Item 5. Other Events.
On February 1, 1996, J. Michaels Inc. (the "Company")
and Muriel Siebert Capital Markets Group Inc. ("Siebert"),
the sole shareholder of Muriel Siebert & Co., Inc. signed a
letter of intent providing for the merger of Siebert into
the Company. The letter of intent contemplates that the
Company will liquidate all of its existing assets, and at
the effectiveness of the Merger, the existing shareholders
of the Company will receive out of the liquidation proceeds
a cash payment and the right to share pro rata the remaining
net after tax proceeds (after payment of expenses and
liabilities) realized from the sale of the existing assets
of the Company. After the Merger, the shareholders of the
Company as of the effectiveness of the Merger will retain
2.5% of the shares of the surviving company, and the
shareholders of Siebert will own 97.5% of the shares of the
surviving company. The surviving company will continue the
existing brokerage business conducted by Muriel Siebert &
Co., Inc.
Consummation of the merger is subject to certain
conditions, including execution of a definitive merger
agreement and the approval of the board of directors and
shareholders of the Company and Siebert.
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this amendment
to be signed on its behalf by the undersigned, thereunto
duly authorized.
J. MICHAELS, INC.
(Registrant)
By:
James H. Michaels, Pres.
Dated: January 31, 1996
EXHIBITS
Exhibit 10 Letter of Intent dated February 1, 1996
<PAGE>
Exhibit 10
Muriel Siebert Capital Markets Group Inc.
885 Third Avenue, Suite 1720
New York, New York 10022
(212) 644-2418
February 1, 1996
J. Michaels, Inc.
182 Smith Street
Brooklyn, New York 11201
Re: Merger
Ladies and Gentlemen:
This letter confirms the non-binding intent of
Muriel Siebert Capital Markets Group Inc. ("Siebert") and J.
Michaels, Inc., a New York corporation (the "Company"), to
cause Muriel Siebert Capital Markets Group Inc., a New York
corporation wholly-owned by Muriel Siebert ("MSC"), which
will be the sole shareholder of Muriel Siebert & Co., Inc.,
to merge with and into the Company subject to the terms and
conditions set forth below.
Subject to paragraph 5 below, the parties intend
as follows:
1. Merger; Merger Consideration. MSC shall
merge with and into the Company (the "Merger"). Each share
of common stock, par value $1.00 per share (the "Common
Stock"), of MSC outstanding immediately prior to the
effective time of the Merger (other than shares of Common
Stock held in the treasury of MSC) shall, by virtue of the
Merger and without any action on the part of the holder
thereof, be entitled to receive as of the effective time of
the Merger such number of shares of common stock, part value
$1.00 per share (the "Company Common Stock") so that all of
the stockholders of MSC as of the effective time of the
Merger receive an aggregate of 97.5% of the issued and
outstanding shares of the Company Common Stock immediately
following the effective time of the Merger. The holders of
the Common Stock of the Company immediately prior to the
effective time of the Merger (the "Existing Holders") shall
at the effective time of the Merger receive a cash payment
equal to the available cash from the liquidation referred to
in 2 below (but subject to the escrow referred in 2 below),
and the right to receive distributions from the liquidating
trust to be established by the Company for the benefit of
the Existing Holders. Each share of Common Stock issued and
held in the treasury of MSC immediately prior to the
effective time of the Merger shall be canceled and retired,
and no shares or other securities shall be issuable and no
cash shall be exchangeable with respect thereto.
2. Liquidation of Assets. Promptly after the
date of this letter, the Company intends to commence to
liquidate the assets relating to the existing business of
the Company. At the effective time of the Merger, the
Existing Holders shall receive the net after-tax proceeds
(including in such liquidation proceeds the amount of the
cash and cash equivalents of the Company in hand at the
effective time of the Merger); provided, that of the cash on
hand at the effective time of the merger, $500,000 thereof
shall be placed in escrow pursuant to a mutually
satisfactory escrow agreement for one year from the
effective time of the Merger. Any assets of the Company
prior to the effective time of the Merger not so disbursed
to the Existing Holders, or held in escrow, shall be
transferred to a liquidating trust for the exclusive benefit
of the Existing Holders. For purposes hereof, liquidation
proceeds shall include all proceeds from the sale of the
Company's pre-Merger assets after deduction of all expenses
relating to such sale including any taxes payable by the
Company upon the liquidation of the Company's assets.
3. Capitalization. Prior to the effective time
of the Merger, the Company shall increase the number of
authorized shares of the Company Common Stock as agreed by
the Company and Siebert.
4. Effective Time of the Merger. The effective
time of the Merger shall occur on a mutually agreeable date,
subject to the negotiation, execution and delivery of the
definitive agreements referred to in paragraph 5 hereof,
which shall occur no later than February 15, 1996, and the
approval of the stockholders of the Company.
5. Definitive Agreements. (i) This letter
constitutes an expression of the present intention of the
parties to conclude the transactions described above, but
does not constitute an offer by either the Company or MSC to
merge, the acceptance of which would result in a binding
agreement between us. Definitive agreements covering the
transactions described above will be prepared by MSC's
counsel and the consummation of the transactions
contemplated hereunder are expressly subject to the
negotiation, execution and delivery by MSC, the Company and
other appropriate parties of mutually acceptable definitive
agreements and the approval thereof by the directors and
stockholders of the Company and MSC. This letter does not
create a binding obligation between MSC, Siebert or the
Company.
6. Miscellaneous. (i) This letter of intent
shall be governed by and construed in accordance with the
laws of the State of New York applicable to contracts made
and to be performed within such state.
(ii) This letter may be executed by the
parties hereto in separate counterparts, which, taken
together, shall constitute one and the same agreement.
7. Press Releases. The Company and MSC shall
consult and cooperate in the issuance, form, content and
timing of any press releases issued in connection with this
letter of intent or the transactions contemplated hereby,
subject to the disclosure obligations of the Company and MSC
under applicable law.
Kindly indicate your agreement with the foregoing
by signing a copy of this letter in the space indicated
below and returning the signed copy to the undersigned.
Sincerely,
MURIEL SIEBERT CAPITAL MARKETS
GROUP INC.
By:____________________________
Muriel Siebert, President
Accepted and Agreed
as of February __, 1996:
J. MICHAELS, INC.
By:____________________________
James H. Michaels, President
