<PAGE> 1
RODMAN & RENSHAW CAPITAL GROUP, INC.
120 SOUTH LASALLE STREET
CHICAGO, ILLINOIS 60603
-------------------------
INFORMATION STATEMENT PURSUANT TO
SECTION 14(f) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14f-1 THEREUNDER
-------------------------
NO VOTE OR OTHER ACTION OF THE COMPANY'S
STOCKHOLDERS IS REQUIRED IN CONNECTION WITH
THIS INFORMATION STATEMENT. NO PROXIES ARE BEING
SOLICITED AND YOU ARE REQUESTED NOT TO
SEND THE COMPANY A PROXY.
-------------------------
This Information Statement, which is being mailed on or about December 7,
1993 to the holders of shares of Common Stock, par value $.09 per share (the
"Shares"), of Rodman & Renshaw Capital Group, Inc. (the "Company"), is being
furnished in connection with the designation by Abaco Grupo Financiero S.A. de
C.V., a Mexican corporation ("Parent"), and Abaco Casa de Bolsa, S.A. de C.V.,
Abaco Grupo Financiero, a Mexican corporation that is a 99.99% owned subsidiary
of Parent ("Purchaser"), of persons ("Parent Directors") to the Board of
Directors of the Company (the "Board"). Such designation is to be made pursuant
to an Acquisition Agreement, dated as of November 17, 1993 (the "Acquisition
Agreement"), by and among the Company, Parent and Purchaser. Pursuant to the
Acquisition Agreement, Purchaser commenced an offer to purchase 2,233,991 Shares
at $10.50 per Share, net to the sellers in cash (the "Offer"), on November 23,
1993. Purchaser has amended its Offer to Purchase, dated November 23, 1993, to
provide that upon the terms and subject to the conditions of the Offer,
Purchaser will accept for payment and thereby purchase, and will pay for
2,363,003 Shares, constituting the sum of 2,233,911 Shares, which is equal to
51% of the outstanding Shares, plus 129,092 Shares, which is equal to 51% of the
excess of the number of vested Company employee stock options (or options that
would vest prior to the scheduled expiration of the Offer) over the number of
such options that are to be cancelled prior to the expiration of the Offer.
Consummation of the Offer is subject to various conditions, including a minimum
tender of at least 51% of the outstanding shares of the Company or such smaller
number of Shares as would result (together with the purchase at the Offer price
of up to 220,000 Shares from the Company) in Purchaser becoming the owner of at
least 51% of the outstanding Shares. Other conditions to the Offer include the
absence of any material adverse changes in the Company's business, necessary
United States and Mexican regulatory approvals, and other conditions typical in
transactions of this type. The Offer is scheduled to expire at 12:00 midnight,
New York City time, on Tuesday, December 21, 1993, at which time, upon the
expiration of the Offer, if all conditions of the Offer have been satisfied or
waived, Purchaser has informed the Company that it intends to purchase all
Shares validly tendered pursuant to the Offer and not withdrawn.
The Acquisition Agreement provides that, upon the purchase of Shares
pursuant to the Offer, and simultaneously with the closing of the Offer (the
"Tender Closing Date"), the Company will take action to amend its by-laws to (A)
provide for not less than 11 and not more than 21 directors, (B) eliminate the
staggered board provisions, (C) provide that directors must be Independent
Directors (as defined below), Parent Directors, or employees of the Company or
its affiliates and (D) provide that the term of any director who ceases to
qualify as provided in clause (C) will terminate. The Company has also agreed to
cause the Board on the Tender Closing Date to consist of 11 Parent Directors, 2
Independent Directors and 8 Company Directors (as defined below). An
"Independent Director" means any person designated by Parent who (i) is in fact
independent and qualifies as an independent director in accordance with the New
York Stock Exchange Rules, (ii) is not connected with Parent or the Company or
any of their respective affiliates as an officer, employee, trustee, partner,
director (other than of the Company) or person performing similar functions and
(iii) has not been employed by the Company or any of its subsidiaries during the
preceding year. "Company Directors" initially means the following persons, each
of whom is currently a director of the
1
<PAGE> 2
Company: Messrs. Kurt B. Karmin, Victor C. Chigas, Mark J. Grant, Lawrence R.
Helfand, Scott H. Lang, Norman E. Mains, Gregory P. Quinlivan and Peter J.
Schild; provided that in the event that any of such initial directors resigns or
otherwise ceases to be a director for any reason, then, during the three years
after consummation of the Offer, the other Company Directors will have the
right, by majority vote, to designate a replacement for such director except in
situations involving reduction of the number of directors, which during such
period will in no event reduce the number of Company Directors below 3. Each of
the initial 11 Parent Directors, 2 Independent Directors and 8 Company directors
will hold office until such director's successor is elected and qualified or
until such director's earlier resignation or removal.
The terms of the Acquisition Agreement and other information concerning the
Offer are contained in the Offer to Purchase, dated November 23, 1993, as
amended on December 7, 1993, and as further amended from time to time, the
related Letter of Transmittal, dated November 23, 1993, and the
Solicitation/Recommendation Statement on Schedule 14D-9 of the Company, dated
November 23, 1993, as amended on December 7, 1993, and as further amended from
time to time (the "Schedule 14D-9"), with respect to the Offer, copies of which
have been previously delivered to stockholders of the Company. Certain other
documents were filed with the Securities and Exchange Commission (the "SEC") as
exhibits to the Tender Offer Statement on Schedule 14D-1, dated November 23,
1993, as amended from time to time (the "Schedule 14D-1") of Purchaser and as
exhibits to the Schedule 14D-9. The exhibits to the Schedule 14D-1 and the
Schedule 14D-9 may be examined at and copies thereof may be obtained from the
SEC (except that the exhibits thereto cannot be obtained from the regional
offices of the SEC). The discussion of any such document included herein is
qualified in its entirety by reference to the text of such document.
NO ACTION IS REQUIRED BY THE STOCKHOLDERS OF THE COMPANY IN CONNECTION WITH
THE ELECTION OF PARENT DIRECTORS TO THE BOARD. HOWEVER, SECTION 14(F) OF THE
EXCHANGE ACT REQUIRES THE MAILING TO THE COMPANY'S STOCKHOLDERS OF THE
INFORMATION SET FORTH IN THIS INFORMATION STATEMENT PRIOR TO A CHANGE IN A
MAJORITY OF THE COMPANY'S DIRECTORS.
The information contained in this Information Statement concerning Parent,
Purchaser and Parent Directors has been furnished to the Company by such
persons, and the Company assumes no responsibility for the accuracy or
completeness of such information. The principal executive offices of Parent and
Purchaser are located at Montes Rocallosos 505 Sur, Residencial San Agustin,
66260, Garza Garcia, N.L. Mexico.
1. CERTAIN INFORMATION CONCERNING PARENT DIRECTORS.
As of the date of this Information Statement, the Parent Directors are
listed on Schedule I annexed hereto, which Schedule includes certain information
regarding such persons. Parent has informed the Company that each of such
persons listed in Schedule I has consented to act as a director. Parent has also
informed the Company that no determination has yet been made as to the identity
of the 2 Independent Directors. The election of the Parent Directors and
Independent Directors will be accomplished at a meeting or by written consent of
the Board.
None of the Parent Directors currently is a director of, or holds any
position with, the Company. The Company has been advised by Parent that, to the
best of its knowledge, none of the Parent Directors 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 SEC.
2. CERTAIN INFORMATION CONCERNING THE COMPANY.
General. The Shares are the only class of voting stock of the Company
outstanding and each Share is entitled to one vote. There were 4,380,217 Shares
issued and outstanding on November 1, 1993.
Current Directors and Executive Officers of the Company. The Board
currently consists of eleven members with one vacancy. The Board currently is
composed of three classes, each serving for a three-year term.
2
<PAGE> 3
The following table sets forth information concerning the age, current
positions with the Company, and term of office as a director and period of
service as such, for all of the directors of the Company, as of November 1,
1993:
<TABLE>
<CAPTION>
YEAR BECAME A DIRECTOR
(EXPIRATION OF
NAME AGE CURRENT TERM) OFFICE & TITLE
- ---------------------------- --- ---------------------- -----------------------------------
<S> <C> <C> <C>
Vaughn R. Blake............. 43 1992 Director
(1995)
Victor C. Chigas............ 66 1989 Executive Vice President and
(1994) Director
Mark J. Grant(1)............ 42 1991 Executive Vice President and
(1995) Director
Lawrence R. Helfand......... 57 1981 Executive Vice President and
(1993) Director
Jonathon D. Kantor.......... 38 1993 Director
(1993)
Kenneth M. Karmin........... 32 1990 Director
(1993)
Kurt B. Karmin.............. 65 1988 Chairman of Board of Directors and
(1995) Chief Executive Officer
Scott H. Lang............... 46 1985 Executive Vice President and
(1994) Director
Norman E. Mains............. 50 1991 President, Chief Operating Officer
(1994) and Director
Gregory P. Quinlivan........ 33 1992 Secretary, General Counsel,
(1993) Executive Vice President and
Director
Peter J. Schild............. 46 1993 Chief Financial Officer, Executive
(1994) Vice President and Director
</TABLE>
- -------------------------
(1) Served previously as a director of the Company from 1987 to 1988.
Information is furnished below concerning the business experience of
directors and executive officers, including the period of service of executive
officers.
VAUGHN R. BLAKE has served since 1987 as a Managing Director for
Creditanstalt International Advisers, Inc., an investment banking subsidiary of
Creditanstalt-Bankverein, which provides corporate finance advisory, securities
brokerage and money management services.
VICTOR C. CHIGAS has served since June 1991 as an Executive Vice President
of the Company and Rodman & Renshaw, Inc. ("Rodman"), a wholly-owned subsidiary
of the Company, having served previously as a Senior Vice President of both
companies since 1988. Prior to such time, Mr. Chigas was a Senior Vice President
of the Investment Management Group of Drexel Burnham Lambert Inc.
MARK J. GRANT served as a Senior Vice President of the Company and Rodman
from 1987 to 1989, and has served as an Executive Vice President of the Company
and Rodman since then. Mr. Grant has also served as Managing Director of
Rodman's Fixed Income Department since 1990.
LAWRENCE R. HELFAND has served as an Executive Vice President of the
Company and Rodman since 1988, and was a Senior Vice President prior thereto.
Mr. Helfand is also Rodman's Managing Director of Retail Sales.
JONATHON D. KANTOR is a partner with the law firm of Shea & Gould, a
nationwide law firm headquartered in New York City. Mr. Kantor has been with
that firm since 1980. Mr. Kantor also serves on the board of directors of First
City Industries, Inc. and the American Symphony Orchestra.
KENNETH M. KARMIN has served as a managing director with Credit Agricole
since August 1993. From 1988 to 1993 Mr. Karmin served as a Senior Vice
President of the Company and Rodman, and was also
3
<PAGE> 4
Managing Director of Rodman's Financial Futures and Options Department. Prior to
such time, Mr. Karmin was employed by Drexel Burnham Lambert Inc., as a First
Vice President in its Institutional Financial Futures Division.
KURT B. KARMIN has served as Chairman of the Board of Directors and Chief
Executive Officer of the Company and Rodman since 1990. From 1988 to 1990, Mr.
Karmin served as a Vice Chairman of the Company and Rodman, and President of the
Company. Prior to joining the Company and Rodman, Mr. Karmin was a Senior Vice
President in charge of Midwest Operations for Drexel Burnham Lambert Inc.
SCOTT H. LANG has served as an Executive Vice President of the Company and
Rodman since 1988, and was a Senior Vice President prior thereto. Mr. Lang is
also Managing Director of Rodman's Investment Banking Department, and a director
of Pacific International Services Corp.
NORMAN E. MAINS has served as President and Chief Operating Officer of the
Company and Rodman since March, 1991. Prior thereto, Mr. Mains served as
Executive Vice President for the firm of Bateman Eichler, Hill Richards, Inc.,
from 1988 to 1991. Mr. Mains also served as First Vice President and Director of
Research for Drexel Burnham Lambert Inc. from 1982 to 1988. Mr. Mains is also a
director of Suncoast Savings & Loan Association, Hollywood, Florida.
GREGORY P. QUINLIVAN has served since 1991 as Secretary and General Counsel
of the Company and Rodman. Mr. Quinlivan previously was Senior Attorney for the
Chicago Board of Trade from 1989-1991 and an enforcement attorney for the
Securities and Exchange Commission from 1987-1989.
FREDERICK G. UHLMANN, age 63, has served as an Executive Vice President of
the Company and Rodman since 1990, and previously served as a Senior Vice
President since joining the Company and Rodman in 1988. He was a director of the
Company from 1989 until 1993. Mr. Uhlmann has also served as Managing Director
of Rodman's Commodities Department since 1988. Prior to joining the Company and
Rodman, Mr. Uhlmann was a Senior Vice President with Bear, Stearns & Co. Inc.
PETER J. SCHILD has served as Executive Vice President and Chief Financial
Officer of the Company and Rodman since 1992. Prior to joining the Company and
Rodman, Mr. Schild served as Senior Vice President and Treasurer of Drexel
Burnham Lambert Inc. from 1987 to 1992.
All officers of the Company serve at the discretion of the Board of
Directors. Certain of the Company's executive officers and directors serve as
officers and directors of other subsidiaries of the Company not specified in the
preceding discussion. There is no family relationship among any of the executive
officers or directors of the Company, except that Kenneth M. Karmin is the son
of Kurt B. Karmin.
On November 16, 1993, Mr. Kurt B. Karmin stepped down as Chief Executive
Officer, while remaining as Chairman of the Board, and Mr. Norman E. Mains was
elected to the additional position of Chief Executive Officer.
Board and Committee Meetings. The Board of Directors held eleven meetings
(exclusive of committee meetings) during the fiscal year of the Company ended on
June 25, 1993. Each of the directors attended at least 75% of the Board meetings
that he was eligible to attend during such year. Each director who was a member
of a Board committee during the fiscal year ended June 25, 1993 attended at
least 75% of the meetings of each committee that he was eligible to attend as a
member.
(i) Executive Committee. The Executive Committee of the Board of Directors,
which currently consists of Messrs. Victor C. Chigas, Lawrence R. Helfand, Kurt
B. Karmin, Scott H. Lang and Norman E. Mains, meets as required. The Executive
Committee has the authority, between meetings of the Board of Directors, to take
all actions with respect to the management of the Company's business that
require action of the Board of Directors, except with respect to certain matters
that by law must be approved by the entire Board. The Executive Committee met
approximately 30 times during the fiscal year of the Company ended June 25,
1993.
(ii) Audit Committee. The Audit Committee currently consists of Mr. Vaughn
R. Blake, who is a director not otherwise employed by the Company or any of its
subsidiaries or otherwise affiliated with the management of the Company or its
subsidiaries. The Audit Committee is responsible for reviewing and helping to
ensure the integrity of the Company's financial statements. Among other matters,
the Audit
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<PAGE> 5
Committee reviews the Company's internal accounting controls and financial
statements, reviews with the Company's independent accountants the scope of
their audit, their report and their recommendations and recommends the selection
of the Company's independent accountants. The Committee met three times during
the fiscal year of the Company ended June 25, 1993.
(iii) Compensation Committee. The Compensation Committee, which currently
consists of Messrs. Victor C. Chigas and Vaughn R. Blake, formulates
recommendations to the Board with respect to compensation to be paid to
executive officers and other key managerial personnel of the Company. The
Compensation Committee met two times during the fiscal year of the Company ended
June 25, 1993.
(iv) Nominating Committee. The Nominating Committee, which currently
consists of Messrs. Victor C. Chigas, Lawrence R. Helfand and Norman E. Mains,
makes recommendations to the Board of Directors in regard to persons who might
be considered for nomination or appointment to the Board, and with respect to
persons who might be selected as executive officers of the Company. The
Nominating Committee met three times during the fiscal year of the Company ended
June 25, 1993.
Compensation Committee Interlocks and Insider Participation. Mr. Victor C.
Chigas and Mr. Norman E. Mains, who served during the fiscal year ended June 25,
1993 as members of the Compensation Committee, were each, during the fiscal
year, executive officers of the Company. Mr. Vaughn R. Blake, a director of the
Company, who served during the fiscal year ended June 25, 1993, as a member of
the Company's Compensation Committee, is a managing director for Creditanstalt
International Advisers, Inc., an investment banking subsidiary of
Creditanstalt-Bankverein, which entered into a lease of office space to the
Company in November 1992 for a five year term, at a monthly rental of
approximately $12,000 subject to certain escalation provisions.
Creditanstalt-Bankverein also made a $3.5 million subordinated loan to the
Company in 1990 (simultaneously with an equity investment that has since been
sold to an outside third party), bearing interest at a rate, at June 25, 1993,
of LIBOR plus 3%, due in eight annual installments beginning October 1, 1993.
During the fiscal year ended June 25, 1993, Creditanstalt-Bankverein received
interest payments from the Company aggregating $202,000.
3. CERTAIN INFORMATION CONCERNING DIRECTORS AND EXECUTIVE COMPENSATION.
Director Compensation. Directors who are not otherwise employed by the
Company or any of its subsidiaries are entitled to receive an annual retainer of
$5,000 and $200 for each meeting of the Board of Directors and any committee
thereof attended by them. Directors who are otherwise employed by the Company or
a subsidiary of the Company are not entitled to any additional compensation for
serving as directors.
Executive Compensation. Historically, the Company's executive officers have
been paid principally through commissions and incentives on a production basis,
with the exception of executive officers having substantial administrative
responsibilities.
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<PAGE> 6
The following table sets forth information concerning the compensation for
each of the Company's last three completed fiscal years of those persons (the
"named executive officers") who were, at June 25, 1993 (i) the chief executive
officer and (ii) the other four most highly compensated executive officers.
SUMMARY EXECUTIVE COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------- ------------
NAME AND FISCAL YEAR OTHER ANNUAL STOCK ALL OTHER
PRINCIPAL POSITION ENDED JUNE SALARY BONUS(2) COMPENSATION(3) OPTIONS COMPENSATION(4)
- ----------------------------- ----------- -------- -------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Kurt B. Karmin(1)............ 1993 $ 75,000 $ 40,083 $ 236,697 15,000 $16,263
Chairman of the Board 1992 75,000 72,000 294,769 0
of Directors and Chief 1991 75,000 0 338,556 20,000
Executive Officer
Victor C. Chigas............. 1993 0 56,741 1,164,444 14,000 47,686
Executive Vice 1992 0 0 984,093 0
President 1991 0 0 437,884 4,300
Mark J. Grant................ 1993 100,000 125,000 443,969 15,000 21,862
Executive Vice 1992 82,500 230,150 165,994 0
President 1991 70,833 35,967 246,298 5,000
Norman E. Mains(1)........... 1993 275,000 40,083 166 12,000 17,546
President and Chief 1992 258,333 98,000 162 50,000
Operating Officer 1991(5) 87,179 0 0 0
Kenneth M. Karmin............ 1993 0 50,441 323,239 0 71,424
Senior Vice President 1992 0 0 379,217 12,500
1991 0 0 363,549 0
</TABLE>
- -------------------------
(1) On November 16, 1993, Mr. Kurt B. Karmin stepped down as Chief Executive
Officer, while remaining as Chairman of the Board, and Mr. Norman E. Mains
was elected to the additional position of Chief Executive Officer.
(2) Bonuses are based on profitability of the specific department or area, or
multiple departments or areas, over which the executive has direct
responsibility.
(3) These amounts primarily consist of commissions earned from securities and
commodities transactions, and include amounts voluntarily deferred under the
Company's Voluntary Deferred Compensation Plan.
(4) Amounts included under "All Other Compensation" consist of (i) Company
matching funds under the Company's Retirement and Savings Plan (Mr. Kurt B.
Karmin, $873, Mr. Chigas, $873, Mr. Grant, $873, Mr. Mains, $873, and Mr.
Kenneth M. Karmin, $0.00); (ii) the Company's contributions to the
Supplemental Executive Retirement Plan (Mr. Kurt B. Karmin, $15,390, Mr.
Chigas, $46,813, Mr. Grant, $20,989, Mr. Mains, $16,673 and Mr. Kenneth M.
Karmin $0.00); and (iii) in the case of Mr. Kenneth M. Karmin, includes
$64,000 in relocation and living expenses arising from his assignment in
London.
In accordance with the transitional provisions of the rules on executive
officer compensation adopted by the Securities and Exchange Commission, "All
Other Compensation" information is excluded for the Company's 1992 and 1991
fiscal years.
(5) Mr. Mains joined the Company on February 25, 1991.
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<PAGE> 7
Options.
OPTION GRANTS IN THE FISCAL YEAR
ENDED JUNE 25, 1993
The following table presents information as to stock option awards to each
of the named executive officers during the fiscal year ended June 25, 1993. No
stock appreciation rights were granted.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT
INDIVIDUAL GRANTS ASSUMED ANNUAL
- ------------------------------------------------------------------------------------- RATES OF STOCK
% OF TOTAL PRICE APPRECIATION
OPTIONS FOR OPTION
OPTIONS GRANTED TO EXERCISE TERM(1)
GRANTED EMPLOYEES IN PRICE EXPIRATION ---------------------
NAME (#)(2) FISCAL YEAR ($/SH) DATE 5% 10%
- --------------------------------- ------- ------------ -------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Kurt B. Karmin................... 15,000 3.9% $ 5.00 5-10-98 $60,143 $128,671
Victor C. Chigas................. 14,000 3.6% 5.00 5-10-98 56,134 120,093
Mark J. Grant.................... 15,000 3.9% 5.00 5-10-98 60,143 128,171
Norman E. Mains.................. 12,000 3.1% 5.00 5-10-98 48,115 102,973
Kenneth M. Karmin................ -- -- -- -- -- --
</TABLE>
- -------------------------
(1) The dollar amounts in these columns project the amount that could be earned
if the Common Stock appreciates at the annual rates indicated from the date
of grant and if the options are held until the expiration dates shown.
These rates of appreciation are specified by the applicable rules of the
Securities and Exchange Commission and are not intended to forecast
possible future actual appreciation, if any, in the Company's stock prices.
(2) Options granted vest at 20% per year cumulatively and are exercisable upon
vesting.
AGGREGATED OPTION EXERCISES IN THE FISCAL YEAR ENDED JUNE 25, 1993
AND OPTION VALUES AT JUNE 25, 1993
The following table provides information as to the value of the options
held by each such executive officer at June 25, 1993. No options were exercised
by the named executive officers during the fiscal year ended June 25, 1993. The
Company has not granted stock appreciation rights.
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FY-END(#) FY-END(1)
------------- ---------------
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) VALUE REALIZED UNEXERCISABLE UNEXERCISABLE
- ------------------ --------------- -------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Kurt B. Karmin..................... -- -- 43,000/27,000 $ 6,000/$20,250
Victor C. Chigas................... -- -- 16,720/16,580 1,290/ 12,435
Mark J. Grant...................... -- -- 27,000/18,000 1,500/ 13,500
Norman E. Mains.................... -- -- 35,000/27,000 26,250/ 20,250
Kenneth M. Karmin.................. -- -- 20,000/7,500 3,750/ 5,625
</TABLE>
- -------------------------
(1) Based on a closing stock price of $5.75 per share on June 25, 1993.
Termination Of Employment And Change Of Control Agreements.
Pursuant to a Severance Agreement dated June 29, 1993 entered into between
Kenneth M. Karmin and Rodman, in connection with the sale of Rodman's United
Kingdom branch to Credit Agricole Futures, SNC, Mr. Karmin has been paid
$135,000 (excluding compensation to which he was otherwise entitled for his
services until his resignation on August 20, 1993, as an employee of Rodman).
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<PAGE> 8
On June 28, 1993, the Company entered into a Change of Control Employment
Agreement with Norman E. Mains, its President and Chief Operating Officer and a
director (the "Employment Agreement"). (On November 16, 1993, Mr. Mains was
elected to the additional position of Chief Executive Officer.) The Employment
Agreement provides that in the event that there is a Change of Control (as
defined therein), which would occur upon consummation of the Offer, the Company
agrees to employ Mr. Mains until June 30, 1995 (the "Employment Period") and he
agrees to continue his employment with the Company until at least one year after
the Change of Control. During the Employment Period, the Company may terminate
him for "Cause", which includes the commission of any felony, the habitual
neglect of duties (other than on account of disability), willful breach of duty
in the course of employment and inability to perform due to habitual alcohol or
drug addiction. Mr. Mains may terminate his employment during the Employment
Period for "Good Reason", which includes the assignment to him of duties other
than senior executive and administrative duties at least commensurate in all
material respects with his experience and abilities or the Company's requiring
him to be based at a location which is more than 25 miles from the location
where he was employed before the Change of Control.
The Employment Agreement provides that Mr. Mains would be paid an annual
base salary during the Employment Period in an amount at least equal to 12 times
his highest monthly base salary during the 12-month period before the Change of
Control. (See "Summary Executive Compensation Table" for information concerning
Mr. Mains' past compensation.) In addition to the base salary, Mr. Mains would
be entitled to a bonus for each fiscal year within the Employment Period in an
amount equal to 2% of Pre-Tax Income (as defined in the Employment Agreement) of
the Company. If Mr. Mains' employment is terminated without Cause or he
terminates employment for Good Reason, then he is entitled to receive his base
salary, bonus and benefits as if he had remained employed throughout the
Employment Period (at the times he would have been entitled to receive such
amounts).
4. CERTAIN INFORMATION CONCERNING SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT.
Security Ownership of Certain Beneficial Owners. As of November 1, 1993,
there were 4,380,217 shares of the Company's common stock outstanding. The
following persons (and Mr. Kurt B. Karmin, information on whom is provided under
the caption "Security Ownership of Management" below) were known by the Company
to be the beneficial owners of more than 5% of such outstanding common stock:
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
NAME AND ADDRESS SHARES TOTAL
---------------------------------------------------------- --------- ----------
<S> <C> <C>
Marshall S. Geller(1)..................................... 436,130 9.96%
1875 Century Park East
Suite 1770
Los Angeles, CA 90067
Josephthal Holdings Inc.(2)............................... 339,700 7.76%
Attn: Dan Purjes
200 Park Avenue
New York, NY 10166
</TABLE>
- -------------------------
(1) Based upon information contained in Schedule 13D, as amended, dated
September 15, 1993.
(2) Based upon information contained in Schedule 13D, as amended, dated October
19, 1993.
8
<PAGE> 9
Security Ownership of Management. The following table sets forth the
beneficial ownership of the Company's common stock as of November 1, 1993 by
each director, by each of the named executive officers, and by all directors and
executive officers as a group:
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
NAME SHARES(1) TOTAL(2)
- ------------------------------------------------------------------------ --------- ----------
<S> <C> <C>
Vaughn R. Blake......................................................... 0 0
Victor C. Chigas........................................................ 95,087 2.16%
Mark J. Grant........................................................... 84,577 1.92%
Lawrence R. Helfand..................................................... 32,100 *
Jonathon D. Kantor...................................................... 0 0
Kenneth M. Karmin....................................................... 135,589 3.08%
Kurt B. Karmin(3)....................................................... 314,200 7.10%
Scott H. Lang........................................................... 71,110 1.61%
Norman E. Mains......................................................... 62,500 1.42%
Gregory P. Quinlivan.................................................... 2,800 *
Peter J. Schild......................................................... 18,000 *
All directors and officers as a group (12 persons, including those
persons named above).................................................. 841,963 18.18%
</TABLE>
- -------------------------
* less than 1%
(1) Includes 250,820 shares of Common Stock of the Company subject to stock
options immediately exercisable (or exercisable within 60 days after
November 1, 1993) under the Company's Incentive Stock Option Plan. Of
those, options on 43,000 shares were held by Kurt B. Karmin, 16,720 by Mr.
Chigas, 27,000 by Mr. Grant, 32,100 by Mr. Helfand, 20,000 by Kenneth M.
Karmin, 30,200 by Mr. Lang, 35,000 by Mr. Mains, 2,800 by Mr. Quinlivan and
18,000 by Mr. Schild.
(2) Pursuant to the requirements of Rule 13d-3d(1) promulgated under the
Securities Exchange Act of 1934, percentage ownership is calculated as if
the shares subject to immediately exercisable stock options (including
options which became exercisable within sixty days) held by the persons
identified in the above table had been issued to them and were outstanding
as of November 1, 1993, or within sixty days thereafter.
(3) The address of Mr. Kurt B. Karmin, the beneficial owner of more than 5% of
the Common Stock of the Company, is 120 South LaSalle Street, Chicago,
Illinois 60603.
5. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As a matter of policy, the Company does not intend to make any loans to
directors or executive officers of the Company other than in margin transactions
conducted in the ordinary course of the business. Directors and executive
officers of the Company maintain margin accounts with the Company pursuant to
which the Company may make loans for the purchase of securities. All margin
loans are made in the ordinary course of business, on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with other persons and do not involve more than the
normal risk of collectibility or present other unfavorable features. See also
"Compensation Committee Interlocks and Insider Participation."
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<PAGE> 10
SCHEDULE I
PARENT DIRECTORS
Parent has designated eleven persons to become members of the Company's
Board of Directors pursuant to the terms of the Acquisition Agreement. None of
the designees owns any Shares either beneficially or of record. Set forth below
for each designee is his age and principal occupations during at least the last
five years. The information below concerning these designees is based upon
information provided to the Company by Parent and Purchaser.
JORGE LANKENAU ROCHA, 49, is Chairman of the Board of Parent and
Purchaser. He served as Chief Executive Officer of Purchaser from 1985
until 1991. He also has served as Chairman of the Board and Chief Executive
Officer of Confia S.A., Institucion de Banca Multiple, Abaco Grupo
Financiero, Parent's commercial bank subsidiary ("Confia, S.A."), since
1992.
EDUARDO CAMARENA LEGASPI, 43, is the Chief Executive Officer of
Purchaser. He has been a Director of Purchaser since 1985, a Director of
Parent since 1992 and a Director of Confia, S.A. since 1991.
FERNANDO DE JESUS VALDES MEDINA, 49, is Parent's Chief Financial
Officer. He was Purchaser's Director of Planning from 1988 to 1992. He has
served as an Alternate Director(1) of both Parent and Purchaser since 1992
and as a Director of Confia, S.A. since 1991.
JORGE ANTONIO GARCIA GARZA, 32, is General Counsel, Secretary of the
Board of Directors and an Alternate Director of Parent. He also has served
as Purchaser's General Counsel since 1985 and as its Secretary of the Board
of Directors since 1986. He has been Confia, S.A.'s General Counsel since
1992, its Secretary of the Board of Directors since 1993 and one of its
Directors since 1991.
RODRIGO PADILLA OLVERA, 46, is a Director of Parent and Purchaser. He
has been the Chief Executive Officer of Grupo SAC, S.A. de C.V., a Mexican
consulting company, since 1989. He also is the President of Industrias
Delmex, S.A. de C.V., a Mexican company that manufactures metal tubing and
laminated products.
JUAN MANUEL MOLLER GAMEZ, 40, is a Regional Manager of Parent. He has
been the International Manager of Purchaser since 1992 and the
International Manager of Confia, S.A. since 1992. He also has served as an
Alternate Director of Confia, S.A. since 1993. From 1986 to 1990 he was the
International Manager of Multibanco Mercantil de Mexico, S.A. de C.V., a
Mexican commercial bank.
MAURICIO MORALES SADA, 32, is Purchaser's Vice President of Sales.
JOSEPH P. SHANAHAN, 46, is the President of Abaco International
Corporation, a wholly-owned subsidiary of Purchaser and a registered
broker-dealer and member of the National Association of Securities Dealers,
Inc. based in New York City. From 1980 to 1990 Mr. Shanahan was the
Treasurer/Managing Director of Keane Securities Co., a securities firm, and
from 1990 to 1992 he was a consultant to Excalibur Management, Ltd., a
securities consulting company.
DAVID S. RUDER, 64, has been a partner in the Chicago office of Baker
& McKenzie, an international law firm, since 1990. He also is a professor
of law at Northwestern University School of Law, where he was Dean from
1977 to 1985. From 1987 to 1989 Mr. Ruder was Chairman of the Securities
and Exchange Commission, and from 1990 to 1993 he was a member of the Board
of Governors of the National Association of Securities Dealers, Inc., where
he is currently Chairman of the Legal Advisory Board. He has been a
Director of Quixote Corporation, a diversified company that develops and
manufactures stenographic equipment, optical discs and highway crash
cushions, since 1990.
NEAL A. KLEGERMAN, 38, has been a partner in the Chicago office of
Baker & McKenzie since 1986.
JAMES D. VAN DE GRAAFF, 33, is an attorney in the Chicago office of
Baker & McKenzie.
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(1) The function of an Alternate Director is to attend and vote at Director's
meetings in place of any Director who is unable to attend.
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