Exhibit 10.1(b)
June 29, 2001
The Board of Directors (the "Board")
THCG, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
We understand that THCG, Inc., a Delaware corporation ("THCG" or the
"Company"), is contemplating entering into a Stock Exchange Agreement (the
"Stock Exchange Agreement") by and among THCG, Starcross, Inc., a Delaware
corporation, and Xxxxxx & Co. Securities, Inc., a New Jersey corporation
(together with Starcross, Inc., "Xxxxxx"), pursuant to which THCG shall acquire
all of the outstanding capital stock of Xxxxxx in exchange for newly issued
shares of the common stock, par value $.01 per share (the "THCG Common Stock"),
of THCG (the "Exchange"). We further understand that, following the Exchange,
the shares of THCG Common Stock held by stockholders of THCG prior to the
Exchange (including shares of THCG Common Stock issuable to holders of options
and warrants prior to the Exchange with an exercise price of $1.00 or less)
shall represent 32.3% of the shares of THCG Common Stock to be outstanding after
the Exchange on a fully diluted basis (the "Post-Exchange Shares"), the shares
of THCG Common Stock to be owned by Xxxxxx shall represent 66.7% of the
Post-Exchange Shares and the shares of THCG Common Stock to be owned by an
independent third party shall represent 1.0% of the Post-Exchange Shares (the
"Ownership Interests"). For the purposes of this letter, the Stock Exchange
Agreement will constitute the draft delivered to us dated June 12, 2001, as
amended for the Ownership Interests. The terms of the Exchange are more fully
described in the Stock Exchange Agreement.
You have requested that we render a fairness opinion (the "Opinion") as
to whether or not the Consideration (as defined below) to be paid by the Company
in the Exchange pursuant to the Stock Exchange Agreement (as amended for the
Ownership Interests) is fair, from a financial point of view, to the Company as
of the date hereof. "Consideration" means only the shares of THCG Common Stock
to be issued in the Exchange to those persons or entities who actually own
shares of common stock of Xxxxxx as of the date of the Opinion.
Notwithstanding the foregoing, our Opinion does not relate in any way
to, or address, the fairness (from a financial point of view or otherwise) of,
the consideration to be received by THCG stockholders in connection with what we
understand and assume will be a distribution to such stockholders of units of a
liquidating trust (the "Trust") containing certain assets and liabilities of
THCG, which distribution is to be made prior to the Exchange, pursuant to a
Liquidating Trust Agreement (the "Trust Agreement"). For the purposes of this
letter, the Trust Agreement will constitute the draft delivered to us dated June
13, 2001.
In arriving at the Opinion set forth herein, we have, among other
things:
a) reviewed the financial terms of the Stock Exchange Agreement, as
amended for the Ownership Interests, and the Trust Agreement;
b) reviewed and analyzed certain business and financial information
with respect to THCG and Xxxxxx, including financial forecasts
prepared by the managements of THCG and Xxxxxx and liquidation
analyses prepared by the management of THCG (THCG's and Xxxxxx's
managements have advised us that such information provided to us is
the most recent information developed or reviewed by THCG and Xxxxxx
and that management has not changed its position with respect to
such information);
c) held discussions with certain members of the managements of THCG and
Xxxxxx concerning their respective businesses, operations and
prospects and visited certain THCG and Xxxxxx facilities;
d) conducted interviews with certain legal, accounting and real estate
advisors of THCG;
e) reviewed THCG's Annual Reports on Form 10-K for the calendar years
1998, 1999 and 2000, and THCG's Quarterly Report on Form 10-Q for
the period ended March 31, 2001;
f) reviewed Xxxxxx's historical financial information as presented in
Xxxxxx's audited financial statements for the fiscal years ended
September 30, 1998, 1999 and 2000 and unaudited Management Reports
for the seven months ended April 30, 2001;
g) reviewed the price and trading history of THCG's common stock; and
h) reviewed certain publicly available information provided to us by
the Company and Xxxxxx regarding the industries in which the Company
and Xxxxxx compete.
In connection with our Opinion, we have assumed and relied upon the
accuracy and completeness of all financial and other information supplied or
otherwise made available by the Company and Xxxxxx. We neither have attempted
independently to verify nor have we assumed any responsibility for verification
of such information. We have not made or obtained or assumed any responsibility
for making or obtaining independent evaluations or appraisals of the Company and
Xxxxxx, their assets or their liabilities (contingent or otherwise), nor have we
been furnished with any such evaluations or appraisals. With respect to the
financial forecasts and liquidation analyses referred to above, we have assumed,
upon the advice of the Company and Xxxxxx, that they have been reasonably
prepared on bases reflecting the best available good faith estimate and judgment
of the managements of the Company and Xxxxxx as to the future financial
performance and condition of the Company and Xxxxxx, and that the Company and
Xxxxxx will or would, as the case may be, perform substantially in accordance
with such forecasts and analyses. We assume no responsibility for and express no
view as to such forecasts and analyses or the assumptions on which they are
based. We have assumed that the Exchange will be consummated on the terms
described in the Stock Exchange Agreement provided to us, without any waiver of
or modification to any of the material terms and conditions of the Stock
Exchange Agreement, as amended for the Ownership Interests, and that all of the
units of the Trust will be distributed to THCG stockholders of record as of a
date prior to the Exchange on the terms described in the Trust Agreement.
Our engagement did not encompass the solicitation of third party
indications of interest in acquiring all or part of THCG, nor did our engagement
encompass the evaluation of any alternative business strategies for the Company.
Because our engagement did not encompass the solicitations of any indications of
value from any third party or the evaluation of alternative business strategies,
our Opinion does not address the consideration the Company might receive from
third party purchasers of THCG or the relative merits of the Exchange as
compared to any alternative business strategies that might exist for THCG. Our
Opinion necessarily is based upon information available to us and financial,
market and other conditions and circumstances existing and disclosed to us, as
of the date of the Opinion.
This Opinion has been prepared for the benefit and use of the Board in
connection with its consideration of the Exchange. The Company has advised us
that no vote of its stockholders is necessary under applicable law to authorize
the Exchange. This Opinion does not in any case constitute a recommendation to
any stockholder as to whether or not such stockholder should vote for or against
the Exchange or if such a stockholder vote were to be necessary. We will receive
a fee for our services that will be paid in part upon the delivery of this
Opinion, but which is not contingent upon the consummation of the Transaction or
the outcome of our Opinion. THCG has agreed to indemnify Aramar Capital Group,
LLC for liabilities that may arise in connection with the rendering of this
Opinion.
In rendering this Opinion, we have not been engaged to act as an agent
or fiduciary of the Company's stockholders or any other third party, and the
Company has expressly waived to the fullest extent permitted by law any duties
or liabilities we may otherwise be deemed to have had in this regard. In
addition, certain principal stockholders of THCG have acknowledged that we are
providing our Opinion for the use of the Board of the Company and not acting in
any fiduciary capacity for any stockholder of the Company. This Opinion speaks
as of its date only, and we have no obligation to update this Opinion to take
into account new facts and circumstances.
On the basis of, and subject to, the foregoing, it is our Opinion that
the Consideration to be paid by the Company in the Exchange pursuant to the
Stock Exchange Agreement is fair, from a financial point of view, to the Company
as of the date hereof.
Very truly yours,
/s/ Aramar Capital Group, LLC
Aramar Capital Group, LLC
