UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)
The Eastern Company
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(Name of Issuer)
Common Stock, no par value
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(Title of Class of Securities)
276317 10 4
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(CUSIP Number)
Clay Lifflander
MMI Investments, L.L.C., RR1, Box 167D, Wing Road, Millbrook, NY 12545
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
July 24, 1996
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|.
Check the following box if a fee is being paid with the statement |X|. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Page 1 of 16 Pages
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SCHEDULE 13D
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CUSIP No. 276317 10 4 Page 2 of 16 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
MMI Investments, L.L.C.
TIN 14-1790769
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2 CHECK THE APPROXIMATE BOX IF A MEMBER OF A GROUP* (a) |X|
(b) |_|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC, OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
174,400
NUMBER OF
SHARES ----------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 0
REPORTING ----------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
174,400
----------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
174,400
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* |_|
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.47%
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14 TYPE OF REPORTING PERSON*
OO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
Page 2 of 16 Pages
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<PAGE>
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CUSIP No. 276317 10 4 Page 3 of 16 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Millbrook Capital Management Inc.
TIN 13-3540644
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2 CHECK THE APPROXIMATE BOX IF A MEMBER OF A GROUP* (a) |X|
(b) |_|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
AF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
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7 SOLE VOTING POWER
174,400
NUMBER OF
SHARES ----------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 0
REPORTING ----------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
174,400
----------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
174,400
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* |_|
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.47%
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14 TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
Page 3 of 16 Pages
<PAGE>
<PAGE>
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CUSIP No. 276317 10 4 Page 4 of 16 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
John S. Dyson
SSN ###-##-####
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2 CHECK THE APPROXIMATE BOX IF A MEMBER OF A GROUP* (a) |X|
(b) |_|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
AF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.
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7 SOLE VOTING POWER
174,400
NUMBER OF
SHARES ----------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 0
REPORTING ----------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
174,400
----------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
174,400
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* |_|
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.47%
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14 TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
Page 4 of 16 Pages
<PAGE>
<PAGE>
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CUSIP No. 276317 10 4 Page 5 of 16 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Ernst Ohnell
SSN ###-##-####
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2 CHECK THE APPROXIMATE BOX IF A MEMBER OF A GROUP* (a) |X|
(b) |_|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
PF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.
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7 SOLE VOTING POWER
89,800
NUMBER OF
SHARES ----------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 0
REPORTING ----------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
89,800
----------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
89,800
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* |_|
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
3.33%
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14 TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
Page 5 of 16 Pages
<PAGE>
<PAGE>
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CUSIP No. 276317 10 4 Page 6 of 16 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
B.W. Elliott Manufacturing Co.
TIN 15-0585760
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2 CHECK THE APPROXIMATE BOX IF A MEMBER OF A GROUP* (a) |X|
(b) |_|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC, BK, OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) |_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
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7 SOLE VOTING POWER
0
NUMBER OF
SHARES ----------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 0
REPORTING ----------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
0
----------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* |_|
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0
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14 TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
Page 6 of 16 Pages
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SCHEDULE 13D
Item 3. Source and Amount of Funds or Other Consideration
Item 3 of Schedule 13D is hereby amended in its entirety to read as
follows:
The aggregate cost of the Shares beneficially owned by the
Millbrook Reporting Persons was approximately $2,142,442, including brokerage
commissions. All of these Shares were acquired by MMI using its working
capital and general margin financing to MMI from a broker or brokers pursuant
to standard margin agreements. The positions held in margin accounts are
pledged as collateral security for the repayment of debit balances in such
accounts.
From 1980 through 1991, Mr. Ohnell acquired the Shares reported as
owned by him for an aggregate purchase price of approximately $646,759,
including brokerage commissions. All of such Shares were purchased using the
personal funds of Mr. Ohnell.
The source of funds to be used in acquiring the Shares pursuant to
the Proposed Merger (as defined in Item 4) will be from working capital of
Elliott and from bank financing. The amount of funds to be used by Elliott
in acquiring the Shares will be approximately $40.5 million, plus retirement
of Eastern debt and expenses.
Item 4. Purpose of Transaction
Item 4 of Schedule 13D is hereby amended in its entirety to read as
follows:
MMI acquired Shares of the Company because MMI believes that
trading prices of the Shares do not adequately reflect the potential value of
the Company's underlying business and assets. MMI initially intended to work
with management to effectuate value enhancement strategies for all
stockholders. However, after meeting with management and studying the
Company's operations and industry, MMI determined that the best means to
maximize value for all stockholders is to effect an acquisition of the
Company.
Page 7 of 16 Pages
<PAGE>
On July 16, 1996, Millbrook sent a merger proposal set forth in
Exhibit 3 to the Chairman of the Company to have Elliott acquire all
outstanding Shares of the Company for $15 per Share in cash. The merger
proposal is subject, among other things, to the approval of the Company's
Board of Directors, a majority of the Company's public shareholders indicating
support for the transaction and other customary conditions for transactions
of this nature. On July 18, 1996 and July 24, 1996, Millbrook sent the
additional correspondence to the Chairman of the Company contained in
Exhibits 9 and 10 hereto.
Millbrook anticipates that upon consummation of the transaction, a
wholly-owned direct or indirect subsidiary of Elliott will merge into the
Company (the "Proposed Merger"). As a result, the Company will become a
wholly-owned subsidiary of Elliott, and its present Board of Directors,
capitalization and dividend policy will be structured accordingly. Further,
the Shares will be delisted from trading on the American Stock Exchange and
will be eligible for termination of registration pursuant to Section 12(g)(4)
of the Securities Exchange Act of 1934, as amended (the "Act").
Item 5. Interest in Securities of the Issuer
Item 5 of Schedule 13D is hereby amended in its entirety to read as
follows:
(a) As of July 24, 1996, MMI directly and beneficially owns (as
defined by Rule 13d-3 under the Act) 174,400 Shares, or 6.47% of the
2,696,284 Shares outstanding as of March 30, 1996 as reported by the Company
in its Quarterly Report on Form 10-Q for the quarter ended March 30, 1996.
As Manager of MMI, Millbrook has sole power to vote and dispose of
investments held by MMI; therefore, it beneficially owns (as defined by Rule
13d-3 of the Act) the Shares owned by MMI. Mr. Dyson, Chairman, a Director
and sole stockholder of Millbrook, has the power to direct Millbrook to vote
or dispose of the Shares held by MMI; therefore, he beneficially owns (as
defined by Rule 13d-3 of the Act) the Shares owned by MMI.
Mr. Ohnell beneficially owns 89,800 Shares, or 3.33% of the Shares
outstanding, including 52,050 Shares held directly by Mr. Ohnell, 9,300
Shares held by the Ohnell Family Foundation of which Mr. Ohnell is trustee,
and 25,450 Shares held by his emancipated adult children and 3,000 Shares
held by his wife with respect to which Mr. Ohnell holds an irrevocable proxy.
(b) As sole owner of the Shares that it holds, MMI has sole voting
and dispositive power over the 174,400 Shares that it owns directly. As
Manager of MMI, Millbrook has the sole power to direct the voting or
disposition of the Shares held by MMI; thus, Millbrook has sole voting and
dispositive power over such Shares. As Chairman, a Director and sole
stockholder of Millbrook, Mr. Dyson has the sole power to direct Millbrook on
the voting or disposition of Shares held by MMI; thus, Mr. Dyson also has
sole voting and dispositive power over such Shares.
Mr. Ohnell has sole voting and dispositive power over the 89,800
Shares that he beneficially owns.
Page 8 of 16 Pages
<PAGE>
(c) The Millbrook Reporting Persons became beneficial owners for
purposes of Rule 13d-3 of more than five percent of the Shares on April 29,
1996. See Exhibit 1 for a list of purchase transactions with respect to
Shares executed by MMI prior to the date of this report. All such purchases
were made on the open market through the facilities of the American Stock
Exchange.
Mr. Ohnell became a Reporting Person on July 16, 1996 upon
execution of the letter agreement contained in Exhibit 5 between Mr. Ohnell
and Millbrook relating to the Proposed Merger. Mr. Ohnell has not acquired
beneficial ownership of any Shares during the 60 day period prior to the date
hereof other than as a result of the execution on July 16, 1996 of the
proxies contained in Exhibits 6, 7 and 8 hereto.
(d) No other person has the right to receive or the power to
direct the receipt of dividends from, or proceeds from the sale of, any of
the Shares held by MMI and the 52,050 Shares directly owned by Mr. Ohnell.
The Ohnell Family Foundation and members of Mr. Ohnell's family have the
right to receive dividends or the proceeds from the sale of Shares held by
them.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer
Item 6 of Schedule 13D is hereby amended in its entirety to read as
follows:
On July 16, 1996, Millbrook and Mr. Ohnell executed a letter
agreement in which they agreed to cooperate in effecting the Proposed Merger.
Such letter agreement is Exhibit 5 hereto.
In addition, on July 16, 1996, Millbrook sent a letter to the
Chairman of the Company setting forth the Proposed Merger. Such letter is
Exhibit 3 hereto. Additional correspondence from Millbrook to the Company
with respect to the Proposed Merger is contained in Exhibits 9 and 10 hereto.
On July 16, 1996, each of Mr. Ohnell's wife and children executed
irrevocable proxies to Mr. Ohnell with respect to Shares held by them. Such
proxies are Exhibits 6, 7 and 8 hereto.
Except as otherwise set forth above or in Item 3, none of the
Reporting Persons, and to the knowledge of the Reporting Persons, none of the
Millbrook Principals, has any contract, arrangement, understanding or
relationship (legal or otherwise) with respect to any securities of the
Company, including but not limited to, transfer or voting of any of the
securities, finder's fees, joint ventures, loan or option arrangements, put
or calls, guarantees of profits, division of profits or loss, or the giving
or withholding of proxies.
Page 9 of 16 Pages
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Item 7. Material to Be Filed as Exhibits
Item 7 of Schedule 13D is hereby amended in its entirety to read as follows:
Exhibit 1 Schedule of Transactions.
Exhibit 2 Amended Joint Filing Agreement dated July 16, 1996.
Exhibit 3 Letter to Chairman of the Company dated July 16, 1996.
Exhibit 4 Press Release dated July 17, 1996.
Exhibit 5 Letter Agreement by and between Millbrook and Mr. Ohnell dated
July 16, 1996.
Exhibit 6 Irrevocable Proxy dated July 16, 1996 of Patricia Ohnell.
Exhibit 7 Irrevocable Proxy dated July 16, 1996 of Carin M. Ohnell.
Exhibit 8 Irrevocable Proxy dated July 16, 1996 of Eileen H. Ohnell.
Exhibit 9 Letter to Chairman of the Company dated July 18, 1996.
Exhibit 10 Letter to Chairman of the Company dated July 24, 1996.
Page 10 of 16 Pages
<PAGE>
SIGNATURE
After reasonable inquiry and to the best knowledge and
belief of the undersigned, each of the undersigned certifies that
the information set forth in this statement is true, complete and
correct.
MMI INVESTMENTS, L.L.C.
By: /s/ Clay B. Lifflander
------------------------------
Clay B. Lifflander
as President of Millbrook
Capital Management Inc.,
Manager of MMI Investments, L.L.C.
MILLBROOK CAPITAL MANAGEMENT
INC.
By: /s/ Clay B. Lifflander
------------------------------
Clay B. Lifflander
President
B.W. ELLIOTT MANUFACTURING CO.
By: /s/ George M. Scherer
--------------------------------
George M. Scherer
President
/s/ John S. Dyson
-------------------------------------
John S. Dyson
Individually
/s/ Ernst Ohnell
-------------------------------------
Ernst Ohnell
Individually
Dated: July 24, 1996
Page 11 of 16 Pages<PAGE>
EXHIBIT INDEX
Page
------
Exhibit 1 Schedule of Transactions. 13
Exhibit 2 Amended Joint Filing Agreement dated July 16, 1996. *
Exhibit 3 Letter to Chairman of the Company dated July 16,
1996. *
Exhibit 4 Press Release dated July 17, 1996. *
Exhibit 5 Letter Agreement by and between Millbrook and Mr.
Ohnell dated July 16, 1996. *
Exhibit 6 Irrevocable Proxy dated July 16, 1996 of Patricia
Ohnell. *
Exhibit 7 Irrevocable Proxy dated July 16, 1996 of Carin
M. Ohnell. *
Exhibit 8 Irrevocable Proxy dated July 16, 1996 of Eileen
H. Ohnell. *
Exhibit 9 Letter to Chairman of the Company dated
July 18, 1996. 14
Exhibit 10 Letter to Chairman of the Company dated
July 24, 1996. 15
- ------------------------
* Filed as an exhibit with Amendment No. 1 to Schedule 13D
dated July 16, 1996.
Page 12 of 16 Pages
<PAGE>
Exhibit 1
Schedule of Transactions
Purchases of Common Stock of The Eastern Company
by MMI Investments, L.L.C.
Price
Date Shares Per Share
2/5/96 17,300 $12.25
2/9/96 7,000 12.50
2/12/96 700 12.50
2/14/96 14,200 12.19
2/20/96 4,400 12.00
2/27/96 400 12.00
2/29/96 3,000 12.00
3/4/96 2,000 11.88
3/5/96 10,500 12.00
3/5/96 1,000 11.88
3/7/96 2,000 12.00
3/7/96 3,600 12.13
3/11/96 200 12.00
3/13/96 44,600 12.25
3/22/96 800 11.95
3/25/96 600 12.00
3/26/96 300 12.00
3/27/96 600 12.00
3/28/96 700 12.00
3/29/96 1,000 12.00
4/2/96 1,100 11.88
4/4/96 9,900 12.00
4/9/96 4,100 11.88
4/10/96 1,900 11.75
4/29/96 10,400 11.50
4/30/96 500 11.63
5/1/96 500 11.88
5/2/96 6,100 11.88
5/3/96 6,000 12.39
5/6/96 7,500 12.48
7/8/96 500 11.75
7/16/96 1,000 11.75
7/18/96 10,000 13.88
Page 13 of 16 Pages
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Exhibit 9
[MILLBROOK CAPITAL MANAGEMENT INC. LETTERHEAD]
July 18, 1996
Mr. Russell G. McMillen
Chairman
The Eastern Company
112 Bridge Street
Naugatuck, CT 06770
Dear Mr. McMillen:
We read The Eastern Company's statement as published
on the wire with dismay. Your characterization of our offer is
unfair and misleading to fellow shareholders. First, the
removal of the key conditions to our offer is entirely within
your control. Second, prudent use of leverage to enhance
returns to shareholders is standard practice for both public
and private companies. We suspect that many of your
shareholders are not concerned with our capital structure given
that they would receive 100% cash consideration per our offer.
Third, to rely upon Eastern's financial condition and prospects
as an argument against our offer is silly. Eastern had to
borrow in the first quarter to pay its dividend, its earnings
peaked in 1991 and first half earnings for 1996 are off 89%
compared to the year prior. In light of all this, we would
think that the board would welcome our fully valued offer.
We look forward to Eastern's written response to our
offer by next Friday as requested in our letter of July 16. We
hope that is what you mean by "due course" otherwise we will
have to consider other courses of action. Again, we are
willing to meet to discuss our offer.
We will not be deterred by unresponsive statements to
the press.
Sincerely,
/s/ Clay B. Lifflander
- ----------------------
Clay B. Lifflander
President
cc: John W. Everets
Charles W. Henry
Ole K. Imset
Leonard F. Leganza
David C. Robinson
Donald S. Tuttle, III
Stedman G. Sweet
Donald E. Whitmore, Jr.
Page 14 of 16 Pages
<PAGE>
Exhibit 10
[MILLBROOK CAPITAL MANAGEMENT INC. LETTERHEAD]
July 24, 1996
Mr. Russell G. McMillen
Chairman
The Eastern Company
112 Bridge Street
Naugatuck, CT 06770
Dear Mr. McMillen:
We understand that your Board of Directors may seek further
clarity with respect to the financability of our proposed
purchase of The Eastern Company. I would highlight the
following:
1. B. W. Elliott is extremely underleveraged relative to
its asset base and cash flow. We have provided an
updated balance sheet to your lawyer. We estimate
Elliott's excess debt capacity to be approximately
$15 million.
2. Eastern's balance sheet is extremely underleveraged.
By your own estimates, Eastern has approximately $25
million of borrowing power.
3. MCM is in receipt of several financing proposals from
major financial institutions. The proposed financing
packages would fund the entire $36.5 million
transaction price (excluding our group's shares) plus
provide ample credit lines for the growth and working
capital needs of Eastern/Elliott.
4. MCM and its affiliates control assets in an amount
well in excess of the proposed purchase price. John
Dyson and his family have been active acquirers of
companies for over 40 years. The family has
consummated well over $1.0 billion in acquisition
transactions and has never failed to finance an
acquisition. Furthermore, no company controlled by
John Dyson has ever defaulted on a loan or even been
late with an interest payment.
I hope this information is useful as your Board considers our
offer. Once again, it would be a pleasure to meet with you and
Page 15 of 16 Pages
<PAGE>
your Board to discuss our offer and provide additional details
of our ability to complete the transaction.
Sincerely,
/s/ Clay B. Lifflander
Clay B. Lifflander
President
cc: Board of Directors
Page 16 of 16 Pages
