
pro rata
portions of the funds available in
the trust account to stockholders voting against the Extension Amendment and electing to convert
their common stock. This use requires amendment of the trust agreement governing the trust account. At the time the Extension Amendment
becomes effective, Columbus will also amend the trust agreement to prohibit any further
changes in the distribution of trust account funds unless each and every Columbus stockholder
specifically agrees in writing to such change. The purpose of this amendment is to effectively
preclude any additional extension of the period in which Columbus is permitted to consummate a
business combination. A copy of the proposed amendment to the certificate of incorporation of
Columbus is attached to this proxy statement as Annex A.
If the Extension Amendment is approved and becomes effective and a business combination is
subsequently consummated, then the Underwriters will received the portion of the underwriting
commissions that was deferred and is currently held in the trust account. The Underwriters will
probably not receive this portion of the commission unless the Extension Amendment is approved and
becomes effective because Columbus believes it is unlikely it will be able to complete a business
combination before its May 18, 2009 termination date.
U.S. Federal Income Tax Consequences
The following discussion is a general summary of the material U.S. federal income tax
consequences that may be relevant to U.S. holders (as defined below) of holding shares of Columbus
common stock or exercising their conversion rights. This summary is based upon the provisions of
the Internal Revenue Code of 1986 (the Code), Treasury regulations promulgated under the Code,
administrative rulings and judicial decisions as of the date hereof, all of which may change,
possibly with retroactive effect, resulting in U.S. federal income tax consequences different from
those discussed below.
This summary assumes the shares of Columbus common stock are held as capital assets within the
meaning of Section 1221 of the Code. This summary does not address tax consequences arising under
the laws of any foreign, state or local jurisdiction and does not address U.S. federal tax
consequences other than income taxation.
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In addition, this summary does not address all tax
consequences that may be applicable to a U.S. holders particular circumstances or to a U.S. holder
that may be subject to special tax rules, including, without limitation: (i) U.S. holders subject
to the alternative minimum tax; (ii) banks,
insurance companies, or other financial institutions; (iii) tax-exempt organizations; (iv)
dealers in securities or commodities; (v) regulated investment companies or real estate investment
trusts; (vi) partnerships (or other flow-through entities for U.S. federal income tax purposes and
their partners or members); (vii) traders in securities that elect to use a mark-to-market method
of accounting for their securities holdings; (viii) U.S. holders whose functional currency is not
the U.S. dollar; (ix) persons holding shares of Columbus common stock as a position in a hedging
transaction, straddle, conversion transaction, constructive sale transaction or other risk
reduction transaction; (x) persons who acquired shares of Columbus common stock in connection with
employment or other performance of services; or (xi) U.S. expatriates. If a partnership (including
any entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds
shares of Columbus common stock, the tax treatment of a U.S. holder that is a partner in the
partnership generally will depend upon the status of the partner and the activities of the
partnership. Such holders should consult their tax advisors regarding the tax consequences of
holding shares of Columbus common stock or exercising their conversion rights.
This summary of certain U.S. federal income tax consequences is for general information only
and is not tax advice. U.S. holders are urged to consult their tax advisors with respect to the
application of U.S. federal income tax laws to their particular situations as well as any tax
consequences arising under the U.S. federal estate or gift tax rules, or under the laws of any
state, local, foreign or other taxing jurisdiction or under any applicable tax treaty.
For purposes of the discussion below, a U.S. holder is a beneficial owner of shares of
Columbus common stock, other than a partnership (or any other entity treated as a partnership for
U.S. federal income tax purposes), that is for U.S. federal income tax consequences:
(i) An individual citizen or resident of the United States;
(ii) a corporation (or other entity properly classified as a corporation for U.S. federal
income tax purposes) created or organized in or under the laws of the United States, any state or
political subdivision thereof (including the District of Columbia);
(iii) an estate, the income of which is subject to U.S. federal income taxation regardless
of its source; or
(iv) a trust, if (a) a court within the United States is able to exercise primary
supervision over its administration and one or more U.S. persons have the authority to control all
of its substantial decisions, or (b) it has a valid election in effect under applicable Treasury
regulations to be treated as a U.S. person.
A stockholder of Columbus that does not exercise its conversion right is not receiving any
consideration or exchanging or otherwise disposing of any of its outstanding shares of Columbus
common stock in connection with the Extension Amendment and, therefore, is not expected to
recognize gain or loss for U.S. federal income tax purposes as a result of the Extension Amendment.
If a U.S. holder votes against the Extension Amendment, properly demands that Columbus convert all
its shares of Columbus common stock into a
pro rata
portion of the trust account and, upon the
consummation of the Extension Amendment, terminates its interest in Columbus in exchange for cash,
such U.S. holder will be required to recognize gain or loss upon the exchange of the shares of
Columbus common stock for cash in an amount equal to the difference, if any, between the amount of
cash received with respect to such shares and the holders adjusted tax basis in such shares. Such
gain or loss will be
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capital gain or loss and will be long-term capital gain or loss if at the
effective time of the Extension Amendment the shares were held for more than one year. Long-term
capital gains recognized by individual and certain other non-corporate U.S. holders are generally
eligible for preferential rates of taxation. The deductibility of capital losses is subject to
certain limitations.
The tax consequences to a U.S. holder that properly demands that Columbus convert less than
all of its shares of Columbus common stock may be different, and such a holder should consult its
tax advisors regarding the consequences of such an election.
Reasons for the Proposal
Columbuss certificate of incorporation purports to prohibit amendment to certain of its
provisions, including any amendment that would extend the May 18, 2009 deadline. Columbuss IPO
prospectus did not suggest that this provision, or the certificate of incorporations other
business combination procedures, were subject to change. Columbus believes that these provisions
were included to protect Columbus stockholders from having to sustain their investments for an
unreasonably long period if Columbus failed to find a suitable acquisition in the timeframe
contemplated by the certificate of incorporation. However, the board of directors also believes
that the proposed business combination is in the best interest of stockholders and that the
stockholders should be afforded an opportunity to consider the business combination with IDE.
Columbus is also affording stockholders who wish to terminate their investments as originally
contemplated the opportunity to do so as well. Accordingly, Columbus believes that the Extension
Amendment is consistent with the majority approval required to amend its certificate of
incorporation.
Commencing promptly upon completion of its IPO, Columbus 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, Columbus initiated contact, either directly or through a third
party intermediary, with over 100 potential targets. Columbus signed non-disclosure agreements
relating to approximately 80 of these potential business combination opportunities. In addition,
Columbus received business plans, financial summaries or presentation books of at least 75
potential target companies. Columbus also had discussions with several target companies with which
a non-disclosure agreement was not signed.
Columbus first met with IDE management in July 2008 and entered into a non-binding letter of
intent with respect to a business combination in September 2008. From July 2008 until December 15,
2008, Columbus, while also involved in due diligence activities, engaged in negotiations with IDE
and its stockholders on the terms of the agreement to govern the business combination. The parties
entered into the Merger Agreement on December 15, 2008. The parties entered into the Merger
Agreement on December 15, 2008.
Columbuss proposed business combination with IDE qualifies as a business combination under
Columbuss certificate of incorporation. The certificate of incorporation currently provides that
if the business combination is not completed by May 18, 2009, Columbus will be liquidated.
Columbus is requesting its stockholders to approve
an amendment to its certificate of incorporation that would provide it an extension until July 15, 2009 to complete a business
combination. Columbus believes that the extension will afford it and
IDE additional time, in light of the challenging market conditions
that have existed since the fourth quarter of 2008, to seek to raise additional capital prior
to completion of the proposed business combination. The additional
capital, if raised, would provide the combined company with additional liquidity and resources to support its ongoing operations and growth strategy, to fund future acquisitions,
and to repay any obligations incurred in connection with the merger, including those that may be incurred in connection with the
put and call option agreement that may be entered into with Victory
Park and certain other investors relating to the purchase by Victory
Park and the investors of an aggregate of up to 10,062,501 shares of
our outstanding common stock, as described more fully on page 7. There can be no assurance that Columbus and IDE will be
successful in their efforts to raise additional capital. Columbus also believes that the proposed extension of time to complete a
business combination would benefit Columbus by providing additional time to solicit stockholder approval of the proposed business
combination with IDE, thereby making completion of the business combination more likely.
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As Columbuss board of directors believes the IDE transaction to be in the best interests of
Columbuss stockholders, and because Columbus may not be able to conclude the business combination
with IDE by May 18, 2009, Columbus has determined to seek stockholder approval to extend the time
for closing the transaction beyond May 18, 2009 to July 15, 2009. If the Extension Amendment is
approved, Columbus expects to seek stockholder approval of the proposed business combination with
IDE in the near future. If the extension is approved,
Columbus could seek
stockholder approval after May 18, 2009 of a business combination with any company other than
IDE, but will not do so. In addition, the purpose of amending the trust agreement, at the
time the Extension Amendment becomes effective, to prohibit any further changes in the distribution
of the trust account funds is to effectively preclude any additional extension of the period in
which Columbus is permitted to consummate a business combination.
If the Extension Amendment is not approved and Columbus is unable to complete the IDE business
combination by May 18, 2009, Columbus will be required to liquidate and distribute the trust
account proceeds to holders of its common stock. In considering the Extension Amendment, Columbuss
board of directors came to the conclusion that the potential benefits of the proposed IDE business
combination to Columbus and its stockholders outweighed the possibility of any liability as a
result of the Extension Amendment.
Under
the terms of the proposed Extension Amendment, public stockholders holding less than 50% of
Columbuss outstanding common stock, may vote against the Extension Amendment and elect to convert their
common stock into a
pro rata
portion of the funds available in the trust account. Based on the
trust account balance as of December 31, 2008, if the maximum permissible number of common stock
elect conversion in connection with the Extension Amendment, or
8,750,000 shares of common stock,
without its being abandoned, a total of approximately $57,571,875 of the trust account would be
disbursed, leaving approximately $57,571,875. If the Extension Amendment is approved and the
proposed business combination with IDE is presented to Columbus stockholders for approval,
stockholders who did not vote against and convert their common stock in connection with the
Extension Amendment will have the same right to vote against the business combination with IDE and
convert their common stock; provided that Columbus will not complete the business combination if
(a) a total of 8,750,000 or more shares of common stock (which number represents 50% or more of
the shares of common stock currently outstanding as of the date of the special meeting to consider
the Extension Amendment) vote against the Extension Amendment (and elect to convert their common
stock into a portion of the funds available in the trust account) or (b) a total of 4,312,500 or
more common stock (which number represents 30% or more of the shares of Columbus common stock
issued in our IPO) vote against the proposed business combination with IDE and elect to convert
their common stock into a portion of the funds available in the trust account.
Because of the two separate opportunities for stockholders to exercise conversion, it is
possible that the total amounts distributed on conversion to the stockholders could exceed the
amount that would be distributed to stockholders that elect to convert in connection with the
proposed business combination with IDE had it been approved before
May 18, 2009 (without a previous
vote on the Extension Amendment), resulting in less cash retained by the combined company to meet
its obligations and for use as operating capital, subsequent to the closing of the IDE business
combination.
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As noted in The Extension Amendment Possible Claims Against and Impairment of the Trust
Account, below, the Extension Amendment will result in Columbus incurring substantial additional
transaction expenses, and may also result in securities law and other claims being made against it
whose holders might seek to have such claims satisfied from funds in the trust account. Columbus
believes that, if the Extension Amendment is approved and no material liabilities are sought to be
satisfied from the trust account, any resulting conversions by stockholders (or a liquidation, if
converting votes equal 30% or more) would have no adverse effect on them, because they would
receive the same amounts they would have received if Columbus were liquidated on May 18, 2009, and,
if the proposed business combination is later not approved, its stockholders at that time would
receive the same liquidation proceeds as if Columbus were liquidated as of May 18, 2009.
However, if material liabilities are sought to be satisfied from the trust account, the trust
account could possibly be reduced or subject to reduction beyond the reduction resulting from
stockholder conversions, which could result in the reduction of a
stockholders current
pro rata
portion of the trust account upon liquidation. Moreover, attendant litigation could result in delay
in the availability of trust account funds for use by the combined company upon completion of the
business combination.
In connection with the IPO, Andrew Intrater agreed to indemnify Columbus for debts and
obligations to vendors that are owed money by Columbus, but only to the extent necessary to ensure
that certain liabilities do not reduce funds in the trust account. These indemnification
obligations would extend to transaction expenses to be incurred in connection with Columbuss
seeking to complete the business combination with IDE as well as the costs of defending claims
referred to in the preceding paragraph. Since they are not collateralized or guaranteed, Columbus
cannot assure you that Mr. Intrater would be able to discharge his obligations if material
liabilities are sought to be satisfied from the trust account. Mr. Intrater is not obligated to
indemnify the trust for any liabilities arising under the federal securities laws.
Possible Claims Against and Impairment of the Trust Account
Columbuss IPO prospectus stated that Columbus would not take any action allowing it to
survive for a longer period of time if it did not appear it would be able to consummate a business
combination within the time allotted in its certificate of incorporation. Therefore, you should be
aware that you may have securities law claims against Columbus 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 business combination
with IDE may be completed, and such claims would not be extinguished by consummation of that
transaction. Such claims may entitle 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 Columbuss IPO, might seek to have the claims
satisfied from funds in the trust account. If proposing the Extension Amendment results in Columbus
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 that are not fully indemnified. A consequence might be
that the amount being held in the trust account is diminished and holders of common stock who do
not elect conversion at the Extension Amendment vote but elect conversion at the business
combination vote would receive a lesser amount than their
pro rata
portion of the trust account.
Columbus 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 stockholders of trust account funds on conversion or liquidation.
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Aside from possible securities law claims against Columbus, you should also be aware that if
the Extension Amendment is approved, Columbus will incur substantial expenses in seeking to
complete the business combination with IDE, in addition to expenses incurred in proposing the
Extension Amendment. Columbus does not have sufficient funds outside of the trust account to pay
these expenses. If the business combination is not completed and the expenses are not satisfied,
they would be subject to the indemnification obligations that Andrew Intrater has to Columbus to
ensure that the claims of such vendors do not reduce funds in the trust account. If these
indemnification obligations are not performed or are inadequate, it is possible that vendors or
service providers could seek to recover these expenses from the trust account, which could
ultimately deplete the trust account and reduce a stockholders current
pro rata
portion of the
funds available in the trust account upon liquidation. Mr. Intrater is not obligated to indemnify
the trust for any liabilities arising under the federal securities laws. Moreover, attendant
litigation could result in a delay in payments to stockholders of trust account funds on conversion
or liquidation. This could result in further depletion of the trust account, which would further
reduce a stockholders
pro rata
portion of the funds available in the trust account upon
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 Columbus whose holders
might seek to
have the claims satisfied from funds in the trust account. Columbus 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 Columbus 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 Columbuss IPO, which were 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 Columbuss 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 business combination with IDE would be
completed, and such claims would not be extinguished by consummation of that transaction.
If Columbus were to become subject to such claims as a result of the Extension Amendment, the
trust account could be depleted by those claims (in addition, as discussed above, to other claims
from vendors, service providers or other entities in connection with Columbuss efforts to complete
the IDE business combination) to the extent of any judgments arising from such claims, together
with any expenses related to defending such claims that are not fully indemnified. A consequence
might be that the amount being held in the trust account is diminished and holders of common stock
who do not elect conversion at the Extension Amendment vote but elect conversion at the business
combination vote would receive a lesser amount as their
pro rata
portion of the trust account,
which might not be sufficient to satisfy a rescission or damages award if the proposed business
combination is not approved and completed.
Depletion of the trust account as a result of claims being made against it as described above
could have the consequence of holders of common stock 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 Columbus becomes subject as a result of the Extension
Amendment or otherwise are satisfied from funds in the trust account and the resources of Andrew
Intrater, who has agreed to certain indemnification obligations with respect to the trust account,
are insufficient or unavailable to indemnify Columbus for the full amount thereof on liquidation.
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If Columbuss trust account is not depleted by liabilities for securities law claims or other
expenses, all stockholders would receive as of December 31, 2008, upon conversion or liquidation,
approximately $8.01 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. stockholders would also
incur costs in prosecuting such claims, which would reduce the per-share amount they realize.
Columbus has not sought the opinion of any legal or financial advisers or experts about the
possible magnitude of such costs. In light of Columbuss current financial condition, its board of
directors determined that an opinion would be of less value to Columbus and its stockholders than
the cost of obtaining one, and did not approach any third party about providing one.
Columbus has attempted to structure the Extension Amendment to preserve the investment
proposition set forth in the IPO prospectus for stockholders (specifically, by giving them the
right to convert now and to defeat the Extension Amendment on the same terms as are provided for
the business combination itself). This is designed to limit the potential damages, but it is
impossible to predict
how courts will 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, Columbuss board of directors believes it in the best interests of
Columbuss stockholders to approve the Extension Amendment.
Forced Liquidation
If the Extension Amendment is not approved and the proposed business combination is not
consummated by May 18, 2009, our corporate existence will cease except for the purposes of winding
up our affairs and liquidating, pursuant to Section 278 of the Delaware General Corporation Law.
This has the same effect as if our board of directors and stockholders had formally voted to
approve our dissolution pursuant to Section 275 of the Delaware General Corporation Law.
Accordingly, limiting our corporate existence to a specified date as permitted by Section 102(b)(5)
of the Delaware General Corporation Law removes the necessity to comply with the formal procedures
set forth in Section 275 (which would have required our board of directors and stockholders to
formally vote to approve our dissolution and liquidation and to have filed a certificate of
dissolution with the Delaware Secretary of State). In any liquidation the funds held in the Trust
Account will be distributed, pro rata, to the holders of the public shares. Columbus 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.
Pursuant to the Letter Agreements with Columbus and the Underwriters, the initial stockholders have
waived their right to receive distributions with respect to their founding shares upon the
Columbuss liquidation. There will be no distribution from the Trust Account with respect to our
warrants which will expire worthless. Columbus will pay the costs of liquidation from its remaining
assets outside of the trust fund. Columbus currently expects that the costs associated with the
implementation and completion of the plan of dissolution and liquidation would not be more than
approximately $50,000. Andrew Intrater has personally agreed that, if we liquidate prior to the
consummation of a business combination, he will be personally liable to pay debts and obligations
to target businesses or vendors or other entities that are owed money by us for services rendered
or contracted for or products sold to us in excess of the net proceeds of our IPO not held in the
trust account; however, there is no guarantee that the assets of Mr. Intrater will be sufficient to
satisfy our dissolution and/or liquidation expenses.
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Conversion Rights
If holders of less than 50% of the outstanding shares of common stock vote against the
Extension Amendment and the Extension Amendment is approved (and not abandoned), Columbus will
afford such stockholders the opportunity to receive, at the time the amendment becomes effective,
and in exchange for surrender of their common stock, a
pro rata
portion of the funds available in
the trust account, as if they had voted against a business combination proposal. You will be
entitled to convert your common stock into trust account proceeds only if you vote against each
proposal of the Extension Amendment (or if you exercise your conversion rights after voting against
the IDE business combination) and follow the conversion procedure described below. Abstaining or
not voting on the Extension Amendment will not give you a right to convert your common stock in
connection with the Extension Amendment.
If you are a stockholder and you vote
FOR
the Extension Amendment, abstain or do not vote,
or if you are a stockholder and you vote
AGAINST
the Extension Amendment but do not elect to
convert your common stock you will retain your right to convert your common stock into a
pro rata
portion of the funds available in the trust account, if the business combination is approved, and
you elect conversion in connection with the business combination vote. You will be entitled to
exercise your conversion right with respect to the business combination only if you:
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vote against the business combination, as and when formally proposed to
stockholders;
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do not dispose of your common stock (other than in accordance with the
conversion procedure) prior to the consummation of the business combination; and
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deliver your stock certificate(s) to Columbuss transfer agent prior to your
vote.
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Conversion Procedure
A conversion demand may be made by checking the box on the proxy card provided for that
purpose and returning the proxy card in accordance with the instructions provided, and, at the same
time, ensuring your bank or broker complies with the requirements identified elsewhere herein. You
will only be entitled to receive cash in connection with a conversion of these shares if you
continue to retain ownership of them through the effective date of the Extension Amendment.
In connection with tendering your common stock for conversion, you must elect either to
physically deliver your stock certificates to Columbuss transfer agent prior to the special
meeting or to deliver your shares to the transfer agent electronically using The Depository Trust
Companys DWAC (Deposit/Withdrawal At Custodian) System, which election would likely be determined
based on the manner in which you hold your shares. The requirement for physical or electronic
delivery prior to the special meeting ensures that a converting holders election to convert is
irrevocable once the Extension Amendment is approved. In furtherance of such irrevocable election,
stockholders electing to convert will not be able to deliver their common stock at the special
meeting.
Through the DWAC system, this electronic delivery process can be accomplished by the
stockholder, whether or not it is a record holder or its shares are held in street name, by
contacting the transfer agent or its broker and requesting delivery of its common stock through the
DWAC system. Delivering shares physically may take significantly longer. In order to obtain a
physical stock certificate, a stockholders broker and/or clearing broker, DTC, and Columbuss
transfer agent will need to act together to facilitate this request. There is a nominal cost associated with the above-referenced tendering process and the act of
certificating the shares or
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delivering them through the DWAC system. The transfer agent will
typically charge the tendering broker $35 and the broker would determine whether or not to pass
this cost on to the converting holder. It is Columbuss understanding that stockholders should
generally allot at least two weeks to obtain physical certificates from the transfer agent.
Columbus does not have any control over this process or over the brokers or DTC, and it may take
longer than two weeks to obtain a physical stock certificate. Such stockholders will have less time
to make their investment decision than those stockholders that do not elect to exercise their
conversion rights. Stockholders who request physical stock certificates and wish to convert may be
unable to meet the deadline for tendering their shares before exercising their conversion rights
and thus will be unable to convert their shares.
Certificates that have not been tendered in accordance with these procedures by the day prior
to the special meeting will not be converted to cash. In the event that a stockholder tenders its
common stock and decides prior to the special meeting that it does not want to convert its common
stock, the stockholder may withdraw the tender. In the event that a stockholder tenders common
stock and the Extension Amendment is not approved, these shares will not be converted to cash and
the physical certificates representing these shares will be returned to the stockholder promptly
following the determination that the Extension Amendment will not be approved. Columbus anticipates
that a stockholder who tenders common stock for conversion in connection with the vote to approve
the Extension Amendment would receive payment of the conversion price for such common stock soon
after the completion of the Extension Amendment. Columbus will hold the certificates of
stockholders that elect to convert their common stock into a
pro rata
portion of the funds
available in the trust account until such common stock are converted to cash or returned to such
stockholders. Any common stock that are converted to cash will be cancelled and retired.
If properly demanded, Columbus will convert each share of common stock into a
pro rata
portion
of the funds available in the trust account, calculated as of two business days prior to the
anticipated consummation of the Extension Amendment. As of December 31, 2008, this would amount to
approximately $8.01 per share. If you exercise your conversion rights, you will be exchanging your
shares of Columbus common stock for cash and will no longer own the shares as of the effective date
of the Extension Amendment. You will be entitled to receive cash for these shares only if you
affirmatively vote against the Extension Amendment, properly demand conversion, and deliver your
stock certificate(s) to Columbuss transfer agent prior to your vote. If the Extension Amendment is
not approved, these shares will not be converted into cash. However, if Columbus is unable to
complete the business combination with IDE or another business combination by May 18, 2009 (unless
such date is extended), it will be forced to liquidate and all holders of common stock will receive
a
pro rata
portion of the funds available in the trust account at the time of the liquidation.
Required Vote
The affirmative vote by holders of a majority of Columbuss outstanding common stock, voting
for all proposals contained in the Extension Amendment, is required to approve the Extension
Amendment.
All of Columbuss directors, executive officers and their affiliates are expected to vote any
common stock owned by them in favor of the Extension Amendment. On the record date, directors and
executive officers of Columbus and their affiliates beneficially owned and were entitled to vote
3,125,000 shares of Columbus common stock, representing approximately 17.9% of Columbuss issued
and outstanding common stock, as a group.
If, following the date of the proxy statement, it is anticipated that the Extension Amendment
may not receive sufficient votes at the special meeting, Columbus, its officers and directors and/or their
affiliates, or IDE or its officers and directors and/or their
affiliates, may enter into negotiations of one or
more transactions with existing stockholders or other third parties that would be designed to
incentivize stockholders who have indicated, or are believed to have indicated, an intention to vote against the Extension Amendment to either vote in favor of, or
to sell their shares to
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one or more parties who would vote in favor of, the Extension Amendment.
Columbus will not compensate or provide financing or reimbursement to its officers and directors and/or their affiliates (other than Columbus) or IDEs officers and directors and/or their affiliates (other than IDE) in
connection with such purchases. To the extent any such purchases are made by Columbus or IDE, Columbus or IDE may
access its existing cash on hand, cash generated from its operations or capital raising
transactions, and cash on the balance sheet of the combined company following the merger to fund such purchases.
In the event of such purchases by Columbus or IDE, the amount of funds available
for use by the combined company following the merger for working
capital and other purposes may be reduced.
There can
be no certainty that any such transactions would in fact be sought to be negotiated or, if
negotiations are commenced, would be consummated.
On
April 17, 2009, Columbus entered into a
non-binding letter agreement with Victory Park under which it is contemplated that Columbus
would enter into the Option Agreement with Victory Park and the Investors with respect to the Put/Call Shares. It
is anticipated that the Investors would effect purchases of shares of our outstanding common
stock through independent, privately negotiated transactions with third parties who are institutions or other sophisticated investors
that have voted against or indicated an intention to vote against the Extension Amendment. Pursuant to the Option Agreement, if the
merger is completed, the Investors would be obligated to sell to Columbus or IDE, and Columbus and IDE would be obligated to purchase
from the Investors, upon the request of any party, the Put/Call Shares at a price of $8.01 per share. If such arrangements are consummated,
Columbus would pay certain fees and deliver, or cause to be delivered, a certain number of shares of our common stock to Victory Park. The
foregoing arrangement is subject to the execution of a definitive agreement between Victory Park and Columbus and certain other customary
conditions, and there can be no assurance that an agreement will be reached or that any such purchases will be made. Such purchases, if
made, would increase the likelihood that a majority of our shares will be voted in favor of the Extension Amendment.
If any purchases are entered into or
consummated by Columbus, its officers and directors and/or their affiliates, or IDE or its officers and
directors and/or their affiliates, the applicable party will promptly disclose such purchases to
the extent required by, and in accordance with, applicable law.
In addition, we will file a Current Report on Form 8-K to disclose any acquisition of
more than five percent (5%) of outstanding Columbus common stock by Columbus, its officers and
directors and/or their affiliates, or IDE or its officers and directors and/or their affiliates.
Any such Form 8-K will be filed within four business days of our becoming aware of any such
purchases.
The purchasers will not convert any
shares that they purchase in the open market, provided, however, that in the event the business
combination with IDE is not consummated and Columbus is forced to liquidate, the purchasers (other than Columbus) will be able to receive liquidation distributions for such shares. Any purchases are expected in
all cases to be made in compliance with all applicable laws, including Section 10(b) of the Securities
Exchange Act of 1934, as amended, and Rule 10b-5 promulgated
thereunder. See The Special Meeting Vote Required.
Any purchases may occur at any time subsequent to the filing of the preliminary proxy
statement filed with the SEC in connection with the special meeting (subject to such purchasers not
having material non-public information) and continue up through or following the Columbus special meeting date,
including any adjournments.
Interests of Columbuss Officers and Directors
When you consider the recommendation of the Columbus board of directors, you should keep in
mind that Columbuss executive officers and members of Columbuss 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 a business combination is not
approved by May 18, 2009, Columbus will be required to liquidate. In such event,
the 3,125,000 shares of common stock held by Columbus officers, directors and
affiliates, which were acquired prior to the IPO for an aggregate purchase price of
$25,000, will be worthless, as will the 3,650,000 insider warrants that were
acquired prior to the IPO for an aggregate purchase price of $3,650,000. Such
common stock and warrants had an aggregate market value of $24,828,250 based on the
last sale price of $7.91 and $0.03, respectively, on the NYSE AMEX on March 27,
2009;
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Andrew Intrater has personally agreed that, if we liquidate prior to the
consummation of a business combination, he will be personally liable to pay debts
and obligations to target businesses or vendors or other entities that are owed
money by us for services rendered or contracted for or products sold to us in
excess of the net proceeds of our IPO not held in the trust account; however, there
is no guarantee that the assets of Mr. Intrater will be sufficient to satisfy our
dissolution and/or liquidation expenses. Despite this agreement by Mr. Intrater,
the amounts in trust could be reduced by claims by Columbuss directors and
officers for indemnification under the amended and restated certificate of
incorporation and their indemnification agreements with Columbus. If the business
combination is consummated, Mr. Intrater will not have to perform such obligations.
Columbus does not have sufficient funds outside of the trust account to pay these
obligations. Therefore, if the business combination is not consummated and vendors
that have not signed waivers sue the trust account and win their cases, the trust
account could be reduced by the amount of the claims and Mr. Intrater would be
required to fulfill their indemnification obligations and he may not be able to
satisfy his individual obligations to indemnify Columbus;
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warrants to purchase Columbus common stock held by Columbuss officers and
directors are exercisable only upon consummation of a business combination;
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all rights specified in Columbuss certificate of incorporation relating to the
right of officers and directors to be indemnified by Columbus, and of Columbuss
officers and directors to be exculpated from monetary liability with respect to
prior acts or omissions, will continue after the business combination. If the
business combination is not approved and Columbus liquidates, Columbus will not be
able to perform its obligations to its officers and directors under those
provisions;
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if the business combination with IDE is completed, it is anticipated that after
the consummation of the merger Andrew Intrater will serve as the initial founder
director to the board of directors of Columbus; and
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Columbuss financial, legal and other advisors have rendered services for which
they may not be paid if the business combination is not approved. As any recovery
of such fees and expenses by these vendors will be much more difficult in the event
the business combination is not approved, while such recovery is not expressly
contingent on the outcome of the Columbus stockholder vote, these vendors could be
viewed as having an interest in the outcome of such vote.
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The Boards Reasons for the Extension Amendment, its Conclusion, and its Recommendation
As discussed below, after careful consideration of all relevant factors, Columbuss board of
directors has determined that the Extension Amendment is fair to, and in the best interests of,
Columbus and its stockholders. The board of directors has approved and declared advisable adoption
of the Extension Amendment, and recommends that you vote FOR such adoption.
In determining to recommend the Extension Amendment, Columbuss board of directors concluded
that the proposed business combination with IDE is in the best interests of Columbuss
stockholders, since it believes they Columbuss stockholders will benefit from the business
combination with IDE. Although the board of directors believes that the certificate of
incorporation provisions to be amended by the Extension Amendment were included to protect Columbus
stockholders from having to keep their investments for an unreasonably long period if Columbus
failed to find a suitable acquisition in the timeframe contemplated by the certificate of
incorporation, the board believes that circumstances warrant permitting those who believe they
might find IDE to be an attractive investment an opportunity to do so, if possible without
adversely affecting the interests of Columbus or its stockholders wishing to terminate their
investments as originally contemplated.
Having taken into account the matters discussed above, the Columbuss board of directors
believes that, if the Extension Amendment is approved and no material liabilities are sought to be
satisfied from the trust account, any resulting conversions by Columbus stockholders (or a
liquidation, if converting votes are 50% or greater) would have no adverse effect on the
stockholders, because they would receive approximately the same amounts they would if Columbus were
liquidated on May 18, 2009, and, if the proposed business combination is later disapproved, its
stockholders at that time would receive approximately the same liquidation proceeds as if Columbus
were liquidated as of May 18, 2009. Because of the two separate opportunities for stockholders to
exercise conversion, it is possible that the total amounts distributed on conversion to
stockholders converting from the Extension Amendment and the proposed business combination could
exceed the amount that would have been distributed to stockholders that elect to convert in
connection with the proposed business combination had the business combination been approved
(without a prior vote on the Extension Amendment).
Columbuss Board of Directors consulted with special Delaware counsel, Morris James,
concerning the validity of the Extension Amendment. Morris James concluded in its opinion, based
upon the analysis set forth therein and its examination of Delaware law, and subject to the
assumptions, qualifications,
34
limitations and exceptions set forth in its opinion, that the proposed Extension 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 Columbus entitled to vote thereon, all in
accordance with Section 242(b) of the DGCL, would be valid and effective when filed with the
Secretary of State in accordance with Sections 103 and 242 of the DGCL. Morris James has consented
to Columbuss use of its opinion in this proxy statement. A copy of Morris James opinion is
included as Annex B to this proxy statement, and stockholders are urged to review it in its
entirety.
Columbuss board of directors has unanimously approved and declared advisable the Extension
Amendment. Accordingly, if the Extension Amendment is approved by the holders of a majority of
Columbuss outstanding common stock in accordance with Delaware law, Columbus 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.
In determining whether to propose the Extension Amendment, Columbuss board of directors took
into consideration the fact that a substantial amount of Columbus stockholders aggregate
investment had been spent pursuing a business combination, that allowing the transaction to
terminate by virtue of the existing certificate of incorporation deadline would make that portion
of their investment unrecoverable and that proposing the Extension Amendment would provide for the
possibility of realizing a return on that investment.
In addition, Columbuss board of directors was mindful of and took into account the conflict,
as described in the immediately preceding subsection, between their respective personal pecuniary
interests in successfully completing a business combination and the interests of stockholders. The
board of directors determined that their respective personal pecuniary interests, in the form of
the contingent and hypothetical value of Columbus shares if a business combination is ultimately
completed, was substantially less than additional time, effort and potential liability they might
incur if they failed to discharge their fiduciary duties to Columbuss stockholders to the best of
their ability, as well as substantially less than the potential benefits to stockholders wishing to
have an opportunity to consider the proposed IDE business combination, which they, as Columbus
stockholders as well, share. In making that determination, the board of directors took into
consideration the fact that in proposing the Extension Amendment, they may incur indemnification
obligations to Columbus under their existing commitment substantially in excess of those currently
accrued. At the same time, they recognized that completing the proposed IDE business combination
would result in a combined company more capable than Columbus alone to pay existing obligations of
Columbus and expenses incurred after approval of the Extension Amendment, all of which obligations
they might be called upon to pay under their existing commitment.
After careful consideration of all relevant factors, Columbuss board of directors determined
that the Extension Amendment is advisable, fair to and in the best interests of Columbus and its
stockholders.
The Board of Directors recommends that you vote FOR the Extension Amendment.
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THE IDE BUSINESS COMBINATION
The following is a brief summary of the terms and background of the Merger Agreement that
Columbus entered into with IDE and its stockholders. A definitive proxy statement will be mailed to
stockholders as of a record date to be established for voting on the proposed business combination
with IDE. This proxy statement will contain important information regarding the business
combination.
YOU ARE NOT BEING ASKED TO PASS ON THE PROPOSED BUSINESS COMBINATION AT THIS TIME. IF YOU ARE
A STOCKHOLDER, YOU WILL HAVE THE SPECIFIC RIGHT TO VOTE ON THE PROPOSED BUSINESS COMBINATION WITH
IDE IF AND WHEN IT IS SUBMITTED TO STOCKHOLDERS, AND COLUMBUS EXPECTS TO PRESENT THE BUSINESS
COMBINATION FOR YOUR VOTE IN THE NEAR FUTURE.
General
On December 15, 2008, the Merger Agreement was entered into by and among Columbus, IDE
Acquisition, IDE, and, for limited purposes, Stephen D. Cope, as escrow representative. Pursuant to the Merger Agreement, Columbus will acquire 100% of the issued and
outstanding securities of IDE. IDE will merge with and into IDE Acquisition with IDE Acquisition
remaining as the surviving entity and a wholly owned subsidiary of Columbus.
Business Combination with IDE Cayman; Acquisition Consideration
Pursuant to the Merger Agreement, Columbus will, in exchange for all of the outstanding shares
of capital stock of IDE:
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pay $43 million in cash;
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issue shares of Columbus common stock having a value (based on the Trust Value Per
Share) equal to $50 million; and
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issue additional shares of Columbus common stock having a value (based on the Trust
Value Per Share) of up to $156 million, subject to certain adjustments based on the net
debt and net working capital of IDE at closing, divided into two tranches, the first of
which will consist of $50 million divided by the Trust Value Per Share of the total
earnout shares and the second of which will consist of $106 million divided by the Trust
Value Per Share of the total earnout shares, subject to the following:
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if Columbuss earnout EBITDA for the year ended December 31, 2009 is equal to
or greater than $55,000,000, then Columbus will issue the first tranche of the
earnout shares;
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in addition to the foregoing, if Columbuss earnout EBITDA for the year ended
December 31, 2009 is greater than $55,000,000, then for every dollar by which such
earnout EBITDA exceeds $55,000,000 up to a maximum of $80,000,000 of such earnout
EBITDA, Columbus shall issue additional first target shares equal to (i) $1
divided by (ii) the Trust Value Per Share;
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if both Columbuss earnout EBITDA for the year ended December 31, 2010 is equal
to or greater than $78,000,000, then Columbus will issue the second tranche of the
earnout shares (less any additional first tranche earnout shares issued); and
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notwithstanding the foregoing, if the first target is not met and if Columbus
has cumulative earnout EBITDA for the fiscal years ending December 31, 2009 and
2010, as calculated above, equal to or greater than $133,000,000, Columbus will
issue the first target shares, which shares will be allocated among the former
holders of IDE preferred stock and IDE common stock as of the effective time.
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Background of IDE Business Combination
The terms of the Merger Agreement are the result of arms-length negotiations between
representatives of Columbus and IDE. The following is a brief discussion of the background of these
negotiations, the merger and related transactions.
Columbus was incorporated in Delaware on August 1, 2006 as a blank check company formed to
serve as a vehicle to effect a merger, capital stock exchange, asset acquisition or similar
business combination with one or more operating businesses that we believe has significant growth
potential, and whose net assets are at least 80% of the value of our net assets, including the
funds held in the trust account that holds Columbuss IPO proceeds (excluding the deferred
underwriting discounts and commissions from our IPO), but not reduced
for any conversions effected in connection with the Extension
Amendment. In addition to using a portion of the funds remaining in the trust account
after giving effect to any conversions effected in connection with
the Extension Amendment, Columbus intends to issue shares of its common stock as consideration to complete
a business combination with a target whose value meets the 80% Test.
Pursuant to Columbuss amended and restated certificate of incorporation, Columbus must
identify a target and consummate a business combination on or before May 18, 2009 or liquidate.
During the period immediately subsequent to the IPO on May 23, 2007 through December 12, 2008,
we were involved in identifying and evaluating prospective businesses regarding potential business
combinations. On May 24, 2007, the day after the consummation of our IPO, we convened our
management to discuss and begin implementing our overall plan for identifying, evaluating and,
where appropriate, pursuing potential acquisition opportunities. After discussing the most
effective means for us to cooperatively solicit opportunities, we determined that we should plan
regular face-to-face meetings or telephonic conferences with our board, management and
representatives to discuss and update our progress. Given our commitment to source, review and
negotiate a transaction within the prescribed timeframe, we agreed to immediately identify and
begin the process of making contact with various prospective sources of deal flow, including
business contacts and relationships we have established to encourage them to contact us with ideas
or specific acquisition opportunities that they might have for us to consider and explore.
Columbus was able to source opportunities both proactively and reactively, and given the
mandate to find a suitable business combination partner, did not limit itself to any one
transaction structure (e.g., cash vs. stock issued to potential seller, straight merger, corporate
spin-out or management buy-out). Columbus has not limited itself to particular industries and/or
types of businesses that may provide such opportunities. Proactive sourcing involved Columbus
management, among other things:
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Initiating conversations with third-party companies which they believed could make attractive
combination partners;
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Attending conferences or industry events to meet prospective business combination
partners;
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Contacting professional service providers (lawyers, accountants, consultants and
bankers);
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Utilizing their own network of business associates and former colleagues for leads;
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Working with third-party intermediaries, including investment bankers; and
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Inquiring of business owners, including private equity firms, of their interest in
selling their business.
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Reactive sourcing involved fielding inquiries or responding to solicitations by either (i)
companies looking for capital or investment alternatives or (ii) investment bankers or other
similar professionals who represented a company engaged in a sale or fund-raising process. Columbus
considered numerous companies in various industries.
In considering potential targets for a business combination, Columbuss management considered
the following factors as being material to their decision:
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financial condition and results of operations;
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cash flow potential;
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growth potential;
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experience and skill of management and availability of additional personnel;
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capital requirements;
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competitive position;
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regulatory or technical barriers to entry;
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stage of development of the products, processes or services;
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degree of current or potential market acceptance of the products, processes or
services;
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contributions Columbus could make to the potential targets business;
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relative valuation to comparable companies;
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regulatory environment of the industry; and
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costs associated with effecting the business combination.
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The evaluation relating to the merits of a particular business combination were based, to the
extent relevant, on the above factors. In evaluating a prospective business target, Columbuss
management conducted an extensive due diligence review which encompassed, among other things,
business, financial and industry analysis, meetings with management, and, where applicable,
inspection of facilities as well as review of financial and other information which were available.
As a result of these efforts, Columbus initiated contact, either directly or through a third
party intermediary, with over 100 potential targets. Columbus signed non-disclosure agreements
relating to approximately 80 of these potential business combination opportunities. In addition,
Columbus received business plans, financial summaries or presentation books of at least 75
potential target companies. Columbus also had discussions with several target companies with which
a non-disclosure agreement was not signed. With respect to several business combination
opportunities, discussions among Columbuss management and the targets included financial
disclosures, reviews of potential transaction structures, preliminary estimates of transaction
values and discussions of management objectives, business plans and projections. Discussions,
including introductory meetings attended by some combination of Messrs. Intrater and Ernestus and
other designated individuals on behalf of Mr. Intrater occurred with potential targets on a regular
basis during the period from June 2007 through December 2008. Our board of directors initial
review and analysis determined that a transaction with many of the potential target companies
would not be successful based on purchase price, valuation, industry, conditions and market
concerns.
Based on their experience in investigating investment opportunities, Columbuss management
assessed the competition for quality companies that could be a potential target for a business
combination and determined that a company that Columbuss management identified as a suitable
potential business combination partner would typically have several alternatives to any potential
business combination with Columbus, including remaining independent or selling itself to another
third party, as well as obtaining capital either privately or publicly. Additionally, in many
cases, Columbuss management had to spend time educating a prospective business combination partner
about blank check companies and explaining, from Columbus managements perspective, the benefits
of a combination with Columbus over other alternatives that it may have been considering. The
reasons varied for why Columbus did not reach agreement with any of these other potential business
combination partners. With respect to certain targets, the Columbus management team did not feel
sufficiently comfortable with the target companys forecasted financial performance in the
likelihood that management could reach such forecasted performance. Some of the other alternatives,
although attractive, did not involve a target business with a level of familiarity with blank check
companies equal to the sellers experience in such matters. Columbus believed the merger with IDE
provided the most attractive option for a business combination, and the choice of the merger
proposed herein over other alternatives was less a rejection of such alternatives and more a
prioritization among alternatives.
On June 18, 2008, Columbus engaged Ladenburg Thalmann & Co. Inc. (Ladenburg) as its
financial advisor.
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The first direct contact between IDE and Columbus occurred on July 29, 2008 when John
Steinmetz, a representative of European American Equities, Inc. (European), retained by IDE to
assist it in attracting capital, contacted Mr. Marceau Schlumberger, a member of Columbus Holdings,
to discuss a potential transaction between Columbus and IDE. There are no direct business
relationships between any of the officers, directors or principal stockholders of Columbus and any
of the officers, directors or principal stockholders of IDE.
On August 5, 2008, Steven Kaplan, a representative of Ladenburg contacted Gregory Prata, a
representative of Columbus, also to discuss a potential transaction between Columbus and IDE. Mr.
Kaplan then forwarded a draft non- disclosure agreement to Mr. Prata from Mr. Robert Stephenson, a
representative of Roth Capital Partners (Roth).
On August 11, 2008, Mr. Prata sent Mr. Stephenson a non-disclosure agreement signed by Mr.
Andrew Intrater.
On August 13, 2008, Mr. Stephenson provided Columbus with IDEs business plan.
On August 18, 2008, Kipp Mohr, a representative of European, provided Mr. Ernestus with access
to IDEs dataroom.
On August 20, 2008, Stephen Cope, Stephen Goodland and Richard Dodson from IDE traveled to the
offices of Columbus in New York to present IDEs business plan and discuss a potential transaction
with Steven Flyer, David Benyaminy, Gregory Prata and Kyce Chihi and Michael Ernestus,
representatives of Columbus. At the meeting, Columbus also discussed potential synergies between
IDE and affiliates and other relationships of Columbus.
On August 28, 2008, Columbus engaged Skadden, Arps, Slate, Meagher & Flom LLP (Skadden,
Arps) to act as legal counsel for a potential transaction.
On September 3, 2008, Messrs. Flyer, Benyaminy, Prata and Chihi traveled to the offices of IDE
in Houston to tour the ARS and IEC facilities, engage in discussions and learn more about the
business of IDE.
On September 13, 2008, Columbus provided IDE with a letter of intent for the merger of the two
companies. As part of the letter of intent, Columbuss management contemplated a deal structure in
which Columbus would issue shares of its common stock and pay cash to IDE stockholders. Columbus
and IDE engaged in several negotiations over the aggregate value to be paid to IDE stockholders
based on Columbuss valuation of IDE. The proposed structure included an earnout component, which
bridged differences of opinion on the valuation of IDE held by Columbus and IDE stockholders, and
assured Columbus management that there would be a strong alignment of interests between IDEs
management and Columbuss stockholders following the closing.
Between September 13, 2008 and September 18, 2008, the representatives of Columbus and IDE
engaged in numerous discussions relating to a non-binding letter of intent for a transaction
between IDE and Columbus.
On September 18, 2008, IDE and Columbus signed a non-binding letter of intent setting forth
the principal terms of the proposed acquisition of IDE by Columbus, which included an exclusivity
provision pursuant
40
to which IDE agreed not to solicit third parties for alternative transactions
until November 17, 2008. A summary of the principal terms of the non-binding letter of intent
appear below:
Merger Consideration $307.2 million comprised of $232.2 million of initial consideration at
closing of the transaction and additional consideration of up to $75 million upon achieving certain
benchmarks;
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Lock-up IDEs existing stockholders will agree to customary restrictions upon the
sale, pledge or other transfer of shares of common stock that they receive;
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Senior Management Management of Columbus following the acquisition to include
Stephen Cope as Chief Executive Officer and Stephen Goodland as Chief Financial Officer;
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Board of Directors The board of Columbus following the acquisition to initially
consist of members designated by IDE and Columbus as well as independent members as
required by law and stock exchange rules; and
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Exclusivity 60 calendar days exclusivity period.
|
Formal and intensive due diligence began on September 19, 2008. The Columbus due diligence
team included Messrs. Flyer, Benyaminy, Prata and Chihi and representatives of Skadden, Arps.
Additionally, Columbus retained the services of several third parties to conduct evaluations of
specific portions of IDEs business.
From September 19 through December 12, 2008, Columbus conducted thorough due diligence of
IDEs business. The due diligence process consisted of a detailed request of information from IDE
on all aspects of the business. IDE created a virtual data room to house all of the information and
track what information had been provided. During this time period, Messrs. Flyer, Benyaminy, Prata
and Chihi made several trips to IDEs facilities in Houston to meet with other members of the IDE
management team, attend sales meetings with potential customers and attend meetings with potential
tuck-in acquisition targets (smaller target entities that could potentially be acquired by IDE to
broaden its product offerings or that are complementary in nature to its current product
offerings).
On September 22, 2008, IDE and Columbus held an organizational meeting at the offices of
Skadden, Arps to update the IDE and Columbus investment bankers, attorneys and auditors on the
potential transaction. At the meeting (or telephonically) were representatives from the following
firms:
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Skadden, Arps, counsel to Columbus;
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Pryor Cashman LLP (Pryor Cashman), counsel to IDE;
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Ladenburg and Lazard Capital Markets LLC (Lazard Capital Markets), underwriters of
Columbuss IPO;
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Solebury Capital Group LLC (Solebury), capital markets advisor to Columbus;
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41
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M1 Capital, Roth and European, financial advisors to IDE; and
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Stonefield Josephson, Inc. (Stonefield Josephson), auditors for IDE.
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At the meeting representatives from Columbus and IDE discussed the transaction value and
structure, merits of the merger and timeline for completing the transaction.
During the week of September 29, 2008, IDE and Columbus interviewed several investment banks
with the intention of engaging one additional investment advisory firm to act as capital markets
advisor.
On October 8, 2008, Columbus provided a draft Merger Agreement to IDE and Pryor Cashman.
Also, on October 8, 2008, Columbus engaged Solebury to act as capital markets advisor for a
potential transaction.
On October 14, 2008, Columbus held a board meeting, where it updated the board of directors on
certain matters relating to the IDE transaction including the status of due diligence, valuation of
IDE relative to market comparables, performance of the business and timing of the transaction. The
board of directors indicated an interest in continuing to pursue a potential transaction with IDE.
On October 18, 2008, Columbus and Skadden, Arps had a conference call with IDE and Pryor
Cashman to discuss the material issues relating to the draft Merger Agreement.
From October 29 through October 31, 2008, representatives from Columbus and IDE attended the
2008 Society of Petroleum Engineers Russian Oil and Gas Technical Conference and Exhibition in
Moscow, Russia, where Columbus introduced IDE to several of its relationships in the oil and gas
industry.
On November 4, 2008, Columbus provided IDE with a revised letter of intent which lowered the
proposed merger consideration. The lower purchase price was based on market valuations for IDEs
public comparables.
Between November 4, 2008 and November 12, 2008, representatives of Columbus and IDE engaged in
numerous discussions relating to the revised non-binding letter of intent.
On November 12, 2008, IDE and Columbus signed a revised non-binding letter of intent setting
forth the principal terms of the proposed acquisition of IDE by Columbus, which extended the
exclusivity provision pursuant to which IDE agreed not to solicit third parties for alternative
transactions until January 11, 2009, and lowered the purchase price based on the valuation of
public comparable companies which had declined significantly during 2008. A summary of the
principal terms of the revised non-binding letter of intent appear below:
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Merger Consideration $249 million comprised of $99 million of initial consideration
at closing of the transaction and additional consideration of up to $150 million upon
achieving certain benchmarks;
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42
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Lock-up IDEs existing stockholders will agree to customary restrictions upon the
sale, pledge or other transfer of shares of common stock that they receive;
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Senior Management Management of Columbus following the acquisition to include
Stephen Cope as Chief Executive Officer and Stephen Goodland as Chief Financial Officer
and Christopher Naquin as ARSs Chief Operating Officer;
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Board of Directors Board of Columbus following the acquisition to initially consist
of members elected by IDE and Columbus as well as independent members as required by law,
with IDE having the right to designate a majority of the independent board members; and
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Exclusivity 60 calendar days exclusivity period.
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At the time that the revised non-binding letter of intent was executed, although Columbus
anticipated entering into employment agreements with other members of management of IDE, the
execution of the Merger Agreement was not conditioned upon additional members of management,
including Messrs. Storm and Pilkinton, executing such agreements. In addition, while the revised
non-binding letter of intent specified that Mr. Cope would serve as Chief Executive Officer, his
role with IDE was expanded to include Chairman of the Board prior to execution of the definitive
Merger Agreement. Similarly, while the letter of intent specified that Mr. Goodland would serve as
Chief Financial Officer, his role with IDE was expanded to include Treasurer prior to execution of
the definitive Merger Agreement.
On November 21, 2008, IDE and Columbus discussed a modification to the revised non-binding
letter of intent that altered the merger consideration to consist of $93 million of initial
consideration at closing of the transaction and additional consideration of up to $156 million
upon achieving certain benchmarks.
On November 25, 2008, Columbus engaged Citigroup Global Markets, Inc. (Citigroup) to act as
capital markets advisor.
Between October 2008 and December 2008, representatives of Columbus and IDE, and their
counsel, negotiated the terms of the merger agreement, the proposed employment agreements for IDEs
senior executives, the Equity and Incentive Plan, the stockholders agreement and the escrow
agreement.
Under Columbuss amended and
restated certificate of incorporation, Columbuss initial
business combination must have a fair market value equal to at least 80% of the value of our net
assets, including the funds held in the trust account that holds Columbuss IPO proceeds (excluding
the deferred underwriting discounts and commissions from our IPO) at the time of such acquisition,
but not reduced for any conversions effected in accordance with the Extension Amendment.
In addition to using a portion of the funds remaining in the trust account
after giving effect to any conversions effected in connection with the Extension Amendment,
Columbus intends to issue shares of its common stock as consideration to complete
a business combination with a target whose value meets the 80% Test.
Columbuss board of directors engaged TM Capital to assist the board of directors in evaluating
whether the merger would satisfy that requirement and whether the consideration to be paid by
Columbus pursuant to the Merger Agreement is fair, from a financial point of view, to the holders
of Columbus common stock pursuant to an engagement letter dated December 1, 2008. During the
following weeks, Columbus provided TM Capital with information concerning IDE and representatives
from TM Capital spoke with representatives of IDE.
On December 8, 2008, at a meeting of Columbuss board of directors, Columbus management
reviewed the principal terms of the proposed transaction with IDE and the status of the
negotiations regarding the Merger Agreement and related documentation. Representatives of TM
Capital presented their financial analysis of
43
the transaction and indicated that they were prepared
to deliver their opinion with respect to (i) the fairness, from a financial point of view, of the
consideration to be paid and (ii) the fair market value of IDE being equal to at least 80% of our
net assets, including the funds held in the trust account that holds our IPO proceeds (excluding
the deferred underwriting discounts and commissions from our IPO). Following a full discussion,
Columbuss board of directors unanimously authorized Columbus to continue to negotiate and finalize
a Merger Agreement and related agreements with respect to a potential transaction with IDE,
provided that final approval by the board of all such agreements was required prior to execution
thereof.
Between December 8 and December 12, 2008, representatives of Columbus and IDE continued to
negotiate the terms of the merger agreement and related documents.
In the afternoon of December 12, 2008, TM Capital issued their opinion that (1) the
consideration to be paid by us pursuant to the merger agreement was fair, from a financial point of
view, to us and the holders of Columbus common stock and (2) IDE has a fair market value equal to
at least 80% of the value of our net assets, including the funds held in the trust account that
holds our IPO proceeds (excluding the deferred underwriting discounts and commissions from our
IPO). After the close of trading on December 12, 2008, the Columbus board unanimously approved the
Merger Agreement and the transactions contemplated thereby, including the merger.
Between December 12 and December 15, 2008, representatives of Columbus and IDE continued to
finalize the Merger Agreement and related documentation. Following the close of trading on December 15, 2008, the Merger Agreement and related documents were executed by the parties thereto and
Columbus issued a press release announcing the transaction.
44
BENEFICIAL OWNERSHIP OF SECURITIES
The following table sets forth information regarding the beneficial ownership of the common
stock of Columbus as of March 27, 2009 and the beneficial ownership of the common stock of Columbus
after the consummation of the merger, by:
each person known by Columbus to be the beneficial owner of more than 5% of its outstanding
shares of common stock both before and after the consummation of the merger;
each of Columbuss executive officers and directors;
all of Columbuss officers and directors as a group after the consummation of the merger.
Unless otherwise indicated, Columbus believes that all persons named in the table have sole
voting and investment power with respect to all shares of common stock beneficially owned by them.
This table assumes that (1) as of March 27, 2009, there are 17,500,000 shares of Columbus common
stock issued and outstanding, (2) no holder of shares of Columbus common stock issued in its IPO
converts such shares into cash, (3) all shares held in escrow are released to the holders and not
cancelled, and (4) none of the shares of Columbus common stock issuable upon exercise of its
outstanding warrants are issued.
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Percentage
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Name of Beneficial Owner
(1)
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Number of Shares
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of Class
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Columbus Acquisition Holdings LLC
153 East 53rd Street, 58th Floor, New
York, New York 10022
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2,692,500
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15.4
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%
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|
Andrew Intrater
(3)
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2,692,500
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15.4
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%
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Michael W. Ernestus
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312,500
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1.8
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%
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|
Barry J. Rourke
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30,000
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*
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Eric Zachs
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30,000
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|
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*
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|
|
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|
|
|
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Rolf Zimmermann
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|
30,000
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|
|
*
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|
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|
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|
Jason Lustig
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30,000
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|
|
|
*
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Paul F. Lipari
(4)
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437,500
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2.5
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%
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|
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|
Jason Epstein
(5)
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|
437,500
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2.5
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%
|
|
|
|
|
|
|
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|
Michael Sloan
(6)
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376,111
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|
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2.1
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%
|
|
|
|
|
|
|
|
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|
All directors and executive officers as a
group (nine individuals)
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3,125,000
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17.9
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%
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|
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|
HBK Investments L.P.
(7)
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|
1,668,149
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9.5
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%
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45
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|
Percentage
|
Name of Beneficial Owner
(1)
|
|
Number of Shares
|
|
of Class
|
QVT Financial LP
(8)
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1,652,390
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|
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9.4
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%
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|
|
|
|
|
|
|
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|
Citigroup Global Markets Inc.
(9)
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1,584,888
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8.8
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%
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Del Mar
Master Fund, Ltd.
(10)
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|
1,194,600
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6.8
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%
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|
|
|
|
|
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|
Polar
Securities Inc.
(11)
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|
1,144,350
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|
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6.5
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%
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|
|
|
*
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Less than 1.0%
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|
(1)
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|
Unless otherwise indicated, the business address of each of the individuals is c/o Columbus
Acquisition Holdings LLC, 153 East 53
rd
Street, 58
th
Floor, New York,
New York 10022.
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|
(2)
|
|
Does not reflect 3,650,000 shares of common stock issuable upon exercise of warrants held by
Columbus Acquisition Holdings LLC, which are not exercisable until the later of our completion
of a business combination and May 18, 2008.
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(3)
|
|
Mr. Intrater is our Chairman of the Board and Chief Executive Officer. Columbus Acquisition
Holdings LLC is the record holder of 2,692,500 shares of our common stock. Columbus
Acquisition Holdings LLC is controlled by Mr. Intrater, who holds sole voting and investment
power with respect to the 2,692,500 shares of our common stock held by Columbus Acquisition
Holdings LLC. As a result, Mr. Intrater may be deemed to beneficially own all the 2,692,500
shares of our common stock held by Columbus Acquisition Holdings LLC. Mr. Intrater holds 36.2%
of the Series A membership interests of Columbus Acquisition Holdings LLC.
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(4)
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Mr. Lipari is our Senior Vice President. Reflects the ownership by Mr. Lipari of 16.2% of the
Series A membership interests of Columbus Acquisition Holdings LLC, which is the record holder
of 2,692,500 shares of our common stock. Accordingly, Mr. Lipari may be deemed to own 437,500
shares of our common stock. However, as noted in footnote (3) above, Andrew Intrater has sole
voting and investment power with respect to all of the 2,692,500 shares of our common stock
that are held by Columbus Acquisition Holdings LLC.
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|
(5)
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|
Mr. Epstein is our Senior Vice President. Reflects the ownership by Mr. Epstein of 16.2% of
the Series A membership interests of Columbus Acquisition Holdings LLC, which is the record
holder of 2,692,500 shares of our common stock. Accordingly, Mr. Epstein may be deemed to own
437,500 shares of our common stock. However, as noted in footnote (3) above, Andrew Intrater
has sole voting and investment power with respect to all of the 2,692,500 shares of our common
stock that are held by Columbus Acquisition Holdings LLC.
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|
(6)
|
|
Mr. Sloan is our Senior Vice President and Chief Financial Officer. Reflects the ownership by
Mr. Sloan of 14% of the Series A membership interests of Columbus Acquisition Holdings LLC,
which is the record holder of 2,692,500 shares of our common stock. Accordingly, Mr. Sloan may
be deemed to own 376,111 shares of our common stock. However, as noted in footnote (3) above,
Andrew Intrater has sole voting and investment power with respect to all of the 2,692,500
shares of our common stock that are held by Columbus Acquisition Holdings LLC.
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|
(7)
|
|
Based on information contained in a Schedule 13G (Amendment No. 2) filed on January 27, 2009
by 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. Jamiel A. Akhtar, Richard L. Booth, David C. Haley,
Lawrence H. Lebowitz, and William E. Rose are each managing members (collectively, the
Members) of HBK Management LLC. The Members expressly declare that the filing of the
statement on Schedule 13G shall not be construed as an admission that they are, for the
purpose of Section 13(d) or 13(g) of the securities Exchange Act of 1934, beneficial owners of
the securities. The principal business address of each of HBK Investments L.P., HBK Services
LLC, HBK Partners II L.P., HBK Master Fund L.P. and HBK Management LLC is 2101 Cedar Springs
Road, Suite 700, Dallas, Texas 75201. The principal business address for HBK New York LLC is
350 Park Avenue, 20th Floor, New York, New York 10022.
|
|
(8)
|
|
Based upon information contained in a Schedule 13G (Amendment No. 1) filed on January 31,
2008 by QVT Financial LP (QVT Financial), QVT Financial GP LLC, QVT Fund LP (the Fund) and
QVT Associates GP, LLC. QVT Financial is the investment manager for the Fund, which
beneficially owns 1,316,418 shares of common stock, and for Quintessence Fund L.P.
(Quintessence), which beneficially owns 147,546 shares of common stock. QVT Financial is
also the investment manager for a separate discretionary account managed for Deutsche Bank AG
(the Separate Account), which holds 188,426 shares of common stock. QVT Financial has the
power to direct the vote and disposition of the common stock held by the Fund, Quintessence
and the Separate Account. Accordingly, QVT Financial may be
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46
|
|
|
|
|
deemed to be the beneficial owner
of an aggregate amount of 1,652,390 shares of common stock, 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, may be deemed to beneficially own
the same number of shares of common stock reported by QVT Financial. QVT Associates GP LLC,
as General Partner of the Fund and Quintessence, may be deemed to beneficially own the
aggregate number of shares of common stock owned by the Fund and Quintessence, and
accordingly, QVT Associates GP LLC may be deemed to be the beneficial owner of an aggregate
amount of 1,463,964 shares of common stock.
The Fund and the Separate Account also own warrants to purchase additional shares of common
stock, which are not exercisable until the later of the Issuers completion of a business
combination and May 18, 2008.
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|
|
|
Each of QVT Financial and QVT Financial GP LLC disclaims beneficial ownership of the shares
of common stock owned by the Fund and Quintessence and held in the Separate Account. QVT
Associates GP LLC disclaims beneficial ownership of all shares of common stock owned by the
Fund and Quintessence, except to the extent of its pecuniary interest therein.
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|
|
|
The principal business address of QVT Financial, QVT Financial GP LLC, and QVT Associates GP
LLC is 1177 Avenue of the Americas, 9th Floor New York, New York 10036. The principal
business address of the Fund is Walkers SPV, Walkers House, Mary Street, George Town, Grand
Cayman, KY1 9001 Cayman Islands.
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|
(9)
|
|
Based upon information contained in a Schedule 13G (Amendment No. 1) filed on January 29,
2008 by Citigroup Global Markets Inc. (CGM), Citigroup Financial Products Inc. (CFP),
Citigroup Global Markets Holdings Inc. (CGM Holdings) and Citigroup Inc. (Citigroup). The
principal business address of each of CGM, CFP and CGM Holdings is 388 Greenwich Street, New
York, NY 10013. The principal business address of Citigroup is 399 Park Avenue, New York, NY
10043.
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|
(10)
|
|
Based upon information contained in a Schedule 13G filed on
March 30, 2009 by Del Mar Master Fund, Ltd. (the Master Fund), Del Mar Asset
Management, LP (DMAM), Del Mar Management, LLC (the GP) and David Freelove,
DMAM serves as the investment manager of the Master Fund, GP serves as
the general partner of DMAM and Mr. Freelove serves as the managing
member of the GP. The principal business address of each of the Master
Fund, DMAM, the GP and Mr. Freelove is 711 Fifth Avenue, New York, NY 10022.
|
|
(11)
|
|
Based upon information contained in a Schedule 13G (Amendment No. 2) filed on February 17,
2008 by Polar Securities, Inc. (Polar Securities) and North Pole Capital Master Fund (North
Pole). Polar Securities serves as the investment manager to North Pole and a number of
discretionary accounts with respect to which it has voting and dispositive authority over the
shares of common stock. Each of Polar Securities and North Pole disclaims any beneficial
ownership of any such shares. The principal business address of each of Polar Securities and
North Pole is 372 Bay Street, 21st floor, Toronto, Ontario M5H 2W9, Canada.
|
STOCKHOLDER PROPOSALS
Columbus expects to hold its 2009 annual meeting of stockholders in June 2009. Any proposal that a
Columbus stockholder intends to present at such annual meeting of stockholders must be submitted to
the Secretary of Columbus by no later than May 1, 2009. Any proposals received after
May 1, 2009 will not be considered timely for inclusion in the proxy materials. Under our
bylaws, in order for a stockholder proposal submitted outside of Rule 14a-8, and therefore not
included in our proxy materials, to be considered timely, such proposal must be received by our
Secretary not later than the close of business on the 90th day, nor earlier than the close of
business on the 120th day, prior to the date of the anniversary of the previous years annual
meeting, provided, however, that in the event the annual meeting is scheduled to be held on a date
more than 30 days prior to or delayed by more than 60 days after such anniversary date, to be
considered timely, such proposal must be received by our Secretary not later than the later of the
close of business 90 days prior to the annual meeting or the 10th day following the day on which
such notice of the date of the annual meeting was mailed or such public disclosure of the date of
the annual meeting was made.
DELIVERY OF DOCUMENTS TO STOCKHOLDERS
Pursuant to the rules of the SEC, Columbus and the services that it employs to deliver
communications to its stockholders are permitted to deliver to two or more stockholders sharing the
same address a single copy of each of Columbuss proxy statement unless Columbus has received
contrary instructions from one or more of the stockholders. Upon written or oral request, Columbus
will deliver promptly 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
47
future. Stockholders receiving
multiple copies of such documents may likewise request that Columbus deliver single copies of such
documents in the future. Stockholders may notify Columbus of their requests by calling or writing Morrow & Co., LLC, Columbuss proxy solicitor, at 470 West Avenue -3rd Floor, Stamford, CT
06902, telephone number (800) 607-0088.
WHERE YOU CAN FIND MORE INFORMATION
SECURITY HOLDERS ARE URGED TO CAREFULLY READ IN THEIR ENTIRETY THE PROXY STATEMENT AND OTHER
MATERIALS REGARDING THE PROPOSED BUSINESS COMBINATION BECAUSE THEY CONTAIN IMPORTANT INFORMATION
ABOUT COLUMBUS AND IDE AND THE PROPOSED BUSINESS COMBINATION.
Columbus files reports, proxy statements and other information with the SEC as required by the
Exchange Act. You may read and copy reports, proxy statements and other information filed by
Columbus with the SEC at the SEC public reference room located at 100 F Street, N.E., Washington,
D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the
SEC at 1-800-SEC-0330. You may also obtain copies of the materials described above at prescribed
rates by writing to the SEC, Public Reference Section, 100 F Street, N.E., Washington, D.C. 20549.
Columbus files its reports, proxy statements and other information electronically with the
SEC. You may access information on Columbus at the SEC web site containing reports, proxy
statements and other information at: http://www.sec.gov. You may also access IDEs website at
www.ide-rig.com.
All of the information contained in this document relating to Columbus has been supplied by
Columbus and all information relating to IDE has been supplied by IDE. Information provided by
either of us does not constitute any representation, estimate or projection of the other. If you
would like additional copies of this proxy statement, or if you have questions about the merger,
you should contact:
Columbus Acquisition Corp.
Attn: Andrew Intrater
153 East 53rd Street, 58th Floor
New York, New York 10022
(212) 418-9600
48
ANNEX A
PROPOSED EXTENSION AMENDMENT
CERTIFICATE OF AMENDMENT
TO THE
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
COLUMBUS ACQUISITION CORP.
Pursuant to Section 242 of the General
Corporation Law of the State of Delaware
Columbus Acquisition Corp., a Delaware corporation (hereinafter called the Corporation),
does hereby certify as follows:
1. The name of the Corporation is Columbus Acquisition Corp.
2. The Corporations Certificate of Incorporation was filed in the office of the Secretary of
State of the State of Delaware on August 1, 2006. The Corporations Amended and Restated
Certificate of Incorporation was filed in the office of the Secretary of the State of Delaware on
May 17, 2007.
3. This Amendment was duly approved by the Board of Directors and stockholders of the
Corporation in accordance with the applicable provisions of Section 242 of the General Corporation
Law of the State of Delaware (DGCL).
4. Article SIXTH of the Amended and Restated Certificate of Incorporation is hereby amended
and restated to read in its entirety as follows:
SIXTH:
The Corporations existence shall terminate on July 15, 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).
5. Article SEVENTH of the Amended and Restated Certificate of Incorporation is hereby amended
to add a new paragraph F thereto to read in its entirety as follows:
F. Any stockholder of the Corporation holding IPO Shares who votes against the amendment
pursuant to which this paragraph F was included in this Certificate of Incorporation may,
contemporaneous with such vote, demand that the Corporation convert his or her IPO shares into
cash. If so demanded, the Corporation shall convert such IPO Shares at a per share conversion price
equal to the quotient determined by dividing (i) the amount in the Trust Fund (as defined above),
inclusive of any interest thereon, calculated as of two business days prior to May 18, 2009, by
(ii) the total number of IPO Shares.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be duly
executed in its corporate name this [
] day of [
], 2009.
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COLUMBUS ACQUISITION CORP.
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By:
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Name:
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Title:
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2
ANNEX B
OPINION OF MORRIS JAMES LLP
April 2, 2009
Columbus Acquisition Corp.
153 E. 53rd Street, 58th Floor
New York, New York 10022
Re:
Enforceability of Certificate of Incorporation Provisions
Ladies and Gentlemen:
We have acted as special Delaware counsel to Columbus 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 Companys Certificate of Incorporation, as initially filed
with the Office of the Secretary of State of the State of Delaware (the Secretary of State) on
August 1, 2006, as amended and restated by the Companys Amended and Restated Certificate of
Incorporation filed with the Secretary of State on May 17, 2007, 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 this connection, you have
requested our opinion as to the enforceability under the General Corporation Law of the State of
Delaware (the General Corporation Law) of certain provisions in Articles SIXTH (Article SIXTH)
and Article SEVENTH (Article SEVENTH) 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, which Bylaws we assume constitute the entire bylaws of the
Company as currently in effect;
(c) The Amendment;
(d) The Proxy Statement of the Company (the Proxy Statement) proposed to be filed with the
United States Securities and Exchange Commission (the SEC) on or about the date hereof; and
Columbus Acquisition Corp.
April 2, 2009
Page 2 of 12
(e) A certificate of good standing for the Company obtained from the Secretary of State, dated
March 31, 2009 (the Good Standing Certificate).
With respect to the foregoing documents, we have assumed: (i) the genuineness of all
signatures, and the incumbency, authority, legal right and power and legal capacity under all
applicable laws and regulations, of each of the officers and other persons and entities signing or
whose signatures appear upon each of said documents as or on behalf of the parties thereto;
(ii) the conformity to authentic originals of all documents submitted to us as certified,
conformed, photostatic, electronic or other copies; and (iii) that the foregoing documents, in the
forms submitted to us for our review, have not been and will not be altered or amended in any
respect material to our opinion as expressed herein. For purposes of rendering our opinion as
expressed herein, we have not reviewed any document other than the documents referenced in
paragraphs (a) through (e) above and certain written statements of governmental authorities and
others referenced in this paragraph. In particular, we have not reviewed and express no opinion as
to any other document that is referred to in, incorporated by reference into, or attached (as an
exhibit, schedule, or otherwise) to any of the documents reviewed by us. The opinions in this
letter relate only to the documents specified in such opinions, and not to any exhibit, schedule,
or other attachment to, or any other document referred to in or incorporated by reference into, any
of such documents. We have assumed that there exists no provision in any document that we have not
reviewed that bears upon or is inconsistent with or contrary to the opinions in this letter. We
have conducted no independent factual investigation of our own, and have relied solely upon the
documents reviewed by us, the statements and information set forth in such documents, certain
statements of governmental authorities and others (including, without limitation, the Good Standing
Certificate), and the additional matters recited or assumed in this letter, all of which we assume
to be true, complete, and accurate in all material respects.
BACKGROUND
We have been advised, and accordingly assume for purposes of our opinion as expressed herein,
that (i) the Company has entered into an Agreement and Plan of Merger (the Merger Agreement) by
and among the Company, IDE Acquisition, LLC, a Delaware limited liability company and wholly owned
subsidiary of the Company, Integrated Drilling Equipment Company, a Delaware corporation (IDE),
and Stephen D. Cope, pursuant to which,
inter alia
, a business combination (the IDE Business
Combination) between the Company and IDE is to be effected, and (ii) the IDE Business Combination
constitutes a Business Combination within the meaning of the Certificate of Incorporation.
We have been further advised, and we have assumed as true for purposes of our opinions
expressed herein, that the Companys Board of Directors believes that transactions contemplated by
the Merger Agreement may not reasonably be able to be consummated prior to the existing Termination
Date. Accordingly, the Company is considering the Amendment, which would (i) extend the Termination
Date from May 18, 2009 to July 15, 2009, and (ii) allow public holders
Columbus Acquisition Corp.
April 2, 2009
Page 3 of 12
of less than 50% of the outstanding shares of the Companys common stock, who vote against the
extension amendment and elect conversion, to convert their shares into a portion of the funds
available in the Trust Fund.
Article SIXTH provides as follows:
The [Companys] existence shall terminate on May 18, 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).
Article SEVENTH provides,
inter alia
, as follows:
The following provisions (A) through (E) shall apply during the period commencing upon the
filing of this Certificate of Incorporation and terminating upon the consummation of any Business
Combination, and may not be amended during the Target Business Acquisition Period. A
Business Combination
shall mean the acquisition by the [Company], whether by merger,
capital stock exchange, asset or stock acquisition or other similar type of transaction, of an
operating business (
Target
Business
). The
Target Business Acquisition
Period
shall mean the period from the effectiveness of the registration statement filed in
connection with the [Companys] initial public offering (IPO) up to and including the first to
occur of (a) a Business Combination or (b) the Termination Date.
Thus, Articles SIXTH and SEVENTH purport to divest the Companys Board of Directors, the
Company and its stockholders of the power to amend such Articles prior to the consummation of a
Business Combination and/or the Termination Date.
DISCUSSION
Section 242(a) of the General Corporation Law provides, in pertinent part, that
[a]fter a corporation has received payment for any of its capital stock, it may amend its
certificate of incorporation, from time to time, in any and as many respects as may be
desired, so long as its certificate of incorporation as amended would contain only such
provisions as it would be lawful and proper to insert in an original certificate of
incorporation filed at the time of the filing of the amendment ... In particular, and without
limitation upon such general power of amendment, a corporation may amend its certificate of
incorporation, from time to time, so as ... (2) To change, substitute, enlarge or diminish the
nature of its business or its corporate powers and purposes ... or (6) To change the period of
its duration.
8
Del. C.
§ 242(a). In addition, Section 242(b) of the General Corporation Law provides
that
Columbus Acquisition Corp.
April 2, 2009
Page 4 of 12
[e]very amendment [to the Certificate of Incorporation] ...
shall
be made and
effected in the following manner: (1) if the corporation has capital stock, its board of
directors
shall
adopt a resolution setting forth the amendment proposed, declaring
its advisability, and either calling a special meeting of the stockholders entitled to vote
in respect thereof for consideration of such amendment or directing that the amendment
proposed be considered at the next annual meeting of the stockholders.... If a majority of the
outstanding stock entitled to vote thereon, and a majority of the outstanding stock of each
class entitled to vote thereon as a class has been voted in favor of the amendment, a
certificate setting forth the amendment and certifying that such amendment has been duly
adopted in accordance with this section
shall
be executed, acknowledged and filed
and
shall
become effective in accordance with § 103 of this title.
8
Del. C.
§ 242(b) (emphasis added). Thus, Section 242(a) grants Delaware corporations
broad statutory power to amend their certificates of incorporation to the extent permitted under
Delaware law, including to the extent contemplated by the Amendment, subject to compliance with the
amendatory procedures set forth in Section 242(b). Implicit in the language of Section 242 is that
the power to amend the certificate of incorporation is a fundamental power of Delaware corporations
vested in directors and stockholders of a corporation. Nothing in Section 242 suggests that this
statutory power may be entirely eliminated by a provision of the certificate of incorporation with
respect to certain provisions thereof. Indeed, the mandatory language in Section 242(b) supports
the proposition that the corporations broad power to amend the certificate of incorporation cannot
be eliminated. Section 242(b) mandates that, absent a provision permitting the board to abandon a
proposed amendment, a certificate setting forth the amendment ...
shall
be executed,
acknowledged and filed and
shall
become effective upon obtaining the requisite board and
stockholder approvals. 8
Del. C.
§ 242(b)(1) (emphasis added).
In our opinion, the provisions in Article SIXTH and Article SEVENTH that purport to eliminate
the statutory power to amend the Certificate of Incorporation, or particular provisions thereof,
are contrary to the laws of the State of Delaware and, therefore, are invalid pursuant to
Section 102(b)(1) of the General Corporation Law. Section 102(b)(1) provides that a certificate of
incorporation may contain:
Any provision for the management of the business and for the conduct of the affairs of the
corporation, and any provision creating, defining, limiting and regulating the powers of the
corporation, the directors, and the stockholders, or any class of the stockholders . . . ;
if such provisions are not contrary to the laws of [the State of Delaware]
.
8
Del. C.
§ 102(b)(1) (emphasis added). Thus, the ability to curtail the powers of the
corporation, the directors and the stockholders through the certificate of incorporation is not
without limitation. Any provision in the certificate of incorporation that is contrary to Delaware
law is
Columbus Acquisition Corp.
April 2, 2009
Page 5 of 12
invalid.
See
Lions Gate Entmt Corp. v. Image Entmt Inc.
, 2006 WL 1668051, at *7
(Del. Ch. June 5, 2006) (footnote omitted) (noting that a charter provision purport[ing] to give
the Image board the power to amend the charter unilaterally without a shareholder vote after the
corporation had received payment for its stock contravenes Delaware law [
i.e.
, Section 242
of the General Corporation Law] and is invalid.). In
Sterling v. Mayflower Hotel Corp.
, 93
A.2d 107, 118 (Del. 1952), the Court found that a charter provision is contrary to the laws of
[Delaware] if it transgresses a statutory enactment or a public policy settled by the common law
or implicit in the General Corporation Law itself. The Court in
Loews Theatres, Inc. v.
Commercial Credit Co.
, 243 A.2d 78, 81 (Del. Ch. 1968), adopted this view, noting that a
charter provision which seeks to waive a statutory right or requirement is unenforceable.
1
That the statutory power to amend the certificate of incorporation is a fundamental power of
Delaware corporations is supported by Delaware case law. Delaware courts have repeatedly held that
a reservation of the right to amend the certificate of incorporation is a part of any certificate
of incorporation, whether or not such reservation is expressly included therein.
2
See
,
e.g.
,
Maddock v. Vorclone Corp.
, 147 A. 255 (Del. Ch. 1929);
Coyne
v. Park & Tilford Distillers Corp.
, 154 A.2d 893 (Del. 1959);
Weinberg v. Baltimore Brick
Co.
, 114 A.2d 812, 814 (Del. 1955);
Morris v. American Public Utilities Co.
, 122 A.
696, 701 (Del. Ch. 1923).
See also
Drexler, Black & Sparks,
Delaware Corporation Law
and Practice
, § 32.02 (2005) (No case has ever questioned the fundamental right of
corporations to amend their certificates of incorporation in accordance with statutory procedures.
From the earliest decisions, it has been held that every corporate charter implicitly contains as a
constituent part thereof every pertinent provision of the corporation law, including the provisions
authorizing charter amendments.); 1 R. Franklin Balotti & Jesse A. Finkelstein,
The Delaware
Law of Corporations & Business Organizations
§ 8.1 (2007 Supp.) (The power of a corporation to
amend its certificate of incorporation was granted by the original General Corporation Law and has
continued to this day.) (footnotes omitted); 1 Rodman Ward, Jr., Edward P. Welch, Andrew J.
Turezyn,
Folk on the Delaware General Corporation Law
§ 242.2.2, GCL-VIII-13 (2007-1 Supp.)
(A corporation may ... do
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We note that Section 102(b)(4) of the General
Corporation Law expressly permits a Delaware corporation to include in its
certificate of incorporation provisions that modify the voting rights of
directors and stockholders set forth in other provisions of the General
Corporation Law. 8
Del. C.
§ 102(b)(4) (the certificate of
incorporation may also contain ... [p]rovisions requiring for corporate action,
the vote of a larger portion or the stock ...or a larger number of the directors,
than is required by this chapter.). While Section 102(b)(4) permits
certificate of incorporation provisions to require a greater vote of directors
or stockholders than is otherwise required by the General Corporation Law, in
our view, nothing in Section 102(b)(4) purports to authorize a certificate of
incorporation provision that entirely eliminates the power of directors and
stockholders to amend the certificate of incorporation, with respect to certain
provisions thereof or otherwise, as expressly permitted by Section 242.
See
also
Sellers v. Joseph Bancroft & Sons Co.
, 2 A.2d 108, 114 (Del.
Ch. 1938) (where the Court questioned the validity of a certificate of
incorporation provision requiring the vote or consent of 100% of the preferred
stockholders to amend the certificate of incorporation in any manner which
reduced the pecuniary rights of the preferred stock because the 100% vote
requirement made such provision practically irrepealable.).
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This principle is also codified in Section 394 of the
General Corporation Law.
See
8
Del.C.
§ 394.
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Columbus Acquisition Corp.
April 2, 2009
Page 6 of 12
anything that section 242 authorizes because the grant of amendment power contained in section
242 and its predecessors is itself a part of the charter.) (citing
Goldman v. Postal Tel.,
Inc.
, 52 F.Supp. 763, 769 (D.Del. 1943);
Davis v. Louisville Gas & Electric Co.
, 142 A.
654, 656-58 (Del. Ch. 1928);
Morris
, 122 A. at 701;
Peters v. United States Mortgage
Co.
, 114 A. 598, 600 (Del. Ch. 1921));
Peters
, 114 A. at 600 (There is impliedly
written into every corporate charter in this state, as a constituent part thereof, every pertinent
provision of our Constitution and statutes. The corporation in this case was created under the
General Corporation Law ... That law clearly reserves to this corporation the right to amend its
certificate in the manner proposed.).
In
Davis v. Louisville Gas & Electric Co.
, 142 A. 654 (Del. Ch. 1928), the Court of
Chancery interpreted this reserved right to amend the certificate of incorporation broadly and
observed that the legislature, by granting broad powers to the stockholders to amend the
certificate of incorporation, recognized the unwisdom of casting in an unchanging mould the
corporate powers which it conferred touching these questions so as to leave them fixed for all
time.
Id.
at 657. Indeed, the Court queried, [m]ay it not be assumed that the Legislature
foresaw that the interests of the corporations created by it might, as experience supplied the
material for judgment, be best subserved by an alteration of their intracorporate and in a sense
private powers,
i.e.
, alteration of the terms of the certificate of incorporation?
Id.
The Court further confirmed the important public policy underlying the reservation of
the right to amend the certificate of incorporation stating,
The very fact that the [General Corporation Law]...deals in great detail with innumerable
aspects of the [certificate of incorporation] in what upon a glance would be regarded as
relating to its private as distinguished from its public character, has some force to
suggest that the state, by dealing with such subjects in the statute rather than by leaving
them to be arranged by the corporate membership, has impliedly impressed upon such matters
the quality of public interest and concern.
Id
.
While there is no definitive case law addressing the enforceability or validity, under
Delaware law or otherwise, of a certificate of incorporation provision that attempts to place a
blanket prohibition on amendments to certain provisions of the certificate of incorporation, in our
view, such a provision would be invalid. Indeed, in confirming the fundamental importance of a
corporations power to amend the certificate of incorporation, Delaware courts have suggested, in
dicta, that such provision might be unenforceable.
See
,
e.g.
,
Jones Apparel
Group, Inc. v. Maxwell Shoe Co.
, 883 A.2d 837 (Del. Ch. 2004) (The Court suggested that the
statutory power to recommend to stockholders amendments to the certificate of incorporation is a
core duty of directors and noted that a certificate of incorporation provision purporting to
eliminate a core duty of the directors would likely contravene Delaware public policy.);
Triplex Shoe Co. v. Rice & Hutchins, Inc.
, 152 A. 342, 347, 351 (Del. 1930) (Despite the
absence of common stockholders who held the sole power to vote on amendments to the certificate
of
Columbus Acquisition Corp.
April 2, 2009
Page 7 of 12
incorporation, the Court assumed that an amendment to the certificate of incorporation
nonetheless had been validly approved by the preferred stockholders noting that, by the very
necessity of the case, the holders of preferred stock had the power to vote where no common stock
had been validly issued because otherwise the corporation would be unable to function.);
Sellers v. Joseph Bancroft & Sons Co.
, 2 A.2d 108, 114 (Del. Ch. 1938) (The Court
questioned the validity of a certificate of incorporation provision requiring the vote or consent
of 100% of the preferred stockholders to amend the certificate of incorporation in any manner which
reduced the pecuniary rights of the preferred stock because the 100% vote requirement made such
provision practically irrepealable.).
More recently, the Court in
Jones Apparel
suggested that the right of directors to
recommend to stockholders amendments to the certificate of incorporation is a core right of
fundamental importance under the General Corporation Law. In
Jones Apparel,
the Delaware
Court of Chancery examined whether a certificate of incorporation provision eliminating the power
of a board of directors to fix record dates was permitted under Section 102(b)(1) of the General
Corporation Law. While the Court upheld the validity of the record date provision, it was quick to
point out that not all provisions in a certificate of incorporation purporting to eliminate
director rights would be enforceable.
Id.
at 848. Rather, the Court suggested that certain
statutory rights involving core director duties may not be modified or eliminated through the
certificate of incorporation. The
Jones Apparel
Court observed:
[Sections] 242(b)(1) and 251 do not contain the magic words [unless otherwise provided in
the certificate of incorporation] and they deal respectively with the fundamental subjects
of certificate amendments and mergers. Can a certificate provision divest a board of its
statutory power to approve a merger? Or to approve a certificate amendment? Without
answering those questions, I think it fair to say that those questions inarguably involve
far more serious intrusions on core director duties than does [the record date provision at
issue]. I also think that the use by our judiciary of a more context- and statute-specific
approach to police horribles is preferable to a sweeping rule that denudes § 102(b)(1) of
its utility and thereby greatly restricts the room for private ordering under the DGCL.
Id.
at 852. While the Court in
Jones Apparel
recognized that certain provisions for
the regulation of the internal affairs of the corporation may be made subject to modification or
elimination through the private ordering system of the certificate of incorporation and bylaws, it
suggested that other powers vested in directors such as the power to amend the certificate of
incorporation are so fundamental to the proper functioning of the corporation that they cannot be
so modified or eliminated.
Id.
As set forth above, the statutory language of Section 242 and Delaware case law confirm that
the statutory power to amend the certificate of incorporation is a fundamental power of Delaware
corporations as a matter of Delaware public policy. Moreover, Delaware case law also
Columbus Acquisition Corp.
April 2, 2009
Page 8 of 12
suggests that the fundamental power to amend the certificate of incorporation is a core right
of the directors of a Delaware corporation. Because the provisions in Article SIXTH and Article
SEVENTH purport to eliminate the fundamental power of the Company (and the core right of the
Companys directors) to amend the Certificate of Incorporation, or particular provisions thereof,
such provisions are contrary to the laws of the State of Delaware and, therefore, are invalid.
Given our conclusion that Article SIXTH and Article SEVENTH may be amended as provided in the
Amendment subject to compliance with the amendatory procedures set forth in Section 242(b) of the
General Corporation Law, you have asked our opinion as to the vote required for approval of the
Amendment. Section 242(b) of the General Corporation Law provides the default voting requirements
for an amendment to certificate of incorporation. Under Section 242(b)(1), the Board of Directors
of the Company (the Board) would be required to adopt a resolution setting forth the amendment
proposed (i.e., the Amendment) and declaring its advisability prior to submitting the Amendment to
the stockholders entitled to vote on amendments to the Certificate of Incorporation. The Board may
adopt such resolution by the affirmative vote of a majority of the directors present at a meeting
at which a quorum is present, or, alternatively, by unanimous written consent of all directors.
See
8
Del.C.
§§ 141(b), 141(f). After the Amendment has been duly approved by the
Board, it must then be submitted to the stockholders of the Company for a vote thereon. The
affirmative vote (or written consent) of a majority of the outstanding stock entitled to vote
thereon would be required for approval of the Amendment.
See
8
Del.C.
§§ 242(b)(1),
228(a). The default voting requirements set forth above may be increased to require a greater vote
of the directors or stockholders by a provision in the certificate of incorporation or the bylaws
(in the case of the Board).
See
8
Del.C.
§§ 102(b)(4), 141(b), 216, 242(b)(4).
However, any certificate of incorporation or bylaw provision purporting to impose a supermajority
or unanimous voting requirement must be clear and unambiguous.
Centaur Partners v. Natl
Intergroup, Inc.
, 582 A.2d 923, 927 (Del. 1990). Moreover, a charter or bylaw provision which
purports to alter the statutory default voting requirements must be 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.
Id.
(quoting
Standard Power &
Light Corp. v. Inv. Assocs., Inc.
, 51 A.2d 572, 576 (Del. 1947). Because there is no provision
in the Certificate of Incorporation or Bylaws purporting to impose a different or greater vote of
the directors or stockholders for the approval of an amendment to the Certificate of Incorporation,
in our view, the statutory default voting requirements would apply to the approval of the Amendment
by the directors and stockholders of the Company.
In addition, in our view, a Delaware court would not interpret the provisions in Article SIXTH
and Article SEVENTH that purport to eliminate the power to amend such Articles as requiring a
supermajority or unanimous vote of the directors and/or stockholders to approve the amendments
purportedly prohibited thereby. Nothing in the language of Article SIXTH or Article SEVENTH
suggests that the drafters intent was to impose a supermajority or unanimous voting requirement on
amendments thereto. Rather, the language in such Articles purports to
Columbus Acquisition Corp.
April 2, 2009
Page 9 of 12
entirely eliminate any amendments to such Articles at the times and in the circumstances
provided therein. Moreover, in our view, a Delaware court would not reform the provisions of
Article SIXTH or Article SEVENTH to provide for a voting requirement not intended by the drafters.
See
Lions Gate
, 2006 WL 1668051 at *8 (holding that reformation of a certificate of
incorporation is unavailable where the proponent fails to demonstrate that all present and past
shareholders intended the reformed provision to be included within the certificate) (citing
Waggoner v. Laster
, 581 A.2d 1127,1135 (Del. 1990)).
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 Amendment,
if duly adopted by the Board of Directors of the Company and duly approved by the holders of a
majority of the outstanding shares of capital stock of the Company in accordance with the General
Corporation Law, would be valid under the General Corporation Law.
The foregoing opinion is limited to the General Corporation Law and we express no opinion on
any other laws or the laws of any other state or jurisdiction, including, without limitation,
federal laws regulating securities or any other federal laws, or the rules and regulations of stock
exchanges or of any other regulatory body.
We express no opinion regarding any rights, claims, or remedies that might or might not be
available to stockholders in connection with the Companys 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 Companys
Certificate of Incorporation, except to the extent expressly set forth in our opinion above with
respect to the provisions of Articles SIXTH and SEVENTH to the extent that such provisions purport
to eliminate the power to amend such Articles. For the avoidance of doubt, we express no opinion as
to the validity, enforceability, or effectiveness of the provisions set forth in the Certificate of
Incorporation as amended by the Amendment 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 General Corporation Law or to the extent
that such provisions provide for disparate treatment of stockholders in connection with liquidating
distributions. 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
Columbus Acquisition Corp.
April 2, 2009
Page 10 of 12
Delaware law as the same exists on the date hereof. The opinion expressed here is not a
guaranty as to what any particular court would actually hold, but a reasoned opinion as to the
decision a Delaware court would reach if the issues were properly presented to it and such court
followed existing precedent as to legal and equitable principles applicable to the issues discussed
herein.
We assume no obligation to update or supplement this opinion letter after the date hereof with
respect to any facts or circumstances that may hereafter come to our attention or to reflect any
changes in the facts or law that may hereafter occur or take effect.
This opinion is rendered solely for your benefit in connection with the matters set forth herein
and, without our prior written consent, may not be furnished or quoted to, or relied upon by, any
other person or entity for any purpose, except that it may be furnished or quoted to the SEC in
connection with the matters addressed herein and you may refer to it in the Proxy Statement, and we
consent to your doing so, and it may be furnished or quoted to Skadden, Arps, Slate, Meagher & Flom
LLP, the Companys outside counsel, and relied upon by such firm in connection with any
correspondence or communications with the SEC. Further, we hereby consent to the filing of this
opinion letter as an exhibit to the Proxy Statement and to the references to our firm and the
statements made with respect to this opinion letter therein under the captions QUESTIONS AND
ANSWERS ABOUT THE SPECIAL MEETING, Columbuss Recommendation to Stockholders, and The Boards
Reasons for the Extension Amendment, its Conclusion, and its Recommendation. In giving such
consent, we do not admit that we are in the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended, or the rules and regulations promulgated
thereunder by the SEC.
Very truly yours,
/s/ Morris James LLP
Exhibit A
CERTIFICATE OF AMENDMENT
TO THE
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
COLUMBUS ACQUISITION CORP.
Pursuant to Section 242 of the General
Corporation Law of the State of Delaware
Columbus Acquisition Corp., a Delaware corporation (hereinafter called the Corporation),
does hereby certify as follows:
1. The name of the Corporation is Columbus Acquisition Corp.
2. The Corporations Certificate of Incorporation was filed in the office of the Secretary of
State of the State of Delaware on August 1, 2006. The Corporations Amended and Restated
Certificate of Incorporation was filed in the office of the Secretary of the State of Delaware on
May 17, 2007.
3. This Amendment was duly approved by the Board of Directors and stockholders of the
Corporation in accordance with the applicable provisions of Section 242 of the General Corporation
Law of the State of Delaware (DGCL).
4. Article SIXTH of the Amended and Restated Certificate of Incorporation is hereby amended
and restated to read in its entirety as follows:
SIXTH:
The Corporations existence shall terminate on July 15, 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).
5. Article SEVENTH of the Amended and Restated Certificate of Incorporation is hereby amended
to add a new paragraph F thereto to read in its entirety as follows:
F. Any stockholder of the Corporation holding IPO Shares who votes against the amendment
pursuant to which this paragraph F was included in this Certificate of Incorporation may,
contemporaneous with such vote, demand that the Corporation convert his or her IPO shares into
cash. If so demanded, the Corporation shall convert such IPO Shares at a per share conversion price
equal to the quotient determined by dividing (i) the amount in the Trust Fund (as defined above),
inclusive of any interest thereon, calculated as of two business days prior to May 18, 2009, by
(ii) the total number of IPO Shares.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be duly
executed in its corporate name this [
l
] day of [
l
], 2009.
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COLUMBUS ACQUISITION CORP.
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By:
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Name:
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Title:
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PROXY
COLUMBUS ACQUISITION CORP.
153 E. 53rd Street, 58th Floor
New York, New York 10022
SPECIAL MEETING OF STOCKHOLDERS
, 2009
YOUR VOTE IS IMPORTANT
FOLD AND DETACH HERE
COLUMBUS ACQUISITION CORP.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON
, 2009
The undersigned, revoking any previous proxies relating to these shares, hereby acknowledges
receipt of the Notice and Proxy statement, dated April , 2009, in connection with the Special
Meeting to be held at a.m. on , 2009 at the offices of Columbus Acquisition Corp. located
at 153 E. 53rd Street, 58th Floor, New York, New York 10022, and hereby appoints and ,
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, as applicable, of Columbus
Acquisition Corp. (the Corporation) registered in the name provided herein, 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 EXTENSION AMENDMENT 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.
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FOR
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AGAINST
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ABSTAIN
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Proposal 1 Business Combination Deadline
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To extend the date before which the Corporation must
complete a business combination from May 18, 2009 to
July 15, 2009, to avoid being required to liquidate
(and in connection with such proposal the
stockholders are authorizing the Corporation to
amend the trust agreement to extend the date by
which the trust account must be liquidated from May
18, 2009 to July 15, 2009).
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Proposal 2 Conversion Rights
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To allow public holders of less than 50% of the outstanding shares of the Corporations common
stock, who vote against
the Extension Amendment and elect conversion, to
convert their common stock into cash held in the
Corporations trust account.
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Only if you voted AGAINST
ALL TWO
proposals above, you hold shares of Columbus
Acquisition Corp.s common stock issued in its initial public offering, and you deliver your shares
in accordance with the procedures set forth in the proxy statement by the day prior to the special
meeting, may you exercise your conversion rights and demand that the Corporation convert your
shares of common stock into a
pro rata
portion of the trust account by marking the Exercise
Conversion Rights box below. If you exercise your conversion rights, then you will be exchanging
your shares of Columbus Acquisition Corp. common stock for cash and will no longer own these shares
as of the effective date of the Extension Amendment. You will only be entitled to receive cash for
your common stock if the Extension Amendment is approved (and not abandoned) and you continue to
retain ownership of your common stock through the time the Extension Amendment becomes effective
and deliver your stock certificate to the Corporation.
EXERCISE CONVERSION RIGHTS
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MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT
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Dated
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2009
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Stockholders Signature
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Stockholders 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
ITEMS 1 AND 2. THIS PROXY WILL REVOKE ALL PRIOR PROXIES SIGNED BY YOU.
2
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