SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the registrant X
Filed by a party other than the registrant
Check the appropriate box:
X Preliminary proxy statement.
Definitive proxy statement.
Definitive additional materials.
Soliciting material under Rule 14a-12.
______________________________________________________________________________
CHIEF CONSOLIDATED MINING COMPANY (FILE # 1-1761)
(Name of registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if Other than the registrant): N/A
Payment of filing fee (check the appropriate box):
X No fee required.
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11: N/A
PRELIMINARY COPY
CHIEF CONSOLIDATED MINING COMPANY
500 Fifth Avenue
New York, New York 10110
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS IN LIEU OF ANNUAL MEETING
TO BE HELD DECEMBER 15, 2000
To the Shareholders of Chief Consolidated Mining Company:
Notice is hereby given that a Special Meeting of Shareholders in Lieu of
Annual Meeting of Chief Consolidated Mining Company will be held at the
Doral Hotel, 70 Park Avenue at 38th Street, (Park Avenue Room), New York
City, New York 10016 on Friday, December 15, 2000 at 11:00 A.M. New York
City time for the following purposes:
(1) To elect seven (7) directors to serve during the ensuing year.
(2) To consider and act upon a proposal to (i) replace outstanding
nonqualified stock options held by three directors and officers of
the Company and (ii) approve and ratify new nonqualified stock options
granted to two other directors of the Company.
(3) To approve the selection of the firm of Arthur Andersen LLP
as independent public accountants for the Company for the current fiscal year.
(4) To transact such other business as may properly come before the
meeting and any adjournments thereof.
The holder of common and preferred stock of the Company of record at
the close of business on November 14, 2000 will be entitled to notice
of and to vote at this meeting and any adjournments thereof.
By Order of the Board of Directors
Edward R. Schwartz
Secretary
November 15, 2000
WE URGE ALL SHAREHOLDERS TO ATTEND THE MEETING IN PERSON, IF POSSIBLE, IF
NOT, THEY ARE URGED TO DATE, SIGN AND RETURN THE PROXY AS PROMPTLY AS
POSSIBLE IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES. The Proxy may be revoked at any time before it is voted,
and shareholders executing proxies may attend the meeting and vote there
in person should they so desire.
Management of the Company desires all shareholders to take an interest in
the affairs of the Company and your interest can best be evidenced by
attendance at the forthcoming meeting. Without a quorum in attendance
the above matters to be taken up cannot be acted upon. Expense of obtaining
a quorum for the meeting can be kept at a minimum if you attend the meeting
either in person or by proxy.
PRELIMINARY COPY
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation
ewith. Where no instrues will be voted FOR the nominees for directors, FOR
the proposal to approve the replacing of outstanding nonqualified stock
options and approve the granting of nonqualified stock options to directors
of the Company, and FOR the selection of independent public accountants, all
as described below, and in their discretion with respect to any other
business as may properly come before the meeting and any adjournment or
adjournments thereof.
The By-laws of the Company provide that the Annual Meeting Shareholders will
vote upon: (1) the election of seven (7) directors to the
Board of Directors of the Company; (2) a proposal to (i) replace outstanding
nonqualified stock options held by three directors and officers of the
Company and (ii) approve and ratify new nonqualified stock options granted
to two other directors of the Company; (3) the approval of the selection
of independent public accountants of the Company; and (4) such
come before the meeting and any adjournments thereof.
The enclosed Proxy may be revoked at any time before it is exercised
by written notice to the Company bearing a later date than the Proxy,
and any shareholder attending the meeting may vote in person whether or not
the shareholder has previously submitted a Proxy. Each proposal is
identified in the Proxy and the accompanying Notice of Special Meeting
of Shareholders in Lieu of Annual Meeting and is set forth and more
fully described and commented upon under the applicable headings for
each proposal in thin of directors is designated as Proposal 1;
the proposal to (i) replace outstanding nonqualified stock options held
by three directors and officers of the Company and (ii) approve and
ratify new nonqualified stock options granted to two other directors
of the Company is designated as Proposal 2; and the approval of the
selection of independent public accountants of the Company is designated
as Proposal 3. Where instructions are indicated, the proxies
will be voted in accordance therewitewith. Where no instru
ees as possible. Shareholders representing a majority of the outstanding
shares entitled to vote at the meeting must be present or represented
by proxy to constitute a quorum. The shares represented by a proxy
submitted by a shareholder will be counted for the purpose of determining
whether a quorum is present; however, if the shareholder abstains from
voting on a particular proposal, the proxies will not vote those shares
on the proposal.
VOTING SECURITIES AND
PRINCIPAL STOCKHOLDERS
(a) The following table shows as of November 1, 2000, stock ownership of
all persons known to management, to be beneficial owners of more than 5%
of the common stock of the Company.
Name and Address of Amount and Nature of Percentage
Beneficial Owners Beneficial Ownership of Class
Estate of William E. Simon 558,600 shares (1) 6.98% (2)
310 South Street
Morristown, NJ 07962
Robert R. Hermann 492,500 shares 6.15% (2)
7701 Forsyth St.
Clayton, MO 63105
Dimeling, Schreiber & Park, as 3,500,000 shares (3)(4) 30.41%
General Partner of Dimeling,
Schreiber & Park Reorganization
Fund II, LP
1629 Locust Street
Philadelphia, PA 19103
(1) 308,600 shares owned directly by estate of William E. Simon; 250,000
shares owned by a corporation in which the estate of William E. Simon has
shared power to direct the vote and disposition of the Company's shares
held by the corporation by virtue of his ownership of voting stock in said
corporation.
(2) Percentage based upon current number of the Company's outstanding
shares of common stock, without regard to the Company's outstanding
convertible common stock and the conversion rights of the holder of the
Company's convertible common stock described at footnote (4), below.
If such convertible common shares were converted into shares of common
stock by the holder, the percentage would be reduced below 5%.
(3) William R. Dimeling, Richard R. Schreiber and Christopher A. Arnold
are principals of Dimeling, Schreiber & Park. They are currently
directors of the Company and are nominees for director at the meeting.
(4) Dimeling, Schreiber & Park, in its capacity as General Partner of
Dimeling, Schreiber & Park Reorganization Fund II, LP, a Delaware limited
partnership, owns 3,500,000 shares of the Company's $0.50 par value
convertible common stock. These shares are convertible into a like number
of the Company's common stock at no additional cost. The percentage shown
is based upon the current number of the Company's outstanding shares of
common stock together with the 3,500,000 shares of outstanding convertible
cer & Park, in its capacity as General Partner: (i) will receive an
additional 280,000 shares of convertible common stock in December 2000,
representing an annual 8% dividend for the year 2000 on its current holdings
of 3,500,000 shares; and (ii) has the right to purchase an additional
5,000,000 shares of convertible common stock from the Company, which
right to purchase expires December 31, 2002. If the additional 5,000,000
shares are purchased, the percentage, including the 280,000 dividend shares,
In addition, Dimeling, Schreiber & Park, in its capacity as General Partner,
holds warrants to purchase additional shares of convertible common stock
that expire December 31, 2004, however, it may not make purchases which
would, assuming conversion of all convertible common stock, result in
Dimeling, Schreiber & Park, in its capacity as General Partner,
owning more than 68% of the Company's outstanding common stock.
The holder of the convertible common stock has voting rights identical
to the voting rigeiber & Park Reorganization Fund II, LP and directorships
in the Company held by three principals of Dimeling, Schreiber & Park.
(b) The equity securities of the Company beneficially owned by all
directors, director nominees and officers, and by directors,
director nominees and officers of the Company as a group,
as of November 1, 2000, are:
Title
Of Name and Address Amount and Nature of Percentage of
Class of Beneficial Owner of Beneficial Ownership* Common Stock
Common Stock
$0.50 par value
Christopher A. Arnold** 200(1) 0%
1629 Locust Street
Philadelphia, PA 19103
Thomas Bruderman 49,100 (2) .61%
1573 Bronson Road
Fairfield, CT 06430
William R. Dimeling** 200(1) 0%
1629 Locust Street
Philadelphia, PA 19103
Paul Hines 130,000(3) 1.60%
17 Trachelle Lane
Charleston, SC 29407
Robert E. Poll 150,000 1.87%
225 West 86th Street
New York, NY 10024
Edward R. Schwartz 165,100(4) 2.03%
500 Fifth Avenue
New York, NY 10110
Richard R. Schreiber** 200(1) 0%
1629 Locust Street
Philadelphia, PA 19103
Leonard Weitz 189,010(5)(6) 2.33%
500 Fifth Avenue
New York, NY 10110
Owned by all directors 683,810(7) 8.17%
and officers as a group
Preferred
Stock, $0.50
Par value: None
* Each director and officer has sole voting and investment power with
respect to shares owned.
** Principal of Dimeling Schreiber & Park. See footnote (4) to part (a)
of "Voting Securities and Principal Stockholders," above, and "Certain
Relationships and Related Transactions," below, for information concerning
the purchase of 3,500,000 shares of the Company's voting convertible common
stock by Dimeling, Schreiber & Park, in its capacity as General Partner of
Dimeling, Schreiber & Park Reorganization Fund II, LP ("Fund II").
(1) Does not include any portion of the 3,500,000 shares of the Company's
convertible common stock held by Dimeling, Schreiber & Park in its capacity
as General Partner of Fund II, in which Messrs. Dimeling, Schreiber and
Arnold have shared power to direct the vote and disposition of such shares
by virtue of their positions as principals of Dimeling, Schreiber & Park.
(2) Does not include 6,500 shares of common stock and 6,000 shares of
preferred stock owned by Thomas Bruderman's wife, in which shares Thomas
Bruderman disclaims any beneficial interest.
(3) Includes nonqualified stock options previously approved by the
shareholders to purchase 120,000 shares held by Paul Hines. Also includes
10,000 shares held in IRA account.
(4) Includes nonqualified stock options previously approved by the
shareholders to purchase 120,000 shares held by Edward R. Schwartz. Does
not include 200 shares owned by Edward R. Schwartz's wife, in which shares
Edward R. Schwartz disclaims any beneficial interest.
(5) Includes nonqualified stock options previously approved by the
shareholders to purchase 120,000 shares held by Leonard Weitz. Also
includes 8,000 shares held in IRA account and 40,000 shares owned jointly
with Leonard Weitz's wife.
(6) Does not include 20,000 shares owned by Leonard Weitz's wife, in which
shares Leonard Weitz disclaims any beneficial interest.
(7) Includes options to purchase an aggregate of 360,000 shares as referred
to at footnotes (3), (4) and (5), above. All options may be exercised by
the directors or officers holding same within 60 days.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
At the Special Meeting In Lieu Of Annual Meeting Of Shareholders of
registrant held December 29, 1999 ("the shareholders meeting") , the
shareholders approved, among other things, a stock purchase agreement and
a warrant. Dimeling, Schreiber & Park, in its capacity as General Partner
of Dimeling, Schreiber & Park Reorganization Fund II, LP, pursuant to the
terms of the Stock Purchase Agreement, purchased 3,500,000 shares of
registrant's convertible common stock on December 30, 1999 and has the
right to pushares on or before December 31, 2002. The warrant approved by
the shareholders gives Dimeling, Schreiber & Park, in its capacity as
General Partner, to purchase additional shares of the convertible common
stock , provided that its stock ownership does not exceed 68% of the
Company's outstanding shares of common stock (assuming conversion of the
convertible common stock into shares of common stock).
William R. Dimeling, Richard R. Schreiber and Christopher A. Arnold,
current directors and director nominees of the Company, are general
principals of Dimeling, Schreiber & Park. Since Dimeling, Schreiber & Park
is acting in the stock purchase transaction in its capacity as the General
Partner of Dimeling, Schreiber & Park Reorganization Fund II, LP, each of
the aforesaid three directors and director nominees has a material interest
in the transaction involving the sale of the convertible common stock by t
2000 Dimeling, Schreiber & Park Reorganization Fund II, LP was the
beneficial owner of 30.41% of the Company's common stock (assuming
conversion of the convertible common stock into shares of common stock).
See "Voting Securities and Principal stockholders", above, and "Proposal 1:
Election of Directors", below.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following information for each of the Company's last three completed
fiscal years is presented concerning the compensation of Leonard Weitz
as Chairman, President and Chief Executive Officer of the Company:
SUMMARY COMPENSATION TABLESUMMARY COMPENSATION TABLE
Name and Annual Long-Term
Principal Compensation Compensation All Other
Position Year Salary Awards-Options Compensation
Leonard Weitz* 1999 $175,000(1) - -
1998 $175,000(1) - -
1997 $175,000(1) -
-
* President, Chairman and Chief Executive Officer
(1) During the years 1997, 1998 and 1999, Leonard Weitz received annual
base salary of $175,000 under the terms of an employment agreement dated as
of September 1, 1996. Under the terms of that employment agreement,
Leonard Weitz was employed as Chairman, President and Chief Executive
Officer of the Company for a five year period ending August 31, 2001 and
would, in addition to the base salary, receive such bonuses as the Board of
Directors of the Company determined. No bonuses were awarded to Leonard W
On February 16, 2000, the Board of Directors approved a new employment
agreement that superceded and canceled the September 1, 1996 employment
agreement. The new employment agreement between the Company and Leonard
Weitz became effective as of January 1, 2000 and is for a five year term
ending December 31, 2004. Under the terms of the new employment agreement,
Leonard Weitz will continue to be employed as Chairman, President and Chief
Executive Officer of the Company and he will receive an annual base
uses as the Board of Directors of the Company may determine.
On January 21, 2000 the Board of Directors granted to Mr. Weitz, subject to
shareholder approval, a nonqualified option to purchase 60,000 shares
of common stock to replace a 60,000 share option that had been previously
approved by the shareholders of the Company. The 60,000 share option to be
cancelled is exercisable at $7 per share. The exercise price of the
replacement option would be $2.1875 per share, if the shareholders approve.
See Proposal 2 for information concerning the replacement option.
OPTION GRANTS DURING FISCAL YEAR ENDED DECEMBER 31, 1999
No stock options were granted by the Company to Leonard Weitz during the
fiscal year ended December 31, 1999. See Proposal 2, below, for information
concerning a replacement option for 60,000 shares granted on January 21,
2000 to Mr. Weitz by the Board of Directors, subject to shareholder
approval at the meeting.
OPTION EXERCISES DURING FISCAL YEAR
ENDED DECEMBER 31, 1999 AND OPTION VALUES
ON DECEMBER 31, 1999
The following table contains, with respect to stock options held by Leonard
Weitz, information as to options exercised during the year 1999, the
aggregate dollar value realized upon exercise, the total number of
unexercised options held on December 31, 1999 and the aggregate dollar value
of the in-the-money, unexercised options held on December 31, 1999.
Shares Value of Unexercised
Acquired or Value Number of Unexercised in-the-money options
Name Exercised Realized Options at 12/31/99 at 12/31/99 (3)
Nonqualified:
Leonard Weitz None None 120,000 (1)(2) None
(1) All options held are fully exercisable.
(2) Nonqualified stock options approved by shareholders.
(3) Values are calculated by subtracting the exercise price from the closing
price of the Company's common stock on The Nasdaq Stock Market on
December 31, 1999.
Compensation of Directors
Leonard Weitz, Chairman of the Board and Chief Executive Officer of the
Company, is employed through December 31, 2004 under an employment
agreement dated February 16, 2000. See "Compensation of Directors and
Executive Officers - Summary Compensation Table", above, for further
details concerning Mr. Weitz's employment agreement.
During 1999, each director who was not an officer of the Company received
a quarterly fee of $1,250; no attendance fees were paid. Edward R. Schwartz,
the Secretary-Treasurer of the Company, who was a director during 1999,
did not receive a salary in 1999; he received a $10,000 annual fee in lieu
of salary. The Board of Directors set a rate of $750 per day for services
performed by each outside director of the Company that are in addition to
services regularly performed by him as a director.
No stock options were granted by the Company to any directors during the
fiscal year ended December 31, 1999 and no director exercised in 1999 any
stock options held by him. See "Voting Securities and Principal
Stockholders," above, for information as to stock options held by
directors. See "Proposal 2" for information concerning replacement options
for 60,000 shares each granted on January 21, 2000 to Leonard Weitz and Paul
Hines, and new options for 60,000 shares each granted on January 21, 2000
to Thom
. All of said option grants to directors of the Company are subject to
shareholder approval at the meeting.
INFORMATION CONCERNING STOCK OPTIONS HELD BY DIRECTORS AND OFFICERS
As of November 1, 2000, there were outstanding nonqualified stock options
held by three directors and officers of the Company to purchase s total
of 360,000 shares of the Company's common stock. All of these options had
been previously approved by the shareholders of the Company. Action is to
be taken at this meeting with respect to the approval of replacement options
for 180,000 shares of those previously approved nonqualified options.
(See Proposal 2, below).
Action is also to be taken at this meeting with respect to the approval of
new nonqualified options to purchase a total of 120,000 shares granted by
the Board of Directors, subject to shareholder approval, to two directors
of the Company who do not currently hold nonqualified options. (See Proposal
2, below.)
The following table shows information with respect to all outstanding
nonqualified stock options to purchase a total of 360,000 shares as of
November 1, 2000 with respect to each of the three directors and officers of
the Company to whom such options were granted, all of said options having
previously been approved by the shareholders of the Company: name of
optionee, date of grant, expiration date, number of shares under option and
exercise price per share.
TABLE OF STOCK OPTIONS CURRENTLY OUTSTANDING
Name of Date of Expiration Date No. of Shares Exercise Price
Optionee Grant of Option Under Option Per Share
Nonqualified
Stock Options
Leonard Weitz(1) 12/10/93 12/09/03 30,000 $3.50
09/19/94 09/18/04 30,000 3.50
08/08/96 08/07/06 60,000 7.00
Paul Hines(2) 09/19/94 09/18/04 60,000 $3.50
12/06/95 12/05/05 40,000 6.9375
08/08/96 08/07/06 20,000 7.00
Edward R. Schwartz(3) 09/19/94 09/18/04 60,000 $3.50
12/06/95 12/05/05 40,000 6.9375
08/08/96 08/07/06 20,000 7.00
(1) President, Chairman and Chief Executive Officer
(2) Director
(3) Secretary and Treasurer
PROPOSAL 1: ELECTION OF DIRECTORS.
Seven directors are proposed to be elected at the meeting to serve until
the meeting of shareholders to be held in the year 2001 and until their
successors shall be elected and qualify. The persons named in the enclosed
form of proxy intend to vote such proxy for the election of the seven
nominees named below as directors of the Company. If any nominee shall
become unavailable for election, the proxies will be voted for the election
of such persons, if any, as shall be designated by the Board of Directors
ny nominee will be unavailable for election.
All seven nominees for directors are current directors of the Company. Each
of the nominees was elected to the Board of Directors at the meeting of
shareholders held on December 29, 1999. The past five years business
experience of each of the nominees is set forth below.
In electing directors, holders of common stock have cumulative voting rights,
that is, each holder of record of common stock shall be entitled to as many
votes as shall equal the number of shares owned of record multiplied by the
number of directors to be elected, and may cast all of such votes for a
single director or may distribute them among all or some of the directors
to be voted for, as such holder sees fit. Unless contrary instructions are
given, the persons named on the proxy will have discretionar
in the same manner. Certain information for each nominee for director is
set forth below:
Director
Name Age Since Business Experience During Past Five Years
Christopher A. Arnold 30 1999* A principal of Dimeling, Schreiber &
Park, a private investment
partnership that makes private equity
investments in a broad range of middle market companies, from September 1999
to present.Various positions with General Electric Capital Corporation,
a diversified financial services company from prior to 1996
Thomas Bruderman 58 1999* Corporate communications
consulting, investment
banking transactions and
investment management
conducted through Canterbury
Companies Inc., as
President, since prior to 1996.
Corporate communications consultant
for the Company from 1996 to
November, 1999.
William R. Dimeling 59 1999* A principal of Dimeling, Schreiber
& Park, a private
investment partnership that makes
private equity
investments in a broad range of
middle market companies, since prior
to 1996.
Paul Hines 63 1994 Financial and management consultant,
since prior to 1996.
Robert E. Poll 52 1999* Financial and management consulting
through Poll Financial, LLC, as
President, since January1998; Managing Director of Lazard Freres & Co.prior
to 1996 to December 1997. Manager of Public Finance and Municipal Bond
Departments and other investment banking activities; Trustee of Citizens
Budget Commission of New York since 1997.
Richard R. Schreiber 45 1999* A principal of Dimeling, Schreiber &
Park, a private investment partnership
that makes private equity
investments in a broad range of middle
market companies, since prior to 1996
Richard R. Schreiber 45 1999* A principal of Dimeling, Schreiber
& Park, a private
investment partnership that makes
private equity
investments in a broad range of middle
market companies, since prior to 1996.
Leonard Weitz 71 967 Chairman and Chief Executive Officer
of the Company since 1971; President from 1971 to 1993
and August 1996 to present.
* Elected as a director by the shareholders of the Company on December 29,
1999.
PROPOSAL 2: APPROVAL AND RATIFICATION OF NONQUALIFIED STOCK OPTIONS TO
REPLACE OUTSTANDING NONQUALIFIED STOCK OPTIONS HELD BY THREE DIRECTORS AND
OFFICERS AND APPROVAL AND RATIFICATIN OF NONQUALIFIED STOCK OPTIONS GRANTED
BY THE BOARD OF DIRECTORS TO TWO OTHER DIRECTORS OF THE COMPANY.
General.
Although Proposal 2 is comprised of two parts involving nonqualified
options, only one vote will be taken on the entire proposal. Therefore,
a shareholder voting in favor of Proposal 2 will be voting to approve both
the replacement of a portion of outstanding options (part (i)), and the
granting of new options (part (ii)), all as further described below.
Accordingly, both parts (i) and (ii) of Proposal 2 will either be approved
together by the shareholders, or will be rejected together by the shareholder
(i) Replacement Options.
The Board of Directors recommends the approval and ratification of three
nonqualified stock options to replace certain existing options
("replacement options") for a total of 180,000 shares of common stock.
These replacement options are intended to replace one-half of the
nonqualified stock options currently held by Leonard Weitz, Paul Hines and
Edward R. Schwartz, directors and officers of the Company, that had been
previously approved by the shareholders. Messrs. Weitz and Hines are
nominees for directcement options were granted by the Board of Directors
on January 21, 2000, subject to the approval of shareholders of the
Company at the meeting. Set forth below is certain information with
respect to the replacement options and the existing options they would
replace.
REPLACEMENT OPTIONS
Name of Date of Expiration Date No. of Shares Exercise Price
Optionee Grant of Option Under Option Per Share
Leonard Weitz 1/21/00 1/20/10 60,000 $2.1875
Paul Hines 1/21/00 1/20/10 60,000 2.1875
Edward R. Schwartz 1/21/00 1/20/10 60,000 2,1875
Total 180,000
EXISTING OPTIONS TO BE REPLACED
Name of Date of Expiration Date No. of Shares Exercise Price
Optionee Grant of Option Under Option Per Share
Leonard Weitz 08/08/96(1) 08/07/06 60,000 $7.00
Paul Hines 12/06/95(1) 12/05/05 40,000 $6.9375
08/08/96(1) 08/07/06 20,000 7.00
Edward R. Schwartz 12/06/95(1) 12/05/05 40,000 $6.9375
08/08/96(1) 08/07/06 20,000 7.00
Total 180,000
(1) Approved by shareholders on December 10, 1996.
See "INFORMATION CONCERNING STOCK OPTIONS HELD BY DIRECTORS AND OFFICERS",
above, for information concerning all options currently held by Messrs.
Weitz, Hines and Schwartz. This information includes both the existing
options that will be replaced (if Proposal 2 is approved by the shareholders)
and the other existing options that are not affected by Proposal 2. The
total number of nonqualified options that Messrs. Weitz, Hines and Schwartz
will hold shall be 120,000 shares each, whether or not Proposal
rs. Therefore, the principal purpose of Proposal 2, as recommended by the
Board of Directors, is to reduce the exercise price for options held by each
of the above optionees on 60,000 shares from the significantly higher market
price for the Company's shares that existed during December 1995 and August
1996 when those options were granted. The exercise price for each of the
replacement options was the then current market price for the Company's
common stock on January 21, 2000, the date the options were g
s will also have the effect of extending the time period during which the
options may be exercised by approximately 4 to 4 1/2 years. All the other
provisions of the replacement options will be the same as the provisions of
the existing options that they are intended to replace. As is shown in the
"TABLE OF STOCK OPTIONS CURRENTLY OUTSTANDING", above, the other currently
outstanding nonqualified options for 60,000 shares each held by Messrs.
Weitz, Hines and Schwartz that have an exercise price of $3.50 p
y the results of the shareholders' note on Proposal 2, and those options
shall remain in effect.
If the shareholders approve Proposal 2 at the meeting, Messrs. Weitz, Hines
and Schwartz would surrender those options held by them which are to be
canceled, in exchange for the replacement options approved at the meeting.
If no such aeholders of the C
recent market prices for the Company's shares are also more appropriate
in terms of acknowledging the work of the directors and officers who
formulate future plans for the Company and take on the fiduciary
responsibilities that go with serving on the Board of Directors and being
an officer of a company whose shares are publicly traded.
(ii) New Options.
The Board of Directors recommends the approval and ratification of two
new nonqualified stock options for 60,000 shares each granteddireche
option must be in ca
Tax and Accounting Treatment of Options.
The Company has been advised by counsel that under the Internal Revenue Code,
the persons to whom the nonqualified stock options were granted will not be
deemed to receive any income for Federal tax purposes at the time the options
were granted, nor will the Company be entitled to a tax deduction at the
time. Upon the exercise of a nonqualified stock option, the optionee will
be deemed to have received income in an amount equal to
The decision of the Board of Directors at its meeting held January 21,
2000 to propose to shareholders that Messrs. Weitz, Hines and Schwartz
each receive nonqualified options to replace one-half of the options
currently held by them was based upon several considerations. The currently
held options that would be replaced have exercise prices of $6.9375
and $7 per share, well above the ____ closing price for the Company's
shares on November 1, 2000. The Board of Directors believe that this
current existinect negated the incentive nature of the original grant.
It is this incentive element that constitutes the very essence of
stock option grants. Rather than issue additional stock options to the
three optionees, the Board of Directors determined that a granting of
replacement options having an exercise price of $2.1875 per share in place
of these higher priced options was a preferable course. Providing overall
incentive to directors and officers is consistent with the goals of all the
shareholders of the Ctated $2.1875 per share option price, both of said new
options contains the following significant provisions: the optionee may
exercise all or a part of the option so long as he continuously serves as
a director or officer, but in no event later than January 20, 2010,
on which latter date the option expires without value; if the optionee dies,
his personal representative may exercise the option within twelve months
from the date of death; and payment by the optionee upon exercise of the o
he option must be in ca
mpensation expense the dollar difference between the $3.6875 market price
on July 1, 2000 and the market price for the shares of common stock on
December 31, 2000 (assuming the market price on December 31, 2000 exceeds
the July 1, 2000 market price) multiplied by the 180,000 shares that are
covered under the three replacement options. Depending upon the future
market price of the Company's shares of common stock, significant
compensation expense for accounting purposes could be incurred over the next
ten y
titled to any payments from the Company relating to any compensation
expense that results for financial reporting purposes under the variable
award method.
Approval of Proposal 2 requires that the votes cast in favor of Proposal
2 exceed the votes cast against Proposal 2. As stated above, Proposal 2
is comprised of part (i) "replacement options" and part (ii) "new options".
If proposal 2 is approved by the shareholders, both the replacement options
and the new options will become effective. If Proposal 2 is not approved,
none of the aforesaid options will become effective.
MANAGEMENT INTENDS TO CAST ITS PROXY VOTES IN FAVOR OF PROPOSAL 2.
PROPOSAL 3: THE SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of Arthur Andersen LLP has been recommended by the Board
of Directors to serve as independent public accountants for the Company
for the current fiscal year. No member of said accounting firm has any
direct financial or any material indirect financial interest in the Company
or any of its subsidiaries or any connection during the past five years
with the Company or any of its subsidiaries in the capacity of promoter,
underwriter, voting trustee, director, officer or employee. At the me
tion of said accounting firm will be proposed by management.
Arthur Andersen LLP has advised the Company that it does not expect a
representative to be present at the meeting.
Approval of Proposal 3 requires that the votes cast in favor of Proposal
3 exceed the votes cast against Proposal 3. MANAGEMENT INTENDS TO CAST
ITS PROXY VOTES IN FAVOR OF PROPOSAL 3.
MEETINGS OF THE BOARD OF DIRECTORS AND
INFORMATION REGARDING COMMITTEES
The Board of Directors held four meetings in 1999. All of the persons who
served as directors at the time of each meeting were present at all the
meetings held in 1999.
The Company has an Audit Committee currently comprised of the following
directors: Christopher A. Arnold, Paul Hines and Robert E. Poll. The
principal functions of the Audit Committee are to (i) review financial
reports and other financial information provided by the Company to any
governmental body or the public; (ii) serve as an independent and objective
party to monitor the Company's financial reporting process and internal
control system; (iii) consider independence and effectiveness and approve
fees o
accountants; (iv) provide an open avenue of communication among the
independent accountants, financial and senior management and the Board of
Directors; and (v) review with the Company's counsel, legal compliance
matters and any legal matter that could have a significant impact on the
Company's financial statements. During 1999, the Audit Committee was
comprised of Mr. Hines and James Callery (a former director who had
resigned in 1999). The Audit Committee held three meetings during the
year 1999. Mess
all the meetings. The Board of Directors does not have a compensation or
nominating committee or committees performing similar functions.
A copy of the Company's 1999 Annual Report, which includes a complete
copy of the Company's Securities and Exchange Commission's Annual Report
on Form 10-KSB containing financial statements and financial statement
schedules for the year ended December 31, 1999, was mailed to each
shareholder of record on August 31, 2000. Additional Annual Reports will
be available upon written request to the Company.
SUBMISSION OF SHAREHOLDER PROPOSALS
Shareholders' proposals intended to be presented at the Company's 2001
Annual Meeting of Shareholders must be received at the Company's offices at
500 Fifth Avenue, New York, New York 10110, by March 30, 2001 for inclusion
in the Company's proxy statement and form of proxy relating to that meeting.
Such proposals must also meet the other requirements of the rules of
the Securities and Exchange Commission relating to shareholders' proposals.
OTHER MATTERS
The Company is not aware of any person who, at any time during the year 1999
was a director, officer or beneficial owner of more than 10% of the
Company's common stock who failed to file on a timely basis, reports
required by Section 16(a) of the Securities Exchange Act of 1934 during 1999
or prior years.
The cost of soliciting proxies will be borne by the Company. The Company
will solicit votes by mail, and officers, directors and employees of the
Company may solicit proxies by telephone, telegraph or personal interview.
In addition, the Company has retained the professional soliciting firm of
Corporate Investors Communications, Inc. to solicit proxies from banks,
brokers, nominees and institutions at a cost to the Company of $5,000 and
disbursements.
Management knows of no other matters to be presented for consideration at
the meeting by management or by shareholders who have requested inclusion
of proposals in the Proxy Statement, other than the matters stated in the
Notice of Special Meeting of Shareholders in Lieu of Annual Meeting. If
any other matter shall properly come before the meeting, the persons in the
accompanying proxy intend to vote on such matters in accordance with their
best judgment.
By Order of the Board of Directors,
Edward R. Schwartz
Secretary
November 15, 2000
PRELIMINARY COPY
PROXY (front)
CHIEF CONSOLIDATED MINING COMPANY
Special Meeting of Shareholders in Lieu of Annual Meeting December 15, 2000
The undersigned, the holder of common stock, convertible common stock or
preferred stock of Chief Consolidated Mining Company hereby constitutes and
appoints Leonard Weitz and Edward R. Schwartz (the Proxy Committee) and/or
each of them attorneys and agents with full power of substitution and
revocation to vote in accordance with the related Proxy Statement in the
name and as proxy of the undersigned at the Special Meeting of Shareholders
in lieu of Annual Meeting of Chief Consolidated Mining Company to be
Hotel, 70 Park Avenue, New York, NY 10016 on December 15, 2000 at
11:00 A.M., and any adjournment of adjournments thereof according to the
number of shares which the undersigned would be entitled to vote if
personally present at the meeting on the following proposals in the manner
specified and upon such other matters as may properly come before the
meeting.
THIS PROXY IS SOLICITED BY MANAGEMENT OF CHIEF CONSOLIDATED MINING COMPANY.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS SO MADE AND
IF NO SPECIFICATIONS ARE SO MADE, THIS PROXY WILL BE VOTED IN FAVOR OF THE
PROPOSALS.
(Continued, and to be marked, dated and signed, on the other side)
(back)
1. ELECTION OF DIRECTORS FOR ALL WITHHOLD FOR ALL
Nominees: Christopher A. Arnold, Thomas Bruderman, William R. Dimeling,
Paul Hines, Robert E. Poll, Richard R. Schreiber and Leonard Weitz
as directors.
(The Board of Directors recommends a vote FOR ALL).
TO WITHHOLD VOTE FOR INDIVIDUAL NOMINEE(S): (Write that nominee(s) name in
the space provided below).
2. Approval of the proposal to (i) replace outstanding nonqualified stock
options held by three directors and officers of the Company and (ii)
approve and ratify new nonqualified stock options granted to two other
directors of the Company.
(The Board of Directors recommends a vote FOR).
FOR AGAINST ABSTAIN
3. Ratification of the appointment of ARTHUR ANDERSEN LLP, as independent
public accountants.
(The Board of Directors recommends a vote FOR).
FOR AGAINST ABSTAIN
4. The Proxy Committee in their discretion, considering and acting upon any
other matters which may properly come before the meeting or any adjournments
thereof.
(The Board of Directors recommends a vote FOR).
FOR AGAINST ABSTAIN
The undersigned hereby acknowledges receipt of a copy of the notice and
proxy statement of the Company for the meeting referred to on the reverse side.
Signature(s) ______________________________________________ Dated ______
NOTE: Please sign as name appears, Joint ownership should each sign.
When signing as Attorney, Executor, Administrator, or Guardian, please
give full title as such. If signer is a corporation, partnership or other
entity, please sign, indicating the full name of the organization and
title of person authorized to sign.
