<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
SAFEGUARD HEALTH ENTERPRISES, INC.
(Name of Issuer)
COMMON STOCK, $.01 PAR VALUE
(Title of Class of Securities)
786444109
(CUSIP Number)
DAVID K. MEYERCORD, ESQ.
STRASBURGER & PRICE, L.L.P.
901 MAIN STREET, SUITE 4300
DALLAS, TEXAS 75202
(214) 651-4300
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
JULY 24, 2000
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check
the following box [ ].
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Section 240.13d-7(b) for
other parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D
CUSIP NO. 786444109
--------------
--------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
LESLIE B. DANIELS
--------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
--------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
--------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e) [ ]
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
--------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 35,155
----------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 9,127,000
----------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 35,155
----------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH: 9,127,000
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
9,162,155
--------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [X]
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
26.4%
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
--------------------------------------------------------------------------------
Page 2 of 14
<PAGE> 3
SCHEDULE 13D
CUSIP NO. 786444109
--------------
--------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
CAI Partners & Company II, Limited Partnership
--------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
--------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
--------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e) [ ]
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Canada
--------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 2,780,785
----------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 6,344,215
----------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 2,780,785
----------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH: 6,344,215
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
9,125,000
--------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [X]
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
26.3%
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
--------------------------------------------------------------------------------
Page 3 of 14
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SCHEDULE 13D
CUSIP NO. 786444109
--------------
--------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
CAI Capital Partners & Company II, Limited Partnership
--------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
--------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
--------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e) [ ]
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Canada
--------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 5,649,293
----------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 3,475,707
----------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 5,649,293
----------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH: 3,475,707
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
9,125,000
--------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
26.3%
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
--------------------------------------------------------------------------------
Page 4 of 14
<PAGE> 5
SCHEDULE 13D
CUSIP NO. 786444109
-----------------
--------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
CAI Capital Partners & Company II-C, Limited Partnership
--------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
--------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
--------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e) [ ]
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Canada
--------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 694,922
----------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 8,430,078
----------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 694,922
----------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH: 8,430,078
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
9,125,000
--------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
26.3%
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
--------------------------------------------------------------------------------
Page 5 of 14
<PAGE> 6
ITEM 1. SECURITY AND ISSUER.
Common Stock, $.01 par value.
SafeGuard Health Enterprises, Inc.
95 Enterprise
Aliso Viejo, California 92656
ITEM 2. IDENTITY AND BACKGROUND.
This report is filed by Leslie B. Daniels, CAI Partners & Company II,
Limited Partnership, an Ontario limited partnership ("Partners"), CAI Capital
Partners & Company II, Limited Partnership, an Ontario limited partnership
("Capital Partners") and CAI Capital Partners & Company II-C, Limited
Partnership, an Ontario limited partnership ("CP II-C"). Leslie B. Daniels is a
principal of Partners and Capital Partners, and CP II-C is associated with
Partners and Capital Partners. On March 1, 2000, SafeGuard Health Enterprises,
Inc. (the "Issuer") entered into a Term Sheet Agreement, dated March 1, 2000
(the "Term Sheet Agreement") with Partners, Capital Partners, Jack R. Anderson
("Anderson"), Silicon Valley Bank ("Bank"), John Hancock Mutual Life Insurance
Company and the other holders of the 7.91% Senior Notes of the Issuer due
September 30, 2005 (collectively, "Hancock"), and Steven J. Baileys, D.D.S.
("Baileys") (Partners, Capital Partners, CP II-C, Anderson and Baileys being
collectively referred to herein as the "Investors") relating to the lending of
funds by the Investors to the Issuer and the subsequent conversion of such loans
and other loans to the Company into Convertible Preferred Stock and Convertible
Notes of the Issuer. On July 24, 2000, Bank agreed to sell the indebtedness of
the Issuer owed to Bank, subject to the terms of the Term Sheet Agreement, to
the Investors and certain other parties pursuant to a Loan Document Purchase and
Assignment Agreement dated June 30, 2000 (the "Bank Debt Agreement").
This report is filed because of the voting securities of the Issuer
that certain Investors have a right to acquire pursuant to the Term Sheet
Agreement and Bank Debt Agreement as set forth below in this report. Closing
under the Term Sheet Agreement and Bank Debt Agreement is subject to the receipt
of the required regulatory approvals from the insurance departments of various
states in which the Issuer does business. This report is filed at this time
because such approvals may be obtained within the next 60 days. However, it is
anticipated that such approvals will not likely be obtained in such time frame
and will require a longer period of time. In addition, the closing under the
Term Sheet Agreement and Bank Debt Agreement is subject to other conditions
which could also delay the closing.
(a) Name of Reporting Person -- Leslie B. Daniels
(b) Business Address --
767 Fifth Avenue, 5th Floor
New York, NY 10153
(c) Principal occupation --
Principal with CAI Managers & Co., L. P., an investment
manager, with offices located at 767 Fifth Avenue, 5th Floor,
New York, NY 10153.
Page 6 of 14
<PAGE> 7
(d) Criminal Convictions -- none
(e) Injunctions with respect to federal or state securities laws
-- none
(f) Citizenship -- U.S.A.
(a) Name of Reporting Person -- CAI Partners & Company II, Limited
Partnership ("Partners")
(b) Business Address --
767 Fifth Avenue, 5th Floor
New York, NY 10153
(c) Principal Business -- Private Investment Fund
(d) Criminal Convictions -- None
(e) Injunctions with respect to federal or state securities laws
-- none
(f) Place of Organization -- Ontario limited partnership
Partners is an Ontario limited partnership. The sole general
partner of Partners is CAI Partners GP & Co., L.P., an Ontario
limited partnership (the "Partners General Partner"). The
Partners General Partner has five general partners each
consisting of corporations controlled by Leslie B. Daniels,
Richard J. Schmeelk, Peter M. Gottsegen, Peter G. Restler and
Manfred W. Yu, respectively. The Partners General Partner has
two limited partners consisting of two corporations controlled
by David M. Culver and Mark P. Culver, respectively.
(a) Name of Reporting Person -- CAI Capital Partners & Company II,
Limited Partnership ("Capital Partners")
(b) Business Address --
767 Fifth Avenue, Fifth Floor
New York, NY 10153
(c) Principal Business -- Private Investment Fund
(d) Criminal Convictions -- None
(e) Injunctions with respect to federal or state securities laws
-- none
(f) Place of Organization -- Ontario limited partnership
Page 7 of 14
<PAGE> 8
Capital Partners is an Ontario limited partnership. The sole
general partner of Capital Partners is CAI Capital Partners GP
& Co., L.P., an Ontario limited partnership (the "Capital
Partners General Partner"). The Capital Partners General
Partner has five general partners each consisting of
corporations controlled by Leslie B. Daniels, Richard J.
Schmeelk, Peter M. Gottsegen, Peter G. Restler and Manfred W.
Yu, respectively. The Capital Partners General Partner has two
limited partners consisting of two corporations controlled by
David M. Culver and Mark P. Culver, respectively.
(a) Name of Reporting Person -- CAI Capital Partners & Company II-C,
Limited Partnership ("CP II-C")
(b) Business Address --
767 Fifth Avenue, Fifth Floor
New York, NY 10153
(c) Principal Business -- Private Investment Fund
(d) Criminal Convictions -- None
(e) Injunctions with respect to federal or state securities laws
-- none
(f) Place of Organization -- Ontario limited partnership
CP II-C is an Ontario limited partnership. The sole general
partner of CP II-C is CAI Capital Partners GP II-C, Inc., a
Canadian corporation (the "CP II-C General Partner"). The CP
II-C General Partner is controlled by David M. Culver and Mark
P. Culver.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
This report covers shares of Common Stock of the Issuer (a)
beneficially owned by Leslie B. Daniels, (b) issuable upon the full conversion
of all loans, preferred stock and notes to be acquired pursuant to the Term
Sheet Agreement and Bank Debt Agreement by Partners, (c) issuable upon the full
conversion of all loans, preferred stock and notes to be acquired pursuant to
the Term Sheet Agreement and Bank Debt Agreement by Capital Partners, and (d)
issuable upon the full conversion of all loans, preferred stock and notes to be
acquired pursuant to the Term Sheet Agreement and Bank Debt Agreement by CP II-C
through assignment of certain rights of Partners and Capital Partners under the
Agreement to CP II-C. See Item 5 below for a complete description of the
ownership of the shares currently held and to be acquired by such parties. The
funds used to acquire the shares currently owned by Leslie B. Daniels were
personal funds. The funds to be used to acquire the convertible preferred stock
and convertible notes to be acquired by Partners, Capital Partners and CP II-C
(rights assigned to CP II-C by Partners and Capital Partners) pursuant to the
Agreement are funds held by such entities for investment. Partners, Capital
Partners and CP II-C
Page 8 of 14
<PAGE> 9
are private investment funds and were not formed specifically for making the
investment in the Issuer.
ITEM 4. PURPOSE OF TRANSACTION.
On March 1, 2000, Partners, Capital Partners, Anderson, Bank, Hancock
and Baileys entered into a Term Sheet Agreement dated March 1, 2000 (the "Term
Sheet Agreement"), with SafeGuard Health Enterprises, Inc., a Delaware
corporation (the "Issuer").
The purpose of the March 1 transaction is an investment by and
refinancing of the debt of the Issuer owed to Partners, Capital Partners, CP
II-C, Anderson, Baileys, Bank and Hancock. As a result of the consummation of
the transactions contemplated by the Term Sheet Agreement, Partners, Capital
Partners, CP II-C, Anderson and Baileys loaned the Issuer a collective
$8,000,000 (the "Investor Senior Loan") on March 1, 2000, as evidenced by five
separate promissory notes dated March 1, 2000. CP II-C received its rights under
the Term Sheet Agreement and is participating in the Investor Senior Loan as a
result of an assignment from Partners and Capital Partners of a portion of their
rights under the Term Sheet Agreement. Reference is made to the Assignment
included as an exhibit to this report for a complete description of such
assignment. Upon the satisfaction of all conditions precedent in the Term Sheet
Agreement, the Investor Senior Loan shall convert into a collective $6.4 million
of Convertible Series A Preferred Stock (64,000 shares at $100 per share) and
$1.6 million of Series A Convertible Notes. The Series A Convertible Notes will
automatically convert into 16,000 shares of Series A Preferred Stock ($100 per
share) upon the approval by the stockholders of the Issuer of an amendment to
its certificate of incorporation increasing the number of authorized shares of
the Issuer's Common Stock sufficient for the issuance of the Common Stock upon
the conversion of the shares of the Series A Preferred Stock and the Series B, C
and D Preferred Stock issuable upon the automatic conversion of the Series A
Convertible Notes and the Series B, C and D Convertible Notes. The Series A
Preferred Stock will be convertible into 8,000,000 (assuming full conversion of
the Series A Convertible Notes into Series A Preferred Stock) shares of Common
Stock of the Issuer at a conversion price of $1.00 per share. The Series A
Preferred Stock will be convertible upon its issuance.
The Issuer currently has outstanding indebtedness owed to Hancock and
to Bank. As stated above, the Investors and others have agreed to purchase the
indebtedness of Bank pursuant to the Bank Debt Agreement. As a result of the
consummation of the transactions contemplated by the Term Sheet Agreement and
after the satisfaction of all conditions precedent to the Term Sheet Agreement,
Hancock will receive $3.2 million of Series B Preferred Stock (32,000 shares at
$100 per share) and $800,000 of Series B Convertible Notes of the Issuer and
$8.8 million of Series D Preferred Stock (88,000 shares at $100 per share) and
$2.2 million of Series D Convertible Notes of the Issuer. As a result of the
consummation of the transactions contemplated by the Agreement, the parties
which acquired the Bank indebtedness will collectively receive $3.2 million in
Series B Preferred Stock (32,000 shares at $100 per share) and $800,000 of
Series B Convertible Notes of the Issuer and $2.4 million of Series C Preferred
Stock (24,000 shares at $100 per share) and $600,000 of Series C Convertible
Notes of the Issuer. The consideration paid by Hancock and Bank for such
preferred stock and convertible notes is the cancellation of all indebtedness
owed by the Issuer to Hancock and Bank. As described above, the indebtedness
owed to Bank will be purchased by the Investors and others pursuant to the Bank
Debt Agreement.
Page 9 of 14
<PAGE> 10
The Series B, C and D Convertible Notes will automatically convert into
Series B, C and D Preferred Stock respectively (at $100 per share) upon the
approval by the Issuer's shareholders of the amendment to the certificate of
incorporation of the Issuer described above. The Series B, C and D Preferred
Stock will be convertible into a collective 22,000,000 shares of Common Stock of
the Issuer at a conversion price of $1.00 per share. The Series B, C and D
Preferred Stock will be convertible upon its issuance.
In addition, Bank and Hancock agreed to not demand or accept any
payment principal or interest or accelerate or take any enforcement action with
respect to the Bank loan and Hancock notes until April 30, 2001, and agreed to
subordinate the Bank Loan and Hancock Notes to the $8 million Investor Senior
Loan.
The holders of Series A Preferred Stock (Partners, Capital Partners, CP
II-C, Anderson and Baileys) voting as a single class will have the right to
elect four out of the seven directors of the Issuer's board. The holders of
Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock
voting together as a single class will have the right to elect one director on
the board of directors of the Issuer. The holders of Common Stock of the Issuer
will have the right to elect the remaining two directors on the board of
directors of the Issuer.
In the event that Partners, Capital Partners, CP II-C (collectively,
"CAI") and Anderson at any time sell 50% or more of their respective Investor
Senior Loan or their respective Series A Preferred Stock and Series A
Convertible Notes, then, with respect to the election of directors, the Series
A, B, C and D Preferred Stock will be entitled to vote together as a single
class to elect five directors to the board of directors of the Issuer.
Leslie B. Daniels is one of the principals of Partners and Capital
Partners. Mr. Daniels individually will not acquire any voting securities of the
Issuer as a result of the transactions contemplated by the Term Sheet Agreement
and Bank Debt Agreement.
(a) Mr. Daniels does not have any current plans or proposals to acquire
any additional securities of the Issuer or to dispose of any securities of the
Issuer. As described above, CAI and others have entered into the Bank Debt
Agreement with Bank whereby CAI and the others would purchase from Bank the
outstanding indebtedness owed to the Bank by the Issuer and all of Bank's rights
under the Term Sheet Agreement, including the right to acquire Series B and C
Preferred Stock and Convertible Notes described herein, for $5,000,000.
(b) CAI and Mr. Daniels do not have any current plans or proposals
involving any extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer or any of its subsidiaries.
(c) CAI and Mr. Daniels do not have any current plans or proposals
involving the sale or transfer of a material amount of the assets of the Issuer
and of its subsidiaries.
(d) The board of directors of the Issuer presently consists of six
members. Pursuant to the Agreement, at the closing, the board of directors of
the Issuer is to consist of seven members, of which four will be individuals
designated by the owners of the Investor Senior Loan, the Series A
Page 10 of 14
<PAGE> 11
Preferred Stock and Series A Convertible Notes, as applicable. Partners, Capital
Partners and CP II-C control collectively more than a majority of such
loan/preferred stock/notes. In addition, Mr. Daniels is currently on the Board
of Directors of the Issuer.
(e) CAI and Mr. Daniels have no current plans or proposals to make any
material change in the present capitalization of the Issuer, other than the
transactions contemplated by the Term Sheet Agreement, or the dividend policy of
the Issuer.
(f) CAI and Mr. Daniels do not have any current plans or proposals to
make any other material change in the Issuer's business or corporate structure.
(g) CAI and Mr. Daniels do not have any current plans or proposals to
make any changes in the Issuer's charter, bylaws or instruments corresponding
thereto which may impede the acquisition of control of the Issuer by any person.
(h) CAI and Mr. Daniels do not have any current plans or proposals to
cause a class of securities of the Issuer to be delisted from a national
securities exchange or to cease to be authorized to be quoted in an inter-dealer
quotation system of a registered national securities association.
(i) CAI and Mr. Daniels do not have any current plans or proposals to
cause any class of equity securities of the Issuers to become eligible for
termination of registration pursuant to Section 12(g)(4) of the Securities Act
of 1934.
(j) CAI and Mr. Daniels do not have any plans or proposals to take any
action similar to any of the items discussed above, except as specifically noted
in Items (a) and (d), above.
Reference is made to the Agreement included as an exhibit to this
report for a complete description of the transactions contemplated by the
Agreement.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
This report covers shares of Common Stock of the Issuer (a)
beneficially owned by Leslie B. Daniels, (b) issuable upon the full conversion
of all loans, preferred stock and notes to be acquired pursuant to the Term
Sheet Agreement and Bank Debt Agreement by Partners, (c) issuable upon the full
conversion of all loans, preferred stock and notes to be acquired pursuant to
the Term Sheet Agreement and Bank Debt Agreement by Capital Partners, and (d)
issuable upon the full conversion of all loans, preferred stock and notes to be
acquired pursuant to the Term Sheet Agreement and Bank Debt Agreement by CP II-C
through assignment of rights of Partners and Capital Partners under the Term
Sheet Agreement to CP II-C.
Mr. Daniels is included in this report by virtue of his relationship
with Partners and Capital Partners.
As of April 30, 2000, the Issuer had 4,747,498 shares of Common Stock
outstanding. In the transactions contemplated by the Term Sheet Agreement and
Bank Debt Agreement, assuming full conversion of the Investor Senior Loan and
Series A, B, and D Convertible Notes, the Series A, B,
Page 11 of 14
<PAGE> 12
C and D Preferred Stock to be issued will collectively be convertible into
30,000,000 shares of Common Stock of the Issuer. As a result, after the purchase
transaction and assuming the conversion of all such preferred stock to be issued
in the purchase transaction, there will be 34,747,498 shares of Common Stock
outstanding (based on the number of shares of common stock of the Issuer
outstanding as of April 30, 2000).
The current beneficial ownership of securities of the Issuer by Mr.
Daniels consists of a total of 37,155 shares of Common Stock held as follows:
(a) 14,250 shares held directly by Mr. Daniels and 20,905 shares held by a trust
of which Mr. Daniels is a trustee, as to which Mr. Daniels has sole voting and
dispositive power, and (b) 1,000 shares held by Elizabeth A. Learson, the spouse
of Mr. Daniels, and 1,000 shares held by Paul B. Daniels, the brother of Mr.
Daniels, as to which Mr. Daniels has shared dispositive power. Such 37,155
shares in the aggregate represent .78% of the shares of common stock of the
Issuer currently outstanding and would represent approximately .11% of the
shares of common stock of the Issuer outstanding after the consummation of the
transactions contemplated by the Agreement, assuming full conversion of the
preferred stock to be issued pursuant to the Term Sheet Agreement and Bank Debt
Agreement as described above.
This report reflects a total of 9,162,155 shares beneficially owned by
Mr. Daniels which represents (a) the 37,155 shares as to which Mr. Daniels
currently has beneficial ownership and (b) the 9,125,000 shares issuable upon
full conversion of the preferred stock and notes to be issued to Partners,
Capital Partners and CP II-C in the transactions contemplated by the Term Sheet
Agreement and Bank Debt Agreement as to which Mr. Daniels will have shared
voting and dispositive powers. Mr. Daniels is one of the five principals of
Partners and Capital Partners, and CP II-C is associated with Partners and
Capital Partners, and as such, has shared voting and dispositive power of the
shares to be acquired by Partners, Capital Partners and CP II-C.
Partners does not currently own any shares of voting securities of the
Issuer. Upon consummation of the purchase, Partners would own Series A, B and C
Preferred Stock and Series A, B and C Convertible Notes convertible into a
collective 2,780,785 shares of Common Stock of the Issuer. Such shares would
represent approximately 8.00% of the outstanding shares of the Common Stock of
the Issuer assuming conversion of all the preferred stock and notes issuable
pursuant to the Term Sheet Agreement and Bank Debt Agreement. This report
reflects a total of 9,125,000 shares beneficially owned by Partners which
represents the shares issuable upon conversion of all the Series A, B and C
Preferred Stock and Series A, B and C Convertible Notes to be issued to
Partners, Capital Partners and CP II-C pursuant to the Term Sheet Agreement and
Bank Debt Agreement (and assignment of rights to CP II-C).
Capital Partners does not currently own any shares of voting securities
of the Issuer. Upon consummation of the purchase, Capital Partners would own
Series A, B and C Preferred Stock and Series A, B and C Convertible Notes
convertible into a collective 5,649,293 shares of Common Stock of the Issuer.
Such shares would represent approximately 16.26% of the outstanding shares of
the Common Stock of the Issuer assuming conversion of all the preferred stock
and notes issuable pursuant to the Term Sheet Agreement and Bank Debt Agreement.
This report reflects a total of 9,125,000 shares beneficially owned by Capital
Partners which represents the shares issuable upon conversion of all the Series
A, B and C Preferred Stock and Series A, B and C Convertible Notes
Page 12 of 14
<PAGE> 13
to be issued to Partners, Capital Partners and CP II-C pursuant to the Term
Sheet Agreement and Bank Debt Agreement (and assignment of rights to CP II-C).
CP II-C does not currently own any shares of voting securities of the
Issuer. Upon consummation of the purchase, CP II-C would own Series A, B and C
Preferred Stock and Series A, B and C Convertible Notes convertible into a
collective 694,922 shares of Common Stock of the Issuer. Such shares would
represent approximately 2.00% of the outstanding shares of the Common Stock of
the Issuer assuming conversion of all the preferred stock and notes issuable
pursuant to the Term Sheet Agreement and Bank Debt Agreement. This report
reflects a total of 9,125,000 shares beneficially owned by CP II-C which
represents the shares issuable upon conversion of all the Series A, B and C
Preferred Stock and Series A, B and C Convertible Notes to be issued to
Partners, Capital Partners and CP II-C pursuant to the Term Sheet Agreement and
Bank Debt Agreement (and assignment of rights to CP II-C).
Mr. Daniels, Partners, Capital Partners and CP II-C have not effected
any transaction involving shares of common stock of the Issuer at any time since
more than 60 days prior to the date of this report.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
Other than the Term Sheet Agreement and Bank Debt Agreement and the
relationship of Mr. Daniels as a principal of Partners and Capital Partners, and
CP II-C's association with Partners and Capital Partners, there are no
contracts, agreements, understandings or relationships between Mr. Daniels,
Partners, Capital Partners and CP II-C except for a Shareholders' Agreement to
be executed by the Investors, the parties acquiring the Bank's indebtedness
pursuant to the Bank Debt Agreement, Hancock, and the Issuer upon consummation
of the transactions contemplated by the Term Sheet Agreement and Bank Debt
Agreement. The Shareholders' Agreement relates to a voting agreement consistent
with the terms of the Term Sheet Agreement and certain drag-along rights for
Partners, Capital Partners, CP II-C and Anderson.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
The following documents are filed as exhibits to this report.
1. Written agreement of Leslie B. Daniels, CAI Partners & Company II,
Limited Partnership, CAI Capital Partners & Company II, Limited
Partnership and CAI Capital Partners & Company II-C, Limited
Partnership with respect to the joint filing of this report.
2. Term Sheet Agreement dated March 1, 2000, by and among the Issuer, the
Investors, Bank and Hancock.
3. Assignment dated as of March 1, 2000, among Partners, Capital Partners
and CP II-C.
4. Loan Document Purchase and Assignment Agreement dated as of June 30,
2000 among Bank, the Investors and Others.
Page 13 of 14
<PAGE> 14
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date July 31, 2000 /s/ Leslie B. Daniels
----------------------------- -------------------------------------
Signature
Leslie B. Daniels
-------------------------------------
Name/Title
Page 14 of 14
<PAGE> 15
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
1. Written agreement of Leslie B. Daniels, CAI Partners & Company II,
Limited Partnership, CAI Capital Partners & Company II, Limited
Partnership and CAI Capital Partners & Company II-C, Limited
Partnership with respect to the joint filing of this report.
2. Term Sheet Agreement dated March 1, 2000, by and among the Issuer, the
Investors, Bank and Hancock.
3. Assignment dated as of March 1, 2000, among Partners, Capital Partners
and CP II-C.
4. Loan Document Purchase and Assignment Agreement dated as of June 30,
2000 among Bank, the Investors and Others.
</TABLE>
