EXHIBIT (A)(1)(i)
Internet Capital Group, Inc.
Offer to Purchase for Cash
Up to $143,000,000 Aggregate Principal Amount
of its Outstanding
5 1/2% Convertible Subordinated Notes due 2004
at a Purchase Price Not Greater than $295
Nor Less than $250
Per $1,000 Principal Amount,
Plus Accrued and Unpaid Interest Thereon
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THE OFFER, PRORATION AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON AUGUST 23, 2002, UNLESS THE OFFER IS EXTENDED.
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Internet Capital Group, Inc., a Delaware corporation ("Purchaser"), is
offering to purchase for cash, upon the terms and subject to the conditions set
forth in this Offer to Purchase and in the accompanying Letter of Transmittal
(which together constitute the "Offer"), up to $143,000,000 aggregate principal
amount of outstanding 5 1/2% Convertible Subordinated Notes due 2004 of
Purchaser (the "Notes") at a price not greater than $295 nor less than $250 per
$1,000 principal amount, plus accrued and unpaid interest thereon to, but not
including, the date of purchase at prices determined by the "Modified Dutch
Auction" procedure described below.
The lowest price in the price range listed above for the Notes is referred
to as the "Minimum Offer Price." The maximum aggregate principal amount listed
above for the Notes is referred to as the "Offer Amount." The Offer Amount is
about one-half of the aggregate outstanding principal amount of the Notes.
Under the "Modified Dutch Auction" procedure, Purchaser will accept Notes
validly tendered (and not withdrawn) in the Offer in the order of lowest to
highest tender prices specified or deemed to have been specified by tendering
holders within the price range for the Notes and will select the single lowest
price so specified (the "Purchase Price") that will enable the Purchaser to
purchase the Offer Amount (or, if less than the Offer Amount is validly
tendered (and not withdrawn), all Notes so tendered). Purchaser will pay the
same Purchase Price for all Notes validly tendered (and not withdrawn) at or
below the Purchase Price, upon the terms and subject to the conditions of the
Offer, including the proration terms of the Offer.
In the event that the amount of Notes validly tendered (and not withdrawn)
on or prior to the Expiration Date (as defined herein) at or below the Purchase
Price exceeds the Offer Amount, then Purchaser will accept for payment the
Notes that are validly tendered (and not withdrawn) at or below the Purchase
Price on a pro rata basis from among such tendered Notes. In all cases,
Purchaser will make appropriate adjustments to avoid purchases of Notes in a
principal amount other than an integral multiple of $1,000.
THE OFFER IS NOT CONDITIONED ON THE TENDER OF ANY MINIMUM PRINCIPAL AMOUNT
OF NOTES. THE OFFER IS, HOWEVER, SUBJECT TO OTHER CONDITIONS. SEE ITEM 9,
"CONDITIONS TO THE OFFER."
OUR BOARD OF DIRECTORS HAS APPROVED THE OFFER. HOWEVER, NEITHER WE NOR OUR
BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO YOU AS TO WHETHER YOU SHOULD
TENDER OR REFRAIN FROM TENDERING YOUR NOTES OR AS TO THE PRICE OR PRICES AT
WHICH YOU MAY CHOOSE TO TENDER YOUR NOTES. YOU MUST MAKE YOUR OWN DECISION AS
TO WHETHER TO TENDER YOUR NOTES AND, IF SO, THE AGGREGATE PRINCIPAL AMOUNT OF
NOTES TO TENDER AND THE PRICE OR PRICES AT WHICH YOUR NOTES SHOULD BE TENDERED.
The Dealer Manager for the Offer is:
[LOGO] Credit Suisse | First Boston
July 26, 2002
IMPORTANT
Any holder desiring to tender Notes before the Offer expires must either (a)
complete and sign the Letter of Transmittal or a facsimile copy thereof in
accordance with the instructions in the Letter of Transmittal, have such
holder's signature thereon guaranteed if required by Instruction 1 to the
Letter of Transmittal, mail or deliver the Letter of Transmittal or such
facsimile and any other required documents to J.P. Morgan Trust Company,
National Association (the "Depositary") and either deliver the certificates
evidencing such Notes to the Depositary along with the Letter of Transmittal or
facsimile or deliver such Notes pursuant to the procedure for book-entry
transfer set forth in Item 6, "Procedures for Tendering Notes" prior to the
expiration of the Offer or (b) request such holder's broker, dealer, commercial
bank, trust company or other nominee to effect the tender for such holder. A
holder having Notes registered in the name of a broker, dealer, commercial
bank, trust company or other nominee must contact such broker, dealer,
commercial bank, trust company or other nominee if such holder desires to
tender such Notes.
A holder who desires to tender Notes and whose certificates for such Notes
are not immediately available or who cannot comply in a timely manner with the
procedure for book-entry transfer described herein, or who cannot deliver all
required documents to the Depositary prior to the expiration of the Offer, may
tender such Notes by following the procedure for guaranteed delivery set forth
in Item 6, "Procedures for Tendering Notes."
Tendering holders who hold Notes registered in their own names and who
tender their Notes directly to the Depositary will not be obligated to pay
brokerage fees or commissions, the fees and expenses of the Dealer Manager, the
Information Agent or the Depositary or, subject to Instruction 8 of the Letter
of Transmittal, transfer taxes on the purchases of Notes in the Offer.
To tender your Notes properly, you must properly complete and duly execute
the related Letter of Transmittal, including the section relating to the price
at which you are tendering your Notes.
WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON OUR BEHALF
AS TO WHETHER YOU SHOULD TENDER OR REFRAIN FROM TENDERING YOUR NOTES IN THE
OFFER. WE HAVE NOT AUTHORIZED ANY PERSON TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED IN THIS
DOCUMENT OR IN THE RELATED LETTER OF TRANSMITTAL. IF GIVEN OR MADE, ANY
RECOMMENDATION OR ANY SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN MADE BY US OR THE DEALER MANAGER.
This Offer to Purchase does not constitute an offer to purchase in any
jurisdiction in which, or to or from any person to or from whom, it is unlawful
to make such offer under applicable securities or blue sky laws. The delivery
of this Offer to Purchase shall not under any circumstances create any
implication that the information contained herein is correct as of any time
subsequent to the date hereof or that there has been no change in the
information set forth herein or in the affairs of Purchaser or any subsidiaries
of Purchaser since the date hereof.
This Offer to Purchase and the accompanying Letter of Transmittal contain
important information which should be read before any decision is made with
respect to the Offer.
This Offer to Purchase has not been reviewed by any federal or state
securities commission or regulatory authority, nor has any such commission or
authority passed upon the accuracy or adequacy of this Offer to Purchase. Any
representation to the contrary is unlawful and may be a criminal offense.
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Questions and requests for assistance or for additional copies of this Offer
to Purchase and the Letter of Transmittal or any document incorporated herein
by reference may be directed to Credit Suisse First Boston Corporation, which
is acting as Dealer Manager in connection with the Offer (the "Dealer
Manager"), or to D. F. King & Co., Inc., which is acting as Information Agent
in connection with the Offer (the "Information Agent"), each at its address and
telephone numbers set forth on the back cover of this Offer to Purchase.
Requests for additional copies of this Offer to Purchase and the Letter of
Transmittal may also be directed to brokers, dealers, commercial banks or trust
companies.
ii
AVAILABLE INFORMATION
Purchaser is subject to the periodic reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Please call the Commission at
1-800-SEC-0330 for further information. Copies of such materials may also be
accessed electronically by means of the Commission's home page on the Internet
at "http://www.sec.gov."
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed by Purchaser with the Commission are
incorporated herein by reference and shall be deemed to be a part hereof:
. Annual Report of Purchaser on Form 10-K, as amended, for the fiscal year
ended December 31, 2001;
. Quarterly Report of Purchaser on Form 10-Q for the quarterly period
ended March 31, 2002; and
. Proxy statement of the Purchaser filed April 29, 2002.
All documents and reports filed by Purchaser with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof and
prior to the earlier of the Expiration Date of an Offer and the termination of
the Offer shall be deemed incorporated herein by reference and shall be deemed
to be a part hereof from the date of filing of such documents and reports. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein, or contained in this Offer to Purchase, shall be deemed to be
modified or superseded for purposes of this Offer to Purchase to the extent
that a statement contained herein or in any subsequently filed document or
report that also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified shall not be
deemed to constitute a part of this Offer to Purchase, except as so modified or
superseded.
You can obtain any document incorporated herein by reference by contacting
the Commission as described above under "Available Information" or Purchaser at
435 Devon Park Drive, 600 Building, Wayne, Pennsylvania 19087, telephone (610)
989-0111; Attention: Investor Relations. Purchaser will provide the documents
incorporated by reference, without charge, upon written or oral request. If
exhibits to the documents incorporated by reference are not themselves
specifically incorporated by reference in this Offer to Purchase, then those
exhibits will not be provided.
iii
FORWARD-LOOKING STATEMENTS
Forward-looking statements are made with respect to our financial condition
and results of operations and business in, and incorporated by reference in,
this document and are made from time to time by us through our senior
management. These forward-looking statements are based on our current
expectations and projections about future events but are subject to known and
unknown risks, uncertainties and assumptions about us and our partner companies
that may cause our actual results, levels of activity, performance, or
achievements to be materially different from any future results, levels of
activity, performance, or achievements expressed or implied by such
forward-looking statements.
Factors that could cause our actual results, levels of activity, performance
or achievements to differ materially from those anticipated in forward-looking
statements include, but are not limited to, factors discussed elsewhere in this
Offer to Purchase and include among other things:
. our ability to access the capital markets;
. our ability to effectively manage existing capital resources;
. our ability to retain key personnel;
. our ability to maximize value in connection with divestitures;
. development of an e-commerce market;
. our ability to identify trends in our markets and the markets of our
partner companies and to offer new solutions that address the changing
needs of these markets;
. our ability to successfully execute our business model and the ability
of our partner companies to successfully execute their business models;
. our partner companies' ability to compete successfully against direct
and indirect competitors;
. growth in demand for Internet products and services; and
. adoption of the Internet as a medium for conducting business.
In some cases, you can identify forward-looking statements by terminology
such as "may," "will," "should," "could," "would," "expect," "plan,"
"anticipate," "believe," "estimate," "continue" or the negative of these terms
or other similar expressions. All forward-looking statements attributable to us
or persons acting on our behalf are expressly qualified in their entirety by
the cautionary statements included in this document. We undertake no obligation
to publicly update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise. In light of these risks,
uncertainties and assumptions, the forward-looking events discussed in this
document might not occur.
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TABLE OF CONTENTS
Page
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SUMMARY TERM SHEET....................................... 1
THE OFFER................................................ 4
1. Purpose of the Offer................................ 4
2. Terms of the Offer.................................. 4
3. Certain Significant Considerations.................. 6
4. Certain Information Concerning Purchaser............ 7
5. Acceptance of Notes for Payment; Accrual of Interest 8
6. Procedures for Tendering Notes...................... 9
7. Withdrawal of Tenders............................... 12
8. Source and Amount of Funds.......................... 13
9. Conditions to the Offer............................. 13
10. Certain U.S. Federal Income Tax Considerations...... 15
11. The Dealer Manager, Depositary and Information Agent 17
12. Solicitation........................................ 18
13. Fees and Expenses................................... 18
14. Prior Purchases..................................... 18
15. Miscellaneous....................................... 18
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SUMMARY TERM SHEET
We are providing this summary term sheet for your convenience. It highlights
certain material information in this document, but you should realize that it
does not describe all of the details of the tender offer to the same extent
described in this document. The following summary is qualified in its entirety
by the more detailed information appearing elsewhere or incorporated by
reference in this Offer to Purchase and the Letter of Transmittal. We urge you
to read the entire document and the related Letter of Transmittal because they
contain the full details of the tender offer.
Who is offering
to purchase my Notes?..... Internet Capital Group, Inc., the issuer of your
5 1/2% Convertible Subordinated Notes due 2004,
is offering to purchase your Notes.
What principal amount
of the total issue of
Notes is being purchased?. We are offering to purchase for cash, at a price
determined by the "Modified Dutch Auction"
procedure described in this Offer to Purchase,
and within the purchase price range described
below, up to $143,000,000 aggregate principal
amount of our outstanding Notes. We call this
amount the "Offer Amount." This is about one-half
of the aggregate outstanding principal amount of
our Notes.
What will be the
purchase price for my
Notes?.................... We are offering to purchase our Notes for cash at
a price not greater than $295 nor less than $250
per $1,000 principal amount, plus accrued and
unpaid interest thereon to, but not including,
the date of purchase.
We will determine the exact price offered using a
"Modified Dutch Auction" procedure. As is
described further below, in this procedure you
are permitted to tender your Notes at any price
within the $250 to $295 range (in $5 increments).
When we refer to the "Purchase Price," we mean
the lowest price at which, based on the number of
Notes tendered and the prices specified by the
tendering holders, we can purchase the Offer
Amount. The Purchase Price will not be greater
than $295 nor less than $250 per $1,000 principal
amount. We will pay this Purchase Price in cash,
plus accrued and unpaid interest thereon to, but
not including, the date on which we purchase your
Notes, for all of our Notes we purchase under the
Offer, even if some of your Notes are tendered
below the Purchase Price.
How do I set my purchase
price?.................... In accordance with the instructions in the Letter
of Transmittal, you must properly indicate one of
two pricing methods. In the section of the Letter
of Transmittal captioned "Price at Which Notes
are Being Tendered," you must indicate the price
(in multiples of $5 per $1,000 principal amount)
at which you wish to tender your Notes, within
the range specified above. Alternatively, you may
elect not to specify a purchase price, in which
case you will be deemed to have specified the
lowest price in the range specified above. If the
purchase price that we pay for your Notes is
higher than the Minimum Offer Price you will
receive the higher purchase price for your Notes.
What if not enough Notes
are tendered?............. There is no minimum number of Notes that need to
be tendered as a condition to the Offer. If less
than the Offer Amount is validly tendered, all
Notes tendered will be accepted and the highest
Purchase Price will be paid to all tendering
holders.
What if more Notes are
tendered than the Offer
Amount?................... In the event that the amount of Notes validly
tendered prior to the Expiration Date (as defined
below) at or below the Purchase Price exceeds the
Offer Amount then we will accept for payment
those Notes that are validly tendered at or below
the Purchase Price on a pro rata basis from among
the tendered Notes. In all cases, we will make
appropriate adjustments to avoid purchases of
Notes in a principal amount other than an
integral multiple of $1,000.
When does this Offer
expire?................... The Offer expires at 12:00 midnight, New York
City time, on August 23, 2002, unless the Offer
is extended.
When will I get paid?..... Payments will be made promptly following the
Expiration Date for the Offer.
How will you pay for my
Notes?.................... The funds required to consummate the Offer are
from our available cash.
Are there any conditions
to the Offer?............. The Offer has no condition that a minimum
principal amount of Notes be tendered in the
Offer. Our obligation to accept for payment, and
to pay for, Notes validly tendered pursuant to
the Offer is conditioned upon the satisfaction of
the general conditions set forth in Item 9,
"Conditions to the Offer."
How do I tender my Notes?. If you own your Notes in "street name" (your
Notes are registered in the name of a broker,
dealer, commercial bank, trust company or other
nominee), then you must contact your broker,
dealer, commercial bank, trust company or other
nominee and direct them to tender your Notes. If
you hold your Notes in your name, you should
complete and sign the enclosed Letter of
Transmittal (or a manually signed facsimile
thereof) in accordance with the instructions set
forth in the letter. Be certain to have your
signature guaranteed if required by the
instructions to the Letter of Transmittal, and
send or deliver that manually signed Letter of
Transmittal (or such manually signed facsimile),
together with the certificates evidencing your
Notes being tendered and any other required
documents to the Depositary. If you hold your
Notes through The Depository Trust Company, you
will tender your Notes through DTC's Automated
Tender Offer Program (commonly known as "ATOP").
DTC participants that are accepting the Offer
must transmit their acceptance to DTC, which will
verify the acceptance and execute a book-entry
delivery to the Depositary's account at DTC. DTC
will then send an agent's message to the
2
Depositary for its acceptance. If you are
tendering by book-entry transfer to the
Depositary's account at DTC, you must execute the
tender through ATOP, for which the transaction
will be eligible.
What if I change my mind,
can I withdraw my tender
of Notes?................. Tenders of Notes may be withdrawn at any time
prior to the Expiration Date. In general you need
only notify the Depositary for the Offer of your
intention to withdraw in writing prior to the
Expiration Date. Some holders may have special
requirements, so please read the procedures
detailed later in this Offer to Purchase. No
consideration shall be payable in respect of
Notes so withdrawn. In addition, if we have not
paid for your Notes by September 23, 2002, you
may also withdraw your Notes.
What if I do not want to
tender my Notes?.......... Notes not tendered and purchased pursuant to the
Offer will remain outstanding. As a result of the
consummation of the Offer, the aggregate
principal amount of Notes that remain outstanding
may be noticeably reduced. This may adversely
affect the liquidity of and, consequently, the
market price for the Notes that remain
outstanding after consummation of the Offer. The
terms and conditions governing the Notes,
including the covenants and other protective
provisions contained in the indenture governing
the Notes, will remain unchanged. No amendment to
the indenture is being sought.
Has the Board of Directors
approved the Offer?....... Yes, our Board of Directors has approved the
Offer. However, neither we nor our Board of
Directors makes any recommendation to you as to
whether you should tender or refrain from
tendering your Notes or as to the price or prices
at which you may choose to tender your Notes.
Are there federal
tax implications if I
tender my Notes?.......... The receipt of cash for Notes pursuant to the
Offer will generally be a fully taxable
transaction for U.S. federal income tax purposes.
You will likely have to pay a tax on any gain
from the sale. You are urged to consult your own
tax advisors as to the specific tax consequences
to you of the Offer.
Who is the Dealer Manager? Credit Suisse First Boston Corporation is serving
as Dealer Manager in connection with the Offer.
Its address and telephone numbers are set forth
on the back cover of this Offer to Purchase.
Who is the Depositary?.... J.P. Morgan Trust Company, National Association
is serving as Depositary in connection with the
Offer. Its addresses and telephone numbers are
set forth on the back cover of this Offer to
Purchase.
Who is the Information
Agent?.................... D. F. King & Co., Inc. is serving as Information
Agent in connection with the Offer. Its address
and telephone numbers are set forth on the back
cover of this Offer to Purchase.
3
THE OFFER
1. Purpose of the Offer
Purchaser is making the Offer to reduce the principal amount of its
outstanding indebtedness and its ongoing debt service obligations. Any Notes
accepted for payment by Purchaser in the Offer will be cancelled upon the
surrender of such Notes to Purchaser. The funds required for Purchaser to
consummate the Offer are from its available cash.
2. Terms of the Offer
Offer and Purchase Price; Modified Dutch Auction Procedure. Upon the terms
and subject to the conditions of the Offer (including, if the Offer is amended
or extended, the terms and conditions of any amendment or extension), Purchaser
is offering to purchase for cash, up to $143,000,000 aggregate principal amount
of outstanding Notes at a price not greater than $295 nor less than $250 per
$1,000 principal amount, plus accrued and unpaid interest thereon to, but not
including, the date of purchase at prices determined by the "Modified Dutch
Auction" procedure described below.
The CUSIP and other clearing reference number(s) for the Notes are: CUSIP
No. 46059C AA4 and ISIN No. US46059C AA 45.
The lowest price in the price range listed above is referred to as the
"Minimum Offer Price" for the Notes. The highest price in the price range
listed above is referred to as the "Maximum Offer Price" for the Notes. The
maximum aggregate principal amount listed above for the Notes is referred to as
the "Offer Amount."
Under the "Modified Dutch Auction" procedure, Purchaser will accept Notes
validly tendered (and not withdrawn) in the Offer in the order of the lowest to
the highest tender prices specified or deemed to have been specified by
tendering holders within the price range for the Notes subject to the Offer.
Purchaser will select the Purchase Price, which is the single lowest price so
specified that will enable Purchaser to purchase the Offer Amount for the Notes
(or, if less than the Offer Amount is validly tendered (and not withdrawn), all
Notes so tendered). Purchaser will pay the same Purchase Price for all Notes
validly tendered (and not withdrawn) at or below the Purchase Price.
The Offer Amount is about one-half of the aggregate outstanding principal
amount of Notes. The aggregate principal amount of Notes outstanding as of July
19, 2002, was approximately $286 million.
Proration. In the event that the amount of Notes validly tendered (and not
withdrawn) on or prior to the Expiration Date at or below the Purchase Price
exceeds the Offer Amount then Purchaser will accept for payment such Notes that
are validly tendered (and not withdrawn) at or below the Purchase Price on a
pro rata basis from among such tendered Notes. In all cases, Purchaser will
make appropriate adjustments to avoid purchases of Notes in a principal amount
other than an integral multiple of $1,000.
Any principal amount of Notes tendered but not purchased pursuant to the
Offer, including Notes tendered pursuant to the Offer at prices greater than
the Purchase Price and Notes not purchased because of proration, will be
returned to the tendering holders at Purchaser's expense as promptly as
practicable following the earlier of the Expiration Date (as defined below) or
the date on which such Offer is terminated.
In the event that proration of tendered Notes is required, Purchaser will
determine the final proration factor as soon as practicable after the
Expiration Date. Although Purchaser does not expect to be able to announce the
final results of such proration until approximately three business days after
the Expiration Date, Purchaser will announce preliminary results of proration
by press release as soon as practicable after the Expiration Date. Holders may
obtain such preliminary proration information from either the Information Agent
or the Dealer
4
Manager. Rule 14e-1(c) under the Exchange Act requires that Purchaser pay the
consideration offered or return the Notes deposited pursuant to the Offer
promptly after the termination or withdrawal of such Offer.
Conditions. The Offer does not have as a condition that a minimum principal
amount of Notes be tendered in the Offer. Purchaser's obligation to accept for
payment, and to pay for, Notes validly tendered pursuant to the Offer is
conditioned upon the satisfaction of the conditions set forth in Item 9,
"Conditions to the Offer." If by the Expiration Date any or all of such
conditions have not been satisfied, Purchaser reserves the right (but will not
be obligated) to (a) extend or otherwise amend the Offer in any respect by
giving oral (confirmed in writing) or written notice of such amendment to the
Depositary and making public disclosure of such extension or amendment to the
extent required by law or (b) waive any or all of the conditions and, subject
to compliance with applicable rules and regulations of the Commission, purchase
Notes validly tendered pursuant to that Offer.
Expiration of the Offer. The Offer will expire at 12:00 midnight, New York
City time, on August 23 , 2002, unless extended by Purchaser (such time and
date with respect to the Offer, as it may be extended, the "Expiration Date").
Amendment; Extension; Waiver; Termination. Purchaser expressly reserves the
right, in its sole discretion, at any time and from time to time, and
regardless of whether or not any of the events set forth in Item 9, "Conditions
to the Offer," shall have occurred or shall have been determined by Purchaser
to have occurred, to extend the period of time in which the Offer is open and
thereby delay the acceptance of any Notes by giving oral, written or electronic
notice of such extension to the holders of the Notes or by making a public
announcement of such extension. Purchaser also expressly reserves the right, in
its reasonable judgment, prior to the Expiration Date to terminate or amend the
Offer or to postpone its acceptance of any Notes tendered upon the occurrence
of any of the conditions specified in Item 9, "Conditions to the Offer," by
giving oral, written or electronic notice of such termination, amendment or
postponement to the holders of the Notes or by making a public announcement of
such termination, amendment or postponement.
In addition to the rights reserved above and subject to compliance with
applicable law, Purchaser further reserves the right, in its sole discretion,
and regardless of whether any event set forth in Item 9, "Conditions to the
Offer," shall have occurred or shall have been determined by Purchaser to have
occurred, to amend the Offer in any respect. Amendments to the Offer may be
made at any time and from time to time by public announcement of the amendment.
There can be no assurance that Purchaser will exercise its right to
terminate or amend the Offer. Irrespective of any amendment to the Offer, all
Notes previously tendered pursuant to the Offer and not accepted for purchase
or withdrawn will remain subject to the Offer and may be accepted thereafter
for payment by Purchaser.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
Purchaser will disseminate additional materials relating to the Offer and
extend the Offer to the extent required by law. In addition, Purchaser may, if
it deems appropriate, extend the Offer for any other reason. In addition, if
the consideration to be paid in the Offer is increased or decreased or the
principal amount of Notes subject to the Offer is increased or decreased, the
Offer will remain open at least 10 business days from the date Purchaser first
gives notice of such increase or decrease to holders of Notes subject to the
Offer, by press release or otherwise.
If for any reason the acceptance for payment of, or (whether before or after
any Notes have been accepted for payment pursuant to the Offer), the payment
for, Notes subject to the Offer is delayed or if Purchaser is unable to accept
for payment or pay for Notes pursuant to the Offer, then, without prejudice to
Purchaser's rights under the Offer, tendered Notes may be retained by the
Depositary on behalf of Purchaser and may not be withdrawn (subject to Rule
14e-1(c) under the Exchange Act, which requires that an offeror pay the
consideration offered or return the securities deposited by or on behalf of the
investor promptly after the termination or withdrawal of a tender offer).
5
Any extension, amendment or termination of the Offer by Purchaser will be
followed as promptly as practicable by announcement thereof. Without limiting
the manner in which Purchaser may choose to make such announcement, Purchaser
will not, unless otherwise required by law, have any obligation to advertise or
otherwise communicate any such announcement other than by making a release to
the Dow Jones News Service or such other means of announcement as Purchaser
deems appropriate.
Rule 13e-4 promulgated under the Exchange Act generally prohibits Purchaser
and its affiliates from purchasing Notes other than pursuant to the Offer,
until at least ten business days after the expiration or termination of the
Offer.
In addition to being limited by Rule 14e-1(c) under the Exchange Act,
Purchaser's reservation of the right to delay payment for Notes which it has
accepted for payment pursuant to the Offer, is limited by Rule 13e-4(f)(5)
promulgated under the Exchange Act, which requires that an offeror pay the
consideration offered or return the securities tendered pursuant to a tender
offer promptly after termination or withdrawal of that tender offer.
If Purchaser materially changes the terms of the Offer or the information
concerning the Offer, or if it waives a material condition to the Offer,
Purchaser will disseminate additional information and extend the Offer to the
extent required by Rules 13e-4(d)(2) and 13e-4(e)(3) promulgated under the
Exchange Act.
Pursuant to Rule 13e-4 under the Exchange Act, Purchaser has filed with the
Commission a Tender Offer Statement on Schedule TO (the "Schedule TO") which
contains additional information with respect to the Offer. The Schedule TO,
including the exhibits and any amendments thereto, may be examined, and copies
may be obtained, at the same places and in the same manner as set forth under
"Incorporation of Documents by Reference" in this Offer to Purchase.
3. Certain Significant Considerations
The following considerations, in addition to the other information described
elsewhere herein or incorporated by reference herein, should be carefully
considered by each holder of Notes before deciding whether to tender Notes
pursuant to the Offer.
Position of Purchaser Concerning the Offer. Neither of Purchaser nor its
Board of Directors makes any recommendation to any holder whether to tender or
refrain from tendering any or all of such holder's Notes and neither of them
has authorized any person to make any such recommendation. Holders are urged to
evaluate carefully all information in the Offer, consult their own investment
and tax advisors and make their own decisions whether to tender Notes, and, if
they decide to tender Notes, the principal amount of Notes to tender and the
price at which to tender.
Substantial Existing Indebtedness. Purchaser has substantial existing debt.
At March 31, 2002, the outstanding amount of indebtedness (excluding trade
payables, accrued liabilities and taxes) of Purchaser and its subsidiaries was
approximately $473.2 million. Since that date, as described in Item 14, "Prior
Purchases," Purchaser has repurchased approximately $160.0 million principal
amount of Notes, together with accrued and unpaid interest thereon.
Purchaser will continue to have substantial indebtedness after the Offer is
consummated. The amount of Purchaser's indebtedness and restrictions contained
in the indenture governing the Notes may limit Purchaser's ability to effect
future financings in the event Purchaser should deem it necessary or desirable
to raise additional capital. Furthermore, there can be no assurance that
Purchaser will have sufficient earnings, access to liquidity or cash flow in
the future to meet its debt service obligations under the Notes that remain
outstanding following consummation of the Offer.
For additional information about Purchaser's indebtedness, capitalization
and financial condition, see Purchaser's Annual Report on Form 10-K, as
amended, for the fiscal year ended December 31, 2001, the Quarterly Report on
Form 10-Q for the quarterly period ended March 31, 2002 and the
6
other information incorporated by reference herein. See "Available Information"
and "Incorporation of Documents by Reference."
Cancellation of Indebtedness Income to Purchaser. The purchase of Notes
pursuant to the Offer will result in cancellation of indebtedness income for
U.S. federal income tax purposes to Purchaser to the extent that the cash paid
is less than the adjusted issue price (as defined for U.S. federal income tax
purposes) of the Notes that are purchased. Purchaser believes that any such
cancellation of indebtedness income will be largely offset by net operating
loss deductions available to Purchaser.
Limited Trading Market. The Notes are not listed on any national or
regional securities exchange. To the knowledge of Purchaser, the Notes are
traded infrequently in transactions arranged through brokers, and reliable
market quotations for the Notes are not available. To the extent that Notes are
tendered and accepted for purchase pursuant to the Offer, the trading market
for Notes that remain outstanding is likely to be even more limited. To the
extent a market continues to exist for such Notes, the Notes may trade at a
discount compared to present trading prices depending on prevailing interest
rates, the market for debt instruments with similar credit features, the
performance of Purchaser and its other subsidiaries and other factors. The
extent of the market for the Notes and the availability of market quotations
will depend upon the number of holders of the Notes remaining at such time, the
interest in maintaining a market in the Notes on the part of securities firms
and other factors. There is no assurance that an active market in the Notes
will exist and no assurance as to the prices at which the Notes may trade after
the consummation of the Offer.
Effects of the Offer on the Market for Notes. A debt security with a
smaller outstanding principal amount available for trading (a smaller "float")
may command a lower price than would a comparable debt security with a larger
float. Therefore, the market price for Notes that are not tendered and accepted
for purchase pursuant to the Offer may be affected adversely to the extent that
the principal amount of Notes purchased pursuant to the Offer reduces the
float. A reduced float may also increase the volatility of the trading prices
of Notes that are not purchased in the Offer.
Conditions to the Consummation of the Offer and Related Risks. Each of the
conditions to the Offer is described in more detail in Item 9, "Conditions to
the Offer." There can be no assurance that such conditions will be met or that,
in the event the Offer is not consummated, the market value and liquidity of
the Notes will not be materially adversely affected.
Treatment of Notes Not Tendered in the Offer. Notes not tendered and
purchased in the Offer will remain outstanding. The terms and conditions
governing the Notes, including the covenants and other protective provisions
contained in the indenture governing the Notes, will remain unchanged. No
amendment to the indenture is being sought. From time to time in the future,
Purchaser or Purchaser's subsidiaries may acquire Notes that are not tendered
in the Offer through open market purchases, privately negotiated transactions,
tender offers, exchange offers or otherwise, upon such terms and at such prices
as they may determine, which may be more or less than the price to be paid
pursuant to the Offer and could be for cash or other consideration.
Alternatively, Purchaser may, subject to certain conditions, redeem any or all
of the Notes not purchased pursuant to the Offer at any time that it is
permitted to do so under the indenture governing the Notes. There can be no
assurance as to which, if any, of these alternatives (or combinations thereof)
Purchaser or any of Purchaser's subsidiaries will choose to pursue in the
future.
4. Certain Information Concerning Purchaser
Purchaser was formed on March 4, 1996. Purchaser is an Internet company
actively engaged in business-to-business, or B2B, e-commerce through a network
of companies. Purchaser defines e-commerce as conducting or facilitating
business transactions over the Internet. As of March 31, 2002, Purchaser owned
interests in 45 companies engaged in e-commerce, which Purchaser calls its
"partner companies." Although Purchaser refers to the companies in which it has
acquired an equity or debt interest as its "partner companies" and that it has a
7
"partnership" with these companies, it does not act as an agent or legal
representative for any of its partner companies, it does not have the power or
authority to legally bind any of its partner companies and it does not have the
types of liabilities for its partner companies that a general partner of a
partnership would have. Purchaser's goal is to become a leader in B2B
e-commerce by owning significant interests in leading B2B companies that
deliver the savings and efficiencies of the Internet to businesses of all sizes
across all industries.
The principal executive offices of Purchaser currently are located at 435
Devon Park Drive, 600 Building, Wayne, Pennsylvania 19087 (telephone number:
(610) 989-0111).
5. Acceptance of Notes for Payment; Accrual of Interest
Acceptance of Notes for Payment. Upon the terms and subject to the
conditions of the Offer (including if such Offer is extended or amended, the
terms and conditions of any such extension or amendment) and applicable law,
Purchaser will accept for payment, and thereby purchase, all Notes validly
tendered (and not withdrawn) at or below the Purchase Price pursuant to the
Offer, on or prior to the Expiration Date, subject to proration.
In the event that the amount of Notes validly tendered (and not withdrawn)
on or prior to the Expiration Date at or below the Purchase Price exceeds the
Offer Amount then Purchaser will accept for payment such Notes that are validly
tendered (and not withdrawn) at or below the Purchase Price on a pro rata basis
from among such tendered Notes. In all cases, Purchaser will make appropriate
adjustments to avoid purchases of Notes in a principal amount other than an
integral multiple of $1,000.
Purchaser will be deemed to have accepted for payment pursuant to the Offer
and thereby have purchased, validly tendered Notes that are subject to the
Offer, if, as and when Purchaser gives oral (confirmed in writing) or written
notice to the Depositary of Purchaser's acceptance of such Notes for purchase
pursuant to the Offer. In all cases, payment for Notes purchased pursuant to
the Offer will be made by deposit of the Purchase Price for the tendered Notes
with the Depositary, which will act as agent for tendering holders for the
purpose of receiving payments from Purchaser and transmitting such payments to
such holders.
Purchaser expressly reserves the right, in its sole discretion and subject
to Rule 14e-1(c) under the Exchange Act, to delay acceptance for payment of, or
payment for, Notes in order to comply, in whole or in part, with any applicable
law. See Item 9, "Conditions to the Offer." In all cases, payment by the
Depositary to holders of consideration for Notes accepted for purchase pursuant
to an Offer will be made only after timely receipt by the Depositary of (a)
certificates representing such Notes or timely confirmation of a book-entry
transfer of such Notes into the Depositary's account at DTC pursuant to the
procedures set forth under Item 6, "Procedures for Tendering Notes," (b) a
properly completed and duly executed Letter of Transmittal (or a manually
signed facsimile thereof) and (c) any other documents required by the Letter of
Transmittal.
If the Offer is terminated or withdrawn, or the Notes subject to the Offer
are not accepted for payment, no consideration will be paid or payable to
holders of those Notes. If any tendered Notes are not purchased pursuant to the
Offer for any reason or certificates are submitted evidencing more Notes than
are tendered in the Offer, the Notes not purchased will be returned, without
expense, to the tendering holder (or, in the case of Notes tendered by
book-entry transfer, those Notes will be credited to the account maintained at
DTC from which those Notes were delivered) unless otherwise requested by such
holder under "Special Delivery Instructions" in the Letter of Transmittal,
promptly following the Expiration Date or termination of the Offer.
Purchaser reserves the right to transfer or assign, in whole at any time or
in part from time to time, to one or more of its affiliates, the right to
purchase Notes tendered pursuant to the Offer, but any such transfer or
assignment will not relieve Purchaser of its obligations under the Offer or
prejudice the rights of tendering holders to receive consideration pursuant to
the Offer.
8
Tendering holders who hold Notes registered in their own names and who
tender their Notes directly to the Depositary will not be obligated to pay
brokerage fees or commissions or, except as set forth in the Letter of
Transmittal, transfer taxes on the purchase of Notes by Purchaser pursuant to
the Offer. Purchaser will pay all fees and expenses of the Dealer Manager, the
Depositary and the Information Agent in connection with the Offer.
Accrual of Interest. Holders who tender Notes, whose Notes are accepted for
payment pursuant to the Offer, will receive a cash payment of accrued but
unpaid interest on such Notes to, but not including, the date of purchase.
Under no circumstances will any additional interest be payable because of
any delay in the transmission of funds to the holders of purchased Notes or
otherwise.
6. Procedures for Tendering Notes
The method of delivery of Notes and the Letter of Transmittal, any required
signature guarantees and all other required documents, including delivery
through The Depository Trust Company ("DTC") and any acceptance of an Agent's
Message (as defined below) transmitted through DTC's Automated Tender Offer
Program ("ATOP"), is at the election and risk of the holder tendering Notes,
delivering the Letter of Transmittal and, except as otherwise provided in the
Letter of Transmittal, delivery will be deemed made only when actually received
by the Depositary, which must be before 12:00 midnight, New York City time, on
the Expiration Date. If delivery is by mail, it is suggested that the holder
use properly insured, registered mail with return receipt requested, and that
the mailing be made sufficiently in advance of the applicable Expiration Date
to permit delivery to the Depositary on or prior to such date. Notes may be
tendered and will be accepted for purchase only in denominations of $1,000
principal amount and integral multiples thereof.
Specification of Purchase Price. In accordance with the instructions
contained in the Letter of Transmittal, holders desiring to tender their Notes
in the Offer must properly indicate either (a) in the section therein captioned
"Price at Which Notes are Being Tendered," the price (in multiples of $5 per
$1,000 principal amount) at which Notes are being tendered, within the range
specified above for such Notes, or (b) not specify a price, in which case the
holder will be deemed to have specified the Minimum Offer Price in respect of
such Notes being tendered and to accept the Purchase Price determined by
Purchaser in accordance with the terms of the Offer. In accordance with the
instructions contained in the Letter of Transmittal, a holder may tender
different portions of the principal amount of its Notes at different prices;
however, a holder may not specify prices for an aggregate principal amount of
Notes in excess of the aggregate principal amount of Notes held by such holder.
The same Notes cannot be tendered at more than one price. To tender Notes
properly, only one price within the price range (or no price) must be specified
in the appropriate section in the Letter of Transmittal.
Holders must clearly specify in the Letter of Transmittal the price within
the price range at which the Notes are being tendered (or, alternatively, not
specify a price, in which case the holder will be deemed to have specified the
Minimum Offer Price in respect of such Notes being tendered and to accept the
Purchase Price determined by Purchaser with respect to the terms of the Offer).
Tendering Without Specifying a Price. As described above, a holder may
tender Notes in the Offer without specifying a tender price in respect of any
or all of such Notes. Tenders of Notes made in this manner will be accepted by
Purchaser before any other tenders of Notes in the Offer that specify a tender
price above the Minimum Offer Price. Holders who have tendered Notes in the
Offer without specifying an offer price and whose Notes are accepted will
receive the Purchase Price, subject to any proration.
Tender of Notes. The tender by a holder of Notes pursuant to the Offer (and
subsequent acceptance of such tender by Purchaser) pursuant to one of the
procedures set forth below will constitute a binding agreement between such
holder and Purchaser with respect to the Offer in accordance with the terms and
subject to the conditions set forth herein and in the Letter of Transmittal.
9
Tender of Notes Held in Physical Form. To tender Notes held in physical
form properly pursuant to the Offer, a properly completed Letter of Transmittal
(or a manually signed facsimile thereof) duly executed by the holder thereof,
and any other documents required by the Letter of Transmittal, must be received
by the Depositary at its address set forth on the back cover of this Offer to
Purchase and certificates representing such Notes must be received by the
Depositary at such address on or prior to 12:00 midnight, New York City time,
on the Expiration Date. Letters of Transmittal and Notes should be sent only
to the Depositary and should not be sent to Purchaser, the Information Agent or
the Dealer Manager.
If the Notes are registered in the name of a person other than the signer of
the Letter of Transmittal, then, in order to tender such Notes pursuant to the
Offer, the Notes must be endorsed or accompanied by an appropriate written
instrument or instruments of transfer signed exactly as the name(s) of such
holder(s) appear(s) on the Notes, with the signature(s) on the Notes or
instruments of transfer guaranteed as provided below. If these procedures are
followed by a beneficial owner tendering Notes on or prior to the Expiration
Date, the holder or holders of such Notes must sign a valid proxy pursuant to
the Letter of Transmittal.
Tender of Notes Held Through a Custodian. Any beneficial owner whose Notes
are registered in the name of a broker, dealer, commercial bank, trust company
or other nominee and who wishes to tender Notes pursuant to the Offer and
deliver the Letter of Transmittal should contact such registered holder
promptly and instruct such holder to tender Notes and deliver the Letter of
Transmittal on such beneficial owner's behalf. Instructions to the Letter of
Transmittal are enclosed in the materials provided along with this Offer to
Purchase which may be used by a beneficial owner in this process to instruct
the registered holder to tender Notes. If such beneficial owner wishes to
tender such Notes himself, such beneficial owner must, prior to completing and
executing the Letter of Transmittal and delivering such Notes, either make
appropriate arrangements to register ownership of the Notes in such beneficial
owner's name or follow the procedures described in the immediately preceding
paragraph. The transfer of record ownership may take considerable time.
Tender of Notes Held Through DTC. To tender effectively Notes that are held
through DTC, DTC participants should either (a) properly complete and duly
execute the Letter of Transmittal (or a manually signed facsimile thereof),
together with any other documents required by the Letter of Transmittal, and
mail or deliver the Letter of Transmittal and such other documents to the
Depositary, or (b) electronically transmit their acceptance through ATOP (and
thereby tender Notes), for which the transaction will be eligible. Upon receipt
of such holder's acceptance through ATOP, DTC will credit the Depositary's
account and verify the acceptance and send an Agent's Message (as defined
herein) to the Depositary for its acceptance. Delivery of tendered Notes must
be made to the Depositary pursuant to the book-entry delivery procedures set
forth below, or the tendering DTC participant must comply with the guaranteed
delivery procedures set forth below.
Except as provided below, unless the Notes being tendered are deposited with
the Depositary on or prior to the Expiration Date (accompanied by a properly
completed and duly executed Letter of Transmittal or a properly transmitted
Agent's Message), Purchaser may, at its option, reject such tender. Payment for
the Notes will be made only against deposit of the tendered Notes and delivery
of any other required documents.
Book-Entry Delivery Procedures. The Depositary will establish accounts with
respect to the series of Notes at DTC for purposes of the Offer within three
business days after the date of this Offer to Purchase. Any financial
institution that is a participant in DTC may make book-entry delivery of the
Notes by causing DTC to transfer such Notes into the Depositary's account in
accordance with DTC's procedures for such transfer.
Although delivery of Notes may be effected pursuant to the Offer through
book-entry transfer into the Depositary's account at DTC, an Agent's Message in
connection with a book-entry transfer, and any other required documents, must,
in any case, be transmitted to and received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase on or prior to
the Expiration Date in connection with the tender of such Notes. Delivery of
documents to DTC does not constitute delivery to the Depositary.
10
The confirmation of a book-entry transfer into the Depositary's account at
DTC as described above is referred to herein as a "Book-Entry Confirmation."
The term "Agent's Message" means a message transmitted by DTC to, and received
by, the Depositary and forming a part of the Book-Entry Confirmation, which
states that DTC has received an express acknowledgment from each participant in
DTC tendering the Notes and that such participants have received the Letter of
Transmittal and agree to be bound by the terms of the Letter of Transmittal and
Purchaser may enforce such agreement against such participants.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal if the Notes tendered are tendered and delivered (a) by a
registered holder of Notes (or by a participant in DTC whose name appears on a
security position listing as the owner of such Notes) who has not completed any
of the boxes entitled "Special Payment Instructions" or "Special Delivery
Instructions" on the Letter of Transmittal, or (b) for the account of a member
firm of a registered national securities exchange, a member of the NASD or a
commercial bank or trust company having an office or correspondent in the
United States (each of the foregoing being referred to as an "Eligible
Institution"). If the Notes are registered in the name of a person other than
the signer of the Letter of Transmittal or if Notes not accepted for payment or
not tendered are to be returned to a person other than the registered holder,
then the signature on the Letter of Transmittal accompanying the tendered Notes
must be guaranteed by a recognized participant in the Securities Transfer
Agents Medallion Program (a "Medallion Signature Guarantor"). See the
Instructions to the Letter of Transmittal.
Mutilated, Lost, Stolen or Destroyed Certificates. If a holder desires to
tender Notes, but the certificates evidencing such Notes have been mutilated,
lost, stolen or destroyed, such holder should contact J.P. Morgan Trust
Company, National Association at 1650 Market Street, Suite 5210, Philadelphia,
PA 19103, by telephone at (215) 988-1319 or by facsimile at (215) 972-1685 to
receive information about the procedures for obtaining replacement certificates
for Notes.
Guaranteed Delivery. If a holder desires to tender Notes pursuant to the
Offer and (a) certificates representing such Notes are not immediately
available, (b) time will not permit such holder's Letter of Transmittal,
certificates representing such Notes and all other required documents to reach
the Depositary on or prior to the Expiration Date, or (c) the procedures for
book-entry transfer (including delivery of an Agent's Message) cannot be
completed on or prior to the Expiration Date, such holder may nevertheless
tender such Notes with the effect that such tender will be deemed to have been
received on or prior to the Expiration Date if all the following conditions are
satisfied: (i) the tender is made by or through an Eligible Institution; (ii) a
properly completed and duly executed Notice of Guaranteed Delivery or an
Agent's Message with respect to guaranteed delivery that is accepted by the
Purchaser is received by the Depositary on or prior to the Expiration Date as
provided below; and (iii) the certificates for the tendered Notes, in proper
form for transfer (or a Book-Entry Confirmation of the transfer of such Notes
into the Depositary's account at DTC as described above), together with a
Letter of Transmittal (or manually signed facsimile thereof) properly completed
and duly executed, with any signature guarantees and any other documents
required by the Letter of Transmittal or a properly transmitted Agent's
Message, are received by the Depositary within three business days after the
date of execution of the Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be sent by hand delivery, facsimile
transmission or mail to the Depositary and must include a guarantee by an
Eligible Institution in the form set forth in the Notice of Guaranteed Delivery.
Effect of the Letter of Transmittal. Subject to and effective upon the
acceptance for purchase of and payment for Notes tendered thereby, by executing
and delivering a Letter of Transmittal, a tendering holder of Notes (a)
irrevocably sells, assigns and transfers to, or upon the order of, Purchaser
all right, title and interest in and to all the Notes tendered thereby and (b)
irrevocably constitutes and appoints the Depositary the true and lawful agent
and attorney-in-fact of such holder (with full knowledge that the Depositary
also acts as agent of Purchaser) with respect to any such tendered Notes, with
full power of substitution and resubstitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest) to (i) deliver
certificates
11
representing such Notes, or transfer ownership of such Notes, on the account
books maintained by DTC, together, in any such case, with all accompanying
evidences of transfer and authenticity, to or upon the order of Purchaser, (ii)
present such Notes for transfer on the security register for the Notes and
(iii) receive all benefits or otherwise exercise all rights of beneficial
ownership of such Notes (except that the Depositary will have the rights to, or
control over, funds from Purchaser, except as agent of Purchaser, for the
Purchase Price for any Notes tendered pursuant to the Offer that are purchased
by Purchaser), all in accordance with the terms of the Offer.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tendered Notes pursuant to any of the procedures described above and the form
and validity (including time of receipt of notices of withdrawal) of all
documents will be determined by Purchaser, in its sole discretion, which
determination will be final and binding. Purchaser reserves the absolute right
to reject any or all tenders of any Notes determined by it not to be in proper
form or if the acceptance of or payment for such Notes may, in the opinion of
Purchaser's counsel, be unlawful. Purchaser also reserves the absolute right,
in its sole discretion, to waive or amend any condition to the Offer that it is
legally permitted to waive or amend and waive any defect or irregularity in any
tender with respect to Notes of any particular holder, whether or not similar
defects or irregularities are waived in the case of other holders.
Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the instructions thereto) will be
final and binding.
Compliance with "Short Tendering" Rule. It is a violation of Rule 14e-4
(promulgated under the Exchange Act), for a person, directly or indirectly, to
tender Notes for his own account unless the person so tendering (a) has a net
long position equal to or greater than the aggregate principal amount of the
Notes being tendered and (b) will cause such Notes 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.
A tender of Notes in the Offer under any of the procedures described above
will constitute a binding agreement between the tendering holder and Purchaser
with respect to the Offer upon the terms and subject to the conditions of the
Offer, including the tendering holder's acceptance of the terms and conditions
of the Offer, as well as the tendering holder's representation and warranty
that (a) such holder has a net long position in the Notes being tendered
pursuant to the Offer within the meaning of Rule 14e-4 under the Exchange Act
and (b) the tender of such Notes complies with Rule 14e-4.
No tender will be deemed to have been validly made until all defects or
irregularities in such tender have been cured or waived. None of Purchaser, the
Dealer Manager, the Depositary, the Information Agent or any other person will
be under any duty to give notification of any defects or irregularities in any
tender of any Notes or notice of withdrawal or will incur any liability for
failure to give any such notification.
PLEASE SEND ALL MATERIALS TO THE DEPOSITARY AND NOT TO PURCHASER, INFORMATION
AGENT, OR THE DEALER MANAGER.
7. Withdrawal of Tenders
A tender of Notes pursuant to the Offer may be withdrawn at any time prior
to the Expiration Date and, unless already accepted for payment by Purchaser
pursuant to the Offer, may be withdrawn at any time after 12:00 midnight, New
York City time, on September 23, 2002, but no consideration shall be payable in
respect of Notes so withdrawn. Except as otherwise provided in this Item 7,
tenders of Notes pursuant to the Offer are irrevocable.
If, for any reason whatsoever, acceptance for payment of, or payment for,
any Notes tendered pursuant to the Offer is delayed (whether before or after
Purchaser's acceptance for payment of Notes) or Purchaser is unable
12
to accept for payment or pay for the Notes tendered pursuant to the Offer,
Purchaser may (without prejudice to its rights set forth herein) instruct the
Depositary to retain tendered Notes, and such Notes may not be withdrawn
(subject to Rule 14e-1(c) under the Exchange Act, which requires that an
offeror pay the consideration offered or return the securities deposited by or
on behalf of the investor promptly after the termination or withdrawal of a
tender offer).
For a withdrawal of Notes tendered pursuant to the Offer to be effective, a
written or facsimile transmission notice of withdrawal or revocation must be
received by the Depositary prior to the Expiration Date at its address set
forth on the back cover of this Offer to Purchase. Any such notice of
withdrawal must (a) specify the name of the person who tendered the Notes to be
withdrawn, (b) contain a description of the Notes to be withdrawn and identify
the certificate number or numbers shown on the particular certificates
evidencing such Notes (unless such Notes were tendered by book-entry transfer)
and the aggregate principal amount represented by such Notes and (c) be signed
by the holder of such Notes in the same manner as the original signature on the
Letter of Transmittal by which such Notes were tendered (including any required
signature guarantees) or be accompanied by evidence sufficient to the
Depositary that the holder withdrawing the tender has succeeded to the
beneficial ownership of the Notes. If the Notes to be withdrawn have been
delivered or otherwise identified to the Depositary, a signed notice of
withdrawal is effective immediately upon written or facsimile notice of such
withdrawal even if physical release is not effected.
Any permitted withdrawal of tendered Notes may not be rescinded, and any
Notes properly withdrawn will thereafter be deemed not validly tendered;
provided, however, that properly withdrawn Notes may be re-tendered, by again
following one of the appropriate procedures described in Item 6, "Procedures
for Tendering Notes," at any time on or prior to the Expiration Date.
Any Notes that have been tendered pursuant to the Offer but that are not
purchased will be returned to the holder thereof without cost to such holder as
soon as practicable following the earlier to occur of the Expiration Date or
the date on which the Offer is terminated without any Notes being purchased
thereunder.
All questions as to the validity, form and eligibility (including time of
receipt) of notices of withdrawal will be determined by Purchaser, in
Purchaser's sole discretion (whose determination shall be final and binding).
None of Purchaser, the Depositary, the Dealer Manager, the Information Agent or
any other person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal, or incur any liability for failure
to give any such notification.
8. Source and Amount of Funds
The maximum amount of funds required by Purchaser to purchase the Notes
pursuant to the Offer is estimated to be approximately $42,185,000 plus
approximately $1,463,764 in accrued interest. Purchaser expects to fund its
purchase of Notes hereunder from available cash. See Item 1, "Purpose of the
Offer."
9. Conditions to the Offer
The Offer does not have as a condition that a minimum principal amount of
Notes be tendered in the Offer. Notwithstanding any other provisions of the
Offer and in addition to (and not in limitation of) Purchaser's rights to
extend and/or amend the Offer, Purchaser shall not be required to accept for
purchase or pay for Notes validly tendered pursuant to the Offer and may amend
or extend the Offer or delay or refrain from accepting for purchase, or paying
for, any such Notes, in each event, subject to Rule 14e-1(c) under the Exchange
Act, and may terminate the Offer if, in the reasonable judgment of Purchaser,
any of the following conditions are not satisfied at the Expiration Date:
(1)there shall not have been threatened, instituted or be pending before
any court, agency, authority or other tribunal any action, suit or
proceeding by any government or
13
governmental, regulatory or administrative agency or authority or by any
other person, domestic or foreign, or any judgment, order or injunction
entered, enforced or deemed applicable by any such court, authority,
agency or tribunal, which (a) challenges or seeks to make illegal, or to
delay or otherwise directly or indirectly to restrain, prohibit or
otherwise affect the making of the Offer, the acquisition of Notes
pursuant to the Offer or is otherwise related in any manner to, or
otherwise affects, the Offer, or (b) could, in the judgment of
Purchaser, materially affect the business, condition (financial or
other), assets, income, operations or prospects of Purchaser and its
subsidiaries, or otherwise materially impair in any way the contemplated
future conduct of the business of Purchaser and its subsidiaries, taken
as a whole, or materially impair the Offer's contemplated benefits to
Purchaser;
(2)there shall not have been any action threatened or taken, or any
approval withheld, or any statute, rule or regulation invoked, proposed,
sought, promulgated, enacted, entered, amended, enforced or deemed to be
applicable to the Offer or Purchaser or any of its subsidiaries, by any
government or governmental, regulatory or administrative authority or
agency or tribunal, domestic or foreign, which, in the judgment of
Purchaser, would or might directly or indirectly result in any of the
consequences referred to in clause (a) or (b) of paragraph (1) above;
(3)Purchaser shall not have determined that the acceptance for payment of,
or payment for, some or all of the Notes would violate, conflict with or
constitute a breach of any order, statute, law, rule, regulation,
executive order, decree, or judgment of any court to which Purchaser may
be bound or subject;
(4)the United States shall not have declared war or a national emergency
and the commencement or escalation of armed hostilities directly or
indirectly involving the United States shall not have occurred;
(5)there shall not have occurred (a) any general suspension of trading in,
or limitation on prices for, securities on the American Stock Exchange,
the New York Stock Exchange, the Nasdaq Stock Market or in the
over-the-counter market, (b) a declaration of a banking moratorium or
any suspension of payments in respect of banks in the United States, (c)
a material change in United States currency exchange rates or a general
suspension of or material limitation on the markets therefor, (d) any
limitation (whether or not mandatory) by any federal or state authority
on, or any other event which might materially affect, the extension of
credit by banks or other financial institutions, (e) any significant
adverse change in the market price of the Notes or Purchaser's common
stock or in the United States securities or financial markets, (f) a
material impairment in the trading market for debt securities, (g) in
the case of any of the foregoing existing at the date hereof, a material
acceleration or worsening thereof, (h) any decline in either the Nasdaq
Composite Index or the S&P 500 Composite Index by an amount in excess of
15%, measured from the close of business on July 26, 2002 or (i) any
major disruption of settlements of securities;
(6)there shall not be any change or changes that have occurred or are
threatened in the business, condition (financial or other), assets,
income, operations, prospects or stock ownership of Purchaser or its
subsidiaries that, in Purchaser's sole judgment, is or may be material
to either Purchaser or its subsidiaries;
(7)a tender or exchange offer with respect to some or all of Purchaser's
common stock shares, or a merger or acquisition proposal for Purchaser,
shall not have been proposed, announced or made by another person or
shall not have been publicly disclosed, or Purchaser shall not have
learned that a person or "group" (within the meaning of Section 13(d)(3)
of the Exchange Act) shall have acquired or proposed to acquire
beneficial
14
ownership of more than 5% of the outstanding shares of Purchaser's
common stock, or any new group shall have been formed that beneficially
owns more than 5% of the outstanding shares of Purchaser's common stock;
or
(8)there shall not have been filed by any person or group a Notification
and Report Form under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976 reflecting an intent to acquire Purchaser or any shares of its
common stock.
The foregoing conditions are for the sole benefit of Purchaser and the
failure of any such condition to be satisfied may be asserted by Purchaser
regardless of the circumstances, including any action or inaction by Purchaser,
giving rise to any such failure and any such failure may be waived by Purchaser
in whole or in part at any time and from time to time prior to the expiration
of the Offer in its sole discretion. If any of the foregoing conditions to the
Offer shall not have been satisfied, subject to the termination rights as
described above, Purchaser may, with respect to the Offer, (a) return tendered
Notes to the holders who tendered them, (b) extend the Offer and retain all
tendered Notes until the expiration of such extended Offer (in which case, the
holders of such tendered Notes will not be entitled to additional withdrawal
rights) (see Item 7, "Withdrawal of Tenders"), or (c) amend the Offer in any
respect by giving written notice of such amendment to the Depository. Purchaser
also reserves the right at any time prior to the expiration of the Offer to
waive satisfaction of any or all of the conditions to the Offer. The failure of
Purchaser at any time to exercise any of the foregoing rights will not be
deemed a waiver of any other right and each right will be deemed an ongoing
right which may be asserted at any time prior to the expiration of the Offer.
10. Certain U.S. Federal Income Tax Considerations
The following is a general summary of certain material U.S. federal income
tax consequences to holders of Notes upon the tender of Notes to Purchaser
pursuant to the Offer. This summary is based on the Internal Revenue Code of
1986, as amended (the "Code"), Treasury regulations, administrative rulings and
court decisions, all as in effect as of the date hereof and all of which are
subject to differing interpretations and/or change at any time (possibly with
retroactive effect). This summary is not a complete description of all the
consequences of a tender pursuant to the Offer and, in particular, may not
address U.S. federal income tax considerations applicable to holders of Notes
subject to special treatment under U.S. federal income tax law (including, for
example, financial institutions, dealers in securities or currencies, traders
that mark to market, holders who hold their Notes as part of a hedge, straddle
or conversion transactions, insurance companies, tax-exempt entities or holders
who do not hold the Notes as "capital assets" within the meaning of Section
1221 of the Code (generally, property held for investment)). In addition, this
summary does not discuss any aspect of state, local or foreign tax law that may
be applicable to any holder of Notes, or any U.S. federal tax considerations
other than U.S. federal income tax considerations.
U.S. Holders
Except as otherwise set forth below, the following discussion is limited to
the U.S. federal income tax consequences relevant to a holder of Notes that is
a U.S. Holder. A "U.S. Holder" is a holder that is:
. an individual who is a citizen or resident of the United States for
federal income tax purposes;
. a corporation (or other entity taxed as a corporation) created or
organized under the laws of the United States or a political subdivision
thereof;
. an estate the income of which is subject to U.S. federal income taxation
regardless of source, or;
. a trust if (a) a U.S. court is able to exercise primary supervision over
the trust's administration or (b) one or more U.S. persons, as defined
under section 7701(a)(30) of the Code, have authority to control all the
trust's substantial decisions.
15
The tax treatment of a partner in a partnership may depend on both the
partnership's and the partner's status. Partnerships tendering Notes and
persons holding beneficial interests in Notes through a partnership are urged
to consult their tax advisors.
The receipt of cash for Notes pursuant to the Offer will be a taxable
transaction for U.S. federal income tax purposes. The tax consequences of such
receipt may vary depending upon, among other things, the particular
circumstances of the holder. In general, a U.S. Holder who receives cash for
Notes pursuant to the Offer will recognize gain or loss, if any, for U.S.
federal income tax purposes equal to the difference between the amount realized
in exchange for the Notes tendered less any amounts attributable to accrued
interest that have not been reflected in the U.S. Holder's adjusted tax basis
in the Notes, and such holder's adjusted tax basis in such Notes. A U.S.
Holder's adjusted tax basis for a Note is generally the price such holder paid
for the Note, increased by any market discount previously included in such
holder's income and reduced (but not below zero) by any amortized premium.
Except as provided below, any gain or loss recognized on a tender of a Note
will generally give rise to capital gain or loss if the Note is held as a
capital asset and will be long-term capital gain or loss if the U.S. Holder's
holding period in the Note for U.S. federal income tax purposes is more than
one year. A U.S. Holder who has acquired a Note with market discount will
generally be required to treat a portion of any gain on a tender of the Note as
ordinary income to the extent of the market discount accrued to the date of the
disposition, less any accrued market discount income previously reported as
ordinary income. Amounts received by a U.S. Holder in respect of interest on
the Notes including any amounts attributable to accrued interest that have not
been reflected in the U.S. Holder's adjusted tax basis in the Notes will be
taxable as ordinary income.
Non-U.S. Holders
The following discussion is limited to the U.S. federal income tax
consequences relevant to a holder of Notes that is not a U.S. Holder (a
"Non-U.S. Holder").
Subject to the discussion of information reporting and backup withholding
below, any gain realized by a Non-U.S. Holder on the sale, exchange or
redemption of a Note generally will not be subject to U.S. federal income tax,
unless:
(1)such gain is effectively connected with the conduct by such Non-U.S.
Holder of a trade or business within the United States;
(2)the Non-U.S. Holder is an individual who is present in the United States
for 183 days or more in the taxable year of disposition and certain
other conditions are satisfied; or
(3)the Non-U.S. Holder is subject to tax pursuant to the provisions of U.S.
federal income tax law applicable to certain expatriates.
Subject to the discussion of information reporting and backup withholding
below, amounts received pursuant to the Offer attributable to interest on a
Note by a Non-U.S. Holder generally will not be subject to U.S. federal income
or withholding tax; provided that:
(1)the holder does not actually or constructively own 10% or more of the
total combined voting power of all classes of stock of Purchaser that
are entitled to vote;
(2)the holder is not (a) a controlled foreign corporation that is related
to Purchaser through stock ownership or (b) a bank receiving interest on
a loan entered into in the ordinary course of business; and
(3)such interest is not effectively connected with the conduct by the
Non-U.S. Holder of a trade or business within the United States.
If interest on the Notes is effectively connected with the conduct by a
Non-U.S. Holder of a trade or business within the United States, such interest
will be subject to U.S. federal income tax on a net income basis at the rate
applicable to U.S. persons generally (and, with respect to corporate holders,
may also be subject to a 30% branch profits tax).
16
Non-U.S. Holders should consult their own tax advisors regarding any
applicable income tax treaties, which may provide for a lower rate of
withholding tax, exemption from or reduction of branch profits tax, or other
rules different from those described above.
Information Reporting and Backup Withholding
Information reporting requirements will generally apply to Notes tendered in
the Offer. U.S. federal income tax law requires that each tendering holder must
provide the Depositary with such holder's correct taxpayer identification
number ("TIN") which, in the case of an individual is his or her social
security number or individual taxpayer identification number, and certain other
information, or otherwise establish a basis for exemption from backup
withholding. Exempt holders (including, among others, all corporations, and
certain foreign individuals) are not subject to these backup withholding and
information reporting requirements.
If the Depositary is not provided with the correct TIN or an adequate basis
for exemption, each non-exempt tendering holder may be subject to a backup
withholding tax imposed on such holder's gross proceeds from the Offer. To
prevent backup withholding, each tendering holder that is not a Foreign Person
must complete the Substitute Form W-9 that will be provided with each Letter of
Transmittal, and either (a) provide his/her/its correct TIN and certain other
information under penalties of perjury or (b) provide an adequate basis for
exemption. Each tendering holder that is a Foreign Person must submit an
appropriate, properly completed Internal Revenue Service Form W-8BEN, W-8ECI,
W-8EXP or W-8IMX, as the case may be, certifying, under penalties of perjury,
to such holder's foreign status in order to establish an exemption from backup
withholding. Backup withholding tax is not an additional federal income tax.
Rather, the federal income tax liability of persons subject to backup
withholding tax will be offset by the amount of tax withheld. If backup
withholding tax results in an overpayment of U.S. federal income taxes, a
refund or credit may be obtained from the Internal Revenue Service, provided
the required information is furnished.
THE FOREGOING DISCUSSION IS NOT INTENDED TO BE A COMPLETE ANALYSIS OR
DESCRIPTION OF ALL POTENTIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS OR ANY
OTHER CONSIDERATIONS OF THE SALE OF NOTES PURSUANT TO THE OFFER. THUS, HOLDERS
ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES
OF THE OFFER TO THEM, INCLUDING TAX RETURN REPORTING REQUIREMENTS, THE
APPLICABILITY AND THE EFFECT OF FEDERAL, STATE, LOCAL, FOREIGN AND OTHER
APPLICABLE TAX LAWS AND THE EFFECT OF ANY PROPOSED CHANGES IN THE TAX LAWS.
11. The Dealer Manager, Depositary and Information Agent
Dealer Manager. Purchaser has retained Credit Suisse First Boston
Corporation ("CSFB") as Dealer Manager in connection with the Offer. In its
capacity as Dealer Manager, CSFB may contact holders regarding the Offer and
request brokers, dealers and other nominees to forward this Offer to Purchase
and related materials to beneficial owners of Notes.
Purchaser has agreed to pay the Dealer Manager a fee for its services as a
Dealer Manager in connection with the Offer. In addition, Purchaser will
reimburse the Dealer Manager for its reasonable out-of-pocket expenses,
including the reasonable fees and expenses of its legal counsel. Purchaser has
agreed to indemnify CSFB against certain liabilities under federal or state law
or otherwise caused by, relating to or arising out of the Offer or its
engagement as Dealer Manager.
Subject to Rule 14e-5 of the Exchange Act, from time to time the Dealer
Manager may trade securities of Purchaser for its own account or the account of
its customers and, accordingly, may hold long or short positions in the Notes
at any time.
From time to time, CSFB has provided investment banking and other services
for Purchaser for customary compensation.
17
The Depositary and the Information Agent. Purchaser has retained J.P.
Morgan Trust Company, National Association to act as the Depositary and D. F.
King & Co., Inc. to act as the Information Agent in connection with the Offer.
All deliveries, correspondence and questions sent or presented to the
Depositary or the Information Agent relating to the Offer should be directed to
the addresses or telephone numbers set forth on the back cover of this Offer to
Purchase.
Purchaser will pay the Depositary and the Information Agent reasonable and
customary compensation for their services in connection with the Offer, plus
reimbursement for out-of-pocket expenses. Purchaser will indemnify the
Depositary and the Information Agent against certain liabilities and expenses
in connection therewith, including liabilities under the Federal securities
laws.
Requests for information or additional copies of this Offer to Purchase and
the Letter of Transmittal should be directed to the Information Agent or the
Dealer Manager.
12. Solicitation
Directors, officers and regular employees of either Purchaser and its
affiliates (who will not be specifically compensated for such services), the
Information Agent and the Dealer Manager may contact holders by mail,
telephone, or facsimile regarding the Offer and may request brokers, dealers
and other nominees to forward this Offer to Purchase and related materials to
beneficial owners of Notes.
13. Fees and Expenses
Tendering holders of Notes will not be obligated to pay brokers fees or
commissions of the Dealer Manager or, except as set forth in the Letter of
Transmittal, transfer taxes on the purchase of Notes by Purchaser pursuant to
the Offer. Purchaser will pay all fees and expenses of the Dealer Manager, the
Depositary and the Information Agent in connection with the Offer.
Brokers, dealers, commercial banks and trust companies will be reimbursed by
Purchaser for customary mailing and handling expenses incurred by them in
forwarding material to their customers. Purchaser will not pay any fees or
commissions to any broker, dealer or other person (other than the Dealer
Manager and the Depositary) in connection with the solicitation of tenders of
Notes pursuant to the Offer.
14. Prior Purchases
In the past nine months, Purchaser has repurchased $280,231,000 principal
amount of Notes together with accrued and unpaid interest thereon at prices
(excluding commissions) ranging from $290 to $305 per $1,000 principal amount
of Notes in both public and private transactions. The average quarterly
purchase price, excluding commissions, for these repurchases was as follows:
4th Quarter 2001 $295.00 per $1,000 principal amount of Notes
1st Quarter 2002 No repurchases of Notes
2nd Quarter 2002 $294.78 per $1,000 principal amount of Notes
3rd Quarter 2002 $292.45 per $1,000 principal amount of Notes
15. Miscellaneous
Purchaser is not aware of any jurisdiction where the making of the Offer is
not in compliance with the laws of such jurisdiction. If Purchaser becomes
aware of any jurisdiction where the making of the Offer would not be in
compliance with such laws, Purchaser will make a good faith effort to comply
with any such laws or seek to have such laws declared inapplicable to the
Offer. If, after such good faith effort, Purchaser cannot comply with any such
applicable laws, an Offer will not be made to (nor will tenders be accepted
from or on behalf of) the holders of Notes residing in such jurisdiction.
July 26, 2002 INTERNET CAPITAL GROUP, INC.
18
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Notes and any other
required documents should be sent or delivered by each holder of Notes or such
holder's broker, dealer, commercial bank, trust company or other nominee to the
Depositary at one of its addresses set forth below.
The Depositary for the Offer is:
J.P. Morgan Trust Company, National Association
Facsimile Transmission
(215) 972-1685
(For Eligibile Institutions only)
Confirm receipt of Facsimile by telephone only:
(215) 988-1319
---------------------
By Mail: By Overnight Delivery: By Hand Delivery:
P.O. Box 2320 2001 Bryan Street, 10th Floor (9:00 a.m. - 5:00 p.m.
Dallas, Texas 75221-2320 Dallas, Texas 75201 New York City Time)
Attention: Institutional Trust Attention: Institutional Trust GIS Unit Trust Window
Services Services 4 New York Plaza, 1st Floor
New York, New York 10004-2413
Attention: ITS
Securities Window
Questions and requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery
may be directed to the Information Agent or the Dealer Manager at their
respective telephone numbers and locations listed below. You may also contact
your broker, dealer, commercial bank, trust company or other nominee for
assistance concerning the Offer.
The Information Agent for the Offer is:
D. F. King & Co., Inc.
77 Water Street
New York, New York 10005
Banks and Brokers Call Collect: (212) 269-5550
All Others Call Toll Free: (800) 859-8508
The Dealer Manager for the Offer is:
Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, New York 10010-3629
Toll Free: (800) 820-1653
or
Call Collect: (212) 325-5415