-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WAyO4M3+lifJhF6uhL4wPR0bZHmZHSLMTFYv5boEnQconTev8znjpIDseFPCjyHp +SQl8C3tD8oSXHUzZN5lxA== 0000921530-99-000065.txt : 19990325 0000921530-99-000065.hdr.sgml : 19990325 ACCESSION NUMBER: 0000921530-99-000065 CONFORMED SUBMISSION TYPE: SC 14D1 PUBLIC DOCUMENT COUNT: 10 FILED AS OF DATE: 19990323 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: HITOX CORPORATION OF AMERICA CENTRAL INDEX KEY: 0000842295 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INORGANIC CHEMICALS [2810] IRS NUMBER: 742081929 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 SEC ACT: SEC FILE NUMBER: 005-40170 FILM NUMBER: 99570381 BUSINESS ADDRESS: STREET 1: P.O. BOX 2544 CITY: CORPUS CHRISTI STATE: TX ZIP: 78401 BUSINESS PHONE: 5128825175 MAIL ADDRESS: STREET 1: P.O. BOX 2544 CITY: CORPUS CHRISTI STATE: TX ZIP: 78403 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: PAULSON ACQUISITION LLC CENTRAL INDEX KEY: 0001082336 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: C/O FOUNDERS EQUITY GROUP, INC. STREET 2: 2602 MCKINNEY AVENUE, SUITE 220 CITY: DALLAS STATE: TX ZIP: 75204 MAIL ADDRESS: STREET 1: AKIN, GUMP, STAUSS, HAUER & FELD L.L.P. STREET 2: 590 MADISON AVENUE CITY: NEW YORK STATE: NY ZIP: 10022 SC 14D1 1 TENDER OFFER STATEMENT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------------- SCHEDULE 14D-1 TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 --------------------------- HITOX CORPORATION OF AMERICA (Name of Subject Company) PAULSON ACQUISITION LLC PAULSON RANCH LTD. BERNARD A. PAULSON (Bidder) COMMON STOCK, PAR VALUE $0.25 PER SHARE (Title of Class of Securities) 433658101 (CUSIP Number of Class of Securities) --------------------------- PAULSON ACQUISITION LLC C/O FOUNDERS EQUITY GROUP, INC. 2602 MCKINNEY AVENUE SUITE 220 DALLAS, TEXAS 75204 (214) 871-3000 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Bidder) --------------------------- Copy to: PATRICK J. DOOLEY, ESQ. VICTORIA A. BAYLIN, ESQ. AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P. 590 MADISON AVENUE NEW YORK, NEW YORK 10022 TELEPHONE: (212) 872-1000 --------------------------- Calculation of Filing Fee Transaction Valuation Amount of Filing Fee $2,500,000 $500 * For purposes of calculating the filing fee only. This amount assumes the purchase of 1,000,000 shares of Common Stock of the subject company (the "Shares") at $2.50 in cash per share. [__] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. Amount Previously Paid: Filing Party: Form or Registration Number: Date Filed: 1. Name of Reporting Person S.S. or I.R.S. Identification Nos. of Above Person -------------------------------------------------- Paulson Acquisition LLC 2. Check the Appropriate Box if a member of a Group (See Instructions) ------------------------------------------------------------------- (a) [ ] (b) [X] 3. SEC Use Only ------------ 4. Sources of Funds (See Instructions) ----------------------------------- WC, PF and OO 5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(e) or 2(f) ------------------------------ [ ] 6. Citizenship or Place of Organization ------------------------------------ Delaware 7. Aggregate Amount Beneficially Owned by Each Reporting Person ------------------------------------------------------------ 0 8. Check if the Aggregate in Row (7) Excludes Certain Shares (See Instructions) ------------- [ ] 9. Percent of Class Represented by Amount in Row (7) ------------------------------------------------- 0% 10. Type of Reporting Person (See Instructions) ------------------------------------------- OO 1. Name of Reporting Person S.S. or I.R.S. Identification Nos. of Above Person -------------------------------------------------- Paulson Ranch Ltd. 2. Check the Appropriate Box if a member of a Group (See Instructions) ------------------------------------------------------------------- (a) [ ] (b) [X] 3. SEC Use Only ------------ 4. Sources of Funds (See Instructions) ----------------------------------- WC, PF and OO 5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(e) or 2(f) ------------------------------ [ ] 6. Citizenship or Place of Organization ------------------------------------ Texas 7. Aggregate Amount Beneficially Owned by Each Reporting Person ------------------------------------------------------------ 0 8. Check if the Aggregate in Row (7) Excludes Certain Shares (See Instructions) ------------- [ ] 9. Percent of Class Represented by Amount in Row (7) ------------------------------------------------- 0% 10. Type of Reporting Person (See Instructions) ------------------------------------------- PN 1. Name of Reporting Person S.S. or I.R.S. Identification Nos. of Above Person -------------------------------------------------- Bernard A. Paulson 2. Check the Appropriate Box if a member of a Group (See Instructions) ------------------------------------------------------------------- (a) [ ] (b) [X] 3. SEC Use Only ------------ 4. Sources of Funds (See Instructions) ----------------------------------- WC, PF and OO 5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(e) or 2(f) ------------------------------ [ ] 6. Citizenship or Place of Organization ------------------------------------ United States 7. Aggregate Amount Beneficially Owned by Each Reporting Person ------------------------------------------------------------ 42,000 8. Check if the Aggregate in Row (7) Excludes Certain Shares (See Instructions) ------------- [ ] 9. Percent of Class Represented by Amount in Row (7) ------------------------------------------------- .9% 10. Type of Reporting Person (See Instructions) ------------------------------------------- IN ITEM 1. Security and Subject Company. ---------------------------- (a) The name of the subject company is Hitox Corporation of America. The address of the Company's principal executive offices is 722 Burleson Street, Corpus Christi, Texas 78402. (b) This Schedule 14D-1 relates to the offer by Paulson Acquisition LLC (the "Purchaser") to purchase up to 1,000,000 shares of common stock, par value $0.25 per share ("Common Stock") of the subject company (the "Shares"). Information regarding the number of shares outstanding is set forth in "Introduction" of the Offer to Purchase and is incorporated herein by reference. (c) Information concerning the principal market in which the Shares are traded and the high and low sales prices of the Shares for each quarterly period for the past two years is set forth in Section 7 "Price Range of the Shares" of the Offer to Purchase and is incorporated herein by reference. ITEM 2. Identity and Background. ----------------------- (a) - (d) The information set forth in "Introduction," "Certain Information Concerning the Purchaser" and in Schedule I of the Offer to Purchase is incorporated herein by reference. (e) - (g) The information set forth in "Certain Information Concerning the Purchaser," and Schedule I of the Offer to Purchase is incorporated herein by reference. Other than as set forth in the Offer to Purchase, during the last five years, neither the Purchaser nor, to the best of the knowledge of the Purchaser, any person named on Schedule I to the Offer to Purchase nor any affiliate of the Purchaser (i) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding were or are subject to a judgment, decree or final order enjoining future violations of, or prohibiting activities subject to, Federal or State securities laws or finding any violation of such laws. ITEM 3. Past Contacts, Transactions or Negotiations with the Subject Company. ------- (a) - (b) The information set forth in Section 10 "Certain Information Concerning the Purchaser," Section 12 "Contacts and Transactions with the Company; Background of the Offer" and Schedule I of the Offer to Purchase is incorporated herein by reference. ITEM 4. Source and Amount of Funds or Other Consideration. ------------------------------------------------- (a) - (c) The information set forth in Section 11 "Source and Amount of Funds" of the Offer to Purchase is incorporated herein by reference. ITEM 5. Purpose of the Tender Offer and Plans or Proposals of the Bidder. ------- (a)-(e) and (g) The information in Section 8 "Purpose of the Offer; Plans for the Company; Effect of the Offer on the Market for the Shares; Stock Quotation; Exchange Act Registration;" of the Offer to Purchase is incorporated herein by reference. (f) Not applicable, ITEM 6. Interest in Securities of the Subject Company. --------------------------------------------- (a) and (b) The information set forth in Section 10 "Certain Information Concerning the Purchaser" and Schedule I of the Offer to Purchase is incorporated herein by reference. ITEM 7. Contracts, Arrangements, Understandings or Relationships with Respect to the Subject Company's Securities. ------------------------------------------- The information set forth in Section 10 "Certain Information Concerning the Purchaser" and Schedule I of the Offer to Purchase is incorporated herein by reference. ITEM 8. Persons Retained, Employed or To Be Compensated. ----------------------------------------------- None. ITEM 9. Financial Statements of Certain Bidders. --------------------------------------- The information set forth in Section 11 "Source and Amount of Funds" of the Offer to Purchase is incorporated herein by reference. ITEM 10. Additional Information. ---------------------- (a) The information set forth in Section 10 "Certain Information Concerning the Purchaser" and Schedule I of the Offer to Purchase is incorporated herein by reference. (b)-(c) The information set forth in Section 14 "Certain Legal Matters" of the Offer to Purchase is incorporated herein by reference. (d) None. (e) None. The information set forth in the Offer to Purchase is incorporated herein by reference. ITEM 11. Material to be Filed as Exhibits. -------------------------------- (a)(1) Form of Offer to Purchase dated March 23, 1999 (a)(2) Form of Letter of Transmittal (a)(3) Form of Notice of Guaranteed Delivery (a)(4) Form of Letter to brokers, dealers, commercial banks, trust companies and nominees (a)(5) Form of Letter to clients for use by brokers, dealers, commercial banks, trust companies and nominees (a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 (a)(7) Summary Advertisement as published in Investor's Business Daily on March 23, 1999 (a)(8) Press release issued on March 23, 1999 (b) Commitment Letter, dated February 23, 1999, from NationsBank, N.A. to Paulson Ranch, Ltd. SIGNATURES 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. Dated: March 23, 1999 PAULSON ACQUISITION LLC BY: /S/ BERNARD A. PAULSON ______________________________________ Name: Bernard A. Paulson Title: President and Chief Executive Officer EXHIBIT INDEX Exhibit Description - --------- -------------- (a)(1) Form of Offer to Purchase dated March 23, 1999 (a)(2) Form of Letter of Transmittal (a)(3) Form of Notice of Guaranteed Delivery (a)(4) Form of Letter to brokers, dealers, commercial banks, trust companies and nominees (a)(5) Form of Letter to clients for use by brokers, dealers, commercial banks, trust companies and nominees (a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 (a)(7) Summary Advertisement as published in Investor's Business Daily on March 23, 1999 (a)(8) Press release issued on March 23, 1999 (b) Commitment Letter, dated February 23, 1999 from NationsBank, N.A. to Paulson Ranch, Ltd. EX-99.A1 2 EXHIBIT (A)(1) - OFFER TO PURCHASE (a)(1) OFFER TO PURCHASE FOR CASH UP TO 1,000,000 SHARES OF COMMON STOCK OF HITOX CORPORATION OF AMERICA a Delaware Corporation AT $2.50 PER SHARE by PAULSON ACQUISITION LLC _____________________________ THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, APRIL 19, 1999, UNLESS THE OFFER IS EXTENDED. _____________________________ THE OFFER IS SUBJECT TO CERTAIN TERMS AND CONDITIONS CONTAINED IN THIS OFFER TO PURCHASE. SEE SECTIONS 13 AND 14. IMPORTANT Any stockholder desiring to tender all or any portion of such stockholder's shares of common stock of the Company, par value $0.25 per share (the "Shares"), should either (1) complete and sign the Letter of Transmittal or a facsimile copy thereof in accordance with the instructions in the Letter of Transmittal, have such stockholder's signature thereon guaranteed if required by Instruction 1 to the Letter of Transmittal, mail or deliver the Letter of Transmittal (or such facsimile), or, in the case of a book-entry transfer effected pursuant to the procedure set forth in Section 3 hereof, an Agent's Message (as defined herein), and any other required documents to the Depositary (as defined herein) and either deliver the certificates for such Shares to the Depositary along with the Letter of Transmittal (or facsimile) or deliver such Shares pursuant to the procedure for book-entry transfer set forth in Section 3 hereof prior to the expiration of the Offer or (2) request such stockholder's broker, dealer, bank, trust company or other nominee to effect the transaction for such stockholder. A stockholder having Shares registered in the name of a broker, dealer, bank, trust company or other nominee must contact such broker, dealer, bank, trust company or other nominee if such stockholder desires to tender such Shares. A stockholder who desires to tender Shares and whose certificates for such Shares are not immediately available or who cannot comply in a timely manner with the procedure for book-entry transfer, or who cannot deliver all required documents to the Depositary prior to the expiration of the Offer, may tender such Shares by following the procedure for guaranteed delivery set forth in Section 3 hereof. Questions and requests for assistance or for additional copies of this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may be directed to the Information Agent at its address and telephone numbers set forth on the back cover of this Offer to Purchase. March 23, 1999 TABLE OF CONTENTS Page INTRODUCTION...................................................................1 1. Terms of the Offer......................................................2 2. Number of Shares; Proration.............................................3 3. Procedure for Tendering Shares..........................................4 4. Withdrawal Rights.......................................................9 5. Acceptance for Payment and Payment......................................9 6. Certain Federal Income Tax Consequences................................10 7. Price Range of the Shares..............................................11 8. Purpose of the Offer-Plans for the Company; Effect of the Offer on the Market for the Shares; Stock Quotation; Exchange Act Registration...........................................................12 9. Certain Information Concerning the Company.............................14 10. Certain Information Concerning the Purchaser...........................15 11. Source and Amount of Funds.............................................15 12. Contacts and Transactions with the Company; Background of the Offer....16 13. Certain Conditions of the Offer........................................16 14. Certain Legal Matters..................................................20 15. Fees and Expenses......................................................22 16. Miscellaneous..........................................................22 SCHEDULE I.............................................................23 i TO THE HOLDERS OF COMMON STOCK OF HITOX CORPORATION OF AMERICA: INTRODUCTION Paulson Acquisition LLC, a Delaware limited liability company (the "Purchaser"), a wholly-owned limited liability company of the Paulson Ranch Ltd., a Texas limited partnership ("Paulson Ranch"), hereby offers to purchase up to 1,000,000 shares of common stock, par value $0.25 per share (the "Shares" or "Common Stock"), of the Company, at a price of $2.50 per Share, net to the seller in cash, without interest thereon (the "Offer Price"), upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal (which, together with any amendments or supplements hereto or thereto, collectively constitute the "Offer"). Purchaser, a Delaware limited liability company, was formed on March 18, 1999 for the purpose of consummating the Offer. Purchaser is wholly-owned limited liability company of the Paulson Ranch, Ltd. The general partner of the Paulson Ranch is Paulson Ranch Management, L.L.C., a Texas limited liability company. The members of Paulson Ranch Management, L.L.C. are Mr. Bernard A. Paulson and his wife. Mr. Paulson is a director and the acting Chief Executive Officer of the Company. Over the past two years, Mr. Paulson has acquired 42,000 shares of the Company's common stock. Neither the Purchaser nor to the Purchaser's knowledge any of the members, executive officers or affiliates of the Purchaser, nor any associates of the foregoing has effected any transaction in any class of the Company's securities during the sixty days prior to the date hereof. Tendering stockholders will not be obligated to pay brokerage fees or commissions or, except as set forth in Instruction 6 of the Letter of Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer. The Purchaser will pay all fees and expenses of Founders Equity Group, Inc., which is acting as the Depositary (the "Depositary"), and the Information Agent (the "Information Agent"), incurred in connection with the Offer. See Section 15 hereof. THE PURCHASER RESERVES THE RIGHT (SUBJECT TO THE APPLICABLE RULES AND REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION")) TO PURCHASE LESS THAN 1,000,000 SHARES. SEE SECTIONS 1 AND 4 HEREOF. THE CONDITIONS SET FORTH IN SECTION 13 HEREOF ARE REFERRED TO AS THE "OFFER CONDITIONS". Based on the Company's Annual Report on Form 10-K for the year ended December 31, 1998, as of February 9, 1999, there were 4,657,487 shares issued and outstanding. Accordingly, based on the foregoing and assuming that 1,000,000 shares are validly tendered and not withdrawn and the Purchaser purchases all of the Shares, upon consummation of the Offer the Purchaser would own approximately 1,042,000 shares, or approximately 21.5% of the outstanding shares as of February 9, 1999. THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION THAT SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. 1 THE OFFER 1. Terms of the Offer ------------------ Upon the terms and subject to the conditions of the Offer, the Purchaser will accept for payment and pay for all Shares validly tendered prior to the Expiration Date and not theretofore withdrawn in accordance with Section 4 hereof. The term "Expiration Date" means 12:00 midnight, New York City time, on April 19, 1999, unless and until the Purchaser shall have extended the period of time during which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date at which the Offer, as so extended by the Purchaser, will expire. Subject to the applicable rules and regulations of the Commission, the Purchaser reserves the right (but shall not be obligated), at any time and from time to time, and regardless of whether or not any of the events or facts set forth in Section 13 hereof shall have occurred, (a) to extend the period of time during which the Offer is open, and thereby delay acceptance for payment of and the payment for any Shares, by giving oral or written notice of such extension to the Depositary and (b) to amend the Offer in any other respect by giving oral or written notice of such amendment to the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE FOR TENDERED SHARES, WHETHER OR NOT THE PURCHASER EXERCISES ITS RIGHT TO EXTEND THE OFFER. If by 12:00 midnight, New York City time, on Monday, April 19, 1999 (or any date or time then set as the Expiration Date), any or all of the Offer Conditions have not been satisfied or waived, the Purchaser reserves the right (but shall not be obligated), subject to the applicable rules and regulations of the Commission, (a) to terminate the Offer and not accept for payment or pay for any Shares and return all tendered Shares to tendering stockholders, (b) to waive all the unsatisfied conditions and accept for payment and pay for all Shares validly tendered prior to the Expiration Date and not theretofore withdrawn, (c) to extend the Offer and, subject to the right of stockholders to withdraw Shares until the Expiration Date, retain the Shares that have been tendered during the period or periods for which the Offer is extended or (d) to amend the Offer. There can be no assurance that the Purchaser will exercise its right to extend the Offer. Any extension, waiver, amendment or termination will be followed as promptly as practicable by a public announcement of such event. In the case of an extension, Rule 14e-l(d) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires that the announcement be issued no later than 9:00 a.m., New York City time, on the next business day after the 2 previously scheduled Expiration Date in accordance with the public announcement requirements of Rule 14d-4(c) under the Exchange Act. Subject to applicable law (including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which require that any material change in the information published, sent or given to stockholders in connection with the Offer be promptly disseminated to stockholders in a manner reasonably designed to inform stockholders of such change) and without limiting the manner in which the Purchaser may choose to make any public announcement, the Purchaser will not have any obligation to publish, advertise or otherwise communicate any such public announcement other than by making a release to the Dow Jones News Service. If the Purchaser extends the Offer or if the Purchaser is delayed in its acceptance for payment of or payment (whether before or after its acceptance for payment of Shares) for Shares or it is unable to pay for Shares pursuant to the Offer for any reason, then, without prejudice to the Purchaser's rights under the Offer, the Depositary may retain tendered Shares on behalf of the Purchaser, and such Shares may not be withdrawn except to the extent tendering stockholders are entitled to withdrawal rights as described in Section 4 hereof. However, the ability of the Purchaser to delay the payment for Shares that the Purchaser has accepted for payment is limited by Rule 14e-l(c) under the Exchange Act, which requires that a bidder pay the consideration offered or return the securities deposited by or on behalf of holders of securities promptly after the termination or withdrawal of such bidder's offer. If the Purchaser makes a material change in the terms of the Offer or the information concerning the Offer or waives a material condition of the Offer, the Purchaser will disseminate additional tender offer materials and extend the Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. 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 or a change in the percentage of securities sought, will depend upon the facts and circumstances then existing, including the relative materiality of the changed terms or information. With respect to a change in price or a change in the percentage of securities sought, a minimum period of 10 business days is generally required to allow for adequate dissemination to stockholders. The Purchaser has requested the Company to provide the Purchaser with the Company's stockholder lists and security position listings for the purpose of disseminating the Offer to holders of Shares. This Offer to Purchase, the related Letter of Transmittal and other relevant materials will be mailed by the Purchaser to record holders of Shares and will be furnished to brokers, dealers, banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the stockholder lists, or, if applicable, who are listed as participants in a clearing agency's security position listing, for subsequent transmittal to beneficial owners of Shares. The Shares are listed and traded on The Nasdaq SmallCap Market System ("Nasdaq") under the symbol "HTXA". The Company announced the Offer prior to the opening of trading on March 23, 1999. The closing price per share as reported on Nasdaq on March 18, 1999 was $1.50. The Purchaser urges stockholders to obtain current market quotations for the Shares. THIS OFFER TO PURCHASE AND RELATED TRANSMITTAL CONTAIN IMPORTANT INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. 2. Number of Shares; Proration --------------------------- Upon the terms and subject to the conditions of the Offer, the Purchaser will accept for payment (and thereby purchase) up to 1,000,000 Shares that are properly tendered on or before the Expiration Date (and not withdrawn in accordance with Section 4) at a price equal to $2.50 per Share. 3 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 Midnight, New York City time. If the number of Shares properly tendered prior to the Expiration Date is less than or equal to 1,000,000 shares, the Purchaser will, upon the terms and subject to the conditions of the Offer, purchase all Shares so tendered. If more than 1,000,000 Shares are validly tendered prior to the Expiration Date and not withdrawn, the Purchaser will, upon the terms and subject to the conditions of the Offer, accept such Shares for payment on a pro rata basis, with adjustments to avoid purchases of fractional Shares, based upon the number of Shares validly tendered prior to the Expiration Date and not withdrawn. In the event that proration of tendered Shares is required, the Purchaser will determine the final proration factor as promptly as practicable after the Expiration Date. Although the Purchaser does not expect to be able to announce the final results of such proration until approximately three Nasdaq trading days after the Expiration Date, it will announce preliminary results of proration by press release as promptly as practicable after the Expiration Date. Stockholders may obtain such preliminary information from the Purchaser and may be able to obtain such information from their brokers. 3. Procedure for Tendering Shares ------------------------------ Valid Tender. For a stockholder validly to tender Shares pursuant to ------------ the Offer, either (a) a Letter of Transmittal (or facsimile thereof), properly completed and duly executed, together with any required signature guarantees, or, in the case of a book-entry transfer, an Agent's Message (as defined below), and any other required documents, must be received by the Depositary at its address set forth on the back cover of this Offer to Purchase prior to the Expiration Date and either certificates for tendered Shares must be received by the Depositary at its address or such Shares must be delivered pursuant to the procedures for book-entry transfer set forth below (and a Book-Entry Confirmation (as defined below) received by the Depositary), in each case prior to the Expiration Date, or (b) the tendering stockholder must comply with the guaranteed delivery procedures set forth below. The Depositary will establish accounts with respect to the Shares at The Depository Trust Company (the "Book-Entry Transfer Facility") for purposes of the Offer within two business days after the date of this Offer to Purchase. 4 Any financial institution that is a participant in the Book-Entry Transfer Facility's system may make book-entry delivery of Shares by causing the Book-Entry Transfer Facility to transfer such Shares into the Depositary's account in accordance with the Book-Entry Transfer Facility's procedures for such transfer. However, although delivery of Shares may be effected through book-entry transfer into the Depositary's account at the Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message, 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 to Purchase prior to the Expiration Date, or the tendering stockholder must comply with the guaranteed delivery procedures described below. The confirmation of a book-entry transfer of Shares into the Depositary's account at the Book-Entry Transfer Facility as described above is referred to herein as a "Book-Entry Confirmation". DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES 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 acknowledgment from the participant in the Book-Entry Transfer Facility tendering the Shares that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that the Purchaser may enforce such agreement against the participant. THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL BE 5 DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. Signature Guarantees. No signature guarantee is required on the Letter -------------------- of Transmittal (a) if the Letter of Transmittal is signed by the registered holder(s) (which term, for purposes of this Section, includes any participant in the Book-Entry Transfer Facility's system whose name appears on a security position listing as the owner of the Shares) of Shares tendered therewith and such registered holder has not completed either the box entitled "Special Delivery Instructions" or the box entitled "Special Payment Instructions" on the Letter of Transmittal or (b) if such Shares are tendered for the account of a financial institution (including most commercial banks, savings and loan associations and brokerage houses) that is a participant in the Security Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion Program (such participant, an "Eligible Institution"). In all other cases, all signatures on the Letter of Transmittal must be guaranteed by an Eligible Institution. See Instructions 1 and 5 to the Letter of Transmittal. If the certificates for Shares are registered in the name of a person other than the signer of the Letter of Transmittal, or if payment is to be made or certificates for Shares not tendered or not accepted for payment are to be returned to a person other than the registered holder of the certificates surrendered, the tendered certificates must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name or names of the registered holders or owners appear on the certificates, with the signatures on the certificates or stock powers guaranteed as aforesaid. See Instructions 1 and 5 to the Letter of Transmittal. 6 Guaranteed Delivery. If a stockholder desires to tender Shares pursuant ------------------- to the Offer and such stockholder's certificates for Shares are not immediately available or the procedure for book-entry transfer cannot be completed on a timely basis or time will not permit all required documents to reach the Depositary prior to the Expiration Date, such stockholder's tender may be effected if all the following conditions are met: (i) such tender is made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form provided by the Purchaser, is received by the Depositary, as provided below, on or prior to the Expiration Date; and (iii) the certificates for all tendered Shares, in proper form for transfer (or a Book- Entry Confirmation with respect to all such Shares), together with a Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees, or, in the case of a book-entry transfer, an Agent's Message, and any other documents required by the Letter of Transmittal are received by the Depositary within three Nasdaq Stock Market trading days after the date of execution of such Notice of Guaranteed Delivery. The Notice of Guaranteed Delivery may be delivered by hand to the Depositary or transmitted by telegram, facsimile transmission or mail to the Depositary and must include a guarantee by an Eligible Institution in the form set forth in such Notice of Guaranteed Delivery. Notwithstanding any other provision hereof, payment for Shares accepted for payment pursuant to the Offer will in all cases be made only after timely receipt by the Depositary of (a) certificates for (or a timely Book-Entry Confirmation with respect to) such Shares, (b) either (i) a Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees, or, (ii) in the case of a book-entry transfer, an Agent's Message, and (c) any other documents required by the Letter of Transmittal. Accordingly, tendering stockholders may be paid at different times depending upon when certificates for Shares or Book-Entry Confirmations with respect to Shares are actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT. The valid tender of Shares pursuant to one of the procedures described above will constitute a binding agreement between the tendering stockholder and the Purchaser upon the terms and subject to the conditions of the Offer. 7 Appointment. By executing a Letter of Transmittal as set forth above, ----------- the tendering stockholder will irrevocably appoint designees of the Purchaser as such stockholder's attorneys-in-fact and proxies in the manner set forth in the Letter of Transmittal, each with full power of substitution, to the full extent of such stockholder's rights with respect to the Shares tendered by such stockholder and accepted for payment by the Purchaser and with respect to any and all other Shares or other securities or rights issued or issuable in respect of such Shares on or after March 23, 1999. All such proxies will be considered coupled with an interest in the tendered Shares. Such appointment will be effective when, and only to the extent that, the Purchaser accepts for payment Shares tendered by such stockholder as provided herein. Upon such appointment, all prior powers of attorney, proxies and consents given by such stockholder with respect to such Shares or other securities or rights will, without further action, be revoked and no subsequent powers of attorney, proxies, consents or revocations may be given (and, if given, will not be deemed effective). The designees of the Purchaser will thereby be empowered to exercise all voting and other rights with respect to such Shares and other securities or rights in respect of any annual, special or adjourned meeting of the Company's stockholders, actions by written consent in lieu of any such meeting or otherwise, as they in their sole discretion deem proper. The Purchaser reserves the right to require that, in order for Shares to be deemed validly tendered, immediately upon the Purchaser's acceptance for payment of such Shares, the Purchaser must be able to exercise full voting, consent and other rights with respect to such Shares and other securities or rights, including voting at any meeting of stockholders. Determination of Validity. All questions as to the validity, form, -------------------------- eligibility (including time of receipt) and acceptance of any tender of Shares will be determined by the Purchaser in its sole discretion, which determination will be final and binding. The Purchaser reserves the absolute right to reject any or all tenders determined by it not to be in proper form or the acceptance for payment of or payment for which may, in the opinion of the Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute right to waive any defect or irregularity in the tender of any Shares of any particular stockholder whether or not similar defects or irregularities are waived in the case of other stockholders. No tender of Shares will be deemed to have been validly made until all defects or irregularities relating thereto have been cured or waived. None of the Purchaser, Parent, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification. The Purchaser's interpretation of the terms and conditions of the Offer (including the Letter of Transmittal and the instructions thereto) will be final and binding. Backup Withholding. In order to avoid "backup withholding" of federal ------------------ income tax on payments of cash pursuant to the Offer, a stockholder surrendering Shares in the Offer must, unless an exemption applies, provide the Depositary with such stockholder's correct taxpayer identification number ("TIN") on a Substitute Form W-9 and certify under penalties of perjury that such TIN is correct and that such stockholder is not subject to backup withholding. If a stockholder does not provide such stockholder's correct TIN or fails to provide the certifications described above, the Internal Revenue Service (the "IRS") may impose a penalty on such stockholder and any payment of cash to such stockholder pursuant to the Offer may be subject to backup withholding of 31%. All stockholders surrendering Shares pursuant to the Offer should complete and sign the main signature form and the Substitute Form W-9 included as part of the Letter of Transmittal to provide the information and certification necessary to avoid backup withholding (unless an applicable exemption exists and is proved in 8 a manner satisfactory to the Purchaser and the Depositary). Certain stockholders (including, among others, all corporations and certain foreign individuals and entities) are not subject to backup withholding. Noncorporate foreign stockholders should complete and sign the main signature form and a Form W-8, Certificate of Foreign Status, a copy of which may be obtained from the Depositary, in order to avoid backup withholding. See Instruction 9 to the Letter of Transmittal. 4. Withdrawal Rights ----------------- Except as otherwise provided in this Section 4, tenders of Shares are irrevocable. Shares tendered pursuant to the Offer may be withdrawn pursuant to the procedures set forth below at any time prior to the Expiration Date and, unless theretofore accepted for payment and paid for by the Purchaser pursuant to the Offer, may also be withdrawn at any time after May 23, 1999. For a withdrawal to be effective, a written, telegraphic or facsimile transmission notice of withdrawal must be timely received by the Depositary at its address set forth on the back cover of this Offer to Purchase and must specify the name of the person having tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder of the Shares to be withdrawn, if different from the name of the person who tendered the Shares. If certificates for Shares have been delivered or otherwise identified to the Depositary, then, prior to the physical release of such certificates, the serial numbers shown on such certificates must be submitted to the Depositary and, unless such Shares have been tendered by an Eligible Institution, the signatures on the notice of withdrawal must be guaranteed by an Eligible Institution. If Shares have been delivered pursuant to the procedure for book-entry transfer as set forth in Section 3 hereof, any notice of withdrawal must also specify the name and number of the account at the Book-Entry Transfer Facility and otherwise comply with the Book-Entry Transfer Facility's procedures. Withdrawals of tenders of Shares may not be rescinded, and any Shares properly withdrawn will thereafter be deemed not validly tendered for purposes of the Offer. However, withdrawn Shares may be retendered by again following one of the procedures described in Section 3 hereof at any time prior to the Expiration Date. All questions as to the form and validity (including time of receipt) of notices of withdrawal will be determined by the Purchaser in its sole discretion, which determination will be final and binding. None of the Purchaser, Parent, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notification. 5. Acceptance for Payment and Payment ---------------------------------- Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), the Purchaser will accept for payment and will pay for all Shares validly tendered prior to the Expiration Date and not properly withdrawn in accordance with Section 4 hereof promptly after the Expiration Date. All determinations concerning the satisfaction of such terms and conditions will be within the Purchaser's discretion, which determinations will be final and binding. See Sections 1 and 13 hereof. The Purchaser expressly reserves the right to delay acceptance for payment of or payment for Shares in order to comply in whole or in part with any applicable law. Any such delays will be effected in compliance with Rule 14e-l(c) under the Exchange Act (relating to a bidder's obligation to pay for or return tendered securities promptly after the termination or withdrawal of such bidder's offer). 9 In all cases, payment for Shares accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (a) certificates for (or a timely Book-Entry Confirmation with respect to) such Shares, (b) either (i) a Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees, or, (ii) in the case of a book-entry transfer, an Agent's Message, and (c) any other documents required by the Letter of Transmittal. The per Share consideration paid to any stockholder pursuant to the Offer will be the highest per Share consideration paid to any other stockholder pursuant to the Offer. For purposes of the Offer, the Purchaser will be deemed to have accepted for payment, and thereby purchased, Shares properly tendered to the Purchaser and not withdrawn as, if and when the Purchaser gives oral or written notice to the Depositary of the Purchaser's acceptance for payment of such Shares. Payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the purchase price therefor with the Depositary, which will act as agent for tendering stockholders for the purpose of receiving payment from the Purchaser and transmitting payment to tendering stockholders. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT. If the Purchaser is delayed in its acceptance for payment of or payment for Shares or is unable to accept for payment or pay for Shares pursuant to the Offer for any reason, then, without prejudice to the Purchaser's rights under the Offer (but subject to compliance with Rule 14e-l(c) under the Exchange Act, which requires that a tender offeror pay the consideration offered or return the tendered securities promptly after termination or withdrawal of a tender offer), the Depositary may, nevertheless, on behalf of the Purchaser, retain tendered Shares, and such Shares may not be withdrawn except to the extent tendering stockholders are entitled to exercise, and duly exercise, withdrawal rights as described in Section 4. If any tendered Shares are not purchased pursuant to the Offer for any reason, certificates for any such Shares will be returned, without expense to the tendering stockholder (or, in the case of Shares delivered by book-entry transfer of such Shares into the Depositary's account at the Book-Entry Transfer Facility pursuant to the procedure set forth in Section 3, such Shares will be credited to the account maintained at the Book-Entry Transfer Facility), as promptly as practicable after the expiration or termination of the Offer. 6. Certain Federal Income Tax Consequences --------------------------------------- The receipt of cash in exchange for Shares pursuant to the Offer will be a taxable transaction for Federal income tax purposes under the Internal Revenue Code of 1986, as amended (the "Code"), and may also be a taxable transaction under applicable state, local or foreign income or other tax laws. Generally, for federal income tax purposes, a tendering stockholder will recognize gain or loss equal to the difference between the amount of cash received by the stockholder pursuant to the Offer and the aggregate tax basis in the Shares tendered by the stockholder and purchased pursuant to the Offer, 10 If Shares are held by a stockholder as capital assets, gain or loss recognized by the stockholder will be capital gain or loss. Such capital gain or loss will be long-term if such stockholder's holding period for the Shares exceeds one year and short-term in all other cases. Long term capital gains of an individual stockholder is generally subject to a maximum tax rate of 20%. A stockholder that tenders Shares may be subject to 31% backup withholding unless the stockholder provides its TIN and certifies that such number is correct or properly certifies that it is awaiting a TIN, or unless an exemption applies. Exemptions are available for stockholders that are corporations and for certain foreign individuals and entities. A stockholder that does not furnish a required TIN may be subject to a penalty imposed by the IRS. If backup withholding applies to a stockholder, the Depositary is required to withhold 31% from payments to such stockholder. Backup withholding is not an additional tax. Rather, the amount of the backup withholding can be credited against the federal income tax liability of the person subject to the backup withholding, provided that the required information is given to the IRS. If backup withholding results in an overpayment of tax, a refund can be obtained by the stockholder upon filing an income tax return. THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE WITH RESPECT TO SHARES RECEIVED PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION OR WITH RESPECT TO HOLDERS OF SHARES WHO ARE SUBJECT TO SPECIAL TAX TREATMENT UNDER THE CODE, SUCH AS NON-U.S. PERSONS, LIFE INSURANCE COMPANIES, TAX-EXEMPT ORGANIZATIONS AND FINANCIAL INSTITUTIONS, AND MAY NOT APPLY TO OTHER HOLDERS OF SHARES IN LIGHT OF THEIR INDIVIDUAL CIRCUMSTANCES. STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO THEM (INCLUDING THE APPLICATION AND EFFECT OF ANY STATE, LOCAL OR FOREIGN INCOME AND OTHER TAX LAWS) OF THE OFFER. 7. Price Range of the Shares ------------------------- The Shares are listed and traded principally on the Nasdaq Small Cap Market System under the symbol "HTXA". The following table sets forth, for the fiscal years ended December 31, 1997 and December 31, 1998, the high and low sales prices per Share as reported in the Company's Annual Report on Form 10-K for the year ended December 31, 1998. The high and low share prices for the period beginning January 1, 1999 and ending on March 18, 1999 were obtained from published sources. 11
Period Ended March 18, 1999 -------------- 1999 High $ 1.937 Low 1.437 Quarter Ended ------------- March 31 June 30 Sept. 30 Dec. 31 -------- ------- -------- ------- 1998 High $ 2.125 $ 2.438 $ 2.125 $ 2.125 Low 1.469 1.688 1.000 1.250 1997 High 3.375 3.875 4.000 3.375 Low 2.500 2.375 2.938 1.563
8. Purpose of the Offer-Plans for the Company; Effect of the Offer on the ----------------------------------------------------------------------- Market for the Shares; Stock Quotation; Exchange Act Registration ----------------------------------------------------------------- Purpose of the Offer. The Purchaser is controlled by Mr. Bernard --------------------- Paulson, the Acting Chief Executive Officer and a director of the Company. As of the date hereof, Mr. Paulson is the beneficial owner of 42,000 shares of the Company's Common Stock, which represents approximately 0.9% of the outstanding Shares. Mr. Paulson would like to increase his investment in the Company and has caused this Offer to be made in order to allow all shareholders the opportunity to sell their Shares at a price above recent levels of the market price for the Shares. Mr. Paulson is active in the formulation and implementation of the Company's strategies and policies. If the Purchaser were to acquire Shares pursuant to the Offer, Mr. Paulson's ability to formulate and implement those strategies and policies might be enhanced. In addition, the Purchaser, from time to time, intends to evaluate and review the Company's assets, operations, management and personnel and consider what, if any, changes would be desirable in light of circumstances which then exist (which may include an assessment of industry trends and conditions, and general economic and market circumstances prevailing at the time). Thereafter, the Purchaser may, among other things, seek to (i) acquire additional securities of the Company, enter into an extraordinary transaction such as a merger, reorganization or liquidation of the Company, (ii) sell or transfer all or substantially all of the Company's assets, (iii) change the Company's current board of directors (including changing the number or term of directors or to fill any existing vacancies on the board), (iv) change the present capitalization or dividend policy of the Company, (v) materially change the Company's business or corporate structure, (vi) change the Company's charter and by-laws, (vii) cause the Company's Common Stock to be delisted from the Nasdaq Stock Market, (viii) cause the Company's Common Stock to become eligible for termination of registration under the Exchange Act, or (ix) take action similar to any of those enunciated above. While the Purchaser currently has no plans or proposals to implement such changes, there can be no assurance that the Purchaser would not seek to implement such changes in the future. Market for the Shares. The purchase of Shares pursuant to the Offer may --------------------- reduce the number of holders of Shares and the number of Shares that might otherwise trade publicly and could adversely affect the liquidity and market value of the remaining Shares held by the public. 12 Stock Quotation. Depending upon the aggregate market value and per ---------------- Share price of any Shares not purchased pursuant to the Offer, the Shares may no longer meet the standards of the National Association of Securities Dealers, Inc. (the "NASD") for continued designation for the Nasdaq Small Cap Market. The maintenance of such designation requires that an issuer meet the following criteria. The issuer must have (a) at least 500,000 shares publicly held, (b) at least 300 shareholders of round lots, (c) a market value of publicly held shares of at least $1 million, (d) a minimum bid price per share of $1, (e) at least two registered and active market makers for its shares and either (f) (i) net tangible assets of at least $2 million, (f) (ii) market capitalization of at least $35 million, or (f) (iii) a net income of at least $500,000 in the latest fiscal year or in two of the last three fiscal years. Shares held directly or indirectly by directors, officers or beneficial owners of more than 10% of the Shares outstanding are not considered as being publicly held for this purpose. If, as a result of the purchase of Shares pursuant to the Offer or otherwise, the Shares no longer meet the requirements of the NASD for continued inclusion in the Nasdaq Small Cap Market or in any other tier of the Nasdaq Stock Market, and the Shares are no longer included in Nasdaq Small Cap Market or in any other tier of the Nasdaq Stock Market, the market for the Shares could be adversely affected. In the event the Shares no longer meet the requirements of the NASD for continued inclusion in any tier of the Nasdaq Stock Market, it is possible that Shares would continue to trade in the over-the-counter market and that price quotations would be reported by other sources. The extent of the public market for the Shares and the availability of such quotations would, however, depend upon the number of holders of Shares remaining at such time, the interest in maintaining a market in Shares on the part of securities firms, the possible termination of registration of the Shares under the Exchange Act, as described below, and other factors. Exchange Act Registration. The Shares are currently registered under -------------------------- the Exchange Act. Registration of the Shares under the Exchange Act may be terminated upon application of the Company to the Commission if the Shares are neither listed on a national securities exchange nor held by 300 or more holders of record. Termination of registration of the Shares under the Exchange Act would substantially reduce the information required to be furnished by the Company to its stockholders and to the Commission and would make certain provisions of the Exchange Act no longer applicable to the Company, such as the short-swing profit recovery provisions of Section 16(b) of the Exchange Act, the requirement of furnishing a proxy statement pursuant to Section 14(a) of the Exchange Act in connection with stockholders' meetings and the related requirement of furnishing an annual report to stockholders and the requirements of Rule 13e-3 under the Exchange Act with respect to "going private" transactions. Furthermore, the ability of "affiliates" of the Company and persons holding "restricted securities" of the Company to dispose of such securities pursuant to Rule 144 or 144A promulgated under the Securities Act of 1933 may be impaired or eliminated. 13 9. Certain Information Concerning the Company ------------------------------------------ The Company is a Delaware corporation with its principal offices at 722 Burleson Street, Corpus Christi, Texas 78402. The Company which was incorporated on December 28, 1973 is a specialty chemical company engaged in the business of manufacturing and marketing mineral products for use as pigments and pigment extenders used in the manufacture of paints, industrial coatings and plastics. Set forth below is certain selected consolidated financial information with respect to the Company and its subsidiaries excerpted from the information contained in the Company's Annual Report on Form 10-K for the year ended December 31, 1998 (the "Company 1998 10-K"). More comprehensive financial information is included in the Company 1998 10-K, and the following summary is qualified in its entirety by reference to the Company 1998 10-K and such other documents and all the financial information (including any related notes) contained therein. The Company 1998 10-K and such other documents should be available for inspection and copies thereof should be obtainable in the manner set forth below under "Available Information".
Year Ended December 31, ----------------------- 1998 1997 ---- ---- Income Statement Data: Net Sales................................................. $11,747,034 $11,242,590 Operating Income.......................................... 946,263 982,262 Net Income................................................ 970,133 945,155 Fully Diluted Earnings Per Share.......................... 0.21 0.21 Year Ended December 31, ----------------------- 1998 1997 ---- ---- Balance Sheet Data: Total Assets.............................................. $11,616,517 $11,247,469 Total Current Assets...................................... 8,437,539 7,755,497 Total Current Liabilities................................. 1,571,972 1,546,844 Total Long Term Liabilities............................... - 626,213 Total Shareholder's Equity................................ 10,044,545 9,074,412
Available Information. The Company is subject to the informational ---------------------- requirements of the Exchange Act and, in accordance therewith, is required to file reports relating to its business, financial condition and other matters. Information as of particular dates concerning the Company's directors and officers, their remuneration, stock options and other matters, the principal holders of the Company's securities and any material interest of such persons in transactions with the Company is disclosed in the Company's proxy statement dated April 15, 1998, and filed with the Commission. Such information should be available for inspection at the public reference facilities of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of the Commission located at Seven World Trade Center, Suite 1300, New York, NY 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, IL 60661. Copies of such information should be obtainable from the Public Reference Section of the Commission upon payment of prescribed 14 fees. Such material should also be available for inspection at the offices of Nasdaq Operations, 1735 K Street, N.W., Washington, D.C. 20006. The Commission also maintains a worldwide web site at http://www.sec.gov which contains reports, proxy and information statements and other information about companies, including the Company, that file electronically. Except as otherwise stated in this Offer to Purchase, the information concerning the Company contained herein has been taken from or based upon publicly available documents on file with the Commission and other publicly available information. Although the Purchaser does not have any knowledge that any such information is untrue, Purchaser takes no responsibility for the accuracy or completeness of such information or for any failure by the Company to disclose events that may have occurred and may affect the significance or accuracy of any such information. 10. Certain Information Concerning the Purchaser -------------------------------------------- Purchaser, a Delaware limited liability company, was formed on March 18, 1999 for the purpose of consummating the Offer. The Purchaser is wholly-owned limited liability company of the Paulson Ranch, Ltd.. The general partner of the Paulson Ranch is Paulson Ranch Management, L.L.C., a Texas limited liability company. The members of Paulson Ranch Management, L.L.C. are Mr. Bernard A. Paulson and his wife. Mr. Paulson is a director and the acting Chief Executive Officer of the Company. Over the past two years, Mr. Paulson has acquired 42,000 shares of the Company's common stock. Neither the Purchaser nor to the Purchaser's knowledge any of the members, executive officers or affiliates of the Purchaser, nor any associates of the foregoing has effected any transaction in any class of the Company's securities during the sixty days prior to the date hereof. 11. Source and Amount of Funds -------------------------- The total amount of funds required by the Purchaser to consummate the Offer is expected to be approximately $2,625,000 which amount includes related fees and expenses. Such amount will be funded by a capital contribution from Paulson Ranch. Paulson Ranch has net assets in excess of $5 million and net liquid assets in excess of $3 million. For more information on the Purchaser, Paulson Ranch and Mr. Paulson, see "Certain Information Concerning the Purchaser" and Schedule I. In addition, Paulson Ranch has obtained a commitment letter, the proceeds at which may be used to purchase Shares in the Offering. Pursuant to the commitment letter, the lender has agreed to make available to the Purchaser a credit facility consisting of a term loan in an amount not to exceed $2.5 million, subject to the execution of definitive loan document in form and substance satisfactory to the lender. While the Offering is not conditioned upon the Purchaser obtaining such financing, the Purchaser may draw funds from such credit facility to purchase Shares in the Offering. There can be no assurance that the Purchaser will be able to enter into such credit facility or obtain funds from another source. 15 12. Contacts and Transactions with the Company; Background of the Offer ------------------------------------------------------------------- Since January 1, 1996, Mr. Paulson has had the following discussions with the Company and its affiliates concerning matters related to the Offering. On September 14, 1998, a representative of one of the largest shareholders of the Company indicated to Mr. Paulson its desire to reduce its investment in the Company. On February 26, 1999, Mr. Paulson had further discussions with the same person about the possibility of Mr. Paulson acquiring some or all the Shares held by such shareholder. At a meeting of the Company's Board of Directors on March 2, 1999, Mr. Paulson informed the Board that he was considering increasing his investment in Company and that he was exploring the possibility of making the Offer. After that Board meeting, Mr. Paulson and the representative of such large shareholder had several discussions concerning the possibility of Mr. Paulson acquiring some or all of the Shares held by such shareholder. No agreements or understandings were reached with such large shareholder concerning Mr. Paulson purchasing any of such Shares. There were no further discussions between Mr. Paulson and such representative or shareholder after March 8, 1999. On March 23, 1999, the Purchaser commenced the Offer. Other arrangements. Except as described in this Offer to Purchase ------------------- (including Schedule I hereto), neither the Purchaser nor, to the best knowledge of the Purchaser, any of the members, executive officers, principals or affiliates or associates of the Purchaser, beneficially owns any equity security of the Company, and none of the Purchaser nor, to the best knowledge of the Purchaser, any of the other persons referred to above, or any of the respective principals, affiliates or associates of the foregoing, has effected any transaction in any equity security of the Company during the past 60 days. Except as described in this Offer to Purchase, as of the date hereof (a) there have not been any contacts, transactions or negotiations between the Purchaser or, to the best knowledge of the Purchaser, any of the persons listed in Schedule I hereto, on the one hand, and the Company or any of its directors, officers or affiliates, on the other hand, that are required to be disclosed pursuant to the rules and regulations of the Commission and (b) none of the Purchaser nor, to the best knowledge of the Purchaser, any of the persons listed in Schedule I hereto has any contract, arrangement, understanding or relationship with any person with respect to any securities of the Company. 13. Certain Conditions of the Offer ------------------------------- Notwithstanding any other term of the Offer, the Purchaser shall not be required to accept for payment, or, subject to any applicable rules and regulations of the Commission, including Rule 14e-1(c) under the Exchange Act (relating to the Purchaser's obligation to pay for or return tendered shares after the termination or withdrawal of the Offer), to pay for any Shares tendered pursuant to the Offer, and may amend or terminate the Offer or postpone 16 the acceptance for payment, the purchase of, and/or (subject to any such applicable rules and regulations of the Commission) payment for, Shares tendered, if at any time at or before the time of payment for any such Shares (whether or not any Shares shall theretofore have been accepted for payment or paid pursuant to the Offer) any of the following conditions exists: (a) there shall have been any action or proceeding brought by any governmental authority before any federal or state court, or any order or preliminary or permanent injunction entered in any action or proceeding before any federal or state court or governmental, administrative or regulatory authority or agency, located or having jurisdiction within the United States or any country or economic region in which the Company, directly or indirectly, has material assets or operations, or any other action taken, proposed or threatened, or statute, rule, regulation, legislation, interpretation, judgment or order proposed, sought, enacted, entered, promulgated, amended or issued that is applicable to Purchaser, the Company or any subsidiary or affiliate of Purchaser or the Company or the Offer, by any legislative body, court, government or governmental, administrative or regulatory authority or agency located or having jurisdiction within the United States or any country or economic region in which the Company, directly or indirectly, has material assets or operations, which could reasonably be expected to have the effect of: (i) making illegal, or otherwise restraining or prohibiting or making materially more costly, the making of the Offer, the acceptance for payment of, payment for, or ownership, directly or indirectly, of some of or all the Shares by Purchaser, (ii) prohibiting or materially limiting the ownership or operation by the Company or any of its subsidiaries, or (iii) imposing or confirming material limitations on the ability of Purchaser effectively to acquire or hold or to exercise full rights of ownership of Shares including, without limitation, the right to vote any Shares acquired or owned by Purchaser on all matters properly presented to the stockholders of the Company, (iv) requiring divestiture by Purchaser, directly or indirectly, of any Shares; or (v) which could reasonably be expected to materially adversely affect the business, financial condition or results of operations of the Company and its subsidiaries (if any) taken as a whole or the value of the Shares or of the Offer to Purchaser; or (b) there shall have occurred (i) the delisting of the Company's Common Stock from the Nasdaq Stock Market, (ii) any general suspension of trading in, or limitation on prices for, securities on any national securities exchange or in the over-the-counter market in the United States, (iii) a decline of at least 25% in either the Dow Jones Average of Industrial Stocks or the Standard & Poor's 500 index from that existing at the close of business on the date hereof, (iv) any material adverse change or any condition, event or development involving a prospective material adverse change in United States or other material international currency exchange rates or a suspension of, or limitation on, the markets therefor, (v) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, (vi) any limitation (whether or not mandatory) by any government or governmental, administrative or regulatory authority or agency, domestic or foreign on, or any other event that materially adversely affects, the extension of credit by banks or other lending institutions, or (vii) a commencement of a war or armed hostilities or other national or international calamity directly or indirectly involving the United States which would reasonably be expected to have a material adverse effect on the Company or materially adversely affect (or materially delay) the consummation of the Offer; or 17 (c) any change (or any condition, event or development involving a prospective change) shall have occurred or been threatened in the business, properties, liabilities, capitalization, stockholders' equity, financial condition, operations, licenses or franchises, results of operations or prospects of the Company or any of its subsidiaries or affiliates, which, in the sole judgment of the Purchaser, is or may be materially adverse to the Company or any of its subsidiaries or affiliates, or the Purchaser shall have become aware of any facts which, in the sole judgment of the Purchaser, has or may have material significance with respect to the value of the Company or any of its subsidiaries or affiliates or the value of the Common Stock to the Purchaser; or (d) the Company or any of its subsidiaries shall have, on or after January 1, 1999, (i) split, combined or otherwise changed, or authorized or proposed the split, combination or other change of the Common Stock or its capitalization, (ii) purchased, acquired or otherwise caused a reduction in the number of, or authorized or proposed the purchase, acquisition or other reduction in the number of, any presently outstanding Common Stock or other securities, (iii) issued, distributed, sold or pledged, or authorized, proposed or announced the issuance, distribution, sale or pledge of, (A) additional shares of any other class of capital stock, other voting securities, debt securities or any securities convertible into Common Stock, or rights, warrants or options, conditional or otherwise, to acquire any of the foregoing, other than Common Stock reserved for issuance as of January 1, 1999 under options in accordance with their terms as publicly disclosed as of January 1, 1999, or (B) any other securities in respect of, in lieu of, or in substitution for Common Stock outstanding on January 1, 1999, (iv) declared, paid or proposed to declare or pay any dividend or distribution on any Common Stock or issued, authorized, recommended or proposed the issuance of any other distribution in respect of the Common Stock, whether payable in cash, securities or other property, (v) altered or proposed to alter any material term of any outstanding securities, (vi) incurred any debt other than in the ordinary course of business and consistent with past practice or any debt containing burdensome covenants, (vii) authorized, recommended, proposed, entered into, or announced its intention to enter into or effect any merger, consolidation, liquidation, dissolution, business combination, acquisition of assets or securities, disposition of assets or securities, release or relinquishment of any material contractual or other right of the Company or any of its subsidiaries or any agreement contemplating any of the foregoing or any comparable events not in the ordinary course of business, (viii) authorized, recommended, proposed or entered into, or announced its intention to authorize, recommend, propose or enter into, any transaction which in the Purchaser's sole opinion could adversely affect either the value of the Company or any of its subsidiaries or the value of the Common Stock, (ix) entered into any employment, severance or similar agreement, arrangement or plan with any of its employees other than in the ordinary course of business and consistent with past practice or entered into or amended any agreements, arrangements or plans so as to provide for increased benefits to the employees-as a result of or in connection with the transactions contemplated by the Offer or any other change in control of the Company, (x) except as may be required by law, taken any action to terminate or amend any employee benefit plan (as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended) of the Company or any of its subsidiaries, or the Purchaser shall have become aware of any such action which was not previously disclosed in publicly available filings, (xi) proposed, adopted or authorized any amendment to the Certificate of Incorporation or the By-laws of the Company, or prepared 18 adopted or authorized a shareholder rights plan or "poison pill," or the Purchaser shall become aware that the Company shall have proposed or adopted any such amendment or shareholder rights plan or "poison pill" which shall not have been previously disclosed, or (xii) agreed in writing or otherwise to take any of the foregoing actions; or (e) the Purchaser shall become aware (1) that any material contractual right of the Company or any of its subsidiaries or affiliates shall be impaired or otherwise adversely affected or that any material amount of indebtedness of the Company or any of its subsidiaries shall become accelerated or otherwise become due prior to its stated due date, in either case with or without notice or the lapse of time or both, as a result of the transactions contemplated by the Offer, or (ii) of any covenant, term or condition in any of the Company's or any of its subsidiaries' instruments or agreements that are or may be materially adverse to the value of the Common Stock in the hands of the Purchaser (including, but not limited to, any event of default that may ensue as a result of the consummation of the Offer, or any other business combination, or the acquisition of control of the Company); or (f) a tender or exchange offer for any Common Stock shall have been commenced or publicly proposed to be made by another person (including the Company or any of its subsidiaries or affiliates), or it shall have been publicly disclosed or the Purchaser shall have otherwise learned that (i) any person, entity (including the Company or its subsidiaries or affiliates) or "group" (as defined in Section 13(d)(3) of the Exchange Act) shall have acquired or proposed or be attempting to acquire beneficial ownership of more than five percent of any class or series of capital stock of the Company (including the Common Stock), or shall have been granted any option, warrant or right, conditional or otherwise, to acquire beneficial ownership of more than five percent of any class or series of capital stock of the Company (including the Common Stock), other than acquisitions for bona fide arbitrage purposes and other than acquisitions by persons or groups who have publicly disclosed such ownership in a Schedule 13D or 13G (or amendments thereto) on file with the Commission on or prior to January 1, 1999, (ii) any such person, entity or group which prior to January 1, 1999 has publicly disclosed any such ownership shall have acquired or proposed to acquire additional shares constituting more than one percent of any class or series of capital stock of the Company (including the Common Stock), or shall have been granted any option, warrant or right, conditional or otherwise, to acquire more than one percent of any class or series of capital stock of the Company (including the Common Stock), (iii) any new group was, or is, formed which beneficially owns more than five percent of the outstanding shares of any class or series of the capital stock of the Company (including the Common Stock), (iv) any person, entity or group shall have entered into a definitive agreement or an agreement in principle or made a proposal with respect to a tender offer or exchange offer for some portion or all of the Common Stock or a merger, consolidation or other business combination with or involving the Company, or (v) any person shall have filed a Notification and Report Form under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the regulations promulgated thereunder, or made a public announcement reflecting an intent to acquire the Company or assets or securities of the Company; which, in the sole. judgment of the Purchaser, in any case, and regardless of the circumstances (including any action or inaction by the Purchaser) giving rise to any such condition, makes it inadvisable to proceed with the Offer or with such acceptance for payment or payment. 19 The foregoing conditions are for the sole benefit of Purchaser and may be asserted by Purchaser regardless of the circumstances giving rise to any such condition or may be waived by Purchaser in whole or in part at any time and from time to time in its sole discretion. The failure by Purchaser at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right, the waiver of any such right with respect to particular facts and other circumstances shall not be deemed a waiver with respect to any other facts and circumstances, and each such right shall be deemed an ongoing right that may be asserted at any time and from time to time. Any determination by the Purchaser concerning the events in this Section 13 will be final and binding on all parties. 14. Certain Legal Matters --------------------- Except as set forth in this Section 14, the Purchaser is not aware of any filings, approvals or other actions by any domestic or foreign governmental or administrative agency that would be required prior to the acquisition of Shares by the Purchaser pursuant to the Offer. Should any such approval or other action be required, it is the Purchaser's present intention that such additional approval or action would be sought. While there is no present intent to delay the purchase of Shares tendered pursuant to the Offer pending receipt of any such additional approval or the taking of any such action, there can be no assurance that any such additional approval or action, if needed, would be obtained without substantial conditions or that adverse consequences might not result to the Company's business, or that certain parts of the Company's business might not have to be disposed of or held separate or other substantial conditions complied with in order to obtain such approval or action, any of which could cause the Purchaser to elect to terminate the Offer without purchasing Shares thereunder. The Purchaser's obligation to purchase and pay for Shares is subject to certain conditions. See Section 13 for certain conditions to the Offer. Section 203 of the Delaware General Corporation Law. Section 203 of the --------------------------------------------------- Delaware General Corporation Law ("DGCL") provides that a Delaware corporation such as the Company may not engage in any Business Combination (defined to include a variety of transactions, including a merger) with any Interested Stockholder (defined generally as any person that, directly or indirectly, beneficially owns 15% or more of the outstanding voting stock of the corporation), or any affiliate or an Interested Stockholder, for three years after the date on which the Interested Stockholder became an Interested Stockholder. The three-year prohibition on Business Combinations with Interested Stockholders (the "Business Combination Prohibition") does not apply if certain conditions, described below, are satisfied. In the event that the purchaser acquires at least 656,624 Shares in the Offer, Mr. Paulson, not the Purchaser, would be deemed to be an Interested Stockholder. The Business Combination Prohibition does not apply to a particular Business Combination between a corporation and a particular Interested Stockholder if (i) prior to the date such Interested Stockholder became an Interested Stockholder, the board of directors of such corporation approves either the Business Combination or the transaction which resulted in the stockholder becoming an Interested Stockholder, or (ii) upon consummation of the transaction which resulted in the stockholder becoming an Interested Stockholder, the Interested Stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding those shares owned 20 by (x) persons who are directors and also officers and (y) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer, or (iii) on or subsequent to the date the stockholder becomes an Interested Stockholder, the Business Combination is approved by the board of directors of such corporation and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66-2/3% of the outstanding voting stock which is not owned by the Interested Stockholder. The foregoing summary of Section 203 of the DGCL does not purport to be complete and is qualified in its entirety by reference to the provisions of Section 203 of the DGCL. Upon consummation of the Offer, if the Purchaser acquires all the Shares in the Offer, Mr. Paulson will beneficiarlly own approximately 21.5% of the Shares outstanding based on the number of Shares outstanding as of February 9, 1999. Accordingly, upon consummation of the Offer, Mr. Paulson may be subject to the Business Combination Prohibition. The Purchaser may ask the Company to adopt a resolution approving the Offer prior to the consummation of the Offer for purposes of Section 203. There can be no assurance that the Company's Board would adopt such a resolution. Other State Takeover Laws. A number of states throughout the United --------------------------- States have enacted takeover statutes that purport, in varying degrees, to be applicable to attempts to acquire securities of corporations that are incorporated or have assets, stockholders, executive offices or places of business in such states. In Edgar v. MITE Corp., the Supreme Court of the United ------------------- States held that the Illinois Business Takeover Act, which involved state securities laws that made the takeover of certain corporations more difficult, imposed a substantial burden on interstate commerce and therefore was unconstitutional. In CTS Corp. v. Dynamics Corp. of America, however, the ----------------------------- Supreme Court of the United States held that a state may, as a matter of corporate law and, in particular, those laws concerning corporate governance, constitutionally disqualify a potential acquirer from voting on the affairs of a target corporation without prior approval of the remaining stockholders, provided that such laws were applicable only under certain conditions. Subsequently, a number of Federal courts ruled that various state takeover statutes were unconstitutional insofar as they apply to corporations incorporated outside the state of enactment. The Purchaser does not believe that any other state takeover statutes purport to apply to the Offer. The Purchaser has not currently complied with any state takeover statute or regulation. The Purchaser reserves the right to challenge the applicability or validity of any state law purportedly applicable to the Offer and nothing in this Offer to Purchase or any action taken in connection with the Offer is intended as a waiver of such right. If it is asserted that any state takeover statute is applicable to the Offer and an appropriate court does not determine that it is inapplicable or invalid as applied to the Offer, the Purchaser might be required to file certain information with, or to receive approvals from, the relevant state authorities, and the Purchaser might be unable to accept for payment or pay for Shares tendered pursuant to the Offer, or be delayed in consummating the Offer. In such case, the Purchaser may not be obligated to accept payment or pay for any Shares tendered pursuant to the Offer. 21 15. Fees and Expenses ----------------- The Purchaser has retained Founders Equity Group, Inc. to act as the Information Agent and to serve as the Depositary in connection with the Offer. The Information Agent and the Depositary will receive reasonable and customary compensation for their services, and will be reimbursed for certain reasonable out-of-pocket expenses and be indemnified against certain liabilities and expenses in connection therewith, including certain liabilities and expenses under the Federal securities laws. The Purchaser will not pay any fees or commissions to any broker or dealer or other person (other than the customary compensation payable to the Information Agent and the Depositary as set forth above) in connection with the solicitation of tenders of Shares pursuant to the Offer. Brokers, dealers, banks and trust companies will be reimbursed by the Purchaser upon request for customary mailing and handling expenses incurred by them in forwarding material to their customers. 16. Miscellaneous ------------- The Offer is not being made to (nor will tenders be accepted from or on behalf of holders of Shares in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the laws of such jurisdiction. The Purchaser is not aware of any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the laws of such jurisdiction. To the extent the Purchaser becomes aware of any state law that would limit the class of offerees in the Offer, the Purchaser may amend the Offer and, depending on the timing of such amendment, if any, may extend the Offer to provide adequate dissemination of such information to holders of Shares prior to the expiration of the Offer. In any jurisdiction the securities, blue sky or other laws of which require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Purchaser by one or more registered brokers or dealers licensed under the laws of such jurisdiction. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION ON BEHALF OF THE PURCHASER NOT CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. The Purchaser has filed with the Commission the Schedule 14D-1 pursuant to Rule 14d-3 under the Exchange Act, together with exhibits, furnishing certain additional information with respect to the Offer, and may file amendments thereto. PAULSON ACQUISITION LLC March 23, 1999 22 SCHEDULE I PRINCIPALS OF THE PURCHASER AND PAULSON RANCH Purchaser, a Delaware limited liability company, was formed on March 18, 1999 for the purpose of consummating the Offer. The Purchaser is wholly-owned limited liability company of the Paulson Ranch, Ltd., a Texas Limited Partnership. The general partner of the Paulson Ranch, Ltd. is Paulson Ranch Management, L.L.C., a Texas limited liability company. The members of Paulson Ranch Management, L.L.C. are Mr. Bernard A. Paulson and his wife. Mr. Paulson is a director and the acting Chief Executive Officer of the Company. Over the past two years, Mr. Paulson has acquired 42,000 shares of the Company's Common Stock. Neither the Purchaser, Paulson Ranch nor Mr. Paulson, nor to their knowledge any of the members, executive officers, principals, or affiliates or associates of the foregoing has effected any transaction in any class of the Company's securities during the sixty days prior to the date hereof. The name, age, business address, present principal occupation or employment and five-year employment history of the principal of Purchaser and Paulson Ranch are set forth below. Unless otherwise indicated, the occupation, office or position of employment listed opposite the individual's name were held by such individual during the last five years. The business address of such individual is c/o Hitox Corporation of America, 722 Burleson Street, Corpus Christi, Texas 78402. The individual listed below is a citizen of the United States. NAME, AGE AND BUSINESS ADDRESS PRESENT PRINCIPAL OCCUPATION OF EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY Bernard A. Paulson, Mr. Paulson has been a director of the Hitox Corporation of America Company since March, 1992 and acting 722 Burleson Street Chief Executive Officer of the Company Corpus Christi, Texas 78402 since October, 1997. Mr. Paulson is also a director of Orion Refining Corp. and is Chairman of the Board of Directors of The Automation Group, Inc. From September, 1996 to January, 1999, Mr. Paulson was Chairman of the Board of Directors and Chief Executive Officer of The Inspection Group, Inc. 23 Manually signed facsimile copies of the Letter of Transmittal will be accepted. The Letter of Transmittal, certificates for Shares and any other required documents should be sent or delivered by each stockholder of the Company or such stockholder's broker, dealer, commercial bank, trust company or other nominee to the Depositary at one of its addresses set forth below. The Depositary for the Offer is: Founders Equity Group, Inc. By Mail, Hand or Overnight Delivery: By Facsimile Transmission: Tender & Exchange Department (214) 871-0088 2602 McKinney Avenue Suite 220 Confirm Receipt of Facsimile by Telephone Dallas, Texas 75204 (888) 858-7303 Questions and requests for assistance or for additional copies of this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may be directed to the Information Agent, the telephone numbers and location listed below. You may also contact your broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Offer. The Information Agent for the Offer is: Founders Equity Group, Inc. 2602 McKinney Avenue Suite 220 Dallas, Texas 75204 1-(888) 858-7303 or Call Collect (214) 871-3000 24 EX-99.A2 3 EXHIBIT (A)(2) - LETTER OF TRANSMITTAL (a)(2) Letter of Transmittal To Tender Shares of Common Stock of HITOX CORPORATION OF AMERICA Pursuant to the Offer to Purchase Dated March 23, 1999 of PAULSON ACQUISITION LLC
____________________________________________________________________________________________________________________________________ THIS OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, 0N MONDAY, APRIL 19, 1999 UNLESS THE OFFER IS EXTENDED. ____________________________________________________________________________________________________________________________________ The Depositary for the Offer is: Founders Equity Group, Inc. By Mail: Facsimile Transmission: By Hand or Overnight Courier: Tender & Exchange Department (for Eligible Institutions Only) Tender & Exchange Department 2602 McKinney Avenue (214) 871-0088 2602 McKinney Avenue Suite 220 Suite 220 Dallas, Texas 75204 For Confirmation Telephone: Dallas, Texas 75204 (888) 858-7303 DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER OF TRANS- MITTAL WHERE INDICATED BELOW AND COMPLETE THE SUBSTITUTE FORM W- 9 PROVIDED BELOW. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANASMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. ____________________________________________________________________________________________________________________________________ NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) (Please Fill in, if Blank, Exactly as Name(s) Appear(s) on Certificate(s)) ____________________________________________________________________________________________________________________________________ ____________________________________________________________________________________________________________________________________ DESCRIPTION OF SHARES TENDERED Certificate(s) Tendered (Attach Additional List if Necessary) ____________________________________________________________________________________________________________________________________ Total Number of Shares Certificate Numbers(s)* Represented by Certificate(s)** Number of Shares Tendered** ____________________________________________________________________________________________________________________________________ Total Shares.................................................................... ____________________________________________________________________________________________________________________________________ * Need not be completed by stockholders tendering by book-entry transfer. ** Unless otherwise indicated, it will be assumed that all Share evidenced by any certificates delivered to the Depositary are being tendered. See Instruction 4.
This Letter of Transmittal is to be completed by stockholders of Hitox Corporation of America (the "Company") if certificates representing Shares (as defined below) ("Share Certificates") are to be forwarded herewith or, unless an Agent's Message (as defined in the Offer to Purchase (as defined below) is utilized, if delivery of Shares is to be made by book-entry transfer to the Depositary's account at The Depository Trust Company (the "Book-Entry Transfer") pursuant to the procedures set forth in Section 3 of the Offer to Purchase. Stockholders whose Share Certificates are not immediately available or who cannot deliver their Share Certificates and all other documents required hereby to the Depositary prior to the Expiration Date (as defined in the Offer to Purchase), or who cannot comply with the book-entry transfer procedures on a timely basis, may nevertheless tender their Shares pursuant to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. See Instruction 2. Delivery of documents to the Book-Entry Transfer Facility in accordance with such Book-Entry Transfer Facility's procedures does not constitute deliver to the Depositary. [ ] CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND COMPLETE THE FOLLOWING: Name of Tendering Institution___________________________________________________ Account Number ________________________________________________________________ Transaction Code Number_________________________________________________________ [ ] CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING: Name(s) of Registered Holder(s) _______________________________________________ Window Ticket No. (if any) ____________________________________________________ Date of Execution of Notice of Guaranteed Delivery _____________________________ Name of Institution which Guaranteed Deliver __________________________________ NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY. Ladies and Gentlemen: The undersigned hereby tenders to Paulson Acquisition LLC, a Delaware limited liability company ("the Purchaser") the above-described shares of Common Stock, par value $.025 per share (the "Shares"), of Hitox Corporation of America, a Delaware corporation (the "Company"), pursuant to Purchaser's offer to purchase any and up to 1,000,000 Shares at a purchase price of $2.50 per Share (the "Offer Price"), net to the seller in cash, without interest thereon, upon terms and subject to the conditions set forth in the Offer to Purchase, dated March 23, 1999 (the "Offer to Purchase"), receipt of which is hereby acknowledged, and in this Letter of Transmittal (which, together with the Offer to Purchase, as each may be amended and supplemented from time to time, constitute the "Offer"). Subject to, and effective upon, acceptance for payment of the Shares tendered herewith, the undersigned hereby sells, assigns and transfers to or upon the order of the Purchaser all right, title and interest in and to all the Shares that are being tendered hereby and any and all other Shares or other securities issued or issuable in respect thereof on or after March 23, 1999 (a "Distribution") and appoints the Depositary the true and lawful agent and attorney-in-fact of the undersigned with respect to such Shares (and any Distributions), with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to (a) deliver Shares Certificates (and any Distributions), or transfer ownership of such Shares (and any Distributions) on the account books maintained by the Book-Entry Transfer Facility, together, in any such case, with all accompanying evidences of transfer and authenticity, to or upon the order of the Purchaser, (b) present such Shares (and any Distributions) for transfer on the books of the Company, and (c) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares (and any Distributions), all in accordance with the terms and subject to the conditions of the Offer. The undersigned hereby irrevocably appoints designees of the Purchaser as the attorneys and proxies of the undersigned, each with full power of substitution, to exercise all voting and other rights of the undersigned in such manner as each such attorney and proxy or his substitute shall in his sole judgment deem proper, with respect to all of the Shares tendered hereby which have been accepted for payment by the Purchaser prior to the time of any vote or other action (and any Distributions), at any meeting of stockholders of the Company (whether annual or special and whether or not an adjourned meeting) or otherwise. This power of attorney and proxy are irrevocable, are coupled with an interest in the Shares tendered hereby, and are granted in consideration of, and effective upon, the acceptance for payment of such Shares by the Purchaser in accordance with the terms of the Offer. Such acceptance for payment shall revoke any other proxy or written consent granted by the undersigned at any time with respect to such Shares (and any Distributions), and no subsequent proxies will be given or written consents executed by the undersigned (and if given or executed, will not be deemed effective). The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Shares tendered hereby (and any Distributions), the tender of the Shares tendered hereby complies with Rule 14e-4 of the Securities and Exchange Act of 1934, as amended, and that when the same are accepted for payment by the Purchaser, the Purchaser will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claims. The undersigned will, upon request, execute and deliver any additional documents deemed by the Depositary or the Purchaser to be necessary or desirable to complete the sale, assignment and transfer of the Shares tendered hereby (and any Distributions). All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned, and any obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Except as stated in the Offer, this tender is irrevocable. The undersigned understands that if more than 1,000,000 Shares are validly tendered prior to the expiration of the Offer and not validly withdrawn in accordance with Section 3 of the Offer to Purchase, Shares so tendered and not validly withdrawn shall be accepted for payment on a pro rata basis, with adjustments to avoid purchases of fractional Shares, based upon the number of Shares validly tendered and not withdrawn by the Expiration Date. The undersigned understands that the tender of Shares pursuant to any one of the procedures described in Section 3 of the Offer to Purchase and in the instructions hereto will constitute an agreement between the undersigned and the Purchaser upon the terms and subject to the conditions of the Offer. The undersigned acknowledges that no interest will be paid on the Offer Price for tendered Shares regardless of any extension of the Offer or any delay in making such payment. Unless otherwise indicated in the box entitled "Special Payment Instructions," please issue the check for the purchase price of any Shares purchased, and return any Share Certificates evidencing any Shares not tendered or not purchased, in the name (s) of the undersigned (and, in the case of Shares tendered by book-entry transfer, by credit to the account at the Book-Entry Transfer Facility. Similarly, unless otherwise indicated in the box entitled "Special Delivery Instructions," please mail the check for the purchase price of any Shares purchased and return any Share Certificates evidencing any Shares not tendered or not purchased (and accompanying documents, as appropriate) to the undersigned at the address shown below the undersigned's signature(s). In the event that the boxes entitled "Special Payment Instructions" and "Special Delivery Instructions" are both completed, please issue the check for the purchase price of any Shares purchased and return any Share Certificates evidencing any Shares not tendered or not purchased in the name(s) of, and mail said check and Share to, the person(s) so indicated. The undersigned acknowledges that the Purchaser has no obligation, pursuant to the "Special Payment Instructions", to transfer any Shares from the name of the registered holder(s) thereof if the Purchaser does not accept for payment any of the Shares so tendered.
____________________________________________________________________________________________________________________________________ SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS (See Instructions 1,5,6 and 7) (See Instructions 1,5,6 and 7) To be completed ONLY if the check for the To be completed ONLY if the check for the purchase price of Shares purchased or certificates purchase price of Shares purchased or certificates evidencing Shares not tendered or not purchased are evidencing Shares not tendered or not purchased are to be issued issued in the name of someone other to be mailed to someone other than the undersigned, than the undersigned, or if Shares tendered hereby or to the undersigned at an address other than that and delivered by book-entry transfer which are not shown under the undersigned's signature. purchased are to be returned by credit to an account at the Book-Entry Transfer Facility other than that Issue: [ ] check [ ] Share Certificate(s) to: designated above. Name:______________________________________________ (Please Print) Issue: [ ] check [ ] Share Certificate(s) to: Address:___________________________________________ Name:______________________________________________ ___________________________________________________ (Please Print) (Zip Code) Address:___________________________________________ ___________________________________________________ ___________________________________________________ (Taxpayer Identification or Social Security Number) (Zip Code) (See Substitute Form W-9 below) ___________________________________________________ (Taxpayer Identification or Social Security Number) (See Substitute Form W-9 on reverse side) [ ] Credit Shares delivered by book-entry transfer and not purchased to the account set forth below: Account Number ___________________________________ IMPORTANT STOCKHOLDERS: SIGN HERE (Please complete Substitute Form W-9) ==================================================================================================================================== (Signature(s) of Holder(s)) Dated: ____________________, 1999 (Must be signed by the registered holder(s) exactly as such holder(s) name(s) appear(s) on the Share Certificate(s) or on a security position listing or by a person(s) authorized to become the registered holder(s) of such Share Certificate(s) by certificates and documents transmitted herewith. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, please provide the following information and see Instruction 5.) Name(s): __________________________________________________________________________________________________________________________ (Please Print) Capacity (full title): ____________________________________________________________________________________________________________ Address: __________________________________________________________________________________________________________________________ (Include Zip Code) Area Code and Telephone No.: ______________________________________________________________________________________________________ Taxpayer Identification or Social Security No.:____________________________________________________________________________________ (See Substitute Form W-9 below) GUARANTEE OF SIGNATURE(S) (See Instructions 1 and 5) Authorized Signature: _____________________________________________________________________________________________________________ Name: _____________________________________________________________________________________________________________________________ (Please Type or Print) Title: ____________________________________________________________________________________________________________________________ Name of Firm: _____________________________________________________________________________________________________________________ Address: __________________________________________________________________________________________________________________________ (Include Zip Code) Area Code and Telephone No.: ______________________________________________________________________________________________________ Dated: _________________________, 1999
INSTRUCTIONS Forming Part of the Terms and Conditions of the Offer 1. Guarantee of Signatures. Except as otherwise provided below, signatures on all Letters of Transmittal must be guaranteed by a firm that is a bank, broker, dealer, credit union, savings association or other entity which is a member in good standing of the Securities Transfer Agents Medallion Program or by any other bank, broker, dealer, credit union, savings association or other entity which is an "eligible guarantor institution," as such term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended (each of the foregoing constituting an "Eligible Institution"), unless the Shares tendered thereby are tendered (i) by a registered holder of Shares who has not completed either the box labeled "Special Payment Instructions" or the box labeled "Special Delivery Instructions" on this Letter of Transmittal or (ii) for the account of an Eligible Institution. See Instruction 5. If Share Certificates are registered in the name of a person or persons other than the signer of this Letter of Transmittal, or if payment is to be made or delivered to, or certificates evidencing unpurchased Shares are to be issued or returned to, a person other than the registered owner or owners, then the tendered Share Certificates must be endorsed or accompanied by duly executed stock powers, in either case signed exactly as the name or names of the registered owner or owners appear on the Share Certificates, with the signatures on the Share Certificates or stock powers guaranteed by an Eligible Institution as provided herein. See Instruction 5. 2. Delivery of Letter of Transmittal and Share Certificates. This Letter of Transmittal is to be used if Share Certificates are to be forwarded herewith or, unless an Agent's Message (as defined in the Offer to Purchase) is utilized, if the delivery of Shares is to be made by book-entry transfer pursuant to the procedures set forth in Section 3 of the Offer to Purchase. Certificates for all physically delivered Shares, or a confirmation of a book-entry transfer into the Depositary's account at the Book-Entry Transfer Facility of all Shares delivered electronically, as well as aproperly completed and duly executed Letter of Transmittal (or a manually signed facsimile thereof) and any other documents required by this Letter of Transmittal, or an Agent's Message in the case of a book-entry transfer, must be received by the Depositary at one of its addresses set forth on the front page of this Letter of Transmittal by the Expiration Date (as defined in the Offer to Purchase). Stockholders who cannot deliver their Share Certificates and all other required documents to the Depositary by the Expiration Date must tender their Shares pursuant to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. Pursuant to such procedure: (a) such tender must be made by or through an Eligible Institution; (b) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form provided by Purchaser, must be received by the Depositary prior to the Expiration Date; and (c) Share Certificates for all tendered Shares, in proper form for tender, or a confirmation of a book-entry transfer into the Depositary's account at the Book-Entry Transfer Facility of all Shares delivered electronically, as well as a properly completed and duly executed Letter of Transmittal (or a manually signed facsimile thereof), and any other documents required by this Letter of Transmittal, must be received by the Depositary within three Nasdaq Stock Market trading days after the date of execution of such Notice of Guaranteed Delivery, all as provided in Section 3 of the Offer to Purchase. THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES AND ALL OTHER REQURIED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. No alternative, conditional or contingent tenders will be accepted. By execution of this Letter of Transmittal (or a manually signed facsimile thereof), all tendering stockholders waive any right to receive any notice of the acceptance of their Shares for payment. 3. Inadequate Space. If the space provided herein is inadequate, the Share Certificate numbers and/or the number of Shares should be listed on a separate schedule attached hereto. 4. Partial Tenders (not applicable to stockholders who tender by book-entry transfer). If fewer than all of the Shares represented by any Share Certificate delivered to the Depositary are to be tendered, fill in the number of Shares which are to be tendered in the box entitled "Number of Shares Tendered." In such case, a new Share Certificate for the remainder of the Shares represented by the old Share Certificate will be sent to the person(s) signing this Letter of Transmittal, unless otherwise provided in the box entitled "Special Delivery Instructions," as promptly as practicable following the expiration or termination of the Offer. All Shares represented by Share Certificates delivered to the Depositary will be deemed to have been tendered unless otherwise indicated. 5. Signatures on Letter of transmittal; Stock Powers and Endorsements. If this Letter of transmittal is signed by the registered holder(s) of the Shares tendered hereby, the signature(s) must correspond with the name(s) as written on the face of the Share Certificate(s) without alteration, enlargement or any other change whatsoever. If any of the Shares tendered hereby are owned of record by two or more persons, all such persons must sign this Letter of Transmittal. If any of the Shares tendered hereby are registered in different names on different Share Certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of Share Certificates. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, no endorsements of Share Certificate(s) or separate stock powers are required, unless payment of the purchase price is to be made, or Share Certificate(s) evidencing Shares not tendered or not purchased are to be returned, in the name of any person other than the registered holder(s). Signatures on any such Share Certificate(s) or stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal is signed by a person other than the registered holder(s) of the Shares tendered hereby, the Share Certificate(s) evidencing the Shares tendered hereby must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear(s) on such Share Certificate(s). Signature(s) on any such Share Certificate(s) or stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal or any Share Certificate or stock power is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should so indicate when signing and proper evidence satisfactory to Purchaser of the authority of such person so to act must be submitted. 6. Stock Transfer Taxes. Purchaser will pay any stock transfer taxes with respect to the sale and transfer of any Shares to it or its order pursuant to the Offer. If, however, payment of the purchase price is to be made to, or Share Certificates evidencing Shares not tendered or not purchased are to be returned in the name of, any person other than the registered holder(s) of such Shares, then the amount of any stock transfer taxes (whether imposed on the registered holder(s), such other person or otherwise) payable on account of the transfer to such person will be deducted from the purchase price unless satisfactory evidence of the payment of such taxes, or exemption therefrom, is submitted. Except as provided in this Instruction 6, it will not be necessary for transfer tax stamps to be affixed to the Share Certificate(s) listed in this Letter of Transmittal. 7. Special Payment and Delivery Instructions. If the check for the purchase price of any Shares purchased is to be issued, or any Share Certificate(s) evidencing Shares not tendered or not purchased are to be returned, in the name of a person other than the person(s) signing this Letter of Transmittal or if the check or any Share Certificate(s) evidencing Shares not tendered or not purchased are to be mailed to someone other than the person(s) signing this Letter of Transmittal or to the person(s) signing this Letter of Transmittal at an address other than that shown above, the appropriate boxes on this Letter of Transmittal should be completed. Shareholders tendering Shares by book-entry transfer may request that Shares not purchased be credited to such account at any of the Book-Entry Transfer Facilities as such stockholder may designate in the box entitled "Special Payment Instructions." If no such instructions are given, any such Shares not purchased will be returned by crediting the account at the Book-Entry Transfer Facilities designated above. 8. Substitute Form W-9. The tendering holder of Shares is required to provide the Depositary with such holder's correct taxpayer identification number ("TIN") on Substitute Form W-9, which is provided below, unless an exemption applies. In the case of any holder who has completed the box entitled "Special Payment Instructions," however, the correct TIN on Substitute Form W-9 should be provided for the recipient of the payment pursuant to such instructions. Failure to provide the information on the Substitute Form W-9 may subject the tendering holder of Shares to 31% federal income tax backup withholding on the payment of the purchase price of the Shares. 9. Questions and Requests for Assistance or Additional Copies. Questions and requests for assistance may be directed to the Information Agent and Depositary at the address and telephone number set forth on the back cover of the Offer to Purchase. Additional copies of the Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and other related materials may be obtained from the Information Agent or from brokers, dealers, commercial banks and trust companies. THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE COPY HEREOF (TOGETHER WITH SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS) OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY ON OR PRIOR TO THE EXPIRATION DATE (AS DEFINED IN THE OFFER TO PURCHASE.) IMPORTANT TAX INFORMATION Under the federal income tax law, a holder of Shares whose tendered Shares are accepted for payment is required by law to provide the Depositary (as payer) with such holder's correct TIN on Substitute Form W-9 Below. The holder of Shares must also state that (i) such holder has not been notified by the Internal Revenue Service that such holder is subject to backup withholding as a result of a failure to report all interest or dividends or (ii) the Internal Revenue Service has notified such holder that such holder is no longer subject to back withholding. If the Depositary is not provided with the correct TIN, payments made to such holder may be subject to 31% backup withholding. Certain holders of Shares (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. In order for a foreign individual to qualify as an exempt recipient, such individual must submit a statement, signed under penalties of perjury, attesting to such individual's exempt status. Forms of such statements can be obtained from the Depositary. See the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional instructions. If backup withholding applies, the Depositary is required to withhold 31% of any payments made to the holder of Shares. Backup withholding is not an additional tax. Rather, the tax withheld pursuant to backup withholding rules will be available as a credit against such holder's tax liabilities. If withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service. What Number to Give the Depositary If the holder of Shares is an individual, the correct TIN is his or her social security number. In other cases, the correct TIN may be the employer identification number of the record holder of the Shares tendered hereby. If the Shares are in more than one name or are not in the name of the actual owner, consult the enclosed Guidelines for Certification of Taxpayer identification Number on Substitute Form W-9 for additional guidance on which number to report. If the tendering holder of Share has not been issued a TIN and has applied for a number in the near future, the holder should write "Applied For" in the space provided for the TIN in Part II of the Substitute Form W-9, and sign and date the Substitute Form W-9. If "Applied For" is written in Part III of the Substitute Form W-9 and the Depositary is not provided with a TIN within thirty (30) days, the Depositary may withhold 31% of all payments of the purchase price to such holder until a TIN is provided to the Depositary.
____________________________________________________________________________________________________________________________________ PAYER'S NAME: FOUNDERS EQUITY GROUP, INC. ____________________________________________________________________________________________________________________________________ SUBSTITUTE Part I - Taxpayer Identification FORM W-9 Number - For all accounts, enter Department of the Treasury taxpayer identification number in Part III - Social Security Number Internal Revenue Service the box at right. (For most OR individuals this is your social Employer Identification Number Payor's Request for Taxpayer security number. If you do not Identification No. (TIN) have a number, see Obtaining a __________________________________________ Number in the enclosed Guidelines.). Certify by signing (If awaiting TIN write "Applied and dating below. For") Note: If the account is in more than one name, see chart in the enclosed Guidelines to determine which number to give the payer. ____________________________________________________________________________________________________________________________________ PART II - For Payees exempt from backup withholding, see the enclosed Guidelines and complete as instructed therein. ____________________________________________________________________________________________________________________________________ Certification - Under penalties of perjury, I certify that: (1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me); and (2) I am not subject to backup withholding either because (a) I have not been notified by the Internal Revenue Service (IRS) that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (b) the IRS has not notified me that I am no longer subject to backup withholding. Certification Instructions - You must cross out item (2) above if you have been notified by the IRS that you are subject to backup withholding because of underreporting interest or dividends on your tax return. However, if, after being notified by the IRS that you were subject to backup withholding, you received another notification from IRS that you were no longer subject to backup withholding, do not cross out item (2). (Also see instructions in the enclosed Guidelines.) ____________________________________________________________________________________________________________________________________ SIGNATURE____________________________________________DATE________________________________ NAME_______________________________________________________________________________________ ADDRESS____________________________________________________________________________________ CITY_____________________________STATE______________________________ZIP____________________ NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING (OR WILL SOON APPLY FOR) A TAXPAYER IDENTIFICATION NUMBER CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (b) I intend to mail or deliver an application in the near future. I understand that, notwithstanding the information I provided in Part III of the Substitute Form W-9 (and the fact that I have completed this Certificate of Awaiting Taxpayer Identification Number), if I do not provide a correct taxpayer identification number to the Depositary within thirty (30) days, 31% of all reportable payments made to me pursuant to the Offer may be withheld. ___________________________________ _____________________________ Signature Date The Information Agent and Depositary for the Offer is: Founders Equity Group, Inc. 2602 McKinney Avenue Suite 220 Dallas, Texas 75202 (888) 858-7303 (toll free) EX-99.A3 4 EXHIBIT (A)(3) - NOTICE OF GURANTEED DELIVERY (a)(3) NOTICE OF GUARANTEED DELIVERY FOR TENDER OF SHARES OF COMMON STOCK OF HITOX CORPORATION OF AMERICA TO PAULSON ACQUISITION LLC (Not To Be Used For Signature Guarantees) - -------------------------------------------------------------------------------- THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, APRIL 19, 1999, UNLESS THE OFFER IS EXTENDED. THE OFFER IS SUBJECT TO CERTAIN CONDITIONS DESCRIBED IN THE OFFER TO PURCHASE. - -------------------------------------------------------------------------------- This Notice of Guaranteed Delivery, or one substantially in the form hereof, must be used to accept the Offer (as defined below) if certificates ("Share Certificates") representing shares of Common Stock, par value $.25 per share (the "Shares"), of Hitox Corporation of America, a Delaware corporation, are not immediately available, if the procedure for delivery by book-entry transfer cannot be completed on a timely basis, or if time will not permit all required documents to reach Founders Equity Group, Inc., as Depositary (the "Depositary") prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase). Such Notice of Guaranteed Delivery may be delivered by hand or transmitted by mail, overnight delivery or facsimile transmission to the Depositary. See Section 3 of the Offer to Purchase. The Depositary for the Offer is: FOUNDERS EQUITY GROUP, INC. By Mail, Hand or Overnight Delivery: By Facsimile Transmission: 2602 McKinney Avenue (214) 871-0088 Suite 220 Dallas, Texas 75204 Confirm Receipt of Facsimile by Telephone: (888) 858-7303 DELIVERY OF THIS LETTER OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION VIA A FACSIMILE NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. This Form Is Not To Be Used To Guarantee Signatures. If A Signature On A Letter Of Transmittal Is Required To Be Guaranteed By An "Eligible Institution" Under The Instructions Thereto, Such Signature Guarantee Must Appear In The Applicable Space Provided In The Letter Of Transmittal. Ladies and Gentlemen: The undersigned hereby tenders to Paulson Acquisition LLC, a Delaware limited liability company, upon the terms and subject to the conditions set forth in the Offer to Purchase dated March 23, 1999 (the "Offer to Purchase") and the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer"), receipt of which is hereby acknowledged Shares pursuant to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. Certificate No(s). (if available):________ Name(s) of Record Holder(s):_______ __________________________________________ ___________________________________ __________________________________________ ___________________________________ (Please Type or Print) [ ] Check here if Shares will be tendered by Book-entry transfer Address(es):_______________________ Account Number:__________________________ ___________________________________ Zip Code Dated:______________________, 1999 Area Code and Tel. No.:____________ Signature(s):______________________ ___________________________________ GUARANTEE (Not To Be Used For Signature Guarantee) The undersigned, a member firm of a registered national securities exchange or a member of the National Association of Securities Dealers, Inc. or a commercial bank or trust company having an office, branch or agency in the United States, hereby (a) represents that the tender of Shares effected hereby complies with Rule 14e-4 under the Securities Exchange Act of 1934, as amended and (b) guarantees delivery to the Depositary, at one of its addresses set forth above, of either certificates representing the Shares tendered hereby, in proper form for transfer, or a Book-Entry Confirmation (as defined in Section 3 of the Offer to Purchase) of a transfer of such Shares, in any case together with a properly completed and duly executed Letter of Transmittal (or facsimile thereof), with any required signature guarantees, or an Agent's Message (as defined in Section 3 of the Offer to Purchase), and any other documents required by the Letter of Transmittal, within three Nasdaq SmallCap Market trading days after the date hereof. _________________________________________ ___________________________________ Name of Firm Authorized Signature _________________________________________ ___________________________________ Address Title _________________________________________ ___________________________________ Zip Code Area Code and Tel. No.:__________________ Dated:____________________, 1999 NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL EX-99.A4 5 EXHIBIT A4 - FORM OF LETTER TO BROKERS (a)(4) Founders Equity Group, Inc. 2620 McKinney Avenue Suite 220 Dallas, Texas Tel: 214-871-3000 Offer to Purchase for Cash Up to 1,000,000 Shares of Common Stock of HITOX CORPORATION OF AMERICA at $2.50 PER SHARE by PAULSON ACQUISITION LLC - -------------------------------------------------------------------------------- THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, APRIL 19, 1999, UNLESS THE OFFER IS EXTENDED. THE OFFER IS SUBJECT TO CERTAIN CONDITIONS DESCRIBED IN THE OFFER TO PURCHASE. - -------------------------------------------------------------------------------- March 23, 1999 To Brokers, Dealers, Commercial Banks, Trust Companies And Other Nominees: We have been engaged by Paulson Acquisition LLC, a Delaware limited liability company (the "Purchaser") to act as Depositary and Information Agent in connection with the Purchaser's offer to purchase up to 1,000,000 shares of Common Stock, par value $.25 per share (the "Shares"), of Hitox Corporation of America, a Delaware corporation (the "Company"), at $2.50 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Purchaser's Offer to Purchase dated March 23, 1999 (the "Offer to Purchase") and the related Letter of Transmittal (which, together with any supplements or amendments thereto, collectively constitute the "Offer") enclosed herewith. For your information and for forwarding to your clients for whom you hold Shares registered in your name or in the name of your nominee, or who hold Shares registered in their own names, we are enclosing the following documents: 1. Offer to Purchase; 2. Letter of Transmittal to be used by stockholders of the Company in accepting the Offer and tendering Shares; 1 3. A letter which may be sent to your clients for whose account you hold Shares in your name or in the name of your nominees, with space provided for obtaining such clients' instructions with regard to the Offer; 4. Notice of Guaranteed Delivery to be used to accept the Offer if certificates for Shares are not immediately available, if the procedure for book-entry transfer cannot be completed on a timely basis, or if time will not permit all required documents to reach Founders Equity Group, Inc. (the "Depositary"), prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase); 5. Guidelines of the Internal Revenue Service for Certification of Taxpayer Identification Number on Substitute Form W-9; and 6. Return envelope addressed to the Depositary. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), the Purchaser will accept for payment and pay for up to 1,000,000 Shares validly tendered prior to the Expiration Date and not theretofore properly withdrawn. Payment for Shares purchased pursuant to the Offer will in all cases be made only after timely receipt by the Depositary of (i) certificates for such Shares (or timely confirmation of a book-entry transfer of such Shares into the Depositary's account at The Depository Trust Company pursuant to the procedures described in Section 3 of the Offer to Purchase), (ii) a properly completed and duly executed Letter of Transmittal (or facsimile thereof), with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message (as defined in Section 3 of the Offer to Purchase)), and (iii) all other documents required by the Letter of Transmittal. The Purchaser will not pay any fees or commissions to any broker or dealer or other person (other than the Depositary and the Information Agent as described in the Offer to Purchase) in connection with the solicitation of tenders of Shares pursuant to the Offer. The Purchaser will, however, upon request, reimburse you for customary mailing and handling expenses incurred by you in forwarding the enclosed materials to your clients. The Purchaser will pay or cause to be paid any Stock transfer taxes payable on the transfer of Shares to it, except as otherwise provided in Instruction 6 of the enclosed Letter of Transmittal. YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, APRIL 19, 1999, UNLESS THE OFFER IS EXTENDED. 2 In order to take advantage of the Offer, a duly executed and properly completed Letter of Transmittal (or facsimile thereof), with any required signature guarantees, or an Agent's Message in connection with a book-entry delivery of Shares, and any other required documents, should be sent to the Depositary, and certificates representing the tendered Shares should be delivered or such Shares should be tendered by book-entry transfer, all in accordance with the Instructions set forth in the Letter of Transmittal and the Offer to Purchase. If holders of Shares wish to tender, but it is impracticable for them to forward their certificates or other required documents prior to the expiration of the Offer, a tender may be effected by following the guaranteed delivery procedures specified under Section 3, "Procedure for Tendering Shares," in the Offer to Purchase. Any inquiries you may have with respect to the Offer should be addressed to Founders Equity Group, Inc. at its address and telephone numbers set forth on the back cover page of the Offer to Purchase. Additional copies of the enclosed materials may be obtained from the undersigned, Founders Equity Group, Inc. at (888) 858-7303, or from brokers, dealers, commercial banks or trust companies. Very truly yours, FOUNDERS EQUITY GROUP, INC. Enclosures NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL DESIGNATE YOU OR ANY PERSON AS AN AGENT OF THE PURCHASER, THE DEPOSITARY, THE INFORMATION AGENT, THE DEALER MANAGER OR ANY AFFILIATE OF ANY OF THE FOREGOING, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED AND THE STATEMENTS CONTAINED THEREIN. 3 EX-99.A5 6 EXHIBIT (A)(5) - FORM OF LETTER TO CLIENTS (a)(5) Offer to Purchase for Cash Up to 1,000,000 Shares of Common Stock of HITOX CORPORATION OF AMERICA at $2.50 PER SHARE by PAULSON ACQUISITION LLC - -------------------------------------------------------------------------------- THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, APRIL 19, 1999, UNLESS THE OFFER IS EXTENDED. THE OFFER IS SUBJECT TO CERTAIN CONDITIONS DESCRIBED IN THE OFFER TO PURCHASE. - -------------------------------------------------------------------------------- To Our Clients: Enclosed for your consideration is an Offer to Purchase dated March 23, 1999 (the "Offer to Purchase") and a related Letter of Transmittal (which, together with any amendments and supplements thereto, collectively constitute the "Offer") relating to an offer by Paulson Acquisition LLC, a Delaware limited liability corporation (the "Purchaser"), to purchase up to 1,000,000 shares of Common Stock, par value $.25 per shares (the "Shares"), of Hitox Corporation of America, a Delaware corporation (the "Company"), at a purchase price of $2.50 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer. We are the holder of record of Shares held by us for your account. The Letter of Transmittal is furnished to you for your information only and cannot be used by you to tender Shares. A tender for such Shares can be made only by us as the holder of record and pursuant to your instructions. We request instructions as to whether you wish to tender any or all of such Shares held by us for your account, pursuant to the terms and conditions set forth in the Offer. Your attention is invited to the following: 1. The tender price is $2.50 per Share, net to the seller in cash. 2. The Offer is being made for up to 1,000,000 Shares. Upon the terms and subject to the conditions of the Offer, if more than 1,000,000 Shares are validly tendered prior to the expiration of 1 the Offer and not properly withdrawn in accordance with Section 4 of the Offer to Purchase, such Shares will be accepted for payment on a pro rata basis (with appropriate adjustments to avoid the purchase of fractional Shares) according to the number of Shares validly tendered and not properly withdrawn by the expiration of the Offer. 3. The Offer, proration period and withdrawal rights will expire at 12:00 Midnight, New York City time, on Monday, April 19, 1999, unless the Offer is extended. 4. Stockholders who tender Shares will not be obligated to pay brokerage commissions, solicitation fees or, except as set forth in Instruction 6 of the Letter of Transmittal, transfer taxes on the purchase of Shares by the Purchaser pursuant to the Offer. If you wish to have us tender any or all of your Shares, please complete, sign and return the form set forth on the reverse side of this letter. An envelope in which you should return your instructions to us is enclosed. Your instructions to us should be forwarded in ample time to permit us to submit a tender on your behalf prior to the expiration of the Offer. If you authorize the tender of your Shares, all such Shares will be tendered unless otherwise specified on the instruction form set forth on the reverse side of this letter. 2 INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH UP TO 1,000,000 SHARES OF COMMON STOCK OF HITOX CORPORATION OF AMERICA The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase of Paulson Acquisition LLC (the "Purchaser") dated March 23, 1999 and the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer") relating to the offer by the Purchaser to purchase up to 1,000,000 shares of Common Stock, par value $.25 per share (the "Shares"), of Hitox Corporation of America, a Delaware corporation. This will instruct you to tender to the Purchaser the number of Shares indicated below (or if no number is indicated below, all Shares) held by you for the account of the undersigned, on the terms and subject to the conditions set forth in the Offer. Number of Shares to be Tendered* ___________________________________ ________________________________Shares ___________________________________ Signature Account Number: ________________ ___________________________________ Dated: ________________________, 1999 ___________________________________ Please print name(s) -------------------- Address:___________________________ (Include zip code) Area Code and Telephone No.:_______ Taxpayer Identification or Social Security No.:_______________ ____________________ * Unless otherwise indicated, it will be assumed that all of your Shares held by us for your account are to be tendered. 3 EX-99.A6 7 EXHIBIT (A)(6) - GUIDELINES FOR FORM W-9
(a)(6) GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER. - Social Security numbers have nine digits separated by two hyphens: i.e., 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: i.e., 00-0000000. The table below will help determine the number to give the payer. ____________________________________________________________________________________________________________________________________ FOR THIS TYPE OF ACCOUNT GIVE THE SOCIAL SECURITY NUMBER OF-- ____________________________________________________________________________________________________________________________________ 1. An individual's account The individual 2. Two or more individuals The actual owner of the account or, if combined (joint account) funds, any one of the individuals (1) 3. Husband and wife (joint account) The actual owner of the account or, if joint funds, either person (1) 4. Custodian account of a minor The minor (2) (Uniform Gift to Minors Act) 5. Adult and minor (joint account) The adult or, if the minor is the only contributors, the minor (1) 6. Account in the name of guardian of committee for The ward, minor, or incompetent person (3) a designated ward, minor or incompetent person 7. a. The usual revocable savings trust account The grantor trustee(1) (grantor is also trustee) b. So-called trust account that is not a legal The actual owner (1) or valid trust under state law ____________________________________________________________________________________________________________________________________ FOR THIS TYPE OF ACCOUNT GIVE THE SOCIAL SECURITY NUMBER OF-- ____________________________________________________________________________________________________________________________________ 8. Sole proprietorship account The owner (4) 9. A valid trust, estate, or pension trust The legal entity (Do not furnish the identification number of the personal representative or trustee unless the legal entity itself is not designated in the Account title.) (5) 10. Corporate Account The corporation 11. Religious, charitable, or educational account The organization 12. Partnership account The partnership 13. Association, club or other tax-exempt organization The organization 14. A broker or registered nominee The broker or nominee 15. Account with the Department of Agriculture in the The public entity name of a public entity (such as a State or local government, School District or prison) that receives agricultural program payments ____________________________________________________________________________________________________________________________________ (1) List first and circle the name of the person whose number you furnish. (2 Circle the minor's name and furnish the minor's social security number. (3) Circle the ward's, minor's or incompetent person's name and furnish such person's social security number. (4) Show the name of the owner. (5) List first and circle the name of the legal trust, estate or pension trust. NOTE: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed.
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 Page 2 OBTAINING A NUMBER If you don't have a taxpayer identification number or you don't know your number, obtain Form SS-5, Application for a Social Security Number Card, or Form SS-4, Application for Employer Identification Number, at the local offices of the Social Security Administration or the Internal Revenue Service and apply for a number. PAYEES EXEMPT FROM BACKUP WITHHOLDING Payees specifically exempted from backup withholding on ALL payments including the following: * A corporation * A financial institution * An organization exempt from tax under section 501(a) of the Internal Revenue Code of 1986, as amended (the "Code"), or an individual retirement plan. * The United States or any agency or instrumentality thereof. * A State, the District of Columbia, a possession of the United States, or any subdivision or instrumentality thereof. * A registered dealer in the securities or commodities registered in the United States or a possession of the United States. * A real estate investment trust. * A common trust fund operated by a bank under section 584(a) of the Code. * An exempt charitable remainder trust, or a nonexempt trust described in section 4947(a)(1) of the Code. * An entity registered at all times under the Investment Company Act of 1940. * A foreign central bank of issue. Payments of dividends and patronage dividends not generally subject to backup witholding include the following: * Payments to nonresident aliens subject to withholding under section 1441 of the Code. * Payments to partnerships not engaged in a trade or business in the United States and which have at least one nonresident partner. * Payments of patronage dividends where the amount received is not paid in money. * Payments made by certain foreign organizations. * Payments made to a nominee. Payments of interest not generally subject to backup withholding include the following: * Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not provided your correct taxpayer identification number to the payer. * Payments of tax-exempt interest (including exempt-interest dividends under section 852 of the Code). * Payments described in section 6049(b)(5) of the Code to non-resident aliens. * Payments on tax-free covenant bond under section 1451 of the Code. * Payments made by certain foreign organizations. * Payments made to a nominee. EXEMPT PAYEES DESCRIBED ABOVE MUST STILL COMPLETE THE SUBSTITUTE FORM W-9 ENCLOSED HEREWITH TO AVOID POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE SUBSTITUTE FORM W-9 WITH THE PAYER, REMEMBERING TO CERTIFY YOUR TAXPAYER IDENTIFICATION NUMBER ON PART III OF THE FORM, WRITE "EXEMPT" ON THE FACE OF THE FORM AND SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER. GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 Page 3 Payments that are not subject to information reporting are also not subject to backup withholding. For details, see section 6041, 6041A(a), 6042, 6044, 6045, 6049, 605A, and 6050N of the Code and their regulations. PRIVACY ACT NOTICE - Section 6109 requires most recipients of dividends, interest, or other payments to give taxpayer identification numbers to payers who must report the payments of IRS. The IRS uses the numbers for identification purposes and to help verify the accuracy of your tax return. Payers must be given the numbers whether or not recipients are required to file a tax return. Payers must generally withhold 31% of taxable interest, dividends, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties must also apply. PENALTIES (1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER - If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING - If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500. (3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION - Falsifying certification or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE. EX-99.A7 8 EXHIBIT (A)(7) - SUMMARY ADVERTISEMENT (a)(7) This advertisement is neither an offer to purchase nor a solicitation of an offer to sell Shares. The Offer is made solely by the Offer to Purchase dated March 23, 1999 and the related Letter of Transmittal and is being made to all holders of Shares. The Offer is not being made to (nor will tenders be accepted from or on behalf of) holders of Shares in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the laws of such jurisdiction. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer will be deemed to be made on behalf of Paulson Acquisition LLC by Founders Equity Group, Inc. or one or more registered brokers or dealers licensed under the laws of such jurisdiction. NOTICE OF OFFER TO PURCHASE FOR CASH UP TO 1,000,000 SHARES OF COMMON STOCK OF HITOX COPORATION OF AMERICA AT $2.50 PER SHARE BY PAULSON ACQUISITION LLC Paulson Acquisition LLC, a Delaware limited liability company (the "Purchaser"), is offering to purchase up to 1,000,000 shares of Common Stock, par value $0.25 per share (the "Shares"), of Hitox Corporation of America, a Delaware corporation (the "Company"), at $2.50 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated March 23, 1999 (the "Offer to Purchase") and in the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer"). - -------------------------------------------------------------------------------- THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, APRIL 19, 1999, UNLESS THE OFFER IS EXTENDED. THE OFFER IS SUBJECT TO CERTAIN CONDITIONS DESCRIBED IN THE OFFER TO PURCHASE. - -------------------------------------------------------------------------------- For purposes of the Offer, the Purchaser will be deemed to have accepted for payment, and thereby purchased, Shares that have been validly tendered and not properly withdrawn as, if and when the Purchaser gives oral or written notice to Founders Equity Group, Inc. (the "Depositary") of the Purchaser's acceptance for payment of such Shares. Upon the terms and subject to the conditions of the Offer, payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the purchase price therefor with the Depositary, which will act as agent for tendering stockholders for the purpose of receiving payment from the Purchaser and transmitting such payment to tendering stockholders. In all cases, payment for shares accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates for such Shares (or timely confirmation of book-entry transfer of such Shares into the Depositary's account at The Depository Trust Company pursuant to the procedures described in Section 3 of the Offer to Purchase), (ii) a properly completed and duly executed Letter of Transmittal (or facsimile thereof) with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message (as defined in Section 3 of the Offer to Purchase)), and (iii) any other documents required by the Letter of Transmittal. Under no circumstances will interest be paid on the purchase price, regardless of any extension of the Offer or any delay in making such payment. The term "Expiration Date" means 12:00 Midnight, New York City time, on Monday, April 19, 1999, unless and until the Purchaser shall have extended the period of time during which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date on which the Offer, as so extended by the Purchaser, shall expire. The Purchaser expressly reserves the right, in its sole discretion at any time or from time to time, to extend the period of time during which the Offer is open and thereby delay acceptance for payment of, and the payment for, any Shares, by giving oral or written notice of such extension to the Depositary. The Purchaser shall not have any obligation to pay interest on the purchase price for tendered Shares in the event the period of time during which the Offer is open is extended for any reason. Any extension of the Offer will be followed by a public announcement thereof no later than 9:00 a.m. New York City time, on the next business day after the previously scheduled Expiration Date. During any such extension, all Shares previously tendered and not withdrawn will remain subject to the Offer, subject to the right of a tendering stockholder to withdraw such stockholder's Shares. If more than 1,000,000 Shares are validly tendered prior to the Expiration Date and not properly withdrawn, the Purchaser will, upon the terms and subject to the conditions of the Offer, accept such Shares for payment on a pro rata basis, with adjustments to avoid purchases of fractional Shares, based upon the number of Shares validly tendered prior to the Expiration Date and not properly withdrawn. Because of the difficulty of determining precisely the number of Shares validly tendered and not properly withdrawn, if proration is required, the Purchaser would not expect to announce the final results of proration immediately after the Expiration Date. The Purchaser will announce the preliminary results of proration by press release as promptly as practicable after the Expiration Date, and expects to be able to announce the final results of proration approximately three Nasdaq SmallCap Market trading days after the Expiration Date. Holders of Shares may obtain such preliminary information and final results from the Depositary or the Information Agent, and also may be able to obtain such information from their brokers. Except as otherwise provided in this paragraph, tenders of Shares are irrevocable. Shares tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date, and, unless theretofore accepted for payment and paid for by the Purchaser pursuant to the Offer, may also be withdrawn at any time after May 23, 1999. For a withdrawal to be effective, a written or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of the Offer to Purchase and must specify the name of the person having tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder of the Shares to be withdrawn, if different from the name of the person who tendered the Shares. If certificates for Shares to be withdrawn have been delivered or otherwise identified to the Depositary, then, prior to the physical release of such certificates, the serial numbers shown on such certificates must be submitted to the Depositary and, unless such Shares have been tendered by an Eligible Institution (as defined in Section 3 of the Offer to Purchase), the signatures on the notice of withdrawal must be guaranteed by an Eligible Institution. If Shares have been tendered pursuant to the procedures for book-entry transfers as set forth in Section 3 of the Offer to Purchase, any notice of withdrawal must also specify the name and number of the account at the appropriate Book-Entry Transfer Facility to be credited with the withdrawn Shares and otherwise comply with such Book-Entry Transfer Facility's procedures. Withdrawals of tenders of Shares may not be rescinded, and any Shares properly withdrawn will thereafter be deemed not validly tendered for any purposes of the Offer. However, withdrawn Shares may be retendered by again following one of the procedures described in Section 3 of the Offer to Purchase at any time prior to the Expiration Date. All questions as to the form and validity (including time of receipt) of notices of withdrawal will be determined by the Purchaser in its sole discretion, whose determination will be final and binding. The Purchaser has requested the Company to furnish the Purchaser with copies of the Company's stockholder lists and security position listings. The Offer to Purchase and the related Letter of Transmittal and other relevant materials will be mailed to record holders of Shares and furnished to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the Company's stockholders lists or, if applicable, who are listed as participants in a clearing agency's security position listing, for subsequent transmittal to beneficial owners of Shares. The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, is contained in the Offer to Purchase and is incorporated herein by reference. THE OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. Requests for copies of the Offer to Purchase, the Letter of Transmittal and all other tender offer materials may be directed to the Information Agent as set forth below, and copies will be furnished promptly at the Purchaser's expense. Questions or requests for assistance may be directed to the Information Agent. THE INFORMATION AGENT FOR THE OFFER IS: FOUNDERS EQUITY GROUP, INC. 2602 McKinney Avenue Suite 220 Dallas, Texas 75204 Toll-free 1-888-858-7303 or Call Collect (214) 871-3000 March 23, 1999 EX-99.A8 9 EXHIBIT (A)(8) - PRESS RELEASE (a)(8) FOR IMMEDIATE RELEASE March 23, 1999 BERNARD PAULSON _______________ COMMENCES TENDER OFFER FOR __________________________ HITOX CORPORATION OF AMERICA ____________________________ CORPUS CHRISTI, TEXAS--March 23, 1999--- Bernard Paulson, the Acting Chief Executive Officer and a Director of Hitox Corporation of America (the "Company") announced today that an affiliated entity has commenced a tender offer to purchase up to 1,000,000 shares of the Company's Common Stock, par value $0.25 per share (the "Shares"), net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated March 23, 1999 (the "Offer to Purchase") and in the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer"). The Offer is subject to certain conditions described in the Offer to Purchase. The Offer, proration period and withdrawal rights will expire on Monday April 19, 1999, unless the Offer is extended. Copies of the Offer to Purchase and transmittal materials governing the Offer may be obtained from the Information Agent, Founders Equity Group, Inc., at the following address: Founders Equity Group, Inc. 2602 McKinney Avenue Suite 220 Dallas, Texas 75204 Telephone: (214) 871-3000 EX-99.B 10 EXHIBIT B - COMMITMENT LETTER (b) [LOGO OF NATIONSBANK, N.A.] February 23, 1999 Paulson Ranch, Ltd. 3 Ocean Park Drive Corpus Christi, TX 78404 Attention: Mr. Paulson Dear Mr. Paulson: Thank you for the opportunity to make the following commitment to you. NationsBank, N.A. (the "Bank") is pleased to have approved for The Paulson Ranch, Ltd. (the "Borrower") a credit facility consisting of a term loan in an amount not to exceed $2,500,000 (the "Loan"). This commitment is to be used by you for the purpose of purchasing 1.5 million shares of Hitox Corporation of America common stock. This commitment is subject to the execution and delivery to the Bank of legal documents yet to be prepared, including, without limitation, loan agreements, promissory notes, guaranties, and collateral and security documents. All such documents must be satisfactory in form and substance to the Bank and its counsel. The making and funding of any loans under this commitment (in addition to any other conditions which may be required in the documents referred to in the preceding paragraph) is expressly subject to the terms and conditions set forth in the attached Terms and Conditions. If you find the terms and conditions of this commitment to be acceptable to you, please execute the enclosed copy of this letter and return it to the undersigned. This commitment shall expire on April 30, 1999. We appreciate the opportunity to provide you with the financial services of NationsBank, N.A. Sincerely, /S/ TOM L. HUNT - --------------- Tom L. Hunt Accepted and agreed to this 18th day of March, 1999. ---- ----- -- Paulson Ranch Ltd. By: /S/ BERNARD A. PAULSON ---------------------- Bernard A. Paulson TERMS AND CONDITIONS BORROWER: Paulson Ranch Ltd. GUARANTORS: Bernard A. Paulson and Joan L. Paulson PURPOSE: Purchase 1.5 million shares of Hitox Corporation of America common stock AMOUNT OF LOAN: Up to $2,500,000 INTEREST RATE OPTIONS - --------------------- A) Variable: 90-day LIBOR, as determined by NationsBank and adjusted for -------- reserves, deposit insurance assessments and other regulatory costs, plus a spread ranging between 1.50% to 2.0%. B) "Effective Fixed Rate" Utilizing Interest Rate Swap: The borrower may elect ---------------------- to fix its rate on the loan by selecting Variable rate option A, and executing an Interest Rate Swap. There are no fees associated with the Swap. An indicative rate for this option is currently 7.35% for a 2 year term or 7.65% for a 5 year term. The additional benefits of selecting this option are: * The Borrower may elect to fix the rate on some or all of the principal amount of the loan, provided that the minimum amount selected for the fixed rate is $1 million. * The Borrower may elect to fix the rate for a period less than the term of the loan (e.g., fixing the rate for three years on a five year term loan). At the end of the fixed rate period the loan would revert to the variable LIBOR based rate. * The Borrower may elect to enter into a "Forward Starting Swap." In this case, the loan will, for a predetermined time of up to two years, float at the variable LIBOR rate, and then convert to an effective fixed rate utilizing the Swap. The advantage to this is that the Borrower would be able to enjoy currently lower variable rates while still having the certainty of a committed fixed rate that will commence at a designated future date. * The Swap may be terminated at any time in the future. However, generally stated, the Swap may have value if terminated in a higher interest rate environment. Alternatively, if terminated in a lower interest rate environment, the Swap may have a termination cost. Should the Borrower select Option B, NationsBank will provide a separate, detailed, interest rate Swap proposal. REPAYMENT: Two Year Term Interest Only Period and Installments: Accrued interest only shall - --------------------------------------------------- be payable quarterly until June 15, 2000 at which time a $790,000 principal reduction will be required. Quarterly interest payments will then be required until June 15, 2001, at which time the remaining principal and interest balance will be due and payable. Five Year Term Interest Only Period and Installments: Accrued interest only - ------------------------------------------------------- shall be payable quarterly until June 15, 2000 at which time a $790,000 principal reduction will be required. Quarterly interest payments will then be required until June 15, 2001, when an additional $790,000 principal reduction will be required. The remaining balance may be amortized up to a three year period or principal plus interest payable quarterly. LOAN DOCUMENTS: The Loan shall be made under and governed by definitive Loan documents to be executed and delivered by the Borrower to the Bank and containing the terms set forth in this commitment and such other terms, conditions, representations, warranties and covenants as are usual and customary in lending transactions such as the Loan, which documents may include one or more promissory notes, loan agreements, security agreements, guaranties, pledge agreements, letter of credit applications/agreements, liquidity maintenance agreements, assignments, financing statements and such other documents, instruments, guarantees, certificates and agreements executed and/or delivered by Borrower, any guarantor or third party in connection with the Loan (collectively, the "Loan Documents"). COLLATERAL: Stocks: Pledge and delivery of 1.5 million shares of Hitox Corporation of - ------ America owned by Bernard Paulson/Paulson Ranch Ltd. together with appropriate stock powers. Assignment of Note Receivable: Represents an assignment of the note receivable - ------------------------------ from Petro Chemical International. Negative Pledge: So long as this commitment is outstanding or the indebtedness - ---------------- to the Bank remains unpaid, all Municipal Bonds shall be maintained by Borrower free and clear of all liens, encumbrances and pledges. This obligation shall be evidenced by a negative pledge agreement executed by Borrower and recorded in the appropriate personal or real property records. SURVIVAL: This commitment letter shall constitute one of the Loan Documents and shall survive the closing of the Loan, the execution and delivery of all Loan Documents, and the making of any advances or disbursements thereunder. In the event of a conflict between a provision contained in this commitment letter and a provision of any other Loan Document, the terms of the other Loan Document shall control. EXPIRATION/RENEWAL CLAUSES: Any commitment to advance funds under the Loan shall expire on April 19, 1999 and the Bank shall have no further obligation to extend credit. Any renewal, extension of maturity and/or expiration date, or increase in amount of this Loan by the Bank shall be governed by the terms of this commitment unless otherwise agreed to by the Bank, in writing. Any renewal, extension of maturity and/or expiration date, or increase in amount of this Loan by the Bank shall be governed by the terms of this commitment unless otherwise agreed to by the Bank, in writing. CONDITIONS TO FIRST ADVANCE: Prior to the making by the Bank of the first advance to the Borrower, the following conditions precedent shall have been satisfied. The Bank shall have received, duly executed, all Loan Documents and any other documents and instruments necessary or advisable in connection with the Loan, all of which shall be in form and substance satisfactory to the Bank and its counsel. All mortgages, deeds to secure debt, deeds of trust, financing statements, notices and other documents and instruments deemed by the Bank and its counsel to be necessary or advisable in connection with the collateral described herein shall have been recorded or filed in all necessary places, and sent to or receive by all necessary person, as the case may be. The bank shall have received the written opinion of Borrower's counsel as to the validity and enforceability of the Loan Documents and such other matters as the Bank may reasonably require. REPORTING REQUIRMENTS: So long as the Borrower is indebted to the Bank, the Borrower shall submit to the Bank the following: 1. Annually,within 45 days, internally prepared financial statements of the Borrower, including a balance sheet and income statement. 2. The above information shall be required from each of the Guarantors on an annual basis. 3. On a quarterly basis, a brokerage statements on the Borrower's account(s) reflecting the market value of the Municipal Bonds described above under Collateral. REPRESENTATIONS AND WARRANTIES: Customary, including confirmation of partnership status and authority; execution, delivery and performance of loan documents do not violate law or existing agreements; no litigation except as disclosed to Bank; ownership of property; payment of taxes; no material adverse change in financial condition or operations since February 23, 1999; principal place of business; compliance with environmental laws and continuation of representations and warranties. Existence and Compliance. Maintain its existence, good standing and qualification to do business, where required and comply with all laws, regulations and governmental requirements including, without limitation, environmental laws applicable to it or to any of its property, business operations and transactions. Adverse Conditions or Events. Promptly advise Bank in writing of (i) any condition, event or act which comes to its attention that would or might materially adversely affect Borrower's financial condition or operations or Bank's rights under the Loan Documents, (ii) any litigation filed by or against Borrower, (iii) any event that has occurred that would constitute an event of default under any Loan Documents and (iv) any uninsured or partially uninsured loss through fire, theft, liability or property damage in excess of an aggregate of $100,000. Taxes and Other Obligations. Pay all of its taxes, assessments and other obligations, including, but not limited to taxes, costs or other expenses arising out of this transaction, as the same become due and payable, except to the extent the same are being contested in good faith by appropriate proceedings in a diligent manner. Maintenance. Maintain all of its tangible property in good condition and repair and make all necessary replacements thereof, and preserve and maintain all licenses, trademarks, privileges, permits, franchises, certificates and the like necessary for the operation of its business. EVENTS OF DEFAULT: - ----------------- A default shall occur under the Letter of Commitment and under each of the Loan Documents and under any other promissory note executed by the Borrower in favor of Bank if the Borrower, any endorser or any guarantor of the Loan defaults in the payment of any amounts due and owing under the Loan or any other indebtedness owing to Bank within fifteen days of its due date or fails to timely and properly observe, keep or perform any term, covenant, agreement or condition in any of the Loan Documents or in any other loan agreement, promissory note, security agreement, deed of trust, deed to secure debt, mortgage, assignment or other contract securing or evidencing payment of any indebtedness of Borrower, any endorser or any guarantor of any loan to Bank or to any affiliate or subsidiary of NationsBank Corporation. REMEDIES UPON DEFAULT: If an event of default shall occur Bank shall have all rights, powers and remedies available under each of the loan Documents as well as all rights and remedies available at law or in equity. CLOSING COSTS AND EXPENSES: Expenses: The Borrower shall pay all costs and expenses incurred by the Bank in connection with the Bank's review, due diligence and closing of the Loan, including attorneys' fees (to include outside counsel fees and all allocated costs of Bank's in-house counsel if permitted by applicable law) incurred by the Bank in connection with the negotiation and preparation of the Loan Documents, the costs of any environmental investigation and audit, appraisal, title insurance premiums, survey and inspection fees, whether or not the Loan actually closes. MATERIAL ADVERSE CHANGE: This commitment may be terminated, in the sole discretion of the Bank, upon the occurrence of a material adverse change in the financial condition of the Borrower or any other person liable to the Bank for the repayment of this Loan. NON-ASSIGNABLE: This commitment and the right of Borrower to receive loans hereunder may not be assigned by Borrower. RELIANCE: This commitment constitutes an offer by the Bank to the Borrower to make a Loan on the terms and conditions set forth herein and should not be relied upon by any third party for any purpose. AMENDMENT AND WAIVER: No alteration, modification, amendment or waiver of any terms and conditions of this commitment, or of any of the documents required by or delivered to the Bank under this commitment, shall be effective or enforceable against the Bank unless set forth in a writing signed by the Bank. GOVERNING LAW: This commitment and the Loan shall be governed by and construed in accordance with the laws of the State of Texas (without regard to choice of law principles). INTEGRATION: The terms set forth above represent the entire understanding between the Borrower and the Bank with respect to the subject matter of this commitment, and this commitment supersedes any prior and contemporaneous agreements, commitments, discussions and understandings, oral or written, with respect to the subject matter of this commitment. YEAR 2000 COMPLIANCE: This commitment is subject to, among the other conditions - -------------------- contained herein, the Bank's satisfaction that (a) the Borrower and its subsidiaries are taking all necessary and appropriate steps to ascertain the extent of, and to quantify and successfully address, business and financial risks facing the Borrower and its subsidiaries as a result of failure to become Year 2000 compliant (that is, that computer applications, imbedded microchips and other systems will be able to perform date-sensitive functions prior to and after December 31, 1999) including risks resulting from the failure of key vendors and suppliers of the Borrower and its subsidiaries to become Year 2000 compliant, and (b) the Borrower's and its subsidiaries' material computer applications and those of its key vendors and suppliers will, on a timely basis, adequately address the Year 2000 problem in all material respects. ARBITRATION: ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO - ----------- INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS INSTRUMENT, AGREEMENT OR DOCUMENT OR ANY RELATED INSTRUMENTS. AGREEMENTS OR DOCUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF PRACTICE AND PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF J.A.M./ENDISPUTE AND ANY SUCCESSOR THEREOF (J.A.M.S.), AND THE "SPECIAL RULES" SET FORTH BELOW. IN THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY TO THIS AGREEMENT MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS AGREEMENT APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION. A. SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE ------------- CITY OF THE BORROWER'S DOMICILE AT TIME OF THE EXECUTION OF THIS INSTRUMENT, AGREEMENT OR DOCUMENT AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR: IF J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL 60 DAYS. B. RESERVATION OF RIGHTS. NOTHING IN THIS INSTRUMENT, ----------------------- AGREEMENT OR DOCUMENT SHALL BE DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS AGREEMENT; OR (II) BE A WAIVER BY THE BANK OF THE PROTECTION AFFORDED TO IT BY 12 U.S.C. SEC. 91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF THE BANK HERETO (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF, OR (B) TO FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT OF A RECEIVER. THE BANK MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSURE UPON SUCH PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS INSTRUMENT, AGREEMENT OR DOCUMENT. NEITHER THIS EXERCISE OF SELF HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF AN ACTION FOR FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN ANY SUCH ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES. EXPIRATION: This commitment is to be closed within 28 days of the acceptance date. Should this commitment not be accepted by the expiration date, and not closed within 28 days of the acceptance date, then the Bank shall have no further obligation to extend credit hereunder. 13. NOTICE OF FINAL AGREEMENT. THIS WRITTEN AGREEMENT REPRESENTS THE ------------------------- FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. -----END PRIVACY-ENHANCED MESSAGE-----