PRER14A 1 a07-15468_4prer14a.htm PRELIMINARY REVISED PROXY SOLICITING MATERIALS

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. 1)

Filed by the Registrant  x

Filed by a Party other than the Registrant  o

Check the appropriate box:

x

Preliminary Proxy Statement

o

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

o

Definitive Proxy Statement

o

Definitive Additional Materials

o

Soliciting Material Pursuant to §240.14a-12

 

HD PARTNERS ACQUISITION CORPORATION

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of Filing Fee (Check the appropriate box):

o

No fee required.

x

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

(1)

Title of each class of securities to which transaction applies:

 

 

Common Stock of HD Partners Acquisition Corporation, $0.001 par value per share.

 

(2)

Aggregate number of securities to which transaction applies:

 

 

1,256,447 shares of common stock of HD Partners Acquisition Corporation.

 

(3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

 

Calculated based upon:

$9,557,792 (the value of 1,256,447 shares of common stock of HD Partners Acquisition Corporation at $7.607 per share); and
$113,900,000 in cash and assumed debt.

 

(4)

Proposed maximum aggregate value of transaction:

 

 

$123,457,792 (including $102,400,000 in cash, $11,500,000 debt assumption, 1,256,447 shares of common stock of HD Partners Acquisition Corporation with a value of $9,557,792 is being paid for assets).

 

(5)

Total fee paid:

 

 

$3,790.15*

o

Fee paid previously with preliminary materials.

o

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

(1)

Amount Previously Paid:

 

 

 

 

(2)

Form, Schedule or Registration Statement No.:

 

 

 

 

(3)

Filing Party:

 

 

 

 

(4)

Date Filed:

 

 

 

 

 

*   $3,788.38 has previously been paid.

 




HD PARTNERS ACQUISITION CORPORATION

2601 Ocean Park Boulevard
Suite 320
Santa Monica, California 90405

September   , 2007

We are pleased to announce that the Board of Directors of  HD Partners Acquisition Corporation and the National Hot Rod Association, which we refer to as the Association, have agreed to the purchase by HD Partners Acquisition Corporation of substantially all of the assets of the Association related to the ownership, operation, marketing and promotion of professional drag racing and various commercialization rights associated with the NHRA® brand. The terms of the acquisition of such assets and rights, which we will refer to as the Acquisition, are set forth in an Asset Purchase Agreement and Key Definitions Agreement, each dated as of May 30, 2007, between us and the Association and related agreements, forms of which appear as exhibits to the Asset Purchase Agreement and which are described herein.

Under the terms of the Acquisition the following will occur:

·       we will acquire substantially all the professional drag racing assets of the Association, including but not limited to, the NHRA POWERade Drag Racing Series, four (4) NHRA-owned racetracks, a long term lease, including leasehold improvements, to a fifth racetrack, the Association’s headquarters building, the Association’s video and photo archives, and a broad set of commercialization rights related to the NHRA brand and NHRA media assets, and assume certain liabilities related to such professional drag racing assets.

·       the Association will receive aggregate consideration of between a minimum of $121,057,792 and a maximum of $123,457,792 consisting of the following:

(i)             an aggregate of 1,256,447 shares of HDP common stock valued at $9,557,792;

(ii)         approximately $100,000,000 in cash, increased by the amount of approved capital expenditures (the “Capital Expenditure Balance”) incurred by the Association for the Gainesville race track (which HDP is also purchasing) up to a maximum of $2,400,000; and

(iii)     the assumption of approximately $11,500,000 of existing Association loans (the “Seller Loan Balance”).

The $100,000,000 in cash to be paid as a portion of the acquisition consideration will be subject to adjustment (A) to the extent that the Seller Loan Balance is greater than $11,500,000 (in which case the cash paid will decrease) or is less than $11,500,000 (in which case the cash paid will increase) and (B) by the amount of the Capital Expenditure Balance.

·       The Association will enter into several contractual relationships with us related to the use and commercialization of the NHRA brand, future promotional activities, the right of the Association to conduct racing activities at our events, sanctioning and race operation services.

Upon completion of the Acquisition pursuant to the terms of our amended and restated certificate of incorporation, our shareholders will continue to own their shares of our common stock, warrants and units.

Our units, common stock and warrants are traded on the American Stock Exchange under the symbols, HDP-U, HDP and HDP-WT, respectively. On September   , 2007, our units, common stock and warrants had a closing price of $      , $      and $      , respectively.

We encourage you to read this proxy statement including the section entitled “Risk Factors” beginning on page 31, before voting.




HD Partners has scheduled a special stockholder meeting in connection with the proposed Acquisition and certain related matters. Enclosed is our Notice of Special Meeting and proxy statement and proxy card. Your vote is very important. Whether or not you plan to attend the special stockholder meeting, please take the time to vote by marking your vote on your proxy card, signing and dating the proxy card, and returning it to us in the enclosed envelope.

Sincerely,

Eddy W. Hartenstein

Chairman of the Board, President

and Chief Executive Officer

 

Neither the Securities and Exchange Commission nor any state securities commission has determined if the attached proxy statement is truthful or complete. Any representation to the contrary is a criminal offense.

The proxy statement is dated                      , 2007 and is first being mailed to HDP stockholders on or about                      , 2007.

IF YOU RETURN YOUR PROXY CARD WITHOUT AN INDICATION OF HOW YOU DESIRE TO VOTE, YOU WILL NOT BE ELIGIBLE TO HAVE YOUR SHARES CONVERTED INTO A PRO RATA PORTION OF THE TRUST ACCOUNT IN WHICH A SUBSTANTIAL PORTION OF OUR IPO NET PROCEEDS ARE HELD. YOU MUST AFFIRMATIVELY VOTE AGAINST THE ASSET ACQUISITION PROPOSAL AND DEMAND THAT WE CONVERT YOUR SHARES INTO CASH NO LATER THAN THE CLOSE OF BUSINESS ON THE DATE OF THE VOTE ON THE ASSET ACQUISITION PROPOSAL TO EXERCISE YOUR CONVERSION RIGHTS. IN ORDER TO CONVERT YOUR SHARES, YOU MUST ALSO PRESENT OUR STOCK TRANSFER AGENT WITH YOUR PHYSICAL STOCK CERTIFICATE NO LATER THAN 5:00 PM, NEW YORK CITY TIME, ON THE BUSINESS DAY PRIOR TO THE DATE OF THE SPECIAL MEETING. SEE “SPECIAL MEETING OF ACQUIROR STOCKHOLDERS—CONVERSION RIGHTS” FOR MORE SPECIFIC INSTRUCTIONS.

SEE ALSO “RISK FACTORS” FOR A DISCUSSION OF VARIOUS FACTORS THAT YOU SHOULD CONSIDER IN CONNECTION WITH THE ASSET ACQUISITION.




HD PARTNERS ACQUISITION CORPORATION

2601 Ocean Park Boulevard
Suite 320
Santa Monica, California 90405

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON                , 2007

TO THE STOCKHOLDERS OF HD PARTNERS ACQUISITION CORPORATION:

NOTICE IS HEREBY GIVEN that a Special Meeting of stockholders of HD Partners Acquisition Corporation, a Delaware corporation (“HDP” or the “Company”) relating to the proposed acquisition of the professional drag racing business of the National Hot Rod Association which we refer to as the Association, which special meeting will be held at 10:00 a.m. Eastern Time, on               , 2007, at the offices of Latham & Watkins LLP, 633 West Fifth Street, Suite 4000, Los Angeles, California 90071-2007, telephone number of Bruce Lederman, Secretary (310) 209 8308 ext 2.

At the special meeting, you will be asked to consider and vote upon the following:

(i)            the Asset Acquisition Proposal—the proposed acquisition of certain assets and the assumption of certain liabilities of the Association by HDP (the “Asset Acquisition”), a Delaware corporation, pursuant to the Asset Purchase Agreement, dated as of May 30, 2007, by and among HDP and the Association, and the transactions contemplated thereby (“Proposal 1” or the “Asset Acquisition Proposal”);

(ii)        the 2007 Long Term Incentive Compensation Plan Proposal - the adoption of the 2007 Long-Term Incentive Compensation Plan (the “Incentive Plan”) pursuant to which HDP will reserve 2,500,000 shares of common stock for issuance pursuant to the plan (“Proposal 2” or the “Incentive Plan Proposal”);

(iii)    the Adjournment Proposal—to consider and vote upon a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that, based upon the tabulated vote at the time of the special meeting, HDP would not have been authorized to consummate the asset acquisition—we refer to this proposal as the adjournment proposal. (“Proposal 3” or the “Adjournment Proposal”);

(iv)      Director Proposal 4A—to elect five (5) directors to HDP’s board of directors to hold office until the next annual meeting of stockholders and until their successors are elected and qualified (in the event the Asset Acquisition is approved); AND Director Proposal 4B - to elect two (2) Class I directors to HDP’s board of directors to hold office until the next annual meeting of stockholders and until their successors are elected and qualified (in the event the Asset Acquisition is not approved);

(v)          to ratify the appointment of Goldstein Golub Kessler LLP, as the Company’s independent auditor for the year ending December 31, 2007 (“Proposal 5” or the “Auditor Proposal”); and

(vi)      such other business as may properly come before the meeting or any adjournment or postponement thereof.

These proposals are described in the attached proxy statement which HDP urges you to read in its entirety before voting.

The Board of Directors of HDP has fixed the close of business on                  , 2007, as the record date (the “Record Date”) for the determination of stockholders entitled to notice of and to vote at the Special Meeting and at any adjournment thereof. A list of the stockholders entitled to vote as of the Record Date at the Special Meeting will be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours for a period of ten calendar days before the Special Meeting at the offices of Latham & Watkins LLP, 633 West Fifth Street, Suite 4000, Los Angeles, California 90071-2007,




telephone number of Bruce Lederman, Secretary (310) 209 8308 ext 2. and at the time and place of the meeting during the duration of the meeting.

HDP will not transact any other business at the Special Meeting, except for business properly brought before the Special Meeting, or any adjournment or postponement thereof, by HDP’s Board of Directors.

Your vote is important. Please sign, date and return your proxy card as soon as possible to make sure that your shares are represented at the Special Meeting. If you are a stockholder of record of HDP common stock, you may also cast your vote in person at the Special Meeting. If your shares are held in an account at a brokerage firm or bank, you must instruct your broker or bank on how to vote your shares.

For purposes of Proposal 1, under our certificate of incorporation, approval of the Asset Acquisition Proposal will require: (i) the affirmative vote of a majority of the shares of HDP’s common stock issued in our initial public offering completed in June 2006 (“IPO”) that vote on this proposal at the Special Meeting, and (ii) not more than 20% of the shares of HDP’s common stock issued in HDP’s IPO vote against the Asset Acquisition Proposal and elect a cash conversion of their shares. For purposes of Proposal 2, the affirmative vote of the holders of a majority of the shares of the Company’s common stock represented in person or by proxy and entitled to vote at the meeting is required to approve the Incentive Plan.  For purposes of Proposal 3, the affirmative vote of holders of a majority of HDP’s common stock voting on the proposal is required to approve the Adjournment Proposal. For purposes of Proposal 4A and 4B, the affirmative vote of the holders of a plurality of the shares of Common Stock cast in the election of directors is required. For purposes of Proposal 5,  a majority of the votes cast by holders of Common Stock is required.

In addition, each HDP stockholder who holds shares of common stock issued in HDP’s IPO or purchased following the IPO in the open market has the right to vote against the Asset Acquisition Proposal and, at the same time, demand that HDP convert such stockholder’s shares into cash equal to a pro rata portion of the proceeds in the trust account, including interest, which as of June 30, 2007 is equal to $7.84 per share. If the holders of 3,750,000 or more shares of HDP’s common stock, an amount equal to 20% or more of the total number of shares issued in the IPO, vote against the Asset Acquisition and demand conversion of their shares into a pro rata portion of the trust account, then HDP will not be able to consummate the Asset Acquisition. HDP’s initial stockholders, including all of its directors and officers and their affiliates, who purchased or received shares of common stock prior to HDP’s IPO, presently own an aggregate of approximately 20% of the outstanding shares of HDP common stock, and all of these stockholders have agreed: (i) to vote the shares acquired prior to the IPO in accordance with the vote of the majority of all other HDP stockholders voting on the Asset Acquisition Proposal, and (ii) to vote the shares acquired in or following the IPO in favor of the Asset Acquisition Proposal.

YOUR VOTE IS IMPORTANT. WHETHER YOU PLAN TO ATTEND THE SPECIAL MEETING OR NOT, PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS SOON AS POSSIBLE IN THE ENVELOPE PROVIDED. IF YOU RETURN YOUR PROXY CARD WITHOUT AN INDICATION OF HOW YOU DESIRE TO VOTE, SINCE IT IS NOT AN AFFIRMATIVE VOTE IN FAVOR OF A RESPECTIVE PROPOSAL, IT: (I) WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE ASSET ACQUISITION PROPOSAL BUT WILL NOT HAVE THE EFFECT OF CONVERTING YOUR SHARES INTO A PRO RATA PORTION OF THE TRUST ACCOUNT IN WHICH A SUBSTANTIAL PORTION OF THE NET PROCEEDS OF HDP’S IPO ARE HELD, UNLESS AN AFFIRMATIVE VOTE AGAINST THE ASSET ACQUISITION PROPOSAL IS MADE AND AN AFFIRMATIVE ELECTION TO CONVERT SUCH SHARES OF COMMON STOCK IS MADE ON THE PROXY CARD, AND (II)  WILL BE TREATED AS A VOTE AGAINST THE ADJOURNMENT PROPOSAL.

SEE THE SECTION ENTITLED “RISK FACTORS’’ BEGINNING ON PAGE 31 FOR A DISCUSSION OF VARIOUS FACTORS THAT YOU SHOULD CONSIDER IN CONNECTION WITH THE ASSET ACQUISITION WITH THE ASSOCIATION SINCE, UPON THE ASSET ACQUISITION WITH THE ASSOCIATION, THE OPERATIONS AND ASSETS OF HDP WILL LARGELY BE THOSE OF THE ASSOCIATION.




The attached proxy statement incorporates important business and financial information about HDP and the Association that is not included in or delivered with this document. This information is available without charge to security holders upon written or oral request. The request should be sent to: Bruce R. Lederman, Secretary of HDP, 2601 Ocean Park Boulevard, Suite 320, Santa Monica, California 90405, or by calling him at (310) 209-8308 ext 2.

To obtain timely delivery of requested materials, security holders must request the information no later than five days before the date they submit their proxies or attend the Special Meeting. The latest date to request the information to be received timely is             , 2007.

We are soliciting the proxy on behalf of the Board of Directors, and we will pay all costs of preparing, assembling and mailing the proxy materials. In addition to mailing out proxy materials, HDP’s officers may solicit proxies by telephone or fax, without receiving any additional compensation for their services. HDP may engage the services of a professional proxy solicitor. We have requested brokers, banks and other fiduciaries to forward proxy materials to the beneficial owners of our stock.

The Board of Directors of HDP unanimously recommends that you vote “FOR” Proposal 1, the Asset Acquisition Proposal, “FOR” Proposal 2, the Incentive Plan Proposal, “FOR” Proposal 3, the Adjournment Proposal, “FOR” Director Proposal 4A (if the Asset Acquisition is approved), “FOR” the Director Proposal 4B (if the Asset Acquisition is not approved), and “FOR” Proposal 5, the Auditor Proposal.

By Order of the Board of Directors,

Eddy W. Hartenstein

Chairman of the Board, President

and Chief Executive Officer

                , 2007

 




PROXY STATEMENT FOR SPECIAL MEETING OF STOCKHOLDERS OF
HD PARTNERS ACQUISITION CORPORATION.

The Board of Directors of HD Partners Acquisition Corporation, or HDP, has unanimously approved an Asset Purchase Agreement, dated as of  May 30, 2007, between HDP and the National Hot Rod Association, which we refer to as the Association (the “Asset Purchase Agreement”) and the asset acquisition contemplated thereby (the “Asset Acquisition”), whereby HDP will acquire substantially all of the assets of  the Association related to the Association’s professional drag racing business and various commercial rights associated with the NHRA brand and media assets.

If the Asset Acquisition is consummated and you vote your shares in favor of the Acquisition Proposal, you will continue to hold the HDP securities that you currently own. If the Acquisition is consummated but you have voted your shares against the Asset Acquisition Proposal and have elected a cash conversion, your HDP shares will be cancelled and you will receive cash equal to a pro rata portion of the trust account, which, as of March 31, 2007, was equal to approximately $7.79 per share.

Pursuant to the terms of the Asset Purchase Agreement, the Association will receive aggregate consideration of between a minimum of $121,057,792 and a maximum of $123,457,792 consisting of the following:

(i)            an aggregate of 1,256,447 shares of HDP common stock valued at 9,557,792;

(ii)        approximately $100,000,000 in cash, increased by the amount of approved capital expenditures (the “Capital Expenditure Balance”) incurred by the Association for the Gainesville race track (which HDP is also purchasing) up to a maximum of $2,400,000; and

(iii)    the assumption of approximately $11,500,000 of existing Association loans (the “Seller Loan Balance”).

The $100,000,000 in cash to be paid as a portion of the acquisition consideration will be subject to adjustment (A) to the extent that the Seller Loan Balance is greater than $11,500,000 (in which case the cash paid will decrease) or is less than $11,500,000 (in which case the cash paid will increase) and (B) by the amount of the Capital Expenditure Balance.

In addition, HDP and the Association will enter into several contractual relationships related to the use and commercialization of the NHRA brand and media assets, future promotional activities, the right of the Association to conduct racing activities at our events, and sanctioning and race operation services. These contractual relationships are discussed in the accompanying proxy statement under the sections entitled “Ancillary Agreements”.

HDP’s units, common stock and warrants are currently listed on the American Stock Exchange under the symbols HDP-U, HDP and HDP-WT, respectively. Upon consummation of the Asset Acquisition, the assets of the Association identified in the Acquisition Agreement will be held by a wholly owned subsidiary of HDP named NHRA Pro Racing. HDP’s units, common stock and warrants will continue to be traded on the American Stock Exchange.

We believe that, generally, for U.S. federal income tax purposes, the Asset Acquisition with the Association will have no direct tax effect on stockholders of HDP. However, if you vote against the Asset Acquisition Proposal and elect a cash conversion of your shares of HDP common stock into your pro-rata portion of the trust account and as a result receive cash in exchange for your HDP shares, there will be certain tax consequences, such as potentially realizing a gain or loss on your investment in HDP’s shares. WE URGE YOU TO CONSULT YOUR OWN TAX ADVISORS REGARDING YOUR PARTICULAR TAX CONSEQUENCES.

This proxy statement provides you with detailed information about the proposed Asset Acquisition, the proposed Adjournment, the proposed Director Election, the proposed Auditor ratification and the Special Meeting. We encourage you to carefully read this entire document and the documents incorporated by reference, including the Asset Purchase Agreement and the Key Definitions Agreement




which are attached hereto as “Annex A” and “Annex B”, respectively. YOU SHOULD ALSO CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE      .

The Asset Acquisition cannot be consummated unless at least a majority of the shares of HDP’s common stock issued in HDP’s IPO and voting at the Special Meeting (whether in person or by proxy) approve and adopt the Asset Purchase Agreement and less than 20% of the shares of HDP’s common stock issued in HDP’s IPO vote against the Asset Acquisition Proposal and elect a cash conversion of their shares.

HDP’s Board of Directors unanimously approved the Asset Purchase Agreement and the proposed Asset Acquisition, the Incentive Plan, the Adjournment, the Director Election, and the Auditor Ratification and unanimously recommends that you vote or instruct your vote to be cast ”FOR” Proposal 1, the Asset Acquisition Proposal, “FOR” Proposal 2, the Incentive Proposal, “FOR” Proposal 3, the Adjournment Proposal, “FOR” Proposal 4A, the Director Proposal if the Asset Acquisition is approved, “FOR” Proposal 4B, the Director Proposal if the Asset Acquisition is not approved, and “FOR” Proposal 5, the Auditor Proposal.

This proxy statement incorporates important business and financial information about HDP and the Association that is not included in or delivered with this document. This information is available without charge to security holders upon written or oral request. The request should be sent to:

Bruce R. Lederman, Secretary

HD Partners Acquisition Corporation

2601 Ocean Park Boulevard

Suite 320

Santa Monica, California 90405

(310) 209-8308 ext 2

 

To obtain timely delivery of requested materials, security holders must request the information no later than five days before the date they submit their proxies or attend the Special Meeting. The latest date to request the information to be received timely is                  , 2007.

We are soliciting the enclosed proxy card on behalf of the Board of Directors of HDP, and we will pay all costs of preparing, assembling and mailing the proxy materials. In addition to mailing out proxy materials, our officers may solicit proxies by telephone or fax, without receiving any additional compensation for their services. We have requested brokers, banks and other fiduciaries to forward proxy materials to the beneficial owners of our stock.

THIS PROXY STATEMENT IS DATED             , 2007, AND IS FIRST BEING MAILED TO HDP STOCKHOLDERS ON OR ABOUT                    , 2007.




TABLE OF CONTENTS

 

Page

SUMMARY TERM SHEET

 

1

 

QUESTIONS AND ANSWERS ABOUT THE PROPOSALS

 

3

 

SUMMARY OF THE PROXY STATEMENT

 

12

 

THE ASSET ACQUISITION PROPOSAL

 

12

 

THE ASSET PURCHASE AGREEMENT

 

12

 

OUR INSIDE STOCKHOLDERS

 

13

 

DATE, TIME AND PLACE OF SPECIAL MEETING OF OUR STOCKHOLDERS

 

13

 

RECORD DATE; VOTING POWER

 

13

 

QUORUM AND VOTE REQUIRED

 

13

 

VOTING YOUR SHARES; PROXIES

 

14

 

TAX CONSEQUENCES

 

14

 

OVERVIEW OF ASSET PURCHASE AGREEMENT

 

15

 

CONDITIONS TO THE CONSUMMATION OF THE ACQUISITION

 

15

 

TERMINATION, AMENDMENT AND WAIVER

 

17

 

ACCOUNTING TREATMENT

 

18

 

RISK FACTORS

 

18

 

CONVERSION RIGHTS

 

18

 

APPRAISAL OR DISSENTERS’ RIGHTS

 

19

 

STOCK OWNERSHIP

 

19

 

REASONS FOR THE ACQUISITION

 

21

 

HDP’S BOARD OF DIRECTORS’ RECOMMENDATION

 

22

 

INTERESTS OF HDP DIRECTORS AND OFFICERS IN THE ACQUISITION

 

22

 

INTERESTS OF ASSOCIATION DIRECTORS AND OFFICERS IN THE ACQUISITION

 

23

 

INTERESTS OF MORGAN JOSEPH IN THE ACQUISITION

 

23

 

FAIRNESS OPINION

 

23

 

REGULATORY MATTERS

 

24

 

INCENTIVE PLAN PROPOSAL

 

24

 

ADJOURNMENT PROPOSAL

 

24

 

DIRECTOR PROPOSAL

 

24

 

AUDITOR PROPOSAL

 

24

 

SELECTED HISTORICAL FINANCIAL INFORMATION

 

25

 

HDP SELECTED FINANCIAL DATA

 

26

 

SUMMARY UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

 

28

 

MARKET PRICE INFORMATION AND DIVIDEND DATA FOR HDP SECURITIES

 

30

 

RISK FACTORS

 

31

 

RISKS RELATED TO THE PURCHASED BUSINESS

 

31

 

RISKS PARTICULAR TO THE ASSET ACQUISITION

 

38

 

i




 

RISKS RELATING TO HDP

 

39

 

FORWARD-LOOKING STATEMENTS

 

47

 

THE HDP SPECIAL MEETING OF STOCKHOLDERS

 

48

 

THE HDP SPECIAL MEETING

 

48

 

DATE, TIME AND PLACE

 

48

 

PURPOSE OF THE SPECIAL MEETING

 

48

 

RECORD DATE, WHO IS ENTITLED TO VOTE

 

49

 

VOTING YOUR SHARES

 

50

 

WHO CAN ANSWER YOUR QUESTIONS ABOUT VOTING YOUR SHARES

 

50

 

NO ADDITIONAL MATTERS MAY BE PRESENTED AT THE SPECIAL MEETING

 

50

 

REVOKING YOUR PROXY

 

50

 

QUORUM; VOTE REQUIRED

 

50

 

ABSTENTIONS AND BROKER NON-VOTES

 

51

 

CONVERSION RIGHTS

 

51

 

APPRAISAL OR DISSENTER RIGHTS

 

52

 

SOLICITATION COSTS

 

52

 

STOCK OWNERSHIP

 

52

 

PROPOSAL 1—THE ACQUISITION PROPOSAL

 

53

 

GENERAL DESCRIPTION OF THE ASSET ACQUISITION

 

53

 

BACKGROUND OF THE ASSET ACQUISITION

 

54

 

INTERESTS OF HDP DIRECTORS AND OFFICERS IN THE ACQUISITION

 

62

 

HDP’S REASONS FOR THE ACQUISITION AND RECOMMENDATION OF THE HDP BOARD

 

63

 

OPINION OF DUFF & PHELPS, LLC

 

64

 

SATISFACTION OF THE 80% REQUIREMENT

 

71

 

UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE ASSET ACQUISITION

 

71

 

REGULATORY MATTERS

 

72

 

CONSEQUENCES IF ASSET ACQUISITION PROPOSAL IS NOT APPROVED

 

72

 

REQUIRED VOTE

 

73

 

ABSTENTIONS AND BROKER NON-VOTES

 

73

 

RECOMMENDATION

 

74

 

THE ASSET PURCHASE AGREEMENT

 

75

 

OVERVIEW

 

75

 

PURCHASE PRICE

 

76

 

ASSETS TO BE ACQUIRED

 

77

 

LIABILITIES TO BE ASSUMED

 

78

 

POST CLOSING ADJUSTMENTS TO BALANCE SHEET OF PURCHASED BUSINESS

 

80

 

COVENANTS

 

80

 

REPRESENTATIONS AND WARRANTIES OF THE ASSOCIATION

 

80

 

ii




 

REPRESENTATIONS AND WARRANTIES OF HDP

 

80

 

INDEMNIFICATION AND REMEDIES

 

81

 

NON-SOLICITATION/EXCLUSIVITY

 

81

 

CERTAIN POST CLOSING COVENANTS

 

81

 

WAIVER

 

82

 

CONDITIONS TO HDP’S OBLIGATIONS

 

82

 

CONDITIONS TO THE ASSOCIATION’S OBLIGATIONS

 

83

 

TERMINATION

 

84

 

CONFIDENTIAL INFORMATION

 

86

 

OTHER MISCELLANOUS PROVISIONS

 

87

 

ANCILLARY AGREEMENTS RELATED TO THE ACQUISITION

 

88

 

KEY DEFINITIONS AGREEMENT

 

88

 

SANCTIONING AGREEMENT

 

88

 

COMMERCIALIZATION AGREEMENT

 

91

 

OPERATIONAL SUPPORT AGREEMENT

 

93

 

BRAND LICENSE AGREEMENT

 

94

 

PROMOTIONAL ACCESS AGREEMENT

 

96

 

ASSOCIATION DRAG RACING ACCESS AGREEMENT

 

96

 

REGISTRATION RIGHTS AGREEMENT

 

97

 

EMPLOYMENT AND CONSULTING AGREEMENTS

 

98

 

LEASE

 

100

 

OTHER AGREEMENTS

 

101

 

REGULATORY APPROVALS

 

101

 

DISSENTERS’ RIGHTS

 

101

 

Accounting Treatment

 

102

 

CERTAIN FEDERAL TAX CONSEQUENCES TO HDP STOCKHOLDERS

 

102

 

ADVISORY AGREEMENT

 

102

 

PROPOSAL 2—THE INCENTIVE PLAN PROPOSAL

 

103

 

PROPOSAL 3—THE ADJOURNMENT PROPOSAL; GENERAL REQUIRED VOTE; RECOMMENDATION

 

110

 

PROPOSAL 4—DIRECTOR PROPOSALS 4A & 4B

 

111

 

INFORMATION ABOUT THE NOMINEES

 

112

 

MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS OF HDP

 

115

 

INDEPENDENCE OF DIRECTORS

 

115

 

AUDIT COMMITTEE

 

115

 

MEETINGS AND ATTENDANCE

 

116

 

AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES

 

116

 

NOMINATING COMMITTEE

 

116

 

CODE OF CONDUCT AND ETHICS

 

116

 

COMPENSATION COMMITTEE INFORMATION

 

116

 

iii




 

COMPENSATION ARRANGEMENTS FOR DIRECTORS

 

117

 

EXECUTIVE COMPENSATION

 

117

 

HDP

 

117

 

COMPENSATION DISCUSSION AND ANALYSIS

 

117

 

BENCHMARKS OF CASH AND EQUITY COMPENSATION

 

118

 

COMPENSATION COMPONENTS

 

118

 

EMPLOYMENT AND CONSULTING AGREEMENTS

 

119

 

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

 

119

 

REQUIRED VOTE

 

122

 

RECOMMENDATION

 

122

 

PROPOSAL 5—AUDITOR PROPOSAL; GENERAL REQUIRED VOTE; RECOMMENDATION

 

123

 

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF THE PURCHASED BUSINESS

 

125

 

INFORMATION ABOUT NHRA AND NHRA PRO RACING

 

141

 

INFORMATION ABOUT HDP

 

152

 

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF HDP

 

153

 

UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL INFORMATION AS OF JUNE 30, 2007 AND DECEMBER 31, 2006

 

159

 

DIRECTORS AND MANAGEMENT OF HDP FOLLOWING THE ASSET ACQUISITION

 

173

 

BENEFICIAL OWNERSHIP OF SECURITIES

 

177

 

PRICE RANGE OF SECURITIES AND DIVIDENDS

 

182

 

DESCRIPTION OF SECURITIES

 

183

 

STOCKHOLDER PROPOSALS

 

187

 

WHERE YOU CAN FIND MORE INFORMATION

 

187

 

INDEX TO FINANCIAL STATEMENTS

 

 

 

ANNEXES

 

 

 

Annex A—Asset Purchase Agreement*

 

 

 

Annex B—Key Definitions Agreement

 

 

 

Annex C—Opinion of Duff & Phelps, LLC

 

 

 

Annex D—2007 Long Term Incentive Compensation Plan

 

 

 

 


*                    Confidential treatment requested

 

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SUMMARY OF THE MATERIAL TERMS OF THE ASSET ACQUISITION

This Summary, together with the sections entitled “Questions and Answers About the Asset Acquisition and the Special Meeting” and “Summary of the Proxy Statement,” summarizes certain material information contained in this proxy statement. You should carefully read this entire proxy statement for a more complete understanding of the matters to be considered at the Special Meeting of stockholders.

·       Pursuant to an Asset Purchase Agreement, HDP will acquire substantially all of the assets of the Association related to its professional drag racing business as well as a broad set of commercialization rights. The assets will be held in a wholly owned subsidiary of HDP named NHRA Pro Racing. For more information about the Asset Acquisition, see the section entitled “The Asset Acquisition Proposal” beginning on page 53 and the Asset Purchase Agreement and the Key Definitions Agreement that are attached as Annex A and Annex B, respectively, to this proxy statement.

·       At the Special Meeting of stockholders to be held on               , 2007, you will be asked, among other things, to approve the Asset Acquisition. For more information about the Special Meeting, see the section entitled “The HDP Special Meeting” beginning on page 48.

·       We are a special purpose acquisition company organized under the laws of Delaware on December 6, 2005. We were formed to effect a merger, capital stock exchange, asset acquisition or other similar business combination with one or more operating businesses in the media, entertainment or telecommunications industries. For more information about us, see the section entitled “Information About HDP” beginning on page 152.

·       The National Hot Rod Association is a California nonprofit mutual benefit corporation that owns, operates, markets and promotes professional and amateur drag racing and undertakes related initiatives to protect and further the best interest of the sport of drag racing. For more information about the Association, see the sections entitled “Unaudited Pro Forma Condensed Combined Financial Statements,” “Information About the NHRA and NHRA Pro Racing,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Purchased Business” beginning on pages 159, 141 and 125, respectively. Also see the Association’s financial statements beginning on page F-1.

·       At the closing of the Asset Acquisition, the Association will receive aggregate consideration of between a minimum of $121,057,792 and a maximum of $123,457,792 consisting of the following:

(i)             an aggregate of 1,256,447 shares of HDP common stock valued at $9,557,792;

(ii)         approximately $100,000,000 in cash, increased by the amount of approved capital expenditures (the “Capital Expenditure Balance”) incurred by the Association for the Gainesville race track (which HDP is also purchasing) up to a maximum of $2,400,000; and

(iii)     the assumption of approximately $11,500,000 of existing Association loans (the “Seller Loan Balance”).

The 1,256,447 shares of HDP common stock was determined using a price per share of $7.56, which was the average closing price of a share of HDP common stock for the 20 consecutive trading days prior to public announcement by HDP of the Asset Acquisition, divided into $9.5 million of consideration, using the formula provided by the Asset Purchase Agreement.  For purchase price determination, based on the guidance of EITF 99-12, the value of the shares was calculated using the average closing price per share of HDP common stock for the 10 days before and 10 days after the public announcement of the transaction, which was $7.607.  This per share amount was multiplied by the 1,256,447 shares to be received by the Association to reach a purchase price value of $9,557,792.

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The $100,000,000 in cash to be paid as a portion of the acquisition consideration will be subject to adjustment (A) to the extent that the Seller Loan Balance is greater than $11,500,000 (in which case the cash paid will decrease) or is less than $11,500,000 (in which case the cash paid will increase) and (B) by the amount of the Capital Expenditure Balance.

·       The Association will also enter into several contractual relationships with us related to the use and commercialization of the NHRA brand, future promotional activities, the right of the Association to conduct racing activities at our events, sanctioning and race operation services.

For more information about the acquisition consideration and the related agreements, see the section entitled “The Asset Purchase Agreement” beginning on page 75.

·       The indemnification obligations of the Association contained in the Asset Purchase Agreement are subject to the limitation that we incur damages of at least $600,000 prior to making any claim. Further, the ability to be indemnified is subject to a $15,000,000 dollar limitation. For more information about indemnification, see the section entitled “The Asset Purchase Agreement—Indemnification and Remedies” beginning on page 81.

·       The closing of the Asset Acquisition is subject to a number of conditions set forth in the Asset Purchase Agreement. For more information about the closing conditions to the Asset Acquisition, see the section entitled “The Asset Purchase Agreement” beginning on page 75.

·       After we complete the Asset Acquisition, our officers and our Board will continue as before the Asset Acquisition except that Robert L. Meyers intends to resign from the Board upon the election to the Board of James E. Meyer. In the event that the Asset Acquisition is not approved, then according to HDP’s Amended and Restated Certificate of Incorporation, the term of office of the first class of directors, consisting of Robert L. Meyers and Steve Cox, expires at this meeting. In this case, Messrs. Robert L. Meyers and Steven J. Cox have been nominated as candidates for election. For more information about management, see the section entitled “Director Proposal” on page 111.

·       Our management and Board considered various factors in determining to purchase these assets of the Association and to approve the Asset Purchase Agreement, including a fairness opinion prepared by Duff & Phelps, LLC. For more information about our decision-making process, see the section entitled “HDP’s Reasons for the Asset Acquisition and Recommendation of the HDP Board” beginning on page 63.

·       Our acquisition of the assets of the Association involves numerous risks. For more information about these risks, see the section entitled “Risk Factors” beginning on page 31.

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QUESTIONS AND ANSWERS ABOUT THE PROPOSALS

Who is HD Partners Acquisition Corporation?

HDP is a blank-check company formed specifically as a vehicle to effect a merger, asset acquisition or similar business combination with one or more operating businesses in the media, entertainment or telecommuncications industries.

Who is the Association?

The National Hot Rod Association is a California non-profit mutual benefit corporation which conducts and sanctions drag racing activities throughout the United States.

Why am I receiving this proxy statement?

HDP and the Association have agreed to a business transaction under the terms of an Asset Purchase Agreement, dated May 30, 2007, between HDP and the National Hot Rod Association (the “Asset Purchase Agreement”) pursuant to which HDP will acquire substantially all assets, and will assume certain liabilities, of the Association related to the Association’s professional drag racing business and acquire various rights to commercialize the NHRA brand and media assets. These assets, rights and liabilities are embodied in the Asset Purchase Agreement, the Brand License Agreement, the Association Drag Racing Access Agreement, the Commercialization Agreement, the Operational Support Agreement, the Sanctioning Agreement and the Promotional Access Agreement (collectively referred to as the “Ancillary Agreements”). A copy of the Asset Purchase Agreement and the Key Definitions Agreement are attached to this proxy statement as Annex A and Annex B, respectively, which we encourage you to review in their entirety.

In order to consummate the Asset Acquisition, under our amended and restated certificate of incorporation, a majority of the shares issued in the IPO voting at the meeting (whether in person or by proxy) must vote to approve and adopt the Asset Purchase Agreement and the transactions contemplated thereby. Also, HDP will only proceed with the Asset Acquisition if stockholders owning less than 20% of such shares vote against the Asset Acquisition and elect to convert their shares to cash from the trust account established with the proceeds of our IPO.

HDP will hold a Special Meeting of its stockholders to obtain this approval. This proxy statement contains important information about the proposed Asset Acquisition, proposed Adjournment, proposed Director Election and proposed Auditor Ratification proposals. You should read it carefully, in particular the section entitled “Risk Factors.”

Your vote is important. We encourage you to vote as soon as possible after carefully reviewing this proxy statement.

What is being voted on?

There are five proposals on which you are being asked to vote. The first proposal is to approve the Asset Acquisition and the transactions contemplated thereby. As a consequence of the Asset Acquisition, HDP will acquire certain assets and rights and assume certain liabilities of the Association.

The second proposal is to adopt the Incentive Plan pursuant to which HDP will reserve 2,500,000 shares of common stock for issuance.

The third proposal is to approve the adjournment of the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that, based upon the tabulated vote at the time of the special meeting, HDP would not have been authorized to consummate the acquisition.

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The fourth proposal is to elect our directors. We have nominated five directors (consisting of Messrs: Eddy W. Hartenstein, James E. Meyer, Steven J. Cox, Henry Goldberg, and Martin E. Gottlieb) to our Board of Directors if the Asset Acquisition is approved. In the event that the Asset Acquisition is not approved, then only the Class I directors (consisting of Messrs. Robert L. Meyers and Steven J. Cox) have been nominated for election.

The fifth proposal is to ratify the appointment of the HDP auditors.

It is important for you to note that in the event the Asset Acquisition Proposal does not receive the necessary vote to approve such proposal, then HDP will not consummate that Asset Acquisition or Proposal 4A and HDP may have to liquidate. We have agreed with the trustee to promptly adopt a plan of dissolution and liquidation and initiate procedures for our dissolution and liquidation if we do not effect the Asset Acquisition or other business combination before June 6, 2008.

What is a quorum?

A quorum is the number of shares that must be represented, in person or by proxy, in order for business to be transacted at the Special Meeting.

More than one-half of the total number of shares of our common stock outstanding as of the record date (a quorum) must be represented, either in person or by proxy, in order to transact business at the special meeting. Abstentions and broker non-votes are counted for purposes of determining the presence of a quorum. If there is no quorum, a majority of the shares present at the Special Meeting may adjourn the Special Meeting to another date.

However, in order to vote on Proposal 1, more than one-half of the shares of our common stock purchased in our IPO must be represented (9,375,001 shares) at the Special Meeting.

Why is HDP proposing the Asset Acquisition?

HDP is a blank-check company formed specifically as a vehicle to effect a merger, asset acquisition or similar business combination with one or more operating businesses in the media, entertainment or telecommuncications industries. In the course of HDP’s search for a business combination partner, HDP investigated the potential acquisition of the professional drag racing assets of the Association and opportunities to commercialize the NHRA brand, which the Board of Directors of HDP believes has significant growth potential. The Association is a California nonprofit mutual benefit corporation that owns, operates, markets and promotes professional and amateur drag racing and undertakes other initiatives relating to the sport of drag racing. The Board of Directors of HDP determined that the professional racing assets and the NHRA brand commercialization rights are an attractive acquisition target because of, among other things, the market in which it operates; its existing activities, growth prospects and management team; and the ability to leverage the expertise and contacts of HDP management. As a result, HDP believes that the Asset Acquisition will provide HDP stockholders with an opportunity to participate in a business and industry with growth potential.

What vote is required in order to approve the Asset Acquisition Proposal?

The approval of the Asset Acquisition Proposal will require the affirmative vote of a majority of the votes cast at the Special Meeting of the shares of common stock issued as part of HDP’s IPO. We issued 18,750,000 shares as part of our IPO. In addition, not more than 20% of such shares (3,750,000 shares) may vote against the Asset Acquisition and elect to convert their shares into their pro rata portion of the cash from the trust account.

4




Prior to the record date for this Special Meeting, HDP, its officers, directors or affiliates may purchase outstanding shares of HDP in the open market and/or in privately negotiated transactions.  After the record date for this Special Meeting, HDP, its officers, directors or affiliates may purchase outstanding shares of HDP in privately negotiated transactions with HDP’s stockholders.  It is the intention of HDP, its officers, directors or affiliates to vote any such shares of HDP so purchased in favor of the proposals contained herein.  As of the date of this proxy, HDP, its officers, diriectors and affiliates have not entered into any private agreements or arrangements to purchase outstanding shares of HDP.

What happens if I vote against the Asset Acquisition?

Each HDP stockholder who holds shares of common stock issued in HDP’s IPO or purchased following such offering in the open market has the right to vote against the Asset Acquisition Proposal and, at the same time, demand that HDP convert such stockholder’s shares into cash equal to a pro rata portion of the trust account. These shares will be converted into cash only if the Asset Acquisition is consummated. Based upon the amount of cash held in the trust account as of June 30, 2007, without taking into account any interest accrued after such date, stockholders who vote against the Asset Acquisition Proposal and elect to convert such stockholder’s shares as described above will be entitled to convert each share of common stock that it holds into approximately $7.84 per share. However, if the holders of 3,750,000 or more shares of common stock issued in HDP’s IPO (an amount equal to 20% or more of the total number of shares issued in the IPO) vote against the Asset Acquisition and demand conversion of their shares into a pro rata portion of the trust account, then HDP will not be able to consummate the Asset Acquisition and, assuming HDP is not able to consummate another business combination by June 6, 2008, stockholders will only receive cash upon the liquidation of HDP.

How is Management of HDP voting?

HDP’s initial stockholders, including all of its directors and officers, who purchased or received shares of common stock prior to HDP’s IPO, presently, together with their affiliates, own an aggregate of approximately 20% of the outstanding shares of HDP common stock (an aggregate of 4,687,500 shares). All of these persons have agreed to vote all of these shares which were acquired prior to the IPO in accordance with the vote of the majority of all other voting HDP stockholders on the Asset Acquisition Proposal. Moreover, all of these persons have agreed to vote all of their shares which were acquired in or following the IPO in favor of the Asset Acquisition Proposal.

What vote is required in order to approve the Incentive Plan Proposal?

Approval of our Incentive Plan will require the affirmative vote of the holders of a majority of the shares of the Company’s common stock represented in person or by proxy and entitled to vote at the meeting.

What vote is required in order to approve the Adjournment Proposal?

Adoption of the adjournment proposal requires the affirmative vote of a majority of the issued and outstanding shares of HDP’s common stock represented in person or by proxy at the meeting. Adoption of the adjournment proposal is not conditioned upon the adoption of any of the other proposals.

What vote is required in order to approve the Director Proposal?

Adoption of the Director Proposal 4A or 4B requires the affirmative vote of the holders of a plurality of the shares of Common Stock cast in the election of directors.

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What vote is required in order to approve the Auditor Proposal?

Adoption of the Auditor proposal requires a majority of the votes cast by holders of Common Stock.

If I am not going to attend the Special Meeting of stockholders in person, should I return my proxy card instead?

Yes. Whether or not you plan to attend the Special Meeting, after carefully reading and considering the information contained in this proxy statement, please complete and sign your proxy card. Then return the enclosed proxy card in the return envelope provided herewith as soon as possible, so that your shares may be represented at the Special Meeting.

What will happen if I abstain from voting or fail to vote?

As long as a quorum is established at the Special Meeting, a failure to vote by someone who is present in person or by proxy will have no impact upon the approval of the Asset Acquisition Proposal, the Director Proposal 4A and the Director Proposal 4B, and the Auditor Proposal.  However, since the Adjournment Proposal requires the affirmative vote of a majority of the issued and outstanding shares of HDP’s common stock represented in person or by proxy at the meeting, and since the Incentive Plan proposal requires the affirmative vote of the holders of a majority of the shares of the Company’s common stock represented in person or by proxy and entitled to vote at the meeting, a failure to vote will have the effect of a vote against the Adjournment Proposal and the Incentive Plan Proposal.  Failure to vote will not have the effect of converting your shares into a pro rata portion of the trust account.

If my shares are held in “street name’’ by my broker, will my broker vote my shares for me?

If you hold your shares in “street name,” your bank or broker cannot vote your shares with respect to the Asset Acquisition Proposal or the Adjournment Proposal without specific instructions from you, which are sometimes referred to in this proxy statement as the broker “non-vote” rules. If you do not provide instructions with your proxy, your bank or broker may deliver a proxy card expressly indicating that it is NOT voting your shares; this indication that a bank or broker is not voting your shares is referred to as a “broker non-vote.” Broker non-votes will be counted for the purpose of determining the existence of a quorum, but will not count for purposes of determining the number of votes cast at the Special Meeting. Your broker can vote your shares only if you provide instructions on how to vote. You should instruct your broker to vote your shares in accordance with directions you provide to your broker.

What do I do if I want to change my vote?

If you wish to change your vote, please send a later-dated, signed proxy card to our corporate Secretary, Bruce R. Lederman at HDP prior to the date of the Special Meeting or attend the Special Meeting and vote in person. You also may revoke your proxy by sending a notice of revocation to Bruce R. Lederman at the address of HDP’s corporate headquarters, provided such revocation is received prior to the Special Meeting.

Will I receive anything in the Asset Acquisition?

If the Asset Acquisition is consummated and you vote your shares for the Asset Acquisition Proposal or you abstain, you will continue to hold the HDP securities that you currently own. If the Asset Acquisition is consummated but you have voted your shares against the Asset Acquisition Proposal and have elected a cash conversion instead, your shares of HDP common stock will be cancelled and you will be entitled to receive cash equal to a pro rata portion of the trust account, which, as of June 30, 2007, was equal to approximately $7.84 per share; provided, however you must deliver your certificate to HDP’s stock transfer agent.

6




How is HDP paying for the Asset Acquisition?

HDP will use a substantial portion of the proceeds from its IPO (currently held in trust) in order to finance the Asset Acquisition. HDP will pay aggregate consideration of between a minimum of $121,057,792 and a maximum of $123,457,792 consisting of the following: approximately $100,000,000 in cash, increased by the amount of approved capital expenditures (the “Capital Expenditure Balance”) incurred by the Association for the Gainesville race track (which HDP is also purchasing) up to a maximum of $2,400,000; the assumption of approximately $11,500,000 of existing Association loans (the “Seller Loan Balance”); and issuance to the Association of an aggregate of 1,256,447 new shares of its common stock valued at $9,557,792. The $100,000,000 in cash to be paid as a portion of the acquisition consideration will be subject to adjustment (A) to the extent that the Seller Loan Balance is greater than $11,500,000 (in which case the cash paid will decrease) or is less than $11,500,000 (in which case the cash paid will increase) and (B) by the amount of the Capital Expenditure Balance.

Are the Association’s stockholders required to approve the Asset Acquisition?

No. The Association is a California nonprofit mutual benefit corporation that does not have stockholders or other members with voting rights. The Asset Acquisition has been approved by the Association’s Board of Directors. There is no other approval required by the Association to consummate the Asset Acquisition.

Is the consummation of the Asset Acquisition subject to any conditions?

Yes. The obligations of each of HDP and the Association to consummate the Asset Acquisition are subject to the fulfillment (or waiver) of certain conditions, as more fully described in the section entitled “The Asset Purchase Agreement” beginning on page 75.

What will happen in the Asset Acquisition?

Upon the consummation of the transactions contemplated by the Asset Purchase Agreement, the Association will transfer to NHRA Pro Racing, the wholly owned subsidiary of HDP that will hold the Purchased Assets, all its right, title and interest in and to substantially all of the Association’s professional drag racing assets, including but not limited to, four (4) owned racetracks, a long term racetrack lease including leasehold improvements on another racetrack, the Association’s headquarters building, a video library, a photo archive, and various contracts and other related assets, collectively referred to as the Purchased Assets in this proxy statement. The Association will retain its non-professional racing and other activities and related assets and continue to be sanctioning body for all NHRA racing activities, including NHRA Pro Racing activities.

Has HDP received a fairness opinion with respect to the Asset Acquisition Proposal?

Yes. Our Board of Directors has obtained a fairness opinion from Duff & Phelps, LLC which states that the consideration to be paid for the Purchased Business by HDP is fair to HDP from a financial point of view. Duff & Phelps, LLC has also determined that the fair market value of the Purchased Business exceeds 80% of our net assets as was described in the prospectus relating to our IPO as a condition to any acquisition and required by our amended and restated certificate of incorporation.

What will the Association receive in the Asset Acquisition?

The Asset Purchase Agreement provides that the Association will receive aggregate consideration of between a minimum of $121,057,792 and a maximum of $123,457,792 consisting of the following:

(i)            an aggregate of 1,256,447 shares of HDP common stock valued at $9,557,792;

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(ii)        approximately $100,000,000 in cash, increased by the amount of the Capital Expenditure Balance incurred by the Association for the Gainesville race track (which HDP is also purchasing) up to a maximum of $2,400,000; and

(iii)    the assumption of approximately $11,500,000 of the Seller Loan Balance.

The $100,000,000 in cash to be paid as a portion of the acquisition consideration will be subject to adjustment (A) to the extent that the Seller Loan Balance is greater than $11,500,000 (in which case the cash paid will decrease) or is less than $11,500,000 (in which case the cash paid will increase) and (B) by the amount of the Capital Expenditure Balance.

The Asset Purchase Agreement provides that the Association will initially own up to approximately 5.03% of the issued and outstanding shares of HDP capital stock after the Asset Acquisition (excluding as outstanding for purposes of this calculation shares to be issued upon exercise of HDP’s outstanding warrants and securities issuable upon exercise of a purchase option issued to underwriters in HDP’s IPO). The Association’s ownership of approximately 5.03% of the issued and outstanding shares of HDP capital stock may be diluted to as little as 2.64% as a result of the issuances of securities described below.

Will any shares be granted as part of the transaction?

As compensation for services, HDP has agreed to issue to three consultants HDP common stock, using an agreed upon conversion price of $8.00 per share, in lieu of part or all of the payments otherwise due to them for their work, effective upon consummation of the Asset Acquisition. Under these agreements, HDP was obligated to issue an aggregate of approximately 3,500 shares for $28,000 for such services as of June 30, 2007 and estimates that it will be obligated to issue an aggregate of up to 15,000 shares through the date of consummation of the Asset Acquisition. In addition, HDP will be obligated to issue shares of HDP common stock to Thomas Compton and Peter Clifford. For more information about issuances to Thomas Compton and Peter Clifford, see the section entitled “The Acquisition Proposal—Other Agreements Related to the Acquisition—Thomas Compton’s Employment Agreement with HDP and Peter Clifford’s Consulting Agreement with HDP.” In addition, HDP has outstanding warrants to purchase 18,750,000 shares of common stock, 2,250,000 shares underlying founder warrants, and has issued to its underwriters in connection with the IPO an option to purchase 1,875,000 units, each unit consisting of one share of common stock and one warrant. The holders of HDP capital stock immediately prior to the Asset Acquisition will own the balance of the issued and outstanding shares of HDP capital stock.

Do I have conversion rights in connection with the Asset Acquisition?

If you hold shares of common stock issued in HDP’s IPO, then you have the right to vote against the Asset Acquisition Proposal and demand that HDP convert your shares of HDP common stock into a pro rata portion of the cash in the trust account. These rights to vote against the Asset Acquisition and demand conversion of your shares into a pro rata portion of the trust account are sometimes referred to herein as conversion rights.

If I have conversion rights, how do I exercise them?

If you wish to exercise your conversion rights, you must vote against the Asset Acquisition Proposal and, at the same time, demand that HDP convert your shares into cash by marking the appropriate space on the proxy card. If, notwithstanding your vote, the Asset Acquisition is consummated, then you will be entitled to receive a pro rata share of the trust account in which a substantial portion of the net proceeds of HDP’s IPO are held, including any pro rated interest earned thereon through the date of the Special Meeting. Based on the amount of cash held in the trust account as of June 30, 2007, without taking into account any interest accrued after such date, you would be entitled to convert each share of HDP common stock that you hold into approximately $7.84 per share. If you exercise your conversion rights, then you will

8




be exchanging your shares of HDP common stock for cash and will no longer own these shares of common stock. You will only be entitled to receive cash for these shares if you continue to hold these shares through the closing date of the Asset Acquisition and then tender your stock certificates to HDP’s stock transfer agent. If you convert your shares of common stock but you remain in possession of the Warrants and have not sold or transferred them, you will still have the right to exercise the warrants received as part of the units purchased in the IPO in accordance with the terms thereof. If the Asset Acquisition is not consummated: (i) then your shares will not be converted into cash at this time, even if you so elected, and (ii) assuming we are unable to consummate another business combination by June 6, 2008, we will commence the dissolution process and you will be entitled to distribution upon liquidation. See “Conversion Rights” at page 51 and the section entitled “Dissolution and Liquidation if No Business Combination” beginning on page 155.

What happens to the funds deposited in the trust account after completion of the Asset Acquisition?

Upon consummation of the Asset Acquisition, a portion of the funds remaining in the trust account after payment of amounts, if any, to stockholders requesting and exercising their conversion rights, will be used to pay expenses associated with the Asset Acquisition and to fund working capital of the combined company. In addition, up to $3,000,000 will be used to pay deferred underwriter’s compensation from HDP’s IPO.

Who will manage HDP from and after consummation of the Asset Acquisition?

From and after consummation of the Asset Acquisition, HDP will be managed by the current management of HDP. Thomas Compton, currently the President of the Association, will become President and Chief Executive Officer of NHRA Pro Racing, the wholly owned subsidiary of HDP that will hold the Purchased Assets, as well as a member of the board of directors of NHRA Pro Racing. Robert Meyers, the current Chief Financial Officer of HDP, will also become Chief Financial Officer of NHRA Pro Racing. In addition, Peter Clifford, presently the General Manager of the Association, will become a consultant to NHRA Pro Racing. A number of senior executives of the Association will join NHRA Pro Racing and approximately 95 existing employees of the Association will join NHRA Pro Racing as employees. The Board of Directors of HDP will consist of five board members, each to serve until his or her successor is elected and qualified or until his or her earlier death, resignation or removal.

What happens if the Asset Acquisition is not consummated?

If the Asset Acquisition is not consummated HDP may seek another suitable business combination. Depending upon the timing and success of such efforts HDP may be forced to dissolve and liquidate if it cannot negotiate a letter of intent for another acquisition proposal before December 6, 2007. If a liquidation were to occur by approximately June 6, 2008 (the last day on which HDP would be permitted to consummate an acquisition under its amended and restated certificate of incorporation), HDP estimates that approximately $5,500,000 in interest, less applicable federal, state and Delaware franchise taxes, would accrue on the amounts that are held in trust through such date, which would yield a trust balance of approximately $150,000,000 or $8.02 per share. This estimate includes the $2,250,000 proceeds from the sale of HDP’s founder director warrants and deferred underwriter fees owed to Morgan Joseph & Co. Inc. This amount, less any liabilities not indemnified by certain officers and members of HDP’s Board and not waived by HDP’s creditors, would be distributed to the holders of the 18,750,000 shares of common stock purchased in HDP’s IPO.

Separately, HDP estimates that the dissolution process would cost approximately $50,000 to $75,000. Such officers and directors have acknowledged and agreed that such costs are covered by their existing indemnification agreement. We do not believe there would be any claims or liabilities in excess of the funds out of the trust against which certain of HDP’s executive officers and directors would be required to

9




indemnify the trust account in the event of such dissolution. In the event that such persons indemnifying HDP are unable to satisfy their indemnification obligation or in the event that there are subsequent claims such as subsequent non-vendor claims for which such persons have no indemnification obligation, the amount ultimately distributed to stockholders may be reduced even further. However, HDP currently has no basis to believe there will be any such liabilities or to provide an estimate of any such liabilities. The only cost of dissolution that HDP is aware of that would not be indemnified against by such officers and directors of HDP is the cost of any associated litigation for which officers and directors obtained a valid and enforceable waiver. Should the Asset Purchase Agreement be terminated due to a breach of such agreement by HDP, then the scope of HDP’s liability would be limited to actual out of pocket costs and expenses reasonably incurred by the Association in connection with the Acquisition since November 1, 2006, including without limitation, all legal, accounting, financial advisor and other third party fees. Should the Asset Purchase Agreement be terminated due to HDP’s failure to obtain the HDP stockholder approval, then the scope of HDP’s liability would be limited to all of the reasonable legal fees, costs and expenses incurred by the Association in connection with the Acquisition, including without limitation, the fees of counsel for the Association and the fees of counsel for Messrs. Thomas Compton and Peter Clifford, all of the fees and expenses of the provider of the Association’s fairness opinion, and all of the fees and expenses of the compensation consultant hired by the Association. See page      of the section entitled “Risk Factors” for a further discussion with respect to amounts payable from the trust account.

In the event the Asset Acquisition Proposal is not approved and assuming the Proposal 4B is approved, then the management and director composition of HDP will remain unchanged.

When do you expect the Asset Acquisition to be completed?

Assuming the approval of the Asset Acquisition Proposal, it is currently anticipated that the Asset Acquisition and other proposals will be completed as promptly as practicable following the Special Meeting of stockholders to be held on                     , 2007.

What do I need to do now?

HDP urges you to read carefully and consider the information contained in this proxy statement, including the annexes, and to consider how the Asset Acquisition will affect you as a stockholder of HDP. You should then vote as soon as possible in accordance with the instructions provided in this proxy statement and on the enclosed proxy card.

Do I need to send in my stock certificates?

Only HDP stockholders who vote against adoption of the Asset Acquisition Proposal and elect to have their shares converted into a pro rata share of the funds in the trust account must send their physical stock certificates to our stock transfer agent no later than 5:00 p.m., New York City time, on the third business day following consummation of the Acquisition. HDP stockholders who vote in favor of the adoption of the Asset Acquisition Proposal, or who otherwise do not elect to have their shares converted should not submit their stock certificates now or after the Asset Acquisition, because their shares will not be converted or exchanged in connection with the Asset Acquisition.

What should I do if I receive more than one set of voting materials?

You may receive more than one set of voting materials, including multiple copies of this proxy statement and multiple proxy cards or voting instruction cards, if your shares are registered in more than one name or are registered in different accounts. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which

10




you hold shares. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast a vote with respect to all of your HDP shares.

Who can help answer my questions?

If you have questions about any of the proposals, you may write or call HD Partners Acquisition Corporation at 2601 Ocean Park Boulevard, Suite 320, Santa Monica, California 90405, (310) 209-8308 ext 2, Attention: Bruce R. Lederman, Secretary.

11




SUMMARY OF THE PROXY STATEMENT

This summary highlights certain information from this proxy statement including information with respect to each of the proposals, although the Asset Acquisition is the primary reason for the calling of the Special Meeting. This summary does not contain all of the information that is important to you. All of the proposals are described in detail elsewhere in this proxy statement and this summary discusses the material items of each of the proposals. You should carefully read this entire proxy statement and the other documents to which this proxy statement refers you. See, “Where You Can Find More Information.” on page         .

The Asset Acquisition Proposal (Page 53)

The Parties

HDP

HDP is a blank-check company formed specifically as a vehicle to effect a merger, asset acquisition or similar business combination with one or more operating businesses in the media, entertainment or telecommuncications industries. The principal executive offices of HDP are located at 2601 Ocean Park Boulevard, Suite 320, Santa Monica, California 90405, and its telephone number is (310) 209-8308 ext 2.

Association

The Association is a California nonprofit mutual benefit corporation that conducts and sanctions amateur and professional drag racing activities throughout the United States. The primary mission of the Association is to preserve, protect and promote the sport of drag racing.

The Association was incorporated on March 13, 1951 under the name National Hot Rod Association. The principal executive offices of the Association are located at 2035 Financial Way, Glendora, California 91741, and its telephone number is (626) 250-2237.

The Asset Purchase Agreement (Page 75)

On May 30, 2007, the parties entered into an Asset Purchase Agreement which provides for an acquisition by HDP of substantially all of the assets, and the assumption of certain liabilities, of the Association related to its professional drag racing business, and HDP’s acquisition of various rights to commercialize the NHRA brand and media assets. At the closing, and subject to certain adjustments as hereafter described, the Association will receive aggregate consideration of between a mimimum of $121,057,792 and a maximum of $123,457,792 consisting of the following as a result in the Asset Acquisition (the “Asset Acquisition Consideration”):

(i)            an aggregate of 1,256,447 shares of HDP common stock valued at $9,557,792;

(ii)        approximately $100,000,000 in cash, increased by the amount of the Capital Expenditure Balance incurred by the Association for the Gainesville race track (which HDP is also purchasing) up to a maximum of $2,400,000; and

(iii)    the assumption of approximately $11,500,000 of the Seller Loan Balance.

The $100,000,000 in cash to be paid as a portion of the acquisition consideration will be subject to adjustment (A) to the extent that the Seller Loan Balance is greater than $11,500,000 (in which case the cash paid will decrease) or is less than $11,500,000 (in which case the cash paid will increase) and (B) by the amount of the Capital Expenditure Balance.

HDP and the Association plan to consummate the Asset Acquisition as promptly as practicable after the Special Meeting, provided that:

·       HDP’s stockholders have approved and adopted the Acquisition Proposal and the transactions contemplated thereby;

12




·       holders of less than 20% of the shares of the common stock issued in HDP’s IPO vote against the Asset Acquisition Proposal and demand conversion of their shares into cash;

·       the other conditions specified in the Asset Purchase Agreement have been satisfied or waived.

See the description of the Asset Purchase Agreement and the Ancillary Agreements in the section entitled “The Asset Purchase Agreement” beginning on page    . The Asset Purchase Agreement is included as “Annex A” and the Key Definitions Agreement is included as “Annex B” to this proxy statement. We encourage you to read the Asset Purchase Agreement and the Key Definitions Agreement in their entirety.

Inside Stockholders (Page 52)

On the Record Date, our officers and directors owned an aggregate of 4,687,500 shares of our common stock, or approximately 20% of our outstanding shares, that they acquired prior to our IPO. They have agreed to vote these shares with respect to the Asset Acquisition Proposal in accordance with the holders of a majority of our IPO shares that are voted at the Special Meeting. Our officers and directors own no shares that were issued in the IPO.

Certain of our officers and directors, or their designees, have collectively purchased a combined total of 2,250,000 warrants concurrently with the closing of the initial public offering at a price of $1.00 per warrant for a total of $2,250,000. We refer to these 2,250,000 warrants as the founding director warrants. The founding director warrants were purchased separately and not in combination with common stock in the form of units. The purchase price of the founding director warrants was added to the proceeds from the initial public offering and is held in the trust account pending our completion of a business combination. If we do not complete a business combination by June 6, 2008, then the $2,250,000 purchase price of the founding director warrants will become part of the amount payable to our public stockholders upon the liquidation of our trust account as part of our plan of dissolution and distribution and the founding director warrants will expire worthless.

Date, Time and Place of Special Meeting of Our Stockholders (Page 48)

The Special Meeting of our stockholders will be held at 10:00 a.m. Eastern Time, on                 , 2007, at the offices of Latham & Watkins LLP, 633 West Fifth Street, Suite 4000, Los Angeles, California 90071-2007.

Record Date; Who is entitled to Vote (Page 49)

You will be entitled to vote or direct votes to be cast at the Special Meeting if you owned shares of our common stock at the close of business on                             , 2007, which is the record date for the Special Meeting. You will have one vote for each share of our common stock you owned at the close of business on the record date. On the record date, there were 23,437,500 shares of our common stock outstanding, of which 18,750,000 shares were IPO shares. The remaining 4,687,500 shares were issued to our founders prior to our IPO.

Quorum and Vote Required (Page 50)

A quorum of our stockholders is necessary to hold a valid stockholders meeting. A quorum will be present at the Special Meeting if a majority of the shares of our common stock outstanding as of the record date are presented in person or by proxy. Abstentions and broker non-votes will count as present for the purposes of establishing a quorum.

The approval of the Asset Acquisition Proposal will require the approval of the holders of a majority of the shares of our common stock issued in our IPO that vote on the Asset Acquisition Proposal at the Special Meeting with respect to the Asset Acquisition. Notwithstanding such approval, the Asset

13




Acquisition will not be completed if the holders of 20% or more of our IPO shares (3,750,000 or more shares) vote against the Asset Acquisition Proposal and exercise their conversion rights. Adoption of our Incentive Plan will require the affirmative vote of the holders of a majority of the shares of the Company’s common stock represented in person or by proxy and entitled to vote at the meeting. Adoption of the Adjournment Proposal requires the affirmative vote of a majority of the issued and outstanding shares of HDP’s common stock represented in person or by proxy at the meeting. Adoption of Director Proposal 4A or Director 4B requires the affirmative vote of the holders of a plurality of the shares of Common Stock cast in the election of directors. Adoption of the Auditor proposal requires a majority of the votes cast by holders of Common Stock.

As long as a quorum is established at the Special Meeting, a failure to vote by someone who is present in person or by proxy will have no impact upon the approval of the Asset Acquisition Proposal, the Director Proposal A and the Director Proposal B, and the Auditor Proposal, but since the Adjournment Proposal and the Incentive Plan Proposal require the affirmative vote of a majority of the issued and outstanding shares of HDP’s common stock represented in person or by proxy at the meeting, a failure to vote will have the effect of a vote against the Adjournment Proposal and against the Incentive Plan Proposal. Failure to vote will not have the effect of converting your shares into a pro rata portion of the trust account.

Voting your Shares; Proxies (Page 50)

You can vote by signing and returning the enclosed proxy card. If you vote by proxy card, your “proxy,” whose name is listed on the proxy card, will vote your shares as you instruct on the proxy card. If you sign and return the proxy card, but do not give instructions on how to vote your shares, your shares will be voted, as recommended by the HDP Board, “FOR” the approval of the Asset Acquisition Proposal, “FOR” the approval of the Incentive Plan Proposal, “FOR” the approval of the Adjournment Proposal, “FOR” Director Proposal 4A (if the Asset Acquisition is approved), “FOR” Director Proposal 4B (if the Asset Acquisition is not approved), and “FOR” the Auditor Proposal.

Proxies may be solicited by mail, telephone or in person.

If you grant a proxy, you may still vote your shares in person if you revoke your proxy at or before the Special Meeting. If you hold your shares in street name you can obtain physical delivery of your shares into your name, and then vote the shares yourself. In order to obtain shares directly into your name, you must contact your brokerage firm representative. Brokerage firms may assess a fee for your conversion; the amount of such fee varies from firm to firm.

Tax Consequences (Page 71)

Since HDP stockholders will not be exchanging or otherwise disposing of their shares of stock in HDP pursuant to the Asset Acquisition, the HDP stockholders will continue to hold their shares of HDP common stock and will not recognize any gain or loss from the Asset Acquisition. However, for those HDP stockholders who exercise their conversion rights and convert their HDP shares into the right to receive cash, such stockholders will generally be required to treat the transaction as a sale of the shares and recognize gain or loss upon the conversion. Such gain should be capital gain or loss if such shares were held as a capital asset on the date of the conversion. Such gain or loss will be measured by the difference between the amount of cash received and the tax basis of that stockholder’s shares of HDP common stock. A stockholder’s tax basis in his shares of HDP common stock generally will equal the cost of such shares. A stockholder who purchased HDP’s units will have to allocate the cost between the shares of common stock and the warrants comprising the units based on their fair market values at the time of the purchase. Under certain circumstances, if the stockholder actually or constructively still owns shares of HDP common stock after the conversion of shares into cash, the conversion may not be treated as a sale of stock by that stockholder for tax purposes but rather as a corporate distribution. A stockholder may constructively own

14




stock for tax purposes because, among other reasons, stock may be owned by certain family members or affiliated entities or the stockholder may retain warrants in HDP. If the conversion does not qualify as a sale for federal tax purposes but instead is treated as a corporate distribution, then the receipt of cash in the conversion will be treated (i) as a dividend to the extent of HDP’s earnings and profits, (ii) as a reduction of basis in the shares for any excess and (iii) to the extent of any excess over basis, gain from the sale or exchange of shares. HDP stockholders who do not exercise their conversion rights will continue to hold their shares of HDP common stock and as a result will not recognize any gain or loss from the asset acquisition.

Overview of Asset Purchase Agreement (Page 75)

Pursuant to the terms and subject to the conditions set forth in the Asset Purchase Agreement, we have agreed to purchase and assume from the Association certain assets and liabilities related to Professional Drag Racing such that, upon the consummation of the transactions contemplated under the Asset Purchase Agreement, we will own, operate, market and promote Professional Drag Racing, and the Association will own, operate, market and promote non-professional drag racing.

The assets to be purchased, and the liabilities to be assumed, by us, collectively referred to as the “Purchased Business,” are:

·       all of the Association’s rights, title and interests (including goodwill) in and to Professional Drag Racing, including the NHRA POWERade Drag Racing Series;

·       all exploitation rights related to Professional Drag Racing and other commercialization rights related to the NHRA brand and media assets, including:

·        the exclusive right, on a worldwide basis, to conduct Professional Drag Racing, including the expansion of any existing Professional Drag Racing events or series and the creation of new Professional Drag Racing events and series;

·        the right, under certain conditions, to conduct any other drag racing activities in any country outside of the United States, Canada and Mexico;

·        the commercialization and exploitation rights set forth in the Commercialization Agreement and the Brand License Agreement, described in further detail below;

·        the non-exclusive right to conduct promotional and exhibitional activities; and

·       The “Purchased Assets” (as such term is defined in the section entitled “The Asset Purchase Agreement—Overview”), are subject to any restrictions or limitations set forth in the Brand License Agreement, the Association Drag Racing Access Agreement, the Commercialization Agreement, the Operational Support Agreement, the Sanctioning Agreement, and the Promotional Access Agreement, collectively referred to as the “Ancillary Agreements”.

Conditions to the Consummation of the Asset Acquisition (Page 82)

The obligations of HDP and the Association to consummate the Asset Acquisition are subject to the satisfaction or waiver of specified conditions set forth in the Asset Purchase Agreement before completion of the Asset Acquisition, including the following:

Conditions to HDP’s obligations:

·       the representations and warranties made by the Association must be true and correct in all material respects;

·       the Association must have performed in all material respects all obligations required to be performed by it under the terms of the Asset Purchase Agreement;

15




·       there is no action by a governmental entity that restrains, enjoins or otherwise prohibits the Asset Acquisition;

·       there is no action by any governmental entity that seeks such a prohibition and no governmental entity has made any specified material adverse determination with respect to the Asset Acquisition;

·       no non-governmental entity shall have instituted any action that seeks to prohibit the Asset Acquisition and which HDP has determined has a reasonable basis for success;

·       all required antitrust approvals have been obtained or applicable mandatory waiting periods have expired;

·       all materials consents shall have been obtained;

·       the required stockholder approval of HDP has been obtained;

·       a fairness opinion shall have been received by HDP’s Board;

·       key executive agreements have been entered into and remain in full force and effect;

·       there must not have occurred since the date of the Asset Purchase Agreement any material adverse effect on the Association’s financial condition or business;

·       the Association must have entered into certain specified insurance arrangements; and

·       all Ancillary Agreements and other agreements to which the Association is to enter into pursuant to the Asset Purchase Agreement have been executed.

Conditions to the Association’s obligations:

·       the representations and warranties made by HDP must be true and correct in all respects;

·       HDP must have performed in all material respects all obligations required to be performed by it under the terms of the Asset Purchase Agreement;

·       No governmental entity of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any governmental prohibition;

·       No governmental entity shall have instituted any action, litigation or suit that seeks a governmental prohibition or have made a material adverse governmental determination, and no other person shall have instituted any action, litigation or suit before any governmental entity (x) which seeks to prohibit the consummation of, or challenges the validity or legality of, the sale of the purchased assets and (y) which the Association has determined in good faith, based upon the advice of counsel, has a reasonable basis for success;

·       The two immediately preceding conditions shall be deemed to be satisfied to the extent that HDP agrees to assume, at its sole cost and expense, the defense of any such governmental or non-governmental action or determination, including any non-frivolous claim against the Association, and to indemnify, defend and hold harmless the Association and the Association’s indemnified parties from and against any and all damages in connection with or arising out of any such governmental or non-governmental action, determination or claim, as the case may be;

·       all required antitrust approvals have been obtained or applicable mandatory waiting periods have expired;

·       all material consents shall have been obtained;

·       a fairness opinion has been received by the Association’s Board and, in certain circumstances, the Association’s Board shall have received a written bring-down of its fairness opinion stating that the proposed purchase is fair to the Association, provided that such bring-down shall only be required if

16




(i) the Closing shall not have occurred on or before February 28, 2008, (ii) there shall have been a material positive change in the results of operations of the Purchased Business and (iii) such material positive change is not the result of any efforts by HDP or any events attributable to the expected consummation of the Asset Acquisition;

·       HDP must have entered into certain specified insurance arrangements;

·       all Ancillary Agreements and other agreements to which HDP is to enter into pursuant to the Asset Purchase Agreement have been executed; and

·       there must not have occurred since the date of the Asset Purchase Agreement any material adverse effect on the financial condition or business of HDP.

Termination, Amendment and Waiver (Page 84)

The Asset Purchase Agreement may be terminated at any time prior to the consummation of the Asset Acquisition, whether before or after receipt of stockholder approval, as follows:

·       by mutual written consent of HDP and the Association;

·       by HDP, on the one hand, or the Association, on the other hand, if the Asset Acquisition has not been consummated (other than through the failure of any party seeking to terminate this Agreement to comply with its obligations under the Asset Purchase Agreement) on or before the later of (i) December 31, 2007 or (ii) forty (40) days following HDP’s receipt of notification from the SEC that it has no further comments to the preliminary proxy statement; provided that in no event shall such date be later than May 30, 2008 (such later date being referred to herein as the “Outside Date”);

·       by either HDP or the Association if the HDP stockholders’ meeting shall have been held and HDP’s stockholders shall have taken a final vote on the Asset Acquisition Proposal and failed to approve the Asset Acquisition;

·       by HDP if, prior to the required HDP stockholder approval having been obtained, HDP receives a written communication from Duff & Phelps, LLC rescinding, withdrawing or adversely modifying its fairness opinion (other than any such rescission, withdrawal or adverse modification based upon any intentional failure to provide information or willful misrepresentation of HDP);

·       by the Association if the Association receives a written communication from its fairness opinion provider rescinding, withdrawing or adversely modifying its fairness opinion (other than any such rescission, withdrawal or adverse modification based upon any intentional failure to provide information or willful misrepresentation of the Association);

·       by HDP if the Association fails to cure HDP’s objections to exceptions to title to the Association’s real property contained in the preliminary title reports thereto;

·       by the Association, on the one hand, or by HDP, on the other hand, if a material breach of the Asset Purchase Agreement has been committed by the other party and such material breach has not been expressly waived in writing;

·       (i) by HDP if satisfaction of any of its conditions to closing becomes impossible prior to the Outside Date (other than through the failure of HDP to comply with its obligations under the Asset Purchase Agreement) and HDP has not expressly waived such condition in writing on or before termination of the Asset Purchase Agreement; or (ii) by the Association, if satisfaction of any of its conditions to closing becomes impossible prior to the Outside Date (other than through the failure of the Association to comply with its obligations under the Asset Purchase Agreement) and the Association has not expressly waived such condition in writing on or before termination of the Asset Purchase Agreement; and

17




·       by either HDP or the Association if there shall be any law or regulation that makes consummation of the Asset Acquisition illegal or otherwise prohibited or if consummation of the Asset Acquisition would violate any non-appealable order of any governmental entity having competent jurisdiction;

If permitted under applicable law, either HDP or the Association may waive conditions for their own respective benefit and consummate the Asset Acquisition, even though one or more of these conditions have not been met. We cannot assure you that all of the conditions will be satisfied or waived or that the Asset Acquisition will occur.

Accounting Treatment (Page 102)

The acquisition will be accounted for under the purchase method of accounting in accordance with U.S. generally accepted accounting principles (``GAAP’’), with HDP being the acquiror. Accordingly, for accounting purposes, the Purchased Assets of the Association will be stated at their fair value based on an appraisal of the Purchased Assets acquired and liabilities assumed. It is anticipated that a substantial portion of the purchase price will be allocated to amortizable intangibles and non-amortizable goodwill and intangibles.

Risk Factors (Page 31)

Before you grant your proxy or vote or instruct the vote with respect to the Asset Acquisition, you should be aware that the occurrence of the events described in the “Risk Factors” section and elsewhere in this proxy statement could have a material adverse effect on us and the Association.

Conversion Rights (Page 51)

Pursuant to HDP’s existing amended and restated certificate of incorporation, a holder of shares of HDP’s common stock issued in its IPO may, if the stockholder votes against the Asset Acquisition Proposal, demand that HDP convert such shares into a pro rata portion of the trust account. This demand must be made on the proxy card at the same time that the stockholder votes against the Asset Acquisition Proposal. We issued a total of 18,750,000 shares in our IPO and, other than the 4,687,500 shares issued to our management, we have no other shares of common stock issued and outstanding. If properly demanded, in connection with a vote against the Asset Acquisition Proposal, HDP will convert each share of common stock as to which such demand has been made into a pro rata portion of the trust account in which a substantial portion of the net proceeds of HDP’s IPO are held, plus all pro rata interest earned thereon. If you exercise your conversion rights, then you will be exchanging your shares of HDP common stock for cash and will no longer own these shares. Based on the amount of cash held in the trust account as of March 31, 2007, without taking into account any interest accrued after such date, you would be entitled to convert each share of common stock that you hold into approximately $7.79 per share. You will only be entitled to receive cash for these shares if you continue to hold these shares through the closing date of the Asset Acquisition and then tender your stock certificate to HDP’s stock transfer agent. If the Asset Acquisition is not consummated, then these shares will not be converted into cash immediately. If you convert your shares of common stock, you will still have the right to exercise the warrants received as part of the units purchased in our IPO in accordance with the terms thereof. If the Asset Acquisition is not consummated, then your shares will not be converted to cash after the Special Meeting, even if you so elected, and your shares will be converted into cash upon liquidation of the trust.

The Asset Acquisition will not be consummated if the holders of 3,750,000 or more shares of common stock issued in HDP’s IPO, an amount equal to 20% or more of such shares, vote against the Asset Acquisition Proposal and exercise their conversion rights.

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Appraisal or Dissenters’ Rights (Page 52)

No dissenter’s or appraisal rights are available under the Delaware General Corporation Law for the stockholders of HDP in connection with the proposals.

Stock Ownership (Page 52)

The following table sets forth information as of July 31, 2007, based on information obtained from the persons named below, with respect to the beneficial ownership of shares of HDP’s common stock by: (i) each person known by us to be the owner of more than 5% of our outstanding shares of HDP’s common stock, (ii) each director, and (iii) all officers and directors as a group. Except as indicated in the footnotes to the table, the persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them.

 

Name and Address of
Beneficial Owner(1)

 

 

 

Amount and Nature of
Beneficial Ownership

 

Percent of Class

 

Eddy W. Hartenstein(2)

 

 

1,372,500

 

 

 

3.09

%

 

Robert L. Meyers(3)

 

 

1,372,500

 

 

 

3.09

%

 

Bruce R. Lederman(4)

 

 

1,372,500

 

 

 

3.09

%

 

Lawrence N. Chapman(5)

 

 

1,372,500

 

 

 

3.09

%

 

Steven J. Cox(6)

 

 

1,372,500

 

 

 

3.09

%

 

Henry Goldberg(7)

 

 

37,500

 

 

 

*

 

 

Martin E. Gottlieb(8)

 

 

37,500

 

 

 

*

 

 

Sapling, LLC(9)

 

 

1,702,359

 

 

 

3.83

%

 

Fir Tree Recovery Master Fund, LP(9)

 

 

594,014

 

 

 

1.34

%

 

Satellite Fund II, L.P.(10)

 

 

317,331

 

 

 

*

 

 

Satellite Fund IV, L.P.(10)

 

 

72,283

 

 

 

*

 

 

Satellite Overseas Fund, Ltd.(10)

 

 

721,998

 

 

 

1.62

%

 

The Apogee Fund, Ltd.(10)

 

 

166,344

 

 

 

*

 

 

Satellite Overseas Fund V, Ltd.(10)

 

 

74,334

 

 

 

*

 

 

Satellite Overseas Fund VI, Ltd.(10)

 

 

22,531

 

 

 

*

 

 

Satellite Overseas Fund VII, Ltd.(10)

 

 

3,430

 

 

 

*

 

 

Satellite Overseas Fund VIII, Ltd.(10)

 

 

11,298

 

 

 

*

 

 

Satellite Overseas Fund IX, Ltd.(10)

 

 

84,651

 

 

 

*

 

 

HBK Investments L.P.(11)

 

 

1,301,860

 

 

 

2.93

%

 

Azimuth Opportunity, Ltd.(12)

 

 

1,543,500

 

 

 

3.47

%

 

All directors and executive officers as a group(7) persons

 

 

6,937,500

 

 

 

15.6

%

 


*                    Represents beneficial ownership of less than 1%.

       (1) Includes shares of common stock issuable upon exercise of warrants which are beneficially owned by certain of the persons named in the above table but which are not exercisable until the later of (i) June 1, 2007 or (ii) the consummation by us of a business combination (including the Asset Acquisition). Unless otherwise indicated, the business address of each of the individuals is 2601 Ocean Park Boulevard, Suite 320, Santa Monica, CA 90405.

       (2) Mr. Hartenstein is the Chairman of the Board, President and Chief Executive Officer of HDP.

       (3) Mr. Meyers is the chief financial officer, treasurer and a director of HDP. Includes 922,500 shares of common stock owned by the Robert Lewis Meyers and Karen L. Meyers Family Trust dated December 11, 1996. Mr. Meyers and his spouse serve as the trustees of the trust. The beneficiary of the trust is Mr. and Mrs. Meyers’ son.

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       (4) Mr. Lederman is an executive vice president and the secretary of HDP. Includes 922,500 shares of common stock owned by the Lederman Family Trust dated January 17, 2000. Mr. Lederman and his spouse serve as trustees of the trust. The Lederman Family Trust dated January 17, 2000 has been established for the benefit of Mr. Lederman and his spouse.

       (5) Mr. Chapman is an executive vice president of HDP. Includes 922,500 shares of common stock owned by the Chapman Revocable Family Trust Dated February 27, 2001. Mr. Chapman and his spouse are the trustees of the trust. The Chapman Revocable Family Trust Dated February 27, 2001 has been established for the benefit of Mr. and Mrs. Chapman’s children.

       (6) Mr. Cox is an executive vice president and a director of HDP. Includes 922,500 shares of common stock owned by the Cox-King Family Living Trust, established for the benefit of Mr. Cox and his spouse. Mr. Cox and his spouse serve as trustees of the trust.

       (7) Mr. Goldberg is a director of HDP.

       (8) Mr. Gottlieb is a director of HDP.

       (9) Based on information contained in a Statement on Schedule 13G filed by Sapling LLC, a Delaware limited liability company (“Sapling”) and by Fir Tree Recovery Master Fund, L.P., a Cayman Islands exempted limited partnership (“Fir Tree Recovery”) on February 14, 2007. Sapling may direct the vote and disposition of the 1,702,359 shares of common stock, and Fir Tree Recovery may direct the vote and disposition of 594,014 shares of common stock. The address of Sapling LLC is 505 Fifth Avenue, 23rd Floor, New York, New York 10017 and the address of Fir Tree Recovery is c/o Admiral Administration Ltd., Admiral Financial Center, 5th Floor, 90 Fort Street, Box 32021 SMB, Grand Cayman, Cayman Islands. Fir Tree, Inc., a New York corporation, is the investment manager of Sapling and Fir Tree Recovery and as such possesses investment discretion over the portfolios of Sapling and Fir Tree Recovery.

(10) Based on information contained in a Statement on Schedule 13G filed on February 14, 2007 by (i) Satellite Fund II, L.P., a Delaware limited partnership, Satellite Fund IV, L.P., a Delaware limited partnership (collectively, the “Delaware Funds”) over which Satellite Advisors, L.L.C., a Delaware limited liability company, has discretionary trading authority, as general partner, and (ii) Satellite Overseas Fund, Ltd., a Cayman Islands exempted company, The Apogee Fund, Ltd. (f/k/a Satellite Overseas Fund III, Ltd.), a Cayman Islands exempted company, Satellite Overseas Fund V, Ltd., a Cayman Islands exempted company, Satellite Overseas Fund VI, Ltd., a Cayman Islands exempted company, Satellite Overseas Fund VII, Ltd., a Cayman Islands exempted company, Satellite Overseas Fund VIII, Ltd., a Cayman Islands exempted company, and Satellite Overseas Fund IX, Ltd., a Cayman Islands exempted company (collectively, the “Offshore Funds” and together with the Delaware Funds, the “Satellite Funds”) over which Satellite Asset Management, L.P. , a Delaware limited partnership, has discretionary investment trading authority. The general partner of Satellite Asset Management, L.P. is Satellite Fund Management LLC, a Delaware limited liability company. Satellite Fund Management LLC and Satellite Advisors, L.L.C. each share the same Executive Committee that make investment decisions on behalf of the Satellite Funds and investment decisions made by such Executive Committee, when necessary, are made through approval of a majority of the Executive Committee members. The address of the Satellite Funds is 623 Fifth Avenue, 19th Floor, New York, New York 10022.

(11)   Based on information contained in a Statement on Schedule 13G filed by HBK Investments L.P., a Delaware limited partnership (“HBK Investments”), by HBK Services LLC, a Delaware limited liability company (“HBK Services”), by HBK Partners II L.P., a Delaware limited partnership (“HBK Partners”), by HBK Management LLC, a Delaware limited liability company (“HBK Management”), and by HBK Master Fund L.P., a Cayman Islands limited partnership (“HBK Master Fund”) on

20




July 6, 2007. The address of HBK Investments, HBK Services, HBK Partners and HBK Management  is 300 Crescent Court, Suite 700, Dallas, Texas 75201 and the address of HBK Master Fund is c/o HBK Services, 300 Crescent Court, Suite 700, Dallas, Texas 75201. HBK Investments has delegated discretion to vote and dispose of the securities to HBK Services. HBK Services may, from time to time, delegate discretion to vote and dispose of certain of the securities to HBK New York LLC, a Delaware limited liability company, HBK Virginia LLC, a Delaware limited liability company, HBK Europe Management LLP, a limited liability partnership organized under the laws of the United Kingdom, and/or HBK Hong Kong Ltd., a corporation organized under the laws of Hong Kong (collectively, the “Subadvisors”). Each of HBK Services and the Subadvisors is under common control with HBK Investments.

(12) Based on information contained in a Statement on Schedule 13G filed by Azimuth Opportunity, Ltd., an international business company organized under the laws of the British Virgin Islands (“Azimuth”) on June 4, 2007. The address of Azimuth is c/o Ogier Qwomar Complex, 4th Floor, P.O. Box 3170, Road Town, Tortola, British Virgin Islands. Azimuth has the sole power to vote or to direct the disposition of 1,543,500 shares.

All of the shares of HDP common stock acquired by our officers and directors prior to the HDP IPO were placed in escrow with American Stock Transfer & Trust Company, as escrow agent, until the earliest of: (i) June 1, 2009; or (ii) the consummation of a liquidation, merger, stock exchange or other similar transaction which results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property subsequent to the Asset Acquisition.

During the escrow period, the holders of these shares are not able to sell or transfer their securities’ except to their spouses and children or trusts established for their benefit, but will retain all other rights as our stockholders, including, without limitation, the right to vote their shares of common stock and the right to receive cash dividends, if declared. If dividends are declared and payable in shares of common stock, such dividends will also be placed in escrow. If we are unable to effect a business combination and liquidate, none of these stockholders will receive any portion of the liquidation proceeds with respect to common stock owned by them prior to HDP’s IPO.

Reasons for the Asset Acquisition (Page 63)

In reaching its decision with respect to the Asset Acquisition and the transactions contemplated thereby, the Board of Directors reviewed various financial data and due diligence and evaluation materials and made an independent determination of fair market value. In addition, in reaching its decision to approve the Asset Acquisition, the Board of Directors considered a number of factors and believes that the non-exhaustive list of factors below strongly supports its determination and recommendation to approve the Asset Acquisition:

·       the growth prospects associated with the Purchased Business;

·       opportunities to grow existing revenue streams and create new revenue streams associated with the Purchased Business;

·       the financial results of the Purchased Business, including potential for revenue growth and operating margins;

·       the competitive position of the Purchased Business;

·       the industry dynamics, including barriers to entry;

·       the experience of the Association’s management, including Thomas Compton, the current President of the Association who will become President and Chief Executive Officer of NHRA Pro Racing, and Peter Clifford, the Association’s Executive Vice President and General Manager, who will provide consulting services to NHRA Pro Racing;

21




·       acquisition opportunities in the industry;

·       the valuation of comparable companies; and

·       the experience of HDP’s management in building, consolidating and investing in media, entertainment and telecommunications businesses in the U.S., including relationships HDP could introduce to NHRA Pro Racing to potentially enhance its growth.

In addition, a fairness opinion was obtained from an independent financial consultant, which supported our Board’s determination.

HDP’s Board of Directors’ Recommendation (Pages 74, 109, 110, 122 and 124)

After careful consideration of the terms and conditions of the Asset Purchase Agreement , HDP’s Board of Directors has determined unanimously that the Asset Purchase Agreement and the transactions contemplated thereby are fair to, and in the best interests of, HDP and its stockholders. Accordingly, HDP’s Board has unanimously approved and declared advisable the Asset Acquisition and unanimously recommends that you vote or instruct your vote to be cast “FOR” the Asset Acquisition Proposal.

HDP’s Board of Directors has also determined unanimously that the Incentive Plan Proposal is fair to, and in the best interest of HDP and its stockholders. Accordingly, HDP’s Board of Directors has unanimously approved and declared advisable the Incentive Plan Proposal and unanimously recommends that you vote or instruct your vote to be cast “FOR” the approval of the Incentive Plan Proposal.

HDP’s Board of Directors has also determined unanimously that the Adjournment Proposal is in the best interest of HDP and its stockholders. Accordingly, HDP’s Board of Directors has unanimously approved and declared advisable the Adjournment Proposal and unanimously recommends that you vote or instruct your vote to be cast “FOR” the approval of the Adjournment Proposal.

HDP’s Board of Directors has also determined unanimously that the Director Proposal 4A and Director Proposal 4B are fair to, and in the best interest of HDP and its stockholders. Accordingly, HDP’s Board of Directors has unanimously approved and declared advisable Director Proposal 4A (in the event the Asset Acquisition is approved) and Director Proposal 4B (in the event the Asset Acquisition is not approved), and unanimously recommends that you vote or instruct your vote to be cast “FOR” the approval of Director Proposal 4A (in the event the Asset Acquisition is approved) and “FOR” the approval of Director Proposal 4B (in the event the Asset Acquisition is not approved).

HDP’s Board of Directors has also determined unanimously that the Auditor Proposal is fair to, and in the best interest of HDP and its stockholders. Accordingly, HDP’s Board of Directors has unanimously approved and declared advisable the Auditor Proposal and unanimously recommends that you vote or instruct your vote to be cast “FOR” the approval of the Auditor Proposal.

Interests of HDP Directors and Officers in the Asset Acquisition (Page 62)

When you consider the recommendation of HDP’s Board of Directors that you vote in favor of the Asset Acquisition Proposal, you should keep in mind that certain of HDP’s Directors and officers have interests in the Asset Acquisition that are different from, or in addition to, your interests as a stockholder. If the Asset Acquisition is not approved, HDP will be required to liquidate, and the warrants owned by certain of HDP’s directors and the shares of common stock issued at a price per share of $0.005 prior to HDP’s IPO to and held by HDP’s executives and directors will be worthless because HDP’s executives and directors are not entitled to receive any of the net proceeds of HDP’s IPO that are held in trust and may be distributed upon liquidation of HDP. Additionally, HDP’s officers and directors who acquired shares of HDP common stock prior to HDP’s IPO at a price per share of $0.005 will benefit if the Asset Acquisition is approved because they will continue to hold their shares.

 

22




The table below sets forth the value of the shares and warrants owned by the officers and directors of HDP upon consummation of the Asset Acquisition and the unrealized profit from such securities based on an assumed market price of the common stock and the warrants of HDP, as of August 24, 2007, of $7.58 and $0.80, respectively.

 

 

 

Common Shares (a)

 

Warrants (b)

 

 

 

Owned

 

Amount 
Paid ($)

 

Current
Value ($)

 

Unrealized
Profit ($)

 

Owned

 

Amount 
Paid ($)

 

Current
Value ($)

 

Unrealized
Loss ($)

 

Eddy W. Hartenstein

 

922,500

 

 

4,920

 

 

6,992,550

 

6,987,630

 

450,000

 

450,000

 

360,000

 

 

(90,000

)

 

Robert L. Meyers

 

922,500

 

 

4,920

 

 

6,992,550

 

6,987,630

 

450,000

 

450,000

 

360,000

 

 

(90,000

)

 

Bruce R. Lederman

 

922,500

 

 

4,920

 

 

6,992,550

 

6,987,630

 

450,000

 

450,000

 

360,000

 

 

(90,000

)

 

Lawrence N. Chapman

 

922,500

 

 

4,920

 

 

6,992,550

 

6,987,630

 

450,000

 

450,000

 

360,000

 

 

(90,000

)

 

Steven J. Cox

 

922,500

 

 

4,920

 

 

6,992,550

 

6,987,630

 

450,000

 

450,000

 

360,000

 

 

(90,000

)

 

Henry Goldberg

 

37,500

 

 

200

 

 

284,250

 

286,675

 

 

 

 

 

 

 

 

 

 

 

Martin Gottlieb

 

37,500

 

 

200

 

 

284,250

 

286,675

 

 

 

 

 

 

 

 

 

 

 


(a)           The purchase price per share for these common shares was $0.00533 per share. Pursuant to escrow agreements signed by these stockholders, these shares may not be sold or pledged until June 1, 2009. Additionally, these shares are currently not registered, although after the release from escrow, these stockholders may demand that HDP use its best efforts to register the resale of such shares.

(b)          These warrants were purchased in a private placement that closed concurrently with the HDP IPO. The exercise price of the warrants is $5.50.

Interests of the Association Directors and Officers in the Asset Acquisition (Page 98)

You should understand that some of the current directors and officers of the Association have interests in the Asset Acquisition that are different from, or in addition to, your interests as a stockholder of HDP. Upon the closing of the Asset Acquisition, Thomas Compton’s employment agreement with HDP and Peter Clifford’s consulting agreement with HDP will become effective.

Interests of Morgan Joseph in the Asset Acquisition; Fees (Page 102)

Morgan Joseph & Co. Inc. (“Morgan Joseph”) served as the representative of the underwriters in our IPO and agreed to defer $3,000,000 of the underwriting discounts and commissions until after the consummation of a business combination. The deferred amount payable in connection with the IPO will be paid out of the trust account established for the proceeds of the IPO only if we consummate the Asset Acquisition. Morgan Joseph, therefore, has an interest in our consummating the Asset Acquisition that will result in the payment of its deferred compensation. Further, Morgan Joseph owns an option to purchase 1,875,000 units (comprised of one share and one warrant) at an exercise price of $10.00 per unit, received as consideration as the representative of the underwriters in our IPO. In addition, Morgan Joseph has been engaged by us as our financial advisor in connection with the Asset Acquisition. Morgan Joseph has been paid a fee of $50,000 and will be paid a success fee if the transaction is approved of $250,000.

Fairness Opinion (Page 64)

Pursuant to an engagement letter dated May 3, 2007, we engaged Duff & Phelps, LLC to render an opinion that the consideration to be paid for our acquisition of the Purchased Assets, and assumption of certain of the liabilities, of the Association on the terms and conditions set forth in the Asset Purchase Agreement is fair to HDP from a financial point of view and that the fair market value of the Purchased Assets is at least equal to 80% of our net assets. Our Board of Directors determined to utilize the services of Duff & Phelps, LLC because it is an investment banking firm that regularly evaluates businesses and their securities in connection with acquisitions, corporate restructuring, private placements and for other purposes. The engagement letter provides that we will pay Duff & Phelps, LLC a fee of $182,500 (which has been paid) and will reimburse Duff & Phelps, LLC for its reasonable out-of-pocket expenses, including

23




attorneys’ fees. We have also agreed to indemnify Duff & Phelps, LLC against certain liabilities that may arise out of the rendering of the opinion.

Duff & Phelps, LLC delivered its opinion to our board of directors on May 29, 2007, which stated that, as of such date, and based upon and subject to the assumptions made, matters considered and limitations on its review as set forth in the opinion: (i) the consideration to be paid for the Purchased Business by HDP is fair to HDP from a financial point of view, and (ii) the fair market value of the Purchased Assets is at least equal to 80% of our net assets. The amount of such consideration was determined pursuant to negotiations between us and the Association and not pursuant to recommendations of Duff & Phelps, LLC. The Duff & Phelps, LLC opinion is not a recommendation as to how any stockholder should vote or act with respect to any matters relating to the Asset Acquisition (including, without limitation, with respect to the exercise of rights to convert HDP shares into cash). Further, the Duff & Phelps, LLC opinion does not in any manner address the underlying business decision of HDP to engage in the Asset Acquisition or the relative merits of the Asset Acquisition as compared to any alternative business transaction or strategy (including, without limitation, liquidation of HDP after not completing a business combination transaction within the allotted time). The decision as to whether to approve the Asset Acquisition or any related transaction may depend on an assessment of factors unrelated to the financial analysis on which the Duff & Phelps, LLC opinion is based. The full text of Duff & Phelps, LLC written opinion, attached hereto as Annex C, is incorporated by reference into this proxy statement. You are encouraged to read the Duff & Phelps, LLC opinion carefully and in its entirety for a description of the assumptions made, matters considered, procedures followed and limitations on the review undertaken by Duff & Phelps, LLC in rendering its opinion. The summary of the Duff & Phelps, LLC opinion set forth in this proxy statement is qualified in its entirety by reference to the full text of the opinion.

Regulatory Matters (Page 101)

We believe that no state or federal regulatory approval is required in connection with the Asset Acquisition other than the expiration or earlier termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

Incentive Plan Proposal (Page 103)

To adopt the 2007 Long-Term Incentive Compensation Plan pursuant to which HDP will reserve 2,500,000 shares of common stock for issuance pursuant to such plan. See the section entitled “The Incentive Plan Proposal.”

Adjournment Proposal (Page 110)

If, based on the tabulated vote, there are not sufficient votes at the time of the special meeting authorizing HDP to consummate the acquisition, HDP’s board of directors may submit a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation of proxies. See the section entitled “ The Adjournment Proposal .’’

Director Proposals (Page 111)

Director Proposal 4A - to elect five (5) directors to HDP’s board of directors to hold office until the next annual meeting of stockholders and until their successors are elected and qualified (in the event the Asset Acquisition is approved); AND Director Proposal 4B - to elect two (2) Class I directors to HDP’s board of directors to hold office until the next annual meeting of stockholders and until their successors are elected and qualified (in the event the Asset Acquisition is not approved). See the section entitled “The Director Proposal.”

Auditor Proposal (Page 123)

To ratify the appointment of Goldstein Golub Kessler LLP, as the Company’s independent auditor for the year ending December 31, 2007. See the section entitled “The Auditor Proposal.”

24




SELECTED HISTORICAL FINANCIAL INFORMATION
Purchased Business

HDP is providing the following financial information to assist you in the analysis of the financial aspects of the Asset Acquisition. We derived the Purchased Business’s historical information from the audited consolidated financial statements of the Purchased Business as of and for each of the years ended December 31, 2006,  and, December 31, 2005 and December 31, 2004 and the unaudited financial statements for the six months ended June 30, 2007. The information is only a summary and should be read in conjunction with the historical consolidated financial statements and related notes contained elsewhere herein. The historical results included below and elsewhere in this proxy statement are not indicative of the future performance of the Purchased Business.

Selected Historical Financial Statements of the Purchased Business
(In thousands of dollars)

 

 

Fiscal Year Ended December 31,

 

 

 

2006

 

2005

 

2004

 

Revenues

 

$

93,443

 

87,241

 

82,370

 

Operating Expenses (incl. G&A, Sales & Marketing, and Depr.)

 

84,927

 

82,343

 

76,850

 

Operating Income

 

8,516

 

4,898

 

5,520

 

Net Income

 

8,445

 

4,659

 

5,113

 

Total Assets

 

$

47,540

 

42,408

 

43,533

 

Cash and cash equivalents

 

6,420

 

6,356

 

7,047

 

Total Liabilities

 

21,642

 

19,567

 

22,855

 

Total Parent Investment*

 

25,898

 

22,841

 

20,679

 

Net cash provided by operating activities

 

$

11,299

 

5,694

 

5,556

 

Non-GAAP Financial Information

 

 

 

 

 

 

 

EBITDA

 

$

10,252

 

6,700

 

7,315

 

 

 

 

Six Months ended
June 30, 2007

 

Six Months Ended
June 30, 2006

 

 

 

(unaudited)

 

(unaudited)

 

Revenues

 

 

$

41,492

 

 

 

$

43,907

 

 

Operating Expenses (incl. G&A, Sales & Marketing, and Depr.)

 

 

37,366

 

 

 

39,621

 

 

Operating Income

 

 

4,126

 

 

 

4,286

 

 

Net Income

 

 

4,206

 

 

 

4,321

 

 

Total Assets

 

 

$

61,829

 

 

 

$

55,807

 

 

Cash and cash equivalents

 

 

16,498

 

 

 

13,246

 

 

Total Liabilities

 

 

33,741

 

 

 

34,435

 

 

Total Parent Investment*

 

 

28,088

 

 

 

21,372

 

 

Net cash provided by operating activities

 

 

$

14,646

 

 

 

$

12,641

 

 

Non-GAAP Financial Information

 

 

 

 

 

 

 

 

 

EBITDA

 

 

$

5,123

 

 

 

$

5,205

 

 

Number of national events held

 

 

10

 

 

 

12

 

 

Revenue per event

 

 

4,149

 

 

 

3,659

 

 

Net income per event

 

 

421

 

 

 

360

 

 

EBITDA per event

 

 

512

 

 

 

434

 

 

 


*                    The amount of the Parent’s investment included in the balance sheets represents a net balance resulting from various transactions between the Purchased Business and the Association and also includes the Purchased Business’ cumulative net income since its inception. The balance is primarily the result of the Purchased Business’ participation in the Association’s central cash management program, under which all of the Purchased Business’ cash receipts are remitted to the Association and all cash disbursements are funded by the Association.

25




HD PARTNERS ACQUISITION CORPORATION SELECTED FINANCIAL DATA

HDP is providing the following selected financial information to assist you in your analysis of the financial aspects of the Asset Acquisition. The following selected financial and other operating data should be read in conjunction with “HD Partners Acquisition Corporation’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” and its financial statements and the related notes to those statements included elsewhere in this proxy statement. The statement of operations data for the six months ended June 30, 2007 and the balance sheet data as of June 30, 2007 have been derived from HDP’s unaudited financial statements included elsewhere in this proxy statement. The statement of operations data from the period from December 6, 2005 (inception) through December 31, 2006 and for the twelve months ended December 31, 2006 and the balance sheet data as of December 31, 2006 have been derived from HDP’s audited financial statements included elsewhere in this proxy statement. Interim results are not necessarily indicative of results for the full fiscal year and historical results are not necessarily indicative of results to be expected in any future period.

STATEMENTS OF OPERATIONS
(In thousands of dollars)

 

 

For the
Six Months Ended
June 30, 2007

 

For the Period from
December 6, 2005
(inception) to
December 31, 2006

 

For the Period from
December 6, 2005
(inception) to
December 31, 2005

 

 

 

(unaudited)

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and dividend income from Trust Account

 

 

3,135

 

 

 

3,593

 

 

 

 

 

Total revenues

 

 

3,135

 

 

 

3,593

 

 

 

 

 

Costs and Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital based taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

Management fees

 

 

 

 

 

 

 

 

 

 

 

 

 

Insurance

 

 

 

 

 

 

 

 

 

 

 

 

 

Legal fees

 

 

 

 

 

 

 

 

 

 

 

 

 

Travel

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

174

 

 

 

220

 

 

 

2

 

 

Formation costs

 

 

 

 

 

 

 

 

 

 

 

 

 

Total expenses

 

 

174

 

 

 

220

 

 

 

2

 

 

Income before taxes

 

 

2,961

 

 

 

3,373

 

 

 

(2

)

 

Provision for income taxes

 

 

1,180

 

 

 

1,346

 

 

 

 

 

Net income

 

 

1,781

 

 

 

2,027

 

 

 

(2

)

 

Basic and diluted earnings per share

 

 

0.08

 

 

 

0.13

 

 

 

(0.00

)

 

Weighted average basic and diluted shares outstanding

 

 

23,437,500

 

 

 

15,136,719

 

 

 

4,687,500

 

 

 

 

26




BALANCE SHEETS
(In thousands of dollars)

 

 

June 30,
2007

 

December 31,
2006

 

December 31,
2005

 

 

 

(unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

344

 

 

 

1,229

 

 

 

154

 

 

Cash held in trust

 

 

147,004

 

 

 

145,536

 

 

 

 

 

Prepaid expense

 

 

117

 

 

 

64

 

 

 

 

 

Total current assets

 

 

147,465

 

 

 

146,829

 

 

 

154

 

 

Deferred Offering Costs

 

 

 

 

 

 

 

 

140

 

 

Deferred Tax Asset

 

 

476

 

 

 

256

 

 

 

 

 

Other Assets

 

 

1,577

 

 

 

197

 

 

 

 

 

Total Assets

 

 

$

149,518

 

 

 

$

147,282

 

 

 

$

294

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

Accrued costs

 

 

656

 

 

 

77

 

 

 

 

 

Accounts payable and Accrued expenses

 

 

28

 

 

 

64

 

 

 

46

 

 

Income and capital taxes payable

 

 

 

 

 

513

 

 

 

 

 

Deferred interest

 

 

911

 

 

 

486

 

 

 

 

 

Notes payable, stockholders

 

 

 

 

 

 

 

 

225

 

 

Deferred underwriter fees

 

 

3,000

 

 

 

3,000

 

 

 

 

 

Total current liabilities

 

 

4,595

 

 

 

4,140

 

 

 

271

 

 

Common stock, subject to possible redemption 3,748,125 shares, at conversion value

 

 

27,901

 

 

 

27,901

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock, $.001 par value, 1,000,000 shares authorized; none issued and outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock, $.001 par value, 60,000,000 shares authorized; 23,437,500 shares issued and outstanding (which includes 3,748,125 subject to possible conversion)

 

 

23

 

 

 

23

 

 

 

5

 

 

Paid—in capital in excess of par

 

 

113,191

 

 

 

113,191

 

 

 

20

 

 

Equity accumulated during the development stage

 

 

3,808

 

 

 

2,027

 

 

 

(2

)

 

Total stockholders’ equity

 

 

117,022

 

 

 

115,241

 

 

 

23

 

 

Total liabilities and stockholders’ equity

 

 

$

149,518

 

 

 

$

147,282

 

 

 

$

294

 

 

 

27




UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED
FINANCIAL INFORMATION AS OF june 30, 2007

HDP will account for the Asset Acquisition as an acquisition under the purchase method of accounting. Pursuant to this method, the aggregate consideration paid by HDP in connection with the acquisition will be allocated to the Purchased Business’s assets and liabilities based on their fair values, with any excess being treated as goodwill. The Purchased Business’s assets, liabilities and results of operations will be consolidated with the assets, liabilities and results of operations of HDP after consummation of the acquisition.

The following tables set forth our unaudited total capitalization and selected balance sheet information as of June 30, 2007 on an as adjusted basis to give effect to the consummation of the Asset Acquisition, including the pro forma capitalization reflecting maximum and minimum shareholder approval.

 

 

 

 

 

 

After Asset Acquisition with

 

 

 

Purchased

 

 

 

Minimum

 

Maximum

 

 

 

Business

 

HDP

 

Shareholder

 

Shareholder

 

 

 

Actual

 

Actual

 

Approval(1)

 

Approval(2)

 

 

 

(unaudited)

 

(unaudited)

 

(in thousands of dollars)

 

Association Notes Payable

 

 

10,554

 

 

 

 

 

 

10,554

 

 

 

10,554

 

 

Association Parent Investment

 

 

28,088

 

 

 

 

 

 

 

 

 

 

 

HDP Common Stock subject to conversion

 

 

 

 

 

27,901

 

 

 

 

 

 

 

 

HDP Common Stock, par value

 

 

 

 

 

23

 

 

 

23

 

 

 

23

 

 

HDP Additional Paid-In Capital

 

 

 

 

 

113,191

 

 

 

122,749

 

 

 

150,650

 

 

HDP Earnings Accumulated during the
Development Stage

 

 

 

 

 

3,808

 

 

 

3,808

 

 

 

4,719

 

 

Total HDP Equity

 

 

 

 

 

 

117,022

 

 

 

126,580

 

 

 

155,392

 

 

Total HDP Capitalization

 

 

 

 

 

 

144,923

 

 

 

137,134

 

 

 

165,946

 

 

 

 

See accompanying notes to unaudited pro forma condensed combined consolidated financial statements beginning on page F-6 of this document.

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Selected Pro Forma Condensed Combined Balance Sheet
(In thousands of dollars)

 

 

At March 31,2007

 

 

 

Minimum 
Shareholder 
Approval(1)

 

Maximum 
Shareholder 
Approval(2)

 

Total assets

 

 

$

159,582

 

 

 

$

188,394

 

 

Current liabilities

 

 

23,602

 

 

 

23,602

 

 

Long-term debt

 

 

9,400

 

 

 

9,400

 

 

Common stock subject to conversion

 

 

 

 

 

 

 

Additional paid-in capital

 

 

122,749

 

 

 

150,650

 

 

Stockholders’ equity

 

 

126,580

 

 

 

155,392

 

 

Total liabilities and stockholders’ equity

 

 

$

159,582

 

 

 

$

188,394

 

 


(1)          Assumes that 3,748,125 shares of HDP common stock were converted into their pro rata share of the trust account.

(2)          Assumes that no HDP stockholders seek conversion of their HDP stock into pro rata shares of the trust account.

See accompanying notes to unaudited pro forma condensed combined consolidated financial statements beginning on page F-6 of this document.

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MARKET PRICE INFORMATION AND DIVIDEND DATA FOR HDP SECURITIES

HDP consummated its IPO on June 1, 2006. In the IPO, HDP sold 18,750,000 units, each consisting of one share of HDP’s common stock and one warrant to purchase common stock. The units were quoted on the AMEX from the consummation of the IPO under the symbol HDP-U. On August 1, 2006, the common stock and warrants included in the units began trading separately and the trading in the units continued. The shares of HDP common stock and warrants are currently quoted on the American Stock Exchange under the symbols “HDP” and “HDP-WT”, respectively. The closing prices per share of common stock and per warrant of HDP on May 29, 2007, the last trading day before the announcement of the execution of the Asset Purchase Agreement, were $7.59 and $0.70, respectively. Each warrant entitles the holder to purchase from HDP one share of common stock at an exercise price of $5.50 commencing on the later of the consummation of a business combination (if consummated) or June 1, 2007. The HDP warrants will expire at 5:00 p.m., New York City time, on June 1, 2010, or earlier upon redemption. Prior to June 1, 2006, there was no established public trading market for HDP’s securities.

The following table sets forth, for the calendar quarter indicated, the quarterly high and low sales prices of HDP’s common stock, warrants and units as reported on the American Stock Exchange.

 

 

Common Stock

 

Warrants

 

Units

 

 

 

High

 

Low

 

High

 

Low

 

High

 

Low

 

2006

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2006

 

$

7.36

 

$

7.06

 

$

0.68

 

$

0.45

 

$

7.95

 

$

7.45

 

September 30, 2006

 

$

7.30

 

$

7.10

 

$

0.69

 

$

0.54

 

$

8.00

 

$

7.71

 

June 30, 2006

 

N/A

 

N/A

 

N/A

 

N/A

 

$

8.02

 

$

7.85

 

2007

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2007

 

$

7.70

 

$

7.54

 

$

1.20

 

$

0.58

 

$

8.75

 

$

8.08

 

March 30, 2007

 

$

7.50

 

$

7.49

 

$

0.63

 

$

0.58

 

$

7.96

 

$

7.96

 

 

On August 24, 2007 the Closing prices of our units, common stock and warrants were $8.15, $7.58 and $0.80, respectively.

Holders

As of          , 2007, the Record Date of the Special Meeting, there were      holders of record of units,      holders of record of the common stock and      holder of record of the warrants. We estimate that there are      beneficial owners of our units,       beneficial owners of our common stock and      beneficial owners of our warrants. As compensation for their efforts, HDP has agreed to issue to three consultants HDP common stock, valued at $8.00 per share, in lieu of part or all of the payments otherwise due to them for their work, effective upon consummation of the Asset Acquisition. Under these agreements, HDP estimates that it is obligated to issue an aggregate up to 3,500 shares as of June 30, 2007 and will be obligated to issue an aggregate of up to 15,000 shares through the date of consummation of the Asset Acquisition. In addition, HDP will be obligated to issue shares of HDP common stock to Thomas Compton and Peter Clifford. For more information about issuances to Thomas Compton and Peter Clifford, see the section entitled “The Acquisition Proposal—Other Agreements Related to the Acquisition.

Dividends

HDP has not paid any cash dividends on its common stock and does not intend to pay dividends prior to consummation of the Asset Acquisition. It is the present intention of the Board of Directors to retain all earnings, if any, for use in the business operations and, accordingly, the Board does not anticipate declaring dividends in the foreseeable future.

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RISK FACTORS

You should carefully consider the following risk factors, together with all of the other information included in this proxy statement, before you decide whether to vote or instruct your vote to be cast to adopt the Asset Acquisition Proposal. As HDP’s operations will be those relating to the Purchased Business upon consummation of the Asset Acquisition , namely, the activities of NHRA Pro Racing, a number of the following risk factors relate to such business and operations of NHRA Pro Racing, as the successor to the Association’s professional drag racing business. The risk factors described below contain a summary of the specific material risks facing the Purchased Business that are known to HDP at this time.

RISKS RELATED TO THE PURCHASED BUSINESS

Our NHRA POWERade Drag Racing Series may face competition for attendance, television viewers and sponsors.

We compete with other motorsports for the patronage of motor racing spectators in addition to promotional and sponsorship dollars. Moreover, racing events sanctioned by different organizations are often held on the same dates, but at different tracks. The quality of the competition, type of racing event, caliber of the event, sight lines, ticket pricing, location, and customer conveniences, among other things, distinguish the various motorsports events. Many of our events compete with other sports and recreational events scheduled on the same dates. As a result, our revenues and operations may be affected not only by our ability to compete in the motorsports entertainment market, but also by the availability of alternative sporting events, forms of entertainment, and consumer preferences. The continued popularity of our type of entertainment is important to our results of operations, financial condition, growth prospects, and the long-term value of the NHRA brand. The public taste is unpredictable and often subject to change at any moment. The public taste may even be affected by changes in the political and social climate in the United States or the world. Therefore, any change in the public taste could have an adverse effect on the success of the Purchased Business and its operations.

The Purchased Business enters into sponsorship agreements with a limited number of sponsors. This is a material component of our revenue; as such, we cannot assure you that our cash flows will remain sufficient to maintain the viability of our business as a going concern.

In 2006, sponsorship revenue accounted for approximately 25% of revenue, and our top ten sponsors accounted for 12.1% of our revenue.  Accordingly, the ability of the Purchased Business to continue operations will depend, among other things, on the continued ability to obtain and maintain sponsorships agreements. Any failure to secure adequate sponsorship may have a material and adverse affect on the financial condition, operations, and viability of the business.

ESPN is the only television network that distributes our programming and has certain exclusive rights which prevent us from distributing our content through other providers. As such we may have limited alternatives if ESPN performs unsatisfactorily.

We require widespread distribution of our programming to interest sponsors, advertisers, and spectators/fans. ESPN is our current television provider and has certain exclusive rights which prevent us from broadcasting much of our racing activities through other distributors. Although we believe there is a market to televise our services, our future ability to enter into distribution agreements with any major networks, including ESPN, cannot be assured. Further the cost of ESPN’s services may increase as a result of the Acquisition. If we are unable to make suitable distribution arrangements, we will likely incur losses that impair the financial condition of our business. If we are unable to secure distribution of our programming after the expiration of our current agreements, the viability and growth of the Purchased Business may be materially and adversely affected.

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Our revenues may depend on the promotional success of our marketing campaigns.

Since the Purchased Business is driven by consumer demand and sponsorship, we spend and expect to spend in the future significant amounts on advertising, promotional and other marketing campaigns for our business activities. Such marketing activities include or are expected to include, among others, promotion of ticket sales, luxury suite rentals, hospitality and other services at our events and advertising associated with the distribution of NHRA-related merchandise, apparel and products, including DVD and video products. There can be no assurance that such advertising, promotional and other marketing campaigns will be successful or will generate revenues or profits.

We depend on the Association to sanction our professional events and rely on them to provide racing operations services. If our events are not sanctioned by the Association, or if we do not receive the necessary operational support, our revenue and profitability may be materially impaired due to our inability to conduct races as planned.

We have agreements with the Association which provide the following:  The Association will be the exclusive sanctioning body for NHRA-branded racing events in perpetuity, and the Association exclusively will provide racing operations services at our national events for a minimum of 25 years. These agreements contain limited termination provisions and, absent repeated material failures by the Association to perform its duties thereunder, termination of the agreements is difficult. The success of the Purchased Business may remain dependent on the Association’s ability to provide these services in support of the Purchased Business and in a cost-effective manner, as well as in our ability to maintain a good relationship with the Association. Failure to obtain sanctioning for an event or have the necessary operational support in place could prevent us from conducting racing events and may materially impair our revenues, profitability and viablity as a business.

The Purchased Business depends on the Association to maintain a network of member-tracks which we are committed to use in staging NHRA Pro Racing events. An inability to secure the membership of, or our inability to reach facility use agreements with, any of these current member-tracks may materially impair our revenue and profitability and our viability as a business due to our inability to conduct races as planned.

We have agreed to conduct NHRA-branded professional racing only at NHRA “member tracks.”  As a result, we depend on the Association to maintain a network of member tracks throughout the country in order to conduct our NHRA Pro Racing events. The member tracks are under no obligation, and we cannot assure you that the current member tracks will maintain membership with the Association in the future. In addition, there are seventeen (17) race tracks not included in the Asset Acquisition which are currently used for conducting professional racing events that are part of the Purchased Business pursuant to lease agreements. These agreements typically provide us with long-term access to conduct our events. However, these tracks are under no obligation to continue to enter into agreements with us in the future for the use of their facilities. We can provide no assurances that such agreements will be obtained in the future. If the Association is unable to secure the membership of sufficiently sized tracks, and/or the Purchased Business is unable to secure the use of the tracks necessary to conduct professional racing events as currently conducted, we may reduce the number of NHRA Pro Racing events and/or cancel events. Our dependence on the Association to maintain the network of tracks upon which our events will be staged may materially impair our revenues, profitability and viablity as a business.

We depend on independent third parties to participate in our events and to build and maintain professional vehicles for use in our events. Thus, the lack of availability of these third parties to participate in our events may materially impair our revenue and profitability and our viability as a business due to our inability to conduct races as planned.

We depend on independent third parties such as race car drivers or teams to participate in our events and we furthermore rely on race teams to build and maintain the drivers’ vehicles for use in our events. 

32




Certain drivers and race teams may be more popular and/or well-known throughout the industry, or amongst racing fans and spectators, than others. However, no race drivers and teams are contractually obligated to us to participate in our events. Therefore, we cannot assure participation by any drivers or race teams at any particular event. An inability of a certain driver or race team to qualify for any/all of our events, or the failure of a race driver or team to participate in any/all of our events, for any reason, whether foreseeable or unforeseeable, may materially impair our revenues, profitability and viablity as a business.

The “change of control” provisions found in the Brand License Agreement may reduce the attractiveness of the Purchased Business to potential future acquirors.

The term of the licenses under the Brand License Agreement is indefinite and neither party can terminate the Brand License Agreement or withdraw the licenses issued or the rights granted thereunder except upon the occurrence of a “Change of Control” involving a “Conflicted Person” within three years of the consummation of the Asset Acquisition or, if the Association does not sell any of the HDP stock acquired in the Asset Acquisition, within four years of the consummation of the Asset Acquisition. A Conflicted Person, as defined in the Brand License Agreement, generally involves a supplier, vendor, or competitor to the racing activities of Association or HDP, a race track owner, a race driver or race team owner associated with the Association or HDP, or any person who sanctions auto racing events. If a Change of Control involving a Conflicted Person does occur within this designated time period, then the Association may, within one hundred eighty (180) days of receiving notification of such a change, terminate the Brand License Agreement and, subject to certain conditions, the Association may also terminate the Sanctioning Agreement and/or rights to use the NHRA brand under the Commercialization Agreement. If such a termination of the Brand License Agreement occurs, then after the 180 day period, we cannot use any of the brand names licensed to us or even those owned by us which utilize any of the Association’s marks.  Thus, the change in control provision may affect the desirability and attractiveness of the Purchased Business as a candidate for acquisition during the first three (or four) years following consummation of the Asset Acquisition. The change in control provisions and the loss of the Brand License Agreement, Sanctioning Agreement and/or rights to use the NHRA brand under the Commercialization Agreement may also affect the valuation of the Purchased Business. Any of the above may have a material and adverse effect on the financial condition, value, and viability of the Purchased Business.

The use and exploitation of the NHRA brand is a significant component of our business plan and growth strategy going forward. We may face risks associated with the fact that we license but do not own the NHRA brand, as well as the fact that the Association will continue to use the NHRA brand in ways which could conflict with the goodwill and value we intend to create.

As part of the Asset Acquisition, the Association will retain ownership of the NHRA brand, but has granted to us a perpetual, non-cancelable, exclusive license to use the NHRA brand in connection with Professional Drag Racing and certain commercialization activities. Although the Brand License Agreement is non-cancelable by its terms, we face the risk that a court may, at some time in the future, restrict our use of the NHRA brand or allow a termination remedy as the result of our breach in the use thereof. In addition, because the Association will continue to use the NHRA brand in the future conduct of its business, we face the risk that its use in ways inconsistent with our use of the brand could diminish the goodwill and commercial opportunities associated with the brand that are part of our business plan. Any termination of the Brand License Agreement or use by the Association of the NHRA brand in a manner that adversely impacts our ability to commercialize the NHRA brand could have a material and adverse effect on the viability of the Purchased Business.

33




Usage or clearance restrictions related to the content contained in the video and photo archives may limit our ability to commercially exploit such archives.

The video and photo archives acquired as part of the Purchased Business contain content from multiple locations and covering several decades of people, places and events. It is possible that we may be required to obtain clearances from people or places depicted therein in order to utilize some or all of such content. There can be no assurances that we will be successful in obtaining any such required clearances, in which case our ability to fully exploit the video and photo archives may be impaired.

Catastrophic incidents occurring at our racing events, or within the drag racing community in general, may materially impair our revenue and profitability.

We intend to conduct our drag racing events applying the Association’s standards of safety, which we believe to be appropriate. Drag racing is, however, a dangerous sport, and there can be no assurance that catastrophic incidents involving race participants, spectators or other third parties will not occur at our events. Such incidents may have an adverse financial effect on our business as a result of canceled events, reduced event attendance, diminished sponsor activities, reduced television broadcast coverage or increased governmental regulation. It is also possible that catastrophic incidents occurring at racing events in which we do not have any involvement could have a similar adverse impact on our business.

A significant number of material contracts relating to the Purchased Business require consent to be assigned to us. If consent is not granted or these contracts are not assigned, our revenue and profitability, and our viability as a business may be materially impaired.

A significant number of contracts relating to the Purchased Business require consent in order to be transferred in connection with the Asset Acquisition. We can make no assurances that consent to the assignment to us of any or all of these contracts will be granted now or in the future. Although we have provided in the Asset Purchase Agreement that obtaining a number of these consents is a condition to our obligation to consummate the Asset Acquisition and that in the event of a failure to obtain the consent to assign any such contract, the parties will negotiate a mutually acceptable arrangement to provide HDP with the benefit of such contract, there can be no assurance that the other party to such contract will not object or attempt to terminate such contract. HDP cannot determine at this time whether it would complete the purchase if any of the required consents were not obtained. However, if HDP did elect to complete the purchase without all such consents, the failure to obtain such consents could have a material and adverse effect on our revenues and profitability and our viability as a business.

The Professional Drag Racing activities conducted as part of the Purchased Business are or may be in the future subject to various federal, state and local regulations, including the requirement that the facilities at which races are conducted acquire and maintain various permits. If we are unable to  satisfy applicable regulatory requirements , including acquiring and maintaining the right to race at a sufficient number of locations, our revenue and profitability, and our viability as a business may be materially impaired due to our inability to conduct races as planned.

Pursuant to various federal, state, and local laws, we may be required to obtain and maintain certain permits or other rights or permissions so that we may conduct our racing events within a certain state or at a certain track. Expanding the locations at which we conduct professional racing events is part of our plan for the Purchased Business going forward. The inability to secure and/or maintain these necessary permits at current or future race track locations pursuant to the various applicable laws could materially impair our revenues, profitability and viablity as a business.

The loss of our key personnel could adversely effect our operations and growth.

Our ability to execute our business strategy depends in part upon the availability and performance of former members of the Association’s senior management, particularly Tom Compton, who will be

34




President and CEO of NHRA Pro Racing, and Peter Clifford, who will provide consulting services to NHRA Pro Racing. Their experience within the industry continues to be of considerable importance to us. The loss of any of our key personnel due to illness, retirement or otherwise, or our inability to attract and retain key employees in the future could have a material and adverse effect on our operations as well as our future business plans.

The availability and cost of proper tires for use in professional drag racing may have an effect on the ability of third parties to compete in the Purchased Business and our revenue and profitability, and our viability as a business may be materially impaired due to our inability to conduct races as planned.

Due to the nature of auto racing and specifically as related to Professional Drag Racing, certain specific types of tires must be used. Goodyear is currently the sole and exclusive provider of the tires required in order to be able to race Top Fuel Dragsters and Nitro Funny Cars, which are classes of professional drag racing conducted as part of the Purchased Business, at current speeds. Use of other currently available tires would likely affect performance and speed. Therefore, any interruption in the production, transportation, or availability of these specialized tires may result in an inability to stage professional competition of these classes of cars as currently conducted. This could materially impair our revenues, profitability and viablity as a business.

The availability and cost of racing fuel may have an effect on the ability to conduct certain racing activities currently conducted and may materially impair our revenue and profitability and our viability as a business due to our inability to conduct races as planned.

In November 2006, ANGUS Chemical Company, a subsidiary of Dow Chemical, and the only domestic manufacturer of nitromethane, issued a press release announcing that it would no longer supply its NITROFUEL™ brand racing nitromethane for the racing industry in the United States after the end of the 2006 season due to its concerns that fuel usage and handling may not be properly monitored. The Association’s exclusive on-site fuel supplier, VP Racing Fuels, formerly provided ANGUS-produced nitromethane as well as a brand of nitromethane imported from China. With ANGUS’ withdrawal from supplying to the racing industry, there is no longer a domestic source of nitromethane available for racing. While supplies of nitromethane fuel have remained adequate throughout the current 2007 racing season, the withdrawal by the ANGUS Chemical Company from the racing fuels market could limit the availability of nitromethane in the future.

There currently is no viable alternative to nitromethane fuel available to Top Fuel Dragsters and Nitro Funny Cars. The regulation and/or availability of nitromethane, including without limitation import restrictions and transportation restrictions, could make it impossible to race Top Fuel Dragsters and Nitro Funny Cars at current speeds and performance levels, if at all. In addition, the Association does not and cannot control the cost of nitromethane to teams and it is possible the cost of such fuel could become cost-prohibitive to use. The lack of availability or increased costs of nitromethane fuel could materially impair our revenues, profitability and viablity as a business.

Inclement weather may have an adverse impact on our events.

Our business involves outdoor motorsports events. In 2006, spectator admissions accounted for approximately 50% of our revenue. Inclement weather conditions (e.g. rain, sleet, or snow) may affect sales of tickets, concessions and souvenirs, among other things to and at our events. In addition, poor weather conditions may adversely affect the sale of additional, walk-up tickets, concessions, and souvenirs, any of which could have an adverse effect on the results of the Purchased Business.

For safety reasons our events cannot be run in inclement weather. In addition, outdoor racing events may be affected by weather patterns after the start of an event and seasonal weather changes, which may necessitate the suspension or cancellation of an event. We may be forced, due to weather conditions, to postpone partially or entirely, a racing event, until the next day or a later date where weather conditions

35




permit drag racing and attendance by spectators, fans, vendors, sponsors, and any and all other affiliated or unaffiliated parties. In certain instances, we may be forced to cancel, partially or entirely, a racing event. In our business planning, we anticipate weather-related postponements and cancellations based on past experiences with the impact of rain across a racing season; however, we do not currently maintain weather-related insurance for national events. If the actual economic impact of inclement weather during a race season exceeds historic experience, we could experience a material and adverse affect on the financial condition and results of the Purchased Business.

A decline in the general economic conditions could adversely impact our financial condition.

The financial condition of our business is affected by general economic conditions and consumer tastes, therefore its future success is unpredictable. The demand for entertainment and leisure activities tends to be sensitive to consumers’ amount of disposable income. A continuing decline in the general economic conditions could result in fans, or potential fans, having less discretionary income to spend on our type of racing entertainment and branded merchandise. This may have an adverse effect on the financial condition, operations, and growth of the Purchased Business.

Any increased costs associated with,or our inability to obtain, adequate insurance could materially impair our profitability.

Heightened concerns and challenges regarding property, casualty, liability, business interruption, and other insurance coverage have resulted from the national incidents on September 11, 2001. We have a material investment in property and equipment at each of our five owned or leased racing facilities, which are generally located near highly populated cities and which hold motorsports events typically attended by large numbers of fans. These operational, geographical and situational factors, among others, have resulted in, and may continue to result in, significant increases in insurance premium costs and difficulties obtaining sufficiently high policy limits. We cannot assure you that future increases in such insurance costs and difficulties obtaining high policy limits will not adversely impact our profitability, which may impact our operating results and growth.

Our insurance coverage may not be adequate if a catastrophic event were to occur.

While management attempts to obtain, and believes it presently has, reasonable policy limits of property, casualty, liability, and business interruption insurance, including coverage for acts of terrorism, with financially sound insurers, we cannot guarantee that our policy limits for property, casualty, liability, and business interruption insurance currently in force, including coverage for acts of terrorism, would be adequate should one or multiple catastrophic events occur at or near any of our facilities or at one of our events, or that our insurers would have adequate financial resources to sufficiently or fully pay our related claims or damages. Once our present coverage expires, we cannot guarantee that adequate coverage limits will be available, offered at reasonable costs, or offered by insurers with sufficient financial soundness. The occurrence of such an incident or incidents affecting any one or more of our racing facilities or events could have a materially adverse effect on our financial position and future results of operations if asset damage and/or company liability were to exceed insurance coverage limits or if an insurer were unable to sufficiently or fully pay our related claims or damages. The occurrence of additional national incidents, in particular incidents at sporting events, entertainment or other public venues, may significantly impair our ability to obtain such insurance coverage in the future.

36




Possible additional risks which may be associated with the Purchased Business:

·       The seasonality of our motorsports events may increase the variability of quarterly earnings

The Purchased Business does not operate events throughout the entire year. The NHRA POWERade Drag Racing Series “season” begins in February and concludes in November and events are not held each weekend of every month. Therefore, the seasonality and number of events held each quarter may increase the variability of our quarterly earnings, and with it, the perception of our financial condition. As such, the equity markets may or may not reflect the seasonality of our business which could be reflected in an increase in the variability of our stock price.

·       Liability for personal injuries and product liability claims could materially impair our profitability.

Motorsports can be dangerous to participants and to spectators. We believe we maintain insurance policies that provide coverage within limits that are sufficient, in management’s judgment, to protect us from material financial loss due to liability for personal injuries sustained by persons on our premises, and for product liability claims, occurring in the ordinary course of business. Nevertheless, there can be no assurance that such insurance will be adequate at all times and in all circumstances. If such an event were to occur, this could have a material and adverse effect on the financial condition of the Purchased Business.

·       Environmental risks due to the on site use and storage of hazardous material, including, but not limited to, petroleum products and any byproducts thereof could materially impair our profitability.

Federal and State laws define “Hazardous Materials” to include any chemical, pollutant, contaminant, material, waste or substance regulated by any governmental authority under environmental health and safety laws, including, but not limited to, any hazardous waste, hazardous substance, toxic substance, radioactive material, including any naturally occurring radioactive material, asbestos-containing materials in any form or condition; polychlorinated biphenyls in any form or condition; or petroleum, petroleum hydrocarbons, petroleum products or any fraction or byproducts thereof.

Due to the necessary characteristics of motorsports events, the Purchased Business will have hazardous material, including, but not limited to, petroleum products and any byproducts thereof on-site and we must comply with any and all federal and state government regulations regarding the use, storage, and disposal of such products. We may incur additional liability from environmental risks related to this on-site use and storage of petroleum products. This increased liability may have an adverse impact on the financial condition, results of operations, and viability of the Purchased Business.

37




RISKS PARTICULAR TO THE ASSET ACQUISITION

Completion of the Asset Acquisition is subject to a number of conditions.

The obligations of HDP and the Association to consummate the Asset Acquisition are subject to the satisfaction or waiver of specified conditions set forth in the Asset Purchase Agreement before completion of the Asset Acquisition. Such conditions include, but are not limited to, satisfaction of covenants contained in the Asset Purchase Agreement, non-existence of legal action against the Association, obtaining antitrust approvals and material consents, approval of the required number of HDP stockholders and conversion of less than 20% of the HDP shares issued in the HDP IPO, obtaining fairness opinions for HDP and the Association, and execution of key executive agreements and the Ancillary Agreements. There is no assurance that these conditions will be satisfied or waived by either HDP or the Association, as applicable, and therefore the Asset Purchase Agreement may not be consummated.

HDP may waive one or more conditions to the Asset Acquisition without resoliciting stockholder approval for the Asset Acquisition.

One or more conditions to HDP’s obligation to complete the Asset Acquisition may be waived in whole or in part to the extent legally allowable, either unilaterally or by agreement of the Association and HDP. Depending upon the condition, the Board of Directors of HDP will evaluate the materiality of any such waiver to determine whether amendment to this proxy statement and re-solicitation of proxies is necessary. In the event that the Board of Directors of HDP determines any such waivers are not significant enough to require re-solicitation of stockholders, it will have the discretion to complete the Asset Acquisition without seeking further stockholder approval.

HDP’s stock price is, and is expected to remain, volatile, which could limit investors’ ability to sell their stock at a profit.

The volatile price of our stock makes it difficult for investors to predict the value of their investment, to sell shares at a profit at any given time, or to plan purchases and sales in advance. A variety of factors may affect the market price of our common stock. These include, but are not limited to:

·       achievement or rejection of regulatory approvals by our competitors or us;

·       developments concerning proprietary rights;

·       regulatory developments in the United States;

·       economic or other crises and other external factors;

·       period-to-period fluctuations in our revenues, cash flows, and other financial metrics pertaining to the operations of the business;

·       changes in financial estimates by securities analysts; and

·       sales and short selling activity of our common stock.

Additionally, because our stock currently is not regularly traded in substantial volume, any information about the Purchased Business or the Association in the media may result in significant stock price fluctuations and volatility.

We realize that we will not be able to control many of the factors listed above, and we further believe that period-to-period comparisons of our financial results and metrics may not be indicative of the future performance of our business.

In addition, the stock market in general, and the market for media and entertainment companies in particular, has experienced price and volume fluctuations that may have been unrelated or disproportionate to the operating performance of individual companies. This broad market and industry

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volatility may seriously and irreparably harm the market price of our common stock, regardless of our operating performance and financial condition.

Concentration of ownership of HDP’s capital stock after the Asset Acquisition could delay or prevent change of control.

Our directors, executive officers and principal stockholders will beneficially own a significant percentage of our common stock after the Asset Acquisition. They also have, through the exercise of warrants, the right to acquire additional common stock. As a result, these stockholders, if acting together, have the ability to significantly influence the outcome of corporate actions requiring stockholder approval. Additionally, this concentration of ownership may have the effect of delaying or preventing a change in control. As of December 31, 2006, directors, officers and principal stockholders beneficially owned approximately 20% of our stock. Following the Asset Acquisition, they (and the new officers and directors) will beneficially own approximately 19% of the capital stock of the combined company.

The sale, or even the possibility of sale, of the shares to be issued to the Association could have an adverse effect on the price for our securities and make it more difficult to obtain public financing in the future.

In connection with the Asset Acquisition, we have agreed to grant to the Association and its affiliates certain registration rights to allow them to resell the 1,256,447 shares of our common stock that they received in the Asset Acquisition. At the closing of the Asset Acquisition, assuming it is approved by our stockholders, we will enter into a registration rights agreement with the Association. The sale or even the possibility of sale, of these shares, could have an adverse effect on the price for our securities on the equity market and on our ability to obtain public financing in the future.

RISKS RELATED TO HDP

The financial interests of our officers and directors may have influenced their motivation in causing us to enter into and close this Asset Purchase Agreement.

If we do not complete the Asset Acquisition or other business combination and are forced to liquidate, the trust account proceeds may be subject to claims that could take priority over the claims of our public stockholders. Our chairman and certain executive officers have entered into separate indemnity agreements under which they will be personally liable under certain circumstances to ensure that the proceeds of the trust account are not reduced by the claims of various vendors that are owed money by us for services rendered or contracted for, or claims of other parties with which we have contracted. Additionally, certain of our officers and directors purchased a combined total of 2,250,000 founding director warrants concurrently with the closing of our initial public offering. The shares of common stock and warrants owned by our officers and directors and their affiliates will be worthless if we do not consummate a business combination, and the $2.25 million purchase price of the founding director warrants will be included in the working capital that is distributed to our public stockholders in the event of our liquidation. These financial interests of our officers and directors may have influenced their motivation in causing us to enter into and close the Asset Purchase Agreement.

If third parties bring claims against us or if the Association has breached any of its representations, warranties or covenants set forth in the Asset Purchase Agreement, we may not be adequately indemnified for any losses arising therefrom.

Although the Asset Purchase Agreement limits the Association’s obligation to indemnify us for losses arising from a breach of the representations, warranties and covenants by the Association set forth in the Asset Purchase Agreement, such indemnification is limited as to both the threshold and maximum amount and is subject to other limitations. The damages suffered by the breach must exceed the threshold amount of $600,000 and are limited to a maximum of $15,000,000. However, neither the threshold nor the maximum apply to certain types of breaches, such as those related to taxes, fraud, or intentional

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misrepresentation. In addition, the survival period for any claims under the Asset Purchase Agreement is limited, except for taxes, to the two year period following the closing. Accordingly, we will be prevented from seeking indemnification for any claims below the aggregate threshold or arising after the applicable survival period.

Because our directors may not be considered “independent” under the policies of the North American Securities Administrators Association, Inc., actions taken and expenses incurred on our behalf by our officers and directors will generally not be subject to an “independent” review.

Each of our directors owns shares of our common stock and may receive reimbursement for out-of-pocket expenses incurred in identifying and performing due diligence on potential target businesses and attending meetings of the board of directors. However, our directors receive no salary or other compensation for services rendered by them on our behalf prior to or in connection with this Asset Acquisition.

We believe our non-executive directors would be considered “independent” as that term is commonly used. However, under the policies of the North American Securities Administrators Association, Inc., an international organization devoted to investor protection, and because each of our directors own shares of our securities and may receive reimbursement for out-of-pocket expenses incurred in connection with activities undertaken on our behalf, state securities administrators may take the position that all of such individuals are not “independent” and, as such, we would not have the benefit of any independent directors examining the propriety of expenses incurred on our behalf and subject to reimbursement. Subject to availability of proceeds not placed in the trust account and interest income, net of income taxes, available to us, there is no limit on the amount of out-of-pocket expenses that could be incurred. The lack of independent review cannot ensure us that our officers and directors will act in the best interests of the business and perform their statutory mandated duties to the company which could materially and adversely affect the financial condition, results, and viability of both HDP and the Purchased Business.

Unless we complete the Asset Acquisition, our officers and directors will not receive reimbursement for any out-of-pocket expenses they incur if such expenses exceed the amount not in the trust account. Therefore, they may have a conflict of interest in determining whether the consummation of the Asset Acquisition is appropriate and in the public stockholders’ best interest.

Our officers and directors will not receive reimbursement for any out-of-pocket expenses incurred by them to the extent that such expenses exceed the amount not in the trust account unless the Asset Acquisition is consummated. However, we have agreed with the representatives of the underwriters of our initial public offering that our audit committee will review and approve all expense reimbursements made to our officers, directors or senior advisors and that any expense reimbursements payable to members of our audit committee will be reviewed and approved by our board of directors, with the interested director or directors abstaining from such review and approval. To the extent such out-of-pocket expenses exceed the available proceeds not deposited in the trust account and interest income, net of income taxes, available to us, such out-of-pocket expenses would not be reimbursed by us unless we consummate a business combination. We cannot, however, provide any assurance the audit committee will act in keeping with its statutory mandated duties and may not act in the best interests of the business which could materially and adversely affect the financial condition, results, and viability of the Purchased Business.

Our outstanding warrants may have an adverse effect on the market price of common stock and make it more difficult to obtain public financing in the future.

In connection with the initial public offering, we issued warrants to purchase 18,750,000 shares of common stock. Furthermore certain of our directors purchased an aggregate of 2,250,000 warrants in a private placement occurring immediately prior to the consummation of our initial public offering. The sale or even the possibility of sale, of the shares underlying these warrants, could have an adverse effect on the price for our securities on the equity market and on our ability to obtain public financing in the future. If

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and to the extent these warrants are exercised, you may experience dilution to your holdings which may correspond with a decline in value of the market price for our stock.

If our existing stockholders exercise their registration rights, it may have an adverse effect on the market price of our common stock.

Our initial stockholders are entitled to require us to register the resale of their shares of common stock at any time after the date on which their shares are released from escrow, which, except in limited circumstances, will not be before June 1, 2009. If our existing stockholders exercise their registration rights with respect to all of their shares of common stock and the shares of common stock underlying the 2,250,000 founding director warrants, then there will be an additional 6,937,500 shares of common stock eligible for trading in the public market, assuming the Asset Acquisition is approved. The presence of this additional number of shares of common stock eligible for trading in the public market may have an adverse effect on the market price of our common stock.

The American Stock Exchange may delist our securities from trading on its Exchange which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.

Our common stock and warrants are listed on the American Stock Exchange, a national securities exchange. We cannot assure you that our securities will continue to be listed on the American Stock Exchange in the future prior to a business combination. If the American Stock Exchange delists our securities from trading on its exchange and we are unable to list our securities on another exchange, or to have them quoted on Nasdaq, our securities could be quoted on the OTC Bulletin Board, or “pink sheets”. As a result, we could face significant material adverse consequences including but not limited to the following:

·       a limited availability of market quotations for our securities;

·       a determination that our common stock is a “penny stock” which will require brokers trading in our common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;

·       a limited amount of news coverage for our company;

·       a limited amount of financial analyst coverage for our company;

·       a decreased ability to obtain new financing or issue new securities on favorable terms in the future; and/or

·       a decreased ability to issue additional securities or obtain additional financing in the future.

The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” Since we are listed on the American Stock Exchange, our securities are covered securities. Although the states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate a company if there is a suspicion of fraud. If there is a finding of fraudulent activity the states may regulate or bar the sale of covered securities in a particular case. While we are not aware of a state having used these powers to prohibit or restrict the sale of securities issued by blank check companies generally, certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states.

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Failure to complete the Asset Acquisition could negatively impact the market price of HDPs common stock, resulting, ultimately, in the disbursement of the trust proceeds, which may cause investors to experience a loss on or of their investment.

If the Asset Acquisition is not completed for any reason, HDP may be subject to a number of material risks, including:

·       the market price of HDP’s common stock may decline to the extent that the current market price of its common stock reflects the market assumption that this Asset Acquisition will be consummated;

·       certain costs related to the Asset Acquisition, such as legal and accounting fees and the costs of the fairness opinion, must be paid even if the Asset Acquisition is not completed; and

·       charges against earnings will be made for transaction-related expenses, which could be higher than expected.

Such decreased market price and added costs and charges of a failed Asset Acquisition may result, ultimately, in the disbursement of the trust proceeds, causing investors to experience a loss on their investment.

If the Asset Acquisition’s benefits do not meet the expectations of financial or industry analysts, the market price of HDP’s common stock may decline.

Assuming the Asset Acquisition is approved, the market price of HDP’s common stock may decline as a result of the Asset Acquisition if:

·       HDP does not achieve the perceived benefits or returns of the Purchased Business as rapidly as, or to the extent anticipated by, financial or industry analysts; or

·       The Purchased Business fails to meet target financial metrics of industry or financial analysts; or

·       The effect of the Purchased Business on HDP’s financial results is not consistent with the expectations of financial or industry analysts.

Accordingly, investors may experience a loss as a result of a decreasing stock price and HDP may not be able to raise future capital, if necessary, in the equity markets.

It is not clear on what basis the HDP stock may be valued after the Asset Acquisition and therefore the market price of HDP’s common stock may decline.

Due to the fact that there is a lack of public companies directly comparable to HDP after the Asset Acquisition, it is not clear on what basis the HDP common stock will be valued. This lack of comparable companies may cause the market price of HDP’s common stock to decline.

If the Asset Acquisition is not consummated, and HDP is deemed to be an investment company, HDP may be required to institute burdensome compliance requirements and its activities may be restricted, which may make it difficult for it to complete a business combination

In order not to be regulated as an investment company under the Investment Company Act of 1940, or the “Investment Company Act,” HDP must qualify for exclusion. To be exempt, HDP must ensure that it is engaged primarily in a business other than investing, reinvesting or trading securities and that its activities do not include investing, reinvesting, owning, holding or trading “investment securities.”

HDP’s business purpose is to identify and consummate a business combination and thereafter to operate the acquired business or businesses. Until it uses the funds raised by the initial public offering and deposited in a trust account, to remain outside the scope of the Investment Company Act, HDP should only invest the trust account funds in:

·       (1) Treasury bills issued by the United States Treasury ;

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·       (2) Having a maturity of 180 days or less or;

·       (3) Money market funds meeting the criteria described in Rule 2a-7 of the Investment Company Act.

By limiting the investment of the funds to the above instruments, HDP believes that it will not be considered an investment company under the Investment Company Act. The trust account and the purchase of government securities for the trust account is intended as a holding place for funds pending the earlier to occur of either: (i) the consummation of our primary business objective, which is a business combination, or (ii) absent a business combination, our dissolution, liquidation and distribution of our assets, including the proceeds held in the trust account, as part of our plan of dissolution and liquidation. If we fail to invest the proceeds as described above or if we cease to be primarily engaged in our business as set forth above (for instance, if our stockholders do not approve a plan of dissolution and liquidation and the funds remain in the trust account for an indeterminable amount of time), we may be considered to be an investment company and thus be required to comply with the Investment Company Act.

If HDP is deemed to be an investment company under the Investment Company Act, its activities may be restricted, including:

·       restrictions on the nature of its investments; and

·       restrictions on the issuance of securities

each of which may make it difficult for HDP to consummate a business combination. HDP would also become subject to burdensome regulatory requirements, including reporting, record keeping, voting, proxy and disclosure requirements and the costs of meeting these requirements would reduce the funds available outside the trust account to consummate a business combination.

If 20% or more of the holders of HDP’s common stock issued in the initial public offering decide to vote against the proposed Asset Acquisition and convert their shares to cash, HDP will be forced to abandon the Asset Acquisition with the Association and may be required to liquidate if HDP does not consummate another business combination. In the event of this occurrence stockholders may receive less than $7.84 per share and the warrants will expire worthless.

Under the terms of HDP’s corporate charter, if 20% or more of shares issued in HDP’s initial public offering decide to vote against the proposed Asset Acquisition and opt to convert their shares to cash, HDP will be forced to abandon the Asset Acquisition and may be required to liquidate in the event that HDP does not consummate a business combination by June 6, 2008. In any liquidation, the net proceeds of HDP’s initial public offering held in the trust account, plus any interest earned thereon, less applicable taxes payable, will be distributed on a pro rata basis to the holders of HDP’s common stock issued in its public offering. If HDP liquidates its assets, the liquidation amount will be the approximately $142.5 million deposited in the trust account at the time of the initial public offering, plus interest accrued thereon until the date of any liquidation; as of June 30, 2007, there was approximately $7.84 available per share in the trust account for distribution to stockholders. Furthermore, there will be no distribution with respect to HDP’s outstanding warrants and, accordingly, the warrants will expire worthless.

If third parties bring claims against us, the proceeds held in trust could be reduced and the per-share liquidation price received by stockholders will be less than $7.84 per share.

Our placing of funds in trust may not protect those funds from third party claims against us. Pursuant to Delaware General Corporation Law Sections 280 and 281, upon our dissolution we will be required to pay or make reasonable provision to pay all claims and obligations incurred by the corporation, including all contingent, conditional or unmatured claims. Accordingly, the proceeds held in trust could be subject to claims which could take priority over the claims of our public stockholders. The initial public offering per-share liquidation price could be less than the $7.84 per share held in the trust account as of June 30, 2007, plus interest, less applicable taxes payable, due to the claims of such creditors. If we are unable to complete

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a business combination and are forced to liquidate, our executive officers will be personally liable to ensure that the proceeds in the trust account are not reduced by the claims of various vendors or other entities that are owed money by us for services rendered or products sold to us, to the extent necessary, to ensure that such claims do not reduce the amount in the trust account, but only to the extent such vendor did not execute a valid and enforceable waiver of any rights or claims to the trust account. However, we cannot assure you that our executive officers will be able to satisfy those obligations.

We will dissolve and liquidate if we do not consummate a Business Combination.

If we do not complete a business combination on or before June 6, 2008, we will dissolve and liquidate subject to stockholder approval. We view this obligation to dissolve and liquidate as an obligation to our public stockholders and neither we nor our board of directors will take any action to amend or waive any provision of our amended and restated certificate of incorporation to allow us to survive for a longer period of time if it does not appear we will be able to consummate a business combination. Upon approval of our plan of dissolution, we will distribute, assuming satisfaction of our creditors, to all of our public stockholders, in proportion to their respective equity interest, an aggregate sum equal to the amount in the trust account (net of taxes payable). Our initial stockholders have waived their rights to participate in any liquidation distribution with respect to their initial shares and have agreed to vote in favor of any plan of dissolution and distribution which we will present to our stockholders for vote. There will be no distribution from the trust account with respect to our warrants which will expire worthless. We will pay the costs of our dissolution and liquidation of the trust account from our remaining assets outside of the trust account, and we estimate such costs to be between $50,000 and $75,000.

If the Asset Acquisition is not consummated HDP may seek another suitable business combination. Depending upon the timing and success of such efforts HDP may be forced to dissolve and liquidate if it cannot negotiate a letter of intent for another acquisition proposal before December 6, 2007 and consummate such other acquisition by June 6, 2008. If we are unable to consummate a business combination before June 6, 2008, our purpose and powers will be limited to dissolving, liquidating and winding up. Upon notice from us, the trustee of the trust account will liquidate the investments constituting the trust account and will turn over the proceeds to our transfer agent for distribution to our public stockholders as part of our stockholder-approved plan of dissolution and liquidation. Concurrently, we shall pay, or reserve for payment, from funds held outside of the trust account, if available, our liabilities and obligations, although we cannot assure you that there will be sufficient funds for such purpose. The amounts held in the trust account may be subject to claims by third parties, such as vendors, prospective target business or other entities, if we do not obtain waivers in advance from such third parties prior to such parties providing us with services or entering into arrangements with them.

Our public stockholders will be entitled to receive funds from the trust account only in the event of our dissolution and liquidation or if they seek to convert their respective shares into cash upon a business combination which the stockholder voted against and which is completed by us. In no other circumstances will a stockholder have any right or interest of any kind to or in the trust account.

Certain of our Officers and Directors have agreed to indemnify us in certain situations, although we cannot assure you that they will be able to satisfy those obligations or that the proceeds in the trust account will not be reduced by claims.

Although our Chairman and certain of our other directors and officers have agreed to indemnify us for claims by any vendor that is owed money by us for services rendered or products sold to us, to the extent that such claims reduce the amounts in the trust account to be distributed to the public stockholders upon our dissolution and liquidation, this indemnification is limited to claims by vendors that do not execute a valid and enforceable waiver of all rights, title, interest, and claim of any kind in or to the monies held in the trust account. The indemnification provided by certain of our directors and officers would not cover claims by target businesses or other entities and vendors that execute such waivers nor claims related to torts, such as if someone were to be injured on our premises, securities litigation or franchise and

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income tax liabilities which, assuming a liquidation date of July 31, 2007, will be an estimated $780,980. Except with respect to the approximate $706,000 of franchise and income tax liabilities, we are not aware of any other claims of the type described above nor any basis for any such claim and, as of June 30, 2007, there is approximately $344,091 of cash outside of the trust account.

Based on representations made to us by certain of our directors and officers, we currently believe that they are of substantial means and capable of funding a shortfall in our trust account to satisfy their foreseeable indemnification obligations, however, the indemnification may be limited as they are not required to reserve for such an eventuality. The indemnification obligations may be substantially higher than certain of our directors and officers currently foresee or expect and/or their financial resources may deteriorate in the future which could also act as a limitation on this indemnification. Hence, we cannot assure you that certain of our directors and officers will be able to satisfy those obligations or that the proceeds in the trust account will not be reduced by such claims. Furthermore, creditors may seek to interfere with the distribution of the trust account pursuant to federal or state creditor and bankruptcy laws, which could delay the actual distribution of such funds or reduce the amount ultimately available for distribution to our public stockholders.

Our stockholders may be held liable for claims by third parties against us to the extent of distributions received by them.

Although we have agreed with the trustee to promptly adopt a plan of dissolution and liquidation and initiate procedures for our dissolution and liquidation after June 6, 2008 under the Delaware General Corporation Law, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in dissolution. If we complied with certain procedures set forth in Section 280 discussed above, and we intended to ensure that we make reasonable provision for all claims against us, including a 60-day notice period during which any third-party claims can be brought against us, a 90-day period during which we may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, then any liability of a stockholder with respect to a liquidating distribution would be limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution.

However, it is our intention to make liquidating distributions to our stockholders as soon as reasonably possible after dissolution is approved by our common stockholders and, therefore, we do not intend to comply with the procedures outlined above. As such, our stockholders could incur potential liability for any claims of the business to the extent of distributions received by them in the dissolution. Any such liability of our stockholders probably will not extend beyond the third anniversary of our dissolution. Accordingly, we cannot assure you that third party creditors will not seek to recover the amounts owed to them from distributions received by our public stockholders.

Under Delaware law, our dissolution requires the approval of the holders of a majority of our outstanding stock, without which we will not be able to dissolve and distribute our assets to our public stockholders.

Pursuant to Delaware law, our dissolution requires the affirmative vote of stockholders owning a majority of our then outstanding common stock. Soliciting the vote of our stockholders will require the preparation of preliminary and definitive proxy statements, which will need to be filed with the Securities and Exchange Commission and could be subject to their review. This process could take a substantial amount of time ranging from 40 days to several months and create a considerable delay in the distribution of trust assets to our shareholders.

Furthermore, we may need to postpone the stockholders meeting, resolicit our stockholders or amend our plan of dissolution and liquidation to obtain the required stockholder approval, all of which would further delay the distribution of our assets and result in increased costs. If we are not able to obtain approval from a majority of our stockholders, we will not be able to dissolve and liquidate and we will not

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be able to distribute funds from our trust account to holders of our common stock sold in our initial public offering; and these funds will not be available for any other corporate purpose. In the event we seek stockholder approval for a plan of dissolution and liquidation and do not obtain such approval, we will nonetheless continue to pursue stockholder approval for our dissolution. However, we cannot predict whether our stockholders will approve our dissolution in a timely manner or will ever approve our dissolution. As a result, we cannot provide our initial stockholders with assurances of a specific timeframe for the dissolution and distribution. If our stockholders do not approve a plan of dissolution and liquidation and the funds remain in the trust account for an indeterminate amount of time, then we may be considered an investment company subject to the burdens discussed on page         .

The procedures we must follow under Delaware law and our amended and restated certificate of incorporation if we dissolve and liquidate may result in substantial delays in the liquidation of our trust account to our public stockholders as part of our plan of dissolution and distribution.

Pursuant to, among other documents, our amended and restated certificate of incorporation, if we do not complete a business combination by June 6, 2008, we will be required to dissolve, liquidate and wind up in compliance with the provisions of the Delaware General Corporation Law. In addition, in the event we seek stockholder approval for a plan of dissolution and distribution and do not obtain such approval, we will nonetheless continue to pursue stockholder approval for our dissolution. The funds held in our trust account may not be distributed except upon our dissolution and, unless and until such approval is obtained from our stockholders, the funds held in our trust account will not be released. Consequently, holders of a majority of our outstanding stock must approve our dissolution in order to receive the funds held in our trust account and the funds will not be available for any other corporate purpose. The procedures required for us to liquidate under the Delaware General Corporation Law, or a vote to reject any plan of dissolution and distribution by our stockholders, may result in substantial delays in the liquidation of our trust account to our public stockholders as part of our plan of dissolution and distribution.

Bankruptcy Considerations

If we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us under Chapters 7 or 11 of the United States Bankruptcy Code, and that claim is not dismissed, the funds held in our trust account will be subject to applicable bankruptcy law and may be included in our bankruptcy estate. Furthermore, the estate may be subject to administrative expenses, including but not limited to post-petition legal fees including court costs, the securitization of cash collateral to maintain the business as a going concern, obtaining additional financing, taxes owed, and claims of both secured and unsecured third parties with priority over those claims of our public stockholders. To the extent bankruptcy claims deplete the trust account; we cannot assure you we will be able to return to our public stockholders the liquidation amounts due to them. Accordingly, the actual per share amount distributed from the trust account to our public stockholders could be significantly less than approximately $7.84 per share due to the claims of creditors. This amount has been calculated without taking into account interest earned on the trust account. Claims by creditors could cause additional delays in the distribution of trust accounts to the public stockholders beyond the time periods required to comply with the Delaware General Corporation Law procedures and federal securities laws and regulations. As discussed herein, if the Asset Acquisition is not consummated, HDP will be forced to dissolve and liquidate. In such event, it is more likely than not that the amount distributed to our public stockholders will be less than $7.84 per share.

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FORWARD-LOOKING STATEMENTS

We believe that some of the information in this proxy statement constitutes forward-looking statements. You can identify these statements by forward-looking words such as “may,” “expect,” “anticipate,” “contemplate,” “believe,” “estimate,” “intends,” and “continue” or similar words. You should read statements that contain these words carefully because they:

·       discuss future expectations;

·       contain projections of future results of operations or financial condition; and

·       state other “forward-looking”‘ information.

HDP believes it is important to communicate its expectations to its stockholders. However, there may be events in the future that HDP or the Association is not able to accurately predict or over which HDP or the Association have no control. The risk factors and cautionary language discussed in this proxy statement provide examples of risks, uncertainties and events that may cause actual results to differ materially from the expectations described by HDP or the Association in their forward-looking statements, including among other things:

·       changing interpretations of generally accepted accounting principles;

·       outcomes of government reviews, inquiries, investigations and related litigation;

·       the Association may not be able to secure or enforce adequate legal protection, including trademark protection, for its assets;

·       continued compliance with government regulations;

·       legislation or regulatory environments, requirements or changes adversely affecting the businesses in which the Purchased Business is engaged;

·       statements about industry trends;

·       general economic conditions; and

·       geopolitical events and regulatory changes.

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this proxy statement.

All forward-looking statements included herein attributable to HDP, the Purchased Business or any person acting on either party’s behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required by applicable laws and regulations, HDP and the Purchased Business undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this proxy statement or to reflect the occurrence of unanticipated events.

Before you grant your proxy or instruct how your vote should be cast or vote on the approval of the Asset Acquisition you should be aware that the occurrence of the events described in the “Risk Factors” section and elsewhere in this proxy statement could have a material adverse effect on HDP or the Association upon completion of the Asset Acquisition.

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THE HDP SPECIAL MEETING OF STOCKHOLDERS

The HDP Special Meeting

HDP is furnishing this proxy statement to you as part of the solicitation of proxies by the HDP Board of Directors for use at the Special Meeting in connection with the proposed Asset Acquisition, the proposed Adjournment, the proposed Director election and the proposed auditor ratification. This proxy statement provides you with the information you need to be able to vote or instruct your vote to be cast at the Special Meeting.

Date, Time and Place

The Special Meeting will be held at              , Eastern Time, on                   , 2007, at the offices of Latham & Watkins LLP, 633 West Fifth Street, Suite 4000, Los Angeles, California 90071-2007, to vote on each of the Asset Acquisition, the Adjournment, Director Proposal 4A (if the Asset Acquisition is approved) or Director Proposal 4B (if the Asset Acquisition is not approved), and the Auditor Proposal.

Purpose of the Special Meeting

At the Special Meeting, the holders of HDP common stock are being asked to consider and vote upon the following:

·       the Asset Acquisition Proposal—the proposed acquisition by HDP, a Delaware corporation, of substantially all professional drag racing assets and certain commercialization rights of the Association and assumption of certain liabilities pursuant to the Asset Purchase Agreement, dated as of May 30, 2007, by and between HDP and the Association, and the transactions contemplated thereby, pursuant to which the Association shall receive aggregate consideration of between a minimum of $121,057,792 and a maximum of $123,457,792 consisting of the following:

(i)             an aggregate of 1,256,447 shares of HDP common stock valued at $9,557,792;

(ii)         approximately $100,000,000 in cash, increased by the amount of the Capital Expenditure Balance incurred by the Association for the Gainesville race track (which HDP is also purchasing) up to a maximum of $2,400,000; and

(iii)     the assumption of approximately $11,500,000 of the Seller Loan Balance.

The $100,000,000 in cash to be paid as a portion of the acquisition consideration will be subject to adjustment (A) to the extent that the Seller Loan Balance is greater than $11,500,000 (in which case the cash paid will decrease) or is less than $11,500,000 (in which case the cash paid will increase) and (B) by the amount of the Capital Expenditure Balance.

The Association will enter into several contractual relationships with us related to the use and commercialization of the NHRA brand and media assets, future promotional activities, the right of the Association to conduct racing activities at our events, sanctioning and race operation services.

·       the 2007 Long term Incentive Compensation Plan Proposal—to adopt the 2007 Long-Term Incentive Compensation Plan pursuant to which HDP will reserve 2,500,000 shares of common stock for issuance pursuant to the plan;

·       the Adjournment Proposal—to consider and vote upon a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that, based upon the tabulated vote at the time of the special meeting, HDP would not have been authorized to consummate the acquisition—we refer to this proposal as the adjournment proposal. (“Proposal 3” or the “Adjournment Proposal”);

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·       Director Proposal 4A—to elect five (5) directors to HDP’s board of directors to hold office until the next annual meeting of stockholders and until their successors are elected and qualified (in the event the Asset Acquisition is approved); AND Director Proposal 4B—to elect two (2) Class I directors to HDP’s board of directors to hold office until the next annual meeting of stockholders and until their successors are elected and qualified (in the event the Asset Acquisition is not approved);

·       Auditor Proposal—to ratify the appointment of Goldstein Golub Kessler LLP, as the Company’s independent auditor for the year ending December 31, 2007; and

·       such other business as may properly come before the Special Meeting or any adjournment or postponement thereof.

The HDP Board of Directors:

·       has unanimously determined that the Asset Acquisition Proposal, the Incentive Plan Proposal, the Adjournment Proposal, Director Proposal 4A and Director Proposal 4B, and the Auditor Proposal are fair to, and in the best interests of, HDP and its stockholders;

·       has determined that the consideration to be paid by HDP in connection with the Asset Acquisition is fair to our current stockholders from a financial point of view and the fair market value of the Purchased Business is equal to or greater than 80% of the value of the net assets of HDP;

·       has unanimously approved and declared it advisable to approve the Asset Acquisition, the Adjournment, the Director Election and the Auditor Ratification; and

·       unanimously recommends that the holders of HDP common stock vote “FOR” the Asset Acquisition Proposal, “FOR” the Incentive Plan Proposal, “FOR” the Adjournment Proposal, “FOR” Director Proposal 4A (if the Asset Acquisition is approved), “FOR” Director Proposal 4B (if the Asset Acquisition is not approved), and “FOR” the Auditor Proposal.

A fairness opinion from Duff & Phelps, LLC, an independent advisor was also obtained by our board of directors, which opinion stated that the consideration to be paid by HDP for the Purchased Business was fair to HDP from a financial point of view and that the fair market value of the Purchased Assets is at least equal to 80% of our net assets. A copy of the fairness opinion is attached as Annex C.

Record Date; Who is Entitled to Vote

The Record Date for the Special Meeting is                     , 2007. Record holders of HDP common stock at the close of business on the Record Date are entitled to vote or have their votes cast at the Special Meeting. On the Record Date, there were 23,437,500 outstanding shares of HDP common stock.

Each share of HDP common stock is entitled to one vote at the Special Meeting.

Any shares of HDP common stock held by our officers and directors prior to HDP’s IPO will be voted in accordance with the majority of the votes cast at the Special Meeting with respect to the Asset Acquisition Proposal. Any shares of HDP common stock acquired by our officers and directors in HDP’s IPO or afterwards will be voted in favor of the Asset Acquisition. We have a total of 23,437,500 shares outstanding, of which 4,687,500 were issued prior to the IPO and are held by our officers and directors.

HDP’s issued and outstanding warrants do not have voting rights and record holders of HDP warrants will not be entitled to vote at the Special Meeting.

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Voting Your Shares

Each share of HDP common stock that you own in your name entitles you to one vote. Your proxy card shows the number of shares of HDP common stock that you own.

There are two ways to vote your shares of HDP common stock:

·       You can vote by signing and returning the enclosed proxy card. If you vote by proxy card, your “proxy,” whose name is listed on the proxy card, will vote your shares as you instruct on the proxy card. If you sign and return the proxy card, but do not give instructions on how to vote your shares, your shares will be voted, as recommended by the HDP Board, “FOR” the approval of the Asset Acquisition Proposal, “FOR” the approval of the Incentive Plan Proposal, “FOR” the approval of the Adjournment Proposal, “FOR” Director Proposal 4A (if the Asset Acquisition is approved), “FOR” Director Proposal 4B (if the Asset Acquisition is not approved), and “FOR” the Auditor Proposal.

·       You can attend the Special Meeting and vote in person. HDP will give you a ballot when you arrive. However, if your shares are held in the name of your broker, bank or another nominee, you must get a proxy from the broker, bank or other nominee. That is the only way HDP can be sure that the broker, bank or nominee has not already voted your shares.

Who Can Answer Your Questions About Voting Your Shares

If you have any questions about how to vote or direct a vote in respect of your HDP common stock, you may call our Secretary, Bruce R. Lederman at (310) 209-8308 ext 2.

No Additional Matters May Be Presented at the Special Meeting

The Special Meeting has been called only to consider the approval of the Asset Acquisition Proposal, the Adjournment Proposal, Director Proposal A (if the Asset Acquisition is approved) or Director Proposal B (if the Asset Acquisition is not approved), and the Auditor Proposal. Under HDP’s bylaws, other than procedural matters incident to the conduct of the meeting, no other matters may be considered at the Special Meeting if they are not included in the notice of the meeting.

Revoking Your Proxy

If you give a proxy, you may revoke it at any time before it is exercised by doing any one of the following:

·       You may send another proxy card with a later date;

·       You may notify Bruce R. Lederman, addressed to HDP, in writing before the Special Meeting that you have revoked your proxy; and

·       You may attend the Special Meeting, revoke your proxy, and vote in person.

Quorum; Vote Required

The approval and adoption of the Asset Purchase Agreement and the transactions contemplated thereby will require the affirmative vote of a majority of the shares of HDP’s common stock issued in HDP’s IPO cast at the Special Meeting. A total of 18,750,000 shares were issued in our IPO. In addition, notwithstanding the approval of a majority, if the holders of 3,750,000 or more shares of common stock issued in HDP’s IPO, an amount equal to 20% or more of the total number of shares issued in the IPO, vote against the Asset Acquisition and demand conversion of their shares into a pro rata portion of the trust account, then HDP will not be able to consummate the Asset Acquisition. Each HDP stockholder

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that holds shares of common stock issued in HDP’s IPO or purchased following such offering in the open market has the right, assuming such stockholder votes against the Asset Acquisition Proposal and, at the same time, demands that HDP convert such stockholder’s shares into cash equal to a pro rata portion of the trust account in which a substantial portion of the net proceeds of HDP’s IPO is deposited. These shares will be converted into cash only if the Asset Acquisition is consummated and the stockholder requesting conversion holds such shares until the date the Asset Acquisition is consummated and tenders such shares to our stock transfer agent.

Adoption of the Incentive Plan will require the affirmative vote of the holders of a majority of the shares of HDP’s common stock represented in person or by proxy and entitled to vote at the meeting. Adoption of the Adjournment Proposal requires the affirmative vote of a majority of the issued and outstanding shares of HDP’s common stock represented in person or by proxy at the meeting. Adoption of Director Proposal 4A or Director Proposal 4B requires the affirmative vote of the holders of a plurality of the shares of Common Stock cast in the election of directors. Adoption of the Auditor Proposal requires a majority of the votes cast by holders of Common Stock.

Abstentions and Broker Non-Votes

If your broker holds your shares in its name and you do not give the broker voting instructions, under the rules of the NASD, your broker may not vote your shares on the proposals to approve the Asset Acquisition with the Association pursuant to the Asset Purchase Agreement . If you do not give your broker voting instructions and the broker does not vote your shares, this is referred to as a “broker non-vote.” Abstentions and broker non-votes are counted for purposes of determining the presence of a quorum.

As long as a quorum is established at the Special Meeting, a failure to vote by someone who is present in person or by proxy will have no impact upon the approval of the Asset Acquisition Proposal, Director Proposal 4A and Director Proposal 4B, and the Auditor Proposal, but the Incentive Plan Proposal and the Adjournment Proposal require the affirmative vote of a majority of the issued and outstanding shares of HDP’s common stock represented in person or by proxy at the meeting; a failure to vote will have the effect of a vote against the Incentive Plan Proposal and the Adjournment Proposal. Failure to vote will not have the effect of converting your shares into a pro rata portion of the trust account.

Conversion Rights

Any stockholder of HDP holding shares of common stock issued in HDP’s IPO who votes against the Asset Acquisition Proposal may, at the same time, demand that HDP convert his shares into a pro rata portion of the trust account. You must mark the appropriate box on the proxy card in order to demand the conversion of your shares. If so demanded, HDP will convert these shares into a pro rata portion of the net proceeds from the IPO that were deposited into the trust account, plus your pro rated interest earned thereon after such date, if the Asset Acquisition is consummated. If the holders of 20%, or 3,750,000, or more shares of common stock issued in HDP’s IPO vote against the Asset Acquisition Proposal and demand conversion of their shares into a pro rata portion of the trust account, HDP will not be able to consummate the Asset Acquisition. Based on the amount of cash held in the trust account as of June 30, 2007, without taking into account any interest accrued after such date, you will be entitled to convert each share of common stock that you hold into approximately $7.84 per share. In addition, HDP will be liquidated if a business combination is not consummated by June 6, 2008. In any liquidation, the net proceeds of HDP’s IPO held in the trust account, plus any interest earned thereon, will be distributed on a pro rata basis to the holders of HDP’s common stock other than the founders, who will not share in any such liquidation proceeds.

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If you exercise your conversion rights, then you will be exchanging your shares of HDP common stock for cash and will no longer own these shares. You will only be entitled to receive cash for these shares if you continue to hold these shares through the closing date of the Asset Acquisition and then tender your stock certificate to HDP. The closing price of HDP’s common stock on                  , 2007, the most recent trading day practicable before the printing of this proxy statement, was $      . The amount of cash held in the trust account is approximately $147,004,394 as of June 30, 2007. If a HDP stockholder would have elected to exercise his conversion rights on such date, then he would have been entitled to receive $7.84 per share, plus interest accrued less taxes payable thereon subsequent to such date. Prior to exercising conversion rights, HDP stockholders should verify the market price of HDP’s common stock as they may receive higher proceeds from the sale of their common stock in the public market than from exercising their conversion rights.

Appraisal or Dissenters Rights

No appraisal rights are available under the Delaware General Corporation Law to the stockholders of HDP in connection with the Asset Acquisition Proposal. The only rights for those stockholders voting against the Asset Acquisition who wish to receive cash for their shares is to simultaneously demand payment for their shares from the trust account.

Solicitation Costs

HDP is soliciting proxies on behalf of the HDP Board of Directors. This solicitation is being made by mail but also may be made by telephone or in person. HDP and its respective directors and officers may also solicit proxies in person, by telephone or by other electronic means, and in the event of such solicitations, the information provided will be consistent with this proxy statement and enclosed proxy card. These persons will not be paid for doing this. HDP may engage the services of a professional proxy solicitation firm. HDP will ask banks, brokers and other institutions, nominees and fiduciaries to forward its proxy statement materials to their principals and to obtain their authority to execute proxies and voting instructions. HDP will reimburse them for their reasonable expenses.

Stock Ownership

Of the 23,437,500 outstanding shares of HDP common stock, HDP’s initial stockholders, including all of its officers and directors and their affiliates, who purchased shares of common stock prior to HDP’s IPO and who own an aggregate of approximately 20% of the outstanding shares of HDP common stock (4,687,500 shares), have agreed to vote such shares acquired prior to the IPO in accordance with the vote of the majority in interest of all other HDP stockholders on the Asset Acquisition Proposal. Moreover, all of these persons have agreed to vote all of their shares which were acquired in or following the IPO in favor of the Asset Acquisition Proposal.

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PROPOSAL 1

THE ACQUISITION PROPOSAL

The discussion in this proxy statement of the Asset Acquisition Proposal and the principal terms of the Asset Purchase Agreement, dated May 30, 2007, by and among HDP and the Association, the Key Definitions Agreement and the associated Ancillary Agreements include all material terms of the Asset Acquisition and are subject to, and are qualified in their entirety by reference to, the Asset Purchase Agreement and the Key Definitions Agreement, which are attached as “Annex A” and “Annex B”, respectively, to this proxy statement and are incorporated in this proxy statement by reference.

General Description of the Asset Acquisition

Under the terms of the Acquisition Agreement, we will acquire certain assets of the Association and will obtain certain rights from the Association, which we refer to as the Purchased Business, the key components of which are summarized as follows:

The NHRA POWERade Drag Racing Series and substantially all professional NHRA drag racing assets and opportunities, which consist primarily of the following: (i) NHRA’s existing television broadcast agreement with ESPN; (ii) an exclusive, worldwide, perpetual license to the NHRA brand for professional drag racing activities; (iii) broad and extensive rights to commercialize the NHRA brand and media assets, including exclusive rights to professional racing and “Official NHRA” sponsorship and licensing rights, exclusive and non-exclusive media exploitation rights in broadcast television, home entertainment and new media, and exclusive merchandising rights relating to both professional racing and the stand-alone NHRA brand; (iv) four NHRA-owned race tracks, an additional long-term track lease in Pomona, California and the NHRA headquarters building in Glendora, California; and (v) a video and photo archive chronicling the history of drag racing, which includes more than 20,000 hours of video and film.

At the closing, and subject to certain adjustments as hereafter described, the Association will receive aggregate consideration of between a minimum of $121,057,792 and a maximum of $123,457,792 consisting of the following:

(i)            an aggregate of 1,256,447 shares of HDP common stock valued at $9,557,792;

(ii)        approximately $100,000,000 in cash, increased by the amount of the Capital Expenditure Balance incurred by the Association for the Gainesville race track (which HDP is also purchasing) up to a maximum of $2,400,000; and

(iii)    the assumption of approximately $11,500,000 of the Seller Loan Balance.

The $100,000,000 in cash to be paid as a portion of the acquisition consideration will be subject to adjustment (A) to the extent that the Seller Loan Balance is greater than $11,500,000 (in which case the cash paid will decrease) or is less than $11,500,000 (in which case the cash paid will increase) and (B) by the amount of the Capital Expenditure Balance.

The 1,256,447 shares of HDP common stock was determined using a price per share of $7.56, which was the average closing price of a share of HDP common stock for the 20 consecutive trading days prior to public announcement by HDP of the Asset Acquisition, divided into $9.5 million of consideration. For purchase price determination, based on the guidance of EITF 99-12, the value of the shares was calculated using the average closing price per share of HDP common stock for the 10 days before and 10 days after the public announcement of the transaction, which was $7.607. This per share amount was multiplied by the 1,256,447 shares to be received by the Association to reach a purchase price value of $9,557,792.

In addition, HDP and the Association will enter into several contractual relationships related to the use and commercialization of the NHRA brand and media assets, future promotional activities, the right

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of the Association to conduct racing activities at our events, and sanctioning and race operation services. These contractual relationships are discussed in the accompanying proxy statement under the sections entitled “Ancillary Agreements.”

Background of the Asset Acquisition

The terms of the Acquisition Agreement are the result of arm’s-length negotiations between our representatives and representatives of the Association. The following is a brief discussion of the background of these negotiations, the asset purchase and related transactions.

We were incorporated in Delaware on December 6, 2005, as a blank check company formed to serve as a vehicle for the acquisition, through a merger, capital stock exchange, asset acquisition or other similar business combination with a then currently unidentified operating business in the media, entertainment and/or telecommunications sector.

A registration statement for our initial public offering was declared effective on June 1, 2006. On June 7, 2006, we consummated our initial public offering of 18,750,000 units. Each unit consists of one share of common stock and one redeemable common stock purchase warrant. Each warrant expires on June 1, 2010, or earlier upon redemption, and entitles the holder to purchase one share of our common stock at an exercise price of $5.50 per share. The common stock and warrants started trading separately as of August 1, 2006.

The net proceeds to us from the sale of our units, after deducting offering expenses of approximately $660,000 and underwriting discounts of approximately $10,500,000 (including $3,000,000 placed in the trust account representing a deferred underwriters’ discount) was $141,090,000. Including the underwriter’s discount of $3,000,000 held in the trust account, there was a total of $142,575,000 placed in the trust account upon closing of the offering. The remaining proceeds of approximately $1,515,000 became available to be used to provide for business, legal and accounting due diligence on prospective transactions and continuing general and administrative expenses. The proceeds held in the trust account (excluding the amount held in the trust account representing a portion of the underwriters’ discount) as well as any other net proceeds not expended will be used to finance the operations of the target. At June 30, 2007, we had cash outside of the trust account of $344,091, investments held in the trust account of $147,004,394, prepaid expenses of $116,497, long term assets of $2,053,382 and total liabilities of $4,595,568 (including $3,000,000 held in the trust account representing a portion of the underwriters’ discount that was deferred until the consummation of a business combination). We believe that the funds available to us outside of the trust account plus the funds available to us under our line of credit and the deferral of fees by our SEC counsel and certain advisors are sufficient to allow us to operate until year end 2007, assuming that an initial transaction is not consummated during that time. Of the funds held outside of the trust account totaling $344,091 as of June 30, 2007 and the credit line for $750,000 that was exercised in August 2007, we anticipate using these funds to cover legal and accounting fees, other expenses attendant to the due diligence investigations, structuring and negotiating this transaction, and administrative expenses incurred prior to completing an initial transaction.

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During the period subsequent to the closing of the IPO, June 7, 2006 through April 2007, we were involved in sourcing and evaluating prospective businesses regarding potential business combinations in the media, entertainment and/or telecommunications sector. We attempted to source opportunities both proactively and reactively, and given the mandate to find a suitable business combination partner, did not limit ourselves to any one segment of the media, entertainment and/or telecommunications industry or transaction structure (i.e. cash vs. stock issued to seller, straight merger, corporate spin-out or management buy-out). Proactive sourcing involved our management taking the following actions, among other things:

·       initiating conversations, whether it be via phone, e-mail or other means and whether directly or via its major stockholders, with third-party companies they believed may make attractive combination partners or have attractive assets which might be for sale;

·       attending conferences or other events to meet prospective business combination partners;

·       contacting professional service providers (lawyers, accountants, consultants and bankers);

·       utilizing their own network of business associates and friends for leads;

·       working with third-party intermediaries, including investment bankers; and

·       inquiring of and meeting with business owners, including private equity firms, concerning their interest in selling their business.

Reactive sourcing involved fielding inquiries or responding to solicitations by either: (i) companies looking for capital or investment alternatives, or (ii) investment bankers or other similar professionals who represented companies engaged in the sale or fund-raising process.

The efforts of our officers often were thematic, with one of the officers taking special interest in a particular topic or industry sector and researching that sector via publicly-available documents or information supplied by third parties. In certain instances that included discussions with other of our officers that also suggested an interest in the particular sector, profiled companies which might be attractive business combination candidates and provided general financial metrics applied to similar companies in such a sector. Based on our management’s preference for avoiding auctions, we placed emphasis on pursuing situations in which the potential seller was not necessarily looking to sell all of their interests and/or had other strategic interests, which consequently tended to lead to a less competitive environment. We found these situations were more likely to result in less competition since the owners were not necessarily looking to sell all of their interests.

On June 7, 2006, promptly after the consummation of the offering, we convened our management to discuss and begin implementing our overall plan for identifying, evaluating and where appropriate pursuing potential acquisition opportunities After discussing the most effective means for us to cooperatively solicit opportunities, we determined: (i) we should create a website to expand our reach and encourage opportunities to be transmitted to us consistent with our charter, (ii) we should create a centralized log accessible to each of us to document all of the opportunities either initiated by us or submitted to us as well as all of the potential contacts who may be the source of deal flow, (iii) we should plan on regular face-to-face meetings or telephonic conferences to discuss and update our progress and (iv) the basic elements of our most effective “pitch” when reaching out proactively to either prospect companies or prospective deal flow sources, including draft “talking points” and written summaries for use in both verbal and email communications. Given our commitment to source, review and negotiate a transaction within the prescribed timeframe, we agreed to immediately identify and begin the process of making contact with any prospective source of deal flow, including friends and business acquaintances to encourage them to start the process of contacting us with any ideas or contacts that they might have for us to explore. We agreed that as an initial matter each member of our management team compile his own list of potential contacts for review and discussion.

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On June 14, 2006, we again convened our management to review the individual and collective lists of potential companies or prospective deal flow sources. Our management reviewed the results of initial contacts with any such sources which had been made during the prior week, including any feedback or additional deal flow contacts which originated from such sources. From this collective list of contacts, we agreed who would be the primary contact for each prospect company or prospective deal flow source, and committed to make initial contact with each such entity as soon as possible. For the remainder of June, our management reached out to each of the identified prospects.

Consistent with this agreed upon process, beginning June 8th, 2006, Mr. Cox, our Executive Vice President and one of our Directors, had numerous calls and exchanged numerous emails with business acquaintances, family members and friends to explain to them our formation, the general nature of a special purpose acquisition company, the successful completion of our offering and the general objective to complete a business combination in the media, entertainment and/or telecommunications sector. On June 26, 2006, Mr. Cox, approached and discussed these issues with Tom Compton, the President of the Association. Mr. Cox knew Mr. Compton socially through common activities. Through these prior social contacts, Mr. Cox was aware that Mr. Compton was the President of the Association, but the two had no prior business relationship, had never discussed Mr. Cox’s involvement with us, what a blank check company is or does nor whether Mr. Compton might have any possible opportunities which would be relevant to our objectives. According to Mr. Compton at that time, he was unfamiliar with the concept of a special purpose acquisition company, unaware of Mr. Cox’s activities with us or that Mr. Cox was looking for prospective acquisition candidates or other business contacts. Prior to HDP’s initial public offering, Mr. Cox was not aware of the Association’s desire or willingness to sell any of its assets. Other than Mr. Cox’s prior non-business related relationship with Mr. Compton, none of our other directors, significant stockholders, or officers had any prior contacts, discussions, meetings or relationship with any officer or director of the Association. Mr. Cox asked Mr. Compton about whether the Association had ever considered any sort of sale or similar business combination. Mr. Compton explained that the Association was a 501(c)(6) not-for-profit corporation, and as such an outright sale of the entire entity was not practical, but that the Association had in the past looked at opportunities to sell its professional racing assets to various parties. Mr. Compton briefly described the professional racing assets of the Association and some of the complexities of being a not-for-profit organization. At the end of their discussion, Mr. Cox and Mr. Compton discussed generally the possibility of a follow-on discussion regarding the professional racing operations of the Association, but did not commit to any further discussions or any particular timeframe in which they might again discuss the issue. As with other introductory contacts made by us during that time frame, the discussion was entered into our log.

Throughout the summer of 2006, we pursued initial and follow-up meetings and discussions with our initial list of contacts, as well as new contacts which became known to us during that time period. From June 6, 2006 through September 30, 2006 we contacted in excess of fifty private equity firms, LBO funds, investment bankers, business brokers and law firms. As a result of those contacts as well as our officers’ and directors’ professional and personal network of contacts at operating businesses, we discussed more than seventy potential targets and met with numerous principals of, and bankers and brokers for, these potential targets. Ultimately, we made detailed acquisition proposals to four potential targets in addition to the Association. All of these targets were in the Company’s stated target industries of media, entertainment or telecommunications, and included opportunities relating to business-to-business video production, digital services marketing and distribution, consumer-based telecommunications services and media-based infrastructure support services. In each instance, the Board ultimately concluded either that it would be unable to acquire the target under what the Board believed to be reasonable terms and conditions, including price, or that the opportunity with the Association provided a greater opportunity for the Company’s shareholders.

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As with other potential opportunities being reviewed at that time, Mr. Cox contacted Mr. Compton from time to time about the possibility of discussing further the Association. Mr. Cox and Mr. Compton ultimately agreed to meet at the offices of the Association on September 7, 2006. In addition to Mr. Cox and Mr. Compton, the meeting was attended by Peter Clifford, Executive Vice President and General Manager of the Association, and Larry Chapman our Executive Vice President. At this meeting, the Association provided a general overview of its business and operations, and we outlined our structure, management and objectives. During that discussion, Mr. Compton and Mr. Clifford outlined the history of the Association and indicated that its key mandate was to preserve, protect and promote the sport of drag racing. They also outlined the “pyramid” structure of the various racing activities conducted by the Association, starting with the NHRA POWERade professional series at the top of pyramid, down through the various sportsman and amateur racing series at a more “grassroots” level. Mr. Compton and Mr. Clifford indicated that the success of each level in the pyramid was interdependent, and that the board of the Association would give strong consideration in the review of any transaction to the extent to which the proposed structure supported this ongoing interdependence. Mr. Compton and Mr. Clifford also described some of the ancillary activities conducted by the Association, including its membership program and publications. At the conclusion of the meeting, the parties agreed to sign a non-disclosure agreement so that additional information, including financial information, could be provided regarding the Association. The next day, Mr. Cox sent Mr. Clifford and Mr. Compton a draft non-disclosure agreement. The non-disclosure agreement was signed September 21, 2006. During the two week period from the first official meeting, no discussions took place and no additional information was exchanged.

After the execution on September 21, 2006 of the NDA, the parties arranged to meet at the offices of the Association. The meeting was attended by Mr. Compton, Mr. Clifford, Mr. Cox, Bruce Lederman, our Executive Vice President and Robert Meyers our Chief Financial Officer and one of our Directors. During that meeting, Mr. Compton and Mr. Clifford further outlined the structure, assets, operations and key contractual relationships of the Association.

Two weeks later, on October 4, 2006, a follow-up meeting was held among Mr. Compton, Mr. Clifford, Mr. Cox, Mr. Lederman, Mr. Meyers and Mr. Chapman. During this meeting, in addition to further discussions and negotiations regarding the assets and operations of the Association, the parties discussed generally what assets and rights could potentially be purchased by us as part of any potential transaction. These discussions and negotiations generally centered on the concept of our purchasing the professional racing assets and certain commercialization rights, with the Association retaining sportsman, amateur and certain other activities as well as its role as a sanctioning body and race operator. As a result of this meeting, we prepared an initial draft Assets and Issues outline (the “Assets and Issues Document”) which began the process of describing possible assets and rights to be sold, assets and rights to be retained, and the ongoing relationship between the Association and us post-transaction. The Assets and Issues Document was not intended for signature or to be a binding commitment of either party, but was instead intended to be used as a guideline of issues for further discussion and negotiation. The parties continued to negotiate the Assets and Issues Document over the next several weeks. During these negotiations, Mr. Compton and Mr. Clifford continued to emphasize that a key issue of importance to the Association in structuring any possible transaction was that it had to benefit and support the Association’s overall mission to preserve, protect and promote the sport of drag racing. In this regard, Mr. Compton and Mr. Clifford stressed that it would be important to preserve, to the greatest extent possible, the existing relationship between the professional racing activities and the sportsman and amateur racing activities which would remain with the Association.

Throughout this time frame, HDP management, including our Chairman and CEO Mr. Hartenstein, met in person or by telephone at least weekly to discuss the status of various potential target opportunities being investigated or analyzed, including the potential transaction with the Association. In addition to our interactions with the Association, we submitted a Letter of Interest regarding an opportunity in the

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broadcast industry on October 31, 2006. We also received management presentations via telephone on September 22, 2006 and in person on October 5, 2006 regarding an opportunity in the telecommunications industry.

Throughout our discussions and negotiations with the Association, with regard to the consideration to be paid by HDP in any transaction, the Association emphasized that such consideration would need to be sufficient to fund the Association’s sportsman, amateur and other activities that were not profitable or required ongoing investments by the Association. Additionally, such consideration would need to be sufficient to provide additional income for the growth of new initiatives in furtherance of the Association’s objectives.

As a continuation of the ongoing negotiations with the Association, nearly one month later, on November 6, 2006, Mr. Hartenstein, Mr. Meyers, Mr. Cox, Mr. Chapman and Mr. Lederman met with Mr. Compton, Mr. Clifford and Michael Cohen, a partner in the law firm of Morrison and Foerster LLP and outside counsel to the Association. At the meeting we outlined a general proposal for the acquisition of the Association’s professional racing assets and various commercialization rights relating to the NHRA brand and media assets. Our proposal resulted from several weeks of discussion and negotiations with the Association. The key elements of our proposal were:

·       We would acquire the following assets:

·        The POWERade professional racing series and substantially all rights to professional drag racing;

·        The four tracks and related real estate owned by the Association in Atlanta, Indianapolis, Gainesville and Columbus as well as the Association’s long term track lease in Pomona, California; and

·        The Association headquarters building in Glendora, California

·       We would also have the following rights:

·        An exclusive, perpetual, irrevocable license to use the “NHRA” brand in connection with professional drag racing;

·        A broad set of exclusive commercialization rights relating to, among other things, television, sponsorships and licensing, new media opportunities and merchandising; and

·        To preserve the joint development of the brand as well as the intended ongoing relationship between the Association and the professional racing assets, the Association would have right, for a period of three years following the consummation of the transaction, to terminate our right to use of the Association brand in the event of a change of control involving persons or entities with potential conflicts, such as competitors, suppliers, team owners and track owners and operators.

·       We would enter into long term agreements with the Association pursuant to which the Association would provide the following:

·        Sanctioning services; and

·        Race operations services.

·       We would guarantee long term access for the Association’s sportsman racing activities at our professional racing events, consistent with the level of access currently provided at such events.

·       We would require satisfactory employment and/or consulting agreements with Mr. Compton and Mr. Clifford to secure their services on our behalf.

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During the November 6 meeting, we presented the Association with our approach for determining an appropriate valuation of the assets and rights associated with our proposal. In doing so, we acknowledged the Association’s previously stated need for the total consideration to be received to be sufficient to fund the future operation and growth of the Association’s sportsman, amateur and other activities. We presented an analysis of comparable companies and, based on the EBITDA multiples at which the comparable companies were then being traded, proposed that the appropriate EBITDA multiple for our proposed transaction was 11 times EBITDA. These comparable companies included World Wrestling Entertainment, Six Flags, Live Nation and various publicly traded race track operators. Using this multiple and a projected 2006 EBITDA of $11M for the to-be-transferred assets, we proposed as our best offer a total consideration of $121M consisting of the following components: $100M in cash, an assumed debt amount of $11.5M and a distribution of HDP stock equal to $9.5M.

The Board considered a number of factors in arriving at the proposed purchase price for the assets and rights associated with our proposal. The Board and management of the Company have substantial experience in valuing assets and opportunities. In addition to an analysis of comparable companies, the Company reviewed other precedent acquisition multiples in the general area of event entertainment and considered a discounted cash flow analysis based on preliminary assessments of growth opportunities. The Company received input in this analysis from various professionals with which management had a prior working relationship, but did not at this time formally engage professional investment banking assistance. In formulating our proposal, the Company also took into account the Association’s previously stated need to receive cash compensation in an amount which would be sufficient to fund the future operation and growth of its ongoing activities.

Mr. Compton, Mr. Clifford and Mr. Cohen met privately to review and discuss our proposal. When the November 6 meeting was reconvened, Mr. Compton sought an increase in the purchase price, at which point, we reiterated to Mr. Compton that our offer was intended to be our best offer and not intended to be the basis for further negotiations.

After further discussions and making certain modifications, Mr. Compton indicated that the Association was prepared to continue the negotiations consistent with this general framework, all of which would be subject to final agreed upon terms, conditions and documentation, approval of the board of directors of the Association and a fairness opinion as to the consideration to be received for the assets and rights being conveyed.

Based on the positive feedback from the Association and the desire by all parties to continue to move forward with a potential transaction, on November 7, 2006, Mr. Lederman instructed Mr. Richard Wirthlin, a partner at the law firm of Latham and Watkins LLP and our legal counsel, to prepare an outline of required documentation to implement the overall transaction. On November 13, 2006, a telephonic discussion was held among Mr. Cox, Mr. Chapman, Mr. Clifford, and lawyers from both Latham & Watkins LLP, representing HDP, and Morrison & Foerster, representing the Association, to discuss the documentation and to assign responsibility for preparing initial drafts of each of the required contracts. The parties agreed on a number of the key agreements which would be required to implement both the asset purchase and the ongoing relationship between the parties relating to the Association brand, the various commercialization rights, certain promotional activities, the right for the Association to access professional racing events to conduct amateur and sportsman racing, race operation support services and sanctioning services. In addition, on November 13, 2006,we forwarded an initial due diligence request list to the Association.

On November 15th, 2006, a telephone conference was held among Mr. Clifford, Mr. Cohen, Mr. Cox, Mr. Chapman, Mr. Meyers, Mr. Wirthlin, and Patricia Baldowski of the accounting firm of Goldstein Golub Kessler LLP, our outside auditors. The purpose of the call was to discuss the nature and extent of

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audited financials which would be required in connection with the assets to be transferred to us as part of a transaction along the lines outlined at the November 6, 2006 meeting.

As a result of the November 6, 2006 meeting at which we set forth our proposal for the acquisition of various assets and rights, Mr. Compton indicated to Mr. Hartenstein, our Chairman of the Board of Directors, that the appropriate next step would be to brief the Chairman of the Board of the Association, Mr. Dallas Gardner, regarding the proposed transaction. Mr. Compton also wanted to engage Mr. Gardner in the discussions at that time since we indicated to Mr. Compton that an express condition to the transaction being consummated would be an agreement between us and Mr. Compton and Mr. Clifford to provide services to us following consummation of any agreement. The parties also thought it was necessary and proper to have Mr. Gardner’s agreement, given this proposed closing condition, that Mr. Compton and Mr. Clifford obtain express approval to continue to negotiate with us on behalf of the Association, subject to final board approval.

On December 1, 2006, Mr. Hartenstein, Mr. Compton, Mr. Clifford, Mr. Cox and Mr. Chapman met with Mr. Gardner in Pomona, California to discuss the proposed transaction. At that meeting, Mr. Hartenstein outlined our background, as well as the nature and perceived benefits of the proposed transaction, consistent with the general outline discussed at the November 6, 2006 meeting.

On December 14, 2006, the Board of the Association held a meeting to review, discuss and deliberate the proposed terms of the Asset Acquisition. At the conclusion of that meeting, the Association Board voted, among other matters, to authorize Messrs. Gardner, Clifford and Compton to continue to proceed with negotiations of the Asset Acquisition on behalf of the Association and to present to the Association Board the d