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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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SCHEDULE 13D
(Rule 13d-101)
Under The Securities Exchange Act of 1934
(Amendment No. 1)(1)
Ponder Industries, Inc.
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(Name of issuer)
Common Stock, par value $0.01 per share
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(Title of class of securities)
732378 10 4
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(CUSIP Number)
c/o William R. Ziegler
Parson & Brown LLP
666 Third Avenue, 9th Floor
New York, New York 10017; (212) 551-9860
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(Name, address and telephone number of person
authorized to receive notices and communications)
January 13, 1998
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(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1 (b)(3) or (4), check the following box [ ].
Note. Six copies of this statement including all exhibits, should be
filed with the Commission. See Rule 13d-1 (a) for other parties to whom copies
are to be sent.
(Continued on following pages)
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(1) The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Page 1 of 13 Pages
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CUSIP NO. 732378 10 4 13D PAGE 2 OF 13 PAGES
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1 NAME OF REPORTING PERSONS
S.S OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
White Owl Capital Partners
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO (See Item 3)
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e)
[ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Texas
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NUMBER OF 7 SOLE VOTING POWER
SHARES 6,080,000 shares (assuming exercise of
BENEFICIALLY Warrants) (See Item 5(b))
OWNED BY ----------------------------------------------------
EACH 8 SHARED VOTING POWER
REPORTING 10,000,000 shares (See Item 5(b))
PERSON WITH ----------------------------------------------------
9 SOLE DISPOSITIVE POWER
6,080,000 shares (assuming exercise of
Warrants) (See Item 5(b))
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10 SHARED DISPOSITIVE POWER
10,000,000 shares (See Item 5(b))
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
16,080,000 shares of Common Stock (includes shares issuable upon
exercise of Warrants) (See Item 5 (a))
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [X]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
33.9% (assuming the exercise of Warrants) (See Item 5(a))
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14 TYPE OF REPORTING PERSON*
PN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
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AMENDMENT NO. 1 TO SCHEDULE 13D
INTRODUCTION.
White Owl Capital Partners (the "Reporting Person") is a
signatory to (i) a certain Schedule 13D which was filed with Securities and
Exchange Commission (the "Commission") on October 27, 1997 by the Reporting
Person (the "Initial Filing") in connection with its acquisition of certain
securities of the Company (as hereinafter defined), inclusive of certain Senior
Convertible Notes of the Company (collectively, the "Senior Notes") and Warrants
to acquire Common Stock of the Company (collectively, the "Bridge Loan
Warrants"), pursuant to the terms and conditions of a certain Securities
Purchase Agreement dated as of October 15, 1997 (the "Bridge Loan Securities
Purchase Agreement") and (ii) a certain new Schedule 13D, of even date herewith
(the "New Schedule 13D"), that is being jointly filed by the Reporting Person
and each of White Owl Investors, L.L.C., a Delaware limited liability company
("White Owl") and Somerset Capital Partners, a New York general partnership
("SCP") with the Commission either prior to or contemporaneously with the filing
of this Amendment No. 1 to Initial Filing, because the Reporting Person, White
Owl and SCP may be deemed a "group" within the meaning of Rule 13d-5(b)(1)
promulgated pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), by virtue of the fact that they may be deemed to have acted in
concert in connection with their acquisition of certain securities of the
Company, pursuant to the terms and conditions of a certain Securities Purchase
and Exchange Agreement dated as of January 12, 1998 among the Company, White
Owl, SCP, the Reporting Persons and certain other individuals signatory thereto
(the "Securities Purchase and Exchange Agreement"), and because the Reporting
Person, as the sole managing member of White Owl, may be deemed to beneficially
own the same securities of the Company acquired by White Owl, and the general
partners of the Reporting Person, as two of the three general partners of SCP,
may be deemed to beneficially own the same securities of the Company acquired by
SCP.
As more fully disclosed in Item 4 below, pursuant to the terms
of the Securities Purchase and Exchange Agreement, (i) the Reporting Person
exchanged some of the securities of the Company previously acquired by it
pursuant to the Bridge Loan Securities Purchase Agreement for other securities
of the Company and (ii) White Owl and SCP purchased certain securities of the
Company that represent more than 5% of the outstanding Common Stock of the
Company. Since the Reporting Person may be deemed to indirectly beneficially own
the securities of the Company acquired by White Owl, and the general partners of
the Reporting Person may be deemed to indirectly beneficially own the securities
of the Company acquired by SCP, the Reporting Person has chosen to satisfy the
disclosure and filing obligations triggered by their consummation of the
transactions contemplated by the Securities Purchase and Exchange Agreement by
joining in the Schedule 13D filing of White Owl and SCP, which filing is
referred to herein as the New Schedule 13D. Accordingly, the Reporting Person is
filing this Amendment No. 1 to the Initial Filing, to provide for a termination
of such Initial Filing, effective upon the filing of the New Schedule 13D.
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Capitalized terms used herein without definition shall have
the respective meanings ascribed to them in the Initial Filing.
ITEM 1. SECURITY AND ISSUER.
This statement relates to the common stock, par value $0.01
per share (the "Common Stock") of Ponder Industries, Inc., a Delaware
corporation (the "Company"). The address of the principal executive offices of
the Company is 5005 Riverway, Suite 550, Houston, Texas 77056.
ITEM 2. IDENTITY AND BACKGROUND.
White Owl Capital Partners (the "Reporting Person") is a Texas
general partnership that was formed recently to acquire, own and hold securities
of the Company. The address of the principal business and the principal office
of the Reporting Person is 20 Pine Brook Road, Bedford, New York 10506. The only
partners of the Reporting Person are Steven A. Webster ("Webster") and William
R. Ziegler ("Ziegler").
Webster is a natural person and has a present business address
of 1900 West Loop South, Suite 1800, Houston, Texas 77027 (which address will
change to 901 Threadneedle, Suite 200, Houston, Texas 77079 sometime in February
of 1998). The present principal occupation or employment of Webster is as the
Chief Executive Officer of R&B Falcon Corporation, a marine oil and gas drilling
contractor with its principal place of business located at 901 Threadneedle,
Suite 200, Houston, Texas 77079. Webster is a United States citizen.
Ziegler is a natural person and has a business address of 666
Third Avenue, 9th Floor, New York, New York 10017. The present principal
occupation or employment of Ziegler is as a partner of Parson & Brown LLP, a law
firm with its principal place of business located at 666 Third Avenue, 9th
Floor, New York, New York 10017. Ziegler is a United States citizen.
During the last five years, neither the Reporting Person nor
either partner of the Reporting Person has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors). During the
last five years, neither the Reporting Person nor either partner of the
Reporting Person was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Pursuant to the terms and conditions of the Securities
Purchase and Exchange Agreement, on January 13, 1998, the Reporting Person
purchased from the Company 3,040,000 shares of Common Stock, in consideration of
the surrender and delivery by the Reporting Person to the Company of the Senior
Note of the Company, in the aggregate principal amount of $1,900,000, registered
in the name of the Reporting Person (the "Senior Note").
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As previously disclosed in the Prior Filing, (i) the source of
funds for the $1,900,000 subscription price for the Senior Note and Bridge Loan
Warrants acquired by the Reporting person pursuant to the Bridge Loan Securities
Purchase Agreement was capital contributions, in the amount of $950,000 from
each of the Reporting Person's two partners, Webster and Ziegler, and (ii) the
source of funds for the capital contributions made by each of Webster and
Ziegler to the Reporting Person was personal funds of Webster and Ziegler,
respectively.
ITEM 4. PURPOSE OF TRANSACTION.
As disclosed in Item 3 above, on January 13, 1998, pursuant to
the terms and conditions of the Securities Purchase and Exchange Agreement, the
Reporting Person acquired from the Company 3,040,000 shares of Common Stock in
consideration for the surrender and delivery of the Senior Note issued to the
Reporting Person. In addition, on January 13, 1998, pursuant to the terms and
conditions of the Securities Purchase and Exchange Agreement (i) the other
holders (collectively, the "Holders") of the Senior Convertible Notes of the
Company acquired an aggregate of 96,000 shares of Common Stock in consideration
of the surrender and delivery of the Senior Convertible Notes issued to such
Holders, in the aggregate principal amount of $600,000 and (ii) the Company
issued and sold to White Owl and to SCP 10,000,000 shares of Common Stock and
1,000,000 shares of Common Stock, respectively, at a purchase price of $1.00 per
share.
It was a condition precedent to the obligations of White Owl,
the Reporting Person, SCP and the Holders (collectively, the "Purchasers") to
consummate the transactions contemplated by the Securities Purchase and Exchange
Agreement that Messrs. Webster and Ziegler and one other person designated by
the Reporting Person, as the managing member of White Owl, be elected to the
Board of Directors of the Company, effective and conditioned upon the closing
(the "Closing") of the transactions contemplated by the Securities Purchase and
Exchange Agreement. Messrs. Webster and Ziegler were elected to the Board of
Directors of the Company on January 13, 1998 (the "Closing Date"). The Reporting
Person and the Company reached an oral understanding giving the Reporting Person
the right, at its option, to designate a third person for election to the Board
of Directors of the Company.
The obligations of the Purchasers to consummate the
transactions contemplated by the Securities Purchase and Exchange Agreement were
also subject to, among other things, the following conditions: (i) the execution
and delivery by the Company of the Registration Rights Joinder Agreement (as
defined in Item 6 below), (ii) the payment by the Company of the reasonable
legal fees and other expenses of the Purchasers' counsel, (iii) the consummation
by the Company of the acquisition of Fishing Tools, Inc., on substantially the
terms described in the White Owl PPM (as defined in the Securities Purchase and
Exchange Agreement), (iv) White Owl having raised $10 million pursuant to the
White Owl PPM, and (v) the Company being in compliance with all of its covenants
under its loan agreements with KBK Financial, Inc. The obligations of the
Company to consummate the transactions contemplated by the Securities Purchase
and Exchange Agreement were subject to, among other things, the surrender by
each of
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the Holders of the Senior Notes of the Company, in the aggregate principal
amount of $2,500,000, to the Company for cancellation of the Senior Note
registered in his or its name. In satisfaction of this closing condition, all of
the Senior Notes were surrendered to the Company for cancellation and an
aggregate of 4,000,000 shares of Common Stock of the Company were issued to the
holders thereof in exchange therefor, in accordance with the conversion
provisions thereof, including the issuance of an aggregate of 3,040,000 shares
of Common Stock to the Reporting Person in exchange for the Senior Note, in the
aggregate principal amount of $1,900,000 registered in the name of the Reporting
Person, as disclosed above.
The Common Stock issued to the Reporting Person pursuant to
the terms and conditions of the Securities Purchase and Exchange Agreement
(inclusive of the Common Stock acquired directly by White Owl and indirectly by
the Reporting Person, as the sole managing member of White Owl) was acquired by
such Reporting Person primarily for investment purposes, but also for the
purpose of influencing management.
Although there is no present intention to do so, any of the
Reporting Person or the partners of the Reporting Person named in Item 2 above
(hereinafter sometimes collectively referred to as the "Item 2 Persons"), may
decide to make additional purchases of Common Stock in the future either in the
open market or in private transactions, subject to their evaluation of the
Company's business, prospects and financial condition, the market for the Common
Stock, other opportunities available to the Reporting Person and/or the Item 2
Persons, prospects for the respective business' of the Reporting Person and/or
the Item 2 Persons, general economic conditions, money and stock market
conditions and other future developments.
Depending upon the results of the reviews and the other
factors mentioned above, any of the Reporting Person and/or any of the Item 2
Persons, at any time, may decide to change his or its intention with respect to
the acquisition and/or retention of shares of Common Stock, including, without
limitation, a determination to increase, decrease or entirely dispose of its
holdings of Common Stock (or common stock equivalents, as the case may be),
although, except for the possible acquisition of shares of Common Stock by the
Reporting Person upon the exercise in whole or in part of any of the Bridge Loan
Warrants acquired by the Reporting Person pursuant to the Bridge Loan Securities
Purchase Agreement, in accordance with the terms thereof, as described above,
none of the Reporting Person or any Item 2 Person has any current intention to
do so.
Any of the Reporting Person or Item 2 Persons may also
approach members of the Company's management in connection with the foregoing
and/or any other matter enumerated in clauses (a) through (j) of Item 4 of
Schedule 13D and/or Messrs. Webster or Ziegler may seek to influence the
management of the Company in his capacity as a director of the Company.
The descriptions of the terms of the Securities Purchase and
Exchange Agreement, the Bridge Loan Securities Purchase Agreement, the Senior
Notes and the Bridge Loan Warrants contained in this Item 4 are summaries and
are subject to and qualified in their entirety by reference to the detailed
provisions of the Securities Purchase and Exchange Agreement, the Bridge Loan
Securities Purchase Agreement, the Senior Note issued to the
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Reporting Person and the Bridge Loan Warrant issued to the Reporting Person,
copies of which are attached as exhibits either to the Initial Filing or the New
Schedule 13D, and incorporated herein by reference, all as more fully described
in Item 7 below.
Except as discussed above in this Item 4 (inclusive of the
provisions of the documents incorporated herein by reference), none of the
Reporting Person or any Item 2 Person has any current plans or proposals which
relate to or would result in the occurrence of any actions or events specified
in clauses (a) through (j) of Item 4 of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) The aggregate number and percentage of shares of Common
Stock beneficially owned by the Reporting Person and other persons named in Item
2 above are as follows:
The aggregate number and percentage of the Common Stock which
are owned beneficially by the Reporting Person on the date hereof are 16,080,000
shares of Common Stock, or approximately 33.9% of the 47,418,477 shares of
Common Stock that would be issued and outstanding as of the close of business on
the Closing Date, assuming the exercise of the Bridge Loan Warrants owned by the
Reporting Person for an aggregate of 3,040,000 shares of Common Stock as of such
date, which shares include the 10,000,000 shares of Common Stock owned of record
by White Owl, since the Reporting Person is the sole managing member of White
Owl, as well as the 3,040,000 shares of Common Stock owned of record by the
Reporting Person and the 3,040,000 shares of Common Stock issuable upon exercise
of the Bridge Loan Warrants owned by the Reporting Person.
Each of Webster and Ziegler, as the sole general partners of
the Reporting Person and as two of the three general partners of SCP, may be
deemed to indirectly beneficially own an aggregate of 17,080,000 shares of
Common Stock, or approximately 36.0% of the 47,418,477 shares of Common Stock
that would be issued and outstanding as of the close of business on the Closing
Date, assuming the exercise of the Bridge Loan Warrants owned by the Reporting
Person for an aggregate of 3,040,000 shares of Common Stock as of such date,
which shares include (i) the 16,080,000 shares of Common Stock owned
beneficially by the Reporting Person, since Messrs. Webster and Ziegler are the
sole partners of the Reporting Person, which shares include (A) the 10,000,000
shares of Common Stock owned of record by White Owl, and beneficially by the
Reporting Person as the sole managing member of White Owl, (B) the 3,040,000
shares of Common Stock owned of record by the Reporting Person, and (C) the
3,040,000 shares of Common Stock issuable upon exercise of the Bridge Loan
Warrants owned by the Reporting Person and (ii) the 1,000,000 shares of Common
Stock owned of record by SCP, since Messrs. Webster and Ziegler are two of the
three general partners of SCP. In addition, Webster owns beneficially and of
record 250,000 shares of Common Stock.
In addition, notwithstanding the foregoing, if the Reporting
Person is deemed to be a member of a "group" within the meaning of Rule
13d-5(b)(1) promulgated pursuant to the Exchange Act, with White Owl and SCP, by
virtue of the fact that they may be deemed to have
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acted in concert in connection with their acquisition of certain securities of
the Company, then each of the Reporting Person and the Item 2 Persons may be
deemed to beneficially own an aggregate of 17,330,000 shares of Common Stock
collectively owned by the Reporting Person, the Item 2 Persons, White Owl and
SCP on the date hereof, or 36.5% of the 47,418,477 shares of Common Stock that
would be issued and outstanding as of the close of business on the Closing Date,
assuming the exercise of the Bridge Loan Warrants owned by the Reporting Person
for an aggregate of 3,040,000 shares of Common Stock as of such date. However,
(i) each of the Reporting Person and Ziegler disclaims beneficial ownership of
the 250,000 shares of Common Stock owned of record by Webster, and (ii) the
Reporting Person disclaims beneficial ownership of the 1,000,000 shares of
Common Stock owned of record by SCP.
(b) With respect to each person named in response to paragraph
(a) of this Item 5 of Schedule 13D, set forth below are the number of shares of
Common Stock as to which there is sole power to vote or to direct the vote,
shared power to vote or direct the vote, and sole or shared power to dispose or
direct the disposition:
The Reporting Person may be deemed to have the sole power to
vote (and to direct the vote of) and to dispose of (and direct the disposition
of) the 6,080,000 shares of Common Stock owned of record by it (inclusive of the
3,040,000 shares of Common Stock issuable upon the exercise of the Bridge Loan
Warrants owned by it) and, as sole managing member of White Owl, to share with
White Owl, the power to vote (and to direct the vote of) and to dispose of (and
direct the disposition of) the 10,000,000 shares of Common Stock owned of record
by White Owl. Notwithstanding the foregoing, each of Webster and Ziegler, as the
sole general partners of the Reporting Person, may be deemed to share the power
to vote (and direct the vote of) and to dispose of (and direct the disposition
of) the 6,080,000 shares of Common Stock owned of record by the Reporting Person
(inclusive of the 3,040,000 shares of Common Stock issuable upon the exercise of
the Bridge Loan Warrants owned by the Reporting Person).
Webster has the sole power to vote (and to direct the vote of)
and to dispose of (and direct the disposition of) the 250,000 shares of Common
Stock owned of record by him. In addition, Webster (i) as one of the two general
partners of the Reporting Person, may be deemed to share (A) with each of the
Reporting Person and Ziegler, the other general partner of the Reporting Person,
the power to vote (and to direct the vote of) and to dispose of (and direct the
disposition of) the 6,080,000 shares of Common Stock owned of record by the
Reporting Person (inclusive of the 3,040,000 shares of Common Stock issuable
upon the exercise of the Bridge Loan Warrants owned by the Reporting Person) and
(B) with each of White Owl, the Reporting Person and Ziegler, the power to vote
(and to direct the vote of) and to dispose of (and direct the disposition of)
the 10,000,000 shares of Common Stock owned of record by White Owl and (ii) as
one of the three general partners of SCP, may be deemed to share with each of
SCP, Ziegler and Thomas H. O'Neill, Jr. ("O'Neill"), the other two general
partners of SCP, the power to vote (and to direct the vote of) and to dispose of
(and direct the disposition of) the 1,000,000 shares of Common Stock owned of
record by SCP.
Ziegler (i) as one of the two general partners of the
Reporting Person, may be deemed to share (A) with each of the Reporting Person
and Webster, the other general partner of
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the Reporting Person, the power to vote (and to direct the vote of) and to
dispose of (and direct the disposition of) the 6,080,000 shares of Common Stock
owned of record by the Reporting Person (inclusive of the 3,040,000 shares of
Common Stock issuable upon the exercise of the Bridge Loan Warrants owned by the
Reporting Person) and (B) with each of White Owl, the Reporting Person and
Webster, the power to vote (and to direct the vote of) and to dispose of (and
direct the disposition of) the 10,000,000 shares of Common Stock owned of record
by White Owl and (ii) as one of the three general partners of SCP, may be deemed
to share with each of SCP, O'Neill and Webster, the other two general partners
of SCP, the power to vote (and to direct the vote of) and to dispose of (and
direct the disposition of) the 1,000,000 shares of Common Stock owned of record
by SCP.
In addition, notwithstanding the foregoing, if the Reporting
Person is deemed to be a member of a "group" within the meaning of Rule
13d-5(b)(1) promulgated pursuant to the Exchange Act, with White Owl and SCP, by
virtue of the fact that they may be deemed to have acted in concert in
connection with their acquisition of certain securities of the Company, then (i)
the Reporting Person may be deemed to share with each of SCP, O'Neill, Webster
and Ziegler, the power to vote (and to direct the vote of) and to dispose of
(and direct the disposition of) the 1,000,000 shares of Common Stock owned of
record by SCP, and (ii) the Reporting Person and Ziegler may be deemed to share
with Webster the power to vote (and to direct the vote of) and to dispose of
(and direct the disposition of) the 250,000 shares of Common Stock owned of
record by Webster. However, as previously state in response to Item 5(a) above,
(i) each of the Reporting Person and Ziegler disclaims beneficial ownership of
the 250,000 shares of Common Stock owned of record by Webster and (ii) the
Reporting Person disclaims beneficial ownership of the 1,000,000 shares of
Common Stock owned of record by SCP.
(c) Except for acquisition of shares of Common Stock by the
Reporting Person pursuant to the Securities Purchase and Exchange Agreement
(inclusive of the shares acquired directly by White Owl and indirectly by the
Reporting Person, as sole managing member of White Owl), and the acquisition of
shares of Common Stock by SCP pursuant to the Securities Purchase and Exchange
Agreement (which shares are deemed indirectly beneficially owned by the Item 2
Persons), all as more fully disclosed in Items 3 and 4 above, during the past 60
days, none of the Reporting Persons or either of the Item 2 Persons has effected
any transaction in the Common Stock. See Items 3 and 4 above and subsection (a)
and (b) of this Item 5 for further details in connection with the acquisition of
the Common Stock pursuant to the Securities Purchase and Exchange Agreement.
(d) As more fully described below in Item 6, (i) the Reporting
Person, as the Managing Member of White Owl, is entitled to receive 25% of any
and all distributions of cash (which may include proceeds from the sale of
securities of the Company) and securities made by White Owl to its members after
its members have received distributions equal to the sum of a specified
preferred return on their investment in White Owl plus 150% of such investment.
Except as disclosed in the foregoing sentence, and except for (A) the right of
any Item 2 Person, as a general partner of each of the Reporting Person and SCP
to receive distributions from the Reporting Person and SCP, respectively, and
(B) the right of O'Neill, as the third general partner of SCP to receive
distributions from SCP, no other person is known to have the right to receive
Page 9 of 13 Pages
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or the power to direct the receipt of dividends from, or the proceeds from the
sale of, the securities of the Company owned by the Reporting Person or by any
Item 2 Person.
(e) Although the Reporting Persons has not ceased to be the
beneficial holder of greater than 5% of the Common Stock of the Company, there
will be no further amendments to the Initial Filing, as the Reporting Person has
joined in the Schedule 13D filing of White Owl and SCP, which filing is referred
to herein as the New Schedule 13D. Any future change in the beneficial ownership
of the securities of the Company by the Reporting Person, or other material
change with respect to the information set forth herein, will be disclosed by
the Reporting Person in an amendment to the New Schedule 13D.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
As previously disclosed in the Initial Filing and in the above
Items, the Reporting Person (i) was (A) a party to the Bridge Loan Securities
Purchase Agreement, which provided for the sale and issuance of certain units of
the Company (inclusive of the Senior Notes and Bridge Loan Warrants) to the
purchasers thereunder (including the Reporting Person) and (B) a holder of a
Senior Note, in the aggregate principal amount of $1,900,000, which was
converted into an aggregate of 3,040,000 shares of Common Stock pursuant to the
terms thereof and the terms of the Securities Purchase and Exchange Agreement
and (ii) is a holder of a Bridge Loan Warrant, which presently is exercisable
for an aggregate of 3,040,000 shares of Common Stock. See Items 3 and 4 above
for further details with respect to the provisions of the Securities Purchase
and Exchange Agreement and the conversion of the Senior Note issued to the
Reporting Person.
The Bridge Loan Warrants issued to the Reporting Person are
presently exercisable, in whole or in part at any time prior to 5:30 p.m., New
York time, on January 1, 2001 (the "Expiration Date"), for an aggregate of
3,040,000 shares of Common Stock (the "Warrant Stock") at a purchase price per
share of $0.625 (the "Warrant Price"). The number of shares of Warrant Stock and
the Warrant Price are subject adjustment upon the occurrence of specified
events, as provided in Section 4 of the Bridge Loan Warrants.
As previously disclosed in Items 3 and 4 above, the Reporting
Person was a party to the Securities Purchase and Exchange Agreement, which
provided, among other things, for (i) the sale and issuance of 3,040,000 shares
of Common Stock to the Reporting Person, in consideration of the surrender for
cancellation by the Reporting Person of the Senior Note issued in the name of
the Reporting Person and (ii) the sale and issuance of 10,000,000 shares of
Common stock to White Owl and 1,000,000 shares of Common Stock to SCP, in each
case, at a cash purchase price of $1.00 per share. See Items 3 and 4 above for
further details with respect to the provisions of the Securities Purchase and
Exchange Agreement.
Contemporaneously with the execution and delivery of the
Bridge Loan Securities Purchase Agreement, the Company and the purchasers
thereunder (inclusive of the Reporting Person) entered into a Registration
Rights Agreement (the "Registration Rights Agreement"), that requires the
Company, upon the occurrence of certain events, to register for resale under the
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Securities Act of 1933, as amended (the "Securities Act"), the shares of Common
Stock issued from time to time upon conversion of the Senior Notes (inclusive of
the Senior Notes issued to holders other than the Reporting Person) or upon
exercise of the Bridge Loan Warrants (inclusive of the Warrants issued to
holders other than the Reporting Person). Contemporaneously with closing of the
transactions contemplated by the Securities Purchase and Exchange Agreement, the
Company and the Purchasers (inclusive of the Reporting Person) entered into the
Joinder Agreement (the "Registration Rights Joinder Agreement"), pursuant to
which White Owl and SCP were added as parties to the Registration Rights
Agreement and the definition of Registrable Securities was amended to include
the shares of Common Stock acquired by White Owl and SCP pursuant to the
Securities Purchase and Exchange Agreement.
Pursuant to Article V of that certain Limited Liability
Company Agreement of White Owl dated as of January 13, 1998 (the "White Owl LLC
Agreement"), once the members of White Owl have received distributions of cash
and/or securities equal in value to the sum of a specified priority return on
their investment in White Owl and 150% of such investment ("Payout"), the
Reporting Person, as the managing member of White Owl, is entitled to receive
25% of all subsequent distributions made by White Owl of (i) available cash flow
from White Owl (which may include proceeds from the sale of Common Stock or
other securities of the Company) and (ii) securities of the Company.
The descriptions of the Securities Purchase and Exchange
Agreement, the Bridge Loan Securities Purchase Agreement, the Senior Notes, and
the Bridge Loan Warrants, the Registration Rights Agreement, as amended and/or
supplemented by the Registration Rights Joinder Agreement, and the White Owl LLC
Agreement contained in this Item 6 are summaries and are subject to and
qualified in their entirety by reference to the detailed provisions of the
Securities Purchase and Exchange Agreement, the Bridge Loan Securities Purchase
Agreement, the Senior Note issued to the Reporting Person, the Bridge Loan
Warrant issued to the Reporting Person, the Registration Rights Agreement, the
Registration Rights Joinder Agreement and the White Owl LLC Agreement, copies of
which are attached as exhibits to either the Initial Filing or the New Schedule
13D, and incorporated herein by reference, all as more fully described in item 7
below.
Except as discussed in this Item 6 and in Item 4 above (in
each case, inclusive of the provisions of the documents incorporated herein by
reference), the Reporting Person is not a party to any contract, arrangement,
understanding or relationship (legal or otherwise) among the Reporting Person
and the Item 2 Persons or between any such persons and any other person with
respect to any securities of the Company, including, without limitation, those
relating to the transfer or voting of any securities, finder's fees, joint
ventures, loan or option arrangements, puts or calls, guarantees of profits,
division of profits or loss, the giving or withholding of proxies, the pledge of
securities or any other arrangement involving a contingency the occurrence of
which would give another person voting power or investment power over such
securities.
Page 11 of 13 Pages
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<PAGE>
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
I. Securities Purchase and Exchange Agreement referred to in the
Introduction and in Items 3, 4, 5 and 6 (Incorporated by
reference to Exhibit II to that certain Schedule 13D of White
Owl Investors, L.L.C., the Reporting Person and Somerset
Capital Partners to be filed with the Commission either prior
to or contemporaneously with this Amendment No. 1 to Initial
Filing, and referred to herein as the New Schedule 13D).
II. Bridge Loan Securities Purchase Agreement referred to in the
Introduction and in Items 3, 4 and 6 (Incorporated by
reference to Exhibit I to that certain Schedule 13D of the
Reporting Person filed with the Commission on October 27,
1997, and referred to herein as the Initial Filing).
III. Senior Note issued to the Reporting Person referred to in
Items 3, 4 and 6 (Incorporated by reference to Exhibit II to
that certain Schedule 13D of the Reporting Person filed with
the Commission on October 27, 1997, and referred to herein as
the Initial Filing).
IV. Bridge Loan Warrant issued to the Reporting Person referred to
in Items 3, 4, 5 and 6 (Incorporated by reference to Exhibit
III to that certain Schedule 13D of the Reporting Person filed
with the Commission on October 27, 1997, and referred to
herein as the Initial Filing).
V. Registration Rights Agreement referred to in Item 6
(Incorporated by reference to Exhibit IV to that certain
Schedule 13D of the Reporting Person filed with the Commission
on October 27, 1997, and referred to herein as the Initial
Filing).
VI. Registration Rights Joinder Agreement referred to in Item 6
(Incorporated by reference to Exhibit VII to that certain
Schedule 13D of White Owl Investors, L.L.C., the Reporting
Person and Somerset Capital Partners to be filed with the
Commission either prior to or contemporaneously with this
Amendment No. 1 to Initial Filing, and referred to herein as
the New Schedule 13D).
VII. White Owl LLC Agreement referred to in Item 6 (Incorporated by
reference to Exhibit VIII to that certain Schedule 13D of
White Owl Investors, L.L.C., the Reporting Person and Somerset
Capital Partners to be filed with the Commission either prior
to or contemporaneously with this Amendment No. 1 to Initial
Filing, and referred to herein as the New Schedule 13D).
Page 12 of 13 Pages
<PAGE>
<PAGE>
SIGNATURE
After reasonable inquiry and to the best knowledge and belief
of the undersigned, the undersigned hereby certifies that the information set
forth in this statement is true, complete and correct.
Dated: January 22, 1998
WHITE OWL CAPITAL PARTNERS
By: /s/ WILLIAM R. ZIEGLER
-------------------------------------------
Name: William R. Ziegler
Title: General Partner
Page 13 of 13 Pages
