<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 19, 1996
REGISTRATION NO. 333-11165
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
UNITY FIRST ACQUISITION CORP.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 6770 13-3899021
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification
incorporation or organization) Number)
</TABLE>
245 FIFTH AVENUE--SUITE 1500
NEW YORK, NEW YORK 10016
(212) 696-4282
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------
LAWRENCE BURSTEIN, PRESIDENT
UNITY FIRST ACQUISITION CORP.
245 FIFTH AVENUE--SUITE 1502
NEW YORK, NEW YORK 10016
(212) 696-4282
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------
COPIES TO:
IRA I. ROXLAND, Esq. DAVID ALAN MILLER, Esq.
PARKER DURYEE ROSOFF & HAFT GRAUBARD MOLLEN & MILLER
529 Fifth Avenue 600 Third Avenue
New York, New York 10017 New York, New York 10016
(212) 599-0500 (212) 818-8661
Fax: (212) 972-9487 Fax: (212) 818-8881
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT
------------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED SEPTEMBER 19, 1996
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
PROSPECTUS
1,250,000 UNITS
UNITY FIRST ACQUISITION CORP.
EACH UNIT CONSISTING OF ONE SHARE OF COMMON STOCK, ONE CLASS A COMMON STOCK
PURCHASE WARRANT AND ONE CLASS B COMMON STOCK PURCHASE WARRANT
---------------------
Unity First Acquisition Corp. ("Company") is offering hereby 1,250,000 Units
("Units"), each consisting of one share of Common Stock, par value $0.0001 per
share ("Common Stock"), one Class A Redeemable Common Stock Purchase Warrant
("Class A Warrants") and one Class B Redeemable Common Stock Purchase Warrant
("Class B Warrants" and together with the Class A Warrants, the "Warrants"). One
Class A Warrant and one Class B Warrant each entitle the holder to purchase one
share of Common Stock at a price of $5.50 and $7.50, respectively, commencing on
the later of (i) the consummation of a Business Combination (as hereinafter
defined) or (ii) one year from the date of this Prospectus and ending on
, 2002 [six years after the effective date of the Registration
Statement (as hereinafter defined)]. The Class A Warrants and the Class B
Warrants are redeemable, each as a class, in whole and not in part, at the
option of the Company and with the consent of the Underwriter, at a price of
$.05 per Warrant at any time after the Warrants become exercisable upon not less
than 30 days' prior written notice, provided that the last reported bid price of
the Common Stock equals or exceeds $8.50 per share, with respect to the Class A
Warrants, and $10.50 per share, with respect to the Class B Warrants, for the 20
consecutive trading days ending on the third day prior to the notice of
redemption. Certain officers of the Company have agreed with the Underwriters
that within the first ten days after separate trading of the Warrants has
commenced, such officers and/or their affiliates will purchase $250,000 of each
of the Class A Warrants and the Class B Warrants at market prices not to exceed
$.875 per Warrant.
Prior to this offering, there has been no public market for the Units, the
shares of Common Stock or the Warrants and there can be no assurance that such a
market will develop after the completion of this offering. For information
regarding the factors considered in determining the initial public offering
price of the Units and the exercise price of the Warrants, see "Underwriting."
The securities comprising the Units will not be separately transferable until 90
days after the date of this Prospectus unless GKN Securities Corp. ("GKN")
informs the Company of its decision to allow earlier separate trading, but in no
event will GKN allow separate trading of the securities comprising the Units
until the preparation of an audited balance sheet of the Company reflecting
receipt by the Company of the proceeds of this offering. The Company anticipates
that the Units will be quoted on the OTC Bulletin Board under the symbol "UFACU"
upon completion of this offering and that, once the securities comprising the
Units become separately transferable, the Common Stock and Warrants will be
quoted on the OTC Bulletin Board under the symbols "UFAC," "UFACW" and "UFACZ,"
respectively.
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK AND ARE NOT
SUBJECT TO THE PROTECTIONS OF THE RULES UNDER THE SECURITIES ACT OF 1933
RELATING TO "BLANK CHECK" OFFERINGS. SEE "RISK FACTORS" ON PAGE 10.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
UNDERWRITING
DISCOUNTS AND PROCEEDS TO
PRICE TO PUBLIC(1) COMMISSIONS(2) COMPANY(3)
<S> <C> <C> <C>
Per Unit....................................................... $6.00 $0.48 $5.52
Total (3)...................................................... $7,500,000 $600,000 $6,900,000
</TABLE>
(1) Does not include a 3% non-accountable expense allowance which the Company
has agreed to pay to the Underwriters. The Company has also agreed to sell
to the Underwriters an option ("Unit Purchase Option") to purchase up to
125,000 Units and to indemnify the Underwriters against certain liabilities
under the Securities Act of 1933, as amended (the "Securities Act"). See
"Underwriting."
(2) Before deducting estimated expenses payable by the Company, including the
Underwriters' non-accountable expense allowance in the amount of $225,000
($258,750 if the Underwriters' over-allotment option is exercised in full),
estimated at $450,000.
(3) The Company has granted the Underwriters a 45-day option to purchase up to
187,500 additional Units upon the same terms and conditions as set forth
above, solely to cover over-allotments, if any. If such over-allotment
option is exercised in full, the total Price to Public, Underwriting
Discounts and Proceeds to Company will be $8,625,000, $690,000 and
$7,935,000, respectively. See "Underwriting."
The Units are offered, subject to prior sale, when, as and if delivered to
and accepted by the Underwriters and subject to approval of certain legal
matters by counsel and certain other conditions. The Underwriters reserve the
right to withdraw, cancel or modify this offering and to reject any order in
whole or in part. It is expected that delivery of certificates will be made
against payment therefor on or about , 1996, at the offices of GKN
Securities Corp. in New York City.
GKN SECURITIES GAINES, BERLAND INC.
, 1996
<PAGE>
STATE BLUE SKY INFORMATION
The Units will only be offered and sold by the Company in the States of
Delaware, District of Columbia, Florida, Hawaii, Illinois, Maryland, New York
and West Virginia (the "Primary Distribution States"). In addition, such
securities will be immediately eligible for resale in the secondary market in
each of the Primary Distribution States and in the States of [Iowa and
Pennsylvania]. Purchasers of such securities either in this offering or in any
subsequent trading market which may develop must be residents of such states.
The Company will amend this prospectus for the purpose of disclosing additional
states, if any, in which the Company's securities will be eligible for resale in
the secondary trading market.
------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE UNITS AT LEVELS
ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING,
IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
------------------------
FURTHER INFORMATION
The Company intends to furnish to its stockholders annual reports containing
financial statements audited and reported upon by its independent public
accounting firm and such other reports as the Company may determine to be
appropriate or as may be required by law.
2
<PAGE>
SUMMARY
THE FOLLOWING IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS, INCLUDING THE NOTES THERETO, APPEARING
ELSEWHERE IN THIS PROSPECTUS. EACH PROSPECTIVE INVESTOR IS URGED TO READ THIS
PROSPECTUS IN ITS ENTIRETY. UNLESS OTHERWISE INDICATED, THE INFORMATION IN THIS
PROSPECTUS DOES NOT GIVE EFFECT TO THE EXERCISE OF THE UNDERWRITER'S
OVER-ALLOTMENT OPTION, THE UNIT PURCHASE OPTION AND THE WARRANTS.
THE COMPANY
BUSINESS OBJECTIVE
Unity First Acquisition Corp. ("Company") was formed on May 30, 1996 to
serve as a vehicle to effect a merger, exchange of capital stock, asset
acquisition or other similar business combination (a "Business Combination")
with an operating business (a "Target Business") which the Company believes has
significant growth potential. The Company intends to utilize cash (to be derived
from the proceeds of this offering), equity, debt or a combination thereof in
effecting a Business Combination. The Company's efforts in identifying a
prospective Target Business will be limited to the following industries: (i) the
manufacture of analytical and controlling equipment, chemicals and allied
products, electronic equipment and medical instrumentation; (ii) health services
(including HMOs, laboratories and nursing homes); (iii) environmental services
and products; (iv) engineering and construction; (v) wholesale and retail
distribution (including discount operations) of home furnishings, office
supplies, computers and related products, medical equipment and supplies,
apparel and accessories, automotive parts and supplies and food and beverage
products; (vi) internet and other new media products and services; and (vii)
communications and entertainment ("Target Industries").
While the Company may, under certain circumstances, seek to effect Business
Combinations with more than one Target Business, its initial Business
Combination must be with a Target Business whose fair market value is at least
equal to 80% of the net assets of the Company at the time of such acquisition.
Consequently, it is likely that the Company will have the ability to effect only
a single Business Combination.
PRIOR INVOLVEMENT OF PRINCIPALS IN "BLANK CHECK" COMPANIES
The officers and directors of the Company (other than Mr. Norman Leben) have
held similar positions in seven other "blank check" companies (i.e, a
development stage company that has no specific business plan or has indicated
that its business plan is to engage in a merger or acquisition with an
unidentified company), each of which has consummated a Business Combination as
of the date of this Prospectus. Certain information with respect to each such
Business Combination is set forth below:
<TABLE>
<CAPTION>
DATE OF BUSINESS TRADING MARKET AND
NAME OF TARGET BUSINESS COMBINATION NATURE OF BUSINESS TICKER SYMBOL
- --------------------------------- ------------------ ------------------------------------- --------------------
<S> <C> <C> <C>
Bloc Development Corp.(1) March 1988 Software development NYSE (GML)
Polyvision Corporation April 1990 Manufacture and sale of vision AMEX (PLI)
projection systems, architectural
building panels, modular partitions
and catalog office products
T-HQ Inc. August 1991 Design and marketing of Nintendo and OTC Bulletin Board
SEGA games (TOYH)
SubMicron Systems August 1993 Semi-conductor capital equipment NASDAQ-NMS (SUBM)
manufacturer
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
DATE OF BUSINESS TRADING MARKET AND
NAME OF TARGET BUSINESS COMBINATION NATURE OF BUSINESS TICKER SYMBOL
- --------------------------------- ------------------ ------------------------------------- --------------------
<S> <C> <C> <C>
Alliance Entertainment Corp. November 1993 Distributor of pre-recorded music, NYSE (CDS)
accessories and entertainment
related products
USCI Inc. May 1995 Centralized automated computer-based NASDAQ-NMS (USCM)
cellular telephone activation
systems
Brazil Fast Food Corp. March 1996 Owner and operator of hamburger fast NASDAQ SmallCap
food restaurants in Brazil (BOBS)
</TABLE>
- ------------------------
(1) Bloc Development Corp. was acquired by Global Direct Mail Corp. in 1995.
There can be no assurance that the Company will be able to effect a Business
Combination or that the type of business or the performance of the Target
Business, if any, will be similar to that of these other "blank check"
companies. See "Management."
OFFERING PROCEEDS HELD IN TRUST
The proceeds of this offering, after payment of underwriting discounts and
the Underwriters' non-accountable expense allowance, will be $6,675,000
($7,676,250 if the Underwriter's over-allotment option is exercised in full).
Ninety percent (90%) of such amount, or $6,007,500 ($6,908,625 if the
Underwriters' over-allotment option is exercised in full), will be placed in a
trust account (the "Trust Fund"), and invested in United States government
securities. The Trust Fund will not be released until the earlier of the
consummation of a Business Combination or the liquidation of the Company, which
may not occur until 24 months from the consummation of this offering. Therefore,
unless and until a Business Combination is consummated, the proceeds held in the
Trust Fund will not be available for use by the Company for any expenses related
to this offering or expenses which may be incurred by the Company related to the
investigation and selection of a Target Business and the negotiation of an
agreement to acquire a Target Business. Such expenses may be paid from the net
proceeds not held in the Trust Fund (approximately $667,500 or $767,625 if the
Underwriters' over-allotment option is exercised in full). See "Use of
Proceeds."
FAIR MARKET VALUE OF TARGET BUSINESS
The Company will not acquire a Target Business unless the fair market value
of such business, as determined by the Board of Directors of the Company based
upon standards generally accepted by the financial community, such as actual and
potential sales, earnings and cash flow and book value ("Fair Market Value"), is
at least 80% of the net assets of the Company at the time of such acquisition.
If the Board of Directors is not able to independently determine that the Target
Business has a sufficient Fair Market Value, the Company will obtain an opinion
from an unaffiliated, independent investment banking firm which is a member of
the National Association of Securities Dealers, Inc. ("NASD") with respect to
the satisfaction of such criteria. Since any opinion, if obtained, would merely
state that Fair Market Value meets the 80% of net assets threshold, it is not
anticipated that copies of such opinion would be distributed to stockholders of
the Company, although copies will be provided to stockholders who request it.
The Company will not be required to obtain an opinion from an investment banking
firm as to Fair Market Value if the Board of Directors determines that the
Target Business does have sufficient Fair Market Value.
4
<PAGE>
STOCKHOLDER APPROVAL OF BUSINESS COMBINATION
The Company, after signing a definitive agreement for the acquisition of a
Target Business, but prior to the consummation of any Business Combination, will
submit such transaction to the Company's stockholders for their approval, even
if the nature of the acquisition is such as would not ordinarily require
stockholder approval under applicable state law. All of the Company's
stockholders prior to this offering ("Initial Stockholders"), including all of
the officers and directors of the Company, have agreed to vote their respective
shares of Common Stock owned by them immediately prior to this offering in
accordance with the vote of the majority of all the other shares of Common Stock
("Public Shares") voted on any Business Combination. The holders of the Public
Shares will be referred to herein as the "Public Stockholders." The Initial
Stockholders shall be deemed to be "Public Stockholders" with respect to any
Public Shares they acquire. The Company will proceed with the Business
Combination only if the holders of at least a majority of the outstanding shares
of Common Stock vote in favor of the Business Combination and less than 20% in
interest of the Public Stockholders exercise their conversion rights described
below.
CONVERSION RIGHTS
At the time the Company seeks stockholder approval of any Business
Combination, the Company will offer each Public Stockholder the right to have
his shares of Common Stock converted to cash if such stockholder votes against
the Business Combination and the Business Combination is approved and
consummated. The per-share conversion price will be equal to the amount in the
Trust Fund (inclusive of any interest thereon) as of the record date for
determination of stockholders entitled to vote on such Business Combination,
divided by the number of Public Shares. Without taking into account interest, if
any, earned on the Trust Fund, the per-share conversion price would be $4.81, or
$1.19 less than the per-Unit offering price of $6.00. There will be no
distribution from the Trust Fund with respect to the Warrants included in the
Units. A Public Stockholder may request conversion of his shares at any time
prior to the vote taken with respect to a proposed Business Combination at a
meeting held for that purpose, but such request will not be granted unless such
stockholder votes against the Business Combination and the Business Combination
is approved and consummated. It is anticipated that the funds to be distributed
to the Public Stockholders who have their shares converted will be distributed
promptly after consummation of a Business Combination. The Initial Stockholders
will not have any conversion rights with respect to the shares of Common Stock
owned by them immediately prior to this offering. The Company will not
consummate any Business Combination if 20% or more in interest of the Public
Stockholders exercise their conversion rights.
ESCROW OF PRINCIPALS' SECURITIES
The shares of the Company's Common Stock owned as of the date hereof by all
of the executive officers and directors of the Company and their respective
affiliates (excluding, however, their respective spouses and adult children) and
by all persons owning 5% or more of the currently outstanding shares of Common
Stock (collectively, the "Affiliated Initial Stockholders"), representing in the
aggregate approximately 49.8% of the outstanding Common Stock as of the date
hereof, will be placed in escrow with American Stock Transfer & Trust Company,
as escrow agent (the "Escrow Agent"), until the earlier of (i) six months
following the consummation of a Business Combination or (ii) the liquidation of
the Company. During such escrow period, such persons will not be able to sell
their respective shares of Common Stock, but will retain all other rights as
stockholders of the Company, including, without limitation, the right to vote
such shares of Common Stock. In addition, the Directors' Warrants (as
hereinafter defined) will also be deposited with the Escrow Agent, to be
released only upon the consummation of a Business Combination. Upon liquidation
of the Company, the shares will be cancelled. All other Initial Stockholders
("Non-Affiliated Initial Stockholders") have agreed not to sell their respective
shares of Common Stock until the occurrence of a Business Combination.
5
<PAGE>
LIQUIDATION IF NO BUSINESS COMBINATION
In the event that the Company does not consummate a Business Combination
within 18 months from the consummation of this offering, or 24 months from the
consummation of this offering if the "Extension Criteria" described below have
been satisfied, the Company will be dissolved and will distribute to all Public
Stockholders in proportion to their respective equity interests in the Company,
an aggregate sum equal to the amount in the Trust Fund, inclusive of any
interest thereon, plus any remaining net assets of the Company. The Initial
Stockholders have waived their respective rights to participate in any
liquidation distribution with respect to the shares of Common Stock owned by
them immediately prior to this offering. If the Company were to expend all of
the net proceeds of this offering, other than the proceeds deposited in the
Trust Fund, and without taking into account interest, if any, earned on the
Trust Fund, the per-share liquidation price would be $4.81 or $1.19 less than
the per-Unit offering price of $6.00. The proceeds deposited in the Trust Fund
could, however, become subject to the claims of creditors of the Company which
could be prior to the claims of stockholders of the Company. Accordingly, there
can be no assurance that the per-share liquidation price will not be less than
$4.81, plus interest. There will be no distribution from the Trust Fund with
respect to the Warrants included in the Units. Notwithstanding the Company's
commitment to liquidate if it is unable to effect a Business Combination within
18 months from the consummation of this offering, if the Company enters into
either a letter of intent, an agreement in principle or a definitive agreement
to effectuate a Business Combination prior to the expiration of such 18-month
period, but is unable to consummate such Business Combination within such
18-month period ("Extension Criteria"), then the Company will have an additional
six months in which to consummate that Business Combination contemplated by such
letter of intent or definitive agreement, as applicable. If the Company is
unable to do so by the expiration of the 24-month period from the consummation
of this offering, it will then liquidate. Upon notice from the Company, the
trustee of the Trust Fund will commence liquidating the investments constituting
the Trust Fund and will turn over the proceeds to the transfer agent for the
Common Stock for distribution to the Public Stockholders. The Company
anticipates that its instruction to the Trustee would be given promptly after
the expiration of the applicable 18-month or 24-month period.
A Public Stockholder shall be entitled to receive funds from the Trust Fund
only in the event of a liquidation of the Company or if he seeks to convert his
shares into cash in connection with a Business Combination which he voted
against and which is actually consummated by the Company. In no other
circumstances shall a Public Stockholder have any right or interest of any kind
to or in the Trust Fund.
6
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Securities offered................ 1,250,000 Units, at $6.00 per Unit, each Unit consisting
of one share of Common Stock, one Class A Warrant to
purchase one share of Common Stock, and one Class B
Warrant to purchase one share of Common Stock. The
securities comprising the Units will not be separately
transferable until 90 days after the date of this
Prospectus unless GKN informs the Company of its
decision to allow earlier separate trading, but in no
event will GKN allow separate trading of the securities
comprising the Units until the preparation of an audited
balance sheet of the Company reflecting receipt by the
Company of the proceeds of this offering. See
"Description of Securities" and "Underwriting."
Common Stock outstanding prior to
the offering.................... 625,000 shares
Common Stock to be outstanding
after the offering(1)........... 1,875,000 shares
Warrants:
Number to be outstanding after
the offering(2)................. 1,350,000 Class A Warrants
1,350,000 Class B Warrants
Exercise price.................... The exercise price of each Class A Warrant is $5.50 per
share and the exercise price of each Class B Warrant is
$7.50 per share, subject to adjustment in certain
circumstances. See "Description of Securities."
Exercise period................... The Warrants will become exercisable on the later of (i)
the consummation of a Business Combination or (ii) one
year from the date of this Prospectus and will expire at
5:00 p.m., New York City time, on , 2002.
Redemption........................ The Warrants are redeemable, each as a class, in whole
and not in part, at the option of the Company and with
the consent of the Underwriter, at a price of $.05 per
Warrant at any time after the Warrants become
exercisable upon not less than 30 days' prior written
notice, provided that the reported closing bid price of
the Common Stock equals or exceeds $8.50 per share, with
respect to the Class A Warrants, and $10.50 per share,
with respect to the Class B Warrants, for the 20
consecutive trading days ending on the third day prior
to the notice of redemption.
Proposed OTC Bulletin Board
Symbols......................... Units: UFACU
Common Stock: UFAC
Class A Warrants: UFACW
Class B Warrants: UFACZ
</TABLE>
- ------------------------
(1) Does not include (i) 2,700,000 shares of Common Stock reserved for issuance
upon the exercise of (A) currently outstanding Directors' Warrants (as
hereinafter defined) and (B) the Warrants, (ii) 187,500 shares of Common
Stock included in the Units subject to the Underwriters' over-allotment
option, (iii) 375,000 shares of Common Stock reserved for issuance upon the
exercise of the
7
<PAGE>
Warrants included in the Units subject to the Underwriters' over-allotment
option, (iv) 125,000 shares of Common Stock included in the Units reserved
for issuance upon exercise of the Unit Purchase Options, (v) 250,000 shares
of Common Stock reserved for issuance upon the exercise of the Warrants
included in the Units reserved for issuance upon exercise of the Unit
Purchase Options, or (vi) 187,500 shares of Common Stock reserved for
issuance upon exercise of options available for grant under the Company's
1996 Stock Option Plan. See "Management--Stock Option Plan," "Certain
Transactions," and "Underwriting."
(2) Includes 100,000 Class A Warrants and 100,000 Class B Warrants heretofore
issued to the Company's officers and directors (collectively, the
"Directors' Warrants"). The Directors' Warrants are identical to the Class A
Warrants and the Class B Warrants, respectively, except that the Directors'
Warrants are not redeemable and cannot be transferred or exercised until the
consummation of a Business Combination. See "Certain Transactions."
USE OF PROCEEDS
The Company intends to apply substantially all of the net proceeds of this
offering, which are estimated to be approximately $6,450,000 ($7,451,250 if the
Underwriters' over-allotment option is exercised in full), to acquire a Target
Business, including identifying and evaluating prospective acquisition
candidates, selecting a Target Business and structuring, negotiating and
consummating the Business Combination. The proceeds of this offering, after
payment of underwriting discounts and the Underwriters' non-accountable expense
allowance, will be $6,675,000 ($7,676,250 if the Underwriter's over-allotment
option is exercised in full). Ninety percent (90%) of such amount, or $6,007,500
($6,908,625 if the Underwriters' over-allotment option is exercised in full),
will be held in a trust account established with The Bank of New York until the
earlier of (i) the consummation of a Business Combination or (ii) the
liquidation of the Company.
That portion of the net proceeds of this offering that will not be held in
the Trust Fund, approximately $442,500 ($542,625 if the Underwriters'
over-allotment option is exercised in full), will be used for (i) the
performance of "due diligence" investigations of prospective acquisition
candidates, (ii) legal, accounting and other expenses attendant to such "due
diligence" investigations and to structuring, negotiating and consummating a
Business Combination, (iii) legal and accounting fees to be incurred in
connection with the Company's obligation to file periodic reports, proxy
statements and other informational material with the Securities and Exchange
Commission and (iv) the Company's general and administrative expenses, including
$7,500 per month payable to Unity Venture Capital Associates Ltd., an affiliate
of the Company's directors. See "Use of Proceeds", "Proposed Business" and
"Certain Transactions."
RISK FACTORS
The securities offered hereby involve a high degree of risk and are not
subject to the protection of the Rules of the Securities Act of 1933 relating to
"blank check" offerings. See "Risk Factors."
8
<PAGE>
SUMMARY FINANCIAL INFORMATION
The following data have been derived from the financial statements of the
Company and should be read in conjunction with those statements, which are
included in this Prospectus. The "As Adjusted" financial information gives
effect to the issuance of the securities in this offering as if such offering
had occurred at July 31, 1996.
<TABLE>
<CAPTION>
JULY 31, 1996
---------------------------
ACTUAL AS ADJUSTED(1)
---------- ---------------
<S> <C> <C>
Balance Sheet Data:
Total assets......................................................................... $ 250,563 $ 6,435,063(2)
Working capital (deficit)............................................................ $ (14,937) $ 6,435,063(2)
Total liabilities.................................................................... $ 265,500 $ --
Value of Common Stock subject to possible conversion................................. $ -- $ 1,201,899(3)
Stockholders' equity (deficit)....................................................... $ (14,937) $ 6,435,063(3)
</TABLE>
- ------------------------
(1) Gives effect to the sale of the Units offered hereby and the application of
the estimated net proceeds therefrom. See "Underwriting."
(2) Includes $6,007,500 being held in the Trust Fund which will be available to
the Company only upon the consummation of a Business Combination within the
time period described in this Prospectus. If a Business Combination is not
so consummated, the Company will be dissolved and the proceeds held in the
Trust Fund will be distributed to the Public Stockholders. See "Use of
Proceeds."
(3) In the event the Company consummates a Business Combination, the conversion
rights to the Public Stockholders may result in the conversion into cash of
up to approximately 19.99% of the aggregate number of Public Shares at a
per-share conversion price equal to the amount in the Trust Fund as of the
record date for the determination of stockholders entitled to vote on the
Business Combination (inclusive of any interest thereon) divided by the
number of Public Shares.
9
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THE COMPANY
BUSINESS OBJECTIVE
The Company was formed to serve as a vehicle to effect a merger, exchange of
capital stock, asset acquisition or other similar business combination (a
"Business Combination") with an operating business (a "Target Business"). The
business objective of the Company is to seek to effect a Business Combination
with a Target Business which the Company believes has significant growth
potential. The Company intends to utilize cash (to be derived from the proceeds
of this offering), equity, debt or a combination thereof in effecting a Business
Combination. The Company's efforts in identifying a prospective Target Business
will be limited to the following industries: (i) the manufacture of analytical
and controlling equipment, chemicals and allied products, electronic equipment
and medical instrumentation; (ii) health services (including HMOs, laboratories
and nursing homes); (iii) environmental services and products; (iv) engineering
and construction; (v) wholesale and retail distribution (including discount
operations) of home furnishings, office supplies, computes and related products,
medical equipment and supplies, apparel and accessories, automotive parts and
supplies and food and beverage products; (vi) internet and other new media
products and services; and (vii) communications and entertainment (the "Target
Industries").
To date, the Company's efforts have been limited to organizational
activities. The implementation of the Company's business plans are wholly
contingent upon the successful sale of the Units offered hereby. See "Proposed
Business."
The Company was organized under the laws of the State of Delaware on May 30,
1996. The Company's office is located at 245 Fifth Avenue, Suite 1500, New York,
New York 10016, and its telephone number is (212) 696-4282.
RISK FACTORS
The securities offered hereby involve a high degree of risk, including, but
not necessarily limited to, the several factors described below. Each
prospective investor should carefully consider the following risk factors
inherent in and affecting the business of the Company and this offering before
making an investment decision.
RECENTLY ORGANIZED COMPANY; LIMITED RESOURCES; NO PRESENT SOURCE OF REVENUES
The Company, which was organized on May 30, 1996 and is in the development
stage, has not as yet attempted to seek a Business Combination. Although the
Company's President and two of its three other directors have had prior
experience relating to the identification, evaluation and acquisition of a
Target Business, the Company has no such experience and, accordingly, there is
only a limited basis upon which to evaluate the Company's prospects for
achieving its intended business objectives. To date, the Company's efforts have
been limited primarily to organizational activities and this offering. The
Company has limited resources and has had no revenues to date. In addition, the
Company will not achieve any revenues (other than interest income upon the
proceeds of this offering) until, at the earliest, the consummation of a
Business Combination. Moreover, there can be no assurance that any Target
Business, at the time of the Company's consummation of a Business Combination,
or at any time thereafter, will derive any material revenues from its operations
or operate on a profitable basis. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
MODIFIED REPORT OF AUDITORS
The report of independent public accountants on the Company's financial
statements includes an explanatory paragraph with respect to the Company being
in its development stage, which raises substantial doubt about its ability to
continue as a going concern. See "Management's Discussion and Analysis of
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<PAGE>
Financial Condition and Results of Operations" and the Financial Statements of
the Company included elsewhere in this Prospectus.
POSSIBLE LIQUIDATION OF THE COMPANY; PER-SHARE LIQUIDATION PRICE LESS THAN
PUBLIC OFFERING PRICE; WARRANTS EXPIRE WORTHLESS IN EVENT OF LIQUIDATION
If the Company does not consummate a Business Combination within 18 months
from the consummation of this offering, or 24 months from the consummation of
this offering if the Extension Criteria have been satisfied, the Company will be
dissolved and will distribute to all Public Stockholders in proportion to their
respective equity interests in the Company, an aggregate sum equal to the amount
in the Trust Fund, inclusive of any interest thereon, plus any remaining net
assets of the Company. It is likely that, in the event of any such liquidation,
the per-share liquidation distribution will be less than the initial per-share
public offering price (assuming no value is attributed to the Warrants included
in the Units offered hereby) as a consequence of the expenses of this offering
and the anticipated costs which will be incurred by the Company in seeking a
Business Combination. If the Company were to expend all of the net proceeds of
this offering not held in the Trust Fund prior to liquidation, and without
taking into account interest, if any, earned on the Trust Fund, the per-share
liquidation price would be $4.81, or $1.19 less than the per-Unit offering price
of $6.00. The proceeds deposited in the Trust Fund could, however, become
subject to the claims of creditors of the Company which could be prior to the
claims of stockholders of the Company. Accordingly, there can be no assurance
that the per-share liquidation price will not be less than $4.81, plus interest.
There will be no distribution from the Trust Fund with respect to the Warrants
included in the Units and, accordingly, the Warrants will expire worthless in
the event of a liquidation prior to the consummation of a Business Combination.
The Initial Stockholders have waived their respective rights to participate in
any liquidation distribution with respect to the shares of Common Stock owned by
them immediately prior to this offering.
A Public Stockholder shall be entitled to receive funds from the Trust Fund
only in the event of a liquidation or in the event he seeks to convert his
shares into cash in connection with a Business Combination which he voted
against and which is actually consummated by the Company. In no other
circumstances shall a Public Stockholder have any right or interest of any kind
to and in the Trust Fund.
UNSPECIFIED INDUSTRY AND TARGET BUSINESS; UNASCERTAINABLE RISKS
To date, the Company has not selected any particular industry from the
Target Industries or any Target Business in which to concentrate its search for
a Business Combination. Accordingly, there is no current basis for prospective
investors to evaluate the possible merits or risks of the Target Business or the
particular industry in which the Company may ultimately operate. However, in
connection with seeking stockholder approval of a Business Combination, the
Company intends to furnish its stockholders with proxy solicitation materials
prepared in accordance with the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), which, among other matters, will include a description of the
operations of the Target Business and audited historical financial statements
thereof. To the extent the Company effects a Business Combination with a
financially unstable company or an entity in its early stage of development or
growth (including entities without established records of sales or earnings),
the Company will become subject to numerous risks inherent in the business
operations of financially unstable and early stage or potential emerging growth
companies. In addition, to the extent that the Company effects a Business
Combination with an entity in an industry characterized by a high level of risk,
the Company will become subject to the currently unascertainable risks of that
industry. An extremely high level of risk frequently characterizes certain
industries which experience rapid growth. Although Management will endeavor to
evaluate the risks inherent in a particular Target Business or industry, there
can be no assurance that the Company will properly ascertain or assess all such
significant risk factors. See "Proposed Business--Blank Check Offering."
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<PAGE>
DETERMINATION OF FAIR MARKET VALUE
The Fair Market Value of the Target Business will be determined by the Board
of Directors of the Company, unless the Board of Directors is not able to
independently determine that the Target Business has sufficient Fair Market
Value. Therefore, the Board of Directors has significant discretion in
determining whether a Target Business is suitable for a proposed Business
Combination and, since each of the directors of the Company owns shares of the
Company's Common Stock which will be released from escrow only if a Business
Combination is successfully consummated, the Board of Directors may have a
conflict of interest in determining the Fair Market Value of a Target Business.
The Board of Directors, however, has a fiduciary duty under the laws of Delaware
to act in the best interests of all of the Company's stockholders, particularly
when faced with a conflict of interest. See "Management--Conflicts of Interest."
UNCERTAIN STRUCTURE OF BUSINESS COMBINATION; REDUCTION IN STOCKHOLDER EQUITY
INTEREST
The structure of a Business Combination with a Target Business, which may
take the form of a merger, exchange of capital stock or asset acquisition,
cannot be presently determined since neither the Company's officers or directors
nor their respective affiliates have had any preliminary contacts, discussions
or understandings with representatives of any potential Target Business
regarding the possibility of a Business Combination. The Company may use the
funds held in the Trust Fund as part of the consideration for the Business
Combination or may issue additional Shares of Common Stock or shares of
Preferred Stock, or incur debt, or any combination thereof. In the event the
Company issues capital stock, the current equity interest of the stockholders
may be significantly reduced. See "Proposed Business-- Selection of Target
Business and Structuring a Business Combination."
DISCRETIONARY USE OF PROCEEDS; ABSENCE OF CURRENT SUBSTANTIVE DISCLOSURE
RELATING TO BUSINESS COMBINATIONS
The Company's Management has broad discretion with respect to the specific
application of the net proceeds of this offering, although substantially all of
the net proceeds of this offering are intended to be generally applied toward
effecting a Business Combination, subject to the limitation concerning Target
Industries discussed under "The Company--Business Objectives." As of the date of
this Prospectus, the Company has not identified a prospective Target Business
and, accordingly, investors in this offering do not currently have any
substantive information available for consideration of any Business Combination.
Notwithstanding the foregoing, in connection with seeking stockholder approval
of a Business Combination, the Company intends to furnish its stockholders with
proxy solicitation materials prepared in accordance with the Securities Exchange
Act of 1934, as amended ("Exchange Act") which will include a description of the
operations of the Target Business and audited historical financial statements
thereof. Such proxy solicitation materials will be filed with, and be subject to
the review of, the Securities and Exchange Commission ("Commission"). See "Use
of Proceeds" and "Proposed Business--Blank Check Offering."
LIMITED ABILITY TO EVALUATE TARGET BUSINESS MANAGEMENT
While the Company's ability to successfully effect a Business Combination
will be dependent upon the efforts of its officers and directors, the future
role of such persons, if any, in the Target Business cannot presently be stated
with any certainty. While it is possible that one or more of these persons will
remain associated in some capacity with the Company following a Business
Combination, it is unlikely that any of them will devote their full efforts to
the affairs of the Company subsequent thereto. Moreover, there can be no
assurance that such persons will have significant experience or knowledge
relating to the operations of the particular Target Business. Furthermore,
although the Company intends to closely scrutinize the management of a
prospective Target Business in connection with evaluating the desirability of
effecting a Business Combination, there can be no assurance that the Company's
assessment of such management will
12
<PAGE>
prove to be correct, especially in light of the possible inexperience of the
Company's officers and directors in evaluating certain types of businesses. In
addition, there can be no assurance that such future management will have the
necessary skills, qualifications or abilities to manage a public company
intending to embark on a program of business development. The Company may also
seek to recruit additional managers to supplement the incumbent management of
the Target Business. There can be no assurance that the Company will have the
ability to recruit such additional managers, or that such additional managers
will have the requisite skills, knowledge or experience necessary to enhance the
incumbent management. See "Proposed Business--'Blank Check' Offering."
INVESTOR DOES NOT RECEIVE PROTECTION OF CERTAIN RULES PROMULGATED UNDER THE
SECURITIES ACT OF 1933
This offering is not being conducted in accordance with Rule 419,
promulgated by the Commission under the Securities Act ("Rule 419"), which
regulates securities offerings by "blank check" companies. Since the Company's
net tangible assets will be in excess of $5,000,000 upon its receipt of the
proceeds of this offering (as supported through audited financial statements),
the Company is not subject to Rule 419. Rule 419 requires that the securities to
be issued and the funds received in a blank check offering be deposited and held
in an escrow account until an acquisition meeting specified criteria is
completed. Before the acquisition can be completed and before the funds and
securities can be released, the blank check company is required to update its
registration statement with a post-effective amendment and, after the effective
date thereof, the blank check company is required to furnish investors with a
prospectus (which forms a part of the post-effective amendment to its
registration statement) containing specified information, including a discussion
of the business and the audited financial statements of the proposed acquisition
candidate. According to Rule 419, the investors must have no less than 20 and no
more than 45 days from the effective date of the post-effective amendment to
decide whether to remain an investor or require the return of their investment
funds. Any investor not making such decision within such 45-day period is
automatically entitled to receive a return of his investment funds. Unless a
sufficient number of investors elect to remain investors, all of the deposited
funds in the escrow account must be returned to all investors and none of the
securities will be issued. Rule 419 further provides that if the blank check
company does not complete an acquisition meeting the specified criteria within
18 months, all of the deposited funds must be returned to investors.
SEEKING TO ACHIEVE PUBLIC TRADING MARKET THROUGH BUSINESS COMBINATION
While a prospective Target Business may deem a Business Combination with the
Company desirable for diverse reasons, a Business Combination may involve the
acquisition of, or merger with, a company which does not need substantial
additional capital but which desires to establish a public trading market for
its shares, while avoiding what it may deem to be adverse consequences of
undertaking a public offering itself, such as time delays, significant expense,
loss of voting control and compliance with various Federal and state securities
laws. See the risk factors herein entitled "Unspecified Industry and Target
Business; Unascertainable Risks" and "No Assurance of Public Market; Arbitrary
Determination of Offering Price."
PROBABLE LACK OF BUSINESS DIVERSIFICATION
While the Company may, under certain circumstances, seek to effect Business
Combinations with more than one Target Business, its initial Business
Combination must be with a Target Business which satisfies the Fair Market Value
criteria at the time of such acquisition. Consequently, it is likely that the
Company will have the ability to effect only a single Business Combination.
Accordingly, the prospects for the Company's success will be entirely dependent
upon the future performance of a single business. Unlike certain entities which
have the resources to consummate several Business Combinations of entities
operating in multiple industries or multiple areas of a single industry, it is
highly likely that the Company will not have the resources to diversify its
operations or benefit from the possible spreading of risks or offsetting of
losses. The Company's probable lack of diversification may subject the Company
to numerous
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<PAGE>
economic, competitive and regulatory developments, any or all of which may have
a substantial adverse impact upon the particular industry in which the Company
may operate subsequent to a Business Combination. In addition, by consummating a
Business Combination with only a single entity, the prospects for the Company's
success may become dependent upon the development or market acceptance of a
single or limited number of products, processes or services. Consequently, there
can be no assurance that the Target Business will prove to be commercially
viable. See "Proposed Business--'Blank Check' Offering."
DEPENDENCE UPON KEY PERSONNEL
The ability of the Company to successfully effect a Business Combination
will be largely dependent upon the efforts of Lawrence Burstein, the Company's
President. The Company has not entered into an employment agreement with Mr.
Burstein or obtained any "key man" life insurance on his life. The loss of Mr.
Burstein's services could have a material adverse effect on the Company's
ability to successfully achieve its business objectives. None of the Company's
officers and directors are required to commit their full time to the affairs of
the Company. Accordingly, conflicts of interest may arise in the allocation of
management time among various business activities. In addition, the success of
the Company may be dependent upon its ability to retain additional personnel
with specific knowledge or skills who may be necessary to assist the Company in
evaluating a potential Business Combination. There can be no assurance that the
Company will be able to retain such necessary additional personnel. See
"Proposed Business--Employees" and "Management--Conflicts of Interest."
COMPETITION
The Company expects to encounter intense competition from other entities
having a business objective similar to that of the Company. Many of these
entities are well-established and have extensive experience in connection with
identifying and effecting business combinations directly or through affiliates.
Many of these competitors possess greater financial, technical, personnel and
other resources than the Company and there can be no assurance that the Company
will have the ability to compete successfully. The Company's financial resources
will be relatively limited when contrasted with those of many of its
competitors. This inherent competitive limitation may compel the Company to
select certain less attractive Business Combination prospects. See "Proposed
Business--Selection of Target Business and Structuring a Business Combination."
CONFLICTS OF INTEREST
None of the Company's officers and directors are required to commit their
full time to the affairs of the Company; therefore, such persons may have
conflicts of interest in allocating management time among various business
activities. Certain of these persons may in the future become affiliated with
entities, including other "blank check" companies, engaged in business
activities similar to those intended to be conducted by the Company. Such
persons may have conflicts of interest in determining to which entity a
particular business opportunity should be presented. In order to reduce
potential conflicts of interest, the Company's officers and directors have
agreed that they will offer all suitable prospective Target Businesses to the
Company before any other company until the earlier of a Business Combination or
the liquidation of the Company. In general, officers and directors of a
corporation incorporated under the laws of the State of Delaware are required to
present certain business opportunities to such corporation. Accordingly, as a
result of multiple business affiliations, certain of the Company's officers and
directors may have similar legal obligations to present certain business
opportunities to multiple entities.
Conflicts of interest may also arise between the Company and Unity Venture
Capital Associates Ltd. ("Unity"). Pursuant to a general and administrative
services agreement, the Company is obligated to pay Unity a monthly fee of
$7,500 for general and administrative services, including the use of
approximately 500 square feet of office space in premises occupied by Unity. Mr.
Burstein is the President and principal
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<PAGE>
shareholder of Unity. Mr. Leben, as well as John Cattier and Barry Ridings, each
a director of the Company, are also shareholders of Unity. Dalessio, Millner &
Leben ("DML"), an accounting firm of which Mr. Leben is a partner, affords Unity
the use of such space at a monthly rental of $2,000. DML which has performed
bookkeeping, tax and accounting services for certain of the "blank check"
companies of which Messrs. Burstein, Cattier and Ridings, have been directors
and shareholders from their inceptions through the consummation of their
respective Business Combinations, is expected to perform similar services for
the Company at an aggregate cost of approximately $12,000 per annum. DML may
also perform financial "due diligence" services for the Company in connection
with its evaluation of prospective Target Businesses for a Business Combination.
In addition, Unity has made non-interest demand loans aggregating approximately
$40,500 to the Company as of the date of this Prospectus to cover expenses
related to this offering. The Company intends to repay these loans, as well as
both those accrued general and administrative expenses owed to Unity discussed
above, out of the proceeds of this offering. See "Management--Conflicts of
Interest" and "Certain Transactions."
POSSIBLE NEED FOR ADDITIONAL FINANCING
The Company has had no revenues to date and is entirely dependent upon the
proceeds of this offering to commence operations relating to selection of a
prospective Target Business. The Company will not achieve any revenues (other
than interest income derived from investment of the net proceeds of this
offering) until, at the earliest, the consummation of a Business Combination.
Although the Company believes that the proceeds of this offering will be
sufficient to effect a Business Combination, inasmuch as the Company has not yet
identified any prospective Target Business candidates, the Company cannot
ascertain with any degree of certainty the capital requirements for any
particular transaction. In the event that the net proceeds of this offering
prove to be insufficient for purposes of effecting a Business Combination
(because of the size of the Business Combination or the depletion of the net
proceeds in search of a Target Business), the Company will be required to seek
additional financing. There can be no assurance that such financing would be
available on acceptable terms, if at all. To the extent that such additional
financing proves to be unavailable when needed to consummate a particular
Business Combination, the Company would, in all likelihood, be compelled to
restructure the transaction or abandon that particular Business Combination and
seek an alternative Target Business candidate. In addition, in the event of the
consummation of a Business Combination, the Company may require additional
financing to fund the operations or growth of the Target Business. The failure
by the Company to secure such additional financing could have a material adverse
effect on the continued development or growth of the Target Business. See
"Proposed Business--'Blank Check' Offering--Selection of a Target Business and
Structuring of a Business Combination."
RISKS OF LEVERAGE
The Company may borrow money to consummate the Business Combination or
assume or refinance the indebtedness of the Target Business if the Company's
management deems it to be beneficial to the Company. There is no legal limit on
the amount of leverage that the Company may incur. Among the possible adverse
effects of any such leverage are: (i) if the Company's operating revenues after
the Business Combination were insufficient to pay debt services, there would be
a risk of default and foreclosure on the Company's assets; (ii) if a loan
agreement contains covenants that require the maintenance of certain financial
ratios or reserves, and any such covenant is breached without a waiver or
renegotiation of the terms of that covenant, then the lender could have the
right to accelerate the payment of the indebtedness even if the Company has made
all principal and interest payments when due; (iii) if the interest rate on a
loan fluctuated or the loan was payable on demand, the Company would bear the
risk of variations in the interest rate or demand for payment; and (iv) if the
terms of a loan did not provide for amortization prior to maturity of the full
amount borrowed and the "balloon" payment could not be refinanced at maturity on
acceptable terms, the Company might be required to seek additional financing
15
<PAGE>
and, to the extent that additional financing were not available on acceptable
terms, to liquidate its assets. See "Proposed Business--Selection of Target
Business and Structuring in Business Combination."
AUTHORIZATION OF ADDITIONAL SECURITIES
The Company's Certificate of Incorporation authorizes the issuance of
20,000,000 shares of Common Stock. Upon completion of this offering (assuming no
exercise of the Underwriter's over-allotment option), there will be 14,862,500
authorized but unissued shares of Common Stock available for issuance (after
appropriate reservation for the issuance of shares upon full exercise of the
Warrants, the Unit Purchase Option and the Directors' Warrants and for future
grants under the Company's 1996 Stock Option Plan). The Company's Board of
Directors has the power to issue any or all of such authorized but unissued
shares without stockholder approval. However, the Underwriting Agreement between
the Company and the Underwriters (the "Underwriting Agreement") prohibits the
Company from issuing shares of Common Stock prior to a Business Combination
other than as described in this Prospectus. Although the Company has no
commitments as of the date of this Prospectus to issue any additional shares of
Common Stock, the Company will, in all likelihood, issue a substantial number of
additional shares in connection with a Business Combination. To the extent that
additional shares of Common Stock are issued, dilution to the interests of the
Public Stockholders will occur. Additionally, if a substantial number of shares
of Common Stock are issued in connection with a Business Combination, a change
in control of the Company may occur which may affect, among other things, the
Company's ability to utilize its net operating loss carryforwards, if any.
Furthermore, the issuance of a substantial number of shares of Common Stock may
adversely affect prevailing market prices, if any, for the Common Stock and
could impair the Company's ability to raise additional capital through the sale
of its equity securities. See "Proposed Business--'Blank Check'
Offering--Selection of a Target Business and Structuring of a Business
Combination" and "Description of Securities."
The Company's Certificate of Incorporation also authorizes the issuance of
5,000 shares of "blank check" preferred stock ("Preferred Stock") with such
designation, rights and preferences as may be determined from time to time by
the Board of Directors. Accordingly, the Board of Directors is empowered,
without stockholder approval, to issue Preferred Stock with dividend,
liquidation, conversion, voting or other rights which could adversely affect the
voting power or other rights of the holders of the Company's Common Stock,
although the Underwriting Agreement prohibits the Company, prior to a Business
Combination, from issuing Preferred Stock which participates in any manner in
the proceeds of the Trust Fund, or which votes as a class with the Common Stock
on a Business Combination. The Company may issue some or all of such shares in
connection with a Business Combination. In addition, the Preferred Stock could
be utilized, under certain circumstances, as a method of discouraging, delaying
or preventing a change in control of the Company. Although the Company does not
currently intend to issue any shares of Preferred Stock, there can be no
assurance that the Company will not do so in the future. See "Proposed
Business--'Blank Check' Offering--Selection of a Target Business and Structuring
of a Business Combination" and "Description of Securities."
INVESTMENT COMPANY ACT CONSIDERATIONS
The regulatory scope of the Investment Company Act of 1940, as amended
("Investment Company Act"), which was enacted principally for the purpose of
regulating vehicles for pooled investments in securities, extends generally to
companies engaged primarily in the business of investing, reinvesting, owning,
holding or trading in securities. The Investment Company Act may, however, also
be deemed to be applicable to a company which does not intend to be
characterized as an investment company but which, nevertheless, engages in
activities which may be deemed to be within the definitional scope of certain
provisions of the Investment Company Act. The Company believes that its
anticipated principal activities, which will involve acquiring control of an
operating company, will not subject the Company to regulation under the
Investment Company Act. Nevertheless, there can be no assurance that the Company
will not be
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deemed to be an investment company, especially during the period prior to a
Business Combination. In the event the Company is deemed to be an investment
company, the Company may become subject to certain restrictions relating to the
Company's activities, including restrictions on the nature of its investments
and the issuance of securities. In addition, the Investment Company Act imposes
certain requirements on companies deemed to be within its regulatory scope,
including registration as an investment company, adoption of a specific form of
corporate structure and compliance with certain burdensome reporting,
recordkeeping, voting, proxy, disclosure and other rules and regulations. In the
event of characterization of the Company as an investment company, the failure
by the Company to satisfy regulatory requirements, whether on a timely basis or
at all, would, under certain circumstances, have a material adverse effect on
the Company. See "Proposed Business--Investment Company Act Considerations."
TAX CONSIDERATIONS
As a general rule, Federal and state tax laws and regulations have a
significant impact upon the structuring of business combinations. The Company
will evaluate the possible tax consequences of any prospective Business
Combination and will endeavor to structure the Business Combination so as to
achieve the most favorable tax treatment to the Company, the Target Business and
their respective stockholders. There can be no assurance, however, that the
Internal Revenue Service (the "IRS") or appropriate state tax authorities will
ultimately assent to the Company's tax treatment of a consummated Business
Combination. To the extent the IRS or state tax authorities ultimately prevail
in recharacterizing the tax treatment of a Business Combination, there may be
adverse tax consequences to the Company, the Target Business and their
respective stockholders. See "Proposed Business--'Blank Check' Offering--
Selection of a Target Business and Structuring of a Business Combination."
DIVIDENDS UNLIKELY
The Company has not paid any dividends on its Common Stock to date and does
not intend to pay dividends prior to the consummation of a Business Combination.
The payment of dividends after any such Business Combination, if any, will be
contingent upon the Company's revenues and earnings, if any, capital
requirements and general financial condition subsequent to consummation of a
Business Combination. The payment of any dividends subsequent to a Business
Combination will be within the discretion of the Company's then Board of
Directors. It is the present intention of the Board of Directors to retain all
earnings, if any, for use in the Company's business operations and, accordingly,
the Board does not anticipate declaring any dividends in the foreseeable future.
See "Description of Securities--Dividends."
CONTROL BY PRESENT STOCKHOLDERS
Upon consummation of this offering, the Initial Stockholders, including the
present management of the Company, will collectively own approximately 33.3% of
the then-issued and outstanding shares of Common Stock (assuming no exercise of
the Underwriter's over-allotment option). In the election of directors,
stockholders are not entitled to cumulate their votes for nominees. Accordingly,
it is likely that the Initial Stockholders will be able to elect all of the
Company's directors and otherwise direct the affairs of the Company. See
"Principal Stockholders," "Certain Transactions" and "Description of
Securities."
NO ASSURANCE OF PUBLIC MARKET; ARBITRARY DETERMINATION OF OFFERING PRICE
Prior to this offering, there has been no public trading market for the
Units, Common Stock, Class A Warrants or Class B Warrants. The initial public
offering price of the Units and the exercise prices of the Class A Warrants and
the Class B Warrants have been arbitrarily determined by negotiations between
the Company and the Underwriters, and bear no relationship to such established
valuation criteria as assets, book value or prospective earnings. There is no
assurance that a regular trading market will develop for the Company's
securities or that, if developed, that any such market will be sustained. The
Underwriters have advised the Company that they currently intend to serve as
market makers in the Company's
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securities but are not obligated to do so and any market making may be
discontinued at any time. See "Underwriting."
OTC BULLETIN BOARD
The Company's securities will be traded in the over-the-counter market. It
is anticipated that they will be quoted on the OTC Bulletin Board, an NASD
sponsored and operated inter-dealer automated quotation system for equity
securities not included in The Nasdaq Stock Market, as well as in the NQB Pink
Sheets published by National Quotation Bureau Incorporated. The OTC Bulletin
Board was introduced as an alternative to "pink sheet" trading of
over-the-counter securities. Although the Company believes that the OTC Bulletin
Board has been recognized by the brokerage community as an acceptable
alternative to the NQB Pink Sheets, there can be no assurance that the liquidity
and prices of the Units in the secondary market will not be adversely affected.
See "Underwriting."
IMMEDIATE DILUTION; DISPARITY OF CONSIDERATION
This offering involves an immediate and substantial dilution of $2.57 per
share (approximately 43.0% of the public offering price) between the pro forma
net tangible book value per share after the offering of $3.43 and the public
offering price of $6.00 per share allocable to the share of Common Stock
included in the Units (assuming no value is attributed to the Warrants included
in the Units). The Initial Stockholders acquired their shares of Common Stock at
a nominal price and, accordingly, new investors will bear virtually all of the
risks inherent in an investment in the Company. See "Dilution."
SHARES ELIGIBLE FOR FUTURE SALE
All of the 625,000 shares of Common Stock issued and outstanding as of the
date of this Prospectus are "restricted securities," as that term is defined
under Rule 144 ("Rule 144"), promulgated by the Commission under the Securities
Act. None of such shares will be eligible for sale under Rule 144 prior to May
30, 1998. Notwithstanding such eligibility, the Affiliated Initial Stockholders
have agreed not to sell their respective shares of Common Stock prior to six
months following the consummation of a Business Combination and the
Non-Affiliated Initial Stockholders have agreed not to sell their respective
shares of Common Stock, which were acquired prior to the date of this
Prospectus, prior to the occurrence of a Business Combination.
An additional 200,000 shares of Common Stock, which have been registered
pursuant to the Registration Statement of which this Prospectus forms a part,
are issuable upon the exercise of the Directors' Warrants. The Directors'
Warrants, however, will not be transferable or exercisable until the
consummation of a Business Combination.
No prediction can be made as to the effect, if any, that sales of such
625,000 restricted shares of Common Stock and such 200,000 registered shares of
Common Stock, or the availability of such shares for sale, will have on the
market prices prevailing from time to time. Nevertheless, the possibility that
substantial amounts of Common Stock may be sold in the public market may
adversely affect prevailing market prices for the Common Stock and could impair
the Company's ability to raise capital through the sale of its equity
securities. See "Certain Transactions" and "Shares Eligible for Future Sale."
CURRENT PROSPECTUS AND STATE BLUE SKY REGISTRATION REQUIRED IN CONNECTION WITH
EXERCISE OF WARRANTS
Beginning on the later of the consummation of a Business Combination or one
year from the date of this Prospectus, the Company will be able to issue shares
of its Common Stock upon exercise of the Warrants only if there is then a
current prospectus relating to the Common Stock issuable upon the exercise of
the Warrants under an effective registration statement filed with the
Commission, and only if such Common Stock is qualified for sale or exempt from
qualification under applicable state securities laws
18
<PAGE>
of the jurisdictions in which the various holders of Warrants reside. Although
the Company has agreed to use its best efforts to meet such requirements, there
can be no assurance that the Company will be able to do so. The Warrants may be
deprived of any value and the market for the Warrants may be limited if a then
current prospectus covering the Common Stock issuable upon the exercise of the
Warrants is not effective pursuant to an effective registration statement or if
such Common Stock is not qualified or exempt from qualification in the
jurisdictions in which the holders of the Warrants reside. See "Description of
Securities."
OUTSTANDING WARRANTS
In connection with this offering, as part of the Units, the Company will be
issuing Warrants to purchase 2,500,000 shares of Common Stock (2,875,000 if the
Underwriters' over-allotment option is exercised in full). Additionally, the
Company issued Directors' Warrants to purchase 200,000 shares of Common Stock
and will issue the Unit Purchase Option entitling the Underwriter to purchase up
to 375,000 shares of Common Stock. To the extent shares of Common Stock are to
be issued by the Company to effect a Business Combination, the potential for the
issuance of substantial numbers of additional shares upon exercise of these
warrants could increase the cost to the Company of the Target Business (in terms
of number of shares required to be issued). See "Description of
Securities--Warrants."
POTENTIAL ADVERSE EFFECT OF REDEMPTION OF WARRANTS
The Warrants may be redeemed by the Company, at a price of $.05 per Warrant,
at any time they are exercisable, subject to not less than 30 days prior written
notice to the holders thereof, provided that the last sale price of the Common
Stock had been at least $8.50 per share for the redemption of the Class A
Warrants and at least $10.50 per share for the redemption of the Class B
Warrants, respectively, for the 20 consecutive trading days ending on the third
day prior to the day on which notice is given. Notice of the redemption of the
Warrants could force the holders thereof to exercise the Warrants and pay the
exercise price at a time when it may be disadvantageous for them to do so to
sell the Warrants, or accept the redemption price which is likely to be
substantially less than the market value of the Warrants at the time of
redemption. See "Description of Securities--Warrants."
USE OF PROCEEDS
The net proceeds to the Company, after offering expenses and underwriting
discounts of approximately $1,050,000 ($1,173,750 if the Underwriters'
over-allotment option is exercised in full), from the sale of the Units offered
hereby are estimated to be $6,450,000 ($7,451,250 if the Underwriters'
over-allotment option is exercised in full). The Company will use substantially
all of the net proceeds of this offering to acquire a Target Business, including
identifying and evaluating prospective acquisition candidates, selecting the
Target Business, and structuring, negotiating and consummating the Business
Combination. The Company will not acquire a Target Business unless it satisfies
the Minimum Valuation Standard at the time of such acquisition. To the extent
that securities of the Company are used in whole or in part as consideration to
effect a Business Combination, the balance of the net proceeds of this offering
not theretofore expended will be used to finance the operations of the Target
Business.
The proceeds of this offering, after payment of underwriting discounts and
the Underwriters' non-accountable expense allowance, will be $6,675,000
($7,676,250 if the Underwriters' over-allotment option is exercised in full).
Ninety percent (90%) of such amount, or $6,007,500 ($6,908,625 if the
Underwriters' over-allotment option is exercised in full), will be placed in the
Trust Fund to be maintained by The Bank of New York, , New York, New
York , as trustee, until the earlier of (i) the consummation of a
Business Combination or (ii) the liquidation of the Company. Therefore, unless
and until a Business Combination is consummated, the proceeds held in the Trust
Fund will not be available for use by the Company for any expenses related to
this offering or expenses which may be incurred by the Company related to the
investigation and selection of a Target Business and the negotiation of an
19
<PAGE>
agreement to acquire the Target Business. The trustee of the Trust Fund is only
authorized to invest the funds in certain government, quasi-government and
investment grade debt securities and to disburse the funds as indicated above;
it has no other duties or obligations.
Approximately $50,000 as of the date of this Prospectus has been advanced by
Unity on a non-interest bearing demand basis, for payment on the Company's
behalf of certain expenses of this offering. Such advances will be repaid out of
the gross proceeds of this offering.
The net proceeds not held in the Trust Fund, approximately $442,500
($542,625 if the Underwriters' over-allotment option is exercised in full), will
be used for, or in connection with (i) the performance of "due diligence"
investigations of prospective acquisition candidates, (ii) legal, accounting and
other expenses attendant to such "due diligence" investigations and to
structuring, negotiating and consummating a Business Combination, and (iii)
legal and accounting fees to be incurred in connection with the Company's
obligation to file periodic reports, proxy statements and other informational
material with the Securities and Exchange Commission. In addition, the Company
has been obligated to pay to Unity, since June 1, 1996, a monthly fee of $7,500
for general and administrative expenses. Such general and administrative
expenses have been accrued and will be paid to Unity out of that portion of the
net proceeds not held in the Trust Fund. See "Certain Transactions."
Proceeds of this offering not immediately required for the purposes set
forth above will be invested in United States Government securities or other
high-quality, short-term interest-bearing investments, provided, however, that
the Company will attempt to invest the net proceeds in a manner which does not
result in the Company being deemed to be an investment company under the
Investment Company Act. The Company believes that, in the event a Business
Combination is not effected during the 18-month period from the date of the
consummation of this offering, unless extended to 24 months as discussed
elsewhere herein, and to the extent that a significant portion of the net
proceeds is not used in evaluating various prospective Target Businesses, the
interest income derived from investment of the net proceeds during such period
will be sufficient to defray continuing general and administrative expenses, as
well as costs relating to compliance with securities laws and regulations
(including associated professional fees).
A Public Stockholder shall be entitled to receive funds from the Trust Fund
only in the event of a liquidation or if he seeks to convert his shares into
cash in connection with a Business Combination which he voted against and which
is actually consummated by the Company. In no other circumstances shall a Public
Stockholder have any right or interest of any kind or in the Trust Fund.
20
<PAGE>
DILUTION
The difference between the public offering price per share of Common Stock
(assuming no value is attributed to the Warrants included in the Units) and the
pro forma net tangible book value per share of Common Stock of the Company after
this offering constitutes the dilution to investors in this offering. Net
tangible book value per share is determined by dividing the net tangible book
value of the Company (total tangible assets less total liabilities) by the
number of outstanding shares of Common Stock.
At July 31, 1996, the net tangible book value of the Company was $(264,937),
or $(.42) per share of Common Stock. After giving effect to the sale of
1,250,000 shares of Common Stock included in the Units offered hereby and the
application of the estimated net proceeds therefrom, the pro forma net tangible
book value of the Company at July 31, 1996 would have been $6,435,063, or $3.43
per share of Common Stock, representing an immediate increase in net tangible
book value of $3.85 per share to existing stockholders and an immediate dilution
of $2.57 per share to new investors. The following table illustrates the
foregoing information with respect to dilution to new investors on a per-share
basis (assuming no value is attributed to the Warrants included in the Units):
<TABLE>
<S> <C> <C>
Public offering price per share of Common Stock.................... $ 6.00
Net tangible book value before this offering..................... $ (.42)
Increase attributable to new investors........................... 3.85
---------
Pro forma net tangible book value after this offering.............. 3.43
---------
Dilution to new investors.......................................... $ 2.57
---------
---------
</TABLE>
The following table sets forth, with respect to Initial Stockholders and new
investors, a comparison of the number of shares of Common Stock acquired from
the Company, the percentage ownership of such shares, the total consideration
paid, the percentage of total consideration paid and the average price per
share:
<TABLE>
<CAPTION>
SHARES PURCHASED(1) TOTAL CONSIDERATION AVERAGE
----------------------- ------------------------- PRICE PER
AMOUNT PERCENTAGE AMOUNT PERCENTAGE SHARE
---------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Initial Stockholders............................... 625,000 33.3% $ 125 --% $ .0001
New Investors...................................... 1,250,000 66.7% $ 7,500,000 100.0% $ 6.00
---------- ----- ------------ -----
Total.......................................... 1,875,000 100.0% $ 7,500,125 100.0%
---------- ----- ------------ -----
---------- ----- ------------ -----
</TABLE>
- ------------------------
(1) The above table assumes no exercise of the Underwriters' over-allotment
option. If the Underwriters' over-allotment option is exercised in full, the
new investors will have paid $8,625,000 for 1,437,500 shares of Common
Stock, representing virtually 100.0% of the total consideration for
approximately 69.7% of the total number of shares of Common Stock then
outstanding. See "Underwriting."
21
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company at July 31,
1996 and as adjusted to give effect to the sale of the Units being offered
hereby and the application of the estimated net proceeds therefrom:
<TABLE>
<CAPTION>
ACTUAL AS ADJUSTED
---------- ------------
<S> <C> <C>
Stockholders' equity:
Common Stock, subject to possible conversion, 249,875 shares at conversion value... $ -- $ 1,201,899
Preferred Stock, $.01 par value, 5,000 shares authorized; none issued.............. -- --
Common Stock, $.0001 par value, 20,000,000 shares authorized; 625,000 shares issued
and outstanding; 1,625,125 shares issued and outstanding (excluding 249,875
shares subject to possible conversion), as adjusted.............................. 63 163
Capital in excess of par value..................................................... -- 5,248,001
Deficit accumulated during development stage....................................... (15,000) (15,000)
---------- ------------
Total stockholders' equity....................................................... $ (14,937) $ 6,435,063
---------- ------------
---------- ------------
</TABLE>
22
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company, a development stage entity, was formed on May 30, 1996 to serve
as a vehicle to effect a merger, exchange of capital stock, asset acquisition or
other similar business combination (a "Business Combination") with an operating
business (a "Target Business") which the Company believes has significant growth
potential. The Company intends to utilize cash (to be derived from the proceeds
of this offering), equity, debt or a combination thereof in effecting a Business
Combination. The Company's efforts in identifying a prospective Target Business
will be limited to the following industries: (i) the manufacture of analytical
and controlling equipment, chemicals and allied products, electronic equipment
and medical instrumentation; (ii) health services (including HMOs, laboratories
and nursing homes); (iii) environmental services and products; (iv) engineering
and construction; (v) wholesale and retail distribution (including discount
operations) of home furnishings, office supplies, computers and related
products, medical equipment and supplies, apparel and accessories, automotive
parts and supplies and food and beverage products; (vi) internet and other new
media products and services; and (vii) communications and entertainment. It has
neither engaged in any operations nor generated any revenues to date. The
Company's entire activity since its inception has been to prepare for its
proposed fundraising through an offering of equity securities as contemplated by
this Prospectus.
The Company's expenses of $15,000 through July 31, 1996 all relate to
general and administrative expenses provided by Unity. In addition, since May
1996, $40,500 has been advanced by Unity, on a non-interest bearing basis, for
payment on the Company's behalf of certain expenses of this offering. Such
amounts will be paid to Unity out of that portion of the net proceeds not held
in the Trust Fund.
The net proceeds to the Company, after offering expenses and underwriting
discounts of approximately $1,050,000 ($1,173,750 if the Underwriters'
over-allotment option is exercised in full), from the sale of the Units offered
hereby are estimated to be $6,450,000 ($7,451,250 if the Underwriters'
over-allotment option is exercised in full). The Company will use substantially
all of the net proceeds of this offering to acquire a Target Business, including
identifying and evaluating prospective acquisition candidates, selecting the
Target Business, and structuring, negotiating and consummating the Business
Combination. The Company will not acquire a Target Business unless it satisfies
the Fair Market Value criteria at the time of such acquisition. To the extent
that securities of the Company are used in whole or in part as consideration to
effect a Business Combination, the balance of the net proceeds of this offering
not theretofore expended will be used to finance the operations of the Target
Business.
The net proceeds not held in the Trust Fund, approximately $442,500
($542,625 if the Underwriters' over-allotment option is exercised in full), will
be used for, or in connection with (i) the performance of "due diligence"
investigations of prospective acquisition candidates, (ii) legal, accounting and
other expenses attendant to such "due diligence" investigations and to
structuring, negotiating and consummating a Business Combination, and (iii)
legal and accounting fees to be incurred in connection with the Company's
obligation to file periodic reports, proxy statements and other informational
material with the Securities and Exchange Commission. In addition, the Company
has been obligated to pay to Unity, since June 1, 1996, a monthly fee of $7,500
for general and administrative expenses. Such general and administrative
expenses have been accrued and will be paid to Unity out of that portion of the
net proceeds not held in the Trust Fund. See "Certain Transactions."
The report of independent public accountants on the Company's financial
statements includes an explanatory paragraph with respect to the Company being
in its development stage, which raises substantial doubt about its ability to
continue as a going concern.
23
<PAGE>
PROPOSED BUSINESS
INTRODUCTION
The Company was formed to serve as a vehicle for the acquisition of a Target
Business which the Company believes has significant growth potential. The
Company intends to utilize cash (derived from the proceeds of this offering),
equity, debt or a combination of these in effecting a Business Combination. The
Company's efforts in identifying a prospective Target Business will be limited
to the Target Industries. While the Company may, under certain circumstances,
seek to effect Business Combinations with more than one Target Business, the
Company will, in all likelihood, have the ability, as a result of its limited
resources, to effect only a single Business Combination. The Company may effect
a Business Combination with a Target Business which may be financially unstable
or in its early stages of development or growth.
"BLANK CHECK" OFFERING
BACKGROUND. As a result of Management's broad discretion with respect to
the specific application of the net proceeds of this offering, this offering can
be characterized as a "blank check" offering. Although substantially all of the
net proceeds of this offering are intended to be generally applied toward
effecting a Business Combination, subject to the limitation concerning Target
Industries discussed under "--Introduction", such proceeds are not otherwise
being designated for any more specific purposes. Accordingly, prospective
investors will invest in the Company without an opportunity to evaluate the
specific merits or risks of any one or more Business Combinations. A Business
Combination may involve the acquisition of, or merger with, a company which does
not need substantial additional capital but which desires to establish a public
trading market for its shares, while avoiding what it may deem to be adverse
consequences of undertaking a public offering itself, such as time delays,
significant expense, loss of voting control and compliance with various Federal
and state securities laws.
UNSPECIFIED INDUSTRY AND TARGET BUSINESS. To date, the Company has not
selected any particular industry from the Target Industries or any Target
Business in which to concentrate its search for a Business Combination.
Accordingly, there is no basis for investors in this offering to evaluate the
possible merits or risks of the Target Business or the particular industry in
which the Company may ultimately operate. To the extent the Company effects a
Business Combination with a financially unstable company or an entity in its
early stage of development or growth (including entities without established
records of sales or earnings), the Company will become subject to numerous risks
inherent in the business and operations of financially unstable and early stage
or potential emerging growth companies. In addition, to the extent that the
Company effects a Business Combination with an entity in an industry
characterized by a high level of risk, the Company will become subject to the
currently unascertainable risks of that industry. An extremely high level of
risk frequently characterizes certain industries which experience rapid growth.
In addition, although Management will endeavor to evaluate the risks inherent in
a particular industry or Target Business, there can be no assurance that the
Company will properly ascertain or assess all significant risk factors.
PROBABLE LACK OF BUSINESS DIVERSIFICATION. While the Company may, under
certain circumstances, seek to effect Business Combinations with more than one
Target Business, its initial Business Combination must be with a Target Business
which satisfies the Minimum Valuation Standard at the time of such acquisition.
Consequently, it is likely that the Company will have the ability to effect only
a single Business Combination. Accordingly, the prospects for the Company's
success will be entirely dependent upon the future performance of a single
business. Unlike certain entities which have the resources to consummate several
Business Combinations of entities operating in multiple industries or multiple
areas of a single industry, it is highly likely that the Company will not have
the resources to diversify its operations or benefit from the possible spreading
of risks or offsetting of losses. The Company's probable lack of diversification
may subject the Company to numerous economic, competitive and regulatory
developments, any or all of which may have a substantial adverse impact upon the
particular industry in which the
24
<PAGE>
Company may operate subsequent to a Business Combination. In addition, by
consummating a Business Combination with only a single entity, the prospects for
the Company's success may become dependent upon the development or market
acceptance of a single or limited number of products, processes or services.
Accordingly, notwithstanding the possibility of capital investment in and
management assistance to the Target Business by the Company, there can be no
assurance that the Target Business will prove to be commercially viable. Prior
to the consummation of a Business Combination, the Company has no intention of
either loaning any of the proceeds of this offering to any company or purchasing
a minority equity interest in any company.
OPPORTUNITY FOR STOCKHOLDER EVALUATION OR APPROVAL OF BUSINESS
COMBINATIONS. The investors in this offering will, in all likelihood, neither
receive nor otherwise have the opportunity to evaluate any financial or other
information which will be made available to the Company in connection with
selecting a potential Business Combination until after the Company has entered
into an agreement to effectuate a Business Combination. Such agreement to
effectuate a Business Combination, however, will be subject to stockholder
approval as discussed elsewhere herein. As a result, investors in this offering
will be almost entirely dependent on the judgment of Management in connection
with the selection and ultimate consummation of a Business Combination. In
connection with seeking stockholder approval of a Business Combination, the
Company intends to furnish its stockholders with proxy solicitation materials
prepared in accordance with the Exchange Act, which, among other matters, will
include a description of the operations of the Target Business and audited
historical financial statements thereof.
Under the Delaware General Corporation Law, various forms of Business
Combinations can be effected without stockholder approval. In addition, the form
of Business Combination will have an impact upon the availability of dissenters'
rights (i.e., the right to receive fair payment with respect to the Company's
Common Stock) to stockholders disapproving the proposed Business Combination.
Under current applicable laws, only a merger, consolidation or share exchange
may give rise to a stockholder vote and to dissenters' rights. Nevertheless, the
Company will afford to investors in this offering the right to approve any
Business Combination, irrespective of whether such approval would be required
under applicable Delaware law. In the event, however, that 20% or more in
interest of Public Stockholders vote against approval of any Business
Combination, the Company will not consummate such Business Combination. All of
the Initial Stockholders, including all of the officers and directors of the
Company, have agreed to vote their respective shares of Common Stock in
accordance with the vote of the majority in interest of all Public Stockholders
with respect to any Business Combination.
LIMITED ABILITY TO EVALUATE TARGET BUSINESS' MANAGEMENT. While the
Company's ability to successfully effect a Business Combination will be
dependent upon the efforts of its officers and directors, the future role of
such persons, if any, in the Target Business cannot presently be stated with any
certainty. While it is possible that one or more of these persons will remain
associated in some capacity with the Company following a Business Combination,
it is unlikely that any of them will devote their full efforts to the affairs of
the Company subsequent thereto. Moreover, there can be no assurance that such
persons will have significant experience or knowledge relating to the operations
of the particular Target Business. Furthermore, although the Company intends to
closely scrutinize the management of a prospective Target Business in connection
with evaluating the desirability of effecting a Business Combination, there can
be no assurance that the Company's assessment of such management will prove to
be correct, especially in light of the possible inexperience of the Company's
officers and directors in evaluating certain types of businesses. In addition,
there can be no assurance that such future management will have the necessary
skills, qualifications or abilities to manage a public company intending to
embark on a program of business development. The Company may also seek to
recruit additional managers to supplement the incumbent management of the Target
Business. There can be no assurance that the Company will have the ability to
recruit such additional managers, or that such additional managers will have the
requisite skills, knowledge or experience necessary to enhance the incumbent
management.
25
<PAGE>
SELECTION OF A TARGET BUSINESS AND STRUCTURING OF A TARGET
COMBINATION. Subject to the limitation that a Target Business be within the
Target Industries, Management of the Company will have virtually unrestricted
flexibility in identifying and selecting a prospective Target Business. In
evaluating a prospective Target Business, Management will consider, among other
factors, the following:
- financial condition and results of operation;
- growth potential;
- experience and skill of management and availability of additional
personnel;
- capital requirements;
- competitive position;
- stage of development of the products, processes or services;
- degree of current or potential market acceptance of the products,
processes or services;
- proprietary features and degree of intellectual property or other
protection of the products, processes or services;
- regulatory environment of the industry; and
- costs associated with effecting the Business Combination.
The foregoing criteria are not intended to be exhaustive; any evaluation
relating to the merits of a particular Business Combination will be based, to
the extent relevant, on the above factors as well as other considerations deemed
relevant by Management in connection with effecting a Business Combination
consistent with the Company's business objective. In connection with its
evaluation of a prospective Target Business, Management anticipates that it will
conduct an extensive due diligence review which will encompass, among other
things, meetings with incumbent management and inspection of facilities, as well
as review of financial or other information which will be made available to the
Company.
The time and costs required to select and evaluate a Target Business
(including conducting a due diligence review) and to structure and consummate
the Business Combination (including negotiating relevant agreements and
preparing requisite documents for filing pursuant to applicable securities laws
and state corporation laws) cannot presently be ascertained with any degree of
certainty. Mr. Burstein, the Company's President and principal stockholder,
intends to devote approximately 30% of his time to the affairs of the Company
and, accordingly, consummation of a Business Combination may require a greater
period of time than if such persons devoted their full time to the Company's
affairs. Any costs incurred in connection with the identification and evaluation
of a prospective Target Business with which a Business Combination is not
ultimately consummated will result in a loss to the Company and reduce the
amount of capital available to otherwise complete a Business Combination.
26
<PAGE>
PRIOR INVOLVEMENT OF PRINCIPALS IN "BLANK CHECK" COMPANIES
The officers and directors of the Company (other than Mr. Norman Leben) have
held similar positions in seven other "blank check" companies, each of which has
consummated a Business Combination as of the date of this Prospectus. Certain
information with respect to each such Business Combination is set forth below:
<TABLE>
<CAPTION>
DATE OF BUSINESS TRADING MARKET AND
NAME OF TARGET BUSINESS COMBINATION NATURE OF BUSINESS TICKER SYMBOL
- --------------------------------- ------------------ ---------------------------------------- ------------------
<S> <C> <C> <C>
Bloc Development Corp.(1) March 1988 Software development NYSE (GML)
Polyvision Corporation April 1990 Manufacture and sale of vision AMEX (PLI)
projection systems, architectural
building panels, modular partitions
and catalog office products
T-HQ Inc. August 1991 Design and marketing of Nintendo and OTC Bulletin Board
SEGA games (TOYH)
SubMicron Systems August 1993 Semi-conductor capital equipment NASDAQ-NMS (SUBM)
manufacturer
Alliance Entertainment Corp. November 1993 Distributor of prerecorded music, NYSE (CDS)
accessories and entertainment related
products
USCI Inc. May 1995 Centralized automated computer-based NASDAQ-NMS (USCM)
cellular telephone activation systems
Brazil Fast Food Corp. March 1996 Owner and operator of hamburger fast NASDAQ SmallCap
food restaurants in Brazil (BOBS)
</TABLE>
- ------------------------
(1) Bloc Development Corp. was acquired by Global Direct Mail Corp. in 1995.
SOURCES OF TARGET BUSINESSES
The Company anticipates that various Target Business candidates will be
brought to its attention from various unaffiliated sources, including securities
broker-dealers, investment bankers, venture capitalists, bankers, other members
of the financial community, and affiliated sources, including, possibly, the
Company's officers, directors and their affiliates, who may present solicited or
unsolicited proposals. While the Company does not presently anticipate engaging
the services of professional firms that specialize in business acquisitions on
any formal basis, the Company may engage such firms in the future, in which
event the Company may pay a finder's fee or other compensation. In no event,
however, will the Company pay a finder's fee or commission to officers or
directors of the Company or any entity with which they are affiliated for such
service. See "Management--Conflicts of Interest."
COMPETITION
In identifying, evaluating and selecting a Target Business, the Company
expects to encounter intense competition from other entities having a business
objective similar to that of the Company. Many of these entities are well
established and have extensive experience in connection with identifying and
effecting business combinations directly or through affiliates. Many of these
competitors possess greater technical, human and/or other resources than the
Company and the Company's financial resources will be relatively limited when
contrasted with those of many of these competitors. This inherent competitive
limitation may
27
<PAGE>
give others an advantage in pursuing the acquisition of certain Target
Businesses. Further, the Company's obligation to seek stockholder approval of a
Business Combination may delay the consummation of a transaction; and the
Company's obligation in certain circumstances to convert into cash shares of
Common Stock held by Public Stockholders may reduce the resources available to
the Company for a Business Combination or for other corporate purposes. Either
of these obligations may place the Company at a competitive disadvantage in
successfully negotiating a Business Combination. Management believes, however,
that the Company's status as a public entity and its potential access to the
United States public equity markets may give the Company a competitive advantage
over privately-held entities having a similar business objective to that of the
Company in acquiring a Target Business with significant growth potential on
favorable terms.
UNCERTAINTY OF COMPETITIVE ENVIRONMENT OF TARGET BUSINESS
In the event that the Company succeeds in effecting a Business Combination,
the Company will, in all likelihood, become subject to intense competition from
competitors of the Target Business. In particular, certain industries which
experience rapid growth frequently attract an increasingly larger number of
competitors, including competitors with increasingly greater financial,
marketing, technical and other resources than the initial competitors in the
industry. The degree of competition characterizing the industry of any
prospective Target Business cannot presently be ascertained. There can be no
assurance that, subsequent to a Business Combination, the Company will have the
resources to compete effectively, especially to the extent that the Target
Business is in a high-growth industry.
FACILITIES
The Company presently occupies approximately 500 square feet of office space
in premises occupied by Unity. The cost for such space is included in a
$7,500-per-month fee charged by Unity for general and administrative services.
The Company believes, based upon rents and fees for similar services in the New
York City metropolitan area, that the fee charged by Unity is at least as
favorable as it could have obtained from an unaffiliated person. See "Certain
Transactions."
EMPLOYEES
As of the date of this Prospectus, the Company, in addition to its two
officers, has one part-time employee who is employed in an administrative
capacity.
PERIODIC REPORTING AND AUDITED FINANCIAL STATEMENTS
The Company has registered its securities under the Exchange Act and
therefore has certain reporting obligations, including the requirement that it
file annual and quarterly reports with the Commission. In accordance with the
requirements of the Exchange Act, the Company intends to furnish to its
stockholders Annual Reports containing financial statements audited and reported
on by its independent accountants.
The Company will not acquire a Target Business if audited financial
statements cannot be obtained for such Target Business. Additionally, management
will provide the Public Stockholders with audited financial statements (prepared
in accordance with generally accepted accounting principles) of the prospective
Target Business as part of the proxy solicitation materials sent to the Public
Stockholders to assist them in assessing the Target Business. Management
believes that the requirement of having available audited financial statements
for the Target Business will not materially limit the pool of potential Target
Businesses available for acquisition.
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<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The current directors and officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------- --- -------------------------------------
<S> <C> <C>
Lawrence Burstein 53 President, Treasurer and Director
John Cattier 62 Director
Barry Ridings 43 Director
Norman Leben 36 Secretary and Director
</TABLE>
LAWRENCE BURSTEIN has been President, Treasurer and a director of the
Company since its inception. Since March 1996, Mr. Burstein has been Chairman of
the Board and a principal shareholder of Unity. Mr. Burstein is a director of
five public companies, being, respectively, TOYH, USCM, BOBS, CAS Medical
Systems, Inc., engaged in the manufacture and marketing of blood pressure
monitors and other medical products principally for the neonatal market, and The
MNI Group Inc., engaged in the marketing of specially formulated medical foods.
Mr. Burstein received an L.L.B. from Columbia Law School.
JOHN CATTIER has been a director of the Company since its inception. Since
May 1996, Mr. Cattier has been a director and a shareholder of Unity. Mr.
Cattier has been an independent consultant since January 1985. From 1957 to
December 1984, Mr. Cattier was associated with White Weld & Co., investment
bankers, serving as a general partner, and with Credit Suisse White Weld (which
subsequently became Credit Suisse First Boston), investment bankers, in various
capacities. Mr. Cattier is a director of Pacific Assets Trust PLC, a United
Kingdom investment trust, and Chairman of the Board of Directors of Heptagon
Investments Limited, an investment company ("Heptagon"). Mr. Cattier received a
B.A. from Yale University.
BARRY RIDINGS has been a director of the Company since its inception. Since
March 1990, Mr. Ridings has been a Managing Director of Alex Brown & Sons,
investment bankers. From June 1986 to March 1990, Mr. Ridings was a Managing
Director of Drexel Burnham Lambert, investment bankers. Mr. Ridings is a
director of SubMicron Systems Corporation, a company engaged in the design,
manufacture and marketing of advanced processing systems sold primarily to
manufacturers of semiconductor chips, Transcor Waste Services Corp., a waste
management company, Leaseway Transportation Corp., a trucking company, Rax
Restaurants Inc., a restaurant chain and Norex America Inc., a shipping company.
Mr. Ridings received an M.B.A. from Cornell University.
NORMAN LEBEN has been Secretary and a director of the Company since its
inception. Mr. Leben is, and since 1988 has been, a partner of DML, certified
public accountants. Prior thereto and from 1985, Mr. Leben was engaged in the
acquisition, management, syndication and operation of real estate and other
emerging marketing businesses. Prior to 1985, Mr. Leben was employed by
Laventhol & Horwath. Mr. Leben received a B.B.A. from George Washington
University.
All directors hold office until the next annual meeting of stockholders and
the election and qualification of their successors. Directors receive no
compensation for serving on the Board of Directors other than reimbursement of
reasonable expenses incurred in attending meetings. Officers are elected
annually by the Board of Directors and serve at the discretion of the Board. Mr.
Burstein intends to devote approximately 30% of his time to the affairs of the
Company. The Company has not entered into employment agreements with any of its
officers.
EXECUTIVE COMPENSATION
No officer has received any cash compensation from the Company since
inception for services rendered. Other than the $7,500 monthly administrative
fee, no compensation of any kind (including finders and consulting fees) will be
paid to any Initial Stockholder, or any affiliate thereof for services
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<PAGE>
rendered to the Company prior to or in connection with the Business Combination;
provided, however, that such persons shall be entitled to receive, upon
consummation of the Business Combination, commissions for monies raised by them
for the Company in connection with the Business Combination, at rates that are
no less favorable to the Company than those which the Company would pay to
unaffiliated third parties. In addition, the Affiliated Initial Stockholders
will receive reimbursement for any out-of-pocket expenses incurred in connection
with activities on behalf of the Company. There is no limit on the amount of
such reimbursable expenses and there will be no review of the reasonableness of
such expenses by anyone other than the Board of Directors which includes two
members who are officers and who may seek reimbursement.
STOCK OPTION PLAN
The Company's 1996 Stock Option Plan ("1996 Plan") was adopted by both the
Board of Directors and a majority in interest of the stockholders of the Company
on May 30, 1996. The 1996 Plan provides for the granting of options which are
intended to qualify either as incentive stock options ("Incentive Stock
Options") within the meaning of Section 422 of the Internal Revenue Code of 1986
or as options which are not intended to meet the requirements of such section
("Nonstatutory Stock Options"). The total number of shares of Common Stock
reserved for issuance under the 1996 Plan is 187,500. Options to purchase shares
may be granted under the 1996 Plan to persons who, in the case of Incentive
Stock Options, are employees (including officers) of the Company, or, in the
case of Nonstatutory Stock Options, are employees (including officers) or
non-employee directors of the Company.
The 1996 Plan provides for its administration by the Board of Directors or a
committee chosen by the Board of Directors, which has discretionary authority,
subject to certain restrictions, to determine the number of shares issued
pursuant to Incentive Stock Options and Nonstatutory Stock Options and the
individuals to whom, the times at which and the exercise price for which options
will be granted.
The exercise price of all Incentive Stock Options granted under the 1996
Plan must be at least equal to the fair market value of such shares on the date
of the grant or, in the case of Incentive Stock Options granted to the holder of
more than 10% of the Company's Common Stock, at least 110% of the fair market
value of such shares on the date of the grant. The maximum exercise period for
which Incentive stock Options may be granted is ten years from the date of grant
(five years in the case of an individual owning more than 10% of the Company's
Common Stock). The aggregate fair market value (determined at the date of the
option grant) of shares with respect to which Incentive Stock Options are
exercisable for the first time by the holder of the option during any calendar
year shall not exceed $100,000.
No options may be granted under the 1996 Plan prior to the consummation of a
Business Combination.
CONFLICTS OF INTEREST
None of the Company's officers and directors are required to commit their
full time to the affairs of the Company and, accordingly, such persons may have
conflicts of interest in allocating management time among various business
activities. Certain of these persons may in the future become affiliated with
entities, including other "blank check" companies, engaged in business
activities similar to those intended to be conducted by the Company. Messrs.
Burstein, Leben and Cattier are each directors and, together with Mr. Ridings,
shareholders of Unity, which is engaged principally in making investments in
privately held companies. Mr. Burstein and each of the other directors of the
Company also serve as directors of various private companies and are engaged in
various other business activities. In the course of their other business
activities, certain of the Company's officers and directors may become aware of
investment and business opportunities which may be appropriate for presentation
to the Company as well as the other entities with which they are affiliated.
Such persons may have conflicts of interest in determining to which entity a
particular business opportunity should be presented. In order to reduce
potential conflicts of interest, the Company's officers and directors have
agreed that they will offer all suitable prospective
30
<PAGE>
Target Businesses to the Company before any other company until the earlier of a
Business Combination or the liquidation of the Company. In general, officers and
directors of a corporation incorporated under the laws of the State of Delaware
are required to present certain business opportunities to such corporation.
Under Delaware law, officers and directors generally are required to bring
business opportunities to the attention of such corporation if: such corporation
could financially undertake the opportunity; the opportunity is within the
corporation's line of business; and it would not be fair to the corporation and
its stockholders for the opportunity not to be brought to the attention of such
corporation. Accordingly, as a result of multiple business affiliations, certain
of the Company's officers and directors may have similar legal obligations
relating to presenting certain business opportunities to multiple entities. In
addition, conflicts of interest may arise in connection with evaluations of a
particular business opportunity by the Board of Directors with respect to the
foregoing criteria. There can be no assurance that any of the foregoing
conflicts will be resolved in favor of the Company. See "Proposed
Business--'Blank Check' Offering--Selection of a Target Business and Structuring
of a Business Combination."
In order to minimize potential conflicts of interest which may arise from
multiple corporate affiliations, each of Messrs. Burstein, Leben and Cattier
have agreed in principle to present to the Company for its consideration, prior
to presentation to any other entity, any business opportunity which, under
Delaware law, may reasonably be required to be presented to the Company.
To further minimize potential conflicts of interest, the Company is
restricted from pursuing any transactions with entities affiliated with an
officer or director of the Company without the prior approval of a majority of
its disinterested directors.
In connection with any stockholder vote relating to approval of a Business
Combination, all of the Initial Stockholders, including all of the officers and
directors of the Company, have agreed to vote their respective shares of Common
Stock in accordance with the vote of the majority in interest of the Public
Stockholders. In addition, the Initial Stockholders have agreed to waive their
respective rights to participate in any liquidation distribution but only with
respect to those shares of Common Stock acquired by such persons prior to this
offering.
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<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth information as of July 31, 1996 and as
adjusted to reflect the sale of the shares of Common Stock included in the Units
offered hereby, based on information obtained from the persons named below, with
respect to the beneficial ownership of shares of Common Stock by (i) each person
known by the Company to be the owner of more than 5% of the outstanding shares
of Common Stock, (ii) each director of the Company and (iii) all officers and
directors of the Company as a group:
<TABLE>
<CAPTION>
AMOUNT AND PERCENTAGE OF
OUTSTANDING SHARES
NATURE OF ------------------------
BENEFICIAL BEFORE AFTER
OWNERSHIP(1)(2) OFFERING OFFERING
---------------- ----------- -----------
<S> <C> <C> <C>
Lawrence Burstein .......................................................... 175,000(3) 28.0% 9.33%
245 Fifth Avenue
New York, NY 10016
John Cattier ............................................................... 140,500(3)(4) 22.48% 7.49%
Achlain Invermoriston
Invernesshire
IV3 6YN, United Kingdom
Barry Ridings .............................................................. 6,000 0.01% -- %
16 Erwin Park
Montclair, NJ 07902
Norman Leben ............................................................... 40,000(3) 6.40% 2.13%
245 Fifth Avenue
New York, NY 10016
All officers and directors as a group (4 persons)........................... 311,500(3)(4) 49.84% 16.61%
</TABLE>
- ------------------------
(1) Unless otherwise noted, the Company 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.
(2) Does not include shares issuable upon exercise of the Directors' Warrants
which are beneficially owned by each of the persons named in the above table
but which are not exercisable until the consummation of a Business
Combination.
(3) Includes 25,000 shares of Common Stock owned by Unity, over which shares
Messrs. Burstein, Leben and Cattier share voting and investment power.
(4) Includes (i) 75,000 shares held by Heptagon and (ii) 1,500 shares held by an
affiliate of Heptagon. Mr. Cattier is Chairman of Heptagon's board of
directors and exercises voting and dispositive control over approximately
4.5% of Heptagon's shares of capital stock. Mr. Cattier disclaims any voting
or dispositive power over these shares. Also includes 39,000 shares owned by
Cricket Services, Ltd. ("Cricket"), over which shares Mr. Cattier exercises
voting and dispositive control.
The shares of the Company's Common Stock owned as of the date hereof by all
of the officers and directors of the Company and by all persons owning more than
5% of the currently outstanding shares of Common Stock will be placed in escrow
with American Stock Transfer & Trust Company, as escrow agent, until the earlier
of (i) six months following the consummation of a Business Combination or (ii)
the liquidation of the Company. During such escrow period, such persons will not
be able to sell their respective shares of Common Stock, but will retain all
other rights as stockholders of the Company, including, without limitation, the
right to vote such shares of Common Stock.
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<PAGE>
Messrs. Burstein, Leben and Cattier, as well as Unity, may be deemed to be
"parents" and "promoters" of the Company, as such terms are defined under the
Federal securities laws.
CERTAIN TRANSACTIONS
In June 1996, the Company issued an aggregate of 625,000 shares of Common
Stock at a purchase price of $.0001 per share, as follows: 25,000 shares to
Unity; 150,000 shares to Mr. Burstein; 15,000 shares to Mr. Leben; an aggregate
of 76,500 shares to Heptagon and its affiliate; 39,000 shares to Cricket; 6,000
shares to Barry Ridings; and 313,500 shares to 24 other persons.
In June 1996, the Company issued 58,334, 58,333, 58,333 and 25,000 Class A
and Class B Warrants to each of, respectively, Messrs. Burstein, Leben, Cattier
and Ridings ("collectively, the "Directors' Warrants"), in consideration for
future services to be rendered by such persons on behalf of the Company. The
Directors' Warrants and the Common Stock underlying such warrants have been
registered pursuant to the Registration Statement of which this Prospectus forms
a part. The Directors' Warrants are identical to the Warrants offered hereby but
are not redeemable by the Company and may not be transferred or exercised until
the consummation of a Business Combination.
The Company has been obligated to pay Unity, since June 1, 1996, a monthly
fee of $7,500 for general and administrative services pursuant to an agreement
which may be canceled by either party upon 30 days' prior written notice. Such
fee includes the use of approximately 500 square feet of office space in
premises occupied by Unity. An accounting firm which is an affiliate of Mr.
Leben affords Unity the use of such space at a monthly rental of $2,000. Messrs.
Burstein, Leben and Cattier are each directors and shareholders of Unity.
Unity has made non-interest demand loans aggregating approximately $50,000
to the Company as of the date of this Prospectus to cover expenses related to
this offering. The Company intends to repay these loans, as well as those
accrued general and administrative expenses owed to Unity discussed above, out
of the proceeds of this offering not held in the Trust Fund.
DML has performed bookkeeping, tax and accounting services for certain of
the "blank check" companies of which Messrs. Burstein, Cattier and Ridings, have
been directors and shareholders from their dates of inceptions through the
consummation of their respective Business Combinations and is expected to
perform similar services for the Company at an aggregate cost of approximately
$12,000 per annum. DML may also be paid to engage in financial "due diligence"
activities for the Company in connection with its evaluation of prospective
Target Companies for a Business Combination.
Other than the $7,500 monthly administrative fee, no compensation of any
kind (including finders and consulting fees) will be paid to any Initial
Stockholder, or any affiliate thereof for services rendered to the Company prior
to or in connection with the Business Combination; provided, however, that such
persons shall be entitled to receive, upon consummation of the Business
Combination, commissions for monies raised by them for the Company in connection
with the Business Combination, at rates that are no less favorable to the
Company than those which the Company would pay to unaffiliated third parties.
Certain officers of the Company have agreed with the Underwriters that
within the first ten days after separate trading of the Warrants has commenced,
such officers and/or their affiliates will purchase $250,000 of each of the
Class A Warrants and the Class B Warrants.
All ongoing transactions between the Company and any of the Affiliated
Initial Stockholders or their respective affiliates, as well as any future
transactions, will be on terms believed by the Company to be no less favorable
than are available from unaffiliated third parties and will be subject to prior
approval in each instance by a majority of the members of the Company's Board of
Directors who do not have an interest in the transaction.
33
<PAGE>
DESCRIPTION OF SECURITIES
GENERAL
The Company is authorized to issue 20,000,000 shares of Common Stock, par
value $.0001 per share, and 5,000 shares of Preferred Stock, par value $.01 per
share. As of the date of this Prospectus, 625,000 shares of Common Stock are
outstanding, held of record by 31 persons. No shares of Preferred Stock are
currently outstanding.
UNITS
Each Unit consists of one share of Common Stock, one Class A Warrant and one
Class B Warrant, each Warrant entitling the holder to purchase one share of
Common Stock. The securities comprising the Units will not be separately
transferable until 90 days after the date of this Prospectus unless GKN informs
the Company of its decision to allow earlier separate trading, but in no event
will GKN allow separate trading of the securities comprising the Units until the
preparation of an audited balance sheet of the Company reflecting receipt by the
Company of the proceeds of this offering.
COMMON STOCK
The holders of Common Stock are entitled to one vote for each share held of
record on all matters to be voted on by stockholders. There is no cumulative
voting with respect to the election of directors, with the result that the
holders of more than 50% of the shares voted for the election of directors can
elect all of the directors. The holders of Common Stock are entitled to receive
dividends when, as and if declared by the Board of Directors out of funds
legally available therefore. In the event of liquidation, dissolution or winding
up of the Company, the holders of Common Stock (except for the Affiliated
Initial Stockholders who have agreed to waive their rights and the
Non-Affiliated Initial Stockholders who have agreed to waive certain of their
rights to share in any distribution relating to a liquidation of the Company due
to the failure of the Company to effect a Business Combination within 18 or 24
months, as the case may be, from the date of consummation of this offering) are
entitled to share ratably in all assets remaining available for distribution to
them after payment of liabilities and after provision has been made for each
class of stock, if any, having preference over the Common Stock. Holders of
shares of Common Stock, as such, have no conversion, preemptive or other
subscription rights, and, except as noted below, there are no redemption
provisions applicable to the Common Stock. All of the outstanding shares of
Common Stock are, and the shares of Common Stock included in the Units, when
issued and paid for as set forth in this Prospectus, will be, fully paid and
nonassessable.
PREFERRED STOCK
The Company's Certificate of Incorporation authorizes the issuance of 5,000
shares of a "blank check" preferred stock (the "Preferred Stock") with such
designation, rights and preferences as may be determined from time to time by
the Board of Directors. Accordingly, the Board of Directors is empowered,
without stockholder approval, to issue Preferred Stock with dividend,
liquidation, conversion, voting or other rights which could adversely affect the
voting power or other rights of the holders of the Company's Common Stock,
although the Underwriting Agreement prohibits the Company, prior to a Business
Combination, from issuing Preferred Stock which participates in any manner in
the proceeds of the Trust Fund, or which votes as a class with the Common Stock
on a Business Combination. The Company may issue some or all of such shares in
connection with a Business Combination. In addition, the Preferred Stock could
be utilized, under certain circumstances, as a method of discouraging, delaying
or preventing a change in control of the Company. Although the Company does not
currently intend to issue any shares of Preferred Stock, there can be no
assurance that the Company will not do so in the future.
34
<PAGE>
WARRANTS
Each Class A Warrant entitles the registered holder to purchase one share of
Common Stock of the Company at a price of $5.50 per share, subject to adjustment
in certain circumstances, at any time commencing on the later of (i) the
consummation of a Business Combination or (ii) one year from the date of this
Prospectus and ending at 5:00 p.m., New York City time, on , 2002, at
which time the Class A Warrants will expire. Each Class B Warrant entitles the
registered holder to purchase one share of the Company's Common Stock at a price
of $7.50 per share, subject to adjustment in certain circumstances, at any time
commencing on the later of (i) the consummation of a Business Combination or
(ii) one year from the date of this Prospectus and ending at 5:00 p.m., New York
City time, on , 2002, at which time the Class B Warrants will expire.
The Company may call the Class A Warrants and the Class B Warrants for
redemption, each as a class, in whole and not in part, at the option of the
Company and with the consent of the Underwriter, at a price of $.05 per Warrant
at any time after the Warrants become exercisable upon not less than 30 days'
prior written notice, provided that the reported closing bid price of the Common
Stock equals or exceeds $8.50 per share, with respect to the Class A Warrants,
and $10.50 per share, with respect to the Class B Warrants, for the 20
consecutive trading days ending on the third day prior to the notice of
redemption to warrantholders. The warrantholders shall have exercise rights
until the close of business on the date fixed for redemption.
The Warrants will be issued in registered form under a Warrant Agreement
between the Company and American Stock Transfer & Trust Company, as Warrant
Agent. Reference is made to said Warrant Agreement (which has been filed as an
exhibit to the Registration Statement of which this Prospectus is a part) for a
complete description of the terms and conditions applicable to the Warrants (the
description herein contained being qualified in its entirety by reference to
such Warrant Agreement).
The exercise price and number of shares of Common Stock issuable on exercise
of the Warrants are subject to adjustment in certain circumstances including in
the event of a stock dividend, recapitalization, reorganization, merger or
consolidation of the Company. However, the Warrants are not subject to
adjustment for issuances of Common Stock at a price below their respective
exercise prices.
The Company has the right, in its sole discretion, to decrease the exercise
price of the Warrants for a period of not less than 30 days on not less than 30
days' prior written notice to the warrantholders. In addition, the Company has
the right, in its sole discretion, to extend the expiration date of the Warrants
on five business days' prior written notice to the warrantholders.
The Warrants may be exercised upon surrender of the Warrant Certificate on
or prior to the expiration date at the offices of the Warrant Agent, with the
exercise form on the reverse side of the Warrant Certificate completed and
executed as indicated, accompanied by full payments of the exercise price (by
certified check, payable to the Company) to the Warrant Agent for the number of
Warrants being exercised. The warrantholders do not have the rights or
privileges of holders of Common Stock.
No Warrants will be exercisable unless at the time of exercise the Company
has filed with the Commission a current prospectus covering the shares of Common
Stock issuable upon exercise of such Warrants and such shares have been
registered or qualified or deemed to be exempt under the securities laws of the
state of residence of the holder of such Warrants. The Company will use its best
efforts to have all shares so registered or qualified on or before the exercise
date and to maintain a current prospectus relating thereto until the expiration
of the Warrants, subject to the terms of the Warrant Agreement. While it is the
Company's intention to do so, there is no assurance that it will be able to do
so. See "Risk Factors--Risks Relating to the Offering--Current Prospectus and
State Blue Sky Registration Required in Connection with Exercise of Warrants."
No fractional shares will be issued upon exercise of the Warrants. However,
if a warrantholder exercises all Warrants then owned of record by him, the
Company will pay to such warrantholder, in lieu of
35
<PAGE>
the issuance of any fractional share which is otherwise issuable to such
warrantholder, an amount in cash based on the market value of the Common Stock
on the last trading day prior to the exercise date.
DIVIDENDS
The Company has not paid any dividends on its Common Stock to date and does
not intend to pay dividends prior to the consummation of a Business Combination.
The payment of dividends in the future, if any, will be contingent upon the
Company's revenues and earnings, if any, capital requirements and general
financial condition subsequent to consummation of a Business Combination. The
payment of any dividends subsequent to a Business Combination will be within the
discretion of the Company's then Board of Directors. It is the present intention
of the Board of Directors to retain all earnings, if any, for use in the
Company's business operations and, accordingly, the Board does not anticipate
declaring any dividends in the foreseeable future.
TRANSFER AGENT
The transfer agent for the Company's securities is American Stock Transfer &
Trust Company, 40 Wall Street, New York, New York 10005.
SHARES ELIGIBLE FOR FUTURE SALE
Upon the consummation of this offering, the Company will have 1,875,000
shares of Common Stock outstanding (2,062,500 shares if the Underwriters'
over-allotment option is exercised in full). Of these shares, the 1,250,000
shares sold in this offering (1,437,500 shares in the event of the exercise of
the over-allotment option) will be freely tradeable without restriction or
further registration under the Securities Act, except for any shares purchased
by an "affiliate" of the Company (in general, a person who has a control
relationship with the Company) which will be subject to limitations of Rule 144.
All of the remaining 625,000 shares are deemed to be "restricted securities", as
that term is defined under Rule 144, in that such shares were issued in private
transactions not involving a public offering. None of such shares will be
eligible for sale under Rule 144 prior to May 30, 1998. Notwithstanding this,
the Affiliated Initial Stockholders have agreed not to sell their respective
shares of Common Stock prior to six months following the consummation of a
Business Combination and the Non-Affiliated Initial Stockholders have agreed not
to sell their respective shares of Common Stock, which were acquired prior to
the date of this Prospectus, prior to the occurrence of a Business Combination.
In general, under Rule 144 as currently in effect, subject to the
satisfaction of certain other conditions, a person, including an affiliate of
the Company (or persons whose shares are aggregated), who has owned restricted
shares of Common Stock beneficially for at least two years is entitled to sell,
within any three-month period, a number of shares that does not exceed the
greater of 1% of the total number of outstanding shares of the same class or, if
the Common Stock is quoted on The Nasdaq Stock Market, the average weekly
trading volume during the four calendar weeks preceding the sale. A person who
has not been an affiliate of the Company for at least the three months
immediately preceding the sale and who has beneficially owned shares of Common
Stock for at least three years is entitled to sell such shares under Rule 144
without regard to any of the limitations described above.
An additional 200,000 shares of Common Stock, which have been registered
pursuant to the Registration Statement of which this Prospectus forms a part,
are issuable upon the exercise of the Directors' Warrants issued to Messrs.
Burstein, Leben, Cattier and Ridings. The Directors' Warrants are identical to
the Warrants offered hereby but are not redeemable by the Company and may not be
exercised until the consummation of a Business Combination.
Prior to this offering, there has been no market for the Common Stock and no
prediction can be made as to the effect, if any, that market sales of restricted
shares of Common Stock or the availability of such shares for sale will have on
the market prices prevailing from time to time. Nevertheless, the possibility
36
<PAGE>
that substantial amounts of Common Stock may be sold in the public market may
adversely affect prevailing market prices for the Common Stock and could impair
the Company's ability to raise capital through the sale of its equity
securities.
STATE BLUE SKY INFORMATION
The Units will only be offered and sold by the Company in the States of
Delaware, District of Columbia, Florida, Hawaii, Illinois, Maryland, New York
and West Virginia (the "Primary Distribution States"). In addition, such
securities will be immediately eligible for resale in the secondary market in
each of the Primary Distribution States and in the States of Iowa and
Pennsylvania. Purchasers of such securities either in this offering or in any
subsequent trading market which may develop must be residents of such states.
The Company will amend this prospectus for the purpose of disclosing additional
states, if any, in which the Company's securities will be eligible for resale in
the secondary trading market.
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<PAGE>
UNDERWRITING
GKN Securities Corp. ("GKN") and Gaines, Berland Inc. ("GBI," together with
GKN, the "Underwriters") have agreed, subject to the terms and conditions of the
Underwriting Agreement, to purchase from the Company a total of 1,250,000 Units.
It is anticipated that GKN and GBI will each underwrite 625,000 Units. The
Underwriting Agreement provides that the obligations of the Underwriters are
subject to approval of certain legal matters by counsel and various other
conditions precedent, and that the Underwriters are obligated to purchase all of
the Units offered by this Prospectus (other than the Units covered by the
over-allotment option described below), if any are purchased.
The Company has been advised by the Underwriters that they propose to offer
the Units to the public at the initial offering price set forth on the cover
page of this Prospectus and to certain dealers at that price less a concession
not in excess of $ per Unit. The Underwriters may allow, and such dealers
may reallow, a concession not in excess of $ per Unit to certain other
dealers. After the initial public offering, the offering price and other selling
terms may be changed by the Underwriters.
The Company has granted to the Underwriters an option, exercisable during
the 45-day period after the date of this Prospectus, to purchase from the
Company at the offering price, less underwriting discounts and the
non-accountable expense allowance, up to an aggregate of 187,500 additional
Units for the sole purpose of covering over-allotments, if any.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act. The Company has
also agreed to pay to the Underwriters an expense allowance on a non-accountable
basis equal to 3% of the gross proceeds derived from the sale of the Units
underwritten ($225,000 if the Underwriters' over-allotment option is not
exercised and $258,750 if the Underwriters' over-allotment option is exercised
in full), $25,000 of which has been paid to date.
The Company has granted GKN for a period of three years from the date hereof
the right to have GKN's designee present at all meetings of the Company's Board
of Directors. Such designee will be entitled to the same notices and
communications sent by the Company to its directors and to attend directors'
meetings, but will not be entitled to vote thereat. GKN has not named such
designee as of the date of this Prospectus.
The Company has engaged the Underwriters, on a non-exclusive basis, as its
agents for the solicitation of the exercise of the Warrants. To the extent not
inconsistent with the guidelines of the NASD and the rules and regulations of
the Commission, the Company has agreed to pay the Underwriters for bona fide
services rendered a commission equal to 5% of the exercise price for each
Warrant exercised more than one year after the date of this Prospectus if the
exercise was solicited by the Underwriters. In addition to soliciting, either
orally or in writing, the exercise of the Warrants, such services may also
include disseminating information, either orally or in writing, to
warrantholders about the Company or the market for the Company's securities, and
assisting in the processing of the exercise of Warrants. No compensation will be
paid to the Underwriters in connection with the exercise of the Warrants if the
market price of the underlying shares of Common Stock is lower than the exercise
price, the holder of the Warrants has not confirmed in writing that the
Underwriters solicited such exercise, the Warrants are held in a discretionary
account, the Warrants are exercised in an unsolicited transaction or the
arrangement to pay the commission is not disclosed in the prospectus provided to
warrantholders at the time of exercise. In addition, unless granted an exemption
by the Commission from Rule 10b-6 under the Exchange Act, while soliciting
exercise of the Warrants, the Underwriters will be prohibited from engaging in
any market making activities or solicited brokerage activities with regard to
the Company's securities unless the Underwriters have waived their right to
receive a fee for the exercise of the Warrants.
In connection with this offering, the Company has agreed to sell to the
Underwriters, for nominal consideration, an option ("Unit Purchase Option") to
purchase up to an aggregate of 125,000 Units. The Units issuable upon exercise
of the Unit Purchase Option are identical to those offered hereby except that
the Warrants contained therein expire five years from the date hereof. The Unit
Purchase Option is
38
<PAGE>
exercisable initially at $6.60 per Unit for a period of four years commencing
one year from the date hereof. The Unit Purchase Option may not be transferred,
sold, assigned or hypothecated during the one-year period following the date of
this Prospectus, except to members of the selected dealers and officers and
partners of the Underwriters or the selected dealers. The Unit Purchase Option
grants to the holders thereof certain demand and "piggy back" rights for periods
of five and seven years, respectively, from the date of this Prospectus with
respect to the registration under the Securities Act of the securities directly
and indirectly issuable upon exercise of the Unit Purchase Option.
Prior to this offering there has been no public market for any of the
Company's securities. Accordingly, the offering price of the Units offered
hereby and the terms of the Warrants were determined by negotiation between the
Company and the Underwriters and do not necessarily bear any relation to
established valuation criteria. Factors considered in determining such prices
and terms, in addition to prevailing market conditions, included the history of
and the prospects for the industry in which the Company competes, an assessment
of the Company's Management, the prospects of the Company, its capital structure
and such other factors as were deemed relevant.
Although it is not obligated to do so, the Underwriters may introduce the
Company to potential Target Businesses or assist the Company in raising
additional capital, as needs may arise in the future. The Company is not under
any contractual obligation with the Underwriter to engage it to provide any
services for the Company after consummation of this offering, but if it does, it
may pay the Underwriters a finder's fee or other compensation.
LEGAL MATTERS
The legality of the securities offered hereby will be passed upon for the
Company by Parker Duryee Rosoff & Haft A Professional Corporation, New York, New
York. Graubard Mollen & Miller, New York, New York, has acted as counsel for the
Underwriter in connection with this offering. A member of Parker Duryee Rosoff &
Haft beneficially owns 6,000 shares of the Company's Common Stock.
EXPERTS
The financial statements included in this Prospectus have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
report. Reference is made to said report which includes an explanatory paragraph
with regard to the Company being in its development stage, which raises
substantial doubt about its ability to continue as a going concern.
ADDITIONAL INFORMATION
The Company has filed with the Commission in Washington, D.C., a
Registration Statement ("Registration Statement") under the Securities Act with
respect to the Units, the Common Stock and the Warrants offered by this
Prospectus. This Prospectus does not contain all of the information set forth in
the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. For further information with
respect to the Company and this offering, reference is made to the Registration
Statement, including the exhibits filed therewith, copies of which may be
obtained at prescribed rates from the Commission at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street N.W.,
Washington, D.C. 20549, and at the following regional offices: 7 World Trade
Center, New York, New York 10048, and Suite 1400, Northwestern Atrium Center,
500 West Madison Street, Chicago, Illinois 60611. In addition, all reports filed
by the Company via the Commission's Electronic Data Gathering and Retrieval
System (EDGAR) can be obtained from the Commission's Internet web set located at
www.sec.gov. Descriptions contained in this Prospectus as to the contents of any
contract or other document filed as an exhibit to the Registration Statement are
not necessarily complete and each such description is qualified by reference to
such contract or document.
39
<PAGE>
UNITY FIRST ACQUISITION CORP.
(A DEVELOPMENT STAGE ENTITY)
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-------------
<S> <C>
Report of Independent Public Accountants........................................................... F-2
Financial Statements
Balance Sheet--July 31, 1996..................................................................... F-3
Statement of Operations for the period May 30, 1996 (Date of Inception) Through July 31, 1996.... F-4
Statement of Changes in Shareholders' Equity for the period May 30, 1996 (Date of Inception)
Through July 31, 1996.......................................................................... F-5
Statement of Cash Flows for the period May 30, 1996 (Date of Inception) Through July 31, 1996.... F-6
Notes to Financial Statements...................................................................... F-7 to F-12
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Unity First Acquisition Corp.:
We have audited the accompanying balance sheet of Unity First Acquisition
Corp. (a Delaware corporation in the development stage) as of July 31, 1996, and
the related statements of operations, changes in shareholders' equity (deficit)
and cash flows for the period from inception (May 30, 1996) to July 31, 1996.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Unity First Acquisition
Corp. as of July 31, 1996, and the results of its operations and its cash flows
for the period from inception (May 30, 1996) to July 31, 1996, in conformity
with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the accompanying financial
statements, the Company is a development stage enterprise with no significant
operating results to date. The factors discussed in Note 1 to the financial
statements raise a substantial doubt about the ability of the Company to
continue as a going concern. Management's plans in regards to those matters are
also described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
New York, New York
August 16, 1996
F-2
<PAGE>
UNITY FIRST ACQUISITION CORP.
(A DEVELOPMENT STAGE ENTITY)
BALANCE SHEET
JULY 31, 1996
<TABLE>
<CAPTION>
ASSETS
<S> <C>
CURRENT ASSETS:
Cash............................................................................ $ 563
---------
DEFERRED REGISTRATION COSTS....................................................... 250,000
---------
TOTAL ASSETS.................................................................. $ 250,563
---------
---------
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accrued registration costs...................................................... $ 225,000
Advances from affiliate......................................................... 40,500
---------
TOTAL CURRENT LIABILITIES..................................................... 265,500
---------
COMMITMENTS AND CONTINGENCIES (Note 6)
SHAREHOLDERS' EQUITY (DEFICIT):
Preferred stock, $.01 par value, 5,000 shares authorized, no shares issued...... --
Common stock, $.0001 par value, 20,000,000 shares authorized, 625,000 shares
issued and outstanding........................................................ 63
Additional paid-in-capital...................................................... --
Deficit accumulated during the development stage................................ (15,000)
---------
TOTAL SHAREHOLDERS' EQUITY (DEFICIT).......................................... (14,937)
---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT).......................... $ 250,563
---------
---------
</TABLE>
See Accompanying Notes to Financial Statements
F-3
<PAGE>
UNITY FIRST ACQUISITION CORP.
(A DEVELOPMENT STAGE ENTITY)
STATEMENT OF OPERATIONS
FOR THE PERIOD MAY 30, 1996
(DATE OF INCEPTION) THROUGH JULY 31, 1996
<TABLE>
<S> <C>
REVENUES.......................................................................... $ --
---------
EXPENSES:
General and administrative...................................................... 15,000
---------
TOTAL EXPENSES................................................................ 15,000
---------
NET LOSS.......................................................................... $ (15,000)
---------
---------
NET LOSS PER COMMON SHARE......................................................... $ (.02)
---------
---------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING.............................. 625,000
---------
---------
</TABLE>
See Accompanying Notes to Financial Statements
F-4
<PAGE>
UNITY FIRST ACQUISITION CORP.
(A DEVELOPMENT STAGE ENTITY)
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD MAY 30, 1996
(DATE OF INCEPTION) THROUGH JULY 31, 1996
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL DEFICIT ACCUMULATED
------------------------ PAID-IN DURING THE
SHARES PAR VALUE CAPITAL DEVELOPMENT STAGE TOTAL
--------- ------------- ------------- ------------------- ----------
<S> <C> <C> <C> <C> <C>
Issuance of stock to original founders for
cash, at par value........................... 625,000 $ 63 $ -- $ -- $ 63
Net loss for the period May 30, 1996 (date of
inception) through July 31, 1996............. -- -- -- (15,000) (15,000)
--------- --- ----- -------- ----------
Balance, July 31, 1996......................... 625,000 $ 63 $ -- $ (15,000) $ (14,937)
--------- --- ----- -------- ----------
--------- --- ----- -------- ----------
</TABLE>
See Accompanying Notes to Financial Statements
F-5
<PAGE>
UNITY FIRST ACQUISITION CORP.
(A DEVELOPMENT STAGE ENTITY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD MAY 30, 1996
(DATE OF INCEPTION) THROUGH JULY 31, 1996
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss........................................................................ $ (15,000)
NET CASH USED IN OPERATING ACTIVITIES......................................... (15,000)
---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock.......................................... 63
Advance from affiliate.......................................................... 40,500
Deferred registration costs..................................................... (25,000)
---------
NET CASH PROVIDED BY FINANCING ACTIVITIES..................................... 15,563
---------
NET INCREASE IN CASH.............................................................. 563
CASH, beginning of period......................................................... --
---------
CASH, end of period............................................................... $ 563
---------
---------
</TABLE>
See Accompanying Notes to Financial Statements
F-6
<PAGE>
UNITY FIRST ACQUISITION CORP.
(A DEVELOPMENT STAGE ENTITY)
NOTES TO FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION AND OPERATIONS
Unity First Acquisition Corp. (the "Company") was incorporated in the State
of Delaware on May 30, 1996, for the purpose of raising capital which is to be
used to effect a business combination (the "Business Combination"). The Company
is currently in the development stage. All activity of the Company to date
relates to its formation and proposed fund raising. Management has elected a
July 31 fiscal year-end for the Company.
The Company's ability to commence operations is contingent upon obtaining
financing through a public offering (the "Proposed Offering") of the Company's
common stock (the "Common Stock"). Note 2 discusses the details of the Proposed
Offering.
The Proposed Offering can be considered a "blind pool." Blind pool offerings
are inherently characterized by an absence of substantive disclosures relating
to the use of the net proceeds of the offering. Consequently, although
substantially all of the proceeds of the Proposed Offering are intended to be
utilized to effect a Business Combination, the proceeds are not specifically
designated for this purpose. Upon completion of this Proposed Offering, 90% of
the net proceeds, after payment of underwriting discounts and commissions and
the underwriter's non-accountable expense allowance, will be held in an
interest-bearing trust account ("Trust Account") until the earlier of (1)
written notification by the Company of its need for all or substantially all of
such net proceeds for the purpose of implementing a Business Combination, or (2)
the liquidation of the Company in the event that the Company does not effect a
Business Combination within 18 months from the consummation of the offering.
Notwithstanding the foregoing, if the Company enters into a letter of intent, an
agreement in principle or a definitive agreement to effectuate a Business
Combination prior to the expiration of such 18-month period, the Company's
Certificate of Incorporation provides that the Company will be afforded up to an
additional 6 months following the expiration of the initial 18-month period to
consummate such Business Transaction. Moreover, since the Company has not yet
identified an acquisition target (the "Target") investors in the Proposed
Offering will have virtually no substantive information available for advance
consideration of any specified Business Combination.
The Proposed Offering is not being conducted in accordance with Rule 419
which was adopted by the Securities and Exchange Commission (the "Commission")
to strengthen the regulation of securities offered by "blank check" companies. A
blank check company is defined as (a) a development stage company that has no
specific business plan or has indicated that its business plan is to engage in a
merger or acquisition with an unidentified company and (b) a company which
issues securities that, among other things, (i) are not quoted in the NASDAQ
system, or, (ii) in the case of a company which has been in continuous operation
for less than three years, has net tangible assets of less than $5,000,000.
Although the Company is a "blank check" company, it does not believe that Rule
419 will be applicable to it in view of the fact that upon its receipt of the
net proceeds of this offering, the Company's net tangible assets will exceed
$5,000,000. Accordingly, investors in this offering will not receive the
substantive protection provided by Rule 419. Additionally, there can be no
assurances that the United States Congress will not enact legislation which will
prohibit or restrict the sale of securities of "blank check" companies.
As a result of its limited resources, the Company will, in all likelihood,
have the ability to effect only a single Business Combination. Accordingly, the
prospects for the Company's success will be entirely dependent upon the future
performance of a single business.
F-7
<PAGE>
UNITY FIRST ACQUISITION CORP.
(A DEVELOPMENT STAGE ENTITY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 1. ORGANIZATION AND OPERATIONS (CONTINUED)
The Company will not effect a Business Combination unless the fair market
value of the Target, as determined by the Board of Directors of the Company in
its sole discretion, based upon valuation standards generally accepted by the
financial community including, among others, book value, cash flow, and both
actual and potential earnings, is at least equal to 80% of the net assets
(assets less liabilities) of the Company at the time of such acquisition.
Upon the completion of this offering, the Company will not satisfy the
criteria for qualifying its securities in the NASDAQ system. The Company's
securities will be traded in the over-the-counter market. It is anticipated that
they will be quoted on the OTC Bulletin Board, an NASD sponsored and operated
inter-dealer automated quotation system for equity securities not included in
The NASDAQ Stock Market, as well as in the NQB Pink Sheets published by National
Quotation Bureau Incorporated. The OTC
Bulletin Board was introduced as an alternative to "pink sheet" trading of
over-the-counter securities. Although the Company believes that the OTC Bulletin
Board has been recognized by the brokerage community as an acceptable
alternative to the NQB Pink Sheets, there can be no assurance that the liquidity
and prices of the Units in the secondary market will not be adversely affected.
Furthermore, there is no assurance that the Company will be able to
successfully effect a Business Combination. As discussed previously, if the
Company is unable to effect a Business Combination within 24 months of the
consummation of the Proposed Offering, the Company's Certificate of
Incorporation provides for the Company's automatic liquidation. In the event of
liquidation, the per share value of the residual assets remaining available for
distribution may be less than the initial public offer price per share in the
Proposed Offering. In no event, however, will the Company's liquidation value be
less than the amount in the Trust Account, inclusive of any net interest income
thereon.
Moreover, all of the Company's present stockholders have agreed to waive
their respective rights to participate in any such liquidation distribution on
shares owned prior to the Proposed Offering.
If the Company is unable to acquire control of an operating business or
businesses, it may be required to register as an investment company under the
Investment Company Act of 1940, as amended (the "Act"). The Company is unable to
predict what effect registration under such Act would have, but it believes that
its ability to pursue its current business plan could be adversely affected as a
result. The most significant difference with respect to financial statement
presentation and disclosure requirements for companies registered under the Act
would require the investments held by the Company to be adjusted to market value
at the balance sheet date. The Company believes that its anticipated principal
activities, which will involve acquiring control of an operating company, will
not subject the Company to regulation under the Act.
NOTE 2. PROPOSED PUBLIC OFFERING OF SECURITIES
The Proposed Offering calls for the Company to offer for public sale up to
1,250,000 units (the "Units") at a price of $6.00 per Unit. Each Unit consists
of one share of the Company's Common Stock, $.0001 par value, one Class A
Redeemable Warrant and one Class B Redeemable Warrant. Each Class A Redeemable
Warrant and Class B Redeemable Warrant entitles the holder to purchase from the
Company one share of Common Stock at an exercise price of $5.50 and $7.50,
respectively, commencing on the later of (i) the consummation of a Business
Combination, or (ii) one year from the effective date of the Prospectus and
ending six years after the effective date of the Proposed Offering (the
"Effective Date").
F-8
<PAGE>
UNITY FIRST ACQUISITION CORP.
(A DEVELOPMENT STAGE ENTITY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2. PROPOSED PUBLIC OFFERING OF SECURITIES (CONTINUED)
The Class A Redeemable Warrants and Class B Redeemable Warrants will be
redeemable at the option of the Company, and with the consent of the
underwriters of the Proposed Offering (the "Underwriters") each as a class, in
whole and not in part, upon 30 days' notice at any time after the Redeemable
Warrants become exercisable, only in the event that the closing bid price of the
Common Stock is at least $8.50 per share with respect to the Class A Redeemable
Warrant(s), and $10.50 with respect to the Class B Redeemable Warrants for 20
consecutive trading days immediately prior to notice of redemption, at a price
of $.05 per Class A Redeemable Warrant or Class B Redeemable Warrant. The
securities comprising the Units will not be separately transferable until 90
days after the date of this Prospectus unless GKN Securities Corp. ("GKN"), one
of the Underwriters, informs the Company of its decision to allow separate
trading, but in no event will GKN allow separate trading of the securities
comprising the Units until the preparation of an audited balance sheet of the
Company reflecting receipt by the Company of the proceeds of this offering.
The Company has granted the Underwriters an option, exercisable within 45
business days from the Effective Date, to purchase up to 187,500 additional
Units at $6.00 per Unit. This option is solely for the purpose of covering
over-allotments.
In connection with the Proposed Offering, the Company will sell to the
Underwriters and their designees, for nominal consideration, Unit Purchase
Option(s) (the "Underwriters' UPO") to purchase up to 125,000 Units at an
exercise price of $6.60 per Unit. The Underwriters' UPO's will be exercisable
for a period of four years commencing one year from the Effective Date.
The Company has granted its executive officers and directors 200,000
warrants (50% Class A Warrants and 50% Class B Warrants, collectively the
"Directors' Warrants") to purchase Common Stock at $5.50 and $7.50,
respectively, per share in consideration of future services to be rendered on
behalf of the Company. The Directors' Warrants are not exercisable until the
consummation by the Company of a Business Combination and are not redeemable by
the Company.
All of the Company's present stockholders have agreed to vote their
respective shares of Common Stock in accordance with the vote of the majority of
all nonaffiliated future stockholders of the Company with respect to a Business
Combination.
In addition, the Common Stock owned by all of the executive officers and
directors of the Company, their affiliates and by all persons owning 5% or more
of the currently outstanding shares of Common Stock has been placed in escrow
until the earlier of (i) the occurrence of a Business Combination, or (ii) the
Liquidation Date. During the escrow period, such stockholders will not be able
to sell or otherwise transfer their respective shares of Common Stock, but
retain all other rights as stockholders of the Company, including, without
limitation, the right to vote such shares of Common Stock.
As of July 31, 1996, the Company has recorded deferred registration costs of
$250,000 relating to various expenses incurred and accrued for in connection
with the Proposed Offering. Upon consummation of the Proposed Offering, these
costs will be charged to equity. Should the Proposed Offering prove to be
unsuccessful, these deferred costs, as well as any other additional expenses
that may be incurred, will be charged to operations.
F-9
<PAGE>
UNITY FIRST ACQUISITION CORP.
(A DEVELOPMENT STAGE ENTITY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
UTILIZATION OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
NET INCOME (LOSS) PER COMMON SHARE
Net income (loss) per common share is computed based on the weighted average
number of common shares outstanding and common stock equivalents, if not
anti-dilutive.
NOTE 4. CAPITAL STOCK
The Company's Certificate of Incorporation authorizes the issuance of
20,000,000 shares of Common Stock. Upon completion of the Proposed Offering
(assuming no exercise of the Underwriter's over-allotment option), there will be
14,862,500 authorized but unissued shares of Common Stock available for issuance
(after appropriate reserves for the issuance of Common Stock in connection with
the Class A Redeemable Warrants and Class B Redeemable Warrants, the
Underwriters's UPO's, the executive officers and director Class A Warrants and
Class B Warrants, and the future grants under the Company's 1996 Stock Option
Plan). The Company's Board of Directors has the power to issue any or all of the
future grants under the Company's 1996 Stock Option Plan. The Company's Board of
Directors has the power to issue any or all of the authorized but unissued
Common Stock without stockholder approval. The Company currently has no
commitments to issue any shares of Common Stock other than as described in the
Proposed Offering; however, the Company will, in all likelihood, issue a
substantial number of additional shares in connection with a Business
Combination. To the extent that additional shares of Common Stock are issued,
dilution to the interests of the Company's stockholders participating in the
Proposed Offering will occur.
The Board of Directors of the Company is empowered, without stockholder
approval, to issue up to 5,000 shares of "blank check" preferred stock (the
"Preferred Stock") with dividend, liquidation, conversion, voting or other
rights which could adversely affect the voting power or other rights of the
holders of the Company's Common Stock.
NOTE 5. RELATED PARTY TRANSACTIONS
The Chairman of the Board of Directors and the President of the Company are
principal shareholders, officers and directors of Unity Venture Capital
Associates Ltd. ("Unity") which owns shares in the Company. Beginning June 1,
1996, commensurate with the Company's activities primarily related to the
Proposed Offering, the Company will be obligated to pay Unity a monthly fee of
$7,500 for general and administrative services, including the use of office
space in premises occupied by Unity. At July 31, 1996, the Company owed $15,000
(included in advances from affiliate on the balance sheet) to Unity for
administrative services.
Through July 31, 1996, the Company has obtained advances totaling $25,500
from Unity to cover expenses related to the Proposed Offering which are included
in advances from affiliate on the balance
F-10
<PAGE>
UNITY FIRST ACQUISITION CORP.
(A DEVELOPMENT STAGE ENTITY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 5. RELATED PARTY TRANSACTIONS (CONTINUED)
sheet. These advances are due on demand and are expected to be repaid out of the
proceeds of the Proposed Offering.
At July 31, 1996, a member of the Company's legal counsel owned 6,000 shares
of the Company's Common Stock.
NOTE 6. STOCK OPTION PLAN
On May 30, 1996, the Company's Board of Directors approved a stock option
plan (the "Plan"). The Plan, which is subject to shareholder approval, provides
for issuance of up to 187,500 options (the "Options") to acquire shares of the
Company's Common Stock.
The Options are intended to qualify either as incentive stock options
("Incentive Stock Options") within the meaning of Section 422 of the Internal
Revenue Code of 1986 or as options which are not intended to meet the
requirements of such section ("Nonstatutory Stock Options"). The Options may be
granted under the Plan to persons who, in the case of Incentive Stock Options,
are key employees (including officers) of the Company, or, in the case of
Nonstatutory Stock Options, are key employees (including officers) and
nonemployee directors of the Company, except that Nonstatutory Stock Options may
not be granted to a holder of more than 10% of the total voting power of the
Company.
The exercise price of all Incentive Stock Options granted under the Plan
must be at least equal to the fair market value of such shares on the date of
grant or, in the case of Incentive Stock Options granted to the holder of 10% or
more of the Company's Common Stock, at least 110% of the fair market value of
such shares on the date of grant. The exercise price of all Nonstatutory Stock
Options granted under the Plan shall be determined by the Board of Directors of
the Company at the time of grant. The maximum exercise period for which the
Options may be granted is ten years from the date of grant (five years in the
case of Incentive Stock Options granted to an individual owning more than 10% of
the Company's Common Stock). The aggregate fair market value (determined at the
date of the option grant) of such shares with respect to which Incentive Stock
Options are exercisable for the first time by the holder of the option during
any calendar year shall not exceed $100,000.
The FASB issued Statement of Financial Accounting Standards No. 123,
"Accounting for Stock Based Compensation" ("SFAS 123"), which will require
companies either to reflect in their financial statements or reflect as
supplemental disclosure the impact on earnings and earnings per share of the
fair value of stock based compensation using certain pricing models for the
option component of stock option plans. As of July 31, 1996, no options have
been granted under the Plan. Disclosure, as required by SFAS 123, will be made
upon the issuance of options.
NOTE 7. INCOME TAXES
Income taxes are accounted for in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes." Under this method,
deferred income taxes are determined based on differences between the tax bases
of assets and liabilities and their financial reporting amounts at each year
end, and are measured based on enacted tax rates and laws that will be in effect
when the differences are expected to reverse. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount
expected to be realized.
F-11
<PAGE>
UNITY FIRST ACQUISITION CORP.
(A DEVELOPMENT STAGE ENTITY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 8. CONTINGENCY
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act. The Company has
also agreed to pay to the Underwriters an expense allowance on a non-accountable
basis equal to 3% of the gross proceeds derived from the sale of the Units
underwritten (including the sale of any Units subject to the Underwriters'
over-allotment option).
F-12
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED ON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY THE UNDERWRITERS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY THE UNITS OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IS UNLAWFUL. THE DELIVERY OF
THIS PROSPECTUS SHALL NOT, UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT
THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF THE
PROSPECTUS.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 3
The Company............................................................... 10
Risk Factors.............................................................. 10
Use of Proceeds........................................................... 19
Dilution.................................................................. 21
Capitalization............................................................ 22
Management's Discussion and Analysis of Financial Condition and Results of
Operations.............................................................. 23
Proposed Business......................................................... 24
Management................................................................ 29
Principal Stockholders.................................................... 32
Certain Transactions...................................................... 33
Description of Securities................................................. 34
Underwriting.............................................................. 38
Legal Matters............................................................. 39
Experts................................................................... 39
Additional Information.................................................... 39
Index to Financial Statements............................................. F-1
</TABLE>
------------------------
UNTIL , 1996, ALL DEALERS EFFECTING TRANSACTIONS IN THE
REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATIONS OF
DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO
THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
1,250,000 UNITS
UNITY FIRST
ACQUISITION CORP.
---------------------
PROSPECTUS
---------------------
GKN SECURITIES
GAINES, BERLAND INC.
, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth various expenses, other than underwriting
discounts, which will be incurred in connection with the offering. Other than
the SEC registration fee, NASD filing fee and the non-accountable expense
allowance of GKN Securities Corp. (the "Underwriter"), amounts set forth below
are estimates:
<TABLE>
<S> <C>
SEC registration fee.............................................. $ 10,711
NASD filing fee................................................... 3,606
Underwriter's nonaccountable expense allowance.................... 225,000*
Blue sky fees and expenses........................................ 25,000
Printing and engraving expenses................................... 75,000
Legal fees and expenses........................................... 65,000
Accounting fees and expenses...................................... 42,000
Transfer and Warrant Agent fees................................... 3,500
Miscellaneous expenses............................................ 183
---------
$ 450,000
---------
---------
</TABLE>
- ------------------------
* Assumes no exercise of the Underwriter's over-allotment option.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article SEVENTH of the Certificate of Incorporation of Unity First
Acquisition Corp. ("Registrant") provides with respect to the indemnification of
directors and officers that Registrant shall indemnify to the fullest extent
permitted by Sections 102(b)(7) and 145 of the Delaware General Corporation Law,
as amended from time to time, each person that such Sections grant Registrant
the power to indemnify. Article SEVENTH of the Certificate of Incorporation of
Registrant also provides that no director shall be liable to the corporation or
any of its stockholders for monetary damages for breach of fiduciary duty as a
director, except with respect to (1) a breach of the director's duty of loyalty
to the corporation or its stockholders, (2) acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (3)
liability under Section 174 of the Delaware General Corporation Law or (4) a
transaction from which the director derived an improper personal benefit, it
being the intention of the foregoing provision to eliminate the liability of the
corporation's directors to the corporation or its stockholders to the fullest
extent permitted by Section 102(b)(7) of Delaware General Corporation Law, as
amended from time to time.
Reference is made to Section 5 of the Underwriting Agreement, which provides
for indemnification of the officers and directors of Registrant under certain
circumstances.
II-1
<PAGE>
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
The following sets forth information relating to all securities of
Registrant sold by it since May 30, 1996, the date of Registrant's inception:
<TABLE>
<CAPTION>
DATE OF NUMBER OF CONSIDERATION
NAME ISSUANCE SHARES PER SHARE
- ------------------------------------------------- --------------- ----------- -------------
<S> <C> <C> <C>
Lawrence Burstein................................ May 30, 1996 150,000 $ .0001
Unity Venture Capital Associates Ltd............. May 30, 1996 25,000 $ .0001
Cowen & Co., as Custodian for Stanley Hollander
IRA............................................ May 30, 1996 30,000 $ .0001
Jerome Baron..................................... May 30, 1996 12,000 $ .0001
Murdoch & Company................................ May 30, 1996 30,000 $ .0001
Cricket Services Ltd............................. May 30, 1996 39,000 $ .0001
Richard Kress & Cheryl Kress JTWROS.............. May 30, 1996 4,500 $ .0001
Stephen Verchick................................. May 30, 1996 31,000 $ .0001
Richard Braver................................... May 30, 1996 4,500 $ .0001
Dan Brecher IRA/RO............................... May 30, 1996 10,500 $ .0001
Barry Ridings.................................... May 30, 1996 6,000 $ .0001
Carl L. Norton................................... May 30, 1996 9,000 $ .0001
Financiera e Inversionista Salles, S.A........... May 30, 1996 12,000 $ .0001
Ian Barnett...................................... May 30, 1996 4,500 $ .0001
Henry Rothman.................................... May 30, 1996 6,000 $ .0001
Donald Rabinovitch............................... May 30, 1996 5,250 $ .0001
David Vozick..................................... May 30, 1996 5,250 $ .0001
Tarzana Associates............................... May 30, 1996 5,000 $ .0001
Jonathan Rothschild.............................. May 30, 1996 1,500 $ .0001
Equity Interest Inc.............................. May 30, 1996 1,500 $ .0001
Domaco Venture Capital Fund...................... May 30, 1996 1,500 $ .0001
KGM Associates................................... May 30, 1996 7,000 $ .0001
Sagres Group Ltd................................. May 30, 1996 6,000 $ .0001
Ronald Koenig.................................... May 30, 1996 30,000 $ .0001
Heptagon Investments Ltd......................... May 30, 1996 75,000 $ .0001
Jay M. Haft...................................... May 30, 1996 10,500 $ .0001
Ira Roxland...................................... May 30, 1996 6,000 $ .0001
Steven Millner................................... May 30, 1996 18,000 $ .0001
Norman Leben..................................... May 30, 1996 15,000 $ .0001
Heptagon Capital Management, Inc................. May 30, 1996 1,500 $ .0001
Michael Karfunkel................................ May 30, 1996 31,000 $ .0001
George Karfunkel................................. May 30, 1996 31,000 $ .0001
</TABLE>
On May 30, 1996, Registrant issued 58,334, 58,333, 58,333 and 25,000 Class A
and Class B Warrants to Lawrence Burstein, Norman Leben, John Cattier and Barry
Ridings, respectively, in consideration for future services to be rendered by
such persons on behalf of Registrant.
Exemption from registration under the Securities Act of 1933, as amended
(the "Securities Act"), is claimed for the sales of Common Stock referred to
above in reliance upon the exemption afforded by Section 4(2) of the Securities
Act for transactions not involving a public offering. Each certificate
evidencing such shares of Common Stock bears an appropriate restrictive legend
and "stop transfer" orders are maintained on Registrant's stock transfer records
thereagainst. None of these sales involved participation by an underwriter or a
broker-dealer.
II-2
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following is a list of Exhibits filed herewith as part of the
Registration Statement:
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement between Registrant and the Underwriters
3.1 Certificate of Incorporation of Registrant
3.2 By-laws of Registrant
3.3 Proposed Restatement of Certificate of Incorporation of Registrant
4.1 Form of certificate evidencing shares of Common Stock
4.2 Form of certificate evidencing Class A Warrants
4.3 Form of certificate evidencing Class B Warrants
4.4 Form of Unit Purchase Option between Registrant and the Underwriters
4.5 Form of Warrant Agreement between Registrant and American Stock Transfer &
Trust Company, as escrow agent
5.1 Opinion of Parker Duryee Rosoff & Haft A Professional Corporation
10.1 1996 Stock Option Plan
10.2 Form of Trust Agreement by and between Registrant and The Bank of New York
10.3 Form of Insider's Letter
10.4 Form of Escrow Agreement by and among Registrant, Lawrence Burstein, John
Cattier, Cricket Services, Ltd., Barry Ridings, Norman Leben, Unity Venture
Capital Associates Ltd. ("Unity") and American Stock Transfer & Trust
Company
10.5 General and Administrative Services Agreement, dated as of May 30, 1996, by
and between Registrant and Unity
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Parker Duryee Rosoff & Haft (included in Exhibit 5.1)
24.1 Power of Attorney (included on the signature page of Part II of this
Registration Statement)
</TABLE>
(b) Financial Statement Schedules. Financial statement schedules are omitted
because the conditions requiring their filing do not exist or the information
required thereby is included in the financial statements filed, including the
notes thereto.
ITEM 17. UNDERTAKINGS
Registrant hereby undertakes:
(1) That for purposes of determining any liability under the Securities
Act, the information omitted from the form of Prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of Prospectus filed by Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) That for the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
(3) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(a) To include any Prospectus required by Section 10(a)(3) of the
Securities Act;
(b) To reflect in the Prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the Registration Statement;
(c) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement.
(4) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(5) To provide to the Representative at the closing specified in the
Underwriting Agreement, certificates in such denominations and registered in
such names as required by the Representative to permit prompt delivery to
each purchaser.
(6) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of Registrant pursuant to Item 14 of this Part II to the
Registration Statement, or otherwise, Registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act, and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Registrant of expenses
incurred or paid by a director, officer or controlling person of Registrant
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification
by it is against the public policy as expressed in the Securities Act and
will be governed by the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Registrant has
duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York, on the 18th day of September, 1996.
UNITY FIRST ACQUISITION CORP.
By: /s/ LAWERENCE BURSTEIN
-----------------------------------------
Lawrence Burstein
PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------------ --------------------------------- ----------------------
<C> <S> <C>
/s/ LAWRENCE BURSTEIN
------------------------------------------- President, Director, Principal September 18, 1996
Lawrence Burstein Executive Officer
/s/ * Secretary, Director, Principal
------------------------------------------- Financial and Accounting September 18, 1996
Norman Leben Officer
------------------------------------------- Director
John Cattier
/s/ *
------------------------------------------- Director September 18, 1996
Barry Ridings
</TABLE>
- ------------------------
* Lawrence Burstein, pursuant to Powers of Attorney (executed by each of the
officers and directors listed above and indicated as signing above, and
filed with the Securities and Exchange Commission), by signing his name
hereto does hereby sign and execute this Amendment to the Registration
Statement on behalf of the persons referenced above.
<TABLE>
<S> <C>
/s/ LAWRENCE BURSTEIN
-------------------------------------------
September 18, 1996 Lawrence Burstein
</TABLE>
II-5
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
OF
UNITY FIRST ACQUISITION CORP.
Under Section 245 of the
Delaware General Corporation Law
We, the undersigned, President and Secretary, respectively, of UNITY FIRST
ACQUISITION CORP., a corporation existing under the laws of the State of
Delaware, DO HEREBY CERTIFY as follows:
FIRST: That the name of the corporation is UNITY FIRST ACQUISITION CORP.
SECOND: That the Certificate of Incorporation of the corporation was
filed with the Secretary of State of Delaware on May 30, 1996.
THIRD: That this Restated Certificate of Incorporation amends the
provisions of the Corporation's Certificate of Incorporation by insertion of a
new Article SEVENTH thereof and the corresponding renumbering of the Articles
following Article SEVENTH, which Article SEVENTH was duly adopted by the Board
of Directors of the Corporation, was declared advisable by Board of Directors
and was approved by written consents executed by the holders of a majority of
the outstanding stock of the Corporation entitled to vote thereon in the manner
prescribed by Sections 228 and 242 of the Delaware General Corporation Law
("DGCL"). This
<PAGE>
Restated Certificate of Incorporation was duly adopted in the manner prescribed
by Section 245 of the DGCL.
FOURTH: That the text of the Certificate of Incorporation of UNITY FIRST
ACQUISITION CORP. is hereby restated to read in full as follows:
FIRST: The name of the corporation is
UNITY FIRST ACQUISITION CORP.
SECOND: The address of the initial registered and principal office of
this corporation is this state is c/o United Corporate Services, Inc., 15
East North Street, in the City of Dover, County of Kent, State of Delaware
19901 and the name of the registered agent at said address is United
Corporate Services, Inc.
THIRD: The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the corporation laws
of the State of Delaware.
FOURTH: a) The corporation shall be authorized to issue the following
shares:
Class Number of Shares Par Value
----- ---------------- ---------
Common 20,000,000 .0001
Preferred 5,000 . 01
b) The designations and the powers, preferences and rights, and
the qualifications or restrictions thereof are as follows:
The Preferred shares shall be issued from time to time in one or more
series, with such distinctive serial designations as shall be stated and
expressed in the resolution or resolutions providing for the issue of such
shares from time to time adopted by the Board of Directors; and in such
resolution or resolutions providing for the issue of shares of each
particular series, the Board of Directors is expressly authorized to fix
the annual rate or rates of dividends for the particular series; the
dividend payment dates for the
2
<PAGE>
particular series and the date from which dividends on all shares of such
series issued prior to the record date for the first dividend payment date
shall be cumulative; the redemption price or prices for the particular
series; the voting powers for the particular series; the rights, if any, of
holders of the shares of the particular series to convert the same into
shares of any other series or class or other securities of the corporation,
with any provisions for the subsequent adjustment of such conversion
rights; and to classify or reclassify any unissued preferred shares by
fixing or altering from time to time any of the foregoing rights,
privileges and qualifications.
All the Preferred shares of any one series shall be identical with
each other in all respects, except that shares of any one series issued at
different times may differ as to the dates from which dividends thereon
shall be cumulative; and all Preferred shares shall be of equal rank,
regardless of series, and shall be identical in all respects except as to
the particulars fixed by the Board as hereinabove provided or as fixed
herein.
FIFTH: The following provisions are inserted for the management of the
business and for the conduct of the affairs of the corporation, and for
further definition, limitation and regulation of the powers of the
corporation and of its directors and stockholders:
(1) The number of directors of the corporation shall be such as from
time to time shall be fixed by, or in the manner provided in the by-laws.
Election of directors need not be by ballot unless the by-laws so provide.
(2) The Board of Directors shall have power without the assent or
vote of the stockholders:
(a) To make, alter, amend, change, add to or repeal the by-laws
of the corporation; to fix and vary the amount to be reserved for any
proper purpose; to authorize and cause to be executed mortgages and
liens upon all or any part of the property of the corporation; to
determine the use and disposition of any surplus or net profits; and
to fix the times for the declaration and payment of dividends.
(b) To determine from time to time whether, and to what times
and places and under what conditions the accounts and books of the
corporation (other than the stock ledger) or any of them, shall be
open to the inspection of the stockholders.
(3) The directors in their discretion may submit any contract or act
for approval or ratification at any annual
3
<PAGE>
meeting of the stockholders or at any meeting of the stockholders called
for the purpose of considering any such act or contract, and any contract
or act that shall be approved or be ratified by the vote of the holders of
a majority of the stock of the corporation which is represented in person
or by proxy at such meeting and entitled to vote thereat (provided that a
lawful quorum of stockholders be there represented in person or by proxy)
shall be as valid and as binding upon the corporation and upon all the
stockholders as though it had been approved or ratified by every
stockholder of the corporation, whether or not the contract or act would
otherwise be open to legal attack because of directors' interest, or for
any other reason.
(4) In addition to the powers and authorities hereinbefore or by
statute expressly conferred upon them, the directors are hereby empowered
to exercise all such powers and do all such acts and things as may be
exercised or done by the corporation; subject, nevertheless, to the
provisions of the statutes of Delaware, of this certificate, and to any by-
laws from time to time made by the stockholders; provided, however, that no
by-laws so made shall invalidate any prior act of the directors which would
have been valid if such by-law had not been made.
SIXTH: No director shall be liable to the corporation or any of its
stockholders for monetary damages for breach of fiduciary duty as a
director, except with respect to (1) a breach of the director's duty of
loyalty to the corporation or its stockholders, (2) acts or omissions not
in good faith or which involve intentional misconduct or a knowing
violation of law, (3) liability under Section 174 of the DGCL or (4) a
transaction from which the director derived an improper personal benefit,
it being the intention of the foregoing provision to eliminate the
liability of the corporation's directors to the corporation or its
stockholders to the fullest extent permitted by Section 102(b)(7) of the
DGCL, as amended from time to time. The corporation shall indemnify to the
fullest extent permitted by Sections 102(b)(7) and 145 of the DGCL, as
amended from time to time, each person that such Sections grant the
corporation the power to indemnify.
SEVENTH: The following paragraphs (A) through (D) shall apply during the
period commencing upon the consummation of the Corporation's initial public
offering of securities ("IPO") and terminating upon the consummation of any
"Business Combination," and may not be amended during such period. A
"Business Combination" shall mean the acquisition by the Corporation,
whether by merger, exchange of capital stock, asset or stock acquisition or
other similar type of transaction, of any business ("Target Business").
A. Prior to the consummation of any Business
4
<PAGE>
Combination, the corporation shall submit such Business Combination to its
stockholders for approval regardless of whether the Business Combination is
of a type which normally would require such stockholder approval under the
DGCL. In the event that the holders of a majority of the outstanding
Voting Stock vote for the approval of the Business Combination, the
Corporation shall be authorized to consummate the Business Combination;
provided that the Corporation shall not consummate any Business Combination
if 20% or more in interest of the holders of the Public Shares (as
hereafter defined) exercise their conversion rights described in paragraph
B below.
B. In the event that a Business Combination is approved in
accordance with the above paragraph A and is consummated by the
Corporation, any holder of shares of Common Stock issued in the IPO
("Public Shares") who voted against the Business Combination may demand
that the Corporation convert his Public Shares into cash. If so demanded,
the Corporation shall convert such Public Shares at a per-share conversion
price equal to the quotient determined by dividing (i) the amount in the
Trust Fund (as defined below), inclusive of any interest thereon, as of the
record date for determination of stockholders entitled to vote on the
Business Combination, by (ii) the number of Public Shares. "Trust Fund"
shall mean that trust account established by the Corporation at the
consummation of its IPO and into which certain net proceeds of the IPO are
deposited.
C. In the event that the Corporation does not consummate a Business
Combination by the later of (i) 18 months after the consummation of the IPO
or (ii) 24 months after the consummation of the IPO in the event that an
agreement for a Business Combination was executed but was not consummated
within such 18 month period (the later of such dates being referred to as
the "Termination Date"), the officers of the Corporation shall take all
such actions as may be necessary to dissolve and liquidate the Corporation
within sixty days of the Termination Date. In the event that the
Corporation is so dissolved and liquidated, liquidating distributions shall
be made only with respect to the Public Shares and the Corporation shall
pay no liquidating distributions with respect to any shares of Common Stock
outstanding prior to the consummation of the IPO.
D. A holder of Public Shares shall be entitled to receive
distributions from the Trust Fund only in the event of a liquidation of the
Corporation or in the event he demands conversion of his shares in
accordance with paragraph B above. In no other circumstances shall a
holder of Public Shares have any right or interest of any kind in or to the
Trust Fund.
EIGHTH: Whenever a compromise or arrangement is proposed
5
<PAGE>
between this corporation and its creditors or any class of them and/or
between this corporation and its stockholders or any class of them, any
court of equitable jurisdiction within the State of Delaware, may, on the
application in a summary way of this corporation or of any creditor or
stockholder thereof or on the application of any receiver or receivers
appointed for this corporation under the provisions of Section 291 of Title
8 of the Delaware Code or on the application of trustees in dissolution or
of any receiver or receivers appointed for this corporation under the
provisions of Section 279 of Title 8 of the Delaware Code order a meeting
of the creditors or class of creditors, and/or of the stockholders or class
of stockholders of this corporation, as the case may be, to be summoned in
such manner as the said court directs. If a majority in number
representing three-fourths (3/4) in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and
to any reorganization of this corporation as a consequence of such
compromise or arrangement, the said compromise or
arrangement and the said reorganization shall, if sanctioned by the court to
which the said application has been made, be binding on all the creditors or
class of creditors, and/or on all the stockholders or class of stockholders, of
this corporation, as the case may be, and also on this corporation.
NINTH: The corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate of incorporation (other
than the provisions of Article SEVENTH, which may not be amended prior to
consummation of a Business Combination) in the manner now or hereafter
prescribed by law, and all rights and powers conferred herein on
stockholders, directors and officers are subject to this reserved power.
IN WITNESS WHEREOF, we have signed this Certificate and caused the
corporate seal of the Corporation to be hereunto affixed this
day of September, 1996.
-----------------------------------
Lawrence Burstein, President
ATTEST:
- ----------------------------
Norman Leben, Secretary
6
<PAGE>
NUMBER SHARES
[ ] [ ]
UNITY FIRST ACQUISITION CORP.
COMMON STOCK
CUSIP
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
THIS SEE REVERSE FOR
CERTIFIES CERTAIN DEFINITIONS
THAT
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK, PAR VALUE $.0001 PER
SHARE, OF
UNITY FIRST ACQUISITION CORP.
CERTIFICATE OF STOCK
(hereinafter called the "Corporation"), transferable upon the books of the
Corporation by the holder hereof in person or by duly authorized attorney upon
surrender of this certificate properly endorsed. This certificate and the
shares represented hereby are issued under and shall be subject to all the
provisions of the Certificate of Incorporation and By-Laws of the Corporation
(copies of which are on file at the office of the Transfer Agent of the
Corporation), to all of which the holder by acceptance hereof assents.
This certificate is not valid unless countersigned by the Transfer Agent.
Witness the facsimile seal of the Corporation and the facsimile signatures of
its duly authorized officers.
Dated:
UNITY FIRST ACQUISITION CORP.
CORPORATE /s/ NORMAN LEBEN /s/ LAWRENCE BURSTEIN
SEAL SECRETARY PRESIDENT
1996
DELAWARE
COUNTERSIGNED:
AMERICAN STOCK TRANSFER & TRUST COMPANY
(NEW YORK, NY) TRANSFER AGENT
BY
AUTHORIZED OFFICER
<PAGE>
UNITY FIRST ACQUISITION CORP.
The Corporation will furnish without charge to each stockholder who so
requests, a statement of the powers, designations, preferences and relative,
participating, optional, or other special rights or each class of stock or
series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM-as tenants in common UNIF GIFT MIN ACT-...........Custodian...........
TEN ENT-as tenants by the entireties (Cust) (Minor)
JT TEN -as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act............
in common (State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
For value received, hereby sell, assign and transfer unto
------------
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
shares
- --------------------------------------------------------------------------
of the capital stock represented by the within Certificate; and do hereby
irrevocably constitute and appoint
Attorney
- ------------------------------------------------------------------------
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated
----------------------
-----------------------------------------------------------------
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
<PAGE>
VOID AFTER , 2002
NO. WA CLASS A REDEEMABLE WARRANT CERTIFICATE TO
PURCHASE SHARES OF COMMON STOCK
WARRANTS
UNITY FIRST ACQUISITION CORP.
THIS CERTIFIES THAT, FOR VALUE RECEIVED CUSIP
or registered assigns (the "Registered Holder") is the owner of the number of
Class A Redeemable Common Stock Purchase Warrants (the "Warrants") specified
above. Each Warrant initially entitles the Registered Holder to purchase,
subject to the terms and conditions set forth in this Certificate and the
Warrant Agreement (as hereinafter defined), one fully paid and nonassessable
share of Common Stock, $.0001 par value, of Unity First Acquisition Corp., a
Delaware corporation (the "Company"), at any time from the Commencement Date
(as hereinafter defined) to the Expiration Date (as hereinafter defined) upon
the presentation and surrender of this Warrant Certificate with the Subscription
Form on the reverse hereof duly executed, at the corporate office of American
Stock Transfer & Trust Company, 40 Wall Street, New York, New York 10005, as
Warrant Agent, or its successor (the "Warrant Agent"), accompanied by payment
of $5.50, subject to adjustment (the "Purchase Price"), in lawful money of the
United States of America in cash or by check made payable to the Warrant Agent
for the account of the Company.
This Warrant Certificate and each Warrant represented hereby are issued
pursuant to and are subject in all respects to the terms and conditions set
forth in the Warrant Agreement (the "Warrant Agreement"), dated as of ,
1996, by and between the Company and the Warrant Agent.
In the event of certain contingencies provided for in the Warrant
Agreement, the Purchase Price and the number of shares of Common Stock subject
to purchase upon the exercise of each Warrant represented hereby are subject to
modification or adjustment.
Each Warrant represented hereby is exercisable at the option of the
Registered Holder, but no fractional interests will be issued. In the case of
the exercise of less than all the Warrants represented hereby, the Company shall
cancel this Warrant Certificate upon the surrender hereof and shall execute and
deliver a new Warrant Certificate or Warrant Certificates of like tenor, which
the Warrant Agent shall countersign, for the balance of such Warrants.
The term "Commencement Date" shall mean the later of (i) , 1996 or
(ii) the date of the consummation of a merger, exchange of capital stock, asset
acquisition or other similar business combination of the Company with an
operating business. The term "Expiration Date" shall mean 5:00 P.M. (New York
City time) on , 2002. If each such date shall in the State of New York
be a holiday or a day on which the banks are authorized to close, then the
Expiration Date shall mean 5:00 P.M. (New York City time) the next following day
which in the State of New York is not a holiday or a day on which banks are
authorized to close.
The Company shall not be obligated to deliver any securities pursuant to
the exercise of this Warrant unless a registration statement under the
Securities Act of 1933, as amended (the "Act"), with respect to such
securities is effective or an exemption thereunder is available. The Company
has covenanted and agreed that it will file a registration statement under
the Federal securities laws, use its best efforts to cause the same to become
effective, to keep such registration statement current, if required under the
Act, while any of the Warrants are outstanding, and deliver a prospectus
which complies with Section 10(a)(3) of the Act to the Registered Holder
exercising this Warrant. This Warrant shall not be exercisable by a
Registered Holder in any state where such exercise would be unlawful.
This Warrant Certificate is exchangeable, upon the surrender hereof by
the Registered Holder at the corporate office of the Warrant Agent, for a new
Warrant Certificate or Warrant Certificates of like tenor representing an
equal aggregate number of Warrants, each of such new Warrant Certificates to
represent such number of Warrants as shall be designated by such Registered
Holder at the time of such surrender. Upon due presentment and payment of
any tax or other charge imposed in connection therewith or incident thereto,
for registration of transfer of this Warrant Certificate at such office, a
new Warrant Certificate or Warrant Certificates representing an equal
aggregate number of Warrants will be issued to the transferee in exchange
therefor, subject to the limitations provided in the Warrant Agreement.
Prior to the exercise of any Warrant represented hereby, the Registered
Holder shall not be entitled to any rights of a stockholder of the Company,
including, without limitation, the right to vote or to receive dividends or
other distributions, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided in the Warrant Agreement.
Subject to the provisions of the Warrant Agreement, this Warrant may be
redeemed at the option of the Company, at a redemption price of $.05 per
Warrant, at any time commencing after the Commencement Date, provided that
(1) the high bid price for the Company's Common Stock as reported by the
National Association of Securities Dealers Automated Quotation System, or
(ii) the closing price on the primary exchange on which the Common Stock is
traded, if the Common Stock is traded on a securities exchange, shall have,
for twenty (20) consecutive trading days immediately prior to the notice of
redemption, equalled or exceeded $8.50 per share (subject to adjustment in
the event of any stock splits or other similar events). Notice of redemption
shall be given not less than the thirtieth day before the date fixed for
redemption, all as provided in the Warrant Agreement. On and after the date
fixed for redemption, the Registered Holder shall have no rights with respect
to this Warrant except to receive the $.05 per Warrant upon surrender of this
Certificate.
In accordance with the Warrant Agreement, GKN Securities Corp. and
Gaines, Berland Inc., collectively, shall be entitled to receive a commission
equal to 5% of the proceeds received by the Company from the exercise of the
Warrants and the Class A Redeemable Common Stock Purchase Warrants of the
Company.
Prior to due presentment for registration of transfer hereof, the
Company and the Warrant Agent may deem and treat the Registered Holder as the
absolute owner hereof and of each Warrant represented hereby (notwithstanding
any notations of ownership or writing hereon made by anyone other than a
duly authorized officer of the Company or the Warrant Agent) for all purposes
and shall not be affected by any notice to the contrary, except as provided
in the Warrant Agreement.
This Warrant Certificate shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to
conflicts of laws.
This Warrant Certificate is not valid unless countersigned by the Warrant
Agent.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed, manually or in facsimile by two of its officers thereunto duly
authorized and a facsimile of its corporate seal to be imprinted hereon.
Dated: UNITY FIRST ACQUISITION CORP.
COUNTERSIGNED: By: By:
AMERICAN STOCK TRANSFER & TRUST COMPANY
as Warrant Agent
UNITY FIRST ACQUISITION CORP.
CORPORATE
By: SEAL
1996 /s/Norman Leben /s/Lawrence Burstein
DELAWARE
*
Authorized Officer SECRETARY PRESIDENT
<PAGE>
SUBSCRIPTION FORM
To Be Executed by the Registered Holder in Order to Exercise Warrants
The undersigned Registered Holder hereby irrevocably elects to exercise
Warrants represented by this Warrant
- ----------------------------------
Certificate, and to purchase the securities issuable upon the exercise of such
Warrants, and requests that certificates for such securities shall be issued in
name of
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(please print or type name and address)
and be delivered to
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(please print or type name and address)
and if such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Registered Holder
at the address stated below.
Dated: X
------------------------------ ---------------------------------------
---------------------------------------
---------------------------------------
---------------------------------------
Address
---------------------------------------
Social Security or Taxpayer
Identification Number
---------------------------------------
Signature Guaranteed
---------------------------------------
The undersigned represents that the exercise of the within Warrant was
solicited by GKN Securities Corp. and/or Gaines, Berland Inc. If not
solicited by GKN Securities Corp. and/or Gaines, Berland Inc., please write
"unsolicited" in the space below or write the name of the broker/dealer which
solicited your exercise. Unless otherwise indicated, it will be assumed that
the exercise was solicited by GKN Securities Corp. and/or Gaines, Berland Inc.
---------------------------------------
(Write "unsolicited" on above line if
not solicited by GKN Securities Corp.
and/or Gaines, Berland Inc.)
DATED: SIGNATURE:
-------------------------------- -----------------------------
ASSIGNMENT
FOR VALUE RECEIVED,
-------------------------------------------------------,
hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(please print or type name and address)
- --------------------
of the Warrants represented by this Warrant Certificate,
and hereby irrevocably constitutes and appoints
- --------------------------------------------------------------------------------
Attorney to transfer this Warrant Certificate on the books of the Company, with
full power of substitution in the premises.
Dated: X
--------------------------------- -------------------------------------
Signature Guaranteed
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO THE
NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER AND MUST BE
GUARANTEED BY A COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF THE
AMERICAN STOCK EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE OR
MIDWEST STOCK EXCHANGE.
<PAGE>
VOID AFTER , 2002
NO. WB CLASS B REDEEMABLE WARRANT CERTIFICATE TO
PURCHASE SHARES OF COMMON STOCK
WARRANTS
UNITY FIRST ACQUISITION CORP.
THIS CERTIFIES THAT, FOR VALUE RECEIVED CUSIP
or registered assigns (the "Registered Holder") is the owner of the number of
Class B Redeemable Common Stock Purchase Warrants (the "Warrants") specified
above. Each Warrant initially entitles the Registered Holder to purchase,
subject to the terms and conditions set forth in this Certificate and the
Warrant Agreement (as hereinafter defined), one fully paid and nonassessable
share of Common Stock, $.0001 par value, of Unity First Acquisition Corp., a
Delaware corporation (the "Company"), at any time from the Commencement Date
(as hereinafter defined) to the Expiration Date (as hereinafter defined) upon
the presentation and surrender of this Warrant Certificate with the Subscription
Form on the reverse hereof duly executed, at the corporate office of American
Stock Transfer & Trust Company, 40 Wall Street, New York, New York 10005, as
Warrant Agent, or its successor (the "Warrant Agent"), accompanied by payment
of $7.50, subject to adjustment (the "Purchase Price"), in lawful money of the
United States of America in cash or by check made payable to the Warrant Agent
for the account of the Company.
This Warrant Certificate and each Warrant represented hereby are issued
pursuant to and are subject in all respects to the terms and conditions set
forth in the Warrant Agreement (the "Warrant Agreement"), dated as of ,
1996, by and between the Company and the Warrant Agent.
In the event of certain contingencies provided for in the Warrant
Agreement, the Purchase Price and the number of shares of Common Stock subject
to purchase upon the exercise of each Warrant represented hereby are subject to
modification or adjustment.
Each Warrant represented hereby is exercisable at the option of the
Registered Holder, but no fractional interests will be issued. In the case of
the exercise of less than all the Warrants represented hereby, the Company shall
cancel this Warrant Certificate upon the surrender hereof and shall execute and
deliver a new Warrant Certificate or Warrant Certificates of like tenor, which
the Warrant Agent shall countersign, for the balance of such Warrants.
The term "Commencement Date" shall mean the later of (i) , 1996 or
(ii) the date of the consummation of a merger, exchange of capital stock, asset
acquisition or other similar business combination of the Company with an
operating business. The term "Expiration Date" shall mean 5:00 P.M. (New York
City time) on , 2002. If each such date shall in the State of New York
be a holiday or a day on which the banks are authorized to close, then the
Expiration Date shall mean 5:00 P.M. (New York City time) the next following day
which in the State of New York is not a holiday or a day on which banks are
authorized to close.
The Company shall not be obligated to deliver any securities pursuant to
the exercise of this Warrant unless a registration statement under the
Securities Act of 1933, as amended (the "Act"), with respect to such
securities is effective or an exemption thereunder is available. The Company
has covenanted and agreed that it will file a registration statement under
the Federal securities laws, use its best efforts to cause the same to become
effective, to keep such registration statement current, if required under the
Act, while any of the Warrants are outstanding, and deliver a prospectus
which complies with Section 10(a)(3) of the Act to the Registered Holder
exercising this Warrant. This Warrant shall not be exercisable by a
Registered Holder in any state where such exercise would be unlawful.
This Warrant Certificate is exchangeable, upon the surrender hereof by
the Registered Holder at the corporate office of the Warrant Agent, for a new
Warrant Certificate or Warrant Certificates of like tenor representing an
equal aggregate number of Warrants, each of such new Warrant Certificates to
represent such number of Warrants as shall be designated by such Registered
Holder at the time of such surrender. Upon due presentment and payment of
any tax or other charge imposed in connection therewith or incident thereto,
for registration of transfer of this Warrant Certificate at such office, a
new Warrant Certificate or Warrant Certificates representing an equal
aggregate number of Warrants will be issued to the transferee in exchange
therefor, subject to the limitations provided in the Warrant Agreement.
Prior to the exercise of any Warrant represented hereby, the Registered
Holder shall not be entitled to any rights of a stockholder of the Company,
including, without limitation, the right to vote or to receive dividends or
other distributions, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided in the Warrant Agreement.
Subject to the provisions of the Warrant Agreement, this Warrant may be
redeemed at the option of the Company, at a redemption price of $.05 per
Warrant, at any time commencing after the Commencement Date, provided that
(1) the high bid price for the Company's Common Stock as reported by the
National Association of Securities Dealers Automated Quotation System, or
(ii) the closing price on the primary exchange on which the Common Stock is
traded, if the Common Stock is traded on a securities exchange, shall have,
for twenty (20) consecutive trading days immediately prior to the notice of
redemption, equalled or exceeded $10.50 per share (subject to adjustment in
the event of any stock splits or other similar events). Notice of redemption
shall be given not less than the thirtieth day before the date fixed for
redemption, all as provided in the Warrant Agreement. On and after the date
fixed for redemption, the Registered Holder shall have no rights with respect
to this Warrant except to receive the $.05 per Warrant upon surrender of this
Certificate.
In accordance with the Warrant Agreement, GKN Securities Corp. and
Gaines, Berland Inc., collectively, shall be entitled to receive a commission
equal to 5% of the proceeds received by the Company from the exercise of the
Warrants and the Class A Redeemable Common Stock Purchase Warrants of the
Company.
Prior to due presentment for registration of transfer hereof, the
Company and the Warrant Agent may deem and treat the Registered Holder as the
absolute owner hereof and of each Warrant represented hereby (notwithstanding
any notations of ownership or writing hereon made by anyone other than a
duly authorized officer of the Company or the Warrant Agent) for all purposes
and shall not be affected by any notice to the contrary, except as provided
in the Warrant Agreement.
This Warrant Certificate shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to
conflicts of laws.
This Warrant Certificate is not valid unless countersigned by the Warrant
Agent.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed, manually or in facsimile by two of its officers thereunto duly
authorized and a facsimile of its corporate seal to be imprinted hereon.
Dated: UNITY FIRST ACQUISITION CORP.
COUNTERSIGNED: By: By:
AMERICAN STOCK TRANSFER & TRUST COMPANY
as Warrant Agent
UNITY FIRST ACQUISITION CORP.
CORPORATE
By: SEAL
1996 /s/Norman Leben /s/Lawrence Burstein
DELAWARE
*
Authorized Officer SECRETARY PRESIDENT
<PAGE>
SUBSCRIPTION FORM
To Be Executed by the Registered Holder in Order to Exercise Warrants
The undersigned Registered Holder hereby irrevocably elects to exercise
Warrants represented by this Warrant
- ----------------------------------
Certificate, and to purchase the securities issuable upon the exercise of such
Warrants, and requests that certificates for such securities shall be issued in
name of
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(please print or type name and address)
and be delivered to
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(please print or type name and address)
and if such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Registered Holder
at the address stated below.
Dated: X
------------------------------ ---------------------------------------
---------------------------------------
---------------------------------------
---------------------------------------
Address
---------------------------------------
Social Security or Taxpayer
Identification Number
---------------------------------------
Signature Guaranteed
---------------------------------------
The undersigned represents that the exercise of the within Warrant was
solicited by GKN Securities Corp. and/or Gaines, Berland Inc. If not
solicited by GKN Securities Corp. and/or Gaines, Berland Inc., please write
"unsolicited" in the space below or write the name of the broker/dealer which
solicited your exercise. Unless otherwise indicated, it will be assumed that
the exercise was solicited by GKN Securities Corp. and/or Gaines, Berland Inc.
---------------------------------------
(Write "unsolicited" on above line if
not solicited by GKN Securities Corp.
and/or Gaines, Berland Inc.)
DATED: SIGNATURE:
-------------------------------- -----------------------------
ASSIGNMENT
FOR VALUE RECEIVED,
-------------------------------------------------------,
hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(please print or type name and address)
- --------------------
of the Warrants represented by this Warrant Certificate,
and hereby irrevocably constitutes and appoints
- --------------------------------------------------------------------------------
Attorney to transfer this Warrant Certificate on the books of the Company, with
full power of substitution in the premises.
Dated: X
--------------------------------- -------------------------------------
Signature Guaranteed
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO THE
NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER AND MUST BE
GUARANTEED BY A COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF THE
AMERICAN STOCK EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE OR
MIDWEST STOCK EXCHANGE.
<PAGE>
September 18, 1996
Unity First Acquisition Corp.
245 Fifth Avenue - Suite 1500
New York, New York 10016
Re: Registration Statement on Form S-1
Under the Securities Act of 1933
Gentlemen:
In our capacity as counsel to Unity First Acquisition Corp., a Delaware
corporation (the "Company"), we have been asked to render this opinion in
connection with a Registration Statement on Form S-1, as amended, heretofore
filed by the Company with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Registration Statement"), covering (i)
1,250,000 shares of Common Stock (the "Shares"), (ii) 1,250,000 Class A common
stock purchase warrants to purchase an identical number of shares of Common
Stock (the "Class A Warrants"), (iii) 1,250,000 Class B common stock purchase
warrants to purchase an identical number of shares of Common Stock (the "Class B
Warrants", and collectively with the Class A Warrants, the "Warrants"), (iv)
2,500,000 shares of Common Stock issuable upon exercise of the Warrants (the
"Warrant Stock"), (v) 187,500 shares of Common Stock (the "Over-Allotment
Stock"), (vi) 187,500 Class A Warrants to purchase an identical number of shares
of Common Stock (the "Class A Over-Allotment Warrants") (vii) 187,500 Class B
Warrants to purchase an identical number of shares of Common Stock (the "Class B
Over-Allotment Warrants", and collectively with the Class A Over-Allotment
Warrants, the "Over-Allotment Warrants"), (viii) 375,000 shares of Common Stock
issuable upon exercise of the Over-Allotment Warrants (the "Over-Allotment
Warrant Stock"), (ix) warrants issuable to the underwriters named in the
Registration Statement to purchase Units (the "Underwriters' Unit Warrants"),
consisting of (A) 125,000 shares of Common Stock (the "Underwriters' Stock"),
(B) 125,000 Class A Warrants to purchase an identical number of shares of Common
Stock (the "Underwriters' Class A Warrants") and (C) 125,000 Class B Warrants to
purchase an identical number of shares of Common Stock (the "Underwriters' Class
B Warrants", and collectively with the Underwriters' Class A Warrants, the
"Underwriters' Warrants"), (x) 250,000 shares of Common Stock
<PAGE>
Unity First Acquisition Corp.
September 18, 1996
Page 2
issuable upon exercise of the Underwriters' Warrants (the "Underwriters' Warrant
Stock"), (xi) 100,000 Class A Warrants beneficially owned by the directors of
the Company to purchase an identical number of shares of Common Stock (the
"Directors' Class A Warrants"), (xii) 100,000 Class B Warrants beneficially
owned by the directors of the Company to purchase an identical number of shares
of Common Stock (the "Directors' Class B Warrants" and collectively with the
Directors' Class A Warrants, the "Directors' Warrants"), and (xiii) 200,000
shares of Common Stock issuable upon exercise of the Directors' Warrants (the
"Directors' Warrant Stock").
In that connection, we have examined the Certificate of Incorporation, and
the By-Laws of the Company, the Registration Statement, corporate proceedings of
the Company relating to the issuance of the Shares, Warrants, Warrant Stock,
Over-Allotment Stock, Over-Allotment Warrants, Over-Allotment Warrant Stock,
Underwriters' Unit Warrants, Underwriters' Stock, Underwriters' Warrants,
Underwriters' Warrant Stock, Directors' Warrants and Directors' Warrant Stock,
respectively, and such other instruments and documents as we have deemed
relevant under the circumstances.
In making the aforesaid examinations, we have assumed the genuineness of
all signatures and the conformity to original documents of all copies furnished
to us as original or photostatic copies. We have also assumed that the
corporate records furnished to us by the Company include all corporate
proceedings taken by the Company to date.
Based upon and subject to the foregoing, we are of the opinion that:
(1) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.
(2) The Shares, Warrant Stock, Over-Allotment Stock, the Over-Allotment
Warrant Stock, Underwriters' Stock, Underwriters' Warrant Stock and
Directors' Warrant Stock have each been duly and validly authorized and,
when issued and paid for as described in the Registration Statement, will
be duly and validly issued, fully paid and non-assessable.
(3) The Warrants, Over-Allotment Warrants, Underwriters' Unit Warrants,
Underwriters' Warrants and Directors' Warrants have each been duly and
validly authorized and, when issued and paid for as described in the
Registration Statement, will be duly and validly issued.
<PAGE>
Unity First Acquisition Corp.
September 18, 1996
Page 3
We hereby consent to the use of our opinion as herein set forth as an
exhibit to the Registration Statement and to the use of our name under the
caption "Legal Matters" in the prospectus forming a part of the Registration
Statement.
Very truly yours,
PARKER DURYEE ROSOFF & HAFT
By:/s/Ira Roxland
--------------------------
A Member of the Firm
<PAGE>
TRUST AGREEMENT dated , 1996 by and
between UNITY FIRST ACQUISITION CORP. (the
"Company") and THE BANK OF NEW YORK (the
"Trustee").
____________________________________________
The Company's Registration Statement on Form S-1, No. 333-11165 (the
"Registration Statement"), for its initial public offering of securities (the
"IPO") was declared effective by the Securities and Exchange Commission on
, 1996 (such date on which the Registration Statement was declared effective
being referred to as the "Effective Date");
GKN Securities Corp. and Gaines, Berland Inc. are the underwriter in
the IPO;
A percentage of the gross proceeds of the IPO, will be delivered to
the Trustee to be deposited and held in a trust account for the benefit of the
Company and all of the stockholders of the Company other than the owners of the
shares of the Company's Common Stock outstanding immediately prior to the
Effective Date, all as set forth herein (the amount to be delivered to the
Trustee will be referred to herein as the "Property"); the stockholders for
whose benefit the Trustee shall hold the Property will be referred to as the
"Public Stockholders" and the Public Stockholders and the Company will be
referred to collectively as the "Beneficiaries");
The Company and the Trustee desire to enter into an agreement setting
forth the terms and conditions pursuant to which the Trustee shall hold the
Property;
NOW, THEREFORE, the parties hereto agree as follows:
1. AGREEMENTS AND COVENANTS OF TRUSTEE. The Trustee hereby agrees
and covenants to:
(a) Hold the Property in trust for the Beneficiaries in
accordance with the terms of this Agreement and in a trust account ("Trust
Account");
(b) Manage, supervise and administer the Trust Account subject
to the terms and conditions set forth herein;
(c) Make such investments and reinvestments of the Property in
U.S. Government securities and money market vehicles in a timely manner at the
direction of the Company. Interest and other earnings on the Property shall be
added to the principal of the Trust Account and shall be included in the term
"Property" as used herein;
(d) Collect and receive, when due, all principal and income
arising from the Property;
(e) Notify the Company of all communications received by it with
respect to any Property requiring action by the Company;
(f) Supply any necessary information or documents as may be
requested by the Company in connection with the Company's preparation of the tax
returns for the Trust Account;
(g) Participate in any plan or proceeding for protecting or
enforcing any right
<PAGE>
or interest arising from the Property if, as and when instructed by the Company
to do so;
(h) Render to the Company, and to such other person as the
Company may instruct, monthly written statements of the activities of and
amounts in the Trust Account reflecting all receipts and disbursements of the
Trust Account; and
(i) Commence liquidation of the Trust Account only after receipt
of and only in accordance with the terms of a letter ("Termination Letter"), in
a form substantially similar to that attached hereto as either Exhibit A or
Exhibit B, signed on behalf of the Company by its President or Chairman of the
Board and Secretary. The Trustee shall complete the liquidation of the Trust
Account and distribute the Property in the Trust Account only as directed in the
Termination Letter.
2. AGREEMENTS AND COVENANTS OF THE COMPANY. The Company hereby
agrees and covenants to:
(a) Give all instructions to the Trustee hereunder in writing,
signed by the Company's President or Chairman of the Board. In addition, except
with respect to its duties under paragraph 1(i) above, the Trustee shall be
entitled to rely on, and shall be protected in relying on, any verbal or
telephonic advice or instruction which it in good faith believes to be given by
any one of the persons authorized above to give written instructions.
(b) Hold the Trustee harmless and indemnify the Trustee from and
against, any and all expenses, including reasonable counsel fees and
disbursements, or loss suffered by the Trustee in connection with any action,
suit or other proceeding brought against the Trustee involving any claim or
demand, or in connection with any claim or demand, which in any way arises out
of or relates to this Agreement, the services of the Trustee hereunder, or the
Property or any income earned from investment of the Property. Promptly after
the receipt by the Trustee of notice of demand or claim or the commencement of
any action, suit or proceeding, pursuant to which the Trustee intends to seek
indemnification under this paragraph, it shall notify the Company in writing of
such claim (hereinafter referred to as the "Indemnified Claim"). The Trustee
shall have the right to conduct and manage the defense against such Indemnified
Claim, provided, that the Trustee shall obtain the consent of the Company with
respect to the selection of counsel, which consent shall not be unreasonably
withheld. Notwithstanding the foregoing sentence, the Trustee shall not have
the right to settle any action without the consent of the Company, which consent
shall not be unreasonably withheld. The Company may participate in such action
with its own counsel.
(c) Pay the Trustee an annual fee of of 1% of the total
market value of the Trust Account, payable quarterly on a pro rata basis. The
Trustee shall be compensated for any special services that it may render
provided that the nature of the services and the amount of the compensation
shall be agreed upon by the Trustee and the Company in advance of the rendering
of such services. The Trustee shall also be compensated for all reasonable
expenses that it may incur in the event that it may submit an application to
have the property deposited with the United States District Court for the
Southern District of New York. The Company shall not be responsible for any
other fees or charges of the Trustee except as may be provided by the foregoing
sentences and in paragraphs 2(b) and 3(i) hereof.
3. LIMITATIONS OF LIABILITY. The Trustee shall have no
responsibility or liability to:
(a) Take any action with respect to the Property, other than as
directed in
2
<PAGE>
paragraph 1 hereof and the Trustee shall have no liability to any party except
for liability arising out of its own gross negligence or willful misconduct;
(b) Institute any proceeding for the collection of any principal
and income arising from, or institute, appear in or defend any proceeding of any
kind with respect to, any of the Property unless and until it shall have
received instructions from the Company given as provided herein to do so and it
shall have advanced or guaranteed to it funds sufficient to meet any expenses
incident thereto;
(c) Change the investment of any Property, other than in
compliance with paragraph 1(c);
(d) Refund any depreciation in principal of any Property;
(e) Assume that the authority of any person designated by the
Company to give instructions hereunder shall not be continuing unless provided
otherwise in such designation, or unless the Company shall have delivered a
written revocation of such authority to the Trustee;
(f) The other parties hereto or to anyone else for any action
taken or omitted by it, or any action suffered by it to be taken or omitted, in
good faith and in the exercise of its own best judgment, except for its gross
negligence or willful misconduct. The Trustee may rely conclusively and shall
be protected in acting upon any order, notice, demand, certificate, opinion or
advice of counsel (including counsel chosen by the Trustee), statement,
instrument, report or other paper or document (not only as to its due execution
and the validity and effectiveness of its provisions, but also as to the truth
and acceptability of any information therein contained) which is believed by the
Trustee, in good faith, to be genuine and to be signed or presented by the
proper person or persons. The Trustee shall not be bound by any notice or
demand, or any waiver, modification, termination or rescission of this agreement
or any of the terms hereof, unless evidenced by a writing delivered to the
Trustee signed by the proper party or parties and, if the duties or rights of
the Trustee are affected, unless it shall give its prior written consent
thereto;
(g) Be responsible for the sufficiency or accuracy of the form
of, or the execution, validity, value or genuineness of, any document or
property received, held or delivered by it hereunder, or of any signature or
endorsement thereon, or for any lack of endorsement thereon, or for any
description therein, nor shall the Trustee be responsible or liable to the other
parties hereto or to anyone else in any respect on account of the liability,
authority, or rights of the persons executing or delivering or purporting to
execute or deliver any document or property or this Agreement. The Trustee
shall have no responsibility with respect to the use or application of any funds
or other property paid or delivered by the Trustee pursuant to the provisions
hereof;
(h) Verify the correctness of the information set forth in the
Registration Statement or to confirm or assure that any acquisition made by the
Company or any other action taken by it is as contemplated by the Registration
Statement;
(i) Pay any taxes on behalf of the Trust Account; and
(j) The Trustee shall have no duties or responsibilities except
as expressly provided in this Agreement, and no implied covenants or obligations
shall be read into this Agreement against the Trustee. The Trustee shall
neither be obligated to recognize nor have any liability or responsibility
arising out of any other agreement to which the Trustee is not a party even
though reference thereto may be made herein.
3
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4. TERMINATION. This Agreement shall terminate as follows:
(a) If the Trustee gives written notice to the Company that it
desires to terminate this Agreement, the Company shall use its reasonable
efforts to locate a successor trustee. At such time that the Company notifies
the Trustee that a successor trustee has been appointed by the Company and has
agreed to become subject to the terms of this Agreement, the Trustee shall
transfer the management of the Trust Account to the successor trustee, including
but not limited to the transfer of copies of the reports and statements relating
to the Trust Account, whereupon this Agreement shall terminate; provided,
however, that in the event that the Company does not locate a successor trustee
within ninety days of receipt of the resignation notice from the Trustee, the
Trustee may submit an application to have the Property deposited with the United
States District Court for the Southern District of New York.
(b) At such time that the Trustee has completed the liquidation
of the Trust Account in accordance with the provisions of paragraph 1(i) hereof,
and distributed the Property in accordance with the provisions of the
Termination Letter, this Agreement shall terminate; or
(c) On such date after , 1998 when the Trustee
deposits the Property with the United States District Court for the Southern
District of New York in the event that, prior to such date, the Trustee has not
received a Termination Letter from the Company pursuant to paragraph 1(i).
5. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York, without giving
effect to conflict of laws. It may be executed in several counterparts, each
one of which shall constitute an original, and all collectively shall constitute
but one instrument.
(b) This Agreement contains the entire agreement and
understanding of the parties hereto with respect to the subject matter hereof.
This Agreement or any provision hereof may only be changed, amended or modified
by a writing signed by each of the parties hereto.
(c) The parties hereto consent to the jurisdiction and venue of
any state or federal court located in the City of New York for purposes of
resolving any disputes hereunder.
(d) Any notice, consent or request to be given in connection
with any of the terms or provisions of this Agreement shall be in writing and
shall be sent by express mail or similar private courier services, by certified
mail (return receipt requested), by hand delivery or by facsimile transmission:
If to the Trustee, to:
The Bank of New York
Fax No.: (212)
Attention:
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<PAGE>
If to the Company, to:
Unity First Acquisition Corp.
245 Fifth Avenue - Suite 1500
New York, New York 10016
Fax No.: (212) 447-7020
in either case with a copy to:
GKN Securities Corp.
61 Broadway
New York, New York 10006
Fax. No.: (212)
Attention:
and
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
Fax No.: (718) 236-4588
(e) This Agreement may not be assigned by the Trustee without
the consent of the Company.
(f) Each of the Trustee and the Company hereby represents that
it has the full right and power and has been duly authorized to enter into this
Agreement and to perform its respective obligations as contemplated hereunder.
The Trustee acknowledges and agrees that it shall not make any claims or proceed
against the Trust Account, including by way of set-off, and shall not be
entitled to any funds in the Trust Account except to the extent of the fees and
other costs described in paragraph 2(c).
IN WITNESS WHEREOF, the parties have duly executed this
Investment Management Trust Agreement as of the date first written above.
THE BANK OF NEW YORK, as Trustee
By: ______________________________________________
Name:
Title:
UNITY FIRST ACQUISITION CORP.
By: ______________________________________________
Name: Lawrence Burstein
Title: President
5
<PAGE>
EXHIBIT A
[Letterhead of Company]
[Insert date]
The Bank of New York
Re: TRUST ACCOUNT NO. _________________TERMINATION LETTER
Gentlemen:
Pursuant to paragraph 1(i) of the Trust Agreement between Unity First
Acquisition Corp. ("Company") and The Bank of New York as trustee ("Trustee"),
dated as of , 1996 ("Trust Agreement"), this is to advise you that
the Company has entered into an agreement ("Business Agreement") with
_______________ ("Target Business") to consummate a business combination with a
Target Business ("Business Combination") on or about [insert date]. The Company
shall notify you at least 48 hours in advance of the actual date of the
consummation of the Business Combination ("Consummation Date").
In accordance with the terms of the Trust Agreement, we hereby authorize
you to commence liquidation of the Trust Account to the effect that, on the
Consummation Date, all of funds held in the Trust Account will be immediately
available for transfer to the account or accounts that the Company shall direct
on the Consummation Date.
On the Consummation Date (i) counsel for the Company shall deliver to you
written notification that the Business Combination has been consummated, and
(ii) the Company shall deliver to you written instructions with respect to the
transfer of the funds held in the Trust Account ("Instruction Letter"). You are
hereby directed and authorized to transfer the funds held in the Trust Account
immediately upon your receipt of the counsel's letter and the Instruction
Letter, in accordance with the terms of the Instruction Letter. In the event
certain deposits held in the Trust Account may not be liquidated by the
Consummation Date without penalty, you will notify the Company of the same and
the Company shall direct you as to whether such funds should remain in the Trust
Account and distributed after the Consummation Date to the Company. Upon the
distribution of all the funds in the Trust Account pursuant to the terms hereof,
the Trust Agreement shall be terminated.
Very truly yours,
UNITY FIRST ACQUISITION CORP.
By: ______________________________________
Lawrence Burstein, President
By: ______________________________________
Norman Leben, Secretary
6
<PAGE>
EXHIBIT B
[Letterhead of Company]
[Insert date]
The Bank of New York
Re: TRUST ACCOUNT NO._________________TERMINATION LETTER
Gentlemen:
Pursuant to paragraph 1(i) of the Trust Agreement between Unity First
Acquisition Corp. ("Company") and The Bank of New York as trustee ("Trustee"),
dated as of , 1996 ("Trust Agreement"), this is to advise you that
the Board of Directors of the Company has voted to dissolve and liquidate the
Company. Attached hereto is a copy of the minutes of the meeting of the Board
of Directors of the Company relating thereto, certified by the secretary of the
Company.
In accordance with the terms of the Trust Agreement, we hereby authorize
you to commence liquidation of the Trust Account. You will notify the Company
and American Stock Transfer & Trust Company ("Designated Paying Agent") in
writing as to when all of the funds in the Trust Account will be available for
immediate transfer ("Transfer Date"). The Designated Paying Agent shall
thereafter notify you as to the account or accounts of the Designated Paying
Agent that the funds in the Trust Account should be transferred to on the
Transfer Date so that the Designated Paying Agent may commence distribution of
such funds in accordance with the Company's instructions. You shall have no
obligation to oversee the Designated Paying Agent's distribution of the funds.
Upon the payment to the Designated Paying Agent of all the funds in the Trust
Account, the Trust Agreement shall be terminated.
Very truly yours,
UNITY FIRST ACQUISITION CORP.
By: ______________________________________
Lawrence Burstein, President
By: ______________________________________
Norman Leben, Secretary
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<PAGE>
Name: _____________________
_______________, 1996
Unity First Acquisition Corp.
245 Fifth Avenue, Suite 1500
New York, New York 10016
GKN Securities Corp.
61 Broadway, 12th Floor
New York, New York 10006
Re: Initial Public Offering
-----------------------
Gentlemen:
The undersigned stockholder, officer and/or director of Unity First
Acquisition corp. ("Unity"), in consideration of GKN Securities Corp. ("GKN")
entering into a letter of intent ("Letter of Intent") to underwrite an initial
public offering of Unity, hereby agrees as follows (certain capitalized terms
used herein are defined in paragraph 10 hereof):
1. If Unity solicits approval of its stockholders of a Business
Combination, the undersigned will vote all of the shares of Common Stock of
Unity owned by him in accordance with the majority of the votes cast by the
Public Stockholders.
2. In the event that Unity fails to consummate a Business
Combination within 18 months from the effective date ("Effective Date") of the
registration statement relating to the IPO (or 24 months under the circumstances
described in the prospectus relating to the IPO), the undersigned will use its
best efforts to cause Unity to liquidate. The undersigned waives any and all
rights he may have to receive any distribution of cash, property or other assets
as a result of such liquidation.
3. The undersigned hereby agrees that it does not have any right,
title, interest or claim of any kind in or to any monies in the Trust Fund
("Claim") and hereby waives any Claim it may have in the future as a result of,
or arising out of, any contracts or agreements with Unity and will not seek
recourse against the Trust Fund for any reason whatsoever.
4. In order to minimize potential conflicts of interest which may
arise from multiple affiliations, the undersigned agrees to present to Unity for
its consideration, prior to presentation to any other person or company, any
suitable opportunity to acquire an operating business in the Target Industry.
5. The undersigned will not submit to Unity for consideration, or
vote for the approval of, any Business Combination which involves a company
which is affiliated with the undersigned.
<PAGE>
Unity First Acquisition Corp.
GKN Securities Corp.
_____________, 1996
Page 2
6. The undersigned will not be entitled to receive and will not
accept a finder's fee or any other compensation in the event the undersigned
originates a Business Combination.
7. The undersigned will not be entitled to receive and will not
accept any compensation for services rendered to Unity prior to the consummation
of the Business Combination; provided that, commencing on the Effective Date,
Unity Venture Capital Associated Ltd. ("UVCA") shall be allowed to charge Unity
$7,500 per month, to compensate it for Unity's use of UVCA's offices, utilities
and personnel. The undersigned shall also be entitled to reimbursement from
Unity for their out-of-pocket expenses incurred in connection with seeking and
consummating a Business Combination.
8. I have full right and power, without violating any agreement by
which I am bound, to enter into this letter agreement and to serve as a Director
of Unity.
9. As used herein, (i) a "Business Combination" shall mean an
acquisition by merger, exchange of capital stock, asset or stock acquisition,
reorganization or otherwise, of an operating business in the Target Industry;
(ii) "Insiders" shall mean all officers, directors and stockholders of Unity
immediately prior to the IPO; (iii) "Public Stockholders" shall mean all common
stockholders of Unity other than the Insiders; and (iv) "Target Industry" shall
mean the entertainment and/or media industry.
------------------------------------
Print Name of Insider
------------------------------------
Signature
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
(and to all references to our Firm) included in or made a part of this
registration statement.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
New York, New York
September 17, 1996
