<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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<S> <C>
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/X/ Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
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___________________________PINNACLE GLOBAL GROUP, INC.__________________________
(Name of Registrant as Specified In Its Charter)
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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<S> <C> <C>
/ / No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
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(2) Aggregate number of securities to which transaction
applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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SUPPLEMENT TO PROXY STATEMENT
FOR
THE ADJOURNED SPECIAL MEETING OF THE SHAREHOLDERS
OF
PINNACLE GLOBAL GROUP, INC.
TO BE
CONTINUED ON JANUARY 28, 2000
JANUARY 12, 2000
This supplements the Proxy Statement dated December 6, 1999, under which
Pinnacle Global Group, Inc. solicited your proxy to be voted at the special
meeting of Pinnacle's shareholders originally convened on December 29, 1999 to
act on a proposal to issue 7,125,233 Pinnacle common shares as part of a merger
of Sanders Morris Mundy Inc. with Harris Webb & Garrison, Inc., Pinnacle's
investment banking subsidiary. This supplement is first being mailed to Pinnacle
shareholders on or about January 13, 2000.
The special meeting to act on the merger-related proposal was convened on
December 29, 1999, and then adjourned until 10:00 a.m., Central Time, on
January 28, 2000. At that time, the meeting will resume at Pinnacle's offices at
5599 San Felipe, Suite 300, Houston, Texas 77056.
The special meeting was adjourned to allow Pinnacle and Sanders Morris Mundy
time to consider the potential impact on the transaction of two independent
developments that came to light in the days before the original meeting date.
This supplement describes those developments and advises you of the actions you
can take after considering them. The two developments involve:
- A PINNACLE DIRECTOR'S WITHDRAWAL OF SUPPORT FOR THE MERGER, AND
- CIRCUMSTANCES SUGGESTING THAT WASTE MANAGEMENT, INC. MAY CONSIDER IT HAS A
CLAIM AGAINST JOHN E. DRURY, A SANDERS MORRIS MUNDY SHAREHOLDER AND FORMER
SANDERS DIRECTOR, AND POSSIBLY AGAINST SANDERS MORRIS MUNDY ITSELF OR ITS
PRINCIPALS, ARISING OUT OF SEVERAL TRANSACTIONS INVOLVING WASTE MANAGEMENT
AND OTHER COMPANIES IN WHICH AFFILIATES OR CLIENTS OF SMM MADE
INVESTMENTS.
These developments are described below in more detail.
PINNACLE BOARD APPROVAL
The proxy statement for the special meeting says that Pinnacle's board of
directors unanimously approved the Sanders transaction and recommended that you
vote for the issuance of the Pinnacle shares in the merger. That unanimous
action was taken at a special meeting of the board held on October 12, 1999.
However, on December 27, 1999, Sean Dobson, then a Pinnacle director and the
Executive Vice President--Trading and New Business Development of Spires
Financial, L.P., Pinnacle's fixed-income, broker-dealer subsidiary, sent a
letter to all other Pinnacle directors questioning the advisability of the
merger and suggesting that the Pinnacle board reconsider its prior action on the
matter. In follow-up discussions between Mr. Dobson and Pinnacle's management,
Mr. Dobson told management that he had withdrawn his support for the Sanders
transaction and intended to vote his Pinnacle shares against the proposed
transaction. Mr. Dobson beneficially owns 256,302 Pinnacle shares representing
3.6% of Pinnacle's total outstanding shares.
In his December 27 letter, Mr. Dobson expressed concern about:
- a lack of assurances as to the shareholders' equity and cash balances of
the Sanders firm upon closing of the merger,
- the illiquid nature of many of Sanders' investments and perceived
uncertainties about the value of those investments,
- a concern that the earnings of the Sanders firm are in part determined by
reference to unrealized gains and losses associated with illiquid
investments, the valuation of which are believed by Mr. Dobson to
represent a "conflict of interest" for management of the Sanders firm, and
<PAGE>
- an anticipated decline in both revenues and earnings for the Sanders firm
for 1999 versus 1998.
At a meeting of Pinnacle's board of directors held on January 6, 2000, the
board heard and evaluated Mr. Dobson's concerns about the proposed merger. At
the meeting, the board also received from Howard Frazier Barker Elliot, Inc.,
Pinnacle's financial advisor in the transaction, that firm's reconfirmation of
its earlier advice to the board that the consideration to be paid by Pinnacle in
the merger is fair, from a financial point of view, to Pinnacle's shareholders.
Over the strong objections of Mr. Dobson, the board, represented by the eleven
directors present at the meeting voted ten to one to:
- reaffirm its determination that the Sanders merger is in the best
interests of Pinnacle and its shareholders,
- ratify its prior approval of the proposed transaction on the terms set out
in the existing Amended and Restated Agreement and Plan of Reorganization
with Sanders Morris Mundy, and
- confirm its recommendation that the Pinnacle shareholders approve the
issuance of the merger shares.
In continuing its endorsement of the transaction, the board considered that
all of the reasons motivating its original approval of the transaction (as
described in detail in the proxy statement) remain valid. The board also
reviewed the recent financial performance of both Pinnacle and the Sanders firm,
and determined that the number of Pinnacle shares to be issued in the Sanders
Morris Mundy transaction remains fair to Pinnacle and its shareholders.
On January 10, 2000, Mr. Dobson resigned as a Pinnacle director and as an
officer and employee of Spires Financial, L.P.
WASTE MANAGEMENT MATTER
Sanders Morris Mundy has specialized investment expertise in the area of
environmental services, including solid waste management. During the past ten
years, the Sanders firm has acted as financial advisor, placement agent, and
underwriter for a number of companies in the industry. Through its principals,
private clients, and the Environmental Opportunities Funds described in the
proxy statement, the firm has also invested significantly in this area.
John E. Drury is a 4.3% shareholder of Sanders Morris Mundy and a former SMM
director. He was president and chief operating officer of Browning-Ferris
Industries, Inc. before becoming associated with SMM. In 1994, Mr. Drury became
the chief executive officer of USA Waste Services, Inc., which acquired Waste
Management, Inc. and adopted its name in July 1998. Mr. Drury took a leave of
absence from Waste Management in March 1999, for health reasons, and resigned
his Waste Management positions in August and October 1999.
In July 1999, Waste Management twice lowered its earnings estimates. That,
in turn, triggered a series of lawsuits against Waste Management and certain of
its directors and officers alleging federal and state securities laws
violations. Waste Management also disclosed that the Securities and Exchange
Commission and New York Stock Exchange were conducting reviews of certain sales
of Waste Management stock that preceded the earnings announcements, and that the
Securities and Exchange Commission had begun a formal investigation of certain
financial statements, procedures, and internal policies of Waste Management
before its transaction with USA Waste Services. Waste Management has said it is
cooperating with the investigations.
In September 1999, Waste Management announced its own internal investigation
of the allegations surrounding the earnings announcements and the actions of
certain of its current and former officers and directors. The investigation is
being directed by the audit committee of the board of directors of Waste
Management.
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<PAGE>
In November 1999, Sanders Morris Mundy received a letter from the chairman
of the Waste Management audit committee asking for information concerning
investments by the Sanders firm, its clients, and the Environmental
Opportunities Funds in a number of private and public companies that either
purchased assets from Waste Management or were acquired by Waste Management
while Mr. Drury was both employed by Waste Management and associated with SMM.
SMM has retained counsel concerning the request. Its counsel has met with
counsel for Waste Management, has provided information in response to the
request, and expects to meet again with Waste Management's counsel in the next
few weeks to provide more information.
In a related development, on December 30, 1999, Waste Management announced
that it had filed a federal lawsuit against Louis D. Paolino, Jr., the former
chairman and chief executive officer of Eastern Environmental Services, Inc.,
other former Eastern officers, and relatives of Mr. Paolino, for fraud in
connection with Waste Management's acquisition of Eastern in December 1998. The
lawsuit claims that Mr. Paolino and other Eastern officers conspired to
overstate Eastern's earnings through incorrect accounting methods. Although
Mr. Drury is not named as a defendant, the lawsuit asserts that he and another
Waste Management officer personally benefitted from transactions with
Mr. Paolino following Eastern's sale to Waste Management. The Environmental
Opportunities Funds managed by Sanders Morris Mundy were private equity
investors in Eastern. Mr. Drury is an individual investor in the Environmental
Opportunity Funds.
Waste Management has not made any formal claim against SMM. However, Waste
Management's internal investigation is continuing, and SMM, through counsel, is
engaged in discussions with Waste Management's counsel. SMM has advised Pinnacle
that it believes there is no factual or legal basis for any Waste Management
claim against SMM. Although SMM believes that neither the existence nor ultimate
resolution of the Waste Management investigation will have a material adverse
effect on the financial condition of SMM, SMM cannot predict the outcome of the
investigation and there is a possibility of a claim and the related costs and
management attention required to defend it.
YOUR CHOICES AS A SHAREHOLDER
You are urged to consider the developments described in this proxy statement
supplement and decide what, if any, action you wish to take in response to them.
You have the following choices:
- If you granted a proxy authorizing a vote in favor of the share issuance
in the Sanders Morris Mundy merger, and if you remain in favor of the
transaction after considering the events described in this supplement, you
need not do anything. Your shares will be voted in favor of the share
issuance at the reconvened special meeting of shareholders on January 28,
2000.
- If you granted a proxy voting against the share issuance, and if you
remain opposed to the transaction, you need not do anything. Your shares
will be voted against the share issuance at the reconvened special
meeting.
- If you have not submitted your proxy, you can complete and return your
proxy card to Pinnacle authorizing a vote either for or against the share
issuance, or you can come to the reconvened special meeting and vote your
shares in person.
- IF YOU HAVE SUBMITTED A PROXY AND WISH TO CHANGE YOUR VOTE, YOU MAY DO SO
IN ANY OF ONE OF THREE WAYS DESCRIBED IN THE PROXY STATEMENT.
- YOU CAN COMPLETE AND SUBMIT A NEW PROXY CARD, OR
- YOU CAN SEND US A WRITTEN NOTICE REVOKING YOUR PROXY, OR
- YOU CAN ATTEND THE RECONVENED SPECIAL MEETING AND VOTE IN PERSON.
3
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If you have instructed a broker to vote your shares, you must follow
directions from your broker on how to change your vote. If you choose to submit
a new proxy card or a notice of revocation, you should do so to this address:
Pinnacle Global Group, Inc.
5599 San Felipe, Suite 555
Houston, Texas 77056
Attention: Robert E. Garrison II
For your convenience, a new proxy card accompanies this supplement.
CURRENT STATUS OF THE VOTE
A quorum is already represented at the special meeting. Through January 7,
2000, proxies favoring the Sanders transaction had been submitted for 4,688,064
Pinnacle shares representing just over 94% of the total number of shares for
which proxies were submitted. Therefore, unless revoked as described above and
in the proxy statement, these shares will be voted in favor of the share
issuance at the reconvened special meeting, and will represent sufficient votes
to approve the transaction.
Texas Banking Commissioner approval is needed before the Sanders transaction
can be completed. Pinnacle expects that approval before the reconvening of its
special meeting. The Sanders Morris Mundy shareholders have approved the merger.
If the Pinnacle shareholders approve the share issuance, Pinnacle expects the
merger will close within five days after Pinnacle's reconvened special meeting.
4
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PINNACLE GLOBAL GROUP, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE RECONVENED PINNACLE SPECIAL MEETING OF SHAREHOLDERS
TO BE CONTINUED ON JANUARY 28, 2000
The undersigned shareholder of Pinnacle Global Group, Inc. ("Pinnacle")
hereby appoints each of Robert E. Garrison II and Jean Anne Mire attorneys and
proxies of the undersigned, with full power of substitution, to vote on behalf
of the undersigned at the reconvened Special Meeting of Shareholders of Pinnacle
to be continued at its offices located at 5599 San Felipe, Suite 300, Houston,
Texas 77056, on January 28, 2000, at 10:00 a.m., central time, and at any
adjournments of the meeting, all of the shares of Pinnacle common stock which
the undersigned may be entitled to vote.
PINNACLE GLOBAL GROUP, INC.
Please mark vote in oval in the following manner using dark ink only.
1. Approval of the issuance of 7,125,233 shares of Pinnacle common stock in the
merger of Harris Webb & Garrison, Inc., our wholly owned subsidiary, with
Sanders Morris Mundy Inc.
/ / FOR / / AGAINST / / ABSTAIN
2. In their discretion, upon other matters as may properly come before the
meeting; hereby revoking any proxy or proxies regarding such matters heretofore
given by the undersigned.
/ / FOR / / AGAINST / / ABSTAIN
Please sign and return in the enclosed envelope.
(Continued and to be signed on reverse side.)
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL ABOVE AND IF NO
SPECIFICATION IS MADE, THE SHARES WILL BE VOTED FOR APPROVAL OF THE SHARE
ISSUANCE IN THE MERGER. THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE
NOTICE OF SPECIAL MEETING, THE PROXY STATEMENT (INCLUDING ITS JANUARY 2000
SUPPLEMENT), PINNACLE'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1998, PINNACLE'S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER
ENDED SEPTEMBER 30, 1999 AND PINNACLE'S 1999 DEFINITIVE PROXY STATEMENT ON
SCHEDULE 14A, EACH OF WHICH HAS BEEN FURNISHED WITH THIS PROXY.
DATED ______________________, ____
__________________________________
__________________________________
Signature of Shareholder
(Signature should agree with name
printed hereon. If Stock is held
in the name of more than one
person, EACH joint owner should
sign. Executors, administrators,
trustees, guardians, and attorneys
should indicate the capacity in
which they sign. Attorneys should
submit powers of attorney.)
