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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(Pursuant to Section 13(e)(1) of the Securities Exchange Act of 1934)
BEEBA'S CREATIONS, INC.
(Name of Issuer)
BEEBA'S CREATIONS, INC.
(Name of Person(s) Filing Statement)
COMMON STOCK
(Title of Class of Securities)
076590108
(CUSIP Number of Class of Securities)
Steven P. Wyandt
President
Beeba's Creations, Inc.
9220 Activity Road
San Diego, California 92126
(619) 549-2922
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of the Person(s) Filing Statement)
Copy to:
James A. Mercer III
Luce, Forward, Hamilton & Scripps
600 West Broadway, Suite 2600
San Diego, CA 92101
(619) 699-2447
JULY 20, 1995
(Date Tender Offer First Published, Sent or Given to Security Holders)
CALCULATION OF FILING FEE
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Transaction Valuation* Amount of Filing Fee
$9,600,000 $1,920
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* Based upon $8.00 cash per share for 1,200,000 shares.
[ ] Check here if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
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Amount Previously Paid:___________ Not Applicable Filing Party:____________Not Applicable
Form or Registration No.:__________ Not Applicable Date Filed:______________Not Applicable
</TABLE>
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ITEM 1. SECURITY AND ISSUER.
(a) The issuer of the securities to which this statement relates is
Beeba's Creations, Inc., a California corporation (the "Company"), and the
address of its principal executive office is 9220 Activity Road, San Diego,
California 92126.
(b) This statement on Schedule 13E-4 relates to an offer by the
Company to purchase up to 1,200,000 shares (or such lesser number of shares as
are properly tendered or, in the sole discretion of the Company, a greater
number of shares) of its common stock (the "Shares"), at $8.00 per Share, net
to the sellers, in cash, upon the terms and subject to the conditions set
forth in the Offer to Purchase, dated July 20, 1995 (the "Offer to Purchase"),
and in the related Letter of Transmittal (which together constitute the
"Offer"), copies of which are filed as Exhibits 99.a(1) and 99.a(2),
respectively. The information set forth in the "Introduction" and Sections 7
"Interest of Certain Persons; Transactions and Arrangements Concerning the
Shares" and 9 "Background and Purpose of the Offer" of the Offer to Purchase
is incorporated herein by reference.
(c) The Shares are listed and traded on the National Association of
Securities Dealers National Market System under the symbol "BEBA". The
information set forth in Section 6 "Price Range of Shares; Dividends" of the
Offer to Purchase is incorporated herein by reference.
(d) This statement is being filed by the Company.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATIONS.
(a) The information set forth in Section 8 "Source and Amount of
Funds" of the Offer to Purchase is incorporated herein by reference.
(b)(1)-(2) The information set forth in Section 8 "Source and Amount
of Funds" of the Offer to Purchase is incorporated herein by reference.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
The information set forth in the "Introduction" and Section 9
"Background and Purpose of the Offer" and Section 10 "Certain Information
About the Company" of the Offer to Purchase is incorporated herein by reference.
(a)-(g) Inapplicable.
(h)-(j) The information set forth in Section 11 "Effects of the
Offer on the Market for Shares; Registration under the Exchange Act" of the
Offer to Purchase is incorporated herein by reference.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
The information set forth in Section 7 "Interest of Certain Persons;
Transactions and Arrangements Concerning the Shares" of the Offer to Purchase
is incorporated herein by reference.
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ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE ISSUER'S SECURITIES.
Inapplicable.
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the "Introduction" and Section 16 "Fees
and Expenses" of the Offer to Purchase is incorporated herein by reference.
ITEM 7. FINANCIAL INFORMATION.
(a)-(b) The information set forth in Section 10 "Certain Information
About the Company", "--General", "--Historical Financial Information" of the
Offer to Purchase is incorporated herein by reference.
ITEM 8. ADDITIONAL INFORMATION.
(a) Inapplicable.
(b) The information set forth in Section 12 "Certain Legal Matters;
Regulatory Approvals" of the Offer to Purchase is incorporated herein by
reference.
(c) The information set forth in Section 11 "Effects of the Offer on
the Market for Shares; Registration under the Exchange Act" of the Offer to
Purchase is incorporated herein by reference.
(d) Inapplicable.
(e) Reference is hereby made to the Offer to Purchase and the related
Letter of Transmittal, forms of which are attached hereto as Exhibits 99.a(1)
and 99.a(2), respectively, which are incorporated in their entirety herein by
reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
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Exhibit 99.a(1) - Form of Offer to Purchase, dated July 20, 1995.
Exhibit 99.a(2) - Form of Letter of Transmittal (including Guidelines for
Certification of Taxpayer Identification Number on
Substitute Form W-9).
Exhibit 99.a(3) - Form of Notice of Guaranteed Delivery.
Exhibit 99.a(4) - Form of Letter to Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
Exhibit 99.a(5) - Form of Letter to Clients for use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees.
Exhibit 99.a(6) - Press Release issued by the Company on July 17, 1995.
Exhibit 99.a(7) - Form of Letter to the Company's shareholders from the
President of the Company, dated July 20, 1995.
Exhibit 99.a(8) - Form of Letter from Plan Administrative Committee to
Plan Participants, dated July 20, 1995.
Exhibit 99.b - Amendments to Non-Notification
Factoring Agreement between the Company and Congress
Talcott, Ltd. dated May 21, 1991, January 24, 1992,
July 20, 1992, and July 12, 1995.
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Exhibit 99.g - Documents incorporated by reference into the Offer to Purchase:
Non-Notification Factoring Agreement between Beeba's Creations, Inc.
and Congress Talcott, Ltd. dated April 1, 1991;
Beeba's Creations, Inc. Annual Report on Form 10-K
for the year ended August 31, 1994 and Quarterly Report on
Form 10-Q for the three-month period ended May 31, 1995.
Exhibit 99.h - Independent Auditors' Consent.
</TABLE>
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SIGNATURE
After due 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.
BEEBA'S CREATIONS, INC.
By: STEVEN P. WYANDT
---------------------------
Steven P. Wyandt, President
Dated: July 17, 1995
5
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EXHIBIT INDEX
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Exhibit No. Description
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99.a(1) Form of Offer to Purchase, dated July 20, 1995.
99.a(2) Form of Letter of Transmittal (including Guidelines for
Certification of Taxpayer Identification Number of
Substitute Form W-9).
99.a(3) Form of Notice of Guaranteed Delivery.
99.a(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and other Nominees.
99.a(5) Form of Letter to Clients for use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees.
99.a(6) Press Release issued by the Company on July 17, 1995.
99.a(7) Form of Letter to the Company's shareholders from the President
of the Company, dated July 20, 1995.
99.a(8) Form of Letter from Plan Administrative Committee to Plan
Participants dated July 20, 1995.
99.b Non Notification Agreement between the Company and Congress
Talcott, Ltd. dated May 2, 1991, January 24, 1992, July 20,
1992, and July 12, 1995.
99.g Documents incorporated by reference into the Offer to Purchase
Agreement: Non Notification Factoring between Beeba's
Creations, Inc. and Congress Talcott, Ltd. dated April 1,
1991, filed as exhibit 9(b) to the Schedule 13c-4 filed with the
Securities and Exchange Commission on January 27, 1992; Beeba's Creations,
Inc. Annual Report on Form 10-K for the year ended August 31, 1994;
and Quarterly Report on Form 10-Q for the three-month period ended
May 31, 1995.
99.h Independent Auditors' Consent.
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EXHIBIT 99.a(1)
BEEBA'S CREATIONS, INC.
OFFER TO PURCHASE FOR CASH UP TO 1,200,000 SHARES OF ITS
COMMON STOCK AT A PURCHASE PRICE OF $8.00 NET PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M.
NEW YORK CITY TIME, ON FRIDAY, AUGUST 18, 1995,
UNLESS THE OFFER IS EXTENDED.
Beeba's Creations, Inc., a California corporation (the "Company"),
invites its shareholders to tender 1,200,000 shares of its Common Stock (the
"Shares"), at $8.00 per Share net to the shareholder, in cash (the "Purchase
Price"), upon the terms and subject to the conditions set forth in this Offer
to Purchase and the related Letter of Transmittal (which together constitute
the "Offer"). The Company reserves the right, in its sole discretion, to
purchase more than 1,200,000 Shares pursuant to the Offer. All Shares properly
tendered and not withdrawn prior to the expiration of the Offer will be
purchased at the Purchase Price, upon the terms and subject to the conditions
of the Offer, including its proration terms.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
SECTION 5.
The Shares are listed and principally traded on the National
Association of Securities Dealers National Market System (NASDAQ). On July 14,
1995, the last trading day before the Company announced its intention to
commence the Offer, the closing per Share sales price as reported on NASDAQ was
$5.50. The Company urges shareholders to obtain current market quotations for
the Shares prior to tendering any Shares pursuant to the Offer. See
Introduction and Section 6.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY
RECOMMENDATION TO ANY SHAREHOLDER AS TO WHETHER TO TENDER OR TO REFRAIN FROM
TENDERING SHARES PURSUANT TO THE OFFER. EACH SHAREHOLDER MUST MAKE HIS OR HER
OWN DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER.
SEE INTRODUCTION AND SECTION 7 FOR INFORMATION CONCERNING THE INTENTION OF
ARJUN C. WANEY, THE COMPANY'S PRINCIPAL SHAREHOLDER, IN CONNECTION WITH THE
OFFER. THE COMPANY HAS BEEN ADVISED THAT CERTAIN OF ITS DIRECTORS AND OFFICERS
INTEND TO TENDER SHARES PURSUANT TO THE OFFER. SEE INTRODUCTION AND SECTION 7.
The objective of the Offer is to deliver directly to shareholders a
portion of the Company's current value and to provide the Company's
shareholders with a means of furthering their investment objectives with
respect to the Shares. The Offer provides shareholders who wish to currently
realize a portion of, or perhaps all, their investment in the Company in cash
with an opportunity to sell a portion of, or perhaps all, their Shares at a
premium over current market prices of the Shares. The Offer also is intended
to provide shareholders with an opportunity to increase their proportionate
ownership interest in the Company, either by not participating in the Offer or
by participating in the Offer and reinvesting their after-tax proceeds in
additional Shares. See Sections 9 and 13.
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IMPORTANT
Any shareholder desiring to tender all or any portion of the Shares
should either (i) complete and sign a Letter of Transmittal or a facsimile copy
thereof in accordance with the instructions in such Letter of Transmittal, mail
or deliver it and any other required documents to American Stock Transfer &
Trust Company (the "Depositary"), and either mail or deliver the certificates
for such Shares to the Depositary (with all such other documents) or follow the
procedure for book-entry transfer set forth in Section 2; or (ii) request such
shareholder's broker, dealer, commercial bank, trust company or other nominee
to effect the transaction for such shareholder. A shareholder having Shares
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee must contact that entity if such shareholder desires to tender
any such Shares. Shareholders who desire to tender Shares and whose
certificates for such Shares cannot be delivered to the Depositary or who
cannot comply with the procedures for book-entry transfer or whose other
required documents cannot be delivered to the Depositary, in any such case,
prior to the expiration of the Offer must tender such Shares by following the
procedures for guaranteed delivery set forth in Section 2.
Questions and requests for assistance or for additional copies of this
Offer to Purchase may be directed to D.F. King & Co., Inc., the Information
Agent, at the addresses and telephone numbers set forth on the back cover of
this Offer to Purchase.
July 20, 1995
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF
THE COMPANY AS TO WHETHER SHAREHOLDERS SHOULD TENDER OR REFRAIN FROM TENDERING
SHARES PURSUANT TO THE OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER
THAN THOSE CONTAINED IN THIS OFFER TO PURCHASE AND IN THE LETTER OF
TRANSMITTAL. IF GIVEN OR MADE, SUCH RECOMMENDATION, INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY.
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TABLE OF CONTENTS
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Section Page
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INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1. Number of Shares; Extension; Proration . . . . . . . . . . . . . 2
2. Procedures for Tendering Shares . . . . . . . . . . . . . . . . 3
3. Withdrawal Rights . . . . . . . . . . . . . . . . . . . . . . . 6
4. Purchase of Shares and Payment of Purchase Price . . . . . . . . 6
5. Certain Conditions of the Offer . . . . . . . . . . . . . . . . 7
6. Price Range of Shares; Dividends . . . . . . . . . . . . . . . . 9
7. Interest of Certain Persons; Transactions and
Arrangements Concerning the Shares . . . . . . . . . . . . . . 10
8. Source and Amount of Funds . . . . . . . . . . . . . . . . . . . 11
9. Background and Purpose of the Offer . . . . . . . . . . . . . . 11
10. Certain Information About the Company . . . . . . . . . . . . . 12
11. Effects of the Offer on the Market for Shares;
Registration under the Exchange Act . . . . . . . . . . . . . 17
12. Certain Legal Matters; Regulatory Approval . . . . . . . . . . . 17
13. Certain Federal Income Tax Consequences . . . . . . . . . . . . 18
14. Certain Limitations on Purchases of Shares by the Company . . . 20
15. Extension of the Tender Period; Termination; Amendments . . . . 21
16. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . 21
17. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . 22
SCHEDULE I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
</TABLE>
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TO THE HOLDERS OF COMMON STOCK OF BEEBA'S CREATIONS, INC.:
INTRODUCTION
Beeba's Creations, Inc. (the "Company"), hereby offers to purchase,
and invites its shareholders to tender, up to 1,200,000 shares of its common
stock (the "Shares"), at $8.00 per Share, net to the seller, in cash, (the
"Purchase Price"), upon the terms and subject to the conditions set forth in
this Offer to Purchase and in the related Letter of Transmittal (the "Letter of
Transmittal," which together with this Offer to Purchase, constitute the
"Offer"). The Company reserves the right, in its sole discretion, to purchase
more than 1,200,000 Shares pursuant to the Offer. See Section 1. All Shares
properly tendered and not withdrawn prior to the expiration of the Offer will
be purchased at the Purchase Price, upon the terms and subject to the
conditions of the Offer, including the proration terms described below. Shares
not purchased because of proration will be returned.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
SECTION 5.
Upon the terms and subject to the conditions of the Offer, if at the
expiration of the Offer more than 1,200,000 Shares are properly tendered, the
Company will buy Shares on a pro rata basis (with appropriate adjustments to
avoid purchases of fractional Shares) from all shareholders who properly tender
Shares and do not withdraw them prior to the expiration of the Offer. See
Sections 1 and 3. The Company will return all Shares not purchased because of
proration. Tendering shareholders will not be obligated to pay brokerage
commissions, solicitation fees or, subject to Instruction 6 of the Letter of
Transmittal, stock transfer taxes because of the Company's purchase of Shares
pursuant to the Offer. In addition, the Company will pay all fees and expenses
of D.F. King & Co., Inc. (the "Information Agent") and American Stock Transfer
& Trust Company (the "Depositary") in connection with the Offer. See Section
16.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY
RECOMMENDATION TO ANY SHAREHOLDER AS TO WHETHER TO TENDER OR TO REFRAIN FROM
TENDERING SHARES PURSUANT TO THE OFFER. EACH SHAREHOLDER MUST MAKE HIS OR HER
OWN DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER.
The Company has been advised that each of its directors and executive
officers intend to tender Shares on at least a pro rata basis with the
aggregate of all Shares tendered by other shareholders. See Section 7.
Plan Administrative Committee. Shareholders who are participants in
the Company's Retirement Savings Plan (the "Savings Plan") and the Employee
Stock Purchase Plan (the "Stock Plan") (collectively the "Plans") may instruct
the Administrative Committee as agent under such Plans, to tender part or all
of the Shares attributed to the participant's account.
The Shares are listed and principally traded on the National
Association of Securities Dealers National Market System (NASDAQ) under the
symbol "BEBA". On July 14, 1995, the last trading day before the Company
announced its intention to commence the Offer, the closing per Share sales
price as reported on NASDAQ was $5.50. The Company urges shareholders to
obtain current market quotations for the Shares prior to tendering any Shares
pursuant to the Offer. See also Section 6 regarding entitlement to dividends.
The 1,200,000 Shares that the Company is offering to purchase pursuant
to the Offer represent approximately 50.04% of the 2,398,224 Shares issued and
outstanding as of July 14, 1995. In addition, as of such date, an aggregate of
up to 92,100 additional Shares were issuable upon exercise of outstanding stock
options.
<PAGE> 5
Shareholders whose Shares are not purchased in the Offer will obtain a
proportionate increase in their ownership interest in the Company immediately
after consummation of the Offer, depending on the number of Shares purchased as
a result of the Offer. Any Shares acquired by the Company pursuant to the
Offer will initially be cancelled and become authorized and unissued Shares and
will be available for issuance by the Company without further shareholder
action (except as required by applicable law or the rules of any securities
exchange on which the Shares are then listed) for general or other corporate
purposes, including stock splits or dividends, acquisitions, the raising of
additional capital for use in the Company's business and the implementation of
employee benefit plans. See also Section 9.
This Offer to Purchase and the Letter of Transmittal are being mailed
to holders of record 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 Company's shareholder list or, if applicable,
who are listed as participants in a clearing agency's security position
listing, for subsequent transmittal to beneficial owners of Shares.
1. NUMBER OF SHARES; EXTENSION; PRORATION.
Number of Shares. Upon the terms and subject to the conditions of the
Offer, the Company will accept for payment and pay for (and thereby purchase)
up to 1,200,000 Shares or such lesser number of Shares as are properly
tendered, and not withdrawn in accordance with Section 3, prior to the
Expiration Date (as defined below) at a price of $8.00 per Share net to the
seller in cash. The term "Expiration Date" means 5:00 P.M., New York City
time, on August 18, 1995, unless and until the Company shall have extended the
period of time during which the Offer will remain open, in which event the term
"Expiration Date" shall refer to the latest time and date at which the Offer,
as so extended by the Company, shall expire. If the Offer is over-subscribed,
Shares tendered and not withdrawn prior to the Expiration Date will be
prorated. The proration period also expires at the Expiration Date.
The Company reserves the right to purchase more than 1,200,000 Shares
pursuant to the Offer. In accordance with applicable regulations of the
Securities and Exchange Commission (the "Commission"), the Company may accept
for payment pursuant to the Offer an additional amount of Shares not to exceed
2% of the Shares (approximately 47,965 Shares based upon Shares outstanding as
of July 14, 1995) without extending the Offer.
See below and Section 15 for a description of the Company's rights to
extend the time during which the Offer is open and to delay, terminate or amend
the Offer. See also Section 5 for a description of certain conditions of the
Offer.
Extension. If the following events occur:
(a) the Company increases or decreases the price to be paid
for the Shares, or the Company increases the number of Shares being
sought and any such increase in the number of Shares being sought
exceeds 2% of the outstanding Shares, or the Company decreases the
number of Shares being sought, and
(b) the Offer is scheduled to expire less than ten business
days from and including the date that notice (the "Notice") of such
increase or decrease is first published, sent or given in the manner
set forth in Section 15,
then the Offer will be extended so that it will not expire until at least the
end of the tenth business day from and including the date of such Notice. For
purposes of the Offer, a "business day" means any day other than a Saturday,
Sunday or federal holiday until 5:00 P.M., New York City time on such day.
2
<PAGE> 6
Acceptance in Full. Upon the terms and subject to the conditions of
the Offer, if the number of Shares properly tendered and not withdrawn prior to
the Expiration Date is less than or equal to 1,200,000 Shares (or such greater
number of Shares as the Company may elect to purchase pursuant to the Offer),
the Company will, upon the terms and subject to the conditions of the Offer,
accept for payment at the Purchase Price all Shares so tendered.
Proration. Upon the terms and subject to the conditions of the Offer,
in the event that at the Expiration Date a greater number of Shares than
1,200,000 Shares (or such greater number of Shares as the Company may elect to
purchase pursuant to the Offer) are properly tendered, the Company will accept
all Shares properly tendered and not withdrawn prior to the Expiration Date on
a pro rata basis (with appropriate adjustments to avoid purchases of fractional
shares) based upon the number of such Shares.
In the event the proration of tendered Shares is required, the Company
will determine the final proration factor as promptly as practicable following
the Expiration Date. Proration for each shareholder tendering Shares shall be
based on the ratio of the number of Shares tendered by such shareholder to the
total number of Shares tendered by all shareholders. Although the Company does
not expect to be able to announce the final results of any proration until
approximately seven trading days after the Expiration Date, it will announce
preliminary results of the prorations by press release as promptly as
practicable following the Expiration Date. Shareholders may obtain such
preliminary information from the Information Agent and may also be able to
obtain such information from their brokers or other nominees. All Shares not
purchased pursuant to the Offer because of proration will be returned to the
tendering shareholders at the Company's expense as promptly as practicable
following the Expiration Date.
2. PROCEDURES FOR TENDERING SHARES.
Proper Tender of Shares. For Shares to be properly tendered pursuant
to the Offer:
(a) the certificates for such Shares or confirmation of
delivery of such Shares pursuant to the procedure for book-entry
transfer set forth below, together with a properly completed and duly
executed Letter of Transmittal (or facsimile thereof) including any
required signature guarantees, and any other documents required by the
Letter of Transmittal, must be received prior to the Expiration Date
by the Depositary at its address set forth on the back cover of this
Offer to Purchase; or
(b) the tendering shareholder must comply with the guaranteed
delivery procedure set forth below.
It is a violation of Section 14(e) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and Rule 14e-4 promulgated thereunder,
for a person to tender Shares for such person's own account unless the person
so tendering:
(a) owns such Shares; or
(b) owns other securities convertible into or exchangeable
for Shares or owns an option, warrant or right to purchase Shares and
intends to acquire such Shares for tender by conversion, exchange or
exercise of such option, warrant or right.
Section 14(e) and Rule 14e-4 contain a similar restriction applicable to a
tender or guarantee of a tender on behalf of another person.
The acceptance of Shares by the Company for payment will constitute a
binding agreement between the tendering shareholder and the Company upon the
terms and subject to the conditions of the Offer,
3
<PAGE> 7
including the tendering shareholder's representation that (i) such shareholder
owns the Shares being tendered within the meaning of Rule 14e-4; and (ii) the
tender of such Shares complies with Rule 14e-4.
Signature Guarantees and Method of Delivery. No signature guarantee
is required on a Letter of Transmittal (i) if such Letter of Transmittal is
signed by the registered institutional holder of Shares (which term, for
purposes of the Offer, includes any participant in The Depository Trust
Company, the Philadelphia Depository Trust Company or the Midwest Securities
Trust Company [together the "Book-Entry Transfer Facilities"] whose name
appears on a security position listing as the holder of such Shares) tendered
therewith and such holder has not completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on
the Letter of Transmittal; or (ii) if Shares are tendered for the account of a
member firm of a registered national securities exchange, a member of the
National Association of Securities Dealers, Inc. or a commercial bank or trust
company having an office, branch or agency in the United States (each such
entity being hereinafter referred to as an "Eligible Institution").
In all other cases, all signatures on a Letter of Transmittal must be
guaranteed by an Eligible Institution. See Instruction 1 of the Letter of
Transmittal. If a certificate representing Shares is registered in the name of
a person other than the signer of a Letter of Transmittal, or if payment is to
be made, or Shares not purchased or tendered are to be issued, to a person
other than the registered holder, the certificate must be endorsed or
accompanied by an appropriate stock power, in either case signed exactly as the
name of the registered holder appears on the certificate, with the signature on
the certificate or stock power guaranteed by an Eligible Institution. In all
cases, payment for Shares tendered and accepted for payment pursuant to the
Offer will be made only after timely receipt by the Depositary of (i)
certificates for such Shares (or timely confirmation of a book-entry transfer
of such Shares into the Depositary's account at a Book-Entry Transfer
Facility), (ii) a properly completed and duly executed Letter of Transmittal
(or facsimile thereof) and (iii) any other documents required by the Letter of
Transmittal. The method of delivery of all documents, including stock
certificates, the Letter of Transmittal and any other required documents, is at
the election and risk of the tendering shareholder. If delivery is by mail,
registered mail with return receipt requested, properly insured, is
recommended.
Book-Entry Transfer. The Depositary will establish an account with
respect to the Shares at the Book-Entry Transfer Facilities for purposes of the
Offer within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in a Book-Entry Transfer Facility's
system may make book-entry transfer of Shares by causing such Facility to
transfer such Shares into the Depositary's account in accordance with such
Facility's procedure for such transfer. Even though delivery of Shares may be
effected through book-entry transfer into the Depositary's account at one of
the Book-Entry Transfer Facilities, either (i) a properly completed and duly
executed Letter of Transmittal (or facsimile thereof) with any required
signature guarantees and any other required documents must be transmitted to
and received by the Depositary at its address set forth on the back cover of
this Offer to Purchase prior to the Expiration Date; or (ii) the guaranteed
delivery procedure set forth below must be followed. Delivery of a Letter of
Transmittal and any other required documents to one of the Book-Entry Transfer
Facilities does not constitute delivery to the Depositary.
Guaranteed Delivery. If a shareholder desires to tender Shares
pursuant to the Offer and such shareholder's certificates cannot be delivered
to the Depositary prior to the Expiration Date or the procedure for book-entry
transfer cannot be completed on a timely basis or all required documents cannot
be delivered to the Depositary prior to the Expiration Date, such Shares may
nevertheless be tendered provided that all of the following conditions are
satisfied:
(a) such tender is made by or through an Eligible Institution;
4
<PAGE> 8
(b) the Depositary receives (by hand, mail or facsimile
transmission) prior to the Expiration Date, a properly completed and
duly executed Notice of Guaranteed Delivery substantially in the form
the Company has provided with this Offer to Purchase; and
(c) the certificates for all tendered Shares in proper form
for transfer or confirmation of book-entry transfer of such Shares
into the Depositary's account at any Book-Entry Transfer Facility,
together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) and any other documents required by
the Letter of Transmittal, are received by the Depositary within five
trading days after the date the Depositary receives such Notice of
Guaranteed Delivery.
Stock Plan; Savings Plan. Shareholders who are participants in the
Stock Plan or the Savings Plan will receive separate instructions in connection
with the Offer from the Administrative Committee for each Plan. If a Plan
participant authorizes the tender of Shares, the number of Shares in the
participant's Plan account will be reduced by the number of Plan Shares that
are purchased. Any Plan Shares tendered but not purchased will be returned to
the participant's Plan account. Participants in the Plans may not use the
Letter of Transmittal to direct the tender of Shares in such accounts.
Participants in the Plans are urged to read the separate instructions
carefully.
Determination of Validity, Rejection of Shares, Waiver of Defects, No
Obligation to Give Notice of Defects. All questions as to the number of Shares
to be accepted, and the form, eligibility, validity (including time of receipt)
and acceptance for payment of any tender of Shares will be determined by the
Company, in its sole discretion, which determinations shall be final and
binding on all parties. The Company reserves the absolute right to reject any
or all tenders it determines not to be in proper form or the acceptance for
payment of or payment for which may, in the opinion of the Company's counsel,
be unlawful. The Company also reserves the absolute right to waive any defect
or irregularity in the tender of any particular Shares. No tender of Shares
will be deemed to be properly made until all defects and irregularities have
been cured or waived. Neither the Company nor the Depositary nor any other
person is or will be obligated to give notice of any defects or irregularities
in tenders, and neither of them will incur any liability for failure to give
such notice.
Federal Income Tax Withholding. To prevent back up federal income tax
withholding equal to 31% of the gross payments made pursuant to the Offer, each
shareholder who does not otherwise establish an exemption from such withholding
must certify to the Depositary such shareholder's correct social security
number or taxpayer identification number (or certify that such taxpayer is
awaiting such number) and provide certain other information by completing the
Substitute Form W-9 included in the Letter of Transmittal. A foreign
shareholder who is an individual must submit a Form W-8 (obtainable from the
Depositary) in order to avoid back up withholding.
The Depositary will withhold 30% of the gross payment payable to a
foreign shareholder unless the Depositary determines that a reduced rate of
withholding or an exemption from withholding is applicable. For this purpose,
a foreign shareholder is a shareholder that is not (i) a citizen or resident of
the United States, (ii) a corporation, partnership or other entity created or
organized in or under the laws of the United States or any political
subdivision thereof, or (iii) any estate or trust the income of which is
subject to United States federal income taxation regardless of the source of
such income. The Depositary will determine a shareholder's status as a foreign
shareholder and eligibility for a reduced rate of, or an exemption from,
withholding by reference to the shareholder's address and to any outstanding
certificates or statements concerning eligibility for a reduced rate of, or
exemption from, withholding unless facts and circumstances indicate that
reliance is not warranted. A foreign shareholder who has not previously
submitted the appropriate certificates or statements with respect to a reduced
rate of, or exemption from, withholding for which such shareholder may be
eligible should consider doing so in order to avoid over-withholding. A
foreign shareholder may be eligible to obtain a refund of tax withheld if such
shareholder meets one of the tests for
5
<PAGE> 9
capital gain or loss treatment described in Section 13 or its otherwise able to
establish that no tax or a reduced amount of tax was due.
For a discussion of certain other federal income tax consequences to
tendering shareholders, see Section 13.
3. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section, a tender of Shares made
pursuant to the Offer is irrevocable. Shares tendered pursuant to the Offer
may be withdrawn at any time prior to the Expiration Date and, unless
thereafter accepted for payment by the Company, may also be withdrawn after
5:00 P.M., New York City time, on September 18, 1995.
For a withdrawal to be effective, the Depositary must timely receive a
written, telegraphic, telex or facsimile transmission notice of withdrawal at
its address set forth on the back cover of this Offer to Purchase. Such notice
of withdrawal must specify the name of the person who tendered the Shares to be
withdrawn, the number of Shares tendered, the number of Shares to be withdrawn
and the name of the registered holder, if different from that of the person who
tendered such Shares. If the certificates for Shares to be withdrawn have been
delivered or otherwise identified to the Depositary, then, prior to the
physical release of such certificates, the tendering shareholder must also
submit the serial numbers of the particular certificates evidencing such Shares
and the signature on the notice of withdrawal must be guaranteed by an Eligible
Institution (except in the case of Shares tendered by an Eligible Institution).
If Shares have been tendered pursuant to the procedure for book-entry transfer
set forth in Section 2, the notice of withdrawal must specify the name and the
account number at the applicable Book-Entry Transfer Facility to be credited
with the withdrawn Shares and otherwise comply with the procedures of such
facility.
All questions as to the form and validity (including time of receipt)
of notices of withdrawal will be determined by the Company, in its sole
discretion, which determination shall be final and binding on all parties.
Neither the Company nor the Depositary nor any other person is or will be
obligated to give notice of any defects or irregularities in any notice of
withdrawal, and neither of them will incur any liability for failure to give
such notice. Any Shares properly withdrawn will thereafter be deemed not
tendered for purposes of the Offer. Withdrawn Shares may, however, be
retendered prior to the Expiration Date by again following any of the
procedures set forth in Section 2.
4. PURCHASE OF SHARES AND PAYMENT OF PURCHASE PRICE.
Upon the terms and subject to the conditions of the Offer, the Company
will accept for payment and pay for (and thereby purchase) Shares properly
tendered, and not withdrawn prior to the Expiration Date, as promptly as
practicable following the Expiration Date. For purposes of the Offer, the
Company will be deemed to have accepted for payment (and thereby purchased),
subject to proration, Shares which are tendered and not withdrawn prior to the
Expiration Date if and when it gives oral and written notice to the Depositary
of its acceptance of such Shares for payment pursuant to the Offer.
Upon the terms and subject to the conditions of the Offer, promptly
following the Expiration Date the Company will accept for payment and pay a
single per Share Purchase Price for 1,200,000 Shares (subject to increase or
decrease as provided in Section 1 and Section 15) or such lesser number of
Shares as are properly tendered and not withdrawn as permitted in Section 3.
Payment for Shares accepted for payment pursuant to the Offer will be
made by deposit of the aggregate Purchase Price therefor with the Depositary
which will act as the agent for shareholders whose Shares have been accepted
for payment for the purpose of receiving payment from the Company and
transmitting payment to such shareholders. In all cases, payment for Shares
accepted for payment pursuant
6
<PAGE> 10
to the Offer will be made only after timely receipt by the Depositary of
certificates for such Shares (or of a timely confirmation of a book-entry
transfer of such Shares into the Depositary's account at one of the Book-Entry
Transfer Facilities), a properly completed and duly executed Letter of
Transmittal (or duly executed photocopy thereof) and any other documents
required by the Letter of Transmittal. The Company expressly reserves the
right, in its sole discretion, to delay the acceptance for payment of or
payment for Shares in order to comply, in whole or in part, with any applicable
legal requirement or court order. See Sections 5 and 12. The Company's
reservation of the right to delay payment for Shares that the Company has
accepted for payment is limited by Rule 13e-4(f)(5) promulgated under the
Exchange Act, which rule requires that the Company pay the consideration
offered or return the Shares tendered promptly after termination or withdrawal
of a tender offer.
In the event of proration, the Company will determine the final
proration factor and pay for Shares accepted for payment promptly following the
Expiration Date. However, the Company does not expect to be able to announce
the final results of any proration until approximately seven trading days after
the Expiration Date. Certificates for all Shares not purchased, including
Shares not purchased because of proration, will be returned (or, in the case of
Shares tendered by book-entry transfer, such Shares will be credited to the
account maintained with one of the Book-Entry Transfer Facilities by the
participant therein who so delivered such Shares) as soon as practicable
following the Expiration Date without expense to the tendering shareholders.
Under no circumstances will the Company pay interest on the aggregate Purchase
Price or any portion thereof.
The Company will pay the stock transfer taxes, if any, payable on
account of the transfer to it of Shares purchased pursuant to the Offer;
provided, however, that if payment of the Purchase Price is to be made to, or
(in the circumstances permitted by the Offer) if unpurchased Shares are to be
registered in the name of any person other than the registered holder, or if
tendered certificates are registered in the name of any person other than the
person signing the Letter of Transmittal, the amount of any stock transfer
taxes (whether imposed on the registered holder or such other person) payable
on account of such payment, transfer or tender will be deducted from the
Purchase Price paid to any such holder or person unless evidence satisfactory
to the Company of the Payment of such taxes or exemption therefrom is
submitted. See Instruction 6 of the Letter of Transmittal.
ANY TENDERING SHAREHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE FULLY
AND TO SIGN THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL MAY
BE SUBJECT TO REQUIRED FEDERAL INCOME TAX WITHHOLDING OF 31% OF THE GROSS
PROCEEDS PAYABLE TO SUCH SHAREHOLDER OR OTHER PAYEE PURSUANT TO THE OFFER. SEE
SECTION 2.
5. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provision of the Offer, the Company shall
not be required to accept for payment or pay for any Shares tendered, and may
terminate or amend the Offer or may postpone the acceptance for payment of, or
the payment for, Shares tendered, if at any time on or after July 14, 1995, and
at or before the time of acceptance for payment of or payment for any such
Shares, any of the following events shall have occurred (or shall have been
determined by the Company to have occurred) which, in the Company's sole
judgment in any such case and regardless of the circumstances giving rise
thereto (including any action or omission to act by the Company), makes it
inadvisable to proceed with the Offer or with such acceptance for payment or
payment:
(a) there shall be any claim, action or proceeding
threatened, pending or instituted, or any consent, license,
authorization, permit, or approval withheld, or any statute, rule,
regulation, judgment, order or injunction threatened, proposed,
sought, promulgated, enacted, entered, amended, enforced or deemed to
be applicable to the Offer or the Company or any of its subsidiaries,
by or before any court or any government or governmental, regulatory
or administrative authority, agency or tribunal,
7
<PAGE> 11
domestic or foreign, which challenges the making of the Offer or the
acquisition of Shares pursuant to the Offer or otherwise relates in
any manner to the Offer or which could directly or indirectly:
(1) make the acceptance for payment of, or payment
for, some or all of the Shares illegal or otherwise restrict
or prohibit consummation of the Offer;
(2) delay or restrict the ability of the Company, or
render the Company unable, to accept for payment or pay for
some or all of the Shares;
(3) in the Company's sole judgment, materially affect
the business, condition (financial or other), income,
operations or prospects of the Company and its subsidiaries,
taken as a whole, or otherwise materially impair in any way
the contemplated future conduct of the business of the Company
or any of its subsidiaries; or
(4) materially impair the Offer's contemplated
benefits to the Company; or
(b) there shall have occurred:
(1) the declaration of any banking moratorium or
suspension of payments in respect of banks in the United
States;
(2) any general suspension of trading in, or
limitation on prices for, securities on any United States
national securities exchange or in the over-the-counter
market;
(3) the commencement of a war, armed hostilities or
any other national or international crisis directly or
indirectly involving the United States;
(4) any limitation (whether or not mandatory) by any
governmental, regulatory or administrative agency or authority
on, or any event that in the Company's sole judgment might
affect, the extension of credit by banks or other lending
institutions in the United States;
(5) any significant decrease in the market price of
the Shares ($5.50 per Share at the close of business on July
14, 1995) or in the market prices of equity securities
generally in the United States or any change in the general
political, economic or financial conditions in the United
States or abroad that, in the Company's sole judgment, could
have a material adverse effect on the business, condition
(financial or other), income, operations or prospects of the
Company and its subsidiaries, taken as a whole;
(6) in the case of any of the foregoing existing at
the time of the commencement of the Offer, a material
acceleration or worsening thereof;
(7) it is publicly disclosed or the Company learns
that any person or "group" (within the meaning of section
13(d)(3) of the Exchange Act) has acquired, or proposes to
acquire, more than five percent of the outstanding Shares,
other than acquisitions of additional Shares representing not
more than two percent of the outstanding Shares by any person
or group owning more than five percent of the outstanding
Shares on the date hereof, as disclosed in a Schedule 13D or
13G on file with the Commission on that date;
(8) a default has occurred under the Credit Agreement
(as defined in Section 8), and/or a representation or warranty
thereunder of the Company is no longer accurate; or
8
<PAGE> 12
(9) any decline in either the Dow Jones Industrial
Average (4,708.82 at the close of business on July 14, 1995)
or the Standard & Poor's Index of 500 Companies (559.88 at the
close of business on July 14, 1995) by an amount in excess of
10% measured from the close of business on July 14, 1995; or
(c) any change shall occur or be threatened in the business,
condition (financial or other), income, operations or prospects of the
Company and its subsidiaries, taken as a whole, which, in the
Company's sole judgment, is or may be material to the Company or its
shareholders; or
(d) a tender or exchange offer for any or all of the Shares
(other than the Offer), or any merger, business combination or other
similar transaction with or involving the Company or any of its
subsidiaries, shall have been proposed, announced or made by any
person, including the Company, or the Company shall determine to make
a disposition of all or substantially all of its assets other than in
the regular course of its business.
The foregoing conditions are for the Company's sole benefit and may be
asserted by the Company regardless of the circumstances giving rise to any such
condition (including any action or omission to act by the Company) or may be
waived by the Company in whole or in part. The Company's failure at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any
such right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time. Any determination by the Company
concerning any of the events described in this Section and any related judgment
by the Company regarding the inadvisability of proceeding with the purchase of
or payment for Shares tendered shall be final and binding on all parties.
6. PRICE RANGE OF SHARES; DIVIDENDS.
The Shares are traded on NASDAQ. The following table sets forth for
the fiscal periods indicated the high and low closing per Share sales prices on
NASDAQ and the dividends declared per Share over the past two years as reported
in published financial sources:
9
<PAGE> 13
<TABLE>
<CAPTION>
High Low Dividends
---- --- ---------
<S> <C> <C> <C>
Fiscal 1995
4th Quarter (through July 14, 1995) 5 1/2 3 7/8
3rd Quarter 4 3/4 3
2nd Quarter 4 3/4 3 9/16
1st Quarter 4 1/4 3 1/4
Fiscal 1994
4th Quarter 4 3/8 3
3rd Quarter 6 1/4 3 7/8
2nd Quarter 7 3/4 4 3/4 .08
1st Quarter 8 1/4 7 1/4 .08
Fiscal 1993
4th Quarter 10 7 1/2 .08
</TABLE>
On July 14, 1995, the last trading day before the Company announced
its intention to commence the Offer, the closing per Share sales price as
reported on NASDAQ was $5.50. The Company urges shareholders to obtain current
market quotations for the Shares prior to tendering any Shares pursuant to the
Offer.
In April 1994, the Company suspended its regular quarterly dividend,
and has not declared a dividend since January 31, 1994. Were any dividend to
be announced, shareholders would not be entitled to receive any dividend with
respect to Shares tendered and purchased by the Company prior to the record
date for such dividend.
The timing and amount of future dividends declared by the Board of
Directors is at the discretion of the Board of Directors and will be dependent
upon the Company's results of operations and financial condition, cash
requirements for its business, contractual restrictions on payment of
dividends, economic and market conditions and other factors deemed relevant by
the Company's Board of Directors.
7. INTEREST OF CERTAIN PERSONS; TRANSACTIONS AND ARRANGEMENTS CONCERNING
THE SHARES.
Mr. Arjun C. Waney is the beneficial owner of approximately 19.9% of
the outstanding Shares and may be deemed to control the Company.
As of July 14, 1995, the Company's directors and executive officers as
a group beneficially owned an aggregate of approximately 35.9% of the
outstanding Shares (which includes 90,000 Shares which the executive officers
of the Company have the right to acquire through exercises of stock options
within 60 days of July 20, 1995). See Schedule I.
The Company has been advised that each director and executive officer
will tender shares pursuant to this Offer on at least a pro rata basis with the
aggregate amount tendered by all other shareholders.
The Company engaged in no transactions involving Shares during the
forty business days prior to July 17, 1995. Purchases of Shares may have been
effected by the Savings Plan during the forty business days prior to July 17,
1995. The Trustee of such Plan reports quarterly to the Company in respect of
such purchases. The report for the three-month period ended June 30, 1995 is
not anticipated to be received by the Company until mid-August, 1995. The
Company does not believe such purchases have been material in amount.
10
<PAGE> 14
Except for transactions in the Shares for the account of executive
officers of the Company pursuant to the Plans, and by the Plans for the account
of all employees of the Company, based upon the Company's records and upon
information provided to the Company by its directors and executive officers,
neither the Company nor any of its subsidiaries nor, to the Company's
knowledge, any of the directors or executive officers of the Company, any of
its associates, or any person controlling the Company or any executive officer
or director of any such person has effected any transactions in the Shares
during the 40 business days prior to the date hereof.
Except as set forth in this Offer to Purchase, neither the Company
nor, to the Company's knowledge, any of its directors or executive officers, or
any person controlling the Company or any executive officer or director of any
such person, is a party to any contract, arrangement, understanding or
relationship with any other person relating, directly or indirectly, to the
Offer with respect to any securities of the Company (including, but not limited
in, any contract, arrangement, understanding or relationship concerning the
transfer or the voting of any such securities, joint ventures, loans or option
arrangements, puts or calls, guarantees of loans, guarantees against loss or
the giving or withholding of proxies, consents or authorizations).
8. SOURCE AND AMOUNT OF FUNDS.
Assuming that the Company purchases 1,200,000 Shares pursuant to the
Offer, the Company expects the maximum aggregate cost, including all fees and
expenses related to the Offer, to be approximately $9,675,000. It is
anticipated that the funds required to pay all such costs will be obtained from
cash and cash equivalents of the Company. The Company may also borrow a
portion of such funds pursuant to its Credit Agreement.
The Company has agreements (the "Credit Agreement") with Congress
Talcott Corporation ("Congress") pursuant to which the Company sells
substantially all of its trade accounts receivable on a pre-approved
non-recourse basis. Payment for such receivables is made at the time customers
make payment to Congress or, if a customer is financially unable to make
payment, within approximately 180 days of the invoice due date. The Company
may request advances in anticipation of customer collections at Congress' prime
rate (currently 8.75%) plus one percent, or LIBOR plus two percent, borrow on
an acceptance basis at rates which vary in accordance with the prevailing
market rate for such acceptances and open letters of credit through Congress.
The amount of such borrowings, including a portion of outstanding letters of
credit, are limited to certain percentages of outstanding accounts receivable
and finished goods inventory owned by the Company and are collateralized by all
of the assets of the Company. Under these agreements, the Company is required
to maintain certain levels of net worth and working capital. The Credit
Agreement can be terminated by either party on 60-days prior written notice.
Borrowings under the Credit Agreement, if any, are expected to be repaid over
not more than 12 months by cash flow from operations. The Credit Agreement has
been included as an exhibit to Schedule 13E-4 filed with the Commission. The
foregoing description of the Credit Agreement is qualified in its entirety by
reference to such document, which may be examined and a copy of which may be
obtained as set forth in Section 10 "Certain Information About the Company--
Additional Information."
9. BACKGROUND AND PURPOSE OF THE OFFER.
Purpose of the Offer. The objective of the Offer is to deliver to
shareholders a portion of the Company's current value and to provide the
Company's shareholders with a means of furthering their investment objectives
with respect to the Shares. The Offer provides shareholders who wish to
currently realize a portion of their investment in the Company in cash with an
opportunity to sell a portion of, or perhaps all, their Shares at a premium
over current market prices of the Shares. The Offer also is intended to
provide shareholders with an opportunity to increase their proportionate
ownership interest in the
11
<PAGE> 15
Company, either by not participating in the Offer or by participating in the
Offer and reinvesting their after-tax proceeds in additional Shares.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY
RECOMMENDATION TO ANY SHAREHOLDER AS TO WHETHER TO TENDER OR TO REFRAIN FROM
TENDERING ANY OR ALL OF SUCH SHAREHOLDER'S SHARES AND HAS NOT AUTHORIZED ANY
PERSON TO MAKE ANY SUCH RECOMMENDATION. EACH SHAREHOLDER IS URGED TO EVALUATE
CAREFULLY ALL INFORMATION IN THE OFFER, CONSULT THE SHAREHOLDER'S OWN
INVESTMENT AND TAX ADVISORS AND MAKE SUCH SHAREHOLDER'S OWN DECISION WHETHER TO
TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER.
Any Shares acquired by the Company pursuant to the Offer will
initially be canceled and become authorized and unissued Shares and will be
available for issuance by the Company without further shareholder action
(except as required by applicable law or the rules of any securities exchanges
on which the Shares are then listed). Such Shares could be issued for general
or other corporate purposes, including stock splits or dividends, acquisitions,
the raising of additional capital for use in the Company's business and the
implementation of employee benefit plans.
10. CERTAIN INFORMATION ABOUT THE COMPANY.
General. The Company is an importer and wholesaler of women's
sportswear; its subsidiary, Body Drama, Inc., imports and wholesales women's
intimate apparel, including daywear and sleepwear. The Company is a California
corporation founded in 1971. The Company's principal executive offices are
located at 9220 Activity Road, San Diego, California 92126, and its telephone
number is (619) 549-2922.
Recent Developments. The Company has determined to pursue a strategy
of seeking niche product markets which offer the potential for higher profit
margins. In connection with this strategy, the Board has determined to sell or
discontinue product lines which have historically contributed to gross
revenues, but have not generated significant profits in recent years. The
Company also intends to reduce its overhead in connection with these
dispositions. However, no assurance can be given that the Company's efforts in
this regard will result in increased profit margins or profitability. The
Company periodically evaluates acquisitions of interests in, or combinations
with, other companies engaged in businesses that may or may not be related to
the Company's current business. It will continue to do so in the future, with
an emphasis for seeking product markets in the apparel industry which offer the
potential for above average profit margins. In connection with these
activities, the Company may consider issuing additional equity securities or
incurring indebtedness.
Historical Financial Information. The following table sets forth
certain historical consolidated financial information of the Company and its
subsidiaries. The historical financial information as of and for the years
ended August 31, 1994 and 1993 has been taken from the Company's audited
consolidated financial statements included in the Company's Annual Report on
Form 10-K for the fiscal year ended August 31, 1994 (the "1994 10-K"). The
historical consolidated financial information as of and for the nine-month
periods ended May 31, 1995 and 1994 has been taken from the unaudited
consolidated financial statements included in the Company's Quarterly Report on
Form 10-Q for the quarter ended May 31, 1995 (the "1995 Third Quarter 10-Q").
More comprehensive financial information is included in the 1994 10-K and the
1995 Third Quarter 10-Q. The historical information as of and for the
nine-month periods ended May 31, 1995 and 1994 has been derived from the
Company's unaudited financial statements for such periods, which statements in
the opinion of the Company's management include all adjustments (which
adjustments consist of normal recurring entries) that are necessary for a fair
presentation of such information.
12
<PAGE> 16
The following historical financial information is qualified in its
entirety by, and should be read in conjunction with, the 1994 10-K and 1995
Third Quarter 10-Q, incorporated by reference herein.
Beeba's Creations, Inc. and Subsidiaries
Consolidated Balance Sheets(1)
<TABLE>
<CAPTION>
May 31, August 31,
1995 1994
------------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . $6,177,004 $6,565,813
Receivables:
Trade accounts, less allowance for doubtful accounts
($430,000 at May 31, 1995 and $578,000 at
August 31, 1994) . . . . . . . . . . . . . . . . . . . . 11,695,734 15,329,232
Income taxes receivable . . . . . . . . . . . . . . . . . 1,596,480
Due from affiliates and employees . . . . . . . . . . . . 87,628 14,799
----------- -----------
11,783,362 16,940,511
Inventories . . . . . . . . . . . . . . . . . . . . . . . . 8,250,875 10,799,714
Deferred income taxes . . . . . . . . . . . . . . . . . . . 1,453,831 1,509,294
Other current assets . . . . . . . . . . . . . . . . . . . . 928,392 916,201
----------- -----------
Total current assets . . . . . . . . . . . . . . . . . . 28,593,464 36,731,533
Furniture, fixture and equipment . . . . . . . . . . . . . . . 896,769 880,793
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . 675,823 967,041
----------- -----------
$30,166,056 $38,579,367
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable . . . . . . . . . . . . . . . . . . . . . . . $3,000,000
Accounts payable and accrued expenses . . . . . . . . . . . $7,348,522 7,749,654
Income taxes payable . . . . . . . . . . . . . . . . . . . . 52,386
----------- -----------
Total current liabilities . . . . . . . . . . . . . . . . . 7,400,908 10,749,654
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . 1,095,858 1,095,858
Minority interest . . . . . . . . . . . . . . . . . . . . . . . 5,747,229
Shareholders' equity:
Preferred stock, no par value, 25,000,000 shares authorized
Common stock, no par value, 50,000,000 shares authorized;
issued and outstanding (2,398,224 at May 31, 1995 and
2,507,924 at August 31, 1994) . . . . . . . . . . . . . . . 12,590,085 12,351,527
Retained earnings . . . . . . . . . . . . . . . . . . . . . . 9,079,205 8,635,099
----------- -----------
Total shareholders' equity . . . . . . . . . . . . . . . . 21,669,290 20,986,626
----------- -----------
$30,166,056 $38,579,367
=========== ===========
</TABLE>
(Notes on page 16)
13
<PAGE> 17
Beeba's Creations, Inc. and Subsidiaries
Consolidated Statements of Operations1
<TABLE>
<CAPTION>
Nine months ended
May 31,
Year ended August 31, (Unaudited)
------------------------------ --------------------------
1994 1993 1995 1994
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
Net sales . . . . . . . . . . . . . . . . . $119,291,419 $116,199,677 $63,676,183 $88,696,460
Cost of goods sold . . . . . . . . . . . . 97,499,053 84,992,982 48,219,489 73,128,528
------------ ------------ ----------- -----------
Gross profit . . . . . . . . . . . . . . . 21,792,366 31,206,695 15,456,694 15,567,932
Expenses:
Selling, general and administrative . . 27,498,849 28,914,490 14,391,469 21,065,415
Employee plans and bonuses . . . . . . . 353,854 789,915 646,241 248,848
------------ ------------ ----------- -----------
Income (loss) from operations . . . . . . . (6,060,337) 1,502,290 418,984 (5,746,331)
Interest income . . . . . . . . . . . . . . 206,350 378,875 156,820 114,738
Interest expense . . . . . . . . . . . . . (462,142) (155,762) (2,221) (361,869)
------------ ------------ ----------- -----------
Income (loss) before income taxes . . . . . (6,316,129) 1,725,403 573,583 (5,993,462)
Provision (benefit) for income taxes . . . (1,262,366) 719,561 184,577 (1,513,306)
------------ ------------ ----------- -----------
Net income (loss) before minority interest (5,053,763) 1,005,842 389,006 (4,480,156)
Minority interest . . . . . . . . . . . . . (1,627,736) (318,553) (55,100) (1,156,711)
------------ ------------ ----------- -----------
Net income (loss) . . . . . . . . . . . . . ($3,426,027) $1,324,395 $444,106 ($3,323,445)
============ ============ =========== ===========
Net income (loss) per common share . . . . ($1.33) $.49 $.18 ($1.28)
============ ============ =========== ===========
</TABLE>
(Notes on page 16)
14
<PAGE> 18
Beeba's Creations, Inc. and Subsidiaries
Pro Forma Consolidated Balance Sheets(2)(3)
(Unaudited)
<TABLE>
<CAPTION>
Year ended August 31, 1994 Nine Months ended May 31, 1995
----------------------------------------- -------------------------------------------
Pro Forma Pro Forma
Historical Adjustments Pro Forma Historical Adjustments Pro Forma
----------- ------------ ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents . . $6,565,813 ($6,565,813) $0 $6,177,004 ($6,177,004) $0
Receivables:
Trade accounts . . . . . . 15,329,232 15,329,232 11,695,734 11,695,734
Income taxes receivable . . 1,596,480 213,818 1,810,298 237,398 237,398
Due from affiliates and
employees . . . . . . . . 14,799 14,799 87,628 87,628
----------- ----------- ----------- -----------
16,940,511 17,154,329 11,783,362 12,020,760
Inventories . . . . . . . . . 10,799,714 10,799,714 8,250,875 8,250,875
Deferred income taxes . . . . 1,509,294 1,509,294 1,453,831 1,453,831
Other current assets . . . . . 916,201 916,201 928,392 928,392
----------- ----------- ----------- -----------
Total current assets . . . . 36,731,533 30,379,538 28,593,464 22,653,858
Furniture, fixtures and equipment 880,793 880,793 896,769 896,769
Other assets . . . . . . . . . . 967,041 967,041 675,823 675,823
----------- ----------- ----------- -----------
$38,579,367 $32,227,372 $30,166,056 $24,226,450
=========== =========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable . . . . . . . . $3,000,000 $3,738,062 $6,738,062 $4,196,224 $4,196,224
Accounts payable and accrued
expense . . . . . . . . . . 7,749,654 7,749,654 $7,348,522 7,348,522
Income taxes payable . . . 52,386 52,386
----------- ----------- ----------- -----------
Total current liabilities . 10,749,654 14,487,716 7,400,908 11,597,132
Deferred income taxes . . . . . 1,095,858 1,095,858 1,095,858 1,095,858
Minority interest . . . . . . . 5,747,229 5,747,229
Shareholders' equity:
Common stock . . . . . . . . . 12,351,527 (9,675,000) 2,676,527 12,590,085 (9,675,000) 2,915,085
Retained earnings . . . . . . 8,635,099 (415,057) 8,220,042 9,079,205 (460,830) 8,618,375
----------- ----------- ----------- -----------
Total shareholders' equity 20,986,626 10,896,569 21,669,290 11,533,460
----------- ----------- ----------- -----------
$38,579,367 $32,227,372 $30,166,056 $24,226,450
=========== =========== =========== ===========
Number of shares outstanding . . 2,507,924 (1,200,000) 1,307,924 2,398,224 (1,200,000) 1,198,224
=========== =========== =========== ===========
Book Value per share . . . . . . $8.37 $8.33 $9.04 $9.63
=========== =========== =========== ===========
</TABLE>
(Notes on page 16)
15
<PAGE> 19
Beeba's Creations, Inc. and Subsidiaries
Pro Forma Consolidated Statements of Operations(2)(3)
(Unaudited)
<TABLE>
<CAPTION>
Year Ended August 31, 1994 Nine Months ended May 31, 1995
------------------------------------------- ------------------------------------------
Pro Forma Pro Forma
Historical Adjustments Pro Forma Historical Adjustments Pro Forma
------------ ----------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net sales . . . . . . . . . . . . $119,291,419 $119,291,419 $63,676,183 $63,676,183
Cost of goods sold . . . . . . . 97,499,053 97,499,053 48,219,489 48,219,489
------------ ------------ ----------- -----------
Gross profit . . . . . . . . . . 21,792,366 21,792,366 15,456,694 15,456,694
Expenses:
Selling, general and
administrative . . . . . . 27,498,849 27,498,849 14,391,469 14,391,469
Employee plans and bonuses . . 353,854 353,854 646,241 646,241
------------ ------------ ----------- -----------
Income (loss) from operations . . (6,060,337) (6,060,337) 418,984 418,984
Interest income . . . . . . . . . 206,350 206,350 156,820 (156,820)
Interest expense . . . . . . . . (462,142) (628,875) (1,091,017) (2,221) (541,408) (543,629)
------------ ------------ ----------- -----------
Income (loss) before income taxes (6,316,129) (6,945,004) 573,583 (124,645)
Provision (benefit) for income
taxes . . . . . . . . . . . . . (1,262,366) (213,818) (1,476,184) 184,577 (237,398) (52,821)
------------ ------------ ----------- -----------
Net income before minority
interest . . . . . . . . . . . (5,053,763) (5,468,820) 389,006 (71,824)
Minority interest . . . . . . . . (1,627,736) (1,627,736) (55,100) (55,100)
------------ ------------ ----------- -----------
Net income (loss) . . . . . . . . ($3,426,027) ($3,841,084) $444,106 ($16,724)
============ ============ =========== ===========
Weighted average number of
shares outstanding . . . . . . 2,573,132 (1,200,000) 1,373,132 2,452,573 (1,200,000) 1,252,573
============ ============ =========== ===========
Earnings (loss) per share . . . . ($1.33) ($2.80) $.18 ($.01)
============ ============ =========== ===========
</TABLE>
_________________
Notes to Financial Statements:
1. The Notes to financial statements appearing in the 1994 10-K and the
1995 Third Quarter 10-Q are incorporated by reference herein.
2. The unaudited pro forma consolidated financial information assumes the
Offer had occurred as of September 1, 1993 for the August 31, 1994
fiscal year end, and September 1, 1994 for the nine-month period ended
May 31, 1995. The pro forma financial information is not necessarily
indicative of the Company's consolidated financial position or results
of operations as they may be in the future. The pro forma financial
information and accompanying notes are qualified in their entirety by,
and should be read in conjunction with, the Company's consolidated
financial statements incorporated by reference herein.
3. The pro forma data assumes the Company has purchased 1,200,000 Shares
at September 1, 1993 for the August 31, 1994 fiscal year end, and
September 1, 1994 for the nine-month period ended May 31, 1995,
pursuant to the Offer at the purchase price per Share of $8.00 and
paid for the expenses of the Offer estimated to aggregate $75,000.
Pre-tax rates of interest of 6.5% and 10% were used to calculate the
pro forma increase in interest expense for the year ended August 31,
1994, and the nine-month period ended May 31, 1995, respectively,
attributable to the cash and cash equivalents assumed to have been
used for the purchase of 1,200,000 Shares pursuant to the Offer and
pay for related expenses. Such rate is based on the Company's assumed
historical average rates of interest paid, calculated on a daily
basis.
The pro forma decrease in interest income assumes the Company did not
have the use of the gross proceeds of the Offer and associated
expenses for the period indicated.
The pro forma weighted average Shares outstanding are based upon the
historical weighted average Shares outstanding during each period
presented less the 1,200,000 Shares assumed to have been acquired
pursuant to the Offer.
16
<PAGE> 20
Additional Information. Additional information concerning the Company
is set forth in the Company's most recent proxy statement which has previously
been provided to shareholders, in the 1994 10-K and 1995 Third Quarter 10-Q.
Additional copies of such documents are available upon request from the
Company. The Company has also filed an Issuer Tender Offer Statement on
Schedule 13E-4 (the "Schedule 13E-4") with the Commission which includes
certain additional information relating to the Offer. The Company is subject
to the informational reporting requirements of the Exchange Act and in
accordance therewith files periodic reports, proxy statements and other
information with the Commission relating to its business, financial condition
and other matters. The Company is required to disclose in such reports and
proxy statements certain information, as of particular dates, concerning the
Company's directors and officers, their remuneration, stock options granted to
them, the principal owners of the Company's securities and any material
interest of such persons in transactions with the Company.
Such material may be inspected and copied upon payment of the
prescribed rates at the public reference facilities of the Commission, at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at its regional
offices at 7 World Trade Center, New York, New York 10048 and Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies may also be obtained by mail upon payment of the prescribed rates from
the Commission's Public Reference Room, 450 Fifth Street, N.W., Washington,
D.C. 20549. The Schedule 13E-4 will not be available at the Commission's
regional offices.
11. EFFECTS OF THE OFFER ON THE MARKET FOR SHARES; REGISTRATION UNDER THE
EXCHANGE ACT.
The Company's purchase of Shares pursuant to the Offer will reduce the
number of Shares that might otherwise trade publicly and could reduce the
number of shareholders. Nonetheless, the Company anticipates that there will
still be a sufficient number of Shares outstanding and publicly traded
following consummation of the Offer to ensure a continued trading market in the
Shares. Based on the published guidelines of the NASD, the Company does not
believe that its purchase of Shares pursuant to the Offer will cause the
remaining Shares to be delisted from the NASD.
The Shares are currently "margin securities" under the rules of the
Federal Reserve Board. This has the effect, among other things, of allowing
brokers to extend credit on the collateral of the Shares. The Company believes
that, following the purchase of Shares pursuant to the Offer, the remaining
Shares will continue to be margin securities for purposes of the Federal
Reserve Board's margin regulations.
The Shares are registered under the Exchange Act which requires, among
other things, that the Company furnish certain information to its shareholders
and to the Commission and comply with the Commission's proxy rules in
connection with meetings of the Company's shareholders. The Company believes
that its purchase of Shares pursuant to the Offer will not result in the Shares
becoming eligible for deregistration under the Exchange Act.
12. CERTAIN LEGAL MATTERS; REGULATORY APPROVAL.
The Company is not aware of any license or regulatory permit that
appears to be material to its business that might be adversely affected by its
acquisition of Shares pursuant to the Offer or of any approval or other action
by any government or governmental, administrative or regulatory authority or
agency, domestic or foreign, that would be required for the Company's
acquisition of Shares pursuant to the Offer. Should any such approval or other
action be required, the Company currently contemplates that it will seek such
approval or other action. The Company cannot predict whether it may determine
that it is required to delay the acceptance for payment of or payment for
Shares tendered pursuant to the Offer pending the outcome of any such matter.
There can be no assurance that any such approval or other action, if needed,
would be obtained or would be obtained without substantial condition or that
the failure to obtain any such approval or other
17
<PAGE> 21
action might not result in adverse consequences to the Company's business. The
Company's obligation under the Offer to accept for payment and pay for Shares
is subject to certain conditions. See Section 5.
13. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The following summary is a general discussion of certain anticipated
Federal income tax consequences of a sale of Shares pursuant to the Offer.
This summary does not discuss all aspects of Federal income taxation that may
be relevant to a particular shareholder in light of personal circumstances or
to certain types of shareholders subject to special treatment under the Federal
income tax laws (for example, financial institutions, tax-exempt organizations,
foreign investors, dealers in securities and shareholders who received their
Shares pursuant to compensation arrangements with the Company) and does not
discuss any aspect of state, local or foreign tax laws. Each shareholder is
urged to consult his or her own tax advisor as to the particular tax
consequences of a sale of Shares pursuant to the Offer.
The sale of Shares pursuant to the Offer will be a taxable transaction
for Federal income tax purposes and may also be taxable under applicable state,
local, foreign or other tax laws. The Federal income tax consequences to a
shareholder will be determined under Sections 301 and 302 of the Internal
Revenue Code of 1986, as amended (the "Code") and may vary depending upon a
shareholder's particular facts and circumstances. Under Section 302 of the
Code, a sale of Shares pursuant to the Offer to Purchase will generally be
treated as a sale or exchange if such sale (i) is "substantially
disproportionate" with respect to the shareholder, (ii) results in a "complete
redemption" of the shareholder's interest in the Company, or (iii) is "not
essentially equivalent to a dividend" with respect to the shareholder.
If any one of the three tests is satisfied, the shareholder tendering
Shares pursuant to the Offer will recognize gain or loss equal to the
difference between the amount of cash received by the shareholder pursuant to
the Offer and the shareholder's tax basis in the Shares sold. The gain or loss
recognized generally will be capital gain or loss if the Shares are held by the
shareholder as a capital asset and such gain or loss will be long term capital
gain or loss if the Shares have been held for a period of more than one year.
In determining whether any of the three tests is satisfied, a
shareholder must take into account not only Shares actually owned but also
Shares that are "constructively owned" under Section 318 of the Code.
Generally, a shareholder will be considered to constructively own Shares which
the shareholder has an option to acquire and Shares owned (and in some cases
constructively owned) by certain related individuals or entities.
The sale of Shares pursuant to the Offer will be "substantially
disproportionate" with respect to a shareholder if the percentage of the
outstanding voting stock of the Company actually and constructively owned by
the shareholder immediately after the Offer is less than 80% of the percentage
of the outstanding voting stock of the Company actually and constructively
owned by such shareholder immediately before the sale of the Shares pursuant to
the Offer. Assuming that the maximum number of Shares (1,200,000) is purchased
pursuant to the Offer, a shareholder would have to sell approximately 58.6% or
more of the Shares actually and constructively owned by the shareholder in
order to meet the "substantially disproportionate" test. Shareholders should
consult their own tax advisor to determine whether the "substantially
disproportionate" test applies to their particular facts and circumstances.
The sale of the Shares pursuant to the Offer will be treated as a
"complete redemption" of the shareholder's interest in the Company if either
(i) all shares actually and constructively owned by the shareholder are sold
pursuant to the Offer, or (ii) all of the Shares actually owned by the
shareholder are sold pursuant to the Offer and the shareholder is eligible to
waive and does effectively waive attribution of all Shares constructively owned
by the shareholder in accordance with Section 302(c) of the Code.
18
<PAGE> 22
If the sale of Shares by a shareholder fails to satisfy the
"substantially disproportionate" test or the "complete redemption" test, the
shareholder may nevertheless receive sale or exchange treatment in the event
the sale pursuant to the Offer is "not essentially equivalent to a dividend." A
shareholder will generally meet this test in the event the sale of Shares
pursuant to the Offer by the shareholder results in a "meaningful reduction" in
the shareholder's proportional interest in the Company. The determination as
to whether a sale of Shares by a shareholder pursuant to the Offer will be "not
essentially equivalent to a dividend" will depend on the individual
shareholder's facts and circumstances. The Internal Revenue Service has held
in a published ruling that a 3.3% reduction in the proportionate interest of a
less than 1% shareholder in a publicly held corporation who exercised no
control over corporate affairs constituted a "meaningful reduction."
Shareholders should consult their own tax advisors as to whether the "not
essentially equivalent to a dividend test" applies to their individual
circumstances.
Shareholders should be aware that their ability to satisfy any of the
tests indicated above could be affected by any proration pursuant to the Offer.
In addition, it may be possible for a shareholder to satisfy one or
more of the above tests by contemporaneously selling or otherwise disposing of
some or all of Shares that are actually or constructively owned by a
shareholder but which are not purchased pursuant to the Offer. Shareholders
should also be aware that the acquisition of additional Shares or an option to
acquire additional Shares, or the acquisition by certain related parties, could
adversely effect whether such shareholder qualifies for any of the tests set
forth above.
In the event that none of the three tests is satisfied by the selling
shareholder and the Company has "sufficient" earnings and profits, the selling
shareholder will be treated as having received a dividend that must be included
in such selling shareholder's gross income in an amount equal to the entire
cash received by the shareholder pursuant to the Offer. In such event, the
selling shareholder will not be entitled to offset the amount received by the
shareholder's basis in the redeemed Shares and the basis in the redeemed Shares
will be added to the basis in the selling shareholder's remaining Shares. In
the event there are "insufficient" earnings and profits, the shareholder will
have a non-taxable return of capital to the extent of the shareholders tax
basis and thereafter, capital gain to the extent the distribution exceeds the
earnings and profits.
In the case of a corporate shareholder, any amount received which is
treated as a dividend may be eligible for the 70% "dividends received"
deduction allowable to domestic corporate shareholders under Section 243 of the
Code subject to certain limitations which would include those relating to "debt
finance portfolio stock" under Section 246A of the Code and to the holding
period requirements set forth in Section 246 of the Code. Any amount treated
as a dividend by a corporate shareholder may constitute an "extraordinary
dividend" subject to Section 1059 of the Code. In such event a corporate
shareholder would be required to reduce the tax basis of its remaining Shares
(but not below zero) by the portion of any "extraordinary dividend," which is
deducted under the dividends received deduction. In the event such portion
exceeds the shareholder's tax basis in the remaining Shares, the shareholder
must treat any such excess as additional gain or loss upon the subsequent sale
or other disposition of the Shares. A dividend will be considered
extraordinary in the event (i) the dividends attributable to Shares held for
two years or less exceeds 10% of the greater of (a) the shareholder's adjusted
basis in the Shares or (b) the fair market value of the Shares, or (ii) except
as otherwise set forth in Treasury Regulations which have not yet been
promulgated, any amount treated as a dividend under Section 301 which is not
part of a pro rata redemption. It is not anticipated that the sales pursuant
to the Offer will be pro rata. Thus, it is anticipated that the extraordinary
dividend rules will apply to any amount received pursuant to the Offer which is
taxable as a dividend to a corporate shareholder. Corporate shareholders
should be aware of special aggregation rules that may apply under Section 1059.
Corporate shareholders are urged to consult their own tax advisors as to the
effect of Section 1059 of the Code on their Shares.
19
<PAGE> 23
A foreign shareholder may be subject to dividend tax withholding at
either the 30% rate or a lower applicable treaty rate on the gross proceeds of
the sale of Shares pursuant to the Offer. Foreign shareholders should consult
their tax advisors regarding application of these withholding rules.
THE FOREGOING TAX DISCUSSION IS INCLUDED FOR GENERAL INFORMATION ONLY.
THE TAX CONSEQUENCES OF A SALE OF SHARES PURSUANT TO THE OFFER MAY VARY
DEPENDING UPON, AMONG OTHER THINGS, THE PARTICULAR CIRCUMSTANCES OF THE
TENDERING SHAREHOLDER. NO INFORMATION IS PROVIDED HEREIN AS TO THE STATE,
LOCAL, FOREIGN OR OTHER TAX CONSEQUENCES OF THE TRANSACTION CONTEMPLATED BY THE
OFFER TO PURCHASE. EACH SHAREHOLDER IS URGED TO CONSULT WITH SUCH
SHAREHOLDER'S OWN TAX ADVISORS TO DETERMINE THE PARTICULAR FEDERAL, STATE,
LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES OF SALES MADE PURSUANT TO THE OFFER
AND THE EFFECT OF THE CONSTRUCTIVE STOCK OWNERSHIP RULES MENTIONED ABOVE.
14. CERTAIN LIMITATIONS ON PURCHASES OF SHARES BY THE COMPANY.
Although the Company is authorized by California law to purchase or
redeem its own shares of capital stock, the Company may not do so if (i) the
amount of retained earnings immediately prior thereto does not equal or exceed
the amount of the aggregate purchase price, or (ii) immediately after giving
effect to the purchase, the sum of the Company's adjusted assets would be at
least equal to 1 1/4 times the sum of its adjusted liabilities, and its current
assets would be at least equal to 1 1/4 times its current liabilities.
Based on the Company's consolidated balance sheet as of May 31, 1995,
which balance sheet was prepared in accordance with generally accepted
accounting principles, the recorded amount of the Company's adjusted assets as
of such date exceeded the amount of the Company's adjusted liabilities and its
current assets exceeded its current liabilities, each by more than the required
amounts. The Board of Directors has determined, based upon the Board's
familiarity with the Company's operations, financial condition and prospects
and the Board's discussions with the Company's management and its advisors,
that after giving effect to the purchase pursuant to the Offer, of Shares
having an aggregate purchase price of $9.6 million, such ratios will continue
to be complied with.
If a court, in a lawsuit brought by an unpaid creditor of the Company
or a representative of such creditors (such as a trustee in bankruptcy or the
Company as a debtor-in-possession), were to find that the Company (i) was
insolvent at the time the Company purchased Shares pursuant to the Offer, (ii)
was rendered insolvent by reason of such purchase, (iii) was engaged, or was
about to engage, in a business or a transaction for which the assets remaining
with the Company constituted an unreasonably small capital, (iv) intended to
incur, or believed, or reasonably should have believed, that the Company would
incur, debts and other liabilities beyond its ability to pay as such debts and
liabilities matured, or (v) entered into such transaction with the actual
intent to hinder, delay or defraud creditors, then such court could, among
other remedies, avoid the purchase of Shares from shareholders and require that
such shareholders return the amount of cash received, or a portion thereof, in
such purchase to the Company, to a complaining creditor, or to a fund for the
benefit of its creditors. The measure of insolvency for purposes of the
foregoing will vary depending upon the law being applied. Generally, however,
the Company would be considered insolvent if the fair value of the Company's
assets were less than the amount of the Company's total debts and liabilities
or if the present fair saleable value of the Company's property were less than
the amount that would be required to pay the Company's probable liability on
its existing debts as they become absolute or mature. There can be no
assurance that a court would value the Company's assets on the same basis as
the Board of Directors in determining whether the Company was insolvent at the
time of the purchase of Shares by the Company or that, regardless of the method
of valuation, a court would not determine that the Company was insolvent at
such time.
20
<PAGE> 24
The Board of Directors and the Company's management believe, based on
management's internal projections and other financial information (including
the Company's historical and pro forma financial statements), that at the time
of the purchase of Shares pursuant to the Offer, the Company will be solvent,
will have sufficient capital for carrying on its business and will be able to
pay its debts as they mature.
15. EXTENSION OF THE TENDER PERIOD; TERMINATION; AMENDMENTS.
The Company expressly reserves the right, at any time and from time to
time, to extend the period of time during which the Offer is open by giving
oral or written notice of such extension to the Depositary and making a public
announcement thereof. There can be no assurance that the Company will exercise
its right to extend the Offer. The Company also expressly reserves the right,
in its sole discretion, to terminate the Offer and not accept for payment or
pay for any Shares not theretofore accepted for payment or paid for or, subject
to applicable law, to postpone payment for Shares upon the occurrence of any of
the conditions specified in Section 5 by giving oral or written notice of such
termination or postponement to the Depositary and making a public announcement
thereof. The Company's reservation of the right to delay payment for Shares
which it has accepted for payment is limited by Exchange Act Rule 13e-4(f)(5),
which requires that the Company pay the consideration offered or return the
Shares tendered promptly after termination or withdrawal of the Offer. Subject
to compliance with applicable law, the Company further reserves the right, in
its sole discretion, to amend the Offer in any respect or to waive the
limitation on the maximum number of Shares to be purchased pursuant to the
Offer. Amendments to and extensions of the Offer may be made at any time and
from time to time by public announcement thereof, such announcement, in the
case of an extension, to be issued no later than 12:00 noon, New York City
time, on the next business day after the previously scheduled Expiration Date.
Any public announcement made pursuant to the Offer will be disseminated
promptly to shareholders in a manner reasonably designed to inform
shareholders. Without limiting the manner in which the Company may choose to
make a public announcement, the Company shall have no obligation to publish,
advertise or otherwise communicate any such public announcement, except as
required by applicable law, other than by issuing a release to the Dow Jones
News Service.
If the Company materially changes the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, the Company will disclose promptly such material change and extend the
Offer to the extent required by Exchange Act Rule 13e-4(f)(1)(ii). This Rule
requires that (other than with respect to a change in price or a change in
percentage of securities sought) the maximum period during which an offer must
remain open following material changes in the terms of an offer or the
information concerning an offer (other than with respect to a change in price
or a change in percentage of securities sought) will depend on the facts and
circumstances, including the relative materiality of such terms or information.
If (i) the Company increases or decreases the price to be paid for Shares, or
the Company increases the number of Shares being sought and any such increase
in the number of Shares being sought exceeds 2% of the outstanding Shares, or
the Company decreases the number of Shares being sought; and (ii) the Offer is
scheduled to expire at any time earlier than the expiration of a period ending
on the tenth business day from, and including, the date that notice of such
increase or decrease is first published, sent or given, the Offer will be
extended until at least the end of such tenth business day.
16. FEES AND EXPENSES.
The Company has retained D.F. King & Co., Inc. as the Information
Agent and American Stock Transfer & Stock Company as Depositary. The
Information Agent will assist shareholders who request assistance in connection
with the Offer, may contact shareholders by mail, telephone, facsimile and in
person and may request brokers, dealers and other nominee shareholders to
forward materials relating to the Offer to beneficial owners. The Depositary
and the Information Agent will receive reasonable and customary compensation
for their services. The Company will also reimburse the Depositary and the
Information Agent for out-of-pocket expenses, including reasonable attorneys'
fees.
21
<PAGE> 25
The Company will not pay fees or commissions to any broker, dealer,
commercial bank, trust company or other person (other than fees to the
Information Agent and the Depositary as described above) for soliciting tenders
of Shares pursuant to the Offer. The Company will, however, on request through
the Information Agent, reimburse such persons for customary handling and
mailing expenses incurred in forwarding materials with respect to the Offer to
the beneficial owners for which they act as nominees or fiduciaries. No such
broker, dealer, commercial bank, trust company or other person has been
authorized to act as the Company's agent for purposes of this Offer. The
Company will pay (or cause to be paid) any stock transfer taxes payable because
of its purchase of Shares pursuant to the Offer, except as otherwise provided
in Instruction 6 of the Letter of Transmittal.
17. MISCELLANEOUS.
The Company is not aware of any jurisdiction where the making of Offer
is not in compliance with applicable law. If the Company becomes aware of any
jurisdiction where the making of the Offer is not in compliance with any valid
applicable law, the Company will make a good faith effort to comply with such
law. If, after such good faith effort, the Company cannot comply with such
law, the Offer will not be made to (nor will tenders be accepted from or on
behalf of the holders of Shares residing in such jurisdiction. In any
jurisdiction the securities or blue sky laws of which require the Offer to be
made by a licensed broker or dealer, the Offer is being made on the Company's
behalf by one or more registered brokers or dealers licensed under the laws of
such jurisdiction.
No person has been authorized to give any information or make any
representation on behalf of the Company not contained herein or in the Letter
of Transmittal and, if given or made, such information or representation must
not be relied upon as having been authorized.
BEEBA'S CREATIONS, INC.
July 20, 1995
22
<PAGE> 26
SCHEDULE I
OWNERSHIP OF SHARES
The following table and notes set forth as of July 14, 1995 (i) the
beneficial ownership, as defined by regulations of the Commission, of Shares
held by (a) each person or group of persons known by the Company who
beneficially owns more than 5% of the outstanding Shares, (b) each director or
nominee for director of the Company and (c) by all persons who serve as
executive officers and directors of the Company as a group. All information is
taken from or based upon ownership filings made by such persons with the
Commission, copies of which were sent by such persons to the Company, or upon
information provided by such persons to the Company.
<TABLE>
<CAPTION>
Name of Beneficial Owner Shares Percent of Class
- ------------------------ ------ ----------------
<S> <C> <C>
Arjun C. Waney 477,148 19.90%
9220 Activity Road
San Diego, CA 92126
Luther A. Henderson(1) 216,047 9.01%
5608 Malvey Ave., Suite 104A
Ft. Worth, TX 76107
Grace & White, Inc.(2) 342,949 14.30%
515 Madison Avenue, Suite 1700
New York, NY 10022
Steven P. Wyandt 104,978 4.27%
9220 Activity Road
San Diego, CA 92126
Eugene B. Price II 43,296 1.81%
9220 Activity Road
San Diego, CA 92126
All directors and executive officers as a group 893,187 35.90%
(6 persons)(3)
</TABLE>
____________
1. The shares attributed to Mr. Henderson are held in the name of Pirvest,
Inc., a corporation in which Mr. Henderson owns 100% of the outstanding
common stock, except for 460 shares held directly by Mr. Henderson.
2. The Company has been advised by a filing made with the Securities and
Exchange Commission by Grace & White, Inc. that as of February 10, 1995,
it owned 342,949 shares of Compoany common stock as to which it had sole
dispositive power, but had sole voting power on only 17,500 of such
shares.
3. This number includes 90,000 shares as to which certain officers have the
right to acquire beneficial ownership by exercising options which were
granted pursuant to the Plans.
23
<PAGE> 27
Facsimile copies of the Letter of Transmittal will be accepted from
Eligible Institutions. A Letter of Transmittal and certificates for Shares and
any other required documents should be sent or delivered by each shareholder or
the shareholder's broker, dealer, commercial bank, trust company or other
nominee to the Depositary at its address set forth below.
The Depositary of the Offer is:
AMERICAN STOCK TRANSFER & STOCK COMPANY
<TABLE>
<S> <C> <C>
Facsimile Transmission By Hand or Overnight Delivery:
By Mail: (For Eligible Institutions Only):
American Stock Transfer &
American Stock Transfer & Trust (718) 234-5001 Trust Company
Company 40 Wall Street
40 Wall Street Confirm Facsimile by Telephone: New York, NY 10005
New York, NY 10005
(718) 921-8820
</TABLE>
Any questions or requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal or the Notice of Guaranteed
Delivery may be directed to the Information Agent at the telephone numbers and
addresses listed below. You may also contact your broker, dealer, commercial
bank, trust company or other nominee for assistance concerning the Offer. To
confirm delivery of your Shares, you are directed to contact the Depositary.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, NY 10005
(212) 269-5550 (collect)
or
Call toll free (800) 669-5550
24
<PAGE> 1
EXHIBIT 99.a(2)
THE OFFER WILL EXPIRE ON FRIDAY, AUGUST 18, 1995 AT 5:00 P.M., NEW YORK CITY
TIME, UNLESS EXTENDED BY THE COMPANY. TENDERING SHAREHOLDERS HAVE THE RIGHT
TO WITHDRAW SHARES TENDERED AT ANY TIME PRIOR TO EXPIRATION OF THE OFFER AND
THEY MAY WITHDRAW SHARES AFTER MONDAY, SEPTEMBER 18, 1995, UNLESS ACCEPTED BY
THE COMPANY BY THAT DATE.
LETTER OF TRANSMITTAL
TO ACCOMPANY SHARES OF COMMON STOCK
OF
BEEBA'S CREATIONS, INC.
TENDERED PURSUANT TO THE OFFER TO PURCHASE
DATED JULY 20, 1995
DEPOSITARY: AMERICAN STOCK TRANSFER & TRUST COMPANY
<TABLE>
<CAPTION>
Facsimile Transmission
By Mail: (For Eligible Institutions Only): By Hand or Overnight Delivery:
<S> <C> <C>
American Stock Transfer & Trust (718) 234-5001 American Stock Transfer &
Company Trust Company
40 Wall Street Confirm Facsimile by Telephone: 40 Wall Street
New York, NY 10005 New York, NY 10005
(718) 921-8820
</TABLE>
Delivery of this Letter of Transmittal to an address other than as set
forth above or transmission to a facsimile number other than the one listed
above will not constitute a valid delivery. The instructions accompanying this
Letter of Transmittal should be read carefully before this Letter is completed.
Shares of Common Stock must be properly tendered prior to 5:00 P.M.,
New York City time, on Friday, August 18, 1995 to assure that at least a portion
of such shares will be purchased if more than 1,200,000 shares are properly
tendered by that date.
This Letter of Transmittal is to be completed by holders of shares of
Common Stock if either (1) certificates for such shares are to be forwarded
herewith or (2) delivery of shares is to be made by book-entry transfer to the
account maintained by the Depositary at The Depository Trust Company ("DTC"),
the Midwest Securities Trust Company ("MSTC") or the Philadelphia Depository
Trust Company ("PDTC") pursuant to the procedures set forth in Section 2 of the
Offer to Purchase. Holders of shares of Common Stock whose certificates are
not immediately available or who cannot deliver their certificates and all
other documents required hereby to the Depositary prior to the Expiration Date
(or who are unable to complete the procedure for book-entry transfer on a
timely basis) must tender their shares according to the guaranteed delivery
procedure set forth in Section 2 of the Offer to Purchase. See Instruction 2.
<PAGE> 2
BEEBA'S CREATIONS, INC. TENDER
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY WITH DTC,
MSTC OR PDTC AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN DTC,
MSTC OR PDTC MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
<TABLE>
<S> <C>
Name of Tendering Institution . . . . . . . . . . . . . . . . . . . .
DTC, MSTC or PDTC Account Number . . . . . . . . . . . . . . . . . . .
Transaction Code Number . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY PRIOR TO THE
DATE HEREOF AND COMPLETE THE FOLLOWING:
<TABLE>
<S> <C>
Name of Registered Owner(s) . . . . . . . . . . . . . . . . . . . . .
Date of Execution of Notice of Guaranteed Delivery . . . . . . . . . .
Name of Institution which Guaranteed Delivery . . . . . . . . . . . .
DTC, MSTC or PDTC Account Number (if to be delivered by book-entry
transfer) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Beeba's Creations, Inc., a
California corporation (the "Company"), the certificates described below
representing shares of its Common Stock (the "Shares"), at $8.00 per Share net
to the seller in cash, upon the terms and conditions set forth in the Offer to
Purchase dated July 20, 1995, receipt of which is hereby acknowledged, and in
this Letter of Transmittal (which together constitute the "Offer").
The undersigned hereby sells, assigns and transfers to or upon the
order of the Company all Shares tendered hereby that are purchased pursuant to
the Offer and hereby irrevocably constitutes and appoints the Depositary as
attorney-in-fact of the undersigned, with full power of substitution (such
power of attorney being deemed to be an irrevocable power coupled with an
interest), to (a) deliver certificates for such Shares or transfer ownership of
such Shares on the account books maintained by DTC, MSTC or PDTC, together in
either case with all accompanying evidences of transfer and authenticity, to or
upon the order of the Company upon receipt by the Depositary, as the
undersigned's agent, of the purchase price, (b) present such certificates for
cancellation and transfer of such Shares on the Company's books and (c) receive
all benefits and otherwise exercise all rights of beneficial ownership of such
Shares, all in accordance with the terms of the Offer. The undersigned hereby
warrants that the undersigned has full authority to sell, assign and transfer
the Shares tendered hereby and that the Company will acquire good title
thereto, free and clear of all liens, charges, encumbrances, conditional sale
agreements or other obligations relating to the sale or transfer thereof, and
not subject to any adverse claim, when and to the extent the same are purchased
by it. Upon request, the undersigned will execute and deliver any additional
documents necessary to complete the sale, assignment and transfer.
The undersigned understands that tenders of Shares pursuant to any of
the procedures described in the Offer to Purchase or in the Instructions hereto
will constitute an agreement between the undersigned and the Company upon the
terms and subject to the conditions of the Offer.
2
<PAGE> 3
BEEBA'S CREATIONS, INC. TENDER
DESCRIPTION OF SHARES TENDERED
(SEE INSTRUCTIONS 3 AND 4)
<TABLE>
<CAPTION>
Name(s) and Address(es) of
Registered Holder(s)
(Please fill in exactly as Name(s) Certificate(s) Enclosed
appear(s) on certificates (Attach signed supplemental list if necessary)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Total No.
of Shares Number of
Certificate Represented by Shares
No.(s)* Certificate(s)* Tendered**
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
Total No. of Shares Tendered
- ---------------------------------------------------------------------------------------------
* Need not be completed by Shareholders who tender Shares by book-entry transfer.
** If you desire to tender fewer than all Shares evidenced by any certificate listed
above, please indicate in this column the number you wish to tender. Otherwise
all Shares evidenced by such certificates will be deemed to have been tendered.
</TABLE>
The undersigned recognizes that under certain circumstances set forth
in the Offer to Purchase, the Company may not be required to purchase any of
the Shares tendered hereby or may accept for purchase fewer than all of the
Shares tendered hereby. In either event, the undersigned understands that
certificate(s) for any Shares not purchased will be returned to the undersigned
at the address indicated above unless otherwise indicated under the Special
Delivery Instructions or Special Payment Instructions below. The undersigned
recognizes that the Company has no obligation, pursuant to the Special Payment
Instructions, to transfer any certificate for Shares from the name of the
registered holder thereof to another name if the Company purchases none of the
Shares represented by such certificates.
The check for the purchase price for such of the tendered Shares as
are purchased will be issued to the undersigned and mailed to the address
indicated above unless otherwise indicated under the Special Delivery
Instructions or Special Payment Instructions below.
All authority hereby conferred shall survive the death or incapacity
of the undersigned and all obligations of the undersigned hereunder shall be
binding upon the heirs, personal representatives, successors and assigns of the
undersigned. Except as stated in the Offer, this tender is irrevocable.
3
<PAGE> 4
BEEBA'S CREATIONS, INC. TENDER
SIGN HERE
(SEE INSTRUCTIONS 1, 5, 6 AND 9)
..............................................
..............................................
(Signature(s) of Owner(s)
Dated..................................., 1995
Name(s).......................................
.......................................
(Please Print)
Area Code and (Day)...........................
(Night).........................
Tax ID or Social Security No.(s)..............
..............................................
GUARANTEE OF SIGNATURE(S)
(If Required by Instruction 1)
Authorized Signature..........................
Name..........................................
(Please Print)
Name of Firm..................................
Address.......................................
(Including Zip Code)
Dated...................., 1995
The shareholder represents to the Company that such shareholder owns
the Shares being tendered withing the meaning of Exchange Act Rule 14e-4 and
the tender of such Shares complies with Rule 14e-4.
4
<PAGE> 5
BEEBA'S CREATIONS, INC. TENDER
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 5 AND 7)
To be completed ONLY if certificates
for unpurchased Shares and/or any check are to
be issued in the name of and sent to someone
other than the undersigned.
Issue Check and/or Certificates to:
Name(s).......................................
(Please Print)
Address.......................................
..............................................
(Include Zip Code)
..............................................
(Tax Identification or Social Security No.)
SIGNATURE
(IF SPECIAL PAYMENT INSTRUCTIONS ARE GIVEN)
(SEE INSTRUCTION 9)
..............................................
..............................................
Signature(s) of Substitute Payee(s)
Dated..................................., 1995
By signing and completing the form above,
under the penalties of perjury, I/we certify
that the above tax identification or social
security number(s) is/are correct.
Note: Failure to complete and sign may result
in backup withholding of 31% of the payments
due to you. See Instruction 10.
Signature(s) of Owner(s) (if the box above has been completed):
___________________________________
___________________________________
5
<PAGE> 6
BEEBA'S CREATIONS, INC. TENDER
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTION 7)
To be completed ONLY if certificates
for unpurchased Shares and/or the check,
issued in the name of the undersigned, are to
be sent to someone other than the undersigned
or to the undersigned at an address other than
that shown above.
Deliver [ ] check and/or [ ] certificates to:
Name(s).......................................
(Please Print)
Address.......................................
..............................................
(Include Zip Code)
Signature(s) of Owner(s)......................
......................
SUBSTITUTE FORM W-9 BELOW MUST BE
COMPLETED - SEE INSTRUCTION 9
PAYER'S NAME: AMERICAN STOCK TRANSFER & TRUST COMPANY
<TABLE>
<S> <C> <C>
SUBSTITUTE Part 1 -- PLEASE PROVIDE YOUR TIN IN
THE BOX AT RIGHT AND CERTIFY BY
FORM W-9 SIGNING AND DATING BELOW.
DEPARTMENT OF THE TREASURY TIN_____________________________
INTERNATIONAL REVENUE SERVICE _____________________________________ SOCIAL SECURITY NUMBER OR
Name EMPLOYER IDENTIFICATION
NUMBER
_____________________________________
Address
_____________________________________
City State Zip Code
_________________________________________________________________________
Part 2 -- Check the box if you are NOT subject to backup withholding
under the provisions of section 3406(a)(1)(C) of the Internal Revenue
Code because (1) you have not been notified that you are subject to
backup withholding as a result of failure to report all interest or
dividends or (2) the Internal Revenue Service has notified you that you
are no longer subject to backup withholding. [ ]
__________________________________________________________________________________________________________
PAYER'S REQUEST FOR TAXPAYER CERTIFICATION -- UNDER THE PENALTIES OF PERJURY, I
IDENTIFICATION NUMBER (TIN) CERTIFY THAT THE INFORMATION PROVIDED ON THIS FORM IS
TRUE, CORRECT AND COMPLETE.
Part 3 --
Awaiting TIN [ ]
SIGNATURE:______________________________________ DATE:_____________, 1995
</TABLE>
6
<PAGE> 7
BEEBA'S CREATIONS, INC. TENDER
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. If this Letter of Transmittal is
signed by the registered institutional holder of the Shares (which registered
holder, for purposes of this document, shall include any participant in DTC,
MSTC or PDTC whose name appears on a security position listing as the owner of
the Shares) tendered herewith and payment is to be made directly to such
holder, or if such Shares are tendered for the account of a member firm of a
registered national securities exchange, a member of the National Association
of Securities Dealers, Inc. or a commercial bank or trust company having an
office, branch or agency in the United States (each being hereinafter referred
to as an "Eligible Institution"), no signature guarantee is required. In all
other cases all signatures in the box entitled "Sign Here" on this Letter of
Transmittal must be guaranteed by an Eligible Institution.
2. Delivery of Letter of Transmittal and Certificates; Guaranteed
Delivery Procedures. This Letter of Transmittal is to be completed by
shareholders if either (1) certificates are to be forwarded herewith or (2)
tenders are to be made pursuant to the procedures for tender by book-entry
transfer set forth in Section 2 of the Offer to Purchase. Certificates for all
physically tendered Shares or confirmation of any book-entry transfer into the
Depositary's accounts at DTC, MSTC or PDTC of Shares tendered electronically,
as well as a properly completed and duly executed Letter of Transmittal or
facsimile thereof and any other documents required by this Letter of
Transmittal, must be received by the Depositary at the appropriate address set
forth herein prior to the Expiration Date of the Offer as defined in Section 1
of the Offer to Purchase. If certificates representing Shares are not
immediately available (or if the book-entry transfer procedure cannot be
completed on a timely basis) or if time will not permit all required documents
to reach the Depositary prior to the Expiration Date, Shares may be tendered by
or through an Eligible Institution by properly completing and duly executing
and delivering a Notice of Guaranteed Delivery and by otherwise complying with
the guaranteed delivery procedures set forth in Section 2 of the Offer to
Purchase. Note that the Notice of Guaranteed Delivery may be completed only by
an Eligible Institution.
THE METHOD OF DELIVERY OF CERTIFICATES REPRESENTING SHARES AND OTHER
DOCUMENTS IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. IF
DELIVERY IS BY MAIL, INSURED REGISTERED MAIL, RETURN RECEIPT REQUESTED, IS
RECOMMENDED.
No alternative, conditional or contingent tenders will be accepted,
and no fractional Shares will be purchased. All tendering shareholders, by
execution of this Letter of Transmittal, waive any right to receive any notice
of the acceptance of their Shares for payment.
3. Inadequate Space. If the space provided is inadequate, the
certificate numbers and number of Shares should be listed on a separate signed
schedule attached hereto.
4. Partial Tenders. (Not applicable to shareholders who tender
by book-entry transfer). If fewer than all of the shares of Common Stock
evidenced by any certificate submitted are to be tendered, fill in the number
of Shares which are to be tendered in the column entitled "Number of Shares
Tendered" in the box captioned "Description of Shares Tendered." A new
certificate for the remainder of the Shares evidenced by the old certificate(s)
and for the number of Shares not purchased after proration, if any, will be
sent to you, unless otherwise specified in the "Special Delivery Instructions"
or "Special Payment Instructions" boxes on this Letter of Transmittal, as soon
as practicable after the Expiration Date of the Offer. All Shares represented
by certificates listed are deemed to have been tendered unless otherwise
indicated.
5. Signatures on Letter of Transmittal, Stock Powers and
Endorsements.
(a) If this Letter of Transmittal is signed by the
registered holder of the Shares represented by the certificates tendered
hereby, the signature(s) must correspond with the name(s) as written on the
face of the certificate without any change whatsoever.
(b) If any of the Shares tendered hereby are held of
record by two or more joint holders, all such holders must sign this Letter of
Transmittal.
(c) If any tendered Shares are registered in different
names on several certificates, it will be necessary to complete, sign and
submit as many separate Letters of Transmittal as there are different
7
<PAGE> 8
BEEBA'S CREATIONS, INC. TENDER
registrations of certificates. Photocopies of this form of Letter of
Transmittal will be accepted if original signatures are affixed.
(d) When this Letter of Transmittal is signed by the
registered holder(s) of the certificates listed and transmitted hereby, no
endorsements of certificates or separate stock powers are required. If,
however, the certificates for unpurchased Shares are to be issued to a person
other than the registered holder(s), then the certificates transmitted hereby
must be endorsed or accompanied by appropriate stock powers, in either case
signed exactly as the name(s) of the registered holder(s) appears on the
certificates. Signatures on such certificates or stock powers must be
guaranteed by an Eligible Institution. See also Instruction 1.
(e) If this Letter of Transmittal or any certificates or
stock powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and must
submit proper evidence satisfactory to the Company of their authority so to
act.
(f) If this Letter of Transmittal is signed by a person
other than the registered holder(s) of the certificates listed, the
certificates must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name of the registered holder(s) appears on
the certificates. Signatures on such certificates or stock powers must be
guaranteed by an Eligible Institution. See also Instruction 1.
6. Stock Transfer Taxes. The Company will pay all stock transfer
taxes, if any, payable on the transfer to it of Shares purchased pursuant to
the Offer. If, however, payment of the purchase price is to be made to, or (in
the circumstances permitted by the Offer) if unpurchased Shares are to be
registered in the name of, any person other than the registered holder, or if
tendered certificates representing Shares are registered in the name of any
person other than the registered holder, or if tendered certificates are
registered in the name of any person other than the person(s) signing this
Letter of Transmittal, the amount of any stock transfer taxes (whether imposed
on the registered holder or such other person) payable on account of the
transfer to such person will be deducted from the purchase price unless
satisfactory evidence of the payment of such taxes, or exemption therefrom, is
submitted to the Depositary.
7. Special Payment and Delivery Instructions. If certificates
representing unpurchased Shares and/or checks are to be issued in the name of a
person other than the signer of this Letter of Transmittal or if such
certificates and/or checks are to be delivered to someone other than the signer
of this Letter of Transmittal, the appropriate boxes on this Letter of
Transmittal should be completed.
8. Irregularities. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by the Company, which determination shall be final and
binding. The Company reserves the absolute right to reject any or all tenders
determined by it to be not in appropriate form or which would, in the opinion
of the Company's counsel, be unlawful to pay for or accept. The Company also
reserves the absolute right to waive any of the conditions of the Offer or any
defect in any tender with respect to any particular Shares or any particular
shareholder, and the Company's interpretations of the terms and conditions of
the Offer (including these instructions) shall be final and binding. Unless
waived, any defects or irregularities in connection with tenders must be cured
within such time as the Company shall determine. Neither the Company, the
Depositary nor the Information Agent shall be obligated to give notice of
defects or irregularities in tenders, nor shall they incur any liability for
failure to give any such notice. Tenders will not be deemed to have been made
until all defects and irregularities have been cured or waived.
9. Substitute Form W-9. Each tendering shareholder is required
to provide the Depositary with a correct Taxpayer Identification Number ("TIN")
on Substitute Form W-9 attached as part of the Letter of Transmittal. Failure
to provide the information on the form may subject the tendering shareholder to
31% withholding on the payment of the purchase price. The box in Part 3 of the
Substitute Form W-9 may be checked if the tendering shareholder has not been
issued a TIN and has applied for a number or intends to apply for a number in
the near future. If the box in Part 3 is checked and the Depositary is not
provided with a TIN within 60 days, the Depositary will withhold 31% of all
payments of the purchase price thereafter until a TIN is provided to the
Depositary.
10. Requests for Assistance or Additional Copies. Questions and
requests for assistance or additional copies of the Offer to Purchase, this
Letter of Transmittal and the Notice of Guaranteed Delivery, may be directed to
the Information Agent at the address set forth below.
8
<PAGE> 9
BEEBA'S CREATIONS, INC. TENDER
IMPORTANT: This Letter of Transmittal or facsimile thereof (together
with the certificates or confirmation of book-entry transfer and other required
documents), or the Notice of Guaranteed Delivery must be received by the
Depositary prior to 5:00 P.M., New York City time on August 18, 1995.
The Information Agent is:
D.F. King & Co., Inc.
77 Water Street
New York, NY 10005
(212) 269-5550 (collect)
or
Call toll free (800) 669-5550
IMPORTANT TAX INFORMATION
Under the federal income tax law, a shareholder whose tendered Shares
are accepted for purchase is required by law to provide the Depositary (as
payer) with his/her correct Taxpayer Identification Number ("TIN") on the
Substitute Form W-9 attached as part of the Letter of Transmittal. If such
shareholder is an individual, the TIN is his/her social security number. If
the Depositary is not provided with the correct TIN, the shareholder may be
subject to a $50 penalty imposed by the Internal Revenue Service. In addition,
payments that are made to such shareholder with respect to Shares purchased
pursuant to the Offer may be subject to backup withholding.
Exempt shareholders (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. (In order for a foreign individual to qualify as an
exempt recipient, that shareholder must submit a statement, signed under
penalties of perjury, attesting to that individual's exempt status. Such
statements may be obtained from the Depositary.) See the enclosed Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
If backup withholding applies, the Depositary is required to withhold
31% of any payments made to the shareholder. Backup withholding is not an
additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in any overpayment of taxes, a refund may be obtained.
Purpose of Substitute Form W-9. To prevent backup withholding on
payments that are made to a shareholder with respect to Shares purchased
pursuant to the Offer, the shareholder is required to notify the Depositary of
his/her correct TIN by completing the Substitute Form W-9 certifying that the
TIN provided on such Form is correct (or that such shareholder is awaiting a
TIN and that (1) the shareholder has not been notified by the Internal Revenue
Service that he/she is subject to backup withholding as a result of failure to
report all interest or dividends or (2) the Internal Revenue Service has
notified the shareholder that he/she is no longer subject to backup
withholding.
What Number to Give the Depositary. The shareholder is required to
give the Depositary the social security number or employer identification
number of the record owner of the Shares. If the Shares are in more than one
name or are not in the name of the actual owner, consult the enclosed
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 for additional guidelines on which number to report.
9
<PAGE> 10
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e. 00-0000000. The table below will help determine the
number to give the payer.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
FOR THIS TYPE OF ACCOUNT: GIVE NAME AND SSN OF:
- ------------------------------------------------------------------------------------------
<S> <C>
1. Individual The individual
2. Two or more individuals (joint account) The actual owner of the account or,
if combined funds, the first
individual on the account(1)
3. Custodian account of a minor (Uniform Gift The minor(2)
to Minors Act)
4. (a) The usual revocable savings trust The grantor-trustee(1)
(grantor is also trustee)
(b) So-called trust account that is not a The actual owner(1)
legal or valid trust under state law
5. Sole proprietorship The owner(3)
- ------------------------------------------------------------------------------------------
FOR THIS TYPE OF ACCOUNT: GIVE NAME AND EIN OF:
- ------------------------------------------------------------------------------------------
6. Sole proprietorship The owner(3)
7. A valid trust, estate, or pension trust Legal entity(4)
8. Corporate The corporation
9. Association, club, religious, charitable, The organization
educational, or other tax-exempt organization
10. Partnership The partnership
11. A broker or registered nominee The broker or nominee
12. Account with the Department of Agriculture in The public entity
the name of a public entity (such as a state or
local government, school district, or prison)
that receives agricultural program payments
- ------------------------------------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's SSN.
(3) You must show your individual name, but you may also enter your business
or "doing business as" name. You may use either your SSN or EIN.
(4) List first and circle the name of the legal trust, estate, or pension
trust. (Do not furnish the TIN of the personal representative or trustee
unless the legal entity itself is not designated in the account title.)
NOTE: If no name is circled when more than one name is listed, the number will
be considered to be that of the first name listed.
<PAGE> 11
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Page 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number ("TIN"), obtain Form SS-5,
Application for a Social Security Number Card, or Form SS-4, Application for
Employee Identification Number, at the local office of the Social Security
Administration or the Internal Revenue Service ("IRS") and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
(Section references are to the Internal Revenue Code of 1986, as amended).
Payees specifically exempted from backup withholding on ALL payments of interest
and dividends include the following:
(1) A corporation.
(2) An organization exempt from tax under section 501(a), or an IRA, or a
custodial account under section 403(b)(7).
(3) The United States or any of its agencies or instrumentalities.
(4) A state, the District of Columbia, a possession of the United States, or
any of their political subdivisions or instrumentalities.
(5) A foreign government or any of its political subdivisions, agencies, or
instrumentalities.
(6) An international organization or any of its agencies or
instrumentalities.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the United
States or a possession of the United States.
(9) A futures commission merchant registered with the Commodity Futures
Trading Commission.
(10) A real estate investment trust.
(11) An entity registered at all times during the tax year under the
Investment Company Act of 1940.
(12) A common trust fund operated by a bank under section 584(a).
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or listed in
the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List.
(15) A trust exempt from tax under section 664 or described in section 2947.
For broker transactions, payees listed in items 1 through 13 above, and a person
registered under the Investment Advisors Act of 1940 who regularly acts as a
broker are exempt.
Payments of dividends and patronage dividends generally not subject to backup
withholding include the following:
o Payments to nonresident aliens subject to withholding under section
1441.
o Payments to partnerships not engaged in a trade or business in the
United States and that have at least one nonresident partner.
o Payments of patronage dividends not paid in money.
o Payments made by certain foreign organizations.
Payments of interest generally not subject to backup withholding include the
following:
o Payments of interest on obligations issued by individuals.
NOTE: You may be subject to backup withholding if this interest is $600
or more and is paid in the course of the payer's trade or business and
you have not provided your correct TIN to the payer.
o Payments of tax-exempt interest (including exempt-interest dividends
under section 852).
o Payments described in section 6049(b)(5) to nonresident aliens.
o Payments on tax-free covenant bonds under section 1451.
o Payments made by certain foreign organizations.
o Payments of Mortgage interest.
Exempt payees described above should file Substitute Form W-9 to avoid possible
erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR
TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND
RETURN IT TO THE PAYER. If you are a non-resident alien or foreign entity not
subject to backup withholding, give the payer a completed Form W-8, Certificate
of Foreign Status.
Payments that are not subject to information reporting are also not subject to
backup withholding. For details, see sections 6041, 6041(A)(a), 6042, 6044,
6045, 6049, 6050A, and 6050N, and their regulations.
PRIVACY ACT NOTICE
Section 6109 requires you give your correct TIN to persons who must file
information returns with the IRS to report interest, dividends, and certain
other income paid to you, mortgage interest you paid, the acquisition or
abandonment of secured property, cancellation of debt, or contributions you
made to an IRA. The IRS uses the numbers for identification purposes and to
help verify the accuracy of your tax return. You must provide your TIN whether
or not you are required to file a tax return. Payers must generally withhold
31% of taxable interest, dividend, and certain other payments to payee who does
not give a TIN to a payer. Certain penalties may also apply.
PENALTIES
FAILURE TO FURNISH TIN. -- If you fail to furnish your correct TIN to a
requester, you are subject to a penalty of $50 for each such failure unless
your failure is due to reasonable cause and not to willful neglect.
CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If you
make a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Willfully falsifying
certification or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
MISUSE OF TINs. -- If the requester discloses or uses TINs in violation of
Federal law, the requester may be subject to civil and criminal penalties.
<PAGE> 1
EXHIBIT 99.a(3)
NOTICE OF GUARANTEED DELIVERY
TO TENDER COMMON STOCK
OF
BEEBA'S CREATIONS, INC.
The below form or a form substantially equivalent to that set forth
below must be used to accept the Offer (as defined below) if a shareholder's
stock certificates are not immediately available or the procedures for
book-entry transfer cannot be completed on a timely basis or time will not
permit the Letter of Transmittal and other required documents to reach the
Depositary prior to the Expiration Date (as defined in Section 1 of the Offer
to Purchase (as defined below)). Such form may be delivered by hand or mail,
or transmitted by facsimile transmission to the Depositary. See Section 2 of
the Offer to Purchase.
DEPOSITARY:
AMERICAN STOCK TRANSFER & TRUST COMPANY
<TABLE>
<S> <C> <C>
Facsimile Transmission By Hand or Overnight Delivery:
By Mail: (For Eligible Institutions Only):
American Stock Transfer &
American Stock Transfer & Trust (718) 234-5001 Trust Company
Company 40 Wall Street
40 Wall Street Confirm Facsimile by Telephone: New York, NY 10005
New York, NY 10005
(718) 921-8820
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN TO ONE OF THOSE
SHOWN ABOVE OR TRANSMISSION TO A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
Ladies and Gentlemen:
The undersigned hereby tender to Beeba's Creations, Inc. (the
"Company") upon the terms and conditions set forth in its Offer to Purchase
dated July 20, 1995 (the "Offer to Purchase"), and the related Letter of
Transmittal (which together constitute the "Offer"), receipt of which is hereby
acknowledged, the number of Shares specified below, pursuant to the guaranteed
delivery procedures set forth in Section 2 of the Offer to Purchase.
NUMBER OF SHARES TENDERED:_________
<TABLE>
<S> <C>
Name(s) of Record Holder(s): Stock Certificate Nos. (if available)
- ------------------------------------------------------- -----------------------------------------------------
- ------------------------------------------------------- -----------------------------------------------------
(Please type or print)
If Shares will be delivered by book-entry transfer,
Address(es) check applicable box:
-------------------------------------------
- -------------------------------------------------------
Zip Code [ ] The Depository Trust Company
[ ] Midwest Securities Trust Company
Area Code and Telephone Number: [ ] Philadelphia Depository Trust Company
- ------------------------------------------------------
Account Number
-----------------------------------------------------
Dated: , 1995
- ------------------------------------------------------- -----------------------------------------------------
- -------------------------------------------------------
(Signature(s))
</TABLE>
<PAGE> 2
Beeba's Creations, Inc. Tender
GUARANTEE OF DELIVERY
The undersigned, a member firm of a registered national securities
exchange or a member of the National Association of Securities Dealers, Inc.,
or a commercial bank or trust company having an office, branch or agency in the
United States, guarantees (i) that the above-named person(s) "own(s)" the
Shares tendered hereby within the meaning of Rule 14e-4 under the Securities
Exchange Act of 1934 and (ii) that it will deliver to the Depositary
certificates for the Shares tendered hereby in proper form for transfer, or
confirmation of book-entry transfer of such Shares into the Depositary's
account at The Depository Trust Company, the Midwest Securities Trust Company
or the Philadelphia Depository Trust Company, together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) with
any required signature guarantees, and any other documents required by the
Letter of Transmittal, within five trading days after the date of receipt of
this Notice of Guaranteed Delivery by the Depositary.
Firm:_________________________________
Sign Here:____________________________
(Authorized Signature)
Dated: _________________, 1995 Name:_________________________________
(Please Type or Print)
______________________________________
(Area Code and Telephone Number)
______________________________________
(Address) (Zip Code)
DO NOT SEND STOCK CERTIFICATES WITH THIS FORM. STOCK CERTIFICATES ARE
TO BE DELIVERED WITH A LETTER OF TRANSMITTAL.
2
<PAGE> 1
EXHIBIT 99.a(4)
BEEBA'S CREATIONS, INC.
OFFER TO PURCHASE FOR CASH
UP TO 1,200,000 SHARES OF ITS COMMON STOCK
AT $8.00 PER SHARE NET
THE OFFER WILL EXPIRE ON FRIDAY, AUGUST 18, 1995 AT 5:00 P.M., NEW YORK CITY
TIME, UNLESS EXTENDED BY THE COMPANY. TENDERING SHAREHOLDERS HAVE THE RIGHT
TO WITHDRAW SHARES TENDERED AT ANY TIME PRIOR TO EXPIRATION OF THE OFFER AND
THEY MAY WITHDRAW SHARES AFTER MONDAY, SEPTEMBER 18, 1995, UNLESS ACCEPTED BY
THE COMPANY BY THAT DATE.
July 20, 1995
TO BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES AND NOMINEES:
We are enclosing herewith the material listed below relating to the
offer by Beeba's Creations, Inc, (the "Company") to purchase up to 1,200,000
shares of the Company's Common Stock (the "Shares"), at $8.00 per Share net to
the seller in cash, upon the terms and subject to the conditions set forth in
the Offer to Purchase dated July 20, 1995 (the "Offer to Purchase") and in the
related Letter of Transmittal (which together constitute the "Offer").
We are asking you to contact your clients for whom you hold Shares
registered in your name (or in the name of your nominee). Please bring the
Offer to their attention as promptly as possible. No fees or commissions will
be payable to brokers, dealers or other persons for soliciting tenders of
Shares pursuant to the Offer. The Company will, however, upon request,
reimburse you for customary mailing and handling expenses incurred by you in
forwarding any of the enclosed materials to your clients. The Company will
also pay all transfer taxes on its purchase of Shares, subject to Instruction 6
of the Letter of Transmittal. However, back-up tax withholding at a 31% rate
may be required unless an exemption is proved or unless the required taxpayer
identification information is provided. See Instruction 9 to the Letter of
Transmittal.
For your information and for forwarding to your clients, we are
enclosing the following documents:
(1) Letter dated July 20, 1995 from the President and Chief
Executive Officer of the Company, to the shareholders;
(2) Offer to Purchase dated July 20, 1995;
(3) Letter of Transmittal for your use and for the information of
your clients;
<PAGE> 2
(4) Notice of Guaranteed Delivery to be used to accept the Offer
if stock certificates are not immediately available or if the procedure for
book-entry transfer (as described in the Offer to Purchase) cannot be completed
in a timely manner; and
(5) Form of letter to clients which may be sent to your clients
for whose accounts you hold Shares registered in your name (or in the name of
your nominee), with space provided for obtaining such clients' instructions
with regard to the Offer.
We urge you to contact your clients promptly. Please note that the
Offer will expire at 5:00 p.m., New York City time, on Friday, August 18, 1995,
unless the Offer is extended. Shares may be withdrawn at any time prior to the
expiration of the Offer and may be withdrawn after Monday, September 18, 1995,
unless accepted by the Company by that date.
The Offer is made solely by the Offer to Purchase and the related
Letter of Transmittal and is not being made to holders of Shares in any
jurisdiction in which the making or acceptance of the Offer would not be in
compliance with law.
The Offer is not conditioned upon any minimum number of Shares being
tendered.
As described in Section 2, "Procedures for Tendering Shares," of the
Offer to Purchase, tenders may be made without the concurrent deposit of stock
certificates (or concurrent compliance with the procedure for book-entry
transfer) if such tenders are made pursuant to a Notice of Guaranteed Delivery
by or though a broker or dealer which is a member firm of a registered national
securities exchange or a member of the National Association of Securities
Dealers, Inc. or a commercial bank or trust company having an office, branch or
agency in the United States. Certificates for Shares so tendered (or
confirmation of book-entry transfer), together with a properly completed and
duly executed Letter of Transmittal and any other documents required by the
Letter of Transmittal, must be received by the Depositary within five trading
days after receipt by the Depositary of a properly completed and duly executed
Notice of Guaranteed Delivery.
Additional copies of the enclosed material may be obtained from the
Information Agent at the addresses and telephone numbers set forth on the Offer
to Purchase. Any questions you may have with respect to the Offer should be
directed to the Information Agent, D.F. King & Co., Inc., at 1-800-669-5550.
Very truly yours,
BEEBA'S CREATIONS, INC.
By: STEVEN P. WYANDT
--------------------------
Chief Executive Officer
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY OTHER PERSON THE AGENT OF THE COMPANY, THE INFORMATION AGENT OR THE
DEPOSITARY OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENTS OR USE
ANY MATERIAL ON THEIR BEHALF WITH RESPECT TO THE OFFER, OTHER THAN THE MATERIAL
ENCLOSED HEREWITH AND THE STATEMENTS SPECIFICALLY SET FORTH IN SUCH MATERIAL.
2
<PAGE> 1
EXHIBIT 99.a(5)
BEEBA'S CREATIONS, INC.
Offer to Purchase for Cash
Up to 1,200,000 Shares of its Common Stock
at a Purchase Price of
$8.00 per Share
July 20, 1995
To our Clients:
Enclosed for your consideration are the Offer to Purchase dated July
20, 1995 (the "Offer to Purchase") and the related Letter of Transmittal (which
together constitute the "Offer") distributed in connection with the offer by
Beeba's Creations, Inc., a California corporation (the "Company"), to purchase
for cash up to 1,200,000 shares of its Common Stock (the "Shares"), at a price
of $8.00 per Share, upon the terms and subject to the conditions of the Offer.
All Shares properly tendered and not withdrawn prior to the expiration
of the Offer will be purchased at the Purchase Price, net to the seller in
cash, upon the terms and subject to the conditions of the Offer, including the
proration terms thereof. The Company will return all Shares not subject to the
conditions of the Offer, including Shares not purchased because of proration.
See Section 4 of the Offer to Purchase.
We are (or our nominee is) the record holder of Shares held for your
account. As such, we are the only ones who can tender those Shares, and then
only pursuant to your instructions. We are sending you the enclosed Letter of
Transmittal for your information only.
Please instruct us as to whether you wish us to tender any or all of
the Shares we hold for your account upon the terms and subject to the
conditions of the Offer.
We call your attention to the following:
1. The Offer is not conditioned on any minimum number of Shares
being tendered.
2. The Offer, proration period and withdrawal rights expire at
5:00 p.m., New York City time, on Friday, August 18, 1995, unless the Offer is
extended.
3. The Offer is for up to 1,200,000 Shares, constituting
approximately 50.04% of the Shares outstanding as of July 14, 1995.
4. Tendering shareholders will not be obligated to pay brokerage
commission solicitation fees or, subject to Instruction 6 of the Letter of
Transmittal, stock transfer taxes in connection with the Company's purchase of
Shares pursuant to the Offer.
If you want us to tender any or all of your Shares (held by us for
you), please so instruct us by completing, executing and returning to us the
attached instruction form. An envelope to return your instructions to us is
enclosed. If you authorize us to tender those Shares, we will tender all such
Shares unless you specify otherwise on the attached instruction form.
YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US
TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER. THE
OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON AUGUST 18, 1995, UNLESS THE OFFER IS EXTENDED.
<PAGE> 2
As described in Section 1 of the Offer to Purchase, in the event that
prior to the expiration of the Offer a greater number of Shares than 1,200,000
Shares are properly tendered and not withdrawn, the Company will accept all
Shares properly tendered and not withdrawn prior to the expiration of the Offer
on a pro rata basis (with adjustments to avoid purchases of fractional Shares)
based upon the number of such Shares.
The Company is not aware of any jurisdiction where the making of the
Offer is not in compliance with applicable law. If the Company becomes aware
of any jurisdiction where the making of the Offer is not in compliance with any
valid applicable law, the Company will make a good faith effort to comply with
such law. If, after such good faith effort, the Company cannot comply with
such law, the Offer will not be made to (nor will tender be accepted from or on
behalf of) the holders of Shares residing in such jurisdiction. In any
jurisdiction the securities or blue sky laws of which require the Offer to be
made by a licensed broker or dealer, the Offer is being made on the Company's
behalf by a registered broker or dealer licensed under the laws of such
jurisdiction.
2
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO OFFER TO PURCHASE FOR CASH
UP TO 1,200,000 SHARES COMMON STOCK
OF
BEEBA'S CREATIONS, INC.
AT A PURCHASE PRICE OF
$8.00 PER SHARE
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase dated July 20, 1995, and the related Letter of Transmittal
(which together constitute the "Offer") in connection with the offer by Beeba's
Creations, Inc., a California corporation (the "Company"), to purchase for cash
up to 1,200,000 Shares of its Common Stock (the "Shares"), at a price of $8.00
per Share, upon the terms and subject to the conditions of the Offer.
The undersigned hereby instruct(s) you to tender to the Company the
number of Shares specified below or, if no number is specified, all Shares you
hold for the account of the undersigned, upon the terms and subject to the
conditions of the Offer.
Aggregate number of Shares to be tendered by you for the undersigned:
____________ Shares
SIGNATURE(S)
Signature(s)____________________________________________________________________
Dated_____________________________________________________________________, 1995
Name(s) and Address(es) (Please Print)__________________________________________
________________________________________________________________________________
________________________________________________________________________________
Area Code(s) and Telephone Number(s)____________________________________________
Taxpayer Identification or Social Security Number(s)____________________________
________________________________________________________________________________
3
<PAGE> 1
EXHIBIT 99.a(6)
FOR IMMEDIATE RELEASE
Subject: Beeba's Creations, Inc. today announced its offer to purchase
up to 1,200,000 shares of its outstanding common stock at a
price of $8.00 per share.
Contact: Thomas P. Baumann (619) 549-2922
SAN DIEGO, California, July 17, 1995 -- Beeba's Creations, Inc.
(NASDAQ-BEBA) announced today that it will make a tender offer for up to
1,200,000 shares of its outstanding common stock at a price of $8.00 per share.
The offering period will commence on July 20, 1995, and will remain open until
5:00 p.m. E.D.T. August 18, 1995. Concurrent with this announcement, Beeba's
Creations, Inc. has filed a Schedule 13E-4 with the Securities and Exchange
Commission. A copy of the offer can be obtained from the Information Agent,
D.F. King & Co., Inc. at (800) 669-5550.
<PAGE> 1
EXHIBIT 99.a(7)
July 20, 1995
To Our Shareholders:
Beeba's Creations, Inc. is offering to purchase up to 1,200,000 shares of its
common stock (representing approximately 50% of the currently outstanding
shares) from its shareholders through a tender offer at $8.00 per share.
All of the shares that are properly tendered (and which have not been withdrawn
prior to the expiration of the offer) will, subject to possible proration, be
purchased. All shares that have been tendered and not purchased will be
returned promptly to the shareholders. The tender offer is not conditioned on
any minimum number of shares being tendered.
The tender offer is explained in detail in the enclosed Offer to Purchase and
Letter of Transmittal. If you wish to tender your shares, detailed
instructions on how to tender shares are also in the enclosed materials. I
encourage you to read these materials carefully before making any decision with
respect to the tender offer. Please note that the tender offer is scheduled to
expire at 5:00 P.M., New York City time, on Friday, August 18, 1995 unless
extended by the Company.
Sincerely,
Beeba's Creations, Inc.
By: STEVEN P. WYANDT
President
<PAGE> 1
EXHIBIT 99.a(8)
BEEBA'S CREATIONS, INC.
Offer to Purchase for Cash
Up to 1,200,000 Shares of its Common Stock
at a Purchase Price of
$8.00 per Share
July 20, 1995
To: Beeba's Creations, Inc. Retirement Savings Plan Participants and
Beeba's Creations, Inc. Employee Stock Purchase Plan Participants:
Enclosed for your consideration are the Offer to Purchase dated July
20, 1995 (the "Offer to Purchase") and the related Letter of Transmittal (which
together constitute the "Offer") distributed in connection with the offer by
Beeba's Creations, Inc., a California corporation (the "Company"), to purchase
for cash up to 1,200,000 shares of its Common Stock (the "Shares"), at a price
of $8.00 per Share, upon the terms and subject to the conditions of the Offer.
All Shares properly tendered and not withdrawn prior to the expiration
of the Offer will be purchased at the Purchase Price, net to the seller in
cash, upon the terms and subject to the conditions of the Offer, including the
proration terms thereof. The Company will return all Shares not subject to the
conditions of the Offer, including Shares not purchased because of proration.
See Section 4 of the Offer to Purchase.
As the Administrative Committee under the Beeba's Creations, Inc.
Retirement Savings Plan and the Employee Stock Purchase Plan, we or the Savings
Plan Trustee or our nominees are the record holders of Shares held for you in
your Plan account(s). As such, we are the only ones who can tender those
Shares, and then only pursuant to your instructions. We are sending you the
enclosed Letter of Transmittal for your information only.
Please instruct us as to whether you wish us to tender any or all of
the Shares we hold for your Plan account(s) upon the terms and subject to the
conditions of the Offer.
We call your attention to the following:
1. The Offer is not conditioned on any minimum number of Shares
being tendered.
2. The Offer, proration period and withdrawal rights expire at
5:00 p.m., New York City time, on Friday, August 18, 1995, unless the Offer is
extended.
3. The Offer is for up to 1,200,000 Shares, constituting
approximately 50.04% of the Shares outstanding as of July 14, 1995.
4. Tendering shareholders will not be obligated to pay brokerage
commission solicitation fees or, subject to Instruction 6 of the Letter of
Transmittal, stock transfer taxes in connection with the Company's purchase of
Shares pursuant to the Offer.
If you want us to tender any or all of your Shares in your Plan
account(s) (held by us for you), please so instruct us by completing, executing
and returning to us the attached instruction form. An envelope to return your
instructions to us is enclosed. If you authorize us to tender those Shares, we
will tender all such Shares unless you specify otherwise on the attached
instruction form.
<PAGE> 2
YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US
TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER. THE
OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON August 18, 1995, UNLESS THE OFFER IS EXTENDED.
As described in Section 1 of the Offer to Purchase, in the event that
prior to the expiration of the Offer a greater number of Shares than 1,200,000
Shares are properly tendered and not withdrawn, the Company will accept all
Shares properly tendered and not withdrawn prior to the expiration of the Offer
on a pro rata basis (with adjustments to avoid purchases of fractional Shares)
based upon the number of such Shares.
The Company is not aware of any jurisdiction where the making of the
Offer is not in compliance with applicable law. If the Company becomes aware
of any jurisdiction where the making of the Offer is not in compliance with any
valid applicable law, the Company will make a good faith effort to comply with
such law. If, after such good faith effort, the Company cannot comply with
such law, the Offer will not be made to (nor will tender be accepted from or on
behalf of) the holders of Shares residing in such jurisdiction. In any
jurisdiction the securities or blue sky laws of which require the Offer to be
made by a licensed broker or dealer, the Offer is being made on the Company's
behalf by a registered broker or dealer licensed under the laws of such
jurisdiction.
If you have any questions concerning the Offer or the procedure for
tendering your Plan shares, you may contact Ms. Linda K. Maskovich.
BEEBA'S CREATIONS, INC. RETIREMENT
SAVINGS PLAN
BEEBA'S CREATIONS, INC. EMPLOYEE STOCK
PURCHASE PLAN
2
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO OFFER TO PURCHASE FOR CASH
UP TO 1,200,000 SHARES OF COMMON STOCK
OF
BEEBA'S CREATIONS, INC.
AT A PURCHASE PRICE OF
$8.00 PER SHARE
TO: RETIREMENT SAVINGS PLAN ADMINISTRATIVE COMMITTEE:
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase dated July 20, 1995 and the related Letter of Transmittal
(which together constitute the "Offer") in connection with the offer by Beeba's
Creations, Inc., a California corporation (the "Company"), to purchase for cash
up to 1,200,000 Shares of its Common Stock (the "Shares"), at a price of $8.00
per Share, upon the terms and subject to the conditions of the Offer.
The undersigned hereby instruct(s) you to tender to the Company the
number of Shares specified below or, if no number is specified, all Shares you
hold for the account of the undersigned in the Body Drama, Inc. Retirement
Savings Plan account, upon the terms and subject to the condition of the Offer.
Aggregate number of Shares to be tendered by you for the undersigned.
____________ Shares
SIGNATURE(S)
Signature(s)____________________________________________________________________
Dated:____________________________________________________________________, 1995
Name(s) and Address(es) (Please Print)__________________________________________
________________________________________________________________________________
________________________________________________________________________________
Area Code(s) and Telephone Number(s)____________________________________________
Taxpayer Identification or Social Security Number(s)____________________________
________________________________________________________________________________
<PAGE> 1
EXHIBIT 99.b
AMENDED FINANCIAL COVENANTS
(SUPPLEMENT TO FACTORING AGREEMENT)
May 2, 1991
Congress Talcott Corporation
3470 Wilshire Boulevard
Suite 1100
Los Angeles, CA 90010
Gentlemen:
This will confirm our agreement to amend the Financial Covenants
(Supplement to Factoring Agreement) between us dated April 1, 1991, to read as
follows:
"We hereby covenant, at all times during the term of the
Non-notification Factoring Agreement between us of even date (the "Factoring
Agreement"), to maintain a tangible net worth of not less than $30,000,000 and
working capital of not less than $26,500,000."
"As used herein, 'tangible net worth' means the excess of total assets
over total, liabilities, determined in accordance with generally accepted
accounting principles; excluding, however, all assets which would be classified
as intangible assets under generally accepted accounting principles, including,
without limitation, goodwill, licenses, patents, trademarks, trade names,
copyrights, and franchises, and 'working capital' means the excess of current
assets over current liabilities, determined in accordance with generally
accepted accounting principles."
"This letter agreement supplements the Factoring Agreement, and a
breach of the financial covenants set forth above will constitute an event of
default under the Factoring Agreement. This letter agreement may not be
modified or amended, nor may any rights hereunder be waived, except in a
writing signed by you and us."
Sincerely yours,
BEEBA'S CREATIONS, INC.
By: /s/ THOMAS P. BAUMANN
---------------------------------
Title: Chief Financial Officer
ACCEPTED AND AGREED
CONGRESS TALCOTT CORPORATION
By: /s/ HAROLD I. DUNDISH
---------------------------------
Title: Senior Vice President
<PAGE> 2
AMENDED FINANCIAL COVENANTS
(SUPPLEMENT TO FACTORING AGREEMENT)
JANUARY 24, 1992
CONGRESS TALCOTT CORPORATION
3470 Wilshire Blvd.
Suite 1100
Los Angeles, CA 90010
Gentlemen:
This will confirm our agreement to amend the Financial Covenants
(Supplement to Factoring Agreement) between us dated April 1, 1991, to read as
follows:
"We hereby covenant, at all times during the term of the
Non-notification Factoring Agreement between us of even date (the "Factoring
Agreement"), to maintain a tangible net worth of not less than $17,000,000 and
working capital of not less than $13,500,000."
"As used herein, 'tangible net worth' means the excess of total assets
over total, liabilities, determined in accordance with generally accepted
accounting principles; excluding, however, all assets which would be classified
as intangible assets under generally accepted accounting principles, including,
without limitation, goodwill, licenses, patents, trademarks, trade names,
copyrights, and franchises, and 'working capital' means the excess of current
assets over current liabilities, determined in accordance with generally
accepted accounting principles."
"This letter agreement supplements the Factoring Agreement, and a
breach of the financial covenants set forth above will constitute an event of
default under the Factoring Agreement. This letter agreement may not be
modified or amended, nor may any rights hereunder be waived, except in a
writing signed by you and us."
Sincerely,
BEEBA'S CREATIONS, INC.
By: /s/ THOMAS P. BAUMANN
---------------------------------
Title: Chief Financial Officer
ACCEPTED AND AGREED:
CONGRESS TALCOTT CORPORATION
By: /s/ HAROLD I. DUNDISH
---------------------------------
Title: Senior Vice President
<PAGE> 3
Amendment Number One to
Non-Notification Factoring Agreement
This Amendment Number One to Non-Notification Factoring Agreement is
made this 20th day of July, 1992 by and between Beeba's Creations, Inc. with an
address of 9220 Activity Road, San Diego, California 92126 and Congress Talcott
Corporation with an address of 5670 Wilshire Boulevard, Suite 1750, Los
Angeles, California 90036. Beeba's Creations, Inc. is herein referred to as
you and your and Congress Talcott Corporation is herein referred to as we, us
and our.
BACKGROUND
On April 1, 1991, we entered into a Non-Notification Factoring
Agreement which, as amended to date is herein referred to as the Factoring
Agreement.
We mutually desire to amend the Factoring Agreement as hereinafter set
forth.
1. All capitalized words used herein shall have the meaning
ascribed to them in the Factoring Agreement unless such terms are defined
herein in which case they shall have the meaning ascribed to them herein.
2. Section 3 of the Factoring Agreement captioned Advances, is
hereby modified and amended so that it reads in its entirety as follows:
3. Advances. (a) Advances and extensions of credit to
you may be made from time to time by us upon your request, but at our
sole discretion in each instance, in an amount at any one time
outstanding not to exceed the lesser of (a) the net amount available
under the Borrowing Base, subject to our right to maintain a reserve
as described below and (b) $27,000,000. Extensions of credit will be
available for (i) the issuance of documentary letters of credit
pursuant to the Trade Financing Agreement Supplement to Factoring
Agreement, as amended, (ii) eligible Bankers Acceptance financing,
(iii) direct loans at the Interest Rate (as defined in Section 13)
selected by you and (iv) the issuance of standby letters of credit.
No more than $10,000,000 in the aggregate may be outstanding at any
one time under subsections (ii) and (iii) and no more than $2,000,000
in the aggregate may be outstanding under subsection (iv). Proceeds
of extensions of credit and
<PAGE> 4
advances may be used for the importation of goods, working capital and
general corporate purposes.
Borrowing Base shall mean the sum of (a) 80% of Approved
Accounts and a certain percentage of non-Approved Accounts as
determined by us on a case by case basis and (b) 50% of Eligible
Inventory provided however 50% of Eligible Inventory can never
exceed 80% of Approved Accounts.
The net amount available under the Borrowing Base shall be
determined by subtracting from the Borrowing Base (1) all outstanding
cash advances (2) one third of the estimated landed value of
outstanding letters of credit and (3) the face amount of all
outstanding standby letters of credit.
For purposes hereof the estimated landed value of outstanding
letters of credit shall be determined by multiplying the face amount
of all outstanding letters of credit times 1.3.
Advances which bear interest at LIBOR plus 2% or which are
funded as Banker's Acceptances shall be in an initial minimum amount
of $1,000,000.
(b) On any Business Day, you may request that we create
or cause one of our affiliates to create a Banker's Acceptance using
drafts signed by you and provided to us; provided that: (i) no
Banker's Acceptance shall be in an amount less than $1,000,000; (ii)
Banker's Acceptances shall have a maturity of 30, 60, 90 or 120 days;
(iii) each Banker's Acceptance shall be of a type eligible for
discounting and purchase under 12 U.S.C. paragraph 372 and the rules
of the Board of Governors of the Federal Reserve System then in
effect. The obligations and rights of the parties hereto with respect
to Banker's Acceptances shall be governed by the terms of this
Factoring Agreement as well as the terms of the Trade Finance
Agreement Supplement to the Factoring Agreement dated April 1, 1991
between us ("Trade Finance Agreement") which is incorporated herein by
reference and made a part hereof.
(c) Each Banker's Acceptance shall be repaid and all
commissions and other amounts relating to Banker's Acceptances shall
be paid to us in accordance with the provisions of the draft relating
to such Acceptance and the Trade Finance Agreement. It is agreed that
Banker's Acceptances will be created at an agreed upon discount rate
plus 2%. Any amount not promptly paid by you under or in connection
with any Banker's Acceptance when the same shall be due shall
thereupon immediately become and be deemed to be an advance hereunder
and shall bear interest at the Prime Rate plus 1%.
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<PAGE> 5
No Banker's Acceptance may be paid prior to its maturity.
(d) Notwithstanding any provisions of this Agreement or
the Trade Finance Agreement, we shall not be obligated to create
Banker's Acceptances (a) if our affiliate is not making the acceptance
form of financing generally available to its customers, (b) if our
affiliate is prohibited from doing so by any law, regulation of the
Board of Governors of the Federal Reserve System or of any state
banking authority, or court order, decree or injunction, or (c) to the
extent that any Banker's Acceptance involved is not of a type eligible
for discounting and purchase under 12 U.S.C., paragraph 372 and the
rules of the Board of Governors of the Federal Reserve System then in
effect.
(e) You shall provide us with such information as we may
require in order to issue a letter of credit. Letters of Credit shall
be issued in accordance with the Trade Finance Agreement as amended on
even date herewith and this Factoring Agreement. Fees, charges and
commissions payable with respect to any letters of credit so issued
shall be governed by the amendment to the Trade Finance Agreement.
(f) You understand and agree that our affiliates,
CoreStates Bank, N.A., ("CoreStates") or Philadelphia International
Bank ("PIB"), Los Angeles will issue all letters of credit and create
all Banker's Acceptances issued pursuant hereto and to the Trade
Finance Agreement. We are risk participating in all such letters of
credit and Banker's Acceptances.
(g) Draws made under any letter of credit, or any other
indebtedness, liabilities, expenses and obligations of any kind paid,
arising or incurred by you in connection with any letter of credit or
Banker's Acceptance shall accrue interest at the Prime Rate plus 1%
commencing on the date any payment or disbursement is made by you
until paid in full.
(h) For purposes of computing interest payable under this
agreement, you will be charged with interest on the average daily
balance of all sums advanced or charged to you under this agreement
and other sums owed by you to us at the Interest Rate selected by you
as provided in section 13, and you will be credited with all payments
received by us from your Customers three calendar days after receipt
thereof in the lock-box referred to in Paragraph 6 below. We shall
have the right to withhold and retain at all times, as a reserve, that
amount of your accounts assigned to us and still outstanding which, in
our sole discretion, is or may be necessary to allow for possible
returns, allowances,
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<PAGE> 6
claims or expenses, or to provide for the payment to us of your
obligations. Interest will not be charged by us on such reserve.
(i) You shall establish and maintain a demand deposit
account at CoreStates during the existence of this Factoring
Agreement. All loans extended under this Agreement will be funded by
us into this account. All fees, charges and commissions payable in
connection with all letters of credit and Banker's Acceptances as well
as all payments and disbursements made by CoreStates or PIB in
connection with any letter of credit ' and Banker's Acceptance created
hereunder shall be-debited to this account by CoreStates.
You hereby irrevocably authorize CoreStates to make all such
debits to the demand account which is established for that purpose.
CoreStates shall provide you with a weekly summary of all
drawings, fees, charges, commissions and other activity for all issued
letters of credit.
3. Subsection e of Section 10 Payment of the Factoring Agreement
is hereby modified and amended by deleting the words "Governing Rate" in the
first sentence and substituting therefor the words "Prime Rate plus 1%."
4. Section 13 of the Factoring Agreement captioned, Interest, is
hereby modified and amended so that it reads in its entirety as follows:
13. Interest. You agree to pay us interest on the
average daily balance of all outstanding advances from us to you at
one or more of the following Interest Rates selected by you:
(a) the CoreStates Prime Rate plus 1%; or
(b) LIBOR plus 2%
Interest shall be paid in immediately available funds on
demand, or if no demand is made, as follows: (1) for those advances
which bear interest at the Prime Rate plus 1%, then on the last day of
each month and upon termination of this Agreement and upon rollover
into a LIBOR based interest rate; (2) for those advances and
Obligations which bear interest at LIBOR plus 2%, then on the last day
of each Interest Period with respect thereto, and in the case of an
Interest Period greater than three months, at three month intervals
after the first day of such Interest Period.
- 4 -
<PAGE> 7
You shall provide to both CoreStates and to us written or
telephone notice (promptly confirmed in writing and effective upon
receipt) of your election of the interest rate to be applicable to the
advances on the Business Day that the Prime Rate plus 1% shall be
applicable and at least three Business Days before the LIBOR plus 2%
rate shall be applicable. You shall also specify (1) the date of such
advances which shall be a Business Day, (2) the amount of such
advances, (3) the type of advance - Prime or LIBOR, and (4) the
duration of the Interest Period if the LIBOR plus 2% rate is to be
applicable.
You may elect to change the interest rate applicable to
advances from the Prime Rate plus 1% to LIBOR plus 2% or from LIBOR
plus 2% to the Prime Rate plus 1% in each case by giving us and
CoreStates written or telephone notice (promptly confirmed in writing
and effective upon receipt) on the Business Day the Prime Rate plus 1%
shall be applicable and at least three Business Days before the LIBOR
plus 2% rate shall be applicable. If the LIBOR plus 2% rate is to be
applicable, you shall also specify the duration of the Interest Period
and, in either case, the conversion date. At any time that any
advances bear interest at LIBOR plus 2% the interest rate may only be
converted on the last day of the applicable Interest Period. All
notices by you either electing an interest rate or a conversion
thereof shall be irrevocable and shall be given not later than 11:00
a.m. Philadelphia, Pennsylvania time on the day which is not less
than the number of Business Days spec above for such notice. If you
shall fail to give us and CoreStates the notice as specified above for
selection of the interest rate prior to the end of any Interest
Period, the interest rate on advances shall automatically be converted
and bear interest at the Prime Rate plus 1% on the last day of such
Interest Period. Any change in the interest rate based on the Prime
Rate resulting from a change in the Prime Rate shall be effective as
of the opening of business on the first day of the first month
following the date such change in the Prime Rate is announced.
Interest shall be calculated and paid on the basis of a year
of 360 days for the actual number of days elapsed.
Any advances which bear interest at LIBOR plus 2% may not be
prepaid except on the last day of the applicable Interest Period.
You understand and agree that our affiliate, CoreStates is
making the LIBOR based interest rate available to us for your benefit.
We are risk participating in the LIBOR based advances. CoreStates is
a national banking association and as such is subject to various
regulations which may affect
- 5 -
<PAGE> 8
its yield and the yield of its subsidiary PIB, on LIBOR based advances
and on letters of credit. In addition, LIBOR based interest rates may
not always be available. Certain provisions relating to the LIBOR
based interest rate and the issuance and maintenance of letters of
credit are included here and are intended to and do benefit CoreStates
and PIB.
In no event shall the rate of interest agreed to or charged to
you hereunder exceed the maximum rate of interest permitted to be
agreed to or charged to you under the laws of the jurisdiction whose
laws are applicable to such rate of interest. In the event there are
any credit balances in your account, we shall pay you interest on such
credit balances at a rate per annum equal to 2% per annum less than
the Prime Rate from time to time announced by CoreStates, in effect on
the first day of each month. Any interest and any debit balances owed
by you to us hereunder shall be payable on demand or, at our option,
charged to any of your accounts with us.
5. Section 17, of the Factoring Agreement captioned, Security
Interest is hereby amended by adding the following in the 11th line thereof
after the parenthetical:
"Including, without limitation due from factor balances, trademarks and
tradenames"
so that the above added items are included in the grant of collateral to us and
to our affiliates and subsidiaries to secure your Obligations.
You agree to execute financing statements and any and all other
instruments and documents that we may request to perfect, protect or enforce
the security interests granted under this Amendment. All filing fees for such
documents shall be at your expense. You authorize us to file such financing
statements without your signature, signed only by us as secured party or a
reproduction of this Amendment to reflect the security interests granted
hereunder.
6. The Factoring Agreement is hereby amended by adding the
following new provisions consecutively numbered.
25. Illegality. Notwithstanding any other provision in this
Agreement, if the adoption of any applicable law, rule, or regulation,
or any change therein, or any change in the interpretation or
administration thereof by the governmental authority, central bank, or
comparable agency charged with the interpretation or administration
thereof, or compliance by CoreStates with any request or directive
(whether or not having the force of law) of any such authority,
central bank, or comparable agency shall make it unlawful or
impossible for CoreStates to maintain or fund any amounts
- 6 -
<PAGE> 9
hereunder at such time as it bears interest by reference to LIBOR plus
2%, together with interest accrued thereon, and any other amounts
payable to us hereunder shall be repaid or converted to bear interest
at the Prime Rate plus 1% (a) immediately upon our demand if such
change or compliance with such request, in our judgment requires
immediate repayment; or (b) at the expiration of the last Interest
Period to expire before the effective date of any such change or
request.
26. Disaster. Notwithstanding anything to the contrary
herein, if CoreStates determines (which determination shall be
conclusive) that:
(1) Quotations of interest rates for the relevant
deposits referred to in the definition of LIBOR
Interest Rate are not being provided in the relevant
amounts or for the relative maturities for purposes
of determining the rate of interest for LIBOR as
provided in this agreement; or
(2) The relevant rates of interest referred to in the
definition of LIBOR Interest Rate, as the case may
be, upon the basis of which the rate of interest for
this agreement is to be determined do not accurately
cover the cost to CoreStates of making or maintaining
such type of interest rate;
then we shall forthwith give notice thereof to you, whereupon until we
notify you that the circumstances giving rise to such suspension no
longer exist, (a) we shall no longer make available an interest rate
hereunder based on LIBOR; and (b) the then outstanding principal
amount hereunder which bears interest by reference to LIBOR, together
with accrued interest thereon, shall be repaid in full by you or
converted to bear interest at the Prime Rate plus 1% on the last day
of the then current Interest Period applicable to this agreement.
27. Increased Cost. You shall pay to us from time to
time such amounts as CoreStates may determine to be necessary to
compensate CoreStates for any costs incurred by CoreStates which
CoreStates determines are attributable to its making or maintaining
the LIBOR based interest rate hereunder, or issuing or maintaining any
letter of credit or any reduction in any amount receivable by
CoreStates hereunder in respect to any LIBOR based interest rate or
any letter of credit or such obligation (such increases in costs and
reductions in amounts receivable being herein called "Additional
Costs"), resulting from any change after the date of this agreement in
United States federal, state, municipal, or foreign laws or
regulations (including
- 7 -
<PAGE> 10
Regulation D) or the adoption or making after such date of any
interpretations, directives or requirements applying to a class of
banks including CoreStates of or under any United States federal,
state, municipal, or any foreign laws or regulations (whether or not
having the force of law) by any court or governmental or monetary
authority charged with the interpretation or administration thereof
("Regulatory Change") which: (1) changes the basis of taxation of any
amounts payable to CoreStates under this agreement (other than taxes
imposed on the overall net income of CoreStates); or (2) imposes or
modifies any reserve, special deposit, or similar requirements
relating to any extensions of credit or other assets of, or any
deposits with or other liabilities of, CoreStates (including any of
such deposits referred to in the definition of LIBOR Interest Rate);
or (3) imposes any other condition affecting this agreement (or any of
such extensions of credit-or liabilities). We will notify you of any
event occurring after the date of this Amendment which will entitle
CoreStates to compensation pursuant hereto as promptly as practicable
after it obtains knowledge thereof and determines to request such
compensation.
Determinations by CoreStates for purposes of this agreement of
the effect of any Regulatory Change on its costs of making or
maintaining any advances or Obligations or on amounts required to
compensate CoreStates in respect of any Additional Costs, shall be
conclusive, provided that such determinations are made on a reasonable
basis.
28. Funding Loss Indemnification. You shall pay to us
upon the request of CoreStates such amount or amounts as shall be
sufficient (in the reasonable opinion of CoreStates) to compensate it
for any loss, cost, or expense incurred as a result of:
(1) Any payment or prepayment of any advance or
Obligation when it bears interest at LIBOR plus 2% or
when it is funded as a Banker's Acceptance on a date
other than the last day of the Interest Period
including, but not limited to, any payment or
prepayment pursuant to an acceleration of this
agreement by us; or
(2) Any failure by you to borrow the LIBOR based interest
rate on the date for such borrowing, specified in the
relevant notice hereunder.
29. Risk Based Capital. If CoreStates shall have
determined that the applicability of any law, rule, regulation or
guideline or the adoption after the date hereof of any other law,
rule, regulation or guidelines regarding capital adequacy, or any
change in any of the
- 8 -
<PAGE> 11
foregoing or in the interpretation or administration thereof, or
compliance by CoreStates (or any lending office of such Bank) or
CoreStates' holding central bank or comparable agency, has or would
have the effect of reducing the rate of return on CoreStates' capital
or on the capital of CoreStates' holding company, if any, as a
consequence of this agreement or the loan made by CoreStates to a
level below that which CoreStates or CoreStates' holding company could
have achieved but for such adoption, change or compliance (taking into
consideration CoreStates' policies and the policies of its holding
company with respect to capital adequacy) by an amount deemed by
CoreStates to be material, then from time to time you shall pay to us
on demand such additional amount or amounts as will compensate
CoreStates or its holding company for any such reduction suffered, we
will notify you of any event occurring after the date of this
agreement that will entitle CoreStates to compensation pursuant hereto
as promptly as practicable after it obtains knowledge thereof and
determines to request such compensation.
A certificate of CoreStates setting forth such amount or
amounts as shall be necessary to compensate CoreStates or its holding
company as specified above shall be delivered to you and shall be
conclusive absent manifest error. You shall pay us the amount shown
as due on any such certificate delivered by CoreStates within 10 days
after its receipt of the same.
Failure on the part of us or CoreStates to demand compensation
for increased costs or reduction in amounts received or receivable or
reduction in return on capital with respect to any period shall not
constitute a waiver of CoreStates' right to demand compensation with
respect to such period or any other period.
30. Definitions - As used in this agreement, the
following terms have the following meanings (terms defined in the
singular to have the same meaning when used in the Plural and vice
versa):
"ASSESSMENT RATE" means, for any Interest Period when this agreement
bear interest at LIBOR plus 2%, the average rate (rounded upwards, if
necessary, to the nearest 1/100 of 1%) at which premiums for deposit
insurance, if imposed, are then charged by the Federal Deposit
Insurance Corporation (or any successor) during such Interest Period
to CoreStates for time deposits with CoreStates at its foreign
branches as estimated by CoreStates in good faith.
"BANKER'S ACCEPTANCE" means any Banker's Acceptance created by
CoreStates for a period of 30, 60, 90 or 120 days
- 9 -
<PAGE> 12
pursuant to Section 3 and the Trade Financing Agreement Supplement to
Factoring Agreement with a risk participation by Congress. All
Banker's Acceptances created hereunder must be eligible for discount
and purchase under 12 U.S.C. paragraph 372 and the rules of the Board
of Governors of the Federal Reserve System then in effect.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other
day on which commercial banks in Philadelphia, Pennsylvania are
authorized or required to close under the laws of the Commonwealth of
Pennsylvania and, if the applicable day relates to the interest rate
based on LIBOR and LIBOR Interest Period, or notice with respect to
the interest rate based on LIBOR, a day on which dealings in Dollar
deposits are also carried on in the London interbank market and banks
are open for business in London.
"EUROCURRENCY RESERVE REQUIREMENT" means, for this agreement when it
bears interest by reference to LIBOR for any Interest Period therefor,
the daily average of the stated maximum rate (expressed as a decimal)
at which reserves (including any marginal, supplemental, or emergency
reserves) are required to be maintained during such Interest Period
under Regulation D by CoreStates against "Eurocurrency liabilities"
(as such term is used in Regulation D) but without benefit or credit
proration, exemptions, or offsets that might otherwise be available to
CoreStates from time to time under Regulation D. Without limiting the
effect of the foregoing, the Eurocurrency Reserve Requirement shall
reflect any other reserves required to be maintained by CoreStates
against (1) any category of liabilities which includes deposits by
reference to which the LIBOR Interest Rate for LIBOR is to be
determined; or (2) any category of extension of credit or other assets
which include this agreement to the extent that any advances bear
interest by reference to LIBOR.
"INTEREST PERIOD" means with respect to this agreement when any
advances bear interest based upon LIBOR, or when any advances are
funded as Banker's Acceptances, the period commencing on the date
which is the third Business Day after (a) you elect to have an advance
under this agreement bear interest based upon LIBOR or any renewal of
any LIBOR based rate or (b) you elect to fund an advance as a Banker's
Acceptance and ending, as you may select, on the numerically
corresponding day in the first, second, third or sixth calendar month
thereafter, except that each such Interest Period that commences on
the last Business Day of a calendar month (or on any day for which
there is no numerically corresponding day in the appropriate
subsequent calendar month) shall end on the last Business Day of the
appropriate subsequent calendar month; provided that the foregoing
- 10 -
<PAGE> 13
provisions relating to Interest Periods are subject to the following:
(a) No Interest Period may extend beyond ________________;
(b) If any Interest Period would end on a day that is not a
Business Day, such Interest Period shall be extended to the
next Business Day, unless, in the case of a LIBOR Interest
Rate, such Business Day would fall in the next calendar month,
in which event such Interest Period shall end on the
immediately preceding Business Day.
"LIBOR INTEREST RATE" means for this agreement, the rate per annum
(rounded upwards, if necessary, to the nearest 1/16 of 1% determined
by CoreStates according to the following formula:
R = X + Z*
-----
1-Y
where: R = LIBOR Interest Rate
X = London Interbank Offered Rate for such LIBOR Loan for
such Interest Period
Y = Eurocurrency Reserve Requirement for such LIBOR Loan for
such Interest Period
Z = * (if applicable) the Assessment Rate
"LIBOR" OR "LONDON INTERBANK OFFERED RATE" applicable to any Interest
Period means the rate per annum (rounded upward, if necessary, to the
nearest 1/16 of 1%) quoted at approximately 11:00 a.m. London time, to
the principal London branch of CoreStates two Business Days prior to
the first day of such Interest Period for the offering by leading
banks in the London Interbank market of Dollar deposits in immediately
available funds for a period, and in an amount, comparable to the
Interest Period and principal amount of the LIBOR Loan which shall be
made by CoreStates and outstanding during such Interest Period.
"PRIME RATE" means the rate of interest for loans established and
publicly announced by CoreStates at its office in Philadelphia,
Pennsylvania from time to time as its prime rate. This rate of
interest is not CoreStates' lowest interest rate for commercial
customers.
7. The execution of this Amendment by your duly authorized
officers shall be deemed to represent and warrant the following to us:
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<PAGE> 14
(a) The representations and warranties set forth in the
Factoring Agreement are true and correct as of the date of this Amendment
(references to your financial statements shall be deemed to be references to
your latest financial statements);
(b) No Event of Default under the Factoring Agreement, as
amended and no event which with the giving of notice or the passage of time or
both, would become such an Event of Default, has occurred as of such date;
(c) Except as previously disclosed to us there has been
no material adverse change in your financial condition, business or prospects
since the date of the Factoring Agreement; and
(d) You have full corporate power and authority to
execute, deliver and perform this Amendment Number One to NonNotification
Factoring Agreement and all necessary approvals have been obtained authorizing
the execution, delivery and performance of this Amendment Number One to
Non-Notification Factoring Agreement.
8. You shall deliver or cause to be delivered to us on or before
the date hereof, the following:
(a) A certified copy dated the date hereof of resolutions
of your Board of Directors authorizing the execution, delivery and performance
of this Amendment Number One and the related amendments to loan documents.
(b) A certificate dated the date hereof of your corporate
secretary or assistant secretary as to the incumbency and signatures of your
officers signing this Amendment Number One and the other relating amendments.
(c) This Amendment duly executed together with the
related amendments to the loan documents.
9. Except as expressly modified and amended hereby, the Factoring
Agreement is and shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Agreement
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<PAGE> 15
to be executed by their duly authorized respective officers as of the date
first above written.
BEEBA'S CREATIONS, INC.
By: /s/ THOMAS P. BAUMANN
---------------------------------
CONGRESS TALCOTT CORPORATION
By: /s/ HAROLD I. DUNDISH
---------------------------------
Senior Vice President and Manager
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<PAGE> 16
Amendment Number One to Trade
Financing Agreement
Supplement to Factoring Agreement
This Amendment Number One to Trade Financing Agreement Supplement to
Factoring Agreement is made this 20th day of July, 1992 by and between Beeba's
Creations, Inc. with an address of 9220 Activity Road, San Diego, California
92126 and Congress Talcott Corporation with an address of 5670 Wilshire
Boulevard, Suite 1750, Los Angeles, California 90036. Beeba's Creations, Inc.
is herein referred to as we, us and our and Congress Talcott Corporation is
herein referred to as you and your.
BACKGROUND
On April 1, 1991, we entered into a Trade Financing Agreement
Supplement to Factoring Agreement with you which, as amended to date, is herein
referred to as the Trade Agreement.
We mutually desire to amend the Trade Agreement as hereinafter set
forth.
1. All capitalized words used herein shall have the meaning
ascribed to them in the Trade Agreement unless the terms are defined herein in
which case they shall have the meaning ascribed to them herein.
2. Sections 1.4 and 1.5 of the Trade Agreement are hereby
modified to be consistent with the Agreement. In the event of any discrepancy
between these two sections in the Trade Agreement and the Agreement, the
Agreement shall control.
3. Section 1.8 of the Trade Agreement is hereby amended by
deleting the words "the then effective governing rate" in the first line
thereof and substituting therefor the following:
"at any rate of interest selected by us as"
4. Section 1.9 of the Trade Agreement is hereby amended by
deleting the existing text and substituting therefor the following:
We agree to pay to you and to CoreStates Bank, N.A.
("CoreStates") and to Philadelphia International Bank ("PIB") all
fees, charges and commissions relating to any credit in accordance
with the fee schedule set forth in Exhibit A which is attached hereto
and made a part hereof.
<PAGE> 17
We shall establish and maintain a demand deposit account at
CoreStates during the existence of this Trade Agreement. All fees,
charges and commissions payable in connection with all Credits as well
as all payments and disbursements made by CoreStates or PIB in
connection with any Credit created hereunder shall be debited to this
account by CoreStates.
We irrevocably authorize CoreStates to make all such debits to
the demand account which is established for that purpose.
5. The execution of this Amendment by our duly authorized
officers shall be deemed to represent and warrant the following to us:
(a) The representations and warranties set forth in the
Trade Agreement are true and correct as of the date of this Amendment;
(b) No Event of Default under the Trade Agreement, as
amended and no event which with the giving of notice or the passage of time or
both, would become such an Event of Default, has occurred as of this date;
(c) Except as previously disclosed to you there has been
no material adverse change in our financial condition, business or prospects
since the date of the Trade Agreement; and
(d) We have full corporate power and authority to
execute, deliver and perform this Amendment Number One to Trade Financing
Agreement Supplement to Factoring Agreement and all necessary approvals have
been obtained authorizing the execution, delivery and performance of this
Amendment Number One.
6. We shall deliver or cause to be delivered to you on or before
the date hereof, the following:
(a) A certified copy dated the date hereof of resolutions
of your Board of Directors authorizing the execution, delivery and performance
of this Amendment Number One and the related amendments to loan documents.
(b) A certificate dated the date hereof of our corporate
secretary or assistant secretary as to the incumbency and signatures of our
officers signing this Amendment Number One and the other relating amendments.
(c) This Amendment Number One duly executed together with
the related amendments to the loan documents.
2
<PAGE> 18
7. Except as expressly modified and amended hereby, the Trade
Agreement is and shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized respective officers as of the date first
above written.
BEEBA's CREATIONS, INC.
By: THOMAS P. BAUMANN
---------------------------------
CONGRESS TALCOTT CORPORATION
By: HAROLD I. DUNDISH
---------------------------------
Senior Vice President and Manager
3
<PAGE> 19
AMENDED FINANCIAL COVENANTS
(Supplement to Factoring Agreement)
July 12, 1995
CONGRESS TALCOTT CORPORATION
5670 Wilshire Blvd., Suite 1750
Los Angeles, CA 90036
Gentlemen:
This will confirm our agreement to amend the Financial Covenants (Supplement to
Factoring Agreement) between us dated April 1, 1991. The amendment is
effective upon the completion of a tender offer by Beeba's for 1,200,000 of its
shares at $8.00 per share and is to read as follows:
"We hereby covenant, at all times during the term of the Nonnotification
Factoring Agreement between us of even date (the "Factoring Agreement"), to
maintain a tangible net worth of not less than $9,000,000 and working capital
of not less than $8,500,000."
"As used herein, 'tangible net worth' means the excess of total assets over
total liabilities, determined in accordance with generally accepted accounting
principles; excluding, however, all assets which would be classified as
intangible assets under generally accepted accounting principles, including,
without limitation, goodwill, licenses, patents, trademarks, trade names,
copyrights, and franchises, and 'working capital' means the excess of current
assets over current liabilities, determined in accordance with generally
accepted accounting principles."
"This letter agreement supplements the Factoring Agreement, and a breach of the
financial covenants set forth above will constitute an event of default under
the Factoring Agreement. This letter agreement may not be modified or amended,
nor may any rights hereunder be waived, except in writing signed by you and
us."
Sincerely,
BEEBA'S CREATIONS, INC.
By: /s/ THOMAS P. BAUMANN
---------------------------------
Title: Chief Financial Officer
ACCEPTED AND AGREED:
CONGRESS TALCOTT CORPORATION
By: /s/ HAROLD I. DUNDISH
---------------------------------
Title: Senior Vice President and Manager
<PAGE> 1
EXHIBIT 99.h
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Schedule 13E-4 filed in
connection with the Offer to Purchase of Beeba's Creations, Inc. of our
report dated October 14, 1994, appearing and incorporated by reference in the
Annual Report on Form 10-K of Beeba's Creations, Inc. for the year ended August
31, 1994.
DELOITTE & TOUCHE LLP
San Diego, California
July 17, 1995
