OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF CLASS A COMMON STOCK
OF
XXXXXX ENVIRONMENTAL SERVICES, INC.
AT
$.20 NET PER SHARE
BY
GAP CAPITAL, L.L.C.
XXXXX X. XXXXX, MANAGER
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THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON MONDAY, JULY 12, 1999, UNLESS THE OFFER IS EXTENDED.
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THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER
2,662,975 CLASS A SHARES (APPROXIMATELY 51% OF THE OUTSTANDING CLASS A SHARES
ON A FULLY DILUTED BASIS EXCLUDING CLASS B SHARES SUBJECT TO THE LOCK-UP AND
VOTING AGREEMENT). THE OFFER IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS.
THE BOARD OF DIRECTORS OF XXXXXX ENVIRONMENTAL SERVICES, INC. (THE
"COMPANY") HAS UNANIMOUSLY APPROVED THE OFFER REFERRED TO HEREIN AND
DETERMINED THAT THE OFFER IS FAIR TO, AND IN THE BEST INTERESTS OF, THE
STOCKHOLDERS OF THE COMPANY AND RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY
ACCEPT THE OFFER AND TENDER THEIR SHARES.
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IMPORTANT
Any stockholder desiring to tender all or any portion of such
stockholder's shares of Class A common stock, par value $.01 per share, of
the Company ("Class A Shares") should either (i) complete and sign the Letter
of Transmittal or a facsimile copy thereof in accordance with the
instructions in the Letter of Transmittal, have such stockholder's signature
thereon guaranteed if required by Instruction 1 to the Letter of Transmittal,
mail or deliver the Letter of Transmittal or such facsimile and any other
required documents to the Depositary and either deliver the certificates for
such Class A Shares to the Depositary along with the Letter of Transmittal or
facsimile or deliver such Class A Shares pursuant to the procedure for
book-entry transfer set forth in Section 2 or (ii) request such stockholder's
broker, dealer, bank, trust company or other nominee to effect the
transaction for such stockholder. A stockholder having Class A Shares
registered in the name of a broker, dealer, bank, trust company or other
nominee must contact such broker, dealer, bank, trust company or other
nominee if such stockholder desires to tender such Class A Shares.
A stockholder who desires to tender Class A Shares and whose
certificates for such Class A Shares are not immediately available or who
cannot comply in a timely manner with the procedure for book-entry transfer,
or who cannot deliver all required documents to the Depositary prior to the
expiration of the Offer, may tender such Class A Shares by following the
procedure for guaranteed delivery set forth in Section 2, including the
Notice of Guaranteed Delivery.
Questions and requests for assistance or for additional copies of
this Offer to Purchase, the Letter of Transmittal and the Notice of
Guaranteed Delivery may be directed to Purchaser at the address and telephone
number set forth on the back cover of this Offer to Purchase.
June 11, 1999
To the Holders of Class A Common Stock of Xxxxxx Environmental Services, Inc.:
INTRODUCTION
GAP Capital, L.L.C., a Texas limited liability company (the
"Purchaser"), hereby offers to purchase all outstanding shares of Class A
common stock, par value $.01 per share, of Xxxxxx Environmental Services,
Inc., a Delaware corporation (the "Company"), at $.20 per share (the "Offer
Price"), net to the seller in cash, without interest, upon the terms and
subject to the conditions set forth in this Offer to Purchase and in the
related Letter of Transmittal (which, together with any amendments or
supplements hereto or thereto, collectively constitute the "Offer"). The
outstanding shares of the Company's Class A common stock, par value $.01 per
share, are referred to herein collectively as "Class A Shares" and
individually as a "Class A Share."
Tendering stockholders will not be obligated to pay brokerage fees
or commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of tendered Class A Shares
pursuant to the Offer. The Purchaser will pay all fees and expenses of
BankBoston, N.A., which is acting as the Depositary (the "Depositary"),
incurred in connection with the Offer. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS UNANIMOUSLY
APPROVED THE OFFER AND DETERMINED THAT THE OFFER IS FAIR TO, AND IN THE BEST
INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY AND RECOMMENDS THAT
STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR CLASS A SHARES
PURSUANT TO THE OFFER.
Xxxxxx, Xxxx & Xxxxxxxx, the Company's financial advisor ("HWG"),
has delivered to the Board of Directors of the Company its written opinion to
the effect that, as of the date of such opinion, the $.20 per share in cash
to be offered to the holders of the Class A Shares in the Offer is fair to
such holders, from a financial point of view. Such opinion, which sets forth
the factors considered and the assumptions made by HWG, is set forth in full
as an exhibit to the Company's Solicitation/Recommendation Statement on
Schedule 14D-9 (the "Schedule 14D-9"), which is being mailed to stockholders
of the Company herewith.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER
2,662,975 CLASS A SHARES (THE "MINIMUM CONDITION"). THE OFFER IS ALSO SUBJECT
TO CERTAIN OTHER CONDITIONS. SEE SECTIONS 1 AND 14 HEREOF.
The Offer is being made pursuant to the Tender Offer Agreement dated
as of June 4, 1999 (the "Tender Offer Agreement"), among the Purchaser and
the Company pursuant to which, the parties have agreed that effective upon
purchase and payment for the tendered Class A Shares by the Purchaser, the
Purchaser shall be entitled to designate the following number of directors on
the Company's Board of Directors: (a) in the event the Purchaser has
purchased any Class A Shares pursuant to the Offer, but less than 51% of the
outstanding Class A Shares and the Company's Class B common stock, par value
$.01 per share (the "Class B Shares"), combined on a fully diluted basis,
taking into account the convertibility of the Class B Shares that are not
subject to the Lock-Up and Voting Agreement (as defined below), the Purchaser
shall be entitled to designate one director less than the number of directors
on the Company's Board of Directors immediately prior to such designation
(e.g., if there are two directors serving immediately prior to such
designation, the Purchaser shall be entitled to designate a third director)
and (b) in the event the Purchaser has purchased a number of Class A Shares
pursuant to the Offer that represents at least 51% of the outstanding Class A
Shares and Class B Shares combined on a fully diluted basis, taking into
account the convertibility of the Class B Shares that are not subject to the
Lock-Up and Voting Agreement, the Purchaser shall be entitled to designate
the least number of directors necessary to constitute, once designated, a
majority of the Company's Board of Directors. The Company has covenanted and
agreed that the Company shall take all action necessary to cause the
Purchaser's designees to be elected or appointed to the Board of Directors,
including without limitation, increasing the number of directors, amending
its bylaws, using its reasonable best efforts to obtain resignations of
incumbent directors, and, to the extent necessary, filing with the Securities
and Exchange Commission (the "Commission") and mailing to its stockholders
the information required by Section 14(f) of the Securities Exchange Act of
1934, as amended (the "Exchange Act").
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In connection with the execution of the Tender Offer Agreement,
certain holders of Class B Shares have entered into a lock-up and voting
agreement with the Purchaser (the "Lock-Up and Voting Agreement"), pursuant
to which such stockholders have agreed to vote any and all of their Class A
Shares and Class B Shares in favor of a 50,000 to 1 reverse stock split of
the Class A Shares and the Class B Shares (the "Reverse Split") in the event
such a Reverse Split is to be voted on or otherwise approved at a meeting of
holders of Class A Shares or Class B Shares (or by written consent in lieu
thereof). The Lock-Up and Voting Agreement is more fully described in Section
12.
In order to induce the Purchaser to enter into the Tender Offer
Agreement, simultaneously with the execution of the Tender Offer Agreement,
the Company issued to Purchaser a warrant (the "Warrant"), pursuant to which
the Company granted to the Purchaser an option to acquire a certain number of
Class A Shares and Class B Shares upon the occurrence of certain events and
in accordance with certain terms and conditions set forth in the Warrant. The
Warrant is more fully described in Section 12.
The Company has represented to the Purchaser that, as of June 4,
1999, there were 4,259,650 Class A Shares issued and outstanding, 4,575,643
Class B Shares issued and outstanding and 168,000 shares subject to
outstanding stock options. According to reports of the Company filed with the
Commission, as of March 31, 1999, the Company had 84,707 Class B Shares held
in treasury.
The Tender Offer Agreement is more fully described in Section 12.
Certain federal income tax consequences of the sale of Class A Shares
pursuant to the Offer are described in Section 5.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY
DECISION IS MADE WITH RESPECT TO THE OFFER.
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer, the
Purchaser will accept for payment and pay for all Class A Shares validly
tendered prior to the Expiration Date and not theretofore withdrawn in
accordance with Section 3. Certain holders of Class B Shares have agreed
pursuant to the Lock-Up and Voting Agreement not to tender shares in
connection with the Offer. See Section 12. The term "Expiration Date" means
12:00 Midnight, New York City time, on Monday, July 12, 1999, unless and
until the Purchaser shall have extended the period of time during which the
Offer is open, in which event the term "Expiration Date" shall mean the
latest time and date at which the Offer, as so extended by the Purchaser,
shall expire.
The Offer is subject to certain conditions set forth in Section 14,
including satisfaction of the Minimum Condition. See Section 14.
Subject to the applicable rules and regulations of the Commission,
the Purchaser reserves the right to waive any other condition to the Offer in
whole or in part in its sole discretion. In addition, subject to the
applicable rules and regulations of the Commission, the Purchaser expressly
reserves the right at any time and from time to time to modify or amend the
terms of the Offer; provided that under the Tender Offer Agreement the
Purchaser has agreed that it will not, without the prior written consent of
the Company, (1) decrease or change the form of consideration payable in the
Offer, (2) decrease the number of Class A Shares sought pursuant to the
Offer, (3) impose additional conditions to the Offer or (4) broaden the scope
of the conditions of the Offer (provided that the Purchaser in its sole
discretion may waive any conditions to the Offer).
In the Tender Offer Agreement, the Purchaser has agreed, subject to
the conditions in Section 14 and its rights under the Offer, to accept for
payment tendered Class A Shares as soon as practicable after the latest of
(1) the date on which the conditions in Section 14 are fulfilled and there is
no right to terminate the Offer under Section 14 (subject to Purchaser's
rights to extend the Offer), (2) at least 2,662,975 Class A Shares have been
validly tendered and not withdrawn prior to the Expiration Date, (3) the
Class A Shares shall be held of record by fewer than 300 persons, (4) the
Company shall have filed with the Commission and not withdrawn a Form 15
deregistering the Company's Class A
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Common Stock (the "Form 15") and (5) the earliest date on which the Offer can
expire under federal law. For a description of the Purchaser's right to
extend the period of time during which the Offer is open, and to amend, delay
or terminate the Offer, see Section 12.
There can be no assurance that the Purchaser will exercise its right
to extend the Offer (other than as required by applicable law). Any
extension, waiver amendment or termination will be followed as promptly as
practicable by public announcement. In the case of an extension, Rule
14e-l(d) under the Exchange Act, requires that the announcement be issued no
later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date in accordance with the public
announcement requirements of Rule 14d-4(d) under the Exchange Act. Subject to
applicable law (including Rules 14d-4(c) and 14d-6(d) under the Exchange Act,
which require that any material change in the information published, sent or
given to stockholders in connection with the Offer be promptly disseminated
to stockholders in a manner reasonably designed to inform stockholders of
such change), and without limiting the manner in which the Purchaser may
choose to make any public announcement, the Purchaser will not have any
obligation to publish, advertise or otherwise communicate any such public
announcement other than by making a release to the Dow Xxxxx News Service.
If the Purchaser extends the Offer or if the Purchaser (whether
before or after its acceptance for payment of tendered Class A Shares) is
delayed in its acceptance for payment of or payment for tendered Class A
Shares or it is unable to pay for tendered Class A Shares pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer, the Depositary may retain tendered Class A Shares on behalf of the
Purchaser, and such tendered Class A Shares may not be withdrawn except to
the extent tendering stockholders are entitled to withdrawal rights as
described in Section 3. However, the ability of the Purchaser to delay the
payment for tendered Class A Shares that the Purchaser has accepted for
payment is limited by Rule 14e-1 under the Exchange Act, which requires that
a bidder pay the consideration offered or return the securities deposited by
or on behalf of holders of securities promptly after the termination or
withdrawal of such bidder's offer.
If the Purchaser makes a material change in the terms of the Offer
or the information concerning the Offer or waives a material condition of the
Offer (including a waiver of the Minimum Condition), the Purchaser will
disseminate additional tender offer materials and extend the Offer to the
extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act.
The minimum period during which an offer must remain open following material
changes in the terms of the Offer or information concerning the Offer, other
than a change in price or a change in the percentage of securities sought,
will depend upon the facts and circumstances then existing, including the
relative materiality of the changed terms or information. With respect to a
change in price or a change in the percentage of securities sought, a minimum
period of 10 business days is generally required to allow for adequate
dissemination to stockholders.
The Company has provided the Purchaser with the Company's
stockholder lists and security position listings for the purpose of
disseminating the Offer to holders of the Class A Shares. This Offer to
Purchase, the related Letter of Transmittal and other relevant materials will
be mailed by the Purchaser to record holders of Class A Shares and will be
furnished by the Purchaser to brokers, dealers, banks, trust companies and
similar persons whose names, or the names of whose nominees, appear on the
stockholder lists or, if applicable, who are listed as participants in a
clearing agency's security position listing, for subsequent transmittal to
beneficial owners of Class A Shares.
2. PROCEDURE FOR TENDERING CLASS A SHARES
VALID TENDER. For a stockholder validly to tender Class A Shares
pursuant to the Offer, either (1) a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), together with any required
signature guarantees, or an Agent's Message (as defined below) in connection
with a book-entry delivery of Class A Shares, and any other documents
required by the Letter of Transmittal, must be received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase
and either certificates for tendered Class A Shares must be received by the
Depositary at one of such addresses or such Class A Shares must be delivered
pursuant to the procedure for book-entry transfer set forth below (and a
Book-Entry Confirmation (as defined below) received by the Depositary), in
each case prior to the Expiration Date, or (2) the tendering stockholder must
comply with the guaranteed delivery procedure set forth below.
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The Depositary will establish an account with respect to the Class A
Shares at The Depository Trust Company (the "Book-Entry Transfer Facility")
for purposes of the Offer within two business days after the date of this
Offer. Any financial institution that is a participant in the Book-Entry
Transfer Facility's system may make book-entry delivery of Class A Shares by
causing the Book-Entry Transfer Facility to transfer such Class A Shares into
the Depositary's account in accordance with the Book-Entry Transfer
Facility's procedures for such transfer. However, although delivery of Class
A Shares may be effected through book-entry transfer into the Depositary's
account at the Book-Entry Transfer Facility, the Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or an Agent's Message in connection with a book-entry
transfer, and any other required documents, must, in any case, be transmitted
to, and received by, the Depositary at one of its addresses set forth on the
back cover of this Offer to Purchase prior to the Expiration Date, or the
tendering stockholder must comply with the guaranteed delivery procedure
described below. The confirmation of a book-entry transfer of Class A Shares
into the Depositary's account at the Book-Entry Transfer Facility as
described above is referred to herein as a "Book-Entry Confirmation."
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY'S IN ACCORDANCE
WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE
DELIVERY TO THE DEPOSITARY.
THE METHOD OF DELIVERY OF CLASS A SHARES, THE LETTER OF TRANSMITTAL
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY
TRANSFER FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER.
CLASS A SHARES WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE
DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
The term "Agent's Message" means a message, transmitted by the
Book-Entry Transfer Facility to, and received by, the Depositary and forming
a part of a Book-Entry Confirmation, which states that the Book-Entry
Transfer Facility has received an express acknowledgment from the participant
in the Book-Entry Transfer Facility tendering the Class A Shares, which are
subject to such Book-Entry Confirmation, that such participant has received
and agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against such participant.
SIGNATURE GUARANTEES. No signature guarantee is required on the
Letter of Transmittal if (1) the Letter of Transmittal is signed by the
registered holder of Class A Shares (which term, for purposes of this
Section, includes any participant in the Book-Entry Transfer Facility's
system whose name appears on a security position listing as the owner of the
Class A Shares) tendered therewith and such registered holder has not
completed either the box entitled "Special Delivery Instructions" or the box
entitled "Special Payment Instructions" on the Letter of Transmittal or (2)
such Class A Shares are tendered for the account of a firm that is a member
of the Medallion Signature Guaranty Program or by any other "eligible
guaranty institution" as such term is defined in Rule 17Ad-15 under the
Exchange Act (each of the foregoing being referred to as an "Eligible
Institution"). In all other cases, all signatures on the Letters of
Transmittal must be guaranteed by an Eligible Institution. See Instructions 1
and 5 to the Letter of Transmittal. If the certificates for Class A Shares
are registered in the name of a person other than the signer of the Letter of
Transmittal, or if payment is to be made or certificates for Class A Shares
not tendered or not accepted for payment are to be issued to a person other
than the registered holder of the certificates surrendered, the tendered
certificates must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name or names of the registered holders or
owners appear on the certificates, with the signatures on the certificates or
stock powers guaranteed as aforesaid. See Instruction 5 to the Letter of
Transmittal.
GUARANTEED DELIVERY. If a stockholder desires to tender Class A
Shares pursuant to the Offer and such stockholder's certificates for Class A
Shares are not immediately available or the procedure for book-entry transfer
cannot be completed on a timely basis or time will not permit all required
documents to reach the Depositary prior to the Expiration Date, such
stockholder's tender may be effected if all the following conditions are met:
(a) such tender is made by or through an Eligible
Institution;
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(b) a properly completed and duly executed Notice of
Guaranteed Delivery substantially in the form provided by the
Purchaser is received by the Depositary, as provided below, prior to
the Expiration Date; and
(c) the certificates for all tendered Class A Shares, in
proper form for transfer (or a Book-Entry Confirmation with respect to
such Class A Shares), together with a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), with any
required signature guarantees (or, in the case of a book-entry
transfer, an Agent's Message) and any other documents required by the
Letter of Transmittal, are received by the Depositary within three
trading days after the date of execution of such Notice of Guaranteed
Delivery. A "trading day" is any day on which the New York Stock
Exchange, Inc. (the "NYSE") is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mail to the
Depositary and must include a guarantee by an Eligible Institution in the
form set forth in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for tendered
Class A Shares accepted for payment pursuant to the Offer will in all cases
be made only after timely receipt by the Depositary of (1) certificates for
(or a timely Book-Entry Confirmation with respect to) such tendered Class A
Shares, (2) a Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or
Agent's Message in connection with a book-entry transfer and (3) any other
documents required by the Letter of Transmittal. Accordingly, tendering
stockholders may be paid at different times depending upon when certificates
for tendered Class A Shares or Book-Entry Confirmations are actually received
by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE
PURCHASE PRICE OF THE TENDERED CLASS A SHARES TO BE PAID BY THE PURCHASER,
REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
The valid tender of Class A Shares pursuant to one of the procedures
described above will constitute a binding agreement between the tendering
stockholder and the Purchaser upon the terms and subject to the conditions of
the Offer.
APPOINTMENT. By executing a Letter of Transmittal as set forth
above, the tendering stockholder will irrevocably appoint designees of the
Purchaser as such stockholder's attorneys-in-fact and proxies in the manner
set forth in the Letter of Transmittal, each with full power of substitution,
to the full extent of such stockholder's rights with respect to the Class A
Shares tendered by such stockholder and accepted for payment by the Purchaser
and with respect to any and all other Class A Shares or other securities or
rights issued or issuable in respect of such Class A Shares on or after June
4, 1999. All such proxies shall be considered coupled with an interest in the
tendered Class A Shares. Such appointment will be effective when, and only to
the extent that, the Purchaser accepts for payment Class A Shares tendered by
such stockholder as provided herein. Upon such acceptance for payment, all
prior powers of attorney and proxies given by such stockholder with respect
to such Class A Shares or other securities or rights will, without further
action, be revoked and no subsequent powers of attorney and proxies may be
given (and, if given, will not be deemed effective). The designees of the
Purchaser will thereby be empowered to exercise voting and other rights with
respect to such Class A Shares or other securities or rights in respect of
any annual, special or adjourned meeting of the Company's stockholders, or
otherwise, as they in their sole discretion deem proper. The Purchaser
reserves the right to require that, in order for Class A Shares to be deemed
validly tendered, immediately upon the Purchaser's acceptance for payment of
such tendered Class A Shares, the Purchaser must be able to exercise voting
and other rights with respect to such tendered Class A Shares and other
securities or rights, including voting at any meeting of stockholders then
scheduled.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Class
A Shares will be determined by the Purchaser in its sole discretion, which
determination will be final and binding. The Purchaser reserves the absolute
right to reject any or all tenders determined by it not to be in proper form
or the acceptance for payment of or payment for which may, in the opinion of
the
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Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute
right to waive any defect or irregularity in any tender with respect to any
particular Class A Shares, whether or not similar defects or irregularities
are waived in the case of other Class A Shares. No tender of Class A Shares
will be deemed to have been validly made until all defects or irregularities
relating thereto have been cured or waived. None of the Purchaser, the
Depositary, the Information Agent or any other person will be under any duty
to give notification of any defects or irregularities in tenders or incur any
liability for failure to give any such notification. The Purchaser's
interpretation of the terms and conditions of the Offer (including the Letter
of Transmittal and the instructions thereto) will be final and binding.
BACKUP WITHHOLDING. In order to avoid "backup withholding" of
federal income tax on payments of cash pursuant to the Offer, a stockholder
surrendering Class A Shares in the Offer must provide the Depositary with
such stockholder's correct taxpayer identification number ("TIN") on a
Substitute Form W-9 and certify under penalties of perjury that such TIN is
correct and that such stockholder is not subject to backup withholding.
Certain stockholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding. If a
stockholder does not provide its correct TIN or fails to provide the
certifications described above, the Internal Revenue Service ("IRS") may
impose a penalty on such stockholder and payment of cash to such stockholder
pursuant to the Offer may be subject to backup withholding of 31%. All
stockholders surrendering Class A Shares pursuant to the Offer should
complete and sign the main signature form and the Substitute Form W-9
included as part of the Letter of Transmittal to provide the information and
certification necessary to avoid backup withholding (unless an applicable
exemption exists and is proved in a manner satisfactory to the Purchaser and
the Depositary). Non-corporate foreign stockholders should complete and sign
the main signature form and a Form W-8, Certificate of Foreign Status, a copy
of which may be obtained from the Depositary, in order to avoid backup
withholding. See Instruction 9 to the Letter of Transmittal.
3. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 3, tenders of Class A
Shares are irrevocable. Shares tendered pursuant to the Offer may be
withdrawn pursuant to the procedures set forth below at any time prior to the
Expiration Date.
For a withdrawal to be effective, a written, telegraphic or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of this Offer
to Purchase and must specify the name of the person having tendered the Class
A Shares to be withdrawn, the number of Class A Shares to be withdrawn and
the name of the registered holder of the Class A Shares to be withdrawn, if
different from the name of the person who tendered the Class A Shares. If
certificates for Class A Shares have been delivered or otherwise identified
to the Depositary, then, prior to the physical release of such certificates,
the serial numbers shown on such certificates must be submitted to the
Depositary and, unless such Class A Shares have been tendered by an Eligible
Institution, the signatures on the notice of withdrawal must be guaranteed by
an Eligible Institution. Withdrawals of tenders of Class A Shares may not be
rescinded, and any Class A Shares properly withdrawn will thereafter be
deemed not validly tendered for any purposes of the Offer. However, withdrawn
Class A Shares may be retendered by again following one of the procedures
described in Section 2 at any time prior to the Expiration Date.
All questions as to the form and validity (including time of
receipt) of notices of withdrawal will be determined by the Purchaser in its
sole discretion, which determination will be final and binding. None of the
Purchaser, the Depositary, the Information Agent or any other person will be
under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification.
4. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR CLASS A SHARES
Upon the terms and subject to the conditions of the Offer
(including, if the Offer is extended or amended, the terms and conditions of
any such extension or amendment), the Purchaser will accept for payment and
will pay for all Class A Shares validly tendered prior to the Expiration Date
and not properly withdrawn in accordance with Section 3 as soon as
practicable after the later of (1) the Expiration Date and (2) the
satisfaction or waiver of the conditions set
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forth in Section 14. For a description of the Purchaser's right to terminate
the Offer and not accept for payment or pay for tendered Class A Shares or to
delay acceptance for payment or payment for tendered Class A Shares, see
Section 14.
In all cases, payment for tendered Class A Shares accepted for
payment pursuant to the Offer will be made only after timely receipt by the
Depositary of (1) certificates for such tendered Class A Shares (or timely
Book-Entry Confirmation of a transfer of such tendered Class A Shares as
described in Section 2), (2) a Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees
(or, in the case of a book-entry transfer, an Agent's Message) and (3) any
other documents required by the Letter of Transmittal. The consideration paid
per Class A Share to any stockholder pursuant to the Offer will be the
highest consideration paid per Class A Share to any other stockholder
pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have
accepted for payment, and thereby purchased, Class A Shares properly tendered
to the Purchaser and not withdrawn as, if and when the Purchaser gives oral
or written notice to the Depositary of the Purchaser's acceptance for payment
of such tendered Class A Shares. Payment for Class A Shares accepted for
payment pursuant to the Offer will be made by deposit of the purchase price
therefor with the Depositary, which will act as agent for tendering
stockholders for the purpose of receiving payment from the Purchaser and
transmitting payment to tendering stockholders. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE OF THE TENDERED CLASS A SHARES TO BE
PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY
IN MAKING SUCH PAYMENT.
If the Purchaser is delayed in its acceptance for payment of or
payment for tendered Class A Shares or is unable to accept for payment or pay
for tendered Class A Shares pursuant to the Offer for any reason, then,
without prejudice to the Purchaser's rights under the Offer (but subject to
compliance with Rule 14e-l(c) under the Exchange Act, which requires that a
tender offeror pay the consideration offered or return the tendered
securities promptly after the termination or withdrawal of a tender offer),
the Depositary may, nevertheless, on behalf of the Purchaser, retain tendered
Class A Shares, any such Class A Shares may not be withdrawn except to the
extent tendering stockholders are entitled to exercise, and duly exercise,
withdrawal rights as described in Section 3.
If any tendered Class A Shares are not purchased pursuant to the
Offer because of an invalid tender or otherwise, certificates for any such
Class A Shares will be returned, without expense to the tendering stockholder
(or, in the case of Class A Shares delivered by book-entry transfer of such
Class A Shares into the Depositary's account at the Book-Entry Transfer
Facility pursuant to the procedure set forth in Section 2, such Class A
Shares will be credited to an account maintained at the Book-Entry Transfer
Facility), as promptly as practicable after the expiration or termination of
the Offer.
The Purchaser reserves the right to transfer or assign, in whole or
from time to time in part, or to any direct or indirect subsidiary of
Purchaser, the right to purchase Class A Shares tendered pursuant to the
Offer, but any such transfer or assignment will not relieve the Purchaser of
its obligations under the Offer and will in no way prejudice the rights of
tendering stockholders to receive payment for Class A Shares validly tendered
and accepted for payment pursuant to the Offer.
5. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
Sales of Class A Shares pursuant to the Offer will be taxable
transactions for federal income tax purposes under the Internal Revenue Code
of 1986, as amended (the "Code"), and may also be taxable transactions under
applicable state, local, foreign and other tax laws. For federal income tax
purposes, a tendering stockholder will generally recognize gain or loss equal
to the difference between the amount of cash received by the stockholder
pursuant to the Offer and the aggregate tax basis in the Class A Shares
tendered by the stockholder and purchased pursuant to the Offer. Gain or loss
will be calculated separately for each block of Class A Shares tendered and
purchased pursuant to the Offer.
If tendered Class A Shares are held by a tendering stockholder as
capital assets, gain or loss recognized by the tendering stockholder will be
capital gain or loss, which will be long-term capital gain or loss if the
tendering
-8-
stockholder's holding period for the Class A Shares exceeds one year. Under
present law, long-term capital gains recognized by a tendering individual
stockholder will generally be taxed at a maximum federal marginal tax rate of
20%.
A stockholder (other than certain exempt stockholders including,
among others, all corporations and certain foreign individuals) that tenders
Class A Shares may be subject to 31% backup withholding unless the
stockholder provides its TIN and certifies that such number is correct or
properly certifies that it is awaiting a TIN. A stockholder that does not
furnish its TIN may be subject to a penalty imposed by the IRS. Each
stockholder should complete and sign the Substitute Form W-9 included as part
of the Letter of Transmittal so as to provide the information and
certification necessary to avoid backup withholding.
If backup withholding applies to a stockholder, the Depositary is
required to withhold 31% from payments to such stockholder. Backup
withholding is not an additional tax. Rather, the amount of the backup
withholding can be credited against the federal income tax liability of the
person subject to the backup withholding, provided that the required
information is given to the IRS. If backup withholding results in an
overpayment of tax, a refund can be obtained by the stockholder upon filing
an income tax return.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE WITH RESPECT TO CLASS
A SHARES RECEIVED PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR
OTHERWISE AS COMPENSATION OR WITH RESPECT TO HOLDERS OF SHARES WHO ARE
SUBJECT TO SPECIAL TAX TREATMENT UNDER THE CODE, SUCH AS NON-U.S. PERSONS,
LIFE INSURANCE COMPANIES, TAX-EXEMPT ORGANIZATIONS AND FINANCIAL
INSTITUTIONS, AND MAY NOT APPLY TO A HOLDER OF CLASS A SHARES IN LIGHT OF ITS
INDIVIDUAL CIRCUMSTANCES. STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO THEM (INCLUDING THE
APPLICATION AND EFFECT OF ANY STATE, LOCAL OR FOREIGN INCOME AND OTHER TAX
LAWS) OF THE OFFER.
6. PRICE RANGE OF THE CLASS A SHARES; DIVIDENDS ON THE CLASS A SHARES
Prior to May 23, 1996, the Class A Shares were listed and traded on
The Nasdaq National Market. Since that date, the Class A Shares have been
quoted for trading on the OTC Bulletin Board under the symbol "MBLYA." The
following table sets forth, for each of the periods indicated, the range of
reported high and low bid quotations as reported by the OTC Bulletin Board as
stated in the Company's documents filed with the Commission ("Commission
Documents"). Such over-the-counter market quotations reflect inter-dealer
prices, without retail mark-up, markdown or commission and may not
necessarily represent actual transactions.
SALES PRICE
--------------------------
LOW HIGH
--------- ----------
1997
First Quarter............................ $ 3/16 $ 9/32
Second Quarter........................... 7/32 19/64
Third Quarter............................ 7/32 19/64
Fourth Quarter........................... 7/32 1/4
1998
First Quarter............................ $ 7/32 $ 3/8
Second Quarter........................... 7/32 3/8
Third Quarter............................ 13/64 3/8
Fourth Quarter........................... 1/8 5/16
1999 First Quarter............................ $ 7/50 $ 7/50
Second Quarter (through June 4, 1999).... $ 7/50 $ 7/50
-9-
On June 4, 1999, the last full day of trading before the public
announcement of the execution of the Tender Offer Agreement, the reported
closing sale price of the Class A Shares was $.14 per Class A Share. On June
10, 1999, the last full day of trading before commencement of the Offer, the
reported closing sale price of the Class A Shares was $.14 per Class A Share.
STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE CLASS A
SHARES.
The Company has not paid cash dividends on the Class A Shares since
its initial public offering in September 1991 and according to the Company's
Commission Documents has no present plans to make any distributions to its
stockholders.
Pursuant to the Tender Offer Agreement, the Company has agreed not
to declare, set aside, make or pay any dividend or distribution on the Class
A Shares.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE CLASS A SHARES; OTC
TRADING; REGISTRATION UNDER THE EXCHANGE ACT
The purchase of Class A Shares pursuant to the Offer will reduce the
number of Class A Shares that might otherwise trade publicly and may reduce
the number of holders of Class A Shares, which could adversely affect the
liquidity and market value of the remaining Class A Shares held by the
stockholders other than the Purchaser. Following completion of the Offer, the
Purchaser may propose to the Company that the Company effectuate a 50,000 to
1 Reverse Split, which may further reduce the liquidity of the Class A
Shares. The Purchaser cannot predict whether the reduction in the number of
Class A Shares that might otherwise trade publicly would have an adverse or
beneficial effect on the market price for or marketability of the Class A
Shares or whether it would cause future market prices to be greater or less
than the Offer Price. See Section 12.
According to the Company, as of June 4, 1999, there were 4,259,650
Class A Shares outstanding held of record by approximately 106 holders and
4,575,643 Class B Shares outstanding held of record by 36 holders.
The Class A Shares have been quoted for trading on the OTC Bulletin
Board. The extent of the public market for the Class A Shares and continued
availability of such quotations would depend, however, upon the number of
holders of the Class A Shares remaining at such time, the interest in
maintaining a market in the Class A Shares on the part of securities firms,
the possible termination of registration under the Exchange Act, as described
below, and other factors.
The Class A Shares are currently registered under the Exchange Act.
On June 4, 1999, the Company filed with the Commission a Form 15 to
deregister the Class A Shares. Such termination of registration takes effect
90 days after such filing, or on such earlier date as the Commission may
determine; however, the Company's obligation to file certain reports with the
Commission was automatically suspended upon the filing of such Form 15.
Termination of the registration of the Class A Shares under the Exchange Act
would substantially reduce the information required to be furnished by the
Company to holders of Class A Shares and to the Commission and would make
certain of the provisions of the Exchange Act, such as the short-swing profit
recovery provisions of Section 16(b), the requirement of furnishing a proxy
or information statement in connection with stockholder action and the
related requirement of an annual report to stockholders no longer applicable
to the Class A Shares. Furthermore, "affiliates" of the Company and persons
holding "restricted securities" of the Company may be deprived of the ability
to dispose of such securities pursuant to Rule 144 promulgated under the
Securities Act of 1933, as amended (the "Securities Act").
8. CERTAIN INFORMATION CONCERNING THE COMPANY
GENERAL. The Company is a Delaware corporation with its principal
executive offices at 000 Xxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000,
c/o Xxxxxx X. Xxxx, Esq. According to the Company's Form 10-KSB for the
fiscal year ended December 31, 1998 (the "Company Form 10-KSB"), prior to
January 20, 1997, the Company provided diverse environmental and
field-related services to industrial, governmental and commercial markets and
specialized in the collection, transportation, treatment, recycling and
management of a wide variety of non-hazardous liquid
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hydrocarbons, oil filters, absorbents and related materials. The Company also
provided oil field services, including transportation, marketing, storing and
disposing of various liquid materials used or produced as waste throughout
the life cycle of oil and gas xxxxx. The Company has had no operating assets
since the sale of its oil field services business and hydrocarbon recovery
and recycling business in 1997.
FINANCIAL INFORMATION. Set forth below is certain selected
consolidated financial information with respect to the Company and its
subsidiaries excerpted or derived from the information contained in the
Company Form 10-KSB, as well as the Company's Quarterly Report on Form 10-QSB
for the three months ended March 31, 1999, which are incorporated by
reference herein. More comprehensive financial information is included in
such reports and other documents filed by the Company with the Commission,
and the following summary is qualified in its entirety by reference to such
reports and such other documents and all the financial information (including
any related notes) contained therein. Such reports and other documents should
be available for inspection and copies thereof should be obtainable in the
manner set forth below under "Available Information."
-11-
XXXXXX ENVIRONMENTAL SERVICES, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------- -------------------------------
1998 1997 1999 1998
------------- -------------- ------------- --------------
Revenues........................................ $ - $ - $ - $ -
Cost of revenues................................ - - - -
------------- -------------- ------------- --------------
Gross profit................................ - - - -
------------- -------------- ------------- --------------
------------- -------------- ------------- --------------
Selling, general and administrative expenses.... 704 759 275 159
------------- -------------- ------------- --------------
Operating Loss.............................. (704) (759) (275) (159)
Gain on sale of investment securities........... - 555 22 -
Interest income................................. 330 158 66 77
Other income (expense), net..................... 15 42 12 5
------------- -------------- ------------- --------------
Loss from continuing operations before
income taxes............................. (359) (4) (175) (77)
Income taxes.................................... - - - -
------------- -------------- ------------- --------------
Loss from continuing operations............. (359) (4) (175) (77)
Discontinued operations, net of tax:
Net loss from operations of waste
management services segment.............. - (405) - -
Gain on sale of oilfield segment............ - 2,802 - -
Net gain from the earnout period of waste
management services segment.............. 607 - - -
------------- -------------- ------------- --------------
Income from discontinued operations......... 607 2,397 - -
------------- -------------- ------------- --------------
Net income.................................. 248 2,393 (175) (77)
Comprehensive income (loss):
Other comprehensive income (loss) - change
in net unrealized gains (loss) on
securities, net of tax of ($35), $15 and
$58...................................... (68) 29 112 -
------------- -------------- ------------- --------------
Comprehensive income............................ $ 180 $ 2,422 $ (63) $ (77)
------------- -------------- ------------- --------------
------------- -------------- ------------- --------------
Net income (loss) per share - basic and
assuming dilution:
Continuing operations........................... $ (0.04) $ (0.00)
Discontinuing operations........................ 0.07 0.27
------------- -------------- ------------- --------------
$ 0.03 $ 0.27 $ (0.02) $ (0.01)
------------- -------------- ------------- --------------
------------- -------------- ------------- --------------
-12-
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31, 1999
------------------------------------ -------------------
1998 1997 (UNAUDITED)
---------------- ----------------
ASSETS:
Current assets:
Cash and cash equivalents.......................... $ 81 $ 353 $ 527
Receivables........................................ 155 373 142
Prepaid expenses................................... 94 93 94
---------------- ---------------- -------------------
Total current assets............................ 330 819 763
Property, plant, and equipment, net.................... 188 211 186
Note receivable........................................ - 500 -
Investment securities available for sale............... 4,954 4,495 4,734
Other assets, net...................................... 359 192 335
---------------- ---------------- -------------------
$ 5,831 $ 6,217 $ 6,018
---------------- ---------------- -------------------
---------------- ---------------- -------------------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable....................................... $ 61 $ 100 $ 133
Accrued expenses....................................... 413 1,041 591
---------------- ---------------- -------------------
Total current liabilities.......................... 474 1,141 724
---------------- ---------------- -------------------
Stockholders' equity:
Preferred stock $.01 par value; 2,000,000 shares
authorized, none issued......................... - - -
Common stock, $.01 par value:
Class A, 15,000,000 shares authorized;
4,259,650 shares issued and outstanding in
1998 and 1997................................. 43 43 43
Class B, 10,000,000 shares authorized;
4,660,350 shares issued and 4,575,643 shares
outstanding in 1998 and 1997.................. 47 47 47
Additional paid-in capital......................... 25,159 25,159 25,159
Accumulated deficit................................ (19,845) (20,093) (20,020)
Accumulated other comprehensive income (loss)...... (39) 29 73
Deferred compensation costs under restricted stock
agreements...................................... - (101) -
Treasury stock: 84,707 shares of Class B common
stock, at cost.................................. (8) (8) (8)
---------------- ---------------- -------------------
Total stockholders' equity...................... $ 5,357 $ 5,076 $ 5,294
Commitments and contingencies.......................... $ 5,831 $ 6,217 $ 6,018
---------------- ---------------- -------------------
---------------- ---------------- -------------------
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AVAILABLE INFORMATION. The Company is currently subject to the
reporting requirements of the Exchange Act and, in accordance therewith, is
required to file reports and other information with the Commission relating
to its business, financial condition and other matters. Upon the filing by
the Company of its Form 15, the Company's obligation to file certain reports
with the Commission was automatically suspended. Information as of particular
dates concerning the Company's directors and officers, their remuneration,
the principal holders of the Company's securities and any material interest
of such persons in transactions with the Company is required to be disclosed
in proxy statements distributed to the Company stockholders and filed with
the Commission. Such reports, proxy statements and other information should
be available for inspection at the public reference facilities of the
Commission located at 000 Xxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000, and at
the regional offices of the Commission located in the Northwestern Atrium
Center, 000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000 and
Seven World Trade Center, 13th Floor, New York, New York 10048. Copies should
be obtainable, by mail, upon payment of the Commission's customary charges,
by writing to the Commission's principal office at 000 Xxxxx Xxxxxx, X.X.,
Xxxxxxxxxx, X.X. 00000, and can be obtained electronically on the
Commission's website at xxxx://xxx.xxx.xxx.
Except as otherwise stated in this Offer to Purchase, the
information concerning the Company contained herein has been taken from or
based upon publicly available documents on file with the Commission and other
publicly available information. Although the Purchaser does not have any
knowledge that any such information is untrue, the Purchaser does not take
any responsibility for the accuracy or completeness of such information or
for any failure by the Company to disclose events that may have occurred and
may affect the significance or accuracy of any such information.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER
PURCHASER. The Purchaser, a Texas limited liability corporation, was
organized to acquire the Company and has not conducted any unrelated
activities since its organization. The principal offices of the Purchaser are
located at 0000 Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000. The
outstanding membership interests of the Purchaser are owned by four
individuals: X.X. Xxxxxxxx, Xxxx Xxxxxx, Xxxx Xxxxx and Xxxxx X. Xxxxx
(collectively, the "Investors"). The Purchaser's sole manager is Xxxxx X.
Xxxxx (the "Manager").
FINANCIAL INFORMATION. Because the Purchaser was recently organized
to acquire the Company and has not conducted any unrelated activities since
its organization, selected financial information regarding the Purchaser is
unavailable. Neither the Purchaser nor the Investors are incurring debt to
finance the aggregate Offer Price; rather, the Investors' have irrevocably
committed to the Purchaser to make capital contributions to the Purchaser,
upon the satisfaction of the Minimum Condition, in an amount required by the
Purchaser to acquire the tendered Class A Shares pursuant to the Offer, which
aggregate Offer Price is estimated not to exceed approximately $1,011,000
(which assumes the conversion into Class A Shares of all Class B Shares not
subject to the Lock-Up and Voting Agreement) (the "Aggregate Offer Amount").
Further, the Investors have advanced and irrevocably committed to the
Purchaser to additionally advance to the Purchaser funds necessary to pay
fees and expenses related to the Offer, which fees and expenses are estimated
to be approximately $125,000 (the "Estimated Expenses")(the Aggregate Offer
Amount with the Estimated Expenses are referred to herein as (the "Aggregate
Transaction Amount")). Each of the Investors has certified to the Purchaser,
and its Manager, and provided additional information as they requested to
verify, that each Investor's net worth exceeds the Aggregate Transaction
Amount and that funds in excess of such Aggregate Transaction Amount are
available to such respective Investor in cash and marketable securities.
The Manager currently beneficially owns an aggregate of 24,593 Class
A Shares, or .58% of the outstanding Class A Shares. In addition, pursuant to
the terms of the Tender Offer Agreement, the Company issued to Purchaser a
Warrant to purchase from the Company (a) 228,133 Class A Shares (being
approximately equal to 4.9% of the number of Class A Shares that, as of
February 22, 1997, were issued and outstanding on a fully diluted basis
giving effect to the exercise of the Warrant and the exercise of all
securities (other than the Class B Shares) convertible into Class A Shares)
and (b) 235,861 Class B Shares (being approximately equal to 4.9% of the
number of Class B Shares that, as of February 22, 1999, were issued and
outstanding on a fully diluted basis giving effect to the exercise of the
Warrant and the exercise of all securities convertible into Class B Shares).
The exercise price per Class A Share and Class B Share under the Warrant is
equal to the Offer Price. The Purchaser may exercise the Warrant, in whole or
in part, at
-14-
any time and from time to time prior to December 31, 2008 after the
occurrence of certain events described therein. The Purchaser has also
entered into the Lock-Up and Voting Agreement with certain holders of Class B
Shares, pursuant to which those holders have agreed to vote their Class A
Shares and Class B Shares in accordance with the provisions of the Lock-Up
and Voting Agreement. See Section 12.
Except as set forth above or described elsewhere in this Offer to
Purchase, neither the Purchaser nor to the best knowledge of the Purchaser,
any of the persons listed in Schedule I or any associate or majority-owned
subsidiary of the Purchaser or any of the persons so listed, beneficially
owns any equity security of the Company, and none of the Purchaser, any of
the other persons referred to above, or any of the respective directors,
executive officers or subsidiaries of any of the foregoing, has effected any
transaction in any equity security of the Company during the past 60 days.
Except as described in this Offer to Purchase, (1) there have not
been any contracts, transactions or negotiations between the Purchaser, any
of its subsidiaries or, to the best knowledge of the Purchaser, any of the
persons listed in Schedule I, on the one hand, and the Company or any to its
directors, officers or affiliates, on the other hand, that are required to be
disclosed pursuant to the rules and regulations of the Commission and (2)
neither the Purchaser nor, to the best knowledge of the Purchaser, any of the
persons listed in Schedule I has any contract, arrangement, understanding or
relationship with any person with respect to any securities of the Company.
During the last five years neither the Purchaser nor, to the best
knowledge of the Purchaser, any of the persons listed in Schedule I (a) has
been convicted in a criminal proceeding (excluding traffic violations and
similar misdemeanors) or (b) was a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree of final order enjoining
future violations of, or prohibiting activities subject to, Federal or state
securities laws or finding any violation of such laws. The name, business
address, present principal occupation or employment, five-year employment
history and citizenship of each of the directors and executive officers of
the Purchaser are set forth in Schedule I.
10. SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by the Purchaser to acquire the
tendered Class A Shares pursuant to the Offer and to pay fees and expenses
related to the Offer is estimated not to exceed approximately $1,136,000. The
Purchaser expects to obtain the funds required to consummate the Offer with
funds provided through capital contributions and, in the case of fees and
expenses, advances made by its members. The members of the Purchaser expect
to fund any necessary capital contributions and advances to the Purchaser
with personal funds. See Section 9.
11. CONTACTS WITH THE COMPANY; BACKGROUND OF THE OFFER
The Manager and Investors have followed the business activities of
the Company for some time.
On November 11, 1998, the Manager met with Xxxx Xxxxxx, President,
Chief Executive Officer and Chairman of the Board of the Company to present a
general outline of a proposed acquisition and reorganization of the Company.
In general, the Manager proposed a cash tender offer for all of the
outstanding Class A Shares. As part of this proposal, the Manager also
discussed with Mr. Xxxx Xxxxxx his expectation that following the
consummation of such tender offer, the Purchaser might propose a transaction
in which the Company might deregister its registration with the Commission,
become a wholly-owned subsidiary of the Purchaser, extend loans to the
Purchaser at a market rate of interest and in which the Purchaser with the
non-tendering stockholders of the Company might form an entity to hold the
Company and seek investment opportunities. Mr. Xxxx Xxxxxx agreed to
evaluate the proposal and have informal discussions with other Board members
to determine the level of interest of the Board.
On November 23, 1998, Mr. Xxxx Xxxxxx requested that the Manager
deliver a general outline of his earlier proposal to Xxxx Xxxxxxx, Director,
Xxx Xxxxxx, Vice President and Director of the Company, and Xxxxxx Xxxx,
counsel to the Company. A copy of the proposal was transmitted to all such
individuals on or about November 23, 1998.
On December 2, 1998, the Manager met with Xxxxxx Xxxxxx and Xxxx X.
Xxxx of HWG to discuss possible transaction structures and procedural
transaction steps.
During the week of December 15, 1998, the Manager, Xx. Xxxxxx
Xxxxxx, Xxxxx Xxxxx, a partner at KPMG, and Mr. Xxxx Xxxxxx discussed certain
structural and tax ramifications of the proposed transaction.
On January 4, 1999, the Manager spoke with Xx. Xxxx regarding the
discussions that occurred during December 1998 and requested that Xx. Xxxx
ascertain what, if any, issues members of the Board might have with his prior
proposals. Xx. Xxxx then prepared a memorandum to the Board and set up a
meeting between the Board, the Manager and certain representatives of each.
On February 1, 1999, the Manager, Xxxxxxx Xxxx, counsel to Manager
and Purchaser, Messrs. Xxx Xxxxxx, Xxxxxxx, Xxxx Xxxxxx and Xxxx met to
discuss a transaction pursuant to which the Purchaser would acquire not less
than a majority of the Class A Shares for $.20 per share and thereafter cause
the Company to become a wholly-owned subsidiary of the Purchaser. In
addition, at that time, the Manager expressed his intention to propose,
following the consummation of any such transaction resulting in the Company
becoming a wholly-owned subsidiary of the Purchaser, that the Company loan
its available cash resources, subject to repayment pursuant to a promissory
note, to Purchaser. The parties agreed that any such loan would be subject
to further negotiation and approval by the Company's Board. The Board
expressed a moderate level of interest in pursuing the transaction. The
parties agreed to proceed with further discussions. The Manager requested
general information regarding the composition of the Company's
securityholders, and the requested information was furnished by the Company
the following week.
On February 11, 1999, the Manager delivered by facsimile to all of
the members of the Board and Xx. Xxxx a letter outlining the terms of a
proposed business transaction calling for the acquisition by the Purchaser of
at least a majority of the outstanding Class A Shares at a cash price of $.20
per share, and requested Board approval of the proposal.
Over the next few weeks, the Manager and the Board negotiated
various terms and provisions contained in the Manager's proposal. The
proposal was revised and recirculated each time. However, on March 5, 1999,
Mr. Xxxx Xxxxxx advised the Manager that Xx. Xxxxxxx resigned from the Board
for reasons unrelated to the proposed transaction. The remaining Board
members and the Manager then discussed the viability of continuing
negotiations and determined to do so.
On March 16, 1999, the parties met again to discuss the transaction
and the possibility of utilizing alternative structures to the one proposed
by the Manager on March 5, 1999. At the end of that meeting, a follow up
meeting was scheduled for March 23, 1999.
On March 23, 1999, the scheduled follow up meeting was held to
discuss the Manager's proposal of March 5, 1999. A consensus was ultimately
reached at the meeting, and the Manager prepared a revised letter of intent
based on the discussions. The revised letter of intent was circulated and on
March 26, 1999, the Manager received a fully-executed copy. The Tender Offer
Agreement is consistent with the terms of such letter of intent in all
material respects.
During the first two weeks of April, initial drafts of the Tender
Offer Agreement, Lock-Up and Voting Agreement and Warrant were circulated
among the parties. After financial information was delivered to the parties
by Xxxx Xxxxxx on April 27, 1999, these documents were revised again.
During the last week of May 1999, revised documents were once again
circulated and negotiated and revised slightly. The documents were finalized
the first week in June 1999, and were executed on June 4, 1999.
On June 11, 1999, the Purchaser commenced the Offer.
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12. PURPOSE OF THE OFFER; THE TENDER OFFER AGREEMENT; THE LOCK-UP AND
VOTING AGREEMENT; THE WARRANT
PURPOSE OF THE OFFER
PURPOSE. The purpose of the Offer is to acquire control of and at
least a majority of the Class A Shares of the Company. There are currently
fewer than 300 holders of record of Class A Shares. The Company has filed
with the Commission Form 15, which filing automatically suspends the
Company's obligation to file certain reports with the Commission and
following 90 days from such filing (or such shorter period as the Commission
may determine) the termination of the Company's registration takes effect.
Accordingly, the Class A Shares will cease to be publicly traded and the
Company will no longer be subject to the reporting requirements of the
Exchange Act.
PLANS FOR THE COMPANY. The Company does not currently have any
operations. Following the completion of the Offer, the Purchaser may propose
one or more transactions with the Company, which may include the lending of
-16-
funds by the Company at competitive interest rates or even the liquidation of
the Company. The Purchaser has not finalized any such plans or proposals.
REVERSE SPLIT. Following the purchase of Class A Shares by the
Purchaser pursuant to this Offer, the Purchaser may propose to the Company
that the Company effectuate a 50,000 to 1 reverse stock split of the Class A
Shares and the Class B Shares, with fractional shares paid in cash at the
Offer Price (on a pre-split basis). The effect of such a reverse stock split
may be to further reduce the number of holders of Class A Shares and Class B
Shares; however, as the Company has already filed a Form 15 with the
Commission, the Company's reporting obligations and registration status
should not be further impacted by the Reverse Split other than by making it
less likely that in the near future the number of stockholders of the Company
would rise to a level that would require the Company to re-register with the
Commission. Such a reduction may further limit the liquidity of the Class A
Shares and the Class B Shares and may have the effect of cashing out
stockholders of the Company that chose not to tender their Class A Shares
pursuant to this Offer. Assuming the Minimum Condition is met, the Purchaser,
with the Class A Shares and Class B Shares subject to the Lock-Up and Voting
Agreement, will have sufficient votes to approve the Reverse Split. See
Section 7.
Except as otherwise described in this Offer to Purchase, the
Purchaser has no current, definite plans or proposals that would relate to,
or result in, any extraordinary corporate transaction involving the Company.
The Tender Offer Agreement provides that, commencing upon the
purchase of the tendered Class A Shares pursuant to the Offer, and from time
to time thereafter, Purchaser will be entitled to designate directors to
serve on the Board of Directors of the Company as described below under "The
Tender Offer Agreement-Board of Directors."
THE TENDER OFFER AGREEMENT
The following is a summary of certain provisions of the Tender Offer
Agreement, which is filed as an Exhibit to the Tender Offer Statement on
Schedule 14D-1 filed with the Purchaser with the Commission in connection
with the Offer (the "Tender Offer Statement") and is incorporated herein by
reference. Such summary is qualified in its entirety by reference to the
Tender Offer Agreement.
THE OFFER. The Tender Offer Agreement provides for the making of the
Offer by the Purchaser. The obligation of Purchaser to accept for payment and
pay for Class A Shares tendered pursuant to the Offer is subject to the
satisfaction of the Minimum Condition and certain other conditions that are
described in Section 14. The Purchaser has agreed that, without the written
consent of the Company, no change in the Offer may be made which changes the
form of consideration to be paid or decreases the price per Class A Share or
the amount of Class A Shares sought in the Offer or which imposes conditions
to the Offer in addition to the Minimum Condition and those conditions
described in Section 14.
RECOMMENDATION. The Tender Offer Agreement states that the Board of
Directors has (i) determined that the Offer is fair to the holders of the
Class A Shares as well as fair to and in the best interests of the Company
and its stockholders, (ii) approved the Tender Offer Agreement and the
transactions contemplated thereby and (iii) resolved to recommend acceptance
of the Offer and approval and adoption of the Tender Offer Agreement by the
Company's stockholders.
INTERIM AGREEMENTS OF THE PURCHASER AND THE COMPANY. Pursuant to the
Tender Offer Agreement, the Company has covenanted and agreed that, during
the period from the date of the Tender Offer Agreement to the Effective Time,
the Company and its subsidiaries will each conduct its operations according
to its ordinary and usual course of business consistent with past practice;
that neither the Company nor any of its subsidiaries will intentionally take
or willfully omit to take any actions that results in or could reasonably be
expected to result in, a Company Material Adverse Effect (as defined in the
Tender Offer Agreement); that the Company will use its reasonable best
efforts to preserve intact the business organization of the Company and each
of its subsidiaries, to keep available the services of its and their present
officers and key employees and consultants and to maintain satisfactory
relationships with customers, agents, suppliers and other persons having
business relationships with the Company or its subsidiaries. Pursuant to the
Tender Offer Agreement, without limiting the generality of the foregoing, and
except as otherwise
-17-
expressly provided in the Tender Offer Agreement, the Company covenanted and
agreed that neither the Company nor any of its subsidiaries will (a) issue,
sell or dispose of additional shares of capital stock of any class (including
the Class A Shares and Class B Shares) of the Company or any of its
subsidiaries, or securities convertible into or exchangeable for any such
shares or securities, or any rights, warrants, or options to acquire any such
shares or securities, other than Class A Shares and Class B Shares issued
upon exercise of options disclosed pursuant to the Tender Offer Agreement, in
each case in accordance with the terms so disclosed; (b) redeem, purchase or
otherwise acquire, or propose to redeem, purchase or otherwise acquire, any
of its outstanding capital stock, or other securities of the Company or any
of its subsidiaries; (c) split, combine, subdivide or reclassify any of its
capital stock or declare, set aside, make or pay any dividend or distribution
on any shares of its capital stock; (d) sell, pledge, dispose of or encumber
any of its assets, except for sales, pledges, dispositions or encumbrances in
the ordinary course of business consistent with past practices; (e) incur or
modify any indebtedness or issue or sell any debt securities, or assume,
guarantee, endorse or otherwise as an accommodation become absolutely or
contingently responsible for obligations of any other person, or make any
loans or advances, other than in the ordinary course of business consistent
with past practices; (f) adopt or amend any bonus, profit sharing,
compensation, severance, termination, stock option, pension, retirement,
deferred compensation, employment or other employee benefit agreements,
trusts, plans, funds, or other arrangements for the benefit or welfare of any
director, officer or employee, or (except for normal increases in the
ordinary course of business that are consistent with past practices and that,
in the aggregate, do not result in a material increase in benefits or
compensation expense to the Company) increase in any manner the compensation
or fringe benefits of any director, officer or employee or pay any benefit
not required by any existing plan or arrangement (including, without
limitation, the granting or vesting of stock options or stock appreciation
rights) or take any action or grant any benefit not expressly required under
the terms of any existing agreements, trusts, plans, funds or other such
arrangements or enter into any contract, agreement, commitment or arrangement
to do any of the foregoing or make or agree to make any payments to any
directors, officers, agents, contractors or employees relating to a change or
potential change in control of the Company; (g) acquire by merger,
consolidation or acquisition of stock or assets any corporation, partnership
or other business organization or division or make any investment either by
purchase of stock or securities, contributions to capital (other than to
wholly-owned subsidiaries), property transfer or purchase of any material
amount of property or assets, in any other person; (h) adopt any amendments
to their respective charters or bylaws or equivalent organizational
documents, except as required by the Tender Offer Agreement; (i) take any
action other than in the ordinary course of business and consistent with past
practices, to pay, discharge, settle or satisfy any claim, liability or
obligation (absolute or contingent, accrued or unaccrued, asserted or
unasserted or otherwise); (j) change any method of accounting or accounting
practice used by the Company or any of its subsidiaries, except for any
change required by reason of a concurrent change in generally accepted
accounting principles; (k) revalue in any respect any of its assets,
including, without limitation, writing down the value of its portfolio or
writing off notes or accounts receivable other than in the ordinary course of
business consistent with past practices; (l) authorize any new capital
expenditure or expenditures that individually, is in excess of $10,000 or, in
the aggregate, are in excess of $50,000; (m) make any tax election, settle or
compromise any federal, state or local tax liability or consent to the
extension of time for the assessment or collection of any federal, state or
local tax; (n) settle or compromise any pending or threatened suit, action or
claim material to the Company and its subsidiaries taken as a whole or
relevant to the transactions contemplated by the Tender Offer Agreement; (o)
enter into any agreement, arrangement or understanding to do any of the
foregoing actions, including any agreement, arrangement or understanding
resulting in or providing for a sale of any assets of the Company (other than
a sale of assets in the ordinary course of business and consistent with past
practice) or a merger or other liquidation, sale or disposition of the
Company; (p) voluntarily take any action or willfully omit to take any action
that could make any representation or warranty of the Company in the Tender
Offer Agreement untrue or incorrect in any material respect at any time,
including as of the date of the Tender Offer Agreement and as of the time of
consummation of the Offer, as if made as of such time.
CONFIDENTIALITY. Pursuant to the Tender Offer Agreement, the
Purchaser covenanted and agreed that the Purchaser will hold and will cause
its consultants and advisors to hold in confidence, unless compelled to
disclose by judicial or administrative process or, in the written opinion of
its legal counsel, by other requirements of law, all documents and
information concerning the Company and its subsidiaries furnished to the
Purchaser in connection with the transactions contemplated by the Tender
Offer Agreement (except to the extent that such information can be shown to
have been (i) previously known by the Purchaser from sources other than the
Company, or its directors, officers, representatives or affiliates, (ii) in
the public domain through no fault of the Purchaser or (iii) later lawfully
acquired
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or the Purchaser on a non-confidential basis from other sources who are not
known by the Purchaser to be bound by a confidentiality agreement or
otherwise prohibited from transmitting the information to the Purchaser by a
contractual, legal or fiduciary obligation) and will not release or disclose
such information to any other person, except its directors, officers, agents,
employees, consultants and advisors in connection with the Tender Offer
Agreement and the transactions contemplated thereby. The Purchaser will be
deemed to have satisfied its obligation to hold such information confidential
if it exercises the same care as it takes to preserve confidentiality for its
own similar information.
NONSOLICITATION. The Tender Offer Agreement provides that the
Company shall not, directly or indirectly, through any officer, director,
employee, representative or agent of the Company or any of its subsidiaries,
solicit or encourage (including by way of furnishing information) the
initiation of any inquiries or proposals (each an "Acquisition Proposal")
regarding a Third Party Acquisition (as defined below). Provided that nothing
in the Tender Offer Agreement shall prevent the Board of Directors if it
determines in good faith, after consultation with, and the receipt of advice
from, outside counsel, that it is required to do so in order to discharge
properly its fiduciary duties, from considering, negotiating, approving and
recommending to the stockholders of the Company an unsolicited bona fide
written Acquisition Proposal which the Board of Directors determines in good
faith (after consultation with its financial advisors and legal counsel)
would result in a transaction more favorable to the Company's stockholders
than the transaction contemplated by the Tender Offer Agreement (any
Acquisition Proposal meeting such criterion, being referred to as a "Superior
Proposal"). Provided further that nothing in the Tender Offer Agreement shall
prohibit the Company from complying with Rules 14d-9 and 14e-2 under the
Exchange Act with respect to any other tender offers. The Company must
promptly, but in no event later than 24 hours, notify the Purchaser after
receipt of any Acquisition Proposal or any request for nonpublic information
relating to the Company or any of its subsidiaries in connection with an
Acquisition Proposal or for access to the properties, books or records of the
Company or any subsidiary by any person or entity that informs the Board of
Directors that it is considering making, or has made, an Acquisition
Proposal. Such notice to the Purchaser has to be made orally and in writing
and must indicate in reasonable detail the identity of the offeror and the
terms and conditions of such proposal, inquiry or contact. If the Board of
Directors receives a request for material nonpublic information by a party
who makes an unsolicited bona fide Acquisition Proposal and the Board of
Directors determines that such proposal, if consummated pursuant to its terms
would be a Superior Proposal, then, and only in such case, the Company may,
subject to the execution of a confidentiality agreement substantially similar
to that then in effect between the Company and the Purchaser, provide such
party with access to information regarding the Company. The Tender Offer
Agreement requires that the Company immediately cease and cause to be
terminated any existing discussions or negotiations with any parties (other
than the Purchaser) conducted before the date of the Tender Offer Agreement
with respect to any Acquisition Proposal, and the Company agreed not to
release any third party from any confidentiality or standstill agreement to
which the Company is a party. The Company also agreed to ensure that the
officers, directors and employees of the Company and its subsidiaries and any
investment banker or other advisor or representative retained by the Company
are aware of these restrictions; and be responsible for any breach of this
restriction by such bankers, advisors and representatives.
ACCESS TO INFORMATION. Between the date of the Tender Offer
Agreement and the Effective Time, the Company will, and will cause its
subsidiaries, officers, directors, employees and agents upon reasonable
notice, to afford to officers, employees and agents of the Purchaser and its
affiliates and the banks, other financial institutional and investment
bankers working with the Purchaser and its respective officers, employees and
agents, complete access at all reasonable times to its officers, employees,
agents, properties, books, records and contracts, and will furnish the
Purchaser and its affiliates and the banks, other financial institutions and
investment bankers working with the Purchaser, all financial, operating and
other data and information as they reasonably request.
BOARD OF DIRECTORS. The Tender Offer Agreement provides that
effective upon purchase and payment for any tendered Class A Shares by the
Purchaser, the Purchaser shall be entitled to designate the following number
of directors on the Company's Board of Directors: (a) in the event the
Purchaser has purchased any Class A Shares pursuant to the Offer, but less
than 51% of the outstanding Class A Shares and Class B Shares combined on a
fully diluted basis, taking into account the convertibility of the Class B
Shares that are not subject to the Lock-Up and Voting Agreement, the
Purchaser shall be entitled to designate one director less than the number of
directors on the Company's Board of Directors immediately prior to such
designation (e.g., if there are two directors serving immediately prior to
such
-19-
designation, the Purchaser shall be entitled to designate a third director)
and (b) in the event the Purchaser has purchased a number of Class A Shares
pursuant to the Offer that represents at least 51% of the outstanding Class A
Shares and Class B Shares combined on a fully diluted basis, taking into
account the convertibility of the Class B Shares that are not subject to the
Lock-Up and Voting Agreement, the Purchaser shall be entitled to designate
the least number of directors necessary to constitute, once designated, a
majority of the Company's Board of Directors. The Company covenanted and
agreed that the Company shall take all action necessary to cause the
Purchaser's designees to be elected or appointed to the Board of Directors,
including, without limitation, increasing the number of directors amending
its bylaws, using its reasonable best efforts to obtain resignations of
incumbent directors, and, to the extent necessary, filing with the Commission
and mailing to its stockholders the information required by Section 14(f) of
the Exchange Act.
The Purchaser covenanted and agreed that the Purchaser will supply
any information with respect to itself and its respective nominees, officers,
directors and affiliates required by Section 14(f) of the Exchange Act and
the rules promulgated thereunder to the Company. Upon written request by the
Purchaser, the Company will use its reasonable best efforts to cause the
designees of the Purchaser to constitute the same percentage of
representation as is on the Board of Directors after giving effect to the
Purchaser's right to designate a certain number of directors of the Company
on (1) each committee of the Board of Directors; (2) the board of directors
of each subsidiary of the Company; and (3) each committee of such
subsidiaries' boards of directors.
INDEMNIFICATION AND INSURANCE. The Purchaser has agreed that all
rights to indemnification now existing in favor of the directors or officers
of the Company and its subsidiaries as provided in their respective
certificates of incorporation or bylaws and pursuant to the contracts
disclosed in the Tender Offer Agreement will, to the extent such rights are
in accordance with applicable law, stay in effect in accordance with their
respective terms. In the event any action, suit, proceeding or investigation
relating to the Tender Offer Agreement or to the transactions contemplated by
the Tender Offer Agreement is commenced by a third party, whether before or
after the Effective Time, the Company and the Purchaser have agreed, subject
to the fiduciary duties of the Board of Directors of the Company and the
Manager of the Purchaser, to cooperate and use all reasonable efforts to
defend against and respond to such action, suit, proceeding or investigation.
BEST EFFORTS. The Tender Offer Agreement provides that the Company
and the Purchaser will each use all reasonable best efforts to consummate the
transactions contemplated by the Tender Offer Agreement.
REPRESENTATIONS AND WARRANTIES. The Tender Offer Agreement contains
various customary representations and warranties of the parties thereto
including, without limitation, representations by the Company as to corporate
power and authority to execute, deliver and consummate the Tender Offer
Agreement, undisclosed liabilities, certain changes or events concerning its
businesses, compliance with applicable law, employee benefit plans,
litigation, environmental liabilities, intellectual property rights and
material contracts.
TERMINATION. The Tender Offer Agreement may be terminated and the
Offer may be abandoned at any time prior to the purchase of the Class A
Shares pursuant to the Offer: (a) by mutual written consent of the Purchaser
and the Company; (b) by the Purchaser or the Company if any court of
competent jurisdiction or other governmental body has issued a final order,
decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the purchase of Class A Shares pursuant to the Offer
and such order, decree, ruling or other action is or has become
nonappealable; (c) by the Purchaser if due to an occurrence or circumstance
that would result in a failure to satisfy any of the conditions set forth in
Section 14 hereto the Purchaser has (i) failed to commence the Offer within
five business days following the date of the initial public announcement of
the Offer, (ii) terminated the Offer, or (iii) failed to pay for the Class A
Shares pursuant to the Offer by October 1, 1999; (d) by the Company if (i)
there has not been a breach of any material representation, warranty,
covenant, or agreement on the part of the Company, and the Purchaser has (A)
failed to commence the Offer within five business days following the date of
the initial public announcement of the Offer, (B) terminated the Offer, (C)
failed to pay for the Class A Shares pursuant to the Offer by October 1, 1999
(provided, however, that any termination pursuant to this clause C must be
made by written notice irrevocably stating the intent of the Company to
terminate the Tender Offer Agreement delivered to the Purchaser by 12:00
noon, Dallas time, on October 1, 1999), or (ii) prior to the purchase of
Class A Shares pursuant to the Offer, a person or group has made a bona fide
offer that the Board of Directors of the Company by a majority vote
determines in its good faith
-20-
judgment and in the exercise of its fiduciary duties, after consultation with
its financial advisors and based as to legal matters on the written opinion
of legal counsel, is obligated by its fiduciary duties under applicable law
to terminate the Tender Offer Agreement, provided that such termination under
this clause (ii) will not be effective until payment of the Termination Fee
(as defined below); (e) by the Purchaser prior to the purchase of Class A
Shares pursuant to the Offer, if (i) there has been a breach (which breach is
not cured or not capable of being cured prior to the earlier of (A) ten days
following notice to the Company by the Purchaser of such breach or (B) two
business days prior to the expiration date of the Offer, as extended from
time to time pursuant to the terms of the Tender Offer Agreement) of any
representation or warranty on the part of the Company having a Company
Material Adverse Effect or materially adversely affecting or delaying the
ability of the Purchaser to consummate the Offer or the Company to effectuate
the Reverse Split, (ii) there has been a breach (which breach is not cured or
not capable of being cured prior to the earlier of (A) ten days following
notice to the Company by the Purchaser of such breach or (B) two business
days prior to the expiration date of the Offer, as extended from time to time
pursuant to the terms of the Tender Offer Agreement) of any covenant or
agreement on the part of the Company resulting in a Company Material Adverse
Effect or materially adversely affecting or delaying the ability of the
Purchaser to consummate the Offer or the Company to effectuate the Reverse
Split, (iii) the Company engages in negotiations with any person or group
(other than the Purchaser) that has proposed a Third Party Acquisition with
certain excepts; (iv) the Company enters into an agreement, letter of intent
or arrangement with respect to a Third Party Acquisition, (v) the Board has
withdrawn or modified (including by amendment of the Schedule 14D-9) in a
manner adverse to the Purchaser its approval or recommendation of the Offer,
the Tender Offer Agreement or the Reverse Split or has recommended another
offer or has adopted any resolution to effect any of the foregoing, or (vi)
the Minimum Condition has not been satisfied by the expiration date of the
Offer and on or prior to such date (A) any person or group (other than the
Purchaser) has made and not withdrawn a public announcement with respect to a
Third Party Acquisition or (B) any person or group (including the Company or
any of its affiliates) other than the Purchaser has become the beneficial
owner of 9.9% (except in bona fide arbitrage transactions) or more of the
Class A Shares and Class B Shares; or (f) by the Company if (i) there has
been a breach (which breach is not cured or not capable of being cured prior
to the earlier of (A) ten days following notice to the Purchaser of such
breach or (B) two business days prior to the expiration date of the Offer, as
extended from time to time pursuant to the terms of the Tender Offer
Agreement) of any representation or warranty on the part of the Purchaser
that materially adversely affects (or materially delays) the consummation of
the Offer or (ii) there has been a material breach (which breach is not cured
or not capable of being cured prior to the earlier of (A) ten days following
notice to the Purchaser of such breach or (B) two business days prior to the
expiration date of the Offer, as extended from time to time pursuant to the
terms of the Tender Offer Agreement) of any covenant or agreement on the part
of the Purchaser that materially adversely affects (or materially delays) the
consummation of the Offer.
TERMINATION FEE. Pursuant to the Tender Offer Agreement, in the
event (A) the Purchaser terminates the Tender Offer Agreement pursuant to
clause (e)(i) through (e)(v) of the preceding paragraph or (B) the Company is
not at such time in material breach of the Tender Offer Agreement and
terminates the Tender Offer Agreement pursuant to clause (d)(ii) of the
preceding paragraph, the Company will reimburse the Purchaser and its
affiliates (not later than one business day after submission of statements
together with reasonable documentation therefor) for all out-of-pocket fees
and expenses actually incurred by any of them or on its behalf in connection
with the Offer and the proposed consummation of all transactions contemplated
by the Tender Offer Agreement (including, without limitation, costs of
advertising, filing fees and fees payable to legal counsel, financial
printers, financing sources, investment bankers, counsel to any of the
foregoing, and accountants); provided, that in the event the Purchaser or its
affiliates seek and obtain payment under these circumstances, the Company
shall not be additionally liable for consequential or speculative
-21-
damages arising from such termination. If, (i) (A) the Purchaser terminates
the Tender Offer Agreement pursuant to clause (e)(i) through (e)(v) of the
preceding paragraph or (B) if the Company terminates the Tender Offer
Agreement pursuant to clause (d)(i)(C) of the preceding paragraph and, within
nine months thereafter, the Company enters into an agreement, letter of
intent or binding arrangement with respect to a Third Party Acquisition, or a
Third Party Acquisition occurs or (ii) the Company terminates the Tender
Offer Agreement pursuant to clause (d)(ii) of the preceding paragraph, then
in either case the Company will reimburse, in cash, the Purchaser within one
business day following the execution and delivery of such agreement or letter
of intent or the entering into of such an arrangement or the occurrence of
such Third Party Acquisition, as the case may be, or simultaneously with such
termination pursuant to clause (d)(ii) of the preceding paragraph for all
out-of-pocket fees and expenses actually incurred by or on behalf of
Purchaser in connection with the Offer and the proposed consummation of all
the transactions contemplated by the Tender Offer Agreement (including,
without limitation, costs of advertising, filing fees and fees payable to
legal counsel, financial printers, financing sources, investment bankers,
counsel to any of the foregoing and accountants) not in excess of $100,000
(the "Termination Fee").
"Third Party Acquisition" means the occurrence of any of the
following events (i) the acquisition of the Company by merger or otherwise by
any person or group other than the Purchaser, or any affiliate of the
Purchaser (a "Third Party"); (ii) the acquisition by a Third Party of any
substantial portion of the business or assets of the Company and its
subsidiaries taken as a whole; (iii) the acquisition by a Third Party of 9.9%
or more of the outstanding Class A Shares or Class B Shares from the Company
or in a transaction or series of related transactions that results in a
change of control of the Company; (iv) the adoption by the Company of a plan
of liquidation or the declaration or payment of an extraordinary dividend; or
(v) the acquisition by the Company or any of its subsidiaries of more than
9.9% of the outstanding Class A Shares or Class B Shares.
COSTS AND EXPENSES. Except as discussed above, the Tender Offer
Agreement provides that all costs and expenses incurred in connection with
the transactions contemplated by the Tender Offer Agreement shall be paid by
the party incurring such costs and expenses.
APPRAISAL RIGHTS. Holders of Class A Shares do not have dissenters'
rights as a result of the Offer.
LOCK-UP AND VOTING AGREEMENT. The following is a summary of certain
provisions of the Lock-Up and Voting Agreement, which is filed as an Exhibit
to the Tender Offer Statement and is incorporated herein by reference. Such
summary is qualified in its entirety by reference to the Lock-Up and Voting
Agreement.
In connection with the execution of the Tender Offer Agreement
certain holders of Class B Shares, which in the aggregate own no Class A
Shares and 3,781,725 Class B Shares, have entered into lock-up and voting
agreements with the Purchaser pursuant to which each such stockholder has
agreed that no Stockholder shall (i) other than gifts to persons who agree to
be subject to the terms of the Lock-Up and Voting Agreement, directly or
indirectly offer for sale, sell, transfer, tender, convert, exchange, pledge,
encumber, assign or otherwise dispose of, or enter into any contract, option
or other arrangement or understanding with respect to or consent to the offer
for sale, sale, transfer, tender, conversion, exchange, pledge, encumbrance,
assignment or other disposition of, any or all of such stockholder's Class A
Shares or Class B Shares or any interest therein; (ii) except as contemplated
by the Lock-Up and Voting Agreement, grant any proxies or powers of attorney,
deposit any Class A Shares or Class B Shares into a voting trust or enter
into a voting agreement with respect to any Class A Shares or Class B Shares;
or (iii) take any action that would make any representation or warranty of
such stockholder contained in untrue or incorrect or would have the effect of
preventing or disabling such stockholder from performing such stockholder's
obligations under the Lock-Up and Voting Agreement.
Each such stockholder has further agreed at any meeting of the
holders of Class A Shares or Class B Shares, however called, or in connection
with any written consent of the holders of Class A Shares or Class B Shares,
such stockholder shall vote (or cause to be voted) the Class A Shares and
Class B Shares held of record or beneficially owned by such stockholder,
whether issued, heretofore owned or hereafter acquired, (i) in favor of a
50,000 to 1 reverse stock split of the Class A Shares and the Class B Shares,
the execution and delivery by the Company of the Tender Offer Agreement and
the approval of the terms thereof and each of the other actions contemplated
by the Tender Offer
-22-
Agreement and the Lock-Up and Voting Agreement and any actions required in
furtherance thereof; (ii) against any action or agreement that would result
in a breach in any respect of any covenant, representation or warranty or any
other obligation or agreement of the Company under the Tender Offer Agreement
or the Lock-Up and Voting Agreement (after giving effect to any materiality
or similar qualifications contained therein); and (iii) except as otherwise
agreed to in writing in advance by Purchaser, against the following actions
(other than the transactions contemplated by the Tender Offer Agreement): (A)
any extraordinary corporate transaction, such as a merger, consolidation or
other business combination involving the Company or its subsidiaries; (B) a
sale, lease or transfer of a material amount of assets of the Company or its
subsidiaries, or a reorganization, recapitalization, dissolution or
liquidation of the Company or its subsidiaries; (C) (1) any change in a
majority of the persons who constitute the board of directors of the Company;
(2) any change in the present capitalization of the Company or any amendment
of the Company's Articles of Incorporation or Bylaws; (3) any other material
change in the Company's corporate structure or business; or (4) any other
action involving the Company or its subsidiaries which is intended, or could
reasonably be expected, to impede, interfere with, delay, postpone, or
materially adversely affect the transactions contemplated by the Lock-Up and
Voting Agreement and the Tender Offer Agreement. Further, each such
stockholder agreed that it shall not enter into any agreement or
understanding with any Person or entity the effect of which would be
inconsistent with or violative of the foregoing provisions and agreements.
WARRANT. The following is a summary of certain provisions of the
Warrant, which is filed as an Exhibit to the Tender Offer Statement and is
incorporated herein by reference. Such summary is qualified in its entirety
by reference to the Warrant.
In order to induce the Purchaser to enter into the Tender Offer
Agreement, simultaneously with the execution of the Tender Offer Agreement,
the Company issued to Purchaser a warrant to purchase from the Company (a)
228,133 Class A Shares (being approximately equal to 4.9% of the number of
Class A Shares that, as of February 22, 1999, were issued and outstanding on
a fully diluted basis giving effect to the exercise of the Warrant and the
exercise of all securities (other than of Class B Shares) convertible into
Class A Shares) and (b) 235,861 Class B Shares (being approximately equal to
4.9% of the number of Class B Shares that, as of February 22, 1999, were
issued and outstanding on a fully diluted basis giving effect to the exercise
of the Warrant and the exercise of all securities convertible into Class B
Shares).
The exercise price per Class A Share and Class B Share under the
Warrant is equal to the Offer Price.
The Purchaser may exercise the Warrant, in whole or in part, at any
time and from time to time prior to December 31, 2003 after the occurrence of
an Exercise Event (as defined below).
An "Exercise Event" shall occur for purposes of the Warrant upon
the occurrence prior to December 31, 1999 of any of the following:
(a) the Company shall have entered into an agreement with a
Third Party pursuant to which such Third Party would acquire in excess
of 9.9% of any class of equity securities of the Company or any
substantial portion of the business or assets of the Company; or
(b) the Board of Directors of the Company or any record or
beneficial holder of more than 5% of the Class B Shares shall recommend
or not oppose any transaction with a Third Party similar to the
transactions contemplated by the Tender Offer Agreement.
13. DIVIDENDS AND DISTRIBUTIONS
Pursuant to the terms of the Tender Offer Agreement, neither the
Company nor any of its subsidiaries will issue, sell, or dispose of
additional shares of capital stock of any class (including the Class A Shares
and Class B Shares) of the Company or any of its subsidiaries, or securities
convertible into or exchangeable for any such shares or securities, or any
rights, warrants or options to acquire any such shares or securities, other
than Class A Shares and Class B Shares issued upon exercise of options
disclosed in the Tender Offer Agreement; (ii) redeem, purchase, or otherwise
acquire,
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or propose to redeem purchase, or otherwise acquire, any of its outstanding
capital stock, or other securities of the Company or any of its subsidiaries;
or (iii) split, combine, subdivide, or reclassify any of its capital stock or
declare, set aside, make, or pay any dividend or distribution on any shares
of its capital stock except for dividends or distributions to the Company and
its subsidiaries from their respective subsidiaries.
14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provisions of the Offer, the Purchaser
will not be required to accept for payment or (subject to any applicable
rules and regulations of the Commission, including Rule 14e-l(c) relating to
the obligation of the Purchaser to pay for or return tendered Class A Shares
promptly after the termination or withdrawal of the Offer) to pay for
tendered Class A Shares, or may terminate or amend the Offer as provided in
the Tender Offer Agreement, or may postpone the acceptance for payment of, or
payment for, tendered Class A Shares (whether or not any other tendered Class
A Shares have been accepted for payment or paid for pursuant to the Offer) if
prior to the expiration of the Offer (i) the Minimum Condition has not been
satisfied; or (ii) if at any time on or after the date of the Tender Offer
Agreement, and at any time before the time of acceptance for payment of any
such tendered Class A Shares, any of the following occurs:
(1) any of the representations or warranties of the Company
contained in the Tender Offer Agreement is not true and correct at and
as of any date prior to the expiration date of the Offer as if made at
and as of such time, except for (i) failures to be true and correct as
could not, individually or in the aggregate, reasonably be expected to
result in a Company Material Adverse Effect; or (ii) failures to comply
as are capable of being and are cured prior to the earlier of (A) ten
days after written notice from the Purchaser to the Company of such
failure or (B) two business days prior to the expiration date of the
Offer;
(2) the Company has failed to comply with any of its
obligations under the Tender Offer Agreement, except for (i) failures
to so comply as could not, individually or in the aggregate, reasonably
be expected to result in a Company Material Adverse Effect; and (ii)
failures to comply as are capable of being and are cured prior to the
earlier of (A) ten days after written notice from the Purchaser to the
Company of such failure or (B) two business days prior to the
expiration date of the Offer;
(3) the Board of Directors of the Company has withdrawn or
modified in any respect adverse to the Purchaser its recommendation of
the Offer or taken any position inconsistent with such recommendation;
(4) the Tender Offer Agreement has been terminated in
accordance with its terms;
(5) the Company has reached an agreement with the
Purchaser that the Offer be terminated or amended;
(6) any state, federal or foreign government or governmental
authority has taken any action, or proposed, sought, promulgated or
enacted, or any state, federal or foreign government or governmental
authority or court has entered, enforced or deemed applicable to the
Offer or the transactions contemplated by the Tender Offer Agreement,
any statute, rule, regulation, judgment, order or injunction that is
reasonably likely to (i) make the acceptance for payment of, the
payment for or the purchase of some or all of the tendered Class A
Shares and the Class B Shares illegal or otherwise restrict, materially
delay, prohibit consummation of or make materially more costly, the
Offer or the Reverse Split, (ii) result in a material delay in or
restrict the ability of the Purchaser, or render the Purchaser unable,
to accept for payment, pay for or purchase some or all of the tendered
Shares in the Offer or for the Company to effectuate the Reverse Split,
(iii) require the divestiture by, the Purchaser or the Company or any
of their respective subsidiaries or affiliates of all or any material
portion of the business, assets or property of any of them or any Class
A Shares or Class B Shares, or impose any material limitation on the
ability of any of them to conduct their business and own such assets,
properties and Class A Shares and Class B Shares, (iv) impose material
limitations on the ability of the Purchaser to acquire or hold or to
exercise effectively all rights of ownership of the Class A Shares or
Class B Shares, including the right to vote any Class A Shares or the
Class B Shares acquired by either of them on
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all matters properly presented to the stockholders of the Company or
(v) impose any limitations on the ability of the Purchaser or any of
its respective subsidiaries or affiliates effectively to control in
any material respect the business or operations of the Company, the
Purchaser or any of their respective subsidiaries or affiliates;
(7) any change (or any condition, event or development
involving a prospective change) has occurred or been threatened in the
business, properties, assets, liabilities, capitalization,
stockholders' equity, financial condition, operations, licenses or
franchises, results of operations or prospects of the Company or any of
its subsidiaries, that could reasonably be expected to result in a
Company Material Adverse Effect;
(8) there has occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market or quotations for shares
traded thereon as reported by the Nasdaq or otherwise, (ii) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States (whether or not mandatory), (iii)
a commencement of a war or armed hostilities or other national or
international calamity directly or indirectly involving the United
States, (iv) any limitation (whether or not mandatory) by any
governmental authority on the extension of credit by banks or other
financial institutions, (v) after the date of the Tender Offer
Agreement, an aggregate decline of at least 25% in the Dow Xxxxx
Industrial Average or Standard & Poor's 500 Index or a decline in
either such index of 12 1/2% in any 24-hour period, or (vi) in the case
of any of the occurrences referred to in clauses (i) through (iv)
existing at the time of the commencement of the Offer, in the
reasonable judgment of the Purchaser, a material acceleration or
worsening thereof;
(9) any person or group other than the Purchaser and its
affiliates has entered into a definitive agreement or an agreement in
principle with the Company with respect to a tender offer or exchange
offer for any Class A Shares or Class B Shares or a merger,
consolidation or other business combination or acquisition with or
involving the Company or any of its subsidiaries; or
(10) any material approval, permit, authorization, consent or
waiting period of any domestic or foreign, governmental, administrative
or regulatory entity (federal, state, local, provincial or otherwise)
has not been obtained or satisfied on terms satisfactory to the
Purchaser in its sole discretion;
that, in the good faith judgment of the Purchaser, makes it inadvisable to
proceed with the Offer or with such acceptance for payment of, or payment
for, tendered Class A Shares or to proceed with the Reverse Split.
The foregoing conditions are for the sole benefit of the Purchaser
and may be asserted by the Purchaser regardless of the circumstances giving
rise to any such condition or may be waived by the Purchaser in whole or in
part at any time and from time to time in its sole discretion (subject to the
terms of the Tender Offer Agreement). The failure by the Purchaser at any
time to exercise any of the foregoing rights will not be deemed a waiver of
any such right, the waiver of any such right with respect to particular facts
and circumstances will not be deemed a waiver with respect to any other facts
or circumstances and each such right will be deemed an ongoing right that may
be asserted at any time and from time to time.
15. CERTAIN LEGAL MATTERS; REGULATORY MATTERS
Based on a review of publicly available filings made by the Company
with the Commission and other publicly available information concerning the
Company, the Purchaser is not aware of any license or regulatory permit that
appears to be material to the business of the Company and its subsidiaries,
taken as a whole, that might be adversely affected by the Purchaser's
acquisition of Class A Shares as contemplated herein or of any approval or
other action, except as otherwise described in this Section 15, by any
governmental entity that would be required for the acquisition or ownership
of Class A Shares by the Purchaser as contemplated herein. Should any such
approval or other action be required, the Purchaser currently contemplates
that such approval or other action will be sought. While, except as otherwise
expressly described in this Section 15, the Purchaser does not presently
intend to delay the acceptance for payment of or payment for Class A Shares
tendered pursuant to the Offer pending the outcome of any such matter, there
can be no assurance that any such approval or other action, if needed, would
be obtained or would be obtained without
-25-
substantial conditions or that failure to obtain any such approval or other
action might not result in consequences adverse to the Company's business or
that certain parts of the Company's business might not have to be disposed of
if such approvals were not obtained or such other actions were not taken.
Because of the failure of such approvals or other actions or because of
conditions to be imposed in connection with such approvals or other actions,
the Purchaser could decline to accept for payment or pay for any Class A
Shares tendered. See Section 14 for certain conditions to the Offer.
STATE TAKEOVER LAWS. A number of states throughout the United States
have enacted takeover statutes that purport, in varying degrees, to be
applicable to attempts to acquire securities of corporations that are
incorporated or have assets, stockholders, executive offices or places of
business in such states. In Xxxxx x. MITE Corp., the Supreme Court of the
United States held that the Illinois Business Takeover Act, which involved
state securities laws that made the takeover of certain corporations more
difficult, imposed a substantial burden on interstate commerce and therefore
was unconstitutional. In CTS Corp. v. Dynamics Corp. of America, however, the
Supreme Court of the United States held that a state may, as a matter of
corporate law and, in particular, those laws concerning corporate governance,
constitutionally disqualify a potential acquiror from voting on the affairs
of a target corporation without prior approval of the remaining stockholders,
provided that such laws were applicable only under certain conditions.
Section 203 of the DGCL limits the ability of a Delaware corporation
to engage in business combinations with "interested stockholders" (defined as
any beneficial owner of 15% or more of the outstanding voting stock of the
corporation) unless, among other things, the corporation's board of directors
has given its prior approval to either the business combination or the
transaction which resulted in the stockholder becoming an "interested
stockholder." The Company's Board of Directors has approved the Tender Offer
Agreement and the Purchaser's acquisition of tendered Class A Shares pursuant
to the Offer and, therefore, Section 203 of DGCL is inapplicable to the Offer.
Based on information supplied by the Company, the Purchaser does not
believe that any state takeover statutes purport to apply to the Offer. The
Purchaser has not currently complied with any state takeover statute or
regulation. The Purchaser reserves the right to challenge the applicability
or validity of any state law purportedly applicable to the Offer and nothing
in this Offer to Purchase or any action taken in connection with the Offer is
intended as a waiver of such right. If it is asserted that any state takeover
statute is applicable to the Offer and an appropriate court does not
determine that it is inapplicable or invalid as applied to the Offer, the
Purchaser might be required to file certain information with, or to receive
approvals from, the relevant state authorities, and the Purchaser might be
unable to accept for payment or pay for Class A Shares tendered pursuant to
the Offer or be delayed in consummating the Offer. In such case, the
Purchaser may not be obliged to accept for payment or pay for any Class A
Shares tendered pursuant to the Offer.
ANTITRUST. The Company and the Purchaser do not believe that the
reporting requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act") require the filing by the Purchaser of a
Notification and Report Form with respect to the Offer. As such, no waiting
period under the HSR Act is applicable to the Offer. Notwithstanding the
foregoing, if the Antitrust Division or the FTC raises substantive issues in
connection with the Offer, the parties may engage in negotiations with the
relevant governmental agency concerning possible means of addressing those
issues and may agree to delay consummation of the transaction while such
negotiations continue.
The FTC and the Antitrust Division frequently scrutinize the
legality under the antitrust laws of transactions such as the Purchaser's
proposed acquisition of the Company. At any time before or after the
Purchaser's purchase of tendered Class A Shares pursuant to the Offer, the
Antitrust Division or FTC could take such action under the antitrust laws as
it deems necessary or desirable in the public interest, including seeking to
enjoin the purchase of tendered Class A Shares pursuant to the Offer or
seeking the divestiture of Class A Shares acquired by the Purchaser or the
divestiture of substantial assets of the Purchaser, or the Company or its
subsidiaries. Private parties may also bring legal action under the antitrust
laws under certain circumstances. There can be no assurance that a challenge
to the Offer on antitrust grounds will not be made or, if such a challenge is
made, of the results thereof.
APPRAISAL RIGHTS. No appraisal rights are available in connection
with the Offer.
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"GOING PRIVATE" TRANSACTIONS. The Commission has adopted Rule 13e-3
under the Exchange Act which is applicable to certain "going private"
transactions and which may under certain circumstances be applicable to a
combination following the purchase of Class A Shares pursuant to the Offer in
which Purchaser seeks to acquire the remaining Class A Shares or Class B
Shares not held by it. Xxxxxxxxx believes, however, that Rule 13e-3 will not
be applicable. Rule 13e-3 requires, among other things, that certain
financial information concerning the Company and certain information relating
to the fairness of the proposed transaction and the consideration offered to
minority stockholders in such transaction, be filed with the Commission and
disclosed to stockholders prior to consummation of the transaction.
16. FEES AND EXPENSES
The Purchaser has retained BankBoston, N.A. to act as the Depositary
in connection with the Offer. The Depositary will receive reasonable and
customary compensation for its services, be reimbursed for certain reasonable
out-of-pocket expenses and be indemnified against certain liabilities and
expenses in connection therewith, including certain liabilities under the
federal securities laws.
The Purchaser will not pay any fees or commissions to any broker or
dealer or other person (other than the Information Agent) in connection with
the solicitation of tenders of Class A Shares pursuant to the Offer. Brokers,
dealers, banks and trust companies will be reimbursed by the Purchaser upon
request for customary mailing and handling expenses incurred by them in
forwarding material to their customers.
17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or
on behalf of) holders of Class A Shares in any jurisdiction in which the
making of the Offer or the acceptance thereof would not be in compliance with
the laws of such jurisdiction. The Purchaser is not aware of any jurisdiction
in which the making of the Offer or the tender of Class A Shares in
connection therewith would not be in compliance with the laws of such
jurisdiction. To the extent the Purchaser becomes aware of any state law that
would limit the class of offerees in the Offer, the Purchaser will amend the
Offer and, depending on the timing of such amendment, if any, will extend the
Offer to provide adequate dissemination of such information to holders of
Class A Shares prior to the expiration of the Offer. In any jurisdiction the
securities, blue sky or other laws of which require the Offer to be made by a
licensed broker or dealer, the Offer is being made on behalf of the Purchaser
by one or more registered brokers or dealers licensed under the laws of such
jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER NOT CONTAINED HEREIN OR IN THE
LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
The Purchaser has filed with the Commission the Tender Offer
Statement pursuant to Rule 14d-3 under the Exchange Act, furnishing certain
additional information with respect to the Offer. In addition, the Company
has filed with the Commission the Schedule 14D-9 pursuant to Rule 14d-9 under
the Exchange Act, setting forth its recommendation with respect to the Offer
and the reasons for such recommendation and furnishing certain additional
related information. Such statements and schedules and any amendments
thereto, including exhibits, should be available for inspection and copies
should be obtainable in the manner set forth in Sections 8 and 9 (except that
they will not be available at the regional offices of the Commission).
GAP CAPITAL, L.L.C.
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SCHEDULE I
MANAGER OF THE PURCHASER
1. MANAGER OF THE PURCHASER. The name, business address, present
principal occupation or employment and five-year employment history of the
sole Manager of the Purchaser is set forth below. The business address of
such Manager is 0000 Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000. The
Manager listed below is a citizen of the United States.
POSITION WITH PURCHASER; PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND BUSINESS ADDRESS 5-YEAR EMPLOYMENT HISTORY; OUTSIDE DIRECTORSHIPS
----------------------------------- -----------------------------------------------------------------------------
Xxxxx X. Xxxxx Xx. Xxxxx has been the sole Manager of the Purchaser since its formation in
May 1999. Xx. Xxxxx also acts as and has been the managing partner of
Harvard Capital, L.L.C., a private company, since its formation in 1995,
and in that capacity has been engaged in investments in financial
obligations, operating companies, and real estate. From 1991 to 1994, Xx.
Xxxxx was the President and part owner of U.S. Recovery, Inc., which
engaged in investments in real estate, financial obligations, and operating
companies. He served as a Director of CBQ, Inc., a publicly traded
Colorado corporation, from November 19, 1998 to April 30, 1999. He is not
presently serving on the Board of any publicly traded companies, but does
serve on the Boards of operating companies in which he, Harvard Capital,
L.L.C. or U.S. Recovery, Inc. have investments. Xx. Xxxxx received a
degree in business for Southern Methodist University in 1975 and a Juris
Doctorate from Texas Tech School of Law in 1978. He is licensed to
practice law in the State of Texas.
The Letter of Transmittal, certificates for Class A Shares and any
other required documents should be sent or delivered by each stockholder of
the Company or such stockholder's broker, dealer, bank, trust company or
other nominee to the Depositary at one of its addresses set forth below.
THE DEPOSITARY FOR THE OFFER IS:
BankBoston, N.A.
BY OVERNIGHT COURIER: BY MAIL DELIVERY: BY HAND:
BankBoston N.A. BankBoston, N.A. Securities Transfer and
c/o EquiServe c/o EquiServe Reporting Services, Inc.
Corporate Actions Corporate Actions c/o EquiServe
000 Xxxxxx Xxxxxx, XX 45-01-40 P.O. Box 8029 000 Xxxxxxx Xxxxxx, Xxxxxxxx
Xxxxxx, XX 00000 Xxxxxx, XX 00000-8029 New York, NY 10038
FOR INFORMATION:
Call (000) 000-0000
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Questions and requests for assistance or for additional copies of
this Offer to Purchase, the Letter of Transmittal and the Notice of
Guaranteed Delivery may be directed to the Purchaser at the telephone numbers
and location listed below. You may also contact your broker, dealer, bank,
trust company or other nominee for assistance concerning the Offer.
GAP Capital, L.L.C.
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
(000) 000-0000
Attn: Xxxxx X. Xxxxx, its Manager
