<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Capsure Holdings Corp.
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
--------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------------------
(5) Total fee paid:
--------------------------------------------------------------------------------
/X/ Fee paid previously with preliminary materials.
--------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
--------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
--------------------------------------------------------------------------------
(3) Filing party:
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(4) Date filed:
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<PAGE> 2
CAPSURE HOLDINGS CORP.
TWO NORTH RIVERSIDE PLAZA
CHICAGO, ILLINOIS 60606
(312) 879-1900
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
ON MAY 24, 1995
------------------
TO: The Shareholders of Capsure Holdings Corp.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Capsure
Holdings Corp. (the "Company") will be held at One North Franklin, Third Floor,
Chicago, Illinois 60606, on Wednesday, May 24, 1995 at 10:00 A.M. CDT, for the
following purposes:
1. To elect twelve directors to serve one-year terms, commencing
immediately upon their election, or to serve until their respective successors
are duly elected and qualified;
2. To approve an amendment to the Company's Certificate of Incorporation to
increase the maximum number of shares of Common Stock the Company is authorized
to issue from 20,000,000 shares to 25,000,000 shares; and
3. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on March 27, 1995,
as the record date (the "Record Date") for the determination of shareholders
entitled to notice of, and to vote at, the Annual Meeting. You are cordially
invited to attend the meeting. In the event you will be unable to attend, you
are respectfully requested to fill in, date, sign and return the enclosed proxy
at your earliest convenience in the enclosed return envelope.
BY ORDER OF THE BOARD OF DIRECTORS
SUSAN OBUCHOWSKI, Secretary
March 31, 1995
Chicago, Illinois
--------------------------------------------------------------------------------
IMPORTANT:
PLEASE FILL IN, DATE, SIGN AND PROMPTLY MAIL THE ENCLOSED PROXY CARD IN THE
POSTPAID ENVELOPE PROVIDED TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE
MEETING. IF YOU ATTEND THE MEETING YOU MAY VOTE IN PERSON IF YOU WISH TO DO SO
EVEN THOUGH YOU HAVE SENT IN YOUR PROXY.
--------------------------------------------------------------------------------
<PAGE> 3
CAPSURE HOLDINGS CORP.
TWO NORTH RIVERSIDE PLAZA
CHICAGO, ILLINOIS 60606
(312) 879-1900
PROXY STATEMENT
INTRODUCTION
This Proxy Statement is being mailed or otherwise furnished to shareholders
of Capsure Holdings Corp., a Delaware corporation (the "Company"), on or about
March 31, 1995, in connection with the solicitation by the Board of Directors of
the Company (the "Board") of proxies to be voted at the Annual Meeting of
Shareholders ("Annual Meeting") of the Company to be held at One North Franklin,
Third Floor, Chicago, Illinois 60606 at 10:00 A.M. CDT, on Wednesday, May 24,
1995, and at any adjournment thereof. Shareholders who, after reading this Proxy
Statement, have any questions should contact Susan Obuchowski, Secretary of the
Company, in Chicago at (312) 466-4010.
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
At the Annual Meeting, shareholders of the Company will consider and vote
upon:
(i) the election of twelve directors of the Company who will serve
one-year terms, commencing immediately upon their election, or to
serve until their respective successors are duly elected and
qualified;
(ii) an amendment to the Company's Certificate of Incorporation to
increase the maximum number of shares of Common Stock the Company is
authorized to issue from 20,000,000 shares to 25,000,000 shares; and
(iii) to transact such other business as may properly come before the
Annual Meeting or any adjournment or adjournments thereof.
The date of this Proxy Statement is March 31, 1995.
PROXY SOLICITATION
The enclosed proxy is solicited by the Board. The cost of this proxy
solicitation is anticipated to be nominal and will be borne by the Company,
including charges and expenses of brokerage firms and others for forwarding
solicitation material to beneficial owners of the Company's Common Stock. The
solicitation generally will be effected by mail and such cost will include the
cost of preparing and mailing the proxy materials. In addition to the use of the
mails, proxies also may be solicited by personal interview, telephone,
telegraph, telecopy, or other similar means. Although solicitation will be made
primarily through the use of the mail, officers, directors, or employees of the
Company may solicit proxies personally or by the above described means without
additional remuneration for such activity.
1994 ANNUAL REPORTS
Shareholders are concurrently being furnished with a copy of the Company's
1994 Annual Report which contains its audited financial statements at December
31, 1994. Any shareholder who has not received an Annual Report may request such
Annual Report by contacting Doreen Lubeck, Investor Relations Representative of
the Company, at Two North Riverside Plaza, Chicago, Illinois 60606, (312)
466-3444, and it will be furnished promptly at no additional expense.
1
<PAGE> 4
VOTING SECURITIES AND PROXIES
Only shareholders of record at the close of business on March 27, 1995,
(the "Record Date") have the right to receive notice of and to vote at the
Annual Meeting and any adjournment thereof. As of the Record Date, 15,394,149
shares of the Company's Common Stock, $.05 par value, were issued and
outstanding. Each share outstanding on the Record Date for the Annual Meeting
entitles the holder thereof to one vote upon each matter to be voted upon at the
Annual Meeting. The shareholders of a majority of the Company's issued and
outstanding Common Stock, present in person or represented by proxy, shall
constitute a quorum at the Annual Meeting. Abstentions and broker non-votes are
counted for purposes of determining the presence or absence of a quorum for the
transaction of business. If, however, a quorum is not present or represented at
the Annual Meeting, the shareholders entitled to vote at the Annual Meeting,
whether present in person or represented by proxy, shall only have the power to
adjourn the Annual Meeting until such time as a quorum is present or
represented. At such time as a quorum is present or represented by proxy, the
Annual Meeting will reconvene without notice to shareholders, other than an
announcement at the prior adjournment of the Annual Meeting, unless the
adjournment is for more than thirty days or a new record date has been set.
If a proxy in the form enclosed is duly executed and returned, the shares
of the Company's Common Stock represented thereby will be voted in accordance
with the specifications made thereon by the shareholder. If no such
specifications are made, such proxy will be voted (i) for election of the
Management Nominees (as hereinafter defined) for directors; (ii) for approval of
the amendment to the Company's Certificate of Incorporation to increase the
maximum number of shares of Common Stock the Company is authorized to issue from
20,000,000 shares to 25,000,000 shares; and (iii) at the discretion of Proxy
Agents (as hereinafter defined) with respect to such other business as may
properly come before the Annual Meeting or any adjournment thereof. Abstentions
are counted in tabulations of the votes cast on proposals presented to
shareholders, whereas broker non-votes are not counted for purposes of
determining whether a proposal has been approved. Under applicable Delaware law,
a broker non-vote will have the same effect as a vote against the proposed
amendment to the Certificate of Incorporation, and will have no effect on the
outcome of the election of directors. A proxy is revocable by either a
subsequently dated, properly executed proxy appointment which is received by the
Company prior to the time votes are counted at the Annual Meeting, or by a
shareholder giving notice of revocation to the Company in writing or during the
Annual Meeting prior to the time votes are counted. The mere presence at the
Annual Meeting of a shareholder who appointed a proxy does not itself revoke the
appointment.
2
<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of March 27, 1995, except as noted,
certain information with respect to each person or entity who is known by the
management of the Company to be the beneficial owner of more than 5% of the
outstanding shares of the Company's Common Stock:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) CLASS
------------------------------------- ----------------------- -----------------------
<S> <C> <C>
Equity Holdings(2)................... 3,042,253(3) 19.8%
Two North Riverside Plaza
Chicago, IL 60606
Arlington Leasing Co.(4)............. 997,369(5) 6.5%
Two North Riverside Plaza
Chicago, IL 60606
Robert Fleming Inc.(6)............... 1,118,990 7.3%
1285 Avenue of the Americas
16th Floor
New York, NY 10019
Foreign & Colonial Management(7)..... 1,099,730 7.1%
Limited and Hypo Foreign &
Colonial Management (Holdings)
Exchange House
Primrose Street
London EC2A2NY, England
</TABLE>
---------------
(1) The number of shares of the Company's Common Stock indicated as
beneficially owned is reported on the basis of regulations of the
Securities and Exchange Commission ("SEC") governing the determination of
beneficial ownership of securities.
(2) Equity Holdings, an Illinois general partnership, is comprised of the
Samuel Zell Revocable Trust with Samuel Zell as Trustee, the Robert H.
and Ann Lurie Trust with Ann Lurie and Sheli Z. Rosenberg as Co-Trustees,
and B/S Investments. Samuel Zell is the Chairman of the Board and Chief
Executive Officer of the Company and Sheli Z. Rosenberg is an executive
officer and director of the Company. B/S Investments is an Illinois general
partnership. Certain direct and indirect beneficial owners of B/S
Investments are trusts created for the benefit of Samuel Zell and his
family and for Ann Lurie and her family. Arthur A. Greenberg, an executive
officer of the Company, and Mmes. Rosenberg and Lurie are trustees or
co-trustees of certain of these trusts which are indirect beneficial owners
of B/S Investments. Messrs. Zell and Greenberg and Mmes. Lurie and
Rosenberg may be deemed to be the beneficial owners of the shares of the
Company's Common Stock owned by Equity Holdings but they each disclaim
beneficial ownership of these shares.
(3) The shares are held by four institutions as collateral for loans to Equity
Holdings. Under the loan agreements, the institutions cannot vote or
exercise any ownership rights relating to the pledged shares unless there
is an event of default thereunder.
(4) Arlington Leasing Co. ("Arlington") is an indirect, wholly owned subsidiary
of Equity Group Investments, Inc. ("EGI"). EGI's stockholders who own more
than 5% of EGI's outstanding stock include certain trusts created for the
benefit of Mr. Zell and Mrs. Lurie and their families. Mr. Greenberg and
Mmes. Lurie and Rosenberg are trustees or co-trustees of certain of these
trusts. Messrs. Zell and Greenberg and Mmes. Lurie and Rosenberg may be
deemed to be the beneficial owners of the shares of the Company's Common
Stock owned by Arlington but they each disclaim beneficial ownership of
these shares.
3
<PAGE> 6
(5) The shares are held by two financial institutions as collateral for loans
to Arlington. Under the loan agreements, the institutions cannot vote or
exercise any ownership rights relating to the pledged shares unless there
is an event of default thereunder.
(6) Pursuant to a Schedule 13G filed with the SEC for calendar 1994, Robert
Fleming Inc. is a registered investment advisor and has shared voting and
dispositive power for the shares reported herein.
(7) Pursuant to a Schedule 13G filed with the SEC for calendar 1994, Foreign &
Colonial Management Limited is a registered investment advisor and Hypo
Foreign & Colonial Management (Holdings) Limited is a parent holding
company and both have shared voting and dispositive power for the shares
reported herein.
TRANSACTIONS WITH PRINCIPAL STOCKHOLDERS
The Company subleases office space from EGI, a company affiliated with
Equity Holdings and Arlington, at Two North Riverside Plaza, Chicago, Illinois
60606. In addition, EGI provides the Company with certain administrative and
office facility services and charges for such services are included in the rent.
The Company paid approximately $95,400 during 1994 for such services.
Various affiliates of Equity Holdings and Arlington have provided services
with respect to certain aspects of the Company's business including, but not
limited to, financial and accounting services, tax services, computer services,
investor relations services and support services and expenses. During 1994, the
Company paid or was billed approximately $232,000 for such services.
The Company also provides financial management services to various
affiliates of Equity Holdings and Arlington. During 1994, the Company received
approximately $35,000 for such services which also included reimbursement of
overhead charges.
ELECTION OF DIRECTORS
(PROPOSAL 1)
VOTING AND THE MANAGEMENT NOMINEES
At the Annual Meeting, twelve directors will be elected to serve one-year
terms commencing immediately upon their election, or to serve until their
respective successors are duly elected and qualified. Management's nominees for
the twelve director positions to be filled by vote at the Annual Meeting are
(the "Management Nominees"):
Rod F. Dammeyer
Herbert A. Denton
Bradbury Dyer, III
Talton R. Embry
Bruce A. Esselborn
Dan L. Kirby
Joe P. Kirby
Donald W. Phillips
Sheli Z. Rosenberg
L.G. Schafran
Richard I. Weingarten
Samuel Zell
All of the Management Nominees are currently serving as directors of the
Company. For information regarding the Management Nominees, see "Directors and
Executive Officers of the Company."
At the Annual Meeting, if a quorum is present, the vote of a majority of the
Company's Common Stock held by shareholders present in person or represented by
proxy shall elect the directors. It is the present intention of Samuel Zell and
Bruce A. Esselborn, who will serve as the Company's proxy agents at the Annual
Meeting (the "Proxy Agents"), to vote the proxies which have been duly executed,
4
<PAGE> 7
dated and delivered and which have not been revoked in accordance with the
instructions set forth thereon or if no instruction had been given or indicated
to elect the Management Nominees as directors. The Board does not believe that
any of the Management Nominees will be unwilling or unable to serve as a
director. However, if prior to the election of directors, any of the Management
Nominees becomes unavailable or unable to serve, the Board reserves the right to
name a substitute nominee or nominees and the Proxy Agents expect to vote the
proxies for the election of such substituted nominee or nominees.
THE BOARD RECOMMENDS A VOTE IN FAVOR OF THE MANAGEMENT NOMINEES. IF A
CHOICE IS SPECIFIED ON THE PROXY BY A SHAREHOLDER, THE SHARES WILL BE VOTED AS
SPECIFIED. IF NO SPECIFICATION IS MADE, THE SHARES WILL BE VOTED "FOR" THE
MANAGEMENT NOMINEES.
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth the name, age, position and offices with the
Company, present principal occupation or employment and material occupations and
employment for the past five years of each person who is presently a director,
or an executive officer of the Company.
<TABLE>
<CAPTION>
PRINCIPAL POSITIONS WITH THE COMPANY;
PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME AGE FIVE-YEAR EMPLOYMENT HISTORY
----------------------- ------------- -----------------------------------------------------
<S> <C> <C>
Rod F. Dammeyer 54 Director of the Company since January 19, 1993;
President and a director since 1985 and Chief
Executive Officer since 1993 of Itel Corporation
("Itel"); Director since 1992 and President and Chief
Executive Officer since 1994 of Great American
Management and Investment, Inc. ("GAMI"); Director of
ANTEC Corporation, Falcon Building Products, Inc.
("Falcon"), Jacor Communications, Inc. ("Jacor"),
Lomas Financial Corporation, Revco D.S., Inc.
("Revco"), Santa Fe Energy Resources, Inc., and The
Vigoro Corporation ("Vigoro"); Trustee of several Van
Kampen American Capital, Inc. Closed End Mutual Funds
and Series Trusts.
Herbert A. Denton 47 Director of the Company since August 2, 1988;
President of Providence Capital, Inc. since February
1991; Managing Director of Jefferies & Company, Inc.
from January 1987 until February 1991; a Director of
Ramco Energy p.l.c.
Bradbury Dyer, III 52 Director of the Company since August 13, 1986;
General Partner, Paragon Associates and Paragon
Associates II; Managing Agent, Paragon Joint Venture;
Director of Falcon, GAMI and Roosevelt Financial
Group, Inc.
Talton R. Embry 48 Director of the Company since August 1, 1986;
Investment Advisor, Magten Asset Management Corp.
("Magten"); Co-Chairman of the Board of Revco;
Director of Combined Broadcasting Corporation, BDK
Holdings, Inc., Thermadyne Holdings Corp., TSX
Corporation, and VARCO International Inc. See
"Litigation Relating to Director."
Bruce A. Esselborn 52 Director of the Company since February 20, 1990 and
President since June 24, 1992; Chairman of the Board
since 1988 and President and Chief Executive Officer
since 1986 of United Capitol Holding Company and
United Capitol Insurance Company ("United Capitol").
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
PRINCIPAL POSITIONS WITH THE COMPANY;
PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME AGE FIVE-YEAR EMPLOYMENT HISTORY
----------------------- ------------- -----------------------------------------------------
<S> <C> <C>
Dan L. Kirby 48 Director of the Company since May 27, 1993; Executive
Vice President, General Counsel and Secretary of
Western Surety Company since 1974.
Joe P. Kirby 41 Director of the Company since May 27, 1993; President
and Chief Executive Officer of Western Surety Company
since 1979.
Donald W. Phillips 46 Director of the Company since May 9, 1990; President
of the Company from March 28, 1990 until June 24,
1992; Executive Vice President of Equity Financial
and Management Company ("Equity") since March 1990;
Chairman of the Board of Equity Institutional
Investors, Inc. since July 1990.
Sheli Z. Rosenberg 53 Director of the Company since May 15, 1987; Vice
President since February 20, 1990; General Counsel of
the Company from February 20, 1990 until September 8,
1994; Member of the law firm of Rosenberg &
Liebentritt, P.C.; President and Chief Executive
Officer since November 1994, Executive Vice President
from 1986 until 1994 and Director of EGI; President
and Chief Executive Officer since November 1994,
Executive Vice President from 1980 until 1994 and a
Director of Equity; Director and Vice President and
General Counsel from October 1985 until March 1995 of
GAMI; Chairman of the Board of CFI Industries, Inc.
from January 1994 until September 1994 and
Co-Chairman since September 1994; Director of
American Classic Voyages Co. ("American Classic"),
Falcon, Itel, Jacor, Revco and Vigoro; a trustee of
Equity Residential Properties Trust ("Equity
Residential"); Vice President of Madison Management
Group, Inc. ("Madison") prior to October 4, 1991.
Madison filed for a petition under the Federal
bankruptcy laws on November 8, 1991. Vice President
of First Capital Benefit Administrators, Inc.
("Benefits Administrators") since July 22, 1987.
Benefits Administrators filed for a petition under
the Federal bankruptcy laws on January 3, 1995.
L.G. Schafran 56 Director of the Company since August 1, 1986;
Managing General Partner of L.G. Schafran &
Associates; Director of Crown Books Corp., Dart Group
Corp., Glasstech, Inc., Oxigene, Inc., Publicker
Industries, Inc. and Trak-Auto Corp.
Richard I. Weingarten 44 Director of the Company since March 2, 1994;
President of Richard Weingarten & Company, Inc. since
1991; Managing director of Bear Stearns & Co., Inc.
from 1988 until 1991.
Samuel Zell 53 Director of the Company since August 13, 1986;
Chairman of the Board and Chief Executive Officer of
the Company since October 15, 1987; President of the
Company from July 25, 1989 until March 27, 1990;
Chairman of the Board of Broadway Stores, Inc.,
American Classic, Equity, EGI, Equity Residential,
Falcon, Itel, and Manufactured Home Communities, Inc.
(effective March 31, 1995); Chairman of the Board
since 1983 and President and Chief Executive
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
PRINCIPAL POSITIONS WITH THE COMPANY;
PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME AGE FIVE-YEAR EMPLOYMENT HISTORY
----------------------- ------------- -----------------------------------------------------
<S> <C> <C>
Officer from 1990 until 1994 of GAMI; Co-Chairman of
the Board of Manufactured Home Communities, Inc.
until March 31, 1995 and Revco; Director of Jacor,
Sealy Corporation, and Vigoro; trustee and
beneficiary of a managing general partner of Equity
Holdings; President of Madison prior to October 4,
1991. Madison filed for a petition under the Federal
bankruptcy laws on November 8, 1991.
Ronald D. Bobman 30 Vice President -- Mergers and Acquisitions of the
Company since March 2, 1994; Director -- Mergers and
Acquisitions of the Company from January 1991 until
March 1994; employed at Equity Group Investments,
Inc. from September 1989 until January 1991, most
recently as Director -- Mergers and Acquisitions.
Arthur A. Greenberg 54 Senior Vice President of the Company since January 1,
1989, and Treasurer of the Company since February 5,
1990; Chief Financial Officer of the Company from
July 25, 1989 until May 27, 1993; Executive Vice
President and Director of EGI and Equity; President
of Greenberg & Pociask, Ltd.; Director of American
Classic and Vigoro; Vice President, Chief Financial
Officer and Treasurer of Madison prior to October 4,
1991. Madison filed for a petition under the Federal
bankruptcy laws on November 8, 1991.
Mary Jane Robertson 41 Senior Vice President and Chief Financial Officer of
the Company since May 27, 1993; Executive Vice
President and Chief Financial Officer of United
Capitol since August 20, 1991; Senior Vice President,
Chief Financial Officer and Controller of United
Capitol from February 1990 until August 1991.
Kelly L. Stonebraker 40 Vice President and General Counsel of the Company
since September 8, 1994; Attorney at Rosenberg &
Liebentritt, P.C. since September 1990; Attorney at
Katten, Muchin & Zavis from September 1981 until
September 1990.
Steven S. Zeitman 46 Executive Vice President and Chief Underwriting
Officer of United Capitol since August 20, 1991;
Senior Vice President of United Capitol from 1988
until August 1991.
John M. Zoeller 34 Vice President-Taxes of the Company since March 1992;
Director of Taxes of the Company from June 1991 until
March 1992; Tax Manager of the Company from January
1990 until June 1991; Vice President-Taxes of GAMI
from December 1991 until March 1995; Director of
Taxes of GAMI from June 1991 until December 1991; Tax
Manager of GAMI from January 1988 until June 1991;
member of Greenberg & Pociask, Ltd. since January
1994.
</TABLE>
LITIGATION RELATING TO DIRECTOR
On September 9, 1993, Mr. Embry and Magten, without admitting or denying
the allegations in a complaint by the SEC, consented to the entry of judgments
enjoining them from violating (and, in the
7
<PAGE> 10
case of Mr. Embry, aiding and abetting violations of) anti-fraud and other
provisions of the Securities Exchange Act of 1934, as amended ("Exchange Act"),
the Investment Advisers Act of 1940, as amended, and the Investment Company Act
of 1940, as amended. The SEC's complaint alleged principally that Mr. Embry
failed to advise clients of certain personal trades relevant to the clients'
holdings, to obtain certain consents required under applicable law in connection
therewith and to comply with certain reporting requirements. The complaint did
not involve the securities of the Company. As part of the settlement, Mr. Embry
made a $1 million payment for the benefit of certain of Magten's clients.
BOARD AND COMMITTEE MEETINGS
The Board has an Executive Committee which consists of Messrs. Dyer,
Esselborn and Zell. The Executive Committee did not hold any meetings in 1994.
The Executive Committee possesses and may exercise the full and complete
authority of the Board in the management and business affairs of the Company
during the intervals between the meetings of the Board. All action by the
Executive Committee is reported to the Board at its next meeting and such action
is subject to revision and alteration by the Board, provided that no rights of
third persons can be prejudicially affected by the subsequent action of the
Board. Vacancies on the Executive Committee are filled by the Board. However,
during the temporary absence of a member of the Executive Committee, due to
illness or inability to attend a meeting for other cause, the remaining
member(s) of the Executive Committee may appoint a member of the Board to act in
the place and with all the authority of such absent member. The current members
of the Executive Committee will continue in office until the Committee is
dissolved, terminated or reorganized, or if such members are replaced.
The Company also has an Audit Committee which consists of Messrs. Denton,
Embry and Schafran. During 1994, the Audit Committee held two meetings. The
Audit Committee has the power to (i) recommend to the Board the independent
certified public accountants to be selected to serve the Company, (ii) review
with the independent certified public accountants the planned scope and results
of the annual audit, their reports and recommendations, (iii) review with the
independent certified public accountants matters relating to the Company's
system of internal controls, and (iv) review the Company's policies with respect
to corporate governance, including policies relating to compliance with laws and
regulations and conflicts of interest.
The Company also has a Compensation Committee which consists of Messrs.
Dammeyer, Denton and Schafran. During 1994, the Compensation Committee held one
meeting. The Compensation Committee reviews and makes recommendations concerning
proposals by management with respect to compensation, bonuses, stock option
grants, employment agreements and other benefits and policies regarding such
matters for the Company.
The Company also has an Investment Committee which consists of Messrs.
Dyer, Embry, Esselborn, Phillips and Zell. During 1994, the Investment Committee
held five meetings. The Investment Committee establishes investment policies and
oversees the management of the Company's investment portfolio.
During 1994, five meetings of the Board were held. All directors were
present at least for 75% of the meetings of the Board and the committees that
they were eligible to attend, except for Mr. Dan Kirby who attended five out of
seven meetings he was eligible to attend and Mr. Zell who attended eight out of
twelve meetings he was eligible to attend.
8
<PAGE> 11
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
OTHER
ANNUAL ALL OTHER
NAME AND SALARY BONUS COMPENSATION OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)
---------------------------------- ---- ------- ------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Samuel Zell....................... 1994 0 0 150,000(1) 25,000 0
Chairman of the Board and 1993 0 0 50,000(1) 25,000 0
Chief Executive Officer 1992 0 0 50,000(1) 5,000 0
of the Company
Bruce A. Esselborn................ 1994 387,500 112,500 854(2) 5,000 24,948(3)
President of the Company 1993 387,500 125,000 1,007(2) 5,000 32,569(3)
and Chairman, President 1992 299,728 125,000 3,501(2) 5,000 28,246(3)
and Chief Executive Officer
of United Capitol
Dan L. Kirby...................... 1994(4) 250,000 250,000 408(5) 5,000 9,000(6)
Executive Vice President, 1993 250,000 250,000 396(5) 5,000 11,572(6)
General Counsel & Secretary 1992 86,538 253,794 7,265(5) 50,000 23,800(6)
of Western Surety Company
Joe P. Kirby...................... 1994(4) 250,000 250,000 0(7) 5,000 9,000(8)
President and Chief 1993 250,000 250,000 336 5,000 11,572(8)
Executive Officer of 1992 86,538 252,389 4,649(7) 50,000 14,985(8)
Western Surety Company
Mary Jane Robertson............... 1994 200,000 30,000 0 8,500 15,034(9)
Senior Vice President and Chief 1993 200,000 30,000 0 0 21,566(9)
Financial Officer of the Company 1992 184,395 30,000 0 0 16,413(9)
and Executive Vice President and
Chief Financial Officer of
United Capitol
</TABLE>
---------------
(1) Mr. Zell received $150,000 in 1994 and $50,000 in 1993 and 1992 for his
services as Chairman of the Board, Chief Executive Officer and Chairman of
the Executive Committee.
(2) Included $854 in 1994, $1,007 in 1993 and $2,456 in 1992 of reimbursements
of personal investment advisory fees and $1,045 in 1992 of reimbursement of
income taxes paid on automobile fringe benefits.
(3) Included (i) $11,760 in 1994, $10,060 in 1993 and $8,600 in 1992 of
company-paid premiums on a life insurance policy owned by him; (ii) $4,620
in 1994, $4,497 in 1993 and $4,364 in 1992 of 401(k) plan company matching
contributions; (iii) $8,568 in 1994, $18,012 in 1993 and $13,782 in 1992 of
company contributions under a defined contribution retirement plan; and (iv)
$1,500 in 1992 of directors' fees from Western Surety Company.
(4) Only includes amounts from August 14, 1992, the date of the Company's
acquisition of Western Surety Company.
(5) Included $408 in 1994, $396 in 1993 and $366 in 1992 of reimbursements of
health club dues and $6,899 in 1992 of reimbursement of income taxes paid on
company-paid premiums on life insurance policies owned by him.
(6) Included $9,000 in 1994 and $11,572 in 1993 of 401(k) plan company matching
and profit sharing contributions and $23,800 in 1992 of company-paid
premiums on life insurance policies owned by him.
(7) Included $336 in 1993 and $306 in 1992 of reimbursements of health club fees
and $4,343 in 1992 of reimbursement of income taxes paid on company-paid
premiums on life insurance policies owned by him.
9
<PAGE> 12
(8) Included $9,000 in 1994 and $11,572 in 1993 of 401(k) plan company matching
and profit sharing contributions and $14,985 in 1992 of company-paid
premiums on life insurance policies owned by him.
(9) Included (i) $4,620 in 1994, $4,497 in 1993 and $4,364 in 1992 of 401(k)
plan company matching contributions; (ii) $10,414 in 1994, $17,069 in 1993
and $10,549 in 1992 of company contributions under a defined contribution
retirement plan; and (iii) $1,500 in 1992 of directors' fees from Western
Surety Company.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
--------------------------- ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES GRANTED TO APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OR OPTION TERM
OPTION GRANTED IN FISCAL BASE PRICE EXPIRATION --------------------
NAME (#)(1) YEAR(2) ($/SH) DATE 5%($)(3) 10%($)(4)
---- -------------- ---------- ------------ ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Samuel Zell................. 5,000 2.5 14.75 5/19/04 46,381 117,539
20,000 10.0 13.00 8/16/04 163,513 414,373
Bruce A. Esselborn.......... 5,000 2.5 14.75 5/19/04 46,381 117,539
Dan L. Kirby................ 5,000 2.5 14.75 5/19/04 46,381 117,539
Joe P. Kirby................ 5,000 2.5 14.75 5/19/04 46,381 117,539
Mary Jane Robertson......... 8,500 4.3 13.00 8/16/04 69,493 176,109
</TABLE>
---------------
(1) The Options granted during 1994 to purchase 5,000 shares were exercisable
after May 19, 1994, for Messrs. Zell, Esselborn, Dan Kirby and Joe Kirby.
The Options granted to Mr. Zell (20,000) and Ms. Robertson (8,500) are
exercisable in four equal annual cumulative installments beginning one year
after the grant date of August 16, 1994.
(2) Does not include options granted to non-employee directors and consultants.
If such grants are included, the percentage would be 1.7% for the options to
purchase 5,000 shares; 6.8% for Mr. Zell's options to purchase 20,000
shares; and 2.9% for Ms. Robertson's options to purchase 8,500 shares.
(3) Assumes a price of $24.03 at the end of ten years for the options to
purchase 5,000 shares and a price of $21.18 at the end of ten years for Mr.
Zell's options to purchase 20,000 shares and Ms. Robertson's options to
purchase 8,500 shares.
(4) Assumes a price of $38.26 at the end of ten years for the options to
purchase 5,000 shares and a price of $33.72 at the end of ten years for Mr.
Zell's options to purchase 20,000 shares and Ms. Robertson's options to
purchase 8,500 shares.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUE
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED ON VALUE FY-END(#) FY-END($)
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
---- ----------- -------- -------------- --------------
<S> <C> <C> <C> <C>
Samuel Zell.................... -0- -0- 20,000/35,000 34,375/49,375
Bruce A. Esselborn............. -0- -0- 165,000/0 1,210,000/0
Dan L. Kirby................... -0- -0- 60,000/0 273,125/0
Joe P. Kirby................... -0- -0- 60,000/0 273,125/0
Mary Jane Robertson............ -0- -0- 100,000/8,500 787,500/13,813
</TABLE>
10
<PAGE> 13
COMPENSATION OF DIRECTORS
Samuel Zell, Chairman of the Board and Chief Executive Officer of the
Company, was compensated at the annual rate of $150,000 for his services as a
Director, Chairman of the Board, Chief Executive Officer and Member of the
Executive Committee during 1994. Such amount has been included in the Summary
Compensation Table on page 9. Other Directors, except for employees of the
Company or its subsidiaries, were compensated at the annual rate of $15,000 and
received $500 for each meeting of the Board and committees of the Board of the
Company which they attended. Additionally, as of the date of the first
Directors' meeting following each Annual Meeting, each Director receives options
to purchase 5,000 shares at the fair market value as of the grant date.
United Capitol pays its non-Company or subsidiary employee directors an
annual retainer of $12,000. Messrs. Phillips and Greenberg and Mrs. Rosenberg,
who are members of such Board, each were compensated pursuant to this policy for
1994. Western Surety Company pays its non-Company or subsidiary employee
directors an annual retainer of $12,000. Mr. Greenberg and Mrs. Rosenberg, who
are members of such Board, each were compensated pursuant to this policy for
1994.
EMPLOYMENT CONTRACTS AND TERMINATION
OF EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
The Company and certain of its subsidiaries and Mr. Esselborn have an
agreement providing for the continuation of Mr. Esselborn's employment through
at least February 19, 1995, with salary adjustments determined by such
subsidiaries, an annual bonus of up to $200,000, a stock option grant for the
purchase of 150,000 shares of Common Stock (granted on February 20, 1990),
Company-paid premiums for a $2,000,000 life insurance policy with Mr. Esselborn
designating the beneficiary and certain other employee benefits. The Company and
Mr. Esselborn entered into a new agreement as of February 20, 1995, providing
for the continuation of Mr. Esselborn's employment through February 19, 1997,
with salary adjustments, an annual bonus of up to $200,000, company-paid
premiums on a $2,000,000 life insurance policy with Mr. Esselborn designating
the beneficiary and certain other employee benefits.
The Company and certain of its subsidiaries and Ms. Robertson have an
agreement providing for the continuation of Ms. Robertson's employment through
at least February 19, 1995, with salary adjustments determined by such
subsidiaries, an annual bonus, a stock option grant for the purchase of 100,000
shares of Common Stock (granted on February 20, 1990) and certain other employee
benefits. The Company and Ms. Robertson entered into a new agreement as of
February 20, 1995, providing for the continuation of Ms. Robertson's employment
through February 19, 1997, with salary adjustments, an annual bonus and certain
other employee benefits.
The Company and certain of its subsidiaries and Dan L. Kirby have an
agreement providing for the continuation of Mr. Kirby's employment through at
least August 14, 1995, with salary adjustments determined by certain of such
subsidiaries, an annual bonus not to exceed $250,000 based upon premiums earned
by Western Surety Company, a stock option grant for the purchase of 50,000
shares of Common Stock (granted on August 14, 1992) and certain other employee
benefits.
The Company and certain of its subsidiaries and Joe P. Kirby have an
agreement providing for the continuation of Mr. Kirby's employment through at
least August 14, 1995, with salary adjustments determined by certain of such
subsidiaries, an annual bonus not to exceed $250,000 based upon premiums earned
by Western Surety Company, a stock option grant for the purchase of 50,000
shares of Common Stock (granted on August 14, 1992) and certain other employee
benefits.
11
<PAGE> 14
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
The members of the Company's Compensation Committee are Messrs. Dammeyer,
Denton and Schafran.
The following relationships existed during 1994:
Ms. Rosenberg and Mr. Zell were executive officers and directors of the
Company and Ms. Rosenberg was a director and member of the Compensation
Committee of Itel, and Mr. Zell was an executive officer and director of Itel.
Mr. Dammeyer was an executive officer and director of Itel and was a director
and member of the Compensation Committee of the Company.
Ms. Rosenberg and Mr. Zell were executive officers and directors of the
Company and Ms. Rosenberg and Mr. Zell were executive officers, directors and
members of the Compensation Committee of GAMI. Mr. Dammeyer was an executive
officer and director of GAMI and was a director and member of the Compensation
Committee of the Company.
Ms. Rosenberg was an executive officer and director of the Company and was
a trustee of Equity Residential. Mr. Zell was an executive officer and trustee
of Equity Residential and an executive officer and director of the Company.
For the year ended December 31, 1994, the Company paid approximately
$196,700 in fees for legal services to the law firm of Rosenberg & Liebentritt,
P.C. of which Mrs. Rosenberg and Mr. Stonebraker are members. For the year ended
December 31, 1994, the company paid Seyfarth Shaw Fairweather & Geraldson
("Seyfarth") approximately $222,200. Ms. Rosenberg's husband is a partner at
Seyfarth. Additionally, see "Security Ownership of Certain Beneficial
Owners-Transactions with Principal Stockholders."
Notwithstanding anything to the contrary set forth in any of the Company's
filings under the Securities Act of 1933, or the Exchange Act that might
incorporate future filings, including this Proxy Statement, in whole or in part,
the report presented below and the Performance Graph following shall not be
incorporated by reference into any such filings.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The compensation policy of the Company for its executive officers
(including those named in the Summary Compensation Table) has been to pay base
salaries and annual bonuses that are both competitive and recognize the
accomplishment of the Company's stated goals. In addition, the Company
established the 1990 Stock Option Plan to provide long-term incentive
opportunities for employees, officers and directors of the Company.
The Company established its basic goals five years ago. These goals
included building a financial services business primarily focusing on insurance.
The Company's first step to accomplish its goals was the 1990 acquisition of
United Capitol. In furtherance of its goals, the Company completed the
acquisition of Western Surety Company during 1992, Fischer Underwriting Group in
1993, and the acquisition of Universal Surety of America during 1994. Since the
Company began realizing its goal of being an insurance company with the
acquisition of United Capitol, a second performance graph has been included
which illustrates the performance of the Company's Common Stock, the S&P 500 and
the S&P Property and Casualty Insurance Index with a beginning point of January
31, 1990, and an ending point of December 31, 1994, to correspond with the
February 20, 1990, acquisition of United Capitol.
Based on the Board's judgment of the accomplishments by certain executive
officers of these stated goals, salary increases and/or bonuses were awarded to
the named United Capitol executives. As a condition precedent to the Western
Surety Company acquisition, the Company entered into
12
<PAGE> 15
employment contracts with two executive officers of Western Surety Company (see
"Employee Contracts and Termination of Employment and Change-In-Control
Arrangements"). In furtherance of the Company's compensation policy, incentive
bonuses provided for in those contracts are based on the amount of premiums
earned by Western Surety Company.
Historically, the Chairman of the Board and Chief Executive Officer of the
Company received a $50,000 fee for serving in such capacities. As of January 1,
1994, that amount was increased to $150,000. This fee is not directly tied to
the performance of the Company but rather reflects the commencement of the
Company's strategic plan and the initial implementation of this plan and Mr.
Zell's contributions to it.
Long-term incentive opportunities were made available to each of the
executive officers (other than the Chief Executive Officer) in the form of
significant grants of stock options at the time of the Company's acquisition of
either United Capitol or Western Surety Company. These options were designed to
promote the long-term interests between such individuals and the Company
shareholders and to assist in the retention of such officers. It continues to be
the Company's intention to accomplish these objectives and, therefore, at the
time of an acquisition of a company, major option grants will be made to retain
certain executive officers of the acquired company at exercise prices at the
time of grant determined in part by the market price of the Company's stock at
the date the options are to be granted. In 1994, options to purchase 20,000
shares were awarded to Mr. Zell in recognition of his accomplishments as
Chairman of the Board and Chief Executive Officer.
Rod F. Dammeyer
Herbert A. Denton
L.G. Schafran
13
<PAGE> 16
PERFORMANCE GRAPHS
Below is a graph comparing total shareholder return on the Company's Common
Stock over the last five years with two broad equity market indices, S&P
Property and Casualty Insurance and S&P Domestic Integrated Oil, and a published
industry index, the S&P 500, as required by the rules of the SEC. The Company
has presented both of the broad equity market indices since it has operated in
both arenas at different times during the five years shown. A second graph has
also been provided for the period January 31, 1990, through December 31, 1994,
which only uses the S&P Property and Casualty Insurance Index. This time period
corresponds to the Company's involvement in the property and casualty insurance
business.
<TABLE>
<CAPTION>
Capsure S&P Property S&P Domestic
Measurement Period Holdings & Casualty Integrated
(Fiscal Year Covered) Corp. ($) S&P 500 ($) ($) Oil ($)
<S> <C> <C> <C> <C>
1989 100.00 100.00 100.00 100.00
1990 65.08 96.89 97.71 94.94
1991 90.48 126.42 122.33 88.76
1992 173.02 136.05 143.26 90.64
1993 171.43 149.76 140.73 95.50
1994 185.71 151.74 147.62 100.20
</TABLE>
<TABLE>
<CAPTION>
Capsure S&P Property
Measurement Period Holdings & Casualty
(Fiscal Year Covered) Corp. ($) S&P 500 ($) ($)
<S> <C> <C> <C>
Jan. 1990 100.00 100.00 100.00
Feb.-Dec. 1990 78.92 103.87 104.22
1991 109.69 135.52 130.48
1992 209.69 145.84 152.80
1993 207.69 160.54 150.10
1994 225.20 162.66 157.44
</TABLE>
14
<PAGE> 17
DELINQUENT FILINGS PURSUANT TO ITEM 405
OF REGULATION S-K
Under the rules of the SEC, the Company is required to report, based on its
review of reports to the SEC about transactions in its stock furnished to the
Company and written representations of its directors, officers and 10%
shareholders. In 1994, Kelly L. Stonebraker filed a Form 3 late which reported
no securities owned as of such Initial Statement of Beneficial Ownership.
SECURITY OWNERSHIP OF MANAGEMENT
The following information is furnished as of March 27, 1995, with respect
to the shares of the Company's Common Stock beneficially owned by each director,
nominee for director and by those executive officers named in the Summary
Compensation Table and by all directors and executive officers as a group.
Information concerning the directors and officers and their security holdings
has been furnished by them to the Company.
<TABLE>
<CAPTION>
SHARES UPON
SHARES OF EXERCISE OF
NAME OF COMMON STOCK PERCENT OF
BENEFICIAL OWNER STOCK OPTION(1) TOTAL(2) CLASS
-------------------------------- ------------- ----------- ------------- ----------
<S> <C> <C> <C> <C>
Rod F. Dammeyer................. 0 10,000 10,000 *
Herbert A. Denton............... 7,860 30,000 37,860 *
Bradbury Dyer, III.............. 546,158(3) 30,000 576,158(3) 3.7%
Talton R. Embry................. 45,675(4) 30,000 75,675(4) *
Bruce A. Esselborn.............. 78,507(5) 170,000(5) 248,507(5) 1.6%
Dan L. Kirby.................... 55,555 60,000 115,555 *
Joe P. Kirby.................... 55,555 60,000 115,555 *
Donald W. Phillips.............. 0 30,000 30,000 *
Sheli Z. Rosenberg.............. 4,062,328(6)(7) 30,000 4,092,328(6)(7) 26.5%
L.G. Schafran................... 13,768(8) 30,000 43,768(8) *
Richard I. Weingarten........... 0 5,000 5,000 *
Samuel Zell..................... 4,039,622(6)(7) 55,000 4,094,622(6)(7) 26.5%
Mary Jane Robertson............. 1,500 108,500 110,000 *
All directors and executive
officers as a group including
the above-named persons....... 4,874,506 818,500 5,693,006 35.1%
============ ========= ============ ========
</TABLE>
---------------
* Less than 1%
(1) Represents beneficial ownership of shares that may be acquired by the
exercise of stock options which are currently exercisable or exercisable
within sixty days of the date of this table.
(2) The amounts of the Company's Common Stock and stock options beneficially
owned are reported on the basis of regulations of the SEC governing the
determination of beneficial ownership of securities.
(3) Includes 544,258 shares of the Company's Common Stock owned by Paragon Joint
Venture ("Paragon"). Paragon is a joint venture formed by Paragon Associates
and Paragon Associates II, both Texas limited partnerships. Mr. Dyer is the
sole general partner of Paragon Associates and Paragon Associates II. Under
the terms of the joint venture agreement of Paragon, each partner has
beneficial ownership in proportion to its respective account in Paragon. Mr.
Dyer does not have full direct ownership; however, as the general partner of
the partners of Paragon, he may be deemed to have beneficial ownership.
(4) The 45,675 shares are owned as follows: 13,800 shares are owned by Mr.
Embry; 14,400 shares are owned by the Magten Asset Management Corp. Pension
Plan & Trust; 1,675 shares are owned by
15
<PAGE> 18
Mr. Embry's minor children; 300 shares are owned by Mr. Embry's wife; and
15,500 shares are owned by the Magten Asset Management Profit Sharing Plan.
(5) Includes 3,500 shares and options to purchase 5,000 shares beneficially
owned by Mr. Esselborn's wife.
(6) Includes 3,042,253 shares of the Company's Common Stock owned by Equity
Holdings. Under regulations of the SEC, Mr. Zell and Mrs. Rosenberg may be
deemed to be the beneficial owners of the shares of the Company's Common
Stock owned by Equity Holdings (see notes (2) and (3) under "Security
Ownership of Certain Beneficial Owners"), but they each disclaim beneficial
ownership of these shares.
(7) Includes 997,369 shares of the Company's Common Stock owned by Arlington.
Under regulations of the SEC, Mr. Zell and Mrs. Rosenberg may be deemed to
be beneficial owners of the shares of the Company's Common Stock (see notes
(4) and (5) under "Security Ownership of Certain Beneficial Owners"), but
they each disclaim beneficial ownership of these shares.
(8) Includes 13,768 shares which are beneficially owned by Mr. Schafran's
spouse. Mr. Schafran disclaims beneficial ownership of such shares.
16
<PAGE> 19
APPROVAL OF AN AMENDMENT TO THE COMPANY'S
CERTIFICATE OF INCORPORATION TO INCREASE THE
MAXIMUM NUMBER OF SHARES OF COMMON STOCK
THE COMPANY IS AUTHORIZED TO ISSUE FROM
20,000,000 SHARES TO 25,000,000 SHARES
(PROPOSAL 2)
The Board of Directors of the Company on March 15, 1995 adopted resolutions
approving a proposed amendment to the Certificate of Incorporation of the
Company, and recommended adoption of the amendment by the shareholders. Exhibit
A to this Proxy Statement contains the proposed amendment to the Certificate of
Incorporation. The following discussion of the proposed amendment is qualified
in its entirety by reference to the text of the proposed amendment set forth in
Exhibit A.
Article Fourth of the Company's Certificate of Incorporation currently
provides that the Company is authorized to issue 20,000,000 shares of $.05 par
value per share of Common Stock and 5,000,000 shares of $.01 par value per share
Preferred Stock. If adopted, the proposed amendment to Article Fourth would
increase the maximum number of shares of Common Stock which the Company is
authorized to issue from 20,000,000 shares to 25,000,000 shares.
Article Fourth currently and will continue in the proposed amendment to
give the Board of Directors the power to issue the shares of Preferred Stock
authorized in one or more series and to fix the designation, rights, conversion
rights, preferences and limitations of the shares in each series.
Of the 20,000,000 shares of Common Stock presently authorized 16,883,053
(84%) were issued and outstanding or reserved for issuance at March 27, 1995. Of
the 5,000,000 shares of Preferred Stock presently authorized, no shares were
issued and outstanding or reserved for issuance at March 27, 1995. If the
proposed amendment is adopted there will be authorized, unissued and unreserved
8,116,947 shares of Common Stock and 5,000,000 shares of Preferred Stock.
Management believes that it is desirable to increase the number of shares of
Common Stock to provide to the Company the ability to raise capital, make
acquisitions in the future and effect other corporate opportunities. No further
action or authorization by the Company's shareholders would be necessary prior
to issuance of the additional shares, except as may be required for a particular
transaction by applicable law or regulating agencies or by the rules of any
stock exchange on which the Company's securities may then be listed. The
Company's Common Stock is currently listed on the New York Stock Exchange, Inc.
Except for the 1990 Stock Option previously approved by shareholders, there
are presently no negotiations, plans or commitments regarding the issuance of
additional shares of Common Stock or of any shares of Preferred Stock.
THE BOARD RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE AMENDMENT TO THE
CERTIFICATE OF INCORPORATION. IF A CHOICE IS SPECIFIED ON THE PROXY BY THE
SHAREHOLDERS, THE SHARES WILL BE VOTED AS SPECIFIED. IF NO CHOICE SPECIFICATION
IS MADE, SHARES WILL BE NOTED "FOR" APPROVAL OF THE AMENDMENT.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand have been the principal accountants for the Company since
1989. Representatives of Coopers & Lybrand are expected to be present at the
Annual Meeting, will be given an opportunity to make a statement if they desire
to do so, and will be available to respond to appropriate questions from
shareholders.
17
<PAGE> 20
SHAREHOLDERS' PROPOSALS FOR 1996 ANNUAL MEETING
A proposal submitted by a shareholder for the 1996 Annual Meeting of
Shareholders of the Company must be received by the Secretary of the Company,
Two North Riverside Plaza, Chicago, Illinois 60606, by December 2, 1995, in
order to be eligible to be included in the Company's proxy statement for that
meeting.
CONCLUSION
The Company knows of no business which will be presented at the Annual
Meeting other than the election of Board, and the amendment to the Certificate
of Incorporation. However, if other matters properly come before the meeting, it
is the intention of the Proxy Agents to vote upon such matters in accordance
with their good judgment in such matters.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ SUSAN OBUCHOWSKI
SUSAN OBUCHOWSKI, Secretary
18
<PAGE> 21
EXHIBIT A
PROPOSED AMENDMENT
TO ARTICLE FOURTH OF CERTIFICATE OF INCORPORATION
FOURTH: The number of authorized shares of capital stock of the Corporation
is 30,000,000 of which 25,000,000 shares shall be Common Stock, par value five
cents ($.05) per share, and 5,000,000 shares shall be Preferred Stock, par value
one cent ($.01) per share. The Board of Directors is expressly granted the
authority to issue the Preferred Stock in one or more series and to determine in
the resolution or resolutions adopted by the Board of Directors providing for
the issuance thereof (i) the powers, designation, preferences and relative
participating, optional or other rights, and the qualifications, limitations or
restrictions of the shares of said series of Preferred Stock, (ii) any
restrictions on the Corporation in connection with the Preferred Stock, and
(iii) the amount of consideration received in respect of the Preferred Stock
which shall be capital. The holder of each share of Common Stock shall have the
right to one (1) vote per share on each matter submitted to the stockholders for
a vote.
<PAGE> 22
CAPSURE HOLDINGS CORP.
TWO NORTH RIVERSIDE PLAZA, CHICAGO, ILLINOIS 60606
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 24, 1995
P The undersigned hereby appoints BRUCE A. ESSELBORN and SAMUEL ZELL,
R or either of them, with individual power of substitution, proxies to vote
O all shares of the Common Stock of Capsure Holdings Corp. (the "Company")
X which the undersigned may be entitled to vote at the Annual Meeting of
Y Shareholders of the Company to be held in Chicago, Illinois, on May 24,
1995, and any adjournment thereof.
1. Authority to vote for the election as directors of the group of
twelve nominees proposed by the Board of Directors listed below:
Rod F. Dammeyer, Herbert A. Denton, Bradbury Dyer III, Talton R.
Embry, Bruce A. Esselborn, Dan L. Kirby, Joe P. Kirby, Donald W. Phillips,
Sheli Z. Rosenberg, L.G. Schafran, Richard Weingarten, Samuel Zell
2. To amend the Company's Certificate of Incorporation to increase
the maximum number of shares of Common Stock the Company is authorized to issue
from 20,000,000 shares to 25,000,000 shares.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE
BOXES ON THE REVERSE SIDE. IF YOU DO NOT MARK ANY BOXES, YOUR PROXY WILL BE
VOTED IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES
CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
SEE REVERSE
SIDE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
------------------------------------
PLEASE MARK
X VOTES AS IN THIS
EXAMPLE.
This Proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made, the Proxy will be
voted FOR Authority to vote for the election as directors of the group of
twelve nominees propsed by the board of directors listed on the other side and
FOR the amendment to the Company's Certificate of Incorporation.
FOR AGAINST ABSTAIN
2. Amend the Company's
Certificate of / / / / / /
FOR WITHHELD Incorporation.
1. Election of
Directors. / / / / 3. In their discretion, the Proxies are
FOR EXCEPT VOTE WITHHELD FROM authorized to vote upon such other matters
THE FOLLOWING NOMINEES as may properly come before the meeting.
/ /---------------------------
MARK HERE
FOR ADDRESS / /
CHANGE AND
NOTE AT LEFT
Note: Please sign as name appears hereon,
Joint owners should each sign. When signing as
attorney, executor, administrator, trustee or
guardian, please give full title as such.
Signature:_____________________Date___________
Signature:_____________________Date___________
