<PAGE>
[JMCG LOGO]
JMC GROUP, INC.
9710 SCRANTON ROAD, SUITE 100, SAN DIEGO, CA 92121
__________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 3, 1999
To the Stockholders of JMC Group, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders (the
"Annual Meeting") of JMC Group, Inc., a Delaware corporation (the "Company"),
will be held at The Inn at Rancho Santa Fe, 5951 Linea Del Cielo, Rancho Santa
Fe, California 92067 on Monday, May 3, 1999, at 10:00 a.m., Pacific Daylight
Savings Time, for the following purposes:
1. To amend the Certificate of Incorporation of the Company to effect a
one for two reverse split of the Common Stock.
2. To elect one Director of the Company to serve for three years or until
his successor shall be duly appointed or elected.
3. To ratify the selection of Deloitte & Touche LLP as the Company's
Independent certified public accountants for fiscal year 1999.
4. To transact such other business as may properly come before the Annual
Meeting or any adjournment(s) or postponement(s) thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on March 30, 1999, will
be entitled to notice of, and to vote at, the Annual Meeting and at any
adjournment thereof.
All stockholders are cordially invited to attend the Annual Meeting in
person. However, whether or not you plan to attend in person, to assure your
representation at the Annual Meeting, you are urged to mark, sign, date, and
return the enclosed Proxy as promptly as possible in the postage-prepaid
envelope provided for that purpose. Any stockholder attending the meeting may
vote in person even if such stockholder returned a completed Proxy.
Requests for additional copies of proxy materials and other
information should be addressed to Investor Relations at the executive offices
of the Company, 9710 Scranton Road, Suite 100, San Diego, California 92121.
By Order of the Board of Directors of
JMC Group, Inc.
/s/ JAMES K. MITCHELL
-------------------------------------
James K. Mitchell
CHAIRMAN, PRESIDENT & CHIEF EXECUTIVE OFFICER
San Diego, California
April 9, 1999
__________
<PAGE>
[JMCG LOGO]
JMC GROUP, INC.
9710 SCRANTON ROAD, SUITE 100, SAN DIEGO, CA 92121
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 3, 1999
GENERAL
The enclosed Proxy is solicited by the Board of Directors on behalf of
JMC Group, Inc., a Delaware corporation (the "Company"), for use at the Annual
Meeting of Stockholders (the "Annual Meeting") to be held on May 3, 1999 at
10:00 a.m., Pacific Daylight Savings Time, or at any adjournment(s) or
postponement(s) thereof, for the purposes set forth herein and in the
accompanying Notice of Annual Meeting of Stockholders. The Annual Meeting
will be held at The Inn at Rancho Santa Fe, 5951 Linea Del Cielo, Rancho
Santa Fe, California 92067.
The Company's principal executive offices are located at 9710 Scranton
Road, Suite 100, San Diego, California 92121, and the Company's telephone
number is (619) 450-0055. These proxy solicitation materials were first mailed
on or about April 9, 1999 to all stockholders entitled to vote at the Annual
Meeting.
INFORMATION CONCERNING VOTING, SOLICITATION AND PROXIES
RECORD DATE AND SHARES OUTSTANDING
Stockholders of record at the close of business on March 30, 1999 (the
"Record Date") are entitled to notice of, and to vote at, the Annual Meeting.
On the Record Date, the Company had issued and outstanding approximately
6,166,451 shares of common stock, $0.01 par value (the "Common Stock"), and
no shares of preferred stock.
VOTING AND SOLICITATION
Each stockholder is entitled to one vote for each share of Common
Stock held by him.
Shares of Common Stock represented by properly executed proxies will,
unless such proxies have been previously revoked, be voted in accordance with
the instructions indicated thereon. In the absence of specific instructions to
the contrary, properly executed proxies will be voted FOR the election of each
person nominated by the Board of Directors for election as a Director, FOR the
proposal to effect a one-for-two reverse split of the Common Stock and FOR
ratification of the independent auditors. The effect of an abstention or a
broker nonvote on a proposal is the same as that of a vote against such
proposal. No business other than that set forth in the accompanying Notice of
Annual Meeting of Stockholders is expected to come before the Annual Meeting.
Should any other matter requiring a vote of stockholders properly arise, the
persons named in the enclosed form of proxy (the "Proxy Holders") will have
discretionary authority to vote such proxy in accordance with their best
judgment on such matter.
Directors are elected by a plurality vote.
1
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The cost of this proxy solicitation will be paid by the Company. The
Company will reimburse brokerage firms and other persons representing
beneficial owners of shares for their expenses in forwarding soliciting
materials to such beneficial owners. Proxies may be solicited by certain of
the Company's Directors, officers, and regular employees, without additional
compensation, personally or by telephone or telegram.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its use by delivering to the Company a
written notice of revocation or a duly executed proxy bearing a later date or
by attending the Annual Meeting and voting in person. Attending the Annual
Meeting in and of itself will not constitute a revocation of a proxy.
DEADLINES FOR RECEIPT OF STOCKHOLDER NOMINATIONS, PROPOSALS AND PROPOSALS FOR
INCLUSION IN THE PROXY STATEMENT FOR THE 2000 ANNUAL MEETING
Section 2.5 of the Company's Bylaws provides that nominations may be
made by the Board of Directors or by any stockholder entitled to vote in the
election of Directors generally, provided that all stockholders intending to
nominate Director candidates for election must deliver written notice thereof
to the Secretary of the Company, which notice must be received not less than
sixty nor more than ninety days prior to the meeting or, if less than seventy
days' notice or prior public disclosure of the date of the meeting is given or
made to stockholders, within ten days after the date on which notice of such
meeting is first given to stockholders. Such notice must set forth certain
information concerning such stockholder and his or her nominee(s), including
their names and addresses, such other information as would be required to
be in the proxy statement soliciting proxies for the election of the nominees
of such stockholder and the consent of each nominee to serve as a
Director of the Company if so elected. The chairman of the Annual Meeting will
refuse to acknowledge the nomination of any person not made in compliance
with the foregoing procedure.
The Company's Bylaws also require that stockholders give advance
notice and follow certain other procedures with regard to business they wish
to bring before an annual meeting of stockholders. Section 2.6 of the
Company's Bylaws provides that all stockholders intending to bring business
before the meeting deliver written notice thereof to the Secretary of the
Company in the same manner and within the same periods as required for
stockholder nominees for the Board of Directors, as described in the
preceding paragraph. Such notice shall set forth certain information
concerning such stockholder and the proposed business, including any
material interest of the stockholder in such business. The chairman of the
Annual Meeting will refuse to permit business to be brought before the Annual
Meeting if notice is not given in compliance with the foregoing procedure.
The Company intends to hold its next Annual Meeting of Stockholders
on or about May 8, 2000. Stockholders seeking to include a proposal in the
Proxy Statement for the Company's 2000 Annual Meeting must ensure that such
proposal is received at the executive offices of the Company on or before
March 9, 2000. Inclusion of any such proposal is subject to certain other
requirements.
2
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth names and certain other information
concerning the Company's Directors and executive officers, as of March 1,
1999:
<TABLE>
<CAPTION>
TERM OF
OFFICE AS
DIRECTOR
NAME AGE POSITION EXPIRES
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
James K. Mitchell 60 Chairman, President and Chief Executive 2001
Officer and Director
Edward J. Baran 62 Director 2000
Barton Beek 75 Director 1999
Charles H. Black 72 Director 2000
Robert G. Sharp 63 Director 2001
</TABLE>
Information with respect to the principal occupation during the past
five years of each nominee, each current Director and each executive officer
is set forth below. There are no family relationships among Directors or
executive officers of the Company.
JAMES K. MITCHELL became a Director in October 1988 and became
Chairman and Chief Executive Officer of the Company on January 1, 1993 and
assumed the responsibilities of President of the Company as well on January 1,
1997. Mr. Mitchell is the founder of the Company's principal subsidiary,
James Mitchell & Co. In 1973, Mr. Mitchell was a founding officer of Security
First Group (now The Holden Group), a financial services firm which pioneered
the concept of marketing insurance and annuity products through stock
brokerage firms. Before joining that firm, Mr. Mitchell served as Vice
President of Marketing for the Variable Annuity Life Insurance Company of
Houston, Texas. He attended Portland State University and is a registered
Principal with the National Association of Securities Dealers, Inc. (the
"NASD").
EDWARD J. BARAN became a Director in August 1992. Mr. Baran, who
has spent more than thirty years in the insurance business, is currently
Chairman and Chief Executive Officer of BCS Financial Corporation, a financial
services holding company. Prior to joining BCS in November 1987, Mr. Baran was
Vice Chairman, President and Chief Executive Officer of Capitol Life Insurance
Company of Denver, Colorado. He is a graduate of Georgetown University and a
member of the Audit and Compensation Committees of the Board of Directors.
BARTON BEEK became a Director in January 1984. Mr. Beek is a senior
partner of O'Melveny & Myers, a law firm which he joined in 1955, with
offices worldwide. Mr. Beek is a graduate of the California Institute of
Technology, the Stanford University Graduate School of Business and Loyola
College of Law. Mr. Beek is a director of Wynns International, Inc. He is a
member of the Audit and Compensation Committees of the Board of Directors.
CHARLES H. BLACK became a Director in June, 1993. Mr. Black is
currently a private investor, having most recently served as Vice Chairman of
Pertron Controls Corporation. From 1982 to 1985, Mr. Black served as Executive
Vice President, Director and Chief Financial Officer of Kaiser Steel
Corporation. He served as Executive Vice President and Chief Financial
Officer of Great Western Financial Corporation and Great Western Savings and
Loan from 1980 to 1982 after having spent over 20 years in various financial
and management positions with Litton Industries, Inc., the most recent being
Corporate Vice President and Treasurer. Mr. Black is a member of the Board of
Governors of the Pacific Exchange and serves as a director of Investment
Company of America and the American Variable Insurance Series, all mutual
funds. He also serves as a director of Wilshire Technologies, Inc., and
Anworth Mortgage Asset Corp., both publicly-held companies, and he is a
director of a number of privately-held corporations. Mr. Black is a graduate
of the University of Southern California. He is Chairman of the Audit
Committee and a member of the Compensation Committee of the Board of
Directors.
ROBERT G. SHARP became a Director in May 1995. Mr. Sharp retired
from his position as President and Chief Executive Officer of Keyport Life
Insurance Company in February 1992 after having served in that position
3
<PAGE>
since 1979. Mr. Sharp is the past chairman of the National Association for
Variable Annuities and a former director of the National Association of Life
Companies. Mr. Sharp is a graduate of the California State University at
Sacramento and is a registered Principal with the NASD. Mr. Sharp is also a
director of Navallier Variable Funds, a mutual fund. Mr. Sharp is a member of
the Audit Committee and Chairman of the Compensation Committee of the Board of
Directors.
BOARD MEETINGS AND COMMITTEES
The business affairs of the Company are managed by or under the
direction of the Board of Directors, although it is not involved in day-to-day
operations. During the year ended December 31, 1998, the Board of Directors
met five times.
The Board of Directors of the Company has standing Audit and
Compensation Committees.
AUDIT COMMITTEE. The Audit Committee recommends to the Board of
Directors the appointment of the firm selected to be independent public
accountants for the Company and monitors and evaluates the performance of
such firm; reviews and approves the scope of the annual audit and evaluates
with the independent public accountants the Company's annual audit and annual
consolidated financial statements; reviews the Company's financial reporting
policies and practices; reviews with management the status of internal audit
and control procedures, adequacies of financial staff and other matters and
makes such recommendations to the Board of Directors as may be appropriate;
evaluates matters having a potential financial impact on the Company which
may be brought to its attention by management, the independent public
accountants or the Board of Directors; and reviews all public financial
reporting documents of the Company. The members of the Audit Committee
during 1998 were Messrs. Baran, Beek, Black and Sharp. Mr. Black serves
as the Chairman. The Audit Committee held one meeting during fiscal 1998.
COMPENSATION COMMITTEE. The Compensation Committee, reviews
and makes recommendations to the full Board of Directors with respect to the
specific compensation to be paid or provided to executive. The members of
the Compensation Committee are Mssrs. Baran, Beek, Black and Sharp with Mr.
Sharp as Chairman. The Compensation Committee held one meeting during fiscal
1998.
During the fiscal year ended December 31, 1998, each of the Directors
of the Company attended at least 75% of the aggregate of (1) the total number
of meetings of the Board of Directors and (2) the total number of meetings of
the committee(s) of the Board on which he served during the period he served
in such capacities.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding
compensation paid during each of the Company's last three fiscal years to the
Company's Chief Executive Officer (the "named executive officer") (1):
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
SECURITIES
UNDERLYING ALL OTHER
ANNUAL COMPENSATION OPTIONS/ COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) SARS(#)(2) ($)(3)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
James K. Mitchell,
Chairman and 1998 225,000 - - 9,740
Chief Executive Officer 1997 239,087 - 100,000 7,811
1996 291,627 - - 9,579
</TABLE>
- ----------
(1) Although SEC regulations require four highest paid executive officers
in the classification of the "named executive officers" (other than the
Chief Executive Officer), no other officer of the company qualifies for
this specification under Regulation S-K, Item 402a(3).
4
<PAGE>
(2) The Company does not have any outstanding Stock Appreciation Rights
("SARs").
(3) Amounts reported for Mr. Mitchell in the "All Other Compensation" column
include $4,911, $2,982 and $4,750, respectively, for 1998, 1997 and
1996, representing the Company's contributions to its 401(k) Savings
Plan on his behalf and $4,829 for each of 1998, 1997 and 1996,
representing life insurance premiums advanced by the Company pursuant
to a split dollar insurance agreement.
OPTION GRANTS
No grants of options to purchase Common Stock were made to the named
executive officer during the 1998 fiscal year:
OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
The following table provides information related to options exercised
by the named executive officer during the 1998 fiscal year and the number and
value of options held at fiscal year-end.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT FY- IN-THE-MONEY OPTIONS/
SHARES ACQUIRED VALUE END(#)(1) SARS AT FY-END($)(1)(2)
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
James K. Mitchell 0 0 141,667 33,333 0 0
</TABLE>
- ----------
(1) The Company does not have any outstanding SARs.
(2) The closing price for the Common Stock on December 31, 1998, as reported
by the NASDAQ National Market System, was $0.9380. The named executive
officer's outstanding options were exercisable for a price greater than
$0.9380 at fiscal year end.
COMPENSATION OF DIRECTORS
The members of the Board of Directors who are not full-time employees of
the Company are entitled to receive reimbursement for out-of-pocket expenses
they incur in attending Board meetings and otherwise performing their duties
and receive fees of $1,000 for each meeting of the Board of Directors which
they attend. Members of committees additionally receive $500 per committee
meeting held on the same day as a Board of Directors' meeting, or $1,000 per
committee meeting if held on a different day. Non-employee Directors receive
formula grants of non-qualified stock options under the Company's 1993
Executive Stock Option Plan. Options to acquire 12,000 shares of Common Stock
are to be granted within six months after an individual takes office as a
Director and options to acquire an additional 12,000 shares are to be granted
within six months after every third anniversary of such Director's taking
office. As reported in the Form 10-K for the year ended December 31, 1997,
on February 17, 1998, the outside Directors of the Company were each granted
stock options to purchase 25,000 shares of Common Stock at a price of $1.125,
which was equal to the closing price for the Common Stock on June 30, 1998,
in addition to their regular formula grants. Officers of the Company are
not compensated for their services as Directors or committee members.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee of the Board of Directors
served as an officer or employee of the Company or its subsidiaries. No
executive officers of the Company served during fiscal 1998 on the board of
directors of any company which had a representative on the Company's Board of
Directors. No member of the Company's Board of Directors served during 1998
as an executive officer of a company whose board of directors had a
representative from the Company or the Company's Board of Directors.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
During 1998, executive compensation policy was recommended by a
Compensation Committee (the "Committee") which is composed of all the
independent members of the Board of Directors (the "Board"). The Committee
held one meeting during 1998. The Committee is responsible for recommending
executive compensation policy and practice to the Board of Directors and was
responsible for administering the Company's 1993 Executive Stock Option Plan.
The Board of Directors did not modify or reject in any material way any action
or recommendation of the Committee during fiscal year 1998.
5
<PAGE>
The Board's compensation policy with regards to the Company's
executive officers has been to provide these officers, in aggregate, with
salary and incentive compensation competitive with the marketplace.
Compensation has primarily consisted of salaries, stock options and cash
bonuses based upon the Company's pre-tax earnings. For 1998, only Mr.
Mitchell was a party to an employment contract. The employment contract of
the President and CEO which had originally expired January 1, 1996, was
reinstated by action of the Board with Mr. Mitchell abstaining, on February
17, 1998, effective as of January 1, 1998. The reinstated contract provides
for a base salary of $225,000 per year plus basic company benefits for a
three-year term, subject to certain provisions described above.
The Committee, at its March 1, 1999 meeting, considered the operating
results for 1998 and although the Committee felt that management during the
year had acted appropriately in a very difficult environment and was
continuing to maintain energy and creativity in its search for new sources of
revenue for the Company, it decided not to award any cash bonus to the Chief
Executive Officer.
While there is no established policy with respect to the frequency or
amount of option grants, the Board desires that the executive officers own
Company stock to both provide incentive compensation based on performance
factors deemed important to the Company's stockholders and to provide an
element of downside risk to more closely align the interests of executives
with the interests of the stockholders. The Board considers the granting of
stock options annually and, in reviewing the Chief Executive Officer's
recommendation, considers the individual executive officer's contributions
to the Company and the amount and terms of existing options. No grants were
made to Mr. Mitchell during 1998.
James K. Mitchell, who became Chief Executive Officer of the Company
effective January 1, 1993, received a total of $225,000 in salary for fiscal
1998. This compares to $239,087 in salary for fiscal 1997. This also
compares to $291,627 in salary for fiscal 1996. All salary totals are
exclusive of standard benefits. At the close of 1998, Mr. Mitchell was the
largest stockholder of the Company with a total of approximately 718,041
shares beneficially owned and vested options to purchase 75,000 shares of
Common Stock at a price of $4.40 per share and 66,667 shares at a price of
$1.375 per share.
The report of the Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
The Compensation Committee of the
Board of Directors of JMC Group, Inc.:
Robert G. Sharp, Chairman
Edward J. Baran
Barton Beek
Charles H. Black
6
<PAGE>
PERFORMANCE GRAPH
The following chart compares the yearly percentage change in the
cumulative total stockholder return on the Common Stock during the five fiscal
years ended December 31, 1998 with the cumulative total return on the S&P 500
Index and the NASDAQ Financial Stocks Industry Index.
Assumes $100 invested on December 31, 1993 in JMC
Group, Inc., S&P 500 Index and NASDAQ Financial
Stock Industry Index.
<TABLE>
<CAPTION>
PERFORMANCE 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
NASDAQ 100 100.24 145.98 187.14 287.20 276.58
S&P 500 100 98.46 132.05 158.80 208.05 266.30
JMCG 100 18.12 10.50 11.23 7.61 10.88
</TABLE>
The foregoing information shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
7
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Unless otherwise noted below, the following table presents certain
information with respect to the ownership of the Common Stock as of March 8,
1999 by each person known by the Company to own beneficially more than 5% of
the Common Stock, by each person who is a Director or nominee for Director of
the Company, by each named executive officer and by all executive officers and
Directors of the Company as a group:
<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK
BENEFICIALLY OWNED
AS OF MARCH 8, 1999 (1)
NAME NUMBER (3) %
- --------------------------------------------------------------------------
<S> <C> <C>
James K. Mitchell (2) 859,708 13.42%
JMC Group, Inc.
9710 Scranton Road, Suite 100
San Diego, CA 92121
Robert London (4) 498,500 7.78%
Cruttendon Roth Incorporated
809 Presidio Avenue
Santa Barbara, CA 93101
Charles H. Black (5) 265,531 4.14%
Barton Beek 102,500 1.60%
Robert G. Sharp 69,500 1.08%
Edward J. Baran 24,500 *
All Executive Officers and Directors
as a group (5 persons) 1,321,739 20.63%
Total outstanding shares(6) 6,406,118
</TABLE>
- ----------
* Less than 1%
(1) All ownership figures include options to purchase shares of Common Stock
exercisable within 60 days of March 8, 1999, as set forth below. Except as
otherwise noted below, each individual, directly or indirectly, has sole
or shared voting and investment power with respect to the shares listed.
(2) Includes 18,815 vested shares of Common Stock contributed by the Company
to the Company's 401(k) Savings Plan for Mr. Mitchell. Directors do not
have 401(k) Plan holdings with the Company.
(3) Includes options to purchase 141,667, 24,500, 28,500, 20,500, 24,500 and
239,667 shares of Common Stock for Messrs. Mitchell, Baran, Beek, Black,
Sharp and for all executive officers and Directors as a group,
respectively.
(4) Mr. London filed a Schedule 13D on November 25, 1997 for 423,500 shares
of Common Stock and an amended Schedule 13D on December 23, 1997 for
an additional 75,000 shares of Common Stock. As of March 8, 1999, no
other Schedule 13D amendment had been filed.
(5) Includes 22,800 shares held by the Charles H. Black Pension Trust and
10,000 shares held by Mr. Black as trustee for the benefit of Charles H.
Black, Jr. and Mr. Black in which Mr. Black has a 1/2 beneficial ownership
interest. Also includes 36,200 shares owned individually by Mr. Black's
wife as to which he disclaims beneficial ownership.
(6) Includes 239,667 shares issuable upon exercise of stock options.
8
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's Directors and executive officers, and persons who own more than 10%
of a registered class of the Company's equity securities, to file with the
Securities and Exchange Commission, NASDAQ and the Pacific Stock Exchange
initial reports of ownership and reports of changes in ownership of Common
Stock and other equity securities of the Company. Executive officers,
Directors and greater than 10% stockholders are required by Securities and
Exchange Commission regulations to furnish the Company with copies of all
Section 16(a) reports they file.
Specific due dates for these reports have been established and the
Company is required to identify those persons who failed to timely file these
reports. To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company and written representations that no
other reports were required, during the fiscal year ended December 31, 1998,
all Section 16(a) filing requirements applicable to its executive officers,
Directors and greater than 10% beneficial owners were complied with.
PROPOSED AMENDMENT TO CERTIFICATE OF INCORPORATION
The Board of Directors has proposed the following amendment of the
Certificate of Incorporation of the Company:
Article IV of the Certificate of Incorporation shall be amended by
inserting an additional paragraph as the first paragraph of said Article, as
follows:
"The shares of Common Stock outstanding on the Effective Date hereof
shall be consolidated, combined and reconstituted to effect a one for
two reverse stock split of such Common stock, such that each Common
share outstanding on the Effective Date shall become one half of a
reconstituted share of Common Stock and two shares of Common Stock
outstanding on the Effective Date shall become one reconstituted share
of Common Stock. The "Effective Date" hereof shall be the day upon
which a Certificate of Amendment of the Certificate of Incorporation
of the Corporation setting forth this paragraph shall be filed with
the Secretary of State of Delaware."
EFFECT OF AMENDMENT ON OUTSTANDING SHARES
If adopted, the proposed Amendment (the "Reverse Split") will change
each outstanding share of Common Stock into one half of a reconstituted Common
Share (a "New Share"). Thus, if the Amendment is adopted, there will be
approximately 3,083,225 New Shares outstanding and the Company will have no
other outstanding shares. The Amendment will not changes the number of
authorized shares of Common Stock.
The total number of shares of Common Stock issuable upon exercise of
outstanding options to acquire such shares, and the exercise price of such
options, will be adjusted proportionally to reflect the Reverse Split.
Under the Company's Stockholders' Rights Plan, each share of Common
Stock will continue to have one preferred share purchase right (a "Right")
associated with it following the Reverse Split; however, the number of shares
of Preferred Stock issuable upon the exercise of each Right will be
proportionally adjusted.
FRACTIONAL SHARES
No fractional shares of Common Stock will be issued as a result of the
Reverse Split and fractional share interests will not entitle the holder
thereof to exercise any right of a stockholder. In lieu of fractional shares
resulting from the Reverse Split, stockholders will be paid, in cash, the
dollar amount (rounded to the nearest whole cent), without interest,
determined by multiplying such fractional shares (after aggregating all
fractional shares of Common Stock owned by such stockholder) by the average
of the reported closing prices for the shares on the NASDAQ Market System for
the ten trading days immediately preceding the Effective Date.
PROCEDURES FOR EXCHANGE OF CERTIFICATES
As soon as practicable after the Effective Date, the Company's
Transfer Agent (the "Exchange Agent") will mail to the registered holders of
Common Stock a Letter of Transmittal and instructions for surrender of Common
Stock certificates for certificates representing New Shares and, if
applicable, cash in lieu of fractional shares. Stockholders will not receive
certificates for New Shares unless and until their certificates for shares of
Common Stock have been surrendered with an appropriate letter of transmittal.
There will be no service charge in connection with the issuance of
certificates for New Shares and cash in lieu of fractional shares following
the Reverse Split.
9
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
The following summary of the federal income tax consequences of the
Reverse Split is based on current law, including the Internal Revenue Code of
1986, as amended, and is for general information only. The tax treatment
for any stockholder may vary depending upon the particular facts and
circumstances of such stockholder. Certain stockholders, including insurance
companies, tax-exempt organizations, financial institutions, broker-dealers,
non-resident aliens, foreign corporations and persons who do not hold Common
Stock of the Company as a capital asset, may be subject to special rules not
discussed below. ACCORDINGLY, EACH STOCKHOLDER SHOULD CONSULT HIS OR HER
TAX ADVISOR TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO HIM OR HER OF THE
REVERSE SPLIT, INCLUDING THE APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL
OR FOREIGN INCOME TAXES AND OTHER LAWS.
The receipt of whole New Shares (excluding fractional new Shares) in
the Reverse Split should be non-taxable for federal income tax purposes.
Consequently, a stockholder receiving New Shares will not recognize either
gain or loss, or any other type of income, with respect to whole New Shares
received as a result of the Reverse Split. In addition, the tax basis of such
stockholder's shares of Common Stock prior to the Reverse Split will carry
over as the tax basis of the stockholder's New Shares. The holding period
of the New Shares should also include the stockholder's holding period of the
Common Stock prior to the Reverse Split, provided that such Common Stock was
held by the stockholder as a capital asset on the Effective Date.
Any stockholder who receives cash in lieu of a fractional New Share
pursuant to the Reverse Split will recognize gain or loss equal to the
difference between the amount of cash received and the portion of the
aggregate tax basis in his or her shares of Common Stock allocable to such
fractional New Share. If the shares of Common Stock were held as a capital
asset on the Effective Date, then the stockholder's gain or loss will be a
capital gain or loss. Such capital gain or loss will be a long-term capital
gain or loss if the stockholder's holding period for the shares of Common
Stock is longer than eighteen months, a short-term capital gain or loss if
the stockholder's holding period is twelve months or less and mid-term gain
or loss if the stockholder's holding period is longer than twelve months
and less than eighteen months.
Based on certain exceptions contained in regulations issued by the
Internal Revenue Service, the Company does not believe that it or its
stockholders would be subject to backup withholding or informational
reporting with respect to cash distributed in lieu of fractional New Shares.
REASONS FOR PROPOSED AMENDMENT
The Company has been advised by NASDAQ that the Common Stock may
no longer meet the requirements for continued listing and trading on the
NASDAQ Market System. The Reverse Split is being proposed to address one
of these requirements, viz, the minimum bid price requirement of a $1.00
per share.
The Company believes that if the Reverse Split is effectuated, the
Company's Common Stock should initially have a minimum bid price in excess of
the $1.00 per share necessary to satisfy the NASDAQ requirement. The Company
would also need to continue to satisfy all other maintenance criteria and
there can be no assurance that the Company will be able to do so, or that,
even if these criteria are met, the Common Stock will continue to be traded
on the NASDAQ National Market.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT TO THE
CERTIFICATE OF INCORPORATION.
ELECTION OF DIRECTOR
NOMINEE
One of the Company's total of five Directors is to be elected at the
Annual Meeting. The Board of Directors of the Company has authorized the
nomination at the Annual Meeting of the person named below as a candidate.
Unless otherwise directed, the Proxy Holders will vote the proxies received
by them for the nominee named below. In the event that the nominee is unable
or declines to serve as a Director at the time of the Annual Meeting, the
proxies will be voted for any nominee who shall be designated by the existing
Board of Directors to fill the vacancy. It is not expected the nominee will
be unable or will decline to serve as a Director.
Information with respect to the nominee to the Board of Directors is
set forth above in "Directors and Executive Officers." The name of the nominee
is as follows:
Barton Beek
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<PAGE>
The Director elected at this Annual Meeting will serve a three-year
term, until the annual meeting of stockholders in 2002, or until his successor
is duly elected.
REQUIRED VOTE
The affirmative vote of a plurality of the shares of Common Stock
present in person or represented by proxy and entitled to vote is required
for the election of the Director nominee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE
PERSON NOMINATED FOR ELECTION AS A DIRECTOR.
APPROVAL OF INDEPENDENT AUDITORS
The Board of Directors is recommending the ratification of its
selection of Deloitte & Touche LLP as the Company's independent certified
public accountants to audit the financial statements of the Company for the
1999 fiscal year. In the event such approval of stockholders is not received,
the Board will select another firm to audit the Company's financial
statements. Deloitte & Touche LLP has audited the financial statements of the
Company and its subsidiaries for fiscal year 1998 and are expected to audit
the financial statements for fiscal 1999. Deloitte & Touche LLP has advised
the Company that neither it nor any of its partners or associates has any
direct or indirect financial interest in or any connection with the Company
other than as accountants and auditors. Representatives of Deloitte &
Touche LLP are welcome to attend the Annual Meeting, to make a statement, if
they desire to do so, and to respond to appropriate questions, however, they
are not presently expected to attend.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF
INDEPENDENT AUDITORS.
OTHER MATTERS
The Board of Directors knows of no other business which will be
presented at the Annual Meeting. If any other business is properly brought
before the Annual Meeting, it is intended that proxies in the enclosed form
will be voted in respect thereof in accordance with the judgments of the
persons voting the proxies. It is important that your shares be represented
at the meeting, regardless of the number of shares which you hold. WHETHER
OR NOT YOU INTEND TO BE PRESENT AT THE ANNUAL MEETING, YOU ARE URGED TO
COMPLETE, SIGN, AND RETURN YOUR PROXY PROMPTLY.
By Order of the Board of Directors of
JMC Group, Inc.
/s/ JAMES K. MITCHELL
---------------------------------------------
James K. Mitchell
CHAIRMAN, PRESIDENT & CHIEF EXECUTIVE OFFICER
Dated: April 9, 1999
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