- 15 -
in financing before April 30, 1997. To effectuate the
transaction, MMI organized MTLM Merger, Inc. (MTLM), as a wholly
owned subsidiary and capitalized the subsidiary with MMI common
stock. MTLM was then to be merged into HouTex, with HouTex’s
being the surviving corporation.
On or about January 7, 1997,20 the acquisition closed, and
MMI paid the following consideration in cash, promissory notes,
and unregistered MMI common stock and warrants in exchange for
all the outstanding shares in HouTex:
MMI MMI Promissory
Shareholder Cash stock warrants notes
Moshe Melnik $435,000 1$168,381 2$93,960 $960,055
Zalman Melnik 315,000 3121,930 468,040 695,213
Clend -0- 51,058,690 6108,000 5,000,000
Total 750,000 1,349,001 270,000 6,655,268
159,289 shares of MMI at $2.84 per share
287,000 MMI warrants at $1.08 per warrant
342,933 shares of MMI at $2.84 per share
463,000 MMI warrants at $1.08 per warrant
5372,778 shares of MMI at $2.84 per share
6100,000 MMI warrants at $1.08 per warrant
The total consideration that the HouTex shareholders received in
exchange for their shares was $9,024,269.21 Individually, Clend,
20The parties stipulated that the acquisition closed on
Jan. 7, 1997. However, various documents associated with the
closing are dated Jan. 3, 1997.
21The values of the MMI shares and warrants that were used
to report the transactions for Federal income tax reporting
purposes were based on an appraisal by Howard Frazier Barker
Elliott, Inc., as of Jan. 7, 1997.
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