SCHEDULE 13E-4
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(E)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)
CTA INCORPORATED
_____________________________________________________________
(Name of Issuer)
CTA INCORPORATED
_____________________________________________________________
(Name of Person(s) Filing Statement)
COMMON STOCK, $.01 PAR VALUE PER SHARE
_____________________________________________________________
(Title of Class of Securities)
__________________________129997714__________________________
(CUSIP Number of Class of Securities)
GREGORY H. WAGNER
Executive Vice President
CTA INCORPORATED
6116 Executive Boulevard
Rockville, Maryland 20852
(301) 816-1200
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of the Person(s) Filing Statement)
COPIES TO:
RICHARD A. STEINWURTZEL
Fried, Frank, Harris, Shriver & Jacobson
1001 Pennsylvania Avenue, N.W.
Suite 800
Washington, D.C. 20004-2505
(202) 639-7000
November 26, 1997
_____________________________________________________________
(Date Tender Offer First Published, Sent or Given to Security Holders)
CALCULATION OF FILING FEE
_________________________________________________________________________
Transaction Valuation*: Amount of Filing
Fee:
$2,020,000 $404.00
__________________________________________________________________________
* Calculated solely for purposes of determining the filing fee, based upon
the purchase of 200,000 shares at the maximum tender offer price per share
of $10.10.
[ ] Check box 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.
Amount Previously Paid: N/A Filing Party: N/A
Form or Registration No.: N/A Date Filed N/A
<PAGE>
ITEM 1. SECURITY AND ISSUER.
(a) The issuer of the securities to which this Schedule 13E-4
relates is CTA INCORPORATED, a Colorado corporation (the "Company"), and
the address of its principal executive office is 6116 Executive
Boulevard, Rockville, Maryland 20852.
(b) This Schedule 13E-4 relates to the offer by the Company to
purchase up to 200,000 shares (or such lesser number of shares as are
validly tendered and not withdrawn) of its common stock, $.01 par value
per share (the "Shares"), for a purchase price of $10.10 per Share net to
the Seller in cash upon the terms and subject to the conditions set forth
in the Offer to Purchase, dated November 26, 1997 (the "Offer to
Purchase"), and in the related Letter of Transmittal (which together
constitute the "Offer"), copies of which are attached as Exhibits (a)(1)
and (a)(2), respectively, and incorporated herein by reference. As of
November 24, 1997, 4,551,088 Shares were issued and outstanding.
The Company completed the sale of its Space and Telecommunications
Systems business and its Mobile Information and Communications Services
business (the "Space Business") to Orbital Sciences Corporation. The
Company received approximately $47.0 million of proceeds from the sale of
the Space Business and decided to effect the Offer to allow stockholders
to benefit from such sale. The Company intends to use approximately $2.0
million (excluding expenses) from amounts drawn under its revolving line
of credit to conduct this Offer.
Officers, directors and affiliates of the Company may participate in
the Offer on the same basis as the other stockholders of the Company.
Dr. C.E. Velez, President, Chief Executive Officer and Chairman of the
Board and Messrs B.A. Claussen and Terry J. Piddington have informed the
Company that they will not tender any Shares in the Offer. The Trustees
of the Company's Employee Stock Ownership Plan (the "ESOP") and the
Company's Defined Contribution 401(k) Retirement Plan (the "401(k) Plan")
have informed the Company that they will not tender any Shares in the
Offer on behalf of the ESOP or the 401(k) Plan. As of November 24, 1997
2,321,040 Shares (approximately 51%) were owned by Dr. C.E. Velez,
359,817 shares (approximately 7.9%) were owned by Mr. B.A. Claussen and
216,001 shares (approximately 4.7%) were owned by Mr. Terry J.
Piddington. The information set forth in "Introduction," Section 1,
"Number of Shares; Proration," Section 8, "Background and Purpose of the
Offer," Section 10, "Transactions and Agreements Concerning Shares," and
Section 14, "Certain Federal Income Tax Consequences," of the Offer to
Purchase is incorporated herein by reference.
(c) The information set forth in "Introduction" and Section 7,
"Price Range of Shares; Dividends," of the Offer to Purchase is
incorporated herein by reference.
(d) Not applicable. This Statement is being filed by the Issuer.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in Section 9, "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.
(a)-(j) The information set forth in "Introduction," Section 8,
"Background and Purpose of the Offer," Section 9, "Source and Amount of
Funds," Section 10, "Transactions and Agreements Concerning Shares,"
Section 12, "Effects of the Offer on the Market for Shares," and Section
14, "Certain Federal Income Tax Consequences," of the Offer to Purchase
is incorporated herein by reference.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
The information set forth in "Introduction," Section 8, "Background
and Purpose of the Offer," and Section 10, "Transactions and Agreements
Concerning Shares," of the Offer to Purchase is incorporated herein by
reference.
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
RELATIONSHIPS WITH RESPECT TO THE ISSUER'S SECURITIES.
The Information set forth in "Introduction," Section 8, "Background
and Purpose of the Offer," Section 9, "Source and Amount of Funds,"
Section 10, "Transactions and Agreements Concerning Shares," Section 14,
"Certain Federal Income Tax Consequences," and Section 16, "Fees,
Expenses and Other Arrangements," of the Offer to Purchase is
incorporated herein by reference.
ITEM 6. PERSONS RETAINED, EMPLOYED, OR TO BE COMPENSATED.
The information set forth in "Introduction," Section 8, "Background
and Purpose of the Offer," and Section 16, "Fees, Expenses and Other
Arrangements," of the Offer to Purchase is incorporated herein by
reference.
ITEM 7. FINANCIAL INFORMATION.
(a)-(b) The information set forth in Section 11, "Financial
Information Concerning the Company" of the Offer to Purchase and the
financial statements and notes related thereto contained in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1996
and its Quarterly Report on Form 10-Q for the quarter ended September 30,
1997, copies of which are attached hereto as Exhibits (g)(1) and (g)(2),
respectively, are incorporated herein by reference.
ITEM 8. ADDITIONAL INFORMATION.
(a)-(d) Not Applicable.
(e) The information set forth in the Offer to Purchase is
incorporated herein by reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) -- Form of Offer to Purchase dated November 26, 1997.
(2) -- Form of Letter of Transmittal (including
Certification of Taxpayer
Identification Number on Substitute Form W-9).
(3) -- Guidelines for Certification of Taxpayer
Identification Number on Substitute
Form W-9.
(4) -- Form of Letter to Stockholders of the Company, dated
November 26, 1997 from
Dr. C.E. Velez, Chairman of the Board and Chief Executive
Officer.
(b)(1) Financing and Security Agreement dated November 6, 1997 by
and between the Company and First Union Commercial
Corporation.
(c)(1) -- Stock Purchase Agreement between and among the ESOP and
Dr. C.E.
Velez, Mr. B.A. Claussen and Mr. Terry J.
Piddington dated November 21,
1997.
(d) -- Not Applicable.
(e) -- Not Applicable.
(f) -- Not Applicable.
(g)(1) -- The Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996.
(2) -- The Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997.
(3) -- Appraisal of Legg Mason Wood Walker Incorporated
dated September 10, 1997.
<PAGE>
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.
CTA INCORPORATED
By: /S/ GREGORY H. WAGNER
November 26, 1997 Name: Gregory H. Wagner
Title: Executive Vice President and
Chief
Financial Officer and Treasurer
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
(a)(1) Form of Offer to Purchase dated November 26, 1997.
(2) Form of Letter of Transmittal (including Certification of
Taxpayer Identification Number on Substitute Form W-9).
(3) Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9.
(4) Form of Letter to Stockholders of the Company, dated November
26, 1997 from Dr. C.E. Velez, Chairman of the Board and Chief
Executive Officer.
(b)(1) Financing and Security Agreement dated November 6, 1997 by and
between the Company and First Union Commercial Corporation.
(c)(1) Stock Purchase Agreement between and among the ESOP and Dr.
C.E. Velez, Mr. B.A. Claussen and Mr. Terry J. Piddington,
dated November 21, 1997.
(d) Not Applicable.
(e) Not Applicable.
(f) Not Applicable.
(g)(1) The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996.
(2) The Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1997.
(3) Appraisal of Legg Mason Wood Walker Incorporated dated
September 10, 1997.
<PAGE>
CTA INCORPORATED
OFFER TO PURCHASE FOR CASH
UP TO 200,000 SHARES OF ITS COMMON STOCK
AT $10.10 NET PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT
12:00 MIDNIGHT, ROCKVILLE, MARYLAND TIME, ON WEDNESDAY,
DECEMBER 31, 1997, UNLESS THE OFFER IS EXTENDED.
CTA INCORPORATED, a Colorado corporation (the "Company"), invites
its stockholders to tender shares of its Common Stock, par value $.01 per
share (the "Shares"), at $10.10 per Share (the "Purchase Price"), net to
the seller in cash, upon the terms and subject to the conditions set
forth herein and in the related Letter of Transmittal (which together
constitute the "Offer"). The Company will purchase any and all Shares
(up to 200,000 Shares) validly tendered and not withdrawn, upon the terms
and subject to the conditions of the Offer, including the provisions
thereof relating to proration described herein. Shares not purchased
because of proration will be returned promptly.
______________________________
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF
SHARES BEING TENDERED. THE OFFER IS, HOWEVER,
SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 6.
______________________________
IMPORTANT
ANY STOCKHOLDER DESIRING TO TENDER ANY PORTION OF HIS OR HER SHARES
SHOULD COMPLETE AND SIGN THE LETTER OF TRANSMITTAL OR A PHOTOCOPY THEREOF
IN ACCORDANCE WITH THE INSTRUCTIONS IN THE LETTER OF TRANSMITTAL AND MAIL
OR DELIVER IT AND ANY OTHER REQUIRED DOCUMENTS TO CAPITOL SECURITIES
MANAGEMENT INCORPORATED AT THE ADDRESS SET FORTH IN THE LAST PAGE OF THIS
OFFER TO PURCHASE. IN THE EVENT A STOCKHOLDER HOLDS SHARES IN
CERTIFICATE FORM SUCH STOCKHOLDER SHOULD DELIVER TO CAPITOL THE LETTER OF
TRANSMITTAL ALONG WITH THE CERTIFICATE(S) FOR SUCH SHARES.
NEITHER THE COMPANY NOR ANY OF ITS DIRECTORS, OFFICERS OR EMPLOYEES
MAKES ANY RECOMMENDATION TO ANY STOCKHOLDER AS TO WHETHER TO TENDER OR
REFRAIN FROM TENDERING SHARES. EACH STOCKHOLDER MUST MAKE HIS OR HER OWN
DECISION AS TO WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO
TENDER.
___________________________
The Shares are not listed, traded or quoted on any national
securities exchange or other market.
Questions or requests for assistance or for additional copies of
this Offer to Purchase, the Letter of Transmittal or other tender offer
materials may be directed to the Information Agent at the address and
telephone number set forth on the last page of this Offer to Purchase.
___________________________
THE INFORMATION AGENT FOR THE OFFER IS:
CAPITOL SECURITIES MANAGEMENT INCORPORATED
___________________________
November 26, 1997
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF
OF THE COMPANY AS TO WHETHER STOCKHOLDERS 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 HEREIN OR IN THE LETTER OF
TRANSMITTAL. IF GIVEN OR MADE, SUCH RECOMMENDATION AND SUCH INFORMATION
AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY
THE COMPANY.
TABLE OF CONTENTS
PAGE
SUMMARY 1
INTRODUCTION 4
THE OFFER 5
1. Number of Shares; Proration 5
2. Tenders by Holders of Ninety-Nine or Fewer Shares 7
3. Procedure for Tendering Shares 8
4. Withdrawal Rights 9
5. Acceptance for Payment of Shares and Payment
of Purchase Price 10
6. Certain Conditions of the Offer 10
7. Price Range of Shares; Dividends 12
8. Background and Purpose of the Offer 13
9. Source and Amount of Funds 15
10. Transactions and Agreements Concerning Shares 15
11. Financial Information Concerning the Company 16
12. Effects of the Offer on the Market for Shares 17
13. Regulatory Approvals 18
14. Certain Federal Income Tax Consequences 18
15. Extension of Tender Period; Termination; Amendments 22
16. Fees, Expenses and Other Arrangements 23
17. Miscellaneous 24
<PAGE>
SUMMARY
This general summary is provided solely for the convenience of
holders of Shares and is qualified in its entirety by reference to the
full text of and the more specific details contained in this Offer to
Purchase and the related Letter of Transmittal and any amendments hereto
and thereto. Capitalized terms used in this summary without definition
shall have the respective meanings ascribed to such terms in this Offer
to Purchase.
The Company CTA INCORPORATED, a Colorado corporation
with principal executive offices at 6116
Executive Boulevard, Suite 800, Rockville,
Maryland 20852.
The Shares Shares of the Company's Common Stock, par
value $.01 per Share.
Number of Shares Sought 200,000 Shares.
Purchase Price $10.10 per Share, net to the seller in
cash.
Expiration Date of Offer Wednesday, December 31, 1997, at 12:00
Midnight, Rockville, Maryland time, unless
extended by the Company pursuant to the
terms hereof.
How to Tender Shares See Section 3. For further information,
call the Information Agent, Capitol
Securities Management Incorporated, 8301
Greensboro Drive, Suite 150, McLean,
Virginia 22102, tel. (800) 878-2010.
Proration If more than 200,000 Shares have been
validly tendered and not withdrawn on or
prior to the Expiration Date, the purchase
of Shares will be subject to proration.
After the purchase of Odd Lot Shares as
described below, Shares will be purchased
on a pro rata basis. Proration of Shares
will be based on the ratio of the number of
Shares to be purchased by the Company
pursuant to the Offer (less Odd Lot Shares
purchased) to the total number of Shares
validly tendered by all stockholders and
not withdrawn (less Odd Lot Shares
purchased). This ratio will be applied to
all Shares validly tendered by each
stockholder (other than Odd Lot owners) to
determine the number of Shares that will be
purchased from each stockholder pursuant to
the Offer. Preliminary results of
proration will be announced by mail to each
stockholder as promptly as practicable
after the Expiration Date.
Odd Lot Owners There will be no proration of Shares
validly tendered and not withdrawn by any
stockholder beneficially owning ninety-nine
or fewer Shares as of the close of business
on November 24, 1997 and as of the
Expiration Date, who tenders all such
Shares and completes the box captioned "Odd
Lots" on the Letter of Transmittal.
Withdrawal Rights Tendered Shares may be withdrawn at any
time until the Expiration Date of the Offer
and, unless previously purchased, after
12:00 Midnight, Rockville, Maryland time,
Monday, January 26, 1998. See Section 4.
Price of Shares $10.10 per Share. Legg Mason Wood Walker
Incorporated ("Legg Mason"), the Company's
independent appraisers for the fiscal year
ending December 31, 1997, determined on
September 10, 1997 that the fair market
value of minority holdings of the Company's
Common Stock falls in a range of $8.60 per
Share to $11.60 per Share with an expected
value of $10.10 per Share as of June 30,
1997 (after giving effect to the sale of
the Space Business to Orbital Sciences
Corporation). In connection with the ESOP
Purchase, Legg Mason also gave its opinion
dated November 20, 1997 to the Trustee of
the Company's Employee Stock Ownership Plan
that the expected value is $10.10 per Share
as of September 30, 1997.
Brokerage Commissions Not payable by stockholders. The Company
will pay to Capitol Securities Management
Incorporated ("Capitol") a fee of $5,000
plus brokerage commissions of 1.5% of the
total purchase price of all Shares
purchased by the Company in connection with
the Offer and reimburse Capitol for certain
out-of-pocket expenses. Capitol provides
its services as a broker/dealer for all of
the Company's transactions in its
securities.
Stock Transfer Tax None, except as provided in Instruction 5
of the Letter of Transmittal.
Payment Date As promptly as practicable after the
Expiration Date of the Offer.
Further Information Any questions, requests for assistance or
requests for additional copies of this
Offer to Purchase, the Letter of
Transmittal or other tender offer materials
may be directed to the Information Agent,
Capitol Securities Management Incorporated,
8301 Greensboro Drive, Suite 150, McLean,
Virginia 22102, tel. (800) 878-2010.
<PAGE>
To the Holders of Common Stock of
CTA INCORPORATED:
INTRODUCTION
CTA INCORPORATED, a Colorado corporation (the "Company"), invites
its stockholders to tender Shares of its Common Stock, par value $.01 per
Share (the "Shares"), at $10.10 per Share (the "Purchase Price"), net to
the seller in cash, upon the terms and subject to the conditions set
forth herein and in the related Letter of Transmittal (which together
constitute the "Offer").
NEITHER THE COMPANY NOR ANY OF ITS DIRECTORS, OFFICERS OR EMPLOYEES
MAKES ANY RECOMMENDATION TO ANY STOCKHOLDER AS TO WHETHER TO TENDER OR
REFRAIN FROM TENDERING SHARES. EACH STOCKHOLDER MUST MAKE HIS OR HER OWN
DECISION AS TO WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO
TENDER.
Each stockholder who has properly tendered and not withdrawn Shares
will receive $10.10 per Share, net to the seller in cash, with respect to
all Shares purchased, upon the terms and subject to the conditions of the
Offer, including the provisions relating to proration and "odd lot"
tenders described below. The Purchase Price will be paid in cash, net to
the seller, with respect to all Shares purchased. Shares tendered and
not purchased because of proration or invalid tender will be returned
promptly to the tendering stockholders.
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS.
SEE SECTION 6.
Tendering stockholders will not be obligated to pay brokerage
commissions, solicitation fees or, subject to Instruction 5 of the Letter
of Transmittal, stock transfer taxes on the sale of their Shares to the
Company pursuant to the Offer. The Company will pay to Capitol
Securities Management Incorporated ("Capitol") a fee of $5,000 plus
brokerage commissions of 1.5% of the total purchase price of all Shares
purchased by the Company in connection with the Offer and reimburse
Capitol for certain out-of-pocket expenses. See Section 16. HOWEVER,
ANY TENDERING STOCKHOLDER WHO FAILS TO COMPLY WITH THE PROCEDURES SET
FORTH IN THE LETTER OF TRANSMITTAL MAY BE SUBJECT TO A REQUIRED FEDERAL
INCOME TAX BACKUP WITHHOLDING OR OTHER WITHHOLDING ON THE GROSS PAYMENTS
PAYABLE TO SUCH STOCKHOLDER PURSUANT TO THE OFFER. SEE SECTION 3.
As more fully discussed in Section 8, on August 15, 1997, the
Company completed the sale of its Space and Telecommunications Systems
business and the Mobile Information and Communications Services business
(collectively, the "Space Business") to Orbital Sciences Corporation
("Orbital"). The Company received approximately $47.0 million of
proceeds from the sale of the Space Business and decided to effect the
Offer to allow stockholders to benefit from such sale. The Company
intends to use approximately $2.0 million (excluding expenses) from
amounts drawn under its revolving line of credit to conduct this Offer.
See Section 9.
Dr. C.E. Velez, President, Chief Executive Officer and Chairman of
the Board, Mr. B.A. Claussen and Mr. Terry J. Piddington, collectively
own 2,896,858 Shares constituting 63.7% of the outstanding Common Stock.
Dr. Velez and Messrs. Claussen and Piddington have informed the Company
that they will not tender any Shares in the Offer. On November 21, 1997,
Dr. Velez and Messrs. Claussen and Piddington sold 228,960, 39,979, and
24,000 Shares, respectively, to the CTA INCORPORATED Employee Stock
Ownership Plan (the "ESOP") for a purchase price of $10.10 per Share(the
"ESOP Purchase").
The Trustees of the ESOP and the Company's Defined Contribution
401(k) Retirement Plan (the "401(k) Plan") have informed the Company that
they will not tender any Shares in the Offer. After giving effect to the
ESOP Purchase, the Trustees of the ESOP and 401(k) Plan collectively own
877,659 Shares constituting 19.3% of the outstanding Common Stock.
As of November 24, 1997, the Company had issued and outstanding
4,551,088 Shares. As of November 24, 1997, there were approximately 348
holders of record of Shares. As the Company has been informed by the
Trustees of the ESOP and 401(k) Plan and Dr. Velez and Messrs. Claussen
and Piddington that they will not tender any Shares in the Offer, the
proration factor (if every stockholder other than the foregoing
stockholders, tenders all of the Shares he or she owns in the Offer) is
anticipated to be approximately 25.7542%. The Company currently intends
to hold the Shares purchased pursuant to the Offer as treasury stock.
The Shares are not listed, traded or quoted on any national
securities exchange or other market. Legg Mason determined on September
10, 1997 that the fair market value of minority holdings of the Company's
Common Stock falls in a range of $8.60 per Share to $11.60 per Share,
with an expected value of $10.10 per Share (the "Appraisal"), as of June
30, 1997 (after giving effect to the sale of the Space Business to
Orbital). In connection with the ESOP Purchase, Legg Mason also gave its
opinion dated November 20, 1997 to the Trustee of the Company's ESOP that
the expected value is $10.10 per Share as of September 30, 1997. See
Section 7.
THE OFFER
1. NUMBER OF SHARES; PRORATION.
Upon the terms and subject to the conditions described herein
and in the Letter of Transmittal, the Company will purchase up to 200,000
Shares that are validly tendered prior to the Expiration Date (and not
properly withdrawn in accordance with Section 4) at $10.10 per Share net
to the Seller in cash. The later of 12:00 Midnight, Rockville, Maryland
time, on Wednesday, December 31, 1997, or the latest time and date to
which the Offer is extended, is referred to herein as the "Expiration
Date." If the Offer is oversubscribed as described below, only Shares
validly tendered and not withdrawn prior to the Expiration Date will be
eligible for proration.
The Offer is not conditioned on any minimum number of Shares being
tendered, but is subject to certain other conditions. See Section 6.
All Shares not purchased pursuant to the Offer, including Shares not
purchased because of proration, will be returned to the tendering
stockholders at the Company's expense as promptly as practicable
following the Expiration Date.
Upon the terms and subject to the conditions of the Offer, if
200,000 or fewer Shares have been validly tendered and not withdrawn
prior to the Expiration Date, the Company will purchase all such Shares.
Upon the terms and subject to the conditions of the Offer, if more than
200,000 Shares have been validly tendered and not withdrawn prior to the
Expiration Date, the Company will purchase Shares in the following order
of priority:
(a) first, all Shares validly tendered and not withdrawn prior
to the Expiration Date by any stockholder (an "Odd Lot Owner") who was as
of the close of business on November 24, 1997, and will continue to be at
the Expiration Date, the record or beneficial owner of an aggregate of
ninety-nine or fewer Shares ("Odd Lot Shares"), all of which are being
tendered (partial tenders will not qualify for this preference), and who
completes the box captioned "Odd Lots" on the Letter of Transmittal; and
(b) then, after purchase of all of the foregoing Shares, all
Shares validly tendered and not withdrawn prior to the Expiration Date on
a pro rata basis if necessary (with appropriate adjustments to avoid
purchases of fractional Shares).
If proration of tendered Shares is required, the Company does not
expect that it will be able to announce the final proration factor or to
commence payment for any Shares purchased pursuant to the Offer until
approximately seven business days after the Expiration Date because of
the difficulty in determining the number of Shares validly tendered and
as a result of the "odd lot" procedures described in Section 2 (the "Odd
Lot Procedure"). Proration of Shares, other than Shares tendered
pursuant to the Odd Lot Procedure, will be based on the ratio of the
number of Shares to be purchased by the Company pursuant to the Offer
(less Odd Lot Shares purchased) to the total number of Shares validly
tendered by all stockholders and not withdrawn (less Odd Lot Shares
purchased). This ratio will be applied to all Shares tendered by each
stockholder (other than an Odd Lot Owner) to determine the number of
Shares that will be purchased from such stockholder pursuant to the
Offer. Preliminary results of proration will be announced by mail to
each stockholder as promptly as practicable after the Expiration Date.
Holders of Shares may obtain such preliminary information from the
Information Agent.
As described in Section 14, the number of Shares that the Company
will purchase from a stockholder may affect the United States federal
income tax consequences to the stockholder of such purchase and therefore
may be relevant to a stockholder's decision whether to tender Shares, and
if tendering, how many Shares to tender. The Letter of Transmittal
affords each tendering stockholder tendering Shares in certificate form
the opportunity to designate the order of priority in which Shares
tendered are to be purchased in the event of proration, which may also
affect the tax consequences to a stockholder.
THE COMPANY EXPRESSLY RESERVES THE RIGHT, IN ITS SOLE DISCRETION, TO
PURCHASE ADDITIONAL SHARES PURSUANT TO THE OFFER OR TO DECREASE THE
NUMBER OF SHARES BEING SOUGHT PURSUANT TO THE OFFER. If (i) the Company
increases or decreases the price to be paid for Shares, increases the
number of Shares being sought and such increase in the number of Shares
being sought exceeds 2% of the outstanding Shares, or 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 in the manner described in
Section 15, the Offer will be extended until the expiration of ten
business days from the date of publication of such notice.
The Company also expressly reserves the right, in its sole
discretion, at any time or from time to time, to amend the Offer in any
respect. Any extension, delay in payment, termination or amendment will
be followed as promptly as practicable by public announcement thereof.
For purposes of the Offer, a "business day" means any day other than
a Saturday, Sunday or federal holiday and consists of the time period
from 12:01 a.m. through 12:00 midnight, Rockville, Maryland time.
Copies of this Offer to Purchase and the Letter of Transmittal are
being mailed to record holders of Shares.
2. TENDERS BY HOLDERS OF NINETY-NINE OR FEWER SHARES.
All Shares validly tendered and not withdrawn on or prior to
the Expiration Date by or on behalf of any stockholder who was, as of the
close of business on November 24, 1997, and will continue to be at the
Expiration Date, the record or beneficial owner of an aggregate of
ninety-nine or fewer Shares all of which are being tendered will be
accepted without proration, provided that the stockholder completes the
box captioned "Odd Lots" on the Letter of Transmittal. See Section 1.
Partial tenders will not qualify for this preference, and it is not
available to beneficial holders of more than ninety-nine Shares, even if
such holders have separate stock certificates for ninety-nine or fewer
Shares.
As of November 24, 1997, there were approximately 348 holders of
record of Shares. Approximately 16% of the holders of record of Shares
held individually ninety-nine or fewer Shares and held in the aggregate
approximately 1,913 Shares. Any Odd Lot Owner wishing to tender all of
his or her Shares free of proration must complete the box captioned "Odd
Lots" on the Letter of Transmittal.
3. PROCEDURE FOR TENDERING SHARES.
PROPER TENDER OF SHARES. To tender Shares validly pursuant to
the Offer the tendering stockholder must deliver a properly completed and
duly executed Letter of Transmittal or photocopy thereof and any other
documents required by the Letter of Transmittal prior to the Expiration
Date to Capitol at its address set forth in the last page of this Offer
to Purchase (by mail, by hand or by facsimile). In the event a
stockholder holds Shares in certificate form, such stockholder should
deliver to Capitol the Letter of Transmittal along with the
certificate(s) for such Shares.
The method of delivery of Shares and all other required documents is
at the election and risk of the tendering stockholder and delivery will
be deemed made only when actually received by Capitol. If delivery is by
mail, registered mail with return receipt requested, properly insured, is
recommended. In all cases, sufficient time should be allowed to assure
timely delivery.
FEDERAL INCOME TAX WITHHOLDING. To prevent backup federal income
tax withholding equal to 31% of the gross payments payable pursuant to
the Offer, each stockholder who does not otherwise establish an exemption
from backup withholding must notify the Company of such stockholder's
correct taxpayer identification number (or certify that such taxpayer is
awaiting a taxpayer identification number) and provide certain other
information by completing, under penalties of perjury, the Substitute
Form W-9 included in the Letter of Transmittal.
For a discussion of certain United States federal income tax
consequences generally applicable to tendering stockholders, see Section
14.
DETERMINATION OF VALIDITY. All questions as to the Purchase Price,
the form of documents and the validity, eligibility (including time of
receipt) and acceptance for payment of any tender of Shares will be
determined by the Company, in its sole discretion, and its determination
shall be final and binding on all parties. The Company reserves the
absolute right to reject any or all tenders of Shares that it determines
are not in proper form or the acceptance for payment of which 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 of the Conditions
of the Offer and any defect or irregularity in any tender of any
particular Shares. No tender of Shares will be deemed validly made until
all defaults or irregularities have been cured or waived. Neither the
Company, Capitol, nor any other person is or will be under any duty to
give notice of any defects or irregularities in tenders, and neither of
them will incur any liability for failure to give any such notice.
RULE 14E-4. It is a violation of Rule 14e-4 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), for a
person, directly or indirectly, to tender Shares for his or her own
account unless, at the time of tender and at the end of the proration
period or period during which Shares are accepted by lot (including any
extensions thereof), the person so tendering (i) has a net long position
equal to or greater than the amount tendered (x) in Shares or (y) in
other securities immediately convertible into, or exercisable or
exchangeable for, Shares and, upon the acceptance of such tender, will
acquire such Shares for tender by conversion, exercise or exchange of
such other securities and (ii) will cause such Shares to be delivered in
accordance with the terms of the Offer. Rule 14e-4 provides a similar
restriction applicable to the tender or guarantee of a tender on behalf
of another person. The tender of Shares pursuant to any one of the
procedures described above will constitute the tendering stockholder's
representation and warranty that (i) such stockholder has a net long
position in the Shares being tendered within the meaning of Rule 14e-4
promulgated under the Exchange Act, and (ii) the tender of such Shares
complies with Rule 14e-4. The Company's acceptance for payment of Shares
tendered pursuant to the Offer will constitute a binding agreement
between the tendering stockholder and the Company upon the terms and
subject to the conditions of the Offer.
4. WITHDRAWAL RIGHTS.
Tenders of Shares made pursuant to the Offer may be withdrawn
at any time prior to the Expiration Date. Thereafter, such tenders are
irrevocable, except that they may be withdrawn after 12:00 Midnight,
Rockville, Maryland time, Monday, January 26, 1998 unless theretofore
accepted for payment as provided in this Offer to Purchase. If the
Company extends the period of time during which the Offer is open, or is
delayed in accepting for payment or paying for Shares, or is unable to
accept for payment or pay for Shares pursuant to the Offer for any
reason, then, without prejudice to the Company's rights under the Offer,
Capitol may, on behalf of the Company, retain all Shares tendered, and
such Shares may not be withdrawn except as otherwise provided in this
Section 4, subject to Rule 13e-4(f)(5) under the Exchange Act, which
provides that the issuer making the tender offer shall either pay the
consideration offered, or return the tendered securities, promptly after
the termination or withdrawal of the tender offer.
To be effective, a written or facsimile transmission notice of
withdrawal signed by the tendering stockholder must be timely received by
Capitol at its address set forth in the Summary of this Offer to
Purchase. Any notice of withdrawal must specify the name of the person
who tendered the Shares to be withdrawn and the number of Shares to be
withdrawn. In addition, such notice must specify, the name and number of
the account at Capitol to be credited with the withdrawn Shares.
Withdrawals may not be rescinded, and Shares withdrawn will thereafter be
deemed not validly tendered for purposes of the Offer. However,
withdrawn Shares may be re-tendered by again following the procedures
described in Section 3 at any time prior to the Expiration Date.
All questions as to the form and validity (including time of
receipt) of any notice of withdrawal will be determined by the Company,
in its sole discretion, which determination shall be final and binding.
Neither the Company, Capitol, nor any other person will be under any duty
to give notification of any defect or irregularity in any notice of
withdrawal or incur any liability for failure to give any such
notification.
5. ACCEPTANCE FOR PAYMENT OF SHARES AND PAYMENT
OF PURCHASE PRICE.
Upon the terms and subject to the conditions of the Offer, and
as promptly as practicable after the Expiration Date, the Company will
(subject to the proration provisions of the Offer) accept for payment and
pay for Shares validly tendered up to 200,000 Shares. In all cases,
payment for Shares accepted for payment pursuant to the Offer will be
made only after timely receipt by Capitol of a confirmation of a book-
entry transfer of such Shares into the Company's account at Capitol, a
properly completed and duly executed Letter of Transmittal or manually
signed photocopy thereof and any other required documents (including, if
applicable, certificates for Shares).
For purposes of the Offer, the Company will be deemed to have
accepted for payment (and thereby purchased), subject to proration,
Shares that are validly tendered and not withdrawn as, if and when it
gives oral or written notice to Capitol of the Company's acceptance for
payment of such Shares. The Company will pay for Shares that it has
purchased pursuant to the Offer by delivering the Purchase Price therefor
to Capitol. Capitol will act as agent for tendering stockholders for the
purpose of receiving payment from the Company and transmitting payment to
the tendering stockholders (by check mailed directly to the tendering
stockholders) as promptly as practicable. Under no circumstances will
interest be paid on amounts to be paid to tendering stockholders,
regardless of any delay in making such payment.
Certificates for all Shares not purchased will be returned as
promptly as practicable without expense to the tendering stockholder or
Shares will be credited to the tendering stockholder's account maintained
with Capitol by book-entry transfer.
Payment for Shares may be delayed in the event of difficulty in
determining the number of Shares properly tendered or if proration is
required. See Section 1. In addition, if certain events occur, the
Company may not be obligated to purchase Shares pursuant to the Offer.
See Section 6.
The Company will pay or cause to be paid any stock transfer taxes
with respect to the sale and transfer of any Shares to it pursuant to the
Offer. If, however, payment of the Purchase Price is to be made to, or
Shares not tendered or not purchased are to be registered in the name of,
any person other than the registered holder, or if tendered Shares 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, such other person or otherwise) 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. See Instruction 5 of the Letter of
Transmittal.
6. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provisions of the Offer, the Company
shall not be required to accept for payment or, subject to the provisions
of the Offer, to pay for any Shares not theretofore accepted for payment
or paid for, and may terminate or amend the Offer, if at any time prior
to the Expiration Date any of the following events shall have occurred
(or shall have been determined by the Company in its sole judgment to
have occurred) regardless of the circumstances giving rise thereto
(including any action or omission to act by the Company):
(a) there shall have been threatened, instituted or pending
any action or proceeding by any government or governmental, regulatory or
administrative agency or authority or tribunal or any other person,
domestic or foreign, or before any court, authority, agency or tribunal
or any other person, domestic or foreign, or any judgment, order or
injunction entered, enforced or deemed applicable by any such court,
authority, agency, tribunal or other person, that (i) challenges the
acquisition of Shares pursuant to the Offer or otherwise in any manner
relates to or affects the Offer, or (ii) in the sole judgment of the
Company, would or might materially and adversely affect the business,
condition (financial or other), income, operations or prospects of the
Company or any of its subsidiaries or otherwise materially impair in any
way the contemplated future conduct of the business of the Company or any
of its subsidiaries or materially impair the contemplated benefits of the
Offer to the Company;
(b) there shall have been any action threatened, pending or
taken, or approval withheld, withdrawn or abrogated 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 to the Company or any of its subsidiaries, by
any legislative body, court, authority, agency or tribunal, domestic or
foreign, which, in the Company's sole judgment, would or might directly
or indirectly (i) 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, (ii) 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, or (iii) materially and adversely affect the
business, condition (financial or other), income, operations or prospects
of the Company or any of its subsidiaries or otherwise materially impair
in any way the contemplated future conduct of the business of the Company
or any of its subsidiaries or materially impair the contemplated benefits
of the Offer to the Company;
(c) it shall have been publicly disclosed or the Company shall
have learned that (i) any new person or "group" (within the meaning of
Section 13(d)(3) of the Exchange Act) has acquired or proposes to acquire
beneficial ownership of more than 5% of the outstanding Shares whether
through the acquisition of stock, the formation of a group, the grant of
any option or right, or otherwise, (ii) any such person or group that on
or prior to November 24, 1997, has beneficial ownership of more than 5%
of the outstanding Shares thereafter shall have acquired or shall propose
to acquire whether through the acquisition of stock, the formation of a
group, the grant of any option or right, or otherwise, beneficial
ownership of additional Shares representing 2% or more of the outstanding
Shares, (iii) any new group shall have been formed which beneficially
owns more than 5% of the outstanding Shares, or (iv) any person, entity
or group shall have filed a Notification and Report Form under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976 or made a public
announcement reflecting an intent to acquire the Company or any of its
subsidiaries or any of their respective assets or securities;
(d) there shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on any national
securities exchange or in the over-the-counter market, (ii) any
significant decline in the price of the Shares or in the general level of
market prices of equity securities in the United States or abroad, (iii)
any change in the general political, market, economic or financial
condition in the United States or abroad which, in the Company's sole
judgment, would or might have a material adverse effect on the business,
condition (financial or other), income, operations or prospects of the
Company or any of its subsidiaries or on the trading in the Shares, (iv)
the declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States or any limitation on, or any event
which, in the Company's sole judgment, might affect, the extension of
credit by lending institutions in the United States, (v) the commencement
of a war, armed hostilities or other international or national crisis
directly or indirectly involving the United States or (vi) in the case of
any of the foregoing existing at the time of the commencement of the
Offer, in the Company's sole judgment, a material acceleration or
worsening thereof;
(e) a tender or exchange offer with respect to some or all of
the Shares (other than the Offer), or a merger, acquisition or other
business combination proposal for the Company or any subsidiary, shall
have been proposed, announced or made by a person other than the Company;
or
(f) there shall have occurred any event or events that in the
Company's sole judgment would or might result in an actual or possible
change in the business, condition (financial or other), income,
operations or prospects of the Company or any of its subsidiaries or
otherwise materially impair in any way the contemplated future conduct of
the business of the Company or any of its subsidiaries or materially
impair the contemplated benefits of the Offer to the Company;
and, in the sole judgment of the Company, such event or events make it
undesirable or inadvisable to proceed with the Offer or with such
acceptance for payment or payment.
Any of the foregoing conditions may be waived by the Company, in
whole or in part, at any time and from time to time in its sole
discretion. The failure by the Company 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 the events described above will be final and binding on all
parties.
7. PRICE RANGE OF SHARES; DIVIDENDS.
The Shares are not listed, traded or quoted on any national
securities exchange or other market. Legg Mason, the Company's
independent appraiser, has conducted appraisals of the Company's Shares
since 1986. Legg Mason determined on September 10, 1997 that the fair
market value of minority holdings of the Company's Common Stock falls in
a range of $8.60 per Share to $11.60 per Share, with an expected value of
$10.10 per Share, as of June 30, 1997 (after giving effect to the sale of
the Space Business to Orbital). In connection with the ESOP Purchase,
Legg Mason also gave its opinion dated November 20, 1997 to the ESOP that
the expected value is $10.10 per Share as of September 30, 1997.
Information on the Company's market for its Common Stock and related
shareholder matters is included under the caption "Item 5. Market for
Registrant's Common Equity and Related Stockholder Matters" of the
Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1996 and is incorporated herein by reference.
It is the current policy of the Company to retain all earnings to
provide funds for the Company's growth. Therefore, the Company has no
current intention of paying cash dividends on the Common Stock. The
Company has not made any distributions to its shareholders since 1988.
The Company is prohibited from paying dividends under its bank credit
agreement. The agreement expires on September 30, 2000.
8. BACKGROUND AND PURPOSE OF THE OFFER.
On August 15, 1997, the Company consummated the sale of its
Space Business to Orbital. The Company received approximately $47.0
million of proceeds from the sale of the Space Business and decided to
effect the Offer to allow stockholders to benefit from such sale.
The Board of Directors decided to proceed with the Offer because (i)
it would provide participating stockholders with an opportunity to obtain
liquidity with respect to certain of their Shares in a tax advantageous
transaction; (ii) it would give the Company a capital structure in which
the Company's average after-tax cost of capital is reduced; (iii) it
should permit each Share outstanding after the Offer to participate in a
greater percentage of any earnings of the Company and (iv) to the extent
that the Offer results in a reduction in the number of stockholders of
record, it would reduce the costs to the Company for stockholder
services, including mailing and printing costs.
The Board of Directors believes that the terms of the Offer
including the Purchase Price of $10.10 per Share, is fair to unaffiliated
stockholders of the Company, including those stockholders who tender
their Shares in the Offer. The Board of Directors has received the
opinion of Legg Mason dated September 10, 1997, that the fair market
value of minority holdings of the Company's Common Stock falls in a range
of $8.60 per Share to $11.60 per Share, with an expected value of $10.10
per Share as of June 30, 1997 (after giving effect to the sale of the
Space Business to Orbital). In connection with the ESOP Purchase, Legg
Mason also gave its opinion dated November 20, 1997 to the Trustee of the
ESOP that the expected value is $10.10 per Share as of September 30,
1997. The full text of the Legg Mason written appraisal, which sets
forth the assumptions made, procedures followed, matters considered and
scope of review by Legg Mason in rendering its appraisal is on file with
the Securities and Exchange Commission as an Exhibit to the Company's
Issuer Tender Offer Statement on Schedule 13E-4 filed in connection with
the Offer. Based on the foregoing and given that stockholders are not
obligated to tender any Shares pursuant to the Offer, the Board of
Directors believes that the Offer is fair to the Company's stockholders.
Legg Mason has been the Company's independent appraiser since 1986.
The Company has paid Legg Mason a fee of $25,000 in connection with the
delivery of the Appraisal. No portion of the fee was contingent upon the
consummation of the Offer or the conclusions reached in the Appraisal.
In addition, the Company has agreed to pay Legg Mason's reasonable out-
of-pocket expenses up to $4,000 and to indemnify Legg Mason against
certain liabilities directly or indirectly in connection with, arising
out of, based upon, or in any way related to, its engagement by the
Company (including with respect to federal securities laws).
The Company currently intends to hold the Shares purchased pursuant
to the Offer as treasury stock. Although the Company has no current
plans to reissue any of such Shares, they may be reissued in the future.
Except as disclosed in this Offer to Purchase, the Company has no
plans or proposals which relate to or would result in: (a) the
acquisition by any person of additional securities of the Company, or the
disposition of securities of the Company; (b) an extraordinary corporate
transaction, such as a merger, reorganization or liquidation involving
the Company or any of its subsidiaries; (c) a sale or transfer of a
material amount of assets of the Company or any of its subsidiaries; (d)
any change in the present Board of Directors or management of the
Company; (e) any material change in the present dividend rate or policy
or indebtedness or capitalization of the Company; (f) any material change
in the Company's corporate structure or business; (g) any change in the
Company's certificate of incorporation or bylaws or any action which may
impede the acquisition of control of the Company by any person; or (h)
the suspension of the Company's obligation to file reports pursuant to
Section 15(d) of the Exchange Act.
Statements contained in this Offer to Purchase, including statements
with respect to the future earnings prospects and growth in earnings per
Share are not historical facts and are forward looking statements made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Each of these items is dependent on the
earnings of the Company. A number of important factors could cause
actual results to differ materially from those expressed in any forward-
looking statements made by or on behalf of the Company. Some of the most
important factors which would impact the Company's earnings include, but
are not limited to, the Company's higher leverage, the Company's higher
debt service requirements, restrictions under the Company's debt
instruments, the concentrated ownership of the Company, the risks
associated with competition and technological innovation by competitors,
general economic conditions in industries that use the Company's
products, general business cycles, political, economic or other
disruptions in the Company's foreign markets, the Company's concentration
of customers, increases in interest rates, exchange rate fluctuations,
departures of the Company's key personnel for any reason, the uncovering
of any liability currently unknown to the Company, and new and different
legal and regulatory requirements and governmental approvals.
NEITHER THE COMPANY NOR ANY OF ITS DIRECTORS, OFFICERS OR EMPLOYEES
MAKES ANY RECOMMENDATION TO ANY STOCKHOLDER AS TO WHETHER TO TENDER OR
REFRAIN FROM TENDERING SHARES. EACH STOCKHOLDER MUST MAKE HIS OR HER OWN
DECISION AS TO WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO
TENDER.
9. SOURCE AND AMOUNT OF FUNDS.
The Company estimates that its maximum cost of purchasing
200,000 Shares pursuant to the Offer (including all fees and expenses
relating to the Offer, but excluding interest on, and fees with respect
to, funds borrowed to finance such purchase of Shares) will approximate
$2.1 million. The funds to pay all such costs will be obtained from a
$15.0 million secured revolving line of credit under a financing and
security agreement between the Company and First Union Commercial
Corporation (the "Lender") dated November 6, 1997 (the "Financing
Agreement"). The Financing Agreement provides for a $15.0 million
secured revolving line of credit ($4.0 million sublimit for letters of
credit) and a $5.0 million term loan.
Amounts drawn under the Financing Agreement bear interest at the
rate of interest from time to time established and publicly announced by
Lender as its prime rate (the "Prime Rate").
In addition, the Company may, under certain circumstances, elect to
have specified amounts drawn under the Financing Agreement bear interest
at the LIBOR rate (as defined in the Financing Agreement) plus an
additional LIBOR rate of 1.5%, 1.75% or 2%, depending on certain
circumstances. The unused line fee under the Financing Agreement is
currently .003% of the average daily unused commitment and is paid on a
quarterly basis. Additionally, letter of credit fees of 1.5% or 1.75% of
the average daily balance of outstanding letters of credit are payable to
the Lender. Interest payable on amounts outstanding under the Financing
Agreement is due and payable monthly beginning November 30, 1997 and
continuing on the last day of each month thereafter until maturity. The
principal amount outstanding under the Financing Agreement is due and
payable in full on September 30, 2000.
The Financing Agreement is secured by the Company's assets. The
Financing Agreement contains usual and customary affirmative, negative
and financial covenants, including restrictions and conditions regarding
capital expenditures, payment of dividends, asset sales, investments,
sales of stock, incurrence of additional indebtedness, and other matters.
The Company expects to repay borrowings incurred to finance the
purchases of Shares in the Offer out of the proceeds of public or private
offerings of securities, additional bank borrowings, internally generated
funds or other financings, or a combination of the foregoing, as the
Company may deem appropriate depending on business and market conditions
at the time.
10. TRANSACTIONS AND AGREEMENTS CONCERNING SHARES.
Dr. Velez, President, Chief Executive Officer and Chairman of
the Board, and Messrs. Claussen and Piddington, collectively own
2,896,858 Shares of Common Stock, constituting 63.7% of the outstanding
Common Stock. Dr. Velez and Messrs. Claussen and Piddington have
informed the Company that they will not tender any Shares in the Offer.
On November 21, 1997, Dr. Velez and Messrs. Claussen and Piddington sold
228,960, 39,979, and 24,000 Shares, respectively to the ESOP for a
purchase price of $10.10 per Share.
The Trustees of the ESOP and the 401(k) Plan have informed the
Company that they will not tender any Shares in the Offer. After giving
effect to the ESOP Purchase, the Trustees of the ESOP and 401(k) Plan
collectively own 877,659 Shares constituting 19.3% of the outstanding
Common Stock.
Except as set forth above, based upon the Company's records and upon
information provided to the Company by its directors and executive
officers, (i) neither the Company nor, to the Company's knowledge, any of
its associates, subsidiaries, directors, executive officers or any
associate of any such director or executive officer, or any director or
executive officer of its subsidiaries, has engaged in any transactions
involving the Shares during the 40 business days preceding the date
hereof and (ii) except for outstanding options to purchase Shares,
neither the Company nor, to the Company's knowledge, any of its directors
or officers is a party to any contract, arrangement, understanding or
relationship relating directly or indirectly to the Offer with any other
person with respect to the Shares.
Immediately prior to the ESOP purchase, (i) Dr. Velez owned
2,550,000 Shares, representing 56% of the then outstanding Shares, (ii)
Mr. Claussen owned 399,720 Shares, representing 8.8% of the then
outstanding Shares, and (iii) Mr. Piddington owned 240,001 Shares
representing 5.3% of the then outstanding Shares. After giving effect to
the ESOP Purchase and assuming the Company purchases 200,000 in the Offer
(i) Dr. Velez will own 2,321,040 Shares, representing 53.3% of the then
outstanding Shares, (ii) Mr. Claussen will own 359,817 Shares,
representing 8.3% of the then outstanding Shares, and (iii) Mr.
Piddington will own 216,001 Shares, representing 5.0% of the then
outstanding Shares.
11. FINANCIAL INFORMATION CONCERNING THE COMPANY.
SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED
FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT RATIOS AND PER SHARE AMOUNTS)
Set forth below is certain summary historical consolidated and
certain pro forma financial information of the Company and its
subsidiaries. The historical financial information (other than the ratio
of earnings to fixed charges) has been derived from the audited
consolidated financial statements included in the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1996 (the "Company's
1996 Annual Report") and from the unaudited condensed consolidated
financial statements included in the Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 1997 (the "Company's 1997 Third
Quarter Report"), each of which is incorporated by reference herein, and
other information and data contained in the Company's 1996 Annual Report
and the Company's 1997 Third Quarter Report. More comprehensive
financial information is included in such reports and the financial
information which follows is qualified in its entirety by reference to
such reports and all of the financial statements and related notes
contained therein, copies of which may be obtained as set forth below
under the caption "Miscellaneous." The summary pro forma consolidated
financial information is based on certain assumptions and estimates, and
therefore does not purport to be indicative of the results that would
actually have been obtained had the transactions been completed as of
such dates or indicative of future results of operations and financial
position.
<TABLE>
<CAPTION>
YEARS ENDED Nine Months Ended
DECEMBER 31, SEPTEMBER 30,
------------------------- ---------------------------
1996 Pro 1997 Pro
1995 1996 FORMA(1) 1996 1997 FORMA(1)
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT
Contract revenue $105,224 $96,246 $70,729 $69,650
Income(loss) from
continuing ops 2,349 276 (2) 1,497
Income(loss) from
discontinued ops (403) (11,313) (3,438) (1,490)
Gain on disposal
of segment 0 0 0 3,016
Net income (loss) 1,946 (11,037) (3,440) 3,023
Earnings (loss)
per share $0.41 ($2.49) ($2.60) ($0.78) $0.79 $0.67
Weighted average
shares
outstanding 4,709,268 4,437,543 4,237,543 4,397,973 4,684,184 4,484,184
Ratio of
earnings to
fixed charges 2.49:1 NM NM NM 1.76:1
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
DECEMBER 31, ----------------------------
1996 ACTUAL PRO FORMA(1)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital $13,721 $15,227 $13,207
Total assets 92,690 48,376 46,356
Total assets, less
excess of cost of assets 87,642 48,376 46,356
acquired over book value
Short-term debt 28,335 13,106 15,126
Long-term debt 15,000 0 0
Stockholders' equity 17,793 20,729 18,709
Book value per share $3.91 $4.56 $4.12
</TABLE>
Notes to Summary Historical and Pro Forma Consolidated Financial Information:
(1) Gives effect to the purchase of 200,000 Shares of Common Stock at $10.10
per share of Common Stock pursuant to the Offer.
12. EFFECTS OF THE OFFER ON THE MARKET FOR SHARES
The Company's purchase of Shares pursuant to the Offer will reduce
the number of Shares and potentially the number of holders of Shares.
Stockholders who determine not to tender Shares in the Offer or whose
Shares are not purchased in the Offer will realize an increase in their
percentage ownership interest in the common equity of the Company and thus, in
the Company's assets and any future earnings of the Company. Because of the
smaller number of Shares outstanding after consummation of the Offer, increases
or decreases in net earnings will result in proportionately greater increases
or decreases in earnings per Share.
13. REGULATORY APPROVALS.
The Company is not aware 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 or
ownership of Shares as contemplated by the Offer or of any license or
regulatory permit that appears to be material to its business that might be
adversely affected by its acquisition of Shares as contemplated in the Offer,
except as may otherwise be required under federal or state securities laws.
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 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 conditions or that the failure to obtain any such approval
or other action might not result in adverse consequences to the Company's
business. The Company's obligations under the Offer to accept for payment and
pay for Shares are subject to certain conditions. See Section 6.
14. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The following summary is a general discussion of certain of the U.S.
federal income tax consequences of the Offer. This summary is based on laws,
regulations, rulings, and decisions now in effect, all of which are subject to
change, possibly retroactively, and any such change could affect the continuing
validity of the discussion. No opinions of counsel or rulings from the
Internal Revenue Service (the "Service") as to any of the matters discussed in
this summary have been requested or received.
This summary does not discuss any aspects of state, local, foreign, or
other tax laws. Certain stockholders (including insurance companies, tax-
exempt organizations, financial institutions, broker dealers, and stockholders
who have acquired their Shares upon the exercise of options or otherwise as
compensation) may be subject to special rules not discussed below. The summary
assumes that stockholders hold their Shares as a capital asset.
EACH STOCKHOLDER IS URGED TO CONSULT AND RELY ON HIS OR HER TAX ADVISOR AS
TO THE PARTICULAR TAX CONSEQUENCES OF THE OFFER TO SUCH STOCKHOLDER, INCLUDING
THE APPLICATION OF STATE, LOCAL AND FOREIGN TAX LAWS AND POSSIBLE TAX CHANGES.
IN GENERAL. A stockholder's exchange of Shares for cash pursuant to the
Offer will be a taxable transaction for federal income tax purposes under the
Internal Revenue Code of 1986, as amended (the "Code"). Such exchange will
constitute a "redemption" within the meaning of Section 317 of the Code, which
will result in the following federal income tax consequences.
TREATMENT AS A SALE OR EXCHANGE. If the redemption qualifies under any of
the provisions of Section 302(b) of the Code, as more fully described below,
the cash received pursuant to the Offer will be treated as a distribution from
the Company in part or full payment for the Shares exchanged. Such treatment
will result in a stockholder recognizing gain or loss equal to the difference
between (a) the cash received by the stockholder pursuant to the Offer and
(b) the stockholder's tax basis in the Shares surrendered. Assuming the Shares
are held as a capital asset, such recognized gain or loss will be capital gain
or loss. In the case of individuals, if the Shares were held longer than
eighteen months, any resulting gain will be subject to federal income tax at a
maximum rate of 20%, and if the Shares were held between twelve months but not
more than eighteen months, such capital gain will be subject to federal income
tax at a maximum rate of 28%. Gain from the sale of Shares held less than
twelve months generally will be taxed at ordinary income rates.
TREATMENT AS A DIVIDEND. If none of the provisions under Section 302(b)
of the Code is satisfied, a stockholder will be treated as having received a
dividend taxable as ordinary income in an amount equal to the cash received
pursuant to the Offer, to the extent of such stockholder's pro rata share of
the Company's earnings and profits, as calculated for U.S. federal income tax
purposes. The Company anticipates that its available earnings and profits will
be sufficient for all of the amounts distributed to be taxed as a dividend. In
the event that the transaction is treated as a dividend distribution to a
stockholder for federal income tax purposes, such stockholder's tax basis in
the Shares actually redeemed will be added to the tax basis of such
stockholder's remaining actually owned or constructively owned Shares in the
Company. No assurance can be given that any of the provisions under Section
302(b) will be satisfied as to any particular stockholder and thus no assurance
can be given that any particular stockholder will not be treated as having
received a dividend taxable as ordinary income.
CONSTRUCTIVE OWNERSHIP OF STOCK. In determining whether the provisions
under Section 302(b)(1), 302(b)(2), or 302(b)(3) of the Code, as described
below, are satisfied, a stockholder must take into account not only Shares
actually owned by such stockholder but also Shares that are constructively
owned within the meaning of Section 318 of the Code. Under Section 318, a
stockholder may constructively own Shares actually owned, and in some cases
constructively owned, by certain related individuals and certain entities in
which the stockholder has an interest and Shares that such stockholder has the
right to acquire by exercise of an option or by conversion of convertible
securities.
THE PROVISIONS OF SECTION 302(B). Under Section 302(b) of the Code, a
redemption will be taxed as a sale or exchange, and not as a dividend, if it
(1) is "not essentially equivalent to a dividend" with respect to a
stockholder; (2) is "substantially disproportionate" with respect to a
stockholder; (3) results in a "complete redemption" of all of the Shares owned
by a stockholder; or (4) is a redemption in "partial liquidation" from a
stockholder that is not a corporation. Each stockholder should be aware that,
under certain circumstances, sales or transfers of shares contemporaneously
with exchanges pursuant to the Offer as part of an overall plan to reduce a
stockholder's interest in the Company may be taken into account in determining
whether the tests under clauses (1), (2), and (3) above are satisfied. Also,
subsequent purchases by the Company may be taken into account in determining
whether the tests under clauses (1), (2), and (3) above are satisfied. If
every stockholder, excluding Dr. Velez, Messrs. Claussen and Piddington and the
Trustees of the ESOP and the 401(k) Plan, elects to tender the full amount of
their Shares available for tender, a tendering stockholder should experience a
reduction in such stockholder's interest in the Company. Under certain
circumstances, depending on whether and to what extent other tendering
stockholders tender their Shares, a stockholder who tenders less than all of
its Shares could experience an increase in its interest in the Company. In
such an event the stockholder will be treated as having received a dividend
taxable as ordinary income in an amount equal to the cash received pursuant to
the Offer, to the extent of the stockholder's pro rata share of the Company's
earnings and profits, as calculated for federal income tax purposes.
A description of each of the provisions of Section 302(b) is as follows:
(1) NOT ESSENTIALLY EQUIVALENT TO A DIVIDEND. The receipt of cash by a
stockholder in exchange for Shares pursuant to the Offer will generally be "not
essentially equivalent to a dividend" within the meaning of Section 302(b)(1)
of the Code if the sale of Shares results in a "meaningful reduction" of the
stockholder's interest in the Company. Based on a published Service ruling,
dividend treatment will likely not apply if, taking into account the
constructive ownership rules set forth in Section 318 of the Code, (a) the
stockholder's relative stock interest in the Company is minimal, (b) the
stockholder exercises no control over the Company's affairs and (c) there is a
reduction in the stockholder's proportionate interest in the Company.
(2) A SUBSTANTIALLY DISPROPORTIONATE REDEMPTION. The receipt of cash by
a stockholder will be "substantially disproportionate" with respect to such
stockholder within the meaning of Section 302(b)(2) of the Code if the
percentage of the then outstanding Shares actually and constructively owned by
the stockholder immediately following the exchange of Shares pursuant to the
Offer is less than 80 percent of the percentage of the outstanding Shares
actually and constructively owned by such stockholder immediately before such
exchange, provided that immediately after the exchange such stockholder owns
actually and constructively less than 50 percent of the total voting power.
(3) A COMPLETE REDEMPTION OF INTEREST. The receipt of cash by a
stockholder will result in a "complete redemption" of all the Shares owned by
the stockholder within the meaning of Section 302(b)(3) of the Code if either
(a) all the Shares actually and constructively owned by the stockholder are
sold pursuant to the Offer or (b) all the Shares actually owned by the
stockholder are sold pursuant to the Offer, the only Shares the stockholder
constructively owns are actually owned by such stockholder's family members,
and the stockholder is eligible to waive and effectively waives, under
procedures described in Section 302(c), such constructive ownership.
(4) A PARTIAL LIQUIDATION. The receipt of cash by a noncorporate
stockholder pursuant to the Offer may qualify as a redemption under a plan of
"partial liquidation" under Section 302(b)(4) of the Code if the distribution
is "not essentially equivalent to a dividend (determined at the corporate level
rather than at the stockholder level)" and certain other conditions are
satisfied. Under the Code, all distributions under a plan of partial
liquidation must be made by the end of the taxable year succeeding the taxable
year of the corporation in which such plan of partial liquidation was adopted.
It is unclear whether the distribution of cash pursuant to the Offer will
qualify as distribution in partial liquidation.
APPLICATION OF SECTION 302(B) TESTS. Stockholders may qualify for sale or
exchange treatment if any of the other provisions of Section 302(b) of the
Code, as described above, are applicable, taking into account the relevant
constructive ownership rules. If none of the Code Section 302(b) tests are
satisfied, the redemption of Shares would be treated as a dividend and taxable
as described above under "Treatment as a Dividend." Holders are strongly urged
to consult their tax advisors in regard to the treatment of the redemption of
Shares in their particular situation.
SPECIAL RULES FOR CORPORATE STOCKHOLDERS. If the redemption of Shares of
a corporate stockholder of the Company is either "not essentially equivalent to
a dividend," a "substantially disproportionate" redemption, or a "complete
termination of interest," under the Code Section 302(b) provisions described
above, then such stockholder receives sale or exchange treatment. Because the
"partial liquidation" provision of Section 302(b)(4) is applicable only to
noncorporate stockholders, if the exchange qualifies only as a "partial
liquidation" or fails to qualify under any of the Section 302(b) provisions as
a redemption, then a corporate stockholder is deemed to receive a dividend.
Upon receipt of a dividend from the Company, a corporate stockholder that
owns less than 20 percent of the Company is eligible for a dividends received
deduction equal to 70 percent of the amount of the distribution, subject to
applicable limitations, including those related to "debt financed portfolio
stock" under Section 246A of the Code and to the holding period requirements of
Section 246 of the Code. In addition, any amount received by a corporate
stockholder that is treated as a dividend may constitute an "extraordinary
dividend" subject to the provisions of Section 1059 of the Code (except as may
otherwise be provided in Treasury Regulations yet to be promulgated). Under
Section 1059, a corporate stockholder must reduce the tax basis of all of such
stockholder's Shares (but not below zero) by the "nontaxed portion" of any
"extraordinary dividend" and, if such nontaxed portion exceeds the
stockholder's tax basis for the Shares, must treat any such excess as gain from
the sale or exchange of such Shares in the year the payment is received.
Section 1059 will apply to the extent that the redemption of Shares is a
redemption in partial liquidation for United States federal income tax
purposes, as described above.
BACKUP WITHHOLDING. Certain noncorporate stockholders may be subject to
backup withholding at a rate of 31% on cash received pursuant to the redemption
of Shares. Generally, backup withholding applies only when the taxpayer fails
to furnish or certify a proper taxpayer identification number or when the
taxpayer is notified by the Service that the taxpayer has failed to report
payments of interest and dividends properly. Each noncorporate stockholder
should consult its own tax advisor regarding its qualification for exemption
from backup withholding and the procedure for obtaining any applicable
exemption. For a discussion of certain withholding tax consequences to
tendering stockholders, see Section 3.
NON-U.S. HOLDERS. The Company will withhold United States federal income
tax at the rate of 30% from cash distributed to Non-U.S. Holders (as defined
below) pursuant to the redemption of Shares, unless the Company determines that
a reduced rate of withholding is applicable pursuant to a tax treaty or that an
exemption from withholding is applicable because such cash is effectively
connected with the conduct of a trade or business in the United States. For
this purpose, a "Non-U.S. Holder" is a beneficial owner of Shares other than a
beneficial owner that is for U.S. federal income tax purposes, (i) an
individual citizen or resident of the United States, (ii) a U.S. domestic
corporation or (iii) otherwise subject to U.S. federal income tax on a net
income basis in respect of the Shares. A Non-U.S. Holder may be eligible to
obtain a refund of tax withheld if such stockholder meets one of the tests for
capital gain or loss treatment described above, or is otherwise able to
establish that no tax or a reduced amount of tax was due. Backup withholding
will generally not apply to amounts subject to the 30-percent or treaty-reduced
rate of withholding.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY. EACH STOCKHOLDER IS URGED TO CONSULT HIS OR HER OWN TAX
ADVISOR TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO SUCH STOCKHOLDER
(INCLUDING THE APPLICABILITY AND EFFECT OF THE CONSTRUCTIVE OWNERSHIP RULES AND
FOREIGN, STATE AND LOCAL TAX LAWS AND POSSIBLE TAX LAW CHANGES) OF THE SALE OF
SHARES PURSUANT TO THE OFFER.
15. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS.
The Company expressly reserves the right, in its sole discretion and
at any time or from time to time, to extend the period of time during which the
Offer is open by making a public announcement thereof. There can be no
assurance, however, that the Company will exercise its right to extend the
Offer. During any such extension, all Shares previously tendered will remain
subject to the Offer, except to the extent that such Shares may be withdrawn as
set forth in Section 4. The Company also expressly reserves the right, in its
sole discretion, (i) to terminate the Offer and not accept for payment any
Shares not theretofore accepted for payment by giving oral or written notice of
such termination to Capitol and making a public announcement thereof or,
subject to Rule 13e-4(f)(5) under the Exchange Act, which requires the Company
either to pay the consideration offered or to return the Shares tendered
promptly after the termination or withdrawal of the Offer, to postpone payment
for Shares, in each case, upon the occurrence of any of the conditions
specified in Section 6 and (ii) at any time or from time to time, to amend the
Offer in any respect. Amendments to the Offer may be effected by public
announcement. Without limiting the manner in which the Company may choose to
make public announcement of any termination or amendment, the Company shall
have no obligation (except as otherwise required by applicable law) to publish,
advertise or otherwise communicate any such public announcement, other than by
making a release to the PR Newswire, except in the case of an announcement of
an extension of the Offer, in which case the Company shall have no obligation
to publish, advertise or otherwise communicate such announcement other than by
issuing a notice of such extension by press release or other public
announcement, which notice shall be issued no later than 9:00 a.m., Rockville,
Maryland time, on the next business day after the previously scheduled
Expiration Date. Material changes to information previously provided to
holders of the Shares in this Offer or in documents furnished subsequent
thereto will be disseminated to holders of Shares in compliance with Rule 13e-
4(e)(2) promulgated under the Exchange Act.
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 extend the Offer to the extent required by Rules 13e-
4(d)(2) and 13e-4(e)(2) under the Exchange Act. The minimum period during
which the Offer must remain open following material changes in the terms of the
Offer or information concerning the Offer (other than a change in price or
change in percentage of securities sought) will depend on the facts and
circumstances, including the relative materiality of such terms or information.
In a published release, the Commission has stated that in its view, an Offer
should remain open for a minimum of five business days from the date that
notice of such a material change is first published, sent or given. Pursuant
to Rule 13e-4(f)(1), the Offer will continue or be extended for at least ten
business days from the time the Company publishes, sends or gives to holders of
Shares a notice that it will (a) increase or decrease the price it will pay for
Shares or (b) increase (except for an increase not exceeding 2% of the
outstanding Shares) or decrease the number of Shares it seeks.
16. FEES, EXPENSES AND OTHER ARRANGEMENTS.
The Company has retained Capitol as Information Agent in connection
with the Offer. The Information Agent may contact stockholders by mail,
telephone, facsimile transmission and personal interviews. Capitol has not
been retained to make solicitations or recommendations in connection with the
Offer.
Certain directors, officers, or employees of the Company may, from time to
time, contact stockholders to provide them with information regarding the
Offer. Such directors, officers or employees will not make any recommendation
to any stockholder as to whether to tender all or any Shares and will not
solicit the tender of any Shares. The Company will not compensate any
director, officer or employee for this service.
Other than Capitol, the Company will not pay any solicitation fees to any
broker, dealer, bank, trust company or other person for any Shares purchased in
connection with the Offer.
The Company will pay all stock transfer taxes, if any, payable on account
of the acquisition of the Shares by the Company pursuant to the Offer. See
Instruction 5 of the Letter of Transmittal.
Legg Mason has received a fee of $25,000 in connection with the delivery
of the Appraisal. In addition, the Company has agreed to pay Legg Mason's
reasonable out-of-pocket expenses up to $4,000 and to indemnify Legg Mason
against certain liabilities, directly or indirectly, in connection with,
arising out of, based upon, or in any way related to, its engagement by the
Company (including with respect to federal securities laws).
The Company will pay to Capitol a fee of $5,000 plus brokerage commissions
of 1.5% of the total purchase price of all Shares purchased by the Company in
connection with the Offer and reimburse Capitol for certain out-of-pocket
expenses. Capitol provides its services as a broker/dealer for all of the
Company's transactions in its securities.
17. MISCELLANEOUS.
The Company is subject to certain of the informational requirements
of the Exchange Act and in accordance therewith files reports, and other
information with the Commission relating to its business, financial condition
and other matters. The Company has also filed an Issuer Tender Offer Statement
on Schedule 13E-4 with the Commission, which includes certain additional
information relating to the Offer. Such reports, as well as such other
material, may be inspected and copies may be obtained at the Commission's
public reference facilities at 450 Fifth Street, N.W., Washington, D.C. 20549,
and should also be available for inspection and copying at the regional offices
of the Commission located at 7 World Trade Center, 13th Floor, New York, New
York 10048, and Suite 1400, Northwestern Atrium Center, 500 West Madison
Street, Chicago, Illinois 60661. The Commission maintains a Web site that
contains such reports, and other information regarding registrants that file
electronically with the Commission. The address of such site is
http://www.sec.gov. Copies of such material may be obtained by mail, upon
payment of the Commission's customary fees, from the Commission's Public
Reference Section at 450 Fifth Street, N.W., Washington, D.C. 20549. The
Company's Schedule 13E-4 may not be available at the Commission's regional
offices.
The Offer is being made to all holders of Shares. The Company is not
aware of any state where the making of the Offer is prohibited by
administrative or judicial action pursuant to a valid state statute. If the
Company becomes aware of any valid state statute prohibiting the making of the
Offer, the Company will make a good faith effort to comply with such statute.
If, after such good faith effort, the Company cannot comply with such statute,
the Offer will not be made to, nor will tenders be accepted from or on behalf
of, holders of Shares in such state. In those jurisdictions whose securities,
blue sky or other laws require the Offer to be made by a licensed broker or
dealer, the Offer shall be deemed to be made on behalf of the Company or one or
more registered brokers or dealers licensed under the laws of such
jurisdiction.
CTA INCORPORATED
November 26, 1997
<PAGE>
The Letter of Transmittal and any other required documents should be sent or
delivered by each holder of Shares to the Information Agent at its address set
forth below.
Questions and requests for assistance may be directed to the Information Agent
at the address and telephone number set forth below. Additional copies of this
Offer to Purchase, the Letter of Transmittal and other related materials may be
obtained from the Information Agent.
THE INFORMATION AGENT FOR THE OFFER IS:
CAPITOL SECURITIES MANAGEMENT INCORPORATED
8301 GREENSBORO DRIVE
SUITE 150
MCLEAN, VIRGINIA 22102
TEL. (800) 878-2010
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
CTA INCORPORATED
PURSUANT TO THE OFFER TO PURCHASE
DATED NOVEMBER 26, 1997
THE OFFER, THE PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT,
ROCKVILLE, MARYLAND TIME, ON WEDNESDAY, DECEMBER 31, 1997, UNLESS THE OFFER IS
EXTENDED.
TO: CAPITOL SECURITIES MANAGEMENT, INCORPORATED
BY MAIL, HAND OR OVERNIGHT DELIVERY: BY FACSIMILE TRANSMISSION
8301 Greensboro Drive, Suite 150 FACSIMILE: (703) 821-7586
McLean, VA 22102 CONFIRM BY TELEPHONE: (800) 878-2010
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TO A NUMBER OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO CAPITOL.
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL, INCLUDING THE
ACCOMPANYING INSTRUCTIONS, CAREFULLY BEFORE CHECKING ANY BOX
<TABLE>
DESCRIPTION OF SHARES TENDERED
(SEE INSTRUCTIONS 2 AND 3)
NAME(S) AND ADDRESS(ES) OF
REGISTERED HOLDER(S)
(PLEASE FILL IN EXACTLY AS
NAME(S) APPEAR(S) SHARES TENDERED
ON CERTIFICATE(S)) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
<CAPTION>
TOTAL NUMBER
OF SHARES NUMBER OF
CERTIFICATE REPRESENTED BY SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
<S> <C> <C> <C>
TOTAL SHARES
</TABLE>
Indicate in this box the order (by certificate number) in which Shares are
to be purchased in the event of proration. (Attach an
additional signed list if necessary.) See Instruction 10.
1{st} 2{nd} 3{rd}
4{th} 5{th}
* Need not be completed by stockholders tendering Shares by book-entry
transfer.
** Unless otherwise indicated, it will be assumed that all Shares
represented by each Share certificate delivered to Capitol
are being tendered hereby. See Instruction 3.
<PAGE>
ODD LOTS
(SEE INSTRUCTION 6)
This section is to be completed ONLY if Shares are being tendered by or on
behalf of a person who was, as of the close of business on November 24, 1997,
and who continues to be at the Expiration Date, the record or beneficial owner
of an aggregate of ninety-nine or fewer Shares and elects to have all of his or
her Shares purchased without proration.
The undersigned either (check one box):
( owned beneficially, as of the close of business on November 24, 1997, and
continues to own beneficially at the Expiration Date, an aggregate of
ninety-nine or fewer Shares, all of which are being tendered; or
( is a broker, dealer, commercial bank, trust company or other nominee that
(i) is tendering, for the beneficial owner thereof, Shares with respect to
which it is the record owner, and (ii) believes, based upon
representations made to it by such beneficial owner, that such beneficial
owner owned beneficially, as of the close of business on November 24,
1997, and continues to own beneficially at the Expiration Date, an
aggregate of ninety-nine or fewer Shares and is tendering all of his or
her Shares.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to CTA Incorporated, a Colorado
corporation (the "Company"), the above-described shares of its common stock,
par value $.01 per share (the "Shares"), at the price per Share of $10.10 net
to the seller in cash, (the "Purchase Price") upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated November 26, 1997 (the
"Offer to Purchase"), receipt of which is hereby acknowledged, and in this
Letter of Transmittal (which together constitute the "Offer").
Subject to, and effective upon, acceptance for payment of and payment for
the Shares tendered herewith in accordance with the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of any such extension or amendment), the undersigned
hereby sells, assigns and transfers to, or upon the order of, the Company all
right, title and interest in and to all the Shares that are being tendered
hereby or orders the registration of such Shares tendered by book-entry
transfer that are purchased pursuant to the Offer to or upon the order of the
Company and hereby irrevocably constitutes and appoints Capitol the true and
lawful agent and attorney-in-fact of the undersigned with respect to such
Shares, with full power of substitution (such power of attorney being deemed to
be an irrevocable power coupled with an interest), to:
(i) deliver certificates for such Shares, or transfer ownership of such
Shares on the account books maintained by Capitol, together, in any
such case, with all accompanying evidences of transfer and
authenticity, to or upon the order of the Company upon receipt by
Capitol, as the undersigned's agent, of the Purchase Price with
respect to such Shares;
(ii) present certificates for such Shares for cancellation and transfer
on the books of the Company; and
(iii) 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 represents and warrants to the Company that the
undersigned has full power and authority to tender, sell, assign and transfer
the Shares tendered hereby and that, when and to the extent the same are
accepted for payment by the Company, the Company will acquire good, marketable
and unencumbered title thereto, free and clear of all liens, restrictions,
charges, encumbrances, conditional sales agreements or other obligations
relating to the sale or transfer thereof, and the same will not be subject to
any adverse claims. The undersigned will, upon request, execute and deliver
any additional documents deemed by Capitol or the Company to be necessary or
desirable to complete the sale, assignment and transfer of the Shares.
The undersigned represents and warrants to the Company that the
undersigned has read and agrees to all of the terms of the Offer. All
authority herein conferred or agreed to be conferred shall not be affected by
and shall survive the death or incapacity of the undersigned, and any
obligation 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.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
Instructions will constitute the undersigned's representation and warranty to
the Company that (i) the undersigned has a net long position in the Shares
being tendered within the meaning of Rule 14e-4 promulgated under the
Securities Exchange Act of 1934, as amended, and (ii) the tender of such Shares
complies with Rule 14e-4. The Company's acceptance for payment of Shares
tendered pursuant to the Offer will constitute a binding agreement between the
undersigned and the Company upon the terms and subject to the conditions of the
Offer.
The names and addresses of the registered holders should be printed, if
they are not already printed above, exactly as they appear on the certificates
representing Shares tendered hereby, if applicable. The certificate numbers,
the number of Shares represented by such certificates and the number of Shares
that the undersigned wishes to tender should be indicated in the appropriate
boxes on this Letter of Transmittal.
The undersigned understands that upon the terms and subject to the
conditions of the Offer, the Company will pay $10.10 per Share for up to
200,000 Shares validly tendered and not withdrawn pursuant to the Offer, taking
into account the number of Shares so tendered. The undersigned understands
that all Shares validly tendered and not withdrawn will be purchased at the
Purchase Price upon the terms and subject to the conditions of the Offer,
including its proration provisions, and that the Company will return promptly
all other Shares, including Shares not purchased because of proration.
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, the Company may terminate or amend the Offer or may not
be required to purchase any of the Shares tendered hereby or may accept for
payment fewer than all of the Shares tendered hereby.
Please issue and mail the check for the Purchase Price of any Shares
purchased (less the amount of any federal income or backup withholding tax
required to be withheld), and/or return any Shares (and accompanying documents,
as appropriate) not tendered or not purchased, in the name(s) of the
undersigned and mail to the undersigned at the address shown below the
undersigned's signature.
<PAGE>
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL STOCKHOLDERS)
(Signature(s) of Owner(s))
Dated ,
1997
Name(s)
(Please Print)
Capacity (full title)
Address
(Include Zip Code)
Area Code and
Telephone No.
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
Share certificate(s) or on accounts of Capitol or on a security position
listing. If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a
fiduciary or representative capacity, please set forth full title and see
Instruction 4.)
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. DELIVERY OF LETTER OF TRANSMITTAL AND SHARE CERTIFICATES. To
tender Shares validly pursuant to the Offer the tendering stockholder must
deliver a properly completed and duly executed Letter of Transmittal or
photocopy thereof and any other documents required by the Letter of Transmittal
prior to the Expiration Date to Capitol at its address set forth on the front
page of this Letter of Transmittal (by mail, by hand or by facsimile). In the
event a stockholder holds Shares in certificate form, such stockholder should
deliver to Capitol the Letter of Transmittal along with the certificate(s) for
such Shares.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING SHARE CERTIFICATES, THE
LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS, IS AT THE ELECTION AND
RISK OF THE TENDERING STOCKHOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN
ACTUALLY RECEIVED BY CAPITOL. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH
RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative or contingent tenders will be accepted. By executing this
Letter of Transmittal (or facsimile thereof), the tendering stockholder waives
any right to receive any notice of the acceptance for payment of the Shares.
2. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
signed schedule and attached to this Letter of Transmittal.
3. PARTIAL TENDERS (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER BY BOOK-
ENTRY TRANSFER). If fewer than all the Shares represented by any certificate
delivered to Capitol are to be tendered, fill in the number of Shares that are
to be tendered in the box entitled "Number of Shares Tendered." In such case, a
new certificate for the Shares not purchased by the Company in the Offer will
be sent to the person(s) signing this Letter of Transmittal, as promptly as
practicable following the expiration or termination of the Offer. All Shares
represented by certificates delivered to Capitol will be deemed to have been
tendered unless otherwise indicated.
4. SIGNATURES ON LETTER OF TRANSMITTAL. If this Letter of Transmittal
is signed by the registered holder(s) of the Shares tendered hereby, the
signatures(s) must correspond with the name(s) as written on the face of the
certificates without alteration, enlargement or any change whatsoever.
If any of the Shares tendered hereby are held of record by two or more
persons, all such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in different names on
different certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal (or facsimiles thereof) as there are
different registrations of certificates.
If this Letter of Transmittal or any certificate or stock power is signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory
to the Company of the authority of such person so to act must be submitted.
5. STOCK TRANSFER TAXES. Except as provided in this Instruction, the
Company will pay or cause to be paid any stock transfer taxes with respect to
the sale and transfer of any Shares to it or its order pursuant to the Offer.
If, however, payment of the aggregate Purchase Price is to be made to, or
Shares not tendered or not purchased are to be registered in the name of, any
person other than the registered holder(s), or if tendered Shares 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(s), such other person or otherwise) 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. See Section 5 of the Offer to Purchase. Except as provided in this
Instruction 5, it will not be necessary to affix transfer tax stamps to the
certificates representing Shares tendered hereby.
6. ODD LOTS. As described in Section 1 of the Offer to Purchase, if
fewer than all Shares validly tendered and not withdrawn prior to the
Expiration Date are to be purchased, the Shares purchased first will consist of
all Shares validly tendered and not withdrawn by any stockholder who owned of
record or beneficially, as of the close of business on November 24, 1997, and
continues to own of record or beneficially at the Expiration Date, an aggregate
of ninety-nine or fewer Shares, and who validly tendered all such Shares
(partial tenders of Shares will not qualify for this preference) and completed
the box captioned "Odd Lots" in this Letter of Transmittal.
7. SUBSTITUTE FORM W-9. To prevent backup federal income tax
withholding equal to 31% of the gross payments payable pursuant to the Offer,
each stockholder who does not otherwise establish an exemption from backup
withholding must notify Capitol of such stockholder's correct taxpayer
identification number (or certify that such taxpayer is awaiting a taxpayer
identification number) and provide certain other information by completing,
under penalties of perjury, the Substitute Form W-9 included in the Letter of
Transmittal.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Any questions or
requests for assistance may be directed to Capitol at its telephone number and
address listed below. Requests for additional copies of the Offer to Purchase,
this Letter of Transmittal or other tender offer materials may likewise be
directed to Capitol, and such copies will be furnished promptly at the
Company's expense.
9. IRREGULARITIES. All questions as to the Purchase Price, the form
of documents and the validity, eligibility (including time of receipt) and
acceptance for payment of any tender of Shares will be determined by the
Company, in its sole discretion, which determination shall be final and binding
on all parties. The Company reserves the absolute right to reject any or all
tenders of Shares that it determines are not in proper form or the acceptance
for payment of which 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 of the conditions of the Offer and any defect or irregularity in the tender
of any particular Shares or by any particular stockholder, and the Company's
interpretation of the terms of the Offer (including these Instructions) will be
final and binding on all parties. No tender of Shares will be deemed to be
validly made until all defects or irregularities have been cured or waived.
Neither the Company, Capitol, nor any other person is or will be under any duty
to give notice of any defects or irregularities in tenders, and none of them
will incur any liability for failure to give any such notice.
10. ORDER OF PURCHASE IN EVENT OF PRORATION. As described in Section 1
of the Offer to Purchase, stockholders tendering Shares in certificate form may
designate the order of priority in which their Shares are to be purchased in
the event of proration. The order of purchase may have an effect on the United
States federal income tax consequences of any gain or loss on the Shares
purchased. See Sections 1 and 14 of the Offer to Purchase.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF) TOGETHER
WITH SHARE CERTIFICATES, OR CONFIRMATION OF BOOK-ENTRY TRANSFER TOGETHER WITH
THIS LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY
CAPITOL PRIOR TO THE EXPIRATION DATE. STOCKHOLDERS ARE ENCOURAGED TO RETURN A
COMPLETED SUBSTITUTE FORM W-9 WITH THEIR LETTER OF TRANSMITTAL.
<PAGE>
November 26, 1997
Dear Fellow Stockholder,
On August 15, 1997, the Company completed the sale of its Space and
Telecommunications Systems business and Mobile Information and Communications
Services business to Orbital Sciences Corporation. At that time, we informed
you that the Company may make a stockholder distribution of a portion of the
proceeds of such sale. We also have been exploring alternatives to maximize
stockholder value, and to provide stockholders with the opportunity to obtain
liquidity with respect to their shares in a tax-efficient manner. In
implementing this strategy, your Board of Directors has approved a self tender
to repurchase approximately $2.0 million of the Company's common stock. This
offer is explained in detail in the enclosed Offer to Purchase and Letter of
Transmittal. Please note that the Offer is scheduled to expire at midnight on
Wednesday, December 31, 1997.
If you wish to tender your shares, instructions on how to tender shares
are provided in the enclosed materials. I encourage you to read these
materials carefully before making any decision with respect to the Offer.
Neither the Company nor its Board of Directors makes any recommendation to any
stockholder whether to tender any or all shares.
We have retained Capitol Securities Management, Incorporated as our
Information Agent to help you respond to this tender offer. Please contact the
Information Agent at its toll free number, (800) 878-2010, if you have any
questions. Suzanne McKeown will be pleased to answer your questions and can
help you complete the correct documents.
Sincerely,
Dr. C.E. Velez
Chairman and CEO
