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Narum v. Faxx Foods Inc.3/18/1999
sed.
[ ] Meanwhile, during the acquisition negotiations, Saunders suggested that Faxx acquire Dakco and all of its subsidiaries. On June 26, 1992, Faxx and Dakco entered into a statement of intent for Faxx to purchase Dakco for more than $6,000,000. Although the purchase was scheduled to close on September 1, 1992, Faxx and Dakco spent the next year in negotiations and preparations for the acquisition. However, in July 1993, Saunders informed Faxx he would no longer complete the deal because Faxx failed to provide written proof it had firm financial commitments to close on the purchase of Dakco. The Faxx-Dakco transaction was never consummated.
[ ] Olsen wrote to Faxx shareholders on August 20, 1993, advising them about Dakco developments. Olsen enclosed with the letter a rescission offer and acceptance form regarding the shareholders' investments in Faxx. Shareholders were given the option of either rejecting the rescission offer and remaining Faxx shareholders, or accepting the rescission offer and requesting return of their investments. The letter asked shareholders to "please review all of the enclosed material and discuss it with your advisors before making your decision," and further warned them in underscored letters "IF YOU DO NOT RESPOND WITHIN 30 DAYS OF RECEIVING THIS MATERIAL, YOU WILL HAVE BEEN DEEMED TO HAVE REJECTED THIS RE CIS ION OFFER FOR LEGAL PURPOSES, AND YOU WILL REMAIN AN INVESTOR IN FAXX FOODS, INC." All of the plaintiffs claim they timely accepted this offer except Spelhaug, who said he did not receive it.
[ ] On October 6, 1993, Olsen wrote to Faxx shareholders informing them "Faxx is placing on hold its recently announced re cis ion offer." The letter advised shareholders there was a "recent development" that might affect their decision to rescind and Faxx's decision to put the rescission offer on hold "in no way impairs your rights regarding the ultimate Disposition of this re cis ion offer." The letter continued, " hen we are able to conclude definitive parameters around the recent development, they will be explained to you fully. At that time Faxx will initiate a new re cis ion offer for your consideration."
[ ] On January 14, 1994, Olsen sent Faxx shareholders a letter "to re-open the re cis ion offer . . . ." The letter explained, although the capital necessary for Faxx to buy Dakco had "seemed well within the range of possibilities," "Faxx expended all of the equity that it had raised during the investment period on professional fees, bank fees, and other costs associated with the acquisition." Faxx offered 40 percent of each shareholder's investment to be paid back to them in Dakco stock valued at $11.15 per share. If shareholders accepted this offer, they would be required to surrender their Faxx stock and the rescission offer "would be in full and complete settlement of this matter." The plaintiffs took no action on this offer.
[ ] On February 8, 1994, Narum wrote a memorandum to "Dakco Employees/Faxx Investors" to "determine our course of action." Narum asked for the opinions of other shareholders because they "have possible actions both against a corporation as well as against individuals according to the Century Code." All of the other plaintiffs except Hove received the memorandum.
[ ] On February 16, 1994, Faxx's attorney wrote a letter to North Dakota Faxx investors withdrawing the second rescission offer because it did not propose a full return of investment as required by N.D.C.C. ยง 10-04-17(2). The letter informed investors Faxx's officers were "studying the situation and are attempting to find a resolution that would return as much value to you investors as possible." Faxx's attorney cautioned, ho
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