September 13, 2005
Via Facsimile ((215) 655-2971) and U.S. Mail
Carmen J. Romano, Esq.
Dechert LLP
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
RE: Emtec, Inc.
Schedules TO-C filed July 14 and August 8, 2005
Schedule TO-I filed September 7, 2005
File No. 005-44028
Dear Mr. Romano:
We have the following comments on the above-referenced
filing.
Schedules TO-C
1. On page 2 of each of your press releases filed under cover of
Schedule TO-C you referred to forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995.
Note that the safe harbor protections for forward-looking
statements contained in the federal securities laws do not apply to
statements made in connection with a tender offer. See Section
21E(b)(2)(C) of the Securities Exchange Act of 1934 and Regulation
M-A telephone interpretation M.2 available at www.sec.gov in the
July 2001 Supplement to the Division of Corporation Finance`s Manual
of Publicly Available Telephone Interpretations. While we note that
some of the information in the press releases does not relate to
this tender offer, this issuer tender offer is referenced and you have
chosen to file the press releases as offer materials under cover
of Schedule TO-C. Please confirm that you will avoid making
reference to that Act in all future communications in connection with
the tender offer.
Schedule TO-I
Exhibits
2. Please tell us your basis for not filing as exhibits the
agreements documenting the promissory notes described in pages 20-
21 of your offer document. Refer to Item 1016(d) of Regulation M-A.
Alternatively, file those agreements with your amended Schedule
TO.
Offer to Purchase
Cover Page
3. We note your statement in the third paragraph of the disclosure
under the "Important" caption that security holders must include
in their letter of transmittal a choice of price at which the shares
are tendered. Given that the offer price appears to be fixed at
$1.92, please explain this disclosure or delete it.
Summary Term Sheet - What will be the purchase price for the
Shares and what will be the form of payment?, page i
4. Explain your references to a delay in making payment, given the
prompt payment requirements of Rule 14e-1(c).
How was the $1.92 per share purchase price determined?, page iv
5. Given that this offer price is significantly below market,
understanding how the offer price was determined is important.
Expand this section to explain in greater detail how the offer price was
set. For example, what is the correlation between the $1.92 per
share offer price and the trading price of these shares on the OTC
Bulletin Board during the year leading up to Emtec`s merger with
Westwood? What discount was applied (if any) to reflect the projected
price were a large number of shares, such as the number you are offering
to purchase, to be purchased in the open market? When the offer price
was agreed upon as part of the merger negotiations, was it the
intent of the parties to make an offer at or below the then-current
market price of Emtec`s shares? Was there a discussion of revising the
offer price to reflect current market conditions at the time of the
offer?
Forward Looking Statements, page v
6. While you may qualify the forward looking statements you make
in the Offer to Purchase, your blanket disclaimer of any obligation
or intention to update such statements in the offer materials is
inconsistent with the requirements of Rule 14d-3 and should be
deleted.
Purpose of the tender offer, page 4
7. Clarify your reference to "they" in the second sentence of this
section.
8. Please revise this section to describe the purpose(s), rather
than just the effects, of your tender offer. For example, is one of
the purposes of the tender offer to allow Mr. Desai and Ms. Grabel to
increase their percentage ownership of the outstanding shares of
your company? In responding to this comment, please address the fact
that the tender offer was a requirement of the merger agreement, and
explain why it was considered an important part of that
transaction.
Withdrawal Rights, page 10
9. Refer to Rule 13e-4(f)((2)(ii). Revise to disclose that
tendering shareholders also have withdrawal rights if tendered shares
have not yet been accepted for payment forty business days after this
offered commenced (specify a date).
Conditions of the tender offer, page 12
10. Refer to the first paragraph in this section. There, you note
that if one of the following events occurs and you determine it is
not in the company`s best interests to proceed with the offer, the
offer will terminate. Note that when one of the listed offer
conditions is "triggered" and you decide to proceed with the offer
anyway, that decision constitutes a waiver of the relevant offer
condition. Depending on the materiality of the waived condition
and the number of days remaining in the offer, you may be required to
extend the offer and circulate new disclosure to security holders.
You may not rely on the language in the first sentence of this
section to tacitly waive a condition of the offer by failing to
assert it. Please confirm that your understanding in your
response letter.
Sources and amounts of funds, page 15
11. Please provide the disclosure required by Item 1007(d) of
Regulation M-A with respect to the credit facility from General
Electric Commercial Distribution Finance, including the stated and
effective interest rates, the term of the agreement, and any other
material terms or conditions. Also, describe briefly your plans
to repay the loan. Refer to Item 1007(d)(2) of Regulation M-A.
Certain information concerning Emtec, page 15
12. We note that Keith Grabel is one of you directors. Please
tell us, with a view toward additional revised disclosure, whether
Mr. Grabel is related to Margaret Grabel, one of your largest
shareholders. If so, please revise your disclosure throughout
your offer document to clarify it.
13. Please revise, on page 18, the address of our reference
section to state 100 F Street, N.E., Washington, D.C. 20549 (our new
address).
Interests of directors and executive officers, page 18
14. Please disclose who among your officers and former directors
have advised you that they will tender their securities and the number
of securities to be tendered. Refer to Item 1004(b) of Regulation
M-A.
15. For each of the promissory notes describe in pages 20-21,
please state the date of the note. For the note issued to Darr
Westwood LLC, please disclose the current interest rate.
United States Federal Income Tax Consequences, page 23
16. Revise this subsection to clarify that you describe all
material federal tax consequences of the transaction, not "certain"
of them.
17. Delete the reference to this discussion being for "general
information only" in the legend on page 26. Security holders are
entitled to rely upon the discussion.
Exhibit (a)(1)(G)
18. Please explain the reference to "TB Wood" in the last
paragraph of the first page of this press release. If this is a
person involved in soliciting tender offers, please provide the
required disclosure under Item 1009(a) of Regulation M-A in the offer
document.
Closing Information
Please amend your filing promptly to comply with our
comments. If you do not agree with a comment, please tell us why in
your response. If the information you provide in response to our
comments materially changes the information that you have already
provided to unit holders, disseminate the revised materials in a manner
reasonably calculated to inform them of the new information.
Depending upon your response to these comments, a supplement may
need to be sent to unit holders.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be certain that they have provided all information investors require
for an informed decision. Since the issuer is in possession of all
facts relating to its disclosure, it is responsible for the accuracy
and adequacy of the disclosures it has made.
In connection with responding to our comments, please
provide, in writing, a statement from the issuer acknowledging that:
* the issuer is responsible for the adequacy and accuracy of the
disclosure in the filings;
* staff comments or changes to disclosure in response to staff
comments in the filings reviewed by the staff do not foreclose the
Commission from taking any action with respect to the filing; and
* the issuer may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement has access to all information you provide to the staff
of the Division of Corporation Finance in our review of your filing
or in response to our comments on your filing.
Please direct any questions to me at (202) 551-3619 or, in
my absence, to Christina Chalk, Special Counsel, at (202) 551-3263.
You may also contact me via facsimile at (202) 772-9203. Please send
all correspondence to us at the following ZIP code: 20549-3628.
Sincerely,
Daniel F. Duchovny
Attorney-Advisor
Office of Mergers &
Acquisitions