EXHIBIT (a)(1)(i)
-----------------
GIBBS HOLDINGS, LLC
807 Wood n Creek
Ardmore, Oklahoma 73401
(580) 226-6700
OFFER TO PURCHASE FOR CASH
SHARES OF
COMMON STOCK, PAR VALUE $0.001 PER SHARE,
OF REDWOOD MICROCAP FUND, INC.
AT A PURCHASE PRICE OF $1.60 PER SHARE
THE OFFER TO PURCHASE AND WITHDRAWAL RIGHTS
EXPIRE AT 5:00 P.M., DENVER TIME
ON MAY 25, 2005,
UNLESS THE OFFER TO PURCHASE IS EXTENDED
Gibbs Holdings, LLC hereby invites shareholders of Redwood Microcap Fund, Inc.
("Redwood") to tender shares of Redwood common stock for purchase by us at a
price of $1.60 per share, net to the seller in cash, without interest. Our offer
is being made upon the terms and subject to the terms described in this offer to
purchase. John Gibbs owns 100% of Gibbs Holdings, LLC and is its sole manager.
The address and phone number of Gibbs Holdings and John Gibbs is set forth
above.
Redwood's principal office is located at 6180 Lehman Drive, Colorado Springs,
Colorado 80918 and its phone number is (719) 593-2111. As of the date hereof,
Redwood has 2,499,544 shares of common stock outstanding.
We own or have a contract to acquire 1,659,907 shares of Redwood common stock
which constitutes 72% of the voting shares outstanding. It is our intention to
acquire all of the remaining shares of Redwood common stock not owned by us or
by Redwood's controlled subsidiaries consisting of 633,237 shares.
Questions or requests for assistance or for additional copies of this offer to
purchase, the letter of transmittal or other tender offer materials may be
directed to Diane Allen, the information agent, at the address and telephone
number set forth on the back cover of this offer to purchase, and copies will be
furnished promptly at our expense. Shareholders also may contact their local
broker, dealer, commercial bank or trust company for assistance concerning the
offer.
No person has been authorized to give any information or to make any
representations in connection with the offer other than those contained in this
document or in the related letter of transmittal. If given or made, the
recommendation and the other information and representations must not be relied
upon as having been authorized by us.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THIS PROPOSED TRANSACTION, PASSED UPON
THE MERITS OR FAIRNESS OF THE TRANSACTION; OR PASSED UPON THE ADEQUACY OR
ACCURACY OF THE DISCLOSURES IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this offer to purchase is April 25, 2005
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TABLE OF CONTENTS
SECTION PAGE
SUMMARY TERM SHEET.............................................................3
SPECIAL FACTORS...............................................................10
Background of the Offer..............................................10
Reason for and Purpose of the Offer..................................14
Holdings' Position on Fairness of the Offer..........................14
THE TENDER OFFER..............................................................17
1. NUMBER OF SHARES.......................................................17
2. PROCEDURE FOR TENDERING SHARES.........................................18
3. WITHDRAWAL RIGHTS......................................................21
4. ACCEPTANCE FOR PAYMENT OF SHARES AND PAYMENT OF PURCHASE PRICE.........22
5. CONDITIONS OF THE OFFER................................................23
6. PRICE RANGE OF SHARES; DIVIDENDS.......................................25
7. SOURCE AND AMOUNT OF FUNDS.............................................26
8. LEGAL MATTERS; REGULATORY APPROVALS....................................26
9. CERTAIN FEDERAL INCOME TAX CONSEQUENCES................................28
10. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS....................28
11. MERGER; DISSENTERS' RIGHTS; RULE 13E-3.................................29
12. FINANCIAL INFORMATION CONCERNING REDWOOD...............................31
13. FEES AND EXPENSES......................................................32
14. MISCELLANEOUS..........................................................33
SCHEDULE A - COLORADO BUSINESS CORPORATION ACT ARTICLE 113 DISSENTERS' RIGHTS
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SUMMARY TERM SHEET
We are providing this summary term sheet for your convenience. It highlights the
most material information in this document, but you should understand that it
does not describe all of the details of the tender offer to the same extent
described in this document. We urge you to read the entire document and the
related letter of transmittal because they contain the full details of the
tender offer. We have included references to the sections of this document where
you will find a more complete discussion.
o Gibbs Holdings, LLC, an Oklahoma limited liability company ("Holdings") is
wholly owned by John D. Gibbs ("Gibbs"). Gibbs is also the sole manager and
President of Holdings. Gibbs has been Vice-President of TDP Energy Company
("TDP") and its wholly owned subsidiaries TriPower Resources, Inc.
("TriPower") and Buttes Energy, Inc. ("Buttes") since 1992. Redwood owns
57.5% of TDP. Gibbs organized Holdings in March 2005 for purposes of
acquiring control of Redwood and thereby to acquire control of TDP,
TriPower and Buttes. On March 24, 2005, Holdings entered into a stock
purchase agreement ("Agreement") with John Power (the former President of
Redwood), Randy Butchard and Allan Williams (the "Selling Shareholders")
whereby Holdings acquired in a "first closing" 901,632 shares of Redwood
common stock and agreed to acquire in a "second closing" an additional
670,731 shares of Redwood common stock for the aggregate purchase price of
$2,515,781, or $1.60 per share, payable $375,000 is cash and $2,140,781 in
promissory notes to the Selling Shareholders. The second closing is subject
to Federal Communications Commission ("FCC") approval of the sale of
control of Redwood by reason of Redwood's ownership and control of
subsidiaries which own radio stations and associated FCC licenses. As a
result of the first closing, Holdings owns 989,176 shares of Redwood common
stock, representing 44% of the voting shares outstanding and after the
second closing, Holdings will beneficially own 1,659,907 shares of Redwood
common stock representing 72% of the voting shares outstanding. These
shares exclude certain shares which Gibbs separately has a right to
acquire. Holdings committed to the Selling Shareholders that it would make
this offer to all of the other shareholders of Redwood other than TriPower
(the "Public Shareholders"). See "Special Factors - Background of the
Offer."
o This is a first step in a "going private" transaction. After the tender
offer, Holdings intends to engage in a short form merger to acquire all of
the remaining shares of Redwood (the "Second-Step Transaction") if all of
the shares of Redwood owned by the Public Shareholders are not tendered.
Upon completion of the Second-Step Transaction:
o Holdings will own all the equity interest in Redwood;
o You will no longer have an interest in Redwood's future earnings or
growth;
o Redwood will no longer be a public company and its financial
statements and periodic reports would no longer be publicly available;
o The shares of Redwood common stock would no longer trade on the
Bulletin Board.
o Holders of Redwood common stock who do not sell their shares in the tender
offer will be entitled to statutory dissenter's rights under Colorado law
in connection with the Second-Step Transaction. See "Merger; Dissenters'
Rights; Rule 13E-3."
o In connection with the Agreement, the independent members of the Board of
Directors of Redwood approved this offer, subject to no changes in
circumstances. We anticipate that the Board will determine whether any
circumstances have changed and advise the shareholders of Redwood of its
final position on the offer within ten business days of the date of this
offer to purchase as is required by the SEC tender offer rules. See
"Special Factors - Holdings' Position on the Fairness of the Offer."
o Holdings will pay to those shareholders who do not tender their shares and
do not exercise their dissenters' rights the same consideration in the
Second-Step Transaction as Holdings pays in this tender offer. See "Special
Factors - Background of the Offer."
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o Shareholders who sell their shares in the tender offer will receive cash
for their shares sooner than shareholders who wait for the Second-Step
Transaction to occur. Shareholders who sell their shares in the tender
offer will not be entitled to assert dissenters' rights and obtain payment
of the fair value of their shares under Colorado law. Any shareholders who
do not tender their shares and dissent from the Second-Step Transaction may
exercise dissenters' rights in accordance Article 113 of the Colorado
General Corporation Act ("CBCA"). See "Merger; Dissenters' Rights; Rule
13E-3" and "Schedule A to the Offer to Purchase."
o The consummation of the offer is conditioned upon Holdings acquiring
sufficient shares from Public Shareholders so that it will own at least 90%
of the voting shares outstanding to enable Holdings to effect a short form
merger under the Colorado Business Corporation Act ("CBCA") without further
approval of the Board or shareholders of Redwood (the "Minimum Condition").
This requires that there be tendered at least 403,923 shares. We may waive
this condition and if we do there is no assurance that a Second-Step
Transaction will occur. See "Number of Shares" and "Conditions of the
Offer."
QUESTIONS AND ANSWERS ABOUT THE OFFER
Who is offering to purchase my shares? Gibbs Holdings, LLC, which we refer to as "we," "us" or
"Holdings," is offering to purchase shares of common stock, par
value $.001 per share of Redwood, in a tender offer. Holdings is
100% owned by John Gibbs ("Gibbs") who has been the President of
TriPower Resources, Inc., ("TriPower") and Buttes Energy, Inc.
("Buttes"), both indirect 57.5% owned subsidiaries of Redwood,
since 1992. See "Special Factors - Background of the Offer."
What will the purchase price for the shares be We are conducting a tender offer to purchase all of the shares of
and what will be the form of payment? Redwood common stock owned by persons other than us or TriPower
(the "Public Shareholders") for $1.60 per share. If your shares
are purchased in the tender offer, you will be paid the purchase
price in cash, without interest, promptly after the expiration of
the tender offer. Under no circumstances will we pay interest on
the purchase price, even if there is a delay in making payment.
See "Number of Shares" and "Acceptance for Payment of Shares and
Payment of Purchase Price."
How many shares will Holdings purchase? We will purchase all shares validly tendered in the tender offer
and not properly withdrawn prior to the expiration date. As of
April 22, 2005, there were 2,499,544 shares issued and outstanding
and the number of shares we intend to acquire is 633,337 (which
excludes 206,400 shares owned by TriPower but includes 29,200
shares owned by individual retirement accounts for Gibbs'
benefit). See "Number of Shares." The tender offer is conditioned
on at least 403,923 shares being tendered (the "Minimum
Condition") unless we agree to waive this condition. This number
of shares will permit Holdings to effect the Second-Step
Transaction. See "Number of Shares" and "Conditions of the Offer."
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Why is Holdings making the tender offer? Holdings intends to acquire 100% of Redwood. On March 24, 2005,
Holdings acquired or committed to acquire a total of 1,572,363
shares of Redwood common stock from its three former principal
shareholders. These shares, together with shares already owned by
Holdings or Gibbs, total 1,659,907 shares which represent 72% of
the Redwood voting shares outstanding. Holdings has agreed with
the Selling Shareholders that it will make this tender offer as a
part of a plan to acquire 100% of the outstanding Redwood common
stock. See "Special Factors - Background of the Offer."
How will Holdings pay for the shares? Assuming we purchase all of the 633,337 shares eligible to be
tendered in the tender offer, $1,013,180 will be required to
purchase such shares. We anticipate that we will obtain all of the
funds necessary to purchase shares tendered in the tender offer,
and to pay related fees and expenses, from a loan from BancFirst,
an Oklahoma bank headquartered in Oklahoma City, Oklahoma. The
tender offer is not conditioned upon the receipt of financing. See
"Source and Amount of Funds."
How long do I have to tender my shares? You may tender your shares until the tender offer expires. The
tender offer will expire on May 25, 2005, at 5:00 p.m., Denver
time, unless we extend it. See "Number of Shares."
How will I be notified if Holdings extends the We will issue a press release by 10:00 a.m., Denver time, on the
tender offer? business day after the previously scheduled expiration date if we
decide to extend the tender offer. See "Extension of Tender
Period; Termination; Amendments."
Following the tender offer, will Redwood It is Holdings intent to continue to pursue Redwood's existing
continue as a registered investment company plan to obtain deregistration under the Investment Company Act of
with publicly traded shares? 1940 ("1940 Act") which requires the approval of the Securities
and Exchange Commission ("SEC"). The tender offer may accelerate
this process. If Redwood is no longer a registered investment
company, it will no longer be required to file reports under the
1940 Act and its shares will no longer be eligible for trading on
the over-the-counter bulletin board ("Bulletin Board"). See
"Special Factors - Background of the Offer."
Will the tender offer be followed by a second Yes. We intend to engage in a short form merger transaction to
step transaction if all the shares of Redwood acquire all of the remaining shares of Redwood (the "Second-Step
common stock are not tendered? Transaction") if all of the shares owned by the Public
Shareholders are not tendered in the tender offer and the Minimum
Condition is satisfied. The difference between tendering your
shares and not tendering your shares is that you will be paid
earlier if you tender your shares in the tender offer. We will own
approximately 72% of the outstanding voting shares of Redwood
common stock after the "second closing" under the Agreement and if
the offer is closed, we will own 90% of the outstanding voting
shares. Under Colorado law, we may effect a short form merger
without further approval of Redwood's board or shareholders if we
own 90% of the outstanding voting shares. See "Special Factors -
Background of the Offer."
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If I decide not to tender, but the tender offer As indicated above, if the tender offer is completed, the shares
is successful, what will happen to my shares? of Redwood common stock may no longer be eligible to be traded on
the Bulletin Board or any other securities exchange, and if the
SEC approves Redwood's deregistration as an investment company, it
will cease making filings with the SEC. We intend to consummate a
Second-Step Transaction in the form of a short-form merger in
which all shares of common stock not purchased in the tender offer
would be exchanged for the same amount of cash per share that
would have been received had such shares of common stock been
tendered in the tender offer, subject to the right of shareholders
to pursue dissenters' rights under Colorado law. Therefore, if a
Second-Step Transaction takes place and you do not perfect your
dissenters' rights, the difference between tendering your shares
of common stock and not tendering such shares is that you will be
paid earlier if you tender your shares in the tender offer. See
"Special Factors - Background of the Offer."
If I object to the price being offered, will I No. Neither appraisal nor dissenters' rights are available in the
have appraisal or dissenters' rights? tender offer. Although you do not have appraisal or dissenters'
rights in the tender offer, you will have appraisal or dissenters'
rights in the event you do not tender your shares and a
Second-Step Transaction occurs following completion of the tender
offer. See "Mergers; Dissenters' Rights; Rule 13E-3."
Has Redwood or its board of directors adopted a Redwood's board of directors has approved the tender offer. See
position on the tender offer? "Special Factors - Holdings' Position on the Fairness of the
Offer."
Are there any conditions to the tender offer? Yes. Our obligation to accept and pay for your tendered shares
depends upon a number of conditions, including:
o The Minimum Condition is satisfied.
o The occurrence of the "second closing" under our Agreement
with the Selling Shareholders.
o FCC approval of the transfer of control of Redwood to us.
o No legal action shall be pending, or shall have been
threatened or taken, that might adversely affect the tender
offer.
o No commencement or escalation of a war, armed hostilities or
other international or national calamity, including, but not
limited to, an act of terrorism.
o No decrease in the price of Redwood common stock by more than
15% from the close of trading on March 28, 2005.
o No decline in the Dow Jones Industrial Average, the S&P 500 or
the New York Stock Exchange Composite Index by more than 10%
from the close of business on March 28, 2005.
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o No one shall have proposed, announced or made a tender or
exchange offer (other than this tender offer), merger,
business combination or other similar transaction involving
Redwood.
o No one (including certain groups) shall have acquired, or
proposed to acquire, beneficial ownership of more than 5% of
the outstanding shares (other than anyone who publicly
disclosed such ownership in a filing with the Securities and
Exchange Commission prior to March 28, 2005). In addition, no
new group shall have been formed which beneficially owns more
than 5% of the outstanding shares. Finally, no one shall have
made a public announcement reflecting an intent to acquire
Redwood or any of Redwood's subsidiaries or any of their
respective assets or securities.
o No material adverse change in Redwood's business condition
(financial or otherwise), assets, income, operations,
prospects or stock ownership shall have occurred during the
tender offer. See "Conditions of the Offer."
How do I tender my shares? To tender your shares, prior to 5:00 p.m., Denver time, on May 25,
2005 (unless the tender offer is extended):
o you must deliver your share certificate(s) and a properly
completed and duly executed letter of transmittal to the
depositary at the address appearing on the back cover page of
this document; or
o the depositary must receive a confirmation of receipt of your
shares by book-entry transfer and a properly completed and
duly executed letter of transmittal; or
o you must comply with the guaranteed delivery procedure.
If your shares are held through a broker, dealer, commercial bank
or other nominee, you must request such broker, dealer, commercial
bank, trust company or other nominee to effect the transaction for
you. You may also contact the information agent for assistance.
See "Procedures for Tendering Shares" and the instructions to the
related letter of transmittal.
Once I have tendered shares in the tender You may withdraw any shares you have tendered at any time before
offer, can I withdraw my tender? 5:00 p.m., Denver time, on May 25, 2005, unless we extend the
tender offer, in which case you may withdraw tendered shares until
the tender offer, as so extended, expires. If we have not accepted
for payment the shares you have tendered to us, you may also
withdraw your shares after June 24, 2005. You may not withdraw any
shares tendered in a subsequent offering period if we elect to
have one. See "Withdrawal Rights."
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How do I withdraw shares I previously tendered? You must deliver, on a timely basis, a written, telegraphic or
facsimile notice of your withdrawal to the depositary at the
address appearing on the back cover page of this document. Your
notice of withdrawal must specify your name, the number of shares
to be withdrawn and the name of the registered holder of these
shares. Some additional requirements apply if the share
certificates to be withdrawn have been delivered to the depositary
or if your shares have been tendered under the procedure for
book-entry transfer set forth in Section 3. See "Withdrawal
Rights."
When will Holdings pay for the shares I tender? We will pay the purchase price, net to you in cash, without
interest, for the shares we purchase promptly after the expiration
of the tender offer and the acceptance of the shares for payment.
See "Acceptance for Payment of Shares and Payment of Purchase
Price."
Does Holdings have the financial resources to Yes. The tender offer is not conditioned on Holdings or its
pay for the shares? affiliates obtaining any financing. Holdings will fund the
purchase of the shares through financing obtained from BancFirst,
a commercial bank located in Oklahoma City, Oklahoma in a one-year
loan bearing interest at prime rate as quoted in the Wall Street
Journal plus one-percent payable monthly. All principal will be
due at maturity. The loan will be secured by marketable securities
owned by Gibbs and by a security interest in the Redwood shares
acquired by Holdings. The total amount of this loan will be
approximately $1,450,000. See "Source and Amount of Funds."
What is the recent market price of my Redwood The trading in Redwood common stock is so limited and sporadic
shares? that the market price of its stock may not be meaningful. However,
on April 20, 2005, the last trading day prior to the printing of
this offer to purchase, the closing price of Redwood shares on the
Bulletin Board was $1.55 per share. On March 24, 2005, the last
trading day before Holdings' intent to make this offer was
announced, the closing price was $0.62 per share. See "Price Range
of Shares; Dividends."
Will I have to pay brokerage commissions if I If you are a registered stockholder and you tender your shares
tender my shares? directly to the depositary, you will not incur any brokerage
commissions. If you hold shares through a broker or bank, we urge
you to consult your broker or bank to determine whether
transaction costs are applicable. See "Procedure for Tendering
Shares."
What are the U.S. federal income tax Generally, you will be subject to U.S. federal income taxation
consequences if I tender my shares? when you receive cash from us in exchange for the shares you
tender. The receipt of cash for your tendered shares will be
treated as a sale or exchange eligible for capital gains
treatment. Non-United States holders are urged to consult their
tax advisors regarding the application of U.S. federal income tax
withholding and backup withholding, including eligibility for a
withholding tax reduction or exemption, and the refund procedure.
See "Certain Federal Income Tax Consequences."
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Will I have to pay any stock transfer tax if I If you instruct the depositary in the letter of transmittal to
tender my shares? make the payment for the shares to the registered holder, you will
not incur any stock transfer tax. See "Acceptance for Payment of
Shares and Payment of Purchase Price."
Will there be a subsequent offering? Following Holdings' purchase of all shares tendered during the
offering period, Holdings may elect to provide a subsequent
offering period of at least three business days, during which time
shareholders whose shares have not been accepted for payment may
tender their shares and receive the tender offer consideration.
Tenders during any subsequent offering period may not be withdrawn
for any reason. Holding is not permitted under the federal
securities laws to provide a subsequent offering period of more
than twenty business days. See "Extension of Tender Period;
Termination; Amendments."
Whom can I talk to if I have questions? The information agent can help answer your questions. The
information agent is Diane Allen. She can be reached at
580-270-6700, extension 207. See Back Cover.
WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON OUR BEHALF AS TO
WHETHER YOU SHOULD TENDER OR REFRAIN FROM TENDERING YOUR SHARES. YOU SHOULD RELY
ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO WHICH WE HAVE REFERRED
YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION OR TO MAKE
ANY REPRESENTATION IN CONNECTION WITH THIS TENDER OFFER OTHER THAN THOSE
CONTAINED IN THIS OFFER TO PURCHASE OR IN THE RELATED LETTER OF TRANSMITTAL. IF
ANYONE MAKES ANY RECOMMENDATION OR GIVES ANY INFORMATION OR REPRESENTATION, YOU
MUST NOT RELY UPON THAT RECOMMENDATION, INFORMATION OR REPRESENTATION AS HAVING
BEEN AUTHORIZED BY HOLDINGS.
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SPECIAL FACTORS
BACKGROUND OF THE OFFER
GIBBS HOLDINGS
John Gibbs ("Gibbs") has been the Vice-President of TDP Energy Company ("TDP")
and President of its wholly owned subsidiaries TriPower Resources Inc.
("TriPower") and Buttes Energy, Inc. ("Buttes") since 1992. Redwood owns 57.5%
of TDP. Gibbs organized Gibbs Holdings, LLC ("Holdings") in March 2005 for
purposes of acquiring control of Redwood and thereby to acquire control of TDP,
TriPower and Buttes. Gibbs has not been convicted in a criminal proceeding nor
has he been a party to any judicial or administrative proceeding within the last
five years. Gibbs is a citizen of the United States.
REDWOOD
Redwood is a Colorado corporation and is registered as a closed-end, diversified
management investment company under the Investment Company Act of 1940 ("1940
Act"). Since 1992, when Redwood terminated its then existing investment
management agreement with Citadel Asset Management, Ltd, Redwood has operated on
a self-directed basis without the counsel and advice from an investment manager
advisor. Since that time, and with the approval of Redwood's shareholders, the
Board of Directors of Redwood has undertaken a concerted effort to redirect its
assets into the acquisition and development of majority-owned operating
subsidiaries. Those efforts have resulted in Redwood's assets being concentrated
in the following controlled subsidiaries:
o TDP Energy Company: Redwood currently owns 57.5% of the total
outstanding securities of TDP. TDP is engaged in oil and gas
exploration and development through two wholly owned subsidiaries:
TriPower and Buttes Energy, Inc. As of September 30, 2004, TDP
accounted for approximately 65% of Redwood's total combined assets and
71% of Redwood's operating revenues for the six months then ended.
o Wyoming Resorts, LLC: Redwood owns 51% of the membership interest in
Wyoming Resorts, LLC which owns and operates a resort hotel located in
Thermopolis, Wyoming and an undivided 25% interest in Cappell Valley
Vineyard, LLC which holds real estate in Napa, California, which is
being developed as a vineyard.
o Alta California Broadcasting, Inc.: Redwood owns 66.25% of the
outstanding equity securities of Alta California Broadcasting, Inc.
which owns 100% of Four Rivers Broadcasting, Inc., which owns radio
stations and related assets.
o Napa Canyon, LLC: Redwood owns 100% of the equity and a 90% profits
interest of Napa Canyon, LLC which owns undeveloped real estate in
Napa County, California.
o Antelope Peak: Redwood owns 100% of Antelope Peak which owns a
broadcasting tower in Northern California.
o Montana Resorts, LLC: Redwood owns 100% of Montana Resorts, LLC, which
owns 100% of Yellowstone Gateway Resorts, LLC, which owns and operates
a hotel in Gallatin Gateway, Montana. On November 15, 2004,
Yellowstone Gateway Resorts, LLC filed a voluntary petition in
bankruptcy under Chapter 11 of the United State Bankruptcy Code.
As a result of the change in its policies in 1992, in June 1994 Redwood filed
with the SEC an application to be deregistered as an investment company as a
result of the fact that it no longer met the requirements of an investment
company that its investments be concentrated in investment securities. The SEC
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suspended its review of the application for deregistration in June 1995 due to
an investigation that the SEC was conducting of certain activities of Redwood's
former president John C. Power. In 1999, Redwood filed with the SEC a new
application seeking an order under the 1940 Act that would permit it to
undertake a reverse split of its outstanding securities in a manner that would
result in Redwood being exempt from the registration requirements of the 1940
Act by reason of having fewer than 100 shareholders. This application was
subsequently withdrawn voluntarily by Redwood after discussions with the staff
of the SEC. On January 2, 2002, Redwood filed another application seeking
deregistration under the 1940 Act. This application is pending. The SEC has
indicated to Redwood that it has deferred consideration of the application
pending the receipt by the SEC of information relating to the Primrose
litigation against TDP discussed below. This information was provided by Redwood
to the SEC in March of 2005 and Redwood is awaiting further information from the
SEC.
As a result of its inability to obtain deregistration under the 1940 Act to
permit Redwood more flexibility in dealing with its assets and liabilities,
Redwood has been experiencing declines in net asset value. Its principal source
of revenues and assets are associated with TDP and it currently has no sources
of financing or cash flow other than from TDP. As discussed below, the status of
TDP has been uncertain pending the resolution of certain litigation involving
TDP.
Trading in Redwood's common stock has essentially been nonexistent during the
last several years. Although quoted on the over-the-counter Bulletin Board, in
the 24 months beginning April 2003 and ending in March 2005 there were ten
months in which no sales of Redwood common stock were reported on the Bulletin
Board and the average daily volume during such period ranged from zero to 1,347
shares. The public quoted stock price prior to the announcement of the intent of
Holdings to make this tender offer during such period ranged from $0.62 to
$0.70. There has been essentially no liquidity for the shareholders of Redwood.
PRIMROSE LITIGATION
As noted earlier, Redwood owns 57.5% of TDP. The balance of TDP is owned by
Primrose Drilling Ventures, Ltd ("Primrose"). In 2003, Primrose filed an action
in the United States District Court for the Eastern District of Oklahoma against
TDP, Redwood, Gibbs and John Power alleging mismanagement and breaches of
fiduciary duty and other claims. The defendants vigorously contested these
claims and believed they were asserted to force a buyout of Primrose's ownership
in TDP. In June 2004, a settlement agreement was reached between Primrose and
the defendants which provides for an obligation of TDP to purchase all of the
shares in TDP owned by Primrose, at a value to be determined based on appraisal.
As a result of delays by Primrose in finalizing this settlement, the defendants
filed a motion to enforce the settlement agreement which motion was granted in
March 2005. Closing of the settlement will result in Redwood's owning 100% of
TDP. The timing of the closing of this transaction is dependent upon the ability
of the parties to negotiate and execute definitive settlement documents in
accordance with the court's order, the completion of the appraisal process and
the approval of the SEC which is required under the 1940 Act.
DEREGISTRATION UNDER THE 1940 ACT
The 1940 Act requires the approval of the SEC for any deregistration of an
investment company. Until such deregistration occurs, Redwood is obligated to
continue to file reports with the SEC and as long as Redwood is current in the
filing of such reports with the SEC, it expects that its shares will still be
eligible for listing on the Bulletin Board. However, due to the limited number
of shareholders of Redwood, approximately 197 as of April, 2005, and the lack of
any persons interested in purchasing the shares of Redwood, we do not anticipate
that there will be any significant liquidity for shareholders of Redwood. While
we believe that a reduction in the number of shareholders to fewer than 100 may
improve the chances of Redwood's being deregistered under the 1940 Act, the SEC
must still approve such deregistration and until it does so, Redwood will
continue to file reports with the SEC. The offer is not conditioned on the SEC's
approval of the deregistration.
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ACQUISITION OF CONTROL BLOCK
Beginning in late 2004, after the settlement agreement was reached in the
Primrose litigation, Gibbs began exploring alternatives that might enable him to
acquire control of Redwood and thereby control of TDP, TriPower and Buttes Gibbs
initiated discussions with John Power, the then president and largest single
shareholder of Redwood about the possibility of buying shares of a control block
of shares of Redwood owned by John Power, Randy Butchard and Allan Williams (the
"Selling Shareholders"). These discussions took place over an extended period of
time to evaluate the effects of any such transactions on Redwood's status under
the 1940 Act, the effect on its pending deregistration application with the SEC,
the ability to obtain financing for any such transaction, as well as negotiating
the potential terms.
On March 24, 2005, Holdings entered into a stock purchase agreement
("Agreement") with the Selling Shareholders whereby Holdings acquired in a
"first closing" 901,632 shares of Redwood common stock and agreed to acquire in
a "second closing" an additional 670,731 shares of Redwood common stock for an
aggregate purchase price of $2,515,781, or $1.60 per share, payable $375,000 in
cash and $2,140,781 in promissory notes from us to the Selling Shareholders
payable in quarterly installments of $150,000 beginning on the earlier of (i)
the date we acquire 100% of the stock of Redwood or (ii) March 24, 2006. The
promissory notes are personally guaranteed by Gibbs and secured by a Redwood
note payable to Gibbs in the principal amount of $1,230,000 due April 1, 2016,
which is convertible into 719,000 shares of Redwood common stock (the
"Convertible Note"). In the first closing, we paid or will pay $375,000 in cash
and $1,067,611 in promissory notes and we will pay in the second closing
$1,703,170 in promissory notes. The purchase of the 670,731 shares in the second
closing is subject to Federal Communications Commission ("FCC") approval of a
sale of control of Redwood by reason of Redwood's ownership of control of a
subsidiary which owns radio stations and associated FCC licenses. An application
for approval was filed with the FCC on April 15, 2005. It is anticipated that
such approval will be obtained within 60 days. See "Legal Matters; Regulatory
Approvals."
Effective March 24, 2005, John Power resigned as an officer and director of
Redwood and its controlled subsidiaries and Gibbs was elected President of
Redwood and TDP. The Board of Redwood consists of its existing remaining
independent directors, Joseph O. Smith and Peter Hirschburg. John Power remains
as a consultant to Redwood as long as we request for a consulting fee of $10,500
per month. In addition, Redwood has entered into a separate indemnity agreement
with Mr. Power agreeing to indemnify him to the fullest extent permitted by
Colorado and federal law.
Redwood and its controlled subsidiaries other than TDP do not have any sources
of cash to meet their obligations. Historically, funds for this purpose have
been provided by asset sales and inter-company advances from TDP or its
subsidiaries. Mr. Power has agreed that Holdings may withhold payments on the
promissory note in favor or Mr. Power if in the judgment of Holdings funds are
needed by Redwood or its controlled subsidiaries to meet their obligations and
advance such "withheld payments" to Redwood. These withheld payments are limited
to 50% of any quarterly payment or $200,000 in the aggregate unless Mr. Power
reviews and approves the amount and reason for the withheld amounts. These
advances will be obligations of Redwood to Mr. Power and will be repaid prior to
any repayments of inter-company advances.
We intend to continue the previously stated objective of Redwood, of terminating
its registration as an investment company under the 1940 Act, which, if
implemented, would result in Redwood's no longer being required to file reports
under the 1940 Act and the termination of trading of its common stock on the
Bulletin Board. We will cause Redwood to file any amendments to its previously
filed applications if necessary to reflect changes resulting from our
acquisition of shares and the change in management.
Gibbs acquired on March 31, 2004, beneficial ownership of 719,000 shares of
common stock of Redwood, which he has the right to acquire on conversion of the
Convertible Note issued to him in 2001 which first became convertible on March
31, 2004. The conversion price for the shares is $1.71 per share. The
Convertible Note was issued to Gibbs in March 2001 in exchange for the sale of
15% of the
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outstanding stock of TDP in an arm's length negotiated transaction between Gibbs
and Redwood. Gibbs acquired 87,544 shares for accrued interest on the
Convertible Note during the period from original issuance in 2001 through March
31, 2003. Gibbs also acquired 29,200 shares in open market transactions at
various prices during the period between December 1996 and February 2004. On
September 30, 2004, Gibbs obtained the right to acquire an additional 76,194
shares of common stock issuable to him for accrued interest of $110,801 on the
Convertible Note through September 30, 2004. Gibbs will also obtain the right to
acquire an additional number of shares of common stock issuable to him for
accrued interest of $147,600 on the Convertible Note through March 31, 2005,
when Redwood's net asset value per share as of March 31, 2005 is computed so the
number of shares can be determined.
By reason of acquisition of the 901,632 shares on March 24, 2005, Gibbs
beneficially owns 2,019,970 shares of Redwood common stock, including 795,194
shares he has the right to acquire on conversion of the Convertible Note and for
accrued interest through September 30, 2004. Of these shares, 989,176 are owned
by Holdings with shared voting and dispositive power, 206,400 shares are owned
by TriPower with shared investment power and the balance are owned by Gibbs with
sole voting and dispositive power. Under the Colorado Business Corporation Act
("CBCA"), the shares owned by TriPower may not be voted because they are
effectively controlled by Redwood. Upon acquisition by Holdings of the remaining
670,731 shares under the Agreement, Gibbs will beneficially own a total of
2,690,701 shares of Redwood common stock, including the 795,194 shares he has
the right to acquire, representing 81.7% of the shares of Redwood outstanding,
including the shares he has the right to acquire. Of these, 1,659,907 shares
will be owned with shared voting and investment power with Holdings and the
balance with sole voting and investment power.
As of the date hereof, Holdings beneficially owns 989,176 shares of Redwood
common stock, representing 44% of the voting shares outstanding. After the
acquisition of the remaining 670,731 shares in the second closing, Holdings will
beneficially own 1,659,907 shares, representing 72% of the voting shares
outstanding.
TENDER OFFER AND SECOND-STEP TRANSACTION
We intended to acquire 100% of Redwood and have agreed with the Selling
Shareholders to make this tender offer to the Public Shareholders at a price of
at least $1.60 per share as soon as practicable and to effect a Second Step
Transaction at the tender offer price to purchase any shares not tendered.
As noted above, if Redwood's deregistration under the Act is obtained, Redwood
will no longer file periodic reports with the SEC and Redwood's common stock
will no longer be listed on the Bulletin Board. Following deregistration under
the Act, Holdings will also cause Redwood to change the composition of the Board
to include solely persons designated by Holdings. Until that time, it is
expected that Redwood's board would continue to consist of its two existing
independent directors as required by the Act. Regardless of whether any of the
shares are purchased in the tender offer, Holdings will be able to control all
matters requiring approval of Redwood shareholders, including the election of
directors.
Consummation of this offer and the Second-Step Transaction will permit Holdings
to own all of the equity interest in Redwood and all of the benefits of such
ownership. Such benefits include management and investment discretion with
regard to the future conduct of Redwood's business, the benefits of the profits
generated by operations and increases, if any, in Redwood's value. Conversely,
Holdings will bear the risk of any decrease in Redwood's value and losses
generated by operations. If the offer and the Second-Step Transaction are
consummated, Holdings will have a 100% interest in Redwood's net book value and
net losses (which would equal approximately $3.4 million and $183 thousand,
respectively, based on our Redwood's unaudited condensed financial statements as
of and for the six month period ended September 30, 2004). After the second
closing under the Agreement, Holdings will have an approximate 75% interest in
such net book value and net losses (approximately $2.6 million and $137
thousand, respectively, based on Redwood's unaudited condensed financial
statements as of and for the six month period ended September 30, 2004).
Consummation of the offer and the Second-Step Transaction also will allow
Holdings to recapitalize Redwood by increasing its debt to equity ratio,
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thereby leveraging its equity investment to a degree that might not be
appropriate for Redwood as a public company. Such high leveraging entails high
risks to equity investors and may have an adverse effect on Redwood's earnings
and value.
Holdings plans to cause Redwood to sell or liquidate all of its portfolio
holdings other than TDP and its subsidiaries. If these are sold at a gain,
Holdings will benefit from such gain. Conversely, if these are sold for a loss,
Holdings will suffer the loss.
The Second-Step Transaction will be implemented through a short form merger
under the CBCA. Where a shareholder owns at least 90% or more of the voting
shares that remain outstanding following completion of the offer, a short-form
merger may be effected, without a vote of the shareholders or approval of
Redwood's directors. The consideration Holdings proposes to pay the Public
Shareholders in the Second-Step Transaction would be cash in an amount equal to
the tender offer price.
If, however, the percentage of ownership of Holdings following completion of
this tender offer is less than 90% of the voting shares then outstanding, a vote
of Redwood's shareholders would be required, and a longer period of time may be
required to effect such merger. In addition, in a long form merger, another
approval of Redwood's board would be required for the Merger. Although we
believe the Redwood board would likely approve a long form merger, it may not do
so if circumstances changes. In any event, if a long form merger is necessary,
the Second-Step Transaction may be delayed or not occur. See "Merger;
Dissenters' Rights; Rule 13E-3."
No appraisal or dissenters' rights are available in connection with the tender
offer. In connection with a Second-Step Transaction, however, the shareholders
who have not tendered their shares will have certain rights to dissent and
receive the fair value of such shares. See "Merger; Dissenters' Rights; Rule
13E-3."
Such rights, if the statutory procedures were complied with, could lead to a
judicial determination of the fair value (excluding any element of value arising
from the accomplishment or expectation of the Second-Step Transaction) required
to be paid in cash to such dissenting holders for their shares. Any such
judicial determination of the fair value of shares could be based on
considerations other than, or in addition to, the purchase price paid in the
tender offer and the market value of the shares, including asset values and the
investment value of the shares. The value so determined could be more or less
than the purchase price per share pursuant to this tender offer or the
consideration per share to be paid in a Second-Step Transaction.
REASON FOR AND PURPOSE OF THE OFFER
As the person who has been and will continue to be primarily responsible for the
operations of TDP, TriPower and Buttes, Gibbs through Holdings desires to
acquire complete control of these entities by his acquisition of control of
Redwood. Upon obtaining control of Redwood, Holdings intends to cause Redwood to
sell or liquidate all of its ownership in other entities other than TDP,
TriPower and Buttes. While Holdings could have purchased the shares of TDP owned
by Redwood, rather than purchasing shares of Redwood, the controlling
shareholders of Redwood were unwilling to consider such a transaction because of
the adverse tax consequences associated with such a proposal. In addition,
because of Gibbs' status as an "affiliate" of Redwood for purpose of the 1940
Act, such a transaction would have required the approval of the SEC which would
take significant time, especially given Redwood's historical difficulties in its
deregistration applications. After consideration of other alternatives, the
Selling Shareholders and Holdings ultimately agreed on the purchase of the
Redwood shares as the most viable method to permit Holdings to acquire control
of TDP and its subsidiaries.
HOLDINGS' POSITION ON FAIRNESS OF THE OFFER
GENERAL
Before buying the shares from the Selling Shareholders in the first closing,
Holdings required the Board of Redwood to approve the tender offer. Because John
C. Power, Redwood's director and President, was
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entering into an agreement to sell all of his shares to Holdings, the Board
determined that he had conflicts of interest in determining whether to approve
the Holdings tender offer or any other transaction that would ultimately result
in Holdings acquiring ownership of all of Redwood's outstanding shares. As such,
on March 22 and 24, 2005, the two independent directors ("Independent
Directors") of Redwood held meetings and ultimately determined to approve the
tender offer, subject to any changes in circumstances that might occur between
the date of the first closing and the commencement of the tender offer. The
Board is required by the SEC tender offer rules to communicate its position on
the offer within ten business days of the date of this offer. Holdings does not
make any recommendation to the Public Shareholders regarding whether to tender
or refrain from tendering the shares beneficially held by them. Each shareholder
must make its, his or her own decision regarding whether to tender shares and,
if so, how many shares to tender.
We believe that the public market has not shown much interest in Redwood common
stock the past few years and that Redwood has been unable to realize the
principal benefits of being a publicly-traded company. Redwood common stock is
very thinly traded and provides little, if any, liquidity for shareholders.
During the twelve months prior to March 28, 2005, the date the Agreement was
publicly announced, the average daily trading volume of Redwood common stock has
been less than 125 shares and shares were traded on only 8 days.
We also believe that there are considerable costs and detriments in remaining a
publicly traded company. In addition to the substantial time expended by Redwood
management, the legal, auditing, accounting and other expenses involved in the
preparation, filing and dissemination of annual and other periodic reports are
considerable. Redwood does not have the resources to pay for such costs other
than from funds provided by sales of assets and by TDP.
Given the inability of Redwood to be deregistered so that it can pursue its
business plan, the lack of funding for its ongoing business and the lack of
liquidity in Redwood's stock, we believe this tender offer provides an
opportunity for Public Shareholders to sell at a price that is a premium to both
recent trading prices and net asset value.
FAIRNESS OF OFFER
Holdings believes this offer and the Second-Step Transaction are both
financially and procedurally fair to the Public Shareholders. In reaching our
determination regarding the substantive fairness of the offer to the Public
Shareholders of Redwood, we considered the following factors:
o The fact that the Selling Shareholders negotiated the Agreement with
Holdings on an arms-length basis and had personal economic incentive to
maximize value.
o The premium reflected in the purchase price of $1.60 per share. The
purchase price represents a premium of 258% over the $0.62 closing price on
March 23, 2005, the day the purchase price was approved by the Independent
Directors and a premium of 228% over the highest closing price of $0.70
over the 12 months preceding March 24, 2005.
o The Purchase Price of $1.60 is substantially higher than Redwood's net
asset value of $1.38 per share as of September 30, 2004.
o The fact that the Selling Shareholders are not receiving all cash for the
shares, making the terms of the tender offer to the Public Shareholders
more favorable than the terms of sale by the Selling Shareholders.
o The potential liquidation proceeds to Public Shareholders if Redwood were
to be liquidated would likely be less than the purchase price due to the
difficulty in selling its controlled subsidiaries and the adverse tax
consequences of any liquidation.
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o The limited public float and Redwood's small shareholder base, as indicated
by the approximately 197 holders of record as defined by Rule 12g5-1 of the
Exchange Act, decreases the likelihood there will be a significant active
trading market for the shares in the foreseeable future.
o The structure of the transaction, which is designed, among other things, to
result in the receipt by the Public Shareholders of cash consideration at
the earliest practicable time.
o Redwood has not declared a dividend to its shareholders since becoming a
public company, and the expectation that no such dividends would be paid in
the foreseeable future;
o The small market for the shares provides limited liquidity for shareholders
to liquidate or add to their investments, and has made it difficult for
Redwood to attract institutional investors or research coverage and to
utilize the public equity capital markets effectively as a source of
financing.
o There are considerable costs associated with remaining a publicly-traded
company, including the legal, auditing, accounting and other expenses
involved in the preparation, filing and dissemination of annual and other
periodic reports as well as the significant amount of time expended by
Redwood's management in connection with such matters.
o The going-private transaction would eliminate the exposure of the Public
Shareholders to any further decline in the market price of the shares.
o The offer will shift the risk of the future financial performance of
Redwood from the Public Shareholders to Holdings.
o Redwood has been unable to obtain deregistration under the Act.
o The financial condition, results of operations and cash flows of Redwood.
In addition to the factors listed above, we also considered certain negative
factors including the fact that consummation of the tender offer would eliminate
the opportunity of the Public Shareholders to participate in any potential
future growth in value of Redwood and that those shareholders who elect not to
tender their shares in the offer may suffer increased illiquidity.
During the preceding two years, to Gibbs' knowledge, Redwood has not received
any offers from independent third parties for the merger or consolidation of
Redwood with another company, the sale of all or any substantial part of Redwood
assets or the purchase of shares that would enable the holder to exercise
control of Redwood. Gibbs has been informed that management of Redwood
approached several possible buyers of TDP and its subsidiaries to determine
possible interest, but none expressed any interest in such a transaction.
We also considered various factors in determining the procedural fairness of the
offer. We believe that the tender offer is procedurally fair to the Public
Shareholders because:
o The Independent Directors have approved this offer.
o Each Public Shareholder can determine individually whether to tender shares
in the offer. Accordingly, those shareholders that do not believe in the
fairness of the tender offer are not required to tender their shares and
can pursue dissenters' rights under the CBCA in connection with the
Second-Step Transaction.
o Each Public Shareholder will receive the same consideration in the
Second-Step Transaction if they do not tender their shares in the offer.
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o Unless Holdings waives the Minimum Condition, the transaction is structured
in a manner that at least a majority of the Public Shareholders must accept
the offer. If the Minimum Condition is waived, Holdings could acquire any
shares tendered, which could be less than a majority. However, Holdings
would not then be able to effect a short form merger and further approval
of the Board of Redwood would then be required for a long form merger.
No unaffiliated representative of the Public Shareholders was appointed by
Holdings or the Board of Redwood, but the Public Shareholders were effectively
represented by the Selling Shareholders who negotiated the price on an arms
length basis.
In determining that the offer is fair to the Public Shareholders, we considered
the above substantive and procedural factors as a whole and did not assign
specific or relative weights to them.
The Independent Directors did not have the benefit of advice from an independent
financial advisor or legal counsel. Holdings believes the Independent Directors
considered the costs to obtain such assistance to be prohibitive given the lack
of Redwood resources to fund such costs and the fact that the fairness of the
offer price was determined by the arms-length negotiation between Holdings and
the Selling Shareholders.
CONDUCT OF REDWOOD'S BUSINESS IF THE OFFER IS NOT COMPLETED
If the offer is not completed because the Minimum Condition or another condition
is not satisfied or waived, or Holdings waives the Minimum Condition, Holdings
expects that current management will continue to operate the business of Redwood
substantially as currently operated. Holdings will thereafter propose a long
form merger to Redwood's board as required by its Agreement with the Selling
Shareholders. Such Agreement will require the approval of the Redwood Board and
a vote of shareholders (which Holdings will control if the second closing with
the Selling Shareholders occurs). In the meantime, or if the Redwood Board does
not approve the merger, Holdings may:
o engage in open market or privately negotiated purchases of Redwood
common stock to increase Holdings' aggregate ownership of the shares
to at least 90% of the then outstanding voting shares and then
effecting a short form merger; or
o keep outstanding the public minority interest in Redwood.
If Holdings pursues any of these alternatives, it might take considerably longer
for the Public Shareholders to receive any consideration for their shares (other
than through sales in the open market) than if they had tendered their shares in
the offer. Any such transaction may result in proceeds per share to the Public
Shareholders of Redwood that are more or less than or the same as the offer
price.
THE TENDER OFFER
1. NUMBER OF SHARES
Upon the terms and subject to the conditions described in this document and in
the letter of transmittal, we will purchase all shares of Redwood that are owned
by Public Shareholders that are validly tendered on or prior to the expiration
date of the offer, and not withdrawn in accordance with Section 3, at a price of
$1.60 per share. The later of 5:00 p.m., Denver time, on May 25, 2005, or the
latest time and date to which the offer is extended pursuant to Section 10, is
referred to herein as the "expiration date."
This offer is conditioned on there being validly tendered and accepted at least
403,923 shares so that we will own at least 90% of the voting shares outstanding
to be able to effect the Second-Step Transaction (the "Minimum Condition"). The
number of shares owned by the Public Shareholders is 633,237 and includes 29,200
owned in individual retirement accounts of which Gibbs is the beneficiary. The
offer is, however, subject to certain other conditions. See "Conditions of the
Offer."
17
All shares not purchased pursuant to this offer, will be returned to the
tendering shareholders at our expense promptly following the expiration date.
We expressly reserve the right, in our sole discretion, at any time or from time
to time, to extend the period of time during which the offer is open by giving
oral or written notice of such extension to the depositary and making a public
announcement thereof. See "Extension of Tender Period; Termination; Amendments."
There can be no assurance, however, that we will exercise our right to extend
the offer.
For purposes of the offer, a "business day" means any day other than a Saturday,
Sunday or federal holiday and consists of the time period from 12:01 a.m.
through 12:00 midnight, Denver time.
Copies of this offer to purchase and the related letter of transmittal are being
mailed to record holders of shares and will be furnished to brokers, banks and
similar persons whose names, or the names of whose nominees, appear on our
stockholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing for subsequent transmittal to beneficial
owners of shares.
2. PROCEDURE FOR TENDERING SHARES
To tender shares pursuant to our offer, either (1) or (2) below must occur:
(1) A properly completed and duly executed letter of transmittal or facsimile
thereof, together with any required signature guarantees 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 either (i)
certificates for the shares to be tendered must be received by the depositary at
such address or (ii) the shares must be delivered pursuant to the procedures for
book-entry transfer described below, and a confirmation of the delivery received
by the depositary including an agent's message (described under "Book Entry
Delivery" below), in each case on or prior to the expiration date.
(2) You must comply with the guaranteed delivery procedure set forth below.
In cases where shares are tendered by a registered holder of our common stock
who has completed either the box entitled "Special Payment Instructions" or the
box entitled "Special Delivery Instructions" in the letter of transmittal, all
signatures on the letters of transmittal must be guaranteed by an "eligible
institution." An "eligible institution" is a bank, broker, dealer, credit union,
savings association or other entity that is a member in good standing of the
Securities Transfer Agents Medallion Program or a bank, broker, dealer, credit
union, savings association or other entity that is an "eligible guarantor
institution," as that term is defined in Rule 17Ad-15 promulgated under the
Securities Exchange Act of 1934 referred to herein as the "Exchange Act". If the
certificates are registered in the name of a person other than the signer of the
letter of transmittal, or if certificates for unpurchased shares are to be
issued to a person other than the registered holder(s), the certificates must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name or names of the registered owner or owners appear on the
certificates, with the signature(s) on the certificates or stock powers
guaranteed by an eligible institution.
A tender of shares pursuant to the procedures described in this section will
constitute a binding agreement between the tendering stockholder and us upon the
terms and subject to the conditions of our offer.
The method of delivering all documents, including certificates for shares, the
letter of transmittal and any other required documents, is at your election and
risk. If delivery is by mail, registered mail with return receipt requested,
properly insured, is recommended.
All deliveries in connection with our offer, including a letter of transmittal
and certificates for shares, must be made to the depositary and not to us or the
book-entry transfer facility. Any documents delivered to us or the book-entry
transfer facility will not be forwarded to the depositary and therefore will not
be deemed to be properly tendered. In all cases, sufficient time should be
allowed to ensure timely delivery.
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BOOK-ENTRY DELIVERY
The depositary will establish an account with respect to the shares at the
book-entry transfer facility for purposes of our offer within two business days
after the date of this document. Any financial institution that is a participant
in the system of the book-entry transfer facility may make book-entry delivery
of shares by causing the book-entry transfer facility to transfer the shares
into the depositary's account in accordance with the depositary's procedure for
the transfer. Even though delivery of shares may be effected through book-entry
transfer into the depositary's account at the book-entry transfer facility,
either (1) or (2) below must occur for a valid tender:
(1) A properly completed and duly executed letter of transmittal or a manually
signed copy thereof, or an agent's message, as defined below, together with any
required signature guarantees and any other required documents, must, in any
case, be transmitted to and received by the depositary at its address set forth
on the back cover of this offer on or prior to the expiration date.
(2) You must comply with the guaranteed delivery procedures set forth below.
Delivery of the letter of transmittal (or other required documentation) to the
book-entry transfer facility does not constitute delivery to the depositary.
The term "agent's message" means a message transmitted by the book-entry
transfer facility to, and received by, the depositary and forming a part of a
book-entry confirmation, which states that the book-entry transfer facility has
received an express acknowledgement from the participant in the book-entry
transfer facility tendering the shares, that the participant has received and
agrees to be bound by the terms of the letter of transmittal and that we may
enforce the agreement against the participant.
GUARANTEED DELIVERY
If you want to tender your shares pursuant to our offer but your share
certificates are not immediately available, the procedure for book-entry
transfer cannot be completed on a timely basis, or if time will not permit all
required documents to reach the depositary prior to the expiration date, you can
still tender your shares if all the following conditions are met:
o the tender is made by or through an eligible institution;
o the depositary receives by hand, mail, overnight courier or facsimile
transmission, prior to the expiration date, a properly completed and duly
executed notice of guaranteed delivery in the form we have provided with
this document, with signatures guaranteed by an eligible institution;
o the depositary receives, within three trading days after the date of its
receipt of the notice of guaranteed delivery:
o the certificates for all tendered shares, or confirmation of receipt of the
shares pursuant to the procedure for book-entry transfer as described above
are received by the depositary;
o a properly completed and duly executed letter of transmittal or facsimile
of it, or an agent's message in the case of a book-entry transfer are
received by the depositary, and
o any other documents required by the letter of transmittal are received by
the depositary.
In any event, the exchange of the purchase price for shares tendered and
accepted for purchase pursuant to our offer will be made only after timely
receipt by the depositary of certificates for the shares, properly completed,
duly executed letter(s) of transmittal and any other required documents.
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DETERMINATION OF VALIDITY; REJECTION OF SHARES; WAIVER OF DEFECTS; NO OBLIGATION
TO GIVE NOTICE OF DEFECTS
All questions as to the validity, form, eligibility (including time of receipt)
and acceptance of any tender of shares will be determined by us in our sole
discretion, and our determination will be final and binding. We reserve the
absolute right to reject any or all tenders determined by us not to be in proper
form or the acceptance or purchase of which may, in the opinion of our counsel,
be unlawful. We also reserve the absolute right to waive prior to the expiration
date any condition (other than the nonwaivable conditions) or any defect or
irregularity in the tender of any shares. In the event a condition is waived
with respect to any particular stockholder, the same condition will be waived
with respect to all shareholders. No tender of shares will be deemed to have
been validly made until all defects and irregularities have been cured or
waived. Our interpretation of the terms and conditions of our offer (including
this document, the letter of transmittal and its instructions and other offer
materials) will be final and binding. Neither we, the depositary nor any other
person will be under any duty to give notification of any defects or
irregularities in the tender of any shares or will incur any liability for
failure to give any such notification.
PROCEDURE FOR SHARES HELD BY BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES
AND OTHER NOMINEES
If your shares are registered in the name of a broker, dealer, commercial bank,
trust company or other nominee, you must contact the broker, dealer, commercial
bank, trust company or other nominee if you wish to tender your shares. You
should contact your broker, dealer, commercial bank, trust company or other
nominee in sufficient time to permit notification of your desire to tender to
reach the depositary by the expiration date of our offer.
YOUR REPRESENTATIONS AND WARRANTIES; OUR ACCEPTANCE CONSTITUTES AN AGREEMENT
It is a violation of Rule 14e-4 promulgated under the Securities Exchange Act of
1934 for a person, directly or indirectly, to tender shares for that person's
own account unless, at the time of tender and at the end of the proration
period, the person so tendering:
o has a "net long position" equal to or greater than the amount of (i) shares
tendered or (ii) securities immediately convertible into, or exchangeable
or exercisable for, the subject securities; and
o will deliver or cause to be delivered the shares in accordance with the
terms of the tender 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 shares under any of the procedures described above will constitute
your acceptance of the terms and conditions of our offer, as well as your
representation and warranty to us that:
o you have a "net long position" in the shares or equivalent securities at
least equal to the shares tendered within the meaning of Rule 14e-4; and
o the tender of shares complies with Rule 14e-4.
Our acceptance for payment of shares tendered under our offer will constitute a
binding agreement between you and us upon the terms and conditions of our offer
described in this and related documents.
FEDERAL BACKUP WITHHOLDING TAX
Under the United States federal backup withholding tax rules, 28% of the gross
proceeds payable to a stockholder or other payee in the tender offer must be
withheld and remitted to the United States Treasury, unless the stockholder or
other payee provides such person's taxpayer identification number
20
(employer identification number or social security number) to the depositary and
certifies under penalties of perjury that this number is correct or otherwise
establishes an exemption. If the depositary is not provided with the correct
taxpayer identification number or another adequate basis for exemption, the
holder may be subject to certain penalties imposed by the Internal Revenue
Service. Therefore, each tendering stockholder should complete and sign the
substitute Form W-9 included as part of the letter of transmittal in order to
provide the information and certification necessary to avoid backup withholding,
unless the stockholder otherwise establishes to the satisfaction of the
depositary that the stockholder is not subject to backup withholding.
Certain shareholders (including, among others, all corporations and certain
foreign shareholders in addition to foreign corporations) are not subject to
these backup withholding rules. In order for a foreign stockholder to qualify as
an exempt recipient, that stockholder must submit an Internal Revenue Service
Form W-8 or a Substitute Form W-8, signed under penalties of perjury, attesting
to that stockholder's exempt status. The applicable form can be obtained from
the depositary. See Instruction 10 of the letter of transmittal.
To prevent federal backup withholding tax equal to 28% of the gross payments
made to shareholders for shares purchased under our offer, each stockholder who
does not otherwise establish an exemption from the withholding must provide the
depositary with the stockholder's correct taxpayer identification number and
provide other information by completing the substitute Form W-9 included with
the letter of transmittal.
Each stockholder is urged to consult with his or her own tax advisor regarding
his, her or its qualifications for exemption from backup withholding and the
procedure for obtaining any applicable exemption.
For a discussion of United States federal income tax consequences to tendering
shareholders, see Section 9.
LOST OR DESTROYED CERTIFICATES
If your certificate(s) for part or all of your shares have been lost, stolen,
misplaced or destroyed, indicate that fact on the letter of transmittal, which
should then be delivered to the depositary after being otherwise properly
completed and duly executed. In such event, the depositary will forward
additional documentation necessary to be completed in order to effectively
replace the lost or destroyed certificate(s). See Instruction 13 of the letter
of transmittal.
3. WITHDRAWAL RIGHTS
Tenders of shares made pursuant to the offer may be withdrawn at any time prior
to the expiration date. Thereafter, tenders are irrevocable, except that they
may be withdrawn after 12:00 midnight, Denver time, June 24, 2005 unless
previously accepted for payment by us as provided in this offer to purchase. If
we extend the period of time during which the offer is open, are delayed in
purchasing shares or are unable to purchase shares pursuant to the offer for any
reason, then, without prejudice to our rights under the offer, the depositary
may, on our behalf, retain all shares tendered, and the shares may not be
withdrawn except as otherwise provided in this Section 3, subject to Rule
13e-4(f)(5) under the Securities Exchange Act of 1934, which provides that the
person making the tender offer shall either pay the consideration offered or
return the tendered securities promptly after the termination or withdrawal of
the tender offer.
Withdrawal of Shares Held in Physical Form. For a withdrawal to be effective, a
holder of shares held in physical form must provide a written or facsimile
transmission notice of withdrawal to the depositary at its address set forth on
the back cover page of this offer before the expiration date, which notice must
contain: (1) the name of the person who tendered the shares; (2) a description
of the shares to be withdrawn; (3) the certificate numbers shown on the
particular certificates evidencing the shares; (4) the signature of the
stockholder executed in the same manner as the original signature on the letter
of transmittal, including any signature guarantee, if such original signature
was guaranteed; and (5) if the
21
shares are held by a new beneficial owner, evidence satisfactory to us that the
person withdrawing the tender has succeeded to the beneficial ownership of the
shares. A purported notice of withdrawal that lacks any of the required
information will not be an effective withdrawal of a tender previously made.
Withdrawal of Shares Held with the Book-Entry Transfer Facility. For a
withdrawal to be effective, a holder of shares held with the book-entry transfer
facility must: (1) call his or her broker and instruct the broker to withdraw
the tender of shares by debiting the depositary's account at the book-entry
transfer facility for all shares to be withdrawn; and (2) instruct the broker to
provide a written or facsimile transmission notice of withdrawal to the
depositary on or before the expiration date. The notice of withdrawal shall
contain (a) the name of the person who tendered the shares; (b) a description of
the shares to be withdrawn; and (c) if the shares are held by a new beneficial
owner, evidence satisfactory to us that the person withdrawing the tender has
succeeded to the beneficial ownership of the shares. A purported notice of
withdrawal that lacks any of the required information will not be an effective
withdrawal of a tender previously made.
Any permitted withdrawals of tenders of shares may not be rescinded, and any
shares so withdrawn will thereafter be deemed not validly tendered for purposes
of the offer; provided, however, that withdrawn shares may be re-tendered by
following the procedures for tendering prior to the expiration date.
All questions as to the form and validity, including time of receipt, of any
notice of withdrawal will be determined by us, in our sole discretion, which
determination shall be final and binding on all parties. Neither we, the
information agent, the depositary nor any other person is or will be under any
duty to give notification of any defect or irregularity in any notice of
withdrawal or incur any liability for failure to give any such notification.
If Holdings elects to continue the offering after the expiration date, holders
tendering shares during such period will not have withdrawal rights. See
"Extension of Tender Period; Termination; Amendments."
4. ACCEPTANCE FOR PAYMENT OF SHARES AND PAYMENT OF PURCHASE PRICE
Upon the terms and subject to the conditions of the offer and promptly after the
expiration date, we will accept for payment and pay the purchase price for all
shares validly tendered and not withdrawn Payment will be made promptly by the
depositary by check. Payment for shares accepted pursuant to the offer will be
made only after timely receipt by the depositary of: (1) certificates for such
shares or confirmation of a book-entry transfer of such shares into the
depositary's account at the book-entry transfer facility; (2) a properly
completed and duly executed letter of transmittal or a manually signed copy
thereof, with any required signature guarantees, or, in the case of a book-entry
delivery, an agent's message; and (3) any other required documents.
For purposes of the offer, we shall be deemed to have accepted for payment, and
thereby purchased, shares that are validly tendered and not withdrawn if and
when we give oral or written notice to the depositary of our acceptance for
payment of the shares. We will pay for shares that we have purchased pursuant to
the offer by depositing the aggregate purchase price therefore with the
depositary. The depositary will act as agent for tendering shareholders for the
purpose of receiving payment from us and transmitting payment to tendering
shareholders. Under no circumstances will interest be paid on amounts to be paid
to tendering shareholders, regardless of any delay in making such payment.
Certificates for all shares not purchased pursuant to this offer to purchase
will be returned, or, in the case of shares tendered by book-entry transfer, the
shares will be credited to an account maintained with the book-entry transfer
facility by the participant therein who so delivered the shares, promptly
following the expiration date without expense to the tendering stockholder.
Payment for shares may be delayed in the event of difficulty in determining the
number of shares properly tendered. See "Number of Shares." In addition, if
certain events occur, we may not be obligated to purchase shares pursuant to the
offer. See "Source and Amount of Funds."
22
We will pay or cause to be paid any stock transfer taxes with respect to the
sale and transfer of any shares to us or our order pursuant to the offer. If,
however, payment of the purchase price is to be made to, or a portion of the
shares delivered to, whether in certificated form or by book-entry, but not
tendered or not purchased are to be registered in the name of, any person other
than the registered holder, or if tendered shares are registered in the name of
any person other than the person signing the letter of transmittal, unless the
person is signing in a representative or fiduciary capacity, the amount of any
stock transfer taxes, whether imposed on the registered holder, such other
person or otherwise, payable on account of the transfer to the person will be
deducted from the purchase price unless satisfactory evidence of the payment of
such taxes, or exemption therefrom, is submitted. See Instruction 7 to the
letter of transmittal.
Any tendering stockholder or other payee who fails to complete fully and sign
the substitute Form W-9 included in the letter of transmittal or, in the case of
a foreign individual, a Form W-8, may be subject to required federal income tax
withholding of 28% of the gross proceeds paid to such stockholder or other payee
pursuant to the offer. See "Procedure for Tendering Shares."
5. CONDITIONS OF THE OFFER
Notwithstanding any other provisions of our offer, we will not be required to
accept for purchase or purchase any shares, may postpone the acceptance for
purchase of or the purchase of shares tendered, and may cancel, terminate or
amend our offer as provided herein if any of the following conditions are not
satisfied or waived on or before the expiration date.
We reserve the right (but are not obligated), subject to the rules and
regulations of the SEC, to waive this condition, in whole or in part, on or
before the expiration date.
MINIMUM CONDITION
We will not be obligated to close the offer if there are not properly tendered
and not withdrawn at least 403,923 shares of Redwood common stock so that we
will own sufficient shares to effect the Second-Step Transaction as a short form
merger.
We reserve the right (but are not obligated), subject to the rules and
regulations of the SEC, to waive this condition, in whole or in part, on or
before the expiration date.
AGREEMENT CONDITION
We will not be obligated to close the offer if the second closing under the
Agreement with the Selling Shareholders has not occurred on or before the
closing of the offer.
We reserve the right (but are not obligated), subject to the rules and
regulations of the SEC, to waive this condition, in whole or in part, on or
before the expiration date.
FCC APPROVAL CONDITION
We will not be obligated to close the offer if the approval of the Federal
Communications Commission for the acquisition of control of radio stations owned
by a subsidiary of Redwood has not been received. See "Legal Matters; Regulatory
Approvals."
NO LEGAL PROHIBITION CONDITION
We will not be obligated to close the offer if a preliminary or permanent
injunction, decree or order has been entered or threatened by any governmental
authority, or another legal restraint or prohibition is in effect, that either:
o enjoins, restrains or prohibits our offer;
23
o or, in our reasonable judgment, could materially and adversely affect our
or Redwood's business, financial condition, income, operations or
prospects, or otherwise materially impair in any way the contemplated
future conduct of our or Redwood's business or our ability to purchase
shares of Redwood's common stock in the tender offer.
As of the date of this document, no such injunction, decree, order, restraint or
prohibition exists, nor to our knowledge has any of the foregoing been
threatened. However, we can give no assurance that an injunction, decree, order,
restraint or prohibition will not exist in the future.
We reserve the right (but are not obligated), subject to the rules and
regulations of the SEC, to waive this condition, in whole or in part, on or
before the expiration date.
MATERIAL ADVERSE CHANGE CONDITION
We will not be obligated to close our offer if, after the date of this document,
any of the following has occurred:
o the declaration of any banking moratorium or any suspension of payments in
respect of banks in the United States (whether or not mandatory);
o any general suspension of trading in, or limitation on prices for,
securities on any U.S. national securities exchange or in the
over-the-counter market;
o any limitation (whether or not mandatory) by any governmental, regulatory
or administrative agency or authority on, or any event which, in our
reasonable judgment, might materially affect the extension of credit by
banks or other lending institutions in the United States;
o a decrease in the market price of Redwood shares of more than 15% measured
from the close of trading on March 28, 2005, the date this offer was first
announced;
o any change in the general political, market, economic or financial
conditions in the United States or abroad that could have, in our
reasonable judgment, a material adverse effect on Redwood's business,
financial condition, income, operations or prospects, or on the trading in
its shares;
o any decline in the Dow Jones Industrial Average, the Standard & Poor's
Index of 500 Industrial Companies or the New York Stock Exchange Composite
Index by an amount in excess of 10% measured from the close of business on
March 28, 2005; or
o any change or event has occurred or is threatened in Redwood or its
subsidiaries' business condition (financial or otherwise), assets, income,
operations or prospects or stock ownership that, in our reasonable
judgment, is or is reasonably likely to have a material adverse effect on
Redwood or its subsidiaries.
NO COMPETING OFFER CONDITION
We will not be obligated to close our offer if, after the date of this document,
a tender or exchange offer with respect to some or all of the shares (other than
our offer), or merger, acquisition proposal or other business combination for
Redwood has been proposed, announced or made by another person or we have
learned that:
o any person or "group" (within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934) has acquired or proposes to acquire
beneficial ownership of more than 5% of the outstanding Redwood shares,
whether through the acquisition of stock, the formation of a group, the
grant of any option or right or otherwise (other than as disclosed in a
Schedule 13D or 13G (or an amendment thereto) on file with the SEC on the
date of this document);
24
o any such person or group that on or prior to the date of this document had
filed such a Schedule with the SEC thereafter has acquired or has proposed
to acquire, whether through the acquisition of stock, the formation of a
group, the grant of any option or right or otherwise, beneficial ownership
of additional shares representing 2.0% or more of the outstanding Redwood
shares; or
o any person or group has made a public announcement reflecting an intent to
acquire Redwood or any of its subsidiaries or any of their assets.
We are not aware of any such event having occurred. In any event, we reserve the
right (but are not obligated), subject to the rules and regulations of the SEC,
to waive this condition, in whole or in part, prior to the expiration date.
EFFECT OF FAILING TO SATISFY CONDITIONS
If any of the conditions have not been satisfied or, if waivable, not waived by
the expiration date, we may elect either to:
o extend the expiration date and our offer and retain all shares tendered
until the expiration date of the offer as extended, subject to the right of
a tendering stockholder to withdraw his or her shares;
o waive the conditions (other than the condition regarding no legal
prohibitions and the FCC approval condition), extend our offer for a period
of ten business days if our offer is scheduled to expire prior thereto if
such waiver constitutes a material change in our offer, and thereafter
purchase all properly tendered shares; or
o terminate our offer and purchase none of the shares and return all tendered
shares.
We will not accept for purchase any shares pursuant to our offer until such time
as the conditions have been satisfied or waived.
In the event a condition is waived with respect to any particular stockholder,
the same condition will be waived with respect to all shareholders.
6. PRICE RANGE OF SHARES; DIVIDENDS
Redwood's common stock is listed on the Bulletin Board under the symbol RWMC.
The trading in Redwood common stock has been extremely sporadic and limited.
During the twelve months ending March 28, 2005, the date the intent to make this
offer was publicly announced, the average daily trading volume was less than 125
shares and there were shares traded only 8 trading days during such period. The
following table sets forth the high and low closing prices for Redwood's common
stock as reported on the Bulletin Board.
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HIGH LOW
------- -------
2003
----
First Quarter................................. $ .80 $ .65
Second Quarter................................ .65 .65
Third Quarter................................. .65 .65
Fourth Quarter................................ .68 .55
2004
----
First Quarter................................. $ .70 $ .60
Second Quarter................................ .70 .62
Third Quarter................................. .62 .62
Fourth Quarter................................ .64 .62
2005
----
First Quarter................................. $ 1.50 $ .62
Second Quarter (through April 20, 2005)....... 1.50 1.55
On April 20, 2005, the closing price of the shares on the Bulletin Board was
$1.55 per share. Shareholders are urged to obtain current market quotations for
the shares.
Redwood has not paid any dividends on its common stock.
7. SOURCE AND AMOUNT OF FUNDS
Holdings expects to obtain the funds for the purchase of the shares in the
tender offer and transaction costs from a loan from BancFirst, a commercial bank
headquartered in Oklahoma City, Oklahoma ("Lender") in the amount of $1,450,000.
The Lender has previously loaned Gibbs the $375,000 in cash which was advanced
to Holdings to purchase Redwood common stock from the Selling Shareholders in
the first closing. BancFirst will advance additional funds to Holdings to pay
for the shares purchased in the tender offer. Gibbs and his wife will be
comakers on the loan to Holdings. After the Second-Step Transaction is completed
and Redwood has been deregistered under the 1940 Act, it is anticipated that
these loans will be refinanced by a loan from the Lender to Holdings which will
be secured by assets owned directly or indirectly by Redwood, including assets
owned by TDP and TriPower. Repayment of these loans will be made from TriPower
cash flow.
The loan to Holdings will mature in April, 2006 and bears interest at the prime
rate as quoted in the Wall Street Journal plus 1% payable monthly. There will
also be charged a loan fee in the amount of 5% of the maximum amount of the loan
less $500,000. The loan will be secured by Gibbs' personal investments and all
of the shares of Redwood acquired by Holdings. The loan will require Gibbs to
maintain a specific minimum net worth, and require that neither Gibbs nor
Holdings create or incur any other debt in excess of a specified amount (other
than for buying or refinancing a personal residence and for indebtedness to the
Selling Shareholders) and requires at least $750,000 in life insurance on Gibbs.
8. LEGAL MATTERS; REGULATORY APPROVALS
FCC APPROVAL
A controlled subsidiary of Redwood, Four Rivers Broadcasting, LLC ("Four
Rivers"), holds a number of Federal Communications Commission ("FCC") licenses
in connection with the operation of radio stations and therefore is subject to
regulation by the FCC. Such licenses and renewals thereof are granted when and
if the FCC finds that the public interest, convenience and necessity will be
served thereby. The FCC is also empowered to modify and revoke such licenses,
and deny applications for renewals of such licenses.
The Communications Act prohibits the transfer of control of any licensee, or the
assignment of any license without prior FCC approval. Such approval is referred
to herein as "Long Form Approval." The consummation of the second closing of the
Agreement and the offer would result in a transfer of control
26
of Redwood, and, therefore, Four Rivers to Holdings. Thus, Long Form Approval
would be required before the second closing or the offer could be consummated.
Such approval may be granted by the FCC's staff on delegated authority from the
FCC and need not await finality of such action.
Holdings, the Selling Shareholders and Four Rivers filed on April 15, 2005 a
"long form" application for consent to a transfer of control of Four Rivers to
Holdings with the FCC seeking Long Form Approval. Interested parties have 30
days after the public notice of acceptance by the FCC for filing of such
application to file formal petitions to deny approval of the application, and
informal objections may be filed at any time prior to approval. Accordingly, the
final resolution of the application could take several months.
PURSUANT TO THE CONDITIONS SET FORTH IN SECTION 5 ABOVE, IF HOLDINGS AND FOUR
RIVERS ARE UNSUCCESSFUL IN OBTAINING APPROVAL FROM THE FCC, HOLDINGS WILL NOT
PURCHASE SHARES UNTIL LONG FORM APPROVAL HAS BEEN OBTAINED FROM THE FCC OR
HOLDINGS IS OTHERWISE SATISFIED, IN ITS SOLE DISCRETION, THAT THE SHARES CAN BE
PURCHASED WITHOUT VIOLATING THE COMMUNICATIONS ACT.
If, by the initial expiration date, the FCC has not granted the Long Form
Approval, Holdings will extend the offer and retain all tendered shares until
the new expiration date, subject to the terms of the offer, and continue to
attempt to obtain Long Form Approval. There can be no assurance that the Long
Form Approval will be obtained from the FCC on satisfactory terms and
conditions.
OTHER APPROVALS
We are not aware of any other license or regulatory permit that appears to be
material to our business that might be adversely affected by our acquisition of
shares as contemplated herein or of any approval or other action by, or any
filing with, any government or governmental, administrative or regulatory
authority or agency, domestic or foreign, that would be required for the
acquisition or ownership of shares by us as contemplated herein. Should any
other approval or other action be required, we presently contemplate that the
approval or other action will be sought. We are unable to predict whether we may
determine that we are required to delay the acceptance for payment of or payment
for shares tendered pursuant to this offer pending the outcome of any such
matter.
There can be no assurance that any approval or other action, if needed, would be
obtained or would be obtained without substantial conditions or that the failure
to obtain any approval or other action might not result in adverse consequences
to our business. Our obligations under the offer to accept for payment and pay
for shares is subject to certain conditions.
See "Conditions of the Offer."
MARGIN RULES
Because Redwood is a registered investment company, its common stock is
considered a "margin security" for purposes of the Federal Reserve margin rules
until Redwood is no longer registered under the 1940 Act. The Lender, Gibbs and
Holdings expect to comply with these rules in connection with the financing
being provided to Holdings for the offer. Because of the lack of liquidity in
Redwood's shares, even though the Company stock is technically eligible for
margin loans, we do not think brokers are likely to extend margin credit based
on these shares.
STATE TAKEOVER STATUTES
There are no provisions in the CBCA which limit or prohibit us from acquiring
shares of Redwood from the Selling Shareholders or from the Public Shareholders.
27
9. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
General. The following is a discussion of the material United States federal
income tax consequences to shareholders with respect to a sale of shares
pursuant to the offer. The discussion is based upon the provisions of the
Internal Revenue Code, Treasury regulations, Internal Revenue Service rulings
and judicial decisions, all in effect as of the date hereof and all of which are
subject to change, possibly with retroactive effect, by subsequent legislative,
judicial or administrative action. The discussion does not address all aspects
of United States federal income taxation that may be relevant to a particular
stockholder in light of the stockholder's particular circumstances or to certain
types of holders subject to special treatment under the United States federal
income tax laws, such as certain financial institutions, tax-exempt
organizations, life insurance companies, dealers in securities or currencies,
employee benefit plans or shareholders holding the shares as part of a
conversion transaction, as part of a hedge or hedging transaction, or as a
position in a straddle for tax purposes. In addition, the discussion below does
not consider the effect of any foreign, state, local or other tax laws that may
be applicable to particular shareholders. The discussion assumes that the shares
are held as "capital assets" within the meaning of Section 1221 of the Internal
Revenue Code. We have neither requested nor obtained a written opinion of
counsel or a ruling from the Internal Revenue Service with respect to the tax
matters discussed below.
Each stockholder should consult his or her own tax advisor as to the particular
United States federal income tax consequences to that stockholder tendering
shares pursuant to the offer and the applicability and effect of any state,
local or foreign tax laws and recent changes in applicable tax laws.
The sale of shares by a stockholder to Holdings pursuant to the offer will be a
taxable transaction for United States federal income tax purposes and may also
be a taxable transaction under applicable state, local and foreign tax laws. The
United States federal income tax consequences to a stockholder may vary
depending upon the stockholder's particular facts and circumstances. The sale of
shares by a stockholder to Holdings will be treated as a "sale or exchange" of
shares for United States federal income tax purposes. The tendering stockholder
will recognize gain or loss equal to the difference between the amount of cash
received by the stockholder and the stockholder's tax basis in the shares
surrendered pursuant to the offer. Any gain or loss will be capital gain or
loss, and will be long term capital gain or loss if the shares have been held
for more than one year.
The "Jobs and Growth Tax Reconciliation Act of 2003" significantly alters the
treatment of long term capital gains of individuals. Under this legislation,
long-term capital gains on sales and exchanges (and payments received) after May
6, 2003 and before January 1, 2009, by individuals are taxed at a maximum rate
of 15%. The rate applicable to individuals with taxable income at or below
$29,050 (if single) or $58,100 (if married and filing jointly) is 5% through the
end of 2007 (0% in 2008).
Shareholders are urged to consult their own tax advisors regarding any possible
impact on their obligation to make estimated tax payments as a result of the
recognition of any capital gain caused by the sale of any shares to Holdings
pursuant to the offer.
Backup Withholding. See Section 2 with respect to the application of the United
States federal income tax backup withholding.
10. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS
We expressly reserve the right, in our sole discretion, to extend the period of
time during which the offer is open by giving oral or written notice of the
extension to the depositary and making a public announcement thereof. There can
be no assurance, however, that we will exercise our right to extend the offer.
During any extension, all shares previously tendered will remain subject to the
offer, except to the extent that shares may be withdrawn as set forth in Section
3. We also expressly reserve the right, in our sole discretion, (i) to terminate
the offer and not accept for payment any shares not previously accepted for
payment or, subject to Rule 13e-4(f)(5) under the Securities Exchange Act of
1934 which requires us either to pay the consideration offered or to return the
shares tendered promptly after the termination or
28
withdrawal of the offer, to postpone payment for shares upon the occurrence of
any of the conditions specified in Section 5 hereof, by giving oral or written
notice of the termination to the depositary and making a public announcement
thereof and (ii) to amend the offer in any respect. Amendments to the offer may
be effected by public announcement. Without limiting the manner in which we may
choose to make public announcement of any extension, termination or amendment,
we shall have no obligation, except as otherwise required by applicable law, to
publish, advertise or otherwise communicate any public announcement, other than
by making a release to PR News Wire, Dow Jones News Service, or another
comparable news service, except in the case of an announcement of an extension
of the offer, in which case we shall have no obligation to publish, advertise or
otherwise communicate the announcement other than by issuing a notice of the
extension by press release or other public announcement, which notice shall be
issued no later than 9:00 a.m., Denver time, on the next business day after the
previously scheduled expiration date. Material changes to information previously
provided to holders of the shares in this offer or in documents furnished
subsequent thereto will be disseminated to holders of shares in compliance with
Rule 13e-4(e)(3) promulgated by the SEC under the Exchange Act.
If we materially change the terms of the offer or the information concerning the
offer, or if we waive a material condition of the offer, we will extend the
offer to the extent required by Rules 13e-4(d)(2) and 13e-4(e)(3) under the
Exchange Act. Those rules require that the minimum period during which an offer
must remain open following material changes in the terms of the offer or
information concerning the offer, other than a change in price, change in
dealer's soliciting fee or change in percentage of securities sought, will
depend on the facts and circumstances, including the relative materiality of the
terms or information. In a published release, the SEC has stated that in its
view, an offer should remain open for a minimum of five business days from the
date that notice of a material change is first published, sent or given. The
offer will continue or be extended for at least ten business days from the time
Holdings publishes, sends or gives to holders of shares a notice that we will
(i) increase or decrease the price we will pay for shares or (ii) increase,
except for an increase not exceeding 2% of the outstanding shares, or decrease
the number of shares we seek.
Holdings may elect, in its sole discretion, to provide a subsequent offering
period of three to 20 business days (the "Subsequent Offering Period"). A
Subsequent Offering Period, if one is provided, is not an extension of the
offering period. A Subsequent Offering Period would be in an additional period
of time, following the expiration of the offering period, in which shareholders
may tender shares not tendered during the offering period. If Holdings decides
to provide for a Subsequent Offering Period, Holdings will make an announcement
to that effect by issuing a press release no later than 9:00 a.m., Denver time,
on the next business day after the previously scheduled expiration date. All
offer conditions must be satisfied or waived prior to the commencement of any
Subsequent Offering Period. If Holdings elects to provide a Subsequent Offering
Period, it expressly reserves the right, in its sole discretion, at any time or
from time to time, to extend the Subsequent Offering Period (not beyond a total
of 20 business days) by giving oral or written notice of such extension to the
depositary. During a Subsequent Offering Period, tendering shareholders will not
have withdrawal rights.
See "Withdrawal Rights."
11. MERGER; DISSENTERS' RIGHTS; RULE 13E-3.
MERGER
If, pursuant to the offer, Holdings acquires shares that, together with shares
beneficially owned by Holdings, constitute at least 90% of the outstanding
voting shares, Holdings currently intends to consummate a "short-form" merger
("Merger") pursuant to Sections 7-90-203 and 7-111-104 of the CBCA. Section
7-111-104 of the CBCA provides that if Holdings owns at least 90% of each class
of the outstanding shares of Redwood, Holdings may merge Redwood into itself. In
order to accomplish the Merger, (i) Holdings must adopt a plan of merger, (ii)
at least ten days before the effective date of the Merger, Holdings must mail a
copy or summary of the plan of merger to each shareholder of Redwood other than
Holdings, who does not waive the mailing requirement in writing, and (iii)
Holdings must file articles of merger with the Colorado Secretary of State on
the effective date. Under Sections 7-111-104 and 7-90-203 of the CBCA, such a
merger of Redwood with Holdings would not require the approval or
29
any other action on the part of the board of directors or shareholders of
Redwood. Holdings intends to effect the Merger without a meeting of
shareholders. The Merger is currently expected to occur approximately ten days
after completion of the offer.
If, after the offer is completed but prior to consummation of the Merger, the
aggregate beneficial ownership by Holdings of the outstanding shares should fall
below 90% for any reason, Holdings may decide to acquire additional shares on
the open market or in privately negotiated transactions to the extent required
for such ownership to equal or exceed 90%. Any such purchases would be made at
market prices or privately negotiated prices at the time of purchase, which may
be higher or lower than or the same as the offer price.
THIS OFFER DOES NOT CONSTITUTE A SOLICITATION OF PROXIES OR CONSENTS. ANY SUCH
SOLICITATION WHICH HOLDINGS MIGHT MAKE WILL BE MADE PURSUANT TO SEPARATE PROXY
OR CONSENT SOLICITATION MATERIALS COMPLYING WITH THE REQUIREMENTS OF SECTION
14(A) OF THE EXCHANGE ACT.
DISSENTERS' RIGHTS
Under Colorado law, Redwood shareholders do not have dissenters' rights in the
tender offer. If the offer is successfully completed and Holdings proceeds with
the Merger, holders of Redwood common stock that (a) do not tender shares into
the offer and hold common stock at the effective time of the Merger, (b) do not
wish to accept the consideration provided for in that Merger, and (c) comply
with the procedures provided for in Article 113 of the CBCA, will be entitled to
receive (1) a payment in cash of the "fair value" of those shares immediately
before the effective date of the Merger and (2) interest accruing from the
effective date of the Merger. Within 10 days after the effective date of the
Merger, Redwood, as the surviving corporation of the merger, will send written
notice to all shareholders entitled to dissenters' rights under Article 113 of
the CBCA. Such notice shall include (a) the effective date of the Merger, (b)
the address at which Redwood will receive payment demands and the address where
certificates must be deposited, and (c) the date by which demand for payment
must be received (which time must be at least 30 days after the giving of such
notice).
In order to exercise such statutory appraisal rights, strict adherence to the
statutory provisions is required, and each shareholder who may desire to
exercise such rights should carefully review and adhere to such provisions. A
holder of common stock who desires to pursue the appraisal rights available to
such shareholder must: (i) file a written objection to the Merger with Redwood
pursuant to Section 7-113-202 of the CBCA, stating the intention of such
shareholder to demand payment for shares owned by such shareholder; (ii) make
written demand (the "Demand") to Redwood, as the surviving corporation in the
Merger, for payment for said shareholder's shares on or before the time set
within the notice sent by Redwood to objecting shareholders; and (iii) deposit
the shareholder's share certificates with Redwood.
The value of the common stock will be determined initially by Redwood, as the
surviving corporation and the dissenting shareholder. Upon the later of the
effective date of the Merger and the date upon which Redwood receives a valid
Demand, Redwood shall pay a dissenting shareholder who complies with the above
the fair value of the shareholder's shares, plus accrued interest, if any. Such
payment shall be accompanied by (i) Redwood's balance sheet as of the end of its
most recent fiscal year, (ii) a statement of Redwood 's estimate of the fair
value of the shares, (iii) an explanation of how interest was calculated, (iv) a
statement of the dissenter's right to demand greater payment if the dissenter
believes that Redwood's payment does not accurately reflect the fair value of
the shares, and (v) a copy of Article 7 of the CBCA. If the dissenter believes
that Redwood's payment does not accurately reflect the fair value of the shares,
or if Redwood fails to make its payment within 60 days of receipt of the Demand,
the dissenter may give written notice to Redwood of the dissenter's estimate of
the fair value of the shares and the interest thereon, and demand payment of
such amount, less any amount previously received from Redwood on account of the
shares. The dissenter shall waive any right to propose a fair value for the
shares if written notice is not given to Redwood within 30 days of the
dissenter's receipt of payment from Redwood.
30
If a demand from a dissenter for greater payment than that offered by Redwood
remains unresolved, Redwood may, within 60 days of receiving such demand,
commence a judicial proceeding to determine the fair value of the shares. If
Redwood does not commence a judicial proceeding within 60 days of receiving such
demand, it shall pay the amount demanded by the dissenting shareholder. Each
dissenting shareholder whose demands remain unresolved shall be made parties to
such action. Upon a judicial determination of the fair value of the shares, each
dissenter shall be entitled to the amount, if any, by which the value found
through the judicial proceeding exceeds the payment made by Redwood, plus
interest. The court costs of such a proceeding shall be borne by Redwood, except
to the extent that the court finds that dissenters acted arbitrarily,
vexatiously, or not in good faith in demanding payment beyond that offered by
Redwood. The court may also assess counsel fees and expenses upon the respective
parties, to the extent that the court finds such assessment fair and equitable.
The "fair value" of the shares could be more than, the same as or less than the
consideration to be received by the Redwood shareholders in the Merger. For
appraisal proceeding purposes, value is determined as of the day before the
effective date of the Merger excluding any element of value arising from the
expectation or accomplishment of the Merger. A final judgment by the court or an
appraiser appointed by the court determining the fair value of the shares would
be binding on and enforceable by Redwood shareholders who have perfected their
statutory appraisal rights, even if such fair value were determined to be less
than the consideration to be received by the shareholders in the Merger. A
shareholder who perfects his rights, as a dissenting shareholder shall retain
all rights of a shareholder, except the right to transfer the shares, until the
effective date of the merger and has only the right to receive payment for the
shares after the effective date of the Merger. Each share of common stock held
by shareholders who seek to exercise appraisal rights and, after the effective
date of the Merger, fail to perfect or lose any such right to appraisal, shall
be treated as a share that had been converted as of the effective date of the
Merger and shall be entitled to receive the consideration otherwise payable
pursuant to the Merger, without interest.
The enforcement by a shareholder of his or her request to receive payment for
shares of common stock as provided under the applicable statutory provisions
shall be an exclusive remedy except that such remedy shall not exclude the right
of a shareholder to bring or maintain an appropriate proceeding to obtain relief
on the ground that said corporate action will be or is illegal or fraudulent as
to said shareholder.
The foregoing discussion is not a complete statement of law pertaining to
appraisal rights under the CBCA and is qualified in its entirety by the full
text of Article 113 of the CBCA, which is attached as Schedule A to this offer
to purchase.
RULE 13E-3
Because Holdings and Gibbs are affiliates of Redwood, the transactions
contemplated herein may be considered to constitute a "going private"
transaction under Rule 13e-3 under the Exchange Act, although the rule does not
technically apply because Redwood already has fewer than 300 shareholders. Rule
13e-3 requires, among other things, that certain financial information
concerning Redwood and certain information relating to the fairness of the offer
and the Second-Step Transaction and the consideration offered to Public
Shareholders be filed with the SEC and disclosed to Public Shareholders prior to
consummation of the Second Step Transaction. Holdings has provided such
information in this offer to purchase.
12. FINANCIAL INFORMATION CONCERNING REDWOOD
Redwood is subject to the information and reporting requirements of the 1940 Act
and in accordance therewith is obligated to file reports and other information
with the SEC relating to its business, financial condition, and other matters.
Information, as of particular dates, concerning Redwood's directors and
officers, their remuneration, stock options granted to them, the principal
holders of Redwood's securities, any material interests of such persons in
transactions with Redwood and other matters is required to be disclosed in proxy
statements distributed to Redwood shareholders and filed with the SEC. Such
reports,
31
proxy statements, and other information should be available for inspection at
the public reference room at the SEC's offices at 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549 and can be obtained electronically on
the SEC's website at http://www.sec.gov.
Set forth below is a summary of certain financial information concerning Redwood
which has been derived from the reports that Redwood files with the SEC under
the 1940 Act.
This data and the comparative per share data set forth below are extracted from,
and should be read in conjunction with, the audited financial statements and
other financial information contained in Redwood's reports filed with the SEC
for the years ended March 31, 2003 and 2004 and unaudited financial statements
for the six months ended September 30, 2004, and other documents filed by
Redwood with the SEC, and the following summary is qualified in its entirety by
reference to such reports and other documents and all of the financial
information and notes contained therein. Copies of such reports and other
documents may be examined at or obtained from the SEC in the manner set forth
above. These documents are incorporated by reference in this offer to purchase.
YEAR ENDED YEAR ENDED SIX MONTHS ENDED
MARCH 31, 2003 MARCH 31, 2004 SEPTEMBER 30, 2004
-------------- -------------- ------------------
Investments in Securities of Affiliated Companies $ 6,047,479 $ 5,785,672 $ 5,799,525
Total Assets 6,744,140 6,321,649 6,215,809
Total Liabilities 2,871,506 2,701,037 2,778,103
Net Assets 3,872,634 3,620,612 3,437,706
Net Asset Value per Share 1.56 1.45 1.38
Investment Income 252,624 1,105,495 110,633
Net Investment Gain (Loss) (191,277) 700,180 (82,697)
Net Loss on Investments (929,484) (1,275,001) (203,209)
Net Decrease in Net Assets from Operations (435,010) (288,821) (182,906)
13. FEES AND EXPENSES
Diane Allen will act as the information agent in connection with the offer. Ms.
Allen, as information agent, may contact shareholders by mail, telephone,
facsimile, telex, telegraph, other electronic means and personal interviews, and
may request brokers, dealers and other nominee shareholders to forward materials
relating to the offer to beneficial owners. Ms. Allen is an employee of TriPower
but she will be compensated by Holdings for her information agent services,
which will be in addition to her TriPower duties.
We have retained Computershare as depositary in connection with the offer. We
have agreed to indemnify the depositary against certain liabilities, including
liabilities under the federal securities laws, in connection with the offer.
The information agent and depositary will receive reasonable and customary
compensation for their services and will also be reimbursed for certain
out-of-pocket expenses.
We will not pay any fees or commissions to any broker, dealer or other person
for soliciting tenders of shares pursuant to the offer. We will, upon request,
reimburse brokers, dealers, commercial banks and trust companies for reasonable
and customary handling and mailing expenses incurred by them in forwarding
materials relating to the offer to their customers.
32
Neither the information agent nor the depositary has been retained to make
solicitations or recommendations in connection with the offer.
We estimate the total fees and expenses estimated is to be incurred in
connection with this tender offer, which will be paid by Holdings, as follows:
Legal fees $ 50,000
Depositary fees 5,000
Printing costs 5,000
Filing fees 300
Miscellaneous 5,000
----------
Total $ 65,300
==========
14. MISCELLANEOUS
The offer is being made to all Public Shareholders of Redwood. We are not aware
of any state where the making of the offer is prohibited by administrative or
judicial action pursuant to a valid state statute. If we become aware of any
valid state statute prohibiting the making of the offer, we will make a good
faith effort to comply with the statute. If, after such good faith effort, we
cannot comply with the statute, the offer will not be made to, nor will tenders
be accepted from or on behalf of, holders of shares in that state. In those
jurisdictions whose securities, blue sky or other laws require the offer to be
made by a licensed broker or dealer, the offer shall be deemed to be made on our
behalf by the dealer/manager or one or more registered brokers or dealers
licensed under the laws of these jurisdictions.
33
SCHEDULE A
COLORADO BUSINESS CORPORATION ACT
ARTICLE 113
DISSENTERS' RIGHTS
7-113-101. DEFINITIONS.
For purposes of this article:
(1) "Beneficial shareholder" means the beneficial owner of shares held in a
voting trust or by a nominee as the record shareholder.
(2) "Corporation" means the issuer of the shares held by a dissenter before the
corporate action, or the surviving or acquiring domestic or foreign corporation,
by merger or share exchange of that issuer.
(3) "Dissenter" means a shareholder who is entitled to dissent from corporate
action under section 7-113-102 and who exercises that right at the time and in
the manner required by part 2 of this article.
(4) "Fair value", with respect to a dissenter's shares, means the value of the
shares immediately before the effective date of the corporate action to which
the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action except to the extent that exclusion would
be inequitable.
(5) "Interest" means interest from the effective date of the corporate action
until the date of payment, at the average rate currently paid by the corporation
on its principal bank loans or, if none, at the legal rate as specified in
section 5-12-101, C.R.S.
(6) "Record shareholder" means the person in whose name shares are registered in
the records of a corporation or the beneficial owner of shares that are
registered in the name of a nominee to the extent such owner is recognized by
the corporation as the shareholder as provided in section 7-107-204.
(7) "Shareholder" means either a record shareholder or a beneficial shareholder.
7-113-102. RIGHT TO DISSENT.
(1) A shareholder, whether or not entitled to vote, is entitled to dissent and
obtain payment of the fair value of the shareholder's shares in the event of any
of the following corporate actions:
(a) Consummation of a plan of merger to which the corporation is a party if:
(I) Approval by the shareholders of that corporation is required for the merger
by section 7-111-103 or 7-111-104 or by the articles of incorporation; or
(II) The corporation is a subsidiary that is merged with its parent corporation
under section 7-111-104;
(b) Consummation of a plan of share exchange to which the corporation is a party
as the corporation whose shares will be acquired;
(c) Consummation of a sale, lease, exchange, or other disposition of all, or
substantially all, of the property of the corporation for which a shareholder
vote is required under section 7-112-102 (1); and
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BY GIBBS HOLDINGS, LLC
(d) Consummation of a sale, lease, exchange, or other disposition of all, or
substantially all, of the property of an entity controlled by the corporation if
the shareholders of the corporation were entitled to vote upon the consent of
the corporation to the disposition pursuant to section 7-112-102 (2).
(1.3) A shareholder is not entitled to dissent and obtain payment, under
subsection (1) of this section, of the fair value of the shares of any class or
series of shares which either were listed on a national securities exchange
registered under the federal "Securities Exchange Act of 1934", as amended, or
on the national market system of the national association of securities dealers
automated quotation system, or were held of record by more than two thousand
shareholders, at the time of:
(a) The record date fixed under section 7-107-107 to determine the shareholders
entitled to receive notice of the shareholders' meeting at which the corporate
action is submitted to a vote
(b) The record date fixed under section 7-107-104 to determine shareholders
entitled to sign writings consenting to the corporate action; or
(c) The effective date of the corporate action if the corporate action is
authorized other than by a vote of shareholders.
(1.8) The limitation set forth in subsection (1.3) of this section shall not
apply if the shareholder will receive for the shareholder's shares, pursuant to
the corporate action, anything except:
(a) Shares of the corporation surviving the consummation of the plan of merger
or share exchange;
(b) Shares of any other corporation which at the effective date of the plan of
merger or share exchange either will be listed on a national securities exchange
registered under the federal "Securities Exchange Act of 1934", as amended, or
on the national market system of the national association of securities dealers
automated quotation system, or will be held of record by more than two thousand
shareholders;
(c) Cash in lieu of fractional shares; or
(d) Any combination of the foregoing described shares or cash in lieu of
fractional shares.
(2) (Deleted by amendment, L. 96, p. 1321, ss. 30, effective June 1, 1996.)
(2.5) A shareholder, whether or not entitled to vote, is entitled to dissent and
obtain payment of the fair value of the shareholder's shares in the event of a
reverse split that reduces the number of shares owned by the shareholder to a
fraction of a share or to scrip if the fractional share or scrip so created is
to be acquired for cash or the scrip is to be voided under section 7-106-104.
(3) A shareholder is entitled to dissent and obtain payment of the fair value of
the shareholder's shares in the event of any corporate action to the extent
provided by the bylaws or a resolution of the board of directors.
(4) A shareholder entitled to dissent and obtain payment for the shareholder's
shares under this article may not challenge the corporate action creating such
entitlement unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation.
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SCHEDULE A TO OFFER TO PURCHASE
BY GIBBS HOLDINGS, LLC
7-113-103. DISSENT BY NOMINEES AND BENEFICIAL OWNERS.
(1) A record shareholder may assert dissenters' rights as to fewer than all the
shares registered in the record shareholder's name only if the record
shareholder dissents with respect to all shares beneficially owned by any one
person and causes the corporation to receive written notice which states such
dissent and the name, address, and federal taxpayer identification number, if
any, of each person on whose behalf the record shareholder asserts dissenters'
rights. The rights of a record shareholder under this subsection (1) are
determined as if the shares as to which the record shareholder dissents and the
other shares of the record shareholder were registered in the names of different
shareholders.
(2) A beneficial shareholder may assert dissenters' rights as to the shares held
on the beneficial shareholder's behalf only if:
(a) The beneficial shareholder causes the corporation to receive the record
shareholder's written consent to the dissent not later than the time the
beneficial shareholder asserts dissenters' rights; and
(b) The beneficial shareholder dissents with respect to all shares beneficially
owned by the beneficial shareholder.
(3) The corporation may require that, when a record shareholder dissents with
respect to the shares held by any one or more beneficial shareholders, each such
beneficial shareholder must certify to the corporation that the beneficial
shareholder and the record shareholder or record shareholders of all shares
owned beneficially by the beneficial shareholder have asserted, or will timely
assert, dissenters' rights as to all such shares as to which there is no
limitation on the ability to exercise dissenters' rights. Any such requirement
shall be stated in the dissenters' notice given pursuant to section 7-113-203.
7-113-201. NOTICE OF DISSENTERS' RIGHTS.
(1) If a proposed corporate action creating dissenters' rights under section
7-113-102 is submitted to a vote at a shareholders' meeting, the notice of the
meeting shall be given to all shareholders, whether or not entitled to vote. The
notice shall state that shareholders are or may be entitled to assert
dissenters' rights under this article and shall be accompanied by a copy of this
article and the materials, if any, that, under articles 101 to 117 of this
title, are required to be given to shareholders entitled to vote on the proposed
action at the meeting. Failure to give notice as provided by this subsection (1)
shall not affect any action taken at the shareholders' meeting for which the
notice was to have been given, but any shareholder who was entitled to dissent
but who was not given such notice shall not be precluded from demanding payment
for the shareholder's shares under this article by reason of the shareholder's
failure to comply with the provisions of section 7-113-202 (1).
(2) If a proposed corporate action creating dissenters' rights under section
7-113-102 is authorized without a meeting of shareholders pursuant to section
7-107-104, any written or oral solicitation of a shareholder to execute a
writing consenting to such action contemplated in section 7-107-104 shall be
accompanied or preceded by a written notice stating that shareholders are or may
be entitled to assert dissenters' rights under this article, by a copy of this
article, and by the materials, if any, that, under articles 101 to 117 of this
title, would have been required to be given to shareholders entitled to vote on
the proposed action if the proposed action were submitted to a vote at a
shareholders' meeting. Failure to give notice as provided by this subsection (2)
shall not affect any action taken pursuant to section 7-107-104 for which the
notice was to have been given, but any shareholder who was entitled to dissent
but who was not given such notice shall not be precluded from demanding payment
for the shareholder's shares under this article by reason of the shareholder's
failure to comply with the provisions of section 7-113-202 (2).
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SCHEDULE A TO OFFER TO PURCHASE
BY GIBBS HOLDINGS, LLC
7-113-202. NOTICE OF INTENT TO DEMAND PAYMENT.
(1) If a proposed corporate action creating dissenters' rights under section
7-113-102 is submitted to a vote at a shareholders' meeting and if notice of
dissenters' rights has been given to such shareholder in connection with the
action pursuant to section 7-113-201 (1), a shareholder who wishes to assert
dissenters' rights shall:
(a) Cause the corporation to receive, before the vote is taken, written notice
of the shareholder's intention to demand payment for the shareholder's shares if
the proposed corporate action is effectuated; and
(b) Not vote the shares in favor of the proposed corporate action.
(2) If a proposed corporate action creating dissenters' rights under section
7-113-102 is authorized without a meeting of shareholders pursuant to section
7-107-104 and if notice of dissenters' rights has been given to such shareholder
in connection with the action pursuant to section 7-113-201 (2), a shareholder
who wishes to assert dissenters' rights shall not execute a writing consenting
to the proposed corporate action.
(3) A shareholder who does not satisfy the requirements of subsection (1) or (2)
of this section is not entitled to demand payment for the shareholder's shares
under this article.
7-113-203. DISSENTERS' NOTICE.
(1) If a proposed corporate action creating dissenters' rights under section
7-113-102 is authorized, the corporation shall give a written dissenters' notice
to all shareholders who are entitled to demand payment for their shares under
this article.
(2) The dissenters' notice required by subsection (1) of this section shall be
given no later than ten days after the effective date of the corporate action
creating dissenters' rights under section 7-113-102 and shall:
(a) State that the corporate action was authorized and state the effective date
or proposed effective date of the corporate action;
(b) State an address at which the corporation will receive payment demands and
the address of a place where certificates for certificated shares must be
deposited;
(c) Inform holders of uncertificated shares to what extent transfer of the
shares will be restricted after the payment demand is received;
(d) Supply a form for demanding payment, which form shall request a dissenter to
state an address to which payment is to be made;
(e) Set the date by which the corporation must receive the payment demand and
certificates for certificated shares, which date shall not be less than thirty
days after the date the notice required by subsection (1) of this section is
given;
(f) State the requirement contemplated in section 7-113-103 (3), if such
requirement is imposed; and
(g) Be accompanied by a copy of this article.
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SCHEDULE A TO OFFER TO PURCHASE
BY GIBBS HOLDINGS, LLC
7-113-204. PROCEDURE TO DEMAND PAYMENT.
(1) A shareholder who is given a dissenters' notice pursuant to section
7-113-203 and who wishes to assert dissenters' rights shall, in accordance with
the terms of the dissenters' notice:
(a) Cause the corporation to receive a payment demand, which may be the payment
demand form contemplated in section 7-113-203 (2) (d), duly completed, or may be
stated in another writing; and
(b) Deposit the shareholder's certificates for certificated shares.
(2) A shareholder who demands payment in accordance with subsection (1) of this
section retains all rights of a shareholder, except the right to transfer the
shares, until the effective date of the proposed corporate action giving rise to
the shareholder's exercise of dissenters' rights and has only the right to
receive payment for the shares after the effective date of such corporate
action.
(3) Except as provided in section 7-113-207 or 7-113-209 (1) (b), the demand for
payment and deposit of certificates are irrevocable.
(4) A shareholder who does not demand payment and deposit the shareholder's
share certificates as required by the date or dates set in the dissenters'
notice is not entitled to payment for the shares under this article.
7-113-205. UNCERTIFICATED SHARES.
(1) Upon receipt of a demand for payment under section 7-113-204 from a
shareholder holding uncertificated shares, and in lieu of the deposit of
certificates representing the shares, the corporation may restrict the transfer
thereof.
(2) In all other respects, the provisions of section 7-113-204 shall be
applicable to shareholders who own uncertificated shares.
7-113-206. PAYMENT.
(1) Except as provided in section 7-113-208, upon the effective date of the
corporate action creating dissenters' rights under section 7-113-102 or upon
receipt of a payment demand pursuant to section 7-113-204, whichever is later,
the corporation shall pay each dissenter who complied with section 7-113-204, at
the address stated in the payment demand, or if no such address is stated in the
payment demand, at the address shown on the corporation's current record of
shareholders for the record shareholder holding the dissenter's shares, the
amount the corporation estimates to be the fair value of the dissenter's shares,
plus accrued interest.
(2) The payment made pursuant to subsection (1) of this section shall be
accompanied by:
(a) The corporation's balance sheet as of the end of its most recent fiscal year
or, if that is not available, the corporation's balance sheet as of the end of a
fiscal year ending not more than sixteen months before the date of payment, an
income statement for that year, and, if the corporation customarily provides
such statements to shareholders, a statement of changes in shareholders' equity
for that year and a statement of cash flow for that year, which balance sheet
and statements shall have been audited if the corporation customarily provides
audited financial statements to shareholders, as well as the latest available
financial statements, if any, for the interim or full-year period, which
financial statements need not be audited;
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SCHEDULE A TO OFFER TO PURCHASE
BY GIBBS HOLDINGS, LLC
(b) A statement of the corporation's estimate of the fair value of the shares;
(c) An explanation of how the interest was calculated;
(d) A statement of the dissenter's right to demand payment under section
7-113-209; and
(e) A copy of this article.
7-113-207. FAILURE TO TAKE ACTION.
(1) If the effective date of the corporate action creating dissenters' rights
under section 7-113-102 does not occur within sixty days after the date set by
the corporation by which the corporation must receive the payment demand as
provided in section 7-113-203, the corporation shall return the deposited
certificates and release the transfer restrictions imposed on uncertificated
shares.
(2) If the effective date of the corporate action creating dissenters' rights
under section 7-113-102 occurs more than sixty days after the date set by the
corporation by which the corporation must receive the payment demand as provided
in section 7-113-203, then the corporation shall send a new dissenters' notice,
as provided in section 7-113-203, and the provisions of sections 7-113-204 to
7-113-209 shall again be applicable.
7-113-208. SPECIAL PROVISIONS RELATING TO SHARES ACQUIRED AFTER ANNOUNCEMENT OF
PROPOSED CORPORATE ACTION.
(1) The corporation may, in or with the dissenters' notice given pursuant to
section 7-113-203, state the date of the first announcement to news media or to
shareholders of the terms of the proposed corporate action creating dissenters'
rights under section 7-113-102 and state that the dissenter shall certify in
writing, in or with the dissenter's payment demand under section 7-113-204,
whether or not the dissenter (or the person on whose behalf dissenters' rights
are asserted) acquired beneficial ownership of the shares before that date. With
respect to any dissenter who does not so certify in writing, in or with the
payment demand, that the dissenter or the person on whose behalf the dissenter
asserts dissenters' rights acquired beneficial ownership of the shares before
such date, the corporation may, in lieu of making the payment provided in
section 7-113-206, offer to make such payment if the dissenter agrees to accept
it in full satisfaction of the demand.
(2) An offer to make payment under subsection (1) of this section shall include
or be accompanied by the information required by section 7-113-206 (2).
7-113-209. PROCEDURE IF DISSENTER IS DISSATISFIED WITH PAYMENT OR OFFER.
(1) A dissenter may give notice to the corporation in writing of the dissenter's
estimate of the fair value of the dissenter's shares and of the amount of
interest due and may demand payment of such estimate, less any payment made
under section 7-113-206, or reject the corporation's offer under section
7-113-208 and demand payment of the fair value of the shares and interest due,
if:
(a) The dissenter believes that the amount paid under section 7-113-206 or
offered under section 7-113-208 is less than the fair value of the shares or
that the interest due was incorrectly calculated;
(b) The corporation fails to make payment under section 7-113-206 within sixty
days after the date set by the corporation by which the corporation must receive
the payment demand; or
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BY GIBBS HOLDINGS, LLC
(c) The corporation does not return the deposited certificates or release the
transfer restrictions imposed on uncertificated shares as required by section
7-113-207 (1).
(2) A dissenter waives the right to demand payment under this section unless the
dissenter causes the corporation to receive the notice required by subsection
(1) of this section within thirty days after the corporation made or offered
payment for the dissenter's shares.
7-113-301. COURT ACTION.
(1) If a demand for payment under section 7-113-209 remains unresolved, the
corporation may, within sixty days after receiving the payment demand, commence
a proceeding and petition the court to determine the fair value of the shares
and accrued interest. If the corporation does not commence the proceeding within
the sixty-day period, it shall pay to each dissenter whose demand remains
unresolved the amount demanded.
(2) The corporation shall commence the proceeding described in subsection (1) of
this section in the district court for the county in this state in which the
street address of the corporation's principal office is located or, if the
corporation has no principal office in this state, in the district court for the
county in which the street address of its registered agent is located, or, if
the corporation has no registered agent, in the district court for the city and
county of Denver. If the corporation is a foreign corporation without a
registered agent, it shall commence the proceeding in the county in which the
domestic corporation merged into, or whose shares were acquired by, the foreign
corporation would have commenced the action if that corporation were subject to
the first sentence of this subsection (2).
(3) The corporation shall make all dissenters, whether or not residents of this
state, whose demands remain unresolved parties to the proceeding commenced under
subsection (2) of this section as in an action against their shares, and all
parties shall be served with a copy of the petition. Service on each dissenter
shall be by registered or certified mail, to the address stated in such
dissenter's payment demand, or if no such address is stated in the payment
demand, at the address shown on the corporation's current record of shareholders
for the record shareholder holding the dissenter's shares, or as provided by
law.
(4) The jurisdiction of the court in which the proceeding is commenced under
subsection (2) of this section is plenary and exclusive. The court may appoint
one or more persons as appraisers to receive evidence and recommend a decision
on the question of fair value. The appraisers have the powers described in the
order appointing them, or in any amendment to such order. The parties to the
proceeding are entitled to the same discovery rights as parties in other civil
proceedings.
(5) Each dissenter made a party to the proceeding commenced under subsection (2)
of this section is entitled to judgment for the amount, if any, by which the
court finds the fair value of the dissenter's shares, plus interest, exceeds the
amount paid by the corporation, or for the fair value, plus interest, of the
dissenter's shares for which the corporation elected to withhold payment under
section 7-113-208.
7-113-302. COURT COSTS AND COUNSEL FEES.
(1) The court in an appraisal proceeding commenced under section 7-113-301 shall
determine all costs of the proceeding, including the reasonable compensation and
expenses of appraisers appointed by the court. The court shall assess the costs
against the corporation; except that the court may assess costs against all or
some of the dissenters, in amounts the court finds equitable, to the extent the
court finds the dissenters acted arbitrarily, vexatiously, or not in good faith
in demanding payment under section 7-113-209.
A-7
SCHEDULE A TO OFFER TO PURCHASE
BY GIBBS HOLDINGS, LLC
(2) The court may also assess the fees and expenses of counsel and experts for
the respective parties, in amounts the court finds equitable:
(a) Against the corporation and in favor of any dissenters if the court finds
the corporation did not substantially comply with part 2 of this article; or
(b) Against either the corporation or one or more dissenters, in favor of any
other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously, or not in good faith with
respect to the rights provided by this article.
(3) If the court finds that the services of counsel for any dissenter were of
substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the corporation, the court may
award to said counsel reasonable fees to be paid out of the amounts awarded to
the dissenters who were benefited.
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SCHEDULE A TO OFFER TO PURCHASE
BY GIBBS HOLDINGS, LLC
Questions and requests for assistance may be directed to the information agent
at the telephone number listed below. Additional copies of this offer to
purchase, the letter of transmittal, the notice of guaranteed delivery or any
other tender offer materials may be obtained from the information agent. You may
also contact your broker, dealer, bank, trust company or other nominee for
assistance concerning the offer
The information agent for the offer is:
DIANE ALLEN
16 E. STREET SOUTHWEST
ARDMORE, OK 73401
580-270-6700 EXT 207
The letter of transmittal, certificates for shares and any other required
documents should be sent or delivered by the shareholder or the shareholder's
broker, dealer, bank, trust company or other nominee to the depositary at the
address listed below. Any questions concerning tender procedures may be directed
to the depositary at the telephone number listed below.
The depositary for the offer is:
COMPUTERSHARE TRUST COMPANY, INC.
BY FACSIMILE BY HAND OR
BY MAIL: TRANSMISSION: OVERNIGHT COURIER:
c/o Computershare Trust For Eligible Institutions Only: Computershare Trust Company, Inc.
Company, Inc. (303) 262-0606 350 Indiana St., Ste 850
P. O. Box 1596 For Confirmation Only: Golden, CO 80401
Denver, CO 80201-1596 Telephone: (800) 962-4284
FOR INFORMATION CALL:
(800) 962-4284