0001050502-01-500452.txt : 20011010
0001050502-01-500452.hdr.sgml : 20011010
ACCESSION NUMBER: 0001050502-01-500452
CONFORMED SUBMISSION TYPE: SC 14D9
PUBLIC DOCUMENT COUNT: 1
FILED AS OF DATE: 20011004
GROUP MEMBERS: WORLD SERVICES, INC.
SUBJECT COMPANY:
COMPANY DATA:
COMPANY CONFORMED NAME: WORLD SERVICES INC
CENTRAL INDEX KEY: 0000767410
STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331]
IRS NUMBER: 460355586
STATE OF INCORPORATION: SD
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: SC 14D9
SEC ACT: 1934 Act
SEC FILE NUMBER: 005-62029
FILM NUMBER: 1751880
BUSINESS ADDRESS:
STREET 1: 404 S LINCOLN
CITY: ABERDEEN
STATE: SD
ZIP: 57401
BUSINESS PHONE: 6052294404
MAIL ADDRESS:
STREET 1: 404 S LINCOLN
CITY: ABERDEEN
STATE: SD
ZIP: 57401
FILED BY:
COMPANY DATA:
COMPANY CONFORMED NAME: WORLD SERVICES INC
CENTRAL INDEX KEY: 0000767410
STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331]
IRS NUMBER: 460355586
STATE OF INCORPORATION: SD
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: SC 14D9
BUSINESS ADDRESS:
STREET 1: 404 S LINCOLN
CITY: ABERDEEN
STATE: SD
ZIP: 57401
BUSINESS PHONE: 6052294404
MAIL ADDRESS:
STREET 1: 404 S LINCOLN
CITY: ABERDEEN
STATE: SD
ZIP: 57401
SC 14D9
1
worldservices14d9.txt
SC 14D9
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
WORLD SERVICES, INC.
(Name of Subject Company)
WORLD SERVICES, INC.
(Name of Person Filing Statement)
COMMON STOCK, PAR VALUE $.001 PER SHARE
(Title of Class of Securities)
98151p 10 5
(CUSIP Number of Class of Securities)
-----------
Ronne Tarrell, President
World Services, Inc.
724 North Kline, P.O. Box 786
Aberdeen, South Dakota 57406-0786
(605) 225-4131
(Name, Address and Telephone Number of Person Authorized to Receive
Notice and Communications on Behalf of the Person Filing Statement)
COPY TO:
Herrick K. Lidstone, Jr., Esq.
Norton Lidstone, P.C.
Suite 850, The Quadrant
5445 DTC Parkway
Greenwood Village, Colorado 80111
(303) 221-5552
|_| Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
================================================================================
Introduction
This Schedule 14D-9 relates to an offer by Super 8 Motel Developers, Inc.,
a South Dakota corporation ("Developers"), to purchase not less than a majority
and up to all of the 2,639,679 outstanding shares of common stock of World
Services, Inc., a South Dakota corporation ("World Services"). Developers is
making this offer in accordance with an agreement executed by World Services and
Developers effective September 10, 2001 (the "September 10 Agreement") that
defines the proposed tender offer and further defines certain obligations of
World Services and Developers.
Developers has filed a Schedule TO with the Securities and Exchange
Commission. The Schedule TO includes Developers' offer to purchase the World
Services shares which has been or will be mailed to World Services'
shareholders, as well as the letter of transmittal World Services shareholders
who elect to accept the tender offer may use to do so. This Schedule 14D-9 uses
the term "Offer Documents" to refer to the Schedule TO, the offer to purchase,
and the letter of transmittal included in the Schedule TO.
Each person reviewing this Schedule 14D-9 should also review the remaining
Offer Documents with his, her, or its personal legal, financial, investment, tax
and other advisors.
Item 1. Subject Company Information.
Name and Address. The name of the subject company is World Services, Inc.
The address of the principal executive office of World Services is 724 North
Kline, P.O. Box 786, Aberdeen, South Dakota 57406-0786. The telephone number of
World Services at its principal executive offices is (605) 225-4131.
Securities. The title of the class of equity securities to which this
Schedule relates is the $.001 par value common stock of World Services. As of
June 30, 2001, there were 2,639,679 shares of common stock issued and
outstanding. World Services has not issued any additional shares since June 30,
2001. There are no options, rights or warrants to purchase additional shares of
World Services common stock that are outstanding.
Item 2. Identity and Background of Filing Persons.
Name and Address. The name, business address and business telephone number
of World Services are set forth in Item 1, above.
Tender Offer. This Schedule relates to the offer by Developers to purchase
at least a majority and up to all outstanding shares of World Services common
stock. Developers has offered a purchase price of $.85 per share, net to the
seller in cash, without interest (the "Offer Price"), upon the terms and subject
to the conditions set forth in the Offer Documents. The tender offer will expire
on October 31, 2001 unless Developers, in its sole discretion, elects to extend
the term of the tender offer.
Developers' Plans for World Services. If Developers completes the tender
offer as described in the Offer Documents, Developers has advised that it has no
plans for the future conduct of any business by World Services other than a
change in the members of the World Services' board.
Conditions to Developers' Tender Offer. The tender offer is generally
conditioned upon shares representing at least a majority of the outstanding
shares of World Services common stock having been tendered and not withdrawn
prior to the expiration of the tender offer (a condition that Developers may not
waive). In addition, notwithstanding any other provision of the Developers'
offer, Developers:
is not required to accept for payment or pay for any shares,
may delay the acceptance for payment of, or
subject to any applicable rules and regulations of the Commission,
including Rule 14e-1(c) under the Exchange Act (relating to Developers'
obligation to pay for or return tendered shares after the termination or
withdrawal of the Offer), the payment for any tendered shares,
2
if at any time prior to acceptance for payment of or payment for shares in the
tender offer, any of the following events or conditions shall occur or exist:
o there shall have been instituted or be pending any action or
proceeding by any governmental entity, whether or not having the force
of law,
(i) challenging or seeking to make illegal, to delay or otherwise
directly or indirectly to restrain or prohibit the making of
Developers' tender offer, the acceptance for payment of or payment for
some of or all the shares of World Services stock by Developers or any
affiliate of Developers or the completion by Developers of the tender
offer, or seeking to obtain damages in connection with the tender
offer,
(ii) seeking to restrain or prohibit Developers' full rights of
ownership or operation (or that of Developers' subsidiaries or
affiliates) of any portion of the business or assets of World Services
or Developers, or any of their respective subsidiaries or affiliates,
or to compel Developers or any of its subsidiaries or affiliates to
dispose of or hold separate all or any portion of the business or
assets of World Services or Developers or any of their respective
subsidiaries or affiliates,
(iii) seeking to impose material limitations on the ability of
Developers or any of its subsidiaries or affiliates effectively to
exercise full rights of ownership of the shares of World Services
stock, including, without limitation, the right to vote any shares of
World Services stock acquired or owned by Developers or any of its
subsidiaries or affiliates on all matters properly presented to the
shareholders of World Services, or
(iv) seeking to require divestiture by Developers or any of its
subsidiaries or affiliates of any shares of World Services stock; or
o there shall have been any action taken or any statute, rule,
regulation, judgment, administrative interpretation, injunction, order
or decree enacted, enforced, promulgated, issued or deemed applicable
to Developers or any other subsidiary or affiliate of Developers,
World Services, or Developers' tender offer, the acceptance for
payment of or payment for any shares of World Services stock, or any
other transaction, by any governmental entity, that has, directly or
indirectly, resulted, or is reasonably likely to, directly or
indirectly, result in any of the consequences referred to in the
immediately preceding paragraph; or
o there shall have occurred any change, effect, event, occurrence, state
of facts or development that results in a material change in the
financial condition, cash assets or results of operations of World
Services, or any change, event or condition that, with the passage of
time, would reasonably be expected to result in such an event or
effect other than as contemplated by Developers' tender offer or the
transactions contemplated hereby; or
o Developers' due diligence investigation of World Services shall have
revealed any information which, in Developers' reasonable discretion,
precludes it from proceeding with the tender offer; or
3
o World Services' board shall have withdrawn its approval of Developers'
acquisition of its shares pursuant to the tender offer for purposes of
Section 47-33-17(1) of the South Dakota Domestic Public Corporation
Takeover Act; or
o If World Services breaches the September 10 Agreement, and fails to
cure such breach within the prescribed period.
The Letter Agreement and the tender offer will terminate automatically upon
World Services' delivery of a notice to Developers that World Services has
accepted or agreed to a proposal for a business combination received from a
third party.
In the event the above conditions are met, Developers has agreed to
purchase all shares that any World Services shareholder elects to tender.
All information in this Schedule or in any of the exhibits concerning Developers
or its affiliates, or actions or events in respect of any of them, was provided
by Developers, and World Services assumes no responsibility for that
information.
Item 3. Past Contacts, Transactions, Negotiations and Agreements.
With Super 8 Motel Developers, Inc.
-----------------------------------
Previous Offer by Developers to Purchase the Developers Stock held by World
Services. World Services owns 796,952 shares of Developers common stock that
constitute approximately 16% of the outstanding Developers shares. This
ownership has resulted in dividends paid to World Services in the amount of
approximately $199,000 per year during the past two fiscal years. On June 9,
1999, Developers offered to purchase those shares from World Services for $1.50
per Developers share (equivalent to about $.44 per share of World Services
common stock).
At the time, World Services declined the June 9, 1999 offer because its
board felt that the price offered was too low. One of the World Services board
members made an oral statement to a representative of Developers that the World
Services board would consider an offer of $5.00 per share (equivalent to about
$1.50 per share of World Services common stock). Developers did not respond to
this oral statement. Developers has recently advised World Services that it did
not believe that World Services intended the statement to be a formal counter
offer.
In the spring of 2001, World Services suggested to Developers that World
Services would consider distributing the Developers shares to the World Services
shareholders. Developers objected to this proposal and stated to World Services
that it would not register the shares for distribution. While World Services
believes that it had no control over Developers and therefore was not an
"affiliate" of Developers as defined in SEC Rule 144(k), World Services believes
that it could distribute the shares of Developers common stock to its
shareholders without registration. Developers has informed World Services that
it believes that World Services' "affiliate" status is presumed because of World
Services' ownership of more than 10% of Developers' stock, and that Developers
would not cooperate in making such a distribution. The World Services board
acknowledged that completing any such distribution would be much more difficult
in the face of Developers' opposition, even if permissible under the securities
laws.
Previous Discussions Relating to Developers' Current Offer. To the
knowledge of World Services, Developers has been discussing the possibility of a
tender offer for the outstanding World Services shares from time-to-time in
2001. During a part of this time, Ronne Tarrell, president of World Services,
was on the board of directors of Developers. Because of potential conflicts of
interest should the tender offer proceed and at the request of the remaining
members of the Developers board of directors, Mr. Tarrell resigned from the
Developers board of directors in May 2001.
4
Commencing in July 2001, representatives of Developers commenced more
specific discussions with Mr. Tarrell and World Services' legal advisors
regarding the possibility of making a tender offer with the cooperation of the
World Services board at a price of $.80 per share. As a result of discussions
with the World Services board members, Developers agreed to raise the price to
$.85 per share and also discussed other terms and conditions to be contained in
the agreement. These conversations continued until World Services and Developers
executed the final September 10 Agreement. During that period, counsel for
Developers and World Services also held independent conversations regarding the
prospective tender offer and exchanged preliminary drafts of the September 10
Agreement.
During the period of these discussions and exchanges of draft agreements
and comments, the World Services board analyzed the proposed tender offer in
light of the best interests of all World Services shareholders and in light of
the Takeover Act. In the opinion of World Services, the Takeover Act in effect
in South Dakota (which is more fully discussed in Item 8, below) materially
influenced the negotiations with Developers and permitted World Services to
negotiate more favorable terms for the World Services shareholders in the
September 10 Agreement than originally proposed by Developers.
World Services' Potential Conflicts of Interest. During the discussions
preceding the September 10 Agreement, Developers questioned whether certain of
the directors of World Services might have a potential conflict of interest
because certain of their shares are held pursuant to an escrow agreement entered
into on May 30, 1980. Pursuant to that agreement, those shares will continue to
be held in escrow until, if ever, World Services achieves net earnings per share
of $0.10 for any three-year period, two of which must be consecutive. The escrow
agreement further provides that:
the Director of Securities may, in his discretion, terminate the escrow for
any or all of the escrowed shares before the termination event "if he
determines that the release of such securities to the Depositor(s) will not
be detrimental to the Issuer, the public investors, or any other party
concerned";
any dividends payable on the escrowed shares must be deposited into escrow,
and that the escrowed shares are not entitled to any proceeds on
liquidation until such time as the "public" shareholders have received a
return of the initial offering price (which as adjusted, is $2.00 per
share), and
no shareholder may transfer shares included in the escrow "without the
prior written consent of the Director."
Also during the discussions preceding the September 10 Agreement,
Developers orally questioned whether a reason the World Services board has
failed to pay dividends to date was to retain assets necessary to generate the
required income.
The World Services board did not believe that the questions raised by
Developers were valid and were raised in an attempt to gain a negotiating
advantage. World Services has from time-to-time in the past considered making
certain distributions to shareholders, but in each case concluded that making
distributions would be inadvisable for several reasons:
The cost of paying a small amount of dividends can be significant,
especially where World Services does not have an administrative staff or a
transfer agent capable of doing so. The World Services board, which
includes two directors who do not have an interest in any escrowed
securities, has concluded in the past that the expenses of declaring
dividends and completion of the necessary additional administrative matters
(including IRS Forms 1099) outweighed the benefit to shareholders of a
nominal dividend.
5
World Services has considered other business combinations in the past, and
in each case the availability of capital was attractive to the target
company; consequently the World Services board was concerned that any
attempt to distribute its cash assets would make a future business
combination less likely to occur. World Services did not reach any
agreement with any target, and no acquisition is being considered at the
present time.
In July 2001, Developers contacted the South Dakota Director of Securities
regarding the World Services common stock included in the 1980 escrow. As a
result of these communications between Developers and the Director of
Securities, the Director accepted an agreement that provides generally that,
should Developers tender for the shares of World Services,
The Director will permit the holders of the escrowed shares to submit World
Services shares and participate in the tender offer; and
If the tender offer is successfully completed so that Developers owned at
least 51% of the World Services shares, the Director will consent to the
release of all shares from the escrow.
Except as described in this Schedule 14D-9, to the knowledge of World
Services, as of the date of this Schedule there exists no material agreement,
arrangement or understanding or any actual or potential conflict of interest
between World Services or its affiliates and either (1) World Services, its
executive officers, directors or affiliates, or (2) Developers or its executive
officers, directors or affiliates.
Developers Potential Conflicts of Interest. As discussed above, World
Services owns approximately 16% of the outstanding Developers common stock and
Developers previously made an offer to purchase the shares from World Services.
World Services believes that Developers may be concerned that World Services may
not always cooperate with the other Developers shareholders at meetings, and
that the World Services goals for its Developers ownership may differ from those
of the other Developers shareholders. Developers is currently a privately held
corporation and is not required to file reports with the Securities and Exchange
Commission or to make disclosure to its shareholders as required by the
Securities Exchange Act of 1934, as amended.
Interests of Certain Persons. In considering the determination of the World
Services board with respect to the tender offer, the World Services shareholders
should consider the factors set forth above.
With Respect to Other Proposals
-------------------------------
During the past three years, World Services has had meetings with several
entities that have expressed interest in entering into a business combination
with World Services on various terms and has received information from other
companies expressing an interest. There have been two recent instances of this
sort of contact with World Services.
On August 15, 2001, the World Services board met with a company from Texas
known as Avix Telecom Solutions, and counsel to World Services and Avix had
a telephone conversation on August 20. World Services anticipated receiving
information from Avix within a short period of time following the initial
meeting, but never did receive the information. Representatives of Avix
have recently orally confirmed their interest in pursuing discussions, but
have not submitted any information in writing.
On August 27, 2001, World Services received information from Let's Play
Sports, Inc., of San Diego, California, but the World Services board
decided not to pursue a business combination.
No discussions are ongoing at the present time, and none of these
discussions matured to a point where definitive proposals were presented or
considered. World Services knows of no conflicts of interest with respect to any
of the proposals.
6
Item 4. The Solicitation or Recommendation.
Position of the Board of Directors.
-----------------------------------
At a meeting held on September 7, 2001, the board of directors reviewed and
discussed Developers' proposed tender offer as set forth in the September 10
Agreement. At that meeting and in previous meetings, counsel to World Services
gave a presentation to the board of directors on the structure of the tender
offer and the fiduciary duties of the board of directors to shareholders.
Following a discussion of the terms of the proposed tender offer among members
of the board of directors, the board of directors unanimously:
o determined it supports the tender offer as set forth in the September
10 Agreement because the tender offer provides liquidity to
shareholders of World Services who may desire liquidity;
o resolved to remain neutral and offer no recommendation with respect to
the adequacy of Developers' Offer Price; and
o approved the acquisition of the World Services shares under the
business combination provision of the Takeover Act.
A copy of a letter to World Services' shareholders communicating the
recommendation for the tender offer and the neutral position of the board of
directors with respect to the price per share offered thereby is filed herewith
as an exhibit.
Reasons for the Position of the Board of Directors.
---------------------------------------------------
In making the determinations and recommending the tender offer for
liquidity but taking the neutral position as to price described above, the board
of directors considered a number of factors, including the following reasons
supporting the tender offer as a means of providing liquidity to the World
Services shareholders:
1. Providing Liquidity for World Services Shareholders. A principal factor
that influenced the World Services Board of Directors to cooperate with
Developers in its efforts to complete the tender offer was that the tender
offer provides liquidity to shareholders who may desire to sell their
shares of World Services and who have not been able to do so thus far.
World Services common stock is not eligible for listing on the Nasdaq
system or on the OTC Bulletin Board. World Services does not believe that
its shares have been quoted in the "pink sheets" published by National
Quotation Bureau, Inc. World Services believes that any trading has been
strictly limited to private transactions that are then submitted to World
Services to complete. (World Services acts as its own transfer agent and
registrar for the shares of common stock.)
2. Developers Agreed to Provide a Number of Protections to Shareholders Who
Elect Not to Accept the Tender Offer. The World Services board attempted to
provide certain protections to shareholders who may choose not to accept
the tender offer before the board was willing to recommend the tender offer
for liquidity purposes (although remaining neutral as to price). These
protections are described in more detail below.
3. The Tender Offer, if Completed, Will Terminate the Escrow of World Services
Shares. 421,286 shares of World Services common stock have been held in
escrow for more than 21 years under a requirement imposed by the South
Dakota Director of Securities in connection with the World Services'
initial public offering. These shareholders include three members of the
World Services board of directors and more than 20 other shareholders who
are not members of the World Services board. The existence of the escrow
imposes uncertainty on World Services capitalization and has made the
consideration of potential business transactions more difficult. The
elimination of the escrow upon completion of the tender offer will allow
persons who have held World Services shares for more than 21 years to fully
participate in the tender offer if they choose to do so, or to fully
participate in the future of World Services as shareholders if they do not
accept the tender offer.
7
4. Limited Conditions to Completion. The World Services board considered the
high likelihood that the acquisition would be completed. The tender offer
is subject to limited conditions all of which Developers may waive, except
the condition that at least a majority of the outstanding shares of World
Services common stock have been tendered and not withdrawn prior to the
expiration of the tender offer.
5. World Services Is Not Currently Engaged in Business Operations. World
Services is not currently engaged in any business operations, and has not
been so engaged for several years. The board is not currently engaged in
discussions with any other person for a prospective business combination,
and there can be no assurance that World Services will commence business
operations in the near future.
Factors The World Services Board Considered In Determining to Remain Neutral as
to the Adequacy of Developers' Offer Price
--------------------------------------------------------------------------------
The board of directors also considered a number of factors that led the
World Services board to remain neutral as to the adequacy of Developers' Offer
Price:
6. Business of Developers. Developers has not defined any proposed business
for World Services following the completion of the tender offer. Therefore,
persons who elect to remain shareholders of World Services will be doing so
without being able to rely on any business plan or proposal from
Developers.
7. Adequacy of the Offer Price. The World Services board considered a number
of factors regarding the price offered by Developers for the World Services
shares. In considering these factors, each director placed different weight
on different factors, and the World Services board could not reach a
consensus whether the price offered by Developers was adequate.
Consequently, the World Services board determined that it could make no
recommendation as to the adequacy of the price and would, therefore, remain
neutral.
As described above, the World Services board could not reach a consensus
determination whether the price being offered by Developers ($0.85 per share)
was adequate or represented the fair value of the World Services common stock.
Each of the directors (who are also the executive officers) considered whether
he or she would tender shares in response to the tender offer, and as of the
date of the meeting (September 7, 2001) and as of the date this Schedule 14D-9
is filed with the Securities and Exchange Commission, none of the directors has
reached a conclusion whether to tender none, some, or all of the shares of World
Services common stock each owns.
The World Services board discussed and considered various valuation models
in making its determination that it could not reach a conclusion as to the
adequacy of the price offered by Developers. As is shown in the following chart,
some valuations resulted in prices higher than the $.85 being offered by
Developers, and some resulted in lower valuations. This chart, the footnotes to
the chart and the narrative information in this Schedule 14D-9 provide
information that shareholders may want to consider in determining whether to
tender their World Services shares to Developers.(1)
8
--------------------------- --------------------------- ------------------- -------------
Per World Services Resulting
share Valuation per
share
--------------------------- --------------------------- ------------------- -------------
World Services book value
per share $0.77(2) $0.77
--------------------------- --------------------------- ------------------- -------------
--------------------------- --------------------------- ------------------- -------------
World Services current Current assets per share(3)
value plus Developers
offer in 1999 $0.58
--------------------------- --------------------------- ------------------- -------------
Developers offer to
purchase Developers stock
on June 9, 1999 $0.44(4) $1.02
--------------------------- --------------------------- ------------------- -------------
current value plus Current assets per share
dividend multiple $0.58
--------------------------- --------------------------- ------------------- -------------
Developers (4x(5) dividends
received of $0.08 per WS
share(6)) $0.32 $0.90
--------------------------- --------------------------- ------------------- -------------
--------------------------- --------------------------- ------------------- -------------
current value plus Current assets per share
Developers book value $0.58
--------------------------- --------------------------- ------------------- -------------
Developers book value per
share(7) $0.22 $0.80
--------------------------- --------------------------- ------------------- -------------
Multiple of net income 10x(8) average 2000 and
1999 income of $.081 per
WS share(9) $0.81
--------------------------- --------------------------- ------------------- -------------
----------
(1) The chart does not include any consideration of the fair market value of
Developers as a going concern. In such cases, one would also likely apply
discounts to World Services' interest in Developers for "lack of
marketability" and for the "minority interest." According to guidelines
accepted by the Internal Revenue Service which have been used in a number
of other contexts (including estate planning), a non-marketable minority
interest in a privately-held corporation has a value equal to less than its
proportionate interest in the whole entity as a going concern.
(2) Based on its June 30, 2001, Form 10-QSB, World Services had 2,639,679
shares outstanding and a net book value of $2,045,344.
(3) World Services' current assets as reflected in its June 30, 2001 Form
10-QSB, were $1,533,591.
(4) Upon receiving the offer, a member of the World Services board made an oral
statement to a representative of Developers that the board would consider
an offer of $5 per share for the Developers common stock, or approximately
$1.50 per share of World Services common stock.
(5) The World Services board recognizes that different multiples would suggest
different conclusions. Each shareholder should consider whether 4 is an
appropriate multiple, or if a different multiple would be more accurate.
(6) Developers has paid World Services cash dividends of approximately $199,000
in both years 2000 and 1999, although there can be no assurance that
Developers will continue to pay dividends at such rates, or that Developers
will declare and pay any dividends in the future.
9
(7) At June 30, 2001, World Services had a book value in its Developers
investment of $568,000.
(8) As discussed above, the World Services board recognizes that different
multiples would suggest different conclusions. Each shareholder should
consider whether 10 is an appropriate multiple in these circumstances, or
if a different multiple would be more accurate.
(9) World Services' net income was $13,278 for the six months ended June 30,
2001, $232,000 for the year ended December 31, 2000, and $197,000 for the
year ended December 31, 1999. A substantial part of World Services' net
income derived from dividends received from Developers as described in Note
6 to this chart. The balance is interest income.
The World Services board also considered other, more subjective factors in
determining to remain neutral as to the price being offered by Developers. These
factors included the following:
a. Developers advised that it would re-evaluate the tender offer and the
$.85 per share price if the World Services board took a negative
position with respect to the Offer Price.
b. The World Services Form 10-KSB makes disclosure that World Services
"may be considered an `investment company' as that term is defined in
the [Investment Company] Act [of 1940]." This risk may result in a
reduction of the value of World Services from numerical calculations.
Developers Protections for World Services Shareholders Who Elect Not to Accept
the Tender Offer.
------------------------------------------------------------------------------
The World Services board expressed its concern to Developers that the
Takeover Act provided certain protections to shareholders who choose not to
tender their shares and consequently remain owners of a minority interest.
Developers expressed its concern that the provisions of the Takeover Act would
substantially reduce or even eliminate the value of its contemplated investment
in World Services because the Takeover Act would restrict Developers' ability to
act as a majority shareholder in the future. After negotiations among the
principals of World Services and Developers, Developers agreed to the following
covenants designed to protect the interests of the minority shareholders should
Developers complete the tender offer:
(i) Developers will not cause World Services to divest or sell any
material assets through a distribution, dividend, payment of any sort
or to conduct any merger, consolidation, exchange or other
transaction, in a manner which is inconsistent with the fiduciary
duties or other legal obligations that a majority shareholder owes to
any minority shareholders under all applicable state or federal laws;
(ii) Developers will not cause World Services to make any payment to
Developers in exchange for any property or services other than at fair
market value as determined in good faith by the Board of Directors of
World Services at the time of such transaction;
(iii) For so long as World Services is subject to the Securities Exchange
Act of 1934, Developers will cause World Services to comply with
financial reporting and other obligations pursuant to such Act, and if
Developers determines to take World Services private through filing a
Form 15, engaging in a 13e-3 Transaction, or other means, Developers
will (and will cause World Services to) comply with all relevant rules
and statutes; and
10
(iv) For a period of twenty-four (24) months following the completion of
the tender offer,
* Developers will not cause World Services to make any dividend or
distribution of cash, stock or other assets or consideration to
its shareholders, or conduct any sale, merger, consolidation,
exchange or other transaction, pursuant to which Developers would
receive a disproportionate amount of cash, stock or other assets
or consideration on a per share basis in comparison to World
Services' other shareholders;
* Developers will not cause World Services to enter into any sale
of all or substantially all of its assets, merger, consolidation,
exchange, voluntary dissolution or other transaction that would
have the effect of eliminating the interests of the non-tendering
shareholders and give rise to dissenters' rights under ss.47-6-23
of the South Dakota business corporations statutes, unless either
(i) the per share price to be paid to the non-tendering
shareholders is not less than the tender offer Price plus
interest calculated from the date the tender offer is completed,
minus dividends, as provided in ss.47-33-18(1)(a) of the business
combinations provisions under the Takeover Act, or (ii) the World
Services Board has received a fairness opinion from an
independent appraiser indicating that the per share price to be
paid to the minority shareholders is fair (without applying a
minority interest or lack of marketability discounts); and
* Developers will not cause World Services to enter into any
transaction with Developers or its affiliates not giving rise to
dissenters' rights as provided above, other than at fair market
value (as provided above), and if World Services were to enter
into any such transaction Developers would cause the World
Services board to give all World Services shareholders notice of
the transaction with an explanation of how the board reached its
determination as to the value of the consideration that is
detailed enough for the shareholders to reasonably evaluate the
board's decision. Any shareholder(s) objecting to the amount or
nature of the consideration will have the right to require World
Services to have an independent appraisal completed, and
(A) if the appraised value is within 10% of the price set by
the board, then the price will stand and World Services will pay
for the appraisal;
(B) if the appraised value is more than 10% higher than the
price set by the board, Developers will be required to pay such
additional consideration to World Services and reimburse World
Services for the reasonable cost of the appraisal; and
(C) if the appraised value is more than 10% lower than the
price set by the board, the price will stand and the
shareholder(s) requesting the appraisal will reimburse World
Services for the reasonable cost of the appraisal.
Any shareholder's right to require an appraisal under the foregoing
provisions is subject to World Services' receipt of the prior written agreement
of such shareholder not to disclose any confidential information about World
Services or Developers contained in the appraisal and to reimburse World
Services for the appraisal cost if the appraised value is more than 10% lower
than the price set by the board (or its pro rata share of such cost if multiple
shareholders request the appraisal).
11
Summary and Conclusion
----------------------
The foregoing discussion of the information and factors considered and
given weight by the World Services board of directors is not intended to be
exhaustive. In view of its many considerations, the board of directors did not
find it practicable to, and did not, quantify or otherwise assign relative
weights to the various individual factors considered. In addition, individual
members of the board of directors may have given different weights to the
various factors considered.
After weighing all of these considerations and other matters, the board of
directors unanimously recommended the tender offer as providing liquidity to
shareholders who may desire liquidity, but remained neutral as to the adequacy
of the Offer Price.
Item 5. Persons/Assets Retained, Employed, Compensated or Used.
Neither World Services nor any person acting on its behalf currently
intends to employ, retain or compensate any person to make solicitations or
recommendations to shareholders on its behalf concerning the tender offer.
Item 6. Interest in Securities of the Subject Company.
To the knowledge of World Services, no transactions in shares of common
stock have been effected during the past 60 days by World Services or by any
executive officer, director, affiliate or subsidiary of World Services.
Item 7. Purposes of the Transaction and Plans or Proposals.
Except as set forth in this Schedule 14D-9, World Services is not currently
undertaking or engaged in any negotiations in response to the tender offer that
relate to:
(1) a tender offer for, or other acquisition of, World Services' securities
by World Services or by any subsidiary or any other person;
(2) any extraordinary transaction, such as a merger, reorganization or
liquidation, involving World Services or any subsidiary;
(3) any purchase, sale or transfer of a material amount of assets of World
Services or any subsidiary; or
(4) any material change in the present dividend rate or policy, or
indebtedness or capitalization of World Services.
Except as set forth in this Schedule 14D-9, there are no transactions,
resolutions of the board of directors, agreements in principle, or signed
contracts in response to the tender offer that relate to one or more of the
events referred to in the preceding paragraph.
In compliance with its duties to the World Services shareholders, however,
the board of directors will consider other bona fide proposals that may be
received from other persons, although none have been received to date.
12
Item 8. Additional Information.
General
-------
Reference is hereby made to the Offer Documents that have been sent by
Developers.
South Dakota Anti-Takeover Statute.
-----------------------------------
South Dakota has adopted a statute entitled the "Domestic Public
Corporation Takeover Act." This statute is found at ss.47-33-1 et seq. of the
South Dakota laws. The statute places significant restrictions on an acquiring
person's ability to participate in or manage the affairs of any corporation it
acquires unless the acquiring person receives the prior approval and/or
cooperation of the corporation's board and/or shareholders.
The Supreme Court of the United States has scrutinized the validity of
similar statutes in other states. In 1982, in Edgar v. MITE Corp., the U.S.
Supreme Court invalidated on constitutional grounds the Illinois Business
Takeover statute, which, as a matter of state securities law, made certain
corporate acquisitions more difficult. However, in 1987, in CTS Corp. v.
Dynamics Corp. of America, the U.S. Supreme Court held that the State of Indiana
may, as a matter of corporate law and, in particular, with respect to those
aspects of corporate law concerning corporate governance, constitutionally
disqualify a potential acquirer from voting on the affairs of a target
corporation without the prior approval of the remaining shareholders. The state
law before the U.S. Supreme Court was by its terms applicable only to
corporations that had a substantial number of shareholders in the state and were
incorporated there.
World Services believes that the Domestic Public Corporation Takeover Act
applies to the transaction contemplated by Developers and is enforceable under
the principles expressed in the Edgar v. MITE and the CTS Corp. v. Dynamics Corp
of America cases. In adopting the statute, the South Dakota legislature also
apparently reached the same conclusion when it stated, in ss.47-33-2(1):
"This state [South Dakota] has traditionally regulated the affairs of
corporations organized in this state, including the regulation of mergers
and other business combinations and the rights of shareholders. The United
States Supreme Court has recently reaffirmed the power of states to
regulate these affairs."
In adopting the statute, the South Dakota legislature similarly expressed
its interest in protecting South Dakota public corporations and their
shareholders from transactions that are coercive, involve substantial risk of
unfair business dealings or deprive shareholders from realizing the full value
of their holdings. At the same time, the South Dakota legislature drafted the
statute in such a way to allow for transactions which have the support of a
company's board and/or shareholders. In these instances, the legislature
apparently felt that the board and/or shareholders would address the public
policy concerns. As part of the tender offer negotiations, Developers has
required that World Service's board and shareholders approve measures that would
eliminate the applicability of the Takeover Act and provide Developers with
greater freedom to manage the on-going business in its discretion.
If a majority of the outstanding World Services shares are tendered, the
September 10 Agreement requires that World Services seek shareholder
approval of an amendment of the World Services' Articles of Incorporation
to "opt out" of the control share acquisitions provisions (ss.ss.47-33-8
through 47-33-16, inclusive) of the Takeover Act (the "Voting Rights
Provision") and, if approved at the Special Meeting, to amend World
Services' Articles of Incorporation accordingly; and
Developers also required that the World Services board approve Developers'
acquisition of a majority of World Services shares from shareholders who
elect to participate in the Tender Offer for purposes of ss.47-33-17(1) of
the Takeover Act (the "Business Combination Provision").
These two actions have significant potential impact on World Services
shareholders who choose not to tender their shares to Developers.
Waiver of the Voting Rights Provision. The Voting Rights Provision provides
that a person acquiring a significant number of shares of a corporation
organized under South Dakota law may not vote those shares unless the
shareholders of the corporation specifically grant the person the right to vote.
However, a corporation may "opt out" of these provisions by amendment to its
articles of incorporation. World Services has not previously adopted such an
amendment and, therefore, without a vote of the World Services shareholders
waiving the Voting Rights Provision, Developers may acquire a majority of the
shares but would not be able to vote those shares.
13
Developers has required, as a condition of completing the tender offer,
that the World Services shareholders approve, and that World Services amend its
articles of incorporation to "opt out" of the Voting Rights Provision. As a
result of the amendment to World Services' articles of incorporation, Developers
would be entitled to vote the shares acquired in the tender offer just as any
other World Services' shareholder is able to vote his or her shares.
World Services has not yet prepared the proxy statement for this meeting,
but at the September 7, 2001 meeting, the World Services board agreed to
recommend that all shareholders who tendered their shares to Developers vote for
the amendment of articles to opt out of the Voting Rights Provision to permit
Developers to complete the tender offer. Since none of the directors or
executive officers has determined whether to tender their shares to Developers
in response to the tender offer, none of the directors has yet determined how
they intend to cast their vote on this provision.
Waiver of the Business Combination Provision. The Business Combination
Provision imposes significant limitations on an acquiring person's ability to
enter into future business combinations with the acquired corporation, unless
the original acquisition is approved by the corporation's board or the business
combination is approved by a majority of the corporation's minority
shareholders. As a condition to the tender offer, Developers is requiring that
the World Services board approve its acquisition of shares; otherwise,
Developers would be in the unusual position where, the more successful its
tender offer, the more difficult it would be to complete a subsequent business
combination.
In light of this, and in light of the protections that Developers offered
for the minority shareholders, the World Services board approved Developers'
purchase of shares pursuant to the tender offer at the September 7, 2001, board
meeting. This board approval also resulted in a waiver of the Business
Combination Provision.
Antitrust.
----------
Under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended,
and the rules that have been promulgated thereunder by the Federal Trade
Commission (the "FTC"), certain transactions may not be consummated unless
certain information has been furnished to the Antitrust Division of the
Department of Justice and the FTC and certain waiting period requirements have
been satisfied. However, the proposed acquisition of the shares by Developers
pursuant to its contemplated tender offer is not subject to these requirements
because (to the knowledge of World Services) Developers does not have either (i)
total assets of $100,000,000 or more, as stated on the last regularly prepared
balance sheet of Developers, or (ii) annual net sales of $100,000,000 or more,
as stated on Developers' last regularly prepared annual statement of income and
expense, as those terms are defined in the FTC's implementing regulations under
the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended.
14
Item 9. Exhibits.
Exhibit No. Description
----------- -----------
(a)(1) World Services' letter to shareholders
(a)(2) See exhibit (a)(1)
(a)(3) Not applicable, as this is not considered to be a going private
transaction
(a)(4) Not applicable, as there is no prospectus being used in this
transaction
(a)(5) Not applicable.
(b) Not applicable, as the filing person is not obtaining any
financing
(c) Not applicable, as no report, opinion, or appraisal has been
obtained
(d) September 10 Agreement (as defined in the Schedule 14D-9)
(e) See exhibit (d)
(f) Not applicable, as there are no security holder appraisal rights
in connection with this transaction
(g) Not applicable, as World Services does not intend to make any oral
solicitations
(h) Not applicable, as World Services has not obtained any written
legal opinion as to the tax consequences of the transaction
------------------
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
WORLD SERVICES, INC.
By: /s/ Ronne Tarrell
---------------------
Ronne Tarrell
President and Chief Executive Officer
Dated: October 4, 2001
15
EXHIBIT (a)(1)
World Services, Inc. Letterhead
October 4, 2001
Dear Shareholders:
We would like to inform you that Super 8 Motel Developers, Inc. ("Developers")
has made an offer to purchase not less than a majority and up to all of the
2,639,679 outstanding shares of World Services common stock for a cash price of
$0.85 per share. Effective September 10, 2001, we entered into an agreement with
Developers that defines the tender offer and the various conditions that must be
met with respect to the tender offer. Your Board of Directors has determined
that:
- it supports the tender offer as it provides liquidity to shareholders
who may desire liquidity; but
- it remains neutral and offers no recommendation with respect to
adequacy of the price per share offered by Developers.
In arriving at this determination, the Board of Directors carefully considered
the tender offer as described in the September 10th agreement and the other
factors described in the attached Schedule 14D-9.
Developers has also sent you an Offer to Purchase together with related
materials including a Letter of Transmittal to be used for tendering your
shares. These documents also describe the terms and conditions of the Developers
tender offer and provide instructions as to how to tender your shares.
I urge you to read the enclosed materials and the documents you have received
from Developers carefully before making your decision with respect to tendering
your shares pursuant to the Developers offer. You should also consult with your
legal, tax, financial and other advisors with respect to making a decision
whether or not to tender your shares.
I personally, along with your Board of Directors and management, thank you for
your support over the years.
Sincerely,
/s/ Ronne Tarrell
-----------------
Ronne Tarrell, President
September 7, 2001
CONFIDENTIAL
Board of Directors of World Services, Inc.
724 N. Kline
P.O. Box 786
Aberdeen, SD 57402-0786
Re: Tender Offer
Gentlemen and Ms. Bower:
The purpose of this letter is to outline the material terms and conditions
of an agreement between Super 8 Motel Developers, Inc., a South Dakota
corporation ("Developers") and World Services, Inc., a South Dakota corporation
("World Services") pursuant to which Developers will make a public tender offer
for all of the outstanding shares of common stock, par value $.001 per share, of
World Services (the "Tender Offer"), and if completed, acquire shares
representing a controlling majority interest of World Services. If you accept
the terms of this proposal by signing below, it is agreed that this agreement
shall become effective September 10, 2001.
The material terms and conditions of the Tender Offer are as follows:
Purchase Price The purchase price for the outstanding shares of World
Services common stock to be purchased by Developers in the
Tender Offer will be eighty-five cents ($.85) per share net
in cash (the "Tender Offer Price").
Expiration Date The Tender Offer will expire on October 31, 2001, subject to
Developers' right, in its sole discretion, to extend it.
Tender of Shares All properly tendered shares will be held in escrow by a
depositary selected by Developers, with the consent of World
Services, which shall not be unreasonably withheld, until
the expiration or termination of the Tender Offer. In its
tender offer materials, Developers will make specific and
reasonable provisions for accepting the tender of shares by
any shareholders who are unable to locate their share
certificates or whose shares are held in escrow pursuant to
the Escrow Agreement dated May 30, 1980 between World
Services and the South Dakota Division of Securities. Unless
earlier terminated as provided herein and subject to the
satisfaction or waiver by Developers of the conditions set
forth below, on or as soon as practicable following the
expiration of the Tender Offer, Developers will accept and
make payment of the Tender Offer Price for all shares
properly tendered on or before the expiration date. If such
conditions are not then satisfied or waived, Developers
shall direct the depositary to promptly return the tendered
shares to the registered holders thereof. Shareholders will
be able to withdraw their shares from the Tender Offer at
any time until they are accepted by Developers. Once
accepted, the holders of such shares will no longer be able
to withdraw them.
CONFIDENTIAL
Board of Directors of World Services, Inc.
September 7, 2001
Page 2
Schedule 14d-9 On or before September 25, 2001 (or such later date on which
Developers is prepared to file its Schedule TO and related
tender offer materials), World Services will prepare and
file with the Securities and Exchange Commission, and
deliver to Developers for distribution to World Services
shareholders, a Schedule 14D-9 and related materials in
which the World Services' Board of Directors will take the
position that it supports Developers' offer in that it
provides liquidity to shareholders who desire to sell but
remains neutral as to price. World Services' Board will not
directly or indirectly change such recommendation unless it
determines in good faith by a majority vote that such action
is likely required to satisfy its fiduciary duties to its
shareholders.
Shareholders World Services agrees to set a date for a special meeting of
Meeting its shareholders (the "Special Meeting") and file
preliminary proxy materials within ten (10) days of its
receipt of a notice from Developers that at least a majority
of shares have been tendered, to hold such special meeting
as soon thereafter as is legally and reasonable practicable,
the primary purpose of which will be to vote on an amendment
of the World Services' Articles of Incorporation to "opt
out" of the control share acquisitions provisions (Sections
47-33-8 through 47-33-16, inclusive) of the South Dakota
Domestic Public Corporation Takeover Act (the "Takeover
Act"), and if approved at the Special Meeting, to duly amend
World Services' Articles of Incorporation accordingly. World
Services Board of Directors will recommend that World
Services shareholders who desire to tender their shares
approve such amendment of World Services' Articles of
Incorporation. World Services' Board will not directly or
indirectly change such recommendation unless it determines
in good faith by a majority vote that such action is likely
required to satisfy its fiduciary duties to its
shareholders.
Notwithstanding the foregoing, World Services will have no
obligation to set the record date, mail proxy materials or
hold the Special Meeting unless and until a Release of
Escrowed Shares Agreement in the form of Exhibit A hereto
has been fully executed by Developers and the Director of
the South Dakota Division of Securities. World Services
agrees to execute and enter into such agreement.
Conditions Developers' obligation to accept and purchase properly
tendered shares of World Services common stock in accordance
with the Tender Offer is conditioned upon the following
events, each of which may be waived by Developers:
o shares representing at least a majority of the
outstanding shares of World Services common stock will
have been tendered (and not withdrawn) prior to the
expiration of the Tender Offer;
o World Services will have amended its Articles of
Incorporation to "opt out" of the control share
acquisition provisions of the Takeover Act as provided
above;
o there will not have been any change, effect, event,
occurrence, state of facts or development that results
in a material change in the financial condition, cash
assets or results of operations of World Services, or
any change, event or condition that, with the passage
of time, would reasonably be expected to result in such
an event or effect other than as contemplated by this
agreement or the transactions contemplated hereby;
CONFIDENTIAL
Board of Directors of World Services, Inc.
September 7, 2001
Page 3
o there will not be any provision of any applicable law
or regulation or any judgment, injunction, order or
decree that will prohibit the transactions described
herein;
o Developers' due diligence investigation of World
Services will not have revealed any information which,
in Developers' reasonable discretion, precludes it from
proceeding with the Tender Offer; and
o World Services' Board of Directors will not have
withdrawn its approval of Developers' acquisition of
its shares pursuant to the Tender Offer for purposes of
Section 47-33-17(1) of the Takeover Act as set forth
herein,
In the event the above conditions are met, Developers will
purchase all tendered shares.
Covenants of Until the Tender Offer is completed or this agreement is
Developers terminated as provided herein, Developers hereby covenants
to World Services as follows:
o Developers will comply with the requirements of all
applicable state and federal laws, including, without
limitation, the Securities and Exchange Act of 1934, as
amended (the "Exchange Act"), and all applicable state
securities laws in connection with its implementation
of the Tender Offer and the performance of its
obligations hereunder;
o Developers will use its best commercially reasonable
efforts in good faith to obtain the agreement of the
Director of the South Dakota Division of Securities to
a Release of Escrowed Shares Agreement in the form of
Exhibit A hereto, and will promptly notify World
Services of all substantive communications with the
Division of Securities with respect to the foregoing;
and
o Developers will use its best commercially reasonable
efforts in good faith to locate certain "missing"
registered shareholders of World Services identified by
World Services, whose registered addresses are believed
by World Services to be no longer current.
Developers further covenants that if the Tender Offer is
completed, resulting in Developers' acquisition of shares
representing a controlling majority interest in World
Services,
o Developers will not cause World Services to divest or
sell any material assets through a distribution,
dividend, payment of any sort or to conduct any merger,
consolidation, exchange or other transaction, in a
manner which is inconsistent with the fiduciary duties
or other legal obligations that a majority shareholder
owes to any minority shareholders under all applicable
state or federal laws;
o Developers will not cause World Services to make any
payment to Developers in exchange for any property or
services other than at fair market value as determined
in good faith by the Board of Directors of World
Services at the time of such transaction;
CONFIDENTIAL
Board of Directors of World Services, Inc.
September 7, 2001
Page 4
o For so long as World Services is subject to Exchange
Act, Developers will cause World Services to comply
with financial reporting and other obligations pursuant
to such Act, and if Developers determines to take World
Services private through filing a Form 15, engaging in
a 13e-3 Transaction, or other means, Developers will
(and will cause World Services to) comply with all
relevant rules and statutes; and
o For a period of twenty-four (24) months following the
completion of the Tender Offer,
o Developers will not cause World Services to make
any dividend or distribution of cash, stock or
other assets or consideration to its
shareholders, or conduct any sale, merger,
consolidation, exchange or other transaction,
pursuant to which Developers would receive a
disproportionate amount of cash, stock or other
assets or consideration on a per share basis in
comparison to World Services' other
shareholders;
o Developers will not cause World Services to
enter into any sale of all or substantially all
of its assets, merger, consolidation, exchange,
voluntary dissolution or other transaction that
would have the effect of eliminating the
interests of the non-tendering shareholders and
give rise to dissenters' rights under Section
47-6-23 of the South Dakota business
corporations statutes, unless either (i) the per
share price to be paid to the non-tendering
shareholders is not less than the Tender Offer
Price plus interest calculated from the date the
Tender Offer is completed, minus dividends, as
provided in Section 47-33-18(1)(a) of the
business combinations provisions under the
Takeover Act, or (ii) the World Services board
has received a fairness opinion from an
independent appraiser indicating that the per
share price to be paid to the minority
shareholders is fair (without applying a
minority interest or lack of marketability
discounts); and
o Developers will not cause World Services to
enter into any transaction with Developers or
its affiliates not giving rise to dissenters'
rights as provided above, other than at fair
market value (as provided above), and if World
Services were to enter into any such transaction
Developers would cause the World Services board
to give all World Services shareholders notice
of the transaction with an explanation of how
the board reached its determination as to the
value of the consideration that is detailed
enough for the shareholders to reasonably
evaluate the board's decision. Any
shareholder(s) objecting to the amount or nature
of the consideration will have the right to
require World Services to have an independent
appraisal completed, and
CONFIDENTIAL
Board of Directors of World Services, Inc.
September 7, 2001
Page 5
|X| if the appraised value is within 10% of
the price set by the board, then the
price will stand and World Services will
pay for the appraisal;
|X| if the appraised value is more than 10%
higher than the price set by the board,
Developers will be required to pay such
additional consideration to World
Services and reimburse World Services
for the reasonable cost of the
appraisal; and
|X| if the appraised value is more than 10%
lower than the price set by the board,
the price will stand and the
shareholder(s) requesting the appraisal
will reimburse World Services for the
reasonable cost of the appraisal.
Notwithstanding the foregoing, any shareholder's
right to require an appraisal is subject to
World Services' receipt of the prior written
agreement of such shareholder not to disclose
any confidential information about World
Services or Developers contained in the
appraisal and to reimburse World Services for
the appraisal cost if the appraised value is
more than 10% lower than the price set by the
board (or its pro rata share of such cost if
multiple shareholders request the appraisal).
Covenants and Until the Tender Offer is completed or this agreement is
Representation of terminated as provided herein, World Services covenants that
World Services it will carry on business in accordance with its historical
practices and will not declare or pay any cash or other
dividends on the outstanding World Services common stock, or
approve, implement or make any payments with regard to any
severance, change of control, "golden parachute" or similar
agreement with its directors, officers or others.
World Services acknowledges that Developers has relied on
the filings of World Services under the Exchange Act in
entering into this agreement and represents and warrants
that such filings are materially accurate, complete and not
misleading, except that World Services makes no
representation with respect to any information provided to
World Services by Developers that is contained in such
filings. World Services further represents and warrants that
its board of directors has approved Developers' acquisition
of World Services shares from shareholders who elect to
participate in the Tender Offer for purposes of Section
47-33-17(1) of the Takeover Act, and agrees that it will not
directly or indirectly revoke such approval unless it
determines in good faith by a majority vote that such action
is likely required to satisfy its fiduciary duties to its
shareholders.
Document Review Each party will give the other a reasonable opportunity to
& Approval review and provide comments on each document that is to be
filed with the Securities and Exchange Commission, mailed to
shareholders, published, or otherwise distributed in
connection with the Tender Offer or Special Meeting, and
will not make any such filing, mailing, publication or
distribution unless and until the approval of the other
party or its counsel is received, which approval will not be
unreasonably withheld or delayed.
CONFIDENTIAL
Board of Directors of World Services, Inc.
September 7, 2001
Page 6
Notification Until the Tender Offer is completed or this agreement is
terminated as provided herein, World Services will promptly
advise Developers orally and in writing of any request for
information or Third Party Proposal (as defined below), or
any inquiry which could result in a Third Party Proposal,
the material terms and conditions of such request, Third
Party Proposal or inquiry and the identity of the person(s)
making the same and shall keep Developers apprised of
related developments. World Services agrees to notify
Developers immediately upon accepting or agreeing to any
Third Party Proposal. "Third Party Proposal" means any
merger, consolidation, sale of all or a material portion of
World Services' assets or business, any acquisition of World
Services' capital stock, any sale of Developers' common
stock owned by World Services, or any similar transaction by
a third party that would reasonably be expected to impede,
interfere with, prevent or materially delay the Tender Offer
or would reasonably be expected to materially dilute the
benefits of the transaction to Developers.
Due Diligence Until the Tender Offer is completed or this agreement is
terminated as provided herein, and subject to Developers'
execution and the terms of a confidentiality agreement in
the form set forth as Exhibit B hereto, Developers will have
the right to conduct reasonable due diligence, including
inspecting and copying World Services' corporate records,
material contracts, accounting information and other
documents, during regular business hours, at its own
expense. In the event that this agreement is terminated for
any reason, Developers agrees to promptly return or destroy
any and all copies it has made of such materials as provided
in the confidentiality agreement.
Termination This agreement and the Tender Offer may be terminated upon
the mutual written agreement of the parties or by either
party upon the occurrence of any material breach of any
provision hereof by the other, provided that the terminating
party will give the breaching party five (5) business days
written notice of any such breach, during which time such
breaching party will have the right to cure any such breach.
Nothing in this agreement is intended to limit a party's
recoverable damages for breach of contract, except that
neither party will be liable for consequential damages.
This agreement will also automatically terminate upon World
Services' delivery of notice to Developers that it has
accepted or agreed to a Third Party Proposal. Developers may
terminate this agreement upon two (2) business days written
notice if World Services' Board of Directors has for any
reason or no reason, directly or indirectly, revoked its
support of the Tender Offer as described above, recommended
that its shareholders reject the Tender Offer, or revoked
its recommendation of the proposal to amend its Articles of
Incorporation as described above.
CONFIDENTIAL
Board of Directors of World Services, Inc.
September 7, 2001
Page 7
Fees and Expenses Each party will be responsible for its own fees and expenses
related to performing its respective obligations pursuant to
this agreement.
Shareholder List Within a commercially reasonable period following its
execution of this agreement, World Services will provide
Developers with a certified list of the holders of all of
its outstanding common and preferred stock and all options,
warrants, and convertible or other securities of World
Services, if any, as of a recent date, which will identify
each holder by name and address and will set forth the
number of shares or other securities owned by such holder,
in paper and electronic form if available. World Services
will keep Developers promptly informed of all transfers,
redemptions or other transactions with respect to its shares
or other securities after the date of such shareholders
list.
Resignations Any officer or director of World Service may resign from his
or her position at any time in his or her discretion, and if
requested by Developers, each director and officer of World
Services will tender his or her resignation to World
Services upon the completion of the Tender Offer.
Cooperation The parties acknowledge that this agreement does not address
all the actions required to be taken by the parties to
accomplish the purposes of this agreement and agree to
cooperate and take such additional actions as are
commercially reasonable in furtherance of their respective
obligations hereunder. Nothing herein is to be interpreted
to prohibit or prevent the parties or their Board of
Directors from complying with the rules and regulations of
the Commission or other applicable state or federal laws.
Should the foregoing accurately reflect your understanding of our agreement,
please execute the additional copy of this agreement enclosed herewith and
return it to me no later than September 10, 2001. By execution hereof, you
represent (a) that this agreement, and the acquisition of World Services shares
by Developers contemplated hereby, has been duly authorized by the Board of
Directors of World Services, (b) that you have been duly authorized to execute
this agreement on behalf of World Services, and (c) that upon execution, this
agreement will be a valid and binding obligation of World Services, enforceable
in accordance with its terms.
The signature of Developers below constitutes a representation by the
undersigned (a) that this agreement has been duly authorized by the Board of
Directors of Developers, (b) that the undersigned has been duly authorized to
execute this agreement on behalf of Developers, and (c) that upon acceptance of
this agreement by World Services by signing below, this agreement will be a
valid and binding obligation of Developers, enforceable in accordance with its
terms.
Thank you, in advance, for your cooperation.
Very truly yours,
/s/ Harvey Aman
---------------
President and Chief Operating Officer
Super 8 Motel Developers, Inc.
CONFIDENTIAL
Board of Directors of World Services, Inc.
September 7, 2001
Page 8
AGREED TO AND ACCEPTED BY
World Services, Inc.
/s/ Ronne Tarrell
-----------------
By: Ronne Tarrell
Its: President
Dated: 9/7/2001
EXHIBIT A
RELEASE OF ESCROWED SHARES AGREEMENT
THIS RELEASE OF ESCROWED SHARES AGREEMENT is entered into this 25th day of
September, 2001, by and among WORLD SERVICES, INC. ("WSI"), a South Dakota
corporation, SUPER 8 MOTEL DEVELOPERS, INC. ("Developers"), a South Dakota
corporation, and THE SOUTH DAKOTA DIVISION OF SECURITIES ("Division of
Securities").
W I T N E S S E T H:
WHEREAS, on May 30, 1980, and as a condition of the issuance of shares to
the residents in the State of South Dakota, certain insiders of WSI were
required to place their shares in escrow until such time as WSI reached certain
earnings standards; and
WHEREAS, WSI and Developers have entered into an agreement whereby
Developers would participate in a friendly tender offer to WSI shareholders in
order to achieve a 51% control of ownership of WSI; and
WHEREAS, the Division of Securities has agreed that it would release all of
the escrowed shares upon Developers receiving 51% of the outstanding shares of
WSI.
NOW, THEREFORE, the parties hereby agree as follows:
1. Release of Shares. The Division of Securities hereby agrees to release
all of those shares currently held in escrow pursuant to the escrow
agreement executed between the Division of Securities and WSI on May
30, 1980, whether or not such shares are tendered by the holder
thereof to Developers. This release is conditioned upon the following:
(i) Developers receiving 51% of the outstanding shares of WSI
pursuant to a friendly tender offer between Developers and WSI no
later than December 31, 2001; and
(ii) Proper documentation is provided to the Division of Securities
indicating that the shares have been tendered and received by
Developers.
2. No Restrictions. Upon the release of the escrowed shares, the shares
shall have no further restrictions pursuant to the escrow agreement
entered into between WSI and the Division of Securities and will be
freely tradeable in accordance with State and federal securities laws.
The Division of Securities will not require any subsequent notice with
regard to the transfer of such shares.
3. Termination of Tender Offer. If the tender offer between Developers
and WSI does not occur and Developers does not receive 51% of the
shares of WSI by December 31, 2001, the shares shall not be released
from escrow and the terms and conditions of the escrow agreement
between the Division of Securities and WSI shall continue to be in
effect.
4. Governing Law. This agreement shall be governed by the laws of the
State of South Dakota.
5. Counterparts. This Release of Escrowed Shares Agreement may be
executed in any number of counterparts, each of which when so executed
and delivered shall be deemed to be an original and all of which
counterparts of this Agreement taken together, shall constitute but
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have set their hands on the day and
year first above written.
WORLD SERVICES, INC. SUPER 8 MOTEL DEVELOPERS, INC.
By /s/ Harvey Aman By /s/ Ronne Tarrell
------------------------------------- -----------------------------------
Its President Its President
------------------------------------ ----------------------------------
THE SOUTH DAKOTA DIVISION OF
SECURITIES
By /s/ Gail Sheppick
-------------------------------------
Its Director
------------------------------------
World Services, Inc.
724 North Kline, P.O. Box 786
Aberdeen, S.D. 57402-0786
CONFIDENTIALITY AND NON-DISCLOSURE AGREEMENT
World Services, Inc. intends to furnish to Super 8 Motel Developers, Inc. (the
"Recipient"), orally or in writing, confidential information of or relating to
World Services and/or its affiliated parties in connection with the Recipients
investigation and pursuance of a tender offer for 100% of the outstanding shares
of World Services. Such information may include names and addresses of
shareholders of World Services, the number of shares of stock owned by such
people and the amount of their investment in World Services, confidential
attorney-client communications, communications with respect to potential
acquisitions, and other communications which World Services has decided not to
make public. The foregoing information, and other information that World
Services identifies to the Recipient as "confidential" is collectively referred
to herein as "Confidential Information". The Recipient agrees to use the
Confidential Information only for the purposes of commencing and completing the
contemplated tender offer, and for no other purpose.
As a condition to the Recipient's receiving the Confidential Information,
the Recipient and HyperLight each agrees as follows.
1. The Recipient will ensure that each of its employees, officers,
directors, agents, attorneys, and accountants is under an obligation of
confidentiality similar to the obligation contained in this agreement before
permitting any such person to have access to the Confidential Information or any
portion thereof. For the purposes of this agreement, the term "Recipient"
includes any person who, with the consent of the Recipient named in the first
paragraph, has access to any Confidential Information. Super 8 Motel Developers,
Inc., hereby represents and warrants that it accepts responsibility for its own
actions and the action of any employee, officer, director, agent, attorney,
accountant or other person acting for Super 8 Motel Developers, Inc., or under
its direction.
2. The Recipient will use the Confidential Information only for the
purposes of commencing and completing the contemplated tender offer.
3. If requested by World Services following the termination of the tender
offer, the Recipient agrees to return to World Services (or confirm to World
Services' satisfaction the destruction of) the Confidential Information, and all
copies thereof including, without limitation, any analyses, compilations,
studies or other documents, prepared by the Recipient or any person at the
Recipient's request or under the Recipient's direction.
4. If the Recipient (or any person acting for the Recipient or under the
Recipient's direction) becomes legally compelled to disclose any of the
Confidential Information, the Recipient agrees to provide World Services with
prompt notice thereof so that World Services may seek a protective order or
other appropriate remedy and/or waive compliance with the provisions of this
Agreement. If a protective order or other remedy is not obtained, the Recipient
shall furnish only that portion of the information which is legally required and
shall cooperate in any reasonable way, at World Services' expense, in actions
reasonably taken by World Services to seek to obtain other reliable assurance
that confidential treatment will be accorded the Confidential Information.
5. No obligation of confidentiality shall apply to any Confidential
Information that the Recipient (i) can reasonably demonstrate in writing was
already known or in the Recipient's possession before disclosure by World
Services, (ii) can reasonably demonstrate in writing was developed independently
by the Recipient, (iii) rightfully receives from a third party without knowledge
of violation of any obligation of confidentiality, provided, however, that if
the Recipient later learns that any such Confidential Information was received
in violation of any obligation of confidentiality, from that point, the
Recipient shall treat such Confidential Information pursuant to the terms of
this Agreement so long as it meets all other requirements of "Confidential
Information," or (iv) can reasonably demonstrate was rightfully in the public
domain other than by a breach of a duty to World Services.
In addition, no obligation of confidentiality shall apply to any
Confidential Information that is known to, or becomes generally available to,
the public without breach of this Agreement.
6. Except as mutually agreed in writing between the Recipient and World
Services, neither the Recipient nor any person acting for or under the direction
of the Recipient shall disclose to any third party either the fact that the
Confidential Information has been made available to any of them or that
discussions or negotiations may be taking place between the Recipient and World
Services, or any of the terms, conditions or other facts with respect thereto or
relating to any business arrangement entered into between the Recipient and
World Services or its affiliated parties.
7. World Services is not making any representations or warranties as to the
accuracy or completeness of the Confidential Information.
8. This Agreement shall be binding upon the successors and assigns of
Recipient, and shall inure to the benefit of World Services and its successors
and assigns. Because World Services does not have an adequate remedy at law to
protect its interest in the Confidential Information, World Services shall be
entitled to seek injunctive relief, in addition to such other remedies and
relief that would, in the event of a breach of the provisions of this Agreement,
be available to World Services.
8. This Agreement shall not be amended except in writing signed by World
Services and the Recipient.
9. This Agreement shall be governed by, and construed in accordance with,
the laws of the State of South Dakota.
10. If any provision of this Agreement is invalid or unenforceable in any
jurisdiction, such provision shall be fully severable from this Agreement and
the other provisions hereof shall remain in full force and effect in such
jurisdiction and the remaining provisions hereof shall be liberally construed to
carry out the provisions and intent hereof. The invalidity or unenforceability
of any provision of this Agreement in any jurisdiction shall not affect the
validity or enforceability of such provision in any other jurisdiction, nor
shall the invalidity or unenforceability of any provision of this Agreement with
respect to any person or entity affect the validity or enforceability of such
provision with respect to any other person or entity.
11. All notices and other communications required under this Agreement to
be in writing shall be addressed to World Services at the address set forth
above, and the Recipient at the addresses or facsimile numbers set forth below,
or to such other addresses or facsimile numbers of which a party may from time
to time notify the other party pursuant hereto. Such notices and communications
shall be deemed given upon the earlier of: (a) actual receipt, (b) five business
days after being mailed by registered or certified mail, return receipt
requested with postage prepaid, (c) when sent by facsimile with receipt
confirmed electronically, or (d) one business day after being deposited with a
recognized overnight courier service with charges prepaid.
12. Neither this Agreement nor the parties' performance hereunder shall be
deemed to create any special relationship or obligations between the parties
other than those expressly set forth herein, and no implied covenants shall
apply to this Agreement other than those of good faith and fair dealing. All
duties, obligations, rights, powers, and remedies provided for herein are
cumulative, and not exclusive, of any and all duties, obligations, rights,
powers, and remedies existing at law or in equity, and the parties shall, in
addition to the duties, obligations, rights, powers, and remedies herein
conferred, be entitled to avail themselves of all such other duties,
obligations, rights, powers, and remedies as may now or hereafter exist.
13. This Agreement may not be altered or amended, nor may any rights
hereunder be waived, except by an instrument in writing and executed by the
party or parties to be charged with such amendment or waiver.
14. No waiver of any term, provision, or condition of this Agreement shall
be deemed to be, or construed as, a further or continuing waiver of any such
term, provision, or condition, or as a waiver of any other term, provision, or
condition hereof.
15. To the extent the parties have deemed necessary, they have consulted
with their legal, tax, financial, and accounting advisors with respect to the
subject matter of this Agreement.
16. Pronouns in masculine, feminine, and neuter gender shall be construed
to include any other gender.
17. Words in the singular form shall be construed to include the plural,
and words in the plural form shall be construed to include the singular, unless
the context otherwise requires.
18. This Agreement shall be binding upon the parties hereto and, except as
otherwise prohibited, their respective successors and assigns.
19. Except for the Recipient and World Services, and their permitted
successors and assigns, nothing in this Agreement, express or implied, is
intended to confer upon any other entity or person any benefits, rights, or
remedies.
20. This Agreement may be executed in counterparts and shall become
operative when each party has executed and delivered at least one counterpart.
21. This Agreement may be delivered by facsimile or similar transmission,
and a facsimile or similar transmission evidencing execution shall be effective
as a valid and binding agreement between the parties for all purposes.
This Agreement has been executed on the dates set forth below to be
effective as of the date set forth below.
RECIPIENT: Super 8 Motel Developers, Inc.
By: ____________________________
Harvey Aman, President and Chief Operating Officer
ACCEPTED BY: World Services, Inc.
By: ____________________________
Ronne Tarrell, President