EXHIBIT(A)(1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF
DUNES HOTELS AND CASINOS, INC.
COMMON STOCK
AT $1.00 NET PER SHARE IN CASH AND
SERIES B, $7.50 CUMULATIVE PREFERRED STOCK
AT $30.00 NET PER SHARE IN CASH
BY
DUNES HOTELS AND CASINOS, INC.
The Offer and Withdrawal Rights will expire at 4:00 p.m., Central Time, on
December 29, 2000, unless the Offer is extended.
A summary of the principal terms of the Offer appears on pages 3 through 5
of this Offer to Purchase. You should read this entire document carefully before
deciding whether to tender your shares.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of this transaction, passed upon the
fairness or merits of this transaction, or passed upon the adequacy or accuracy
of the disclosure contained in this document. Any representation to the contrary
is a criminal offense.
IMPORTANT
Any shareholder who would like to tender all or any portion of their
shares of common stock or preferred stock of Dunes Hotels and Casinos, Inc.
should either (1) complete and sign the applicable Letter of Transmittal (or a
facsimile thereof) in accordance with the instructions in the applicable Letter
of Transmittal, mail or deliver it (or such facsimile) and any other required
documents to the Depositary, and either deliver the certificates for such common
stock or preferred stock and any other required documents to the Depositary or
tender such common stock or preferred stock pursuant to the procedure for book
entry transfer set forth in "THE OFFER--3. Procedures for Accepting the Offer
and Tendering Shares" or (2) request his or her broker, dealer, commercial bank,
trust company or other nominee to effect the transaction for him or her.
Shareholders having common stock or preferred stock registered in the name of a
broker, dealer, commercial bank, trust company or other nominee must contact the
broker, dealer, commercial bank, trust company or other nominee if they desire
to tender their shares.
A shareholder who desires to tender shares and whose certificates for
common stock or preferred stock are not immediately available, or who cannot
deliver the certificates for common stock or preferred stock and all other
required documents to the Depositary on or prior to the expiration date, or who
cannot comply with the procedure for book entry transfer on a timely basis, may
tender their shares by following the procedures for guaranteed delivery set
forth in "THE OFFER--3. Procedures for Accepting the Offer and Tendering
Shares".
Questions and requests for assistance may be directed to the Dunes at the
address and telephone number set forth on the back cover of this Offer to
Purchase. Additional copies of this Offer to Purchase, the Letters of
Transmittal and the Notice of Guaranteed Delivery may also be obtained from the
Dunes.
October 31, 2000
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TABLE OF CONTENTS
TABLE OF CONTENTS.................................................3
SUMMARY TERM SHEET................................................4
INTRODUCTION......................................................7
SPECIAL FACTORS...................................................7
1. OPERATING HISTORY; PAYMENT OF DIVIDENDS AND REDEMPTION OF
SHARES UNCERTAIN............................................7
2. PURPOSE AND FAIRNESS OF THE OFFER...........................7
3. USI LITIGATION.............................................11
4. INTERESTS OF CERTAIN PERSONS IN THE OFFER..................11
5. MATERIAL FEDERAL INCOME TAX CONSEQUENCES...................12
6. FINANCING OF THE OFFER.....................................14
7. BENEFICIAL OWNERSHIP OF THE STOCK..........................14
8. TRANSACTIONS AND ARRANGEMENTS CONCERNING SHARES............15
9. CERTAIN EFFECTS OF THE OFFER...............................15
THE OFFER........................................................16
1. TERMS OF THE OFFER.........................................16
2. ACCEPTANCE FOR PAYMENT AND PAYMENT.........................17
3. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES....18
4. WITHDRAWAL RIGHTS..........................................20
5. PRICE RANGE OF THE SHARES; DIVIDENDS.......................21
6. POSSIBLE EFFECTS OF THE OFFER ON THE MARKET FOR THE SHARES
AND EXCHANGE ACT REGISTRATION..............................22
7. CERTAIN INFORMATION CONCERNING THE DUNES...................22
8. CONDITIONS TO THE OFFER....................................23
9. LEGAL MATTERS..............................................24
10. FEES AND EXPENSES..........................................24
11. MISCELLANEOUS..............................................25
FORWARD LOOKING STATEMENTS
Certain statements contained in, or incorporated by reference into, this
Statement may be considered forward looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended (the "Securities Act"),
and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). These forward looking statements are based largely on the
expectations of the Dunes and are subject to a number of risks and
uncertainties, many of which are beyond the control of the Dunes. Actual
results could differ materially from these forward looking statements as a
result of certain factors, including but not limited to those described in the
Annual Report on Form-10-K of the Dunes for the year ended December 31, 1999,
which is incorporated herein by reference.
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SUMMARY TERM SHEET
Dunes Hotels and Casinos, Inc. is offering to purchase all the outstanding
shares of its Common Stock for $1.00 net per share, in cash, without interest
and its Series B, $7.50 Cumulative Preferred Stock for $30.00 net per share, in
cash, without interest. The following are some of the questions you, as a
shareholder of the Dunes, may have and answers to those questions. We urge you
to read carefully this Offer to Purchase because the information in this summary
is not complete. Additional important information is contained in the remainder
of this Offer to Purchase and the accompanying Letters of Transmittal.
WHO IS OFFERING TO BUY MY SHARES?
The Dunes is making an offer to buy your shares of the Dunes Common Stock
and Series B, $7.50 Cumulative Preferred Stock. See "THE OFFER--1. Terms of the
Offer".
WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER?
We are offering to buy all of the outstanding shares of the Dunes common
stock and preferred stock. See "THE OFFER--1. Terms of the Offer".
HOW MUCH ARE YOU OFFERING TO PAY? WHAT IS THE FORM OF PAYMENT? WILL I HAVE TO
PAY ANY FEES OR COMMISSIONS?
We are offering to pay $1.00 per share for the common stock and $30.00 per
share for the preferred stock, in each case, net to you in cash, without
interest. If you are the record owner of your shares and you tender your shares
to us in the Offer, you will not have to pay brokerage fees or commissions. If
you own your shares through a broker or other nominee, and your broker tenders
your shares on your behalf, your broker or nominee may charge you a fee for
doing so. You should consult with your broker or nominee to determine whether
any charges will apply. See "INTRODUCTION".
IF I TENDER MY PREFERRED SHARES, WILL I BE PAID MY ACCRUED DIVIDENDS?
No. Tendering holders of preferred stock will receive only the offer
payment. See "THE OFFER--1. Terms of the Offer". There are no accrued
dividends on the common stock.
WHAT IS THE MARKET VALUE OF THE SHARES?
The common stock is traded in the over-the-counter market. See "THE
OFFER--5. Price Range of the Shares; Dividends" for the bid history of the
common stock. There is no established reporting or trading system for the
preferred stock and we are unable to determine the trading history of the
preferred stock. We believe that the trading in both the common stock and the
preferred stock has been limited and sporadic. On October 16, 2000, the bid
price for common stock was $0.656 per share. The only recent sales of preferred
shares of which the Dunes is aware were for $20 per share. See "SPECIAL
FACTORS--2. Purpose and Fairness of the Offer" and "THE OFFER--5. Price Range of
the Shares; Dividends".
DO YOU HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
We will need approximately $1.3 million to purchase all the outstanding
shares, excluding the shares of common stock beneficially owned by General
Financial Services, Inc. and its affiliates, and to pay all the expenses of the
offering. We intend to pay the purchase price and related expenses using cash
and other liquid assets owned by us. See "SPECIAL FACTORS--4. Interests of
Certain Persons in the Offer" and "SPECIAL FACTORS--6. Financing of the Offer".
IS YOUR FINANCIAL CONDITION RELEVANT TO MY DECISION WHETHER TO TENDER IN THE
OFFER?
Because tendering your shares in the Offer will end your ownership
interest in the Dunes, we believe that the financial condition of the Dunes is
relevant to your determination of whether the Offer Price is fair and whether
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you should tender in the Offer. The financial statements for the Dunes are
included in the reports the Dunes has filed with the Securities and Exchange
Commission. You can obtain copies of these reports in the manner described in
"THE OFFER--7. Certain Information Concerning the Dunes".
HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
You may tender your shares anytime prior to the expiration of the Offer.
The Offer will expire at 4:00 p.m., Central Time, on December 29, 2000, if the
offering period is not extended. See "THE OFFER--3. Procedures for Accepting the
Offer and Tendering Shares".
CAN THE OFFER BE EXTENDED, AND UNDER WHAT CIRCUMSTANCES?
Yes. We have the right to extend the Offer deadline at any time by
giving written notice to ChaseMellon Shareholder Services, the depositary for
the Offer. See "THE OFFER--1. Terms of the Offer".
HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
If we decide to extend the offering period, we will publicly announce the
extension before 4:00 p.m., Central Time, on the next business day after the
previously scheduled expiration date. See "THE OFFER--1. Terms of the Offer".
WHAT WILL HAPPEN TO SHARES NOT TENDERED IN THE OFFER?
Shares not tendered in the Offer will remain outstanding. However, the
trading market for any shares not tendered may be even more limited than it
currently is. See "SPECIAL FACTORS--9. Certain Effects of the Offer".
IS THE DUNES MAKING ANY RECOMMENDATION ABOUT THE OFFER?
No. We express no opinion and remain neutral with respect to whether
shareholders should tender shares in response to the Offer. Shareholders should
determine whether or not to accept the Offer based upon their own assessment of
current market value, liquidity needs and investment objectives. See "SPECIAL
FACTORS--2. Purpose and Fairness of the Offer".
WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
We are not required to complete the Offer unless the conditions to the
Offer are met. The Dunes is not required to accept any shares of common stock
tendered in the Offer unless there will be less than 300 record holders of each
of the common stock and the preferred stock upon completion of the Offer. Other
significant conditions are the absence of any litigation, proceedings or other
events that would prohibit, prevent, restrict or delay consummation of the
Offer. Other important conditions to the Offer are described in "THE OFFER--8.
Conditions to the Offer". Any of these conditions may be waived by the Dunes.
HOW DO I TENDER MY SHARES?
To tender your shares, you must do one of the following:
(1) If you are a record holder (i.e., a stock certificate has been
issued to you), you must complete and sign the applicable enclosed
Letter(s) of Transmittal and send it with your stock certificate to
ChaseMellon Shareholder Services, or follow the procedures
described in this Offer to Purchase for book-entry transfer in "THE
OFFER--3. Procedures for Accepting the Offer and Tendering Shares".
These materials must reach ChaseMellon Shareholder Services before
the Offer expires. Detailed instructions are contained in the
Letters of Transmittal and in "THE OFFER--3. Procedures for
Accepting the Offer and Tendering Shares".
(2) If you are a record holder, but your stock certificate is not
available, or you cannot deliver it to ChaseMellon Shareholder
Services before the Offer expires, you may be able to tender your
shares
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using the enclosed Notice of Guaranteed Delivery. Please call
ChaseMellon Shareholder Services at 1-800-526-0801 for assistance.
(3) If you hold your shares through a broker, bank or other nominee, you
should contact your nominee and instruct them to tender your shares.
See "THE OFFER--3. Procedures for Accepting the Offer and Tendering
Shares".
UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED SHARES?
You can withdraw previously tendered shares until 4:00 p.m., Central Time,
December 29, 2000, unless the Offer is extended. If the Offer is extended, you
may withdraw previously tendered shares until the end of the extension period.
See "THE OFFER--4. Withdrawal Rights".
HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES?
You can withdraw previously tendered shares by instructing ChaseMellon
Shareholder Services. If you tendered your shares by giving instructions to a
broker or bank, you must instruct the broker or bank to arrange for a withdrawal
of your shares. See "THE OFFER--4. Withdrawal Rights".
TO WHOM CAN I TALK IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
You can call Thomas Steele, General Counsel for the Dunes, at (316)
636-1070, extension 28.
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INTRODUCTION
Dunes Hotels and Casinos, Inc., a New York corporation (the "Dunes"),
hereby offers to purchase all outstanding shares of its Common Stock, $0.50 par
value (the "Common Stock"), at a purchase price of $1.00 per share of Common
Stock, net to the selling shareholder in cash, without interest thereon (the
"Common Stock Offer Price") and its Series B, $7.50 Cumulative Preferred Stock,
$0.50 par value (the "Preferred Stock"), at a purchase price of $30.00 per share
of Preferred Stock, net to the selling shareholder in cash, without interest
thereon (the "Preferred Stock Offer Price"), on the terms and subject to the
conditions set forth in this Offer to Purchase and in the applicable Letter of
Transmittal (which, as amended or supplemented from time to time, together
constitute the "Offer"). As used in this Offer to Purchase, the term "Common
Share" means a share of the Dunes Common Stock, the term "Preferred Share" means
a share of the Dunes Preferred Stock and the term "Share" means a share of
either the Common Stock or the Preferred Stock, as applicable.
If you are the record owner of your Shares and you tender your Shares to
us in the Offer, you will not have to pay brokerage fees or commissions. If you
own your Shares through a broker or other nominee, and your broker tenders your
Shares on your behalf, your broker or nominee may charge you a fee for doing so.
You should consult with your broker or nominee to determine whether any charges
will apply. Except as described in Instruction 6 of the Letters of Transmittal,
you will not be required to pay stock transfer taxes on the purchase of Shares
in the Offer. However, if you do not complete and sign the Substitute Form W-9
that is included in the Letters of Transmittal, you may be subject to a required
backup federal income tax withholding of 31% of the gross proceeds payable to
you. See "THE OFFER--3. Procedures for Accepting the Offer and Tendering
Shares". The Dunes will pay all charges and expenses of ChaseMellon Shareholder
Services as depositary (the "Depositary") incurred in connection with the Offer.
See "THE OFFER--3. Procedures for Accepting the Offer and Tendering Shares".
The Offer will expire at 4:00 p.m., Central Time, on December 29, 2000,
unless we extend it.
This Offer to Purchase and the applicable Letter of Transmittal contain
important information which you should read carefully before you make any
decision with respect to the Offer.
SPECIAL FACTORS
1. OPERATING HISTORY; PAYMENT OF DIVIDENDS AND REDEMPTION OF SHARES
UNCERTAIN
The Dunes has experienced significant losses in recent years and, as of
June 30, 2000, had an accumulated deficit of approximately $20.5 million. In
addition, the Dunes has not paid dividends on the Common Shares since the second
quarter of 1979 and on the Preferred Shares since the first quarter of 1982. The
Dunes is in arrears on such Preferred Share dividends in the amount of
approximately $1,370,832 ($143.00 per Preferred Share) as of September 30, 2000.
Accordingly, there can be no assurance that the Dunes will achieve profitability
at a level sufficient to assure payment of the accrued dividends on, or
redemption of, the Preferred Shares that remain outstanding following the Offer
or to pay dividends on the Commons Shares that remain outstanding. In addition,
there are no restrictions on the ability of the Dunes or its subsidiaries to
incur indebtedness. Any indebtedness incurred by the Dunes would be senior to
the Shares. The existence of current or future indebtedness of the Dunes or its
subsidiaries may make payment of dividends on, or redemption of, the Shares less
probable. The Dunes has no present intention to pay dividends on the Shares in
the near future.
2. PURPOSE AND FAIRNESS OF THE OFFER
On April 14, 2000, the Dunes held its first annual meeting of shareholders
in more than 15 years. At the meeting, General Financial Services, Inc., which
recently acquired beneficial ownership of approximately 76.2% of the Common
Shares, elected a new Board of Directors. After reviewing the financial
condition and operations of the Dunes, the new Board of Directors decided on
September 13, 2000 to make the Offer for the following reasons:
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Common Shares
o The Dunes incurs significant costs in being a public company. The Dunes
estimates that it incurs approximately $200,000 annually in connection
with (1) preparing and filing with the SEC periodic reports under the
Securities Exchange Act of 1934, (2) preparing, filing with the SEC and
mailing to shareholders a proxy statement in connection with the annual
shareholders meeting, (3) the annual audit of the Dunes' financial
statements, (4) directors' fees and expenses and (5) directors and
officers liability insurance, all of which expenses could be eliminated
if the Dunes were no longer subject to the reporting requirements of the
Securities Exchange Act of 1934. The Dunes will be able to terminate its
registration under the Securities Exchange Act of 1934 if the number of
holders of record for each of the Common Shares and the Preferred Shares
after the Offer is completed is less than 300. It is a condition to the
Offer for the Common Shares that the number of holders of record for
each of the Common Shares and Preferred Shares will be reduced to less
than 300 as a result of the Offer.
o The trading market for the Common Shares is extremely limited. During
the last five years, excluding the Common Shares acquired by GFS
Acquisition Company during the period from May 1999 through June 2000,
the average quarterly trading volume has typically been below 200,000
Common Shares. As a result, the holders of the Common Shares do not have
what is considered one of the main advantages of owning shares in a public
company--a liquid market for their shares.
o The Board of Directors also believes that the recent bid prices for a
Common Share are below fair value. The Board of Directors believes that
the low stock price is due to the Dunes' poor recent operating results
(see "SPECIAL FACTORS--Operating History; Payment of Dividends and
Redemption of Shares Uncertain") and the lack of potential buyers for
the Common Shares. The Board of Directors believes that the holders of the
Common Shares may be interested in selling their Common Shares at a fair
price, but are unable to do so because of the lack of an active public
market for the Common Shares.
o In determining the Offer Price for the Common Shares, the Board of
Directors considered the following factors:
o the net book value of a Common Share as of June 30, 2000, after
deducting all amounts owed to the holders of the Preferred Shares
($1.19);
o the net book value of a Common Share as of June 30, 2000, assuming
that the Offer for the Preferred Shares had closed on June 30, 2000
and all the holders of the Preferred Shares had tendered their
shares to the Dunes for $30.00 per share as of that date ($1.64);
o the bid prices for the first two quarters of 2000 ranged from
$0.59 to $1.31;
o the most recently reported sale prices of the Common Shares prior
to the Board of Directors meeting on September 13, 2000 ($0.6875);
and
o the weighted average purchase price for the 883,922 Common Shares
acquired by GFS Acquisition Company in the over-the-counter market
between May 1999 and June 2000 ($0.87) and the highest price per
Common Share paid by GFS Acquisition Company during such period
($1.16).
The Board of Directors did not separately consider the liquidation value
of the Common Stock because the Board of Directors believes that the June
30, 2000 book value per Common Share approximates the liquidation value
for a Common Share, since most of the assets of the Dunes have been
written down to fair value. Due to the recent operating history of the
Dunes and the lack of any "goodwill" associated with the Dunes'
businesses, the Board of Directors believes that the "going concern
value" of the Dunes would be approximately the same as its net book value.
o The Board of Directors considered the potential affect of two contingent
obligations of the Dunes: the costs of completing the environmental
clean-up of the Sam Hamburg Farm, and the potential additional franchise
taxes that may be owed to the State of California.
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o Since the new Board of Directors was elected in April 2000, it has
been reviewing the adequacy of the reserve related to the possible
contamination of 40 acres at Sam Hamburg Farm of approximately
5,000 cubic yards of soil. Based on preliminary information
recently received from the Dunes' chemical and toxic clean-up
consultant, the Board of Directors believes that the current
reserve of $170,000 for the on-site remediation of the problem is
probably too low. The previous estimates received from the chemical
and toxic clean-up consultant ranged from $500,000 to 6,500,000.
The Board has directed the officers of the Dunes to order a more
detailed assessment from the consultant.
o As previously reported, the California Franchise Tax Board ("FTB")
is examining the Dunes' 1995 tax return. The FTB is questioning
the Dunes' reporting of approximately $7,700,000 of income as
being exempt from the 9.3% California tax. On September 13, 2000,
the FTB requested, and the Dunes granted, a six month extension
of the period in which the FTB could make an assessment related
to the 1995 tax return. The Dunes disagrees with the FTB and
plans to oppose any assessment of additional taxes or interest
and, therefore, has not made any provision for additional taxes or
interest. However, if the FTB were successful on all of the issues
that it has raised, the Dunes would be liable for approximately
$1 million in taxes and interest.
See Note 11 to the Consolidated Financial Statements of the Dunes
contained in its Form 10-KSB/A for 1999 filed with the SEC on April 4,
2000 for more information related to these two contingencies. Based on the
information available at this time, the Board of Directors is not able
to accurately assess the amount that would ultimately be required to
remediate the environmental problems at the Sam Hamburg Farm, or that may
be owed to the State of California as additional franchise taxes. Each
$500,000 of additional liability related to the these matters would
decrease the net book value of a Common Share by $0.10.
o The lack of an active trading market for the Common Shares and the
uncertainty related to the cost of cleaning up the environmental problems
at the Sam Hamburg Farm make it difficult to determine a fair value for
the Common Shares. The Board of Directors believes that reasonable
persons could select a range of valuations for the Common Shares. The
Dunes has not retained and does not intend to retain any unaffiliated
representative to act solely on behalf of the unaffiliated shareholders
for purposes of negotiating the terms of the Offer for the Common Shares
and/or preparing a report concerning the fairness of the Offer for the
Common Shares. The Dunes has not received any report, opinion or
appraisal from an outside party that is materially related to the Offer
for the Common Shares. The Board of Directors elected not to retain an
unaffiliated representative or to obtain a report, opinion or appraisal,
because the Board of Directors determined that the cost of retaining a
representative or of obtaining a report, opinion or appraisal would not
be justified given the company's current financial condition and the
relatively small dollar value of the transaction.
o The Board of Directors has decided to set the Common Stock Offer Price
at $1.00 per Common Share, which was an approximate 54% premium over the
most recently reported bid price for the Common Shares. The Board of
Directors also noted that although the Offer Price was 16% below current
net book value, depending on the results of the environmental
assessment and the FTB review of the 1995 tax return, the Offer Price
could be equal to or above the net book value adjusted for the costs of
environmental clean-up and additional taxes and interest. As such, the
Offer may give holders of Common Shares who are considering the sale of
all or some of their Common Shares the opportunity to sell their Common
Shares for a higher price than may have been available on the open market
immediately prior to the announcement of the Offer and without the usual
transaction costs associated with market sales. No commissions are
payable to the Depositary by shareholders who tender their Common Shares
in the Offer. There may be adverse consequences to the shareholders of
Preferred Shares who do not tender them in the Offer. See "--8.
Certain Effects of the Offer".
o Due to the uncertainty about the number of Preferred Shares that will be
tendered in the Offer, the Board of Directors determined that it was in
the best interest of the Dunes to set the Offer Price for the Common
Shares based on recently reported bid prices and the current book value
rather than a pro forma book value based on an assumption that a certain
percentage of the Preferred Shares would be tendered in the Offer. If a
significant percentage of the Preferred Shares are tendered in the Offer,
the book value of a Common Share after the Offer would be higher than the
current book value.
o The Offer for the Common Shares has been unanimously approved by the
Dunes' Board of Directors. Although the Board of Directors believes that
the Common Stock Offer Price is a fair price for the Common Shares, the
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Dunes is not making a recommendation as to whether holders should tender
their Common Shares. Holders of Common Shares should determine whether to
accept the Offer based upon their own assessment of current market value
of the Common Shares, the rate of acceptance of the Offer for the
Preferred Shares, liquidity needs and investment objectives.
Preferred Shares
o The trading market for the Preferred Shares is extremely limited. The
Board of Directors has not been able to find any reported trades in the
over-the-counter market for the Preferred Shares. The Board of Directors
believes that USI Corp. acquired approximately 31% of the Preferred Shares
at a price of $20 per share in a tender offer that USI Corp. conducted
from August 1999 through April 2000. See "--3. USI Litigation". In
addition, the Board of Directors is aware that General Financial Services
also acquired 120 Preferred Shares at a price of $20 per Preferred Share
in August 1999. The Board of Directors is not aware of any other recent
sale prices for the Preferred Shares. The Board of Directors believes that
holders of the Preferred Shares may be interested in selling their
Preferred Shares, but are unable to do so because of the lack of a
public market for the Preferred Shares.
o The Board of Directors considered the fact that the Preferred Shares
have a liquidation preference of $125.00 per Preferred Share and that they
have accrued dividends of approximately $143.00 per Preferred Share. The
Board of Directors also considered the fact that the Dunes is currently
not insolvent and that if the corporation were liquidated today, the
holders of the Preferred Shares would receive approximately $268.00 per
Preferred Share. However, the Board of Directors does not intend to
liquidate the corporation, or pay dividends on the Preferred Shares, in
the foreseeable future. Instead, the corporation intends to reinvest any
excess cash in developing the corporation's business. As a result, the
Board of Directors believes that the fair market value of the Preferred
Shares is less than the current redemption value because it is unlikely
that the shareholders will be paid this amount in the foreseeable future.
o The lack of a trading market for the Preferred Shares makes it difficult
to determine a fair value for the Preferred Shares. The Board of Directors
believes that reasonable persons could select a range of valuations for
the Preferred Shares. The Dunes has not retained and does not intend to
retain any unaffiliated representative to act solely on behalf of the
unaffiliated holders of Preferred Shares for purposes of negotiating the
terms of the Offer for the Preferred Shares and/or preparing a report
concerning the fairness of the Offer for the Preferred Shares. The Dunes
has not received any report, opinion or appraisal from an outside party
that is materially related to the Offer for the Preferred Shares. The
Board of Directors elected not to retain an unaffiliated representative
or to obtain a report, opinion or appraisal, because the Board of
Directors determined that the cost of retaining a representative or of
obtaining a report, opinion or appraisal would not be justified given the
company's current financial condition and the relatively small dollar
value of the transaction.
o The Board of Directors has decided to set the Preferred Stock Offer
Price at $30.00 per Preferred Share, which is a 50% premium over the $20
per Preferred Share at which approximately 31% of the Preferred Shares
were recently sold. See "--3. USI Litigation". As such, the Offer
may give shareholders who are considering the sale of all or some of their
Preferred Shares the opportunity to sell their Preferred Shares for a
higher price than may have been available on the open market immediately
prior to the announcement of the Offer and without the usual transaction
costs associated with market sales. No commissions are payable to the
Depositary by shareholders who tender their Preferred Shares in the Offer.
There may be adverse consequences to the shareholders of Preferred Shares
who do not tender them in the Offer. See "--8. Certain Effects of the
Offer".
o The Offer for the Preferred Shares has been unanimously approved by the
Dunes' Board of Directors. Although the Board of Directors believes that
the Preferred Stock Offer Price is a fair price for the Preferred Shares,
the Dunes is not making a recommendation whether holders should tender
their Preferred Shares. Shareholders should determine as to whether to
accept the Offer based upon their own assessment of current market value,
liquidity needs and investment objectives.
o The Board of Directors also considered the fact that the Offer for the
Preferred Shares would be an opportunity to eliminate or reduce the
obligations evidenced by the Preferred Shares. In the absence of making
the Offer, the Preferred Shares will continue to accrue dividends at the
rate of $7.50 per Preferred Share per year. All of
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the Preferred Shares purchased by the Dunes upon the consummation of the
Offer will be cancelled by the Dunes.
o Finally, as discussed above, in the event that after the Offering there
are less than 300 holders of record of each of the Common Shares and
Preferred Shares, the Dunes will be able to avoid the significant costs
associated with being a public company.
3. USI LITIGATION
J.B.A. Investments, Inc., General Financial Services, Inc. and GFS
Acquisition Company, Inc. (a wholly-owned subsidiary of General Financial
Services) filed an action against USI Corp., Barney Kreutzer and Thomas
Honton (collectively the "USI Group") in the U.S. District Court for the
District of Kansas alleging, among other things, violations of the Williams
Act, ss.ss.13(d), 14(d) and 14(e) of the Securities Exchange Act of 1934, 15
U.S.C. 78a et seq. ("Williams Act"). The case is captioned J.B.A.
Investments, Inc., et al. v. USI Corp., et al., Case No. 00127 WEB (D. Kan.
2000). The plaintiffs allege that the USI Group conducted a tender offer for
the Preferred Shares from approximately August 1999 through April 2000 in
violation of the Williams Act. The plaintiffs believe that the USI Group was
able to purchase approximately 3,000 Preferred Shares at a price of $20 per
Preferred Share. The plaintiffs further allege that the USI Group failed to
file any of the necessary reports required under the Williams Act, failed to
make material disclosures to the former Series B Preferred shareholders and
engaged in fraudulent practices in conjunction with the alleged tender
offer. The plaintiffs seek a preliminary and permanent injunction
prohibiting the USI Group from completing the tender offer, recision of the
Preferred Shares purchased by the USI Group and damages.
The USI Group and the plaintiffs have consented to an order halting any
further purchases of the Preferred Shares by the USI Group, allowing the Dunes
to instruct its transfer agent to stop the transfer of such Preferred Shares to
USI Group and precluding the USI Group from transferring or otherwise disposing
of the acquired Preferred Shares.
The USI Group has filed a motion to dismiss the plaintiffs' action. The
plaintiffs have responded and the matter is under advisement by the court. On
August 3, 2000, the court entered an agreed order joining the Dunes as a third
party plaintiff in the action.
While management believes in the merits of the action against the USI
Group, there can be no assurance as to the outcome of the action and ultimate
ownership of the contested Preferred Shares. Due to the pending litigation and
the existing stop transfer order, management of the Dunes believes it is
unlikely that any of the Preferred Shares owned by the USI Group will be
tendered in the Offer.
4. INTERESTS OF CERTAIN PERSONS IN THE OFFER
Steve Miller, the president and a director of the Dunes, owns all of the
outstanding stock of General Financial Services, Inc. General Financial Services
directly owns 120 Preferred Shares and beneficially owns 3,883,922 Common Shares
(of which 833,922 are directly owned by GFS Acquisition Company, Inc., a wholly
owned subsidiary of General Financial Services). Mr. Miller has informed the
Dunes that General Financial Services intends to tender the Preferred Shares
that it owns in the Offer, because General Financial Services believes the price
to be fair. Mr. Miller has also informed the Dunes that neither General
Financial Services nor GFS Acquisition Company intend to tender the Common
Shares that they own, because they intend to continue to maintain their position
as majority shareholder of the Dunes.
The address for Mr. Miller, General Financial Services and GFS
Acquisition Company is 8441 E. 32nd Street N., Suite 200, Wichita, Kansas
67226.
To the extent that holders of Preferred Shares accept the Offer, Mr.
Miller will indirectly benefit from the reduction of the Dunes' obligations to
the holders of the Preferred Shares as a result of his indirect beneficial
ownership of Common Shares. To the extent that holders of Common Shares accept
the Offer, Mr. Miller's beneficial ownership percentage in the Dunes will
increase proportionately.
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Mr. Peaden owns 3,100 Common Shares. Mr. Peaden has informed the Dunes
that he does not intend to tender his Common Shares in the Offer because of
his continuing, long-term commitment to the Dunes as a director and officer.
None of the other directors or executive officers of the Dunes own any equity
securities of the Dunes.
5. MATERIAL FEDERAL INCOME TAX CONSEQUENCES
This summary of federal income tax consequences is not intended to be a
complete discussion of all possible federal income tax consequences that you may
have by selling your Shares in the Offer to Purchase. It is not intended as a
substitute for careful tax planning. The applicability of federal income tax
laws to shareholders owning Common Stock or Preferred Stock will vary from one
shareholder to another, depending upon each shareholder's tax situation.
Accordingly, you are advised to consult with your own attorneys, accountants and
other tax advisors as to the effect on your own tax situation of selling your
Shares.
The following discussion of the federal income tax consequences does not
purport to discuss all aspects of federal, state and local tax laws which may
affect you. Instead, it focuses on the federal income tax consequences of a
typical shareholder. This discussion of federal income tax consequences is based
upon the Internal Revenue Code of 1986, as amended (the "Code"), and upon
regulations, revenue rulings, court decisions and administrative authorities
governing the Code, as of the date of this Offer to Purchase, and related
documents and factual representations made by the Dunes. Many of the provisions
of the Code which are discussed in this summary were added or amended by one or
more of the tax acts passed by Congress from 1987 to the present, including 1999
legislation. Legislation proposed in 2000, but not signed into law or enacted,
is not considered in this discussion. In many instances, the Internal Revenue
Service ("IRS") has not issued regulations or rulings setting forth its
interpretation of provisions discussed in this summary, or the courts have not
yet ruled on relevant issues. Where neither the IRS nor the courts have provided
any guidance as to their position on an issue, this summary contains an
interpretation of legal counsel to the Dunes, Morrison & Hecker L.L.P.
("Counsel"), of such provisions, which merely represents Counsel's judgment and
is not binding upon the IRS or the courts. The following discussion is subject
to both the accuracy of facts and assumptions, and the continued applicability
of such legislative, administrative and judicial authorities, all of which
authorities are subject to change, possibly retroactively. Subsequent changes in
such authorities may cause the tax consequences to vary substantially from the
consequences described below, and any such change could be retroactively applied
in a manner that could adversely affect the tax consequences to you of disposing
of your Shares.
Furthermore, in an effort to provide guidance to taxpayers as
expeditiously as possible, the IRS in many cases adopts its proposed regulations
in temporary form or issues announcements or notices of its position. Temporary
regulations, announcements and notices may differ significantly from, or be
contrary to, the interpretation ultimately adopted by the IRS or the courts.
Where the IRS has not released any guidance as to its position, the
interpretations in this Offer to Purchase may be based almost entirely upon
Counsel's interpretation of the Code provisions. There can be no assurance that
Counsel's interpretation will prove to be correct in light of future IRS or
judicial decisions. You are urged, therefore, to seek independent advice in
evaluating the merits of this discussion, and specifically, evaluating those
provisions of the Code which may have a material affect on your disposition of
Shares.
The discussion below is directed primarily to an individual shareholder
who owns Common Stock or Preferred Stock in the Dunes and who is a United States
person (as determined for federal income tax purposes). Except as specifically
noted, the discussion does not address all of the federal income tax
consequences that may be relevant to you in light of your particular
circumstances. In particular, if you are a partnership, corporation, trust or
estate, or if you are subject to special rules, such as certain financial
institutions, tax exempt entities, foreign corporations, non-resident alien
individuals, regulated investment companies, insurance companies, dealers in
securities or traders in securities who elect to mark-to-market, or if you own
Common Stock or Preferred Stock of the Dunes as part of a "straddle," "synthetic
security," "hedge," "conversion transaction" or other integrated investment,
then you should seek independent advice in evaluating the merits of this
discussion and, specifically, in evaluating the provisions of the Code which may
have a material effect upon your decision to dispose of Common Stock or
Preferred Stock in the Dunes. Furthermore, the discussion deals only with Common
Stock or Preferred Stock of the Dunes held as "capital assets" within the
meaning of Section 1221 of the Code.
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Sale or Exchange Treatment for Shareholders
-------------------------------------------
Assuming that the Dunes purchases all of the outstanding Shares that you
own in the Dunes so that your interest in the Dunes is completely terminated,
then you will, upon the sale of the Shares, recognize a gain or loss for federal
income tax purposes in an amount equal to the difference between the amount
realized and your adjusted tax basis in the Shares so purchased. Such gain or
loss will be long-term capital gain or loss if the Shares were held for more
than one year. You are required to hold your Shares for more than one year in
order for the investment to qualify as a long-term capital gain which is subject
to an effective maximum federal income tax rate of 20%. If you sell your Shares
after December 31, 2000 after having held them more than five years, you may
qualify for a lower maximum federal income tax rate on the long-term capital
gain. If you sell your Shares at a profit within 12 months of purchasing them,
any gain would be taxed at ordinary income tax rates. Any loss upon the sale of
your Shares will generally be a capital loss. Net capital losses may offset no
more than $3,000 of ordinary income in the case of individuals and may only
offset capital gain in the case of a corporation. If you are an individual,
unused portions of such capital loss can be carried over to be used in later tax
years until such net capital loss is exhausted. If you are a corporation, an
unused capital loss may be carried back three years from the loss year and
carried forward five years from the loss year to offset capital gains.
If you elect to tender only a portion of your Shares in the Dunes, then
you cannot qualify for a sale or exchange treatment upon the Dunes' purchase of
your tendered Shares because your interest in the Dunes would not be completely
terminated. However, there are two other provisions of the Code which may permit
you to utilize sale or exchange treatment. The first provision, Code ss.
302(b)(2), would permit a purchase of your Shares to qualify as a sale or
exchange provided that a three-part mechanical test is met immediately after the
purchase: (1) you own less than 50% of the total combined voting power of all
classes of stock immediately after the purchase; (2) your percentage interest of
voting stock in the Dunes after the purchase is less than 80% of your percentage
interest of voting stock immediately before the purchase; and (3) if your
Preferred Stock is purchased, your ownership of Common Stock (whether voting or
non-voting) after and before the purchase also meets the 80% test described
above.
Even if you do not qualify under the three-part test outlined above, a
third provision, Code ss. 302(b)(1), allows sale or exchange treatment for a
purchase of your Shares by the Dunes if the purchase is "not essentially
equivalent to a dividend." In order to be "not essentially equivalent to a
dividend," the purchase must result in a meaningful reduction of your
proportionate interest in the Dunes, taking into consideration shares attributed
to you under the constructive ownership rules discussed below. This is a vague
standard which makes the determination depend upon facts and circumstances in
each individual situation and does not easily lend itself to clear guidelines.
There are some cases that have been decided by courts in which it was determined
that a purchase of stock by a company resulted in a stockholder having an
ownership interest in the company meaningfully reduced, depending upon the
ownership of the remaining stock in the company that existed after the purchase
and other factors. If you do not qualify for sale or exchange treatment under
the first two tests outlined above, you should review your situation with a tax
advisor to determine whether or not you could contend that a purchase of your
Shares by the Dunes is "not essentially equivalent to a dividend."
Attribution to You of Shares Owned by Others
--------------------------------------------
For purposes of all three of the tests for determining whether a sale or
exchange of your Shares has occurred, the Code requires you to be treated as
owning Shares in the Dunes that are owned by persons or entities that are
related to you. Shares that are attributed to you, because family members
related to you own such Shares, can be waived in determining whether your
interest in the Dunes has completely terminated, if certain steps are carried
out, one of which is filing an agreement with the Department of the Treasury to
notify them if you acquire an interest in the Dunes within a ten-year period
after the purchase occurs. Again, you should review these provisions carefully
with a tax advisor before determining whether or not a sale or exchange of your
Shares has occurred.
If you do not qualify for treatment as a sale or exchange, you will be
treated as having received a distribution of property from the Dunes at the time
that your Shares are purchased. The tax impact upon you of such a distribution
would depend upon the outcome of a three-part test set out in Code ss. 301(c).
First, such a distribution would be treated as a dividend to you to the extent
that the Dunes has either earnings and profits accumulated from prior operations
or earnings and profits of the tax year in which the distribution occurs. Since
the Dunes had an accumulated deficit of approximately $20 million as of June 30,
2000 and a net loss of approximately $690,000 for the first six months of 2000,
it is unlikely that the purchase price for the Shares would be treated as a
dividend.
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Under the second part of the three-part test set out in Code ss. 301(c), the
distribution would be applied against and reduce the adjusted basis that you
have in the Shares being purchased. Finally, if the distribution exceeds the
adjusted basis that you have in the Shares being purchased, the third part of
the test set out in Code ss. 301(c) would permit you to recognize a capital gain
for federal income tax purposes which would be a long-term capital gain if the
Shares were held for more than one year.
The Dunes may be Required to Withhold Taxes from Payments Otherwise Made to
------------------------------------- ------------------- --------- -------
You
---
Under Code ss. 3406, the Dunes may be required to withhold 31% of the
distributions (known as "backup withholding") that would otherwise be made to
you. Only in certain circumstances is the Dunes required to engage in backup
withholding. These rules apply to shareholders who fail to furnish information
to the Dunes or if the Dunes receives a notice that you have failed to include
interest or dividend payments on returns that were to have been filed with the
IRS. Any tax that is withheld can be claimed as a credit on your federal income
tax return. You should consult with your own tax advisor as to the impact of the
backup withholding rules upon your situation. These rules may apply whether the
payments are treated as capital gain transactions to you or as dividend
distributions to you under the discussion immediately above.
Conclusion Regarding Tax Treatment of the Dunes and Shareholders
----------------------------------------------------------------
This summary of the federal income tax consequences set forth above is not
intended to be a complete summary of the tax consequences to you of the Offer to
Purchase. It is not intended as a substitute for careful tax planning. The
applicability of the tax laws to shareholders will vary from one shareholder to
another, depending upon your tax situation. Accordingly, you are advised to
consult with one of your own attorneys, accountants and other personal tax
advisors as to the effect on your tax situation of the proposed purchase of your
Shares.
You should also be aware that the purchase of the Shares that you own in
the Dunes will likely have income tax consequences to you under state income tax
laws, depending upon the laws of the state in which you reside. You should
consult your tax advisor about the income tax impact upon you of any state
income taxation of the purchased Shares, if you reside in a state which imposes
a state income tax.
The federal income tax discussion set forth above is included for general
information only. You are urged to consult your tax advisor with respect to the
specific tax consequences to you of the Offer, including federal, state, local
and foreign tax consequences.
6. FINANCING OF THE OFFER
The total amount of funds required by the Dunes to purchase all the
outstanding Shares, other than those owned by General Financial Services, Inc.
and its affiliates, is expected to be approximately $1.3 million. The Dunes will
provide the funds needed from cash, cash equivalents and other marketable
securities and investments currently held by the Dunes.
7. BENEFICIAL OWNERSHIP OF THE STOCK
The following table sets forth certain information regarding beneficial
ownership of the Shares as of September 27, 2000 by (a) each shareholder who is
known by the Dunes to beneficially own, directly or indirectly, more than 5% of
either the Preferred Shares or the Common Shares, (b) each executive officer of
the Dunes, (c) each director of the Dunes and (d) all directors and executive
officers of the Dunes as a group.
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Name and Address Common Common Preferred Preferred
of Beneficial Owner Share Amount Share Percent Share Amount Share Percent
(1) (2) (1) (3)
--------------------------------------------------------------------------------
USI Corp.(4) 33 * 2,399 24.96%
1040 Lawrence Court
Wichita, Kansas 67206
Empire & Co. - - 1,973 20.53%
c/o Transpacific Corp
Box 328 A Exchange Pl Station
Jersey City, N.J. 07303
Steve K. Miller(5) 3,883,922 76.2% 120 *
Cary Peaden 3,100 * - -
James Herfurth - - - -
James Steckart - - - -
Paul Viets - - - -
Directors and officers 3,887,022 76.3% 120 *
as a group (five persons)(5)
----------------------
*Represents beneficial ownership of less than 1%
(1) Except as otherwise noted, and subject to community property laws where
applicable, each of the shareholders named in the table has sole voting
and investment power with respect to all Common Shares shown as
beneficially owned by the shareholder.
(2) Applicable percentages are based on 5,094,340 Common Shares outstanding as
of September 27, 2000.
(3) Applicable percentages are based on 9,610 Preferred Shares outstanding as
of September 27, 2000.
(4) Indicates record ownership. USI has informed the Dunes that they have
beneficial ownership of over 3,000 Preferred Shares.
(5) Includes 883,922 Common Shares that are owned by GFS Acquisition Company,
Inc. and 3,000,000 Common Shares and 120 Preferred Shares that are
beneficially owned by General Financial Services, Inc. GFS Acquisition
Company is a wholly-owned subsidiary of General Financial Services and as
a result, General Financial Services may be deemed to beneficially own
the Common Shares that are owned by GFS Acquisition Company. Mr. Miller is
the President, sole director and sole shareholder of General Financial
Services and as a result may be deemed to beneficially own the Common
Shares and Preferred Shares that are beneficially owned by General
Financial Services, including the Common Shares owned by GFS Acquisition
Company.
8. TRANSACTIONS AND ARRANGEMENTS CONCERNING SHARES
To the Dunes' knowledge, no transactions in the Shares have been effected
during the past 60 days by the Dunes or its executive officers, directors,
affiliates or subsidiaries, or by executive officers, directors or affiliates of
its subsidiaries.
9. CERTAIN EFFECTS OF THE OFFER
Reduced liquidity of the shares. Trading in the Shares has been very
limited. See "--2. Purpose and Fairness of the Offer". There can be no assurance
that any trading market will exist for the Shares following consummation of the
Offer. Any Shares acquired by the Dunes in the Offer will be cancelled. The
extent of the public market for the Shares following a consummation of the Offer
will depend on the number of holders that remain at such time, the interest in
maintaining a market in the Shares on the part of securities firms and other
factors. An issue of security with a smaller float may trade at lower prices
than would a comparable issue of
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<PAGE>
securities with a greater float. Accordingly, the market price for Shares that
are not tendered in the Offer may be adversely affected to the extent that the
amount of Shares purchased pursuant to the Offer reduces the float. The reduced
float also may have the effect of causing the trading prices of the Shares that
are not tendered or purchased to be more volatile.
Exchange Act Registration. The Common Shares and the Preferred Shares are
each currently registered under the Exchange Act. Registration of the Common
Shares or the Preferred Shares under the Exchange Act may be terminated upon
application of the Dunes to the SEC if the respective class of Shares is no
longer held by 300 or more holders of record. In the event that there are fewer
than 300 shareholders of record after the Offer, the Dunes will terminate the
registration of the respective class of Shares under the Exchange Act. The Dunes
is not required to accept any Common Shares tendered in the Offer, unless both
the Common Shares and the Preferred Shares will be held of record by less than
300 holders of record upon completion of the Offer. However, so long as either
of the Dunes' Common Shares or the Preferred Shares remains registered under the
Exchange Act, termination of registration of the other class of Shares under the
Exchange Act would not substantially reduce the information required to be
furnished by the Dunes to the SEC or that is available to shareholders. If the
Exchange Act registration for both the Common Shares and the Preferred Shares is
terminated as a result of the Offer, the amount of information publicly
available to the remaining shareholders of the Dunes would be significantly
reduced, which could adversely affect the trading market and market value for
the remaining Shares.
Certain Bankruptcy Considerations. Any payments made to shareholders in
consideration for their Shares also may be subject to challenge as a preference
if such payments: (a) are made within 90 days of a bankruptcy filing by the
Dunes (or within one year in the case of shareholders who are determined to be
insiders of the Dunes); (b) are made when the Dunes is insolvent; and (c) permit
the shareholders to receive more than they otherwise might receive in a
liquidation under applicable bankruptcy laws. If such payments were deemed to be
a preference, the full amount of such payments could be recovered by the Dunes
as a debtor in possession or by the Dunes' trustee in bankruptcy, and the
shareholder would be entitled to assert claims in respect of the Shares against
the Dunes in its reorganization or bankruptcy case. The Dunes does not believe
that it is currently insolvent, will be insolvent after giving effect to the
Offer or will be insolvent within one year, although for purposes of the
preference laws described above, the Dunes would be presumed insolvent for the
90 days preceding a bankruptcy or reorganization case.
THE OFFER
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer, the Dunes will
purchase all Common Shares at a purchase price of $1.00 net per share, in cash,
without interest, and all Preferred Shares at a purchase price of $30.00 net per
share, in cash, without interest, that are validly tendered and not withdrawn
prior to the expiration of the Offer. Holders of Preferred Shares will not
receive any accrued dividends on their Preferred Shares. There are no accrued
dividends on the Common Shares. If at the Expiration Date, all of the Shares
have not been tendered, the Dunes may extend the Expiration Date for an
additional period or periods of time by making public announcement and giving
oral or written notice of the extension to the Depositary. During any such
extension, all Shares previously tendered and not withdrawn will remain subject
to the Offer and subject to your right to withdraw the Shares. See "THE
OFFER--4. Withdrawal Rights".
Subject to the applicable regulations of the SEC, the Dunes also reserves
the right, in its sole discretion, at any time or from time to time, to: (a)
terminate the Offer (whether or not any Shares have previously been purchased)
if any condition referred to in "THE OFFER--8. Conditions to the Offer" has not
been satisfied or upon the occurrence of any event specified in "THE OFFER--8.
Conditions to the Offer"; and (b) waive any condition or otherwise amend the
Offer in any respect, in each case, by giving oral or written notice of the
termination, waiver or amendment to the Depositary and, other than in the case
of any waiver, by making a public announcement thereof. The Dunes acknowledges
(a) that Rule 14e-l(c) under the Securities Act requires it to pay the
consideration offered or return the Shares tendered promptly after the
termination or withdrawal of the Offer and (b) that the Dunes may not delay
purchase of, or payment for, any Shares upon the occurrence of any event
specified in "THE OFFER--8. Conditions to the Offer" without extending the
period of time during which the Offer is open.
The rights the Dunes reserves in the preceding paragraph are in addition
to its rights described in "THE OFFER--8. Conditions to the Offer". Any
extension, termination or amendment of the Offer will be followed as
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<PAGE>
promptly as practicable by a public announcement. An announcement in the case of
an extension will be made no later than 4:00 p.m., Central Time, on the next
business day after the previously scheduled Expiration Date. Without limiting
the manner in which we may choose to make any public announcement, subject to
applicable law (including Rules 13e-4(e), 14d-4(d) and 14d-6(c) under the
Exchange Act, which require that material changes be promptly disseminated to
holders of Shares), the Dunes will have no obligation to publish, advertise or
otherwise communicate any such public announcement other than by issuing a press
release to the Dow Jones News Service.
If the Dunes makes a material change in the terms of the Offer, or if the
Dunes waives a material condition to the Offer, the Dunes will extend the Offer
and disseminate additional tender offer materials to the extent required by
Rules 13e-3(e), 13e-4(e), 14d-4(d), 14d-6(c) and 14e-1 under the Exchange Act.
The minimum period during which a tender offer must remain open following
material changes in the terms of the offer, other than a change in price or a
change in percentage of securities sought, depends upon the facts and
circumstances, including the materiality of the changes. In the SEC's view, an
offer should remain open for a minimum of five business days from the date the
material change is first published, sent or given to shareholders, and, if
material changes are made with respect to information that approaches the
significance of price and the percentage of securities sought, a minimum of ten
business days may be required to allow for adequate dissemination and investor
response. With respect to a change in price, a minimum ten-business-day period
from the date of the change is generally required to allow for adequate
dissemination to shareholders. Accordingly, if prior to the Expiration Date, the
Dunes decreases the number of Shares being sought, or increases or decreases the
consideration offered pursuant to the Offer, and if the Offer is scheduled to
expire at any time earlier than the period ending on the tenth business day from
the date that notice of the increase or decrease is first published, sent or
given to holders of Shares, the Dunes will extend the Offer at least until the
expiration of such period of ten business days. For purposes of the Offer, a
"business day" means any day other than a Saturday, Sunday or a federal holiday
and consists of the time period from 12:01 a.m. through 12:00 midnight, Central
Time.
Consummation of the Offer is conditioned upon satisfaction of the
conditions set forth in "THE OFFER--8. Conditions to the Offer". The Dunes
reserves the right (but is not obligated), in accordance with applicable rules
and regulations of the SEC, to waive any or all of those conditions. If, by the
Expiration Date, any or all of those conditions have not been satisfied, the
Dunes may elect to (a) extend the Offer and, subject to applicable withdrawal
rights, retain all tendered Shares until the expiration of the Offer, as
extended, subject to the terms of the Offer; or (b) terminate the Offer and not
accept for payment any Shares and return all tendered Shares to tendering
shareholders. In the event that the Dunes waives any condition set forth in "THE
OFFER--8. Conditions to the Offer", the SEC may, if the waiver is deemed to
constitute a material change to the information previously provided to the
shareholders, require that the Offer remain open for an additional period of
time and/or that the Dunes disseminates information concerning such waiver.
This Offer to Purchase, the applicable Letter of Transmittal and other
relevant materials will be mailed to record holders of Shares and will be
furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the security
holder lists or, if applicable, who are listed as participants in a clearing
agency's security position listing, for forwarding to beneficial owners of
Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the conditions of the Offer (including, if
the Dunes extends or amends the Offer, the terms and conditions of the Offer as
so extended or amended), the Dunes will purchase, by accepting for payment, and
will pay for, all Shares validly tendered and not withdrawn (as permitted under
"THE OFFER--4. Withdrawal Rights") prior to the Expiration Date promptly after
the Expiration Date if all of the conditions to the Offer set forth in "THE
OFFER--8. Conditions to the Offer" have been satisfied or waived on or prior to
the Expiration Date.
In all cases, the Dunes will pay for Shares purchased in the Offer only
after timely receipt by the Depositary of (a) certificates representing the
Shares ("Share Certificates") or timely confirmation (a "Book-Entry
Confirmation") of the book-entry transfer of the Shares into the Depositary's
account at The Depository Trust Company (the "Book-Entry Transfer Facility")
pursuant to the procedures set forth in "THE OFFER--3. Procedures for Accepting
the Offer and Tendering Shares"; (b) the appropriate Letter of Transmittal (or a
facsimile), properly completed and duly executed, with any required signature
guarantees or an Agent's Message (as defined below) in connection with a
book-entry transfer; and (c) any other documents that the applicable Letter of
Transmittal requires. Accordingly, payment may be made to tendering shareholders
at different times. See "THE
17
<PAGE>
OFFER--3. Procedures for Accepting the Offer and Tendering Shares" for a
description of the procedure for tendering Shares pursuant to this Offer.
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 Shares which are the subject of the Book-Entry
Confirmation that the participant has received and agrees to be bound by the
terms of the applicable Letter of Transmittal and that we may enforce that
agreement against the participant.
For purposes of the Offer, the Dunes will be deemed to have accepted for
payment, and purchased, Shares validly tendered and not withdrawn if, as and
when the Dunes gives oral or written notice to the Depositary of acceptance of
the Shares for payment pursuant to the Offer. In all cases, upon the terms and
subject to the conditions of the Offer, payment for Shares purchased pursuant to
the Offer will be made by deposit of the purchase price for the Shares with the
Depositary, which will act as agent for tendering shareholders for the purpose
of receiving payment from us and transmitting payment to validly tendering
shareholders.
Under no circumstances will the Dunes pay interest on the Common Stock
Offer Price or the Preferred Stock Offer Price for any Shares, regardless of any
extension of the Offer or any delay in making such payment.
If the Dunes does not purchase any tendered Shares pursuant to the Offer
for any reason, or if you submit Share Certificates representing more Shares
than you wish to tender, the Dunes will return Share Certificates representing
unpurchased or untendered Shares, without expense to you (or, in the case of
Shares delivered by book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facility pursuant to the procedures set forth in "THE
OFFER--3. Procedures for Accepting the Offer and Tendering Shares", the Shares
will be credited to an account maintained within the Book-Entry Transfer
Facility), as promptly as practicable following the expiration, termination or
withdrawal of the Offer.
If, prior to the expiration date, the Dunes increases the price offered to
holders of Shares in the Offer, the Dunes will pay the increased price to all
holders of Shares that we purchase in the Offer, whether or not the Shares were
tendered before the increase in price.
3. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES
To tender Shares pursuant to this Offer, you must deliver before the
expiration of this Offer to the Depositary at one of its addresses set forth on
the back cover of this Offer to Purchase (1) either (a) the applicable Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed,
together with any required signature guarantees (and any other documents
required by the Letter of Transmittal) or (b) an Agent's Message in connection
with a book-entry delivery of shares and (2) either (a) the Share Certificates
for the tendered Shares must be received by the Depositary at one of such
addresses, (b) the 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 or (c) you must comply with the guaranteed delivery
procedures described below.
The method of delivery of Shares, the Letter of Transmittal and all other
required documents, including delivery through the Book-Entry Transfer Facility,
is at your option and sole risk, and delivery will be considered made only when
the Depositary actually receives the Shares. If delivery is by mail, registered
mail with return receipt requested, properly insured, is recommended. In all
cases, you should allow sufficient time to ensure timely delivery.
Book-Entry Transfer. The Depositary will make a request to establish an
account with respect to the Shares at the Book-Entry Transfer Facility or
purposes of the Offer within two business days after the date of this Offer to
Purchase. Any financial institution that is a participant in the system of the
Book-Entry Transfer Facility may make book-entry delivery of Shares by causing
the Book-Entry Transfer Facility to transfer the Shares into the Depositary's
account at the Book-Entry Transfer Facility in accordance with the Book-Entry
Transfer Facility's procedures. However, although Shares may be delivered
through book-entry transfer into the Depositary's account at the Book-Entry
Transfer Facility, the Depositary must receive the applicable Letter of
Transmittal (or facsimile), properly completed and executed, with any required
signature guarantees, or an Agent's Message in connection with
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a book-entry transfer, and any other required documents, at one of its addresses
set forth on the back cover of this Offer to Purchase on or before the
Expiration Date, or you must comply with the guaranteed delivery procedure set
forth below. Delivery of documents to the Book-Entry Transfer facility in
accordance with the Book-Entry Transfer Facility's procedures does not
constitute delivery to the Depositary.
Signature Guarantees. A bank, broker, dealer, credit union, savings
association or other entity which is a member in good standing of the Securities
Transfer Agents Medallion Program (an "Eligible Institution") must guarantee
signatures on all Letters of Transmittal, unless the Shares tendered are
tendered (a) by a registered holder of Shares who has not completed either the
box labeled "Special Payment Instructions" or the box labeled "Special Delivery
Instructions" on the Letter of Transmittal or (b) for the account of an Eligible
Institution. See Instruction 1 of the Letters of Transmittal.
If the Share Certificates are registered in the name of a person other
than the signer of the Letter of Transmittal, or if payment is to be made to, or
Share Certificates for unpurchased Shares are to be issued or returned to, a
person other than the registered holder, then the tendered certificates must be
endorsed or accompanied by appropriate stock powers, signed exactly as the name
or names of the registered holder or holders appear on the certificates, with
the signatures on the certificates or stock powers guaranteed by an Eligible
Institution as provided in the Letter of Transmittal. See Instructions 1 and 5
of the Letters of Transmittal.
If the Share Certificates are forwarded separately to the Depositary, a
properly completed and duly executed Letter of Transmittal (or facsimile) must
accompany each delivery of Share Certificates.
Guaranteed Delivery. If you want to tender Shares in the Offer and your
Share Certificates are not immediately available or time will not permit all
required documents to reach the Depositary on or before the Expiration Date or
the procedures for book-entry transfer cannot be completed on time, your Shares
may nevertheless be tendered if you comply with all of the following guaranteed
delivery procedures:
(a) your tender is made by or through an Eligible Institution;
(b) the Depositary receives, as described below, a properly completed
and signed Notice of Guaranteed Delivery, substantially in the form
made available by us, on or before the Expiration Date; and
(c) the Depositary receives the Share Certificates (or a Book-Entry
Confirmation) representing all tendered Shares, in proper form for
transfer together with a properly completed and duly executed
Letter of Transmittal (or facsimile), 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 within three trading days after the date of execution
of the Notice of Guaranteed Delivery.
You may deliver the Notice of Guaranteed Delivery by hand, mail or
facsimile transmission to the Depositary. The Notice of Guaranteed Delivery must
include a guarantee by an Eligible Institution in the form set forth in the
Notice of Guaranteed Delivery.
Notwithstanding any other provision of the Offer, we will pay for Shares
only after the conditions to the Offer have been met and only after timely
receipt by the Depositary of Share Certificates for, or of Book-Entry
Confirmation with respect to, the Shares, a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), together 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 appropriate Letter of
Transmittal. Accordingly, payment might not be made to all tendering
shareholders at the same time, and will depend upon when the Depositary receives
Share Certificates or Book-Entry Confirmation that the Shares have been
transferred into the Depositary's account at the Book-Entry Transfer Facility.
Backup Federal Income Tax Withholding. Under the backup federal income tax
withholding laws applicable to certain shareholders (other than certain exempt
shareholders, including, among others, all corporations and certain foreign
individuals), the Depositary may be required to withhold 31% of the amount of
any payments made to those shareholders pursuant to the Offer. To prevent backup
federal income tax withholding, you must provide the Depositary with your
correct taxpayer identification number and certify that you are not subject to
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backup federal income tax withholding by completing the Substitute Form W-9
included in the Letters of Transmittal. See Instruction 9 of the Letters of
Transmittal.
Determination of Validity. All questions as to the form of documents and
the validity, eligibility (including time of receipt) and acceptance for payment
of any tender of Shares will be determined by the Dunes, in its sole discretion,
which determination will be final and binding on all parties. The Dunes reserves
the absolute right to reject any or all tenders determined by it not to be in
proper form or the acceptance of or payment for which may, in the opinion of
counsel for the Dunes, be unlawful. The Dunes also reserves the absolute right
to waive any of the conditions of the Offer or any defect or irregularity in any
tender of Shares of any particular shareholder whether or not similar defects or
irregularities are waived in the case of other shareholders.
The Dunes' interpretation of the terms and conditions of the Offer will be
final and binding. No tender of Shares will be deemed to have been validly made
until all defects and irregularities with respect to the tender have been cured
or waived by the Dunes. None of the Dunes nor any of its affiliates or assigns,
the Depositary or any other person or entity will be under any duty to give any
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification.
Binding Agreement. The Dunes' acceptance for payment of Shares tendered
pursuant to any of the procedures described above will constitute a binding
agreement between the Dunes and you upon the terms and subject to the conditions
of the Offer.
4. WITHDRAWAL RIGHTS
Except as described in this Section 4, tenders of Shares made in the Offer
are irrevocable. You may withdraw Shares that you have previously tendered in
the Offer at any time on or before the Expiration Date.
If, for any reason, acceptance for payment of any Shares tendered in the
Offer is delayed, or the Dunes is unable to accept for payment or pay for Shares
tendered in the Offer, then, without prejudice to its rights set forth in this
document, the Depositary may, nevertheless, on the Dunes' behalf, retain Shares
that you have tendered, and you may not withdraw your Shares except to the
extent that you are entitled to and duly exercise withdrawal rights as described
in this Section 4. Any such delay will be by an extension of the Offer to the
extent required by law.
In order for your withdrawal to be effective, you must deliver a written
or facsimile transmission notice of withdrawal to the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase. Any such notice
of withdrawal must specify your name, the number of Shares that you want to
withdraw, and (if Share Certificates have been tendered) the name of the
registered holder of the Shares as shown on the Share Certificate, if different
from your name. If Share Certificates have been delivered or otherwise
identified to the Depositary, then prior to the physical release of such
certificates, you must submit the serial numbers shown on the particular
certificates evidencing the Shares to be withdrawn and an Eligible Institution,
as defined in "THE OFFER--3. Procedures for Accepting the Offer and Tendering
Shares", must guarantee the signature on the notice of withdrawal, except in the
case of Shares tendered for the account of an Eligible Institution. If Shares
have been tendered pursuant to the procedures for book-entry transfer set forth
in "THE OFFER--3. Procedures for Accepting the Offer and Tendering Shares", the
notice of withdrawal must also specify the name and number of the account at the
appropriate Book-Entry Transfer Facility to be credited with the withdrawn
Shares, in which case a notice of withdrawal will be effective if delivered to
the Depositary by any method of delivery described in the first sentence of this
paragraph. You may not rescind a withdrawal of Shares. Any Shares that you
withdraw will be considered not validly tendered for purposes of the Offer, but
you may tender your Shares again at any time before the Expiration Date by
following any of the procedures described in "THE OFFER--3. Procedures for
Accepting the Offer and Tendering Shares".
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Dunes, in its sole discretion,
which determination will be final and binding. Neither the Dunes, any of its
respective affiliates or assigns, the Depositary or any other person or entity
will be under any duty to give any notification of any defects or irregularities
in any notice of withdrawal or incur any liability for failure to give any such
notification.
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5. PRICE RANGE OF THE SHARES; DIVIDENDS
The Dunes' Common Shares are traded in the over-the-counter market under
the symbol "DUNE". The following table sets forth for the periods indicated the
range of the high and low bid quotations for the Dunes' Common Shares as quoted
on the OTC Bulletin Board. The reported bid quotations reflect inter-dealer
prices, without retail markup, markdown or commissions, and may not necessarily
represent actual transactions.
2000 HIGH LOW
---- ---- ---
1st Quarter $1.31 $0.80
2nd Quarter $1.00 $0.59
3rd Quarter $0.88 $0.63
1999 HIGH LOW
---- ---- ---
1st Quarter $0.25 $0.19
2nd Quarter $0.83 $0.21
3rd Quarter $0.89 $0.50
4th Quarter $0.78 $0.68
1998 HIGH LOW
---- ---- ---
1st Quarter $0.44 $0.25
2nd Quarter $0.37 $0.28
3rd Quarter $0.32 $0.15
4th Quarter $0.19 $0.14
There is not an established reporting system or trading market for trading
in the Preferred Shares. Accordingly, the Board of Directors has determined that
there is no practical way to determine the trading history of the Preferred
Shares. However, the Dunes believes that trading in the Preferred Shares has
been limited and sporadic. See "SPECIAL FACTORS--2.
Purpose and Fairness of the Offer".
Although the Dunes expects any untendered Shares to continue to be traded
after the consummation of the Offer, to the extent that the Shares are traded,
the prices of Shares may fluctuate depending on the trading volume and the
balance between buy and sell orders. The Dunes believes that the trading market
for the Shares that remain outstanding after the Offer will be very limited. See
"SPECIAL FACTORS--9. Certain Effects of the Offer--Reduced Liquidity of the
Shares".
The Dunes and its affiliates, including its executive officers and
directors, will be prohibited under applicable federal securities law from
repurchasing additional Shares outside of the Offer until at least the 10th
business day after the Expiration Date. Following such time, if any Shares
remain outstanding, the Dunes may purchase additional Shares in the open market,
in private transactions, through a subsequent offer, or otherwise, any of which
may be consummated at purchase prices higher or lower than that offered in the
Offer described in this Offer to Purchase. The decision to repurchase additional
Shares, if any, will depend upon many factors, including the market price of the
Shares, the results of the Offer, the business and financial position of the
Dunes, and general economic and market conditions. Any such repurchase may be on
the same terms or on terms more or less favorable to shareholders than the terms
of the Offer as described in this Offer to Purchase.
As of September 27, 2000, there were approximately 1,750 holders of record
of the Common Shares and 609 holders of record of the Preferred Shares.
Dividends on the Common Shares have not been paid since the second quarter of
1979 and dividends on the Preferred Shares have not been paid since the first
quarter of 1982. Dividends accrue on the Preferred Shares at the rate of $7.50
per share per year. The Dunes is in arrears on such Preferred Share dividends in
the amount of approximately $143.00 per Preferred Share as of September 30,
2000. There are no accrued dividends on the Common Shares. The Dunes has no
present intention to pay dividends on the Shares in the near future.
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6. POSSIBLE EFFECTS OF THE OFFER ON THE MARKET FOR THE SHARES AND EXCHANGE
ACT REGISTRATION
The purchase of the Shares pursuant to the Offer will reduce the number of
Shares that might otherwise be traded and the number of holders of Shares, which
could adversely affect the liquidity and market value of the remaining Shares
held by the public and have other consequences with respect to the Exchange Act
registration of the Shares. See "SPECIAL FACTORS--9. Certain Effects of the
Offer" and "THE OFFER--Conditions to the Offer".
7. CERTAIN INFORMATION CONCERNING THE DUNES
General. The Dunes is a New York corporation with its principal executive
offices located at 4600 Northgate Boulevard, Suite 130, Sacramento, CA 95834 and
the phone number is 916-292-2295.
Directors and Executive Officers. Each of the persons named below was
elected to serve as a member of the Dunes' Board of Directors until the 2001
Annual Meeting of Stockholders and until his successor has been duly elected and
qualified. The names of the current directors and certain information about
them, as of October 31, 2000, are set forth below.
Director
Name Age Position Since
---- --- -------- -----
Steve K. Miller 51 President and Director April 2000
D. Cary Peaden 45 Vice President and Director April 2000
James Herfurth 58 Director April 2000
James G. Steckart 51 Director April 2000
Paul H. Viets 67 Director April 2000
Mr. Miller was elected a director and President of the Dunes in April
2000. Mr. Miller has been employed by General Financial Services, Inc. since
1988 and as President since 1995. He earlier served as president and has
continually served as Chairman of the Board of Directors since its founding.
General Financial Services is primarily engaged in the investment and
redevelopment of distressed real estate assets. He also owns several
companies operated in conjunction with General Financial engaged in real
estate investment, agricultural, hotel ownership and aviation. Mr. Miller is
president and owns fifty percent of the stock of Milmo, Inc. which invests in
real estate and owns a hotel in Branson, Missouri. Prior to founding General
Financial, Mr. Miller owned and operated John Deere agricultural equipment
dealerships. Mr. Miller received his B.A. in Accounting and Finance from
Southwestern Oklahoma State University.
Mr. Peaden was elected a Director, Secretary and Treasurer of the Dunes
in April 2000. Mr. Peaden has been employed by General Financial Services,
Inc. since 1989 and as Vice President for the last five years. Mr. Peaden
attended and studied business administration at Wichita State University.
Mr. Herfurth was elected a Director of the Dunes in April 2000. Mr.
Herfurth has practiced law in California since 1977. He is a member of the
Board of Directors of Valley Solar Systems, Inc., a corporation doing
business in energy conservation, and is the President and a Director of FCW,
Inc., a corporation engaged in the purchase of consumer loans. Mr. Herfurth
owns and operates commercial, industrial and residential properties. He is
a graduate of the College of the Sequoias and Humphreys College of Law.
Mr. Steckart was elected a Director of the Dunes in April 2000. Since
January 1999, Mr. Steckart has been the President of PXC, LLC., a Washington
state based financial services company. Prior to joining PXC, Mr. Steckart
served as Chief Executive Officer and President of Home Choice, Inc., Dallas,
Texas, a publicly traded home furnishings and electronics leasing company from
May 1998 to January 1999 and Chief Operating Officer from February 1998 to
January 1999. From 1996 to October 1997, he was the President of Alameda
Management Company, a business engaged in the development, management and
ownership of inn-type motels. Mr. Steckart was employed by Advantage Companies,
Inc., a publicly traded franchisee of Rent-A-Center, first as Vice President of
Operations from 1991 to 1993 and then as President from 1993 to 1996.
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Mr. Viets was elected a Director of the Dunes in April 2000. Mr. Viets
is Chairman of the Board of Directors of Commerce Bank of Independence,
Kansas. Prior to that he served as Chairman, President and Director of
Citizens National Bank which he and his partners sold to Commerce Bankshares,
Inc., St. Louis, Missouri. Mr. Viets is also a partner in Vico Rentals, L.C.
a real estate development company unrelated to General Financial. Mr. Viets
is a business graduate of the University of Kansas.
Mr. Miller and Mr. Peaden are the only executive officers of the Dunes.
During the last five years, to the best knowledge of the Dunes, none of
the persons listed above have been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or 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 or final order
enjoining future violations of, or prohibiting activities subject to, federal or
state securities laws or finding any violation of such laws.
Available Information. The Dunes is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is required to
file periodic reports, proxy statements and other information with the SEC
relating to its business, financial condition and other matters. Information as
of certain dates concerning the Dunes' directors and officers, their
remuneration, stock options granted to them, the principal holders of the Dunes'
securities and any material interest of such persons in transactions with the
Dunes is required to be disclosed in proxy statements distributed to the Dunes'
shareholders and filed with the SEC. Such reports, proxy statements and other
information should be available for inspection at the public reference
facilities maintained by the SEC, 450 Fifth Street, N.W., Washington, D.C.
20549, and also should be available for inspection at the SEC's regional offices
located at Seven World Trade Center, Suite 1300, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such materials may also be obtained (i) by mail, upon payment of the
SEC's customary fees, by writing to its principal office at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, or (ii) at the SEC's world-wide web
site at www.sec.gov.
Historical Financial Information. The audited financial statements set
forth on pages F-2 through F-20 of the Dunes' Form 10-KSB for the fiscal year
ended December 31, 1999 and the unaudited financial statements in the Dunes'
Form 10-QSB for the fiscal quarters ended March 31, 2000 and June 30, 2000 are
hereby incorporated by reference into this Offer to Purchase. Such reports,
documents and other financial information may be inspected and copies may be
obtained from the SEC in the manner set forth above.
8. CONDITIONS TO THE OFFER
Notwithstanding any other term of the Offer, the Dunes will not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating
to the Dunes' obligation to pay for or return tendered Shares after the
termination or withdrawal of the Offer), pay for any Shares not theretofore
accepted for payment or paid for, and may terminate or amend the Offer, if:
(1) after giving effect to the purchase by the Dunes of all Shares
tendered in the Offer, there would be 300 or more holders of record
of either the Preferred Shares or the Common Shares. This condition
applies only to the Offer to acquire Common Shares and does not
apply to the Offer to acquire Preferred Shares;
(2) there will be pending or overtly threatened any suit, action or
proceeding brought by or on behalf of any governmental entity, or
any suit, action or proceeding brought by or on behalf of any
shareholder of the Dunes or any other person or party (A)
challenging the acquisition of any Shares pursuant to the Offer,
seeking to restrain or prohibit the making or consummation of the
Offer, or alleging that any such acquisition or other
transaction relates to, involves or constitutes a breach of
fiduciary duty by the Dunes' directors or a violation of
federal securities law or applicable corporate law or (B) seeking
to impose a material condition to the Offer which would be adverse
to the Dunes' shareholders;
(3) there will be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed
applicable to the Offer or any other action will be taken by
any governmental entity or court, that is reasonably likely to
result, in any of the consequences referred to in clauses (A) and
(B) of paragraph (2) above;
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(4) there will have occurred (A) any general suspension of, shortening
of hours for or limitation on prices for trading in securities in
the over-the-counter market (whether or not mandatory), (B) any
significant adverse change in the price of the Shares or in the
United States' securities or financial markets, (C) a
significant impairment in the trading market for equity securities,
(D) the declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States (whether or not
mandatory), (E) the commencement of a war, armed hostilities or
other international or national calamity directly or indirectly
involving the United States and having a material adverse effect
on the Dunes or materially adversely affecting (or materially
delaying) the consummation of the Offer, (F) any limitation or
proposed limitation (whether or not mandatory) by any U.S.
governmental authority or agency, or any other event, that
materially adversely affects generally the extension of credit
by banks or other financial institutions, or (G) in the case
of any of the situations described in clauses (A) through (F)
inclusive existing at the date of commencement of the Offer, a
material escalation or worsening thereof; or
(5) there will have occurred or be likely to occur any event or
series of events that, in the sole judgment of the Dunes, would or
might prohibit, prevent, restrict or delay consummation of the
Offer or that will, or is reasonably likely to, impair the
contemplated benefits to the Dunes of the Offer, or otherwise
result in the consummation of the Offer not being or not being
reasonably likely to be in the best interest of the Dunes;
which, in the reasonable judgment of the Dunes, in the case of (2), (3), (4)
or (5), and regardless of the circumstances giving rise to any such
condition, makes it inadvisable to proceed with the Offer or with such
acceptance for payment or payment for Shares.
The foregoing conditions are for the sole benefit of the Dunes and its
affiliates and may be asserted by the Dunes regardless of the circumstances
giving rise to such condition or may be waived by the Dunes in whole or in part
at any time and from time to time in its sole discretion. If any condition to
the Offer is not satisfied or waived by the Dunes prior to the Expiration Date,
the Dunes reserves the right (but shall not be obligated), subject to
applicable law, (i) to terminate the Offer and return the tendered Shares to
the tenderingshareholders; (ii) to waive all unsatisfied conditions and
accept for payment and purchase all Shares that are validly tendered (and not
withdrawn) prior tothe Expiration Date; (iii) to extend the Offer and retain
the Shares that have been tendered during the period for which the Offer is
extended; or (iv) to amend the Offer. The failure by the Dunes at any time to
exercise any of the foregoing rights will not be deemed a waiver of or
otherwise affect any other rights and each such right will be deemed an ongoing
right which may be asserted at any time and from time to time. Any
determination by the Dunes concerning the events described above will be final
and binding upon all parties.
The Dunes acknowledges that the SEC believes that (a) if the Dunes is
delayed in accepting the Shares it must either extend the Offer or terminate
the Offer and promptly return the Shares and (b) the circumstances in which a
delay in payment is permitted are limited and do not include unsatisfied
conditions of the Offer.
9. LEGAL MATTERS
The Dunes is not aware of any license or regulatory permit that appears
to be material to the business of the Dunes and that might be adversely
affected by the Dunes' acquisition of Shares pursuant to the Offer, or of any
approval or other action by any governmental, administrative or regulatory
agency or authority, domestic or foreign, that would be required for the
acquisition or ownership of Shares by the Dunes pursuant to the Offer. Should
any such approval or other action be required, it is presently contemplated
that such approval or action would be sought and if such approval could not be
obtained in a timely manner, the Offer would be terminated.
10. FEES AND EXPENSES
Except as otherwise provided herein, all fees and expenses incurred in
connection with the Offer will be paid by the party incurring such fees and
expenses, except that the Dunes will pay for all fees and expenses relating to
the filing, printing and mailing of the documents in connection with the Offer.
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Estimated fees and expenses to be incurred by the Dunes in connection
withthe Offer, are as follows:
Depositary Fees...................................... $20,000
Legal, Accounting and Other Professional Fees........ 25,000
Printing and Mailing Costs .......................... 7,500
SEC Filing Fees...................................... 1,077
Miscellaneous........................................ 5,000
-------
Total......................................... $58,577
=======
Directors, officers and regular employees of the Dunes and its affiliates
(who will not be specifically compensated for such services) may contact
shareholders by mail, telephone, telex, telegram messages, mailgram messages,
datagram messages and personal interviews regarding the Offer and may request
brokers, dealers and other nominees to forward this Offer to Purchase and
related materials to beneficial owners of Shares. The Dunes will reimburse its
affiliates for the time that the employees of such affiliates spend performing
such services.
Except as set forth above, neither the Dunes nor any person acting on its
behalf has employed, retained or compensated any person or class of persons to
make solicitations or recommendations on its behalf with respect to the Offer.
11. MISCELLANEOUS
The Depositary for the Offer is ChaseMellon Shareholder Services. All
deliveries, correspondence and questions sent or presented to the Depositary
relating to the Offer should be directed to the address or telephone number set
forth on the back cover of this Offer to Purchase. The Dunes will pay the
Depositary reasonable and customary compensation for its services in connection
with the Offer, plus reimbursement for reasonable out-of-pocket expenses.
Depositary does not assume any responsibility for the accuracy or
completeness of the information concerning the Dunes or its affiliates
contained in this Offer to Purchase or for any failure by the Dunes to
disclose events that may have occurred and may affect the significance or
accuracy of such information.
Brokers, dealers, commercial banks and trust companies will be reimbursed
by the Dunes for customary mailing and handling expenses incurred by them in
forwarding material to their customers. The Dunes will not pay any fees or
commissions to any broker, dealer or other person in connection with the
solicitation of tenders of Shares pursuant to the Offer.
We are not aware of any jurisdiction where the making of the Offer is
prohibited by any administrative or judicial action pursuant to any valid state
statute. If we become aware of any valid state statute prohibiting the making
of the Offer or the acceptance of the Shares, we will make a good faith
effort to comply with that state statute. If, after a good faith effort, we
cannot comply with the state statute, we will not make the Offer to, nor will
we accept tenders from or on behalf of, the holders of Shares in that state.
We have filed with the SEC a Tender Offer Statement on Schedule TO
together with exhibits, furnishing certain additional information with respect
to the Offer, and may file amendments to our Schedule TO. The Schedule TO and
any exhibits or amendments may be examined and copies may be obtained from the
SEC in the same manner as described in "THE OFFER--7. Certain Information
Concerning the Dunes" with respect to information concerning the Dunes except
that copies will not be available at the regional offices of the SEC.
We have not authorized any person to give any information or to make any
representation on behalf of the Dunes not contained in this Offer to Purchase
or in the Letters of Transmittal and, if given or made, you should not rely on
any such information or representation as having been authorized.
Neither the delivery of this Offer to Purchase nor any purchase pursuant
to the Offer will under any circumstances create any implication that there has
been no change in the affairs of the Dunes since the date as of which
information is furnished or the date of this Offer to Purchase.
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FACSIMILE COPIES OF LETTERS OF TRANSMITTAL, PROPERLY COMPLETED AND DULY
EXECUTED, WILL BE ACCEPTED. THE APPROPRIATE LETTER OF TRANSMITTAL, CERTIFICATES
FOR SHARES AND ANY OTHER REQUIRED DOCUMENTS SHOULD BE SENT OR DELIVERED BY YOU
OR YOUR BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE TO THE
DEPOSITARY AT ONE OF ITS ADDRESSES SET FORTH BELOW:
THE DEPOSITARY FOR THE OFFER IS:
[OBJECT OMITTED]
ChaseMellon Shareholder Services, L.L.C.
By First Class Mail: By Hand: By Overnight Company:
Reorganization Department Reorganization Department Reorganization Department
P.O. Box 3301 120 Broadway 82 Challenger Road
South Hackensack, NJ 07606 13th Floor Mail Stop-Reorg
New York, NY 10271 Ridgefield Park, NJ 07660
Facsimile (for eligible institutions only):
(201) 296-4293
Confirm Facsimile by telephone ONLY:
(201) 296-4860
YOU MAY DIRECT QUESTIONS AND REQUESTS FOR ASSISTANCE TO THE DUNES AT THE
TELEPHONE NUMBER AND ADDRESS SET FORTH BELOW. YOU MAY OBTAIN ADDITIONAL COPIES
OF THIS OFFER TO PURCHASE, THE LETTER OF TRANSMITTAL, THE NOTICE OF GUARANTEED
DELIVERY AND OTHER TENDER OFFER MATERIALS FROM THE DUNES AS SET FORTH BELOW AND
THEY WILL BE FURNISHED PROMPTLY AT OUR EXPENSE. YOU MAY ALSO CONTACT YOUR
BROKER, DEALER, COMMERCIAL BANK, TRUST COPMANY OR OTHER NOMINEE FOR ASSISTANCE
CONCERNING THE OFFER.
Thomas Steele
8441 E. 32nd Street N.
Suite 200
Wichita, Kansas 67226
(316) 636-1070, Ex. 28
