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________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT
TO SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
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FIRST OF MICHIGAN CAPITAL CORPORATION
(NAME OF SUBJECT COMPANY)
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FIRST OF MICHIGAN CAPITAL CORPORATION
(NAMES OF PERSON(S) FILING STATEMENT)
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COMMON STOCK, $.10 PAR VALUE
(TITLE OF CLASS OF SECURITIES)
320862 10 5
(CUSIP NUMBER OF CLASS OF SECURITIES)
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MR. EDWARD SOULE
CHAIRMAN OF THE BOARD OF DIRECTORS
FIRST OF MICHIGAN CAPITAL CORPORATION
100 RENAISSANCE CENTER, 26TH FLOOR
DETROIT, MICHIGAN 48243
(313) 259-2600
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS
ON BEHALF OF THE PERSON(S) FILING STATEMENT)
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WITH A COPY TO:
JOHN F. MARVIN, ESQ.
LEONARD W. JURDEN, ESQ.
DAVID M. STAKER, ESQ.
SONNENSCHEIN NATH & ROSENTHAL
4520 MAIN STREET, SUITE 1100
KANSAS CITY, MISSOURI 64113
(816)932-4400
________________________________________________________________________________
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INTRODUCTION
This Solicitation/Recommendation Statement on Schedule 14D-9 ('Schedule
14D-9' or this 'Statement') relates to an offer by FMCC Acquisition Corp., a
Delaware corporation (the 'Purchaser') and a direct wholly owned subsidiary of
Fahnestock & Co. Inc., a New York corporation ('Fahnestock'), itself a direct
wholly owned subsidiary of Fahnestock Viner Holdings Inc., an Ontario
corporation ('Holdings'), to purchase all of the Shares (as defined below) of
First of Michigan Capital Corporation, a Delaware corporation (the 'Company').
Capitalized terms used and not otherwise defined herein shall have the meanings
assigned to them in the Offer to Purchase (as defined below).
ITEM 1. SECURITY AND SUBJECT COMPANY
The name of the subject company is First of Michigan Capital Corporation, a
Delaware corporation (the 'Company'). The address of the Company's principal
executive offices is 100 Renaissance Center, 26th Floor, Detroit, Michigan
48243. The title of the class of securities to which this Schedule 14D-9 relates
is the Company's common stock, par value $.10 per share (the 'Shares').
ITEM 2. TENDER OFFER OF THE BIDDER
This Statement relates to a tender offer by the Purchaser disclosed in a
Tender Offer Statement on Schedule 14D-1 filed with the Securities and Exchange
Commission (the 'Commission') on June 18, 1997, as amended by Amendment No. 1
thereto filed with the Commission on July 1, 1997 (the 'Schedule 14D-1') to
purchase all of the outstanding Shares at a price of $15.00 per share, net to
the sellers in cash (such price being referred to herein as the 'Offer Price'),
upon the terms and subject to the conditions set forth in the Offer to Purchase,
dated June 18, 1997, as amended and supplemented by the Supplement relating
thereto, dated July 1, 1997 (collectively, the 'Offer to Purchase') and the
related Letter of Transmittal (which, together with the Offer to Purchase,
constitutes the 'Offer'), which are filed herewith as Exhibits (a)(1), (a)(2)
and (a)(3), respectively.
The Offer is being made as part of the Purchaser's plan to acquire all of
the outstanding Shares. Pursuant to a Securities Purchase Agreement, dated as of
June 11, 1997 (the 'Purchase Agreement'), between Purchaser and DST Systems,
Inc. ('DST') and 1888 Limited Partnership ('1888' and together with DST, the
'Sellers'), Purchaser agreed to purchase from Sellers an aggregate of 1,418,351
Shares (the 'Sellers Shares'), representing approximately 53% of the outstanding
Shares on a fully diluted basis, for a purchase price of $15.00 per share, net
to the Sellers in cash (the 'Sellers Shares Purchase Price'), subject to
expiration or termination of the waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the 'HSR Act'), the receipt of
necessary regulatory approvals and certain other conditions described below.
Pursuant to a Tender Offer Agreement, dated as of June 11, 1997 (as amended by
that certain letter agreement dated June 17, 1997 among Purchaser, the Company
and the Sellers, the 'Tender Offer Agreement'), Purchaser agreed to commence the
Offer on the terms and subject to the conditions described therein.
The Company has been advised that the waiting period under the HSR Act
terminated on June 25, 1997.
Based on information contained in the Schedule 14D-1 and the Offer to
Purchase, the principal executive offices of the Purchaser are located at 110
Wall Street, New York, New York 10005.
ITEM 3. IDENTITY AND BACKGROUND
(a) The name and business address of the Company, which is the person
filing this statement, are set forth in Item 1 above.
(b) Except as set forth in this Item 3(b) or as incorporated by reference
herein, to the knowledge of the Company, as of the date hereof, there exists no
material contract, agreement, arrangement or understanding or any actual or
potential conflict of interest between the Company or its affiliates and (i) the
Company, its executive officers, directors or affiliates or (ii) Purchaser, its
executive officers, directors or affiliates.
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(1) Arrangements with the Company, its Executive Officers, Directors or
Affiliates.
Shobe Agreement
The Company entered into an employment agreement with Mark Shobe dated as
of May 13, 1997 (the 'Shobe Agreement') for a two year term commencing May 19,
1997. Mr. Shobe is to be paid a base salary of $200,000 per year plus certain
specified bonuses if certain performance goals are achieved.
In the event of Mr. Shobe's death or disability (as defined in the Shobe
Agreement) during the term of such agreement or his termination by the Company
for cause (as defined therein), the Company will not be obligated to make any
further payments under the Shobe Agreement. If Mr. Shobe terminates such
agreement as a result of a material breach by the Company, he will continue to
receive his base compensation through the end of the term of the agreement. If
Mr. Shobe is terminated by the Company other than for cause (as defined in the
Shobe Agreement) or other than as a result of a Change of Control (as defined in
the Shobe Agreement) he is entitled to receive a payment of $600,000 less the
aggregate amount of all payments made to him under the Shobe Agreement.
If Mr. Shobe is not given the opportunity to remain employed by the Company
or a surviving entity in the same or equivalent position following a Change of
Control of the Company (as defined in the Shobe Agreement) during the term of
the agreement, he is entitled to a payment of $400,000 plus medical benefits for
the remainder of the term of such agreement.
Soule Bonus Compensation
The Compensation/Stock Option Committee of the Board of Directors has
authorized the Company to pay to Edward Soule ('Soule'), Chairman of the Board,
a special bonus in the amount of $100,000 to compensate him for extraordinary
service rendered to the Company beyond his original commitment and to encourage
him to remain as Chairman and to assist the Company in the resolution of its
management difficulties through a business combination or acquisition. Such
bonus is to be paid to Mr. Soule at such time as the then members of the
Compensation/Stock Option Committee no longer serve in such capacity, but not
later than July 31, 1997.
Indemnification
Section 145 of the Delaware General Corporation Law (the 'DGCL') empowers a
Delaware corporation to indemnify any persons who are, or are threatened to be
made, parties to any threatened, pending or completed legal action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of such corporation), by reason of the fact that
such person is or was an officer, director, employee or agent of such
corporation, or is or was serving at the request of such corporation as an
officer, director, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise. The indemnity may include expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such action,
suit or proceeding, provided that such officer or director acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, for criminal proceedings, had no reasonable
cause to believe his conduct was unlawful. A Delaware corporation may indemnify
officers and directors against expenses (including attorneys' fees) in an action
by or in the right of the corporation under the same conditions, except that no
indemnification is permitted without judicial approval if the officer or
director is adjudged to be liable to the corporation. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him against the expenses which
such director actually and reasonably incurred.
In accordance with Section 102(b)(7) of the DGCL, the Company's Restated
Certificate of Incorporation (the 'Charter') and By-laws (the 'By-laws') contain
provisions limiting the personal liability of the directors of the Company for
violations of their fiduciary duty. Article Ninth of the Company's Charter and
Article Thirteenth of the Company's By-laws provide for the indemnification of
officers and directors of the Company and the advancement of expenses incurred
by such officers or directors in relation to any action, suit or proceeding to
the fullest extent permitted by the DGCL. These provisions eliminate a
director's liability to the Company or its stockholders for monetary
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damages except for liability (i) for any breach of the director's duty of
loyalty to the Company or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the DGCL providing for liability of directors
for unlawful payment of dividends or unlawful stock repurchases or redemptions
or (iv) for any transaction from which the director derived an improper personal
benefit. The effect of this provision is to eliminate the personal liability of
directors for monetary damages for actions involving a breach of their fiduciary
duty of care, including any such actions involving gross negligence.
The Company also has in effect insurance policies providing both directors'
and officers' liability coverage and corporation reimbursement coverage. Under
the terms of the Tender Offer Agreement described in Item 3(b) of this Schedule
14D-9, Purchaser has agreed to maintain this coverage in effect for a period of
two years following completion of the Offer, subject to certain limitations
regarding cost and availability.
Additional information with respect to certain contracts, agreements,
arrangements or understandings between the Company or its affiliates and certain
of the Company's executive officers, directors and affiliates is set forth in
Annex A to this Schedule 14D-9 and incorporated herein by reference.
(2) Arrangements with Purchaser, its Executive Officers, Directors or
Affiliates.
The following are summaries of certain provisions of: (i) the Purchase
Agreement; (ii) the Tender Offer Agreement; (iii) the Sellers Escrow Agreement,
dated as of June 11, 1997 (the 'Sellers Escrow Agreement'), among Sellers,
Purchaser and The Bank of New York, as escrow agent (the 'Escrow Agent'); (iv)
the Tender Escrow Agreement, dated as of June 11, 1997 (the 'Tender Escrow
Agreement'), among Purchaser, the Company and the Escrow Agent; (v) the
Confidential Disclosure and Standstill Agreement, dated as of June 6, 1997 (the
'Confidentiality Agreement'), between Holdings and the Company; and (vi) the
Memorandum of Understanding, dated June 11, 1997 (the 'Memorandum'), between the
Board of Directors of the Company and Purchaser. Such summaries do not purport
to be complete and are qualified in their entirety by reference to the full text
of those agreements which are filed as Exhibits (c)(1), (c)(3)(i) and (ii),
(c)(2), (c)(4), (c)(5) and (c)(6), respectively, to this Schedule 14D-9, each of
which is hereby incorporated herein by reference.
The Purchase Agreement
Purchase of Sellers Shares. Under the terms of the Purchase Agreement,
Purchaser agreed to purchase the Sellers Shares from the Sellers (representing
approximately 53% of the outstanding Shares on a fully diluted basis) for a
purchase price of $15.00 per share, net to the Sellers in cash.
Conditions. The obligations of Sellers to sell and of Purchaser to purchase
the Sellers Shares are subject to the fulfillment or waiver of certain
conditions relating to (i) expiration or termination of the waiting period under
the HSR Act and compliance with the requirements of the Securities Exchange Act
of 1934, as amended (the 'Exchange Act'), (ii) receipt of all material
regulatory approvals required in connection with the execution, delivery and
performance of the Purchase Agreement, (iii) performance in all material
respects by Sellers and Purchasers of their respective obligations under the
Purchase Agreement and the accuracy in all material respects of the respective
representations and warranties of Sellers and Purchaser in the Purchase
Agreement, (iv) the absence of any order or injunction prohibiting the
consummation of the transactions contemplated by the Purchase Agreement, and (v)
the absence of any pending action, suit or proceeding involving the parties to
the Purchase Agreement or the Company that would or reasonably would be expected
to prevent or materially delay the consummation of the transactions contemplated
by the Purchase Agreement or result in material damages in connection therewith.
The obligations of Sellers are subject to the additional condition that
Purchaser shall have commenced the Offer. The obligation of Purchaser is subject
to the additional condition that the entire Board of Directors of the Company
shall be composed of designees of Purchaser at the Closing Time; provided,
however, that Purchaser shall have used its best efforts to make such
designations prior to the Closing Time.
Purchaser has designated five people to become directors of the Company.
Information concerning the Purchaser's designees is set forth in the Information
Statement attached hereto as Annex A, as
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required by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder, and incorporated herein by reference.
Representations and Warranties. The Purchase Agreement contains various
representations and warranties of the parties thereto. These include
representations and warranties made by Sellers with respect to (i) the due
organization, existence and good standing of Sellers, (ii) the requisite power
and authority of Sellers to execute and deliver the Purchase Agreement, the
Tender Offer Agreement and certain ancillary agreements executed in connection
therewith and the consummation of the transactions contemplated thereby and the
validity and enforceability thereof, (iii) the absence of any violation or
resulting breach of any operative document of Sellers, or any license,
authorization, agreement, instrument, commitment or obligation of Sellers or
need to obtain any consent, approval, authorization or make a filing or
registration, other than under the HSR Act, the Exchange Act and certain
regulatory filings under applicable securities laws in connection with the
execution, delivery and performance of the Purchase Agreement by Sellers, (iv)
the absence of any agreements or commitments to pay fees to any brokers in
connection with the transactions contemplated thereby, (v) ownership of the
Sellers Shares, and (vi) capitalization of the Company.
Purchaser also has made certain representations and warranties, including
(i) the due organization, existence and good standing of Purchaser, (ii) the
requisite power and authority of Purchaser to execute and deliver the Purchase
Agreement, the Tender Offer Agreement and certain ancillary agreements executed
in connection therewith and the consummation of the transactions contemplated
thereby and the validity and enforceability thereof, (iii) the absence of any
violation or resulting breach of any operative document of Purchaser, or any
license, authorization, agreement, instrument, commitment or obligation of
Purchaser or need to obtain any consent, approval, authorization or make a
filing or registration, other than under the HSR Act, the Exchange Act and
certain regulatory filings under applicable securities laws in connection with
the execution, delivery and performance of the Purchase Agreement by Purchaser,
(iv) the absence of any agreements or commitments to pay fees to any brokers in
connection with the transactions contemplated thereby, (v) availability of funds
sufficient to purchase the Sellers Shares, (vi) Purchaser's accredited investor
status, investment intent and agreement not to transfer without registration the
Sellers Shares unless pursuant to an available exemption and (vii) the direct or
indirect ownership of Purchaser by Holdings.
Covenants. Sellers have made certain covenants, including covenants (i) not
to sell or cause a Lien to be created against the Sellers Shares, (ii) to assign
any non-cash distributions to Purchaser and not to solicit any person to acquire
the Sellers Shares or engage in any business combination or similar transaction
with the Company, (iii) to vote the Sellers Shares (A) in favor of any business
combination or similar transaction proposed by Purchaser, (B) against any
business combination or similar transaction proposed by any other person, and
(C) subject to regulatory approvals, in favor of any individuals proposed by
Purchaser for election to the Board of Directors of the Company and against
anyone else, (iv) to make their respective filings and required submissions
under the HSR Act and the Exchange Act, (v) to assign any rights that Sellers
may have to cause the Company to register or qualify any of the Sellers Shares
under the Securities Act or any state law and to deliver to Purchaser any
agreements between such Sellers and the Company and (vi) to use their respective
best efforts to cause certain parties to tender approximately 120,000 Shares
pursuant to the Offer.
In addition, Sellers and Purchaser have made certain covenants, including
covenants (i) to cooperate with respect to any necessary regulatory filings and
otherwise in connection with the Purchase Agreement and the consummation of the
transactions contemplated thereby and to use their respective reasonable efforts
to cause each of the conditions precedent to the consummation of the
transactions contemplated by the Purchase Agreement to be met as promptly as
practicable, (ii) to consult with each other with respect to the text of any
press release with respect to the transactions contemplated by the Purchase
Agreement, subject to the requirements of law, and (iii) to perform their
respective obligations under the Tender Offer Agreement.
Termination. The Purchase Agreement may be terminated and the purchase and
the sale of the Sellers Shares may be abandoned at any time prior to the Closing
Time by the mutual consent of the Sellers and Purchaser or if the Closing Time
shall not have occurred by October 11, 1997 or if a tribunal
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having jurisdiction shall have issued a final non-appealable order, judgment or
decree permanently restraining, enjoining or restricting the transactions
contemplated by the Purchase Agreement.
Costs. All reasonable out-of-pocket costs and expenses incurred in
connection with the transactions contemplated by the Purchase Agreement
(including but not limited to those reasonable out-of-pocket costs and expenses
associated with the Tender Offer Agreement and Sellers Escrow Agreement and all
filings made by any of the parties as contemplated in such agreements), other
than the legal fees and expenses of any legal counsel retained by any Seller,
will be borne by Purchaser. Sellers have agreed to reimburse the Company for all
legal fees payable to the Company's special counsel for legal services rendered
in connection with the Purchase Agreement and the transactions contemplated
thereby (including, without limitation, the Tender Offer Agreement) to the
extent such legal fees exceed $25,000.
Sellers Escrow Agreement. Sellers have deposited the Sellers Shares and
Purchaser has deposited $21,275,265 into escrow pursuant to the Sellers Escrow
Agreement.
The Tender Offer Agreement
Actions by Purchaser. Purchaser agreed to file the Schedule 14D-1 with the
Commission, containing the Offer to Purchase and a related Letter of Transmittal
and any other ancillary documents pursuant to which the Offer is being made (the
'Offer Documents'). Purchaser also agreed to comply with the requirements of the
Exchange Act and to disseminate to holders of the Shares such of the Offer
Documents required by applicable federal securities laws. Purchaser agreed to
afford the Company and its counsel a reasonable opportunity to review and
comment on the Offer Documents.
Actions by the Company. The Company approved and consented to the
transactions contemplated by the Purchase Agreement and represented and
warranted that the Board of Directors has duly adopted resolutions approving the
Tender Offer Agreement and the Offer, subject to receipt of a written opinion
from its financial advisor, Duff & Phelps LLC (the 'Financial Advisor'), that
the per share Offer Price is fair from a financial point of view (the 'Fairness
Opinion'), and has taken all action required under or pursuant to the Company's
Charter so as to make the provisions of Article Tenth of the Charter
inapplicable to any Business Combination (as defined in the Charter) involving
Purchaser and its affiliates.
The Company agreed to file with the Commission within ten business days
after the commencement of the Offer and disseminate copies to its stockholders,
this Statement on Schedule 14D-9 with respect to the Offer. The Company
undertook to afford Purchaser and its counsel a reasonable opportunity to review
and comment on this Schedule 14D-9.
The Company agreed to cause its transfer agent to furnish Purchaser with
mailing labels containing the names and addresses of the record holders of
Shares as of a recent date and of those persons who became record holders
subsequently and to provide such other assistance as Purchaser shall reasonably
request in communicating the Offer to the stockholders of the Company.
Representations and Warranties. The Tender Offer Agreement contains various
representations and warranties of the parties thereto. These include
representations and warranties made by the Company with respect to (i) the due
organization, existence and good standing of the Company, (ii) the requisite
power and authority of the Company to execute and deliver the Tender Offer
Agreement, certain ancillary agreements executed in connection therewith and the
consummation of the transactions contemplated thereby and the validity and
enforceability thereof, (iii) the absence of any violation or resulting breach
of any operative document of the Company, or any license, authorization,
agreement, instrument, commitment or obligation of the Company or need to obtain
any consent, approval authorization or make any filing or registration, other
than under the HSR Act, the Exchange Act and certain regulatory filings under
applicable securities laws in connection with the execution, delivery and
performance of the Tender Offer Agreement by the Company, (iv) the absence of
agreements or commitments to pay fees to any brokers in connection with the
transactions contemplated thereby, (v) capitalization of the Company, (vi) the
truth and completeness of documents filed with the Commission, (vii) the
inapplicability of certain provisions of the Business Corporations Act of the
State of Michigan (the 'MBCA') to the Offer and related transactions, and (viii)
the accuracy of the
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Schedule 14D-9 and statements provided by it for inclusion in other Offer
Documents filed with the Commission.
Purchaser has also made certain representations and warranties, including
(i) the due organization, existence and good standing of Purchaser, (ii) the
requisite power and authority of Purchaser to execute and deliver the Purchase
Agreement, the Tender Offer Agreement and certain ancillary agreements executed
in connection therewith and the consummation of the transactions contemplated
thereby and the validity and enforceability thereof, (iii) the absence of any
violation or resulting breach of any operative document of Purchaser, or any
license, authorization, agreement, instrument, commitment or obligation of
Purchaser or need to obtain any consent, approval, authorization or make any
filing or registration, other than under the HSR Act, the Exchange Act and
certain regulatory filings under applicable securities laws in connection with
the execution, delivery and performance of the Tender Offer Agreement by
Purchaser, (iv) the absence of agreements or commitments to pay fees to any
brokers in connection with the transactions contemplated thereby, (v) the
accuracy of the Offer Documents filed with the Commission and statements
supplied by it for inclusion in this Schedule 14D-9, and (vi) the deposit into
escrow of $16,724,735.
Covenants. The Company has made certain covenants in the Tender Offer
Agreement, including covenants (i) to take such actions as needed to effect
Sellers' and Buyer's filings and submissions under the HSR Act and the Exchange
Act, (ii) not to solicit, directly or indirectly, or initiate or encourage any
discussion or negotiations with or provide information to or afford access to
the properties, books or records of the Company or otherwise facilitate an
Alternative Proposal (as hereinafter defined), (iii) not to (A) declare, set
aside or pay any dividends on, or make any distributions with respect to its
capital stock or (B) split, combine or reclassify any of its capital stock or
issue or authorize the issuance of any other securities in lieu of or
substitution for its capital stock or (C) purchase, redeem, retire or otherwise
acquire any Shares, (iv) not to issue, sell, deliver, pledge or otherwise
encumber any shares of its capital stock and (v) to maintain in effect for two
years from the date of acceptance for payment of the Shares pursuant to the
Offer, directors' and officers' liability insurance coverage, subject to certain
limitations regarding cost and availability. 'Alternative Proposal' means any
tender offer, merger, consolidation, business combination, liquidation,
reorganization, sale of significant assets, sale of shares of capital stock or
similar transactions involving the Company or any part thereof.
The Company and the Sellers also agreed to execute and deliver such other
agreements, instruments and other documents and to file such other schedules and
reports and other documents and to take such other actions as Purchaser may
reasonably request in order to effect the intent and purposes of the Tender
Offer Agreement. Purchaser agreed to enter into the Tender Offer Escrow
Agreement and pursuant thereto deposit $16,724,735.
Without the prior written consent of the Board of Directors of the Company,
Purchaser agreed not to (i) reduce the number of shares of Common Stock subject
to the Offer, (ii) reduce the price per share of Common Stock to be paid
pursuant to the Offer, (iii) change the form of consideration payable in the
Offer, (iv) amend or modify any term or condition of the Offer in any manner
materially adverse to the holders of Common Stock, or (v) impose additional
conditions to the Offer, other than such conditions required by applicable law.
Notwithstanding anything in the Tender Offer Agreement to the contrary,
Purchaser may, in its sole discretion without the consent of the Company, extend
the Offer at any time and from time to time (A) if at the then scheduled
expiration date of the Offer any of the conditions to Purchaser's obligation to
accept for payment and pay for shares of Common Stock shall not have been
satisfied or waived, (B) for any period required by any rule, regulation,
interpretation or position of the Commission or its staff applicable to the
Offer, and (C) for any period required by applicable law, rule, regulation,
administrative or judicial determination or order. So long as the Tender Offer
Agreement is in effect and the conditions to the Offer have not been satisfied
or waived, at the request of the Company, Purchaser has agreed to extend the
Offer for an aggregate period of not more than five business days (for all such
extensions) beyond the originally scheduled expiration date of the Offer. Such
period of five business days shall include any contemplated grace period that
extends beyond the otherwise scheduled expiration date of the Offer.
Termination. The Tender Offer Agreement may be terminated and the Offer may
be abandoned at any time prior to acceptance by the Purchaser of the Shares
tendered in connection with the Offer by
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the mutual consent of the Company and Purchaser or if the conditions to the
Offer shall have not been satisfied by October 11, 1997; if a tribunal having
jurisdiction shall have issued a final non-appealable order, judgment or decree
permanently restraining, enjoining or restricting the transactions contemplated
by the Offer; if there shall be any Law that makes the Offer illegal or
prohibited; by mutual agreement of the Company and Purchaser; or the Purchase
Agreement shall have terminated.
Conditions. Purchaser shall not be required to accept for payment or pay
for, subject to any applicable rules and regulations of the Commission,
including Rule 14e-1(c) of the Exchange Act, any Shares not theretofore accepted
for payment or paid for, and may terminate or amend the Offer, unless any
waiting period under the HSR Act applicable to the purchase of Shares pursuant
to the Offer shall have expired or been terminated. Furthermore, notwithstanding
any other term of the Offer, Purchaser shall not be required to accept for
payment or, subject to the aforesaid, to pay for any Shares not theretofore
accepted for payment or paid for, and may terminate or amend the Offer, if at
any time prior to the expiration of the Offer, any of the following conditions
exist or shall occur and remain in effect:
1. a court of competent jurisdiction or other governmental,
quasi-governmental, self-regulatory agency or other regulatory, judicial or
arbitral body having jurisdiction over the parties to the transaction shall
have issued an order, judgment, decree or ruling on the merits in
connection with an action, suit or proceeding (i) which challenges or seeks
to restrict the acquisition by Purchaser (or any of its affiliates or
subsidiaries) of Shares pursuant to the Offer or the Purchase Agreement, or
obtain damages in connection therewith; (ii) which seeks to make the
purchase of or payment for some or all of the Shares pursuant to the Offer
or the Purchase Agreement illegal; (iii) which seeks to impose material
limitations on the ability of Purchaser (or any of its affiliates)
effectively to acquire, operate or hold, or to require Purchaser or any of
its affiliates to dispose of or hold separate, any material portion of
their assets or business or the Company's assets or business; or (iv) which
seeks to impose material limitations on the ability of Purchaser (or any of
its affiliates) to exercise full rights of ownership of the Shares
purchased by it, including, without limitation, the right to vote the
Shares purchased by it on all matters properly presented to the
stockholders of the Company; or
2. there shall have been promulgated, enacted, entered, enforced or
deemed applicable to the Offer any law or there shall have been issued any
injunction resulting in any of the consequences referred to in subsection
(a) above; or
3. the Tender Offer Agreement shall have been terminated in
accordance with its terms; or
4. (i) the representations and warranties made by the Company or
Sellers in the Tender Offer Agreement shall not be true and correct as of
the date of consummation of the Offer as though made on and as of that date
(other than representations and warranties made as of a specified date)
except for any breach or breaches which, in the aggregate, would not have a
material adverse effect on the Company or its business or (ii) the Company
or Sellers shall have breached or failed to comply in any material respect
with any of their respective obligations under the Tender Offer Agreement
(and, with respect to any such failure that can be remedied, the failure is
not remedied within five business days after Purchaser has furnished the
Company or Sellers, as the case may be, with written notice thereof); or
5. any person (other than Purchaser or one or more of its affiliates
or subsidiaries) shall have entered into any agreement in principle or
definitive agreement with the Company with respect to a tender or exchange
offer for any Shares or a merger, consolidation or other business
combination with or involving the Company; or
6. the Board of Directors shall have modified or amended its
recommendation of the Offer in any manner adverse to Purchaser or shall
have withdrawn its recommendation of the Offer or shall have recommended
acceptance of any alternative proposal or shall have resolved to do so; or
7. there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on any national securities
exchange or in the over-the-counter market in the United States for a
period in excess of ten (10) consecutive trading hours, (ii) any
declaration of any banking moratorium by any United States federal or state
authorities or any suspension of
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payments in respect of banks, or (iii) a commencement of war, armed
hostilities or any other international or national calamity directly or
indirectly involving the United States which is reasonably expected to have
a material adverse effect on the Company or its business or to materially
adversely affect Purchaser's ability to complete the Offer; or
8. immediately prior to and at the time Shares are accepted for
payment, the entire Board of Directors of the Company shall not be composed
of designees of Purchaser, provided Purchaser shall have used its best
efforts to make such designations prior to the expiration of the Offer.
Purchaser has designated five people to become directors of the Company.
Information concerning the Purchaser's designees is set forth in the Information
Statement attached hereto as Annex A, as required by Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder, and incorporated herein by
reference.
Sellers Escrow Agreement
Pursuant to the Sellers Escrow Agreement, Sellers deposited the Sellers
Shares and Purchaser deposited $21,275,625 in cash (i.e., an amount equal to the
Sellers Shares Purchase Price) into escrow with the Escrow Agent in connection
with the sale of the Sellers Shares to Purchaser for the Sellers Shares Purchase
Price pursuant to the Purchase Agreement.
Under the Sellers Escrow Agreement, at the Closing Time (as defined in the
Purchase Agreement) upon the receipt of a certificate in appropriate form, from
Sellers and Purchaser, the Escrow Agent will deliver the Sellers Shares Purchase
Price to Sellers and the Sellers Shares to Purchaser. During the term of the
escrow, the cash held in escrow will be invested in accordance with the
directions of Purchaser, but only in Permitted Investments (as defined in the
Sellers Escrow Agreement).
Tender Escrow Agreement
Pursuant to the Tender Escrow Agreement, Purchaser has deposited into
escrow $16,724,735 (i.e., 'Tender Offer Deposit') with the Escrow Agent in
connection with the Offer.
Under the Tender Escrow Agreement, upon the receipt of a certificate in
appropriate form, from the Company and Purchaser, the Escrow Agent shall deliver
the Tender Offer Deposit to the Depository (as defined in the Tender Escrow
Agreement) up to the amount of the aggregate Offer Price. In the case of any
balance in excess of the amount necessary to purchase all Shares validly
tendered and accepted in the Offer, the Escrow Agent shall return such excess
funds to Purchaser.
Memorandum of Understanding
In the Memorandum, the Board of Directors confirmed its understanding with
respect to certain of the terms of the transaction (the 'Transaction') involving
the acquisition of all the issued and outstanding Shares by Purchaser through
the purchase of the Sellers Shares, the Offer and/or a subsequent merger (the
'Merger'). The Memorandum evidenced approval by the Board of Directors of the
Transaction and authorized the Company's officers to take action necessary to
consummate the Transaction and for any and all purposes, for which approval
might be required or permitted under applicable law, the Charter or the By-laws
of the Company, including the provisions of Article Tenth, Section 2(b) of the
Charter relating to certain voting requirements applicable to certain business
combinations.
Confidentiality Agreement
Pursuant to the terms of the Confidentiality Agreement, the Company agreed
to disclose certain information of a confidential or proprietary nature to
Holdings in connection with a possible acquistion or business combination (the
'Transaction'). Pursuant to the Confidentiality Agreement, Holdings agreed that
it and its representatives and agents would treat as confidential all
information concerning the Company furnished by the Company or on behalf of the
Company except for such information which (i) is lawfully available to the
public other than as a result of a disclosure by Holdings or its
representatives, (ii) was lawfully available to Holdings on a non-confidential
basis prior to its disclosure to Holdings by the Company or its representatives,
or (iii) lawfully becomes available to Holdings on a non-confidential basis from
a source other than the Company or its representatives provided that such
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source is not bound by a confidentiality agreement with the Company of which
Holdings has been made aware.
The Confidentiality Agreement provides that neither party, without the
other party's prior written consent, will disclose to any person any information
concerning discussions or negotiations in connection with the Transaction or any
of the terms, conditions, or other facts with respect to the Transaction
including the status thereof. Holdings also agreed that for a period of two (2)
years following the date of the Confidentiality Agreement, it will not purchase
or offer to purchase any material assets or any securities of the Company or
propose any merger or other business combination involving the Company except
pursuant to a transaction to be approved by the Board of Directors of the
Company and only if specifically invited in writing by the Company to do so. The
requirement for an invitation in writing was satisfied by the execution and
delivery of the Tender Offer Agreement and Memorandum. In addition, for a period
of two (2) years after the date of the Confidentiality Agreement, Holdings
agreed that it will not, without the Company's prior written consent, (i) make,
or in any way participate, directly or indirectly, in any solicitation of
proxies to vote, or seek to advise or influence any person or entity with
respect to the voting of any voting securities of the Company, (ii) form, join
or in anyway participate in a 'group' within the meaning of Section 13(d)(3) of
the Exchange Act with respect to any voting securities of the Company, or (iii)
otherwise seek to control the management, Board of Directors, or policies of the
Company; provided, however, these provisions shall not apply to Holdings if
another entity enters into a business combination with the Company or initiates
a tender offer for the Company's securities.
In addition, the Company and Holdings each agreed for a period of two (2)
years after the date of the Confidentiality Agreement not to solicit any of the
other's current officers or employees with whom they had contact or who were
identified to them during Holdings' due diligence review of the Company, without
the prior written consent of the Company or Purchaser, respectively.
Additional Information with respect to certain contracts, agreements,
arrangements or understandings between the Company or its affiliates and
Purchaser or certain of Purchaser's executive officers, directors or affiliates
is set forth in Annex A to this Schedule 14D-9 and incorporated herein by
reference.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) Recommendation. At a meeting held on June 11, 1997, the Board of
Directors of the Company unanimously approved the Tender Offer Agreement and the
Offer, subject to the receipt of a fairness opinion. On June 24, 1997, the
Financial Advisor rendered its written opinion to the Board of Directors to the
effect that, as of the date of such opinion, the terms and conditions of the
Offer are fair and reasonable to the stockholders of the Company from a
financial point of view (the 'Fairness Opinion'). AT A MEETING HELD ON JUNE 24,
1997, THE BOARD OF DIRECTORS DETERMINED THAT THE TERMS OF THE OFFER ARE FAIR TO,
AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY. ACCORDINGLY, THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS OF THE COMPANY
ACCEPT THE OFFER AND TENDER ALL OF THEIR SHARES PURSUANT THERETO. THIS
RECOMMENDATION IS BASED IN PART UPON THE FAIRNESS OPINION, THE FINANCIAL
ADVISOR'S REPORT TO THE BOARD OF DIRECTORS CONCERNING THE BASIS FOR ITS OPINION
AND CERTAIN OTHER FACTORS.
The Fairness Opinion contains a description of the factors considered, the
assumptions made, and the scope of the review undertaken by the Financial
Advisor in rendering its opinion. The full text of the Fairness Opinion is
attached hereto as Annex B to this Schedule 14D-9 and is incorporated herein by
reference. Stockholders are urged to read the Fairness Opinion in its entirety.
In arriving at the Fairness Opinion, the Financial Advisor reviewed
information obtained publicly and provided to it by the Company, as well as
industry and financial information which included, among other items, financial
and stock market data relating to publicly held companies which it deemed
relevant and sales transactions with respect to other securities and
broker/dealer firms. The Financial Advisor relied on industry information and
data on public companies deemed comparable to the Company and also took into
account its assessment of general economic, market and financial conditions, as
well as its experience in securities valuation with respect to similar
transactions. All
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industry information and data on public companies deemed comparable to the
Company, in whole or in part, and used in its analysis were obtained from
regularly published industry and investment sources. In addition, the Financial
Advisor held discussions with senior management of the Company regarding past,
current, and projected operations and regarding discussions and contacts with
other potential acquirers. The Financial Advisor also took into account its
assessment of general economic, market and financial conditions, as well as its
experience in securities and business valuation, in general, and with respect to
similar transactions, in particular. The Financial Advisor did not make any
independent appraisals of the assets or liabilities of the Company.
In arriving at the Fairness Opinion, the Financial Advisor reviewed, among
other items: (i) Securities and Exchange Commission ('SEC') 10-K filings of the
Company for the fiscal years ended September 30, 1991 to 1996; (ii) SEC 10-Q
filings of the Company for the periods ended March 31, 1996 and 1997; and (iii)
the Offer to Purchase dated June 18, 1997.
In preparing its opinion to the Board of Directors, the Financial Advisor
reported that it performed a variety of financial and comparative analyses,
including: (i) a discounted cash flow analysis of the projected free cash flows
of the Company; (ii) a comparison of financial performance and market valuation
ratios of the Company with those of publicly traded companies the Financial
Advisor deemed relevant for purposes of its opinion; (iii) a review of recent
control transactions in the securities brokerage industry; and (iv) an analysis
of the historical stock trading ranges and trading volumes for the Company. In
addition, the Financial Advisor conducted other studies, analyses and
investigations as it deemed appropriate for purposes of its opinion.
Summary of Factors Considered by the Financial Advisor:
Discounted Cash Flow Analysis. The Financial Advisor performed a discounted
cash flow analysis of the projected free cash flows of the Company based on
projected revenues, net income, depreciation and amortization, working capital
and capital expenditure requirements for the fiscal years ending September 30,
1997 to September 30, 2006. The projections were prepared from the perspective
of a hypothetical buyer of a controlling interest in the Company. The Financial
Advisor discounted the resulting free cash flows at rates of 19.0% to 21.0%. The
discount rate range reflects, among other things, industry risks, the relatively
small market capitalization of the Company, and current rates of return required
by investors in equity instruments in general. Due to the perspectives from
which the projections were prepared, the discounted cash flow analysis resulted
in a control price, or a reasonable estimate of the price that a fully informed
buyer would pay for all of the Shares of the Company. The discounted cash flow
analysis yielded an aggregate control price range of $13.50 to $15.00 per share.
Comparable Company Analysis. In the comparable company analysis, the
Financial Advisor selected a set of publicly traded companies based on
comparability to the Company. Although no single company chosen was exactly
similar to the Company, these companies shared many of the same operating
characteristics and are affected by many of the same economic forces. The value
of the Company was derived from the rate at which these companies are
capitalized in the market, after adjusting for differences in operations and
performance.
Using publicly available information, the Financial Advisor analyzed the
historical financial performance, stock prices and resulting valuation multiples
for various comparable securities brokerage firms.
The Financial Advisor compared the financial performance of the Company
with the financial performance of comparable companies. Comparative statistics
revealed the following: (i) five-year compounded annual growth in revenue for
the Company was 8.1% versus a median of 15.5% for comparable companies; (ii)
after adjusting for non-recurring items, five-year compounded annual growth in
earnings for the Company was -4.0% versus a median of 18.2% for the comparable
companies; (iii) after adjusting for non-recurring items, five-year average and
latest twelve months' net income margins for the Company were 5.1% and 5.5%,
respectively, versus medians of 5.8% and 4.5%, respectively, for comparable
companies; (iv) after adjusting for non-recurring items, five-year average and
latest twelve months' returns on equity for the Company were 11.1% and 13.4%,
respectively, versus medians of 16.4% and 13.0%, respectively, for the
comparable companies. Five-year averages for
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the Company are based on fiscal years ended September 30, 1991 to 1996, while
the latest twelve months is ended March 31, 1997.
The Financial Advisor analyzed the market values for the comparable
companies as multiples of latest twelve months' and three-year average earnings
per share ('EPS') available as of the date of the Fairness Opinion. The market
value of the Company was assumed to be the Offer Price of $15.00 per share. The
median multiples of market value of common equity to latest twelve months' and
three-year EPS for the comparable companies were 12.3x, and 15.4x, respectively.
The market value of the Company as a multiple of latest twelve months' and
three-year average EPS was 10.1x, and 22.9x, respectively. The Financial Advisor
also analyzed the market values as multiples of the book values of the
comparable companies available as of the date of the opinion. The median
multiple of market value to book value for the comparable companies was 1.4x.
The multiple of market value to book value for the Company was 1.2x. All
multiples were based on closing stock prices as of June 16, 1997.
Comparable Transactions Analysis. The Financial Advisor reviewed recent
control transactions involving securities brokerage firms as targets. The
Financial Advisor identified five completed transactions and one pending
transaction. The median premium that buyers paid over the trading price of the
target firms before the announcement date of the acquisition was 41.5%. The
median ratio of offer price to latest twelve months' earnings was 13.3x and the
median offer price to book value was 1.6x. This compared to the price to latest
twelve months' earnings ratio of 10.1x and price to book value ratio of 1.2x for
the Company, based on the $15.00 per share Offer Price.
Historical Stock Trading and Volume Ranges. The Financial Advisor performed
an analysis of the recent stock price and trading volume of the Company's
Shares. The high and low prices over the last 52 weeks prior to the announcement
of the Offer were $10.00 and $7.125, respectively. The Financial Advisor created
an index comprised of the stock prices of the comparable companies and tracked
the performance of that index versus the price performance of the Company's
Shares from June 1996 to just before the announcement of the Offer. The index
increased in value by approximately 20.0% while the Company's Shares increased
in value by approximately 15.0%. The Financial Advisor also found that there has
been very little trading of the Shares over the past year.
Based on the foregoing factors and other information about the Company
considered by the Fairness Opinion, the Financial Advisor arrived at the
Fairness Opinion.
(b)(1) Background of the Offer. In August 1995, Albert G. Lowenthal, the
Chairman of Holdings ('Lowenthal'), spoke with representatives of the Company to
propose the acquisition of the Company by Holdings as an alternative to an
attempted recapitalization of the Company that would have resulted in the
repurchase by the Company of its publicly held Shares. Management of the Company
rejected Holdings' overtures. However, the recapitalization was abandoned.
Subsequently, the Company's two controlling stockholders, DST and 1888,
increased their respective ownership interests in the Company so that in the
aggregate they controlled in excess of 50% of the outstanding Shares. In recent
years, the Company experienced some turnover in senior management.
In May 1997, Lowenthal met with Soule, Chairman of the Company, at the
suggestion of Gerard Lavin ('Lavin'), a director of the Company with whom
Lowenthal had maintained casual contact since the initial discussions had broken
down about a possible business combination in 1995. At the meeting, Soule
advised Lowenthal that the Company was not interested in a business combination
with Holdings and that the Board of Directors of the Company was determined to
keep the Company independent.
However, a vacancy occurred unexpectedly in the Presidency of the Company
in early June 1997. This development caused the Board of Directors of the
Company to reconsider its intentions. Soule contacted Lowenthal on Wednesday,
June 4, 1997, and they agreed to meet in St. Louis on Friday, June 6, 1997.
Soule advised Lowenthal that DST and 1888, as well as the Board of Directors of
the Company, were prepared to entertain a transaction, provided that it was for
adequate consideration and that it occur quickly, in order to resolve the
considerable uncertainty in the Company. The Confidentiality Agreement was
entered into with Holdings on June 6, 1997 and a similar agreement was entered
into with another firm which expressed interest in acquiring the Company.
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At the meeting with Soule on June 6, 1997, price discussions reached $15
per Share, which represented a substantial premium over the then current market
value of the Shares. Soule agreed to discuss this with the controlling
stockholders and both companies agreed to convene their respective Boards of
Directors on Sunday, June 8, 1997 to consider the acquisition transaction. At
this meeting, the directors discussed the possiblity of a transaction with the
other suitor for the Company. Based on reports from members of the Board of
Directors who had had discussions with the other potential acquiror, the Board
of Directors concluded that the other company would not be able to move
expeditiously, would have to offer stock rather than cash and was unlikely to
offer a premium sufficient to offset these disadvantages.
The acquisition transaction authorized by the Board of Directors of
Holdings was then accepted by the Board of Directors of the Company subject to
the preparation of definitive agreements between the Sellers and Purchaser and
between the Company and Purchaser. The Board of Directors of the Company also
reserved their recommendation to the Company's stockholders in respect of the
acquisition transaction to the receipt of a Fairness Opinion from the Financial
Advisor.
The Board of Directors of Holdings authorized Lowenthal to proceed with the
negotiation of the terms of definitive agreements with the Sellers and the
Company for the purchase of the Sellers Shares and the purchase of Shares
pursuant to the Offer. Counsel for Holdings thereupon prepared drafts of the
Tender Offer Agreement and the Purchase Agreement, as well as the Tender Escrow
Agreement and the Sellers Escrow Agreement. These drafts, together with the
Memorandum, were negotiated by the parties and their respective counsel on
Tuesday and Wednesday, June 10 and 11, 1997, and late on Wednesday, June 11,
1997, the agreements were finalized. The respective Boards of Directors of the
Company and Holdings were convened to consider the acquisition transaction and
approve the agreements. The agreements were thereupon executed and delivered by
the parties. On Thursday, June 12, 1997, the Company and Holdings publicly
announced the execution and delivery of the Purchase Agreement, Tender Offer
Agreement and related agreements and that the Company's Board of Directors had
approved the Offer subject to receipt of a fairness opinion.
(b)(2) Reasons for the Recommendation. In making the determination and
recommendation set forth in paragraph (a) to this Item 4, the Board of Directors
considered many factors including, but not limited to, the following:
(i) The oral and written presentations of the Financial Advisor, and
the written opinion of the Financial Advisor, that the terms and conditions
of the Offer are fair and reasonable to the stockholders of the Company
from a financial point of view;
(ii) The historical market prices of and recent trading activity of
the Shares, particularly the fact that the Offer will enable the
stockholders of the Company to realize a significant premium over the
prices at which the Shares traded prior to the public announcement of the
proposed transaction and to enjoy immediate liquidity for their investment,
which has not been possible with the limited trading market for the
Company's Shares;
(iii) The consideration of an expression of interest in acquiring the
Company from another party, which appeared to the Board of Directors to
likely involve terms less favorable than those presented to the Company by
Purchaser, as well as the view of the Board of Directors that it was
unlikely that another potential acquiror would be prepared in the time
allowed to pay a higher price for the Shares than the consideration offered
by Purchaser, particularly without the Company's stockholders assuming
greater risks of non-consummation than existed in the Offer;
(iv) The possible alternatives to the Offer, including, without
limitation, continuing to operate the Company as a separate entity;
(v) Information with regard to the financial condition, results of
operations, business and prospects of the Company as reflected in the
financial and comparative analyses presented by the Financial Advisor, as
well as the risks involved in achieving those prospects, current economic
and market conditions (including current conditions in the industry in
which the Company is engaged) and the going concern value of the Company;
(vi) The Company's urgent need for experienced top management and
improved securities clearance capabilities, both of which appeared to be
offered by the Purchaser;
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(vii) The lack of a financing condition in the Offer and that the
consideration for the Offer and the purchase of the Sellers Shares would be
paid from funds escrowed by Purchaser;
(viii) The ability of all stockholders of the Company to participate
on the same basis and receive equivalent consideration as provided to the
Sellers in the Purchase Agreement; and
(ix) The majority ownership of the Company's capital stock that would
be obtained by Purchaser upon consummation of the Purchase Agreement,
regardless of the number of Shares tendered in the Offer.
The foregoing discussion of the information and factors considered and
given weight by the Board of Directors of the Company is not intended to be
exhaustive. In view of the variety of factors considered in connection with its
evaluation of the Offer, the Board did not find it practicable to, and did not,
quantify or otherwise assign relative weights to the specific factors considered
in reaching its determination. In addition, individual members of the Board may
have given different weights to different factors.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
Except as described below, neither the Company nor any person acting on its
behalf has employed, retained or agreed to compensate any other person to make
solicitations or recommendations to stockholders of the Company concerning the
Offer.
The Financial Advisor is acting as financial advisor to the Company in
connection with the Offer and other matters arising in connection therewith
pursuant to an engagement letter, dated as of June 13, 1997, between the
Financial Advisor and the Company (the 'Engagement Letter'). Under the terms of
the Engagement Letter, the Financial Advisor agreed to render an opinion as to
the fairness, from a financial point of view, to the Company's stockholders of
the consideration to be received by such stockholders in the Offer. The Company
agreed to pay the Financial Advisor a fee of $125,000 for services rendered in
connection with the Fairness Opinion, of which $50,000 was due as a retainer
payment upon execution of the Engagement Letter, with the remainder payable upon
delivery of the Fairness Opinion and supporting analysis. No portion of the fee
is contingent upon consummation of the Offer or the conclusions reached in the
Fairness Opinion. If the Offer is abandoned for reasons unrelated to the
conclusions contemplated in the Fairness Opinion, the Financial Advisor will be
entitled to receive the greater of the retainer payment and the Financial
Advisor's professional hours incurred at its standard hourly rates then in
effect, but in no event more than $125,000. The Financial Advisor also will be
reimbursed for all reasonable out-of-pocket expenses, including travel, lodging,
telephone, document reproduction, telecopying, and computer database charges.
The Company has also agreed to indemnify the Financial Advisor in
accordance with the terms of an indemnification agreement, dated as of June 13,
1997 between the Financial Advisor and the Company (the 'Indemnification
Agreement'), made part of the Engagement Letter. The Company will indemnify and
hold harmless the Financial Advisor from and against all losses, claims,
damages, expenses, costs and liabilities resulting, directly or indirectly, from
any threatened or pending investigation, action, claim, proceeding or dispute
which is related to or arises out of oral or written information provided to the
Financial Advisor by the Company or any omission by the Company or otherwise
related to or arising out of the Financial Advisor's engagement, activities, or
performance of professional services on the Company's behalf. The Company will
not, however, be responsible for losses, claims, damages, expenses, costs, and
liabilities arising out of the Financial Advisor's engagement, activities, or
performance of professional services on the Company's behalf which are
judicially determined to have resulted primarily and directly from the bad faith
or negligence of the Financial Advisor. The foregoing summaries of the
Engagement Letter and Indemnification Agreement do not purport to be complete
and are qualified in their entirety by reference to the full text of those
agreements which are filed as exhibits (b)(2) and (b)(3), respectively, to this
Schedule 14D-9, each of which is hereby incorporated herein by reference.
The Financial Advisor has provided certain investment banking services to
the Company from time to time for which the Financial Advisor has received
customary compensation, including certain services
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in connection with the Company's plan of recapitalization which was abandoned in
1995 as discussed in Item 4(b)(1) of this Statement.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES
(a) On June 18, 1997, DST made a gift of 35,000 Shares to the Greater
Kansas City Community Foundation. To the best of the Company's knowledge, except
as described in Item 3(b)(2) above relating to the Purchase Agreement, no other
transactions in the Shares have been effected during the last 60 days by the
Company or any executive officer, director, affiliate or subsidiary of the
Company.
Under the terms of the Purchase Agreement, the Sellers have agreed to use
their best efforts to cause holders of approximately 120,000 Shares, certain of
which are affiliates or assignees of a Seller, to tender their Shares pursuant
to the Offer.
The discussion of the Purchase Agreement and the agreement of the Sellers
to sell the Sellers Shares to Purchaser in accordance with its terms and
conditions is incorporated in this Item 6 by reference to the discussion
contained in Item 3(b)(2) of this Statement.
(b) To the best of the Company's knowledge, subject to applicable
securities laws and personal considerations (including tax planning), all
directors and executive officers of the Company presently intend to tender
pursuant to the Offer all Shares owned beneficially or of record by such
persons. The foregoing does not include any Shares over which, or with respect
to which, any such director or executive officer acts in a fiduciary or
representative capacity or is subject to the instructions of a third party with
respect to such tender.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY SUBJECT COMPANY
(a) As described in Item 3(b) of this Statement, the Company has agreed in
the Tender Offer Agreement not to solicit, directly or indirectly, or initiate
or encourage any discussion or negotiations with or provide information to or
afford access to the properties, books or records of the Company or otherwise
facilitate an Alternative Proposal (as such term is defined in the Tender Offer
Agreement).
Except in accordance with the terms of the Tender Offer Agreement and
except as described in this Statement, the Company does not presently intend to
undertake any negotiations in response to the Offer which relate to or would
result in (i) an extraordinary transaction, such as a merger or reorganization,
involving the Company or any of its subsidiaries, (ii) a purchase, sale or
transfer of a material amount of assets by the Company or any subsidiary of the
Company, (iii) a tender offer for, or other acquisition of, securities by or of
the Company, or (iv) any material change in the present capitalization or
dividend policy of the Company.
(b) Except as described in Item 3 or Item 4 above, there are no
transactions, board resolutions, agreements in principle or signed contracts in
response to the Offer which relate to or would result in one or more of the
matters referred to in paragraph (a) of this Item 7.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
(a) Incorporation by Reference. The information contained in the exhibits
listed in Item 9 below is incorporated herein by reference.
(b) State Anti-takeover Laws.
(i) The Company is incorporated under the laws of the State of Delaware.
Section 203 ('Section 203') of the Delaware General Corporation Law (the 'DGCL')
prevents an 'Interested Stockholder' (defined generally as a person beneficially
owning 15% or more of a corporation's voting stock) from engaging in a 'Business
Combination' (as defined in Section 203) with a Delaware corporation for three
years following the date such person becomes an Interested Stockholder unless:
(i) before such person became an Interested Stockholder, the board of directors
of the corporation approved the transaction in which the Interested Stockholder
became an Interested Stockholder or approved the Business Combination, (ii) upon
consummation of the transaction which resulted in the Interested Stockholder
becoming an Interested Stockholder, the Interested Stockholder owned at least
85% of the
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voting stock of the corporation outstanding at the time that the transaction
commenced (excluding stock held by directors who are also officers and by
employee stock ownership plans that do not allow plan participants to determine
confidentially whether to tender shares) or (iii) following the transaction in
which such person became an Interested Stockholder, the Business Combination is
(x) approved by the board of directors of the corporation and (y) authorized at
a meeting of stockholders by the affirmative vote of the holders of at least
66 2/3% of the outstanding voting stock of the corporation not owned by the
Interested Stockholder. The Company's By-laws provide that the Company shall not
be governed by Section 203 of the DGCL. If Section 203 were to apply for any
reason, its prohibitions on business combinations would be inapplicable to the
Offer, the purchase of the Sellers Shares and the Merger because the Board of
Directors has approved the Tender Offer Agreement and the transactions
contemplated thereby, including the Offer, for purposes of Section 203 of the
DGCL and has delivered the Memorandum to Purchaser. The restrictions of Section
203 are, accordingly, not applicable to Holdings, Purchaser or affiliates or
associates of Purchaser as a result of the consummation of the transactions
contemplated by the Offer to Purchase.
(ii) The Michigan Control Share Statute provisions of the Business
Corporations Act of the State of Michigan (the 'MBCA') purport to apply to a
corporation that has (A) 100 or more shareholders of record, (B) its principal
place of business, principal office or substantial assets within Michigan, and
(C)(i) more than 10% of its shareholders of record resident in Michigan; (ii)
more than 10% of its shares owned of record by Michigan residents, or (iii)
10,000 shareholders of record in Michigan. The Company has amended its By-laws
to elect not to be governed by the Michigan Control Share Statute as permitted
by Section 794 of the MBCA and no longer needs to comply with these provisions.
The Michigan Business Combination Statute generally requires that for a company
to enter into a business combination with an interested stockholder it must
obtain: (i) an advisory statement from the Board of Directors; (ii) approval of
at least 90% of the votes of each class of voting stock outstanding; and (iii)
two-thirds of the non-interested voting stock to approve the business
combination.
Neither Purchaser nor Holdings has currently complied with any state
takeover statute or regulation. Purchaser has reserved the right to challenge
the applicability or validity of any state law purportedly applicable to the
Offer, the purchase of the Seller Shares or the Merger.
(c) Anti-Trust. Under the HSR Act and the rules promulgated thereunder by
the Federal Trade Commission (the 'FTC') certain acquisition transactions may
not be consummated unless certain information has been furnished to the
Anti-Trust Division of the United States Department of Justice (the 'Anti-Trust
Division') and the FTC and certain waiting period requirements have been
satisfied. The acquisition of the Shares by Purchaser pursuant to the Offer is
subject to such requirements.
Pursuant to the requirements of the HSR Act, Purchaser and the Company
filed the required Notification and Report Forms with the Anti-Trust Division
and the FTC. A request was made by Purchaser and the Company pursuant to the HSR
Act for early termination of the applicable waiting period. The Company has been
advised that early termination was granted, effective June 25, 1997.
(d) Resignation of Conrad W. Koski and Severance Dispute. Conrad W. Koski,
former President and Chief Executive Officer of the Company, resigned effective
May 29, 1997. Mr. Koski is, however, disputing the amount and other terms of his
severance. Negotiations are being conducted between the Company and Mr. Koski to
resolve this dispute.
(e) Information Statement. The Information Statement attached hereto as
Annex A and incorporated herein by reference is being furnished in connection
with the designation by Purchaser, pursuant to the Purchase Agreement and the
Tender Offer Agreement, of certain persons to be appointed or elected to the
Board of Directors of the Company other than at a meeting of the Company's
stockholders immediately prior to the time Shares are accepted for payment by
Purchaser.
16
<PAGE>
<PAGE>
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
- -----------
<S> <C>
(a)(1) -- Offer to Purchase, dated June 18, 1997
(a)(2) -- Supplement relating to Offer to Purchase, dated July 1, 1997
(a)(3) -- Letter of Transmittal
(a)(4) -- Letter of the Board of Directors to the Stockholders, dated July 1, 1997
(a)(5) -- Press release issued by Holdings and the Company on June 12, 1997
(a)(6) -- Press release issued by Holdings and the Company on June 18, 1997
(a)(7) -- Press release issued by Holdings and the Company on July 1, 1997
(b)(1) -- Fairness Opinion of Duff & Phelps, LLC dated June 24, 1997
(b)(2) -- Engagement Letter dated June 13, 1997, between the Company and Duff & Phelps, LLC
(b)(3) -- Indemnification Agreement dated June 13, 1997, between the Company and Duff & Phelps, LLC
(c)(1) -- Securities Purchase Agreement dated June 11, 1997, between 1888 Limited Partnership ('1888'), DST
Systems Inc. ('DST' and together with 1888, the 'Sellers') and Purchaser
(c)(2) -- Sellers Escrow Agreement dated June 11, 1997, among the Sellers, The Bank of New York, as escrow agent
(the 'Escrow Agent'), and Purchaser
(c)(3)(i) -- Tender Offer Agreement dated June 11, 1997 (the 'Tender Offer Agreement'), among the Sellers, the
Company and the Purchaser
(c)(3)(ii) -- Letter agreement dated June 17, 1997, among the Sellers, the Company and Purchaser (amending the
Tender Offer Agreement)
(c)(4) -- Tender Escrow Agreement dated June 11, 1997, between the Company, the Escrow Agent and the Purchaser
(c)(5) -- Confidential Disclosure and Standstill Agreement dated June 6, 1997, between the Company and Purchaser
(c)(6) -- Memorandum of Understanding dated June 11, 1997
(c)(7) -- Consent of Duff & Phelps, LLC
(c)(8) -- Letter, dated June 25, 1997, to the Company and Sellers designating individuals to be elected to the
Board of Directors of the Company
(c)(9) -- Consent of Albert G. Lowenthal, dated June 30, 1997
(c)(10) -- Consent of A. Winn Oughtred, dated June 30, 1997
(c)(11) -- Consent of Elaine K. Roberts, dated June 30, 1997
(c)(12) -- Consent of Mark W. Shobe, dated June 30, 1997
(c)(13) -- Consent of Edward Soule, dated June 30, 1997
</TABLE>
17
<PAGE>
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
FIRST OF MICHIGAN CAPITAL CORPORATION
By: /s/ EDWARD SOULE
.....................................
Name: Edward Soule
Title: Chairman of the Board of
Directors
Dated: July 1, 1997
18
<PAGE>
<PAGE>
ANNEX A
FIRST OF MICHIGAN CAPITAL CORPORATION
100 RENAISSANCE CENTER, 26TH FLOOR
DETROIT, MICHIGAN 48243
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
INTRODUCTION
This Information Statement is being mailed on or about July 1, 1997 as part
of the Company's Solicitation/Recommendation Statement on Schedule 14D-9 (the
'Schedule 14D-9') to the holders of the shares of common stock, par value $0.10
per share (the 'Shares'), of First of Michigan Capital Corporation (the
'Company') at the close of business on or about June 27, 1997. Capitalized terms
used and not otherwise defined herein shall have the meaning set forth in the
Schedule 14D-9.
You are receiving this Information Statement in connection with the
possible appointment or election of persons designated by the FMCC Acquisition
Corp. ('Purchaser') to a majority of the seats on the Board of Directors of the
Company (the 'Board' or the 'Board of Directors'). It is a condition of the
Offer and the Purchase Agreement that at the time of acceptance of the Shares
for payment or purchase of the Seller Shares, as the case may be, that the Board
of Directors be comprised entirely of the Purchaser Designees (as defined
below).
You are urged to read this Information Statement carefully. You are not,
however, required to take any action.
The information contained in this Information Statement concerning the
Purchaser and the Purchaser Designees has been furnished to the Company by the
Purchaser or the Purchaser Designees, and the Company assumes no responsibility
for the accuracy or completeness of such information.
The Shares are the only class of capital stock of the Company outstanding.
Each Share is entitled to one noncumulative vote for each matter on which such
shares are voted. As of June 16, 1997, there were 2,496,464 Shares issued,
outstanding and entitled to vote. None of the Company's 500,000 shares of
authorized preferred stock have been issued.
BOARD OF DIRECTORS
GENERAL
The Board of Directors currently has five members. However, under the
provisions of the Company's Restated Certificate of Incorporation (the
'Charter'), the number of Directors of the Company may range from five to
twenty, as determined by the Board of Directors from time to time. The Board is
divided into three equal classes with the three year term of each class
successively staggered resulting in only one class being up for election each
year. Each Director of the Company holds office until such Director's term
expires and his successor is elected and qualified or until such Director's
earlier resignation or removal. Under Section 141(k)(1) of the Delaware General
Corporation Law (the 'DGCL'), stockholders may remove directors only for cause
when a board of directors is classified.
THE PURCHASER'S DESIGNEES
It is a condition of the Tender Offer Agreement and the Purchase Agreement
that at the time of acceptance of the Shares for payment or the purchase of the
Sellers Shares, respectively, that the Board of Directors be comprised entirely
of individuals designated by Purchaser (the 'Purchaser Designees'). The Company
expects that the Purchaser Designees will become Directors of the Company at the
time of completion of the Offer or the purchase of the Sellers Shares, whichever
occurs first. The
A-1
<PAGE>
<PAGE>
appointment or election of the Purchaser Designees will be accomplished at a
meeting or by written consent of the Board.
The Purchaser has advised the Company that the Purchaser Designees will be
the persons described in the following table.
<TABLE>
<CAPTION>
NAME AGE, BUSINESS EXPERIENCE AND OTHER DIRECTORSHIPS
- --------------------------- ---------------------------------------------------------------------------
<S> <C>
Albert G. Lowenthal........ Age 52. He has been Chairman of the Board, Chief Executive Officer, and a
director of Fahnestock Viner Holdings Inc. ('Holdings') since 1985. In
addition, he has served as Chairman of the Board, Chief Executive Officer,
and a director of Fahnestock & Co. Inc. ('Fahnestock') since 1985 and a
director of FMCC Acquisition Corp. ('Purchaser') since June 11, 1997. He is
also a director of Hudson Capital Appreciation Fund, a registered
investment company.
A. Winn Oughtred........... Age 54. He has been a partner with Borden & Elliot (Barristers and
Solicitors) since 1979. He is a director of Holdings and its Secretary
since June 1992 and prior to June 1991. He has also been a director of
Fahnestock since 1983.
Elaine K. Roberts.......... Age 45. She has been President, Treasurer and a director of Holdings since
1977. In addition, she has served as Treasurer and a director of Fahnestock
since 1983.
Mark W. Shobe.............. Age 41. He has been President and Chief Operating Officer of the Company
since May 1997. He was with Comerica Bank as Senior Vice President of
Direct Banking from 1995 to 1997 and Senior Vice President of Community
Banking from 1992 to 1995.
Edward Soule............... Age 44. He has been Chairman of the Board of Directors of the Company since
January 1997. He also has been Adjunct Professor of Business Ethics,
University of Missouri in St. Louis, since January 1997. He was formerly
Chief Financial Officer of Transworld Airlines from September 1996 to
December 1996, a consultant to Edward Jones (securities brokerage) from
June 1995 to September 1996, and Partner and Chief Financial Officer of
Edward Jones from May 1986 to June 1995.
</TABLE>
The business address for Mr. Lowenthal is care of Fahnestock & Co. Inc.,
110 Wall Street (9th Floor), New York, New York 10005, for Mr. Oughtred is care
of Borden & Elliot, Scotia Plaza, 40 King Street West, Toronto, Ontario M5H 3Y4,
for Ms. Roberts is care of Fahnestock Viner Holdings Inc., 30 Eglinton Avenue
West, Suite 1110, P.O. Box 2015, Toronto, Ontario M4R 1K8, for Mr. Shobe is care
of First of Michigan Capital Corporation, 100 Renaissance Center, 26th Floor,
Detroit, Michigan 48243 and for Mr. Soule is 7370 Kinsbury, University City,
Missouri 63130. Messrs. Lowenthal, Shobe and Soule are United States citizens,
and Ms. Roberts and Mr. Oughtred are Canadian citizens. The Purchaser Designees
have consented to act as Directors of the Company. The Purchaser Designees have
indicated that none of them, during the last five years, has been convicted in a
criminal proceeding (excluding traffic violations and similar misdemeanors) or
was a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was, or is, subject to
a judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any violation
of such laws. The Purchaser Designees, other than Messrs. Shobe and Soule, have
also advised the Company that none of them is a director or executive officer
of, or holds any other position with, the Company, and that none of such persons
beneficially owns any equity securities, or rights to acquire any equity
securities, of the Company or has been involved in any transactions with the
Company or any of its directors, executive officers or affiliates which are
required to be disclosed pursuant to the rules and regulations of the Securities
and Exchange Commission, except as described in the Schedule 14D-1 (including
the related Schedule 13D) with respect to the Offer and the Purchase Agreement
and the transactions contemplated thereby.
A-2
<PAGE>
<PAGE>
THE CURRENT BOARD OF DIRECTORS OF THE COMPANY
Listed below are the names, present titles, and ages of the current
Directors of the Company and the positions held by such persons in the last five
years. It is contemplated that the current Directors of the Company, other than
Mr. Soule, will resign at the time of completion of the Offer or the purchase of
the Sellers Shares, whichever occurs first.
DIRECTORS WITH TERM EXPIRING AT 1998 ANNUAL MEETING
<TABLE>
<CAPTION>
NAME AGE, BUSINESS EXPERIENCE AND OTHER DIRECTORSHIPS
- --------------------------- ---------------------------------------------------------------------------
<S> <C>
Craig P. Baker............. Age 44. Director of the Company since January 1994. Private investor.
Edward Soule............... See 'The Purchaser's Designees' above.
</TABLE>
DIRECTORS WITH TERM EXPIRING AT 1999 ANNUAL MEETING
<TABLE>
<CAPTION>
NAME AGE, BUSINESS EXPERIENCE AND OTHER DIRECTORSHIPS
- --------------------------- ---------------------------------------------------------------------------
<S> <C>
Gerard M. Lavin............ Age 54. Director of the Company since March 1995. President, Chief
Executive Officer, and a Director, Berger Associates, Inc., a mutual fund
management company. Also Chairman of the Board of Managers, BBOI Worldwide
LLC (an investment management company), since November 1996; President and
a trustee, Berger/BIAM Worldwide Portfolios Trust and Berger/BIAM Worldwide
Funds, each since May 1996; President and a trustee, Berger Institutional
Products Trust, since October 1995; and Vice President, DST Systems, Inc.
(information processing and computer software services and products), since
July 1995. Formerly President and Chief Executive Officer, Investors
Fiduciary Trust Company (February 1992 to March 1995) and Chief Operating
Officer, SUNAMERICA Asset Management Co. (January 1990 to February 1992).
</TABLE>
DIRECTORS WITH TERM EXPIRING AT 2000 ANNUAL MEETING
<TABLE>
<CAPTION>
NAME AGE, BUSINESS EXPERIENCE AND OTHER DIRECTORSHIPS
- --------------------------- ---------------------------------------------------------------------------
<S> <C>
Geoffrey B. Baker.......... Age 46. Director of the Company since April 1985. Private investor.
William H. Cuddy........... Age 61. Director of the Company since March 1994. Partner in the law firm
of Day, Berry & Howard since 1968. He was Chairman of the Board of
Directors of the Company from April 1995 to January 1997.
</TABLE>
CERTAIN RELATIONSHIPS
As discussed under 'Ownership of Securities of the Company by the
Management and Certain Beneficial Owners' below, Craig P. Baker, a director of
the Company, is a general partner of 1888 and owns one-third of the general
partnership interests and a portion of the limited partnership interests of
1888. Mr. Baker originally held approximately 36 percent of the limited
partnership interests as indicated in the 1888's original Schedule 13D dated
October 5, 1995. Such amount, however, may be reduced as a result of the
additional contribution by other limited partners to 1888 indicated in its April
8, 1996 amendment to its Schedule 13D.
In addition to the Shares that Geoffrey B. Baker, a director of the
Company, is shown to beneficially own under 'Ownership of Securities of the
Company by the Management and Certain Beneficial Owners' below, he is the sole
beneficiary of a trust holding 11,000 Shares of which he is a co-trustee.
A-3
<PAGE>
<PAGE>
As mentioned above under 'The Current Board of Directors of the Company,'
Mr. Lavin, a director of the Company, is an officer of DST.
Mr. Cuddy serves as legal counsel to 1888.
CERTAIN INFORMATION AS TO COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Executive Committee of the Board of Directors, which has full authority
to act in lieu of the Board of Directors between Board meetings, except with
respect to such matters as are reserved to the entire Board of Directors by
applicable law, held nine meetings during fiscal 1996. The current members of
this committee are Craig P. Baker, Gerard M. Lavin, and Edward Soule.
The Audit Committee of the Board of Directors makes recommendations to the
Board of Directors with respect to the selection of auditors and reviews with
the auditors their report on the Company's financial statements. This committee
met three times during the last fiscal year. The current members of this
committee are Geoffrey B. Baker, William H. Cuddy, and Gerard M. Lavin.
The Compensation/Stock Option Committee administers the Company's option
plans as to officers of the Company and, as requested by the Board, considers
and makes recommendations to the Board respecting discretionary cash
compensation for Executive Officers and certain other employees of the Company.
The Compensation/Stock Option Committee met once during the last fiscal year.
The current members of this committee are Craig P. Baker, Geoffrey B. Baker, and
Gerard M. Lavin.
The Nominating Committee makes recommendations to the Board of Directors
concerning prospective Director-nominees and, on occasion, also may make
recommendations to the Board of Directors concerning adjustments to the total
number of Board seats. In the course of its deliberations, the Nominating
Committee expects from time to time to consider such potential
director-candidates as may have been recommended by stockholders for its
consideration. A stockholder desiring to recommend a candidate should submit the
recommendation in writing to the Secretary of the Company at the Company's
principal executive offices. The recommendation should explain the proposing
stockholder's reasons for recommending the candidate and be accompanied by the
candidate's current resume and a statement, signed by the candidate and recently
dated, affirming his or her interest in being considered as a prospective
director-nominee and willingness to provide additional information if requested
by the Nominating Committee or the Board of Directors. The Nominating Committee
did not meet during the last fiscal year. The current members of this committee
are Craig P. Baker and William H. Cuddy.
The Board of Directors has no other standing committees.
The Board of Directors held five meetings in fiscal 1996. During that year,
each incumbent Director attended more than 75% of the total of (a) the number of
Board meetings held while he served as a Director and (b) the number of meetings
of Board committees on which such Director served that were held during his
period of service.
DIRECTORS' COMPENSATION
CURRENT COMPENSATION
On April 1, 1997 the Executive Committee of the Board of Directors revised
the directors compensation as follows.
Retainer, Fees, and Other Benefits. Directors who are not also employees of
the Company or its subsidiaries (other than Mr. Soule) receive an annual
retainer of $25,000, fees of $500 for each Board or committee meeting attended
in person or by phone, and are reimbursed reasonable traveling expenses. Mr.
Soule is paid the same as the other directors who are not employees except that
his retainer is $85,000. The Company also permits Directors who are not
employees to elect to participate in its health insurance plans on the same
terms as are available to its employees generally. The only Directors currently
participating in such plans are Geoffrey B. Baker and Edward Soule.
In addition, the current directors who are not and who have never been
employees of the Company continue to be able to participate in the Directors
Plan (as defined below). Currently, the eligible
A-4
<PAGE>
<PAGE>
Directors are Craig P. Baker, Geoffrey B. Baker, William H. Cuddy, Gerard M.
Lavin, and Edward Soule.
Acceleration of Soule Options. As discussed below, Mr. Soule was granted on
January 24, 1997 options to purchase up to 25,000 Shares. In connection with the
Offer, the Board has accelerated the exerciseability of those options.
FISCAL 1996 COMPENSATION
Retainers, Fees, and Other Benefits. Directors who are not also employees
of the Company or its subsidiaries received an annual retainer of $8,000, fees
of $1,500 for each meeting of the Board attended in person, $500 for each
meeting of the Board attended by phone, $750 for each committee meeting
attended, and are reimbursed reasonable travel expenses. In addition, the
Chairman of the Board (then, Mr. Soule) and the Chairman of the Audit Committee
(then, Mr. Cuddy) are paid additional retainers of $85,000 and $6,000,
respectively. The Company also permits Directors who are not employees to elect
to participate in its health insurance plans on the same terms and conditions as
are available to its employees.
Stock Options. At their meeting in 1989, the stockholders approved the
Company's Directors Stock Option Plan of 1989 (the 'Directors Plan'), which is
intended to extend the policy of providing management with an equity interest in
the Company to Directors who are not employees and therefore not eligible for
stock options under any of the Company's other stock option plans, and to
provide an incentive to qualified individuals to serve or continue to serve as
Directors. The only Directors eligible to participate in this plan are those who
are not and have never been employees of the Company or any of its subsidiaries.
Under the terms of the Directors Plan, for any year in which the Company
meets the performance goals stated in either Column A or Column B below, each
eligible Director receives an option to purchase the quotient of the number of
shares listed in Column C divided by the number of eligible Directors:
<TABLE>
<CAPTION>
B.
A. INCREASE IN
PRE-TAX PROFIT PERCENTAGE PROFITS OVER PREVIOUS C.
OVER REGIONAL AVERAGE THREE-YEAR AVERAGE NUMBER OF SHARES
- ------------------------- --------------------- ----------------
<S> <C> <C>
.25 5% 1,000
.50 10% 1,000
.75 15% 2,000
1.00 20% 2,000
1.25 25% 3,000
1.50 30% 3,000
1.75 35% 4,000
2.00 40% 4,000
2.25 45% 5,000
2.50 or more 50% or more 5,000
</TABLE>
For fiscal 1996, no options were granted under this plan.
The exercise price for any option granted under the Directors Plan during a
given year is the market value for the Common Stock on the Chicago Stock
Exchange as of the date of the regular December meeting of the Board of
Directors (or if there is no such meeting, December 31) of that year. Options
granted under the Directors Plan ordinarily may be exercised at any time during
the period which begins five years from the date of grant and ends seven years
after that date. However, exercisability would be accelerated in the event of a
change in control of the Company (as defined in the plan). No option may be
exercised after the holder thereof voluntarily resigns from service as a
Director, unless such resignation is due to disability or retirement from the
Board with the consent of all other Board members or after age 65. Options
granted under the Directors Plan are non-transferable, except by will or the
laws of descent and distribution in the event of death. No options may be
granted under the plan after December 31, 1999.
A-5
<PAGE>
<PAGE>
On January 24, 1997, in connection with his appointment as a Director and
the new Chairman of the Board, a special option grant was made to Mr. Soule by
the Board, covering 25,000 shares of Common Stock at a per share exercise price
of $8 (the closing bid price on the Chicago Stock Exchange on the day before the
grant). The option is nontransferable, normally will not become exercisable
until the third anniversary of grant (although the Board will have discretion to
accelerate exercisability upon a change in control), and will expire on the
fifth anniversary of grant if not sooner exercised. If Mr. Soule were to
voluntarily resign from service as a Director while the option remains
outstanding, other than due to disability or retirement with the consent of all
other Board members, the option no longer would be exercisable.
PERFORMANCE GRAPH
The graph below compares the cumulative total return on the Shares for the
last five fiscal years with the cumulative total return on the Standard & Poor's
500 Composite Stock Index (the 'S&P 500 Index') and on the Lipper Analytical
Brokerage Firm Composite Stock Price Index (the 'Lipper Composite Index') over
the same period (assuming an investment of $100 in each on September 30, 1991
and reinvestment of all dividends). The Lipper Composite Index is comprised of
30 publicly held regional and national securities firms, not including the
Company.
[GRAPH]
<TABLE>
<CAPTION>
FISCAL YEAR ENDING SEPTEMBER
--------------------------------------------------------------
1991 1992 1993 1994 1995 1996
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
First of Michigan..................... $100.00 $131.49 $126.46 $176.04 $119.61 $104.49
S&P 500 Index......................... $100.00 $111.04 $125.44 $130.06 $168.70 $202.98
Lipper Composite Index................ $100.00 $113.66 $199.70 $152.91 $239.41 $255.24
</TABLE>
EXECUTIVE OFFICERS
CURRENT EXECUTIVE OFFICERS
The current executive officers of the Company (determined in accordance
with Item 402 of Regulation S-K) are Messrs. Shobe and Soule. For certain
information with respect to such officers, see 'The Purchaser's Designees' and
'The Current Board of Directors of the Company' above, and 'Executive
Compensation' below. Each executive officer holds office until his (i) successor
shall have been elected or appointed, (ii) death, (iii) resignation, or (iv)
removal by the affirmative vote of a majority of the Board of Directors of the
Company.
A-6
<PAGE>
<PAGE>
FORMER EXECUTIVE OFFICERS
During and since the end of the Company's 1996 fiscal year, the executive
officers named in the summary compensation table and otherwise discussed below
resigned their positions with the Company.
Resignation of Conrad W. Koski and Severance Dispute. Conrad W. Koski,
former President and Chief Executive Officer of the Company, resigned effective
May 29, 1997. Mr. Koski is, however, disputing the amount and other terms of his
severance. Negotiations are being conducted between the Company and Mr. Koski to
resolve this dispute.
The other individuals who were executive officers of the Company during the
Company's 1996 fiscal year and who resigned are discussed under 'Board of
Directors Report on Executive Compensation' below.
EXECUTIVE COMPENSATION
CONTRACTS WITH CURRENT EXECUTIVE OFFICERS
The Company entered into the following agreements with the current
executive officers of the Company (as determined in accordance with Item 402 of
Regulation S-K).
Soule Bonus Compensation. The Compensation/Stock Option Committee of the
Board of Directors has authorized the Company to pay to Edward Soule, Chairman
of the Board, a special bonus in the amount of $100,000 to compensate him for
extraordinary service rendered to the Company beyond his original commitment and
to encourage him to remain as Chairman and to assist the Company in the
resolution of its management difficulties through a business combination or
acquisition. Such bonus is to be paid to Mr. Soule at such time as the then
members of the Compensation/Stock Committee no longer serve in such capacity,
but not later than July 31, 1997.
Shobe Employment Contract. The Company entered into an employment agreement
with Mark Shobe dated as of May 13, 1997 (the 'Shobe Agreement') for a two year
term commencing May 19, 1997 (the 'Term'). He is to be paid a base salary of
$200,000 per year plus certain specified bonuses ranging up to $350,000 if
certain performance goals are achieved. The Shobe Agreement also provides that
the Board may, in its discretion, award additional bonuses.
In the event of Mr. Shobe's death or disability (as defined in the Shobe
Agreement) during the term of such agreement or his termination by the Company
for cause (as defined therein), the Company will not be obligated to make any
further payments under the Shobe Agreement. In the event Mr. Shobe terminates
such agreement as a result of a material breach by the Company, he will continue
to receive his base compensation through the end of the term of the agreement.
In the event that Mr. Shobe is terminated by the Company other than for cause
(as defined in the Shobe Agreement) or other than as a result of a change in
control, he is entitled to receive a payment of $600,000 less the aggregate
amount of all payments made to him under the Shobe Agreement.
If Mr. Shobe is not offered the opportunity to remain with the Company in
the same or equivalent position following a Change of Control of the Company (as
defined in the Shobe Agreement) during the term, he is entitled to a payment of
$400,000 plus medical benefits for the remainder of the term of such agreement.
EXECUTIVE COMPENSATION FOR FISCAL YEAR 1996
The following disclosures relate to the compensation of the executive
officers of the Company through the end of its fiscal year 1996. The Board
ceased to issue options under the Company's Employee Stock Option Plan on March
16, 1995.
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
General Executive Compensation Policy. For many years, the Company's policy
concerning the compensation of Executive Officers has been to structure the
compensation components for such executives (principally salary, bonuses, and
stock-based awards) such that a substantial portion of an executive's total
potential compensation, annually and over the longer term, is dependent upon
A-7
<PAGE>
<PAGE>
Company profits and/or appreciation in the market value of the Common Stock.
Allowing for variations made necessary or advisable by arrangements individually
negotiated with recently hired executives as they joined the Company or by the
unusual turnover of Executive Officers during the course of the year, this same
general policy was followed with respect to compensating fiscal 1996 Executive
Officers for the year. More particularized information concerning the fiscal
1996 compensation of these executives is provided in the remainder of this
report and the committee reports which follow.
1996 Executives No Longer with the Company. During the course of fiscal
1996 the Company had two Chief Executive Officers: Steve Gasper, Jr., who served
as CEO until his resignation in March of 1996, and Kenneth C. Eich, who
succeeded Mr. Gasper and served until his resignation after the end of the
fiscal year. Former Executive Officer Urban A. MacDonald, who served as head of
the Company's Corporate Finance Department for most of the fiscal year, and
Charles R. Roberts who served as an Executive Officer for a portion of the year,
also resigned their positions with the Company during the course of the year.
As indicated in the Proxy Statement relating to the Company's 1997 Annual
Meeting of Stockholders, the terms of Mr. Gasper's compensation for his fiscal
1996 period of service as CEO were specified in the employment agreement
negotiated with him when he first joined the Company. His severance payments for
the year also were the result of arms' length negotiation with him, conducted on
behalf of the Company by the Chairman of the Board (then, Mr. Cuddy) and
approved by the full Board.
Mr. Eich did not enter into a written employment agreement with the Company
when he became CEO and, although it initially was contemplated that such an
agreement might be negotiated after his engagement, no such agreement had been
finalized by the time of his resignation. For his period of CEO service during
fiscal 1996, he therefore continued to be paid salary and provided employee
benefits on the terms the Board had approved when he first joined the Company.
Those terms also were the result of arms' length negotiation conducted for the
Company as described above, as were the terms of the severance arrangements made
with him after year end.
Mr. MacDonald also did not have a written employment agreement with the
Company. For fiscal 1996, his compensation package (which also included
commissions earned as the Company investment executive, a potential cash bonus
based on net profits of the Corporate Finance Department, and certain employee
benefits) was continued by the Board on the terms initially negotiated with him
by the CEO (then, Mr. Gasper) when Mr. MacDonald first joined the Company in the
prior fiscal year.
Charles R. Roberts, who resigned during the fiscal year was entitled to
salary at a specified annual rate through February 1, 1996, under the contract
that had been negotiated with him by Mr. Gasper when the executive first joined
the Company. His fiscal 1996 compensation consisted entirely of salary at that
rate through the date of his resignation in March 1996, together with certain
employee benefits consistent with his position.
Salaries of Other 1996 Executives. Barring special circumstances, such as
when the Board or the CEO (acting within Board-approved parameters) has
determined that a salary increase is in order in light of expansion of an
executive's duties or for competitive reasons (none of which determinations were
made for fiscal 1996), the Company's long-standing practice has been to continue
the salaries of Executive Officers without change from year to year, except for
occasional cost-of-living adjustments.
For fiscal 1996, a 4% cost-of-living adjustment was made in the salaries of
all Executive Officers whose employment with the Company preceded that year,
other than those whose salary arrangements were governed by contract. The fiscal
1996 'salary' total shown in the Summary Compensation Table for Mr. Koski is
less than in prior years because of the end of interest reimbursements to him
under the Loan Guaranty Plan, which also are included as 'salary' in that table.
Bonuses of Other 1996 Executives. Early in fiscal 1996, the Board
determined that 12.75% of Company pre-tax profits for the year (determined on a
consolidated basis, before bonuses) would be used as a cash incentive bonus
pool. Messrs. Gasper and MacDonald were not eligible to participate in this pool
in light of their separate bonus arrangements described above, nor was Mr. Eich.
All other fiscal 1996 Executive Officers were eligible, as were other, less
senior, management-level employees.
A-8
<PAGE>
<PAGE>
After fiscal year end, the Executive Committee of the Board was charged
with allocating bonuses from the pool among the eligible employees. The basis
for that committee's decisions is discussed in the report of that committee
below.
Stock Options. The stock-based component of the Company's compensation
structure for Executive Officers traditionally has been implemented through the
grant of options to purchase Common Stock under the Company's employee stock
option plans. Consistent with the practice in prior years, decisions concerning
the grant of options to Executive Officers for fiscal 1996 were made by the
Compensation/Stock Option Committee of the Board. The basis for that committee's
decisions is discussed in the report of that committee below.
FIRST OF MICHIGAN CAPITAL CORPORATION
BOARD OF DIRECTORS
Craig P. Baker
Geoffrey B. Baker
William H. Cuddy
Conrad W. Koski*
Gerard M. Lavin
Edward Soule*
-----------------------------
* Messrs. Koski and Soule did not become Directors until after the close of
fiscal 1996 and accordingly did not take part in any of the compensation
decisions covered by the above report. As discussed under 'Executive Officers'
above, Mr. Koski resigned from the Company.
EXECUTIVE COMMITTEE REPORT
As indicated in the preceding Board report, the decisions of the Executive
Committee relating to fiscal 1996 compensation of Executive Officers concerned
allocating the bonus pool for that year among the employees eligible to
participate, who included some for the 1996 Executive Officers as well as other
employees. With respect to these allocations, the Executive Committee determined
to defer to the judgment of Mr. Eich, who then was the Company's CEO. Mr. Eich's
allocation recommendations were based in part on the varying levels of
responsibility of the eligible employees and in part on his subjective
assessment of the quality of performance and value to the Company of each
employee, relative to that of the other eligible employees, during the portion
of the year in which he had served as CEO.
EXECUTIVE COMMITTEE
Craig P. Baker
Geoffrey B. Baker
William H. Cuddy
Gerard M. Lavin
COMPENSATION/STOCK OPTION COMMITTEE REPORT
The decisions of the Compensation/Stock Option Committee relating to
compensation of Executive Officers were made in its capacity as administrator of
the Company's option plan for employees. Although not required to do so under
the terms of this plan, which authorizes grants as and when determined to be
appropriate by the Committee, in its sole discretion, the Committee normally
considers the grant of options to Executive Officers after the close of a fiscal
year in light of Company financial performance for the year, and this was the
procedure followed for fiscal 1996. In the judgment of the members of the
Committee, the Company's performance for the year did not justify any option
grants to Executive Officers. Accordingly, no grants were made to any of them
for fiscal 1996.
A-9
<PAGE>
<PAGE>
COMPENSATION/STOCK OPTION COMMITTEE
Geoffrey B. Baker
William H. Cuddy
Gerard M. Lavin
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As indicated in the Proxy Statement relating to the Company's 1997 Annual
Meeting of Stockholders, certain decisions concerning the fiscal 1996
compensation of Executive Officers were made by the Compensation/Stock Option
Committee of the Board of Directors; others were made by the Executive Committee
of the Board or by the full Board. Messrs. Geoffrey Baker, Cuddy, and Lavin
served on the Compensation/Stock Option Committee throughout the last fiscal
year. They also served on the Executive Committee during the year, as did Mr.
Craig Baker. The only other persons who served on either committee at any time
during fiscal 1996 are former Director Joseph M. Mengden, who served on the
Compensation/Stock Option Committee until his resignation from the Board in June
1996 and on the Executive Committee until May 1996, and former Director Thomas
A. McDonnell, who also served on the Executive Committee for the same period.
The only persons other than Messrs. Mengden and McDonnell who served on the
Board of Directors at any time during the last fiscal year are the incumbent
Directors (other than Messrs. Koski and Soule, who first became Directors during
the current fiscal year), Steve Gasper, Jr., who resigned from the Board in
March 1996 in connection with his resignation as the Company's CEO, and Kenneth
C. Eich, who replaced Mr. Gasper on the Board in April 1996 and resigned that
position in November 1996 in connection with his resignation as CEO. Messrs.
Gasper, Eich, and Mengden are the only current or former Directors who took part
in any decisions concerning the fiscal 1996 compensation of any Executive
Officer and who also have ever been employed by or an officer of the Company or
any of its subsidiaries.
The Company's post-employment compensation arrangements with Mr. Gasper and
Mr. Eich are described above under 'Executive Compensation -- Certain
Contracts.' Mr. Mengden has an agreement with the Company for the provision of
supplemental retirement benefits similar to the agreement with Mr. Koski
described in the same section, which was entered into several years ago while
Mr. Mengden was still an employee of the Company. Benefits became payable to Mr.
Mengden under his agreement in April 1992, at the rate of $49,500 per year for
10 years.
SUMMARY COMPENSATION INFORMATION
The table which follows sets forth summary information for the Company's
1996 fiscal year and, as applicable, the preceding two fiscal years with respect
to the compensation of Kenneth C. Eich and of Steve Gasper, Jr., each of whom
served as the Company's Chief Executive Officer during a portion of fiscal 1996,
and of each other current or former Executive Officer of the Company (including
the Company's current CEO) who served as an Executive Officer during fiscal 1996
and whose total salary and bonus compensation for such fiscal year exceeded
$100,000 ('named executives').
A-10
<PAGE>
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION(1) ----------------------------
-------------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND SALARY BONUS COMPENSATION OPTIONS/SARS COMPENSATION
PRINCIPAL POSITION(S) YEAR ($)(1) ($)(2) ($)(3) (#)(4) $(5)
- --------------------------------------------- ---- -------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Conrad W. Koski ............................. 1996 $ 87,496 $ 25,000 -0- -0- $4,500
President and Chief Executive Officer from 1995 88,731 20,000 -0- -0- 1,364
November 18, 1996 through May 1997; during 1994 88,703 98,980 -0- -0- 2,989
fiscal years reported, Executive
Vice-President and Treasurer
Charles R. Roberts(6) ....................... 1996 $ 95,000 $ 50,000 -0- -0- $4,500
Senior Vice-President (since July 26, 1994) 1995 95,000 180,000 -0- 8,000 811
1994 N/A N/A N/A N/A N/A
Kenneth C. Eich ............................. 1996 $ 56,090 -0- -0- -0- $ -0-
Former President and Chief Executive 1995 N/A N/A N/A N/A N/A
Officer (March 19, 1996 through November 1994 N/A N/A N/A N/A N/A
15, 1996)
Steve Gasper, Jr. ........................... 1996 $100,000 $500,000 -0- -0- $4,500
Former President and Chief Executive 1995 100,000 500,000 -0- -0- 735
Officer (April 4, 1994 through March 18, 1994 50,000 236,667 $178,818 120,000 -0-
1996)
Urban A. MacDonald(6) ....................... 1996 105,462 $143,951 -0- -0- $ -0-
Former Senior Vice-President (October 17, 1995 120,000 180,930 -0- 8,000 -0-
1994 through August 16, 1996) 1994 N/A N/A N/A N/A N/A
</TABLE>
- ------------
(1) This compensation was received primarily in their capacities with the
Company. In addition to salary paid in respect of services performed during
the pertinent fiscal year, amounts reported in this column include, where
applicable, salary payable for such year but deferred under the Company's
former Deferred Compensation Plan (which was discontinued on February 29,
1996) and salary so payable but contributed on behalf of the named executive
to the Company's Capital Accumulation Plan, a so-called '401(k) plan.' For
Mr. Koski, the amounts reported also include for each fiscal year an amount
equal to the interest paid by him for such year on a then-outstanding loan
to purchase Common Stock, pursuant to the terms of the Company's former Loan
Guaranty Plan.
(2) This compensation was received primarily in their capacities with the
Company. In addition to bonuses paid in respect of the pertinent fiscal
year, the amounts reported in this column include, where applicable, bonuses
payable for such year but deferred under the Deferred Compensation Plan or
contributed to the Capital Accumulation Plan. For Mr. MacDonald, the amounts
reported consist of a share of the net profits of the Company's Corporate
Finance Department that were payable to him as head of that department and
investment executive commissions.
(3) The fiscal 1994 amount reported in this column for Mr. Gasper includes
relocation expense reimbursements and an adjustment for the tax effect of
such reimbursements aggregating to $154,026. In accordance with Commission
rules, the other amounts shown in this column do not include any perquisites
or other personal benefits provided to named executives, which in each case
and for each fiscal year did not exceed the lesser of (a) $50,000 and (b)
10% of the aggregate salary and bonus reported for the named executive.
(4) All shares reported in this column relate to option grants. The Company has
never maintained any plans for the grant of so-called 'freestanding' stock
appreciation rights ('SARs').
(5) Fiscal 1996 amounts reported in this column consist entirely of Company
'matching' contributions allocated for the pertinent year to the accounts of
then-eligible named executives under the Capital Accumulation Plan. Fiscal
1994 and 1995 amounts also include contributions allocated to the accounts
of then-eligible named executives under the Company's former Profit Sharing
Retirement Plan, and fiscal 1994 amounts also include contributions
allocated to the accounts of then-eligible named executives under the
Company's former Employee Stock Ownership Plan, both so-called 'defined
contribution' plans that have been discontinued.
(6) Beginning date shown is date of engagement as an officer of the Company.
Messrs. MacDonald and Roberts were first appointed Executive Officers in
December 1994. As permitted by rules of the Commission, fiscal 1994
compensation information is not presented for Mr. Roberts since he did not
serve as an Executive Officer during that year.
A-11
<PAGE>
<PAGE>
STOCK OPTIONS
During fiscal 1996, no options were granted to any of the named executives
and no previously granted options were exercised by any of them. The following
table provides information concerning unexercised options held by the named
executives at fiscal year-end.
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT FISCAL OPTIONS/SARS AT FISCAL
YEAR END(#) YEAR-END($)(1)
------------------------- --------------------------
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- --------------------------------------------------- ------------------------- --------------------------
<S> <C> <C>
Conrad W. Koski.................................... 10,725/0 $5,315/$0
Kenneth C. Eich.................................... 0/0 $0/$0
Steve Gasper, Jr................................... 0/0 $0/$0
Charles R. Roberts................................. 8,000/0 $0/$0
Urban A. MacDonald................................. 0/0 $0/$0
</TABLE>
- ------------
(1) For purposes of this column, 'value' is determined by subtracting the
aggregate exercise price for the optioned shares from the product of that
number of shares and the closing price for the Common Stock on the Chicago
Stock Exchange as of fiscal year-end.
AGREEMENTS WITH CERTAIN EXECUTIVE OFFICERS
CERTAIN CONTRACTS WITH EXECUTIVES NO LONGER WITH THE COMPANY.
As mentioned above under 'Executive Compensation' certain of the executives
whose contracts are summarized below are no longer with the Company.
Koski Employment Contract. In connection with his promotion to CEO of the
Company, Conrad W. Koski has entered into a new employment agreement with the
Company. The agreement provides for payment to Mr. Koski of salary at the annual
rate of $96,919 and of a cash bonus equal to 10% of the Company's consolidated
net income (as determined according to generally accepted accounting principles)
for the period of the agreement or, if greater, $200,000. The bonus is payable
quarterly within 30 days after release of the Company's quarterly earnings
report for a pertinent quarter and is to be prorated for the first quarter of
fiscal years 1997 and 1998 to take into account the portions of those quarters
not within the agreement period. The agreement also entitles Mr. Koski to
certain perquisites and to participate in Company employee benefit plans while
he continues as an employee, and it imposes certain non-compete obligations upon
him for a period of one year after termination of his employment.
The agreement has a one-year term, commencing as of November 18, 1996, but
would automatically terminate earlier if Mr. Koski should die or become
'disabled' (as that term is used in the agreement) and may be terminated earlier
under certain other circumstances. If Mr. Koski's employment is terminated by
the Company 'for cause' (as defined in the agreement) during its one-year term,
he would be entitled only to payment of any unpaid amounts of salary then
accrued for his services prior to termination, but if termination during that
period is due to his death or disability, by Mr. Koski for 'good reason' (as
therein defined), or by the Company other than for cause, he (or his estate)
would be entitled to receive the remainder of the salary and the $200,000
guaranteed portion of the bonus that would have been payable under the agreement
had he remained employed through the end of its term. The agreement also
provides that if Mr. Koski's employment is terminated by the Company other than
for cause before the end of the agreement's term, he will be entitled during the
30-day period following his termination to require the Company to purchase all
shares of Common Stock then owned by him, at a price equal to the closing bid
price for such shares on the public market as of his termination date.
A-12
<PAGE>
<PAGE>
Koski Retirement Agreement, Former Guaranteed Loan. The Company also has a
supplemental retirement benefit agreement with Mr. Koski, which was entered into
several years ago and continues to be in effect. Under this agreement, following
his retirement from the Company's employ or termination of his employment under
certain circumstances in the event of a change in control of the Company, but in
any event not before age 65, cash payments equal to 25% of his average
compensation in the fiscal years 1987 through 1991 are payable to Mr. Koski for
each year until age 75 and to designated beneficiaries in the event of his death
before age 75. Should he die before retirement, an amount equal to such annual
benefit is payable to his designated beneficiaries in the year following death
and 50% of such amount is payable in each year thereafter until Mr. Koski would
have reached age 65 or for nine years, whichever is later.
For a portion of fiscal 1996, there also was outstanding a Company guaranty
of a third-party loan that was made to Mr. Koski in fiscal 1987 for the purpose
of purchasing Common Stock. This guaranty was extended pursuant to the
provisions of a former Company plan designated as the Key Employee Stock
Purchase Loan Guaranty Plan (the 'Loan Guaranty Plan'), which was approved by
the Company's stockholders at its 1986 annual meeting. By the beginning of
fiscal 1996, the aggregate principal amount of the guaranteed loan had decreased
to $60,000; it was repaid in full early that year. Under the terms of the Loan
Guaranty Plan, while the loan was outstanding the Company was obligated to pay
Mr. Koski additional compensation equal to the amount of interest on the loan
paid by him. The additional compensation so paid for the fiscal years covered by
the Summary Compensation Table above is included there under 'Salary.'
Roberts Employment Agreement. In connection with his engagement by the
Company in July of 1994, Charles R. Roberts entered into an employment agreement
providing for salary at the annual rate of $95,000, a minimum cash bonus at the
annual rate of $180,000 through the end of fiscal 1995, and a potential future
grant of options to purchase 8,000 shares of Common Stock, which occurred during
fiscal 1995. Currently, only the salary payment continues to be covered by the
agreement. Under the agreement, Mr. Roberts may be terminated by the Company at
will, but if he is terminated other than for 'cause' (as therein defined) prior
to the end of fiscal 1997 he will be entitled to receive his salary through the
end of that period. The agreement also entitles Mr. Roberts to receive certain
fringe benefits and to participate in employee benefit plans and in any bonus
pool for executives at his level, and it imposes certain indemnification
obligations upon him.
In connection with Mr. Robert's employment, the Company also made him a
$25,000 cash advance, $5,000 of which was forgiven on each of the first and
second anniversaries of his employment by the Company and the remainder of which
is to be forgiven in $5,000 increments on the third through fifth anniversaries
of his employment provided he is then still employed by the Company.
Eich Severance Arrangements. In connection with his resignation from his
former positions with the Company, Kenneth C. Eich entered into a severance
agreement with the Company. Under this agreement, in lieu of all other
compensation and benefits otherwise payable or required to be provided to him,
Mr. Eich received a $100,000 cash payment in November 1996 and is entitled
through March 1997 to continue participation in the Company's medical and health
insurance plan on the same basis as immediately prior to his resignation.
Gasper Severance Arrangements. In connection with his former engagement as
President and CEO in March of 1994, Steve Gasper, Jr. entered into an employment
agreement with the Company. In connection with his March 1996 resignation from
his positions with the Company, that employment agreement was modified into a
severance agreement. As so modified, the agreement provides that through March
17, 1997, he will continue to be paid cash compensation at the annual salary and
quarterly bonus rates that applied to him in fiscal 1995 and to continuation of
some of the fringe benefits provided to him while he was CEO. Until March 18,
1998, Mr. Gasper is prohibited under this agreement from making any attempt to
induce or encourage any employee of the Company or any affiliate to leave for
employment with a competitor. The agreement also imposes confidentiality
obligations upon Mr. Gasper, which continue indefinitely.
A-13
<PAGE>
<PAGE>
OWNERSHIP OF THE SECURITIES OF THE COMPANY BY MANAGEMENT
AND CERTAIN OTHER BENEFICIAL OWNERS
Set forth below is certain information as of June 16, 1997 (except as
otherwise indicated) with respect to: (i) the persons or groups which are known
to the Company to beneficially own more than five percent of the outstanding
Shares; and (ii) the beneficial ownership of the Shares by each of the Company's
Directors, by certain current executive officers, and by all of the Company's
Directors and executive officers as a group. The holders have sole voting and
dispositive power unless otherwise noted.
<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES(1) PERCENT(1)
- ------------------------------------------------------------------------------ --------- ----------
<S> <C> <C>
Certain Beneficial Owners
DST Systems, Inc. ............................................................ 640,422(2) 25.7%
1888 Limited Partnership...................................................... 777,929(3) 31.2%
Hal H. Smith, III............................................................. 173,356(4) 6.9%
Directors and Certain Executive Officers
Geoffrey B. Baker(5).......................................................... 79,632(5) 3.2%
Craig P. Baker(5)............................................................. 799,809(6) 32.0%
William H. Cuddy.............................................................. 1,000 *
Gerald M. Lavin............................................................... 25,000 1.0%
Mark W. Shobe................................................................. 0 N/A
Edward Soule.................................................................. 25,000(7) 1.0%
All current Directors and Executive Officers (8 Persons)...................... 911,340(8) 36.1%
</TABLE>
- ------------
* Less than one percent
(1) The number of Shares is determined in accordance with Rule 13d-3 under the
Exchange Act, which results in the inclusion of shares that may be acquired
upon the exercise of options or other convertible securities that are
exercisable at the record date or will become exercisable within 60 days of
such date (the 'Additional Shares'). Percentage ownership is based on the
number of shares outstanding as of the record date plus the Additional
Shares. The holders may disclaim beneficial ownership of shares included
under certain circumstances.
(2) Based upon a Schedule 13D as amended through June 25, 1997, filed with the
Securities and Exchange Commission (the 'Commission') by DST Systems, Inc.
('DST'). DST's address is 333 West 11th Street, Kansas City, Missouri 64105.
(3) Based upon a Schedule 13D as amended through April 8, 1996 filed with the
Commission by 1888 Limited Partnership (the 'Partnership') and in Schedule
13D amendments filed October 10, 1995 by Louis C. Baker, who is the father
of Directors Craig P. and Geoffrey B. Baker, and by Mr. Louis Baker's
brother, Paxton Mendelssohn II. Such filings report that Messrs. Craig and
Louis Baker and Mr. Mendelssohn constitute the sole general partners of the
Partnership, each having a one-third general partnership interest as well as
limited partnership interests, and that action by the Partnership requires
the approval of the general partners holding at least two-thirds in interest
of the general partners. In light of that approval requirement, each general
partner has disclaimed beneficial ownership of any shares of Common Stock
held by the Partnership, and the Partnership has reported having sole voting
and dispositive power over such shares. The shares reported for the
Partnership do not include 100 shares held by Mr. Craig Baker individually,
21,780 shares held by a trust of which Messrs. Craig and Louis Baker and one
other person are co-trustees, 21,780 shares held by a trust of which Messrs.
Geoffrey and Louis Baker and another person are co-trustees, and 21,780
shares held by a trust of which Mr. Mendelssohn and two other persons are
co-trustees. The address of the partnership is c/o Day, Berry & Howard, One
Canterbury Green, Stamford, Connecticut 06091.
(4) Based upon disclosures contained in a Form 5 dated November 14, 1994 filed
with the Commission by Mr. Smith. His address is One Griswold Street,
Detroit, Michigan 48226.
(footnotes continued on next page)
A-14
<PAGE>
<PAGE>
(footnotes continued from previous page)
(5) Messrs. Geoffrey and Craig Baker are brothers. Shares reported for each
include 21,780 shares as to which voting and investment power is shared as a
co-trustee. The amount includes 2,200 Shares which may be acquired through
the exercise of options.
(6) Includes 777,929 shares owned by 1888 Limited Partnership of which Mr. Craig
Baker is a general and limited partner. Mr. Baker disclaims beneficial
ownership of these shares. See also note (5) above.
(7) All shares may be acquired through the exercise of options.
(8) Includes 27,310 shares which may be acquired through the exercise of
options.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Executive Officers and Directors of the Company and beneficial owners of
more than 10 percent of its outstanding Shares are required to file initial
statements of their beneficial ownership and reports of changes in such
ownership of the Shares pursuant to Section 16(a) of the Exchange Act. The
Company has reviewed such reports as it has received from persons known to it to
be (or during fiscal 1996 to have been) subject to such requirements and has
obtained written representations of certain such persons to the effect that
other reports are not required. Based solely on such review and certain written
representations, the Company believes that all Section 16(a) reports for fiscal
1996 were timely filed.
OTHER MATTERS
Except for the Offer made pursuant to the Tender Offer Agreement and the
agreement by the Sellers to sell the Sellers' Shares pursuant to Purchase
Agreement, the Memorandum, and certain agreements in respect thereof, each
described in the Schedule 14D-1, the Company is not aware of any other
arrangements, the operation of which may result in a change in control of the
Company. None of the Officers, Directors or Purchaser Designees are related
except for Messrs. Craig P. and Geoffrey B. Baker, who are brothers.
A-15
<PAGE>
<PAGE>
ANNEX B
311 SOUTH WACKER DRIVE, SUITE 4200 CHICAGO, ILLINOIS 60606 312-697-4600 FAX
312-697-0112
DUFF&PHELPS
June 24, 1997
Board of Directors
FIRST OF MICHIGAN CAPITAL CORPORATION
Suite 2600
100 Renaissance Center
Detroit, MI 48243
To the Board of Directors:
Duff & Phelps, LLC ('Duff & Phelps') has been engaged as independent
financial advisor to the Board of Directors of First of Michigan Capital
Corporation (the 'Company'), in connection with the acquisition of the Company
by Fahnestock Viner Holdings, Inc. (the 'Proposed Transaction'). Under the terms
of the Proposed Transaction, shareholders of the Company will receive cash of
$15.00 per share, or approximately $37.5 million in aggregate. Specifically,
Duff & Phelps has been asked to determine whether the Proposed Transaction is
fair from a financial point of view to the shareholders of the Company. Duff &
Phelps has previously provided financial advisory services to the Board of
Directors of the Company.
SCOPE OF ANALYSIS
We reviewed, among other items, the following Company information obtained
publicly or provided to us by Company management in connection with the Proposed
Transaction: (i) Securities and Exchange Commission ('SEC') 10-K filings for the
fiscal years ended September 30, 1991 to 1996; (ii) SEC 10-Q filings for the
periods ended March 31, 1996 and 1997; and (iii) the Offer to Purchase dated
June 18, 1997.
We reviewed industry and financial information, which included, among other
items, financial and stock market data relating to publicly held companies which
we deemed relevant and sales transactions for broker/dealer companies. All
industry information and data on public companies deemed comparable to the
Company, in whole or in part, and used in our analysis were obtained from
regularly published industry and investment sources. In addition, we held
discussions with senior management of the Company regarding past, current, and
projected operations and regarding discussions and contacts with other potential
acquirers. Duff & Phelps also took into account its assessment of general
economic, market and financial conditions, as well as its experience in
securities and business valuation, in general, and with respect to similar
transactions, in particular. Duff & Phelps did not make any independent
appraisals of the assets or liabilities of the Company.
In performing its analysis and rendering its Opinion with respect to the
Proposed Transaction, Duff & Phelps relied upon the accuracy and completeness of
all information provided to it, whether obtained from public or private sources,
including Company management, and did not attempt to independently verify any
such information. We note that nothing has come to our attention in the course
of our analysis to make us believe that it is not reasonable to rely on the
information described above, including the projections and reports of the
management of the Company. Our opinion further assumes that information supplied
and representations made by the Company's management are substantially accurate
regarding the Company and the background and terms of the Proposed Transaction.
B-1
<PAGE>
<PAGE>
Duff & Phelps has prepared its Opinion effective as of June 24, 1997. This
Opinion is necessarily based upon market, economic, financial and other
conditions as they exist and can be evaluated as of such date.
It is understood that this letter is only for the information of the
Company and its shareholders. Except as required under the disclosure
requirements of the securities laws and applicable law or legal process, without
our prior consent, this letter may not be quoted or referred to, in whole or in
part, in any written document or used for any other purpose.
CONCLUSION
Based on the discussion contained above and assuming the accuracy and
completeness of information provided to us, it is our opinion as of the date
hereof that the terms and conditions of the Proposed Transaction are fair and
reasonable to the shareholders of the Company from a financial point of view.
Respectfully Submitted,
Duff & Phelps, LLC
Duff & Phelps, LLC
B-2
<PAGE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT PAGE
- ----------- ------------------------------------------------------------------------------------------------- ----
<S> <C> <C>
(a)(1) -- Offer to Purchase, dated June 18, 1997........................................................
(a)(2) -- Supplement relating to Offer to Purchase, dated July 1, 1997..................................
(a)(3) -- Letter of Transmittal.........................................................................
(a)(4) -- Letter of the Board of Directors to the Stockholders, dated July 1, 1997......................
(a)(5) -- Press release issued by Holdings and the Company on June 12, 1997.............................
(a)(6) -- Press release issued by Holdings and the Company on June 18, 1997.............................
(a)(7) -- Press release issued by Holdings and the Company on July 1, 1997..............................
(b)(1) -- Fairness Opinion of Duff & Phelps, LLC dated June 24, 1997....................................
(b)(2) -- Engagement Letter dated June 13, 1997, between the Company and Duff & Phelps, LLC.............
(b)(3) -- Indemnification Agreement dated June 13, 1997, between the Company and Duff & Phelps LLC......
(c)(1) -- Securities Purchase Agreement dated June 11, 1997, between 1888 Limited Partnership ('1888'),
DST Systems Inc. ('DST' and together with 1888, the 'Sellers') and Purchaser...................
(c)(2) -- Sellers Escrow Agreement dated June 11, 1997, among the Sellers, The Bank of New York, as
escrow agent (the 'Escrow Agent'), and Purchaser...............................................
(c)(3)(i) -- Tender Offer Agreement dated June 11, 1997 (the 'Tender Offer Agreement'), among the Sellers,
the Company and the Purchaser..................................................................
(c)(3)(ii) -- Letter agreement dated June 17, 1997, among the Sellers, the Company and Purchaser (amending
the Tender Offer Agreement)....................................................................
(c)(4) -- Tender Escrow Agreement dated June 11, 1997, between the Company, the Escrow Agent and the
Purchaser......................................................................................
(c)(5) -- Confidential Disclosure and Standstill Agreement dated June 6, 1997, between the Company and
Purchaser......................................................................................
(c)(6) -- Memorandum of Understanding dated June 11, 1997...............................................
(c)(7) -- Consent of Duff & Phelps, LLC.................................................................
(c)(8) -- Letter, dated June 25, 1997, to the Company and Sellers designating individuals to be elected
to the Board of Directors of the Company.......................................................
(c)(9) -- Consent of Albert G. Lowenthal, dated June 30, 1997...........................................
(c)(10) -- Consent of A. Winn Oughtred, dated June 30, 1997..............................................
(c)(11) -- Consent of Elaine K. Roberts, dated June 30, 1997.............................................
(c)(12) -- Consent of Mark W. Shobe, dated June 30, 1997.................................................
(c)(13) -- Consent of Edward Soule, dated June 30, 1997..................................................
</TABLE>
<PAGE>
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
FIRST OF MICHIGAN CAPITAL CORPORATION
AT
$15.00 NET PER SHARE
BY
FMCC ACQUISITION CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
FAHNESTOCK VINER HOLDINGS INC.
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON WEDNESDAY, JULY 16, 1997, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS OF FIRST OF MICHIGAN CAPITAL CORPORATION HAS
UNANIMOUSLY APPROVED THE OFFER, SUBJECT TO RECEIPT OF A FAIRNESS OPINION. THE
BOARD OF DIRECTORS OF THE COMPANY HAS INDICATED ITS INTENTION TO ISSUE ITS
RECOMMENDATION WITH RESPECT TO THE OFFER UPON RECEIPT OF SUCH FAIRNESS OPINION.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) ANY WAITING PERIOD
UNDER THE HSR ACT (AS HEREINAFTER DEFINED) APPLICABLE TO THE PURCHASE OF SHARES
PURSUANT TO THE OFFER HAVING EXPIRED OR HAVING TERMINATED PRIOR TO THE
EXPIRATION OF THE OFFER, AND (2) THE SATISFACTION OF CERTAIN OTHER TERMS AND
CONDITIONS. SEE 'TENDER OFFER -- CERTAIN CONDITIONS TO THE OFFER.'
THE OFFER IS PART OF A PLAN OF FAHNESTOCK VINER HOLDINGS INC. AND ITS
INDIRECT WHOLLY OWNED SUBSIDIARY, FMCC ACQUISITION CORP., TO ACQUIRE ALL THE
SHARES (AS HEREINAFTER DEFINED).
------------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should either (i) complete and sign the Letter of Transmittal (or a
facsimile copy thereof) in accordance with the instructions in the Letter of
Transmittal, mail or deliver the Letter of Transmittal or such facsimile and all
other required documents to the Depositary and either deliver the certificates
for such Shares to the Depositary along with the Letter of Transmittal or tender
such Shares pursuant to the procedure for book-entry transfer set forth in
'TENDER OFFER -- Procedure for Tendering Shares', or (ii) request such
stockholder's broker, dealer, bank, trust company or other nominee to effect the
transaction for such stockholder. A stockholder whose Shares are registered in
the name of a broker, dealer, bank, trust company or other nominee must contact
such person if he or she desires to tender such Shares.
A stockholder who desires to tender Shares and whose certificates for such
Shares are not immediately available and who cannot comply with the procedures
for book-entry transfer prior to the expiration of the Offer, may tender such
Shares by following the procedure for guaranteed delivery set forth in 'TENDER
OFFER -- Procedure for Tendering Shares.'
Questions and requests for assistance may be directed to the Information
Agent or to the Dealer Manager at their respective addresses and telephone
numbers set forth on the back cover of this Offer to Purchase. Additional copies
of this Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed
Delivery and other related materials may be obtained from the Information Agent
or from brokers, dealers, commercial banks and trust companies.
------------------------
The Dealer Manager for the Offer is:
FAHNESTOCK & CO. INC.
June 18, 1997
<PAGE>
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTRODUCTION............................................................................................... 1
TENDER OFFER............................................................................................... 3
Terms of the Offer.................................................................................... 3
Acceptance for Payment and Payment for Shares......................................................... 3
Procedure for Tendering Shares........................................................................ 4
Withdrawal Rights..................................................................................... 6
Certain Federal Income Tax Consequences............................................................... 7
Price Range of the Shares; Dividends on the Shares.................................................... 8
Certain Effects of the Offer.......................................................................... 8
Certain Information Concerning the Company............................................................ 9
Certain Information Concerning Purchaser, Fahnestock and Holdings..................................... 10
Source and Amount of Funds............................................................................ 12
Background of the Offer............................................................................... 13
Purpose of the Offer.................................................................................. 14
Plans for the Company................................................................................. 14
Certain Agreements.................................................................................... 15
The Merger............................................................................................ 19
Board Representation.................................................................................. 20
Appraisal Rights...................................................................................... 20
Approval by the Board of Directors of the Company..................................................... 22
Certain Conditions to the Offer....................................................................... 22
Certain Legal and Regulatory Matters.................................................................. 23
Fees and Expenses..................................................................................... 25
Miscellaneous......................................................................................... 25
</TABLE>
<TABLE>
<S> <C>
Schedule I -- Directors and Executive Officers of Holdings
Schedule II -- Directors and Executive Officers of Fahnestock
Schedule III -- Directors and Executive Officers of Purchaser
</TABLE>
i
<PAGE>
<PAGE>
TO THE STOCKHOLDERS OF
FIRST OF MICHIGAN CAPITAL CORPORATION:
INTRODUCTION
FMCC Acquisition Corp., a Delaware corporation ('Purchaser'), and the
indirect wholly owned subsidiary of Fahnestock Viner Holdings Inc., an Ontario
corporation ('Holdings'), hereby offers to purchase all outstanding shares of
Common Stock, $.10 par value per share ('Common Stock'), of First of Michigan
Capital Corporation, a Delaware corporation (the 'Company'), at a purchase price
of $15.00 per share, net to the seller in cash, without interest (the 'Offer
Price'), upon the terms and subject to the conditions set forth in this Offer to
Purchase and in the related Letter of Transmittal (which, together with any
amendments or supplements hereto or thereto, collectively constitute the
'Offer').
Purchaser is a wholly owned subsidiary of Fahnestock & Co. Inc.
('Fahnestock'), a brokerage firm that is wholly owned by Holdings. Holdings
formed Purchaser in connection with the Offer and the transactions contemplated
hereby.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER,
SUBJECT TO RECEIPT OF A FAIRNESS OPINION. THE COMPANY HAS INFORMED PURCHASER
THAT THE COMPANY INTENDS TO FILE WITH THE SECURITIES AND EXCHANGE COMMISSION
(THE 'COMMISSION') AND TO DISSEMINATE TO ITS STOCKHOLDERS A SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT WITH RESPECT TO SUCH APPROVAL, PROMPTLY
UPON RECEIPT OF SUCH FAIRNESS OPINION.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (i) ANY WAITING PERIOD
UNDER THE HSR ACT APPLICABLE TO THE PURCHASE OF SHARES PURSUANT TO THE OFFER
HAVING EXPIRED OR HAVING TERMINATED PRIOR TO THE EXPIRATION OF THE OFFER, AND
(ii) THE SATISFACTION OF CERTAIN OTHER TERMS AND CONDITIONS. SEE 'TENDER
OFFER -- CERTAIN CONDITIONS TO THE OFFER.'
Tendering stockholders will not be obligated to pay brokerage commissions
or, except as set forth in Instruction 6 of the Letter of Transmittal, transfer
taxes on the purchase of Shares by Purchaser. Purchaser will reimburse
Fahnestock, its affiliate, which is acting as Dealer Manager (the 'Dealer
Manager'), for all its out-of-pocket expenses in connection with the Offer.
Purchaser will pay all fees and expenses of The Bank of New York, which is
acting as the Depositary (the 'Depositary'), and of Beacon Hill Partners, Inc.,
which is acting as Information Agent (the 'Information Agent'), in connection
with the Offer. See 'TENDER OFFER -- Fees and Expenses.' The Offer Price will be
paid for Shares validly tendered and accepted as described in 'TENDER
OFFER -- Acceptance for Payment and Payment for Shares' hereof as soon as
practicable after acceptance by Purchaser.
The Offer is being made as part of Holdings' plan to acquire all the
outstanding shares of Common Stock (the 'Shares'). Pursuant to the Securities
Purchase Agreement dated as of June 11, 1997 (the 'Purchase Agreement'), between
Purchaser and DST Systems, Inc. ('DST') and 1888 Limited Partnership ('1888')
(together with DST, the 'Sellers'), Purchaser agreed to purchase from Sellers an
aggregate of 1,418,351 Shares (the 'Sellers Shares') (representing approximately
53% of the outstanding Shares on a fully diluted basis) for a purchase price of
$15.00 per share, net to the Sellers in cash (the 'Sellers Shares Purchase
Price'), subject to expiration or termination of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the 'HSR Act'), the
receipt of necessary regulatory approvals and certain other conditions,
including expiration of the Offer. Pursuant to the Tender Offer Agreement dated
as of June 11, 1997, as amended (the 'Tender Offer Agreement'), among Purchaser,
the Company and the Sellers, Purchaser agreed to commence the Offer on the terms
and subject to the conditions described herein. See 'TENDER OFFER -- Certain
Agreements.'
Under the terms of the Purchase Agreement, the Sellers agreed to place the
Sellers Shares, and Purchaser agreed to place $21,275,265 (i.e., the Sellers
Shares Purchase Price), in escrow pending the consummation or termination of the
purchase of the Sellers Shares. In addition, Sellers agreed to use their
respective best efforts to cause certain stockholders who beneficially own
approximately 120,000 Shares to tender their Shares pursuant to the Offer. Under
the terms of the Tender Offer Agreement,
<PAGE>
<PAGE>
Purchaser agreed to deposit cash in the amount of $16,724,735 (the 'Tender Offer
Deposit') in escrow pending the consummation or termination of the Offer.
It is the intention of Holdings and Purchaser that Shares not acquired in
the Offer or pursuant to the Purchase Agreement will be subsequently acquired in
a back-end merger (the 'Merger') for consideration per Share equivalent to the
Offer Price. However, Purchaser and the Company have not entered into an
agreement that sets forth the specific terms and conditions of the Merger. The
approval by the Board of Directors of the Company in the Memorandum of
Understanding, dated June 11, 1997 (the 'MOU'), with Purchaser effected the
waiver of the applicability of a provision of the Company's certificate of
incorporation (the 'Charter') which would require the affirmative vote of 80% of
the outstanding Shares to approve a Business Combination with a Related Party
(as such terms are defined in the Charter). Accordingly, under the Charter and
the General Corporation Law of the State of Delaware (the 'DGCL'), Purchaser
will have sufficient voting power to approve the Merger if it consummates the
purchase of the Sellers Shares, whether or not it consummates the Offer and
whether or not any other stockholders of the Company vote to approve the Merger.
If Purchaser acquires 90% or more of the outstanding Shares pursuant to the
Offer and the purchase of the Sellers Shares, the 'short form' merger provisions
of the DGCL would permit the Merger to occur without a vote of the stockholders
of the Company. If a 'short form' merger is available under the DGCL, Purchaser
expects to consummate a 'short form' merger of Purchaser with and into the
Company. See 'TENDER OFFER -- Purpose of the Offer.'
Certain restrictions on business combinations are set forth in Section 203
of the DGCL and Section 780 of the Business Corporations Act of the State of
Michigan (the 'MBCA'). In the Tender Offer Agreement, the Company has
represented that (i) neither Section 203 of the DGCL nor Section 780 of the MBCA
is applicable to the Offer, and (ii) there are no provisions of the DGCL or the
MBCA that would prevent the consummation of the transactions contemplated by the
Offer. See 'TENDER OFFER -- Certain Legal and Regulatory Matters.'
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION
IS MADE WITH RESPECT TO THE OFFER.
2
<PAGE>
<PAGE>
TENDER OFFER
TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms of any such extension or amendment),
Purchaser will accept for payment and purchase at the price set forth above all
Shares properly tendered by, and not properly withdrawn prior to, the Expiration
Date. The term 'Expiration Date' means 12:00 Midnight, New York City time, on
Wednesday, July 16, 1997, unless Purchaser shall, in its sole discretion, have
extended the Offer, in which event the term 'Expiration Date' shall mean the
latest time and date on which the Offer, as so extended by Purchaser, shall
expire.
Consummation of the Offer is conditioned upon satisfaction of certain
conditions. See 'TENDER OFFER -- Certain Conditions to the Offer.' If any such
condition, whether individually or in combination, is not satisfied prior to the
Expiration Date, Purchaser reserves the right (but shall not be obligated) to
(i) decline to purchase any of the Shares tendered and terminate the Offer, or
(ii) waive any condition and, subject to complying with applicable rules and
regulations of the Commission, the New York Stock Exchange, Inc. ('NYSE') or
other applicable regulatory authority, purchase all Shares validly tendered.
The Company has provided to Purchaser its list of stockholders and security
position listings for the purpose of disseminating the Offer to holders of
Shares. This Offer to Purchase and the related Letter of Transmittal and other
relevant materials will be mailed to record holders of Shares and furnished to
brokers, dealers, commercial banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on the Company's stockholder lists
or, if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Shares.
ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment and will pay for all Shares
validly tendered prior to the Expiration Date, and not properly withdrawn in
accordance with the provisions set forth under 'TENDER OFFER -- Withdrawal
Rights' promptly after the Expiration Date. Any determination concerning the
satisfaction or waiver of such terms or conditions will be within the sole
discretion of Purchaser, and such determination will be final and binding on all
tendering stockholders. See 'TENDER OFFER -- Terms of the Offer' and
' -- Certain Conditions to the Offer.'
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) certificates for
such Shares (or timely Book-Entry Confirmation of a transfer of such Shares as
described in 'TENDER OFFER -- Procedure for Tendering Shares'), (ii) a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees, or an Agent's Message (as hereinafter
defined) in connection with a book-entry transfer, and (iii) any other documents
required by the Letter of Transmittal.
The per Share consideration paid to any stockholder pursuant to the Offer
will be the highest per Share consideration paid to any other stockholder
pursuant to the Offer.
The term 'Agent's Message' means a message, transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation (as hereinafter defined), which states that such
Book-Entry Transfer Facility has received an express acknowledgment from the
participant in such Book-Entry Transfer Facility tendering the Shares which are
the subject of such Book-Entry Confirmation, that such participant has received
and agrees to be bound by the terms of the Letter of Transmittal and that
Purchaser may enforce such agreement against such participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to Purchaser and not
withdrawn as, if and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance for payment of such Shares. Payment for
Shares accepted for payment pursuant to the Offer will be made by deposit of the
Offer Price
3
<PAGE>
<PAGE>
therefor with the Depositary, which will act as agent for tendering stockholders
for the purpose of receiving payment from (or on behalf of) Purchaser and
transmitting payment to tendering stockholders. The Tender Offer Deposit has
been placed in escrow in accordance with the terms of the Tender Offer Escrow
Agreement dated as of June 11, 1997 (the 'Tender Escrow Agreement'), among the
Company, the Sellers, The Bank of New York (the 'Escrow Agent') and Purchaser,
and will be used to pay (in whole or in part) for Shares properly tendered and
not withdrawn.
If any certificates are submitted for Shares which are not properly
tendered pursuant to the terms and conditions of the Offer, or if certificates
are submitted for more Shares than are tendered, certificates for such
unpurchased Shares will be returned, without expense to the tendering
stockholder (or, in the case of Shares delivered by book-entry transfer of such
Shares into the Depositary's account at a Book-Entry Transfer Facility pursuant
to the procedure set forth under 'TENDER OFFER -- Procedure for Tendering
Shares', such Shares will be credited to an account maintained at the
appropriate Book-Entry Transfer Facility by the participant therein which so
delivered such Shares), as soon as practicable after the expiration or
termination of the Offer.
If Purchaser is delayed in its acceptance for payment of, or payment for,
Shares or is unable to accept for payment or pay for Shares pursuant to the
Offer for any reason, then, without prejudice to Purchaser's rights under the
Offer (but subject to compliance with Rule 14e-1(c) under the Exchange Act,
which requires that a tender offeror pay the consideration offered or return the
tendered securities promptly after the termination or withdrawal of a tender
offer), the Depositary may, nevertheless, on behalf of Purchaser, retain
tendered Shares, and any such Shares may not be withdrawn except to the extent
tendering stockholders are entitled to exercise, and duly exercise, withdrawal
rights as described in 'TENDER OFFER -- Withdrawal Rights.'
Purchaser reserves the right to transfer or assign, in whole or from time
to time in part, to any of its affiliates, the right to purchase Shares tendered
pursuant to the Offer, but any such transfer or assignment will not relieve
Purchaser of its obligations under the Offer and will in no way prejudice the
rights of tendering stockholders to receive payment pursuant to the Offer.
PROCEDURE FOR TENDERING SHARES
Valid Tender. For a stockholder validly to tender Shares pursuant to the
Offer, either (1) a properly completed and duly executed Letter of Transmittal
(or a manually signed facsimile thereof), together with any required signature
guarantees, or an Agent's Message in connection with a book-entry transfer of
Shares, and any other required documents, must be received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase and
either certificates for tendered Shares must be received by the Depositary at
one of such addresses or such Shares must be delivered pursuant to the procedure
for book-entry transfer set forth below (and a confirmation of such transfer
received by the Depositary), in each case prior to the Expiration Date, or (2)
the tendering stockholder must comply with the guaranteed delivery procedure set
forth below.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL
BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY
IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at The Depository Trust Company and the Philadelphia Depository
Trust Company (each a 'Book-Entry Transfer Facility' and together, the
'Book-Entry Transfer Facilities') for purposes of the Offer within two business
days after the date of this Offer to Purchase. Any financial institution that is
a participant in any of the Book-Entry Transfer Facilities' systems may make
book-entry delivery of Shares by causing a Book-Entry Transfer Facility to
transfer such Shares into the Depositary's account in accordance with such
Book-Entry Transfer Facility's procedures for such transfer. However, although
4
<PAGE>
<PAGE>
delivery of Shares may be effected through book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility, the Letter of
Transmittal (or a manually signed facsimile thereof), properly completed and
duly executed, with any required signature guarantees or an Agent's Message in
connection with a book-entry delivery of Shares, and any other required
documents, must, in any case, be transmitted to, and received by, the Depositary
at one of its addresses set forth on the back cover of this Offer to Purchase
prior to the Expiration Date, or the tendering stockholder must comply with the
guaranteed delivery procedure described below. The confirmation of a book-entry
transfer of Shares into the Depositary's account at a Book-Entry Transfer
Facility as described above is referred to herein as a 'Book-Entry
Confirmation.' DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN
ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal if (1) the Letter of Transmittal is signed by the registered holder
of Shares (which term, for purposes of this Section, includes any participant in
any Book-Entry Transfer Facility whose name appears on a security position
listing as the owner of the Shares) tendered therewith and such registered
holder has not completed either the box entitled 'Special Delivery Instructions'
or the box entitled 'Special Payment Instructions' on the Letter of Transmittal,
or (2) such Shares are tendered for the account of a firm that is a member firm
of a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc. or a bank, broker, dealer, credit union,
savings association or other entity that is a member in good standing of a
recognized Medallion Program approved by The Securities Transfer Association,
Inc. (an 'Eligible Institution'). In all other cases, all signatures on the
Letters of Transmittal must be guaranteed by an Eligible Institution. See
Instructions 1 and 5 to the Letter of Transmittal. If the certificates for
Shares are registered in the name of a person other than the signer of the
Letter of Transmittal, or if payment is to be made or certificates for Shares
not tendered or not accepted for payment are to be issued to a person other than
the registered holder of the certificates surrendered, the tendered certificates
must be endorsed or accompanied by appropriate stock powers, in either case
signed exactly as the name or names of the registered holders or owners appear
on the certificates, with the signatures on the certificates or stock powers
guaranteed as aforesaid. See Instruction 5 to the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available, or the procedure for book-entry transfer cannot be completed on a
timely basis, or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such stockholder's tender may be
effected if all the following conditions are met:
A. such tender is made by or through an Eligible Institution;
B. a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser is received by
the Depositary as provided below prior to the Expiration Date; and
C. the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation with respect to such Shares),
together with a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), with any required signature guarantees and any
other documents required by the Letter of Transmittal, are received by the
Depositary within three NYSE trading days after the date of execution of
such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mail to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (i) certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares, (ii) a properly completed and duly
executed Letter of Transmittal (or facsimile thereof) with any required
signature guarantees or an Agent's Message in connection with a book-entry
delivery of Shares, and (iii) any other documents required by the Letter of
Transmittal. Accordingly, tendering stockholders may be paid at different
5
<PAGE>
<PAGE>
times depending upon when certificates for Shares or Book-Entry Confirmations
are actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE
PAID ON THE OFFER PRICE OF SHARES TO BE PURCHASED BY PURCHASER, REGARDLESS OF
THE EXTENSION OF THE OFFER OR ANY DELAY IN MAKING PAYMENT.
A valid tender of Shares will constitute a binding agreement between the
tendering stockholder and Purchaser in accordance with the terms and subject to
the conditions set forth in the Offer.
BACKUP WITHHOLDING. UNLESS AN EXEMPTION APPLIES UNDER THE APPLICABLE LAW
AND REGULATIONS CONCERNING 'BACKUP WITHHOLDING' OF FEDERAL INCOME TAX, THE
DEPOSITARY WILL BE REQUIRED TO WITHHOLD, AND WILL WITHHOLD, 31% OF THE GROSS
PROCEEDS OTHERWISE PAYABLE TO A STOCKHOLDER OR OTHER PAYEE PURSUANT TO THE OFFER
UNLESS THE STOCKHOLDER OR OTHER PAYEE PROVIDES HIS OR HER TAXPAYER
IDENTIFICATION NUMBER (SOCIAL SECURITY NUMBER OR EMPLOYER IDENTIFICATION NUMBER)
AND CERTIFIES THAT SUCH NUMBER IS CORRECT. EACH TENDERING STOCKHOLDER (AND, IF
APPLICABLE, EACH OTHER PAYEE) SHOULD COMPLETE AND SIGN THE MAIN SIGNATURE FORM
AND THE SUBSTITUTE FORM W-9 INCLUDED AS PART OF THE LETTER OF TRANSMITTAL, SO AS
TO PROVIDE THE INFORMATION AND CERTIFICATION NECESSARY TO AVOID BACKUP
WITHHOLDING, (UNLESS AN APPLICABLE EXEMPTION EXISTS AND IS PROVED IN A MANNER
SATISFACTORY TO PURCHASER AND THE DEPOSITARY).
Appointment. By executing the Letter of Transmittal, the tendering
stockholder will irrevocably appoint designees of Purchaser as such
stockholder's attorneys-in-fact and proxies in the manner set forth in the
Letter of Transmittal, with full power of substitution, to the full extent of
such stockholder's rights with respect to the Shares tendered by such
stockholder and accepted for payment by Purchaser and with respect to any and
all other Shares or other securities or rights issued or issuable in respect of
such Shares on or after June 18, 1997. All such proxies shall be considered
coupled with an interest in the tendered Shares. Such appointment will be
effective when, and only to the extent that, Purchaser accepts for payment
Shares tendered by such stockholder as provided herein. Upon such acceptance for
payment, all prior powers of attorney and proxies given by such stockholder with
respect to such Shares or other securities or rights will, without further
action, be revoked and no subsequent powers of attorney and proxies may be given
(and, if given, will not be deemed effective). The designees of Purchaser will
thereby be empowered to exercise all voting and other rights with respect to any
annual, special or adjourned meeting of the Company's stockholders, or
otherwise, as they in their sole discretion deem proper. Purchaser reserves the
right to require that, in order for Shares to be deemed validly tendered,
immediately upon Purchaser's acceptance for payment of such Shares, Purchaser
must be able to exercise full voting and other rights with respect to such
Shares and other securities or rights, including voting at any meeting of
stockholders then scheduled.
Determination of Validity. All questions as to the form of all documents
and the validity, eligibility (including time of receipt) and acceptance of
tendered Shares will be determined by Purchaser, in its sole discretion, which
determination will be final and binding. Purchaser reserves the absolute right
to reject any or all tenders of any particular Shares either not in appropriate
form or the acceptance of which would, in the opinion of Purchaser's counsel, be
unlawful. Purchaser also reserves the absolute right to waive any of the
conditions of the Offer or any defect or irregularity in the tender of any
particular Shares whether or not similar defects or irregularities are waived in
the case of other Shares. Purchaser's interpretation of the terms and conditions
of the Offer will be final (including the Letter of Transmittal and the
instructions thereto). No tender of Shares will be deemed to have been properly
made until all defects and irregularities with respect to Shares so tendered
have been cured or waived. Purchaser shall not be under any duty to give notice
of any defects or irregularities of tenders and shall not incur any liability
for failure to give any such notification.
WITHDRAWAL RIGHTS
Tenders of Shares made pursuant to the Offer are irrevocable, except that
Shares tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment by Purchaser
pursuant to the Offer, may also be withdrawn at any time on or after August 18,
1997.
To be effective, a written, telegraphic, telex, or facsimile transmission
notice of withdrawal must be timely received by the Depositary at one of its
addresses set forth on the back cover of this Offer to
6
<PAGE>
<PAGE>
Purchase. Any notice of withdrawal must specify the name of the person having
deposited Shares to be withdrawn, the number or amount of Shares to be withdrawn
and the names in which such Shares are registered, if different from that of the
tendering stockholder. If the certificates have been delivered or otherwise
identified to the Depositary, then prior to the release of such certificates,
the tendering stockholder also must submit the serial numbers shown on the
particular certificates and, unless such Shares have been tendered by an
Eligible Institution, the signature on such stockholder's notice of withdrawal
must be guaranteed by an Eligible Institution. If Shares have been delivered
pursuant to the procedure for book-entry transfer as set forth under 'TENDER
OFFER -- Procedure for Tendering Shares', any notice of withdrawal also must
specify the name and number of the account at the appropriate Book-Entry
Transfer Facility to be credited with the withdrawn Shares and otherwise comply
with such Book-Entry Transfer Facility's procedures.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
which determination shall be final and binding.
Any Shares withdrawn will thereafter be deemed not properly tendered for
purposes of the Offer, unless and until such withdrawn Shares are re-tendered
prior to the Expiration Date by following one of the procedures described under
'TENDER OFFER -- Procedure for Tendering Shares.'
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
THE FOLLOWING IS A SUMMARY OF THE PRINCIPAL FEDERAL INCOME TAX CONSEQUENCES
OF THE OFFER AND THE MERGER TO HOLDERS WHOSE SHARES ARE PURCHASED PURSUANT TO
THE OFFER OR WHOSE SHARES ARE CONVERTED INTO THE RIGHT TO RECEIVE CASH IN THE
MERGER (INCLUDING PURSUANT TO APPRAISAL RIGHTS). THE DISCUSSION APPLIES ONLY TO
HOLDERS OF SHARES IN WHOSE HANDS SHARES ARE CAPITAL ASSETS, AND MAY NOT APPLY TO
SHARES RECEIVED UPON CONVERSION OF SECURITIES OR EXERCISE OF WARRANTS OR OTHER
RIGHTS TO ACQUIRE SHARES OR PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS
OR OTHERWISE AS COMPENSATION, OR TO HOLDERS OF SHARES WHO ARE IN SPECIAL TAX
SITUATIONS (SUCH AS INSURANCE COMPANIES, TAX-EXEMPT ORGANIZATIONS OR NON-U.S.
PERSONS).
THE FEDERAL INCOME TAX CONSEQUENCES SET FORTH BELOW ARE INCLUDED FOR
GENERAL INFORMATIONAL PURPOSES ONLY AND ARE BASED UPON CURRENT LAW. BECAUSE
INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH HOLDER OF SHARES SHOULD CONSULT SUCH
HOLDER'S OWN TAX ADVISOR TO DETERMINE THE APPLICABILITY OF THE RULES DISCUSSED
BELOW TO SUCH STOCKHOLDER AND THE PARTICULAR TAX EFFECTS OF THE OFFER AND THE
MERGER, INCLUDING THE APPLICATION OF STATE, LOCAL AND OTHER INCOME TAX LAWS.
Sales of Shares by stockholders of the Company pursuant to the Offer and
the conversion of Shares into the right to receive cash in the Merger (including
pursuant to the exercise of appraisal rights) will be taxable transactions for
federal income tax purposes and also may be taxable transactions under
applicable state, local and other tax laws.
In general, for federal income tax purposes, a stockholder who sells his
Shares pursuant to the Offer or receives cash in the Merger will recognize gain
or loss equal to the difference between the cash received and his tax adjusted
basis for such Shares sold pursuant to the Offer or converted into the right to
receive cash in the Merger. Gain or loss must be determined separately for each
block of Shares (i.e., Shares acquired at the same cost in a single transaction)
sold pursuant to the Offer or converted into the right to receive cash in the
Merger. Provided that Shares sold were held by the stockholder as capital
assets, such gain or loss will be capital gain or loss (other than, with respect
to the exercise of appraisal rights, amounts, if any, which are or are deemed to
be interest for federal income tax purposes, which amounts will be taxed as
ordinary income). Any such capital gain or loss will be long-term if, as of the
date of sale (or, if applicable, the date of the Merger), such Shares were held
for more than one year.
In the case of an individual, net long-term capital gain may be subject to
a reduced rate of tax and net capital losses may be subject to limits on
deductibility.
Payments in connection with the Offer or the Merger may be subject to
'backup withholding' as discussed in 'TENDER OFFER -- Procedure for Tendering
Shares.'
7
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<PAGE>
PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
According to the Company's Annual Report on Form 10-K for the fiscal year
ended September 27, 1996 (the 'Company Form 10-K') and information supplied to
Purchaser by the Company, the Shares have traded on the Chicago Stock Exchange
('CSE') under the trading symbol 'FMG' since September 19, 1974. The following
table sets forth, for the calendar quarters indicated, the high and low sales
prices per Share as reported in publicly available resources.
<TABLE>
<CAPTION>
SALE PRICE
----------------
HIGH LOW
------ ------
<S> <C> <C>
1995
First Calendar Quarter......................................................... $12.50 $10.50
Second Calendar Quarter........................................................ 11.13 9.25
Third Calendar Quarter......................................................... 10.13 8.88
Fourth Calendar Quarter........................................................ 9.50 7.88
1996
First Calendar Quarter......................................................... $ 8.75 $ 7.88
Second Calendar Quarter........................................................ 8.25 7.13
Third Calendar Quarter......................................................... 8.00 7.50
Fourth Calendar Quarter........................................................ 9.75 7.63
1997
First Calendar Quarter......................................................... $ 9.00 $ 7.75
Second Calendar Quarter (through June 11)...................................... 10.06 8.00
</TABLE>
On June 11, 1997, the last full day of trading prior to the public
announcement of the execution of the Purchase Agreement and the Tender Offer
Agreement, the closing sale price per Share as reported on the CSE was $8.75. On
June 17, 1997, the last full day of trading before the commencement of the
Offer, the closing sales price per Share as reported on the CSE was $14.25.
STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES.
Cash dividends were last paid during fiscal 1995. No cash dividend was paid
in fiscal 1996 or in fiscal 1997 (through June 17, 1997). The Tender Offer
Agreement prohibits the Company from declaring or paying any dividend or
distribution.
CERTAIN EFFECTS OF THE OFFER
The purchase of Shares pursuant to the Offer will reduce the number of
holders of Shares and the number of Shares that might otherwise trade publicly
and could adversely affect the liquidity and market value of the remaining
Shares held by the public.
Stock Exchange Listing. Depending upon the number of Shares purchased in
the Offer, the Shares may no longer meet the requirements of the CSE for
continued listing. According to the CSE's published guidelines, the CSE would
consider delisting the Shares if, among other things, (i) the number of public
beneficial owners, i.e., owners who are not officers, directors, members of
their immediate families, or owners of 5% or more of the outstanding Shares
('CSE Excluded Owners'), should fall below 400 and the number of public
beneficial owners of at least 100 Shares is less than 300; (ii) the number of
publicly held Shares, i.e., Shares held by persons other than CSE Excluded
Owners, should fall below 200,000 (or below 100,000 if there are then 500 or
more public beneficial owners of Shares); or (iii) the aggregate market value of
publicly held Shares should fall below $1,000,000 and there are then less than
500 public beneficial owners of Shares. According to the Company Form 10-K, as
of December 11, 1996, there were 598 holders of record of Shares and 2,672,477
Shares outstanding.
If the CSE were to delist the Shares, it is possible that the Shares would
continue to trade on another securities exchange or in the over-the-counter
market and that price quotations would be reported by such exchange, by the
Nasdaq Stock Market, Inc. or other sources. The extent of the public market for
the Shares and availability of such quotations would depend, however, upon such
factors as the number of holders, the aggregate market value of the publicly
held Shares at such time, the interest remaining in the market in the Shares on
the part of securities firms, the possible termination of
8
<PAGE>
<PAGE>
registration of the Shares under the Securities Exchange Act of 1934, as amended
(the 'Exchange Act') and other factors.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission if the Shares are
neither listed on a national securities exchange nor held by 300 or more holders
of record. Termination of registration of the Shares under the Exchange Act
would substantially reduce the information required to be furnished by the
Company to its stockholders and to the Commission and would make certain
provisions of the Exchange Act no longer applicable to the Company, such as the
short-swing profit recovery provisions of Section 16(b) of the Exchange Act, the
requirement of furnishing a proxy statement pursuant to Section 14(a) of the
Exchange Act in connection with stockholders' meetings and the related
requirement of furnishing an annual report to stockholders and the requirements
of Rule 13e-3 under the Exchange Act with respect to 'going private'
transactions. Furthermore, the ability of 'affiliates' of the Company and
persons holding 'restricted securities' of the Company to dispose of such
securities pursuant to Rule 144 or 144A under the Securities Act may be impaired
or eliminated.
Purchaser intends to seek to cause the Company to apply for termination of
registration of the Shares under the Exchange Act as soon after the completion
of the Offer as the requirements for such termination are met. If registration
of the Shares is not terminated prior to the Merger, then the Shares will be
delisted from all stock exchanges and the registration of the Shares will be
terminated following the consummation of the Merger.
Margin Regulations. The Shares are currently 'margin securities' under the
regulations of the Board of Governors of the Federal Reserve System (the
'Federal Reserve Board'), which has the effect, among other things, of allowing
brokers to extend credit on the collateral of the Shares. Depending on factors
similar to those described above regarding listing and market quotations, it is
possible that following the Offer the Shares would no longer constitute 'margin
securities' for the purposes of the margin regulations of the Federal Reserve
Board and therefore could no longer be used as collateral for loans made by
brokers.
CERTAIN INFORMATION CONCERNING THE COMPANY
General. The historical information concerning the Company contained in
this Offer to Purchase, including financial information, has been taken from or
based upon publicly available documents and records on file with the Commission
and other public sources. None of Holdings, Purchaser and Fahnestock assumes any
responsibility for the accuracy or completeness of the information concerning
the Company contained in such documents and records or for any failure by the
Company to disclose events which may have occurred or may affect the
significance or accuracy of any such information to Holdings or Purchaser.
The Company is a Delaware corporation with its principal executive offices
at 100 Renaissance Center, 26th Floor, Detroit, Michigan 48243. According to the
Company Form 10-K, the Company's principal subsidiary is First of Michigan
Corporation ('FOM'), founded in 1933. FOM is a securities broker-dealer and
investment banker, and engages in brokerage of listed securities. Securities
dealt include equity and debt securities of industrial and financial companies
and institutions, mutual funds, and securities of states, municipalities and
other governmental entities, including hospital, industrial development and
pollution control bonds. FOM is a member of the NYSE, other stock and option
exchanges, and the National Asssociation of Securities Dealers, Inc.
FOM is registered as a broker-dealer in all 50 states, except Nebraska. It
maintains offices in 34 locations in two states, 33 of which offices are in
Michigan. At September 27, 1996, FOM maintained current accounts for
approximately 175,000 customers (such 'customers' being defined as persons for
whom at least one transaction had been effected or for whom securities or money
were being held during the previous 24 months). Also, as of September 26, 1996,
money or securities were being held, or a transaction had been effected since
August 30, 1996, for approximately 84,000 customers.
Available Information. The Company is subject to the reporting requirements
of the Exchange Act and, in accordance therewith, is obligated to file reports
and other information with the Commission
9
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<PAGE>
relating to its business, financial condition and other matters. Information as
of particular dates concerning the Company's directors and officers, their
remuneration, options granted to them, the principal holders of the Company's
securities and any material interests of such persons in transactions with the
Company is required to be disclosed in proxy statements distributed to the
Company's stockholders and filed with the Commission. Such reports, proxy
statements and other information should be available for inspection at the
public reference facilities of the Commission located at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the regional offices of the Commission located in
the Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661, and Seven World Trade Center, 13th Floor, New York, New York
10048. Copies should be obtainable, by mail, upon payment of the Commission's
customary charges, by writing to the Commission's principal office at 450 Fifth
Street, N.W., Washington, D.C. 20549. The Commission also maintains an Internet
site on the World Wide Web at http://www.sec.gov that contains reports, proxy
statements and other information.
Certain Selected Financial Data. Set forth below is a summary of certain
selected historical consolidated financial data with respect to the Company and
its subsidiaries excerpted or derived from the financial information included in
the Company Form 10-K, and certain of the Company's Quarterly Reports on Form
10-Q filed with the Commission. More comprehensive financial information is
included in such reports and other documents filed by the Company with the
Commission. The following summary is qualified in its entirety by reference to
such reports and such other documents, including the financial statements and
related notes contained therein. The reports and other documents filed with the
Commission should be available for inspection and copies thereof should be
obtainable in the manner set forth below under 'Available Information' above.
FIRST OF MICHIGAN CAPITAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
SIX MONTHS ENDED FISCAL YEAR ENDED
---------------------------- -----------------------------------------------
MARCH 27, MARCH 29, SEPTEMBER 27, SEPTEMBER 29, SEPTEMBER 30,
1997 1996 1996 1995 1994
------------ ------------ ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Revenue........................ $ 35,733,802 $ 35,471,727 $ 71,707,443 $ 62,864,914 $ 61,196,518
Net income..................... 1,586,033 32,280 1,763,716 108,067 1,042,893
Net income per common and
common equivalent share...... $.61 $.01 $.66 $.04 $.35
Cash dividends per common
share........................ .00 .00 .00 .18 .16
Average number of common and
common equivalent shares
outstanding.................. 2,600,174 2,708,427 2,672,477 2,855,460 2,952,969
Total assets (at end of
period)...................... $106,286,512 $111,403,029 $ 101,553,351 $ 110,457,474 $ 103,767,953
Stockholders' equity per common
share (at end of period)..... $12.13 $10.79 $11.34 $10.59 $10.80
</TABLE>
CERTAIN INFORMATION CONCERNING PURCHASER, FAHNESTOCK AND HOLDINGS
General. Holdings is a publicly traded Canadian company, incorporated in
Ontario on November 16, 1933. Class A non-voting shares of Holdings are listed
on the NYSE and The Toronto Stock Exchange and are held of record by
approximately 400 persons. As of December 31, 1996, 12,265,760 Class A
non-voting shares and 99,680 Class B voting shares of Holdings were issued and
outstanding. The principal businesses of Holdings and it subsidiaries and
associated companies are securities brokerage and trading, and investment
advisory and related financial services. On December 31, 1996, Holdings and its
subsidiaries and associated companies employed 567 full-time registered
representatives and 384 employees in trading, research, investment banking,
investment advisory services, public
10
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<PAGE>
finance and support positions in 47 offices in the United States and in two
associated offices in Venezuela and Argentina. Client assets entrusted to
subsidiaries of Holdings as of December 31, 1996 totalled approximately $9
billion. The principal executive offices of Holdings are located at P.O. Box
2015, Suite 1110, 20 Eglinton Avenue West, Toronto, Ontario, Canada M4R 1K8.
Purchaser, a Delaware corporation, was incorporated on June 10, 1997, for
the purpose of acquiring the Company and to date has engaged in no activities
other than those incident to its formation, the execution of the Purchase
Agreement, the Tender Offer Agreement and other related agreements, and the
commencement of the Offer. The principal executive offices of Purchaser are
located at 110 Wall Street, 9th Floor, New York, New York 10005. All the
outstanding stock of Purchaser is owned by Fahnestock.
Fahnestock, a New York corporation, was incorporated on December 23, 1954.
The principal executive offices of Fahnestock are located at 110 Wall Street,
9th Floor, New York, New York 10005. Fahnestock is engaged in the securities
brokerage business. All the outstanding stock of Fahnestock is owned by
Holdings.
Albert G. Lowenthal, the indirect owner of 50.2% of the outstanding Class B
voting shares, which is the only class of voting stock of Holdings, is Chairman
of the Board and the Chief Executive Officer of each of Holdings, Fahnestock and
Purchaser.
The name, business address, present principal occupation or employment and
citizenship of each of the directors and executive officers of Holdings,
Fahnestock and Purchaser are set forth in Schedules I, II and III, respectively.
None of Holdings, Fahnestock, Purchaser or, to the best knowledge of
Purchaser, any of the persons listed in Schedules I, II and III, or any
associate or majority-owned subsidiary of Holdings, Fahnestock, Purchaser or any
of the persons so listed, beneficially owns any equity security of the Company,
and none of Holdings, Fahnestock, Purchaser or, to the best knowledge of
Purchaser, any of the other persons referred to above, or any of the respective
directors, executive officers or subsidiaries of any of the foregoing, has
effected any transaction in any equity security of the Company during the past
60 days.
Except as otherwise stated in this Offer to Purchase, (i) there have not
been any contacts, transactions or negotiations between Holdings, Fahnestock,
Purchaser, any of their respective subsidiaries or, to the best knowledge of
Purchaser, any of the persons listed in Schedules I, II or III, on the one hand,
and the Company or any of its directors, officers or affiliates, on the other
hand, that are required to be disclosed pursuant to the rules and regulations of
the Commission, (ii) there are no present or proposed material contracts,
arrangements, understandings or relationships between Holdings, Fahnestock,
Purchaser, their respective controlling persons or subsidiaries or, to the best
knowledge of Purchaser, any of the persons listed in Schedule I, II or III, on
the one hand, and the Company or any of its controlling persons, subsidiaries,
executive officers or directors, on the other hand, and (iii) none of Holdings,
Fahnestock, Purchaser, or, to the best knowledge of Purchaser, any of the
persons listed in Schedule I, II or III has any contract, arrangement,
understanding or relationship with any person with respect to any securities of
the Company.
Available Information. Holdings is subject to the reporting requirements of
the Exchange Act and, in accordance therewith, is obligated to file reports and
other information with the Commission relating to its business, financial
condition and other matters. Information as of particular dates concerning
Holdings' directors and officers, their remuneration, options granted to them,
the principal holders of Holdings' securities and any material interests of such
persons in transactions with Holdings is required to be disclosed in the Annual
Report on Form 10-K filed by Holdings with the Commission. Such reports and
other information should be available for inspection at the public reference
facilities of the Commission located at 450 Fifth Street, N.W., Washington, D.C.
20549 and at the regional offices of the Commission located in the Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and
Seven World Trade Center, 13th Floor, New York, New York 10048. Copies should be
obtainable, by mail, upon payment of the Commission's customary charges, by
writing to the Commission's principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission also maintains an Internet site on the
World Wide Web at http://www.sec.gov that contains reports and other
11
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<PAGE>
information. Such material should also be available for inspection at the
library of the NYSE, 20 Broad Street, New York, New York 10005.
Certain Selected Financial Data. Set forth below is a summary of certain
selected historical consolidated financial data with respect to Holdings and its
subsidiaries excerpted or derived from the financial information included in
Holdings' Annual Report on Form 10-K for the year ended December 31, 1996, and
certain of Holdings' Quarterly Reports on Form 10-Q filed with the Commission.
More comprehensive financial information is included in such reports and other
documents filed by Holdings with the Commission. The following summary is
qualified in its entirety by reference to such reports and such other documents,
including the financial statements and related notes contained therein. The
reports and other documents filed with the Commission should be available for
inspection and copies thereof should be obtainable in the manner set forth under
'Available Information' above.
FAHNESTOCK VINER HOLDINGS INC.
SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
---------------------- ------------------------------------
1997 1996 1996 1995 1994
-------- -------- -------- -------- --------
(U.S. DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Revenue.................................. $ 50,488 $ 55,750 $213,988 $184,433 $157,253
Profit before extraordinary item......... $ 7,069 $ 7,891 $ 30,279 $ 20,899 $ 11,780
Net profit............................... $ 7,069 $ 7,891 $ 30,279 $ 20,899 $ 11,780
Profit before extraordinary item per
share *................................ $ 0.55 $ 0.63 $ 2.42 $ 1.70 $ 0.96
Net profit per share *
-- basic........................... $ 0.55 $ 0.63 $ 2.42 $ 1.70 $ 0.96
-- fully diluted................... $ 0.53 $ 0.61 $ 2.30 $ 1.64 $ 0.93
Total assets (at end of period).......... $535,924 $550,671 $519,916 $623,466 $510,636
Total current liabilities (at end of
period)................................ $392,688 $436,513 $384,048 $516,031 $421,818
Subordinated indebtedness, including
current portion (at end of period)..... $ 30 $ 30 $ 30 $ 30 $ 30
Cash dividends per Class A Share and
Class B Share.......................... $ 0.06 $ 0.20 $ 0.35 $ 0.15 $ 0.15
Shareholders' equity (at end of
period)................................ $143,206 $114,128 $135,877 $107,405 $ 88,788
Book value per share *................... $ 11.52 $ 9.32 $ 10.99 $ 8.92 $ 7.34
Number of shares of capital stock
outstanding............................ 12,435,440 12,244,215 12,365,440 12,040,090 12,094,680
</TABLE>
- ------------
* The Class A Shares and Class B Shares are combined because they are of equal
rank for purposes of dividends and in the event of a distribution of assets
upon liquidation, dissolution or winding up.
SOURCE AND AMOUNT OF FUNDS
The Company has informed Purchaser that, as of May 14, 1997, there were
2,497,764 Shares and options to purchase 177,490 Shares outstanding. If all the
Shares outstanding at such date are purchased pursuant to the Offer and the
Purchase Agreement (assuming no exercise of any of such options), the maximum
aggregate amount required by Purchaser to purchase such Shares and to pay
related fees and expenses is estimated to be approximately $38,000,000. The
funds for such purpose have been obtained by Purchaser from a capital
contribution to Purchaser from Fahnestock in such amount. Funds in the amount of
$21,275,265 for the purchase of the Sellers Shares have been deposited into
escrow with The Bank of New York, as Escrow Agent, together with the Sellers
Shares pursuant to the Purchase Agreement and the Sellers Escrow Agreement. Such
funds and the Sellers Shares will be released by
12
<PAGE>
<PAGE>
the Escrow Agent at the closing under the Purchase Agreement. See 'TENDER
OFFER -- Certain Agreements.' The Tender Offer Deposit is sufficient for the
purchase of all Shares outstanding as of May 14, 1997 (other than the Sellers
Shares) and has been deposited into escrow with The Bank of New York, as Escrow
Agent, pursuant to the Tender Offer Agreement and the Tender Escrow Agreement.
The Tender Offer Deposit will be released by the Escrow Agent in connection with
the expiration of the Offer. See 'TENDER OFFER -- Certain Agreements.'
Fahnestock obtained the amount necessary to capitalize Purchaser from its
general corporate funds.
Typically, Fahnestock will utilize excess corporate funds to finance client
debit balances. (The purchase of client securities on margin requires the
advance of part of the purchase price by Fahnestock or commercial banks. The
amount borrowed for this purpose is called a 'client debit balance'.) Fahnestock
has bank lines that are available through commercial banks in the ordinary
course of business for financing client debit balances. Client debit balances
are financed through commercial bank lines utilizing clients' securities as
collateral.
BACKGROUND OF THE OFFER
In the past, Holdings has sought opportunities to expand its broker-dealer
business by acquiring regional securities firms. Among others, Holdings has
considered the Company as a possible acquisition candidate.
In August 1995, Albert G. Lowenthal, the Chairman of Holdings
('Lowenthal'), spoke with representatives of the Company to propose the
acquisition of the Company by Holdings as an alternative to an attempted
recapitalization of the Company that would have resulted in the repurchase by
the Company of its publicly held Shares. Management of the Company rejected
Holdings' overtures. However, the attempted recapitalization was abandoned.
Subsequently, the Company's two controlling stockholders, DST and 1888,
increased their respective ownership interests in the Company so that in
aggregate they controlled in excess of 50% of the outstanding Shares. In recent
years, the Company experienced some turnover in senior management.
In May 1997, Lowenthal met with Edward Soule ('Soule'), Chairman of the
Company, at the suggestion of Gerard Lavin ('Lavin'), a director of the Company
with whom Lowenthal had maintained casual contact since the initial discussions
had broken down about a possible business combination in 1995. At the meeting,
Soule advised Lowenthal that the Company was disinterested in a business
combination with Holdings and that the Board of Directors of the Company was
determined to keep the Company independent.
However, a vacancy occurred unexpectedly in the Presidency of the Company
in early June 1997. This development caused the Board of Directors of the
Company to reconsider its intentions. Soule contacted Lowenthal on Wednesday,
June 4, 1997, and they agreed to meet in St. Louis on Friday, June 6, 1997.
Soule advised Lowenthal that DST and 1888, as well as the Board of Directors of
the Company, were prepared to entertain a transaction, provided that it was for
adequate consideration and that it occur quickly, in order to resolve the
considerable uncertainty in the Company.
At the meeting with Soule on June 6, 1997, price discussions reached $15
per Share, which represented a substantial premium over the then current market
value of the Shares. Soule agreed to discuss this with the controlling
stockholders and both companies agreed to convene their respective Boards of
Directors on Sunday, June 8, 1997 to consider the acquisition transaction.
The acquisition transaction was authorized by the Board of Directors of
Holdings and accepted by the Board of Directors of the Company, subject to the
preparation of definitive agreements between the Sellers and Purchaser and
between the Company and Purchaser. The Board of Directors of the Company also
reserved their recommendation to the Company's stockholders in respect of the
acquisition transaction to the receipt of a 'fairness opinion' from a financial
advisor.
The Board of Directors of Holdings authorized Lowenthal to proceed with the
negotiation of the terms of definitive agreements with the Sellers and the
Company for the purchase of the Sellers Shares
13
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<PAGE>
and the purchase of Shares pursuant to the Offer. Counsel for Holdings thereupon
prepared drafts of the Tender Offer Agreement and the Purchase Agreement, as
well as the Tender Escrow Agreement and the Sellers Escrow Agreement. These
drafts, together with the MOU, were negotiated by the parties and their
respective counsel on Tuesday and Wednesday, June 10 and 11, 1997, and late on
Wednesday, June 11, 1997, the agreements were finalized. The respective Boards
of Directors of the Company and Holdings were convened to consider the
acquisition transaction and to approve the agreements. The agreements were
thereupon executed and delivered by the parties. On Thursday, June 12, 1997, the
Company and Holdings publicly announced the execution and delivery of the
acquisition agreements and that the Company's Board of Directors had approved
the Offer, subject to receipt of a fairness opinion from its financial advisor.
PURPOSE OF THE OFFER
The purpose of the Offer, together with the purchase of the Sellers Shares,
is to enable Purchaser to acquire control of the Company. Pursuant to the
Purchase Agreement, Purchaser will acquire Sellers Shares representing
approximately 53% of the outstanding Shares on a fully diluted basis, subject to
expiration or early termination of the waiting period under HSR Act, receipt of
necessary regulatory approvals and certain other conditions, including
expiration of the Offer. See 'TENDER OFFER -- Certain Agreements -- The Purchase
Agreement.'
In connection with the purchase of the Sellers Shares, Sellers desired to
ensure that all stockholders of the Company received consideration equivalent to
the consideration to be paid to Sellers for the Sellers Shares and determined
that the Offer was the most appropriate means to that end.
Holdings determined that the purchase of the Sellers Shares pursuant to the
Purchase Agreement and a cash tender offer for a price equivalent to the Sellers
Shares Purchase Price, representing a substantial premium to the market price
for the Shares, would likely result in the acquisition by Purchaser of
substantially all the Shares on a basis more efficient in terms of time and
transactional costs than would be required to effect an acquisition through a
one-step merger with the Company, particularly if Purchaser acquires Shares in
the Offer that together with the Sellers Shares total more than 90% of the
outstanding Shares. Such an acquisition would permit Purchaser to consummate the
Merger without convening a meeting of the stockholders of the Company. See
'TENDER OFFER -- The Merger.'
The intention of Holdings and Purchaser to purchase Sellers Shares and
thereafter to effect the Merger is not conditioned upon any minimum number of
Shares being validly tendered and accepted in the Offer.
PLANS FOR THE COMPANY
If and to the extent that Purchaser acquires control of the Company,
Holdings intends to conduct a detailed review of the Company and its business.
It is anticipated that Lowenthal will be appointed Chief Executive Officer
of the Company following expiration of the Offer and consummation of the
purchase of Sellers Shares.
Following the consummation of the Offer or the Merger, Purchaser currently
intends, to the extent possible, to seek to have the Common Stock delisted from
the CSE and to terminate the registration of the Common Stock under the Exchange
Act. Delisting of the Common Stock may occur, in any event, at the instigation
of the CSE following the consummation of the Offer due to the reduced number of
Shares or holders thereof then outstanding.
If the Common Stock ceases to be registered under the Exchange Act, the
Company, among other things, would no longer be required to comply with the
Exchange Act's proxy or reporting rules. See 'TENDER OFFER -- Certain Effects of
the Offer.'
Except as noted in this Offer to Purchase, Purchaser and Holdings have no
present plans or proposals that would result in an extraordinary corporate
transaction, such as a merger, reorganization, liquidation, or sale or transfer
of a material amount of the assets, involving the Company or any
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subsidiary of the Company, or any material changes in the Company's
capitalization, dividend policy, corporate structure, business, composition of
its management or Board of Directors or policies.
CERTAIN AGREEMENTS
THE PURCHASE AGREEMENT
The following is a summary of the material terms of the Purchase Agreement.
This summary is not a complete description of the terms and conditions thereof
and is qualified in its entirety by reference to the full text thereof, which is
incorporated herein by reference and a copy of which has been filed with the
Commission as an exhibit to the Tender Offer Statement filed on Schedule 14D-1
pursuant to the Exchange Act (the 'Schedule 14D-1'). Capitalized terms used
herein not otherwise defined in this Offer to Purchase shall have the same
meanings as ascribed to them in the Purchase Agreement. The Purchase Agreement
may be examined, and copies thereof may be obtained, as set forth under 'TENDER
OFFER -- Certain Information Concerning the Company.'
Purchase of Sellers Shares. Under the terms of the Purchase Agreement,
Purchaser agreed to purchase the Sellers Shares from the Sellers (representing
approximately 53% of the outstanding Shares on a fully diluted basis) for a
purchase price of $15.00 per share, net to the Sellers in cash.
Conditions. The obligations of Sellers to sell and Purchaser to purchase
the Sellers Shares are subject to the fulfillment of certain conditions relating
to (i) expiration or termination of the waiting period under the HSR Act and
compliance with the requirements of the Exchange Act, (ii) receipt of all
material regulatory approvals required in connection with the execution,
delivery and performance of the Purchase Agreement, (iii) performance in all
material respects by Sellers and Purchaser of their respective obligations under
the Purchase Agreement and the accuracy in all material respects of the
respective representations and warranties of Sellers and Purchaser in the
Purchase Agreement, (iv) the absence of any order or injunction prohibiting the
consummation of the transactions contemplated by the Purchase Agreement, and (v)
the absence of any pending action, suit or proceeding involving the parties to
the Purchase Agreement or the Company that would or reasonably would be expected
to prevent or materially delay the consummation of the transactions contemplated
by the Purchase Agreement or result in material damages in connection therewith.
The obligations of Sellers are subject to the additional condition that
Purchaser shall have commenced the Offer. The obligation of Purchaser is subject
to the additional condition that the entire Board of Directors of the Company
shall be composed of designees of Purchaser at the Closing Time, provided,
however, that Purchaser shall have used its best efforts to make such
designations prior to the Closing Time.
Representations and Warranties. The Purchase Agreement contains various
representations and warranties of the parties thereto. These include
representations and warranties made by Sellers with respect to (i) the due
organization, existence and good standing of Sellers, (ii) the requisite power
and authority of Sellers to execute and deliver the Purchase Agreement, the
Tender Offer Agreement and certain ancillary agreements executed in connection
therewith and the consummation of the transactions contemplated thereby and the
validity and enforceability thereof, (iii) the absence of any violation or
resulting breach of any operative document of Sellers, or any license,
authorization, agreement, instrument, commitment or obligation of Sellers or
need to obtain any consent, approval authorization or make a filing or
registration, other than under the HSR Act, the Exchange Act and certain
regulatory filings under applicable securities laws in connection with the
execution, delivery and performance of the Purchase Agreement by Sellers, (iv)
the absence of any agreements or commitments to pay fees to any brokers in
connection with the transactions contemplated thereby, (v) ownership of the
Sellers Shares, and (vi) capitalization of the Company.
Purchaser also has made certain representations and warranties, including
(i) the due organization, existence and good standing of Purchaser, (ii) the
requisite power and authority of Purchaser to execute and deliver the Purchase
Agreement, the Tender Offer Agreement and certain ancillary agreements executed
in connection therewith and the consummation of the transactions contemplated
thereby and the validity and enforceability thereof, (iii) the absence of any
violation or resulting breach of any operative document of Purchaser, or any
license, authorization, agreement, instrument, commitment or obligation of
Purchaser or need to obtain any consent, approval authorization or make a filing
or
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registration, other than under the HSR Act, the Exchange Act and certain
regulatory filings under applicable securities laws in connection with the
execution, delivery and performance of the Purchase Agreement by Purchaser, (iv)
the absence of any agreements or commitments to pay fees to any brokers in
connection with the transactions contemplated thereby, (v) availability of funds
sufficient to purchase the Sellers Shares, (vi) accredited investor status,
investment intent and agreement not to transfer without registration the Sellers
Shares unless pursuant to an available exemption, and (vii) the direct or
indirect ownership of Purchaser by Holdings.
Covenants. Sellers have made certain covenants, including covenants: (i)
not to sell or cause a Lien to be created against the Sellers Shares, (ii) to
assign any non-cash distributions to Purchaser and not to solicit any person to
acquire the Sellers Shares or engage in any business combination or similar
transaction with the Company, (iii) to vote the Sellers Shares (A) in favor of
any business combination or similar transaction proposed by Purchaser, (B)
against any business combination or similar transaction proposed by any other
person, and (C) subject to regulatory approvals, in favor of any individuals
proposed by Purchaser for election to the Board of Directors of the Company and
against anyone else, (iv) to make their respective filings and required
submissions under the HSR Act and the Exchange Act, (v) to assign any rights
that Sellers may have to cause the Company to register or qualify any of the
Sellers Shares under the Securities Act, or any state law and to deliver to
Purchaser any agreements between such Seller and the Company, and (vi) to use
their respective best efforts to cause certain related parties to tender
approximately 120,000 Shares pursuant to the Offer.
In addition, Sellers and Purchaser have made certain covenants, including
covenants: (i) to cooperate with respect to any necessary regulatory filings and
otherwise in connection with the Purchase Agreement and the consummation of the
transactions contemplated thereby and to use their respective reasonable efforts
to cause each of the conditions precedent to the consummation of the
transactions contemplated by the Purchase Agreement to be met as promptly as
practicable, (ii) to consult with each other with respect to the text of any
press release with respect to the transactions contemplated by the Purchase
Agreement, subject to the requirements of law, and (iii) to perform their
respective obligations under the Tender Offer Agreement.
Termination. The Purchase Agreement may be terminated and the purchase and
the sale of the Sellers Shares may be abandoned at any time prior to the Closing
Time by the mutual consent of the Sellers and Purchaser or if the Closing Time
shall not have occurred by October 11, 1997 or if a tribunal having jurisdiction
shall have issued a final non-appealable order, judgment or decree permanently
restraining, enjoining or restricting the transactions contemplated by the
Purchase Agreement.
Costs. All reasonable out-of-pocket costs and expenses incurred in
connection with the transactions contemplated by the Purchase Agreement, other
than the legal fees and expenses of any legal counsel retained by any Seller,
will be borne by Purchaser. Sellers have agreed to reimburse the Company for all
legal fees payable to Sonnenschein Nath & Rosenthal for legal services rendered
in connection with the Purchase Agreement and the transactions contemplated
thereby (including the Tender Offer Agreement), to the extent such legal fees
exceed $25,000.
Escrow Agreement. Sellers have deposited the Sellers Shares and Purchaser
has deposited $21,275,265 into escrow pursuant to a 'Sellers' Escrow Agreement
dated as of June 11, 1997 (the 'Sellers Escrow Agreement'), among Sellers,
Purchaser and the Escrow Agent. See 'TENDER OFFER -- Certain
Agreements -- Sellers Escrow Agreement.'
THE TENDER OFFER AGREEMENT
The following is a summary of the material terms of the Tender Offer
Agreement. This summary is not a complete description of the terms and
conditions thereof and is qualified in its entirety by reference to the full
text thereof, which is incorporated herein by reference and a copy of which has
been filed with the Commission as an exhibit to the Schedule 14D-1. Capitalized
terms used herein not otherwise defined in this Offer to Purchase shall have the
same meanings as ascribed to them in the Tender Offer Agreement. The Tender
Offer Agreement may be examined, and copies thereof may be obtained, as set
forth under 'TENDER OFFER -- Certain Information Concerning the Company.'
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Actions by Purchaser. Purchaser agreed to file the Schedule 14D-1 with the
Commission, containing the Offer to Purchase and a related Letter of Transmittal
and any other ancillary documents pursuant to which the Offer is being made (the
'Offer Documents') as promptly as possible following the execution of the Tender
Offer Agreement. Purchaser also agreed to comply with the requirements of the
Exchange Act and to disseminate to holders of the Shares such of the Offer
Documents required by applicable federal securities laws. Purchaser agreed to
afford the Company and its counsel a reasonable opportunity to review and
comment on the Offer Documents.
Actions by the Company. The Company approved and consented to the
transactions contemplated by the Purchase Agreement and represented and
warranted that the Board of Directors has duly adopted resolutions approving the
Tender Offer Agreement and the Offer, subject to receipt of a written opinion
from its financial advisor that the per share Offer Price is fair from a
financial point of view (the 'Fairness Opinion'), and has taken all action
required under or pursuant to the Charter so as to make the provisions of
Article Tenth of the Charter to any Business Combination (as defined in the
Charter) involving Purchaser and its affiliates. Duff & Phelps, LLC has been
engaged by the Company to issue the Fairness Opinion.
The Company agreed to file with the Commission and disseminate copies to
its stockholders a Solicitation/Recommendation Statement on Schedule 14D-9 (the
'Schedule 14D-9') with respect to the Offer. In addition, the Company will file
with the Commission any necessary amendments to the Schedule 14D-9. The Company
undertook to afford Purchaser and its counsel a reasonable opportunity to review
and comment on the Schedule 14D-9.
The Company agreed to cause its transfer agent to furnish Purchaser with
mailing labels containing the names and addresses of the record holders of
Shares as of a recent date and of those persons who became record holders
subsequently and to provide such other assistance as Purchaser shall reasonably
request in communicating the Offer to the stockholders of the Company.
Representations and Warranties. The Tender Offer Agreement contains various
representations and warranties of the parties thereto. These include
representations and warranties made by the Company with respect to (i) the due
organization, existence and good standing of the Company, (ii) the requisite
power and authority of the Company to execute and deliver the Tender Offer
Agreement, certain ancillary agreements executed in connection therewith and the
consummation of the transactions contemplated thereby and the validity and
enforceability thereof, (iii) the absence of any violation or resulting breach
of any operative document of the Company, or any license, authorization,
agreement, instrument, commitment or obligation of the Company or need to obtain
any consent, approval authorization or make a filing or registration, other than
under the HSR Act, the Exchange Act and certain regulatory filings under
applicable securities laws in connection with the execution, delivery and
performance of the Tender Offer Agreement by the Company, (iv) the absence of
agreements or commitments to pay fees to any brokers in connection with the
transactions contemplated thereby, (v) capitalization of the Company, (vi) the
truth and completeness of documents filed with the Commission, (vii) the
inapplicability of the MBCA to the Offer and related transactions, and (viii)
the accuracy of the Schedule 14D-9 and statements provided by them for inclusion
in other Offer Documents filed with the Commission.
Purchaser has also made certain representations and warranties, including
(i) the due organization, existence and good standing of Purchaser, (ii) the
requisite power and authority of Purchaser to execute and deliver the Purchase
Agreement, the Tender Offer Agreement and certain ancillary agreements executed
in connection therewith and the consummation of the transactions contemplated
thereby and the validity and enforceability thereof, (iii) the absence of any
violation or resulting breach of any operative document of Purchaser, or any
license, authorization, agreement, instrument, commitment or obligation of
Purchaser or need to obtain any consent, approval authorization or make a filing
or registration, other than under the HSR Act, the Exchange Act and certain
regulatory filings under applicable securities laws in connection with the
execution, delivery and performance of the Tender Offer Agreement by Purchaser,
(iv) the absence of agreements or commitments to pay fees to any brokers in
connection with the transactions contemplated thereby, (v) the accuracy of the
Offer Documents filed with the Commission and statements supplied by it for
inclusion in the Schedule 14D-9, and (vi) the deposit into escrow of
$16,724,735.
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Sellers also made certain representations with respect to the accuracy of
certain statements supplied by them for inclusion in the Offer Documents and the
Schedule 14D-9.
Covenants. The Company has made certain covenants in the Tender Offer
Agreement, including covenants: (i) to take such actions as needed to effect
Sellers' and Buyer's filings and submissions under the HSR Act and the Exchange
Act, (ii) not to solicit, directly or indirectly, or initiate or encourage any
discussion or negotiations with or provide information to or afford access to
the properties, books or records of the Company or otherwise facilitate an
Alternative Proposal (as hereinafter defined), (iii) not to (A) declare, set
aside or pay any dividends on, or make any distributions with respect to its
capital stock or (B) split, combine or reclassify any of its capital stock or
issue or authorize the issuance of any other securities in lieu of or
substitution for its capital stock or (C) purchase, redeem, retire or otherwise
acquire any Shares, (iv) not to issue, sell, deliver, pledge or otherwise
encumber any shares of its capital stock, and (v) to maintain in effect for two
years from the date of acceptance for payment of the Shares pursuant to the
Offer, directors' and officers' liability insurance coverage, subject to certain
limitations regarding cost and availability. 'Alternative Proposal' means any
tender offer, merger, consolidation, business combination, liquidation,
reorganization, sale of significant assets, sale of shares of capital stock or
similar transactions involving the Company or any part thereof.
The Company and the Sellers also agreed to execute and deliver such other
agreements, instruments and other documents and to file such other schedules and
reports and other documents and to take such other actions as Purchaser may
reasonably request in order to effect the intent and purposes of the Tender
Offer Agreement. Purchaser agreed to enter into the Tender Offer Escrow
Agreement and pursuant thereto deposit $16,724,735.
Without the prior written consent of the Board of Directors of the Company,
Purchaser agreed not to (i) reduce the number of shares of Common Stock subject
to the Offer, (ii) reduce the price per share of Common Stock to be paid
pursuant to the Offer, (iii) change the form of consideration payable in the
Offer, (iv) amend or modify any term or condition of the Offer in any manner
materially adverse to the holders of Common Stock, or (v) impose additional
conditions to the Offer, other than such conditions required by applicable law.
Notwithstanding anything in the Tender Offer Agreement to the contrary,
Purchaser may, in its sole discretion without the consent of the Company, extend
the Offer at any time and from time to time (A) if at the then scheduled
expiration date of the Offer any of the conditions to Purchaser's obligation to
accept for payment and pay for shares of Common Stock shall not have been
satisfied or waived, (B) for any period required by any rule, regulation,
interpretation or position of the Commission or its staff applicable to the
Offer, and (C) for any period required by applicable law, rule, regulation,
administrative or judicial determination or order. So long as the Tender Offer
Agreement is in effect and the conditions to the Offer have not been satisfied
or waived, at the request of the Company, Purchaser has agreed to extend the
Offer for an aggregate period of not more than five business days (for all such
extensions) beyond the originally scheduled expiration date of the Offer. Such
period of five business days shall include any contemplated grace period that
extends beyond the otherwise scheduled Expiration Date of the Offer.
Termination. The Tender Offer Agreement may be terminated and the purchase
and the Offer may be abandoned at any time prior to acceptance of the Shares by
the mutual consent of the Company and Purchaser or if the conditions to the
Offer shall have not been satisfied by October 11, 1997 or if a tribunal having
jurisdiction shall have issued a final non-appealable order, judgment or decree
permanently restraining, enjoining or restricting the transactions contemplated
by the Offer.
Conditions. The conditions to the Tender Offer Agreement are the conditions
to the Offer described under 'TENDER OFFER -- Certain Conditions to the Offer.'
SELLERS ESCROW AGREEMENT
The following is a summary of the material terms of the Sellers Escrow
Agreement. This summary is not a complete description of the terms and
conditions thereof and is qualified in its entirety by reference to the full
text thereof, which is incorporated herein by reference and a copy of which has
been filed with the Commission as an exhibit to the Schedule 14D-1. The Sellers
Escrow Agreement
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may be examined, and copies thereof may be obtained, as set forth under 'TENDER
OFFER -- Certain Information Concerning the Company.'
Pursuant to the Sellers Escrow Agreement, Sellers deposited the Sellers
Shares and Purchaser deposited $21,275,265 in cash (i.e., an amount equal to the
Sellers Shares Purchase Price) into escrow with the Escrow Agent in connection
with the sale of the Sellers Shares to Purchaser for the Sellers Shares Purchase
Price pursuant to the Purchase Agreement.
Under the Sellers Escrow Agreement, at the Closing Time (as defined in the
Purchase Agreement) upon the receipt of a certificate in appropriate form, from
Sellers and Purchaser, the Escrow Agent will deliver the Sellers Shares Purchase
Price to Sellers and the Sellers Shares to Purchaser. During the term of the
escrow, the cash held in escrow will be invested in accordance with the
directions of Purchaser, but only in Permitted Investments (as defined in the
Sellers Escrow Agreement).
TENDER ESCROW AGREEMENT
The following is a summary of the material terms of the Tender Escrow
Agreement. This summary is not a complete description of the terms and
conditions thereof and is qualified in its entirety by reference to the full
text thereof, which is incorporated herein by reference and a copy of which has
been filed with the Commission as an exhibit to the Schedule 14D-1. The Tender
Escrow Agreement may be examined, and copies thereof may be obtained, as set
forth under 'TENDER OFFER -- Certain Information Concerning the Company.'
Pursuant to the Tender Escrow Agreement, Purchaser has deposited into
escrow $16,724,735 in cash (i.e., the Tender Offer Deposit) with the Escrow
Agent in connection with the Offer.
Under the Tender Escrow Agreement, upon the receipt of a certificate in
appropriate form from Sellers and Purchasers, the Escrow Agent shall deliver the
Tender Offer Deposit to the Depositary up to the amount of the aggregate Offer
Price. In the case of any balance in excess of the amount necessary to purchase
all Shares validly tendered and accepted in the Offer, the Escrow Agent shall
return such excess funds to Purchaser.
MEMORANDUM OF UNDERSTANDING
The following is a summary of the material terms of the MOU. This summary
is not a complete description of the terms and conditions thereof and is
qualified in its entirety by reference to the full text thereof, which is
incorporated herein by reference and a copy of which has been filed with the
Commission as an exhibit to the Schedule 14D-1. The MOU may be examined, and
copies thereof may be obtained, as set forth under 'TENDER OFFER -- Certain
Information Concerning the Company.'
In the MOU, the Board of Directors of the Company confirmed its
understanding with respect to the terms of the transaction (the 'Transaction')
involving the acquisition of all the issued and outstanding Shares by Purchaser
through the purchase of the Sellers Shares, the Offer and/or the Merger. The MOU
evidenced approval by the Board of Directors of the Transaction and authorized
the Company's officers to take action necessary to consummate the Transaction
and for any and all purposes, for which approval might be required or permitted
under applicable law, the Charter or the by-laws of the Company, including the
provisions of Article Tenth, Section 2(b) of the Charter relating to certain
voting requirements applicable to certain business combinations.
THE MERGER
Holdings and Purchaser intend, as a further step in their plan to acquire
all the Shares, to merge Purchaser with and into the Company on terms that would
provide that any Shares remaining outstanding following the consummation of the
Offer and the purchase of the Sellers Shares would be converted into the right
to receive an amount equivalent to the Offer Price.
If Purchaser accepts and purchases sufficient Shares pursuant to the Offer
so that, when combined with the purchase of the Sellers Shares, Purchaser owns
at least 90% of the outstanding Shares, Purchaser will, under the DGCL and the
Charter, have sufficient voting power to approve the Merger by action of the
Board of Directors without the vote of the stockholders of the Company pursuant
to a
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'short form' merger. However, beneficial ownership of 90% of the Shares is not a
condition to the intention of Purchaser to effect the Merger.
If required by applicable law, following the acquisition of the Sellers
Shares and any Shares acquired pursuant to the Offer, Purchaser shall cause the
Company acting through the Board of Directors to call a meeting of its
stockholders for the purpose of voting on the Merger. To the extent required
under applicable federal securities law or the DGCL, Purchaser shall cause the
Company to provide any proxy or information statement disclosure required in
connection with the Merger.
BOARD REPRESENTATION
The Purchase Agreement provides as a condition to the consummation of the
purchase of the Sellers Shares, which may be waived by Purchaser in its sole
discretion, that, at the Closing Time (as defined in the Purchase Agreement),
the Board of Directors of the Company shall consist solely of designees of
Purchaser. The appointment or election of Purchaser's designees as directors of
the Company is subject to compliance by the Company with Section 14(f) of the
Exchange Act and the rules promulgated thereunder of the Commission.
APPRAISAL RIGHTS
UNDER THE DGCL, HOLDERS OF SHARES NOT PURCHASED BY PURCHASER ARE NOT
ENTITLED TO APPRAISAL RIGHTS IN CONNECTION WITH THE OFFER. However, if following
consummation of the Offer, Purchaser consummates the Merger, holders of Shares
not purchased by Purchaser in the Offer will be entitled to seek appraisal
rights under the DGCL in connection with the Merger as follows.
The following discussion is not a complete statement of the law pertaining
to appraisal rights under the DGCL and does not purport to be a complete
statement of the procedure to be followed by stockholders desiring to exercise
appraisal rights under the DGCL. All references in this summary to a
'stockholder' or 'holders' are to the record holder of the Shares as to which
appraisal rights are asserted.
Under the DGCL, holders of Shares ('Appraisal Shares') who follow the
procedures set forth in Section 262 of the DGCL ('Section 262'), and who have
neither voted in favor of the Merger nor consented thereto in writing, will be
entitled to have their Appraisal Shares appraised by the Delaware Chancery Court
and to receive payment in cash of the 'fair value' of such Appraisal Shares,
exclusive of any element of value arising from the accomplishment or expectation
of the Merger, together with a fair rate of interest, if any, as determined by
such court.
Under Section 262, if the Merger must be submitted to the stockholders of
the Company because Purchaser does not own 90% of the outstanding Shares or
otherwise, the Company must, not less than 20 days prior to the meeting held for
the purpose of obtaining stockholder approval of the Merger, notify each of the
Company's stockholders entitled to appraisal rights that such rights are
available, and must include in such notice a copy of Section 262. If no
stockholder vote is required or if stockholder approval is obtained by written
consent in lieu of a meeting, the Company, either before the effective date of
the Merger or within ten days thereafter, must notify each of the stockholders
entitled to appraisal rights of the effective date of the Merger and that
appraisal rights are available, and must include in such notice a copy of
Section 262.
A holder of Appraisal Shares wishing to exercise such holder's appraisal
rights will be required to deliver to Purchaser within 20 days after the date of
mailing of the notice described in the preceding paragraph a written demand for
appraisal of such holder's Appraisal Shares. A holder of Appraisal Shares
wishing to exercise such holder's appraisal rights must be the record holder of
such Appraisal Shares on the date the written demand for appraisal (as described
below) is made and must continue to hold such Appraisal Shares of record through
the effective date of the Merger. Accordingly, a holder of Appraisal Shares who
is the record holder of Appraisal Shares on the date the written demand for
appraisal is made (if such demand is made prior to the effectiveness of the
Merger), but who thereafter transfers such Appraisal Shares prior to the
consummation of the Merger, will lose any right to appraisal in respect of such
Appraisal Shares.
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Within 120 days after the effective date of the Merger, but not thereafter,
Purchaser or any stockholder who has complied with the statutory requirements
summarized above and who is otherwise entitled to appraisal rights may file a
petition in the Delaware Chancery Court demanding a determination of the fair
value of the Appraisal Shares. Purchaser is under no obligation to file a
petition with respect to the appraisal of the fair value of the Appraisal Shares
and does not intend to do so. Accordingly, it will be the obligation of the
stockholders seeking appraisal rights to initiate all necessary action to
perfect any appraisal rights within the time prescribed in Section 262.
Within 120 days after the effective date of the Merger, any stockholder who
has complied with the statutory requirements summarized above will be entitled,
upon written request, to receive from Purchaser a statement setting forth the
aggregate number of Appraisal Shares with respect to which demands for appraisal
have been received and the aggregate number of holders of such Appraisal Shares.
Such statements must be mailed within ten days after a written request therefor
has been received by Purchaser or within ten days after expiration of the period
for delivery of demands for appraisal, whichever is later.
If a petition for an appraisal is timely filed, after a hearing on such
petition, the Delaware Chancery Court will determine the stockholders entitled
to appraisal rights and will appraise the 'fair value' of their Appraisal
Shares, exclusive of any element of value arising from the accomplishment or
expectation of the Merger, together with a fair rate of interest, if any, to be
paid upon the amount determined to be the fair value.
In determining the 'fair value' of the Appraisal Shares, a court could
consider factors other than, or in addition to, the market value of the Common
Stock, including, among other things, asset values and earning capacity of the
Company. In Weinberger v. UOP, Inc., the Delaware Supreme Court stated, among
other things, that 'proof of value by any techniques or methods which are
generally considered acceptable in the financial community and otherwise
admissible in court' should be considered in the appraisal proceeding.
Therefore, the value so determined in any appraisal proceeding could be
different from the consideration payable in connection with the Merger. Several
decisions by the Delaware courts, which may or may not apply to the Merger, have
held that a controlling stockholder of a company involved in a merger has a
fiduciary duty to other stockholders which requires that the merger be 'entirely
fair' to such other stockholders. In determining whether a merger is fair to
minority shareholders, Delaware courts have considered, among other things, the
type and amount of the consideration to be received by the stockholders and
whether there was fair dealing among the parties. The Delaware Supreme Court
stated in Weinberger that, although the remedy ordinarily available in a merger
that is found not to be 'fair' to minority stockholders is the right to
appraisal described above, such appraisal remedy may not be adequate 'in certain
cases, particularly where fraud, misrepresentation, self-dealing, deliberate
waste of corporate assets, or gross and palpable overreaching are involved', and
that in such cases, the Delaware Chancery Court would be free to fashion any
form of appropriate relief.
The costs of the proceeding may be determined by the Delaware Chancery
Court and taxed upon the parties as the Delaware Chancery Court deems equitable
in the circumstances. Upon application of a stockholder, the Delaware Chancery
Court also may order all or a portion of the expenses incurred by any
stockholder in connection with the appraisal proceeding, including, without
limitation, reasonable attorneys' fees and the fees and expenses of experts, to
be charged pro rata against the value of all of the Appraisal Shares entitled to
appraisal.
Any holder of Appraisal Shares who has duly demanded an appraisal in
compliance with Section 262 will not, from and after the effective date of the
Merger, be entitled to vote the Appraisal Shares subject to such demand for any
purpose or to receive payment of dividends or other distributions on those
Appraisal Shares (except dividends or other distributions payable to
stockholders of record at a date which is prior to the effective date of the
Merger).
If any stockholder who properly demands appraisal of his or her Appraisal
Shares under Section 262 fails to perfect, or effectively withdraws or loses,
his or her right to appraisal as provided in the DGCL, the Appraisal Shares of
such stockholder will be converted into the right to receive the consideration
receivable with respect to such Appraisal Shares pursuant to the Merger. A
stockholder will fail to perfect, or effectively withdraw or lose, his or her
right to appraisal if, among other things, no
21
<PAGE>
<PAGE>
petition for appraisal is filed within 120 days after the consummation of the
Merger, or if the stockholder delivers to Purchaser a written withdrawal of his
or her demand for appraisal. Any such attempt to withdraw an appraisal demand
more than 60 days after the consummation of the Merger will require the written
approval of Purchaser.
APPROVAL BY THE BOARD OF DIRECTORS OF THE COMPANY
The Board of Directors of the Company has approved the Offer and the
execution and delivery of the Tender Offer Agreement, the Purchase Agreement and
the MOU, as well as related ancillary documents, subject to receipt of the
Fairness Opinion from the Company's financial advisor, Duff & Phelps, LLC, or
another financial advisor (the 'Financial Advisor'), which sets forth the
written opinion and basis therefor of the Financial Advisor that the per Share
Offer Price is fair to the Company's stockholders from a financial point of
view. The Company has indicated to Purchaser its intention to file the Schedule
14D-9 with the Commission and disseminate copies to its stockholders setting
forth the recommendation of the Board of Directors of the Company with respect
to the Offer, upon receipt of the Fairness Opinion, but in any event no later
than ten business days after the commencement of the Offer.
The Company will file any necessary amendment to the Schedule 14D-9 which
includes the Fairness Opinion and sets forth the basis for the Board of
Directors' recommendation to its stockholders regarding the Offer.
CERTAIN CONDITIONS TO THE OFFER
Notwithstanding any other term of the Offer, Purchaser shall not be
required to accept for payment or pay for, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) of the Exchange Act, any
Shares not theretofore accepted for payment or paid for, and may terminate or
amend the Offer, unless any waiting period under the HSR Act applicable to the
purchase of Shares pursuant to the Offer shall have expired or been terminated.
Furthermore, notwithstanding any other term of the Offer, Purchaser shall not be
required to accept for payment or, subject to the aforesaid, to pay for any
Shares not theretofore accepted for payment or paid for, and may terminate or
amend the Offer, if at any time prior to the expiration of the Offer, any of the
following conditions exist or shall occur and remain in effect:
1. a court of competent jurisdiction or other governmental,
quasi-governmental, self-regulatory agency or other regulatory, judicial or
arbitral body having jurisdiction over the parties to the transaction shall
have issued an order, judgment, decree or ruling on the merits in
connection with an action, suit or proceeding (i) which challenges or seeks
to restrict the acquisition by Purchaser (or any of its affiliates or
subsidiaries) of Shares pursuant to the Offer or the Purchase Agreement, or
obtain damages in connection therewith; (ii) which seeks to make the
purchase of or payment for some or all of the Shares pursuant to the Offer
or the Purchase Agreement illegal; (iii) which seeks to impose material
limitations on the ability of Purchaser (or any of its affiliates)
effectively to acquire, operate or hold, or to require Purchaser or any of
its affiliates to dispose of or hold separate, any material portion of
their assets or business or the Company's assets or business; or (iv) which
seeks to impose material limitations on the ability of Purchaser (or any of
its affiliates) to exercise full rights of ownership of the Shares
purchased by it, including, without limitation, the right to vote the
shares purchased by it on all matters properly presented to the
stockholders of the Company; or
2. there shall have been promulgated, enacted, entered, enforced or
deemed applicable to the Offer any Law or there shall have been issued any
injunction resulting in any of the consequences referred to in subsection
(a) above; or
3. the Purchase Agreement shall have been terminated in accordance
with its terms; or
4. (i) the representations and warranties made by the Company or
Sellers in the Purchase Agreement shall not be true and correct as of the
date of consummation of the Offer as though made on and as of that date
(other than representations and warranties made as of a specified date)
except for any breach or breaches which, in the aggregate, would not have a
material adverse effect
22
<PAGE>
<PAGE>
on the Company or its business or (ii) the Company or Sellers shall have
breached or failed to comply in any material respect with any of their
respective obligations under the Purchase Agreement (and, with respect to
any such failure that can be remedied, the failure is not remedied within
five business days after Purchaser has furnished the Company or Sellers, as
the case may be, with written notice of such failure); or
5. any person (other than Purchaser or one or more of its affiliates
or subsidiaries) shall have entered into any agreement in principle or
definitive agreement with the Company with respect to a tender or exchange
offer for any Shares or a merger, consolidation or other business
combination with or involving the Company; or
6. the Board of Directors shall have modified or amended its
recommendation of the Offer in any manner adverse to Purchaser or shall
have withdrawn its recommendation of the Offer or shall have recommended
acceptance of any alternative proposal or shall have resolved to do so; or
7. there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on any national securities
exchange or in the over-the-counter market in the United States for a
period in excess of ten consecutive trading hours, (ii) any declaration of
any banking moratorium by any United States federal or state authorities or
any suspension of payments in respect of banks, or (iii) a commencement of
war, armed hostilities or any other international or national calamity
directly or indirectly involving the United States which is reasonably
expected to have a material adverse effect on the Company or its business
or to materially adversely affect Purchaser's ability to complete the
Offer; or
8. immediately prior to and at the time Shares are accepted for
payment, the entire Board of Directors of the Company shall not be composed
of designees of Purchaser, provided Purchaser shall have used its best
efforts to make such designations prior to the expiration of the Offer.
CERTAIN LEGAL AND REGULATORY MATTERS
Except as described herein, based on a review of publicly available filings
made by the Company with the Commission and other publicly available information
concerning the Company, as well as certain representations made to Purchaser in
the Tender Offer Agreement by the Company, Purchaser is not aware of any license
or regulatory permit that appears to be material to the business of the Company
and its subsidiaries, taken as a whole, that might be adversely affected by
Purchaser's acquisition of Shares as contemplated herein or of any approval or
other action by any governmental entity that would be required for the
acquisition or ownership of Shares by Purchaser as contemplated herein. Should
any such approval or other action be required, Purchaser and Holdings currently
contemplate that such approval or other action will be sought, except as
described below under
' -- State Takeover Laws.' While, except as otherwise expressly described
herein, Purchaser does not presently intend to delay the acceptance for payment
of, or payment for, Shares tendered pursuant to the Offer, pending the outcome
of any such matter, there can be no assurance that any such approval or other
action, if needed, would be obtained or would be obtained without substantial
conditions or that failure to obtain any such approval or other action might not
result in consequences adverse to the Company's business, or that certain parts
of the Company's business might not have to be disposed of if such approvals
were not obtained or such other actions were not taken or in order to obtain any
such approval or other action. If certain types of adverse action are taken with
respect to certain of the matters discussed below, Purchaser could decline to
accept for payment or pay for any Shares tendered. See 'TENDER OFFER -- Certain
Conditions to the Offer.'
State Takeover Laws. A number of states throughout the United States, have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, stockholders, executive offices or places of business in such states. In
Edgar v. MITE Corp., the Supreme Court of the United States held that the
Illinois Business Takeover Act, which involved state securities laws that made
the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and therefore was unconstitutional. In CTS Corp.
v. Dynamics Corp. of America, however, the Supreme Court of the United States
held that a state may, as a matter of corporate law and, in particular, those
laws concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the
23
<PAGE>
<PAGE>
affairs of a target corporation without prior approval of the remaining
stockholders, provided that such laws were applicable only under certain
conditions.
The Company is incorporated under the laws of Delaware. Section 203 of the
DGCL ('Section 203') prevents an 'Interested Stockholder' (defined generally as
a person with 15% or more of the corporation's outstanding voting stock) from
engaging in a 'Business Combination' (defined to include a variety of
transactions, including mergers) with a Delaware corporation for three years
following the date such person becomes an Interested Stockholder, unless (i)
before such person became an Interested Stockholder, the board of directors of
the corporation approved the transaction in which the Interested Stockholder
became an Interested Stockholder or approved the Business Combination, or (ii)
upon consummation of the transaction which resulted in the Interested
Stockholder becoming an Interested Stockholder, the Interested Stockholder owned
at least 85% of the voting stock of the corporation outstanding at the time the
transaction commenced (excluding stock held by directors who are also officers
of the corporation and by certain employee stock ownership plans), or (iii)
following the transaction in which such person became an Interested Stockholder,
the Business Combination is approved by the board of directors of the
corporation and authorized at a meeting of stockholders by the affirmative vote
of the holders of two-thirds of the outstanding voting stock of the corporation
not owned by the Interested Stockholder. The Company's by-laws provide that the
Company shall not be governed by Section 203 of the DGCL. If Section 203 were to
apply for any reason, its prohibitions on Business Combinations would be
inapplicable to the Offer, the purchase of the Sellers Shares and the Merger
because the Board of Directors has approved the Tender Offer Agreement and the
transactions contemplated thereby, including the Offer, subject to receipt of
the Fairness Opinion, for purposes of Section 203 of the DGCL and has delivered
the MOU to Purchaser. The restrictions of Section 203 are, accordingly, not
applicable to Holdings, Purchaser or affiliates or associates of Purchaser as a
result of the consummation of the transactions contemplated by this Offer to
Purchase.
The Michigan Control Share Statute provisions of the MBCA purport to apply
to the corporations that have (A) 100 or more shareholders of record, (B) its
principal place of business, principal office or substantial assets within
Michigan, and (C)(i) more than 10% of its shareholders of record resident in
Michigan, (ii) more than 10% of its shares owned of record by Michigan
residents, or (iii) 10,000 shareholders of record in Michigan. On this basis,
the Michigan Control Share Statute applies to the acquisition of the Shares,
absent an exemption. The Michigan Control Share Statute generally requires that
for a company to enter into a business combination with an interested
stockholder it must obtain: (i) an advisory statement from the Board of
Directors; (ii) approval of at least 90% of the votes of each class of voting
stock outstanding; and (iii) two-thirds of the non-interested voting stock to
approve the merger. The Company amended its by-laws to elect not to be governed
by the Michigan Control Share Statute as permitted by Section 794 of the MBCA
and no longer needs to comply with the Michigan Control Share Statute.
Neither Purchaser nor Holdings has currently complied with any state
takeover statute or regulation. Purchaser reserves the right to challenge the
applicability or validity of any state law purportedly applicable to the Offer,
the purchase of the Sellers Shares or the Merger, and nothing in this Offer to
Purchase or any action taken in connection with the Offer, the purchase of the
Sellers Shares or the Merger is intended as a waiver of such right. If it is
asserted that any state takeover statute is applicable to the Offer, the
purchase of the Sellers Shares or the Merger and an appropriate court does not
determine that it is inapplicable or invalid as applied to the Offer, the
purchase of the Sellers Shares or the merger, Purchaser might be required to
file certain information with, or to receive approvals from, the relevant state
authorities, and Purchaser might be unable to accept for payment or pay for
Shares tendered pursuant to the Offer or be delayed in consummating the Offer,
the purchase of the Sellers Shares or the Merger. In such case, Purchaser may
not be obliged to accept for payment or pay for any Shares tendered pursuant to
the Offer.
Antitrust. The provisions of the HSR Act are applicable to the acquisition
of Shares pursuant to the Purchase Agreement and the Offer. Under the provisions
of the HSR Act applicable to the Offer, there is a 15-calendar day waiting
period following the filing by Lowenthal, as the ultimate parent of the
Purchaser, of a Notification and Report Form before the Offer may be
consummated. A 30-calendar day waiting period applies to the purchase of the
Sellers Shares. Such waiting periods may be extended if Lowenthal receives a
request for additional information or documentary material from the Antitrust
24
<PAGE>
<PAGE>
Division of the Department of Justice (the 'Antitrust Division') or the Federal
Trade Commission (the 'FTC'). The waiting period may also be terminated early.
If, within the initial waiting period, either the Antitrust Division or the FTC
requests additional information or material from Lowenthal concerning the Offer
or the Purchase of Sellers Shares, the waiting period will be extended. Only one
extension of the waiting period pursuant to a request for additional information
is authorized by the HSR Act. Thereafter, such waiting period may be extended
only by court order or with consent of Lowenthal. In practice, complying with a
request for additional information or material can take a significant amount of
time.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as Purchaser's acquisition of Shares
pursuant to the Offer, the Purchase Agreement and the Merger. At any time before
or after Purchaser's acquisition of Shares, the Antitrust Division or the FTC
could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the acquisition of
Shares pursuant to the Offer or the Purchase Agreement or otherwise or seeking
divestiture of Shares acquired by Purchaser or divestiture of substantial assets
of Holdings or its subsidiaries. Private parties and state attorneys general may
also bring legal action under the antitrust laws in certain circumstances. Based
upon an examination of publicly available information relating to the business
in which Holdings and the Company are engaged, Holdings and Purchaser believe
that the acquisition of Shares by Purchaser will not violate the antitrust laws.
Nevertheless, there can be no assurance that a challenge to the Offer or other
acquisition of Shares by Purchaser on antitrust grounds will not be made or, if
such challenge is made, of the result. See 'TENDER OFFER -- Certain Conditions
to the Offer' for certain conditions of the Offer, including conditions with
respect to litigation and certain governmental actions.
Rule 13e-3. The Commission has adopted Rule 13e-3 under the Exchange Act
('Rule 13e-3'), which is applicable to certain 'going private' transactions.
Rule 13e-3 requires, among other things, that certain financial information
concerning the Company and certain information relating to the fairness of the
proposed transaction and the consideration offered to minority stockholders in
such transaction be filed with the Commission and disclosed to stockholders
prior to the consummation of the transaction.
Holdings believes that Rule 13e-3 will not be applicable to the Merger or
any other transaction covered by Rule 13e-3 because of the exemption afforded by
Rule 13e-3(g)(1), among other things. However, under certain circumstances, Rule
13e-3 could be applicable to the Merger or other transaction in which Holdings
seeks to acquire the remaining Shares it does not beneficially own following the
purchase of Shares pursuant to the Offer. Holdings intends to comply with Rule
13e-3 with respect to any transaction that is subject to Rule 13e-3.
FEES AND EXPENSES
Purchaser has retained Fahnestock to act as the Dealer Manager, Beacon Hill
Partners, Inc. to act as Information Agent and The Bank of New York to act as
the Depositary in connection with the Offer. The Information Agent may contact
holders of Shares by mail, telephone, telegraph and personal interview and may
request brokers, dealers, commercial banks, trust companies and other nominees
to forward the Offer material to beneficial owners. The Dealer Manager is an
affiliate of Holdings and Purchaser and will not be compensated for its
services. The Information Agent and the Depositary each will receive reasonable
and customary compensation for their services. Each of the Dealer Manager,
Information Agent and Depositary will be reimbursed for certain reasonable
out-of-pocket expenses and will be indemnified against certain liabilities and
expenses in connection therewith, including certain liabilities under the
federal securities laws.
Except as described herein, Purchaser will not pay any fees or commissions
to any broker or dealer or other person for soliciting tenders of Shares
pursuant to the Offer. Brokers, dealers, commercial banks and trust companies
will be reimbursed by Purchaser for reasonable expenses incurred by them in
forwarding material to their customers.
MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the Offer or the
acceptance thereof would not be in compliance with
25
<PAGE>
<PAGE>
the securities, 'blue sky' or other laws of such jurisdiction. None of
Purchaser, Fahnestock and Holdings is aware of any jurisdiction in which the
making of the Offer or the tender of Shares in connection therewith would not be
in compliance with the laws of such jurisdiction. If Purchaser or Holdings
becomes aware of any state law prohibiting the making of the Offer or the
acceptance of Shares pursuant thereto in such state, Purchaser will make a good
faith effort to comply with any such state statute or seek to have such state
statute declared inapplicable to the Offer. If, after such good faith effort,
Purchaser cannot comply with any such state statute, the Offer will not be made
to (nor will tenders be accepted from or on behalf of) the holders of Shares in
such jurisdictions. In any jurisdiction the securities laws or blue sky laws of
which require the Offer to be made by a licensed broker or dealer, the Offer is
being made on behalf of Purchaser by the Dealer Manager or one or more
registered brokers or dealers which are licensed under the laws of such
jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER, FAHNESTOCK OR HOLDINGS NOT CONTAINED IN
THE OFFER, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY PURCHASER, FAHNESTOCK OR HOLDINGS.
Purchaser, Fahnestock and Holdings have filed with the Commission the
Schedule 14D-1, together with exhibits, pursuant to Rule 14d-3 under the
Exchange Act, furnishing certain additional information with respect to the
Offer. In addition, the Company will file with the Commission the Schedule 14D-9
(including exhibits) pursuant to Rule 14d-9 under the Exchange Act. Such
Schedules and any amendments thereto, including exhibits, may be inspected and
copies may be obtained in the manner set forth under 'TENDER OFFER -- Certain
Information Concerning the Company' (except that they will not be available at
the regional offices of the Commission).
FMCC ACQUISITION CORP.
June 18, 1997
26
<PAGE>
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF HOLDINGS
The following table sets forth the name, business address, present
principal occupation or employment and five-year employment history of the
directors and executive officers of Holdings. Unless otherwise indicated, the
position listed is with Holdings. Each individual listed below is a citizen of
Canada, other than Messrs. Lowenthal and Crystal who are citizens of the United
States of America. None of the individuals named in Schedules I, II or III have,
during the last five years, either (i) been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors), or (ii) been a party to
a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
<TABLE>
<CAPTION>
POSITION WITH HOLDINGS; PRESENT PRINCIPAL
OCCUPATION OR EMPLOYMENT; MATERIAL
NAME AND BUSINESS ADDRESS POSITIONS HELD DURING THE PAST FIVE YEARS
- ------------------------------------------ ---------------------------------------------------------------------
<S> <C>
Albert G. Lowenthal ...................... Chairman of the Board, Chief Executive Officer and Director since
110 Wall Street 1985; Chairman of the Board and Chief Executive Officer of
9th Floor Fahnestock since 1985.
New York, New York 10005
Elaine K. Roberts ........................ President, Treasurer and Director since 1977; Treasurer and Director
20 Eglinton Avenue West of Fahnestock since 1983.
Suite 1110
P.O. Box 2015
Toronto, Ontario
Canada M4R 1K8
A. Winn Oughtred ......................... Secretary since June 1992 and prior to June 1991 and Director since
Borden & Elliot January 1979; Director of Fahnestock since 1983; Partner, Borden &
Scotia Plaza Elliot (Barristers and Solicitors) since 1977; Canadian counsel to
40 King Street West Holdings since 1979.
Canada M5H 3Y4
John L. Bitove ........................... Director since February 1980; Chairman and President of The Bitove
The Bitove Corporation Corporation (a holding company for subsidiaries engaged in food and
145 Wellington St. West beverage services) since 1987.
Suite 600 -- Member of the Audit and Compensation and Stock Option
Toronto, Ontario Committees.
Canada M5J 1H8
Burton Winberg ........................... Director since 1979; President of Rockport Holdings Limited (a real
Rockport Holdings Limited estate development company) since 1959.
170 The Donway West -- Member of the Audit and Compensation and Stock Option
Suite 307 Committees.
Don Mills, Ontario
Canada M3C 2G3
Richard Crystal .......................... Director since 1992; Partner, Whitman Breed Abbott & Morgan LLP
Whitman Breed Abbott & (Attorneys-at-Law) and its predecessor firm since 1986; U.S.
Morgan LLP Counsel to the Company since 1985.
200 Park Avenue
New York, New York 10166
Kenneth W. McArthur ...................... Director of the Company since 1996; President and C.E.O. of Shurway
93 Riverwood Parkway Capital Corporation (a private corporation), since July 1993;
Toronto, Ontario Senior Vice-President Bank of Montreal Investment Counsel between
Canada M84 4E4 January 1992 and July 1993; Senior Vice-President Nesbitt Thomson
Inc. between July 1989 and January 1993.
-- Member of the Audit Committee.
</TABLE>
I-1
<PAGE>
<PAGE>
SCHEDULE II
DIRECTORS AND EXECUTIVE OFFICERS OF FAHNESTOCK
The following table sets forth the name and position with Fahnestock of the
directors and executive officers of Fahnestock. Unless otherwise indicated, the
business address, principal occupation or employment, five-year employment
history and citizenship of each individual listed below is as set forth in
Schedule I. Each individual named below not mentioned in Schedule I is a citizen
of the United States of America.
<TABLE>
<CAPTION>
POSITION WITH FAHNESTOCK; PRESENT
PRINCIPAL OCCUPATION OR EMPLOYMENT;
MATERIAL POSITIONS HELD DURING
NAME AND BUSINESS ADDRESS THE PAST FIVE YEARS
- ------------------------------------ ---------------------------------------------------------------------------
<S> <C>
Albert G. Lowenthal................. Chairman of the Board, Chief Executive Officer and Director
Robert Neuhoff ..................... Executive Vice President and Director since 1988; Assistant Secretary since
110 Wall Street 1990; Vice President at Laidlaw, Adams & Peck from 1964 to 1987.
9th Floor
New York, New York 10005
Elaine K. Roberts................... Treasurer and Director
A. Winn Oughtred.................... Director
Robert Maimone ..................... Senior Vice President - Operations since April 1994; Operations Manager
110 Wall Street from June 1990 to April 1989; Margin Manager from February 1988 to June
9th Floor 1990.
New York, New York 10005
Paul Chropuvka ..................... Senior Vice President - Compliance since April 1994; Director of Compliance
110 Wall Street from August 1990 to present; Compliance Department Manager from October
9th Floor 1988 to August 1990; Internal Auditor from March 1988 to October 1988;
New York, New York 10005 Assistant Margin Manager from February 1988 to March 1988.
Richard Wohlman .................... Senior Vice President - Finance and Controller since April 1994; Controller
110 Wall Street from January 1989 to present; Assistant Controller from February 1988 to
9th Floor January 1989.
New York, New York 10005
Eric Shames ........................ Secretary and Chief Legal Counsel since February 1995; Chief Legal Counsel
110 Wall Street from January 1995 to present; Attorney, Milberg Weiss Bershad Hynes &
9th Floor Lerach (NY, NY) from May 1993 to December 1994; student, Benjamin N.
New York, New York 10005 Cardozo School of Law from June 1990 to December 1992.
</TABLE>
II-1
<PAGE>
<PAGE>
SCHEDULE III
DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER
The following table sets forth the name and position with Purchaser of the
sole director and executive officers of Purchaser. The business address,
principal occupation or employment, five-year employment history and citizenship
of each individual listed below is as set forth in Schedule I.
<TABLE>
<CAPTION>
NAME POSITION WITH PURCHASER
- ---- -----------------------
<S> <C>
Albert G. Lowenthal ................ Chairman of the Board, Chief Executive Officer and Director
Elaine K. Roberts .................. President and Treasurer
A. Winn Oughtred ................... Secretary
</TABLE>
III-1
<PAGE>
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
signed, will be accepted. The Letter of Transmittal, certificates for the Shares
and any other required documents should be sent or delivered by each stockholder
of the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary at one of the addresses set forth below:
The Depositary for the Offer is:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Facsimile Transmission: By Hand:
or
Tender & Exchange (212) 815-6213 Overnight Courier:
P.O. Box 11248 (For Eligible Institutions Only) Tender & Exchange Department
Church Street Station 101 Barclay Street
New York, NY 10286-1248 Receive and Deliver Window
New York, New York 10286
</TABLE>
For Confirmation Telephone:
(800) 507-9357
Any questions or requests for assistance or additional copies of the Offer
to Purchase, the Letter of Transmittal and Notice of Guaranteed Delivery may be
directed to the Information Agent or the Dealer Manager at their respective
telephone numbers and locations listed below. Stockholders may also contact
their broker, dealer, commercial bank, trust company or other nominee for
assistance concerning the Offer.
The Information Agent for the Offer is:
BEACON HILL PARTNERS, INC.
90 Broad Street
20th Floor
New York, New York 10004
Banks and Brokers please call:
(212) 843-8500
Toll Free: (800) 854-9486
The Dealer Manager for the Offer is:
[Logo]
Fahnestock & Co. Inc.
110 Wall Street, 9th Floor
New York, New York 10015
Call: (212) 668-8000 (collect)
<PAGE>
<PAGE>
SUPPLEMENT RELATING TO
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
FIRST OF MICHIGAN CAPITAL CORPORATION
AT
$15.00 NET PER SHARE
BY
FMCC ACQUISITION CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
FAHNESTOCK VINER HOLDINGS INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON WEDNESDAY, JULY 16, 1997, UNLESS THE OFFER IS
EXTENDED.
THE BOARD OF DIRECTORS OF FIRST OF MICHIGAN CAPITAL CORPORATION HAS
APPROVED THE OFFER REFERRED TO HEREIN AND DETERMINED THAT THE TERMS OF THE OFFER
ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY AND
RECOMMENDS THAT THE STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER ALL
THEIR SHARES PURSUANT THERETO.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE SATISFACTION OF
CERTAIN TERMS AND CONDITIONS SET FORTH IN THE OFFER TO PURCHASE (AS HEREINAFTER
DEFINED). SEE 'TENDER OFFER -- CERTAIN CONDITIONS TO THE OFFER' IN THE OFFER TO
PURCHASE.
THE OFFER IS PART OF A PLAN OF FAHNESTOCK VINER HOLDINGS INC. AND ITS
INDIRECT WHOLLY OWNED SUBSIDIARY, FMCC ACQUISITION CORP., TO ACQUIRE ALL THE
SHARES (AS DEFINED IN THE OFFER TO PURCHASE).
------------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should either (i) complete and sign the Letter of Transmittal (or a
facsimile copy thereof) in accordance with the instructions in the Letter of
Transmittal, mail or deliver the Letter of Transmittal or such facsimile and all
other required documents to the Depositary and either deliver the certificates
for such Shares to the Depositary along with the Letter of Transmittal or tender
such Shares pursuant to the procedure for book-entry transfer set forth in
'TENDER OFFER -- Procedure for Tendering Shares' in the Offer to Purchase, or
(ii) request such stockholder's broker, dealer, bank, trust company or other
nominee to effect the transaction for such stockholder. A stockholder whose
Shares are registered in the name of a broker, dealer, bank, trust company or
other nominee must contact such person if he or she desires to tender such
Shares.
A stockholder who desires to tender Shares and whose certificates for such
Shares are not immediately available and who cannot comply with the procedures
for book-entry transfer prior to the expiration of the Offer, may tender such
Shares by following the procedure for guaranteed delivery set forth in 'TENDER
OFFER -- Procedure for Tendering Shares' in the Offer to Purchase.
Questions and requests for assistance may be directed to the Information
Agent or to the Dealer Manager at their respective addresses and telephone
numbers set forth on the back cover of this Supplement. Additional copies of the
Offer to Purchase, this Supplement, the Letter of Transmittal, the Notice of
Guaranteed Delivery and other related materials may be obtained from the
Information Agent or from brokers, dealers, commercial banks and trust
companies.
------------------------
The Dealer Manager for the Offer is:
FAHNESTOCK & CO. INC.
July 1, 1997
<PAGE>
<PAGE>
TO THE STOCKHOLDERS OF
FIRST OF MICHIGAN CAPITAL CORPORATION:
The following information amends and supplements the Offer to Purchase,
dated June 18, 1997 (the 'Offer to Purchase'), of FMCC Acquisition Corp., a
Delaware corporation ('Purchaser'), and the indirect wholly owned subsidiary of
Fahnestock Viner Holdings Inc., an Ontario corporation ('Holdings'), pursuant to
which Purchaser is offering to purchase all outstanding shares of Common Stock,
$.10 par value per share, of First of Michigan Capital Corporation, a Delaware
corporation (the 'Company'), at a purchase price of $15.00 per share, net to the
seller in cash, without interest, upon the terms and subject to the conditions
set forth in the Offer to Purchase, as amended and supplemented by this
Supplement, and in the related Letter of Transmittal (which, together with any
amendments or supplements hereto or thereto, collectively constitute the
'Offer'). Capitalized terms used and not defined herein shall have the meanings
assigned to them in the Offer to Purchase.
1. EXPIRATION DATE; EXTENSION. The Offer and withdrawal rights will expire
at 12:00 Midnight, New York City time, on Wednesday, July 16, 1997 (or any other
date and time then set as the Expiration Date), unless the Offer is extended.
There can be no assurance that Purchaser will exercise any right to extend
the Offer. Any extension, waiver, amendment or termination of the Offer will be
followed as promptly as practicable by public announcement thereof. In the case
of an extension, Rule 14e-1(d) under the Securities Exchange Act of 1934, as
amended (the 'Exchange Act'), requires that the announcement be issued no later
than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date in accordance with the public announcement
requirements of Rule 14d-4(c) under the Exchange Act, subject to applicable law
(including Rules 14d-4(c) and 14d-6(d) under the Exchange Act which require that
any material change in the information published, sent or given to stockholders
in connection with the Offer be promptly disseminated to stockholders in a
manner reasonably designed to inform stockholders of such change). Without
limiting the obligation of Purchaser under such rules or the manner in which
Purchaser may choose to make any public announcement, Purchaser will not have
any obligation to publish, advertise or otherwise communicate any such public
announcement other than by issuing a release to the Dow Jones News Service. See
the sections entitled 'TENDER OFFER -- Terms of the Offer' and ' -- Certain
Agreements -- The Tender Offer Agreement' in the Offer to Purchase.
2. FAIRNESS OPINION. Duff & Phelps, LLC has delivered to the Board of
Directors of the Company its opinion to the effect that, as of June 24, 1997,
the terms and conditions of the Offer are fair and reasonable to the
stockholders of the Company from a financial point of view. Such opinion is set
forth in full as an annex to the Company's Solicitation/Recommendation Statement
on Schedule 14D-9 filed with the Commission, a copy of which is being mailed to
stockholders of the Company concurrently herewith.
3. HSR ACT. On June 25, 1997, each of the Company and Purchaser was
notified that early termination of the waiting period under the HSR Act
applicable to the purchase of Shares pursuant to the Offer and the Purchase
Agreement was granted by the Federal Trade Commission. Accordingly, this
condition to the purchase of Shares pursuant to the Offer and the Purchase
Agreement has been satisfied.
4. SELLERS SHARES. If agreed to by Sellers and Purchaser, the mechanics of
the closing of the purchase of the Sellers Shares pursuant to the Purchase
Agreement may be effected by a tender of the Sellers Shares in the Offer.
5. COVER PAGE; INTRODUCTION. Each of (i) the first paragraph on the cover
page of the Offer to Purchase, and (ii) the third paragraph of the section
entitled 'INTRODUCTION' in the Offer to Purchase is hereby amended by replacing
such paragraph in its entirety with the following:
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER AND
DETERMINED THAT THE TERMS OF THE OFFER ARE FAIR TO, AND IN THE BEST
INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY AND RECOMMENDS THAT THE
STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER ALL OF THEIR SHARES
PURSUANT THERETO.
<PAGE>
<PAGE>
6. PRICE RANGE OF THE SHARES. The section entitled 'TENDER OFFER -- Price
Range of the Shares; Dividends on the Shares' in the Offer to Purchase is hereby
supplemented and amended by inserting the following at the end of such section:
The high and low sales prices per Share as reported in publicly
available resources for the second calendar quarter of 1997 were $14.75 and
$8.00, respectively. On June 30, 1997, the closing sale price per Share on
the Chicago Stock Exchange was $14.63. STOCKHOLDERS ARE URGED TO OBTAIN
CURRENT MARKET QUOTATIONS FOR THE SHARES.
7. BACKGROUND OF THE OFFER.
a. The section entitled 'TENDER OFFER -- Background of the Offer' in the
Offer to Purchase is hereby supplemented and amended by inserting the following
at the end of the sixth paragraph of such section:
On June 6, 1997, Holdings entered into a Confidential Disclosure and
Standstill Agreement, dated June 6, 1997, with the Company (the
'Confidentiality Agreement'), in which Holdings agreed, among other things,
to treat as confidential any information provided to it by or on behalf of
the Company, and Holdings and Purchaser agreed that, if discussions were
abandoned by the parties, Holdings would be subject to certain restrictions
on its ability to engage in certain actions involving the Company and its
assets. Subsequent thereto, the Company has supplied Holdings with certain
confidential, non-public information about the Company.
b. The section entitled 'TENDER OFFER -- Background of the Offer' in the
Offer to Purchase is hereby supplemented and amended by inserting the following
at the end of such section:
On June 24, 1997, Duff & Phelps, LLC delivered to the Board of
Directors of the Company its opinion to the effect that, as of June 24,
1997, the terms and conditions of the Offer are fair and reasonable to the
stockholders of the Company from a financial point of view.
8. CERTAIN AGREEMENTS. The section entitled 'TENDER OFFER -- Certain
Agreements' in the Offer to Purchase is hereby supplemented and amended by
inserting the following at the end of such section:
Confidentiality Agreement
The following is a summary of the material terms of the
Confidentiality Agreement between the Company and Holdings. This summary is
not a complete description of the terms and conditions thereof and is
qualified in its entirety by reference to the full text thereof, which is
incorporated herein by reference and a copy of which has been filed with
the Commission as an exhibit to Amendment No. 1 to the Schedule 14D-1 filed
with the Commission pursuant to the Exchange Act. The Confidentiality
Agreement may be examined, and copies thereof may be obtained, as set forth
under 'TENDER OFFER -- Certain Information Concerning the Company.'
Pursuant to the terms of the Confidentiality Agreement, the Company
agreed to disclose certain information of a confidential or proprietary
nature to Holdings in connection with the proposed acquisition of the
Company by Holdings. In the Confidentiality Agreement, Holdings agreed that
it and its representatives and agents would treat as confidential all
information concerning the Company furnished by the Company or on behalf of
the Company, except for such information which (i) becomes lawfully
available to the public other than as a result of a disclosure by Holdings,
its representatives or its agents, (ii) was lawfully available to Holdings
on a non-confidential basis prior to its disclosure to Holdings by the
Company or its agents or representatives, or (iii) lawfully becomes
available to Holdings on a non-confidential basis from a source other than
the Company or its agents or representatives, provided that such source is
not bound by a confidentiality agreement with the Company of which Holdings
has been made aware.
The Confidentiality Agreement further provides that neither party,
without the other party's prior written consent, will disclose to any
person any information concerning discussions or negotiations in connection
with the proposed acquisition of the Company by Holdings or any of the
terms, conditions, or other facts with respect thereto including the status
thereof. Holdings also agreed that for a period of two years following the
date of the Confidentiality Agreement, it will not purchase or offer to
purchase any material assets or any securities of the Company or propose
2
<PAGE>
<PAGE>
any merger or other business combination involving the Company except
pursuant to a transaction to be approved by the Board of Directors of the
Company and only if specifically invited in writing by the Company to do
so. The requirement for an invitation in writing has been satisfied by the
execution and delivery of the Tender Offer Agreement and the MOU. In
addition, for a period of two years after the date of the Confidentiality
Agreement, Holdings agreed that it will not, without the Company's prior
written consent (which consent has been given by the Company through the
execution and delivery of the Tender Offer Agreement and the MOU), (i)
make, or in any way participate in, any solicitation of proxies to vote, or
seek to advise or influence any person or entity with respect to the voting
of any voting securities of the Company, (ii) form, join, or in any way
participate in a 'group' within the meaning of Section 13(d)(3) of the
Exchange Act with respect to any voting securities of the Company, or (iii)
otherwise seek to control the management, Board of Directors or policies of
the Company; provided, however, these provisions shall not apply to
Holdings if another entity enters into a business combination with the
Company or initiates a tender offer for the Company's securities.
In addition, the Company and Holdings each agreed for a period of two
years after the date of the Confidentiality Agreement not to solicit any of
the other's current officers or employees with which it had contact or who
were identified to it during Holdings' due diligence review of the Company
without the prior written consent of the other party.
9. BOARD REPRESENTATION. The section entitled 'TENDER OFFER -- Board
Representation' in the Offer to Purchase is hereby supplemented and amended by
inserting the following at the end of such section:
The Offer also is conditioned on the Board of Directors consisting, at
the time Shares are accepted for payment, solely of designees of Purchaser.
See 'TENDER OFFER -- Certain Conditions to the Offer.' Purchaser has
designated in writing the following individuals as its designees: Albert G.
Lowenthal (Chairman, Chief Executive Officer and Director of Holdings);
Elaine K. Roberts (President, Treasurer and Director of Holdings); A. Winn
Oughtred (Secretary and Director of Holdings); Edward Soule (Chairman of
the Company); and Mark Shobe (President of the Company).
Purchaser has been informed that the Compensation/Stock Option
Committee of the Board of Directors of the Company has authorized the
Company to pay Edward Soule ('Soule'), Chairman of the Board of Directors
of the Company, a special bonus in the amount of $100,000 to compensate him
for extraordinary service rendered to the Company beyond his original
commitment and to encourage him to remain as Chairman and to assist the
Company in the resolution of its management difficulties through a business
combination or acquisition. Such bonus is to be paid to Soule at such time
as the then members of the Compensation/Stock Option Committee no longer
serve in such capacity, but not later than July 31, 1997.
10. APPROVAL BY THE BOARD OF DIRECTORS OF THE COMPANY. The section entitled
'TENDER OFFER -- Approval by the Board of Directors of the Company' in the Offer
to Purchase is hereby supplemented and amended by inserting at the end of such
section the following:
The Board of Directors of the Company has approved the Offer and
determined that the terms of the Offer are fair to, and in the best
interests of, the stockholders of the Company and recommends that the
stockholders of the Company accept the Offer and tender all of their Shares
pursuant thereto.
FMCC ACQUISITION CORP.
July 1, 1997
3
<PAGE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
signed, will be accepted. The Letter of Transmittal, certificates for the Shares
and any other required documents should be sent or delivered by each stockholder
of the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary at one of the addresses set forth below:
The Depositary for the Offer is:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
By Hand:
or
By Mail: By Facsimile Transmission: Overnight Courier:
Tender & Exchange (212) 815-6213 Tender & Exchange Department
P.O. Box 11248 (For Eligible Institutions Only) 101 Barclay Street
Church Street Station Receive and Deliver Window
New York, NY 10286-1248 New York, New York 10286
</TABLE>
For Confirmation Telephone:
(800) 507-9357
Any questions or requests for assistance or additional copies of the Offer
to Purchase, this Supplement, the Letter of Transmittal and Notice of Guaranteed
Delivery may be directed to the Information Agent or the Dealer Manager at their
respective telephone numbers and locations listed below. Stockholders may also
contact their broker, dealer, commercial bank, trust company or other nominee
for assistance concerning the Offer.
The Information Agent for the Offer is:
BEACON HILL PARTNERS, INC.
90 Broad Street
20th Floor
New York, New York 10004
Banks and Brokers please call:
(212) 843-8500
Toll Free: (800) 854-9486
The Dealer Manager for the Offer is:
[Logo]
Fahnestock & Co. Inc.
110 Wall Street, 9th Floor
New York, New York 10015
Call: (212) 668-8000 (collect)
<PAGE>
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
FIRST OF MICHIGAN CAPITAL CORPORATION
PURSUANT TO THE OFFER TO PURCHASE
DATED JUNE 18, 1997
BY
FMCC ACQUISITION CORP.
AN INDIRECT AND WHOLLY OWNED SUBSIDIARY
OF
FAHNESTOCK VINER HOLDINGS INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, JULY 16, 1997, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Facsimile Transmission: By Hand/Overnight
Tender & Exchange (212) 815-6213 Tender & Exchange
P.O. Box 11248 (For Eligible Department
Church Street Station Institutions Only) 101 Barclay Street
New York, New York Receive and Deliver Window
10286-1248 New York, New York 10286
Confirm by Telephone:
(800) 507-9357
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN THAT SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION TO A
NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU
MUST SIGN THIS LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE THEREFOR PROVIDED
BELOW AND COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by holders of Shares (as
defined below) (the 'Tendering Stockholders') if certificates evidencing Shares
('Certificates') are to be forwarded herewith or, unless an Agent's Message (as
defined in the Offer to Purchase referred to below) is used, if delivery of
Shares is to be made by book-entry transfer to an account maintained by The Bank
of New York (the 'Depositary') at The Depository Trust Company ('DTC') or the
Philadelphia Depository Trust Company ('PDTC') (each a 'Book-Entry Transfer
Facility') pursuant to the procedures set forth in 'TENDER OFFER -- Procedure
for Tendering Shares' of the Offer to Purchase (as defined below).
Tendering Stockholders whose Certificates for Shares are not immediately
available or who cannot deliver their Certificates for, or a Book-Entry
Confirmation (as defined in 'TENDER OFFER -- Procedure for Tendering Shares' of
the Offer to Purchase) with respect to, their Shares and all other required
documents to the Depositary prior to the Expiration Date (as defined in 'TENDER
OFFER -- Terms of the Offer' of the Offer to Purchase) may tender their Shares
according to the guaranteed delivery procedures set forth in 'TENDER
OFFER -- Procedure for Tendering Shares' of the Offer to Purchase. DELIVERY OF
DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL
NUMBER
OF SHARES NUMBER
SHARE REPRESENTED OF
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE BY SHARES
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON THE CERTIFICATE(S)) NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
Total Shares
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Need not be completed by holders of Shares delivering Shares by Book-Entry Transfer.
(2) Unless otherwise indicated, it will be assumed that all Shares represented by Certificates delivered to the Depositary are
being tendered. See Instruction 4.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A
BOOK-ENTRY TRANSFER FACILITY, AND COMPLETE THE FOLLOWING (ONLY
PARTICIPANTS IN A BOOK-ENTRY TRANSFER FACILITY MAY DELIVER SHARES BY
BOOK-ENTRY TRANSFER).
Name of Tendering Institution: .......................................
Check Box of Book-Entry Transfer Facility:
[ ] DTC [ ] PDTC
Account Number: ______________ Transaction Code Number: ______________
[ ] CHECK HERE IF SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY, AND COMPLETE THE
FOLLOWING. PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED
DELIVERY.
Name(s) of Registered Owner(s): _________________________________________
Window Ticket Number (if any): __________________________________________
Date of Execution of Notice of Guaranteed Delivery: _____________________
Name of Institution which Guaranteed Delivery: __________________________
If delivery is by book-entry transfer, check box of applicable Book-Entry
Transfer Facility:
DTC [ ] PDTC [ ]
Account Number: ______________ Transaction Code Number: ______________
<PAGE>
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to FMCC Acquisition Corp. (the 'Purchaser'),
a Delaware corporation and an indirect wholly owned subsidiary of Fahnestock
Viner Holdings Inc. ('Holdings'), the above-described shares of Common Stock,
par value $.10 per share (the 'Shares'), of First of Michigan Capital
Corporation, a Delaware corporation ('Company'), at a purchase price of $15.00
per Share, net to the seller in cash, without interest thereon, upon the terms
and subject to the conditions set forth in the Offer to Purchase, dated June 18,
1997 (the 'Offer to Purchase'), receipt of which is hereby acknowledged, and in
this Letter of Transmittal (which, together with any amendments or supplements
thereto, collectively, constitute the 'Offer'). The Purchaser has been formed by
Holdings in connection with the Offer and the transactions contemplated thereby.
The Offer is being made in connection with the Tender Offer Agreement, dated as
of June 11, 1997 (the 'Tender Offer Agreement'), among the Purchaser, the
Company, DST Systems Inc. and 1888 Limited Partnership. The undersigned
understands that the Purchaser reserves the right to transfer or assign, in
whole or from time to time in part, to one or more of its or Holding's
affiliates, the right to purchase all or any portion of the Shares tendered
pursuant to the Offer, but any such transfer or assignment will not relieve the
Purchaser of its obligations under the Offer or prejudice the rights of
Tendering Stockholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of, or payment for,
the Shares tendered herewith in accordance with the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms or conditions of any such extension or amendment), the undersigned hereby
sells, assigns and transfers to, or upon the order of, the Purchaser all right,
title and interest in and to all of the Shares that are being tendered hereby
and any and all other Shares or other securities issued or issuable in respect
of such Shares on or after June 18, 1997 (a 'Distribution') and irrevocably
constitutes and appoints the Depositary the true and lawful agent and
attorney-in-fact of the undersigned with respect to such Shares (and any
Distributions), with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to (i) deliver
Certificates for such Shares (and Distributions), or transfer ownership of such
Shares (and any Distributions) on the account books maintained by a Book-Entry
Transfer Facility together, in any such case, with all accompanying evidences of
transfer and authenticity to, or upon the order of, the Purchaser, upon receipt
by the Depositary as the undersigned's agent, of the purchase price with respect
to such Shares, (ii) present such Shares (and all Distributions) for transfer on
the books of the Company, and (iii) receive all benefits and otherwise exercise
all rights of beneficial ownership of such Shares (and any Distributions), all
in accordance with the terms and subject to the conditions of the Offer.
The undersigned hereby irrevocably appoints Albert G. Lowenthal and Elaine
K. Roberts (each a 'Purchaser Designee') the attorney-in-fact and proxy of the
undersigned, each with full power of substitution, to the full extent of the
undersigned's rights with respect to all Shares tendered thereby and accepted
for payment and paid for by the Purchaser (and any Distributions), including,
without limitation, the right to vote such Shares (and any Distributions) in
such manner as each such attorney and proxy or his or her substitute shall, in
his or her sole discretion, deem proper. All such powers of attorney and
proxies, being deemed irrevocable, shall be considered coupled with an interest
in the Shares tendered herewith. Such appointment will be effective when, and
only to the extent that, the Purchaser accepts such Shares for payment. Upon
such acceptance for payment, all prior powers of attorney and proxies given by
the undersigned with respect to such Shares (and any Distributions) will be
revoked, without further action, and no subsequent powers of attorney and
proxies may be given with respect thereto (and, if given, will be deemed
ineffective). Each Purchaser Designee will, with respect to the Shares (and any
Distributions), for which such appointment is effective, be empowered to
exercise all voting and other rights of the undersigned with respect to such
Shares (and any Distributions) as such Purchaser Designee in his or her sole
discretion may deem proper. The Purchaser reserves the absolute right to require
that, in order for Shares to be deemed validly tendered, immediately upon
acceptance for payment of such Shares, the Purchaser or any Purchaser Designee
is able to exercise full voting rights and all other rights which inure to a
record and beneficial holder with respect to such Shares (and any
Distributions), including voting at any meeting of stockholders then selected.
All authority conferred or agreed to be conferred in this Letter of
Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators, trustee in bankruptcy, personal and legal representatives of the
undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned. Except as
<PAGE>
<PAGE>
stated in the Offer to Purchase, this tender is irrevocable, provided that the
Shares tendered pursuant to the Offer may be withdrawn prior to their acceptance
for payment.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby (and any Distributions) and that, when the same are accepted for
payment and paid for by the Purchaser, the Purchaser will acquire good,
marketable and unencumbered title thereto, free and clear of all liens,
restrictions, charges and encumbrances, and that the Shares tendered hereby (and
any Distributions) will not be subject to any adverse claim. The undersigned,
upon request, will execute and deliver any additional documents deemed by the
Depositary or the Purchaser to be necessary or desirable to complete the sale,
assignment and transfer of Shares tendered hereby (and any Distributions). In
addition, the undersigned shall promptly remit and transfer to the Depositary
for the account of the Purchaser any and all Distributions issued to the
undersigned on or after June 18, 1997 in respect of the Shares tendered hereby,
accompanied by appropriate documentation of transfer, and, pending such
remittance and transfer or appropriate assurance thereof, the Purchaser shall be
entitled to all rights and privileges as owner of any such Distributions and may
withhold the entire purchase price or deduct from the purchase price the amount
of value thereof, as determined by the Purchaser in its sole discretion.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in 'TENDER OFFER -- Procedure for Tendering
Shares' of the Offer to Purchase and in the instructions hereto will constitute
a binding agreement between the undersigned and the Purchaser with respect to
such Shares upon the terms and subject to the conditions of the Offer.
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, the Purchaser may not be required to accept for payment
any of the Shares tendered hereby or may accept for payment fewer than all of
the Shares tendered hereby.
Unless otherwise indicated herein under 'Special Payment Instructions',
please issue a check for the purchase price and/or return any Certificates
evidencing Shares not tendered or not accepted for payment in the name(s) of the
registered holder(s) appearing under 'Description of Shares Tendered.'
Similarly, unless otherwise indicated under 'Special Delivery Instructions',
please mail the check for the purchase price and/or return any Certificates
evidencing Shares not tendered or not accepted for payment (and accompanying
documents, as appropriate) to the address(es) of the registered holder(s)
appearing under 'Description of Shares Tendered.' In the event that both the
'Special Payment Instructions' and the 'Special Delivery Instructions' are
completed, please issue the check for the purchase price and deliver such check
and/or return such Certificates evidencing Shares not tendered or accepted for
payment (and accompanying documents, as appropriate) in the name(s) of, and
deliver such check and/or return such Certificates (and accompanying documents,
as appropriate) to the person(s) so indicated. Unless otherwise indicated herein
under 'Special Payment Instructions', in the case of a book-entry delivery of
Shares, please credit the account maintained at the Book-Entry Transfer Facility
indicated above with respect to any Shares not accepted for payment. The
undersigned recognizes that the Purchaser has no obligations pursuant to the
'Special Payment Instructions' to transfer any Shares from the name of the
registered holder thereof if the Purchaser does not accept for payment any of
the Shares tendered hereby.
<PAGE>
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6, AND 7)
To be completed ONLY if certificates for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment are to be issued in the name of someone other than
the undersigned, or if Shares delivered by book-entry transfer that are
not accepted for payment are to be returned by credit to an account
maintained at a Book-Entry Transfer Facility, other than to the account
indicated above.
Issue (check appropriate box(es)):
[ ] Check to:
[ ] Certificate(s) to:
Name: ____________________________________________________________________
Address: _________________________________________________________________
__________________________________________________________________________
(INCLUDE ZIP CODE)
__________________________________________________________________________
(TAX IDENTIFICATION OR
SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9)
[ ] Credit unpurchased Shares tendered by book-entry transfer to the
account set forth below:
[ ] DTC [ ] PDTC
(check one)
__________________________________________________________________________
(DTC/PDTC Account Number)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6, AND 7)
To be completed ONLY if certificates for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment are to be sent to someone other than the undersigned,
or to the undersigned at an address other than that shown above.
Mail (check appropriate box(es)):
[ ] Check to:
[ ] Certificate(s) to:
Name: ____________________________________________________________________
Address: _________________________________________________________________
__________________________________________________________________________
(INCLUDE ZIP CODE)
__________________________________________________________________________
(TAX IDENTIFICATION OR
SOCIAL SECURITY NUMBER
(SEE SUBSTITUTE FORM W-9)
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, signatures
on this Letter of Transmittal must be guaranteed by a bank, broker, dealer,
credit union, savings association or other entity that is a member in good
standing of a recognized Medallion Program approved by The Securities Transfer
Association, Inc. (an 'Eligible Institution'), unless the Shares tendered hereby
are tendered (i) by a registered holder (which term, for purposes of this
document, shall include any participant in a Book-Entry Transfer Facility whose
name appears on a security position listing as the owner of Shares) of such
Shares who has completed neither the box labeled 'Special Payment Instructions'
nor the box entitled 'Special Delivery Instructions' herein, or (ii) for the
account of an Eligible Institution. See Instruction 5. If the Certificates are
registered in the name of a person other than the signer of this Letter of
Transmittal, or if payment is to be made or delivered to, or Certificates
evidencing unpurchased Shares are to be issued or returned to, a person other
than the registered owner, then the tendered Certificates must be endorsed or
accompanied by duly executed powers, in either case signed exactly as the name
or names of the registered owner or owners appear on the Certificates or stock
powers guaranteed by an Eligible Institution as provided herein. See Instruction
5.
2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed by
Tendering Stockholders if Certificates evidencing Shares are to be forwarded
herewith or, unless an Agent's Message (as defined in the Offer to Purchase) is
utilized, if delivery of Shares is to be made pursuant to the procedures for
book-entry transfer set forth in 'TENDER OFFER -- Procedure for Tendering
Shares' of the Offer to Purchase. For a Tendering Stockholder validly to tender
Shares pursuant to the Offer, either (a) a properly completed and duly executed
<PAGE>
<PAGE>
Letter of Transmittal (or a manually signed facsimile thereof), with any
required signature guarantees or an Agent's Message (as defined in the Offer to
Purchase) in connection with a book-entry delivery of Shares, and any other
documents required by this Letter of Transmittal, must be received by the
Depositary at one of its addresses set forth herein on or prior to the
Expiration Date, and either (i) the Certificates evidencing such Shares to be
tendered must be received by the Depositary along with this Letter of
Transmittal or (ii) Shares must be delivered pursuant to the procedure for
book-entry transfer set forth in 'TENDER OFFER -- Procedure for Tendering
Shares' of the Offer to Purchase and a Book-Entry Confirmation must be received
by the Depositary on or prior to the Expiration Date, or (b) the Tendering
Stockholder must comply with the guaranteed delivery procedures set forth below
and in 'TENDER OFFER -- Procedure for Tendering Shares' of the Offer to
Purchase.
Tendering Stockholders whose Certificates are not immediately available or
who cannot deliver their Certificates and all other required documents to the
Depositary or complete the procedures for book-entry transfer on or prior to the
Expiration Date may tender their Shares by properly completing and duly
executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery
procedures set forth in 'TENDER OFFER -- Procedure for Tendering Shares' of the
Offer to Purchase. Pursuant to such procedure: (i) such tender must be made by
or through an Eligible Institution, (ii) a properly completed and duly executed
Notice of Guaranteed Delivery, substantially in the form made available to the
Purchaser, must be received by the Depositary prior to the Expiration Date, and
(iii) the Certificates representing all tendered Shares in proper form for
transfer, or a Book-Entry Confirmation with respect to all tendered Shares,
together with a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile thereof) with any required signature guarantees or an
Agent's Message in connection with a book-entry delivery of the Shares, and any
other documents required by this Letter of Transmittal, must be received by the
Depositary within three New York Stock Exchange trading days after the date of
such Notice of Guaranteed Delivery. If Certificates are forwarded separately to
the Depositary, a properly completed and duly executed Letter of Transmittal (or
a manually signed facsimile thereof) must accompany each such delivery.
THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL AND ANY
OTHER REQUIRED DOCUMENTS, IS AT THE OPTION AND SOLE RISK OF THE TENDERING
STOCKHOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY
THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted, and no
fractional Shares will be purchased. All Tendering Stockholders, by execution of
this Letter of Transmittal (or a facsimile thereof), waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
information required under 'Description of Shares Tendered' should be listed on
a separate signed schedule attached hereto.
4. PARTIAL TENDERS. If fewer than all the Shares represented by any
Certificates delivered to the Depositary herewith are to be tendered hereby,
fill in the number of Shares which are to be tendered in the box which is
entitled 'Number of Shares Tendered.' In such case, a new Certificate for the
remainder of the Shares which were evidenced by the old Certificate(s) will be
sent, without expense, to the person(s) signing this Letter of Transmittal,
unless otherwise provided in the box entitled 'Special Delivery Instructions' on
this Letter of Transmittal, as promptly as practicable after the Expiration
Date. All Shares represented by Certificate(s) delivered to the Depositary will
be deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, INSTRUMENTS OF TRANSFER AND
ENDORSEMENTS. If this Letter of Transmittal is signed by the registered
holder(s) of the Shares tendered hereby, the signature(s) must correspond with
the name(s) as written on the face of the Certificates without alteration,
enlargement or any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
Certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of Certificates.
If this Letter of Transmittal or any Certificates or instruments of
transfer are signed by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, such person should so indicate when signing, and
proper evidence satisfactory to the Purchaser of such person's authority to so
act must be submitted.
<PAGE>
<PAGE>
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of Certificates listed or
separate instruments of transfer are required unless payment is to be made, or
Certificates not tendered or not purchased are to be issued or returned, to a
person other than the registered holder(s). Signatures on such Certificates or
instruments of transfer must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) the Shares evidenced by the Certificate(s) listed and
transmitted hereby, the Certificates must be endorsed or accompanied by
appropriate instruments of transfer, in either case signed exactly as the
name(s) of the registered holder(s) appear(s) on the Certificate(s). Signatures
on any such Certificates or instruments of transfer must be guaranteed by an
Eligible Institution.
6. TRANSFER TAXES. Except as set forth in this Instruction 6, the Purchaser
will pay or cause to be paid any transfer taxes with respect to the transfer and
sale of Shares to it or its order pursuant to the Offer. If, however, payment of
the purchase price is to be made to, or (in the circumstances permitted hereby)
if Certificates for Shares not tendered or not purchased are to be registered in
the name of, any person other than the registered holder(s), or if tendered
Certificates are registered in the name of any person other than the person(s)
signing this Letter of Transmittal, the amount of any stock transfer taxes
(whether imposed on the registered holder(s) or such persons) payable on account
of the transfer to such person will be deducted from the purchase price unless
satisfactory evidence of the payment of such taxes or exemption therefrom is
submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Certificate(s) listed in this Letter of
Transmittal.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check and/or
Certificates for unpurchased Shares are to be issued in the name of a person
other than the signer of this Letter of Transmittal or if a check is to be sent
and/or such Certificates are to be returned to someone other than the signer of
this Letter of Transmittal or to an address other than that shown above, the
appropriate boxes on this Letter of Transmittal must be completed. If any
tendered Shares are not purchased for any reason and such Shares are delivered
by Book-Entry Transfer Facility, such Shares will be credited to an account
maintained at the appropriate Book-Entry Transfer Facility.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for
assistance may be directed to the Information Agent or the Dealer Manager at
their addresses and telephone numbers set forth below, and requests for
additional copies of the Offer to Purchase, this Letter of Transmittal and the
Notice of Guaranteed Delivery may be directed to the Information Agent or
brokers, dealers, commercial banks and trust companies and such materials will
be furnished at the Purchaser's expense.
9. WAIVER OF CONDITIONS. The conditions of the Offer may be waived by the
Purchaser, in whole or in part, at any time or from time to time, in the
Purchaser's sole discretion.
10. BACKUP WITHHOLDING. Each Tendering Stockholder is required to provide
the Depositary with a correct Taxpayer Identification Number ('TIN') on
Substitute Form W-9, which is provided under 'Important Tax Information' below
and to certify that the stockholder is not subject to backup withholding.
Failure to provide the information on the Substitute Form W-9 may subject the
Tendering Stockholder to 31% federal income tax backup withholding on the
payment of the purchase price for the Shares. The Tendering Stockholder should
indicate in the box in Part III of the Substitute Form W-9 if the Tendering
Stockholder has not been issued a TIN and has applied for a TIN or intends to
apply for a TIN in the near future. If the Tendering Stockholder has indicated
in the box in Part III that a TIN has been applied for and the Depositary is not
provided with a TIN by the time of payment, the Depositary will withhold 31% of
all payments of the purchase price, if any, made thereafter pursuant to the
Offer until a TIN is provided to the Depositary.
11. LOST OR DESTROYED CERTIFICATES. If any Certificate representing Shares
has been lost or destroyed, the holder(s) should promptly notify the Company's
transfer agent and registrar, Boston Equiserv. The holders will then be
instructed as to the procedure to be followed in order to replace such
Certificate. This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost or destroyed Certificates have
been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE
THEREOF (TOGETHER WITH CERTIFICATES OR A BOOK-ENTRY CONFIRMATION FOR SHARES AND
ANY OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED BY THE DEPOSITARY, OR THE NOTICE
OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE
EXPIRATION DATE.
<PAGE>
<PAGE>
IMPORTANT TAX INFORMATION
Under federal income tax law, a Tendering Stockholder whose tendered Shares
are accepted for payment is required to provide the Depositary (as payor) with
such Tendering Stockholder's correct TIN on Substitute Form W-9 below. If such
Tendering Stockholder is an individual, the TIN is his or her social security
number. If the Tendering Stockholder has not been issued a TIN and has applied
for a number or intends to apply for a number in the near future, such Tendering
Stockholder should so indicate on the Substitute Form W-9. If the Depositary is
not provided with the correct TIN, the Tendering Stockholder may be subject to a
$50 penalty imposed by the Internal Revenue Service. In addition, payments that
are made to such Tendering Stockholder with respect to Shares purchased pursuant
to the Offer may be subject to backup federal income tax withholding.
Certain Tendering Stockholders (including, among others, all corporations
and certain foreign individuals) are exempt recipients not subject to these
backup withholding and reporting requirements. In order for a foreign individual
to qualify as an exempt recipient, that Tendering Stockholder must submit a
statement, signed under penalties of perjury, attesting to that individual's
exempt status. Forms for such statements may be obtained from the Depositary.
See the enclosed Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9 for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the Tendering Stockholder. Backup withholding is not an
additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If backup withholding
results in an overpayment of taxes, a refund may be obtained from the Federal
Government.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup federal income tax withholding on payments of the
purchase price for Shares purchased pursuant to the Offer, a Tendering
Stockholder must provide the Depositary with his or her correct TIN by
completing the Substitute Form W-9 below, certifying that the TIN provided on
Substitute Form W-9 is correct (or that such Tendering Stockholder is awaiting a
TIN) and that (1) such Tendering Stockholder has not been notified by the
Internal Revenue Service that he or she is subject to backup withholding as a
result of a failure to report all interest or dividends, or (2) the Internal
Revenue Service has notified the Tendering Stockholder that he or she is no
longer subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The Tendering Stockholder is required to give the Depositary the social
security number or employer identification number of the record owner of the
Shares tendered hereby. If the Shares are registered in more than one name or
are not in the name of the actual owner, consult the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional guidelines on which number to report. If the Tendering Stockholder
has not been issued a TIN and has applied for a number or intends to apply for a
number in the near future, he or she should write 'Applied For' in the space
provided for in the TIN in Part III, and sign and date the Substitute Form W-9.
If 'Applied For' is written in Part III and the Depositary is not provided with
a TIN by the time of payment, the Depositary will withhold 31% on all payments
of the purchase price thereafter until a TIN is provided to the Depositary.
<PAGE>
<PAGE>
IMPORTANT
TENDERING STOCKHOLDER: SIGN HERE AND COMPLETE
SUBSTITUTE FORM W-9 ON REVERSE
X____________________________________________________________________________
(SIGNATURE(S) OF TENDERING STOCKHOLDER(S))
Dated: _______________, 1997
(Must be signed by registered holder(s) exactly as name(s) appear(s)
on stock Certificate(s) or on a security position listing or by the person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, agent, officer of a corporation or other person
acting in a fiduciary or representative capacity, please set forth full title
and see Instruction 5).
Name(s) _____________________________________________________________________
(PLEASE PRINT)
_____________________________________________________________________________
Capacity (full title) _______________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
(SEE INSTRUCTION 5)
Address _____________________________________________________________________
_____________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone No. _________________________________________________
(HOME)
_____________________________________________________________________________
(BUSINESS)
Taxpayer Identification or Social Security No. ______________________________
(COMPLETE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
FOR USE BY FINANCIAL INSTITUTIONS ONLY
FINANCIAL INSTITUTIONS:
PLACE MEDALLION GUARANTEE IN SPACE BELOW
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
PAYER'S NAME: THE BANK OF NEW YORK
<S> <C> <C> <C>
SUBSTITUTE PART I -- PLEASE PROVIDE YOUR TIN IN THE PART III -- Social Security Number or
FORM W-9 BOX AT THE RIGHT AND CERTIFY BY SIGNING Employer Identification Number
AND DATING BELOW.
(If awaiting TIN write 'Applied For')
DEPARTMENT OF THE TREASURY INTERNAL
REVENUE SERVICE
PAYER'S REQUEST FOR TAXPAYER PART II -- For Payees exempt from backup withholding, see the enclosed Guidelines
IDENTIFICATION NUMBER ('TIN') AND for Certification of Taxpayer Identification Number on Substitute Form W-9 and
CERTIFICATION complete as instructed therein. Certification -- Under penalties of perjury, I
certify that:
(1) The number shown on this form is my correct TIN (or I am waiting for a number
to be issued to me); and
(2) I am not subject to backup withholding either because I have not been notified
by the Internal Revenue Service (IRS) that I am subject to backup withholding as a
result of a failure to report all interest or dividends, or the IRS has notified
me that I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS: You must cross out Item (2) above if you have been
notified by the IRS that you are subject to backup withholding because of
underreporting interest or dividends on your tax return. However, if after being
notified by the IRS that you were subject to backup withholding, you received
another notification from the IRS that you were no longer subject to backup
withholding, do not cross out Item (2). (Also see instructions in the enclosed
Guidelines).
NAME:______________________________________________________________________________
(Please Print)
SIGNATURE:__________________________________________ DATE:_________________________
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING A TIN.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION
I certify under penalties of perjury that a TIN has not been issued to
me, and either (1) I have mailed or delivered an application to receive a
TIN to the appropriate IRS Center or Social Security Administration Office,
or (2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a TIN by the time of payment, 31% of all
payments pursuant to the Offer made to me thereafter will be withheld until
I provide a number.
SIGNATURE ______________________________ DATE ______________________________
<PAGE>
<PAGE>
The Information Agent for the Offer is:
BEACON HILL PARTNERS, INC.
90 Broad Street
20th Floor
New York, New York 10004
Banks and Brokers please call:
(212) 843-8500
(800) 854-9486 (toll-free)
The Dealer Manager for the Offer is:
[LOGO]
FAHNESTOCK & CO. INC.
110 Wall Street, 9th Floor
New York, New York 10015
Call: (212) 668-8000 (collect)
June 18, 1997
<PAGE>
<PAGE>
FIRST OF MICHIGAN CAPITAL CORPORATION
100 RENAISSANCE CENTER
26TH FLOOR
DETROIT, MICHIGAN 48243
July 1, 1997
Dear Stockholder:
As you know, a Tender Offer for the common stock of your Company has been
made at a purchase price of $15 per share, net in cash to the sellers, upon
terms and conditions set forth in an Offer to Purchase, dated June 18, 1997 (the
'Offer to Purchase'). The Offer to Purchase has been made by FMCC Acquisition
Corp., an indirect wholly owned subsidiary of Fahnestock Viner Holdings Inc.
In the Offer to Purchase, you were advised that your Board of Directors had
approved the Tender Offer subject to receipt of a fairness opinion from an
independent financial advisor and would inform you of its recommendation upon
receipt of that opinion.
I am pleased to report that the Board of Directors has received the opinion
of Duff & Phelps, LLC to the effect that the terms and conditions of the Tender
Offer are fair and reasonable to the stockholders of the Company from a
financial point of view. A copy of that opinion is set forth in Annex B to the
enclosed Schedule 14D-9. On the basis of that opinion and the other factors
considered, as described in the enclosed materials, the Board of Directors has
determined that the Tender Offer is fair to, and in the best interests of, the
Company's stockholders. ACCORDINGLY, YOUR BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS THAT ALL COMPANY STOCKHOLDERS ACCEPT THE OFFER TO PURCHASE AND TENDER
ALL OF THEIR SHARES IN ACCORDANCE WITH ITS TERMS.
Also set forth in Annex A to the enclosed Schedule 14D-9 is an Information
Statement containing important information about the replacement of the Board of
Directors. We urge you to read carefully the Offer to Purchase and the related
materials in making your decision to tender your shares.
On behalf of the Board of Directors,
EDWARD SOULE
EDWARD SOULE
Chairman of the Board of Directors
<PAGE>
<PAGE>
EXHIBIT(a)(5)
PRESS RELEASE
TENDER OFFER FOR FIRST OF MICHIGAN CAPITAL CORPORATION
BY FAHNESTOCK VINER HOLDINGS INC.
NEW YORK, NEW YORK, JUNE 12, 1997. -- First of Michigan Capital Corporation
("First of Michigan") (FMG on CSE) and Fahnestock Viner Holdings Inc.
("Fahnestock") (FVH on NYSE and FHV.A on TSE) announced today that a wholly
owned subsidiary of Fahnestock will commence a tender offer to acquire all the
outstanding common stock of First of Michigan at a purchase price of US$15.00
per share, net to the seller in cash. As of May 14, 1997, there were 2,497,764
shares outstanding. First of Michigan common stock is traded on the Chicago
Stock Exchange.
First of Michigan stockholders holding approximately 57% of its outstanding
common stock have entered into a Stock Purchase Agreement pursuant to which
their shares will be purchased, also for US$15 per share, following expiration
of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of
1976 and expiration of the tender offer. Purchase of the shares under the Stock
Purchase Agreement is not conditioned upon the success of the tender offer.
Under the terms of the Stock Purchase Agreement, the selling stockholders have
agreed to place the shares of
<PAGE>
<PAGE>
common stock to be purchased, and Fahnestock's subsidiary has agreed
to place the purchase price, in escrow pending closing.
The selling stockholders who are parties to the Stock Purchase Agreement also
have agreed to use their best efforts to cause certain related persons, who
currently hold approximately 120,000 shares (approximately 5%) of First of
Michigan common stock, to tender their shares in response to the tender offer.
The Board of Directors of First of Michigan has approved the tender offer
subject to receiving a fairness opinion. The tender offer will not be
conditioned upon any minimum number of shares being tendered. Consummation will
occur subsequent to the expiration of the waiting period under the
Hart-Scott-Rodino Act.
It is expected that Mr. Albert G. Lowenthal, Chairman and CEO of Fahnestock
Viner Holdings Inc., will be appointed CEO by the Board of Directors of First of
Michigan upon expiration of the waiting period under the Hart-Scott-Rodino Act.
Fahnestock Viner Holdings Inc., through its principal subsidiary, Fahnestock &
Co. Inc., is engaged in securities brokerage and trading and offers investment
advisory and related financial services. Fahnestock employs approximately 525
investment
<PAGE>
<PAGE>
executives and operates 49 retail branch offices principally in the U.S.
Northeast, Midwest and Florida.
First of Michigan Capital Corporation is engaged in securities brokerage and
trading and investment banking. First of Michigan Capital is a member firm of
the New York Stock Exchange. First of Michigan Capital employs approximately 280
investment executives and operates 34 retail branch offices of which 33 are
located in Michigan.
* * * * *
For further information, contact:
Albert G. Lowenthal, Chairman and Chief Executive Officer
Fahnestock Viner Holdings Inc.
(212) 668-8000
Mark Shobe, President
First of Michigan Capital Corporation
(313) 259-2600
<PAGE>
<PAGE>
EXHIBIT(a)(6)
PRESS RELEASE
FAHNESTOCK VINER HOLDINGS INC. COMMENCES
TENDER OFFER FOR FIRST OF MICHIGAN CAPITAL CORPORATION
New York, New York, June 18, 1997. -- Fahnestock Viner Holdings, Inc.
("Fahnestock") (FVH on NYSE and FHV.A on TSE) announced today that FMCC
Acquisition Corp. (the "Purchaser"), a wholly-owned subsidiary of Fahnestock,
commenced its cash tender offer for all the outstanding shares of common stock
of First of Michigan Capital Corporation ("First of Michigan") (FMG on CSE).
Under the tender offer, stockholders who tender their shares will be
entitled to receive U.S.$15.00 in cash per share. The tender offer and
withdrawal rights are scheduled to expire at 12:00 Midnight, New York City time,
on Wednesday, July 16, 1997 unless extended. As previously announced, pursuant
to a Stock Purchase Agreement, the Purchaser has agreed to purchase, and
certain First of Michigan stockholders have agreed to sell, approximately 57%
of the outstanding common stock of First of Michigan, for the same price as
the tender.
The Bank of New York is the depositary for the tender offer. Fahnestock
& Co. Inc., is the Dealer Manager and Beacon Hill Partners Inc. is the
Information Agent for the tender offer.
It is expected that Mr. Albert G. Lowenthal, Chairman and CEO of
Fahnestock, will be appointed CEO of First of Michigan by its Board of
Directors upon completion of the tender offer and closing of the purchase
and sale under the Stock Purchase Agreement.
Fahnestock Viner Holdings Inc., through its principal subsidiary,
Fahnestock & Co. Inc., is engaged in securities brokerage and trading and
offers investment advisory and related financial services. Fahnestock
employs approximately 525 investment executives and operates 49 retail branch
offices principally in the U.S. Northeast Midwest and Florida.
First of Michigan Capital Corporation is engaged in securities brokerage
and trading and investment banking. First of Michigan is a member firm of the
New York Stock Exchange. First
<PAGE>
<PAGE>
of Michigan employs approximately 280 investment executives and operates 34
retail branch offices of which 33 are located in Michigan.
* * * * *
For further information, contact:
Albert G. Lowenthal, Chairman and Chief Executive Officer
Fahnestock Viner Holdings Inc.
(212) 668-8000
Mark Shobe, President
First of Michigan Capital Corporation
(313) 259-2600
<PAGE>
<PAGE>
PRESS RELEASE
BOARD OF FIRST OF MICHIGAN CAPITAL CORPORATION RECOMMENDS
ACCEPTANCE OF FAHNESTOCK VINER HOLDINGS INC. OFFER
New York, New York and Detroit, Michigan, July 1, 1997
- --Fahnestock Viner Holdings Inc. (FVH on NYSE and FHV.A on TSE) ('Fahnestock'),
and First of Michigan Capital Corporation (FMG on CSE) ('First of Michigan'),
announced today that the Board of Directors of First of Michigan has recommended
that the stockholders of First of Michigan accept and tender their shares
pursuant to the previously announced tender offer by Fahnestock's indirect
wholly owned subsidiary for all outstanding shares of the common stock of First
of Michigan at a price of U.S. $15.00 per share in cash (the 'Offer').
Fahnestock and First of Michigan also announced that they have received notice
from the Federal Trade Commission of the early termination of the waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 with
respect to the Offer and the related acquisition of shares of common stock
from two of First Michigan's stockholders.
In its Schedule 14D-9 filed today with the Securities and
Exchange Commission (the 'Commission'), First of Michigan stated that the
Board of Directors' recommendation to accept the Offer is based upon its
determination that the offer is fair to, and in the best interests of, the
stockholders of First of Michigan. First of Michigan also stated in its
Schedule 14D-9 that it had received the opinion of Duff & Phelps, LLC to the
effect that the terms and conditions of the Offer are fair and reasonable to
the stockholders of First of Michigan from a financial point of view. In
reaching its determination to recommend acceptance of the Offer, the Board
of Directors of First of Michigan considered the fairness opinion of Duff &
Phelps, LLC and other factors.
Fahnestock filed its Schedule 14D-1 on June 18, 1997 with the
Commission and Amendment No. 1 to the Schedule 14D-1 today with the Commission.
The Offer and withdrawal rights will expire at 12:00 Midnight,
New York City time, on Wednesday, July 16, 1997, unless the Offer is extended.
The Bank of New York is the depositary for the Offer. Fahnestock & Co. Inc. is
the Dealer Manager and Beacon Hill Partners, Inc. is the Information Agent for
the Offer.
Fahnestock Viner Holdings Inc., through its principal subsidiary,
Fahnestock & Co. Inc., is engaged in securities brokerage and trading and offers
investment advisory and related financial services. Fahnestock employs
approximately 525 investment executives and operates 49 retail branch offices
principally in the U.S. Northeast, Midwest and Florida.
First of Michigan Capital Corporation, through its subsidiaries,
is engaged in securities brokerage and trading and investment banking. Its
principal subsidiary, First of Michigan Corporation, is a member firm of the New
York Stock Exchange. First of Michigan employs approximately 280 investment
executives and operates 34 retail branch offices, of which 33 are located in
Michigan.
<PAGE>
<PAGE>
* * * * *
For further information, contact:
Albert G. Lowenthal, Chairman and Chief Executive Officer
Fahnestock Viner Holdings Inc.
(212) 668-8000
Mark Shobe, President
First of Michigan Capital Corporation
(313) 259-2600
-2-
<PAGE>
<PAGE>
<PAGE>
<PAGE>
[Duff & Phelps LLC Letterhead]
June 13, 1997
The Board of Directors
First of Michigan Capital Corporation
100 Renaissance Center
26th Floor
Detroit, MI 48243
Gentlemen:
This letter (the 'Agreement') confirms the basis of engagement between the First
of Michigan Capital Corporation (the 'Company') on behalf of the Board of
Directors and Duff & Phelps, LLC ('Duff & Phelps') for financial advisory
services. The terms of the engagement are as follows:
1. The Board of Directors has been advised of a tender offer (the 'Tender
Offer') from Fahnestock Viner Holdings, Inc. to be made to the stockholders
of the Company. The terms of the Tender Offer include the purchase of all
outstanding shares of the Company at a price of $15.00 per share payable in
cash. Holders of approximately 53% of the common stock (on a fully diluted
basis) have agreed to sell their shares and have placed them in escrow. The
Board of Directors engages Duff & Phelps as an independent financial advisor
to determine whether the terms of the Tender Offer are fair to the
shareholders of the Company from a financial point of view.
2. The Board of Directors understands that in rendering services hereunder, Duff
& Phelps will be relying, without independent verification, upon the accuracy
and completeness of all information that is or will be furnished to Duff &
Phelps by or on behalf of the Company, and Duff & Phelps will not, in any
respect, be responsible for the accuracy or completeness thereof.
3. Duff & Phelps agrees to maintain the confidentiality of all information
relating to the Company which it receives or develops during the course of
the engagement and to disclose such information only after receiving prior
written consent from the Company, which consent will not be unreasonably
withheld, or as required by law.
4. Duff & Phelps will provide a written opinion letter (the 'Opinion') and
supporting documentation as to whether the Tender Offer is fair to the
Shareholders of First of Michigan from a financial point of view.
The Opinion will include descriptions of the principal materials reviewed by
Duff & Phelps, the assumptions and qualifications upon which Duff & Phelps
has relied, and such other matters as Duff & Phelps in its sole discretion
deems appropriate.
5. Duff & Phelps shall be paid by the Company a fee of $125,000 for the services
described herein, of which $50,000 is due as a retainer payment upon
execution of the Agreement with the remainder payable upon delivery of the
Opinion and
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The Board of Directors
First of Michigan Capital Corporation
June 12, 1997
Page 2
supporting analysis. No portion of the fee is contingent upon consummation of
the Tender Offer or the conclusions reached in the Opinion, subject to the
following. If the Tender Offer is abandoned for reasons unrelated to the
conclusions contemplated in the Opinion, Duff & Phelps shall be entitled to
receive the greater of the retainer payment or Duff & Phelp's professional
hours incurred at its standard hourly rates then in effect but in no event
more than $125,000.
6. In connection with this engagement Duff & Phelps shall be reimbursed for
reasonable out-of-pocket expenses, including travel, lodging, telephone,
document reproduction, telecopying, and reasonable computer data base
charges.
7. If Duff & Phelps is required to render other services not directly incidental
to the delivery of the Opinion, including the provision of testimony in
administrative or judicial proceedings, the Company agrees to compensate Duff
& Phelps, in addition to the other fees provided for herein, on a per diem
basis at the rates of Duff & Phelps then in effect, plus reimbursement for
reasonable out-of-pocket expenses.
8. The Company agrees to indemnify Duff & Phelps in accordance with the terms of
the attached Indemnification Agreement.
9. The Company may terminate this Agreement at any time for any reason subject
to five days' notice. In the event of a termination, however, the
Indemnification Agreement shall remain in full force and effect for all
services previously provided by Duff & Phelps.
If the foregoing terms are acceptable to you, we request that you arrange to
have this letter fully executed and returned to us.
Sincerely,
/s/ Lee Bloom
AGREED TO AND ACCEPTED:
For First of Michigan Capital Corporation
By: /s/ Edward Soule
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Title: Chairman
-----------------------------------
Date: 6/18/97
-----------------------------------
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INDEMNIFICATION AGREEMENT
This indemnity is made part of an agreement dated June 13, 1997 (the
'Agreement'), by and between Duff & Phelps, LLC and First of Michigan Capital
Corporation (the 'Company') for financial valuation services to be rendered by
Duff & Phelps, LLC in connection with the Tender Offer described in the
Agreement.
A. Indemnification. To the fullest extent lawful, the Company will
promptly, upon demand, indemnify and hold harmless Duff & Phelps, LLC and their
affiliates (collectively, 'D&P'), and each director, officer, employee, agent,
shareholder and controlling person of D&P (any or all of the foregoing
hereinafter referred to as an 'Indemnified Person'), from and against all
losses, claims, damages, expenses, costs and liabilities (joint or several),
including amounts paid in reasonable settlement (collectively, 'Losses'),
resulting directly or indirectly from any threatened or pending investigation,
action, claim, proceeding or dispute, including securityholder actions
(collectively, a 'Claim'), which (1) are related to or arise out of any oral or
written information provided D&P by the Company or any omission by the Company,
or (2) are otherwise related to or arise out of D&P's engagement role,
activities or performance of professional services on the Company's behalf. The
Company will not be responsible, however, for any Losses pursuant to clause (2)
of the preceding sentence which are judicially determined to have resulted
primarily and directly from the bad faith or negligence of the party seeking
indemnification hereunder; but pending any such judicial determination, the
indemnification and reimbursement obligations of the Company hereunder shall
continue to apply. The Company also agrees that neither D&P nor any Indemnified
Person shall have any liability to the Company, its owners, parents, creditors
or securityholders for or in connection with its engagement, except for such
liability for Losses incurred by the Company which are judicially determined to
have resulted primarily and directly from D&P's bad faith or negligence. For
purposes of the foregoing, 'negligence' shall mean acts or failures to act that
represent a material departure from ordinary standards of care, and 'judicially
determined' shall mean determined by a court of competent jurisdiction in a
final non-appealable judgment on the merits.
B. Reimbursement of Expenses; Notice of Proceedings. The Company will
reimburse D&P and any Indemnified Person hereunder for all reasonable expenses,
including fees and disbursements of counsel and accountants incurred, and
compensation for D&P professional time spent, in connection with investigating,
preparing or defending any Claim for which indemnification may be sought
hereunder and in connection with enforcing this agreement, in each case, as they
are incurred by D&P or such other Indemnified Person, whether or not D&P or any
other Indemnified Person is a potential or actual named party or witness or
suffers any actual Losses. D&P will notify the Company if it learns that any
investigation, lawsuit, administrative proceeding or self-regulatory
organization proceeding has been instituted based, directly or indirectly, on
the transactions which were the subject of D&P's engagement under the Agreement,
although failure to do so will not relieve the Company from any obligation or
liability it has hereunder or otherwise, except to the extent such failure
causes the Company to forfeit substantial rights and defenses.
C. Contribution. If any indemnification sought by an Indemnified Person
pursuant to the terms hereof is held by a court to be unavailable for any
reason, then the Company and D&P will contribute to the Losses for which such
indemnification is held unavailable in
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such proportion as is appropriate to reflect not only the relative benefits
received (or anticipated) from the proposed transaction by the Company on the
one hand and the Indemnified Person on the other, but also the relative fault of
the Company and the Indemnified Person, as well as any other relevant equitable
considerations, subject to the limitation that the contribution by D&P will not
exceed the amount of fees actually received by D&P pursuant to D&P's engagement.
D. Settlement of Claims. The Company will not, without the prior written
consent of D&P, settle or compromise or consent to the entry of any judgment in
any pending or threatened Claim or Proceeding in respect of which
indemnification may be sought hereunder (whether or not D&P or any Indemnified
Person is an actual or potential party to such Claim or Proceeding) unless such
settlement, compromise or consent includes provisions holding harmless and
unconditionally releasing D&P and each other Indemnified Person hereunder from
all liability related to or arising out of such Claim or Proceeding,
including claims for contribution.
E. Miscellaneous. The obligations of D&P are solely corporate obligations.
No director, officer, employee, agent, shareholder or controlling person of D&P
shall be subjected to any liability to any person, nor will any such claim be
asserted by or on behalf of any other party to this Agreement. The Company's
indemnity, reimbursement and contribution obligations provided for herein shall:
(1) be in addition to any liability that the Company otherwise may have to D&P
and any rights that D&P or any Indemnified Person may have at common law or
otherwise; (2) survive the completion or termination of professional services
rendered by D&P under the Agreement; (3) apply to any activities prior to this
date and any amendment, modification or future addition to D&P's engagement; and
(4) inure to the benefit of the heirs, personal representatives, successors, and
assigns of D&P and each other Indemnified Person.
The Company hereby consents to personal jurisdiction and service and venue
in any court in which any Claim and Proceeding which is subject to the terms
provided for herein is brought against D&P or any other Indemnified Person. The
parties waive any right to trial by jury with respect to any claim or proceeding
related to or arising out of D&P's engagement, any transaction or conduct in
connection therewith or this agreement.
Dated: 6/18/97 Duff & Phelps, LLC
-----------------------
By: /s/ Lee Bloom
--------------------------------
Its: Managing Director
--------------------------------
Dated: 6/18/97 First of Michigan Capital Corporation
-----------------------
By: /s/ Edward Soule
--------------------------------
Its: Chairman
--------------------------------
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SECURITIES PURCHASE AGREEMENT
between
EACH OF THE SELLERS SIGNATORY HERETO
as Sellers
and
FMCC ACQUISITION CORP.
as Buyer
Dated as of June 11, 1997
======================================
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TABLE OF CONTENTS
Page
1. SALE AND PURCHASE.........................................................1
2. PURCHASE PRICE............................................................2
3. REPRESENTATIONS AND WARRANTIES OF BUYER...................................2
3.1. Existence; Good Standing.........................................2
3.2. Authorization, Validity and Effect of Agreements.................2
3.3. No Violation.....................................................2
3.4. Availability of Funds............................................3
3.5. Purchase for Investment..........................................3
3.6. No Brokers.......................................................3
3.7. Parent Company...................................................3
4. REPRESENTATIONS AND WARRANTIES OF SELLER..................................3
4.1. Existence; Good Standing.........................................3
4.2. Authorization, Validity and Effect of Agreements.................4
4.3. No Violation.....................................................4
4.4. No Brokers.......................................................4
4.5. Ownership of Securities..........................................4
4.6. Capitalization...................................................5
5. COVENANTS.................................................................5
5.1. No Disposition; No Lien..........................................5
5.2. Payments; No Solicitation........................................5
5.3. Certain Commitments..............................................6
5.4. Filings; Other Action............................................6
5.5. Certain Agreements...............................................7
5.6. Publicity........................................................7
5.7. Tender Offer Agreement...........................................7
5.8. Best Efforts to Cause Tender of Certain Shares...................7
6. CONDITIONS................................................................8
6.1. Conditions to Obligation of Sellers to Sell the Securities.......8
6.2. Conditions to Obligation of Buyer to Purchase the Securities.....9
7. TERMINATION...............................................................9
7.1. Termination by Mutual Consent....................................9
7.2. Termination by Either Buyer or Sellers..........................10
7.3. Effect of Termination and Abandonment...........................10
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7.4. Extension; Waiver...............................................10
8. GENERAL PROVISIONS.......................................................10
8.1. Survival of Representations and Warranties......................10
8.2. Escrow Arrangements.............................................10
8.3. Notices.........................................................11
8.4. Assignment; Binding Effect; Benefit.............................12
8.5. Entire Agreement................................................13
8.6. Amendment.......................................................13
8.7. GOVERNING LAW...................................................13
8.8. Counterparts....................................................13
8.9. Headings........................................................13
8.10. Interpretation..................................................13
8.11. Waivers.........................................................13
8.12. Severability....................................................13
8.13. Enforcement of Agreement........................................14
8.14. Costs...........................................................14
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SECURITIES PURCHASE AGREEMENT
THIS AGREEMENT dated as of June 11, 1997, is entered into
between each of the Sellers that is a signatory hereto identified as a "SELLER"
on the signature pages hereto (each, a "Seller" and collectively, "Sellers") and
FMCC ACQUISITION CORP., a Delaware corporation ("Buyer").
W I T N E S S E T H:
WHEREAS, each of the Sellers is the owner of the number of
shares of Common Stock, par value $0.10 per share (the "Common Stock"), of First
of Michigan Capital Corporation, a Delaware corporation (the "Company"), set
forth opposite its name on Schedule A hereto (the foregoing securities of all
the Sellers, together with all non-cash dividends and distributions declared,
set aside or paid with respect thereto on or after the date hereof, are
collectively referred to herein as the "Securities");
WHEREAS, Sellers and Buyer have negotiated on an arm's length
basis the terms of the sale and purchase of the Securities owned by Sellers and
Sellers have determined that the terms of such sale and purchase are fair and
reasonable;
WHEREAS, Buyer has agreed to commence a tender offer for
shares of Common Stock pursuant to the Tender Offer Agreement (as defined in
Section 5.7); and
WHEREAS, Buyer desires to purchase from Sellers and each of
the Sellers desires to sell to Buyer the Securities owned by Sellers upon the
terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual benefit to be
derived from this Agreement and of the representations, warranties, conditions,
covenants and agreements hereinafter contained, Buyer and each of the Sellers
hereby agree as follows:
1. SALE AND PURCHASE.
(a) Each Seller hereby agrees to sell, transfer,
assign and deliver to Buyer and Buyer hereby agrees to purchase from such Seller
the Securities owned by such Seller for the Purchase Price (as defined in
Section 2).
(b) Immediately (but in no event later than three
business days) after all conditions hereto have been satisfied or waived, at the
time for closing set forth in a notice from Buyer to Sellers (the "Closing
Time"), (i) each Seller will deliver (or cause to be delivered) to Buyer, free
and clear of all liens, restrictions, claims, charges and encumbrances of any
nature whatsoever ("Liens"), certificates representing the Securities owned by
such Seller, such certificates being in negotiable form duly endorsed by such
Seller on the reverse
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side of such certificates or on transfer powers attached to such certificates
as may be necessary for transfer upon the transfer books and records of the
Company into the name of Buyer or its designee, with signature guarantees and
otherwise in form for good delivery, and (ii) Buyer will wire transfer (or
cause to be wire transferred) funds in the aggregate amount set forth in
Section 2 in payment of the Purchase Price to an account or accounts to be
designated in writing by Sellers to Buyer at least three business days prior to
the Closing Time.
2. PURCHASE PRICE.
The consideration to be paid by Buyer to each Seller for the
Securities being sold by such Seller shall be $15.00 in cash per share of Common
Stock less the amount of any cash dividends and/or distributions declared, set
aside or paid with respect thereto on or after the date hereof and prior to the
Closing Time (the "Purchase Price").
3. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer hereby represents and warrants to each Seller as
follows:
3.1. Existence; Good Standing. Buyer is a corporation
duly incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation.
3.2. Authorization, Validity and Effect of Agreements. Buyer
has the requisite corporate power and authority to execute and deliver this
Agreement and all agreements and documents contemplated hereby (including,
without limitation, the Tender Offer Agreement). The consummation by Buyer of
the transactions contemplated hereby has been duly authorized by all requisite
corporate action. This Agreement constitutes, and all agreements and documents
contemplated hereby (when executed and delivered pursuant hereto for value
received) will constitute, the valid and legally binding obligations of Buyer,
enforceable in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to creditors'
rights and general principles of equity.
3.3. No Violation. Neither the execution and delivery by Buyer
of this Agreement, nor the consummation by Buyer of the transactions
contemplated hereby in accordance with the terms hereof, will: (a) conflict with
or result in a breach of any provisions of the Certificate of Incorporation or
By-laws of Buyer; (b) violate, or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under any of the terms, conditions
or provisions of any material license, certificate of authority, franchise,
permit, lease, contract, agreement or other instrument, commitment or obligation
to which Buyer or any of its subsidiaries is a party, or by which Buyer or any
of its subsidiaries or any of their properties is bound or affected, except for
any of the foregoing matters which would not have a material
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adverse effect on the ability of Buyer to perform its obligations hereunder
(a "Buyer Material Adverse Effect"); or (c) other than expiration or termination
of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of
1976 (the "HSR Act"), Rule 10b-13 under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and such regulatory approvals and filings as
may be required under applicable securities laws, require any material consent,
approval or authorization of, or declaration, filing or registration with, any
domestic governmental or regulatory authority, the failure to obtain or make
which would have a Buyer Material Adverse Effect.
3.4. Availability of Funds. Buyer has available on the date
hereof sufficient funds to enable it to consummate the transactions contemplated
by this Agreement and, subject to the terms and conditions of the Escrow
Agreement (as defined in Section 8.2), will make the deposit of cash with the
Escrow Agent (as defined in Section 8.2) as contemplated by Section 8.2.
3.5. Purchase for Investment. Buyer is an "accredited
investor", as such term is defined under Regulation D promulgated under the
Securities Act of 1933, as amended (the "Securities Act"). Buyer is purchasing
the Securities for Buyer's own account, with the intention of holding the
Securities for investment, with no present intention of dividing or allowing
others to participate in its investment in the Securities or of reselling or
otherwise participating, directly or indirectly, in a distribution of the
Securities. Buyer will not make any sale, transfer or other disposition of the
Securities, without registration under the Securities Act and any applicable
state securities laws unless an exemption from registration is available under
the Securities Act and applicable state securities laws.
3.6. No Brokers. Buyer has not entered into any contract,
arrangement or understanding with any person or firm which may result in the
obligation of any party hereto to pay any finder's fees, brokerage or agent's
commissions or other like payments in connection with the negotiations leading
to this Agreement or the consummation of the transactions contemplated hereby
(including, without limitation, the Tender Offer Agreement). Buyer is not aware
of any claim for payment of any finder's fees, brokerage or agent's commissions
or other like payments in connection with the negotiations leading to this
Agreement or the consummation of the transactions contemplated hereby.
3.7 Parent Company. Buyer is a direct or indirect wholly
owned subsidiary of Fahnestock Viner Holdings Inc., an Ontario corporation.
4. REPRESENTATIONS AND WARRANTIES OF SELLERS. Each
Seller hereby severally and not jointly represents and warrants, respectively,
to Buyer as follows:
4.1. Existence; Good Standing. Such Seller is an entity duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization.
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4.2. Authorization, Validity and Effect of Agreements. Such
Seller has the requisite power and authority to execute and deliver this
Agreement and all agreements and documents contemplated hereby (including,
without limitation, the Tender Offer Agreement). The consummation by such Seller
of the transactions contemplated hereby has been duly authorized by all
requisite action. This Agreement constitutes, and all agreements and documents
contemplated hereby (when executed and delivered pursuant hereto for value
received) will constitute, the valid and legally binding obligations of such
Seller, enforceable in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights and general principles of equity.
4.3. No Violation. Neither the execution and delivery by such
Seller of this Agreement, nor the consummation by such Seller of the
transactions contemplated hereby in accordance with the terms hereof, will: (a)
conflict with or result in a breach of any provisions of the charter, bylaws,
partnership agreement, operating agreement, trust agreement or other operative
document or instrument of such Seller; (b) violate, or conflict with, or result
in a breach of any provision of, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under any of
the terms, conditions or provisions of any material license, certificate of
authority, franchise, permit, lease, contract, agreement or other instrument,
commitment or obligation to which such Seller or any of its subsidiaries is a
party, or by which such Seller or any of its subsidiaries or any of their
properties is bound or affected, except for any of the foregoing matters which
would not have a material adverse effect on the ability of such Seller to
perform its obligations hereunder (a "Seller Material Adverse Effect"); or (c)
assuming the accuracy of Buyer's representation in Section 3.5 and other than
expiration or termination of the waiting period under the HSR Act, Rule 10b-13
under the Exchange Act and such regulatory approvals and filings as may be
required under applicable securities laws, require any material consent,
approval or authorization of, or declaration, filing or registration with, any
domestic governmental or regulatory authority, the failure to obtain or make
which would have a Seller Material Adverse Effect.
4.4. No Brokers. Such Seller has not entered into any
contract, arrangement or understanding with any person or firm which may result
in the obligation of any party hereto to pay any finder's fees, brokerage or
agent's commissions or other like payments in connection with the negotiations
leading to this Agreement or the consummation of the transactions contemplated
hereby (including, without limitation, the Tender Offer Agreement). Such Seller
is not aware of any claim for payment of any finder's fees, brokerage or agent's
commissions or other like payments in connection with the negotiations leading
to this Agreement or the consummation of the transactions contemplated hereby.
4.5. Ownership of Securities. On the date hereof, such Seller
has good and valid title to the Securities owned by it, free and clear of all
Liens (except that, in the case of DST Systems, Inc., on the date hereof, 22,000
shares of Common Stock owned by it bear a restrictive legend). At the Closing
Time, such Seller will have good and valid title to the
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<PAGE>
Securities owned by it, free and clear of all Liens. Such Seller has full power
and authority to sell, assign and transfer the Securities owned by it. Such
Seller shall transfer to Buyer good and valid title to such Securities, free and
clear of all Liens (other than Liens created by Buyer). Such Seller, upon
request, will execute (or cause to be executed) any additional documents
necessary or reasonably desirable to complete the transfer of the Securities to
Buyer.
4.6. Capitalization. To the best knowledge of such Seller: The
authorized capital stock of the Company consists of 10,000,000 shares of Common
Stock and 500,000 shares of Serial Preferred Stock. As of May 14, 1997, there
were 2,497,764 shares of Common Stock issued and outstanding. Since such date,
only such shares of Common Stock have been issued and only such options to
employees to purchase shares of Common Stock have been granted, such that the
Securities to be purchased pursuant to this Agreement, constitute as of the date
hereof, and will constitute as of the Closing Time, at least 53% of the shares
of Common Stock and any and all other voting securities of the Company on a
fully diluted basis as of each of such dates. For purposes of this Agreement,
"fully diluted basis" shall mean the number of shares of Common Stock then
issued and outstanding, assuming full conversion, exercise and exchange of all
warrants, options and rights to purchase Common Stock and all securities of any
type that shall be (or may become) exchangeable for, or exercisable or
convertible into, Common Stock. To the best knowledge of such Seller, there are
not any existing options, rights, warrants, calls, subscriptions, convertible
securities, or other rights, agreements or commitments which obligate the
Company or any of its subsidiaries to issue, transfer or sell any shares of
capital stock of the Company or any of its subsidiaries, other than options
granted to employees to purchase shares of Common Stock (i) in accordance with
the Company's past practices, and (ii) which together with shares of Common
Stock issued will not cause the third sentence of this Section 4.6 to be false.
There are no outstanding obligations of the Company or any of its subsidiaries
to purchase, redeem or otherwise acquire any shares of capital stock or voting
securities convertible or exercisable into or exchangeable for capital stock or
voting securities of the Company.
5. COVENANTS.
5.1. No Disposition; No Lien. Each Seller will not, between
the date hereof and the Closing Time, sell, dispose of, cause a Lien to be
created against, or in any other manner encumber (other than pursuant to this
Agreement), any of the Securities or enter into any agreement with any person or
entity (other than Buyer and the Escrow Agent) with respect to any of the
foregoing matters. DST Systems, Inc. will cause the removal prior to the Closing
Time of the restrictive legend on 22,000 shares of Common Stock owned by it that
constitute part of the Securities.
5.2. Payments; No Solicitation. Each Seller acknowledges
that any non-cash payments to it in respect of dividends or distributions on any
of the Securities declared, set aside or paid are included as part of the
Securities for purposes of this Agreement, and agrees
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to assign and deliver to Buyer at the Closing Time such payments. Between the
date hereof and the Closing Time, neither Seller nor any affiliate or
representative of such Seller shall solicit or encourage any person (other than
Buyer and the Escrow Agent) to acquire the Securities or sell or agree to sell
or engage in a recapitalization, merger, sale of stock, sale of assets, other
business combination or other similar transaction with or otherwise involving
the Company or any of its subsidiaries or enter into any agreement with any
person or entity (other than Buyer) with respect to any of the foregoing.
5.3. Certain Commitments. Each Seller hereby agrees that
during the time this Agreement is in effect, at any meeting of the stockholders
of the Company, however called, and in any action by consent of the stockholders
of the Company, Seller shall vote the Securities: (i) in favor of any proposal
for any recapitalization, merger, sale of stock, sale of assets, other business
combination or other similar transaction between or involving the Company or any
of its subsidiaries and Buyer or an affiliate of Buyer; (ii) after consultation
with Buyer, against any proposal for any recapitalization, merger, sale of
stock, sale of assets, other business combination or other similar transaction
involving the Company or any of its subsidiaries or which is reasonably likely
to materially and adversely affect Buyer or prevent or delay the consummation of
the transactions contemplated by this Agreement (other than a transaction
referred to in clause (i) above); and (iii) subject to any required regulatory
approvals, with respect to directors of the Company, in favor of any individuals
designated by Buyer and, without prior written instructions from Buyer to the
contrary, against any other individuals. If requested by Buyer, each Seller will
execute and deliver a written consent pursuant to Section 228 of the Delaware
General Corporation Law wherein such Seller shall take one or more of the
actions described in the preceding sentence.
5.4. Filings; Other Action. (a) Subject to the terms and
conditions herein provided, (i) each Seller and Buyer shall promptly make its
filings and thereafter make any other required submissions under the HSR Act and
the Exchange Act with respect to the transactions contemplated by this
Agreement; (ii) each Seller and Buyer shall use all reasonable efforts to
cooperate with one another in (A) determining which filings are required to be
made prior to the Closing Time with, and which consents, approvals, permits or
authorizations are required to be obtained prior to the Closing Time from,
governmental or regulatory authorities of the United States, the several states
and foreign jurisdictions in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby, and (B)
timely making all such filings required on its part and timely seeking all such
consents, approvals, permits or authorizations; and (iii) each Seller and Buyer
shall use all reasonable efforts to take, or cause to be taken, all other action
and do, or cause to be done, all other things necessary, proper or appropriate
to consummate and make effective the transactions contemplated by this
Agreement. If, at any time after the Closing Time, any further action on the
part of Sellers is necessary or reasonably desirable to carry out the purpose of
this Agreement and the transactions contemplated hereby, each Seller shall make
reasonable efforts to take all such actions.
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(b) Subject to the terms and conditions herein provided, each
Seller shall use all reasonable efforts to cause the Company and its
subsidiaries to cooperate with the parties hereto with respect to the
transactions contemplated by this Agreement. Without limiting the generality of
the foregoing, each Seller shall use all reasonable efforts consistent with this
Agreement to cause the Company and its subsidiaries to cooperate with the
parties hereto in connection with any filings, submissions, consents, approvals,
permits, authorizations or other action referred to in Section 5.4(a) .
(c) The parties hereto shall use all reasonable efforts
consistent with this Agreement to cause each of the conditions precedent to the
consummation of the transactions contemplated by this Agreement applicable to
each of them, respectively, to be met as promptly as practicable.
5.5. Certain Agreements. (a) Effective as of the Closing
Time, each Seller shall assign (to the extent assignable) to Buyer or its
designee any and all rights that such Seller may have under any agreement or
instrument or otherwise to cause the Company to register or qualify any of the
Securities under the Securities Act and/or under any state securities laws.
(b) Except as set forth in the Company's Annual Report on Form
10-K for the fiscal year ended September 27, 1996, there is no agreement,
contract, arrangement and understanding between each Seller, on the one hand,
and the Company or any of its subsidiaries, on the other hand ("Affiliated
Contracts"). Each Seller has previously delivered to Buyer true, correct and
complete copies of any Affiliated Contracts. At the request of Buyer, each
Seller shall cause any Affiliated Contract to which it is a party to be assigned
(to the extent assignable) to Buyer or its designee or to be canceled, in each
case effective at the Closing Time.
5.6. Publicity. Subject to their respective legal obligations
(including, without limitation, requirements under the federal securities laws
and of stock exchanges and other similar regulatory bodies), the parties hereto
shall consult with each other, and shall use reasonable efforts to agree upon
the text of any press release, before issuing any such press release or
otherwise making public statements (other than filings made pursuant to
Regulation 13D, Regulation 14D or Form 8-K under the Exchange Act) with respect
to the transactions contemplated hereby.
5.7. Tender Offer Agreement. Concurrently herewith, the
Company, Sellers and Buyer have entered into that certain Tender Offer Agreement
of even date herewith (the "Tender Offer Agreement"). Each of Buyer and Sellers
hereby agrees to perform its respective obligations under the Tender Offer
Agreement.
5.8. Best Efforts to Cause Tender of Certain Shares.
Sellers shall use their respective best efforts to cause the parties set forth
on Schedule 5.8 hereto who beneficially
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<PAGE>
own in the aggregate approximately 120,000 shares of Common Stock to validly
tender and not withdraw all such shares of Common Stock beneficially owned by
them to Buyer pursuant to the terms of the tender offer contemplated by the
Tender Offer Agreement.
6. CONDITIONS.
6.1. Conditions to Obligation of Sellers to Sell the
Securities. The obligation of each Seller to sell the Securities owned by it
shall be subject to the fulfillment at or prior to the Closing Time of the
following conditions:
(a) Buyer shall have performed in all material respects its
agreements contained in this Agreement required to be performed on or prior to
the Closing Time and the representations and warranties of Buyer contained in
this Agreement shall be true and correct in all material respects as of the date
when made and (unless made as of a specified date) as of the Closing Time, and
Sellers shall have received a certificate of Buyer, dated the date of the
Closing Time, certifying to such effect.
(b) The waiting period under the HSR Act applicable to the
transactions contemplated hereby shall have expired or been terminated and the
purchase and sale of the Securities pursuant to this Agreement shall not be in
violation of the Exchange Act or any of the rules or regulations promulgated
thereunder.
(c) Neither any Seller nor Buyer shall be subject to any order
or injunction of a court of competent jurisdiction which prohibits the
consummation of the transactions contemplated by this Agreement. If any such
order or injunction shall have been issued against a Seller, each Seller agrees
to use its reasonable best efforts to have any such order or injunction lifted.
(d) All material consents, authorizations, orders and
approvals of (or filings or registrations with) any governmental commission,
board or other regulatory body (including, without limitation, self-regulatory
organizations) required in connection with the execution, delivery and
performance of this Agreement shall have been obtained or made.
(e) There shall be no action, suit or preceding pending
against any of the parties hereto or the Company or any of its subsidiaries
which would or would reasonably be expected to prevent or materially delay the
transactions contemplated by this Agreement or result in material damages in
connection herewith.
(f) Buyer shall have commenced the tender offer for all shares
of Common Stock pursuant to the Tender Offer Agreement.
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<PAGE>
<PAGE>
6.2. Conditions to Obligation of Buyer to Purchase the
Securities. The obligations of Buyer to purchase the Securities shall be
subject to the fulfillment at or prior to the Closing Time of the following
conditions:
(a) Each of the Sellers shall have performed in all material
respects its agreements contained in this Agreement required to be performed on
or prior to the Closing Time and the representations and warranties of such
Seller contained in this Agreement shall be true and correct in all material
respects as of the date when made and (unless made as of a specified date) as of
the Closing Time, and Buyer shall have received a certificate of such Seller,
dated the date of the Closing Time, certifying to such effect.
(b) The waiting period under the HSR Act applicable to the
transactions contemplated hereby shall have expired or been terminated and the
purchase and sale of the Securities pursuant to this Agreement shall not be in
violation of the Exchange Act or any of the rules or regulations promulgated
thereunder.
(c) Neither Buyer nor any Seller shall not be subject to any
order or injunction of a court of competent jurisdiction which prohibits the
consummation of the transactions contemplated by this Agreement. If any such
order or injunction shall have been issued against Buyer, Buyer agrees to use
its reasonable best efforts to have any such order or injunction lifted.
(d) All material consents, authorizations, orders and
approvals of (or filings or registrations with) any governmental commission,
board or other regulatory body (including, without limitation, self-regulatory
organizations) or any other third party required in connection with the
execution, delivery and performance of this Agreement shall have been obtained
or made.
(e) There shall be no action, suit or preceding pending or
threatened against any of the parties hereto or the Company or any of its
subsidiaries which would or would reasonably be expected to prevent or
materially delay the transactions contemplated by this Agreement or result in
material damages in connection herewith.
(f) The entire Board of Directors of the Company shall be
composed of designees of Buyer at the Closing Time, provided Buyer shall have
used its best efforts to make such designations prior to the Closing Time.
7. TERMINATION.
7.1. Termination by Mutual Consent. This Agreement may
be terminated and the purchase and sale may be abandoned at any time prior
to the Closing Time by the mutual consent of Buyer and Sellers.
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<PAGE>
7.2. Termination by Either Buyer or Sellers. This Agreement
may be terminated and the purchase and sale of the Securities may be abandoned
by Buyer or Sellers if: (i) the Closing Time shall not have occurred by October
11, 1997; or (ii) a United States federal or state court of competent
jurisdiction or United States federal or state governmental, regulatory or
administrative agency or commission having jurisdiction shall have issued an
order, decree or ruling or taken any other action permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated by this
Agreement and such order, decree, ruling or other action shall have become final
and non-appealable; provided, however, that the party seeking to terminate this
Agreement pursuant to this clause (ii) shall have used all efforts required by
this Agreement to remove such injunction, order or decree.
7.3. Effect of Termination and Abandonment. In the event of
termination of this Agreement pursuant to this Article 7, all obligations of the
parties hereto shall terminate. In the event of termination of this Agreement,
nothing herein shall prejudice the ability of the non-breaching party to seek
damages from any other party for any breach of this Agreement, including,
without limitation, attorneys' fees and the right to pursue any remedy at law or
in equity. Notwithstanding the foregoing, none of Sellers and Buyer shall be
liable for the failure of any representation or warranty to be true at the
Closing Time because of any action taken or omitted to be taken by the Company
that was not taken or omitted to be taken with the consent or approval or at the
direction of any Seller or Buyer, as the case may be.
7.4. Extension; Waiver. At any time prior to the Closing Time,
any party hereto may, to the extent legally allowed and if requested by any
other party hereto, (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto, and (c) waive compliance
with any of the agreements or conditions for the benefit of such party contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed by or
on behalf of the party granting such extension or waiver.
8. GENERAL PROVISIONS.
8.1. Survival of Representations and Warranties. The
representations and warranties made in this Agreement shall not terminate at the
Closing Time and shall survive for three years after the Closing Time, other
than the representation and warranty made in Section 4.5 which shall survive
until the expiration of any applicable statute of limitations.
8.2. Escrow Arrangements. Promptly following the execution
and delivery of this Agreement, Sellers, Buyer and the Escrow Agent (as defined
below) shall enter into an escrow agreement in form and substance reasonably
satisfactory to Sellers and Buyer (the "Escrow Agreement"). Pursuant to the
Escrow Agreement, (a) Sellers will deposit the Securities with the Escrow Agent,
(b) Buyer will deposit cash in the aggregate amount of
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<PAGE>
$21,275,265 with the Escrow Agent, and (c) the Escrow Agent will hold the
Securities and such cash in escrow. The Escrow Agreement will provide, inter
alia, that: (i) at the Closing Time, the Securities will be released from escrow
and delivered to Buyer and the Purchase Price will be released from escrow and
delivered to Sellers; and (ii) if this Agreement is terminated pursuant to
Section 7.1 or 7.2, the Securities will be released from escrow and delivered to
Sellers and such cash will be released from escrow and delivered to Buyer.
"Escrow Agent" means an entity mutually selected by Sellers and Buyer which
shall serve as escrow agent under the Escrow Agreement. If requested by Buyer,
(A) Sellers will cause an appropriate legend to be placed on all certificates
representing Securities to the effect that such certificated Securities are
subject to this Agreement and the Escrow Agreement, or (B) with respect to any
of the Securities that are deposited with the Escrow Agent in book-entry form,
Sellers will cause an appropriate notation or entry to be made (or take such
other appropriate action) so as to give notice equivalent to that of a legend on
certificated Securities to the effect that such book-entry Securities are
subject to this Agreement and the Escrow Agreement.
8.3. Notices. Any notice required to be given hereunder shall
be sufficient if in writing, and sent by facsimile transmission (with machine
confirmation of delivery) and by courier service (with proof of service), hand
delivery (with proof of delivery) or certified or registered mail (return
receipt requested and first-class postage prepaid), addressed as follows:
If to Buyer:
c/o Fahnestock & Co. Inc.
110 Wall Street (9th Floor)
New York, New York 10005
Att: Albert G. Lowenthal
Facsimile: (212) 943-8728
Telephone: (212) 668-5782
With a copy to:
Whitman Breed Abbott & Morgan LLP
200 Park Avenue
New York, New York 10166
Att: Richard Crystal, Esq.
Facsimile: (212) 351-3131
Telephone: (212) 351-3000
If to Sellers:
1888 Limited Partnership
c/o Day, Berry & Howard
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<PAGE>
One Canterbury Green
Stamford, CT 06091
Att: William H. Cuddy
Facsimile: (860) 434-5266
Telephone: (860) 275-0217
and
DST Systems, Inc.
1055 Broadway
Kansas City, MO 64105
Facsimile: (816) 435-8630
Telephone: (816) 435-1000
With a copy to:
Sonnenschein Nath & Rosenthal
4520 Main Street
Kansas City, MO 64111
Att: John F. Marvin, Esq.
Facsimile: (816) 531-7545
Telephone: (816) 932-4400
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
8.4. Assignment; Binding Effect; Benefit. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other parties; provided, however, that
Buyer may assign this Agreement to any of its subsidiaries or affiliates whether
or not such subsidiaries or affiliates exist at the date hereof; provided
further, however, that no such assignment shall relieve Buyer of any of its
obligations hereunder. Subject to the preceding sentence, this Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. Notwithstanding anything contained in this
Agreement to the contrary, nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or their
respective heirs, successors, executors, administrators and assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement. Until
the Closing Time or termination of this Agreement pursuant to Section 7.1 or
7.2, the Securities (and any transfer thereof) shall be subject to this
Agreement.
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<PAGE>
8.5. Entire Agreement. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings (oral and written) among the
parties with respect thereto. No addition to or modification of any provision of
this Agreement shall be binding upon any party hereto unless made in writing and
signed by all parties hereto.
8.6. Amendment. This Agreement may be amended by the parties
hereto by an instrument in writing signed by or on behalf of each of the
parties hereto.
8.7. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK WITHOUT REGARD TO ITS RULES OF CONFLICT OF LAWS.
8.8. Counterparts. This Agreement may be executed by the
parties hereto (including by facsimile transmission) with separate counterpart
signature pages or in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument.
8.9. Headings. Headings of the Sections of this Agreement are
for the convenience of the parties only, and shall be given no substantive or
interpretive effect whatsoever.
8.10. Interpretation. In this Agreement, unless the context
otherwise requires, words describing the singular number shall include the
plural and vice versa, and words denoting any gender shall include all genders
and words denoting natural persons shall include corporations and partnerships
and vice versa.
8.11. Waivers. Except as provided in this Agreement, no action
taken pursuant to this Agreement, including without limitation any investigation
by or on behalf of any party, shall be deemed to constitute a waiver by the
party taking such action of compliance with any representations, warranties,
covenants or agreements contained in this Agreement. The waiver by any party
hereto of a breach of any provision hereunder shall not operate or be construed
as a waiver of any prior or subsequent breach of the same or any other provision
hereunder.
8.12. Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or otherwise affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
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<PAGE>
8.13. Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur if any of the provisions of this Agreement were
not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof, this being in addition to any other remedy to
which they may be entitled at law or in equity.
8.14. Costs. All reasonable out-of-pocket costs and expenses
incurred in carrying out the transactions contemplated by this Agreement
(including but not limited to those reasonable out-of-pocket costs and expenses
associated with the Tender Offer Agreement, Escrow Agreement and all filings
made by any of the parties as contemplated herein) shall be borne solely by
Buyer, except for the fees and expenses of any legal counsel retained by any
Seller to advise such Seller in connection herewith and the transactions
contemplated hereby. Sellers agree to reimburse the Company for all legal fees
payable to Sonnenschein Nath & Rosenthal for legal services rendered in
connection herewith and the transactions contemplated hereby (including, without
limitation, the Tender Offer Agreement), to the extent such legal fees exceed
$25,000.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement
and caused the same to be duly delivered on their behalf as of the day and year
first written above.
SELLERS:
1888 LIMITED PARTNERSHIP
By: /s/ Louis C. Baker
----------------------------
Name: Louis C. Baker
Title: General Partner
By: /s/ Craig P. Baker
----------------------------
Name: Craig P. Baker
Title: General Partner
DST SYSTEMS, INC.
By: /s/ Kenneth V. Hager
----------------------------
Name: Kenneth V. Hager
Title: Vice President, Chief
Financial Officer and
Treasurer
BUYER:
FMCC ACQUISITION CORP.
By: /s/ Albert G. Lowenthal
----------------------------
Name: Albert G. Lowenthal
Title: Chairman and CEO
<PAGE>
<PAGE>
SCHEDULE A
List of Sellers
<TABLE>
<CAPTION>
===========================================================================================================
Name and Address Shares of Common Stock Percent of Class*
---------------- ---------------------- -----------------
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
1888 Limited Partnership 777,929 29.1%
c/o Day, Berry & Howard
One Canterbury Green
Stamford, CT 06091
- ----------------------------------------------------------------------------------------------------------
DST Systems, Inc. 640,422 23.9%
1055 Broadway
Kansas City, MO 64105
==========================================================================================================
- ---------------------
* On a fully diluted basis.
</TABLE>
<PAGE>
<PAGE>
SCHEDULE 5.8
BEST EFFORTS TO CAUSE TENDER OF CERTAIN SHARES
Name of Stockholders
DST Systems, Inc.
The Baker Family Trusts
Gerard M. Lavin
<PAGE>
<PAGE>
"SELLERS" ESCROW AGREEMENT
"SELLERS" ESCROW AGREEMENT dated as of June 11, 1997, among
each of the Sellers identified under the caption "Sellers" on the signature
pages hereto (individually, a "Seller" and collectively, "Sellers"), FMCC
Acquisition Corp., a Delaware corporation ("Buyer"), and The Bank of New York,
as escrow agent (the "Escrow Agent").
WHEREAS, pursuant to the Securities Purchase Agreement dated
as of June 11, 1997 (the "Purchase Agreement"), between Sellers and Buyer, Buyer
has agreed to acquire from each of the Sellers the number of shares of Common
Stock, par value $0.10 per share (the "Common Stock"), of First of Michigan
Capital Corporation, a Delaware corporation (the "Company"), set forth opposite
its name on Schedule A to the Purchase Agreement (the foregoing securities of
all the Sellers, together with all non-cash dividends and distributions
declared, set aside or paid with respect thereto on or after the date hereof,
are collectively referred to herein as the "Securities");
WHEREAS, pursuant to the terms of this Agreement, Sellers
shall deposit share certificates representing the Securities into escrow; and
WHEREAS, pursuant to the terms of this Agreement, Buyer shall
deposit cash in the amount of $21,275,265 into escrow; and
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants, agreements and understandings contained herein and of other
good and valuable consideration, the receipt and adequacy of which hereby are
acknowledged, the parties hereto agree as follows:
Section 1. Deposits. (a) At or prior to 5:00 p.m. (New York
City time) on June 13, 1997, Sellers will deposit with the Escrow Agent (and
thereafter the Escrow Agent will acknowledge, in writing, receipt of) all the
Securities. Such portion of the Securities that are represented by certificates
are listed on Schedule A hereto and such certificated Securities will be in
negotiable form duly endorsed in blank by Sellers on the reverse side of such
certificates or on transfer powers attached to such certificates as may be
necessary for transfer upon the transfer books and records of the Company into
the name of Buyer or its designee, with signature guarantees and otherwise in
form for good delivery. Such portion of the Securities that are in book-entry
form are described on Schedule A hereto and such book-entry Securities will be
transferred using procedures customary for the transfer of securities held in
book-entry form (it being understood that Seller shall, to the extent
practicable, use procedures so as to be equivalent to the certificated
Securities deposited with the Escrow Agent in providing for the use of
unrestricted negotiability and for good delivery). All the Securities, together
with all additional or different shares of capital stock of the Company issued
in respect of the Securities as a result of any recapitalization, exchange,
merger, consolidation, stock split, stock dividend or stock distribution on or
after the date hereof, and all non-cash dividends or distributions declared, set
aside or paid on or after the date hereof in respect of the Securities, are
hereinafter sometimes referred to as the "Shares".
<PAGE>
<PAGE>
(b) At or prior to 5:00 p.m. (New York City time) on June 13,
1997, Buyer will deposit with the Escrow Agent (and thereafter the Escrow Agent
will acknowledge, in writing, receipt of) cash in the amount of $21,275,265
(together with all interest earned thereon and any additions, substitutions or
other property in which the same may be invested or for which the same may be
exchanged, the "Deposit").
(c) The Shares and the Deposit to be so deposited with the
Escrow Agent pursuant to this Section 1 are sometimes collectively referred to
in this Agreement as the "Escrowed Property".
(d) The Escrow Agent shall hold the Escrowed Property solely
for the purposes and upon the terms and conditions set forth in this Agreement
and it shall not be released and delivered from escrow except in accordance with
Section 2.
(e) Each of the Sellers represents and warrants to the Escrow
Agent that such Seller owns its Shares beneficially and of record free and clear
of any liens (other than any lien that may be created by this Agreement), and
that such Seller has full legal right, power and authority to enter into this
Agreement and to deposit its Shares in the manner provided in this Agreement.
(f) Buyer represents and warrants to the Escrow Agent that
Buyer has full legal, right, power and authority to enter into this Agreement
and to deposit the Deposit in the manner provided in this Agreement.
Section 2. Delivery by the Escrow Agent. The Escrow Agent
shall hold, deliver and otherwise deal with the Escrowed Property as follows:
(a) Upon receipt of a certificate in the form of Exhibit A
hereto, signed by Buyer and Sellers, the Escrow Agent promptly shall release and
deliver: (i) from the Deposit to an account(s) specified by Sellers, by wire
transfer of immediately available funds, the amount specified in such
certificate; (ii) the balance of the Deposit to an account specified by Buyer,
by wire transfer of immediately available funds; and (iii) the Shares to Buyer.
(b) Upon receipt of a certificate in the form of Exhibit B
hereto, signed by Sellers, the Escrow Agent promptly shall notify Buyer of its
intent to release and deliver the Shares to Sellers and to release and deliver
the Deposit to Buyer. If Buyer does not object in writing to Escrow Agent to
such intent within five days after receiving notice thereof, the Escrow Agent
shall release and deliver (i) the Shares to Sellers, and (ii) the Deposit to an
account specified by Buyer, by wire transfer of immediately available funds.
(c) Upon receipt of a certificate in the form of Exhibit C
hereto, signed by Buyer, the Escrow Agent promptly shall notify Sellers of its
intent to release and deliver the Shares to Sellers and to release and deliver
the Deposit to Buyer. If Sellers do not object in writing to Escrow Agent to
such intent within five days after receiving notice thereof, the
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Escrow Agent shall release and deliver (i) the Shares to Sellers, and (ii) the
Deposit to an account specified by Buyer, by wire transfer of immediately
available funds.
(d) If any party makes a timely objection to the release and
delivery of the Escrowed Property (or portion thereof), the Escrow Agent shall
continue to hold the Escrowed Property in its possession until directed to
disburse the same in accordance with (i) the joint written instructions of Buyer
and Sellers, or (ii) a final unappealable judgment of a court of competent
jurisdiction. In lieu of the foregoing, the Escrow Agent may deposit the
disputed Escrowed Property with a court of competent jurisdiction and commence
an action of interpleader between the parties in dispute.
(e) At the time of release and delivery by the Escrow Agent of
all the Escrowed Property in accordance with this Section 2, the Escrow Agent
shall be released from all further liability under this Agreement with respect
to the Escrowed Property or otherwise.
Section 3. Investments. Moneys from time to time comprising
the Deposit shall be held in a separate account (the "Escrow Account") and
invested and reinvested by the Escrow Agent in accordance with the specific
written directions of the Buyer, but only in Permitted Investments.
As used herein, "Permitted Investments" means the following
kinds of instruments with a maturity not later than the day preceding the
Closing Date: (a) obligations of the United States of America, or fully
guaranteed as to payment of interest and principal by the United States of
America; (b) commercial paper that, at the time of the investment therein
pursuant to this Section, has the highest credit ratings from Moody's Investors
Service, Inc. ("Moody's") and Standard & Poor's Corporation ("S&P") and the
issuers of which have outstanding long-term unsecured debt obligations (other
than any such obligations whose ratings are based on the credit of a person
other than such issuers), at the time of such investment therein, having the
highest credit ratings from Moody's and S&P; and (c) demand or time deposits in
Permitted Banks (as defined below), or certificates of deposit of, or bankers'
acceptances issued by, Permitted Banks.
As used herein, "Permitted Bank" means a depository
institution or trust company organized under the laws of the United States of
America, any State thereof or the District of Columbia, having a combined
capital and surplus of at least $100,000,000, if the commercial paper (if any)
and the long-term unsecured debt obligations (other than such obligations whose
ratings are based on the credit of a person other than such institution or trust
company) of such depository institution or trust company, at the time of an
investment therein pursuant to this Section, have the highest credit ratings
from Duff & Phelps.
Section 4. Rights With Respect to Securities; Rights of
Action. (a) The Escrow Agent shall not be entitled to any rights of a
shareholder with respect to the Securities deposited in escrow hereunder except
in its capacity as Escrow Agent.
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(b) Each of Buyer, Seller and the Escrow Agent, as the case
may be, without the consent of the other parties, may, in its own behalf and for
its own benefit, institute or maintain any suit, action or proceeding, at law or
in equity, against the other parties in order to enforce or preserve its rights
hereunder.
Section 5. Termination. This Agreement shall automatically
terminate upon the release and delivery by the Escrow Agent to Buyer or
otherwise pursuant to Section 2 (and in compliance with all the provisions of
such Section) of all the Escrowed Property.
Section 6. Concerning the Escrow Agent. (a) The Escrow Agent
hereby accepts the agency established by this Agreement and shall perform the
same upon the terms and conditions herein set forth, by all of which Buyer and
each Seller shall be bound. The duties of the Escrow Agent hereunder shall be
purely ministerial. The Escrow Agent shall not have any duties or
responsibilities except those expressly set forth herein, and no implied
covenants or obligations shall be read into this Agreement against the Escrow
Agent, whose duties and obligations shall be determined solely by the express
provisions hereof.
(b) The Escrow Agent shall not be deemed to make any
representations or warranties as to the Securities.
(c) The Escrow Agent shall not (i) be liable for any action
taken or suffered or omitted to be taken by it in good faith in the belief that
any documents or any signatures are genuine or properly authorized, (ii) be
responsible for any failure on the part of any Seller or Buyer or any
predecessor Escrow Agent to comply with any of its representations, warranties,
covenants or agreements contained in this Agreement or the Purchase Agreement,
or (iii) be liable for any act or omission in connection with this Agreement,
except in each case for its own gross negligence or willful misconduct. The
Escrow Agent is hereby irrevocably authorized to, and shall, (A) act in
accordance with this Agreement, and (B) make the releases and deliveries as
provided in Section 2. Subject to the foregoing, the Escrow Agent hereby is
authorized to accept instructions with respect to the performance of its duties
hereunder from Buyer and Sellers, and the Escrow Agent shall not be liable for
any action taken or suffered or omitted to be taken by it in good faith in
accordance with the instructions of Buyer and Sellers, except for its own gross
negligence or willful misconduct. However, if Escrow Agent incurs reasonable
legal fees and other costs in connection with its successful defense of a claim
of gross negligence or willful misconduct, the Escrow Agent shall be indemnified
for such fees and costs.
(d) The Escrow Agent may execute and exercise any of the
rights and powers hereby vested in it or perform any duty hereunder either
itself or by or through its officers, agents or employees, and the Escrow Agent
shall not be answerable or accountable for any action taken, default, neglect or
misconduct of any such officer, agent or employee, except for the gross
negligence or willful misconduct of the Escrow Agent or any of them. The Escrow
Agent shall not be under any obligation or duty to institute, appear in, or
defend any action, suit or proceeding in respect hereof, unless first
indemnified to its reasonable satisfaction, but this provision shall not affect
the power of the Escrow Agent to take such
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<PAGE>
<PAGE>
action as the Escrow Agent may consider proper, whether with or without such
indemnity. Notwithstanding anything in this Agreement that may be to the
contrary, the Escrow Agent shall have no liability hereunder to any of the other
parties for complying in good faith with any judgment or order of a court of
competent jurisdiction. The Escrow Agent shall notify Buyer and Sellers of any
claim made or action, suit or proceeding instituted against it arising out of or
in connection with this Agreement.
(e) Buyer and Sellers from time to time shall perform,
execute, acknowledge and deliver, or cause to be performed, executed,
acknowledged and delivered, all such further acts, instruments and assurances as
may be reasonably required by the Escrow Agent in order to enable it to carry
out or perform its duties under this Agreement.
(f) Sellers and Buyer jointly and severally agree to reimburse
the Escrow Agent for its reasonable expenses, including taxes and governmental
charges of any kind and nature, incurred by the Escrow Agent hereunder; and
further jointly and severally agree to indemnify the Escrow Agent and save it
harmless against any and all losses, liabilities, damages and expenses and for
anything done, suffered or omitted by the Escrow Agent in the execution of its
duties and powers hereunder, except as a result of the Escrow Agent's gross
negligence or willful misconduct. As between Sellers and Buyer, any amounts
payable to the Escrow Agent pursuant to the preceding sentence shall be payable
by Buyer.
(g) The Escrow Agent may resign its duties and be discharged
from all further duties and liabilities hereunder (except liabilities arising as
a result of the Escrow Agent's own gross negligence or willful misconduct),
after giving prior notice to Sellers and Buyer, such resignation and discharge
to be effective as hereinafter provided. With the prior consent of Sellers
(which consent shall not be unreasonably withheld or delayed), Buyer may remove
the Escrow Agent upon at least 10 days' prior notice, and the Escrow Agent shall
thereupon in like manner be discharged from all further duties and liabilities
hereunder (except as aforesaid), such removal and discharge to be effective as
hereinafter provided. No such resignation or removal shall take effect until a
new escrow agent which Buyer and Sellers shall have approved in writing (such
approval not to be unreasonably withheld or delayed) shall have been appointed
and shall have agreed to assume the Escrow Agent's duties hereunder, as
hereinafter provided. After such a new escrow agent shall accept such
appointment in writing, such new escrow agent shall be vested with the same
powers, rights, property, duties and responsibilities as if it had been
originally named herein as Escrow Agent, without any further assurance,
conveyance, act or deed; but if for any reason it shall be necessary or
expedient to execute and deliver any further assurance, conveyance, act or deed,
the same shall be done and shall be legally and validly executed and delivered
by the resigning or removed Escrow Agent.
(h) Notwithstanding anything in this Agreement that may be to
the contrary: (i) if the Escrow Agent shall receive notice advising that
litigation in connection with the Escrowed Property, the Purchase Agreement or
this Agreement has been commenced, the Escrow Agent may deposit the Escrowed
Property with the Clerk of the Court in which said litigation is pending; or
(ii) the Escrow Agent may deposit the Escrowed
-5-
<PAGE>
<PAGE>
Property in a court of competent jurisdiction and commence an action for
interpleader, the costs thereof to be borne jointly and severally by Buyer and
Sellers. Upon the occurrence of any of the foregoing events set forth in the
preceding sentence, the Escrow Agent shall be automatically released of and from
all liability hereunder.
(i) Nothing herein shall preclude the Escrow Agent from acting
in any other capacity for Buyer, the Company or Sellers or any of their
respective affiliates.
(j) Escrow Agent may consult with outside legal counsel at the
reasonable expense of Buyer as to any matter relating to this Agreement.
Section 7. Parties in Interest; Assignment. This Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and assigns.
Section 8. Notices. All notices, consents, requests, waivers
or other communications required or permitted under this Agreement (each a
"Notice") shall be in writing and shall be sufficiently given (a) if hand
delivered, (b) if sent by nationally recognized overnight courier, or (c) if
sent by registered or certified mail, postage prepaid, return receipt requested,
and in each case addressed as follows:
If to Buyer:
------------
c/o Fahnestock & Co. Inc.
110 Wall Street (9th Floor)
New York, NY 10005
Att: Albert G. Lowenthal
Tel: (212) 668-5782
Fax: (212) 943-8728
with a copy to:
Whitman Breed Abbott & Morgan LLP
200 Park Avenue
New York, NY 10161
Att: Richard Crystal, Esq.
Tel: (212) 351-3000
Fax: (212) 351-3131
If to Sellers:
--------------
1888 Limited Partnership
c/o Day, Berry & Howard
One Canterbury Green
-6-
<PAGE>
<PAGE>
Stamford, CT 06091
Att: William H. Cuddy
Tel: (860) 275-0217
Fax: (860) 434-5266
and
DST Systems, Inc.
1055 Broadway
Kansas City, MO 64105
Tel: (816) 435-1000
Fax: (816) 435-8630
With a copy to:
Sonnenschein Nath & Rosenthal
4520 Main Street
Kansas City, MO 64111
Att: John F. Marvin, Esq.
Tel: (816) 932-4400
Fax: (816) 531-7545
If to Escrow Agent:
-------------------
The Bank of New York
101 Barclay Street (Floor 12E)
New York, NY 10286
Att: Harley Jeanty
Insurance Trust and Escrow
Tel: (212) 815-5901
Fax: (212) 815-7181
or at such other address for a party as shall be specified in a Notice. Any
Notice shall be effective and deemed given upon receipt.
Section 9. Miscellaneous. (a) This Agreement constitutes the
entire agreement between the parties hereto in respect of the subject matter
hereof and supersedes all other prior agreements and understandings, both
written and oral, among the parties hereto with respect to such subject matter.
(b) This Agreement is not intended to confer upon any other
person any rights or remedies hereunder.
-7-
<PAGE>
<PAGE>
(c) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ITS
CONFLICT OF LAW RULES.
(d) This Agreement may be executed by the parties hereto
(including by facsimile transmission) with counterpart signature pages or in
several counterparts, each of which shall be deemed an original but all of which
together shall constitute but one agreement.
(e) The descriptive headings contained herein are for
convenience only and shall not affect in any way the meanings or interpretation
of this Agreement.
Section 10. Agreement to Take Necessary and Desirable Actions.
Buyer and Sellers agree to execute and deliver such other documents,
certifications, agreements and other writings and to take such other actions as
may be necessary and desirable in order to consummate and make effective the
transactions contemplated by this Agreement as promptly as practicable.
Section 11. Partial Invalidity. Any provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining
provisions of this Agreement or affecting the validity or enforceability of any
of the provisions of this Agreement in any other jurisdiction. If any provision
of this Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
Section 12. Amendments. This Agreement may not be amended or
supplemented except upon the execution and delivery of a written agreement
executed by all the parties hereto.
Section 13. Consent to Jurisdiction. Each of the parties
hereto hereby irrevocably and unconditionally consents to submit to the
exclusive jurisdiction of the courts of the State of New York or the United
States of America located in the State of New York for any actions, suits or
proceedings arising out of or relating to this Agreement and the transactions
contemplated hereby and agrees not to commence any action, suit or proceeding
relating hereto except in such courts, and further agrees that service of any
process, summons, notice or document by United States registered or certified
mail in accordance with Section 8 shall be effective service of process for any
action, suit or proceeding brought in any such court. Each of the parties hereto
hereby irrevocably and unconditionally waives any objection to personal
jurisdiction and the laying of venue of any action, suit or proceeding arising
out of this Agreement or the transactions contemplated hereby, in the courts of
the State of New York or the United States of America located in the State of
New York, and hereby further irrevocably and unconditionally waives and agrees
not to plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.
-8-
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized representatives, as of the day
and year first above written.
Sellers:
1888 LIMITED PARTNERSHIP
By: /s/ Louis C. Baker
-------------------------
Name: Louis C. Baker
Title: General Partner
By: /s/ Craig P. Baker
-------------------------
Name: Craig P. Baker
Title: General Partner
DST SYSTEMS, INC.
By: /s/ Kenneth V. Hager
-------------------------
Name: Kenneth V. Hager
Title: Vice President, Chief
Financial Officer
Buyer:
FMCC ACQUISITION CORP.
By: /s/ Albert G. Lowenthal
-------------------------
Name: Albert G. Lowenthal
Title: Chairman and CEO
Escrow Agent:
THE BANK OF NEW YORK
By: /s/ Harley Jeanty
-------------------------
Name: Harley Jeanty
Title: Assistant Vice President
-9-
<PAGE>
<PAGE>
Schedule A
to Sellers
Escrow Agreement
SHARES OF COMMON STOCK OF
FIRST OF MICHIGAN CAPITAL CORPORATION
(CUSIP #320862 10 5)
DEPOSITED INTO ESCROW
I. 1888 Limited Partnership
- -----------------------------
A. Stock Certificates
-------------------
Certificate No. No. of Shares
-------------- -------------
DU 12012 657,564
DU 12172 90,365
DU 12701 5,000
DU 12702 5,000
DU 12704 10,000
DU 12706 10,000
B. Book-Entry
1. Financial Institution (Nominee)
Not applicable
-------
Total shares deposited
by 1888 Limited Partnership 777,929
<PAGE>
<PAGE>
II. DST Systems, Inc.
-----------------
A. Stock Certificates
------------------
Certificate No. No. of Shares
-------------- -------------
DU 9127 6,630
DU 9128 6,630
DU 9129 6,630
DU 9130 6,630
DU 9131 6,630
DU 9132 6,630
DU 9133 6,630
DU 9134 6,630
DU 9153 20,000
DU 11391 2,000
DU 11392 5,304
B. Book-Entry
----------
1. Financial Institution (Nominee)
------------------------------
Schroder Wertheim & Co., Inc. 560,078
(LEWCO Securities)
-------
Total shares deposited
by DST Systems, Inc. 640,422
-2-
<PAGE>
<PAGE>
Exhibit A to
Escrow Agreement
FORM OF FUNDING CERTIFICATE
[Date]
The Bank of New York
101 Barclay Street (Floor 12E)
New York, NY 10286
Attn: Harley Jeanty
Insurance Trust and Escrow
Re: Release of Escrow Deposit
-------------------------
Dear Sir:
Pursuant to Section 2(a) of the Escrow Agreement dated as of June 11,
1997 (the "Escrow Agreement"), among 1888 Limited Partnership, DST Systems, Inc.
(collectively, the "Sellers"), FMCC Acquisition Corp. ("Buyer"), and you, as
escrow agent, you are hereby notified that the Closing Time (as defined in the
Securities Purchase Agreement dated as of June 11, 1997, between the Sellers and
Buyer, the "Purchase Agreement") [is taking place] [has taken place].
Accordingly, you are hereby directed to release and deliver: (i) to the
account of each Seller listed opposite such Seller's name on the attached
Schedule A the amount listed opposite such Seller's name on the attached
Schedule A, by wire transfer of immediately available funds; (ii) to the account
listed opposite Buyer's name on the attached Schedule A, the balance of the
Deposit, by wire transfer of immediately available funds; and (iii) the Shares
to Buyer.
Capitalized terms used herein without definition have the meanings
attributed thereto in the Escrow Agreement.
IN WITNESS WHEREOF, the parties hereto have duly caused this Funding
Certificate to be delivered to you in accordance with the terms of the Escrow
Agreement.
Sellers:
-------
1888 LIMITED PARTNERSHIP
By:_________________________
Name:
Title: General Partner
<PAGE>
<PAGE>
DST SYSTEMS, INC.
By:_________________________
Name:
Title:
Buyer:
------
FMCC ACQUISITION CORP.
By:_________________________
Name:
Title:
-2-
<PAGE>
<PAGE>
Exhibit B to
Escrow Agreement
FORM OF TERMINATION NOTICE CERTIFICATE
[Date]
The Bank of New York
101 Barclay Street (Floor 12E)
New York, NY 10286
Attn: Harley Jeanty
Insurance Trust and Escrow
Re: Release of Escrow Deposit
-------------------------
Dear Sir:
Pursuant to Section 2(b) of the Escrow Agreement dated as of June 11,
1997 (the "Escrow Agreement"), among 1888 Limited Partnership, DST Systems, Inc.
(collectively, the "Sellers"), FMCC Acquisition Corp. ("Buyer"), and you, as
escrow agent, you are hereby notified that the Securities Purchase Agreement
dated as of June 11, 1997, between the Sellers and Buyer (the "Purchase
Agreement"), has been terminated pursuant to Section 7.1 or 7.2 of the Purchase
Agreement.
Accordingly, you are hereby directed (i) to notify Buyer (the "Notice")
of your intent to release and deliver the Shares to Sellers and to release and
deliver the Deposit to Buyer, and (ii) to release and deliver to each Seller,
the Shares owned by such Seller held by you, and to release and deliver the
Deposit to Buyer, if Buyer does not provide you with a written objection to such
intent within five days after receiving the Notice.
Capitalized terms used herein without definition have the meanings
attributed thereto in the Escrow Agreement.
IN WITNESS WHEREOF, the Sellers hereto have duly caused this
Termination Notice Certificate to be delivered to you in accordance with the
terms of the Escrow Agreement.
Sellers:
--------
1888 LIMITED PARTNERSHIP
By:_________________________
Name:
Title: General Partner
<PAGE>
<PAGE>
DST SYSTEMS, INC.
By:_________________________
Name:
Title:
-2-
<PAGE>
<PAGE>
Exhibit C to
Escrow Agreement
FORM OF TERMINATION NOTICE CERTIFICATE
[Date]
The Bank of New York
101 Barclay Street (Floor 12E)
New York, NY 10286
Attn: Harley Jeanty
Insurance Trust and Escrow
Re: Release of Escrow Deposit
-------------------------
Dear Sir:
Pursuant to Section 2(c) of the Escrow Agreement dated as of June 11,
1997 (the "Escrow Agreement"), among 1888 Limited Partnership, DST Systems, Inc.
(collectively, the "Sellers"), FMCC Acquisition Corp. ("Buyer"), and you, as
escrow agent, you are hereby notified that the Securities Purchase Agreement
dated as of June 11, 1997, between the Sellers and Buyer (the "Purchase
Agreement"), has been terminated pursuant to Section 7.1 or 7.2 of the Purchase
Agreement.
Accordingly, you are hereby directed (i) to notify Sellers (the
"Notice") of your intent to release and deliver the Deposit to Buyer and to
release and deliver the Shares to Sellers, and (ii) to release and deliver the
Deposit to the account specified by Buyer on the attached Schedule A, by wire
transfer of immediately available funds, and to release and deliver the Shares
to Sellers, if Sellers do not provide you with a written objection to such
intent within five days after receiving the Notice.
Capitalized terms used herein without definition have the meanings
attributed thereto in the Escrow Agreement.
IN WITNESS WHEREOF, the Buyer hereto has duly caused this Termination
Notice Certificate to be delivered to you in accordance with the terms of the
Escrow Agreement.
Buyer:
FMCC ACQUISITION CORP.
By:_________________________
Name:
Title:
<PAGE>
<PAGE>
TENDER OFFER AGREEMENT
TENDER OFFER AGREEMENT dated as of June 11, 1997 (this
"Agreement"), among FMCC ACQUISITION CORP., a Delaware corporation ("Buyer"),
FIRST OF MICHIGAN CAPITAL CORPORATION, a Delaware corporation (the "Company"),
and each of the stockholders of Company that is a signatory hereto identified as
a "SELLER" on the signature pages hereto (each, a "Seller" and collectively,
"Sellers").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Buyer and the
Company have determined that it is in the best interests of their respective
companies for Buyer to acquire the Company upon the terms and subject to the
conditions set forth herein and in the Purchase Agreement referred to below;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Sellers and Buyer are entering into a certain Securities Purchase
Agreement of even date herewith (the "Purchase Agreement"), pursuant to which
Buyer has agreed to purchase and Sellers have agreed to sell shares of Common
Stock, par value $0.10 per share (the "Common Stock"), equal to approximately
53% of the issued and outstanding shares of capital stock of the Company (on a
fully diluted basis), and Sellers have agreed to take certain actions in
furtherance of the acquisition of the Company by Buyer; and
WHEREAS, the parties hereto desire to make certain
representations, warranties and covenants in connection herewith.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, and
other good and other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
THE OFFER
SECTION 1.1 The Offer. (a) As promptly as practicable (but in
no event later than five (5) business days after the public announcement of the
execution hereof), Buyer shall commence (within the meaning of Rule 14d-2 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act")), an offer
to
<PAGE>
<PAGE>
purchase (the "Offer") for cash all the outstanding shares of Common Stock at a
price of $15.00 per share, net to the seller (the aggregate consideration for
all such shares is sometimes hereinafter called the "Tender Consideration"). The
shares of Common Stock owned by Sellers will be sold to Buyer pursuant to the
Purchase Agreement. The obligation of Buyer to commence the Offer and to accept
for payment, and pay for, any shares of Common Stock tendered pursuant to the
Offer shall be subject to the conditions set forth in Exhibit A hereto and to
the terms and conditions of this Agreement. Subject to the provisions of this
Agreement, the Offer shall expire twenty (20) business days after the date of
its commencement, unless extended or sooner terminated in accordance with this
Agreement.
(b) Subject to the terms and conditions of the Offer and this
Agreement, Buyer shall accept for payment and pay for, in accordance with the
terms of the Offer, all shares of Common Stock validly tendered and not
withdrawn pursuant to the Offer as soon as practicable after the expiration of
the Offer.
(c) Buyer expressly reserves the right to modify the terms of
the Offer and to waive any condition of the Offer, except that, without the
prior written consent of the Board of Directors of the Company, Buyer shall not
(i) reduce the number of shares of Common Stock subject to the Offer, (ii)
reduce the price per share of Common Stock to be paid pursuant to the Offer,
(iii) change the form of consideration payable in the Offer, (iv) amend or
modify any term or condition of the Offer (including the conditions set forth on
Exhibit A) in any manner materially adverse to the holders of Common Stock, or
(v) impose additional conditions to the Offer, other than such conditions
required by applicable Law (as hereinafter defined). Notwithstanding anything
herein to the contrary, Buyer may, in its sole discretion without the consent of
the Company, extend the Offer at any time and from time to time (A) if at the
then scheduled expiration date of the Offer any of the conditions to Buyer's
obligation to accept for payment and pay for shares of Common Stock shall not
have been satisfied or waived, (B) for any period required by any rule,
regulation, interpretation or position of the Securities and Exchange Commission
(the "SEC") or its staff applicable to the Offer, and (C) for any period
required by applicable law, rule, regulation, administrative or judicial
determination or order (collectively, "Law"). So long as this Agreement is in
effect and the conditions to the Offer have not been satisfied or waived, at the
request of the Company, Buyer shall extend the Offer for an aggregate period of
not more than five (5) business days (for all such extensions) beyond the
originally scheduled expiration date of the Offer. Such period of five (5)
business days shall include any grace period contemplated by clause (d)(ii) of
Exhibit A that extends beyond the otherwise scheduled expiration date of the
Offer.
SECTION 1.2 Actions by Buyer. As soon as reasonably
practicable following execution of this Agreement, but in no event later than
five (5) business days from the date hereof, Buyer shall file with the SEC a
Tender Offer Statement on Schedule 14D-1 with respect to the Offer, which shall
contain an offer
-2-
<PAGE>
<PAGE>
to purchase and a related letter of transmittal and any other ancillary
documents pursuant to which the Offer shall be made (such Schedule 14D-1 and the
documents therein pursuant to which the Offer will be made, together with any
supplements or amendments thereto, the "Offer Documents"). The Company and its
counsel shall be given a reasonable opportunity to review and comment upon the
Offer Documents prior to the filing thereof with the SEC. The Offer Documents
shall comply as to form in all material respects with the requirements of the
Exchange Act, and, on the date filed with the SEC and on the date first
published, sent or given to the Company's stockholders, the Offer Documents
shall not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except that no representation is made by Buyer with
respect to information supplied by the Company or Sellers for inclusion in the
Offer Documents. Each of Sellers, Buyer and the Company agrees promptly to
correct any information provided by it for use in the Offer Documents if and to
the extent that such information shall have become false or misleading in any
material respect, and each of Buyer and the Company further agree to take all
steps necessary to cause the Offer Documents as so corrected to be filed with
the SEC and to be disseminated to holders of shares of Common Stock, in each
case as and to the extent required by applicable federal securities laws. Buyer
agrees to provide the Company and its counsel in writing with any comments Buyer
or its counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after receipt of such comments.
SECTION 1.3 Actions by the Company. (a) The Company hereby
approves of and consents to the Offer and the transactions contemplated by the
Purchase Agreement and represents and warrants that the Board of Directors of
the Company (the "Board of Directors" or the "Board") at a meeting duly called
and held has duly adopted resolutions approving this Agreement and the Offer,
subject to receiving the written opinion of Duff & Phelps LLP or another
financial advisor (the "Fairness Opinion") that the per share Tender
Consideration is fair to the Company's stockholders from a financial point of
view. The Company undertakes to obtain promptly the Fairness Opinion. The
Company further represents and warrants that the Board has taken all action
required under or pursuant to the Company's Certificate of Incorporation (the
"Certificate") so as to make inapplicable the provisions of Article Tenth to any
Business Combination (as defined in the Certificate) involving Buyer or any of
its affiliates.
(b) Within ten (10) business days following the commencement
of the Offer, the Company shall file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as
amended from time to time, the "Schedule 14D-9") and shall mail the Schedule
14D-9 to the stockholders of the Company. Promptly following receipt of the
Fairness Opinion, the Company shall file with the SEC the Schedule 14D-9 (or an
amendment thereto) containing the recommendation of the Board of Directors that
the Company's
-3-
<PAGE>
<PAGE>
stockholders accept the Offer and shall mail the Schedule 14D-9 (or such
amendment) to the stockholders of the Company. To the extent practicable, the
Company shall cooperate with purchaser in mailing or otherwise disseminating the
Schedule 14D-9 with the appropriate Offer Documents to the Company's
stockholders. Buyer and its counsel shall be given a reasonable opportunity to
review and comment upon the Schedule 14D-9 prior to the filing thereof with the
SEC. The Schedule 14D-9 shall comply as to form in all material respects with
the requirements of the Exchange Act and, on the date filed with the SEC and on
the date first published, sent or given to the Company's stockholders, shall not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except that no representation is made by the Company with respect to
information supplied by Buyer for inclusion in the Schedule 14D-9. Each of the
Company, Sellers and Buyer agrees promptly to correct any information provided
by it for use in the Schedule 14D-9 if and to the extent that such information
shall have become false or misleading in any material respect, and the Company
further agrees to take all steps necessary to cause the Schedule 14D-9 as so
corrected to be filed with the SEC and to be disseminated to the holders of
shares of Common Stock, in each case as and to the extent required by applicable
federal securities laws. The Company agrees to provide Buyer and its counsel in
writing with any comments the Company or its counsel may receive from the SEC or
its staff with respect to the Schedule 14D-9 promptly after the receipt of such
comments.
(c) In connection with the Offer, the Company shall cause its
transfer agent to furnish Buyer with mailing labels containing the names and
addresses of the record holders of Common Stock as of a recent date and of those
persons becoming record holders subsequent to such date, together with copies of
all lists of stockholders, security position listings and computer files and all
other information in the Company's possession or control regarding the
beneficial owners of Common Stock, and shall furnish to Buyer such information
and assistance (including updated lists of stockholders, security position
listings and computer files) as Buyer may reasonably request in communicating
the Offer to the Company's stockholders. Subject to the requirements of Law, and
except for such steps as are necessary to disseminate the Offer Documents and
any other documents necessary to consummate the Offer, Buyer and its affiliates
and associates shall hold in confidence the information contained in any of such
labels, lists and files, shall use such information only in connection with the
Offer and the Merger, and, if this Agreement is terminated, shall promptly
deliver to the Company all copies of such information then in their possession
or under their control.
(d) Subject to the terms and conditions of this Agreement, if
there shall occur a change in Law or in a binding judicial interpretation of
existing Law that would, in the absence of action by the Company or the Board,
prevent Buyer, were it to acquire a specified percentage of the shares of Common
Stock then outstanding, from approving and adopting this Agreement by its
affirmative vote as the holder of a
-4-
<PAGE>
<PAGE>
majority of shares of Common Stock and without the affirmative vote of any other
stockholder, the Company will use its reasonable best efforts to promptly take
or cause such action to be taken.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.1 Representations and Warranties of Buyer. Buyer
hereby represents and warrants to the Company as follow:
(a) Existence; Good Standing. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation.
(b) Authorization, Validity and Effect of Agreements. Buyer
has the requisite corporate power and authority to execute and deliver this
Agreement and all agreements and documents contemplated hereby (including,
without limitation, the Purchase Agreement). The consummation by Buyer of the
transactions contemplated hereby has been duly authorized by all requisite
corporate action. This Agreement constitutes, and all agreements and documents
contemplated hereby (when executed and delivered pursuant hereto for value
received) will constitute, the valid and legally binding obligations of Buyer,
enforceable in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to creditors'
rights and general principles of equity.
(c) No Violation. Neither the execution and delivery by Buyer
of this Agreement, nor the consummation by Buyer of the transactions
contemplated hereby in accordance with the terms hereof, will: (i) conflict with
or result in a breach of any provisions of the Certificate of Incorporation or
By-laws of Buyer; (ii) violate, or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, any of the terms, conditions
or provisions of any material license, certificate of authority, franchise,
permit, lease, contract, agreement or other instrument, commitment or obligation
to which Buyer or any of its subsidiaries is a party, or by which Buyer or any
of its subsidiaries or any of their properties is bound or affected, except for
any of the foregoing matters which would not have a material adverse effect on
the ability of Buyer to perform its obligations hereunder (a "Buyer Material
Adverse Effect"); or (iii) other than expiration or termination of the waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR
Act") and such regulatory approvals as may be required under applicable
securities laws, require any material consent, approval or authorization of, or
declaration, filing or registration with, any domestic governmental or
regulatory authority, the failure to obtain or make which would have a Buyer
Material Adverse Effect.
-5-
<PAGE>
<PAGE>
(d) Offer Documents. None of the Offer Documents, any schedule
required to be filed by Buyer with the SEC or any amendment or supplement will
contain, on the date of filing with the SEC, any untrue statement of a material
fact or will omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they are made, not misleading, except that no
representation is made by Buyer with respect to information supplied by the
Company specifically for inclusion in the Offer Documents, any schedule required
to be filed with the SEC or any amendment or supplement. None of the information
supplied by Buyer in writing specifically for inclusion or incorporation by
reference in the Schedule 14D-9 will, at the date of filing with the SEC,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. If at any time prior to acceptance of shares of Common Stock
tendered pursuant to the Offer Buyer shall obtain knowledge of any facts with
respect to itself, any of its officers and directors that would require the
supplement or amendment to any of the foregoing documents in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or to comply with applicable Laws, such amendment or
supplement shall be promptly filed with the SEC and, as required by Law,
disseminated to the stockholders of the Company, and in the event the Company
shall advise Buyer as to its obtaining knowledge of any facts that would make it
necessary to supplement or amend any of the foregoing documents, Buyer shall
promptly amend or supplement such document as required and distribute the same
to the stockholders of the Company.
(e) Financing. Buyer will deposit into escrow pursuant to
Section 3.3 cash in the amount of $16,724,735.
SECTION 2.2 Representations and Warranties of the Company. The
Company hereby represents and warrants to Buyer as follows:
(a) Existence; Good Standing. The Company is an entity duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization.
(b) Authorization, Validity and Effect of Agreements. The
Company has the requisite power and authority to execute and deliver this
Agreement and all agreements and documents contemplated hereby. The consummation
by the Company of the transactions contemplated hereby has been duly authorized
by all requisite action. This Agreement constitutes, and all agreements and
documents contemplated hereby (when executed and delivered pursuant hereto for
value received) will constitute, the valid and legally binding obligations of
the Company, enforceable in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights and general principles of equity.
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(c) No Violation. Neither the execution and delivery by the
Company of this Agreement, nor the consummation by the Company of the
transactions contemplated hereby in accordance with the terms hereof, will: (i)
conflict with or result in a breach of any provisions of the charter, bylaws,
partnership agreement, operating agreement or other operative document or
instrument of the Company; (ii) violate, or conflict with, or result in a breach
of any provision of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, any of the terms,
conditions or provisions of any material license, certificate of authority,
franchise, permit, lease, contract, agreement or other instrument, commitment or
obligation to which the Company or any of its subsidiaries is a party, or by
which the Company or any of its subsidiaries or any of their properties is bound
or affected, except for any of the foregoing matters which would not have a
material adverse effect on the ability of the Company to perform its obligations
hereunder (a "Company Material Adverse Effect"); or (iii) other than expiration
or termination of the waiting period under the HSR Act and such regulatory
approvals as may be required under applicable securities laws, require any
material consent, approval or authorization of, or declaration, filing or
registration with, any domestic governmental or regulatory authority, the
failure to obtain or make which would have a Company Material Adverse Effect.
(d) No Brokers. The Company has not entered into any contract,
arrangement or understanding with any person or firm which may result in the
obligation of any party hereto to pay any finder's fees, brokerage or agent's
commissions in connection with the negotiations leading to this Agreement, the
Purchase Agreement, or the consummation of the transactions contemplated hereby
or thereby. The Company is not aware of any claim for payment of any finder's
fees, brokerage or agent's commissions or other like payments in connection with
the negotiations leading to this Agreement or the consummation of the
transactions contemplated hereby.
(e) Capitalization. The authorized capital stock of the
Company consists of 10,000,000 shares of Common Stock and 500,000 shares of
Serial Preferred Stock. As of May 14, 1997, there were 2,497,764 shares of
Common Stock and no shares of Serial Preferred Stock issued and outstanding.
Since such date, only such shares of Common Stock have been issued and only such
options to employees to purchase shares of Common Stock have been granted, such
that the Securities (as defined in the Purchase Agreement) to be purchased
pursuant to the Purchase Agreement constitute as of the date hereof, and will
constitute as of the Closing Time (as defined in the Purchase Agreement), at
least 53% of the shares of Common Stock and any and all other voting securities
of the Company on a fully diluted basis as of each of such dates. For purposes
of this Agreement, "fully diluted basis" shall mean the number of shares of
Common Stock then issued and outstanding, assuming full conversion, exercise and
exchange of all warrants, options and rights to purchase Common Stock and all
securities of any type that shall be (or may become) exchangeable for, or
exercisable or convertible into, Common Stock.
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There are not any existing options, rights, warrants, calls, subscriptions,
convertible securities, or other rights, agreements or commitments which
obligate the Company or any of its subsidiaries to issue, transfer or sell any
shares of capital stock of the Company or any of its subsidiaries, other than
options granted to employees to purchase 177,490 shares of Common Stock (i) in
accordance with the Company's past practices, and (ii) which together with
shares of Common Stock issued will not cause the third sentence of this Section
2.2(e) to be false. There are no outstanding obligations of the Company to
purchase, redeem or otherwise acquire any shares of capital stock or voting
securities convertible or exercisable into or exchangeable for capital stock or
voting securities of the Company.
(f) Disclosure. The Company has furnished to Buyer true and
complete copies of all documents (other than preliminary material) that the
Company has filed with the SEC since January 1, 1995 (the "SEC Documents"). As
of their respective filing dates, the SEC Documents complied in all material
respects with the applicable requirements of the Securities Act of 1933, as
amended, or the Exchange Act, as applicable, were complete and correct in all
material respects as of the dates at which the information was furnished, and
contained (as of such dates) no untrue statement of a material fact necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading.
(g) Takeover Laws. The restrictions on business combinations
set forth in Section 203 of the General Corporation Law of the State of Delaware
(the "GCL") and in Section 780 of the Business Corporation Act of the State of
Michigan (the "MBCA") are not applicable to the transactions contemplated by the
Purchase Agreement, this Agreement or the Offer. There are no provisions of the
GCL, the MBCA or any other applicable jurisdiction that would prevent the
consummation of the transactions contemplated by the Purchase Agreement, this
Agreement or the Offer or rights or benefits pertaining to ownership of the
Common Stock or the Company.
(h) Schedule 14D-9; Offer Documents. None of the Schedule
14D-9, any schedule report or other document filed or required to be filed by
the Company with the SEC or any amendment or supplement thereto, at the
respective times such documents are filed with the SEC or first published, sent
or delivered to the Company's stockholders, will contain any untrue statement of
a material fact or will omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they are made, not misleading except that no
representation is made by the Company with respect to information supplied by
Buyer specifically for inclusion in the Schedule 14D-9 or any amendment or
supplement. None of the information supplied or to be supplied by the Company
for inclusion or incorporation by reference in the Offer Documents will, at the
date of filing with the SEC, contain any untrue statement of a material fact or
omit to state any material fact required to stated therein or necessary in order
to make the statements therein, in the light of the circumstances under which
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they were made, not misleading. If at any time prior to the Purchase Date (as
defined below) the Company shall obtain knowledge of any facts with respect to
itself, any of its officers and directors that would require the supplement or
amendment to any of the foregoing documents in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or to comply with applicable Laws, such amendment or supplement
shall be promptly filed with the SEC and, as required by Law, disseminated to
the stockholders of the Company, and if Buyer shall advise the Company as to
obtaining knowledge of any facts that would make it necessary to supplement or
amend any of the foregoing documents, the Company shall promptly amend or
supplement such document as required and distribute the same to its
stockholders. "Purchase Date" means the date upon which shares validly tendered
in the Offer are paid for.
SECTION 2.3 Representations and Warranties of Sellers. Sellers
hereby severally and not jointly represent and warrant to Buyer and the Company
as follows:
(a) Schedule 14D-9; Offer Documents. None of the Schedule
14D-9, any schedule, report or other document filed or required to be filed by
Sellers with the SEC or any amendment or supplement thereto, at the respective
time such documents are filed with the SEC or first published, sent or delivered
to the Company's stockholders, will contain any untrue statement of a material
fact or will omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading except that no
representation is made by the Sellers with respect to information supplied by
Buyer specifically for inclusion in the Schedule 14D-9 or any amendment or
supplement. None of the information supplied or to be supplied by Sellers for
inclusion or incorporation by reference in the Offer Documents will, at the date
of filing with the SEC or first published, sent or delivered to the Company's
stockholders, contain any untrue statement of a material fact or omit to state
any material fact required to stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. If at any time prior to the Purchase Date either Seller
shall obtain knowledge of any facts with respect to itself, any of its officers,
partners and directors that would require the supplement or amendment to any of
the foregoing documents in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, or to comply with
applicable Laws, such amendment or supplement shall be promptly filed with the
SEC and, as required by Law, disseminated to the stockholders of the Sellers.
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ARTICLE 3
COVENANTS
SECTION 3.1 Filings; Other Actions. The Company shall take
such actions as are necessary and appropriate in order to effect the provisions
of Section 5.4 of the Purchase Agreement. The Company and Sellers shall from
time to time, at the request of Buyer, execute and deliver such other
agreements, instruments and other documents, file such other schedules, reports
and other documents and shall take such other actions as Buyer may reasonably
request in order to effect the intent and purposes of this Agreement.
SECTION 3.2 No Solicitation. Neither the Company nor any of
its officers, directors, employees, agents, affiliates or representatives
(including, without limitation, any investment banker, attorney or accountant
retained by the Company) shall, directly or indirectly, solicit, initiate or
participate in or knowingly encourage, in any way, any discussions or
negotiations with, or provide any information to, or afford any access to the
properties, books or records of the Company to, or otherwise assist, facilitate
or knowingly encourage, any corporation, partnership, person or other entity or
group (other than Buyer or any affiliate of Buyer) with respect to any tender
offer, merger, consolidation, business combination, liquidation, reorganization,
sale of significant assets, sale of shares of capital stock or similar
transactions involving the Company or any part thereof (an "Alternative
Proposal"), and shall immediately cease and cause to be terminated any existing
activities, discussion or negotiations with any parties conducted heretofore
with respect to any of the foregoing. The Company shall promptly notify Buyer in
writing if any such information is requested from the Company, if any such
negotiations or discussions are sought to be initiated with the Company or if
any party makes an Alternative Proposal, including the identity of the person or
group requesting such information, proposing to engage in such negotiations or
discussions or making such Alternative Proposal, the material terms and
conditions of any Alternative Proposal and any subsequent developments with
respect thereto.
SECTION 3.3 Escrow Arrangements. Promptly following the
execution and delivery of this Agreement, Buyer, the Company and the Escrow
Agent (as defined below) shall enter into an escrow arrangement in form and
substance reasonably satisfactory to Buyer and the Company (the "Tender Escrow
Agreement"). Pursuant to the Tender Escrow Agreement, (a) Buyer will deposit in
cash $16,724,735 with the Escrow Agent, and (b) the Escrow Agent will hold such
cash in escrow. The Tender Escrow Agreement will provide, inter alia, that: (i)
promptly following the acceptance of shares of Common Stock in accordance with
the terms of the Offer, such cash shall be released from escrow and such
appropriate portion thereof shall be delivered to stockholders of the Company
whose shares of Common Stock have been validly tendered and accepted by Buyer
(with the balance thereof returned to Buyer); and (ii) if this Agreement and the
Offer is terminated pursuant to
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Article V, such cash shall be released from escrow and returned to Buyer.
"Escrow Agent" means an entity mutually selected by the Company and Buyer which
shall serve as escrow agent under the Tender Escrow Agreement.
SECTION 3.4 Certain Prohibited Actions. (a) The Company shall
not (i) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, (ii) split, combine or
reclassify any of its capital stock or issue or authorized the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock, or (iii) purchase, redeem, retire or otherwise acquire any shares
of its capital stock or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities, other than as required
pursuant to the provisions of the employee stock option plan of the Company as
in effect prior to the date hereof.
(b) The Company shall not issue, deliver, sell, pledge
otherwise encumber any shares of its capital stock, any other voting securities
or any securities convertible into, or any rights, warrants or options to
acquire any such shares, voting securities or convertible securities, other than
pursuant to options outstanding prior to the date hereof to purchase Common
Stock under the employee stock option plan of the Company as in effect prior to
the date hereof.
SECTION 3.5 Directors' and Officers' Liability Insurance. The
Company shall maintain in effect for two years from the date of acceptance for
payment of shares of Common Stock pursuant to the Offer directors' and officers'
liability insurance covering the persons who are currently covered in their
capacities as such directors and officers by the Company's existing directors'
and officers' policies and on terms substantially no less advantageous than such
existing insurance coverage; provided, however, that in no event shall the
Company be required to expend pursuant to this Section 3.5 more than an amount
per year equal to 150% of the current annual premiums paid by the Company for
such existing insurance coverage (the "Cap"); provided further, however, that if
equivalent coverage cannot be obtained, or can be obtained only by paying an
annual premium in excess of the Cap, the Company shall only be required to
obtain as much coverage as can be obtained by paying an annual premium equal to
the Cap.
ARTICLE IV
TERMINATION
SECTION 4.1 Termination by Mutual Consent. This Agreement may
be terminated and the Offer may be abandoned at any time prior to acceptance by
the Buyer of the shares of Common Stock tendered in connection with the Offer by
the mutual consent of the Company and Buyer.
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SECTION 4.2 Termination by Either Buyer or the Company. This
Agreement and the Offer may be terminated and the Offer may be abandoned by
Buyer or the Company if: (i) the conditions to the Offer set forth in Exhibit A
shall have not been satisfied by October 11, 1997; (ii) a United States federal
or state court of competent jurisdiction or United States federal or state
governmental, regulatory or administrative agency or commission shall have
issued an order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated by
this Agreement and such order, decree, ruling or other action shall have become
final and non-appealable; provided, however, that the party seeking to terminate
this Agreement pursuant to this clause (ii) shall have used all efforts required
by this Agreement to remove such injunction, order or decree; (iii) if there
shall be any Law that makes consummation of the Offer illegal or prohibited;
(iv) by mutual agreement of the Company and Buyer; or (v) the Purchase Agreement
shall have terminated pursuant to Section 7.1 or 7.2 thereof.
ARTICLE V
GENERAL PROVISIONS
SECTION 5.1. Non-Survival of Representations and Warranties.
None of the representations and warranties made in this Agreement shall survive
the consummation of the Tender Offer. This Section 5.1 shall not limit any
covenant or agreement of the parties which by its terms contemplates performance
after consummation of the Tender Offer.
SECTION 5.2. Notices. Any notice required to be given
hereunder shall be sufficient if in writing, and sent by facsimile transmission
(with machine confirmation of delivery) or by courier service (with proof of
service), hand delivery (with proof of delivery) or certified or registered mail
(return receipt requested and first-class postage prepaid), addressed as
follows:
If to Buyer:
c/o Fahnestock & Co., Inc.
110 Wall Street (9th Floor)
New York, N.Y. 10005
Att: Albert G. Lowenthal
Facsimile: (212) 943-8728
Telephone: (212) 668-5782
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With a copy to:
Whitman Breed Abbott & Morgan
200 Park Avenue
New York, NY 10161
Att: Richard Crystal, Esq.
Facsimile: (212) 351-3131
Telephone: (212) 351-3000
If to the Company:
First of Michigan Capital Corporation
100 Renaissance Center
26th Floor
Detroit, Michigan 48243
Att: Chairman
Tel: (313) 259-2600
Fax: (313)
If to Sellers:
1888 Limited Partnership
c/o Day, Berry & Howard
One Canterbury Green
Stamford, CT 06091
Facsimile: (860) 434-5266
Telephone: (860) 275-0217
and
DST Systems, Inc.
1055 Broadway
Kansas City, MO 64105
Facsimile: (816) 435-8630
Telephone: (816) 435-1000
With a copy to:
Sonnenschein Nath & Rosenthal
4520 Main Street
Kansas City, MO 64111
Att: John F. Marvin, Esq.
Facsimile: (816) 531-7545
Telephone: (816) 932-4400
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or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
SECTION 5.3. Assignment; Binding Effect; Benefit. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other parties; provided, however, that
Buyer may assign this Agreement to any of its subsidiaries or affiliates whether
or not such subsidiaries or affiliates exist at the date hereof; provided
further, however, that no such assignment shall relieve Buyer of any of its
obligations hereunder. Subject to the preceding sentence, this Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. Notwithstanding anything contained in this
Agreement to the contrary, nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or their
respective heirs, successors, executors, administrators and assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
SECTION 5.4. Entire Agreement. This Agreement constitutes the
entire agreement among the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings (oral and written) among the
parties with respect thereto. No addition to or modification of any provision of
this Agreement shall be binding upon any party hereto unless made in writing and
signed by all parties hereto.
SECTION 5.5. Amendment. This Agreement may be amended by the
parties hereto by an instrument in writing signed by or on behalf of each of the
parties hereto.
SECTION 5.6. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO ITS RULES OF CONFLICT OF LAWS.
SECTION 5.7. Counterparts. This Agreement may be executed by
the parties hereto (including by facsimile transmission) with separate
counterpart signature pages or in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute one and the same instrument.
SECTION 5.8. Headings. Headings of the Sections of this
Agreement are for the convenience of the parties only, and shall be given no
substantive or interpretive effect whatsoever.
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SECTION 5.9. Interpretation. In this Agreement, unless the
context otherwise requires, words describing the singular number shall include
the plural and vice versa, and words denoting any gender shall include all
genders and words denoting natural persons shall include corporations and
partnerships and vice versa.
SECTION 5.10. Waivers. Except as provided in this Agreement,
no action taken pursuant to this Agreement, including without limitation any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representations,
warranties, covenants or agreements contained in this Agreement. The waiver by
any party hereto of a breach of any provision hereunder shall not operate or be
construed as a waiver of any prior or subsequent breach of the same or any other
provision hereunder.
SECTION 5.11. Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or otherwise affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
SECTION 5.12. Enforcement of Agreement. The parties hereto
agree that irreparable damage would occur if any of the provisions of this
Agreement were not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof, this being in addition to
any other remedy to which they may be entitled at law or in equity.
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IN WITNESS WHEREOF, the parties have executed this Agreement and caused
the same to be duly delivered on their behalf as of the day and year first
written above.
THE COMPANY:
FIRST OF MICHIGAN CAPITAL
CORPORATION
By: /s/ Edward Soule
----------------------------
Name: Edward Soule
Title: Chairman of the Board
BUYER:
FMCC ACQUISITION CORP.
By: /s/ Albert G. Lowenthal
----------------------------
Name: Albert G. Lowenthal
Title: Chairman and CEO
SELLERS:
1888 LIMITED PARTNERSHIP
By: /s/ Louis C. Baker
------------------------------
Name: Louis C. Baker
Title: General Partner
By: /s/ Craig P. Baker
------------------------------
Name: Craig P. Baker
Title: General Partner
DST SYSTEMS, INC.
By: /s/ Kenneth V. Hager
------------------------------
Name: Kenneth V. Hager
Title: Vice President, Chief
Financial Officer and Treasurer
<PAGE>
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EXHIBIT A
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or the Tender
Offer Agreement (the "Agreement"), Buyer shall not be required to accept for
payment or pay for, subject to any applicable rules and regulations of the SEC,
including Rule 14e-1(c) of the Exchange Act, any shares of Common Stock not
theretofore accepted for payment or paid for and may terminate or amend the
Offer as to such shares of Common Stock unless any waiting period under the HSR
Act applicable to the purchase of shares of Common Stock pursuant to the Offer
shall have expired or been terminated. Furthermore, notwithstanding any other
term of the Offer or the Agreement, Buyer shall not be required to accept for
payment or, subject as aforesaid, to pay for any shares of Common Stock not
theretofore accepted for payment or paid for, and may terminate or amend the
Offer if at any time on or after the date of the Agreement and prior to the
expiration of the Offer, any of the following conditions exist or shall occur
and remain in effect:
(a) a court of competent jurisdiction or other
governmental, quasi-governmental, self-regulatory agency or other
regulatory, judicial or arbitral body having jurisdiction over the
parties to the transaction shall have issued an order, judgment, decree
or ruling on the merits in connection with an action, suit or
proceeding; (i) which challenges or seeks to restrict the acquisition
by Buyer (or any of its affiliates) of shares of Common Stock pursuant
to the Offer or the Purchase Agreement, or obtain damages in connection
therewith; (ii) which seeks to make the purchase of or payment for some
or all of the shares of Common Stock pursuant to the Offer or the
Purchase Agreement illegal; (iii) which seeks to impose material
limitations on the ability of Buyer or any of its affiliates
effectively to acquire, operate or hold, or to require Buyer or any of
its affiliates to dispose of or hold separate, any material portion of
their assets or business or the Company's assets or business; or (iv)
which seeks to impose material limitations on the ability of Buyer or
its affiliates to exercise full rights of ownership of the shares of
Commons Stock purchased by it, including, without limitation, the right
to vote the shares purchased by it on all matters properly presented to
the stockholders of the Company; or
(b) there shall have been promulgated, enacted,
entered, enforced or deemed applicable to the Offer any Law or there
shall have been issued any injunction resulting in any of the
consequences referred to in subsection (a) above; or
(c) the Agreement shall have been terminated in
accordance with its terms; or
(d) (i) the representations and warranties made by
the Company or Sellers in the Agreement shall not be true and correct
as of the date of consummation
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of the Offer as though made on and as of that date (other than
representations and warranties made as of a specified date) except for
any breach or breaches which, in the aggregate, would not have a
material adverse effect on the Company or its business; or (ii) the
Company or Sellers shall have breached or failed to comply in any
material respect with any of their respective obligations under this
Agreement and, with respect to any such failure that can be remedied,
the failure is not remedied within five business days after Buyer has
furnished the Company or Sellers, as the case may be, with written
notice of such failure; or
(e) any person (other than Buyer or its affiliates)
shall have entered into any agreement in principle or definitive
agreement with the Company with respect to a tender or exchange offer
for any shares of Common Stock, or a merger, consolidation or other
business combination with or involving the Company; or
(f) the Board of Directors shall have modified or
amended its recommendation of the Offer in any manner adverse to Buyer
or shall have withdrawn its recommendation of the Offer or shall have
recommended acceptance of any Alternative Proposal or shall have
resolved to do so; or
(g) there shall have occurred (i) any general
suspension of, or limitation on prices for, trading insecurities on any
national securities exchange or in the over-the-counter market in the
United States for a period in excess of ten (10) consecutive trading
hours, (ii) any declaration of any banking moratorium by any United
States federal or state authorities or any suspension of payments in
respect of banks, or (iii) a commencement of war, armed hostilities or
any other international or national calamity directly or indirectly
involving the United States which is reasonable expected to have a
material adverse effect on the Company or its business or to materially
adversely affect the Buyer's ability to complete the Offer; or
(h) the entire Board of Directors of the Company
shall be composed of designees of Buyer, provided Buyer shall have used
its best efforts to make such designations prior to the expiration of
the Offer.
The foregoing conditions are for the sole benefit of Buyer and
may be asserted by Buyer regardless of the circumstances (including any action
or inaction of Buyer) giving rise to any such condition and may be waived by the
Buyer, in whole or in part, at any time and from time to time, in the sole
discretion of Buyer. The failure by Buyer at any time to exercise any of the
foregoing rights will not be deemed a waiver of any right, the waiver of such
right with respect to any particular facts or circumstances shall not be deemed
a waiver with respect to any other facts or circumstances, and each right will
be deemed an ongoing right which may be asserted at any time and from time to
time.
Should the Offer be terminated pursuant to the foregoing
provisions, all tendered shares of Common Stock not theretofore accepted for
payment shall forthwith be returned by the depositary to the tendering
stockholder.
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FMCC ACQUISITION CORP.
c/o Fahnestock & Co. Inc.
110 Wall Street (9th Floor)
New York, NY 10005
June 17, 1997
First of Michigan Capital Corporation
1888 Limited Partnership
DST Systems, Inc.
Reference is made to that certain Tender Offer Agreement dated
as of June 11, 1997 (the "Tender Offer Agreement"), among us and you.
Capitalized terms used herein shall have the respective meanings ascribed
thereto in the Tender Offer Agreement.
Buyer, the Company and Sellers agree that the Tender Offer
Agreement hereby is amended as follows:
1. The third sentence of Section 2.2(e) is amended by
inserting the words "as of the Purchase Date and" after
the phrase "will constitute".
2. Clause (h) of Exhibit A to the Tender Offer Agreement is
amended in its entirety to read as follows:
"(h) immediately prior to and at the time shares of
Common Stock are accepted for payment, the entire
Board of Directors of the Company shall not be
composed of designees of Buyer, provided Buyer shall
have used its best efforts to make such designations
prior to the expiration of the Offer."
Except as amended hereby, the Tender Offer Agreement remains
in full force and effect.
Very truly yours,
FMCC ACQUISITION CORP.
By: /s/ Albert G. Lowenthal
---------------------------
Name: Albert G. Lowenthal
Title: Chairman of the Board and
Chief Executive Officer
<PAGE>
<PAGE>
Accepted and Agreed to
as of the date first
above written:
FIRST OF MICHIGAN CAPITAL CORPORATION
By: /s/ Edward Soule
-----------------------------
Name: Edward Soule
Title: Chairman of the Board
1888 LIMITED PARTNERSHIP
By: /s/ Louis C. Baker
-----------------------------
Name: Louis C. Baker
Title: General Partner
By: /s/ Craig P. Baker
-----------------------------
Name: Craig P. Baker
Title: General Partner
DST SYSTEMS, INC.
By: /s/ Kenneth V. Hager
-----------------------------
Name: Kenneth V. Hager
Title: Vice President,
Chief Financial Officer
and Treasurer
2
<PAGE>
<PAGE>
"TENDER" ESCROW AGREEMENT
"TENDER" ESCROW AGREEMENT dated as of June 11, 1997, among
First of Michigan Capital Corporation, a Delaware corporation (the "Company"),
FMCC Acquisition Corp., a Delaware corporation ("Buyer"), and The Bank of New
York, as escrow agent (the "Escrow Agent").
WHEREAS, pursuant to the Tender Offer Agreement dated as of
June 11, 1997 (the "Tender Offer Agreement"), among the Company, Sellers (as
defined below) and Buyer, Buyer has agreed to commence a tender offer (the
"Offer") for all the shares of Common Stock, par value $0.10 per share (the
"Common Stock"), of the Company;
WHEREAS, a Securities Purchase Agreement dated as of June 11,
1997 (the "Purchase Agreement"), has been entered into between 1888 Limited
Partnership and DST Systems, Inc. (collectively, "Sellers") and Buyer.
WHEREAS, pursuant to the terms of this Agreement, Buyer shall
deposit cash in the amount of $16,724,735 into escrow, for the purpose of
purchasing shares of Common Stock subject to the Offer other than the Securities
(as defined in the Purchase Agreement); and
WHEREAS, in connection with the Offer, Buyer shall enter into
a depositary agreement with a financial institution (the "Depositary"), pursuant
to which the Depositary will receive and make payment for, on behalf of Buyer,
shares of Common Stock tendered pursuant to the terms of the Offer.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants, agreements and understandings contained herein and of other
good and valuable consideration, the receipt and adequacy of which hereby are
acknowledged, the parties hereto agree as follows:
Section 1. Deposits. (a) Subject to the deposit by Sellers of
the Securities pursuant to the "Sellers" Escrow Agreement of even date herewith,
among Buyer, Sellers and The Bank of New York, as escrow agent, at or prior to
5:00 p.m. (New York City time) on June 13, 1997, Buyer will deposit with the
Escrow Agent (and thereafter the Escrow Agent will acknowledge in writing
receipt of) cash in the amount of $16,724,735 (together with all interest earned
thereon and any additions, substitutions or other property in which the same may
be invested or for which the same may be exchanged, the "Deposit").
(b) The Deposit to be so deposited with the Escrow Agent
pursuant to this Section 1 is sometimes referred to in this Agreement as the
"Escrowed Property".
(c) The Escrow Agent shall hold the Escrowed Property solely
for the purposes and upon the terms and conditions set forth in this Agreement
and it shall not be released and delivered from escrow except in accordance with
Section 2.
<PAGE>
<PAGE>
(d) Buyer represents and warrants to the Escrow Agent that
Buyer has full legal, right, power and authority to enter into this Agreement
and to deposit the Deposit in the manner provided in this Agreement.
Section 2. Delivery by the Escrow Agent. The Escrow Agent
shall hold, deliver and otherwise deal with the Escrowed Property as follows:
(a) Upon receipt of a certificate in the form of Exhibit A
hereto, signed by Buyer and the Company, the Escrow Agent promptly shall release
and deliver: (i) from the Deposit to an account(s) of the Depositary specified
in such certificate, by wire transfer of immediately available funds, the amount
specified in such certificate; and (ii) the balance of the Deposit to an account
specified by Buyer, by wire transfer of immediately available funds.
(b) Upon receipt of a certificate in the form of Exhibit B
hereto, signed by the Company, the Escrow Agent promptly shall notify Buyer of
its intent to release and deliver the Deposit to Buyer. If Buyer does not object
in writing to Escrow Agent to such intent within five days after receiving
notice thereof, the Escrow Agent shall release and deliver the Deposit to an
account specified by Buyer, by wire transfer of immediately available funds.
(c) Upon receipt of a certificate in the form of Exhibit C
hereto, signed by Buyer, the Escrow Agent promptly shall notify the Company of
its intent to release and deliver the Deposit to Buyer. If the Company does not
object in writing to Escrow Agent to such intent within five days after
receiving notice thereof, the Escrow Agent shall release and deliver the Deposit
to an account specified by Buyer, by wire transfer of immediately available
funds.
(d) If any party makes a timely objection to the release and
delivery of the Escrowed Property (or portion thereof), the Escrow Agent shall
continue to hold the Escrowed Property in its possession until directed to
disburse the same in accordance with (i) the joint written instructions of Buyer
and the Company, or (ii) a final unappealable judgment of a court of competent
jurisdiction. In lieu of the foregoing, the Escrow Agent may deposit the
disputed Escrowed Property with a court of competent jurisdiction and commence
an action of interpleader between the parties in dispute.
(e) At the time of release and delivery by the Escrow Agent of
all the Escrowed Property in accordance with this Section 2, the Escrow Agent
shall be released from all further liability under this Agreement with respect
to the Escrowed Property or otherwise.
Section 3. Investments. Moneys from time to time comprising
the Deposit shall be held in a separate account (the "Escrow Account") and
invested and reinvested by the Escrow Agent in accordance with the specific
written directions of the Buyer, but only in Permitted Investments.
-2-
<PAGE>
<PAGE>
As used herein, "Permitted Investments" means the following
kinds of instruments with a maturity not later than the day preceding the
Closing Date: (a) obligations of the United States of America, or fully
guaranteed as to payment to interest and principal by the United States of
America; (b) commercial paper that, at the time of the investment therein
pursuant to this Section, has the highest credit ratings from Moody's Investors
Service, Inc. ("Moody's") and Standard & Poor's Corporation ("S&P") and the
issuers of which have outstanding long-term unsecured debt obligations (other
than any such obligations whose ratings are based on the credit of a person
other than such issuers), at the time of such investment therein, having the
highest credit ratings from Moody's and S&P; and (c) demand or time deposits in
Permitted Banks (as defined below), or certificates of deposit of, or bankers'
acceptances issued by, Permitted Banks.
As used herein, "Permitted Bank" means a depository
institution or trust company organized under the laws of the United States of
America, any State thereof or the District of Columbia, having a combined
capital and surplus of at least $100,000,000, if the commercial paper (if any)
and the long-term unsecured debt obligations (other than such obligations whose
ratings are based on the credit of a person other than such institution or trust
company) of such depository institution or trust company, at the time of an
investment therein pursuant to this Section, have the highest credit ratings
from Duff & Phelps.
Section 4. Rights of Action. Each of Buyer, the Company and
the Escrow Agent, as the case may be, without the consent of the other parties,
may, in its own behalf and for its own benefit, institute or maintain any suit,
action or proceeding, at law or in equity, against the other parties in order to
enforce or preserve its rights hereunder.
Section 5. Termination. This Agreement shall automatically
terminate upon the release and delivery by the Escrow Agent to Buyer or
otherwise pursuant to Section 2 (and in compliance with all the provisions of
such Section) of all the Escrowed Property.
Section 6. Concerning the Escrow Agent. (a) The Escrow Agent
hereby accepts the agency established by this Agreement and shall perform the
same upon the terms and conditions herein set forth, by all of which Buyer and
the Company shall be bound. The duties of the Escrow Agent hereunder shall be
purely ministerial. The Escrow Agent shall not have any duties or
responsibilities except those expressly set forth herein, and no implied
covenants or obligations shall be read into this Agreement against the Escrow
Agent, whose duties and obligations shall be determined solely by the express
provisions hereof.
(b) The Escrow Agent shall not (i) be liable for any action
taken or suffered or omitted to be taken by it in good faith in the belief that
any documents or any signatures are genuine or properly authorized, (ii) be
responsible for any failure on the part of the Company or Buyer or any
predecessor Escrow Agent to comply with any of its representations, warranties,
covenants or agreements contained in this Agreement, or (iii) be liable for any
act or omission in connection with this Agreement, except in each case for its
own gross negligence or willful misconduct. The Escrow Agent is hereby
irrevocably authorized to, and shall, (A) act in accordance with this Agreement,
and (B) make the
-3-
<PAGE>
<PAGE>
releases and deliveries as provided in Section 2. Subject to the foregoing, the
Escrow Agent hereby is authorized to accept instructions with respect to the
performance of its duties hereunder from Buyer and the Company, and the Escrow
Agent shall not be liable for any action taken or suffered or omitted to be
taken by it in good faith in accordance with the instructions of Buyer and the
Company, except for its own gross negligence or willful misconduct. However, if
Escrow Agent incurs reasonable legal fees and other costs in connection with its
successful defense of a claim of gross negligence or willful misconduct, the
Escrow Agent shall be indemnified for such fees.
(c) The Escrow Agent may execute and exercise any of the
rights and powers hereby vested in it or perform any duty hereunder either
itself or by or through its officers, agents or employees, and the Escrow Agent
shall not be answerable or accountable for any action taken, default, neglect or
misconduct of any such officer, agent or employee, except for the gross
negligence or willful misconduct of the Escrow Agent or any of them. The Escrow
Agent shall not be under any obligation or duty to institute, appear in, or
defend any action, suit or proceeding in respect hereof, unless first
indemnified to its reasonable satisfaction, but this provision shall not affect
the power of the Escrow Agent to take such action as the Escrow Agent may
consider proper, whether with or without such indemnity. Notwithstanding
anything in this Agreement that may be to the contrary, the Escrow Agent shall
have no liability hereunder to any of the other parties for complying in good
faith with any judgment or order of a court of competent jurisdiction. The
Escrow Agent shall notify Buyer and the Company of any claim made or action,
suit or proceeding instituted against it arising out of or in connection with
this Agreement.
(d) Buyer and the Company from time to time shall perform,
execute, acknowledge and deliver, or cause to be performed, executed,
acknowledged and delivered, all such further acts, instruments and assurances as
may be reasonably required by the Escrow Agent in order to enable it to carry
out or perform its duties under this Agreement.
(e) The Company and Buyer jointly and severally agree to
reimburse the Escrow Agent for its reasonable expenses, including taxes and
governmental charges of any kind and nature, incurred by the Escrow Agent
hereunder; and further jointly and severally agree to indemnify the Escrow Agent
and save it harmless against any and all losses, liabilities, damages and
expenses and for anything done, suffered or omitted by the Escrow Agent in the
execution of its duties and powers hereunder, except as a result of the Escrow
Agent's gross negligence or willful misconduct. As between the Company and
Buyer, any amounts payable to the Escrow Agent pursuant to the preceding
sentence shall be payable by Buyer.
(f) The Escrow Agent may resign its duties and be discharged
from all further duties and liabilities hereunder (except liabilities arising as
a result of the Escrow Agent's own gross negligence or willful misconduct),
after giving prior notice to the Company and Buyer, such resignation and
discharge to be effective as hereinafter provided. With the prior consent of the
Company (which consent shall not be unreasonably withheld or delayed), Buyer may
remove the Escrow Agent upon at least 10 days' prior notice, and the
-4-
<PAGE>
<PAGE>
Escrow Agent shall thereupon in like manner be discharged from all further
duties and liabilities hereunder (except as aforesaid), such removal and
discharge to be effective as hereinafter provided. No such resignation or
removal shall take effect until a new escrow agent which Buyer and the Company
shall have approved in writing (such approval not to be unreasonably withheld or
delayed) shall have been appointed and shall have agreed to assume the Escrow
Agent's duties hereunder, as hereinafter provided. After such a new escrow agent
shall accept such appointment in writing, such new escrow agent shall be vested
with the same powers, rights, property, duties and responsibilities as if it had
been originally named herein as Escrow Agent, without any further assurance,
conveyance, act or deed; but if for any reason it shall be necessary or
expedient to execute and deliver any further assurance, conveyance, act or deed,
the same shall be done and shall be legally and validly executed and delivered
by the resigning or removed Escrow Agent.
(g) Notwithstanding anything in this Agreement that may be to
the contrary: (i) if the Escrow Agent shall receive notice advising that
litigation in connection with the Escrowed Property, the Tender Offer Agreement
or this Agreement has been commenced, the Escrow Agent may deposit the Escrowed
Property with the Clerk of the Court in which said litigation is pending; or
(ii) the Escrow Agent may deposit the Escrowed Property in a court of competent
jurisdiction and commence an action for interpleader, the costs thereof to be
borne jointly and severally by Buyer and the Company. Upon the occurrence of any
of the foregoing events set forth in the preceding sentence, the Escrow Agent
shall be automatically released of and from all liability hereunder.
(h) Nothing herein shall preclude the Escrow Agent from acting
in any other capacity for Buyer, the Company or any of their respective
affiliates.
(i) Escrow Agent may consult with outside legal counsel at the
reasonable expense of [Buyer] as to any matter relating to this Agreement.
Section 7. Parties in Interest; Assignment. This Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and assigns.
Section 8. Notices. All notices, consents, requests, waivers
or other communications required or permitted under this Agreement (each a
"Notice") shall be in writing and shall be sufficiently given (a) if hand
delivered, (b) if sent by nationally recognized overnight courier, or (c) if
sent by registered or certified mail, postage prepaid, return receipt requested,
and in each case addressed as follows:
-5-
<PAGE>
<PAGE>
If to Buyer:
------------
c/o Fahnestock & Co. Inc.
110 Wall Street (9th Floor)
New York, NY 10005
Att: Albert G. Lowenthal
Tel: (212) 668-5782
Fax: (212) 943-8728
With a copy to:
Whitman Breed Abbott & Morgan LLP
200 Park Avenue
New York, NY 10161
Att: Richard Crystal, Esq.
Tel: (212) 351-3000
Fax: (212) 351-3131
If to the Company:
-----------------
First of Michigan Capital Corporation
100 Renaissance Center
26th Floor
Detroit, Michigan 48243
Att: Chairman
Tel: (313) 259-2600
Fax: (313)
With a copy to:
Sonnenschein Nath & Rosenthal
4520 Main Street
Kansas City, MO 64111
Att: John F. Marvin, Esq.
Tel: (816) 932-4400
Fax: (816) 531-7545
If to Escrow Agent:
------------------
The Bank of New York
101 Barclay Street (Floor 12E)
New York, NY 10286
Att: Harley Jeanty
Insurance Trust and Escrow
Tel: (212) 815-5901
-6-
<PAGE>
<PAGE>
Fax: (212) 815-7181
or at such other address for a party as shall be specified in a Notice. Any
Notice shall be effective and deemed given upon receipt.
Section 9. Miscellaneous. (a) This Agreement constitutes the
entire agreement between the parties hereto in respect of the subject matter
hereof and supersedes all other prior agreements and understandings, both
written and oral, among the parties hereto with respect to such subject matter.
(b) This Agreement is not intended to confer upon any other
person any rights or remedies hereunder.
(c) THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO ITS CONFLICT OF LAW RULES.
(d) This Agreement may be executed by the parties hereto
(including by facsimile transmission) with counterpart signature pages or in
several counterparts, each of which shall be deemed an original but all of which
together shall constitute but one agreement.
(e) The descriptive headings contained herein are for
convenience only and shall not affect in any way the meanings or interpretation
of this Agreement.
Section 10. Agreement to Take Necessary and Desirable Actions.
Buyer and the Company agree to execute and deliver such other documents,
certifications, agreements and other writings and to take such other actions as
may be necessary and desirable in order to consummate and make effective the
transactions contemplated by this Agreement as promptly as practicable.
Section 11. Partial Invalidity. Any provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining
provisions of this Agreement or affecting the validity or enforceability of any
of the provisions of this Agreement in any other jurisdiction. If any provision
of this Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
Section 12. Amendments. This Agreement may not be amended or
supplemented except upon the execution and delivery of a written agreement
executed by all the parties hereto.
Section 13. Consent to Jurisdiction. Each of the parties
hereto hereby irrevocably and unconditionally consents to submit to the
exclusive jurisdiction of the courts
-7-
<PAGE>
<PAGE>
of the State of New York or the United States of America located in the State of
New York for any actions, suits or proceedings arising out of or relating to
this Agreement and the transactions contemplated hereby and agrees not to
commence any action, suit or proceeding relating hereto except in such courts,
and further agrees that service of any process, summons, notice or document by
United States registered or certified mail in accordance with Section 8 shall be
effective service of process for any action, suit or proceeding brought in any
such court. Each of the parties hereto hereby irrevocably and unconditionally
waives any objection to personal jurisdiction and the laying of venue of any
action, suit or proceeding arising out of this Agreement or the transactions
contemplated hereby, in the courts of the State of New York or the United States
of America located in the State of New York, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.
-8-
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized representatives, as of the day
and year first above written.
The Company:
-------------
FIRST OF MICHIGAN CAPITAL
CORPORATION
By: /s/ Edward Soule
-------------------------
Name: Edward Soule
Title: Chairman of the Board
Buyer:
-------
FMCC ACQUISITION CORP.
By: /s/ Albert G. Lowenthal
-------------------------
Name: Albert G. Lowenthal
Title: Chairman and CEO
Escrow Agent:
-------------
THE BANK OF NEW YORK
By: /s/ Harley Jeanty
-------------------------
Name: Harley Jeanty
Title: Assistant Vice President
<PAGE>
<PAGE>
Exhibit A to
Escrow Agreement
FORM OF FUNDING CERTIFICATE
[Date]
The Bank of New York
101 Barclay Street (Floor 12E)
New York, NY 10286
Attn: Harley Jeanty
Insurance Trust and Escrow
Re: Release of Escrow Deposit
-------------------------
Dear Sir:
Pursuant to Section 2(a) of the Escrow Agreement dated as of June 11,
1997 (the "Escrow Agreement"), among First of Michigan Capital Corporation (the
"Company"), FMCC Acquisition Corp. ("Buyer"), and you, as escrow agent, you are
hereby notified that the Offer for the shares of Common Stock has expired and
Buyer has accepted for payment all shares of Common Stock validly tendered in
the Offer.
Accordingly, you are hereby directed to release and deliver (i) to the
account of [name of financial institution], as depositary for the Offer, listed
on the attached Schedule A, the amount of $[ ], and (ii) to the account
listed opposite Buyer's name on the attached Schedule A the balance of Deposit,
by wire transfer of immediately available funds.
Capitalized terms used herein without definition have the meanings
attributed thereto in the Escrow Agreement.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly caused this Funding
Certificate to be delivered to you in accordance with the terms of the Escrow
Agreement.
The Company:
------------
FIRST OF MICHIGAN CAPITAL
CORPORATION
By:_________________________
Name:
Title:
Buyer:
------
FMCC ACQUISITION CORP.
By:_________________________
Name:
Title:
<PAGE>
<PAGE>
Exhibit B to
Escrow Agreement
FORM OF TERMINATION NOTICE CERTIFICATE
[Date]
The Bank of New York
101 Barclay Street (Floor 12E)
New York, NY 10286
Attn: Harley Jeanty
Insurance Trust and Escrow
Re: Release of Escrow Deposit
-------------------------
Dear Sir:
Pursuant to Section 2(b) of the Escrow Agreement dated as of June 11,
1997 (the "Escrow Agreement"), among First of Michigan Capital Corporation (the
"Company"), FMCC Acquisition Corp. ("Buyer"), and you, as escrow agent, you are
hereby notified that the Offer has terminated.
Accordingly, you are hereby directed (i) to notify Buyer (the "Notice")
of your intent to release and deliver the Deposit to Buyer, and (ii) to release
and deliver the Deposit to Buyer to an account specified by Buyer, by wire
transfer of immediately available funds, if Buyer does not provide you with a
written objection within five days after receiving the Notice.
Capitalized terms used herein without definition have the meanings
attributed thereto in the Escrow Agreement.
IN WITNESS WHEREOF, the Company hereto has duly caused this Termination
Notice Certificate to be delivered to you in accordance with the terms of the
Escrow Agreement.
Company:
--------
FIRST OF MICHIGAN CAPITAL
CORPORATION
By:_________________________
Name:
Title:
<PAGE>
<PAGE>
Exhibit C to
Escrow Agreement
FORM OF TERMINATION NOTICE CERTIFICATE
[Date]
The Bank of New York
101 Barclay Street (Floor 12E)
New York, NY 10286
Attn: Harley Jeanty
Insurance Trust and Escrow
Re: Release of Escrow Deposit
-------------------------
Dear Sir:
Pursuant to Section 2(c) of the Escrow Agreement dated as of June 11,
1997 (the "Escrow Agreement"), among First of Michigan Capital Corporation (the
"Company"), FMCC Acquisition Corp. ("Buyer"), and you, as escrow agent, you are
hereby notified that the Offer has terminated.
Accordingly, you are hereby directed (i) to notify the Company (the
"Notice") of your intent to release and deliver the Deposit to Buyer, and (ii)
to release and deliver the Deposit to Buyer to an account specified by Buyer, by
wire transfer of immediately available funds, if the Company does not provide
you with a written objection within five days after receiving the Notice.
Capitalized terms used herein without definition have the meanings
attributed thereto in the Escrow Agreement.
IN WITNESS WHEREOF, Buyer hereto has duly caused this Termination
Notice Certificate to be delivered to you in accordance with the terms of the
Escrow Agreement.
Buyer:
------
FMCC ACQUISITION CORP.
By:_________________________
Name:
Title:
<PAGE>
<PAGE>
EXHIBIT (c)(5)
CONFIDENTIAL DISCLOSURE AND STANDSTILL AGREEMENT
------------------------------------------------
THIS AGREEMENT is made effective as of the 6th day of June, 1997, by
and between First of Michigan Capital Corporation (the "Company") and Fahnestock
Viner Holdings, Inc. ("Buyer"), with the Company and Buyer sometimes referred to
herein as the "Parties" or individually as the "Party". "Buyer" shall include
all parents, subsidiaries and other affiliates of Buyer.
WITNESSETH
WHEREAS, the Company and Buyer are contemplating the possibility of a
transaction between them (the "Transaction"), and
WHEREAS, the Company will be disclosing certain data and other
information of a confidential or proprietary nature to Buyer in connection with
the due diligence review of the Company in connection with the Transaction, and
WHEREAS, the Company is willing to disclose such information, on a
confidential basis, to Buyer to enable Buyer to perform its due diligence of the
Company.
NOW, THEREFORE, the Parties hereto agree as follows:
1. Buyer agrees to treat confidentially information concerning the
Company, including, but not limited to, information concerning its business,
operations, assets, liabilities, business prospects, acquisitions, financial
projections and financial condition, furnished by the Company or on behalf of
the Company to Buyer, including any other information or notes derived by Buyer
or its financial advisors, independent auditors, legal counsel or other agents
or representatives from any such information (herein collectively referred to as
the "Diligence Material"). For purposes of this Agreement, the phrase "Diligence
Material" shall not include information which (i) becomes lawfully available to
the public other than as a result of a disclosure by Buyer, its representatives
or its agents, (ii) was lawfully available to Buyer on a non-confidential basis
prior to its disclosure by Buyer by the Company or its agents or
representatives, or (iii) lawfully becomes available to Buyer on a
non-confidential basis from a source other than the Company or its agents or
representatives provided that such source is not bound by a confidentiality
agreement with the Company of which Buyer has been made aware.
2. It is hereby agreed that the Diligence Material will be used by
Buyer and its agents and representatives only for due diligence purposes, that
the Diligence Material will be kept confidential by Buyer, its agents and
representatives and that Buyer and its agents and representatives will make no
commercial use of the Diligence Material without the prior written agreement to
the Company; provided, however, that (i) any of such information may be
disclosed to Buyer's directors, officers, employees, agents and representatives
who need to know such information for the purpose of performing due diligence of
the Company and evaluating the Transaction (it being understood that such
directors, officers, employees, agents and representatives shall be informed by
Buyer of the confidential nature of such information and shall be directed by
Buyer to treat such information confidentially and not to use the information to
the Company's detriment and Buyer shall be responsible for any breach of this
<PAGE>
<PAGE>
Agreement by such directors, officers, employees, agents or representatives),
(ii) any other disclosure of such information may be made to which the Company
consents in writing, or (iii) disclosure of such information may be made if
pursuant to the order or requirement of a court, administrative agency or other
governmental body. If Buyer, its agents or representatives receive a request or
requirement to disclose the Diligence Material as provided in (iii) above, they
shall promptly notify the Company so that the Company may seek a protective
order or other appropriate remedy and/or waive compliance with the provisions of
this Agreement. In the vent that such a protective order or other remedy is not
timely obtained, or that the Company waives compliance with the provisions of
this Agreement, Buyer and its agents and representatives will furnish only that
portion of the Due Diligence Material which counsel reasonably acceptable to the
Company advises is legally required and will exercise their best efforts to
obtain reliable assurance that confidential treatment will be accorded the
Diligence Material.
3. Without the other Party's prior written consent, each Party will
not, and will direct its directors, officers, employees, agents and
representatives not to, disclose to any person information concerning the
discussions or negotiations in connection with the Transaction or any of the
terms, conditions, or other facts with respect to the Transaction including the
status thereof; provided, that if in the opinion of one Party's counsel
disclosure is required by applicable law, regulation or rule, such Party may
make such disclosure after notifying the other Party of the reasons and the text
of the proposed disclosure. Any press release with respect to the Transaction
shall be jointly agreed to by Buyer and the Company. The term "person" as used
herein shall include, without limitation, any corporation, company, partnership
and individual.
4. Except as may otherwise be expressly set forth in a definitive
agreement between the parties entered into to effect the Transaction, the
Company shall not be deemed to make or have made any representation or warranty
as to the accuracy or completeness of any Diligence Material furnished
hereunder.
5. Buyer hereby acknowledges that it is aware (and that its directors,
officers, employees, agents and representatives who are apprised of the matter
have been, or upon becoming so apprised will be, advised) of the restrictions
(including the restrictions regarding transactions in securities) imposed by the
United States federal securities laws on a person possessing material non-public
information about a public company such as the Company.
6. Buyer hereby agrees that for a period of two years after the date
hereof, it will not, directly or indirectly, purchase or offer to purchase any
material assets or any securities of the Company or propose any merger or other
business combination involving the Company ("Business Combination") except
pursuant to a transaction to be approved by the Board of Directors of the
Company and only if specifically invited in writing by the Company to do so;
provided that, to the extent consistent with obligations under applicable law,
Buyer shall be permitted to purchase up to one percent of the issued and
outstanding shares of Common Stock of the Company without violating the
foregoing restriction. In addition, for a period of two years after the date
thereof, Buyer will not, without the Company's prior written consent, (a) make,
or in any way participate, directly or indirectly, in any "solicitation" of
"proxies" to vote (as such terms are used in the proxy rules of the Securities
and Exchange Commission), or seek to advise or influence any person or entity
with respect to the voting of any voting securities of the Company, (b) form,
join or in any way participate in a "group" within the meaning of
-2-
<PAGE>
<PAGE>
Section 13(d)(3) of the Securities Exchange Act of 1934 with respect to any
voting securities of the Company, or (c) otherwise act, alone or in concert with
others, to seek to control the management, Board of Directors, or policies of
the Company. The above provisions of this paragraph 6 shall not apply to Buyer
if another entity enters into a Business Combination with the Company or
initiates a tender offer for the Company securities. Buyer also agrees during
such two-year period not to (i) request the Company or its advisors, directly or
indirectly, to amend or waive any provision of this paragraph (including this
sentence), or (ii) take any initiative in respect of the Company which would,
upon the advice of counsel, reasonably require the Company to make a public
announcement regarding the possibility of Buyer acquiring control of the Company
whether by means of a business combination or otherwise. Buyer also agrees that,
for a period of two years after the date hereof, neither it nor any of its
affiliates will solicit to employ any of the current officers or employees of
the Company with whom Buyer had contact, or who was specifically identified to
Buyer, during the period of Buyer's diligence review of the Company, so long as
they are employed by the Company, without the prior written consent of the
Company. The Company agrees that, for a period of two years after the date
hereof, neither it nor any of its affiliates will solicit to employ any of the
current officers or employees of Buyer with whom the Company had contact, or who
was specifically identified to the Company, during the period of Buyer's
diligence review of the Company, so long as they are employed by Buyer, without
the prior written consent of Buyer.
7. In the event that the Parties do not enter into a definitive
agreement with respect to the Transaction within six (6) months from the date
hereof, Buyer, upon request of the Company, will deliver to the Company all
written Diligence Material furnished, without retaining copies thereof. In the
case of any other information or notes derived from the Diligence Material, the
same shall be promptly destroyed.
8. Buyer agrees to reimburse, indemnify and hold harmless the Company
and its affiliates, employees, investment bankers, legal counsel and other
agents and representatives from any damage, loss or expense incurred by them as
a result of the use of the Diligence Material contrary to the terms of this
Agreement.
9. It is understood and agreed that money damages would not be a
sufficient remedy for any breach of this Agreement by either Party, their
employees, officers, directors, agents or representatives and that the Parties
shall be entitled to specific performance as a remedy for any such breach. Such
remedy shall not be deemed to be the exclusive remedy for any such breach of
this Agreement, but shall be in addition to all other remedies available at law
or equity or either Party.
10. It is further understood and agreed that no failure to delay by
either Party in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any right, power or
privilege hereunder. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
11. This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware.
-3-
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Confidential
Disclosure and Standstill Agreement as of the date first above set forth.
FIRST OF MICHIGAN CAPITAL CORPORATION
By: /s/ Edward Soule
----------------------------------
Title: Chairman
-------------------------------
FAHNESTOCK VINER HOLDINGS, INC.
FAHNSTOCK & CO, INC., BUYER
By: /s/ Albert G. Lowenthal
----------------------------------
Title: Chairman and CEO
-------------------------------
-4-
<PAGE>
<PAGE>
EXHIBIT (c)(6)
MEMORANDUM OF UNDERSTANDING
---------------------------
June 11, 1997
Mr. Albert G. Lowenthal
Chairman
FMCC Acquisition Corp.
c/o Fahnestock & Co., Inc.
110 Wall Street
New York, NY 10045
Re: Proposed Business Combination
Dear Mr. Lowenthal:
This Memorandum of Understanding is intended to confirm our
understanding regarding the terms of a transaction (the "Transaction") being
considered by FMCC Acquisition Corp. or an entity to be formed by Fahnestock &
Co., Inc. (the "Buyer"), First of Michigan Capital Corporation (the "Company"),
DST Systems, Inc. and 1988 Limited Partnership (collectively, the "Sellers")
involving the Buyer's possible acquisition of all of the issued and outstanding
shares of common stock, par value $.10 per share (the "Common Stock"), of the
Company by purchasing shares of Common Stock owned by the Sellers and, pursuant
to a tender offer and/or a merger, shares of Common Stock held by the other
shareholders.
More specifically, pursuant to the terms of a proposed securities
purchase agreement (the "Securities Purchase Agreement"), dated as of June 11,
1997, to be entered into between Sellers and Buyer, Seller will sell to Buyer
and Buyer will purchase from Sellers an aggregate of 1,418,351 shares of Common
Stock for a cash purchase price of $15 per share.
In accordance with the terms of a proposed tender offer agreement (the
"Tender Offer Agreement"), dated as of June 11, 1997, to be entered into among
Buyer, the Company and Sellers, Buyer will commence an offer (the "Offer") to
purchase for cash all of the remaining issued and outstanding shares of Common
Stock at a net price of $15 per share (the "Tender Consideration"). Buyer's
obligation to commence the Offer and accept for payment, and pay for, any shares
of Common Stock tendered pursuant to the Offer will be subject to the terms and
conditions referred to in the Tender Offer Agreement. Shares of Common Stock not
purchased in the tender offer subsequently may be acquired
<PAGE>
<PAGE>
in a back-end merger for consideration per share equivalent to the Tender
Consideration (the "Merger").
Sellers and Buyer are to use their reasonable best efforts to obtain
all consents and approvals to effectuate the Transaction and to make all
requisite filings pursuant to applicable federal, state and local laws
including, but not limited to, the Hart Scott Rodino Act and the Securities
Exchange Act of 1934.
The Board of Directors of the Company has approved the Transaction and
authorized the appropriate officers of the Company to take all action necessary
and appropriate to cause the Transaction to be consummated. This Memorandum of
Understanding is made to evidence approval of the Board of Directors of the
Company of the Securities Purchase Agreement, the Tender Offer Agreement and the
Merger for any and all purposes for which such approval might be required or
permitted under any applicable law or the Restated Certificate of Incorporation
or By-laws of the Company, including, without limitation, the provisions of
Article Tenth, Section 2(b) of the Company's Restated Certificate of
Incorporation.
-2-
<PAGE>
<PAGE>
Very truly yours,
/s/ Geoffrey B. Baker /s/ William H. Cuddy
- ------------------------- -------------------------
Geoffrey B. Baker William H. Cuddy
/s/ Craig P. Baker /s/ Edward Soule
- ------------------------- -------------------------
Craig P. Baker Edward Soule
/s/ Gerard M. Lavin
- -------------------------
Gerard M. Lavin
Accepted and Agreed as of
this 11th day of June, 1997
FMCC ACQUISITION CORP.
/s/ Albert G. Lowenthal
- -------------------------
By: Albert G. Lowenthal
Chairman
-3-
<PAGE>
<PAGE>
June 27, 1997
Board of Directors
First of Michigan Capital Corporation
100 Renaissance Center
Suite 2600
Detroit, MI 48243
Consent of Financial Advisor
We consent to the references to our Firm and opinion letter dated June 24,
1997 in the Schedule 14D-9 and related Information Statement pursuant to Section
14(f) of the Securities Exchange Act of 1934, as amended, of First of Michigan
Capital Corporation and to the inclusion of our opinion letter as an annex to
such Schedule 14D-9 to be filed with the Securities and Exchange Commission on
or about June 30, 1997.
DUFF & PHELPS, LLC
By: Patricia J. Luscombe
Its: Managing Director
Chicago, Illinois
June 27, 1997
<PAGE>
<PAGE>
EXHIBIT (c)(8)
FMCC ACQUISITION CORP.
110 Wall Street
New York, NY 10005
June 25, 1997
First of Michigan Capital Corporation
100 Renaissance Center
26th Floor
Detroit, Michigan 48243
Attn: Chairman
1888 Limited Partnership
c/o Day, Berry & Howard
One Canterbury Green
Stamford, CT 06091
DST Systems, Inc.
1055 Broadway
Kansas City, MO 64105
Re: Board of Directors of
First of Michigan Capital Corporation
-------------------------------------
Dear Sirs:
Reference is made to that certain Tender Offer Agreement dated as
of June 11, 1997, as amended (the "Tender Offer Agreement"), among First of
Michigan Capital Corporation (the "Company"), FMCC Acquisition Corp. ("Buyer"),
1888 Limited Partnership and DST Systems, Inc. Unless otherwise defined herein,
capitalized terms used herein shall have the respective meanings ascribed
thereto in the Tender Offer Agreement.
Under the Tender Offer Agreement and under the terms and
conditions stated in the Offer to Purchase, dated June 18, 1997, of Buyer, it is
a condition, among other conditions, of Buyer's obligation to accept for
payment, and pay for, any shares of Common Stock tendered pursuant to the Offer
that the Board of Directors of the Company shall be composed of designees of
Buyer immediately prior to and at the time Buyer accepts the shares of Common
Stock for payment, provided Buyer shall have used its best efforts to make such
designations prior to the expiration of the Offer.
Buyer hereby designates the following individuals as its
designees to be elected to the Board of Directors of the Company:
<PAGE>
<PAGE>
1. Mr. Albert G. Lowenthal
Fahnestock &. Co.
110 Wall Street
New York, NY 10005
2. Ms. Elaine K. Roberts
Fahnestock Viner Holdings Inc.
20 Eglington Avenue West
Suite 1110
P.O. Box 2015
Toronto, Ontario M4R 1K8
3. Mr. A. Winn Oughtred
Borden & Elliot
Scotia Plaza
40 King Street West
Toronto, Ontario M5H 3Y4
4. Mr. Edward Soule
First of Michigan Capital Corporation
100 Renaissance Center
26th Floor
Detroit, Michigan
5. Mr. Mark Shobe
First of Michigan Capital Corporation
100 Renaissance Center
26th Floor
Detroit, Michigan
Very truly yours,
FMCC ACQUISITION CORP.
By: /s/ Albert G. Lowenthal
-----------------------------
Albert G. Lowenthal
Chairman and CEO
cc: Sonnenschein Nath & Rosenthal
4520 Main Street
Kansas City, Missouri 64111
Attn: John F. Marvin, Esq.
<PAGE>
<PAGE>
EXHIBIT (c)(9)
June 30, 1997
First of Michigan Capital Corporation
100 Renaissance Center
26th Floor
Detroit, Michigan 48243
Gentlemen:
I hereby confirm my consent to serving as a director of First of Michigan
Capital Corporation (the 'Company') if elected or appointed to its Board of
Directors, to being named in the filings by the Company, (including the
Information Statement prepared in accordance with Rule 14f-1 under the
Securities Exchange Act of 1934), and to the filing of this consent therewith.
Sincerely,
/s/ Albert G. Lowenthal
<PAGE>
<PAGE>
EXHIBIT (c)(10)
June 30, 1997
First of Michigan Capital Corporation
100 Renaissance Center
26th Floor
Detroit, Michigan 48243
Gentlemen:
I hereby confirm my consent to serving as a director of First of Michigan
Capital Corporation (the 'Company') if elected or appointed to its Board of
Directors, to being named in the filings by the Company, (including the
Information Statement prepared in accordance with Rule 14f-1 under the
Securities Exchange Act of 1934), and to the filing of this consent therewith.
Sincerely,
/s/ A. Winn Oughtred
<PAGE>
<PAGE>
EXHIBIT (c)(11)
June 30, 1997
First of Michigan Capital Corporation
100 Renaissance Center
26th Floor
Detroit, Michigan 48243
Gentlemen:
I hereby confirm my consent to serving as a director of First of Michigan
Capital Corporation (the 'Company') if elected or appointed to its Board of
Directors, to being named in the filings by the Company, (including the
Information Statement prepared in accordance with Rule 14f-1 under the
Securities Exchange Act of 1934), and to the filing of this consent therewith.
Sincerely,
/s/ Elaine K. Roberts
<PAGE>
<PAGE>
EXHIBIT (c)(12)
June 30, 1997
First of Michigan Capital Corporation
100 Renaissance Center
26th Floor
Detroit, Michigan 48243
Gentlemen:
I hereby confirm my consent to serving as a director of First of Michigan
Capital Corporation (the 'Company') if elected or appointed to its Board of
Directors, to being named in the filings by the Company, (including the
Information Statement prepared in accordance with Rule 14f-1 under the
Securities Exchange Act of 1934), and to the filing of this consent therewith.
Sincerely,
/s/ Mark Shobe
------------------
Mark Shobe
<PAGE>
<PAGE>
EXHIBIT (c)(13)
June 30, 1997
First of Michigan Capital Corporation
100 Renaissance Center
26th Floor
Detroit, Michigan 48243
Gentlemen:
I hereby confirm my consent to serving as a director of First of Michigan
Capital Corporation (the 'Company') if elected or appointed to its Board of
Directors, to being named in the filings by the Company, (including the
Information Statement prepared in accordance with Rule 14f-1 under the
Securities Exchange Act of 1934), and to the filing of this consent therewith.
Sincerely,
/s/ Edward Soule
-----------------
Edward Soule
