Case 1:04-cv-00725-RPM
Document 41-12
Filed 07/01/2005
Page 1 of 21
(b)
the historical market price and recent trading activity of the Shares, including the fact
that the $8.00 per Share offer represents a substantial premium over the Nasdaq trading price of the
Shares prior to announcement of the self tender transaction; the fact that the interested directors refrained from voting on the transactions at meetings (c) of our Board at which the transactions were approved and did not place any limitation on the procedures followed by the independent directors, or the materials and infomation sought by the independent directors from management and Tucker Anthony, to evaluate the proposed transactions; the opinion of Tucker Anthony to our Board that the Purchase Price to be offered is fair (d) to all the stockholders (other than the Schaden Stockholders) from a financial point of view; and the report and analysis presented by Tucker Anthony that included discussion and analysis of historical trading performance of the Shares, comparable company analysis and discounted free cash flow analysis based on the Company's historical and projected operating results, as well as the opinion of Tucker Anthony that the Company's total assets would exceed its total liabilities plus preferred stock liquidation preferences after closing of the self tender transaction; (e) the market price for the Shares as compared to the performance of the Company;
the very small stockholder base of the Company, as indicated by our approximately 150 (f) stockholders of record; the fact that we have not paid a cash dividend since our inception to our stockholders, (g) and the expectation that no such cash dividends are expected to be paid in the foreseeable future;
the lack of credible buyers of the Company and financial market conditions. including (h) that the Schaden Stockholders indicated they have no interest in selling their Shares to a third party in the foreseeable future, which made pursuit of other strategic alternatives (such as a sale of the Company as a going concern) impracticable; and
the intention of the Schaden Stockholders to continue the business as a going concern, (i) which makes any mideration of liquidation of the Company or values that ultimately might be obtained from such a liquidation highly speculative.
With respect to the maners contained in the opinion of Tucker Anthony, our Board of Directors reviewed the report and adopted the analysis mtained therein and considered the other factors set forth herein in determining that the Offer is fair. In light of the number and variety of factors that our Board considered in connection with their evaluat~on the Offer. they did not find it practicable to assign of h n. relatwe weights to t e foregoing factors a d accordingly, did not do so.
h connection with its dehberations, our Board of Directors did not consider, and did not request that Tucker Anthony evaluate, the Company's liquidation value. Our Board did not view the Company's hquidation value to be a relevant measure of valuation given that the Purchase Price exceeded the book value per Share of the Company on June 30. 2000, and it was our Board's view that the Company is more valuable as a going concern than its book value of $0.85 per Share as of June 30,2000 based on Shares outstanding at that time.
Case 1:04-cv-00725-RPM
Document 41-12
Filed 07/01/2005
Page 2 of 21
The Schaden ~t&kholdersalso believe the Offer is fair to you based on-(i) the conclusions of, and approval of our Board of Directors, as well as the basis therefor, which conclusions and basis, as set forth above, are incorporated by reference herein and (ii) notwithstanding the fact that the Tucker Anthony opinion was provided for the information and assistance of our Board of Directors and that the Schaden Stockholders are not entitled to rely on such opinion, the fact that our Board of Directors had received the written opinion of Tucker Anthony that the offer price of $8.00 in cash was fair, f o a rm financial point of view, to all other stockholders. The Schaden Stockholders adopted the analysis of our Board of Directors in determining that the Offer is fair, from a financial point of view, to YOU. The Schaden Stockholders did not find it practical to, and did not, quantify or otherwise attach relative weights to the specific factors they considered
4.
Opinion of Tucker Anthony
Tucker Anthony was engaged to render an opinion to our Board of Directors as to the fairness,
fsom a financial point of view, of the proposed Purchase Price of $8.00 per Share, net to the seller in cash
(the "Initial Offer"), to all of the Company's stockholders (other than the Schaden Stockholders). See "Special Factors-Background and Purpose of the Offer; Certain Effects of the Offer, Plans of the Company After the Offer."
On October 9, 2000, in connection with our Board of Directors' evaluation of the Initial Offer, Tucker Anthony made a presentation to our Board with respect thereto (the "Report"). As part of the presentation, Tucker Anthony reviewed with our Board certain of the information and financial data described below. Final copies of the Report dated October 9, 2000 were delivered to our Board in connection with its evaluation of the Initial Offer.
Tucker Anthony delivered its written opinions to our Board of Directors dated November 12, 2000 (the "Tucker Anthony Opinion"). A copy of the Tucker Anthony Opinion, which sets forth the assumptions made. matters considered and limitations of review undertaken by Tucker Anthony, is attached as Schedule I1 attached hereto. No limitations were imposed by the Company or our Board of Directors on the scope of the Tucker Anthony investigation or the procedures to be followed by Tucker Anthony in rendering the Tucker Anthony Opinion, except that Tucker Anthony was not authorized to solicit, and did not solicit, any indications of interest f o any third party with respect to a purchase of all or a part of the rm Company's business. The Tucker Anthony Opinion does not address nor should it be construed to address the relative merits of t e Offer and the Secocld-Step Transaction with any alternative business strategy h that may be available to the Company. In arriving at the Tucker Anthony Opinion, Tucker Anthony did not ascribe a specific range of value to the Cmpany. but rather made its d e t e h t i o n as to the fairness, from a financial point of view, of the consideration to be offered to all of the Company's stockholders (other than the Schaden Stockholders) in the Initial Offer on the basis of the financial and comparative analyses described below.
THE TUCKER ANTHONY OPINION IS FOR THE USE AND BENEFIT OF OUR BOARD OF DIRECTORS AND WAS RENDERED TO THEM IN CONNECTION WITH THEIR CONSIDERATION OF THE INITIAL OFFER AND IS NOT INTENDED TO BE AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY STOCKHOLDER AS TO WHETHER OR NOT
Case 1:04-cv-00725-RPM
Document 41-12
Filed 07/01/2005
Page 3 of 21
TO TENDER SHARES UNDER THE TERMS AND CONDITIONS OFFERED TO SUCH STOCKHOLDER IN THE OFFER.
Our Boa@ of Directors engaged Tucker Anthony to render the opinion referred to above because Tucker Anthony regularly engages in the valuation of businesses and their securities. Tucker Anthony is an investment bank whose corporate finance activities are focused on small- to middle-market companies. Tucker Anthony provides a full line of investment banking services to its clients, ranging from merger and acquisition services, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements and valuations for corporate and other purposes. Our Board requested proposals from two other investment banking firms and decided to retain Tucker Anthony based on our Board's evaluation of al the proposals. l The following paragraphs summarize the financial and comparative analyses performed by Tucker Anthony in connection with its opinion. The summary does not represent a complete description of the analyses performed by Tucker Anthony. In amving at the Tucker Anthony Opinion, Tucker Anthony: (a) reviewed certain publicly available historical financial and operating data concerning the Company including the Annual Reports to Stockholders and Annual Reports on Form 10-KSB for the nine months ended September 30, 1999 and the previous five years ended December 3 1. and the Quarterly Reports on Form 10-QSB filed with the Commission for the three quarterly periods ended December 3 1, 1999, March 3 1, 2000 and June 30, 2000; (b) reviewed certain projected financial information prepared by management of the Company; (c) reviewed certain publicly available information concerning the Company; (d) conducted discussions with the senior management of the Company and consultants to the Company concerning the Company's business prospects and historical financial results and projected financial information as presented and described in (a), (b) and (c) above; (e) conducted discussions with the Board of Directors of the Company; (f) reviewed the draft financing document by and between the Company, several of the and Company's subsidiaries, and Levine Le~chman the ancillary documents related thereto; (g) reviewed the Offer to Purchase and the related draft Letter of Transmittal; and (h) performed various financial analyses, as Tucker Anthony deemed appropriate. of the Company using generally accepted analytical methodologies.
In amving at the Tucker Anthony Opinion. Tucker Anthony assumed and relied on the accuracy and completeness of the financial information provided by the Company and other information used by Tucker Anthony without assUlllLng any responsibility for independent verification of such information and further relied on the assurances of management of the Company that they were not aware of any facts that would make the mformat~on prov~ded the Company inaccurate or misleading. With respect to the hy financial projections of the Company. Tucker Anthony assumed that such projections were prepared in good faith in accordance with industry practlcc (XI a basis reflecting the best currently available estimates and judgments of the management of thc Company as to the future financial performance of the Company. In amving ar the Tucker Anrhony Opmion. Tucker Anthony conducted a limited physical inspection of the properties and facilitieq of the Company and did not make any evaluationk or appraisals of the assets or liabilities of the Cumpany and was not presented with any such appraisal. The Tucker Anthony Opllzlon was necessarily based on financial. economic, market and other conditions as they exlsted on, and could be evaluated as of, its date.
Case 1:04-cv-00725-RPM
Document 41-12
Filed 07/01/2005
Page 4 of 21
The preparation of an opinion as to the fairness of the Purchase Price, from a financialpoint of view, involves various determinations as to the most appropriate and relevant methods of financial and comparative analysis and the application of those methods to the particular circumstances; therefore, such an opinim is not readily susceptible to summary description Furthermore. in amving at the Tucker Anthony Opinion, Tucker Anthony did not attribute any particular weight to the analyses or factors considered by it, but rather made qualitative judgments as to the s i @ ~ ; ~ ~and relevancy of each ce analysis and factor. Accordingly, Tucker Anthony believes that its analyses must be considered as a whole and that considering any portions of its analyses and of the factors considered by it, without considering al analyses and factors, could create a misleading or incomplete view of the process l underlying the Tucker Anthony Opinion. In its analyses, Tucker Anthony made numerous assumptions with respect to industry performance, general business and economic conditions, and other matters, many of which are beyond the Company's control. Any estimates contained in these analyses are n t necessarily o indicative of actual values or predictive of future results or values, which may be significantly more or less favorablethan as set forth therein Additionally, analyses relating to the value of businesses do not purport to be appraisals or to reflect the prices at which businesses actually may be sold A~rdingly, such analyses and estimates are inherently subject to substantial uncertainty. Subject to the foregoing, the following is a summary of the material financial analyses presented by Tucker Anthany to our Board of Directors on November 12,2000.
.
In connection with the Tucker Anthony Opinion, Tucker Anthony performed certain financial and comparative analyses. Tucker Anthony considered several methods to evaluate the fairness of the Purchase Price per Share. These methods included (i) public company trading analysis; (ii) selected transaction analysis, including mergers and acquisitions transactions and other take private transactions; (iii) hypothetical implied trading values based on sales, EBITDA and earnings; (iv) premiums paid in this transaction compared to average premiums paid; (v) unleveraged after-tax discounted cash flow valuation analysis; and (vi) leveraged b u y a t / recapitalization analysis (which is intended to deter& the value a financial investor might be. willing to pay to acquire all or, as in the case of the Transaction or other recapitalization transactions, a conmlling and substantial portion of the Company's equity if it were 5-year financial forecast provided interested in pursuing such a transaction). Tucker Anthony utilized by the Company's management ("Management Forecast") and an adjusted forecast ("Sensitivity Case Projections") derived by Tucker Anthony from the Management Forecast incorporating historical performance, industry trends a d profitability levels of comparable publicly traded companies (See n Comparable Company Analysis below). These analyses were considered relevant to a financial review of the terms of the Offer to Purchase Agreement and the strategic alternatives available to the Company. At a number of meetings of our Board these analyses were reviewed with our Board. T e material analyses h and their findings are summarized below.
Cornvarable Public Comvanv Trading Analvsis. Tucker Anthony reviewed certain publicly available financial and stock market information relating to 24 selected companies in lines of business believed to be somewhat similar to those of the Company. The companies selected were in the restaurant husiness (collectively, the "Selected Companies"): however. it was noted that there were no public companies with precisely the same mix of businesses or financial condition as the Company. Tucker Anthony reviewed companies with a range of market capitalizations. For the purposes of this analysis. Tucker generally focused on the Selected Companies with market capitalizations of under $100 million (nine companies; "Small Cap") versus the Company's current market capitalization of approximately $20 million. However, trading values for the larger capitalization Selected Companies ("Large Cap") were also considered in Tucker Anthony's analysis. This analysis indicated that the price multiples, based on
Case 1:04-cv-00725-RPM
Document 41-12
Filed 07/01/2005
Page 5 of 21
I
i
i
I
latest 12 months' earnings per share (P/E), ranged from 5 . 0 ~ 1 2 . 1 for the Small Cap Selected to ~ companies,with a median of 11Sx; the P/E multiples for the Large Cap Selected Companies ranged from 6 . 9 ~ 46.4x, with a median of 13.3~.These PIEmultiples for the Small and Large Cap Selected to for companiescompare to a P/Eof 16.4~ the Company, based on management's estimated September 30, The P/E multiple for the Company, based on management's estimated September 30, 2000 2000 earnings and a Purchase Price of $8.00 per share is 19.0~.Based on 2000 year-end estimated d g s per share (based on estimates of First Call Corporation a d t senice that monitors and aa compilations of earnings estimates produced by selkted research analysts regarding companies of interat to investors, for the Selected Companies and management estimates for the Company), the 2000 estimated price earnings multiples ranged from 6 . 4 ~ 29.4~ the Large Cap Selected to for ~ompanies, with a median of 11.9~. compared to a projected 1 3 . 8 for the Company's calendar year as ~ ended December 3 1,2000. Only three of the Small Cap Selected Companies reported a projected P/E multiple, ranging from 3 . 7 ~ 12.9~. a median of 10.0~.The ratio of fr value to latest 12 months' to with im revenue ranged from .08x to 7.08x, with a median of 0 . 3 5 ~ the Small Cap Selected Companies, for compared to 0 . 8 2 ~ the Company, and the ratio of the fim value to latest 12 months' earnings before for interest, taxes, depreciation and amortization (EBITDA) for the Small Cap Selected Companies ranged from 1 . 8 to 11.2x, with a median of 3.7% compared to 5 . 2 for the Company. The ratio of firm value to ~ ~ latest 12 months' revenue ranged fTom 0 . 3 0 ~ 3.52x, with a median of 1.16~ the Large Cap Selected to for Companies and the ratio of the firm value to latest 12 months' earnings before interest, taxes, depreciation to with a and amortization (EBITDA) for the Large Cap Selected Companies ranged from 2 . 6 ~ 21.2~. median of 6.5~.Based on this analysis. Tucker Anthony derived an equity value range for the Company of $5.00 to $7.00 per fully diluted share. Tucker Anthony noted that the Purchase Price of $8.00 was above the indicated range.
-
-
Selected Transactions Analvsis. Tucker Anthony reviewed and analyzed selected publicly available financial, operating and stock market information relating to 19 acquisition transactions in the restaurant industry since 1998 (collectively. the "Selected Transactions"). This analysis indicated that (i) the price multiples for the Selected Transactions. based on larest 12 months' assets, ranged from 0.30~ and 2 . 2 0 ~ with a median of 1.0~. compared to 1 . 0 2 ~ the Company, based on an offer price of as for $8.00 per share for the entire equity interest. (ii) the ratio of firm value to latest 12 months' revenues ranged from .18x to 1.32~ the Selected Transactions. with a median of .74x, compared to a multiple for 1 im of 1-0 x for the Company, and (iii) the ratio of f r value to Latest 12 months' earnings before interest, taxes, depreciation and amortization (EBITDA) for the Selected Transactions ranged from 2 . 9 ~ 10.8x, to with a median of 6.1~. compared to 6 . 4 ~ the Company. Based on this analysis, Tucker Anthony for derived an equity value range for the Company of $6.50 to $8.25 per fully diluted Share. Tucker Anthony noted that the Purchase Price of $8.00 was near the top end of that range. Future Tradina Price Analvsis. Based on the Management Forecast and the Sensitiklty Case Projections of sales. EBITDA and net income, Tucker Anthony calculated the present value of the implied hypothetical future trading values of the Company's coounon stock. Tucker Anthony obtained this by multiplying projected stand-alone sales. EBITDA and earnings per Share for the years ending December 31. 2000, and fiscal years aded September 200 1 and 2002 based on the Management Forecast by multiples derived from the Comparable Companies cumnt trading multiples analysis. The Company's unplied forward stock price was discounted at an quit;! discount rate of 25.0% and 30.0%. The present value of such implied hypothetical future trading values ranged from $6.50 to $8.25 per Share using the Management Forecast and $6.50 to $8.00 per Share using the Sensitivity Case Projections. In connection with this presentation, Tucker Anthony advised our Board that this analysis was not necessarily indicative
Case 1:04-cv-00725-RPM
Document 41-12
Filed 07/01/2005
Page 6 of 21
of future trading ranges and that any estimate of future market prices is speculative and subject to significant uncertainties and contingencies, all of which are difficult to predict and beyond the control of Tucker Anthony. Therefore, the actual uading prices of the Company might be outside the estimated range and would depend on. and fluctuate with, changes in interest rates, market conditions and the condition, results of operations and pmpects. financial and otherwise, of the Company and other factors that generally influence the prices of securities. Tucker Anthony noted that the Purchase Price of $8.00 was near the top of the indicated range.
Premium Analysis. Tucker Anthony analyzed the premium of the Purchase Price t the closing o price of the common stock over the one-day, four-week periods closing prices. This analysis resulted in a range of purchase price premiums for the common stock of (i) 23.08% based on the last trade of the common stock prior to the Fairness Opinion Date ($6.50 per share on October 19, 2000) and (ii) 20.75% based on the closing price of the common stock four weeks prior to the Fairness Opinion Date ($6.63 per share on September 22,2000). Tucker Anthony compared the premiumpaid in the Transaction to those paid in all take private transactions announced d u ~ the 1997 to October 6,2000 time period, as g compiled by the Securities Data Corporation Premiums over the closing stock price four weeks prior to the Fairness Opinion Date ranged from -1.00% to 111.3% during the period, with year-todate 2000 median premium of 23.9%. Premiums over the closing stock price one day prior to the Fairness Opinion Date ranged from -13.60% to 117.50% during the period, with a year-to-date 2000 median premium of 2 1.00%. Tucker Anthony noted that the premiums paid in other transactions were in line with the premium being proposed in the Offer.
Discounted Cash Row Analvsis. Tucker Anthony analyzed the Company's fully diluted per Share value based on an unleveraged a h - t a x discounted cash flow analysis of the projected five-year financial performance of the Company. Tucker Anthony estimated the net present value of the future cash flows of the Company using the Management Forecast and Sensitivity Case Projections covering the period ending September 30.2005 and calculated a terminal value of the Company based on a range of the multiples of projected 2005 EBITDA I conducting this analysis, Tucker Anthony applied discount n rates ranging from 21 % to 22% and terminal value multiples ranging from 5 . 0 ~ 5 . 5 ~ to EBITDA Tucker Anthony derived the range of EBITDA multiples and discount rates on the basis of multiples of EBITDA for public Comparable Companies and estimated risk adjusted cost of capital for the Company. This analysis indicated a discounted cash flow valuation ranging from approximately $12.70 per share to $14.35 per share in the Management Forecast Case. This analysis indicated a discounted cash flow valuation ranging from approximately $10.30 per share to $1 1.75 per share in the Sensitivity Case Projections. Tucker Anthony md that thc Purchase Price of $8.00 was below the indicated range in t both cases. Leveraged Buv-out/Rcca~itahzatim Analvsis. Tucker Anthony prepared an analysis based on the same projections utilized in the discounted cash flow analysis as to the value paid pursuant to a recapitalization transaction. A range of possible acquisrtion prices was derived by reviewing the estimated return on equity mvestrncnt, which would result from a leveraged buy-out based on various ;~ssumptions, including t e financial ratias required by the bank financing and high yield debt markets, h and interest rates. Assurmng tcmunal values at the end of the fifth year following a buy-out transaction to ~ ranging from 5 . 0 ~ 5 . 5 EBITDA and required internal rates of return on equity of 30.0%+, this methodology indicated Lhat a recapitalizat~on transaction could earn a purchaser a market return on their lnvesanent at a Purchase Pnce of $7.00 to $8.00 per Share. Tucker Anthony cautioned our Board that the actual price that a party would be willing to pay in a leveraged buy-out or recapitalization transaction
Case 1:04-cv-00725-RPM
Document 41-12
Filed 07/01/2005
Page 7 of 21
w~ dependent on various factors not included in this methodology and, therefore, that this analysis was not necessarily indicative of actual prices realizable or of rates of return on shares of the common stock retained in the Transaction, which rates of return may be more or less favorable than those indicated in this analysis, are dependent on many contingencies and, therefore, are speculative.
In connection with Tucker Anthony's analysis, it was concluded that following the announcement of the Offer, the stock market valuation of the common stock would be significantly influenced by estimates of the forward-looking pro forma earnings and EBITDA forecasts, if available. Tucker Anthony advised our Board that trading in the post-Transaction common stock for a period following the announcement of the Offer-could be characterized by a redistribution of such securities among the stockholders of the Company immediately preceding the tender offer and other investors, and, accordingly, such securities may be subject to downward price pressures during this period resulting in n trading prices below the Purchase Price. I addition, in connection with the presentation, Tucker Anthony advised our Board that any estimate of trading ranges is speculative, and subject to uncertainties and contingencies, all of which are difficult to predict and beyond the control of Tucker Anthony. The price of the Company's stock will be influenced, both positively and negatively, by changes in interest rates, market conditions, the terms of financing for the Transaction, t e condition and prospects, financial and h otherwise, of the Company, management's post-transaction strategy with respect to both the Company's business and the market for the Company's stock and other factors that generally influence the prices of securities. In addition, the reduced float of shares, the potential lack of a public market for the securities and the fact that the Company may not be required to publicly disclose its financial statements to investors may adversely affect the liquidity of these Shares and result in greater volatihty in trading prices following the Effective Time.
The engagement letter between the Company and Tucker Anthony provides that the Company will pay Tucker Anthony a fee of $200,000 upon delivery of the preliminary Tucker Anthony Opiruon, a fee of $200,000 due upon the delivery by Tucker Anthony to our Board of Directors of the find Tucker Anthony Opinion and an advisory fee of $400,000 due upon the closing of the Offer. Ln addition, the engagement letter between the Company and Tucker Anthony provides that the Company will reimburse Tucker Anthony for certain of its out-of-pocket expenses and will indemnify Tucker Anthony and certain related persons against certain liabilities, including liabilities under securities laws. arising out of its engagement.
5.
-
Interests of Certain Persons in the Offer and the Second-Step Transaction
In considering the Offer and the faimcss of the consideration to be received in the Offer and if deemed desirable by us, the Second-Step Transaction. you should be aware that ce& of our officers and directors have interests in the Offer which are described below and which may present them with certain actual or potential conflicts of interest.
As of September 30.2000. the directors and executive officers as a group beneficially owned 1,954,290 Shares. or 58.2% of the Shares. which includes 122,893 Shares issuable upon exercise of outstanding stock options that are currently exerasable. Even if no Shares are tendered in the Offer, the Schaden Stockholders together own more than a majority of the outstanding Shares and, if acting together, will be able to control al maners requlnng approval of the Company's stockholders, including l the election of directors. Richard E. Schaden (President, Chief Executive Officer and director),
Case 1:04-cv-00725-RPM
Document 41-12
Filed 07/01/2005
Page 8 of 21
Richard F. Schaden (Vice President, Secretary and director) and Frederick H. Schaden (a director of the Company) together currently own 5 1.6% of the outstanding Shares. Our Board was aware of these actual and potential d c t s of interest and considered them along with the other mattem described under "Special Factors--Position of Our Board; Fairness of the Offer" and "--Beneficial Ownership of Shares." Each of t e Schaden Stockholders has advised us that he or she does not intend to tender any h Shares pursuant to the Offer. If we purchase 1,456,248 Shares pursuant to the Offer, then after the purchase of Shares pursuant to the Offer, the Schaden Stockholders would beneficially own approximately 100%of the outstanding Shares immediately after the Offer, assuming the exercise or conversion by such persons of their currently exercisable options and Shares of pxkmed stock (in addition, Levine Leichtman will hold warrants to purchase up to 14% of the outstanding Shares of the Company on a fully-diluted basis - see 'The Tender Offer-Financing of the Offer"). In addition, certain of our other employees who are not affiliated with the Schaden Stockholders may not tender their Shares pursuant to the Offer. Except as described herein, based on our records and on information provided to us by our directors, executive officers and subsidiaries, neither the Company nor any associate or subsidiary of the Company nor, to the best of our knowledge, any of our directors or executive officers or any of our subsidiaries, nor any associates or affiliates of any of the foregoing, have effected any transactions involving the Shares during the 60 business days prior to the date hereof. Except as otherwise described herein, neither the Company nor. to the best of our knowledge, any of our affiliates, directors or executive officers are a party to any contract, arrangement, understanding or relationship with any other person relating, dmectly or indirectly, to the Offer with respect to any of our securities, including, but not limited to. any contract. arrangement, understanding or relationship concerning the transfer or the voting of any such securities, joint ventures, loan or option arrangunents, puts or calls, guarantees of loans, guarantees against loss or the giving or withholding of proxies, consents or authorizations.
As part of the Offer, all individuals. other than the Schaden Stockholders, holding stock options will be given the opportunity to surrender thcxsc options in exchange for payment from the Company (subject to any applicable withholding taxes) in cash equal to the product of (x) t e total number of h Shares subjtct to any such stock opuon and (y) the excess of the Purchase Price over the exercise price per Share subject to any such stock option, without any interest thereon None of the Schaden Stockholders will be surrendering stock options owned by them in connection with the Offer. With respect to executive officers (other than executive officers who are Schaden Stockholders), vested options will be treated as described above. and unvested optlons are expected to be exchanged for rights in a stock appreciation plan. As of September 30. 2000, executive officers (other than those who are also Schaden Stockholders) hold vested options to purchase approximately 52,000 Shares and unvested options to purchase approximately 1 10.000 Shares.
Under the CBCA corporations organized under the laws of Colorado are permitted to indemnify their current and former directors. officers. anployees and agents under certain circumstances against cenain liabilities and expenses incurred by than by reason of their serving in such capacities. Our Charter provides that each director and offiur will be indemnified by the Company against liabilities and expenses incurred in connection with any threatened, pending or completed legal action or proceeding to which he or she may be made a party or threatened to be made a party by reason of being a director of the Company or a predecessor company, or serving any other enterprise as a director or officer at the request of the Company. Our Charter provides that. to the fullest extent that limitations on the liability of
Case 1:04-cv-00725-RPM
Document 41-12
Filed 07/01/2005
Page 9 of 21
directors and officers are permitted by the CBCA, no director or officer of the Company shall have any Liability to the Company or its stockholders for monetary damages. The CBCA provides that a c o r p o r a ~ ~ n ' ~ may include a provision that restricts or limits the liability of its directors or officers charter to the corporation or its stockholders for money damages except: (1) to the extent that it is proved that the person actually received an improper benefit or profit in money, property or services for the amount of n the benefit or profit i money, property or services actually received or (2) to the extent that a judgment or other final adjudication adverse to the person is entered in a proceeding based on a finding in the pceeding that the person's action, or failure to act, was the result of active and deliberate dishonesty and was material to the cause of action adjudicated in the proceeding. We have also purchased directors' and officers' liability insurance for the benefit of these persons.
6.
Beneficial Ownership of Shares
The following table sets forth certain information. as of September 30, 2000, regarding the ownership of Shares by each person known by us to be the beneficial owner of more than 5% of the outstanding Shares, each of our directors and executive officers, and all of our executive officers and directors as a group:
Common Stock
Name and Address Owned(])
Common Stock Percentage
Preferred Stock Owned and Percentage
RichardE.Schaden .................... 1415 Larimer Street Denver, CO 80202 Richard F. Schaden .................... 1 1870 Airport Way Broomfield, CO 8002 1 Retail & Restaurant Growth Capital. L.P. .................. 10000 N. Central Expmsway Suite 1060 Dallas. TX 7523 1 Brad k Griffin ........................... Mark L. Bromberg...................... J. Eric Lawrence......................... Frederick H. Schaden.................. John J. T d ............................... od Steven B. Shaffer........................ Robert W. Scqlon ..................... Sue A. Hoover ............................ Roben Elliott..............................
861.177(2)
27.9%
(6)
92 1.470(2)
29.1 9 %
(6)
41 1.177(3)
12.1%
10,000(4)
14.000(4)
16.000(4)
28.000(4) 1.000(4) 27.484(5) 7.459(5) 25.159(5)
0
Case 1:04-cv-00725-RPM
Document 41-12
Filed 07/01/2005
Page 10 of 21
Name and Address
Patrick E. Meyers .......................
Common Stock Owned(]) 26,296(5)
17,718(5)
Common Stock Percentage
Preferred Stock Owned and Percentage
0
John L. Gallivan .........................
* *
58.2%
(6)
A l Executive Officers and l Directors as a Group
(13 persons)................................
1.954.290
E l
*
(1)
Less than 1% of shares outstanding.
The persons named in the table have sole voting power with respect to all shares of common stock shown as beneficially owned by them. A person is deemed to be the beneficial owner of semities that can be acquired by such person within 60 days from the date as of which the table is presented, upon the exercise of options or warrants, or conversion of convertible securities. The record ownership of each beneficial owner is determined by as.wning that options or warrants or mvertible securities that are held by such person and that are exercisable or convemble within 60 days have been exercised or converted. The total outstanding shares used to calculate each beneficial owner's percentage also assumes that such options, warrants or convertible securit~es have been exercised or converted. Our Class A Cumulative Convertible Referred Stock ("Class A Preferred"), Class C Cumulative Convertible Referred Stock ("Class C Preferred") and Class E Cumulative Convertible Referred Stock ("Class E Referred") are currently convemble into our common stock on a 1-for-I basis. Richard E. Schaden and Richard F. Schaden beneficially own, through a voting trust pursuant to which they are joint voting trustees, 773.667 shares of our common stock and 146.000 shares of our Class A Referred. and 4.000 shares of our common stock owned by a family member for which the voting trust holds sole Mting power. The remaming duration of the voting trust agreement is four years, subject to extension. in the table. beneficial ownership of shares, other than the 773.667 shares of cammon stock, have been allocated equally to each of them. Such 773,667 shares of common stock are allocated to Richard F. Schaden in the table. and he has been given a proxy to vote such shares. Richard E. Schaden has withdrawn 773,667 shares of common stock from the voting trust to use to secure a personal loan. subject. however, to an agreement to redeposit those shares into the votsng tmst if they are no longer necessary to secure such loan. Richard E. Schaden. individually. beneficially owns 1,084 shares of our common stock allocated to him under our 40I(k) Plan. 4339 shares of our common stock held in his own name. 5.087 shares of our common stock represented by currently exercisable stock options and 2.000 shares of our common stock owned by a family member for which he holds sole voting power. Richard F. Schaden. individually, beneficially owns 34,000 shares of our Class C Preferred, 4.000 shares of our common stock represented by currently exercisable stock options and 34,803 shares of our Class E Referred. We issued two warrants to RRGC in connection with a loan to us that has since been repaid. One is exercisable for 372.847 shares of common stock at an exercise price of $3.10. subject to adjustment in certain circumstances. The other is exercisable for 38,330 shares of common stock at an exercise price of $5.00 per share, subject to adjustment in certain circumstances.
(2)
(3)
Case 1:04-cv-00725-RPM
Document 41-12
Filed 07/01/2005
Page 11 of 21
(4)
All the shares indicated as owned by Mesas. Lawrence, Bromberg and Todd may be acquired through the exercise of stock options. All the shares indicated as owned by Mesas. Frederick Schaden and G i f nmay be'acquired through the exercise of stock options or conversion of Class C Preferred by the rfi holder. Steven B. Shaffer, individually and through an affiliated entity, beneficially owns 184 shares of common stock allocared to him under our 401(k) plan and 27.300 shares of our common stock. Robert W. Scanlon, individually, beneficially owns 384 shares of our common stock allocated to him under our 4 0 1 0 plan, 1,475 shares of our common stock held in his own name and 5,600 shares of our common stock represented by currently exercisable stock options. Sue A. Hoover, individually, beneficially owns 709 shares of our common stock allocated to her under our 4016) plan, 11,873 shares of our common stuck held in her own name and 12.400 shares of our common stock represented by currently exercisable stock options. Patrick E. Meyers, individually, beneficially owns 323 shares of common stock allocated to h i under our 401(k) plan. 3,973 shares of our common stock held in his own name and 22,000 shares of our common stock represented by currently exercisable stock options. John L. Gallivan, individually, owns 994 shares of our common stock allocated to h m under our 401(k) plan, i 3,445 shares of our common stock held in his own name, 11,806 shares of our common stock ~epresented currently exercisable stock options and 1,473 shares of our Class E Preferred. by The Company has issued and outstanding four classes of Convertible Preferred Stock, the Class A Preferred, Class C Preferred. the Class D Subordinated Convertible Preferred Stock (the "Class I) Referred") and Class E Preferred. There are 146,000 shares of Class A Referred outstanding: 50% are beneficially owned by Richard F. Schaden and 50% are beneficially owned by Richard E. Schaden. There are 167,000 shares of Class C Referred outstanding: 34.000 shares or 20.4% are held by Richard F. Schaden, 5,000 shares or 2.7% are held by Brad A. Griffin and 2,000 shares or 1.1% are held by Frederick H. Schaden. There are 3.000 shares of Class D Referred outstanding. There are 59,480 shares of Class E Referred outstanding: 34,803 shares or 59% are held by Richard F. Schaden and 1,473 shares or 2.5% are held by John L. Gallivan. Among all executive officers and directors as a group. the following preferred shares are beneficially owned: 100% of the Class A Preferred, 41.000 shares or 24.2% of the Class C Preferred and 36.276 shares or 61% of the Class E Preferred. None of these classes of preferred stock are publicly traded or registered under Section 12(b) or 12(g) of the Exchange Act.
(5)
(6)
-
7 .
Fees and Expenses
The following is an estimate of expenses incurred or to be incurred in connection with the Offer. Also see 'The Tender Offer--Fees and Expenses."
Legal Fees ..................................................................... Printing and Mailing....................................................... Filing Fees...................................................................... Investment Banker's Fees ................................................ Levine Leichtman Capital Parmers Fees.......................... Miscellaneous................................................................. TOTAL .............................................................
$
200,000
50,000
5,000 800,000 800,000 245.000
5
2,100,000
Case 1:04-cv-00725-RPM
Document 41-12
Filed 07/01/2005
Page 12 of 21
THE TENDER OFFER
1 .
Terms of the Offer; Expiration Date
Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of such extension or amendment), we will purchase al outstanding l shares of common stock as are validly tendered prior to the Expiration Date (as defined below) and not withdrawn as permitted by "The Tender Offer-Withdrawal Rights" at a price of $8.00 per Share (the a e means Purchase Price, net to the seller in cash without interest thereon. The term "Expiration D t " 1290 midnight, New York City time, on December 11,2000 unless and u t l the Company, in its sole ni discretion shall have extended the period during which the Offer is open in which event the term "Expiration Date" shall mean the latest time a d date at which the Offer, as so extended by the Company, n shall expire. We expressly reserve the right, in our sole discretion, at any time and from time to time, to extend for any reason the period of time during which the Offer is open, including the occurrence of any of the conditions specified in "The Tender Offer--Certain Conditions of the Offer," by giving oral or written notice of such extension to the Depositary. During any such extension, all Shares previously tendered and not withdrawn wiU remain subject to the Offer, subject to the rights of a tendering stockhoIder to withdraw such stockholder's Shares. See 'The Tender Offer--Withdrawal Rights." Subject to the applicable regulations of the Securities and Exchange Commission (the "Commission"). we also expressly reserve the right. in our sole discretion, at any time and from time to time, (i) to delay acceptance for payment of, or. regardless of whether such Shares were theretofore accepted for payment, payment for. any Shares, pcndu~g receipt of any regulatory approval specified in "TheTender Offer--Certain Legal Maners and Re@atory Approvals," (iij to terminate the Offer and not accept for payment any Shares upon the occumnce of any of the conditions specified in 'The Tender Offcr--Certain Conditions of the Offer,"and (iii) to waive any condition or otherwise amend the Offer in any respect, by giving oral or written notice of such delay, termination, waiver or amendment to the Depositary and by making a public announcanent thereof. We acknowledge that (i) Rule 13e4(f) under the Exchange Act requires us to pay the consickration offered or return the Shares tendered promptly after the termination or withdrawal of the Offer and (ii) we may not delay acceptance for payment of, or payment for (except as provided in clause (i) of thc first sentence of this paragraph), any Shares upon the occurrence of any of the conditions specified in 'The Tender Offer--Certain Conditions of the Offer" without extending t e period of time during which the Offer is open. h Any such extension. &lay, termination waiver or amendment wilI be followed as promptly as practicable by public announcement thenof. such announcement in t e case of an extension to be made no h later than 9:00a.m., New York City time. on the next business day after the previously scheduled Expiration Date. Subject to applicable law (including Rules 13e-3(ej(2), l3e-*e)(2) and 13e4(f) under the Exchange Act, which require chat matenal changes be promptly disseminated to stockholders in a manner reasonably designed to inform them of such changes) and without limiting the manner in which we may choose to make any public announcement, we shall have no obligation to publish, advertise or otherurlse communicate any such puhlic announcement other than by issuing a press release to the Dow business wire service. Jones News Service or othcr nat~onal
-
Case 1:04-cv-00725-RPM
Document 41-12
Filed 07/01/2005
Page 13 of 21
If we make a material change in the terms of the Offer or other information concerning the Offer, or if we waive a material condition of the Offer, we will extend the Offer to the extent required by Rules l3e-3(e)(2), 13e-4(e)(2) and 13e-4(fj 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 on 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 ten business days is generally required to allow for adequate dissemination to stockholders and investor response.
If, prior to the Expiration Date, we should decide to decrease the number of Shares beiig sought or to increase or decrease the consideration b e i g offered in the Offer, such decrease in the number of Shares being sought or such increase or decrease in the consideration being offered will be applicable to all stockholders whose Shares are accepted for payment pursuant to the Offer, and, if at the time notice of any such decrease in the number of Shares being sought or such increase or decrease in the consideration being offered is first published, sent or given to holders of such Shares, the Offer is scheduled to expire at any time earlier than the period ending on the tenth business day from and including the date that such notice is first so published, sent or given, the Offer will be extended at least until the expiration of such ' ten business day period For purposes of the Offer, a "business day" means any day other than a rm Saturday, Sunday or federal holiday and consists of the time period f o 12:Ol a.m. through 12:OO midnight, New York City time.
This Offer to Purchase and the related Letter of Transmittal will be mailed to record holders of Shares whose names appear on our stockholder list and will be furnished, for subsequent transmittal to beneficial owners of Shares, to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the stockholder list or, if applicable, who are listed as participants in a clearing agency's security position listing.
2.
Acceptance for Payment and Payment for Shams
.
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), we will accept for payment and pay for (and thereby purchase) Shares properly tendered and not properly withdrawn prior to the Expiration Date. For purposes of the Offer, we will be deemed to have accepted for payment (and therefore purchased) Shares that are properly tendered and not properly withdrawn only when and if we give written notice to the Depositary of our acceptance of the Shares for payment pursuant to the Offer. Subject to applicable rules of the Commission. we expressly reserve the right to delay acceptance for payment of, or payment for, Sham pmdmg receipt of any regulatory approvals specified in "The Tender Offer--Certain Legal Matters and Regulatory Approvals" or in order to comply in whole or in pan with any other applicable law.
In al cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be l made only after timely receipt by the Depositary of (i) the certificates evidencing such Shares (the "Share Certificates") or timely confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such Shares into the Depositary's account at The Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the procedures set forth in 'The Tender Offer--Procedures for Accepting the Offer and Tendering Shares." (ii) the Letter of Transmittal (or a facsimile thereof), properly completed and duly
Case 1:04-cv-00725-RPM
Document 41-12
Filed 07/01/2005
Page 14 of 21
executed, with any required signature guarantees or, in the case of a book-entrytransfer, an Agent's Message (as defined beiow) in lieu of the Letter of Transmittal, and (i) any other documents required under the Letter of Transmittal. For purposes of the Offer, we will be deemed to have accepted for payment (and thereby purchased) Shares validly tendered and not properly withdrawn as, if and when we give oral or written notice to the Depositary of our acceptance for payment of such Shares pursuant to the Offer. Upon the t e r n and subject to the conditions of the Offer, payment for Shares accepted for payment pursuant to the Offer wiU be made by &posit of the purchase price therefor with the Depositary, which will act as agent for tendering stockholders for the purpose of receiving payments from us and transmitling such payments to tendering stockholders whose Shares have been accepted for payment. Under no circumstances will interest on the purchase price for Shares be paid, regardless of any delay in making such payment.
il Certificates for all Shares tendered and not purchased wl be returned (or, in the case of Shares tendered by book-entry transfer, will be credited to the account maintained with the Book-Entry Transfer Facility by the participant therein who so delivered the Shares) to the tendering stockholder at our expense as promptly as practicable after the Expiration Date or termination of the Offer without expense to the tendering stockholders. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE BE PAID BY US BY REASON OF ANY DELAY IN MAKING PAYMENT. In addition, if certain events occur, we may not be obligated to purchase Shares pursuant to the Offer. See 'The Tender Offer--Procedures for Accepting the Offer and Tendering Shares" and "--Certain Conditions of the Offer."
We will pay all stock transfer taxes, if any, payable upon the transfer to us of Shares purchased pursuant to the Offer. If, however, payment of the Purchase Price is to be made to, or (in the cirgmstances permitted by the Offer) if unpurchased Shares are to be registered in the name of, any hn prson other t a the registered holder. or if ttndcred certificates are registered in the name of any person other than the person signing the Lener of Transmittal. the amount of all stock transfer taxes, if any (whether imposed on the registered holder or the other person), payable on account of the transfer to the person will be deducted from the Purchase Pnce unless satisfactory evidence of the payment of the stock transfer taxes, or exemption therefrom. is submitted See Instruction 6 of the Letter of Transmittal.
If, prior to the Expiration Date, we shall increase the consideration offered to any holders of Shares pursuant to the Offer, such incnastd consideration will be paid to all holders of Shares that are purchased pursuant to the Offer, whether or not such Shares were tendered prior to such increase in
consideration We reserve the right to transfer or assign, in whole or from time to time in part, to one or more of our affiliates, the right to purchase all or any portion of the Shares tendered p u y m t to the Offer,but any such transferor assignment will not relieve us of our obligations under the Offer and will in no way prejudice the rights of tendering stockhddcrs to receive payment for Shares validly tendered and accepted for payment pursuant to the Offer.
3 .
Procedures for Accepting the Offer and Tendering Shares
In order for a holder of Shares validly to tender Shares pursuant to the Offer, the Letter of Transmittal (or a facsimile rhcreofj, properly completed and duly executed, together with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message (as defined below) in lieu of the Letter of TransmittaI) and any other documents required by the Letter of Transmittal, must be
Case 1:04-cv-00725-RPM
Document 41-12
Filed 07/01/2005
Page 15 of 21
received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase and either (i) the Share Certificates evidencing tendered Shares must be received by the Depositary at such address or such Shares must be tendered pursuant to the procedure for book-entry transfer described below and a Book-Entry Confirmation must be received by the Depositary (including an Agent's Message if the tendering stockhol&r has not delivered a Letter of Transmittal), in each case prior to the Expiration Date, or (ii) the tendering stockholder must comply with the guaranteed delivery procedures described below. The term "Agent's Message" means a message, transmitted by a Book-Entry Transfer Facility to, and received by, the Depositary and forming a part of a Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has received an express acknowledgment from the participant in such bookentry confinnation that such participant has received and agrees to be boundby the terms of the Letter of Transmittal and that we may enforce such agreement against such participant. STOCKHOLDERS WHO HOLD SHARES THROUGH BROKERS OR BANKS ARE BROKERS OR BANKS TO DETERMINE WHETHER URGED TO CONSULT TRANSACTION COSTS ARE APPLICABLE IF STOCKHOLDERS TENDER SHARES THROUGH THE BROKERS OR BANKS AND NOT DIRECTLY TO THE DEPOSITARY.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE DELIVERY WILL BE DEEMED MADE 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.
-
h BOOK-ENTRY TRANSFER. T e Depositary will establish an account with respect to the Shares at the Book-Entry Transfer Facility for purposes of the Offer within two business days after the date of this Offer to Purchase. Any financial institunon that is a participant in the system of such BookEntry Transfer Facility may make a book-entry dehvery of Shares by causing such Book-Entry Transfer Facility to transfer such Shares into the Depositary's account at such Book-Entry Transfer Facility in accordance with such Book-Entry Transfer Facility's procedures for such transfer. However, although delivery of Shares may be effected through bookentry transfer at a Book-Entry Transfer Facility, either the Letter of Transmittal (or a facsimile thereof). properly completed and duly executed, together with any required signature guarantees. or an Agent's Message in Lieu of the Letter of Transmittal, and any other required documents, must, in any case. be rcceivtd by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase prior to the Exp~ration Date. or the tendering stockholder must comply with the guaranteed delivery procedure described below. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITU'IE DELIVERY TO THE DEPOSITARY.
SIGNATURE GUARANTEES. Signatures on aU Letters of Transmittal must be guaranteed by a firm that is a member of the Medallion Signamre Guarantee Program. or by any other "eligible guarantor institution," as such term is &find in Rule 17Ad-15 under the Exchange Act (each of the foregoing referred to as an "Eligible Institution"), except in cases where Shares are tendered (i) by a registered holder of Sham who has not completed either the box entitled "Special Payment Instructions" or the box entitled "Special Delivery Instructions" on the Letter of Transmittal or (ii) for the account of an Ehpible Institution. If a Share CertificateIS registered in the name of a person other than the signer of the
Case 1:04-cv-00725-RPM
Document 41-12
Filed 07/01/2005
Page 16 of 21
Letter of Transmittal, or if payment is to be returned. to a person other than the registered holder(s), then the Share Certificate must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear on the Share Certificate, with the signature(s) on such Share Certificate or stock powers guaranteed by an Eligible Institution. See Instructions 1 and 5 of the Letter of Transmittal. GUARANTEED DELIVERY. If a stockholder desires to tender Shares pursuant to the Offer and the Share Certificates evidencing such stockholder's Shares are not immediately available or such stockholder cannot deliver the Share Certificates and all other required documents to the Depositary prior to the Expiration Date, or such stockholder cannot complete the procedure for delivery by book-entry transfer on a timely basis, such Shares may nevertheless be tendered, provided that all the following conditions are satisfied:
(a)
such tender is made by or through an Eligible Institution;
a properly completed and duly executed Notice of Guaranteed Delivery, substantially in (b) the form made available by us. is received prior to the Expiration Date by the Depositary as provided below; and the Share Certificates (or a Book-Entry Confirmation) evidencing all tendered Shares, in (c) proper form for transfer, in each case together with the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed w t any required signature guarantees, or an Agent's Message, in ih the case of a book-entry transfer. and any other documents required by the Letter of Transmittal are received by the Depositary within three Nasdaq trading days after the date of execution of such Notice of Guaranteed Delivery. The Notice of Guaranteed Delivery may be delivered by hand or mail or transmitted by telegram or facsimile transmission to the Depositary and must include a guarantee by an Eligible Institution in the form set forth in the Notice of Guaranteed Delivery made available by us. In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of the Share Certificates evidencing such Shares, or a Book-Entry Confirmation of the delivery of such Shares, and the Letter of Transmittal (or a facsunile thereof), properly completed and duly executed, with any required signature guarantees, and any other documents requ~red the Letter of Transmittal. by DETERMINATION OF VALIDITY. All questions as to the number of Shares to be accepted, the validity. form, eligihity (including time of receipt) and acceptance for payment of any tender of Shares will be determined by us m our sole dscretion. which determination shall be final and binding on al parties. We reserve the absolute right to reject any and all tenders determined by us not to be in proper l form or the acceptance for payment of which may, in the opinion of our counsel, be unlawful. We also reserve the absolute right to wawe any condition of the Offer or any defect or irregularity in the tender of any Shares of any particular stockholder, whether or not similar defects or irregularities are waived in the case of other stockholders. No tender of Shares will be deemed to have been validly made until all defects and irregularities have been cured or wa~ved.None of the Company, t e Dealer Manager, the Depositary, h the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in tenders or mcur any habdity for failure to give any such notification. Our interpretation
Case 1:04-cv-00725-RPM
Document 41-12
Filed 07/01/2005
Page 17 of 21
of the tern and conditions of the Offer (including the Letter of Transmittal and the instructions thereto) be f n l and binding. ia LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificates for the Shares have been lost, destroyed or stolen, stockholders should contact the Company's Transfer Agent, Computershare Trust Company Inc.. at (303) 986-5400 immediately. In such event, the Transfer Agent will forward additional documentation necessary to be completed in order to surrender effectively such lost, destroyed or stolen certificates. The Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost, destroyed or stolen certificates have been followed. OTHER REQUIREMENTS. By executing the Letter of Transmittdl as set forth above, a tendering stockholder irrevocably appoints our designees as such stockholder's proxies, each with full power of substitution, in the manner set forth in the Letter of Transmittal. to the full extent of such stockholder's rights with respect to the Shares tendered by such stockholder and accepted for payment by us (and with respect to any and all Shares or other securities issued or issuable in respect of such Shares on or after ~ovem&r13. 2000). All such proxies shall be considered coupled with an interest in the tendered Shares. Such appointment wiU be effective when, and only to the extent that, we accept such Shares for payment. Upon such acceptance for payment, all prior proxies given by such stockholder with respect to such Shares (and such other Sham and securities) will be revoked without further action, and no subsequent proxies may be given or any subsequent written consent executed by such stockholder (and, if given or executed, will not be dear~ed be effective) with respect thereto. Our desipees will, to with respect to the Shares for which the appointment is effective, be empowered to exercise all voting and other rights of such stockholder as they in their sole discretion may deem proper at any annual or special meeting of our stockholders or any adjournment or postponement thereof, by written consent in lieu of any such meeting or otherwise.
-
I
I
I
I
TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING WITH RESPECT TO PAYMENT TO CERTAIN STOCKHOLDERS OF THE PURCHASE PRICE OF SHARES PURCHASEDPURSUANT TO THE OFFER, EACH SUCH STOCKHOLDER MUST PROVIDE THE DEPOSITARY WITH SUCH STOCKHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER AND CERTIFY THAT SUCH STOCKHOLDER IS NOT SUBJECT TO BACKUP EDERAL INCOME TAX WITHHOLDING BY COMPLETING THE SUBSTITUTE FORM W-9 IN THE LETTER OF TRANSMITTAL. IF BACKUP WITHHOLDING APPLIES WITH RESPECT TO A STOCKHOLDER, THE DEPOSITARY IS REQUIRED TO WITHHOLD 3 1?% OF ANY PAYMENTS MADE TO SUCH STOCKHOLDER. SEE INSTRUCTION 11 OF THE LETTER OF TRANSMITTAL. TENDERING STOCKHOLDER'S REPRESENTATION AND WARRANTY THAT OUR ACCEPTANCE CONSTITUTES AN AGREEMENT. A tender of Shares pursuant to any of the procedures described above will constitute the tendering stockholder's acceptance of the terms and conditions of the Offer, as well a the t&mp stockholder's representation and warranty to us that $ (a) the stockholder has a "net long pasition" (as defined in Rule 14e-4 promulgated by the Commission h securities at least equal to the Shares tendered within under the Exchange Act) in t e Shares or cqu~valcnt the m m g of Rule 1 4 . 4 and fi) the tender of Shares complies with Rule 14e-4. It is a violation of Rule 14e-4 for a person, directly or mdimtly. to tender Shares for that person's own account unless, at the time of tender (including any extawions thereof), the person so tendering (i) has a net long position equal to or greater than the amount of (x) Sham tendered or (y) other securities immediately convertible
Case 1:04-cv-00725-RPM
Document 41-12
Filed 07/01/2005
Page 18 of 21
into or exchangeable or exercisable for the Shares tendered and will acquire the Shares for tender by conversion, exchange or exercise and (ii) will deliver or cause to be delivered the Shares in accordance with the terms of the Offer. Rule 14.4 provides a similar restriction applicable to the tender or guarantee of a tender on behalf of another person Our acceptance for payment of Shares tendered