SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 14)(1)
MEDICAL IMAGING CENTERS OF AMERICA, INC.
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(Name of issuer)
COMMON STOCK, $.01 PAR VALUE
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(Title of class of securities)
584578108
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(CUSIP number)
STEVEN WOLOSKY, ESQUIRE
OLSHAN GRUNDMAN FROME & ROSENZWEIG LLP
505 Park Avenue
New York, New York 10022
(212) 753-7200
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(Name, address and telephone number of person
authorized to receive notices and communications)
February 29, 1996
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(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box
/ /.
Check the following box if a fee is being paid with the statement / /.
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent of
the class of securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five percent or less of
such class.) (See Rule 13d-7).
Note. six copies of this statement, including all exhibits,
should be filed with the Commission. See Rule 13d-1(a) for other parties to whom
copies are to be sent.
(Continued on following pages)
(Page 1 of 27 Pages)
Exhibit Index on Page 13
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(1) The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the subject class
of securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18 of the
Securities Exchange Act of 1934 or otherwise subject to the liabilities of that
section of the Act but shall be subject to all other provisions of the Act
(however, see the Notes).
<PAGE>
================================================================================
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
STEEL PARTNERS II, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
PF, WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
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6 CITIZENSHIP OR PLACE OR ORGANIZATION
DELAWARE
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NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 422,658
OWNED BY
EACH
REPORTING
PERSON WITH
---------------------------------------------------------
8 SHARED VOTING POWER
-0-
---------------------------------------------------------
9 SOLE DISPOSITIVE POWER
422,658
---------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
422,658
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.00%
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14 TYPE OF REPORTING PERSON*
PN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
================================================================================
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
STEEL PARTNERS SERVICES, LTD.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
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6 CITIZENSHIP OR PLACE OR ORGANIZATION
NEW YORK
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NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 105,024
OWNED BY
EACH
REPORTING
PERSON WITH
---------------------------------------------------------
8 SHARED VOTING POWER
-0-
---------------------------------------------------------
9 SOLE DISPOSITIVE POWER
105,024
---------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
105,024
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
3.97%
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14 TYPE OF REPORTING PERSON*
CO
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
================================================================================
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
STEEL PARTNERS COMMITTEE
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
PF, WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
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6 CITIZENSHIP OR PLACE OR ORGANIZATION
DELAWARE
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NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 527,682
OWNED BY
EACH
REPORTING
PERSON WITH
---------------------------------------------------------
8 SHARED VOTING POWER
-0-
---------------------------------------------------------
9 SOLE DISPOSITIVE POWER
527,682
---------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
527,682
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
19.97%
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14 TYPE OF REPORTING PERSON*
PN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
================================================================================
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
WARREN LICHTENSTEIN
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
PF, OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
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6 CITIZENSHIP OR PLACE OR ORGANIZATION
USA
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NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 527,682(2)
OWNED BY
EACH
REPORTING
PERSON WITH
------------------------------------------------------------
8 SHARED VOTING POWER
- 0 -
------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
527,682(2)
------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
- 0 -
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
527,682(2)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
19.97%
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14 TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
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(2) Includes 422,658 Shares owned by Steel Partners II, L.P. and
105,024 Shares managed by Steel Partners Services, Ltd., an entity controlled by
Warren G. Lichtenstein and Lawrence Butler.
<PAGE>
================================================================================
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
LAWRENCE BUTLER
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
PF, OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
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6 CITIZENSHIP OR PLACE OR ORGANIZATION
USA
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NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 527,682(3)
OWNED BY
EACH
REPORTING
PERSON WITH
---------------------------------------------------------
8 SHARED VOTING POWER
- 0 -
---------------------------------------------------------
9 SOLE DISPOSITIVE POWER
527,682(3)
---------------------------------------------------------
10 SHARED DISPOSITIVE POWER
- 0 -
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
527,682(3)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
19.97%
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14 TYPE OF REPORTING PERSON*
IN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
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(3) Includes 422,658 Shares owned by Steel Partners II, L.P. and
105,024 Shares managed by Steel Partners Services, Ltd., an entity controlled by
Warren G. Lichtenstein and Lawrence Butler.
<PAGE>
================================================================================
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
JACK L. HOWARD
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
PF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
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6 CITIZENSHIP OR PLACE OR ORGANIZATION
USA
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NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 700(4)
OWNED BY
EACH
REPORTING
PERSON WITH
---------------------------------------------------------
8 SHARED VOTING POWER
- 0 -
---------------------------------------------------------
9 SOLE DISPOSITIVE POWER
700(4)
---------------------------------------------------------
10 SHARED DISPOSITIVE POWER
- 0 -
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
700(4)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
.03%
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14 TYPE OF REPORTING PERSON*
IN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
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(4) Consists of 700 Shares all of which are owned by his wife,
Kathryn Howard, in trust for their children.
<PAGE>
This constitutes Amendment No. 14 ("Amendment No. 14") to Schedule 13D
filed by the undersigned on March 18, 1995 (the "Schedule 13D"). Except as
specifically amended by this Amendment No. 14, the Schedule 13D, as amended,
remains in full force and effect. Defined terms herein shall have the meaning
specified in the Schedule 13D, except as otherwise provided herein.
Item 2 is amended to read in its entirety as follows:
Item 2. Identity & Background.
(a) This Statement is filed by Steel Partners II, L.P.,
a Delaware limited partnership ("Steel Partners II"), Steel Partners Services,
Ltd., a New York corporation ("Service"), the Steel Partners Committee (the
"Committee"), Warren G. Lichtenstein, Lawrence Butler, and Jack L. Howard.
Steel Partners, L.L.C., a Delaware limited liability company
("Partners LLC") is the general partner of Steel Partners II. The sole executive
officers and Members of Partners LLC are as follows: Warren Lichtenstein is
Chairman of the Board, Secretary and a Member; and Lawrence Butler is President,
Treasurer and a Member.
The sole executive officers, directors and stockholders of
Steel Partners Services, Ltd., a New York corporation ("Services"), are as
follows: Warren Lichtenstein is Chairman of the Board, Secretary and a
stockholder; and Lawrence Butler is President, Treasurer and a stockholder.
The Steel Partners Committee (the "Committee") is composed of
Steel Partners II and Steel Partners Services, Ltd. ("Services"). The Committee
is not a business entity and has no place of organization, principal business or
business address. The Committee can be contacted through Warren G. Lichtenstein,
c/o Steel Partners II, L.P., 750 Lexington Avenue, 27th Floor, New York, New
York 10022.
Each of the foregoing are referred to as a "Reporting Person"
and collectively as the "Reporting Persons". By virtue of their positions with
Steel Partners II, Mr. Lichtenstein and Mr. Butler have the power to vote and
dispose of the Issuer's Shares owned by Steel Partners II. Accordingly, the
Reporting Persons are hereby filing a joint Schedule 13D.
(b) The principal business address of each Reporting
Person other than Mr. Howard is 750 Lexington Avenue, 27th Floor, New York, New
York 10022. The principal business address of Mr. Howard is 2927 Montecito
Avenue, Santa Rosa, California 95404.
(c) The principal business of Steel Partners II is
investing in the securities of microcap companies. The principal occupation of
Mr. Lichtenstein and Mr. Butler is investing in securities of microcap
companies. In addition, Mr. Butler is the
<PAGE>
president of Alpha Technologies Group, Inc., a NASDAQ company engaged in the
electronics components business. The principal business of Services is providing
management and advisory services. Jack L. Howard is affiliated with the
brokerage firm of Mutual Securities, Inc., a division of Cowles Sabol & Co.
Services acquired the 105,024 Shares reported herein for the
account of Quota Fund N.V., a Netherlands Antilles investment corporation
("Quota"). Quota has its principal office at Kaya Flamboyan 9, Willemstad,
Curacao, Netherlands Antilles. Quota granted investment discretion to Soros Fund
Management ("SFM") pursuant to an investment advisory contract. SFM's contract
with Quota provides that SFM is responsible for designing and implementing
Quota's overall investment strategy, for conducting direct portfolio management
strategies to the extent that SFM determines that it is appropriate to utilize
its own portfolio management capabilities; for selecting, evaluating and
monitoring other investment advisors who manage separate portfolios on behalf of
Quota; and for allocating and reallocating Quota's assets among the outside
managers and itself. In connection therewith, Quota granted investment
discretion to Services pursuant to an investment advisory contract between Quota
and Services (the "Services Contract"). The 105,024 Shares beneficially owned by
Services were acquired at the direction of Services, and neither SFM nor Quota
currently exercises voting or investment discretion over the Shares.
SFM is a sole proprietorship of which George Soros, a United
States citizen, is the sole proprietor. SFM has its principal office at 888
Seventh Avenue, 33rd Floor, New York, New York 10106. Its sole business is to
serve, pursuant to contract, as the principal investment manager to several
foreign investment companies, including Quota.
During the past five years, none of Mr. Soros, SFM, Quota or any
of the managing directors of SFM or Quota have been (a) convicted in a criminal
proceeding, or (b) a party to any civil proceeding as a result of which they
have been subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws, or finding any violation with respect to such laws.
Pursuant to regulations promulgated under Section 13(d) of the
Securities Exchange Act of 1934, as amended (the "Act"), and notwithstanding
that neither SFM nor Quota currently exercises voting or investment discretion
over the Shares, Mr. Soros (as the sole proprietor and the person ultimately in
control of SFM) may be deemed a beneficial owner of securities, including the
Shares, held for the account of Quota as a result of the contractual authority
of SFM, upon termination of the Services Contract, to acquire voting and
dispositive power with regard to the Shares. Quota, SFM and Mr. Soros have
advised the Reporting Persons that they are not part of any group for purposes
of Section 13(d)(3) of the Act.
<PAGE>
(d) No Reporting Person has, during the last five years,
been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
(e) No Reporting Person has, during the last five years,
been party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
(f) Each of Messrs. Lichtenstein, Butler and Howard are
citizens of the United States of America.
Item 3 is amended to read in its entirety as follows:
Item 3. Source and Amount of Funds or Other Consideration.
The aggregate purchase price of the 422,658 Shares owned by
Steel Partners II is $2,475,693. The Shares owned by Steel Partners II were
acquired with partnership funds.
The aggregate purchase price of the 105,024 Shares
beneficially owned by Services is $845,164. Such Shares were acquired with funds
it manages for Quota. Pursuant to the Services Agreement with Quota, Services
has been appointed to manage, on a discretionary basis, certain of Quota's
assets, which are maintained in a brokerage account in the name of Quota Fund
N.V. (Steele). The Services Agreement may be terminated by either party at any
time.
The aggregate purchase price of the 700 Shares owned by Jack
Howard is $5,600. The Shares beneficially owned by Jack Howard were acquired
with personal funds.
Item 4 is amended to add the following paragraph
Item 4. Purpose of Transaction.
On February 15, 1996, in an action captioned MEDICAL IMAGING
CENTERS OF AMERICA, INC. V. LICHTENSTEIN, ET. AL., Case No. 96-0039B, the U.S.
District Court for the Southern District of California denied the Steel
Defendants' motion to dismiss. On February 29, 1996, the Court issued an Order
granting, in part, the Issuer's motion for a preliminary injunction. A copy of
the Court's order is attached hereto as Exhibit 6. The Steel Defendants intend
to vigorously defend themselves against all such litigation commenced by the
Issuer.
<PAGE>
Paragraph (a) of Item 5 is amended to read as follows:
Item 5. Interest in Securities of the Issuer.
(a) The aggregate percentage of Shares reported owned by
each person named herein is based upon 2,642,326 Shares of Common Stock
outstanding, which is the total number of Shares of Common Stock outstanding as
reported in the Company's Proxy Statement for a Special Meeting of Stockholders
to be held February 26, 1996.
As of the close of business on March 4, 1996:
The Committee beneficially owns an aggregate of 527,682
Shares, representing 19.97% of the Shares of Common Stock outstanding, of which
422,658 Shares are beneficially owned by Steel Partners II, and 105,024 by
Services.
Steel Partners II beneficially owns 422,658 Shares,
constituting approximately 16.00% of the Shares of Common Stock outstanding; and
Services beneficially owns 105,024 Shares, constituting approximately 3.97% of
the Shares of Common Stock outstanding. Mr. Howard may be deemed to beneficially
own 700 shares of the Shares, constituting approximately .03% of the Shares of
Common Stock outstanding, all of which are owned by his wife, Kathryn Howard, in
trust for their children. Collectively, the Reporting Persons own 528,382
Shares, constituting approximately 19.997% of the Issuer's Common Stock
outstanding. Mr. Lichtenstein and Mr. Butler may be deemed to beneficially own
527,682 Shares, representing approximately 19.97% of the Issuer's Common Stock
outstanding, by virtue of their authority to vote and dispose of the 422,658
Shares owned by Steel Partners II and the 105,024 Shares managed by Services. As
a consequence of SFM's ability to terminate the Services Contract with respect
to all investments, including but not limited to those involving the Shares, and
acquire the voting and dispositive power held by Services with respect to the
Shares, notwithstanding that neither SFM nor Quota currently exercises voting or
investment discretion over the Shares, Mr. Soros (in his capacity as sole
proprietor of SFM) may be deemed to be the beneficial owner of the 105,024
Shares currently held for the account of Quota (representing approximately 3.97%
of the total number of Shares of Common Stock outstanding). Quota, SFM and Mr.
Soros have advised the Reporting Persons that they are not part of any group for
purposes of Section 13(d)(3) of the Act. All of such Shares were acquired in
open-market transactions.
Item 7 is amended to add the following exhibit:
Item 7. Material to be filed as Exhibits:
6. Order Granting Plaintiff's Application For
Preliminary Injunction.
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of his knowledge and belief,
each of the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Dated: March 4, 1996 STEEL PARTNERS II, L.P.
By: Steel Partners, L.L.C.
General Partner
By: Steel Partners, Ltd.
General Partner
By:/s/ Warren G. Lichtenstein
---------------------------
Warren G. Lichtenstein,
Chairman of the Board
STEEL PARTNERS SERVICES, LTD.
By:/s/ Warren G. Lichtenstein
---------------------------
Warren G. Lichtenstein,
Chief Executive Officer
/s/ Warren G. Lichtenstein
------------------------------
WARREN G. LICHTENSTEIN
/s/ Lawrence Butler
------------------------------
LAWRENCE BUTLER
/s/ Jack L. Howard
------------------------------
JACK L. HOWARD
<PAGE>
EXHIBIT INDEX
Exhibit Page
1. Joint Filing Agreement (previously
filed)
2. Demand for Special Meeting
(previously filed)
3. Preliminary Proxy Statement
(previously filed)
4. Indemnity Agreement between Steel,
Steven Wolosky and David C. Flaugh
(previously filed)
5. Indemnity Agreement between Steel and
Jack L. Howard (previously filed)
6. Order Granting Plaintiff's Application
For Preliminary Injunction. 14
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA
MEDICAL IMAGING CENTERS OF )
AMERICA, INC. ) Civil No. 96-0039-B (AJB)
)
Plaintiff, )
)
vs. ) ORDER GRANTING PLAINTIFF'S
) APPLICATION FOR PRELIMINARY
WARREN G. LICHTENSTEIN, ) INJUNCTION
et al., )
)
)
Defendants. )
- --------------------------------------------
On February 23, 1996, this Court held a hearing in the above-captioned
matter considering Plaintiff's Application for a Preliminary Injunction. Peter
H. Benzian, Esq. and James W. Baker, Esq. appeared on behalf of plaintiff,
Medical Imaging Centers of America (MICA). Donald G. Rez, Esq., Cynthia A.
Fissel, Esq. and David E. Bamberger, Esq. appeared on behalf of the defendants,
Warren F. Lichtenstein, et. al.
I. INTRODUCTION
The parties are before this Court pursuant to an action filed by
plaintiff alleging various violations of federal and state law by defendants.
Plaintiff is seeking equitable relief with respect to a special shareholders'
meeting scheduled for February
<PAGE>
26, 1996, which was called by defendants pursuant to California Corporations
Code ss.ss. 600-601. Defendants have filed a proxy statement and have indicated
their intention to attempt to unseat the current board of directors of MICA at
this meeting.
On January 10, 1996, following defendants' call for the special
meeting, plaintiff filed this Complaint seeking declaratory and injunctive
relief, alleging (1) violations of Section 13(d) of the Securities Exchange Act
(hereinafter "1934 Act"), 15 U.S.C. ss. 78m(d)(1), and (2) tortious interference
with economic relations. In response to plaintiff's Complaint, defendants filed
a Motion to Dismiss the Complaint, based on their contention that they had not
violated the law as described by plaintiff. By Order dated February 15, 1996,
this Court denied the Motion, finding that plaintiff had stated a claim for
relief.
Plaintiff now seeks declaratory relief and asks the Court to declare
that: (1) the Steel defendants have, and must publicly disclose, beneficial
ownership of 20% or more of MICA stock; and (2) the Steel defendants are an
"acquiring person" under MICA's "poison pill" rights plan.
Plaintiff also seeks injunctive relief to enjoin defendants from:
(a) voting in person or by proxy any MICA shares;
(b) soliciting any proxies or consents from MICA
stockholders;
<PAGE>
(c) purchasing or otherwise acquiring any additional MICA
stock;
(d) attempting to replace the current directors with
defendants' nominees;
(e) exercising influence and control over MICA's affairs;
(f) initiating any other litigation with MICA;
(g) selling or disposing of MICA shares except by
orderly, public means;
(h) interfering with MICA's economic relationships with
its lenders, suppliers or customers.
II. BACKGROUND
Since January 25, 1995, defendants or members of their beneficial
ownership group have admittedly acquired approximately 19.9% of MICA's stock,
the accumulation of which was documented through defendants' filing of a
Schedule 13D and eleven subsequent amendments. Section 13(d) requires that any
"person" (which is defined to include certain groups of purchasers) who acquires
"beneficial ownership" of 5% or more of the outstanding shares of a publicly
traded company must file a Schedule 13D which discloses their ownership interest
as well as a variety of other information. Defendants filed their original
Schedule 13D on March 20, 1995.
On December 29, 1995, defendants made a demand that MICA hold a special
shareholders' meeting pursuant to the Company's bylaws and under California
Corporations Code ss.ss. 600 and 601. Under sections 600 and 601, the holders of
10% or more of the
<PAGE>
voting shares of a corporation may call a special shareholders' meeting with 60
days' notice.1/ Also on December 29, 1995, defendants through the "Steel
Partners Committee"2/ disclosed that it had filed preliminary proxy materials
with the SEC to be used to: (a) solicit proxies from other MICA shareholders;
(b) remove the current MICA board; and (c) replace the board with defendants'
nominees.
Plaintiff alleges that defendants' Schedule 13D and amendments were
false and misleading in essentially three ways: (1) Defendants "hid their true
intentions for MICA" in their original 13D and subsequent Amendments; (2) Did
not disclose the identity of a "foreign investment fund" ("Fund") on whose
behalf and with whose funds Steel Services accumulated approximately 3.7% of
MICA stock; (3) Did not disclose all members of their control group and the fact
that defendants control more than 20% of MICA's stock.
III. PRELIMINARY INJUNCTION
A. Standard of Law: Preliminary Injunction
- --------
1/Cal. Corp. Code section 600(d) states:
Special meetings of the shareholders may be called by the board, the
chairman of the board, the president or the holders of shares entitled
to cast not less than 10 percent of the votes at the meeting or such
additional persons as may be provided in the articles or bylaws.
2/ According to defendants, the "Steel Partners Committee" is "a committee of
MICA shareholders formed by and consisting of Steel Partners and Steel
Services."
<PAGE>
A plaintiff requesting injunctive relief for violations of section
13(d) should show, "the traditional prerequisites of extraordinary equitable
relief by establishing irreparable harm." Rondeau v. Mosinee Paper Corp., 422
U.S. 49, 61 (1975) (not granting injunctive relief for a merely "technical
violation" of section 13(d) which had been corrected by defendant). In the Ninth
Circuit, the traditional test for injunctive relief requires the moving party to
demonstrate either: (1) a combination of probable success on the merits and the
possibility of irreparable injury, or (2) "that serious questions are raised and
the balance of hardships tips sharply in its favor." Hoopa Valley Tribe v.
Christie, 812 F.2d 1097, 1102 (9th Cir. 1986); Apple Computer, Inc. v. Formula
International Inc., 725 F.2d 521, 523 (9th Cir. 1984). As stated by the Ninth
Circuit, "[t]hese two formulations represent two points on a sliding scale in
which the required degree of irreparable harm increases as the probability of
success decreases." Oakland Tribune, Inc. v. Chronicle Pub. Co., 762 F.2d 1374,
1376 (9th Cir. 1985).
Under the second standard, ""serious questions' refers to questions
which cannot be resolved one way or the other at the hearing on the injunction
and as to which the court perceives a need to preserve the status quo lest one
side prevent resolution of the questions or execution of any judgment by
altering the status
<PAGE>
quo.'" GILDER V. PGA TOUR, INC., 936 F.2d 417, 422 (9th Cir. 1991) (quoting
REPUBLIC OF PHILIPPINES V. MARCOS, 862 F.2d 1355, 1362 (9th Cir. 1988) (EN
BANC), CERT. DENIED, 490 U.S. 1035 (1989)).
B. Standard Law: Section 13(d)
In order to determine plaintiff's probability of success on the merits,
the Court must consider the legal requirements of section 13(d). Section
13(d)(1) and Rule 13d-1, require that any "person" who acquires beneficial
ownership of more than five percent of the equity securities of a publicly held
company disclose their position in a Schedule 13D filing to the SEC within ten
days after such acquisition. 15 U.S.C. ss. 78m(d)(1); 17 C.F.R. ss. 240.13d-1.
In addition, they must disclose, "the background, and identity, residence, and
citizenship of, and the nature of such beneficial ownership by such persons and
all other persons by whom or on whose behalf the purchases have been or are to
be effected." Id. A "person" can be defined to include a group of owners who
have agreed to act together in "acquiring, holding or disposing of securities."
15 U.S.C. ss. 78m(d)(3).3/ Section 13(d)(2) and Rule
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3/ Courts have generally determined that, "the touchstone of a group within
the meaning of Section 13(d) is that the members combined in furtherance of a
common objective." WELLMAN V. DICKINSON, 682 F.2d 355, 363 (2d. Cir. 1982)
(citations omitted); SEE ALSO, TRANS WORLD CORP. V. ODYSSEY PARTNERS, 561 F.
Supp. 1315, 1323 (S.D.N.Y. 1983) (noting that to find a group there must be an
agreement to "act together 'in furtherance of a common objective.'") (citations
omitted); TRANSCON LINES V. A.G. BECKER, INC., 470 F. Supp. 356, 374-75
(S.D.N.Y. 1979) (a group is
<PAGE>
13d-2 require that whenever any "material" change occurs in the facts set forth
in a Schedule 13D, the person must "promptly" file an amendment disclosing the
"material" changes. 15 U.S.C. ss. 78m(d)(2); 17 C.F.R. ss. 240.13d-2. Section
13(d) is "intended to protect investors by enabling them to receive facts that
are material to an informed investment decision." PUROLATOR, INC. V. TIGER
INT'L, INC., 510 F. Supp. 554, 555-56 (D.D.C. 1981).
C. Plaintiff's Case: Probability of Success on the Merits and Irreparable
Harm
The Court finds that plaintiff has demonstrated both a high probability
of success on the merits and irreparable harm, which is sufficient to warrant a
grant of injunctive relief.
Plaintiff has made several claims under section 13(d). The Court
believes that the evidence presented thus far indicates a plaintiff's probable
ability to ultimately prevail on the claim regarding disclosure of the foreign
investment fund ("Fund") and on the claim regarding the non-disclosure of group
members.
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evidenced by a "common purpose" or a "pooling of interests.") While it is true
that a "mere relationship . . . is insufficient to create the group which is
deemed to be a statutory person," TEXASGULF V. CANADA Dey, Corp., 366 F. Supp.
374, 403 (S.D. Tex. 1973), it is also true that "the concerted action of the
group's members need not be expressly memorialized in writing." WELLMAN, 682 F.
2d at 363. In addition, there is no requirement that, "the members be committed
to acquisition, holding, or disposition on any specific set of terms." ID.
<PAGE>
According to the representations of counsel and the depositions taken
by the parties, particularly the deposition of Warren Lichtenstein, it appears
to the Court that the Fund exercised considerable control over the actions of
Mr. Lichtenstein with respect to the investment of its money. Thus, the Court
finds that the Fund was in control of the 3.7% of MICA's stock held in an
account with Mr. Lichtenstein. The Court also finds that the Fund and defendant
Steel Services had entered into an agreement or understanding which involved a
common plan regarding defendants' pursuit of control of MICA. The Management
Agreement between the Fund and defendants clearly indicates that the Fund's
shares would be voted in conjunction with Lichtenstein's wishes. Several factors
indicate that the Fund also affirmatively approved the plan to seek some form of
control of MICA. First, during the negotiations between Mr. Lichtenstein and the
Fund PRIOR TO the Fund's distribution of money to Mr. Lichtenstein's hands, the
Fund was informed of Mr. Lichtenstein's control interest and gave money to Mr.
Lichtenstein understanding that it would be used, at least in part, in the
pursuit of MICA. Second, the Fund Manager's attorneys approved each and every
Schedule 13D that was filed by defendants during the time the Fund's money was
under Steel Services' management, including amendment eleven which included the
defendants' proxy statement and indicated a clear intent to seek
<PAGE>
control; the defendants modified the language of the Schedule 13Ds in response
to comments by the Fund. These factors have persuaded the Court that plaintiff
has a probability of success with respect to the failure to disclose the
identity of the Fund.
The evidence presented to the Court, particularly the deposition
testimony of Mr. Jack Howard, also indicates that there are undisclosed members
of defendants' control group. During the last quarter of 1995, the span of time
immediately prior to defendant's filing of amendment eleven in which they
declared their intent to control MICA, several of Mr. Howard's clients began
purchasing large quantities of MICA stock. One of Mr. Howard's clients purchased
just short of 5% of the outstanding stock. Because of defendants' refusal to
supply plaintiff with the identity of several of these clients, plaintiff was
unable to depose them and determine Mr. Howard's exact role in the purchases of
the MICA stock. As one court has noted, "whenever concealment is at issue,
plaintiff's proof necessarily has to be circumstantial . . . This Court is not
compelled to play ostrich in the face of the strong circumstantial evidence
demonstrating the existence of an agreement . . ." Champion Parts Rebuilders v.
Cormier Corp., 661 F. Supp. 825, 850 (N.S. Ill. 1987) (citations omitted). This
Court finds that the large purchases of stock by Mr. Howard's clients, which
took place over a period of only a couple of months, and
<PAGE>
which took place during a period when defendants were precluded from further
strengthening their position because of MICA's "poison pill" provision which
would be triggered if they disclosed ownership in excess of 20%, is strong
circumstantial evidence indicating that Mr. Howard, an admitted member of the
defendants' control group, was also directing the purchases of his clients and
controlling their votes.
Finally, the Court finds that plaintiff has demonstrated irreparable
harm which may befall it in the absence of injunctive relief. Generally, this
Court has a strong preference for prevention over repair, which may require it
to "unscramble the eggs." As the Supreme Court has noted, "in corporate control
contests the stage of preliminary injunctive relief, rather than post-contest
lawsuits, 'is the time when relief can best be given.'" PIPER V. CHRIS-CRAFT
INDUS., 430 U.S. 1, 41-42 (1976) (citing ELECTRONIC SPECIALTY CO. V.
INTERNATIONAL CONTROLS CORP., 409 F.2d 937, 947 (2d Cir. 1969) (Friendly, J.)).
Plaintiff has argued that it will suffer irreparable harm because if
control of MICA shifts at the February 26th shareholders' meeting, the control
shift and subsequent related activities will be difficult to "unscramble" with
post-election relief if plaintiff succeeds in proving defendants' section 13(d)
violations. First, if defendants gain control of the corporation,
<PAGE>
they may immediately dismiss this suit and thus an ultimate resolution of the
validity of plaintiff's claims of violations of section 13(d) will never be
obtained. Second, certain contractual provisions tied to a "change in control"
will be automatically activated in the event of a successful bid for control by
defendants and will cause injury to MICA that will be difficult to repair.4/
While it may be WITHIN THE POWER of the court to subsequently "fix" any damage
caused by an illegitimate change in control, SEE, E.G., WESTERN DIST. COUNCIL OF
LUMBER PROD. V. LOUISIANA PAC. CORP., 892 F.2d 1412, 1416 (9th Cir. 1989)
(finding that a district court can void an election found to be unfair and order
a new one), it may not be the preferable remedy if the court has a chance to
take some pre-election preventive measures. In addition, here there are ongoing
violations of section 13(d) which makes injunctive relief more appropriate. SEE,
E.G., HIBERNIA SAV. BANK V. BALLARINO, 891 F.2d 370, 373 (1st Cir. 1989);
SOUTHMARK PRIME PLUS, L.P. V. FALZONE, 776 F. Supp. 888 (D. Del 1991).
IV. REMEDY
Having determined that plaintiff is entitled to injunctive relief, the
Court must fashion an appropriate remedy.
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4/ Specifically, plaintiff represents that there are approximately $8.2
million of convertible subordinated debentures outstanding which contain a
provision that in the event of a "change of control," MICA is obligated to
immediately offer to prepay.
<PAGE>
Plaintiff here does not want to delay or cancel the shareholders' meeting, but
rather requests that defendants be enjoined from voting the shares obtained in
violation of 13(d). Specifically, plaintiff requests total disenfranchisement of
the shares held by defendants on behalf of the Fund and "proportional voting" of
the shares held by Mr. Howard's clients ("Howard Group").
This Court is reluctant to order total disenfranchisement. The Court
wishes to award the most minimal equitable relief that is consistent with the
culpable conduct and the irreparable injury to be prevented. Thus, the Court
finds that "proportional voting" for some of defendant's controlled stock is
appropriate. In fashioning this remedy, the Court is guided by the decision of
the court in CHAMPION PARTS, SUPRA 661 F. Supp. at 851- 853. Thus, the Howard
Group shares (not including shares held PERSONALLY by Mr. Howard) and the shares
held by the Fund (hereinafter "Tainted Shares") will be voted on the substantive
agenda items at the shareholders' meeting based on the following formula: after
a vote of all the shares which are not held by Howard Group or on behalf of the
Fund (hereinafter "Untainted Shares"), the number of shares voted for
defendants' proposals will be divided by the total number of corporate shares of
the same class outstanding to determine the "proportion multiplier." The
"proportion multiplier" will then be applied to the Tainted Shares,
<PAGE>
which will be voted under defendants' control in that proportion. At the oral
hearing, defendants requested that the court delay the meeting for a week so
they could attempt to make curative disclosure and/or curative transactions and
thus allow them possibly to vote the Tainted Shares. The Court DENIES this
request on the grounds that defendants have alternative means of relief as to
this matter. Specifically, defendants may be able to: (1) cancel the meeting;
(2) adjourn the meeting under MICA's bylaws;5/ or (3) tally the votes cast at
the meeting and determine the hypothetical result in absence of this order,
which result could be easily validated if defendants are successful in reversing
this order on an interlocutory appeal.6/
V. CONCLUSION
After consideration of all of the facts, papers, and oral arguments
presented by both parties, the Court concludes that plaintiff has shown both a
substantial probability of success on the merits and irreparable harm which
justify limited injunctive
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5/ The Court intends that the defendants are restricted to the "proportional"
vote of the Tainted Shares on any vote taken at the shareholders' meeting,
including any vote on adjournment, even if the multiplier denominator is shares
present rather than outstanding shares.
6/ Pursuant to a stipulation of the parties, the results of the vote at the
shareholders' meeting will not be certified for two weeks after the election,
thus giving defendants opportunity to get appellate review and maybe a stay
prior to such certification, if appropriate.
<PAGE>
relief for the plaintiff. The Court wishes to award the most minimal relief
available that will protect the rights of the plaintiff.
THEREFORE, the Court GRANTS plaintiff's request for a preliminary
injunction and ORDERS that the Tainted Shares will be voted according to the
proportional formulae outlined in this order. The Court further ORDERS that the
defendants are enjoined from interfering with MICA's relationships with its
lenders, suppliers or customers. Any other requests for injunctive relief made
by plaintiff that are not covered by this order are DENIED. The Court further
DENIES defendants' request for a one week delay of the shareholders' meeting,
and ORDERS that defendants shall have 30 days from the date of the entry of the
Order denying defendants' Motion to Dismiss to answer plaintiff's Complaint.
IT IS SO ORDERED.
DATED: February 29, 1996
/s/ RUDI M. BREWSTER
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UNITED STATES DISTRICT JUDGE
cc: All Counsel and Parties Without Counsel
Magistrate Judge
