<PAGE>
As filed with the Securities and Exchange Commission on February 3, 1997
REGISTRATION NO. 33-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------
FORM S-4
Registration Statement
Under the
Securities Act of 1933
-----------------------------------
UNICO, INC.
(Exact name of registrant as specified in its charter)
New Mexico ______ 85-030072
(State or other (Primary Standard Industrial (IRS Employer
jurisdiction of Classification Code Number) identification number)
incorporation)
--------
William Hagler
1921 Bloomfield Boulevard 1921 Bloomfield Boulevard
Farmington, New Mexico 87401 Farmington, New Mexico 87401
(505) 326-2668 (505) 326-2668
(Address, including zip code, (Name, address, including zip code,
and telephone number, including area code, and telephone number, including area
of registrant's principal executive office) code, of agent for service)
----------------------------
Copies to:
William S. Haft, Esq. Robert Shaiman, Esq.
Watson, Farley & Williams Lohf, Shaiman & Jacobs, P.C.
380 Madison Avenue 950 South Cherry Street
New York, NY 10017 Denver, Colorado 80222
(212) 922-2264 (303) 753-9000
Robert P. Schreiner, Esq.
380 Madison Avenue
New York, NY 10017
(212) 922-2216
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the Registration Statement is declared effective.
If any of the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box / /
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, as amended, other than securities offered
only in connection with dividend or interest
reinvestment plans, check the following box /x/
-----------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
Title of Each Proposed Proposed
Class of Securities Amount Maximum Maximum Amount of
to be to be Offering Aggregate Registration
Registered Registered Price Per Offering Fee(2)
Unit(1) Price
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common stock, par value $.20. . . . 10,000,000 shares(3) $0 $0 $0
- ----------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated pursuant to Rule 457(f)(2) solely for the purpose of calculating
the registration fee, based upon the negative book value of Chatfield Dean &
Co., Inc. and its par value of zero.
(2) 1/29th of one percent of the proposed maximum aggregate offering price
($"0").
(3) Includes _______ shares that are being reserved for issuance under the
newly created Chatfield Dean Holdings, Inc. employee stock bonus plan. See
"BUSINESS - Chatfield's Employee Stock Bonus Plan."
<PAGE>
UNICO, INC.
1921 Bloomfield Boulevard
Farmington, New Mexico 87401
Dear Shareholders:
You are cordially invited to attend a special meeting of the shareholders
of Unico, Inc. ("Unico") to be held on ____________________, at 4:00 p.m., local
time, at Unico's corporate offices at 1921 Bloomfield Boulevard, Farmington ,
New Mexico (the "Unico Meeting"), to consider approval of the Agreement and Plan
of Merger dated as of July 30, 1996 (the "Merger Agreement"), among Unico,
Chatfield Acquisition Corp., a Colorado corporation wholly-owned by Unico
("Newco") and Chatfield Dean & Co., Inc., a Colorado corporation ("Chatfield"),
providing for the merger of Newco with and into Chatfield (the "Merger") and
certain other related matters. At the time of the Merger, Unico will change its
name to Chatfield Dean Holdings, Inc. ("Chatfield Dean Holdings"). All
shareholders of Unico will be asked to vote with respect to the Merger.
Pursuant to the Merger Agreement, (1) Newco will merge with and into
Chatfield in consideration of the issuance of certain capital stock of Unico in
favor of Chatfield shareholders; (2) Newco will cease to exist and Chatfield
will become a wholly-owned subsidiary of Chatfield Dean Holdings; (3) the
current directors and executive officers of Unico and Newco will resign, except
for Mr. William Hagler, the current President of Unico, who will remain a
director of post-Merger Unico (which is referred to herein as "Chatfield Dean
Holdings"); and (4) each of Unico and Chatfield will use its best efforts to
have the directors designated by Chatfield elected to the Board of Directors of
Chatfield Dean Holdings. At the effective time of the Merger, Newco shall be
merged with and into Chatfield in accordance with the Colorado Business
Corporation Act, whereupon the separate corporate existence of Newco shall cease
(the "Effective Time"). Thereafter, Chatfield shall continue as the surviving
corporation, and as a wholly-owned subsidiary of Chatfield Dean Holdings, under
the laws of the State of Colorado (the "Surviving Corporation").
Specifically, the Merger Agreement contemplates the following:
(A) Each holder of Unico common stock issued and outstanding immediately
before the Effective Time will be entitled to receive three newly created
Unico warrants (collectively, the "Unico Warrants") for each share of Unico
common stock held:
1. one Unico warrant evidencing the right to purchase .3 (three-
tenths) of a share of Chatfield Dean Holdings common stock (the "Unico
Three Year Warrant");
2. one Unico warrant evidencing the right to purchase .4 (four-tenths)
of a share of Chatfield Dean Holdings common stock (the "Unico Four
Year Warrant"); and
3. one Unico warrant evidencing the right to purchase .5 (five-tenths)
of a share of Chatfield Dean Holdings common stock (the "Unico Five
Year Warrant");
(B) Each share of Chatfield common stock issued and outstanding at the
Effective Time shall be exchanged for and converted into ___ of a share of
Unico common stock for each share of Chatfield common stock surrendered;
(C) Each share fp Chatfield common stock issued and outstanding under
Chatfield's employee stock bonus plan (the "Chatfield's Plan Common
Stock") at the Effective Time shall be exchanged for and converted into
___ of a share of Unico common stock for each shre of Chatfield Plan
Common Stock surrendered;
(D) Each share of Chatfield Series A 7% Cumulative Preferred Stock (the
"Chatfield Series A Stock") and each share of Chatfield Series B Preferred
Stock (the "Chatfield Series B Stock")
i
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issued and outstanding at the Effective Time shall be exchanged for and
converted into 2.66 shares of Unico Series A Preferred Stock to be created
from Unico's authorized preferred shares (the "Unico Series A Stock") for
each share of Chatfield Series A Stock or Chatfield Series B Stock
surrendered. Each share of Unico Series A Stock shall thereafter be
convertible into one and one-quarter (1.25) shares of Unico common stock
for each share of Unico Series A Stock surrendered, PROVIDED, HOWEVER, that
each holder of Unico Series A Stock issued and outstanding at the Effective
Time who fails to surrender his or her Unico Series A Stock for conversion
into Unico common stock within sixty (60) days following the Effective Time
shall be entitled to receive, upon conversion, only one (1) share of Unico
common stock for each share of Unico Series A Stock surrendered; and
(E) All the shares of capital stock of Newco outstanding at the Effective
Time shall be exchanged for and converted into one (1) share of common
stock of the Surviving Corporation.
In addition to your approval of the Merger, we are also asking you to:
(A) adopt Amended and Restated Articles of Incorporation:
1. changing the name of Unico to "Chatfield Dean Holdings, Inc.";
2. increasing the number of authorized shares of Unico common stock
from 2,500,000 to 20,000,000 and increasing the number of authorized
preferred shares from 8,000,000 preferred to 20,000,000 preferred
shares (to include the Unico Series A Stock); and
3. authorizing the newly created Unico Three Year Warrants, Unico Four
Year Warrants and Unico Five Year Warrants;
(B) adopt an employee stock bonus plan in form and substance similar to
Chatfield's existing employee stock bonus plan;
(C) approve the spin-off by Unico of its subsidiary Intermountain Refining
Co. Inc. ("IRC") by pro rata distribution to current Unico shareholders;
(D) approve the creation of an employee incentive plan with a minimum of
1,000,000 shares of Unico (post-Merger, Chatfield Dean Holdings) common
stock reserved for issuance to certain employees of Chatfield Dean Holdings
and its subsidiaries, with such plan to take the form and substance
determined by Chatfield Dean Holdings' Board of Directors, or a
compensation committee designated thereby, effective promptly after
consummation of the Merger; and
(E) transact such other business as may properly come before the Unico
Meeting or any adjournment thereof.
The accompanying Information Statement/Prospectus provides a detailed
description of the Merger and these related matters, and the complete texts of
the Merger Agreement and the proposed Amended and Restated Articles of
Incorporation are attached as Appendices thereto.
The Securities and Exchange Commission has declared effective the
Information Statement/ Prospectus of Unico and Chatfield relating to the Merger.
It is a condition to the consummation of the Merger that the shareholders of
Unico approve the Merger Agreement and the other matters related thereto being
submitted to a vote at the Unico Meeting. These matters are interdependent, and
if any one proposal is not approved by the shareholders of Unico, all proposals
will be withdrawn from consideration. Mr. William Hagler, who holds 428,811
shares of Unico common stock (assuming exercise of all warrants), or
approximately 43% of the outstanding Unico common stock, intends to vote all of
the shares held by him for approval of the proposed Merger and the other
proposals.
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<PAGE>
Assuming that each share of Unico common stock issued to Chatfield's
shareholders in the Merger (including conversion of the Unico Series A Stock
into Unico common stock within 60 days of the issuance thereof) has a value
equal to the closing bid price for the Unico common stock on the last trading
day before the public announcement of the Merger ($3.00), the value of the
consideration to be given to the Chatfield shareholders pursuant to the Merger
Agreement would be approximately $ ____.
Holders of Unico common stock as of the record date of the Unico Meeting
are entitled to dissenters' rights under Sections 53-15-3 and 53-15-4 of the New
Mexico Business Corporation Act (the "NMBCAct"), copies of which are attached as
an Appendix to the Information Statement/Prospectus. Shareholders are encouraged
to read such statutes in their entirety and consult with their counsel regarding
whether or not to exercise their dissenters' rights. To exercise such rights, a
Unico shareholder must, INTER ALIA, (i) deliver to Unico before the vote at the
Unico Meeting a written objection to the Merger and within at least ten days
after the date the vote was taken, make written demand on the corporation for
payment for his shares of Unico common stock; (ii) either vote against the
approval of the Merger or abstain from voting with respect to the Merger; and
(iii) comply with the provisions set forth in the NMBCAct following the Unico
Meeting. A vote against approval of the Merger will not in and of itself
constitute a written demand for dissenters' rights satisfying the requirements
of the above Sections. See "THE MERGER - Dissenters' Rights" in the
accompanying Information Statement/Prospectus.
IT IS IMPORTANT THAT YOUR SHARES BE VOTED AT THE UNICO MEETING, REGARDLESS
OF THE NUMBER OF SHARES YOU HOLD. WE ARE NOT ASKING YOU FOR A PROXY, AND YOU
ARE REQUESTED NOT TO SEND US A PROXY.
IF PROXIES ARE RECEIVED BY UNICO, THE SHARES REPRESENTED BY SUCH PROXIES
SHALL BE VOTED IN ACCORDANCE WITH PROXY INSTRUCTIONS. ALL PROXIES GRANTED TO
MANAGEMENT WILL BE VOTED IN FAVOR OF THE PROPOSED MERGER.
February __, 1997 Sincerely,
-------------------
William N. Hagler
President
iii
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CHATFIELD DEAN & CO., INC.
7935 East Prentice Avenue
Suite 200
Greenwood Village, Colorado 80111
Dear Shareholders:
You are cordially invited to attend an annual meeting of the shareholders
of Chatfield Dean & Co., Inc., a Colorado corporation ("Chatfield"), to be held
on ____________________, at 4:00 p.m., local time, at Chatfield's corporate
offices at 7935 East Prentice Avenue, Suite 200, Colorado Village, Colorado (the
"Chatfield Meeting"), to consider approval of the Agreement and Plan of Merger
dated as of July 30, 1996 (the "Merger Agreement"), among Chatfield, Unico, Inc.
("Unico") and Chatfield Acquisition Corp., a Colorado corporation wholly-owned
by Unico ("Newco"), providing for the merger of Newco with and into Chatfield
(the "Merger"), and certain other related matters. At the time of the Merger,
Unico will change its name to Chatfield Dean Holdings, Inc. ("Chatfield Dean
Holdings").
Pursuant to the Merger Agreement, (1) Newco will merge with and into
Chatfield in consideration of the issuance of certain capital stock of Unico in
favor of Chatfield shareholders; (2) Newco will cease to exist and Chatfield
will become a wholly-owned subsidiary of Chatfield Dean Holdings; (3) the
current directors and executive officers of Unico and Newco will resign, except
for Mr. William Hagler, the current President of Unico, who will remain a
director of post-Merger Unico (which is referred to herein as "Chatfield Dean
Holdings"); and (4) each of Unico and Chatfield will use its best efforts to
have the directors designated by Chatfield elected to the Board of Directors of
Chatfield Dean Holdings. At the effective time of the Merger, Newco shall be
merged with and into Chatfield in accordance with the Colorado Business
Corporation Act, whereupon the separate corporate existence of Newco shall cease
(the "Effective Time"). Thereafter, Chatfield shall continue as the surviving
corporation, and as a wholly-owned subsidiary of Chatfield Dean Holdings, under
the laws of the State of Colorado (the "Surviving Corporation").
Specifically, the Merger Agreement contemplates the following:
(A) Each holder of Unico common stock issued and outstanding immediately
before the Effective Time will be entitled to receive three newly created
Unico warrants (collectively, the "Unico Warrants") for each share of Unico
common stock held:
1. one Unico warrant evidencing the right to purchase .3 (three-
tenths) of a share of Chatfield Dean Holdings common stock (the "Unico
Three Year Warrant");
2. one Unico warrant evidencing the right to purchase .4 (four-tenths)
of a share of Chatfield Dean Holdings common stock (the "Unico Four
Year Warrant"); and
3. one Unico warrant evidencing the right to purchase .5 (five-tenths)
of a share of Chatfield Dean Holdings common stock (the "Unico Five
Year Warrant");
(B) Each share of Chatfield common stock issued and outstanding at the
Effective Time shall be exchanged for and converted into ___ of a share of
Unico common stock for each share of Chatfield common stock surrendered;
(C) Each share of Chatfield common stock issued and outstanding under
Chatfield's employee stock bonus plan (the "Chatfield Plan Common Stock")
at the Effective Time shall be exchanged
iv
<PAGE>
for and converted into ___ of a share of Unico common stock for each share
of Chatfield Plan Common Stock surrendered;
(D) Each share of Chatfield Series A 7% Cumulative Preferred Stock (the
"Chatfield Series A Stock") and each share of Chatfield Series B Preferred
Stock (the "Chatfield Series B Stock") issued and outstanding at the
Effective Time shall be exchanged for and converted into 2.66 shares of
Unico Series A Preferred Stock to be created from Unico's authorized
preferred shares (the "Unico Series A Stock") for each share of Chatfield
Series A Stock or Chatfield Series B Stock surrendered. Each share of Unico
Series A Stock shall thereafter be convertible into one and one-quarter
(1.25) shares of Unico common stock for each share of Unico Series A Stock
surrendered, PROVIDED, HOWEVER, that each holder of Unico Series A Stock
issued and outstanding at the Effective Time who fails to surrender his or
her Unico Series A Stock for conversion into Unico common stock within
sixty (60) days following the Effective Time shall be entitled to receive,
upon conversion, only one (1) share of Unico common stock for each share of
Unico Series A Stock surrendered; and
(E) All the shares of capital stock of Newco outstanding at the Effective
Time shall be exchanged for and converted into one (1) share of common
stock of the Surviving Corporation.
In addition to your approval of the Merger, we are also asking you to:
(A) elect Messrs. Sanford Greenberg, Robert Lemon, Richard O'Donnell, Scott
Carothers, Kenneth Greenberg and Barry Cheren as Directors of Chatfield,
with Mr. Scott Carothers representing the holders of Chatfield Series A
Stock;
(B) approve the appointment of Spicer, Jeffries & Co. as Chatfield's
independent certified accountants; and
(C) transact such other business as may properly come before the Chatfield
Meeting or any adjournment thereof.
The accompanying Information Statement/Prospectus provides a detailed
description of the Merger and these related matters, and the complete texts of
the Merger Agreement and the proposed Amended and Restated Articles of
Incorporation are attached as Appendices thereto.
The Securities and Exchange Commission has declared effective the
Information Statement/ Prospectus of Unico and Chatfield relating to the Merger.
It is a condition to the consummation of the Merger that the shareholders of
Chatfield approve the Merger Agreement and the other matters related thereto
being submitted to a vote at the Chatfield Meeting. These matters are
interdependent, and if one proposal is not approved by the shareholders of
Chatfield, all proposals will be withdrawn from consideration. The directors
and executive officers of Chatfield, who collectively own approximately 59% of
the outstanding Chatfield common stock (assuming exercise of all warrants and
incorporating the voting rights of the holders of Chatfield Series A Stock), and
approximately 63% of the outstanding Chatfield Series B Stock, the holders of
which are entitled to vote as a class, intend to vote such shares for the
proposed Merger. See "PRINCIPAL SHAREHOLDERS OF CHATFIELD" in the accompanying
Information Statement/Prospectus.
THE BOARD OF DIRECTORS OF CHATFIELD HAS APPROVED THE PROPOSED MERGER,
BELIEVES IT TO BE IN THE BEST INTEREST OF CHATFIELD AND ITS
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SHAREHOLDERS AND RECOMMENDS THAT YOU VOTE IN FAVOR OF IT AND OTHER MATTERS
PRESENTED AT THE CHATFIELD MEETING.
Assuming that each share of Unico common stock issued to Chatfield's
shareholders in the Merger (including conversion of the Unico Series A Stock
into Unico common stock within 60 days of the issuance thereof) has a value
equal to the closing bid price for the Unico common stock on the last trading
day before the public announcement of the Merger ($3.00), the value of the
consideration to be given to the Chatfield shareholders pursuant to the Merger
Agreement would be approximately $ ____.
Holders of Chatfield common stock, Chatfield Plan Common Stock, Chatfield
Series A Stock and Chatfield Series B Stock, as of the record date of the
Chatfield Meeting, are entitled to dissenters' rights under Sections 73-113-101
ET. SEQ. of the Colorado Business Corporation Act (the "CoBCAct"), copies of
which are attached as an Appendix to the Information Statement/Prospectus.
Shareholders are encouraged to read such statutes in their entirety and consult
with their counsel regarding whether or not to exercise their dissenters'
rights. To exercise such rights, a Chatfield shareholder must, INTER ALIA, (i)
deliver to Chatfield before the vote at the Chatfield Meeting a written notice
of his intent to demand payment for his shares of Chatfield stock; (ii) either
vote against the approval of the Merger or abstain from voting with respect to
the Merger; and (iii) comply with the provisions set forth in the CoBCAct
following the Chatfield Meeting. A vote against approval of the Merger will not
in and of itself constitute a written demand for dissenters' rights satisfying
the requirements of the above Sections. See "THE MERGER - Dissenters' Rights"
in the accompanying Information Statement/Prospectus.
IT IS IMPORTANT THAT YOUR SHARES BE VOTED AT THE CHATFIELD MEETING,
REGARDLESS OF THE NUMBER OF SHARES YOU HOLD. THEREFORE, PLEASE COMPLETE, SIGN,
DATE AND RETURN THE ENCLOSED PROXY AS SOON AS POSSIBLE, WHETHER OR NOT YOU PLAN
TO ATTEND THE CHATFIELD MEETING. PROXIES ARE REVOCABLE AT ANY TIME PRIOR TO THE
TIME THEY ARE VOTED, AND SHAREHOLDERS WHO ARE PRESENT AT THE MEETING MAY
WITHDRAW THEIR PROXIES AND VOTE IN PERSON IF THEY SO DESIRE.
February __, 1997 Sincerely,
-----------------------
Sanford Greenberg
Chief Executive Officer
vi
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UNICO, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that a special meeting of the shareholders of Unico,
Inc. ("Unico") will be held on __________, at 4:00 p.m., local time, at Unico's
corporate offices at 1921 Bloomfield Boulevard, Farmington , New Mexico (the
"Unico Meeting"), for the following purposes:
(A) To consider and vote upon a proposal to approve the acquisition by
Unico of Chatfield Dean & Co., Inc., a Colorado corporation, ("Chatfield"),
pursuant to an Agreement and Plan of Merger dated as of July 30, 1996 (the
"Merger Agreement") among Unico, Chatfield Acquisition Corp., a Colorado
corporation wholly-owned by Unico ("Newco") and Chatfield, providing for the
merger of Newco with and into Chatfield (the "Merger") and contemplating the
following:
1. each holder of Unico common stock issued and outstanding
immediately before the Effective Time will be entitled to receive
three newly created Unico warrants (collectively, the "Unico
Warrants") for each share of Unico common stock held:
a. one Unico warrant evidencing the right to purchase .3 (three-
tenths) of a share of post-Merger Unico (hereinafter referred to
as "Chatfield Dean Holdings") common stock (the "Unico Three Year
Warrant");
b. one Unico warrant evidencing the right to purchase .4 (four-
tenths) of a share of Chatfield Dean Holdings common stock (the
"Unico Four Year Warrant"); and
c. one Unico warrant evidencing the right to purchase .5 (five-
tenths) of a share of Chatfield Dean Holdings common stock (the
"Unico Five Year Warrant");
2. each share of Chatfield common stock issued and outstanding at the
Effective Time shall be exchanged for and converted into ___ of a
share of Unico common stock for each share of Chatfield common stock
surrendered;
3. each share of Chatfield common stock issued and outstanding under
Chatfield's employee stock bonus plan (the "Chatfield Plan Common
Stock") at the Effective Time shall be exchanged for and converted
into ___ of a share of Unico common stock for each share of Chatfield
Plan Common Stock surrendered;
4. each share of Chatfield Series A 7% Cumulative Preferred Stock (the
"Chatfield Series A Stock") and each share of Chatfield Series B
Preferred Stock (the "Chatfield Series B Stock") issued and
outstanding at the Effective Time shall be exchanged for and converted
into 2.66 shares of Unico Series A Preferred Stock to be created from
Unico's authorized preferred shares (the "Unico Series A Stock") for
each share of Chatfield Series A Stock or Chatfield Series B Stock
surrendered. Each share of Unico Series A Stock shall thereafter be
convertible into one and one-quarter (1.25) shares of Unico common
stock for each share of Unico Series A Stock surrendered, PROVIDED,
HOWEVER, that each holder of Unico Series A Stock issued and
outstanding at the Effective Time who fails to surrender his or her
Unico Series A Stock for conversion into Unico common stock within
sixty (60) days following the Effective Time shall be entitled to
receive, upon conversion, only one (1) share of Unico common stock for
each share of Unico Series A Stock surrendered; and
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5. all the shares of capital stock of Newco outstanding at the
Effective Time shall be exchanged for and converted into one (1) share
of common stock of the Surviving Corporation.
(B) To adopt Amended and Restated Articles of Incorporation:
1. changing the name of Unico to "Chatfield Dean Holdings, Inc.";
2. increasing the number of authorized shares of Unico common stock
from 2,500,000 to 20,000,000 and increasing the number of authorized
preferred shares from 8,000,000 preferred to 20,000,000 preferred
shares (to include the Unico Series A Stock); and
3. authorizing the newly created Unico Three Year Warrants, Unico Four
Year Warrants and Unico Five Year Warrants;
(C) To adopt an employee stock bonus plan in form and substance similar to
Chatfield's existing employee stock bonus plan;
(D) To approve the spin-off by Unico of its subsidiary Intermountain
Refining Co. Inc. ("IRC") by pro rata distribution to current Unico
shareholders;
(E) To approve the creation of an employee incentive plan with a minimum of
1,000,000 shares of Unico (post-Merger, Chatfield Dean Holdings) common
stock reserved for issuance to certain employees of Chatfield Dean Holdings
and its subsidiaries, with such plan to take the form and substance
determined by Chatfield Dean Holdings' Board of Directors, or a
compensation committee designated thereby, effective promptly after
consummation of the Merger; and
(F) To transact such other business as may properly come before the Unico
Meeting or any adjournment thereof.
The accompanying Information Statement/Prospectus provides a detailed
description of the Merger and these related matters, and the complete texts of
the Merger Agreement and the proposed Amended and Restated Articles of
Incorporation for Chatfield Dean Holdings are attached as Appendices thereto.
The Securities and Exchange Commission has declared effective the
Information Statement/ Prospectus of Unico and Chatfield relating to the Merger.
It is a condition to consummation of the Merger that the shareholders of Unico
approve the Merger Agreement and the other matters related thereto being
submitted to a vote at the Unico Meeting. These matters are interdependent, and
if any one proposal is not approved by the shareholders of Unico, all proposals
will be withdrawn from consideration. Mr. William Hagler, who holds 428,811
shares of Unico common stock (assuming exercise of all warrants), or
approximately 43% of the outstanding Unico common stock, intends to a vote all
of the shares held by him for approval of the proposed Merger and the other
proposals.
Only those shareholders of record at the close of business on
_______________ are entitled to notice of and to vote at the Unico Meeting or
any adjournment thereof.
Holders of Unico common stock as of the record date of the Unico Meeting
are entitled to dissenters' rights under Sections 53-15-3 and 53-15-4 of the New
Mexico Business Corporation Act (the "NMBCAct"), copies of which are attached as
an Appendix to the Information Statement/Prospectus. Shareholders are encouraged
to read such statutes in their entirety and consult with their counsel regarding
viii
<PAGE>
whether or not to exercise their dissenters' rights. To exercise such rights, a
Unico shareholder must, INTER ALIA, (i) deliver to Unico before the vote at the
Unico Meeting a written objection to the Merger and within at least ten days
after the date the vote was taken make written demand on the corporation for
payment for his shares of Unico common stock; (ii) either vote against the
approval of the Merger or abstain from voting with respect to the Merger; and
(iii) comply with the provisions set forth in the NMBCAct following the Unico
Meeting. A vote against approval of the Merger will not in and of itself
constitute a written demand for dissenters' rights satisfying the requirements
of the above Sections. See "THE MERGER - Dissenters' Rights" in the
accompanying Information Statement/Prospectus.
Farmington, New Mexico By Order of the Board of Directors,
February __, 1997
---------------
Secretary
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CHATFIELD DEAN & CO., INC.
NOTICE OF MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that an annual meeting of the shareholders of
Chatfield Dean & Co., Inc., a Colorado corporation ("Chatfield"), will be held
on _________, at 4:00 p.m., at Chatfield's corporate offices at 7935 East
Prentice Avenue, Suite 200, Colorado Village, Colorado (the "Chatfield
Meeting"), for the following purposes:
(A) To consider and vote upon a proposal to approve the acquisition by
Unico of Chatfield, pursuant to an Agreement and Plan of Merger dated as of July
30, 1996 (the "Merger Agreement") among Unico, Chatfield Acquisition Corp., a
Colorado corporation wholly-owned by Unico ("Newco"), and Chatfield, providing
for the merger of Newco with and into Chatfield (the "Merger") and contemplating
the following:
1. each holder of Unico common stock issued and outstanding
immediately before the Effective Time will be entitled to receive
three newly created Unico warrants (collectively, the "Unico
Warrants") for each share of Unico common stock held:
a. one Unico warrant evidencing the right to purchase .3 (three-
tenths) of a share of post-Merger Unico (hereinafter referred to
as "Chatfield Dean Holdings") common stock (the "Unico Three Year
Warrant");
b. one Unico warrant evidencing the right to purchase .4 (four-
tenths) of a share of Chatfield Dean Holdings common stock (the
"Unico Four Year Warrant"); and
c. one Unico warrant evidencing the right to purchase .5 (five-
tenths) of a share of Chatfield Dean Holdings common stock (the
"Unico Five Year Warrant");
2. each share of Chatfield common stock issued and outstanding at the
Effective Time shall be exchanged for and converted into ___ of a
share of Unico common stock for each share of Chatfield common stock
surrendered;
3. each share of Chatfield common stock issued and outstanding under
Chatfield's employee stock bonus plan (the "Chatfield Plan Common
Stock") at the Effective Time shall be exchanged for and converted
into ___ of a share of Unico common stock for each share of Chatfield
Plan Common Stock surrendered;
4. each share of Chatfield Series A 7% Cumulative Preferred Stock (the
"Chatfield Series A Stock") and each share of Chatfield Series B
Preferred Stock (the "Chatfield Series B stock") issued and
outstanding at the Effective Time shall be exchanged for and converted
into 2.66 shares of Unico Series A Preferred Stock to be created from
Unico's authorized preferred shares (the "Unico Series A Stock") for
each share of Chatfield Series A Stock or Chatfield Series B Stock
surrendered. Each share of Unico Series A Stock shall thereafter be
convertible into one and one-quarter (1.25) shares of Unico common
stock for each share of Unico Series A Stock surrendered, PROVIDED,
HOWEVER, that each holder of Unico Series A Stock issued and
outstanding at the Effective Time who fails to surrender his or her
Unico Series A Stock for conversion into Unico common stock within
sixty (60) days following the Effective Time shall be entitled to
receive, upon conversion,
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<PAGE>
only one (1) share of Unico common stock for each share of Unico
Series A Stock surrendered; and
5. all the shares of capital stock of Newco outstanding at the
Effective Time shall be exchanged for and converted into one (1) share
of common stock of the Surviving Corporation.
(B) To elect Messrs. Sanford Greenberg, Robert Lemon, Richard O'Donnell,
Scott Carothers, Kenneth Greenberg and Barry Cheren as directors of
Chatfield, with Mr. Scott Carothers representing the holders of
Chatfield Series A Stock.
(C) To approve the appointment of Spicer, Jeffries & Co. as Chatfield's
independent certified accountants.
(D) To transact such other business as may properly come before the
Chatfield Meeting or any adjournment thereof.
The accompanying Information Statement/Prospectus provides a detailed
description of the Merger and these related matters, and the complete texts of
the Merger Agreement and the proposed Amended and Restated Articles of
Incorporation for Chatfield Dean Holdings are attached as Appendices thereto.
The Securities and Exchange Commission has declared effective the
Information Statement/ Prospectus of Unico and Chatfield relating to the Merger.
It is a condition to the consummation of the Merger that the shareholders of
Chatfield approve the Merger Agreement and the other matters related thereto
being submitted to a vote at the Chatfield Meeting. These matters are
interdependent, and if one proposal is not approved by the shareholders of
Chatfield, all proposals will be withdrawn from consideration. The directors
and executive officers of Chatfield, who collectively own approximately 59% of
the outstanding Chatfield common stock (assuming exercise of all warrants and
incorporating the voting rights of the holders of Chatfield Series A Stock), and
approximately 63% of the outstanding Chatfield Series B Stock, the holders of
which are entitled to vote as a class, intend to vote such shares for the
proposed Merger. See "PRINCIPAL SHAREHOLDERS OF CHATFIELD" in the accompanying
Information Statement/Prospectus.
Only those shareholders of record at the close of business on
_________________ are entitled to notice of and to vote at the Chatfield Meeting
or any adjournment thereof.
Holders of Chatfield common stock, Chatfield Plan Common Stock, Chatfield
Series A Stock and Chatfield Series B Stock, as of the record date of the
Chatfield Meeting, are entitled to dissenters' rights under Sections 7-113-101
ET. SEQ. of the Colorado Business Corporation Act (the "CoBCAct"), copies of
which are attached as an Appendix to the Information Statement/Prospectus.
Shareholders are encouraged to read such statutes in their entirety and consult
with their counsel regarding whether or not to exercise their dissenters'
rights. To exercise such rights, a Chatfield shareholder must, INTER ALIA, (i)
deliver to Chatfield before the vote at the Chatfield Meeting a written notice
of his intent to demand payment for his shares; (ii) either vote against the
approval of the Merger or abstain from voting with respect to the Merger; and
(iii) comply with the provisions set forth in the CoBCAct following the
Chatfield Meeting. A vote against approval of the Merger will not in and of
itself constitute a written demand for dissenters' rights satisfying the
requirements of the above Sections. See "THE MERGER - Dissenters' Rights" in
the accompanying Information Statement/Prospectus.
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Greenwood Village, Colorado
February __, 1997 By Order of the Board of Directors
--------------------------------------
Secretary
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INFORMATION STATEMENT/PROSPECTUS
for
Unico, Inc.
Special Meeting of Shareholders
February __, 1997
This Information Statement/Prospectus of Unico, Inc. ("Unico"), a New
Mexico corporation, is being furnished to holders of shares of Unico's common
stock, par value $.20 per share, in connection with the special meeting of
shareholders of Unico to be held on ____________, at 4:00 p.m., local time, at
Unico's corporate offices at 1921 Bloomfield Boulevard, Farmington, New Mexico
(the "Unico Meeting"), and any adjournment thereof.
The shareholders of Unico will be asked to consider and vote upon a
proposal to approve the acquisition by Unico of Chatfield Dean & Co., Inc., a
Colorado corporation ("Chatfield"), pursuant to an Agreement and Plan of Merger,
dated as of July 30, 1996 (the "Merger Agreement"), among Unico, Chatfield
Acquisition Corp., a Colorado corporation wholly owed by Unico ("Newco"), and
Chatfield providing for the merger of Newco with and into Chatfield (the
"Merger"). At the time of the Merger, Unico will change its name to Chatfield
Dean Holdings, Inc. ("Chatfield Dean Holdings").
Pursuant to the Merger Agreement, (1) Newco will merge with and into
Chatfield in consideration of the issuance of certain capital stock of Unico in
favor of Chatfield shareholders; (2) Newco will cease to exist and Chatfield
will become a wholly-owned subsidiary of Chatfield Dean Holdings; (3) the
current directors and executive officers of Unico and Newco will resign, except
for Mr. William Hagler, the current President of Unico, who will remain a
director of post-Merger Unico (which is referred to herein as "Chatfield Dean
Holdings"); and (4) each of Unico and Chatfield will use its best efforts to
have the directors designated by Chatfield elected to the Board of Directors of
Chatfield Dean Holdings. At the effective time of the Merger, Newco shall be
merged with and into Chatfield in accordance with the Colorado Business
Corporation Act, whereupon the separate corporate existence of Newco shall cease
(the "Effective Time"). Thereafter, Chatfield shall continue as the surviving
corporation, and as a wholly-owned subsidiary of Chatfield Dean Holdings, under
the laws of the State of Colorado (the "Surviving Corporation.").
Specifically, the Merger Agreement contemplates the following:
(A) Each holder of Unico common stock issued and outstanding immediately
before the Effective Time will be entitled to receive three newly created
Unico warrants (collectively, the "Unico Warrants") for each share of Unico
common stock held:
1. one Unico warrant evidencing the right to purchase .3 (three-
tenths) of a share of Chatfield Dean Holdings common stock (the "Unico
Three Year Warrant");
2. one Unico warrant evidencing the right to purchase .4 (four-tenths)
of a share of Chatfield Dean Holdings common stock (the "Unico Four
Year Warrant"); and
3. one Unico warrant evidencing the right to purchase .5 (five-tenths)
of a share of Chatfield Dean Holdings common stock (the "Unico Five
Year Warrant");
(B) Each share of Chatfield common stock issued and outstanding at the
Effective Time shall be exchanged for and converted into ___ of a share of
Unico common stock for each share of Chatfield common stock surrendered;
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(C) Each share of Chatfield common stock issued and outstanding under
Chatfield's employee stock bonus plan (the "Chatfield Plan Common Stock")
at the Effective Time shall be exchanged for and converted into ___ of a
share of Unico common stock for each share of Chatfield Plan Common Stock
surrendered;
(D) Each share of Chatfield Series A 7% Cumulative Preferred Stock (the
"Chatfield Series A Stock") and each share of Chatfield Series B Preferred
Stock (the "Chatfield Series B Stock") issued and outstanding at the
Effective Time shall be exchanged for and converted into 2.66 shares of
Unico Series A Preferred Stock to be created from Unico's authorized
preferred shares (the "Unico Series A Stock") for each share of Chatfield
Series A Stock or Chatfield Series B Stock surrendered. Each share of Unico
Series A Stock shall thereafter be convertible into one and one-quarter
(1.25) shares of Unico common stock for each share of Unico Series A Stock
surrendered, PROVIDED, HOWEVER, that each holder of Unico Series A Stock
issued and outstanding at the Effective Time who fails to surrender his or
her Unico Series A Stock for conversion into Unico common stock within
sixty (60) days following the Effective Time shall be entitled to receive,
upon conversion, only one (1) share of Unico common stock for each share of
Unico Series A Stock surrendered; and
(E) All the shares of capital stock of Newco outstanding at the Effective
Time shall be exchanged for and converted into one (1) share of common
stock of the Surviving Corporation.
The Securities and Exchange Commission has declared effective the
Information Statement/ Prospectus of Unico and Chatfield relating to the Merger.
It is a condition to the consummation of the Merger that the shareholders of
Unico approve the Merger Agreement and the other matters related thereto being
submitted to a vote. These matters are interdependent, and if any one proposal
is not approved all proposals will be withdrawn. Mr. William Hagler, who owns
an aggregate of approximately 43% of the shares of Unico common stock (assuming
exercise of all warrants), intends to vote his shares in favor of approval of
the Merger Agreement.
Holders of Unico common stock as of the record date of the Unico Meeting,
are entitled to dissenters' rights under Sections 53-15-3 and 53-15-4 of the New
Mexico Business Corporation Act (the "NMBCAct"), copies of which are attached as
an Appendix to the Information Statement/Prospectus. Shareholders are encouraged
to read such statutes in their entirety and consult with their counsel regarding
whether or not to exercise their dissenters' rights. To exercise such rights, a
Unico shareholder must, INTER ALIA, (i) deliver to Unico before the vote at the
Unico Meeting a written objection to the Merger and within at least ten days
after the date the vote was taken make written demand on the corporation for
payment for his shares of Unico common stock; (ii) either vote against the
approval of the Merger or abstain from voting with respect to the Merger; and
(iii) comply with the provisions set forth in the NMBCAct following the Unico
Meeting. A vote against approval of the Merger will not in and of itself
constitute a written demand for dissenters' rights satisfying the requirements
of the above Sections. See "THE MERGER - Dissenters' Rights" in the
accompanying Information Statement/Prospectus.
This Information Statement/Prospectus is first being mailed to the
stockholders of Unico on or about ______. The Unico Board of Directors has
fixed _ as the record date (the "Unico Record Date") for the determination of
the Unico shareholders entitled to notice of and to vote at the Unico Meeting.
Only shareholders of record as of the close of business on the Unico Record Date
will be entitled to vote at the Unico Meeting. Although Unico is not soliciting
proxies, any proxies submitted by persons who are shareholders of record on the
date hereof (or who become shareholders of record subsequent to the
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<PAGE>
date hereof) and continue to be shareholders of record as of the close of
business on the Unico Record Date, will be voted, unless subsequently revoked.
Proxies submitted by persons who are shareholders of record on the date hereof
(or who become shareholders of record subsequent to the date hereof) and cease
to be shareholders of record as of the close of business on the Unico Record
Date will not be voted.
SUBJECT TO COMPLETION
The date of this Information Statement/Prospectus is February 3, 1997.
Information contained here is subject to completion or amendment. A
registration statement relating to the securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
For a discussion of certain factors which should be considered when
evaluating the transaction contemplated by this Information
Statement/Prospectus, see "RISK FACTORS."
WE ARE NOT ASKING YOU FOR A PROXY, AND YOU ARE REQUESTED NOT TO SEND US A
PROXY.
IF PROXIES ARE RECEIVED BY UNICO, THE SHARES REPRESENTED BY SUCH PROXIES
SHALL BE VOTED IN ACCORDANCE WITH PROXY INSTRUCTIONS. ALL PROXIES GRANTED TO
MANAGEMENT WILL BE VOTED IN FAVOR OF THE PROPOSED MERGER.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
* * *
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<PAGE>
UNICO, INC.
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K
SHOWING LOCATION IN PROSPECTUS OF
INFORMATION REQUIRED BY PART I OF FORM S-4
S-4 ITEM NUMBER AND CAPTION LOCATION IN INFORMATION
STATEMENT/PROSPECTUS
A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of the Registration Statement
and Outside Front Cover Page of Prospectus Cover Page
2. Inside Front and Outside Back Cover
Pages of Prospectus Cover Page; Available
Information
3. Risk Factors, Ratio of Earnings to Fixed Summary; Risk Factors;
Charges and Other Information The Merger; Pro Formas;
Business
4. Terms of the Transaction Summary; The Merger;
Description of Chatfield
Dean Holdings' Capital
Stock; Proposal to Adopt
Amended and Restated
Articles of Incorporation
5. Pro Forma Financial Information Summary; Pro Formas
6. Material Contacts with the
Companies Being Acquired The Merger
7. Additional Information Required for **
Reoffering by Persons and Parties Deemed
to be Underwriters
8. Interests of Named Experts and Counsel **
9. Disclosure of Commission Position on **
Indemnification for Securities Act
Liabilities
B. INFORMATION ABOUT THE REGISTRANT
10. Information with Respect to S-3 Registrants **
11. Incorporation of Certain Information by
Reference **
12. Information with Respect to S-2 or S-3
Registrants **
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13. Incorporation of Certain Information by
Reference **
14. Information with Respect to Registrants Summary; Unico Selected
Financial Data; Price
Range of Unico Common
Stock; Unico Management's
Discussion and Analysis
of Financial Condition
and Results of
Operations; Business;
Financial Statements
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
15. Information with Respect to S-3 Companies **
16. Information with Respect to S-2 or S-3
Companies **
17. Information with Respect to Companies Summary; Chatfield
other than S-2 or S-3 Companies Selected Financial Data;
Chatfield Management's
Discussion and Analysis
of Financial Condition
and Results of
Operations; Financial
Statements
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or **
Authorizations are to be Solicited
19. Information if Proxies, Consents or Summary; Unico Meeting;
Authorizations are not to be Solicited or Chatfield Meeting;
in an Exchange Offer Management of Chatfield;
Management of Unico;
Chatfield Summary
Compensation Table; Unico
Summary Compensation
Table
- ------
** Not applicable
v
<PAGE>
TABLE OF CONTENTS
AVAILABLE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . .viii
SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
CHATFIELD MEETING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
UNICO MEETING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
CHATFIELD SELECTED FINANCIAL DATA. . . . . . . . . . . . . . . . . . . . . . 44
UNICO SELECTED FINANCIAL DATA. . . . . . . . . . . . . . . . . . . . . . . . 45
PRO FORMAS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
PRICE RANGE OF UNICO COMMON STOCK. . . . . . . . . . . . . . . . . . . . . . 50
CHATFIELD MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS. . . . . . . . . . . . . . . . 52
UNICO MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS. . . . . . . . . . . . . . . . . . . . . 56
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
BUSINESS OF CHATFIELD DEAN HOLDINGS. . . . . . . . . . . . . . . . . . . . . 74
MANAGEMENT OF CHATFIELD. . . . . . . . . . . . . . . . . . . . . . . . . . . 75
CHATFIELD SUMMARY COMPENSATION TABLE . . . . . . . . . . . . . . . . . . . . 78
MANAGEMENT OF UNICO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
UNICO SUMMARY COMPENSATION TABLE . . . . . . . . . . . . . . . . . . . . . . 81
MANAGEMENT OF CHATFIELD DEAN HOLDINGS. . . . . . . . . . . . . . . . . . . . 82
PRINCIPAL SHAREHOLDERS OF CHATFIELD. . . . . . . . . . . . . . . . . . . . . 83
PRINCIPAL SHAREHOLDERS OF UNICO. . . . . . . . . . . . . . . . . . . . . . . 85
PRINCIPAL SHAREHOLDERS OF CHATFIELD DEAN HOLDINGS. . . . . . . . . . . . . . 86
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ELECTION OF DIRECTORS OF CHATFIELD DEAN HOLDINGS . . . . . . . . . . . . . . 87
DESCRIPTION OF CHATFIELD DEAN HOLDINGS' CAPITAL STOCK. . . . . . . . . . . . 88
PROPOSAL TO ADOPT AMENDED AND RESTATED ARTICLES OF INCORPORATION . . . . . . 92
LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
OTHER MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
INDEX TO FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . F-1
INDEPENDENT AUDITORS' REPORT . . . . . . . . . . . . . . . . . . . . . . . . F-2
INDEMNIFICATION OF OFFICERS AND DIRECTORS. . . . . . . . . . . . . . . . . .II-1
INFORMATIONAL UNDERTAKINGS . . . . . . . . . . . . . . . . . . . . . . . . .II-1
EXHIBITS AND FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . .II-2
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .II-4
APPENDIX A - AGREEMENT AND PLAN OF MERGER
APPENDIX B - SECTIONS 53-15-3 and 53-15-4 OF THE NEW MEXICO BUSINESS CORPORATION
ACT
APPENDIX C - SECTIONS 73-113-101 ET. SEQ. OF THE COLORADO BUSINESS CORPORATION
ACT
APPENDIX D - UNICO AMENDED AND RESTATED ARTICLES OF INCORPORATION
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AVAILABLE INFORMATION
Unico is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and, accordingly, files reports
and other information with the Securities and Exchange Commission (the "SEC").
Such reports and other information filed with the SEC are available for
inspection and copying at the public reference facilities maintained by the SEC
at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC 20549, and
at the SEC's Regional Offices located at 1801 California Street, Suite 4800,
Denver, Colorado 80202 and at Seven World Trade Center, Suite 1300, New York,
New York 10048. Copies of such documents may also be obtained from the Public
Reference Section of the SEC at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, DC 20549, at prescribed rates. In addition, such materials and
other information concerning Unico can be inspected at the National Association
of Securities Dealers, Inc., 1735 K Street, N.W., Washington, DC 20006. The
Commission maintains a web site at (http://www.sec.gov) that contains reports
and other information regarding Unico (as an EDGAR filer).
Unico has filed with, and has had declared effective by the SEC a
registration statement (the "Registration Statement") under the Securities Act
of 1933, as amended (the "Securities Act") on Form S-4 (No. 33-_______) with
respect to the securities offered hereby. This Information Statement/Prospectus
also constitutes the prospectus of Unico filed as part of the Registration
Statement and does not contain all of the information set forth in the
Registration Statement and the exhibits thereto, certain parts of which are
omitted in accordance with the rules and regulations of the SEC. Statements
made in this Information Statement/Prospectus as to the contents of any
contract, agreement or other document referred to are not necessarily complete.
With respect to each such contract, agreement or other document filed as an
exhibit to the Registration Statement, reference is made to the exhibit for a
more complete description of the matter involved. Unico will provide without
charge to each person who receives this Information Statement/Prospectus, upon
written or oral request, a copy of the information incorporated by reference
herein (not including exhibits to the information incorporated by reference
unless the exhibits are themselves incorporated by reference). Such inquires
should be directed to Mr. Rick Hurt, Controller, Secretary and Treasurer, Unico,
Inc., 1921 Bloomfield Boulevard, Farmington, New Mexico 87401, (505) 326-2668.
The Registration Statement, and any amendments thereto, including exhibits filed
or incorporated by reference as a part thereof, are available for inspection and
copying at the SEC's offices as described above. All information herein with
respect to Unico has been furnished by Unico, and all information herein with
respect to Chatfield has been furnished by Chatfield. Neither Unico nor
Chatfield assumes any responsibility for the accuracy or completeness of the
information related to the other.
This Information Statement/Prospectus constitutes (1) the Prospectus of Unico
relating to the Unico common stock issuable in the Merger (including shares of
Unico common stock (referred to as Chatfield Dean Holdings common stock in the
post-Merger context), issuable upon conversion of the Unico Series A Stock and
upon exercise of the Unico Warrants, Debenture Warrants and the Compensation
Options (each as defined herein); (2) the Information Statement of Unico in
connection with the Unico Meeting; and (3) the notice to shareholders of both
Unico and Chatfield relating to the Unico and Chatfield Meetings.
* * *
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION
NOT CONTAINED IN THIS INFORMATION STATEMENT/PROSPECTUS AND, IF GIVEN OR MADE,
SUCH INFORMATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THE
INFORMATION STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER
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TO EXCHANGE OR SELL, OR A SOLICITATION OF AN OFFER TO EXCHANGE OR PURCHASE, THE
SECURITIES OFFERED HEREBY OR THE SOLICITATION OF A PROXY IN ANY JURISDICTION IN
WHICH, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS INFORMATION STATEMENT/PROSPECTUS NOR
ANY DISCUSSION OF THE UNICO COMMON STOCK MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCE, CREATE AN IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE
AFFAIRS OF UNICO OR CHATFIELD SINCE THE DATE HEREOF.
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SUMMARY
THE FOLLOWING IS A SUMMARY OF CERTAIN SIGNIFICANT MATTERS DISCUSSED ELSEWHERE
IN THIS DOCUMENT. THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
MORE DETAILED INFORMATION APPEARING ELSEWHERE IN THIS INFORMATION
STATEMENT/PROSPECTUS AND THE APPENDICES HERETO. SHAREHOLDERS ARE URGED TO READ
THE ENTIRE INFORMATION STATEMENT/PROSPECTUS, INCLUDING THE APPENDICES HERETO.
CERTAIN TERMS USED IN THIS SUMMARY AND ELSEWHERE IN THE INFORMATION
STATEMENT/PROSPECTUS ARE USED AS DEFINED IN THE SUMMARY AND ELSEWHERE IN THE
INFORMATION STATEMENT/PROSPECTUS. WHEN THE CONTEXT REQUIRES, REFERENCES TO
CHATFIELD DEAN HOLDINGS SHALL REFER TO UNICO AFTER CONSUMMATION OF THE MERGER.
THE MERGER
This Information Statement/Prospectus is furnished to shareholders of Unico,
Inc., a New Mexico corporation ("Unico"), in connection with a special meeting
of shareholders of Unico to be held on ________________, at 4:00 pm., local time
(the "Unico Meeting"). See "UNICO MEETING." This Information
Statement/Prospectus is also being furnished to the shareholders of Chatfield
Dean & Co., Inc., a Colorado corporation ("Chatfield"), in connection with a
annual meeting of Chatfield shareholders to be held on ______, at 4:00 p.m.,
local time (the "Chatfield Meeting"). See "CHATFIELD MEETING."
At each of the Unico Meeting and Chatfield Meeting, the shareholders of Unico
and Chatfield will consider and vote upon a proposal to approve the Agreement
and Plan of Merger dated as of July 30, 1996 (the "Merger Agreement"), among
Unico, Chatfield Acquisition Corp., a Colorado corporation wholly-owned by Unico
("Newco"), and Chatfield providing for the merger of Newco with and into
Chatfield (the "Merger"). The Merger Agreement is attached hereto as an
Appendix and is incorporated into this Information Statement/Prospectus. At the
time of the Merger, Unico will change its name to Chatfield Dean Holdings, Inc.
("Chatfield Dean Holdings").
Pursuant to the Merger Agreement, (1) Newco will merge with and into
Chatfield in consideration of the issuance of certain capital stock of Unico in
favor of Chatfield shareholders; (2) Newco will cease to exist and Chatfield
will become a wholly-owned subsidiary of Chatfield Dean Holdings; (3) the
current directors and executive officers of Unico and Newco will resign, except
for Mr. William Hagler, the current President of Unico, who will remain a
director of post-Merger Unico (which is referred to herein as "Chatfield Dean
Holdings"); and (4) each of Unico and Chatfield will use its best efforts to
have the directors designated by Chatfield elected to the Board of Directors of
Chatfield Dean Holdings. At the effective time of the Merger, Newco shall be
merged with and into Chatfield in accordance with the Colorado Business
Corporation Act, whereupon the separate corporate existence of Newco shall cease
(the "Effective Time"). Thereafter, Chatfield shall continue as the surviving
corporation, and as a wholly-owned subsidiary of Chatfield Dean Holdings, under
the laws of the State of Colorado (the "Surviving Corporation.").
Specifically, the Merger Agreement contemplates the following:
(A) Each holder of Unico common stock issued and outstanding immediately
before the Effective Time will be entitled to receive three newly created
Unico warrants (collectively, the "Unico Warrants") for each share of Unico
common stock held:
1. one Unico warrant evidencing the right to purchase .3 (three-
tenths) of a share of Chatfield Dean Holdings common stock (the
"Unico Three Year Warrant");
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2. one Unico warrant evidencing the right to purchase .4 (four-
tenths) of a share of Chatfield Dean Holdings common stock (the
"Unico Four Year Warrant"); and
3. one Unico warrant evidencing the right to purchase .5 (five-
tenths) of a share of Chatfield Dean Holdings common stock (the
"Unico Five Year Warrant");
(B) Each share of Chatfield common stock issued and outstanding at the
Effective Time shall be exchanged for and converted into ___ of a share of Unico
common stock for each share of Chatfield common stock surrendered;
(C) Each share of Chatfield common stock issued and outstanding under
Chatfield's employee stock bonus plan (the "Chatfield Plan Common Stock") at the
Effective Time shall be exchanged for and converted into ___ of a share of Unico
common stock for each share of Chatfield Plan Common Stock surrendered;
(D) Each share of Chatfield Series A 7% Cumulative Preferred Stock (the
"Chatfield Series A Stock") and each share of Chatfield Series B Preferred Stock
(the "Chatfield Series B Stock") issued and outstanding at the Effective Time
shall be exchanged for and converted into 2.66 shares of Unico Series A
Preferred Stock (the "Unico Series A Stock") for each share of Chatfield Series
A Stock or Chatfield Series B Stock surrendered. Each share of Unico Series A
Stock shall thereafter be convertible into one and one-quarter (1.25) shares of
Unico common stock for each share of Unico Series A Stock surrendered, PROVIDED,
HOWEVER, that each holder of Unico Series A Stock issued and outstanding at the
Effective Time who fails to surrender his or her Unico Series A Stock for
conversion into Unico common stock within sixty (60) days following the
Effective Time shall be entitled to receive, upon conversion, only one (1) share
of Unico common stock for each share of Unico Series A Stock surrendered; and
(E) All the shares of capital stock of Newco outstanding at the Effective
Time shall be exchanged for and converted into one (1) share of common stock of
the Surviving Corporation.
CHATFIELD: DESCRIPTION OF BUSINESS ACTIVITIES
Chatfield is an integrated, full-service brokerage and investment banking
firm. Chatfield acts as a broker-dealer with a national network of retail
brokers, undertakes market making activities for The Nasdaq Stock Market, has
research capabilities and provides complete capital raising services, as an
underwriter and investment banker.
Chatfield offers retail sales of diverse investment products and undertakes
investment banking transactions (including public and private offerings, merger
and acquisition services, and valuation and fairness opinions). Chatfield Dean
Capital Corp., a Colorado corporation ("CDCC") and wholly-owned subsidiary of
Chatfield, invests in merchant banking transactions developed by it or other
sources, including Max Capital LLC, an entity headed and principally owned by a
former director and officer of Chatfield. Chatfield Dean Insurance Corp., also
a wholly-owned subsidiary of Chatfield, serves as agent for Chatfield in
connection with the sales of life insurance products and annuities (acting both
directly and through its own wholly-owned subsidiaries). Chatfield Real Estate,
LLC provides real estate services to Chatfield and other subsidiaries in an
effort to develop a fully functioning commercial real estate brokerage business.
See "BUSINESS - Chatfield: Description of Business Activities."
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PROPERTIES
Chatfield's office leases comprise an aggregate of 87,243 square feet
(including approximately 13,408 square feet leased in Stamford, Connecticut and
Irvine, California, which offices have been closed) at an average rent of $15.63
per square foot under terms of varying length. The largest office is
Chatfield's headquarters in Greenwood Village, Colorado, which covers 26,622
square feet at $11.72 per square foot under a lease which terminates on June 30,
1998. The earliest termination of an existing lease is in 1998 and the longest
term ends in July 2001. Chatfield is currently negotiating a new lease for the
space located in Greenwood Village. All leases are with unaffiliated third
parties, and contain terms which resulted from arms-length negotiations.
MANAGEMENT OF CHATFIELD DEAN HOLDINGS: INTERESTS OF CERTAIN PERSONS IN MERGER
Currently, assuming (i) full conversion of all the Chatfield Series A Stock
and Chatfield Series B Stock into Unico Series A Stock and further conversion of
such Unico Series A Stock into Unico common stock within 60 days of the
Effective Time; (ii) satisfaction of the condition precedent to Merger that all
Chatfield Series B warrants issued in connection with the Chatfield Series B
Stock (the "Chatfield Warrants") be exercised prior to the Effective Time; (iii)
exercise of the Debenture Warrants (as defined herein, see "THE MERGER - Resales
of Chatfield Dean Holdings Common Stock and Registration Rights"); and (iv)
exercise of the Compensation Options (as defined herein, see "THE MERGER -
Resales of Chatfield Dean Holdings Common Stock and Registration Rights;" and
"DESCRIPTION OF CHATFIELD DEAN HOLDINGS' CAPITAL STOCK - Compensation Options"),
current directors and executive officers of Chatfield will own approximately ___
of the Chatfield Dean Holdings issued and outstanding common stock immediately
after the Effective Time. If it is further assumed that the Unico Three Year
Warrants, Unico Four Year Warrants and Unico Five Year Warrants are exercised,
approximately ___ shares of Chatfield Dean Holdings common stock will be
outstanding, of which ___ shares, representing approximately __% of the total,
will be held by current Unico shareholders and of which __ shares, representing
approximately ___ of the total, will be held by current Chatfield shareholders.
Since the present majority shareholders of Chatfield will become the principal
majority shareholders of Chatfield Dean Holdings, they will have considerable
influence on the outcome of any vote for directors and will essentially control
and direct the management and affairs of Chatfield Dean Holdings notwithstanding
any disagreement of the other shareholders. See "PRINCIPAL SHAREHOLDERS OF
CHATFIELD DEAN HOLDINGS."
REGULATION
Chatfield is subject to overlapping schemes of federal and state regulation
in connection with its broker-dealer and other activities. Chatfield is also
subject to regulation by the Board of Governors of the Federal Reserve System
which promulgates rules applicable to securities transactions involving
extensions of credit. See "RISK FACTORS - Risks of the Securities Industry;" and
"- Regulation of the Securities Industry."
CHATFIELD SHAREHOLDERS ENTITLED TO VOTE
Approval by 66 2/3% of the outstanding shares of Chatfield common stock
entitled to vote (including the vote of the Chatfield Series A Stock at a ratio
of 3.33:1), 66 2/3% of the outstanding shares of Chatfield Series A Stock
entitled to vote (voting as a class) and 66 2/3% of the outstanding shares of
Chatfield Series B Stock entitled to vote (voting as a class), is required for
Chatfield to approve the
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Merger and the transactions contemplated thereby. 59% of such Chatfield common
stock vote (including the vote of the holders of Chatfield Series A Stock at a
ratio of 3.33:1 and the vote of the holders of Chatfield Plan Common Stock) is
held by directors and executive officers of Chatfield, 0% of such Chatfield
Series A Stock vote is held by directors and executive officer of Chatfield, and
63% of such Chatfield Series B Stock vote is held by directors and executive
officers of Chatfield.
UNICO: DESCRIPTION OF BUSINESS ACTIVITIES
BUSINESS SEGMENTS
Currently, Unico is engaged in four separate lines of business which are
conducted by Unico directly (natural gas production, more fully described
below), and through two wholly-owned operating subsidiaries - Intermountain
Chemical, Inc. ("IC"), which manages and operates a methanol production facility
owned by others, and Intermountain Refining Co., Inc. ("IRC"), which owns and
operates a petroleum refinery and co-generation facility. A third non-operating
subsidiary, Gas Technology Group, Inc. ("GTI"), owns certain limited partnership
interests in the methanol production facility which is managed and operated by
IC.
Unico's natural gas production operations consists of mineral lease interests
in and operation of 20 producing natural gas wells located on 11,568 gross acres
in the Hugoton basin in Western Kansas (the "Kansas Gas Properties"). As of
February 29, 1996, proven developed reserves were estimated to be 2.6 billion
cubic feet net to Unico's interest. The Kansas Gas Properties will continue as
an active business of Chatfield Dean Holdings at the Effective Time.
SPIN-OFFS
As a condition precedent to the Merger, Unico will distribute pro rata to its
shareholders all the shares of capital stock of each of IC (after consolidation
with GTI) and IRC. There will be no public market for the shares of either IC
or IRC immediately after the Spin-Offs become effective. While management of
each entity may consider establishing such a market in the future in compliance
with federal securities laws, no assurance can be made that any public market
will be established for the shares of IC or IRC. See "RISK FACTORS - No Public
Market for IC and IRC Shares;" and "BUSINESS - Unico: Description of Business
Activities - IC and GTI; Operation and Management of Methanol Production
Facility."
EMPLOYEES
Unico, its subsidiaries and affiliates currently have 21 full time employees
and 1 part time employee, including officers. While it is anticipated that none
of these employees will remain as employees of Chatfield Dean Holdings, Mr.
William Hagler, in his capacity as director of Chatfield Dean Holdings, will
assist in the management of the Kansas Gas Properties. See "MERGER - Background
of the Merger;" and "BUSINESS - Natural Gas Production; the Kansas Gas
Properties."
PROPERTIES
Except for the Kansas Gas Properties which operate on leases held by
production and the SCCLP methanol production facility, all properties used by
Unico and its subsidiaries in the conduct of its business
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are owned in fee. Unico also owns outright a 7,000 square foot office building
in Farmington, New Mexico.
UNICO SHAREHOLDERS ENTITLED TO VOTE
Approval by 66 2/3% of the outstanding shares of Unico common stock
entitled to vote is required for Unico to approve the Merger and the
transactions contemplated thereby. Approximately 44% of such vote is held by
directors and executive officers of Unico. For a discussion of the tax
consequences of the Merger transactions, see "THE MERGER - Certain Federal
Income Tax Consideration."
SPECIAL MEETING OF THE UNICO SHAREHOLDERS
The Unico Meeting will be held at 4:00 p.m., local time, on _________, at
Unico's corporate offices at 1921 Bloomfield Boulevard, Farmington, New Mexico,
(505) 326-2668. At the Unico Meeting, the shareholders of Unico will be asked
to consider and vote upon a proposal to approve the Merger Agreement. In
addition to approval of the Merger, such shareholders will be asked to: (A)
adopt Amended and Restated Articles of Incorporation (1) changing the name of
Unico to "Chatfield Dean Holdings, Inc.;" (2) increasing the number of
authorized shares of Unico common stock from 2,500,000 to 20,000,000 and
increasing the number of authorized preferred shares from 8,000,000 preferred to
20,000,000 preferred shares (to include the Unico Series A Stock); and (3)
authorizing the Unico Three Year Warrants, Unico Four Year Warrants and Unico
Five Year Warrants; (B) adopt an employee stock bonus plan in form and substance
similar to Chatfield's existing employee stock bonus plan; (C) approve the spin-
off by Unico of its subsidiary Intermountain Refining Co. Inc. ("IRC") by pro
rata distribution to current Unico shareholders; (D) approve the creation of an
employee incentive plan ("EIP") with a minimum of 1,000,000 shares of Unico
(post-Merger, Chatfield Dean Holdings) common stock reserved for issuance to
certain employees of Chatfield Dean Holdings and its subsidiaries, with such
plan to take the form and substance determined by Chatfield Dean Holdings' Board
of Directors, or a compensation committee designated thereby, effective promptly
after consummation of the Merger; and (E) transact such other business as may
properly come before the Unico Meeting or any adjournment thereof.
As of the Record Date, Mr. William Hagler, Unico's President, held 428,811
shares of Unico common stock (assuming exercise of all warrants), representing
approximately 43% of the outstanding Unico common stock. Mr. Hagler intends to
vote all of the shares held by him for approval of the proposed Merger.
THE BOARD OF DIRECTORS OF UNICO HAS APPROVED THE PROPOSED MERGER, BELIEVES IT
TO BE IN THE BEST INTEREST OF UNICO AND ITS SHAREHOLDERS AND RECOMMENDS THAT YOU
VOTE IN FAVOR OF IT AND OTHER MATTERS PRESENTED AT THE UNICO MEETING.
ANNUAL MEETING OF THE CHATFIELD SHAREHOLDERS
The Chatfield Meeting will be held on ____________________, at 4:00 p.m.,
local time, at Chatfield's corporate offices at 7935 East Prentice Avenue, Suite
200, Colorado Village, Colorado, (303) 740-0006. At the Chatfield Meeting, the
shareholders of Chatfield will be asked to consider and vote upon a proposal to
approve the Merger Agreement. In addition to approval of the Merger, such
shareholders will be asked to: (A) elect Messrs. Sanford Greenberg, Robert
Lemon, Richard O'Donnell, Scott Carothers, Kenneth Greenberg and Barry Cheren as
directors of Chatfield, with Mr. Scott Carothers representing holders of
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the Chatfield Series A Stock; (B) approve the appointment of Spicer, Jeffries &
Co. as Chatfield's independent certified accountants; and (C) transact such
other business as may properly come before the Chatfield Meeting or any
adjournment thereof.
THE BOARD OF DIRECTORS OF CHATFIELD HAS APPROVED THE PROPOSED MERGER,
BELIEVES IT TO BE IN THE BEST INTEREST OF CHATFIELD AND ITS SHAREHOLDERS AND
RECOMMENDS THAT YOU VOTE IN FAVOR OF IT AND OTHER MATTERS PRESENTED AT THE
CHATFIELD MEETING.
DISSENTERS' RIGHTS
Holders of Unico common stock as of the record date of the Unico Meeting
are entitled to dissenters' rights under Sections 53-15-3 and 53-15-4 of the
New Mexico Business Corporation Act (the "NMBCAct"), copies of which are
attached as an Appendix to the Information Statement/Prospectus.
Shareholders are encouraged to read such statutes in their entirety and
consult with their counsel regarding whether or not to exercise their
dissenters' rights. To exercise such rights, a Unico shareholder must, INTER
ALIA, (i) deliver to Unico before the vote at the Unico Meeting a written
objection to the Merger and within at least ten days after the date the vote
was taken make written demand on the corporation for payment for his shares
of Unico common stock; (ii) either vote against the approval of the Merger or
abstain from voting with respect to the Merger; and (iii) comply with the
provisions set forth in the NMBCAct following the Unico Meeting. A vote
against approval of the Merger will not in and of itself constitute a written
demand for dissenters' rights satisfying the requirements of the above
Sections. See "THE MERGER - Dissenters' Rights."
Holders of Chatfield common stock, Chatfield Plan Common Stock, Chatfield
Series A Stock and Chatfield Series B Stock, as of the record date of the
Chatfield Meeting, are entitled to dissenters' rights under Sections 73-113-101
ET. SEQ. of the Colorado Business Corporation Act (the "CoBCAct"), copies of
which are attached as an Appendix to the Information Statement/Prospectus.
Shareholders are encouraged to read such statutes in their entirety and consult
with their counsel regarding whether or not to exercise their dissenters'
rights. To exercise such rights, a Chatfield shareholder must, INTER ALIA, (i)
deliver to Chatfield before the vote at the Chatfield Meeting a written notice
of his intent to demand payment for his shares; (ii) either vote against the
approval of the Merger or abstain from voting with respect to the Merger; and
(iii) comply with the provisions set forth in the CoBCAct following the
Chatfield Meeting. A vote against approval of the Merger will not in and of
itself constitute a written demand for dissenters' rights satisfying the
requirements of the above Sections. See "THE MERGER - Dissenters' Rights."
TAX CONSEQUENCES
THE FOLLOWING SUMMARY IS INCLUDED FOR GENERAL INFORMATION ONLY. EACH UNICO
SHAREHOLDER AND EACH CHATFIELD SHAREHOLDER IS URGED TO CONSULT WITH SUCH
SHAREHOLDER'S OWN TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO SUCH
HOLDER OF THE TRANSACTIONS DESCRIBED HEREIN, INCLUDING THE APPLICABILITY AND
EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS, AND OF CHANGE IN APPLICABLE TAX
LAWS.
DISTRIBUTION OF THE STOCK OF IRC AND IC. No gain or loss will be recognized
by (or includible in the income of) shareholders of Unico upon receipt of IC
Stock or IRC Stock pursuant to the Spin-Offs. Such
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<PAGE>
shareholders will apportion the basis of their Unico shares (before the Spin-
Offs) among the IRC Stock received, the IC Stock received, and the shares of
Unico stock retained, in proportion to their relative fair market values. The
holding period for IRC Stock and IC Stock received will include the holding
period for the shares of Unico stock retained, provided that the shares of Unico
stock were held as a capital asset on the date of the distribution.
In the event that the Spin-Offs are consummated and subsequently were
determined not to qualify for tax-free treatment, Unico would recognize gain
equal to the excess of the fair market value of the IRC Stock and the IC Stock
distributed to Unico shareholders over Unico's basis in the shares of IC and IRC
immediately before the distribution. In addition, if the Spin-Offs fail to
qualify for tax-free treatment, each Unico shareholder who received shares of IC
Stock and IRC Stock would be generally treated as if it had received a taxable
distribution in an amount equal to the fair market value on the date of the
distribution of the IRC Stock and the IC Stock it received. See "THE MERGER -
Certain Federal Income Tax Consequences - The Spin-Offs."
THE MERGER. It is intended that the Merger qualify as a reorganization within
the meaning of Section 368(a) of the Code, and that, accordingly, for U.S.
federal income tax purposes, no gain or loss will be recognized by Unico,
Chatfield or Newco as a result of the Merger. No rulings have been or will be
requested from the Internal Revenue Service ("IRS") that the Merger will be
treated as a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), nor is the receipt of such a
ruling a condition to the obligations of Unico, Chatfield or Newco to consummate
the Merger. Unico will receive an opinion of counsel to the effect that the
Merger will be treated as a reorganization under Section 368(a), but this
opinion is not binding on the IRS, and no assurance can be given that the IRS or
a court considering the issues will not take a contrary view.
If the Merger fails to qualify as a tax-free reorganization, each Chatfield
shareholder who receives shares of Unico common stock or Unico Series A Stock in
exchange for Chatfield common stock, Chatfield Plan Common Stock, Chatfield
Series A Stock or Chatfield Series B Stock (collectively, the "Chatfield Stock")
would recognize gain or loss equal in amount to the difference between the fair
market value of the Unico stock received and the shareholder's basis in the
shares of Chatfield Stock surrendered. Any such gain or loss would be capital
gain or loss, assuming that the Chatfield Stock is held as a capital asset, and
would be long-term capital gain or loss if the Chatfield Stock has been held for
more than one year. The holding period for the Unico Stock received would begin
on the day after the Effective Time. "THE MERGER - Certain Federal Income Tax
Consequences - The Merger."
ACCOUNTING TREATMENT
It is intended that the Merger qualify for "reverse purchase accounting"
whereby Unico is deemed to be purchased by Chatfield and the historical
financial statements of Chatfield become the historical financial statements of
Unico.
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CHATFIELD'S SUMMARY FINANCIAL DATA
STATEMENT OF OPERATIONS DATA
(IN $000'S)
(AUDITED)
<TABLE>
<CAPTION>
Quarter Ended
9/30/96 6/30/96 3/31/96 12/31/95 9/30/95 6/30/95 3/31/95 12/31/94
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total Revenues
$5,163 $7,891 $6,317 $5,537 $10,592 $7,548 $6,826 $6,430
Total Expenses $7,353 $8,123 $7,378 $6,169 $11,197 $7,704 $7,245 $6,505
Net loss ($2,190) ($232) ($1,061) ($632) ($605) ($156) ($419) ($75)
Net loss per ($0.48) ($0.05) ($0.23) ($0.14) ($0.35) ($0.09) ($0.25) ($0.04)
common share
</TABLE>
BALANCE SHEET DATA
(IN $000'S)
(AUDITED)
Year ended September 30,
1996 1995 1994 1993 1992
--------------------------------------------------
Total assets $5,077 $3,947 $4,503 $9,129 $8,314
Total liabilities $2,486 $3,066 $2,438 $6,144 $4,613
(excluding subordinated
debt)
Subordinated debt $1,100 $350 $1,100 $0 $0
Total shareholders' equity $1,491 $531 $965 $2,985 $3,701
Cash dividends declared $111 $0 $0 $0 $0
_______
Due to the spin-off of substantially all assets by Unico, summary financial data
of Unico is not material with respect to the Merger. Thus, this information is
not included, so as not to confuse potential investors.
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RISK FACTORS
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. EACH
PROSPECTIVE INVESTOR SHOULD CONSIDER CAREFULLY THE FOLLOWING RISKS INHERENT IN
AND AFFECTING THE BUSINESSES OF CHATFIELD AND UNICO AND THE SECURITIES OFFERED
PURSUANT TO THE MERGER BEFORE MAKING AN INVESTMENT DECISION. SOME OF THESE
RISKS ARE DESCRIBED IN SUMMARY FORM BELOW. INVESTORS SHOULD READ THE SECTION OR
SECTIONS OF THIS INFORMATION STATEMENT/PROSPECTUS CROSS-REFERENCED BELOW FOR A
MORE COMPLETE DISCUSSION OF CERTAIN OF THESE RISKS.
OPERATING LOSSES
Chatfield Dean & Co., Inc. ("Chatfield," and after consummation of the Merger
sometimes also referred to herein as the "Surviving Corporation") has
experienced net losses, after tax, in each of its last five fiscal years. See
"SUMMARY - Chatfield's Summary Financial Data;" and "CHATFIELD SELECTED
FINANCIAL DATA." For the fiscal year ended September 30, 1996, Chatfield
incurred losses of approximately $4,100,000. In connection with such losses,
Chatfield required and obtained capital infusions aggregating $6,000,000 during
the first four months of its fiscal year. Chatfield sold preferred stock
raising approximately $5,000,000 and borrowed $1,000,000 from Hanifen Imhoff
Clearing Corp. under a subordinated loan agreement. Chatfield has used these
capital infusions to fund its working capital and continued operating losses.
There can be no assurance that Chatfield's operating losses will not continue.
SOURCES OF WORKING CAPITAL; POTENTIAL NEED FOR ADDITIONAL CAPITAL
To date, each of Unico and Chatfield have financed their respective
working capital requirements principally through cash flow from operations,
capital infusions and other borrowings. Continued operations and any future
expansion will depend on the working capital resources available to Chatfield
Dean Holdings. In the event Chatfield Dean Holdings requires substantial
additional financing, such financing may not be available or may be available
on unfavorable terms. Availability of such financing may be obtained from a
combination of funding sources that may include borrowings from financing
institutions, joint venture partnerships, merchant and investment banking
revenues, and additional offerings of Chatfield Dean Holdings' capital stock,
and may depend on market conditions, profitability, trading activities,
credit ratings and the overall availability of credit to the securities and
natural gas industries. Terms of any such financing may restrict the ability
of Chatfield Dean Holdings to pay dividends or make distributions and limit
the ability of its shareholders to participate in a distribution of assets
upon any liquidation or reorganization. There can be no assurance that
capital will be available from any source or that, if available, it will be
on favorable terms. See "UNICO MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION;" and "CHATFIELD MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION."
IMPACT OF TERMINATION OF JOHN HANCOCK MUTUAL FUNDS SELLING AGREEMENT
Since 1991, Chatfield sold approximately $200 million of investments in the
John Hancock family of mutual funds, which accounted for most of Chatfield's
mutual fund sales. Effective October 6, 1995, John Hancock Funds, Inc. ("John
Hancock") terminated Chatfield's selling agreement and its ability to sell John
Hancock funds or obtain information necessary to satisfactorily service customer
investments in those funds. Chatfield sued John Hancock with respect to such
termination, and accepted a settlement of $850,000. John Hancock's actions,
however, have caused and may continue to cause damage to
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Chatfield's reputation and its ability to generate similar revenues from the
sales of approximately 70 other mutual fund families with whom it maintains
selling agreements. If Chatfield cannot obtain similar revenues from sales of
other mutual funds, overcome the damage to its relationship with its customers
and avoid the loss of account executives and customers, Chatfield's business may
continue to be adversely affected. See "CHATFIELD MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS."
CONTROL OF CHATFIELD DEAN HOLDINGS
Upon consummation of the Merger, Unico's present Board of Directors will
resign, except for Mr. William Hagler, and each of Unico and Chatfield will use
its best efforts to elect the additional directors nominated by Chatfield to the
Board of Directors of Chatfield Dean Holdings.
After the Merger, current holders of Chatfield capital stock will own
approximately __% of the issued and outstanding capital stock of Chatfield
Dean Holdings. Current Chatfield holders will therefore have considerable
influence and controls regarding the outcome of any vote for directors and
will essentially control and direct the management and affairs of Chatfield
Dean Holdings notwithstanding any disagreement of the other shareholders. See
"PRINCIPAL SHAREHOLDERS AFTER THE MERGER."
RISKS OF THE SECURITIES INDUSTRY
Pursuant to the Merger, the present business of Chatfield will represent a
vast majority of the business of Chatfield Dean Holdings. Accordingly, the
prospects of Chatfield Dean Holdings' future success may depend primarily on
the future performance of Chatfield's present business. Chatfield Dean
Holdings will become subject to all the risks inherent in securities
operations, including fierce competition and numerous factors beyond the
control of Chatfield, among them foreign and domestic political and economic
conditions, public perception of trends in the general economy and specific
industries, interest rates, governmental legislation and regulations, tax
laws and currency fluctuations. Although management of Unico has endeavored
to identify and evaluate the risks inherent in Chatfield and the financial
services business generally, there can be no assurance that such risks have
been properly evaluated or that management of Chatfield Dean Holdings will be
able to properly manage such risks in the future.
COMPETITION IN THE SECURITIES INDUSTRY
Chatfield encounters significant competition in all aspects of its business,
and has many competitors with much greater resources and more established
operating histories. In addition to competition from securities firms,
Chatfield expects increased challenges from commercial banks, insurance
companies and other financial institutions which may be relieved of legislative
and regulatory restrictions on engaging in the securities business. Those
entities may also possess much larger existing client bases allowing easier
entry into the market. The principal factors affecting Chatfield's ability to
compete include the quality and continuity of its account executives and
professional staff, reputation, client relationships, and availability of
capital. Large turnover of account executives is endemic to the industry, and
competitors with greater resources may lure away the most productive of these
employees before Chatfield realizes a return on its investment in them. While
Chatfield attempts to limit such losses by restrictive covenants, employee
incentives and a generally effective working environment, there can be no
assurance that material employee turnover will be prevented.
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REGULATION OF THE SECURITIES INDUSTRY
Chatfield's business, and the securities industry in general, is subject to
extensive regulation at both the federal and state levels, as well as by self-
regulatory organizations ("SRO's") and various declarations of the Board of
Governors of the Federal Reserve System which promulgates regulations applicable
to securities credit transactions. The regulations and directives of such
authorities are complex and, if violated, may carry severe penalties. Chatfield
is governed principally by the Securities and Exchange Commission (the "SEC"),
the National Association of Securities Dealers, Inc. ("NASD"), an SRO, and state
authorities which independently regulate broker-dealers. Responding to
investigations and allegations is time-consuming and expensive, and can
adversely affect productivity and morale. Violation of laws and regulations can
result in penalties ranging from censure to the loss of a required license.
Even if a broker-dealer succeeds in disproving allegations, the cost of
defending against the charges and the damage to its reputation may materially
impair its operations and revenues. See "BUSINESS - Previous Regulatory
Proceedings and Related Matters".
The SEC and NASD have enacted and/or recently proposed rules addressing order
flow which are designed to benefit individual investors in the purchase and sale
of securities. If adopted, these rules may increase the burden on Chatfield's
account executives and its compliance department and may result in decreased
commissions on certain transactions. Chatfield cannot predict the nature or
substance of future laws or regulations, compliance or responses to regulatory
requests which may require additional expense, limit sales or other activities
or otherwise adversely affect Chatfield's business and revenues.
Each of the SEC and NASD also have net capital rules to which Chatfield is,
and the Surviving Corporation will be, subject. These rules, which specify
minimum net capital requirements for registered broker-dealers and NASD members,
are designed to assure that broker-dealers maintain adequate capital and have
the effect of requiring that at least a substantial portion of their assets are
kept in cash or highly liquid investments. Compliance with such requirements
may limit operations of Chatfield that require the intensive use of capital,
such as underwriting, trading activities and merchant banking activities.
CHATFIELD'S CUSTOMER LITIGATION AND GENERAL CLAIMS
Many aspects of Chatfield's business involve substantial risks of liability.
The incidence of litigation in the securities industry has increased markedly in
the past decade, and Chatfield is subject to significant liability in its
securities activities, including class actions. Because securities investment
is inherently risky and disappointment in investment results is common,
Chatfield, like all other brokerage firms, receives complaints from and claims
by customers. Many of those claims are resolved by agreement, but others must
be adjudicated, usually in arbitration proceedings, with the associated cost and
risk of loss. The availability to claimants of quick and relatively inexpensive
arbitration proceedings increases the risk of such litigation.
Chatfield is presently in litigation with respect to a claim being brought by
former employees regarding alleged past-due wages. In the view of Chatfield
management, the claims brought by such former employees are nearly identical to
claims made against Chatfield by other disgruntled former employees, which
claims have been dismissed judicially. See "BUSINESS - Department of Labor
Matters."
In 1996, Chatfield settled in principle with the Florida Department of
Banking and Finance, Division of Securities and Investor Protection, pursuant to
which the State of Florida claimed that Chatfield engaged in, and certain of its
officers and employees failed to prevent, excessive mark-ups and illegal
11
<PAGE>
crosstrades. There can be no assurance that the settlement agreed to in
principle will be finalized by the State of Florida. In addition, there can be
no assurance that any other state will not in the future make similar
allegations against Chatfield Dean Holdings or the Surviving Corporation. See
"BUSINESS - State of Florida Administrative Proceeding."
SEC AND NASD MATTERS
In 1990, Chatfield expanded its operations significantly by taking over
several offices and hiring numerous employees of another securities firm. The
SEC and the NASD both alleged that after being hired by Chatfield, certain of
these employees engaged in improper sales activities and that certain of
Chatfield's officers had failed to supervise those employees properly.
Investigations and charges by the SEC and NASD resulted in settlements pursuant
to which Chatfield paid an aggregate of approximately $3,500,000 and several of
Chatfield's principal employees, including Mr. Sanford Greenberg, its current
chief executive officer, and Mr. Robert Lemon, its current president, consented
to and served suspensions.
In addition, District 3 of the NASD accepted an Acceptance, Waiver and
Consent dated June 17, 1996 ("AWC") offered by Chatfield relating to net capital
violations asserted against Chatfield for November and December 1994 and May
through November 1995 when Chatfield was alleged to have failed to maintain
various net capital requirements, ranging from approximately $34,500 to $600,000
(with a median value of $168,000). Chatfield paid a fine of $25,000 with
respect to the AWC and its financial principal, Mr. Scott Carothers, served a 10
day suspension and was required to requalify as a financial and operations
principal. See "BUSINESS - Chatfield's Customer Litigation and General Claims;"
and " - NASD Capital Matters."
Those settlements and suspensions and the legal fees related thereto have
had a materially adverse impact on Chatfield's revenues, operations and
profitability. In each of fiscal years 1992, 1993, 1994 and 1995, Chatfield
paid $678,000, $3,128,000, $1,790,000 and $262,000, respectively, in
settlement fees. Settlement payments significantly reduced Chatfield's
profits and contributed to its significant net losses. See "CHATFIELD'S
SELECTED FINANCIAL DATA." During fiscal years 1994 and 1995, the suspension
of key personnel had a materially adverse impact on Chatfield's revenues and
profitability. Adverse publicity from these penalties and suspensions
continues to have a detrimental impact on Chatfield.
Although Chatfield's enhanced compliance procedures, including the
retention in early 1992 through mid-1996 of the law firm of Baker & McKenzie
as a compliance consultant, should reduce the likelihood of future regulatory
problems, there can be no assurance that future investigations or charges
will not occur. The prior proceedings may make Chatfield (and Chatfield Dean
Holdings) more susceptible to scrutiny by the SEC, state regulators, NASD and
other SRO's, which may increase the possibility of future proceedings. The
cost of assuring continuing compliance is significant.
PENDING SEC INVESTIGATION
In early 1995, the SEC issued a formal order of private investigation
concerning possible regulatory violations by Chatfield and two of its
principals, Messrs. Sanford Greenberg and Robert Lemon. Chatfield believes that
this order was prompted by the SEC's receipt of an anonymous letter from a
disgruntled former employee. Chatfield vigorously disputes that any violations
occurred, and has learned the identity of the complainant and obtained
admissions from him that he had no factual basis or
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information to support the allegations. Nonetheless, the investigation has not
been terminated. There can be no assurance that formal proceedings will not be
commenced or be resolved favorably to Chatfield and its management, or that the
cost of defense and damage to Chatfield's reputation will not be material.
CHATFIELD'S INVESTMENT BANKING, UNDERWRITING AND TRADING BUSINESS
Many aspects of Chatfield's business, including underwriting activities,
involve substantial risks of liability. In recent years, there has been an
increasing amount of litigation involving the securities industry, including
class actions that generally seek substantial damages. Because Chatfield may
be engaged in the underwriting and distribution of securities, it risks
exposure to substantial liability under federal and state securities laws.
In addition, Chatfield's securities trading and market-making activities
are conducted, in part, by Chatfield as a principal, and subject Chatfield's
capital to significant market, credit and liquidity risks. Chatfield's
investment in securities is subject to the same risks as those incurred by
any private or institutional investor. Chatfield may purchase, sell or
short-sell securities as a principal in markets that may be susceptible to
rapid fluctuations in price. In addition, the SEC and NASD have adopted
regulations and are considering others which may significantly limit the
ability of broker-dealers to profit from trading in securities for which they
also act as agent for their customers and which regulate order flow in such
transactions. These restrictions may have a materially adverse impact on
Chatfield's ability to profit from trading for its own account.
CHATFIELD'S MERCHANT BANKING ACTIVITIES
Chatfield has committed significant resources to its merchant banking
activities in which investments are made through Chatfield Dean Capital Corp.
("CDCC") directly in the securities of issuers which are considered to have
potential for growth, for future public offerings or for future sale. CDCC
may initially invest all or substantially all of Chatfield's funds allocated
to merchant banking in a limited number of investment vehicles. As a result,
it may require infusions of capital from revenues generated internally, or
from capital markets fundings or from other borrowings to continue or expand
its investing activities. The ability to obtain such funds will be limited
by net capital requirements and the impact of market conditions, pending
investigations, proceedings and other factors beyond its control. If
necessary, Chatfield may seek to obtain more funds to diversify its risks by
selling all or part of the securities purchased in a particular investment
vehicle, or by selling shares in the merchant banking subsidiary which would
dilute Chatfield's ownership. If Chatfield is unable or unwilling to
transfer funds to its merchant banking subsidiary and such entity is unable
to obtain funds from other sources, investment activities may be
significantly curtailed. However, if the need arises for the merchant
banking entity to curtail its investment activities, Chatfield itself may
continue to pursue merchant banking business, negotiate and guide those
transactions and obtain fees for such services.
In addition, from time to time, Chatfield, directly or through CDCC, may
invest in merchant banking transactions originated by Max Capital LLC, an entity
headed and principally owned by Mr. Russell Greenberg, a former director and
officer of Chatfield. While Chatfield management intends to conduct certain due
diligence with respect to such transactions originated by Max Capital LLC, to
the extent that it does invest in such transactions, there can be no assurance
that they will prove to be financially sound or profitable.
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Certain of Chatfield's officers may invest personally in merchant banking
transactions notwithstanding the decision of Chatfield or CDCC with respect
to investment. In addition, certain officers of Chatfield and of CDCC may
currently serve, or may serve in the future, as directors of certain of their
corporate clients. Those transactions may create conflicts of interest
between or among Chatfield, its officers and its clients. See "- Conflicts
of Interest."
To date, Chatfield has closed four merchant banking transactions.
Although its expertise in other areas of the securities industry will be
applied to Chatfield's merchant banking activities and although certain of
its officers from time to time may have merchant banking experience from
prior employment, its merchant banking activities should be considered to
have the same risks and limited operating history as any new enterprise.
There is no assurance that the cash available to Chatfield upon completion of
the Merger will be sufficient to fully develop any of the merchant banking
prospects that may be identified.
SALES OF INSURANCE AND ANNUITY PRODUCTS
Chatfield Dean Insurance Corp., also a wholly-owned subsidiary of Chatfield,
serves as agent for Chatfield in connection with the sales of life insurance
products and annuities (acting both directly and through its own wholly-owned
subsidiaries). Chatfield's marketing of insurance and annuity products is
subject to substantial risk, including a lack of expertise by Chatfield,
complete dependence on management, inability to obtain qualified, licensed sales
personnel, unavailability of competitive insurance products, competition from
established, larger firms, inability to obtain customers by telephone sales in a
field which stresses personal contact, and loyalty of existing prospective
customers to the company of their current insurance agents. At this time,
Chatfield's insurance operations constitute a growing, but not yet material,
consideration for an investment in Chatfield Dean Holdings, although there can
be no assurance regarding the scope of Chatfield Dean Holdings' future exposure
to insurance industry risks.
REAL ESTATE
Chatfield Real Estate, LLC ("Chatfield Realty") was established in 1995,
expects to have one employee in the short term, and has neither an operating
history nor a specific business plan. Very limited funding is intended to be
applied to its activities. Chatfield Realty will be dependent on the efforts
of its employee and on referrals from Chatfield for its business. No
assurance can be given that this subsidiary will provide any revenues to
Chatfield. At this time, Chatfield's real estate operations should not
constitute a material consideration for an investment in Chatfield Dean
Holdings.
AUTHORIZATION AND ISSUANCE OF PREFERRED STOCK
Pursuant to the Merger, the shareholders of Unico will be asked to
authorize 20,000,000 shares of preferred stock, with such designations,
rights and preferences as may be determined from time to time by Unico's
(post-Merger, Chatfield Dean Holdings') Board of Directors, with such
preferred stock to include the Unico Series A Stock. Accordingly, the Board
of Directors will be empowered, without stockholder approval, to issue
preferred stock with dividend, liquidation, conversion, voting or other
rights that could adversely affect the voting power or other rights of the
holders of Chatfield Dean Holdings common stock. The rights of the Unico
Series A Stock have already been designated pursuant to the Merger terms and
upon issuance will grant to the holders of only the Unico Series A Stock
rights and preferences over the Unico common stock (to become Chatfield Dean
Holdings common stock upon consummation of the Merger). In the event of
issuance of additional classes of preferred stock, such stock could be
utilized, under certain circumstances, as a method of discouraging, delaying
or preventing a
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change in control which could have the effect of discouraging bids for Chatfield
Dean Holdings and thereby preventing shareholders from receiving the maximum
value for their shares. Although, no present intention exists to issue any
shares of preferred stock other than the Unico Series A Stock, there can be no
assurance that Chatfield Dean Holdings will not do so in the future. See
"DESCRIPTION OF CHATFIELD DEAN HOLDINGS' CAPITAL STOCK."
NO OPINION OF FINANCIAL ADVISOR
Although the Boards of Directors of both Unico and Chatfield believe the
Merger to be in the best interest of their respective shareholders and recommend
the approval thereof, neither Board has engaged a financial advisor to evaluate
the Merger terms or to determine if such terms are fair to their respective
shareholders from a financial point of view. Both the Unico and Chatfield
Boards of Directors believe that each shareholder should individually review the
Merger terms and consult with his, her or its respective advisers to evaluate
the Merger from such shareholder's personal vantage point. Facts and conditions
existing as of the date of this Information Statement/Prospectus may change
prior to the Effective Time of the Merger and there can be no assurance that the
Merger will be favorable to any or all shareholders of Unico or Chatfield from a
financial point of view.
UNCERTAINTY OF PUBLIC MARKET FOR THE CHATFIELD DEAN HOLDINGS COMMON STOCK;
POSSIBLE VOLATILITY OF STOCK PRICE
The Unico common stock is presently traded on The Nasdaq Stock Market (Small
Cap) ("Nasdaq"). Although it is a condition to Closing that Chatfield Dean
Holdings apply for and obtain a listing on Nasdaq, there can be no assurance
that Chatfield Dean Holdings' common stock will continue to be listed in
accordance with Nasdaq rules, or that if such stock remains listed, that an
active trading market will be sustained or be liquid. The trading price of the
Chatfield Dean Holdings common stock could be subject to wide fluctuations in
response to factors such as quarterly or cyclical variations in financial
results and future announcements affecting the securities industry generally.
NO PUBLIC MARKET FOR IC AND IRC SHARES
While management of each of IC (after consolidation with GTI) and IRC may
consider establishing a public market in compliance with the federal securities
laws for the respective shares of each entity in the future, no assurance can be
made that any public market will be established.
DILUTION OF VOTING POWER; POTENTIAL ADVERSE IMPACT OF FUTURE SALES OF CHATFIELD
DEAN HOLDINGS COMMON STOCK
Upon consummation of the Merger, based on the number of outstanding shares of
Unico common stock as of November 14, 1996, and assuming (i) full conversion of
all the Chatfield Series A Stock and Chatfield Series B Stock into Unico Series
A Stock and further conversion of such Unico Series A Stock into Unico common
stock within 60 days of the Effective Time; (ii) satisfaction of the condition
precedent to Merger that all Chatfield Series B warrants issued in connection
with the Chatfield Series B Stock (the "Chatfield Warrants") be exercised prior
to the Effective Time; (iii) exercise of the Debenture Warrants (as defined
herein, see "THE MERGER - Resales of Chatfield Dean Holdings Common Stock and
Registration Rights"); and (iv) exercise of the Compensation Options (as defined
herein, see "THE MERGER - Resales of Chatfield Dean Holdings Common Stock and
Registration Rights"; and "DESCRIPTION OF CHATFIELD DEAN HOLDINGS' CAPITAL STOCK
- - Compensation Options"),
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approximately _________ shares of Chatfield Dean Holdings common stock will be
outstanding, of which _________ shares, representing approximately __% of the
total, will be held by current Unico shareholders and of which _________ shares,
representing approximately __% of the total, will be held by current Chatfield
shareholders. If it is further assumed that the Unico Three Year Warrants,
Unico Four Year Warrants and Unico Five Year Warrants are exercised,
approximately _____ shares of Chatfield Dean Holdings common stock will be
outstanding, of which ___ shares, representing approximately __% of the total,
will be held by current Unico shareholders and of which __ shares representing
approximately ___ of the total will be held by current Chatfield shareholders.
The shares of Chatfield capital stock that are outstanding prior to the
consummation of the Merger shall be, after consummation of the Merger and after
full conversion into shares of Unico common stock (which will become shares of
Chatfield Dean Holdings common stock after the Merger), freely tradeable without
restriction under the Securities Act, unless such shares are received by persons
who are "affiliates" of Unico or Chatfield as defined in the Securities Act of
1933. Additional shares of Chatfield Dean Holdings common stock issuable upon
(i) exercise of options to purchase shares of common stock; (ii) exercise of the
Unico Warrants, Debenture Warrants and Compensation Options; and (iii)
conversion of the Unico Series A Stock, may also become available for sale in
the public market from time to time in the future. Sales or the potential for
sales of substantial amounts of Chatfield Dean Holdings common stock in the
public market could adversely affect the market price of such common stock and
adversely affect Chatfield Dean Holdings' ability to raise additional capital in
the capital markets at a favorable price.
INDEMNIFICATION FOR CHATFIELD AND UNICO BOARD MEMBERS
Unico's bylaws and the New Mexico Business Corporation Act and Chatfield's
bylaws and the Colorado Business Corporation Act provide for indemnification
of officers and directors if certain claims are made against them in their
corporate capacity. It is intended that the officers and directors of
Chatfield Dean Holdings and of the Surviving Corporation, and officers and
directors of their respective affiliates and subsidiaries may also be
provided similar indemnification. Such indemnification may be required,
subject to state law provisions imposing director liability despite
indemnification, even if damage is caused to Chatfield Dean Holdings or the
Surviving Corporation by the actions of such indemnified officers or
directors.
PAYMENT OF DIVIDENDS AND LIQUIDATION RIGHTS FOR CHATFIELD DEAN HOLDINGS
Dividends will be paid on the shares of issued and outstanding Chatfield
Dean Holdings capital stock only if profits are sufficient to make such
dividend payments and only if Chatfield Dean Holdings' revenues and earnings,
if any, capital requirements and general financial condition so permit. No
dividends shall be paid with respect to the Chatfield Dean Holdings common
stock unless all required dividends on the Unico Series A Stock not converted
into Chatfield Dean Holdings common stock have been paid. The decision to
pay dividends will be subject to the discretion of the Chatfield Dean
Holdings Board of Directors although it is anticipated that no dividends will
be paid in the near future. In addition, net capital requirements of the SEC
and rules of the NASD and the various states could restrict Chatfield Dean
Holdings' ability to pay dividends. Although dividends on the outstanding
Unico Series A Stock will accumulate if not paid, Chatfield Dean Holdings'
obligation is unsecured, and general creditors of Chatfield Dean Holdings
will have priority over the owners of Unico Series A Stock and other
Chatfield Dean Holding Capital Stock entitled to dividends. Owners of the
Unico Series A Stock will not be afforded any additional right to limit
corporate action while dividends remain accrued but unpaid. Upon liquidation
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of Chatfield Dean Holdings, creditors of Chatfield Dean Holdings will be
preferred over owners of Unico Series A Stock and other Chatfield Dean Holdings
capital stock with respect to distributions. See "DESCRIPTION OF CHATFIELD
DEAN HOLDINGS CAPITAL STOCK."
CONFLICTS OF INTEREST
Certain of Unico's, Chatfield's, and, after consummation of the Merger,
Chatfield Dean Holdings,' officers and directors, in their individual
capacities, are or may become officers, directors, controlling shareholders
and/or partners of other entities involved in businesses similar to those in
which Unico presently, and Chatfield Dean Holdings in the future, will, be
engaged. In addition, such entities may in the future enter into
transactions with Chatfield Dean Holdings or the Surviving Corporation.
Thus, there exists potential for conflicts of interest between Unico,
Chatfield Dean Holdings, or the Surviving Corporation on the one hand, and an
officer, director and/or controlling stockholder of an entity which any such
person controls, on the other hand.
Currently, certain directors and executive officers of both Unico and
Chatfield also hold positions, and in the future may hold additional positions,
as directors of unaffiliated corporations, and will continue to so act after
consummation of the Merger. Although the management of each of Chatfield Dean
Holdings and the Surviving Corporation intends to spend a substantial portion of
its post-Merger business time managing the affairs of Chatfield Dean Holdings
and the Surviving Corporation, respectively, there may be a conflict of interest
in the apportionment of management time between the business matters of
Chatfield Dean Holdings and the Surviving Corporation, and any other positions
they hold. Post-Merger transactions with related parties will be subject to the
approval of the Board of Directors of Chatfield Dean Holdings and the Surviving
Corporation, and will be further subject to common law "corporate opportunity"
doctrines. The Board of each of Chatfield Dean Holdings and the Surviving
Corporation expects to adopt policies limiting the ability of officers and
directors to assume corporate opportunities for themselves without first
offering such opportunities to both Chatfield Dean Holdings and the Surviving
Corporation. There can be no assurance that such potential conflicts will not
have an adverse effect on Chatfield Dean Holdings or the Surviving Corporation.
See "MANAGEMENT OF CHATFIELD"; and "MANAGEMENT OF UNICO."
CHATFIELD DEAN HOLDINGS' DEPENDENCE ON MANAGEMENT AND KEY PERSONNEL
The success of Chatfield Dean Holdings will depend to a significant extent
upon the performance of its management. In particular, the success of Chatfield
is dependent upon the retention and performance of certain key personnel: Mr.
Sanford Greenberg, Chief Executive Officer; Mr. Robert Lemon, President; and Mr.
David Graven, Executive Vice President (Legal).
Certain principal officers have agreed in principle to sign employment
agreements if requested by Chatfield's Board of Directors. However, there can
be no assurance that such agreements will be executed or that their terms will
be favorable to Chatfield or will be sufficient to ensure such employees'
continued employment with Chatfield or the Surviving Corporation or their
satisfactory performance of duties.
In addition, the success of Chatfield Dean Holdings' retail and trading
activities depends on its ability to attract and retain supervisory personnel
and highly productive account executives, despite the significant employee
turnover which generally characterizes the securities industry. Chatfield
has created a restricted employee stock bonus plan as an incentive to retain
its key employees. The success of that plan, other inducements and
contractual restrictions limiting the loss of key employees cannot be
predicted.
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FEDERAL INCOME TAX RISKS
THE MERGER
Unico will receive an opinion of Watson, Farley & Williams, counsel to Unico
(the "Tax Opinion"), to the effect that the Merger will be treated as a
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code") and that Unico, Chatfield and Newco will each
be a party to the reorganization pursuant to Section 368(b) of the Code. No
rulings have been or will be requested from the Internal Revenue Service ("IRS")
that the Merger will be treated as a reorganization within the meaning of
Section 368(a) of the Code, nor is the receipt of such a ruling a condition to
the obligations of Unico, Chatfield or Newco to consummate the Merger. The Tax
Opinion is not binding on the IRS and no assurance can be given that the IRS or
a court considering the issues will not take a contrary view. The Tax Opinion
will be based on, among other things, current law, certain assumptions and
certain Officer's Certificates of Unico, Newco and Chatfield as to factual
matters which, if incorrect in certain material respects, would jeopardize the
conclusions reached by counsel in the Tax Opinion. Neither Unico, Newco nor
Chatfield is currently aware of any facts or circumstances that would cause any
such Officer's Certificate to be untrue or incorrect in any material respect.
If the Merger fails to qualify as a tax-free reorganization, each Chatfield
shareholder who receives shares of Unico common stock or Unico Series A Stock in
exchange for Chatfield common stock, Chatfield Plan Common Stock, Chatfield
Series A Stock or Chatfield Series B Stock (collectively, the "Chatfield Stock")
would recognize gain or loss equal in amount to the difference between the fair
market value of the Unico shares received and the shareholder's basis in the
shares of Chatfield Stock surrendered. Any such gain or loss would be capital
gain or loss, assuming that the Chatfield Stock has been held as a capital
asset, and would be long-term capital gain or loss if the Chatfield Stock has
been held for more than one year. The holding period for the Unico shares
received would begin on the day after the Effective Time. See "THE MERGER -
Certain Federal Income Tax Consequences - The Merger."
THE SPIN-OFFS
No rulings have been or will be requested from the IRS addressing the federal
income tax treatment of the Spin-Offs, nor is the receipt of such a ruling a
condition to the obligations of Unico, Chatfield or Newco to consummate the
Merger. In addition, Unico has not obtained an opinion of counsel with respect
to the tax treatment of the Spin-Offs. However, based upon the facts and
circumstances, Unico's management believes that the IRC Spin-Off should be
treated as tax-free distribution described in Section 355 of the Code, and that
the IC Spin-Off should be treated as a reorganization and tax-free distribution
described in Sections 368(a)(1)(D) and 355 of the Code.
In the event that the Spin-Offs are consummated and subsequently were
determined not to qualify for tax-free treatment, Unico would recognize gain, if
any, equal to the excess of the fair market value of the IRC Stock and the IC
Stock distributed to Unico shareholders over Unico's basis in the shares of IC
and IRC immediately before the distribution. In addition, if the Spin-Offs fail
to qualify for tax-free treatment, each Unico shareholder who received shares of
IC Stock and IRC Stock would be generally treated as if it had received a
taxable distribution in an amount equal to the fair market value on the date of
the distribution of the IRC Stock and the IC Stock it received.
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President Clinton's proposed budget for fiscal year 1997 includes a provision
which, if enacted as proposed, would cause Unico to recognize corporate-level
tax on the distribution of the IRC Stock and the IC Stock if the Merger is also
consummated. By its terms, the proposal would be effective for distributions
after March 19, 1996. No assurance can be given concerning whether the proposal
will be enacted into law. The proposal would not affect the tax treatment of
the shareholders of Unico in relation to the distribution of the IRC Stock or
the IC Stock. See "THE MERGER - Certain Federal Income Tax Consequences - The
Spin-Offs."
NATURAL GAS BUSINESS; COMPETITION AND PRICES
The production and marketing of natural gas is highly competitive. Unico
competes directly and indirectly with a large number of companies which after
the Merger will compete directly and indirectly with Chatfield Dean Holdings.
Certain of these competitors may have longer operating histories, greater
financial resources and larger marketing organizations than Chatfield Dean
Holdings. Although Unico historically has been able to market its gas at
generally favorable prices, there is no assurance that Chatfield Dean Holdings
will be able to do so in the future because of, among other things, changes in
demand and/or unfavorable transportation costs. Currently, Unico must rely on a
single entity to gather the gas from its wells for transportation to marketing
points. There can be no assurance that the fees charged for such gathering and
transportation services will continue at favorable levels. See "BUSINESS -
Unico Business."
As an independent natural gas producer, Unico's revenues and profits are, and
Chatfield Dean Holdings' revenues and profits will be, substantially dependent
on prevailing gas prices, which are subject to wide fluctuations in response to
changes in supply and demand, market uncertainty, political conditions, weather
conditions, domestic and foreign governmental regulations, the price and
availability of alternative fuels and overall economic conditions. In addition,
various factors, including the availability and capacity of gas gathering
systems and pipelines and the effect of federal regulations on production and
transportation, may adversely affect Unico's ability to market its gas
production.
Unico's gas operations are, and Chatfield Dean Holdings' gas operation will
be, also subject to all the risks and hazards typically associated with the
production of gas. Risks include blowouts, spills, fires and adverse weather
conditions and can result in personal injury, loss of life and substantial
damage to or destruction of gas wells, production facilities or property,
suspension of operations and liability to customers.
GOVERNMENTAL REGULATION
Unico's gas production business is, and Chatfield Dean Holdings' gas
production business will be, regulated by certain federal, state and local
environmental and health agencies, as well as laws and regulations relating to
the development, production, handling, storage, marketing, transportation and
disposal of gas and related products. Unico's past operations and Chatfield
Dean Holdings' future operations could also result in liability for spills,
discharges of hazardous nature and other environmental damages. From time to
time, regulatory agencies have imposed price controls and limitations on
production by restricting the rate of flow of gas wells below actual production
capacity in order to conserve supplies of gas. In accordance with customary
industry practices, Chatfield Dean Holdings intends to maintain insurance
against some, but not all, of such risks and some, but not all, of such losses.
There can be no assurance, however, that any insurance Chatfield Dean Holdings
intends to carry will be available to Chatfield Dean Holdings when applied for
or, if available and carried, will be adequate to cover Chatfield Dean Holdings'
liability in all circumstances.
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ENVIRONMENTAL CONCERNS
Unico and, post-Merger, Chatfield Dean Holdings, may be liable for
environmental damages caused by previous owners of its properties, which
liabilities might not be covered by insurance.
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CHATFIELD MEETING
TIME, DATE AND PLACE OF MEETING
The Chatfield annual meeting of shareholders will be held at ___ p.m., local
time, on ___, 1997, at Chatfield's corporate offices at 7935 East Prentice
Avenue, Suite 200, Greenwood Village, Colorado, (303) 740-0006 (the "Chatfield
Meeting").
BUSINESS TO BE CONDUCTED AT THE CHATFIELD MEETING
At the Chatfield Meeting, the shareholders of Chatfield will consider and
vote upon a proposal to (i) approve the Merger Agreement and the transactions
contemplated thereby; (ii) elect Messrs. Sanford Greenberg, Robert Lemon,
Richard O'Donnell, Scott Carothers, Kenneth Greenberg and Barry Cheren as
Directors of Chatfield, with Mr. Scott Carothers representing the holders of
Chatfield Series A Stock; and (iii) conduct any other business that may properly
come before the Chatfield Meeting. The Merger Agreement provides for the Merger
of Newco with and into Chatfield, with Chatfield remaining as the surviving
wholly-owned subsidiary of Chatfield Dean Holdings. See "THE MERGER."
PROXIES: VOTING AND REVOCATION
When a Chatfield proxy is properly executed and returned, the shares of
Chatfield common stock, Chatfield Plan Common Stock, Chatfield Series A Stock or
Chatfield Series B Stock it represents will be voted in accordance with the
directions indicated on the proxy, or if no directions are indicted, the shares
will be voted for the approval of the Merger Agreement. Any Chatfield
shareholder giving a proxy may revoke his or her proxy at any time before its
exercise at the Chatfield Meeting by (i) giving written notice of such
revocation to Mr. David Graven; or (ii) signing and delivering to Mr. David
Graven a proxy bearing a later date. However, the mere presence at the
Chatfield Meeting of a Chatfield shareholder who has delivered a valid proxy
will not in itself revoke that proxy.
PROXY SOLICITATION
Chatfield will bear the cost of soliciting proxies from its shareholders.
Proxies will be solicited by personnel of Chatfield in person, by telephone or
through other forms of communication without payment of additional compensation
to such personnel. Chatfield anticipates that its proxy solicitation costs,
excluding printing and mailing expense, will be less than $5,000.
OUTSTANDING SHARES OF CHATFIELD CAPITAL STOCK AND VOTING RIGHTS
Only holders of record of Chatfield common stock, Chatfield Plan Common Stock
and Chatfield Series A 7% Cumulative Preferred Stock (the "Chatfield Series A
Stock") and Chatfield Series B Preferred Stock (the"Chatfield Series B Stock")
at the close of business on the Record Date are entitled to receive notice of,
and to vote at, the Chatfield Meeting. On the Record Date, there were 2,672,238
shares of Chatfield common stock, 1,937,006 shares of Chatfield Plan Common
Stock, 338,450 shares of Chatfield Series A Stock and 190,000 shares of
Chatfield Series B Stock outstanding and entitled to vote at the Chatfield
Meeting. Each share of Chatfield common stock and each share of Chatfield Plan
Common Stock is entitled to one vote on all matters submitted to the
shareholders of Chatfield for consideration. Each share of the Chatfield Series
A Stock will be entitled to 3.33 votes on all matters presented for
consideration to the shareholders of Chatfield, although the holders of
Chatfield Series A Stock vote as
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a class for the election of one Chatfield director. The holders of the
Chatfield Series B Stock are entitled to vote, as a class, with respect to the
Merger.
Under the Colorado Business Corporation Act, the presence in person or by
proxy of a majority of the outstanding shares of each class of Chatfield common
stock and Chatfield Series A Stock is necessary to constitute a quorum at the
Chatfield Meeting. Approval by 66 2/3% of the outstanding shares of Chatfield
common stock entitled to vote (including the vote of the Chatfield Series A
Stock at a ratio of 3.33:1), 66 2/3% of the outstanding shares of Chatfield
Series A Stock entitled to vote (voting as a class) and 66 2/3% of the
outstanding shares of Chatfield Series B Stock entitled to vote (voting as a
class), is required for Chatfield to approve the Merger and the transactions
contemplated thereby. 59% of such Chatfield common stock vote (including the
vote of the holders of Chatfield Series A Stock at a ratio of 3.33:1 and the
vote of the holders of Chatfield Plan Common Stock) is held by directors and
executive officers of Chatfield, 0% of such Chatfield Series A Stock vote is
held by directors and executive officers of Chatfield, and 63% of such Chatfield
Series B Stock vote is held by directors and executive officers of Chatfield.
If less than a majority of the outstanding shares of Chatfield capital stock is
represented at the Chatfield Meeting, a majority of the shares so represented
may adjourn the Chatfield Meeting from time to time without further notice.
Abstentions will be considered shares presented and entitled to vote for
purposes of determining the presence of a quorum and the outcome of any matter
submitted to the shareholders of Chatfield for a vote, but will not count as
votes "for" or "against" any matter. Broker non-votes (shares held by brokers
or nominees as to which instructions have not been received from the beneficial
owners or persons entitled to vote and the broker or nominee does not have
discretionary voting power on a particular matter) will be treated as
abstentions. Abstentions and broker non-votes will have the same effect as
votes against the Merger Agreement and the proposal to adopt Amended and
Restated Articles.
COMMITTED VOTES
The directors and executive officers of Chatfield, who collectively own
approximately 59% of the outstanding Chatfield common stock (assuming exercise
of all warrants and incorporating the voting rights of the holders of Chatfield
Series A Stock), and approximately 63% of the outstanding Chatfield Series B
Stock, the holders of which are entitled to vote as a class, intend to vote such
shares for the proposed Merger.
OTHER MATTERS
Chatfield is not presently aware of any other business to be brought before
the Chatfield Meeting. If any matters come before the Chatfield Meeting which
are not directly referred to in this Information Statement/Prospectus, including
matters incident to the conduct of the Chatfield Meeting, the shares represented
by proxies will be voted in accordance with the recommendations of Chatfield's
management.
DISSENTERS' RIGHTS
Holders of Chatfield common stock, Chatfield Plan Common Stock, Chatfield
Series A Stock and Chatfield Series B Stock, as of the record date of the
Chatfield Meeting, are entitled to dissenters' rights under Sections 73-113-101
ET. SEQ. of the Colorado Business Corporation Act (the "CoBCAct"), copies of
which are attached as an Appendix to the Information Statement/Prospectus.
Shareholders are encouraged to read such statutes in their entirety and consult
with their counsel regarding whether or not
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to exercise their dissenters' rights. To exercise such rights, a Chatfield
shareholder must, INTER ALIA, (i) deliver to Chatfield before the vote at the
Chatfield Meeting a written notice of his intent to demand payment for his
shares of Chatfield stock; (ii) either vote against the approval of the Merger
or abstain from voting with respect to the Merger; and (iii) comply with the
provisions set forth in the CoBCAct following the Chatfield Meeting. A vote
against approval of the Merger will not in and of itself constitute a written
demand for dissenters' rights satisfying the requirements of the above Sections.
See "THE MERGER - Dissenters' Rights."
BOARD RECOMMENDATIONS
The Board of Directors of Chatfield has approved the proposed Merger,
believes it to be in the best interest of Chatfield and its shareholders and
recommends that its shareholders vote in favor of it and the other matters
presented at the Chatfield Meeting.
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UNICO MEETING
TIME, DATE AND PLACE OF SPECIAL MEETING
A special meeting of shareholders will be held at 4:00 p.m., local time, on
____, 1997, at Unico's corporate offices at 1921 Bloomfield Boulevard,
Farmington, New Mexico, (505) 326-2668 (the "Unico Meeting").
BUSINESS TO BE CONDUCTED AT THE UNICO MEETING
At the Unico Meeting, the shareholders of Unico will consider and vote
upon proposals to (i) approve the Merger Agreement and the transactions
contemplated thereby; (ii) adopt the Amended and Restated Articles; (iii)
adopt an employee stock bonus plan; (iv) approve the spin-off by Unico of its
subsidiary Intermountain Refining Co. Inc. ("IRC") by pro rata distribution
to current Unico shareholders; (v) approve the creation of an employee
incentive plan; and (vi) conduct any other business that may properly come
before the Unico Meeting. The Merger Agreement provides for the Merger of
Newco with and into Chatfield, with Chatfield remaining as the surviving
wholly-owned subsidiary of Chatfield Dean Holdings. See "THE MERGER."
Approval and adoption of each of the proposals submitted to the shareholders
of Unico is conditioned upon the approval and adoption of all other proposals
submitted for a vote of the shareholders of Unico. Accordingly, although
Unico's shareholders may vote separately on each proposal, for any of such
proposals to be adopted, all of such proposals must be approved by Unico's
shareholders. If the shareholders of Unico fail to approve the Merger Agreement
or any of such other proposals, the Merger will not be consummated.
OUTSTANDING UNICO SHARES AND VOTING RIGHTS
Only holders of record of Unico common stock at the close of business on
the Record Date are entitled to receive notice of, and to vote at, the Unico
Meeting. On the Record Date, there were 997,715 shares of Unico common stock
outstanding and entitled to vote at the Unico Meeting (assuming exercise of
the Debenture Warrants (as defined herein, see "THE MERGER - Resales of
Chatfield Dean Holdings Common Stock and Registration Rights")), with each
such share entitled to one vote on matters submitted for consideration.
Under the New Mexico Business Corporation Law, the presence in person or
by proxy of the majority of the outstanding shares of the Unico common stock
is necessary to constitute a quorum at the Unico Meeting. The approval of
the Merger Agreement will require an affirmative vote of the holders of 66
2/3% of the outstanding shares of Unico common stock. If less than a
majority of the outstanding Unico common stock is represented at the Unico
Meeting, a majority of the shares so represented may adjourn the Unico
Meeting from time to time without further notice.
Abstentions will be considered shares present and entitled to vote for
purposes of determining the presence of a quorum and the outcome of any matter
submitted to the shareholders of Unico for a vote, but will not count as votes
"for" or "against" any matter. Broker non-votes (shares held by brokers or
nominees as to which instructions have not been received from the beneficial
owners or persons entitled to vote and the broker or nominee does not have
discretionary voting power on a particular matter) will
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be treated as abstentions. Abstentions and broker non-votes will have the
same effect as votes against the Merger Agreement and the proposal to adopt
the Amended and Restated Articles.
COMMITTED VOTES
Mr. William Hagler, who beneficially owns 428,811 shares of Unico common
stock representing approximately 43% of the total outstanding shares of Unico
common stock (assuming exercise of all warrants), intends to vote all of such
shares for approval of the proposed Merger. Unico is not seeking proxies from
the holders of the Unico common stock, but will vote all shares represented by
proxies in accordance with proxy instructions. All proxies granted to
management of Unico will be voted in favor of the proposed Merger.
OTHER MATTERS
Unico is not presently aware of any other business to be brought before the
Unico Meeting. If any matters come before the Unico Meeting which are not
directly referred to in this Information Statement/Prospectus, including matters
incidental to the conduct of the Unico Meeting, Messrs. William Hagler and Rick
Hurt intend to vote the shares owned by them and represented by the proxies held
by them in a manner consistent with their discretion.
DISSENTERS' RIGHTS
If the proposed Merger is approved at the Unico Meeting, dissenting Unico
shareholders who fulfill the requirements of Sections 53-15-3 and 53-15-4 of
the New Mexico Business Corporation Act ("NMBCAct"), copies of which are
attached as an Appendix to this Information Statement/Prospectus, will be
entitled to receive payment for their shares in accordance with such
provisions. Shareholders are encouraged to read such statutes in their
entirety and consult with their counsel regarding whether or not to exercise
their dissenters' rights. To exercise such rights, a Unico shareholder must,
INTER ALIA, (i) deliver to Unico before the vote at the Unico Meeting a
written objection to the Merger and within at least ten days after the date
the vote was taken make written demand on the corporation for payment for his
shares of Unico common stock; (ii) either vote against the approval of the
Merger or abstain from voting with respect to the Merger; and (iii) comply
with the provisions set forth in the NMBCAct following the Unico Meeting. A
vote against approval of the Merger will not in and of itself constitute a
written demand for dissenters' rights satisfying the requirements of the
above Sections. See "THE MERGER - Dissenters' Rights."
BOARD RECOMMENDATION
The Board of Directors of Unico has approved the proposed Merger, believes it
to be in the best interest of Unico and its shareholders and recommends that its
shareholders vote in favor of it and the other matters presented at the Unico
Meeting.
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THE MERGER
GENERAL
The following is a brief summary of certain aspects of the Merger, including
material provisions of the Merger Agreement which are described in detail below.
This summary does not purport to be complete and is qualified in its entirety by
reference to the Merger Agreement, a copy of which is set forth in this
Information Statement/Prospectus as an Appendix and is incorporated herein by
reference. Shareholders are urged to read the Merger Agreement carefully.
EFFECTIVE TIME
Unico and Chatfield anticipate closing the transactions contemplated by the
Merger Agreement as soon as practicable after the adoption of the matters to be
considered at the Unico Meeting and the Chatfield Meeting and the satisfaction,
or waiver, of the conditions contained in the Merger Agreement. See " - The
Merger Agreement." The time upon which the conversion of shares of Chatfield
common stock, Chatfield Plan Common Stock, Chatfield Series A Stock and
Chatfield Series B Stock (collectively, the "Chatfield Stock") into shares of
Unico common stock, Unico Series A Stock and the Unico Three Year Warrants,
Unico Four Year Warrants and Unico Five Year Warrants (collectively, the "Unico
Warrants," and together with the Unico common stock and Unico Series A Stock the
"Unico Stock") is consummated, is the time upon which the Merger will have
become effective (the "Effective Time").
BACKGROUND OF THE MERGER
The terms of the Merger Agreement are the result of arm's-length negotiations
between representatives of Unico and Chatfield. The following is a brief
discussion of the background of these negotiations, the Merger and related
transactions.
Unico's management has long sought to enhance the value of its shares through
asset sales, joint ventures, mergers or acquisitions. These efforts were
intensified in mid-1993 when it was determined that certain market factors and
the availability of properties might permit the expansion of Unico's natural gas
producing activities. Most of the acquisitions of such available properties
considered by Unico's management during mid-1993 through late 1995 would have
required funding beyond Unico's internal means, and Chatfield was contacted for
advice with respect to obtaining such funding through various private and public
financing methods. While Unico ultimately determined that the available
acquisition opportunities did not meet its investment criteria, Unico's
relationship with Chatfield continued through 1995 when Chatfield and Unico
jointly made an unsuccessful attempt to purchase a non-energy related business.
Ultimately, the management of each of Unico and Chatfield concluded that
shareholders of both entities would benefit from the Merger. Among other
things, it was determined that Chatfield's greater access to capital and
acquisition opportunities could enhance the future growth of Unico's natural gas
production activities. In addition, it was determined that Unico's petroleum
refining and electric generation and methanol production businesses would not
constitute appropriate long terms strategic core assets for the merged
companies. Accordingly, Unico's management concluded that such businesses would
be distributed to Unico's current shareholders. These principal terms were set
forth in a letter of intent that was executed by each of Unico and Chatfield on
January 13, 1996.
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Thereafter, following legal and financial "due diligence" and intensive
negotiation by representatives of Unico and Chatfield and their respective
counsel, a definitive Merger Agreement dated as of July 30, 1996 was entered
into by Unico, Chatfield and Chatfield Acquisition Corp.
THE SPIN-OFFS
Prior to the Effective Time, Unico will distribute pro rata to its
shareholders all the shares of capital stock of each of IC (after consolidation
with GTI) and IRC. See "BUSINESS - IC and GTI - Operation and Management of
Methanol Production Facility." There will be no public market for the shares of
either IC or IRC immediately after the Effective Time. While management of each
of IC (after consolidation with GTI) and IRC may consider establishing such a
public market for the respective shares of each entity in compliance with the
federal securities laws in the future, no assurance can be made that any public
market will be established.
CHATFIELD REASONS FOR THE MERGER; RECOMMENDATIONS
The Chatfield Board of Directors believes that the Merger is in the best
interests of Chatfield shareholders, and to the Chatfield shareholders
recommends that they vote in favor of it. In reaching its conclusion, the
Chatfield Board of Directors considered the terms and conditions of the
Merger Agreement and information with respect to the financial condition of
Unico and the requirements of Chatfield.
The Chatfield Board has not sought the opinion of a financial advisor with
respect to the Merger and urges each shareholder to evaluate the Merger from
his, her or its own vantage point.
In considering the Merger, the Chatfield Board examined alternative methods
of raising capital for business growth, including a further private placement of
equity or debt, and the possibility and cost of combining with other publicly
listed companies. During its deliberations on the Merger, the Chatfield Board
concluded that the public market for Unico common stock would give Chatfield not
only access to the capital markets, but also the opportunity to attract new
brokers and possibly acquire smaller brokerage firms by offering the liquidity
of publicly traded shares in Chatfield Dean Holdings. Among other factors, the
Chatfield Board noted the following advantages of the Merger: (i) the Merger is
expected to provide liquidity for current holders of Chatfield common stock,
Chatfield Plan Common Stock, Chatfield Series A Stock and Chatfield Series B
Stock; and (ii) the Merger is expected to provide Chatfield with an attractive
method of raising capital for growth and business expansion when compared with
more traditional alternatives, such as a further offering of Chatfield equity
securities with associated discounts in offering price, offering costs, the
uncertainties of timing and the risk of non-consummation related thereto. The
Chatfield Board considered each of the factors listed above and each contributed
to its conclusion to recommend the Merger to Chatfield's shareholders.
UNICO REASONS FOR THE MERGER; RECOMMENDATIONS
The Unico Board of Directors believes that the Merger is in the best
interests of Unico shareholders and unanimously recommends to the Unico
shareholders that they vote in favor of it. In reaching this conclusion, the
Unico Board considered the terms and conditions of the Merger Agreement and
information with respect to the financial condition, operations and prospects
of Chatfield from both a historical and prospective basis.
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In considering the Merger, the Unico Board took into account the recent
and projected improvement in domestic economic activity, which the Unico
Board believes will result in an increase in the retail brokerage, investment
banking and merchant banking activities of Chatfield in the next several
years, thereby placing a premium on the services offered by Chatfield. In
addition, the Unico Board was favorably impressed by the manner in which
Chatfield had provided services to it in the past, and in its vibrant and
entrepreneurial approach to the securities industry. The Unico Board
ascribed significant value to the capital improvements made by Chatfield with
respect to compliance, computers, training and the efforts and programs to
attract and retain high level bankers and brokers. Given Chatfield's
national reputation, its recent expenditures evidencing commitment toward
high levels of professionalism and its proven ability to engage in not only
mergers and acquisitions but also investment and merchant banking activities,
the Unico Board considered Chatfield, with its retail and investment banking
businesses, to be a favorable merger partner. The Unico Board is unable to
quantify the relative importance or value which it ascribed to the factors
referred to above, but each such factor contributed to its conclusion to
recommend the Merger to Unico's shareholders.
In addition, the Unico Board believes that Unico's diversification away
from its primary focus on the oil and gas industries into the securities and
investment banking industries is of strategic importance. Unico's refinery
business has witnessed a sharp reduction in the availability of crude oil
from its traditional sources and has operated its refinery only on a limited
basis during the past three years. Despite repeated efforts, Unico has thus
far been unsuccessful in locating raw materials that would allow the economic
operation of the facility. Additionally, efforts to secure a long term
contract for the sale of power from the co-generation plant have thus far
been unsuccessful. Economies of scale and the uncertain nature of energy
related businesses generally make it difficult for a company of Unico's size
to create increased value for its shareholders without a significant business
combination. With the Spin-Offs of IC and IRC, the Unico shareholders will
maintain ownership of entities engaged in the refining and chemical
industries, while at the same time gaining exposure to the securities and
investment banking markets. The present natural gas business of Unico may
grow as Chatfield Dean Holdings gains more access to the capital markets and
is able to secure more investment monies for natural gas activities.
The Unico Board has not sought the opinion of a financial advisor with
respect to the Merger and urges each shareholder to evaluate the Merger from
his, her or its own personal vantage point.
On the basis of the foregoing, the directors of Unico believe that the Merger
provides Unico's shareholders with an attractive opportunity for growth in
shareholder value. Consequently, the directors of Unico have determined to
submit the Merger to Unico's shareholders. In arriving at this recommendation,
the directors of Unico took into account the fact that stockholders of
Chatfield, rather than the current shareholders of Unico, are expected upon
consummation of the Merger to own in excess of 50% of the issued and outstanding
shares of capital stock of Chatfield Dean Holdings.
THE MERGER AGREEMENT
MERGER OF UNICO AND CHATFIELD
At the time of the Merger, Unico will change its name to Chatfield Dean
Holdings, Inc. ("Chatfield Dean Holdings"). Additionally, pursuant to the
Merger Agreement, (1) Chatfield Acquisition Corp., a Colorado corporation
wholly-owned by Unico ("Newco"), will merge with and into Chatfield in
consideration of the issuance of certain capital stock of Unico in favor of
Chatfield shareholders; (2) Newco will cease to exist and Chatfield will
become a wholly-owned subsidiary of Chatfield Dean
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Holdings; (3) the current directors and executive officers of Unico and Newco
will resign, except for Mr. William Hagler, the current President of Unico, who
will remain a director of post-Merger Unico (which is referred to herein as
"Chatfield Dean Holdings"); and (4) each of Unico and Chatfield will use its
best efforts to have the directors designated by Chatfield elected to the Board
of Directors of Chatfield Dean Holdings. At the effective time of the Merger,
Newco shall be merged with and into Chatfield in accordance with the Colorado
Business Corporation Act, whereupon the separate corporate existence of Newco
shall cease (the "Effective Time"). Thereafter, Chatfield shall continue as the
surviving corporation, and as a wholly-owned subsidiary of Chatfield Dean
Holdings, under the laws of the State of Colorado (the "Surviving Corporation").
CONSIDERATION
The Merger Agreement contemplates the following:
(A) Each holder of Unico common stock issued and outstanding immediately
before the Effective Time will be entitled to receive three newly created
Unico warrants (collectively, the "Unico Warrants") for each share of Unico
common stock held:
1. one Unico warrant evidencing the right to purchase .3 (three-tenths)
of a share of Chatfield Dean Holdings common stock (the "Unico Three
Year Warrant");
2. one Unico warrant evidencing the right to purchase .4 (four-tenths)
of a share of Chatfield Dean Holdings common stock (the "Unico Four Year
Warrant"); and
3. one Unico warrant evidencing the right to purchase .5 (five-tenths)
of a share of Chatfield Dean Holdings common stock (the "Unico Five Year
Warrant");
(B) Each share of Chatfield common stock issued and outstanding at the
Effective Time shall be exchanged for and converted into ___ of a share of
Unico common stock for each share of Chatfield common stock surrendered;
(C) Each share of Chatfield common stock issued and outstanding under
Chatfield's employee stock bonus plan (the "Chatfield Plan Common Stock") at
the Effective Time shall be exchanged for and converted into ___ of a share
of Unico common stock for each share of Chatfield Plan Common Stock
surrendered;
(D) Each share of Chatfield Series A 7% Cumulative Preferred Stock (the
"Chatfield Series A Stock") and each share of Chatfield Series B Preferred
Stock (the "Chatfield Series B Stock") issued and outstanding at the
Effective Time shall be exchanged for and converted into 2.66 shares of Unico
Series A Preferred Stock to be created from Unico's authorized preferred
shares (the "Unico Series A Stock") for each share of Chatfield Series A
Stock or Chatfield Series B Stock surrendered. Each share of Unico Series A
Stock shall thereafter be convertible into one and one-quarter (1.25) shares
of Unico common stock for each share of Unico Series A Stock surrendered,
PROVIDED, HOWEVER, that each holder of Unico Series A Stock issued and
outstanding at the Effective Time who fails to surrender his or her Unico
Series A Stock for conversion into Unico common stock within sixty (60) days
following the Effective Time shall be entitled to receive, upon conversion,
only one (1) share of Unico common stock for each share of Unico Series A
Stock surrendered; and
(E) All the shares of capital stock of Newco outstanding at the Effective
Time shall be exchanged for and converted into one (1) share of common stock
of the Surviving Corporation.
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REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains representation and warranties by Chatfield
relating to, among other things, (a) due organization, good standing and
corporate power; (b) authorization and validity of the Merger Agreement; (c)
capitalization and ownership of capital stock; (d) consents and approvals; no
violations; (e) financial statements; (f) absence of certain changes; (g) title
to assets; (h) compliance with laws; (i) litigation; (j) employee stock bonus or
benefit plans; (k) labor matters; (l) taxes; (m) environmental matters; (n) SEC
filings; (o) broker's or finder's fees; (p) agreements with regulatory agencies;
(q) material contracts; and (r) ownership of Unico common stock and affiliates.
The Merger Agreement also contains representations and warranties of Unico
and Newco relating to, among other things: (a) due organization, good standing
and corporate power; (b) authorization and validity of the Merger Agreement; (c)
capitalization and stock ownership; (d) consents and approvals; no violations;
(e) financial statements; (f) absence of certain changes; (g) title to assets;
(h) compliance with laws; (i) litigation; (j) employee stock bonus or benefit
plans; (k) labor matters; (l) taxes; (m) environmental matters; (n) SEC filings;
(o) broker's or finder's fee; (p) agreements with regulatory agencies; (q)
material contracts; and (r) ownership of Chatfield common stock and affiliates.
CONDUCT OF BUSINESS PRIOR TO MERGER
Chatfield has agreed to each of the following conditions with respect to the
conduct of its and its subsidiaries' businesses:
(a) During the time period from the date of the Merger Agreement to the
Effective June, Chatfield and each of its subsidiaries shall conduct its
respective operations only according to their ordinary and usual course of
business and shall give Unico and Newco prompt notice of any default under
any agreement, contract or obligation which could have a material adverse
effect on Chatfield;
(b) Neither Chatfield nor any of its subsidiaries shall (i) make any change
in or amendment to its Certificate of Incorporation or Bylaws or its Articles of
Organization or Operating Agreement, as the case may be; (ii) except for the
Chatfield Plan Common Stock issued under Chatfield's employee stock bonus plan
and the Chatfield common stock issued in relation to the mandatory exercise of
the Chatfield Series B warrants issued in connection with the Chatfield Series B
Stock (the "Chatfield Warrants") prior to the Effective Time, issue or sell any
shares of its capital stock or issue or sell any interests in its existence or
issue or sell any of its other securities, or issue or sell any securities or
interests convertible into, or options, warrants or rights to purchase or
subscribe to, or enter into any arrangement or contract with respect to the
issuance or sale of, any shares of its capital stock, interests or any of its
other securities; (iii) declare, pay or make any dividend or other distribution
or payment with respect to, or split, redeem or reclassify, any shares of its
capital stock or its interests (other than cash dividends declared and payable
on the Chatfield Series A Stock or Chatfield Series B Stock in accordance with
their terms); (iv) enter into any contract or commitment relating to (A) any
acquisition of assets or securities, which would be material, individually or in
the aggregate, to Chatfield and its subsidiaries taken as a whole, or to (B) any
disposition of assets or securities or any release or relinquishment of any
contract rights, which would be material, individually or in the aggregate, to
Chatfield and its subsidiaries taken as a whole, other than in the ordinary
course of business; (v) enter into any new material line of business; (vi)
change its methods of accounting in effect at March 31, 1996, except as required
by changes in US GAAP or regulatory accounting principles with which Chatfield's
independent auditors concur; (vii) amend any employee or non-employee benefit
plan or program, employment agreement, license agreement or retirement agreement
or plan, or pay any bonus or contingent compensation, or otherwise increase the
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compensation or fringe benefits of any employee (other than regularly scheduled
increases not to exceed 10% for any individual employee, provided that all such
increases shall not exceed 5% of the total aggregate compensation of all
employees on the date hereof); (viii) other than in the ordinary course of
business consistent with past practice, incur any indebtedness for borrowed
money, assume, guarantee, endorse or otherwise as an accommodation become
responsible for the obligations of any other individual, corporation or other
entity; (ix) take any action, engage in any transaction or enter into any
agreement which would cause any of the representations or warranties set forth
in Section 3.01 of the Merger Agreement to be untrue as of the Closing Date
except as required by applicable law; (x) elect or appoint any new director or
officer; and (xi) agree, in writing or otherwise, to take any of the foregoing
actions;
(c) During the period from the date of the Merger Agreement to the Effective
Time, without the prior written consent of Unico or Newco, neither Chatfield nor
any of its subsidiaries will take any action that would (i) delay or adversely
affect in any material respect the ability of Chatfield to obtain any necessary
approvals, consents or waivers of any governmental authority required for the
transactions contemplated hereby; or (ii) adversely affect in any material
respect the ability of Chatfield to perform its covenants and agreements on a
timely basis under the Merger Agreement;
(d) Chatfield and its subsidiaries shall, upon reasonable notice, afford to
Unico and Newco and its/their counsel, accountants and other authorized
representatives, reasonable access during normal business hours to its
properties, books and records. Chatfield and its subsidiaries agree to cause
its/their agents, officers and employees to furnish such additional financial
and operating data and other information and respond to such inquiries as Unico
or Newco shall from time to time reasonably request. Chatfield and its
subsidiaries shall also permit employees and agents of Unico and Newco to have
reasonable access during normal business hours to the properties and facilities
of Chatfield and its subsidiaries. Neither Chatfield nor its subsidiaries shall
be required to provide access to or to disclose information when such access or
disclosure would violate or prejudice the rights of Chatfield's or its
subsidiaries' customers, jeopardize the attorney-client privilege of Chatfield
or of its subsidiaries, or contravene any law, rule, regulation, order,
judgment, decree, fiduciary duty or binding agreement entered into prior to the
date of the Merger Agreement. Chatfield and its subsidiaries will make
appropriate substitute disclosure arrangements under circumstances in which the
restrictions of the preceding sentence apply;
(e) Information obtained by Chatfield or any of its subsidiaries pursuant to
the Merger shall be maintained in complete confidence by such party, and shall
be disclosed only upon the express written consent of Unico or Newco;
(f) Chatfield and its subsidiaries agree to cooperate with Unico and Newco in
the preparation and filing of this Information Statement/Prospectus and
Chatfield will use its best efforts to respond to the comments of the SEC that
apply to it or its subsidiaries in connection therewith and to furnish all
information relating thereto (including, without limitation, financial
statements and supporting schedules and certificates and reports of independent
public accountants);
(g) Chatfield, acting through its Board of Directors, shall call a meeting of
its shareholders entitled to vote, for the purpose of voting upon the Merger
Agreement and the transactions contemplated thereby. Subject to the fiduciary
duties of the Board of Directors of Chatfield, Chatfield agrees that its Board
of Directors will recommend that shareholders of Chatfield approve and adopt the
Merger Agreement and approve the Merger;
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(h) Chatfield and each of its subsidiaries shall use their respective
reasonable best efforts to cooperate or take, or cause to be taken as promptly
as practicable, all appropriate action, and to make, or cause to be made as
promptly as practicable, all filings necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by the Merger Agreement, including, without
limitation, their respective reasonable best efforts to obtain, promptly, all
licenses, permits, consents, approvals, authorizations, qualifications and
orders of governmental authorities as are necessary for consummation of the
transactions contemplated by the Merger Agreement and to fulfill the conditions
to the Merger. With respect to any such actions or filings, Chatfield and its
subsidiaries shall consult and cooperate with Unico prior to taking any such
actions or making any such filings and, in the case of any such filings, to
afford reasonable consideration of the comments of Unico;
(i) Neither Chatfield nor any of its subsidiaries shall take or cause to be
taken any action, prior to or after the Effective Time, which would disqualify
the Merger as a "reorganization" within the meaning of Section 368 of the Code;
(j) On or prior to the Closing Date, Chatfield shall deliver to Unico a
letter identifying all persons who are, at the time the Merger Agreement is
submitted for approval to the shareholders of Chatfield, an affiliate of
Chatfield for purposes of Rule 145 under the Securities Act. Chatfield shall
use all reasonable efforts to cause each such person to deliver to Unico prior
to the Closing Date a written agreement in form and substance satisfactory to
Unico to the effect that such person will not offer to sell, sell or otherwise
dispose of any Unico capital stock except pursuant to an effective registration
statement or in compliance with Rule 145 or other exemption from the
registration requirements of the Securities Act;
(k) Chatfield agrees that promptly upon execution of the Merger Agreement, it
shall form a committee for purposes of examining the financial performance of
Chatfield and formulating policy recommendations to improve the earnings and
profits of Chatfield. Such committee shall consist of Messrs. William Hagler,
Sanford Greenberg, Kenneth Greenberg and Scott Carothers and shall have regular
meetings at times and dates mutually acceptable to its members.
Unico agrees to the following conditions with respect to the conduct of its
and its subsidiaries' businesses:
(a) Unico
and Newco and each of Unico's other subsidiaries will conduct their respective
operations only according to their ordinary and usual course of business and
will use their reasonable best efforts to preserve intact their respective
business organizations and keep available the services of their officers and
employees, and shall give Chatfield prompt notice of any default under any
agreement, contract or obligation, which could have a material adverse effect on
Unico or Newco;
(b) Neither Unico nor Newco nor any of Unico's other subsidiaries shall (i)
make any change in or amendment to its Certificate of Incorporation or By-Laws;
(ii) issue or sell any shares of its capital stock or any of its other
securities, or issue any securities convertible into, or options, warrants or
rights to purchase or subscribe to, or enter into any arrangement or contract
with respect to the issuance or sale of, any shares of its capital stock or any
of its other securities; (iii) declare, pay or make any dividend or other
distribution or payment with respect to, or split, redeem or reclassify, any
shares of its capital stock; (iv) enter into any contract or commitment relating
to (A) any acquisition of assets or securities, which would be material,
individually or in the aggregate, to Unico or Newco or any of Unico's other
subsidiaries taken as a whole, or to (B) any disposition of assets or securities
or any release or relinquishment of any contract rights, which would be
material, individually or in the aggregate to Unico
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or Newco or to any of Unico's other subsidiaries taken as a whole, other than in
the ordinary course of business; (v) enter into any new material line of
business; (vi) change its methods of accounting in effect at February 29, 1996,
except as required by changes in US GAAP or regulatory accounting principles
with which Unico's and Newco's independent auditors concur; (vii) amend any
employee or non-employee benefit plan or program, employment agreement, license
agreement or retirement agreement or plan, or pay any bonus or contingent
compensation, or otherwise increase the compensation or fringe benefits of any
employee (other than regularly scheduled increases not to exceed 10% for any
individual employee, provided that all such increases shall not exceed 5% of the
total aggregate compensation of all employees on the date hereof); (viii) other
than in the ordinary course of business consistent with past practice, incur any
indebtedness for borrowed money, assume, guarantee, endorse or otherwise as an
accommodation become responsible for the obligations of any other individual,
corporation or other entity; (ix) take any action, engage in any transaction or
enter into any agreement which would cause any of the representations or
warranties set forth in the Merger Agreement to be untrue as of the Closing Date
except as required by applicable law; (x) elect or appoint any new director or
officer; and (xi) agree, in writing or otherwise, to take any of the foregoing
actions;
(c) During the period from the date of the Merger Agreement to the Effective
Time, without the prior written consent of Chatfield, Unico and Newco will take
no action that would (i) delay or adversely affect in any material respect the
ability of Unico or Newco to obtain any necessary approvals, consents or waivers
of any governmental authority required for the transactions contemplated hereby;
or (ii) adversely affect in any material respect the ability of Unico or Newco
to perform its covenants and agreements on a timely basis under the Merger
Agreement;
(d) Unico and Newco and Unico's other subsidiaries shall, upon reasonable
notice, afford to Chatfield and its counsel, accountants and other authorized
representatives, reasonable access during normal business hours to its
properties, books and records in order that Chatfield may have the opportunity
to make such investigations as it shall desire of the affairs of Unico and Newco
and Unico's other subsidiaries. Unico and Newco and Unico's other subsidiaries
agree to cause their agents, officers and employees to furnish such additional
financial and operating data and other information and respond to such inquiries
as Chatfield shall from time to time reasonably request. Unico, Newco and
Unico's other subsidiaries shall also permit employees and agents of Chatfield
to have reasonable access during normal business hours to the properties and
facilities of Unico and Newco and Unico's other subsidiaries. Neither Unico nor
Newco nor any of Unico's other subsidiaries shall be required to provide access
to or to disclose information when such access or disclosure would violate or
prejudice the rights of Unico's or Newco's or Unico's other subsidiaries'
customers, jeopardize the attorney-client privilege of Unico or Newco or of
Unico's other subsidiaries or contravene any law, rule, regulation, order,
judgment, decree, fiduciary duty or binding agreement entered into prior to the
date of the Merger Agreement. Unico and Newco and Unico's other subsidiaries
will make appropriate substitute disclosure arrangements under circumstances in
which the restrictions of the preceding sentence apply;
(e) Information obtained by Unico or Newco or by any of Unico's other
subsidiaries pursuant to the Merger shall be maintained in complete confidence
by such party, and shall be disclosed only upon the express written consent of
Chatfield;
(f) Unico will, in cooperation with Chatfield, prepare and file with the SEC
this Information Statement/Prospectus and will use its best efforts to respond
to the comments of the SEC in connection therewith and to furnish all
information required. Unico will cause this Information Statement/Prospectus
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to be mailed to its shareholders and, if necessary, after it shall have been so
mailed, promptly circulate amended, supplemental or supplemented material and,
if required in connection therewith, solicit proxies;
(g) Unico, acting through its Board of Directors, shall call a special
meeting of its shareholders entitled to vote for the purpose of voting upon the
Merger Agreement. Subject to the fiduciary duties of the Board of Directors of
Unico, Unico agrees that its Board of Directors will recommend that such
shareholders vote to approve and adopt the Merger Agreement and the Merger;
(h) Unico each of its subsidiaries shall use its respective reasonable
best efforts to cooperate or take, or cause to be taken as promptly as
practicable, all appropriate action, and to make, or cause to be made as
promptly as practicable, all filings necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by the Merger Agreement, including, without
limitation, their respective reasonable best efforts to obtain, promptly, all
licenses, permits, consents, approvals, authorizations, qualifications and
orders of governmental authorities as are necessary for consummation of the
transactions contemplated by the Merger Agreement and to fulfill the
conditions to the Merger. With respect to any such actions or filings, Unico
shall consult and cooperate with Chatfield prior to taking any such actions
or making any such filings and, in the case of any such filings, to afford
reasonable consideration of the comments of Chatfield; and
(i) Neither Unico nor Newco nor any of Unico's other subsidiaries shall take
or cause to be taken any action, prior to or after the Effective Time, which
would disqualify the Merger as a "reorganization" within the meaning of Section
368 of the Code.
CONDITIONS PRECEDENT TO THE MERGER
The respective obligations of Chatfield, on the one hand, and Unico and
Newco on the other hand, to effect the Merger are subject to the satisfaction
or waiver (subject to applicable law) at or prior to the Effective Time of
each of the following conditions: (a) approval by Chatfield and Unico
shareholders of the Merger Agreement, the Merger and the post-Merger name
change of Unico to Chatfield Dean Holdings, Inc.; (b) the Registration
Statement shall have become effective and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the
SEC and such Registration Statement, as at the time the Merger becomes
effective, shall not contain any untrue statement of a material fact and
shall not omit to state any material fact required to be stated therein or
necessary to make any statement therein, in light of the circumstances under
which the statements were made, not misleading; (c) all of the shares of
Chatfield Dean Holdings common stock issued, or reserved for future issuance,
in connection with the Merger shall have been approved for listing on The
Nasdaq Stock Market and all of the Unico common stock issued prior to the
Merger shall remain approved for listing on The Nasdaq Stock Market; (d) no
preliminary or permanent injunction or other order in effect at the Effective
Time shall have been issued by any court or by any governmental or regulatory
agency, body or authority which prohibits the consummation of the Merger and
the transactions contemplated by the Merger Agreement; no litigation or
proceeding shall be pending against Chatfield, Unico or Newco or any of their
respective subsidiaries or affiliates brought by any governmental entity
seeking to prevent consummation of the transactions contemplated by the
Merger Agreement; (e) all necessary consents or approvals from third parties,
regulatory authorities and other governmental entities which are required in
order to consummate the Merger and the other transactions contemplated
thereby shall have been obtained; EXCEPT, where any such consents or
approvals are not required by law to consummate the Merger, and the failure
to obtain any such consents or approvals would not have a material adverse
effect on the Surviving Corporation after giving effect to
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the Merger; (f) Chatfield shall have received an opinion dated as of the
Closing from Watson, Farley & Williams, and Unico and Newco shall have
received an opinion dated as of the Closing from Lohf, Shaiman & Jacobs,
P.C., in form and substance satisfactory to the respective parties; (g) since
the date of the Merger Agreement, no material adverse change shall have
occurred in the business, operations or financial conditions, taken as a
whole, of Unico or Chatfield or of any of their respective subsidiaries; (h)
no state or federal statute, rule, regulation or action shall exist or shall
have been adopted or taken, and no judicial or administrative decision shall
have been entered (whether on a preliminary or final basis), and no action or
proceeding by any governmental, regulatory or administrative agency shall be
pending that if adversely decided would prohibit, restrict or unreasonably
delay the consummation of the transactions contemplated by the Merger
Agreement or make illegal the consideration due hereunder; (i) all
representations and warranties of each of Unico, Newco and Chatfield
contained in the Merger Agreement shall be true and correct as of the date of
the Merger Agreement and at and as of the Closing, with the same force and
effect as though made on and as of the Closing Date, except as to
representations and warranties made as of a specific date, which shall be
true and correct as of such date; (j) each of Unico, Newco and Chatfield
shall have performed in all material respects all obligations and agreements,
and complied in all material respects with all covenants and conditions
contained in the Merger Agreement to be performed or complied with by it
prior to the Closing Date; (k) Chatfield will use its best efforts to locate
a buyer to purchase, assume or otherwise acquire all of the Chatfield Series
B Stock (and related Chatfield Warrants) held by Unico and the Chatfield
Series A Stock held by Intermountain Chemical, Inc.; (l) all of the Chatfield
Warrants issued and outstanding immediately before the Effective Time shall
have been exercised for Chatfield common stock; (m) Unico shall have
completed the divestiture of its subsidiaries, Intermountain Refining Co.
Inc. ("IRC") and Intermountain Chemical, Inc. ("IC") by distribution of 100%
of the stock of each of IRC and IC to current Unico shareholders and/or
employees, sale to third parties or otherwise, so that none of such entities
shall constitute a subsidiary of Unico at the Effective Time; (n) Unico shall
have adopted a Unico Three Year Warrant Agreement, Unico Four Year Warrant
Agreement and Unico Five Year Warrant Agreement governing the Unico Warrants
in form and substance to be mutually agreed by the parties to the Merger
Agreement and including the terms specified in Section 2.01(a) of the Merger
Agreement; (o) Unico shall have authorized for issuance a sufficient number
of Unico Warrants; (p) Unico shall have adopted a Certificate of Designations
for the Unico Series A Stock in form and substance substantially similar to
the certificate of designation governing the Chatfield Series A Stock, but
incorporating appropriate provisions relating to delayed conversion; (q)
Unico shall have authorized for issuance a sufficient number of shares of
Unico Series A Stock; (r) Unico shall have authorized, and its shareholders
shall have approved, an increase in the amount of authorized Unico common
stock to 20,000,000 shares, $.20 par value; (s) Unico shall have adopted an
employee stock bonus plan in form and substance substantially similar to
Chatfield's existing employee stock bonus plan; (t) Unico shall have adopted
an employee incentive plan ("EIP") with a minimum of 1,000,000 shares of
Unico (post-Merger, Chatfield Dean Holdings) common stock reserved for
issuance to certain employees of Chatfield Dean Holdings and its
subsidiaries, with such plan to take the form and substance determined by
Chatfield Dean Holdings' Board of Directors, or a compensation committee
designated thereby, effective promptly after consummation of the Merger, and
with authority to designate and grant awards under the EIP to rest solely
with Chatfield Dean Holdings' Board of Directors, or at such Board's
direction, with a compensation committee designated thereby; (u) Chatfield
and Unico shall grant Mr. William Hagler appropriate security for the
$178,000 obligation due him from Unico; (v) Chatfield shall be satisfied that
neither environmental conditions nor General Electric Capital Corp.
conditions related to the sale/leaseback transactions exist which would have
a material adverse effect upon Unico or upon any of Unico's subsidiaries.
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AMENDMENTS; WAIVER; TERMINATION
No waiver, modification or amendment of any provision, term or condition of
the Merger Agreement shall be valid unless in writing and signed by Unico, Newco
and Chatfield.
The Merger Agreement may be terminated and the transactions contemplated
thereby may be abandoned at any time prior to the Effective Time, whether before
or after approval of the Merger by Unico's and/or Chatfield's shareholders:
(a) by mutual consent of Unico, Newco and Chatfield; (b) by Unico, Newco
or Chatfield, if the Effective Time shall not have occurred on or prior to
March 30, 1996, unless the failure to so consummate by such time is due to
the material breach of any representation or warranty, or failure to satisfy
any covenant or condition contained in the Merger Agreement by the party
seeking to so terminate; (c) by any of Unico, Newco or Chatfield, if there
shall be any law or regulation of any competent authority that makes
consummation of the Merger illegal or otherwise prohibits the Merger or if
any judgment, injunction, order or decree of any competent authority
prohibiting such transaction is entered and such judgment, injunction, order
or decree shall have become final and nonappealable; or (d) by any of Unico,
Newco or Chatfield, in the event (i) the shareholders of either Unico or
Chatfield fail to approve the Merger; or (ii) there occurs a breach by the
other party of any representation, warranty or covenant, which breach,
individually or together with all other such breaches, has a material adverse
effect on the breaching party, provided, that any such breach is not cured
(or cannot reasonably be expected to be cured) within 60 days following
receipt by the breaching party of notice of such breach.
Following termination of the Merger Agreement any party may pursue any real
or equitable remedies that may be available if such termination is based on the
breach of another party.
MANAGEMENT AFTER THE MERGER
Immediately at the Effective Time, the entire present Board of Directors
of Unico shall resign, except Mr. William Hagler. It is intended that Mr.
Hagler will remain a director of Chatfield Dean Holdings and that Unico and
Chatfield will each use its best efforts to have the persons nominated by
Chatfield elected to the remaining director positions of Chatfield Dean
Holdings. Until 50% of the shares of Unico Series A Stock have been
converted, the holders of Unico Series A Stock will vote as a class for the
election of one Chatfield Dean Holdings director to represent that class. In
addition, the holders of Unico Series A Stock will have one vote per share
held.
ACCOUNTING TREATMENT
The Merger is considered a reverse acquisition. Under reverse acquisition
accounting, Chatfield is considered the acquiror for accounting and financial
reporting purposes, and is assumed to have acquired all of the assets and
assumed all the liabilities of Unico. The acquisition will be accomplished
through the exchange of all of the outstanding stock of Chatfield for __________
shares of common stock and ___________ shares of preferred stock of Unico,
representing a controlling interest in Unico. In connection with the Merger,
Chatfield will be recapitalized and the historical financial statements of
Chatfield become the historical financial statements of the Surviving
Corporation (the post-Merger equivalent of Chatfield and a subsidiary of
Chatfield Dean Holdings).
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a summary of the material United States federal
income tax consequences of the Spin-Offs and the Merger and is not intended to
be a complete discussion of all potential tax effects that might be relevant to
the Spin-Offs and the Merger. This summary addresses only tax consequences to
individual citizens or residents of the United States and domestic corporations.
This summary assumes that the Chatfield Stock and Unico common stock and Unico
Series A Stock have been and will be held as capital assets. This summary may
not be applicable to certain classes of taxpayers subject to special tax rules,
including, without limitation, insurance companies, tax-exempt organizations,
financial institutions, securities dealers, broker-dealers, foreign persons, and
persons who acquired Chatfield Stock or Unico common stock and Unico Series A
Stock pursuant to an exercise of employee stock options or rights or otherwise
as compensation. Moreover, the state, local and foreign tax consequences of the
Spin-Offs and the Merger are not discussed below, nor are estate or gift tax
considerations.
This summary is based on laws, regulations, rulings, practice and judicial
decisions in effect at the date of this Information Statement/Prospectus;
however, legislative, judicial or administrative changes or interpretations may
be forthcoming that could alter or modify the statements and conclusions set
forth herein. Any such changes or interpretations may or may not be retroactive
and could affect the tax consequences described herein to shareholders. THIS
SUMMARY IS INCLUDED FOR GENERAL INFORMATION ONLY. EACH UNICO SHAREHOLDER AND
EACH CHATFIELD SHAREHOLDER IS URGED TO CONSULT WITH SUCH SHAREHOLDER'S OWN TAX
ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO SUCH HOLDER OF THE TRANSACTIONS
DESCRIBED HEREIN, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR
FOREIGN TAX LAWS, AND OF CHANGE IN APPLICABLE TAX LAWS.
THE SPIN-OFFS
GENERAL. It is intended the IRC Spin-Off be treated as a tax-free
distribution described in Section 355 of the Code and that the IC Spin-Off be
treated as a reorganization and tax-free distribution described in Sections
368(a)(1)(D) and 355 of the Code, and that, accordingly, for U.S. federal income
tax purposes, no gain or loss will be recognized by Unico or its subsidiaries or
by holders of Unico common stock as a result of the Spin-Offs.
No rulings have been or will be requested from the Internal Revenue Service
("IRS") addressing the federal income tax treatment of the Spin-Offs, nor is the
receipt of such a ruling a condition to the obligations of Unico, Chatfield or
Newco to consummate the Merger. In addition, Unico has not obtained an opinion
of counsel with respect to the tax treatment of the Spin-Offs. However, based
upon the facts and circumstances, Unico's management believes that the IRC Spin-
Off should be treated as tax-free distribution described in Section 355 of the
Code, and that the IC Spin-Off should be treated as a reorganization described
in Sections 368(a)(1)(D) and 355 of the Code, and the following discussion
assumes such treatment; however, no assurance can be given that the IRS or a
court considering the issue will not take a contrary view.
DISTRIBUTION OF THE STOCK OF IRC AND IC. No gain or loss will be recognized
by (or includible in the income of) shareholders of Unico upon receipt of IC
Stock or IRC Stock pursuant to the Spin-Offs. Such shareholders will apportion
the basis of their Unico shares (before the Spin-Offs) among the IRC Stock
received, the IC Stock received, and the Unico common stock retained, in
proportion to their relative fair market values. The holding period for IRC
Stock and IC Stock received will include the holding period
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for the shares of Unico common stock retained, provided that the shares of Unico
common stock were held as a capital asset on the date of the distribution.
In the event that the Spin-Offs are consummated and subsequently were
determined not to qualify for tax-free treatment, Unico would recognize gain
equal to the excess of the fair market value of the IRC Stock and the IC Stock
distributed to Unico shareholders over Unico's basis in the shares of IC and IRC
immediately before the distribution. In addition, if the Spin-Offs fail to
qualify for tax-free treatment, each Unico shareholder who received shares of IC
Stock and IRC Stock would be generally treated as if it had received a taxable
distribution in an amount equal to the fair market value on the date of the
distribution of the IRC Stock and the IC Stock it received.
President Clinton's proposed budget for fiscal year 1997 includes a provision
which, if enacted as proposed, would cause Unico to recognize corporate-level
tax on the distribution of the IRC Stock and the IC Stock if the Merger is also
consummated. By its terms, the proposal would be effective for distributions
after March 19, 1996. No assurance can be given concerning whether the proposal
will be enacted into law. The proposal would not affect the tax treatment of
the shareholders of Unico in relation to the distribution of the IRC Stock or
the IC Stock.
THE MERGER
GENERAL. It is intended that the Merger qualify as a reorganization within
the meaning of Section 368(a) of the Code, and that, accordingly, for U.S.
federal income tax purposes, no gain or loss will be recognized by Unico,
Chatfield or Newco as a result of the Merger.
Unico will receive an opinion of Watson, Farley & Williams, counsel to Unico
(the "Tax Opinion"), to the effect that the Merger will be treated as a
reorganization within the meaning of Section 368(a) of the Code and that Unico,
Chatfield and Newco will each be a party to the reorganization pursuant to
Section 368(b) of the Code. No rulings have been or will be requested from the
IRS that the Merger will be treated as a reorganization within the meaning of
Section 368(a) of the Code, nor is the receipt of such a ruling a condition to
the obligations of Unico, Chatfield or Newco to consummate the Merger. The Tax
Opinion is not binding on the IRS, and no assurance can be given that the IRS or
a court considering the issues will not take a contrary view.
The Tax Opinion will be based on, among other things, current law, certain
assumptions, and certain Officer's Certificates of Unico, Newco and Chatfield as
to factual matters which, if incorrect in certain material respects, would
jeopardize the conclusions reached by counsel in the Tax Opinion. Neither
Unico, Newco nor Chatfield is currently aware of any facts, or circumstances
that would cause any such Officer's Certificate to be untrue or incorrect in any
material respect.
EXCHANGE OF CHATFIELD STOCK SOLELY FOR UNICO COMMON STOCK OR UNICO SERIES A
STOCK. A holder of Chatfield Stock who, pursuant to the Merger, exchanges all of
the Chatfield Stock that such holder owns solely for Unico common stock or Unico
Series A Stock will not recognize any gain or loss upon such exchange. The
aggregate adjusted tax basis of Unico common stock or Unico Series A Stock
received by such holder in exchange for Chatfield Stock will equal such holder's
adjusted tax basis in the Chatfield Stock exchanged therefor. The holding period
of Unico common stock or Unico Series A Stock received by each holder of
Chatfield Stock in the Merger will include the holding period of the Chatfield
Stock exchanged therefor, provided that such Chatfield Stock is held as a
capital asset at the Effective Time of the Merger. Chatfield shareholders
should consult their own tax advisors as to the determination of their
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adjusted tax basis and holding period of any one share of Unico common stock or
Unico Series A Stock, as several methods of determination may be available.
A holder of Chatfield Stock would be required to recognize gain to the extent
of any "boot" received. Generally, "boot" is cash or other property other than
Unico stock. Under legislation proposed by the Clinton administration, certain
preferred stock would be treated as "boot." The Unico Series A Stock to be
issued in exchange for Chatfield Series A Stock and Chatfield Series B Stock is
preferred stock, but does not bear the characteristics of preferred stock that
would be treated as "boot" under the Clinton administration proposal.
Accordingly, even if the proposal is enacted into law, it should not cause the
Unico Series A Stock to be treated as "boot."
If the Merger fails to qualify as a tax-free reorganization, each Chatfield
shareholder who receives Unico common stock or Unico Series A Stock in exchange
for Chatfield Stock would recognize gain or loss equal in amount to the
difference between the fair market value of the Unico common stock or Unico
Series A Stock received and the shareholder's basis in the shares of Chatfield
Stock surrendered. Any such gain or loss would be capital gain or loss,
assuming the Chatfield Stock has been held as a capital asset, and would be
long-term capital gain or loss if the Chatfield Stock has been held for more
than one year. The holding period for the Unico common stock or Unico Series A
Stock received would begin on the day after the Effective Time.
EXCHANGE OF CHATFIELD STOCK SOLELY FOR CASH. A holder of Chatfield Stock who
exchanges such holder's Chatfield Stock solely for cash generally will recognize
capital gain or loss in an amount equal to the difference between the amount of
cash received and the holder's adjusted tax basis in the Chatfield Stock.
SECTION 306 STOCK. Under Section 306(c)(1)(B) of the Code, preferred stock
received in a reorganization may be treated as "section 306 stock" if the stock
exchanged therefor is not of equal value or has substantially different terms,
and the effect of the transaction is substantially the same as the receipt of a
stock dividend. Since each share of Unico Series A Stock is intended to be of
equal value to, and to have substantially the same terms as, each share of
Chatfield Series A Stock, the Unico Series A Stock received in exchange
therefore should not be treated as section 306 stock. Because the terms of the
Unico Series A Stock arguably are not substantially the same as the terms of the
Chatfield Series B Stock, it is possible the Unico Series A Stock received in
exchange for Chatfield Series B Stock in the Merger will be treated as section
306 stock, with the result that a portion of any gain recognized upon a sale or
other disposition of the Unico Series A Stock (and, possibly, upon a sale or
other disposition of Chatfield Dean Holdings common stock into which Unico
Series A Stock has been converted) may be treated as ordinary income, rather
than capital gain.
UNICO WARRANTS. The distribution of the Unico Warrants in connection with
the Merger should be treated as a tax-free distribution described in Section 305
of the Code. Consequently, a Unico shareholder should not recognize gain or
loss or otherwise include any amount in income as a result of the receipt of the
Unico Warrants, or as a result of the exercise of the Unico Warrants and
purchase of Chatfield Dean Holdings common stock. A Unico shareholder's tax
basis in the Chatfield Dean Holdings common stock acquired upon exercise of the
Unico Warrants would be equal to the price paid for such Unico common stock.
The holding period of Chatfield Dean Holdings common stock acquired upon
exercise of Unico Warrants would not include the period during which the
shareholder held the Unico Warrants, but rather would begin on the day following
the day on which the Unico Warrants are exercised. In addition, if the
distribution of the Unico Warrants is treated as a tax-free distribution under
Section 305 of the Code, the Unico Warrants and the Chatfield Dean Holdings
common stock purchased
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pursuant to the exercise of the Unico Warrants will be "section 306 stock", with
the result that, under Section 306 of the Code, a portion of any amount realized
upon a sale or other disposition of Unico Warrants or Chatfield Dean Holdings
common stock purchased pursuant to the exercise of Unico Warrants will be
treated as ordinary income.
In the event that the distribution of the Unico Warrants is not treated as a
tax-free distribution described in Section 305, each Unico shareholder would be
generally treated as if it had received a taxable distribution in an amount
equal to the fair market value on the date of the date of the distribution of
the Unico Warrants it received. That amount would also constitute the
shareholder's tax basis for its Unico Warrants. No gain or loss would be
recognized as a result of the exercise of the Unico Warrants and purchase of
Chatfield Dean Holdings common stock, and the shareholder's tax basis in the
Chatfield Dean Holdings common stock acquired pursuant to the exercise of the
Unico Warrants would be equal to the price paid for such Chatfield Dean Holdings
common stock, increased by the shareholder's tax basis in the Unico Warrants
exercised. Any gain or loss recognized upon a sale or other disposition of
Unico Warrants or such Chatfield Dean Holdings common stock would be treated as
capital gain or loss, provided that the Unico Warrants or Chatfield Dean
Holdings common stock are held as capital assets.
EXCHANGE OF CHATFIELD STOCK CERTIFICATES
Upon consummation of the Merger, instructions with regard to the surrender of
stock certificates which prior to the Effective Time represented shares of
Chatfield Stock, shall be provided to Corporate Stock Transfer, Inc., Denver
(the "Exchange Agent") for purposes of conducting the exchange procedures
hereinafter described. The Exchange Agent shall mail or make available to each
holder of record of a certificate or certificates which immediately prior to the
Effective Time represented outstanding Chatfield capital stock, or shares of
Chatfield Dean Holdings common stock, a notice and letter of transmittal in such
form as Unico and Chatfield shall mutually agree (the "Transmittal Form")
advising such holder of the effectiveness of the Merger and the procedure for
surrendering to the Exchange Agent his, her or its share certificate(s) for
exchange.
Within five (5) business days after the Effective Time, Unico shall cause the
Exchange Agent to issue to the holders of the Chatfield Stock who have submitted
properly completed Transmittal Forms and the holders of Unico common stock who
have done the same, the appropriate amounts of Chatfield Dean Holdings common
stock, Unico Series A Stock or Unico Warrants, as the case may be, in accordance
with Section 2.01 of the Merger Agreement.
All shares of Unico common stock must be surrendered for shares of Chatfield
Dean Holdings common stock. If any shares of Unico Stock are to be issued to a
person other than the registered holder of the Chatfield Stock represented by
the certificate or certificates surrendered with respect thereto, it shall be a
condition to such issuance that the certificate or certificates so surrendered
shall be properly endorsed or otherwise be in proper form for transfer and that
the person requesting such issuance shall pay to the Exchange Agent any transfer
taxes or other taxes or charges required as a result of such issuance to a
person other than the registered holder of such Chatfield Stock or establish to
the satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
At the Effective Time, without any further action required by the holders of
Unico common stock, certificates representing the Unico Warrants shall be mailed
to all the registered holders of Unico common stock. The Unico Warrants shall
be so mailed regardless of whether any Unico shareholder had surrendered his or
her Unico common stock to the Exchange Agent for conversion into Chatfield Dean
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Holdings common stock. The Unico Warrants shall not be issued to a person other
than the registered holder of the Unico common stock.
Also at the Effective Time, Chatfield Dean Holdings shall provide an order
(the "Chatfield Dean Holdings Order") to the Exchange Agent, executed by its
Secretary, directing the Exchange Agent to mail the Debenture Warrants and
Compensation Options to the recipients thereof, as named on the Chatfield Dean
Holdings Order, at the addresses therein provided. Neither the Debenture
Warrants nor the Compensation Operations shall be issued to a person other than
the recipient identified in the Chatfield Dean Holdings Order.
As of the Effective Time, there shall be no further registration of transfers
of Chatfield Stock that were outstanding prior to the Merger. After the
Effective Time, certificates representing Chatfield Stock presented to the
Surviving Corporation for transfer shall be cancelled and exchanged for the
Unico Stock provided for, and in accordance with, the procedures set forth in
Article II of the Merger Agreement.
No dividends, interest or other distributions with respect to Unico Stock
issuable upon surrender of Chatfield Stock shall be paid to the holder of any
unsurrendered certificates representing Chatfield Stock until such certificates
are surrendered as provided herein and in the Merger Agreement. Upon such
surrender, there shall be declared and paid, without interest, to the person in
whose name the Chatfield Dean Holdings stock representing such securities are
then registered, all dividends and other distributions declared and payable in
respect of such securities on a date subsequent to, and in respect of a record
date after, the Effective Time.
Notwithstanding anything in the Merger Agreement to the contrary, for a
period of sixty (60) days after the Effective Time, owners of shares of
Chatfield Stock exchangeable into Chatfield Dean Holdings common stock shall be
entitled to vote as holders of Chatfield Dean Holdings common stock
notwithstanding that such certificates shall not have been exchanged.
RIGHTS OF DISSENTING CHATFIELD SHAREHOLDERS
Holders of Chatfield common stock, Chatfield Plan Common Stock, Chatfield
Series A Stock and Chatfield Series B Stock, as of the record date of the
Chatfield Meeting, are entitled to dissenters' rights under Section 73-113-101
ET. SEQ. of the Colorado Business Corporation Act (the "CoBCAct"), copies of
which are attached as an Appendix to the Information Statement/Prospectus.
Shareholders are encouraged to read such statutes in their entirety and consult
with their counsel regarding whether or not to exercise their dissenters'
rights. To exercise such rights, a Chatfield shareholder must, INTER ALIA, (i)
deliver to Chatfield before the vote at the Chatfield Meeting a written notice
of his intent to demand payment for his shares to Chatfield stock; (ii) either
vote against the approval of the Merger or abstain from voting with respect to
the Merger; and (iii) comply with the provisions set forth in the CoBCAct
following the Chatfield Meeting. A vote against approval of the Merger will not
in and of itself constitute a written demand for dissenters' rights satisfying
the requirements of the above Sections.
RIGHTS OF DISSENTING UNICO SHAREHOLDERS
Holders of Unico common stock as of the record date of the Unico Meeting are
entitled to dissenters' rights under Sections 53-15-3 and 53-15-4 of the New
Mexico Business Corporation Act (the "NMBCAct"), copies of which are attached as
an Appendix to the Information Statement/Prospectus. Shareholders are encouraged
to read such statutes in their entirety and consult with their counsel
41
<PAGE>
regarding whether or not to exercise their dissenters' rights. To exercise such
rights, a Unico shareholder must, INTER ALIA, (i) deliver to Unico before the
vote at the Unico Meeting a written objection to the Merger and within at least
ten days after the date the vote was taken make written demand on the
corporation for payment for his shares to Unico common stock; (ii) either vote
against the approval of the Merger or abstain from voting with respect to the
Merger; and (iii) comply with the provisions set forth in the NMBCAct following
the Unico Meeting. A vote against approval of the Merger will not in and of
itself constitute a written demand for dissenters' rights satisfying the
requirements of the above Sections.
APPRAISAL RIGHTS
Neither the Unico shareholders nor the Chatfield shareholders have any
statutory right to appraisal under applicable law with respect to the Merger.
GOVERNMENTAL AND REGULATORY APPROVALS
Unico and Chatfield are aware of no material governmental or regulatory
approval required for consummation of the Merger, other than compliance with
federal and applicable state securities and corporate laws.
RESALES OF CHATFIELD DEAN HOLDINGS COMMON STOCK AND REGISTRATION RIGHTS
Shares of Chatfield common stock, Chatfield Plan Common Stock, Chatfield
Series A Stock and Chatfield Series B Stock outstanding prior to the
consummation of the Merger will, after conversion into shares of Unico common
stock, be freely tradeable without restrictions under the Securities Act of
1933, as amended (the "Act"), after consummation of the Merger, except that
shares of Unico common stock received by persons who are deemed to be
"affiliates" (as that term is defined in Rule 144 under the Act) of Chatfield
Dean Holdings may be resold by them only in transactions permitted by the resale
provisions of Rule 145 or as otherwise permitted under the Act. The existence
of these shares held by affiliates may have a depressive effect on the market
price of the Chatfield Dean Holdings common stock. Based upon the number of
outstanding shares of Chatfield common stock, Chatfield Plan Common Stock,
Chatfield Series A Stock and Chatfield Series B Stock and Chatfield Warrants as
of November 15, 1996, and assuming conversion of all such Chatfield Stock into
Unico common stock, and assuming the exercise of 11,125 debenture warrants due
Mr. William Hagler from Unico (the "Debenture Warrants") and exercise of an
aggregate of 150,000 compensation options due Messrs. William Hagler, Rick Hurt
and Kenneth Greenberg pursuant to the Merger Agreement (the "Compensation
Options") and no exercise of dissenters' rights by holders of the Unico common
stock or Chatfield common stock, Chatfield Plan Common Stock, Chatfield Series A
Stock or Chatfield Series B Stock, upon consummation of the Merger there will be
_________ shares of Unico common stock outstanding of which approximately ___
shares of Unico common stock will be held by persons who may be deemed
"affiliates" (the "Restricted Holders").
In general, under Rule 145 as currently in effect, a person (or persons who
shares are aggregated) including an affiliate, is entitled to sell in the open
market within any three-month period a number of shares that does not exceed the
greater of (i) 1% of the then outstanding shares of Chatfield Dean Holdings'
common stock (approximately ______ shares immediately after the Merger, assuming
full conversion into Chatfield Dean Holdings common stock by all Chatfield
Series A Stock and Chatfield Series B Stock shareholders); or (ii) the average
weekly trading volume during the four calendar weeks
42
<PAGE>
preceding such sale. Sales under Rule 145 are also subject to certain
limitations on the manner of sale, notice requirements and availability of
currently public information. Restricted shares properly sold in reliance upon
Rule 145 are thereafter freely tradable without restrictions or registration
under the Act, unless thereafter held by an "affiliate."
In addition to the _________ shares of Chatfield Dean Holdings common
stock that will be issuable upon surrender of the Chatfield common stock,
Chatfield Plan Common Stock and upon the conversion of the Chatfield Series A
Stock, Chatfield Series B Stock and exercise of the Debenture Warrants and
Compensation Options, Chatfield Dean Holdings shall have also reserved ____
shares of Chatfield Dean Holdings common stock to be issued under Chatfield
Dean Holdings' newly created employee stock bonus plan (which will be
essentially identical to, and contain the same forfeiture provisions as,
Chatfield's existing employee stock bonus plan, see "BUSINESS - Chatfield's
Employee Stock Bonus Plan") plus an aggregate of 2,197,259 shares of
Chatfield Dean Holdings common stock for issuance pursuant to the employee
incentive plan, ("EIP"), which is to contain a minimum of 1,000,000 shares
and in anticipation of exercise of the Unico Warrants (1,197,259 shares upon
full conversion). The distribution of the shares of Chatfield Dean Holdings
common stock underlying the Chatfield Dean Holdings employee stock bonus plan
and the Unico Warrants will be registered under the Act, although all the
shares of Chatfield Plan Common Stock and all the shares of Chatfield Dean
Holdings common stock into which they convert, as well as all the shares of
Chatfield Dean Holdings common stock issued post-Merger pursuant to Chatfield
Dean Holdings' newly created employee stock bonus plan will be issued with
the same restrictions and forfeiture provisions imposed pursuant to such
employee stock bonus plan. See "BUSINESS - Chatfield's Employee Stock Bonus
Plan." The shares of Chatfield Dean Holdings common stock which will be
issued pursuant to the EIP will not be registered under the Act pursuant to
this Registration Statement and will not be available for sale in the public
market without registration or exemption from registration. However,
Chatfield Dean Holdings may contemplate undertaking a further registration of
the EIP shares in the future, although no assurance can be made in connection
therewith.
43
<PAGE>
CHATFIELD SELECTED FINANCIAL DATA
The selected financial data presented herein, for the years ended September 30,
1996, 1995, 1994, 1993 and 1992 have been derived from Chatfield's financial
statements which have been audited by Spicer Jeffries and Co., an independent
certified public accountant. This data should be read in conjunction with
"CHATFIELD'S MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS" and the financial statements, including the notes
thereto, appearing elsewhere in this document.
Statement of Operations Data:
(IN $000'S)
Year Ended September 30,
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total Revenues $24,908 $31,396 $31,130 $53,092 $54,607
Owner's salary and bonus $104 $250 $349 $2,597 $3,951
Settlements $478 $262 $1,790 $3,218 $678
Legal Costs $884 $1,024 $1,346 $1,988 $1,978
Total Expenses $29,023 $32,651 $34,678 $53,846 $54,272
Income (loss) before taxes ($4,115) ($1,255) ($3,547) ($754) $335
Net loss ($4,115) ($1,222) ($2,521) ($716) ($51)
Net loss per share ($0.90) ($0.73) ($3.92) ($1.17) ($0.08)
Weighted average number
of Shares outstanding 4,582,582 1,680,947 643,281 609,773 609,773
</TABLE>
Balance Sheet Data:
(IN $000'S)
Year ended September 30,
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Total assets $5,077 $3,947 $4,503 $9,129 $8,314
Total $2,486 $3,066 $2,438 $6,144 $4,613
liabilities (excluding
subordinated debt)
Subordinated debt $1,100 $350 $1,100 $0 $0
Total shareholders' equity $1,491 $531 $965 $2985 $3701
Cash dividends $111 $0 $0 $0 $0
declared
- -------------------------------------------------------------------------------------------------
Book value per common share ($.94)1 $.32 $1.50 $4.90 $6.07
</TABLE>
- -----------------------
1 Assuming the Chatfield Series A Stock and Chatfield Series B Stock had
been fully redeemed.
44
<PAGE>
UNICO SELECTED FINANCIAL DATA
Due to the spin-off of substantially all assets by Unico, the selected financial
data of Unico is not material with respect to this transaction. Thus, this
information is not included, so as not to confuse potential investors.
45
<PAGE>
PRO FORMAS
INTRODUCTION TO PRO FORMA COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma combined statement of financial condition
reflects the acquisition of Chatfield Dean & Co., Inc. ("Chatfield") by Unico,
Inc. ("Unico") through the exchange of stock, as if it had occurred on September
30, 1996. Also reflected in the pro forma statements is the pro rata
distribution to Unico shareholders of certain of its assets.
The following unaudited pro forma combined statement of operations reflects
the acquisition of Chatfield by Unico through the exchange of stock, as if it
had occurred on October 1, 1995, representing Chatfield's operations since
October 1, 1995 through September 30, 1996.
The acquisition will be accomplished through the exchange of all the
outstanding common shares of Chatfield for ____ shares of common stock and ____
shares of preferred stock representing a controlling interest in Unico.
The acquisition of Chatfield is being considered a reverse acquisition and
accounted for under the purchase method of accounting. Under reverse
acquisition accounting, Chatfield is considered the acquiror for accounting and
financial reporting purposes, and will acquire the assets and assume the
liabilities of Unico. Under the purchase method of accounting, assets acquired
and liabilities assumed are recorded at their fair values. No adjustments have
been made in the pro forma statement of financial condition to the carrying
values of the Unico assets acquired and liabilities assumed since management
believes that their carrying values approximate fair value. The final
determination of the fair values of such assets and liabilities will be made at
the date of acquisition.
46
<PAGE>
UNICO, INC.
PRO FORMA COMBINED STATEMENT OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
Pro Forma Pro Forma Pro Forma After
Unico, Inc. Adjustments Adjustments Divestiture
08/31/96 Chatfield Divest Unico Acquisition of and
ASSETS (Unaudited) 09/30/96 Assets Chatfield Acquisition
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents $ 410,090 $718,209 ($397,581) $730,718
Receivables 272,349 1,857,496 (50,702) 2,079,143
Land, Building and
Equipment, net 1,204,055 270,730 (665,055) 809,730
Notes Receivable 9,318 95,833 105,151
Investment in Subsidiaries 846,274 (846,274) 0
Investment in Chatfield
Dean - preferred stock 600,000 (600,000)(a) 0
Other assets 274,465 593,448 (147,102) 720,811
Deposit with clearing broker 1,330,369 1,330,369
Securities Owned, at Market 210,674 210,674
-------------------------------------------------------------------------------------
TOTAL ASSETS $3,616,551 $5,076,759 ($2,106,714) ($600,000) $5,986,596
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
LIABILITIES AND
SHAREHOLDERS' EQUITY
LIABILITIES
Commissions payable $794,554 $794,554
Securities sold, at market value 61,612 61,612
Trade accounts payable 106,401 945,852 (92,120) 960,133
Other accrued liabilities 93,150 335,279 428,429
Notes payable 69,450 283,985 (69,450) 283,985
Obligations under capital lease 64,615 64,615
-------------------------------------------------------------------------------------
TOTAL LIABILITIES 269,001 2,485,897 (161,570) 0 2,593,328
-------------------------------------------------------------------------------------
LIABILITIES SUBORDINATED
TO CLAIMS OF GENERAL
CREDITORS 178,000 1,100,000 1,278,000
-------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Preferred stock 0 4,970,810 (4,953,239)(a)(b) 17,571
Common stock 197,318 1,762,517 (1,087,559)(b) 872,276
Paid in capital 2,042,576 (1,015,488) 5,440,798(b) 6,467,886
Retained earnings 929,656 (5,242,465) (929,656) (5,242,465)
-------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 3,169,550 1,490,862 (1,945,144) (600,000) 2,115,268
-------------------------------------------------------------------------------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $3,616,551 $5,076,759 ($2,106,714) ($600,000) $5,986,596
---------- ---------- ------------ --------- ----------
---------- ---------- ------------ --------- ----------
47
</TABLE>
<PAGE>
UNICO, INC.
PRO FORMA COMBINED STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Pro Forma
Adjustments Pro Forma After
UNICO Divest Unico Divestiture
REVENUES 8/31/96 Chatfield Subsidiary and
(Unaudited) 9/30/96 Operations Acquisition
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commissions $0 $20,734,369 $0 $20,734,369
Trading profits, net $0 424,298 424,298
Corporate finance income $0 651,684 651,684
Loss from partnership (635,627) 0 635,627 0
Oil and Gas revenues 497,719 0 (382,290) 115,429
Other 239,537 3,097,818 (126,200) 3,211,155
------------------------------------------------------------------------------
TOTAL REVENUES 101,629 24,908,169 127,137 25,136,935
------------------------------------------------------------------------------
EXPENSES
Commissions 0 12,440,856 12,440,856
Clearing Charges 0 2,894,536 2,894,536
Operating Costs 383,176 0 (344,401) 38,775
Occupancy and equipment costs 0 2,845,203 2,845,203
Salaries and Wages
General and administrative 0 3,680,007 (35,547) 3,680,007
Communications 244,384 3,187,682 3,396,519
Postage and printing 0 1,709,219 1,709,219
Legal and professional 0 531,055 531,055
Advertising and promotion 0 884,039 884,039
Settlements 0 372,230 372,230
0 478,114 478,114
------------------------------------------------------------------------------
TOTAL EXPENSES 627,560 29,022,941 (379,948) 29,270,553
------------------------------------------------------------------------------
LOSS BEFORE TAXES (525,931) (4,114,772) 507,085 (4,133,618)
Income tax expense (benefit) 167,348 0 (165,450) 1,898
------------------------------------------------------------------------------
NET LOSS ($358,583) ($4,114,772) $341,635 ($4,131,720)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
NET LOSS PER SHARE (0.36) ($0.90) ($1.06)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 986,590 4,582,582 3,916,280**
------------------------------------------------------------------------------
------------------------------------------------------------------------------
</TABLE>
** The pro forma weighted average number of shares outstanding was calculated as
if the Merger had taken effect on October 1, 1995. The shares were adjusted
using the percentages upon completion of the Merger as noted elsewhere in this
document.
48
<PAGE>
UNICO, INC.
NOTES TO PRO FORMA FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
The pro forma combined statement of financial condition of Unico is as of
August 31, 1996. The statement of financial condition of Chatfield is as of
September 30, 1996.
PRO FORM ADJUSTMENTS DIVEST OF UNICO ASSETS
The pro forma adjustments relating to the divestiture of certain assets and
liabilities of Unico to Unico shareholders is based on anticipated transactions
which will happen if the proposed Merger is consummated. The distributions are
being recorded similar to dividend distributions by Unico to the appropriate
shareholders of record.
PRO FORMA ADJUSTMENTS ACQUISITION OF CHATFIELD
(a) - This adjustment eliminates Unico's investment in preferred stock of
Chatfield.
(b) - This adjustment is to record the exchange of common stock of Unico
for all of the outstanding common stock of Chatfield (including the
issuance of additional ____ shares of common stock and ____ shares of
preferred stock of Unico). This adjustment also reclassifies to additional
paid in capital the difference of the par values of the respective capital
accounts.
49
<PAGE>
PRICE RANGE OF UNICO COMMON STOCK
MARKET FOR UNICO COMMON STOCK
MARKET INFORMATION
As of the date hereof, the Unico common stock is traded on The Nasdaq Stock
Market (Small Cap) ("Nasdaq") under the symbol "UNRC". The following table sets
forth the high and low closing bid prices of the Unico common stock for various
periods as reported by Nasdaq.
High Low
---- ---
Fiscal 1994(1)
Quarter Ended
February 28, 1994 $1 7/8 $1 1/4
November 30, 1993 2 1/2 1 1/4
August 31, 1993 3 3/4 3 3/4
May 31, 1993 3 3/4 3 3/4
Fiscal 1995
Quarter Ended
February 28, 1995 $2 1/8 $2
November 30, 1994 2 1 3/4
August 31, 1994 2 1/2 1 1/2
May 31, 1994 2 1/2 1 7/8
Fiscal 1996
Quarter Ended
February 29, 1996 $3 $2
November 31, 1995 2 3/4 2 1/4
August 31, 1995 2 5/8 2 1/4
May 31, 1995 2 5/8 2
Fiscal 1997
Quarter Ended
August 31, 1996 $3 1/2 $2 1/2
May 31, 1996 4 1/8 2 1/4
- ----------------------
(1) Period prior to August, 1994 restated to reflect 1:20 reverse stock split.
50
<PAGE>
On January 12, 1996, the last trading day before the public announcement of
the proposed Merger, the last sale price of the Unico common stock was $3.00 per
share. On February 3, 1997, the closing price for the Unico common stock was
$1 3/4 per share. Shareholders are encouraged to obtain current quotations for
the market price of the Unico common stock before voting on this Merger. The
above transactions reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not necessarily represent actual transactions.
As of April 30, 1996, there were approximately 269 holders of record of the
Unico common stock and an estimated 250 holders whose shares are held in "street
name".
DIVIDENDS
Unico has not declared any cash dividends since its inception, and
currently has no plans to declare such dividends in the foreseeable future. Any
future determination by Chatfield Dean Holdings' Board of Directors to pay
dividends will be made only after consideration of Chatfield Dean Holdings'
financial condition, results of operation, capital requirements and other
relevant facts. There are presently no contracts or other obligations of Unico
which prevent or restrict the payment of cash dividends.
MARKET FOR THE CHATFIELD COMMON STOCK, CHATFIELD PLAN COMMON STOCK, CHATFIELD
SERIES A STOCK AND CHATFIELD SERIES B STOCK
MARKET INFORMATION
Presently there is no public market for any of the Chatfield Stock. As of
February 15, 1996, there were four holders of record of the Chatfield common
stock, 114 holders of record of the Chatfield Plan Common Stock, 139 holders of
record of the Chatfield Series A Stock and five holders of record of the
Chatfield Series B Stock.
DIVIDENDS
Chatfield has not declared any cash dividends on the Chatfield common stock
or Chatfield Plan Common Stock since its inception and currently has no plans to
declare dividends on such stock in the foreseeable future. In June 1996
Chatfield declared and paid dividends on the Chatfield Series A Stock based on
the percentage of time such shares were held as a proportion of the six month
period to which the dividends relate, and on the Chatfield Series B Stock. There
are no present contracts or obligations of Chatfield which prevent or restrict
the payment of cash dividends EXCEPT FOR the subordinated loan agreement between
Chatfield and Hanifen Imhoff Clearing Corp. (the "Subordinated Loan"), which
prohibits the payment of principal or interest to any preferred shareholders so
long as amounts remain unpaid under the Subordinated Loan. However, the
Subordinated Loan is presently an obligation of only Chatfield, will remain
(post-Merger) an obligation of only the Surviving Corporation, and consequently,
is not expected to impact the payment of dividends by Unico (post-Merger,
Chatfield Dean Holdings) on the Unico Series A Stock.
51
<PAGE>
CHATFIELD MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the financial
statements, including the notes thereto, and the Selected Financial Data
included elsewhere in this document.
GENERAL
Chatfield, which was incorporated in 1983, began its current level of
business during the 1991 fiscal year. Chatfield's primary source of revenue has
been revenues generated from the brokerage business. Included in the revenues
are fees earned on the brokerage of securities, investment banking fees and
gains and losses in the trading and investment accounts.
Chatfield's principal business activities are, by their nature, affected by
many factors, including general economic and financial conditions, the level and
volatility of interest rates, security valuations in the marketplace,
competitive conditions, transactional volume and market liquidity.
Consequently, commission revenues, investment banking fees and investment
account results can be volatile. While Chatfield maintains stringent cost
controls, a significant portion of Chatfield's expenses are fixed and do not
vary with market activity. As a result, substantial fluctuations can occur in
Chatfield's revenues and net income from period to period.
RESULTS OF OPERATIONS
Chatfield's historical results must be analyzed, and future profitability
considered, in light of three factors: (1) general economic conditions as they
may impact the securities industry and the competitive position of Chatfield
against larger, better capitalized industry members; (2) the impact of
regulatory issues and penalties; and (3) compensation to Chatfield's principal
shareholder.
Chatfield's principal shareholder and chief executive officer has agreed to
reduce and limit his aggregate compensation to no more than 2.5% of certain
gross revenues. In essence, Chatfield has adopted a policy to the effect that
so long as it is not profitable none of its "executive officers" will be paid an
override in addition to their salary. Adjusting historic results to reflect
this agreement on a pro forma basis and eliminating the regulatory settlements
and penalties and related legal costs incurred during these periods would have
had a positive material impact on profitability.
FISCAL 1996 COMPARED TO FISCAL 1995
Revenues decreased from $31 million in fiscal 1995 to $25 million in fiscal
1996, or approximately 20%. Consequently, the net loss also increased from
$1.2 million in fiscal 1995 to $4.1 million in fiscal 1996. Revenues
decreased due to management's decision to close one branch and combine two
other branches into one. Management also elected to slow its recruiting and
hiring of inexperienced account executives and concentrate on hiring proven
talent. These decisions have slowed the growth or replacement of account
executives so that management can concentrate on training its current work
force to be able to provide better and more customer service. The internal
training has provided the current account executives with the opportunity to
sell insurance products, municipal bonds, institutional investments and other
products so that the account executive can become a true "full-service"
broker to the individual client.
52
<PAGE>
While revenues decreased by $6 million, the net loss increased from $1.2
million in fiscal 1995 to $4.1 million in fiscal 1996. The sharp increase in
loss is attributable to the fixed costs of Chatfield that do not fluctuate
with volume. Another reason for the increased loss from fiscal 1995 to
fiscal 1996 is the decrease in revenues from trading and corporate finance
from $3.3 million to just over $1.0 million. The operating margins on these
revenue sources are significantly higher than the operating margins on retail
sales commission.
Commission expense as a percentage of commission revenue increased from 55%
in fiscal 1995 to 60% in fiscal 1996. This was caused by a larger proportion of
Chatfield's commissions being generated by experienced and higher paid sales
people.
Because of the losses sustained during fiscal 1996, Chatfield obtained
capital infusions, both in equity and subordinated debt. During fiscal 1996
Chatfield received $1.9 million dollars from the sale of Chatfield Series B
Stock to its principal shareholder and other Chatfield executives. During March
1996, Chatfield closed on a private placement of Chatfield Series A Stock
primarily to accredited investors netting Chatfield $3.2 million dollars.
Chatfield also received $1.1 million in subordinated loans during January 1996.
FISCAL 1995 COMPARED TO FISCAL 1994
Revenues from fiscal 1995 compared to fiscal 1994 were nearly identical,
while net loss decreased from $2.5 million in fiscal 1994 to $1.2 million in
fiscal 1995. During fiscal 1995 Chatfield stabilized its revenue base while
decreasing its overhead costs. A significant reason the net loss decreased
was due to settlement costs decreasing from $1.8 million in fiscal 1994 to $.3
million in fiscal 1995. Chatfield's retail sales commission revenue increased
by nearly $2.0 million from fiscal 1994 to fiscal 1995 as a result of greater
stability in its management and sales staff and improvement in the market. A
decline in underwriting revenues of nearly $.5 million was more than offset
by income of $1.2 million from Chatfield's merchant banking division.
Trading revenues declined by approximately $1.4 million from fiscal 1994 to
fiscal 1995 as a result of industry-wide tightening of trading spreads.
REGULATORY MATTERS
Management intends to hire and train account executives who are capable of
working within its new compliance and new commission policies. While management
believes that its compliance policies represent a competitive advantage to
Chatfield, there can be no assurances Chatfield will be successful in attracting
and/or training account executives who will be able to achieve profitable levels
of economic performance under these policies. Hiring personnel and the
acquisition of technology, including hardware, software, and applications
training, is a top priority of Chatfield. These changes are intended to make
Chatfield more competitive and to attract and retain quality account executives.
Between 1992 and 1995, Chatfield paid $1 million to its outside compliance
consultant, invested $150,000 in proprietary compliance software and purchased a
$1 million "DVL" digital phone recording system to reduce the likelihood of
future regulatory violations. These costs and expenses have not been
capitalized, but were expensed, thereby reducing profitability. Management
believes that the investment of these dollars will enhance Chatfield's future
profitability.
53
<PAGE>
LIQUIDITY
Chatfield will obtain working capital from internal operations, capital
infusions and other borrowings. In general, some of Chatfield's expenses are
variable costs and increase as revenues increase. However, if Chatfield cannot
reduce the impact of the loss of its relationship with John Hancock and
otherwise end its operating losses through cost-cutting measures, it may have
difficulty offsetting such losses. See "RISK FACTORS - Termination of John
Hancock Selling Agreement." If losses do continue, Chatfield management
anticipates a need for additional sources of capital. Chatfield's assets and
shareholders' equity have decreased from fiscal 1993 to fiscal 1996. A
significant portion of this decrease can be attributed to the legal regulatory
and other settlements and related costs expensed and paid during these three
years.
EXPENSES AND OVERHEAD
Some of Chatfield's expenses, including commissions, clearing charges and
other compensation expenses which are directly related to sales activity, will
not increase unless revenues also increase. Other administrative and overhead
costs have been reduced. Chatfield believes that automation of its trading
system will reduce potential trading problems, and diversification into merchant
banking, insurance and real estate activities will enhance its revenues.
COST SAVING MEASURES
Management of Chatfield has recently initiated a series of cost cutting
measures which it estimates will result in significant savings to the company.
Effective August 28, 1996, Chatfield adjusted the broker payout by raising
production levels and lowering payout percentages, resulting in a 2% to 5%
savings in commission expense per month. Management estimates this will result
in savings to Chatfield of approximately $400,000 per year.
Management has also divested Chatfield's New York merchant banking division
to Max Capital LLC ("Max Capital"), a new unrelated entity headed by Mr. Russell
Greenberg, a former Executive Vice President and director of Chatfield. As part
of the divestiture terms, Chatfield retained the option, through its wholly-
owned subsidiary, Chatfield Dean Capital Corp., to invest in any leveraged buy-
outs arranged by Max Capital. Management of Chatfield anticipates that the
divestiture will result in an annual cost savings to Chatfield of approximately
$400,000 to $600,000. Chatfield has retained the right to, and management
expects that Chatfield will, originate its own leveraged buy-outs through its
Denver corporate finance group and will offer Max Capital a reciprocal right to
invest in its leveraged buy-out transactions if and when developed. As
Chatfield's management believes underwritings are a more consistent and reliable
source of revenue for the firm, it is management's intention to focus more
heavily on underwriting.
In a further streamlining measure, Chatfield has renegotiated its telephone
contract with MCI with a $300,000 in savings per year expected. Additionally,
as Chatfield has now finished paying for its DVL digital telephone recording
system, it should experience a $423,000 annual savings, beginning January 1,
1997.
Finally, Chatfield has negotiated a new clearing agreement with its
clearing firm that will reduce clearing charges by approximately by 20%, which
is expected to result in estimated savings of $360,000 per year.
54
<PAGE>
REVENUE ENHANCEMENT
In an effort to increase revenues and attract more and better customers,
Chatfield has initiated various revenue enhancement strategies. Specifically,
management in Chatfield's San Diego, New York and Tampa retail branches has been
upgraded so that the managers in these branches now have an aggregate of over 40
years in the securities business.
In addition, Chatfield has added an institutional sales group in its New
York City and Denver offices, and a municipal bond department in its Tampa
office. Chatfield's management expects that the institutional sales group in
New York and Denver will grant Chatfield employees access to more institutional
clients than previously available. Management further anticipates that more
immediate access to municipal bonds by Tampa employees will allow the Tampa
brokers and others located in the Southeastern United States to service
Chatfield's client orders more quickly, and to offer a broader range of
investments to clients presently not in the municipal bond business.
In keeping with advancements in technology, Chatfield has established a
significant presence on the Internet which it is developing daily in terms of
design, sophistication and customer visits. The Chatfield web page allows
customers and other web users to access research news, merchant banking
information and cross-links to other important sites.
Chatfield has also entered into the annuity and insurance sales markets.
In an effort to offer its clients the broadest range of investment and
portfolio-balancing investments, Chatfield has licensed over 50 of its
representatives in the last seven months for annuity and insurance sales.
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UNICO MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND
RESULTS OF OPERATIONS
Prior to the Merger, Unico will distribute pro-rata to its shareholders all
the shares of capital stock of each of IC (after its consolidation with GTI) and
IRC. Accordingly, the following discussion of results of operation reflect only
the business of the Kansas Gas Properties and not the results and operations of
IRC, IC or GTI.
RESULTS OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1996 COMPARED TO SIX MONTHS ENDED AUGUST 31,
1995
Revenues for the first half of fiscal 1997 were $115,000, a 51% increase
from $77,000 realized during the same period last year. Operating income,
before allocation of administrative overhead and provision for income taxes, was
$56,000, a 205% increase over $18,000 realized during the first six months of
fiscal 1996. Cash flow from operations was $75,000 during the first half of the
current year, a 45% increase over $41,000 experienced during the same period in
fiscal 1995.
The increase in revenue is attributed to a 77% increase in the average
selling price of natural gas due to a new contract which took effect in April
1996, offset by a 15% decline in production. The decline in production is
attributed to a decrease in agricultural demand in the local area due to heavy
rains experienced during parts of the summer growing season and generally soft
demand for natural gas during the early part of the year.
The increase in operating income is attributed to the improvement in the
contract selling price. Operating costs essentially did not change compared to
the same period last year. While depletion expense declined by 14% consistent
with the reduction in production, direct operating costs increased by 13% due to
an increase in well equipment repair costs.
FISCAL 1996 COMPARED TO FISCAL 1995
Revenues from the sale of natural gas decreased to $141,000, down 27% from
revenues of $193,000 during fiscal 1995. Operating income, before allocation of
administrative overhead and provision for income taxes, decreased to $500, down
from $88,000 realized in the prior year. Cash flow from operations was $69,000,
down 41% from $116,000 provided from operations in fiscal 1995.
The sharp decline in revenues is attributed to a 44% decline in the average
natural gas contract selling prices, offset partly by a 42% increase in
production. The price decrease came about as a result of a general decline in
natural gas prices in the industry as a whole. The increase in production was
the result of higher demand by local agricultural users and some increased
winter demand by customers.
The decline in operating income is attributed to the drop in revenues as
previously discussed and an increase in operating costs attributed to a one-time
charge write off of capitalized costs related to a prior unsuccessful drilling
effort on a Texas property. Operating costs in fiscal 1996, exclusive of the
one time charge for dry hole costs, increased by $7,000 over fiscal 1995
consisting of a $12,000 increase in depletion consistent with the increase in
production and offset by a $5,000 decrease in direct operating and
administrative costs associated with the activity.
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Unico was successful in renegotiating the contract selling price for
natural gas and received an estimated 75% increase, based on then current market
price posting, that became effective in April 1996. It is anticipated that
natural gas revenues and related operating income will improve substantially
over those realized during fiscal 1996.
FISCAL 1995 COMPARED TO FISCAL 1994
Fiscal 1995 revenues from natural gas production declined to $193,000, down
25% from $257,000 realized in fiscal 1994. Operating income, before allocation
of administrative overhead and provision for income taxes, was $88,000 for
fiscal 1995, a decline of 26% from $119,000 in fiscal 1994. Cash flow from
operations was $116,000, down 27% from $158,000 realized in the prior year.
The decline in revenue was attributed to a 28% decline in production,
partially offset by a slight increase in the contract selling price. The
decline in production was mostly attributed to a reduction in demand by Unico's
sole natural gas customer because the fixed contract selling price in effect
during the year was well above the prevailing spot market price during most of
the year. The contract selling price was renegotiated in December 1994 and some
improvements in demand were realized during the last two months of fiscal 1995.
The reduction in operating income is almost entirely attributed to the
decrease in revenues as previously discussed. Operating costs, including
depletion, declined by 24% which consisted of an $11,000 decline in depletion
expense consistent with the decline in production, and a $24,000 decline in
direct operating costs associated mainly with lower well equipment repair costs
experienced in fiscal 1995.
LIQUIDITY AND CAPITAL RESOURCES
Management believes that working capital provided by operations will be
adequate to meet working capital needs in the coming year. Term loan agreements
that have short term maturities are expected to be retired or extended as they
become due.
INFLATION, DEFLATION AND CHANGING PRICES
The results of operations and capital expenditures will continue to be
affected by inflation, deflation and changing prices. However, Management is
unable to predict the extent of the impact of inflation, deflation and changing
prices on the results of operations or working capital.
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BUSINESS
CHATFIELD BUSINESS
CHATFIELD: DESCRIPTION OF BUSINESS ACTIVITIES
Chatfield Dean & Co, Inc. ("Chatfield") is an integrated, full-service
investment banking and brokerage firm. Although it principally serves
individual and corporate clients, Chatfield intends to pursue institutional
investors as part of its plan to expand both the products and services it offers
and the customers it serves. Chatfield provides complete capital raising and
merger and acquisition services, as an underwriter and investment banker, and
acts as a broker-dealer with a national network of retail brokers, market making
activities for The Nasdaq Stock Market and research capabilities.
Chatfield offers retail sales of diverse investment products and undertakes
investment banking transactions (including public and private offerings, mergers
and acquisitions and valuation and fairness opinions). Chatfield and Chatfield
Dean Capital Corp., a Colorado corporation ("CDCC") wholly-owned by Chatfield,
perform Chatfield's merchant banking business. Chatfield obtains transaction
fees for structuring equity and/or debt financing and obtaining capital from
institutional or large individual investors for corporate clients to use for
business expansion, changes in control, acquisitions, public offerings and other
transactions. CDCC was formed to provide funding through the purchase of
securities in certain of these transactions.
Chatfield Dean Insurance Corp., also a wholly-owned subsidiary of
Chatfield, serves as agent for Chatfield in connection with the sales of life
insurance products and annuities (acting both directly and through its own
wholly-owned subsidiaries). Chatfield Real Estate, LLC, an 80% owned limited
liability company, has been formed to provide real estate services to Chatfield
and other subsidiaries and to develop a commercial real estate brokerage
business.
Support services for Chatfield operations are provided by its research,
compliance, legal, training, operations and human resources departments.
HISTORICAL DEVELOPMENT
Chatfield was organized in 1983 as Denari Securities, Inc., and changed its
name to Chatfield Investment Group, Inc. in 1988 and to its current name in
1989. Its significant operations began in 1989, when Mr. Sanford Greenberg,
Chatfield's chief executive officer, acquired 48.7% of its shares and became its
president. In 1990, as a result of transactions in Chatfield's common stock,
Mr. Sanford Greenberg became the owner of 92.5% of the outstanding shares.
Chatfield grew from one office with five account executives in 1989 to a
national firm with over 300 account executives in 10 offices through the
acquisition in late 1990 of certain offices, employees and customer accounts of
another firm. Beginning in 1991, Chatfield's instituted programs to promote
training, recruiting, compliance and administration in each office. In
addition, Chatfield initiated continuous in-house employee recruiting and
training programs and established systems to monitor account executive service
and customer satisfaction.
In fiscal 1991, Chatfield underwrote or participated in 26 common stock
issues, and 10 mutual fund issues, raising a total of $24.9 million in its
underwritings. Chatfield had gross revenues of $42
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million in 1991, including $32 million in retail commissions. In that year, the
firm established a new corporate headquarters in Greenwood Village, Colorado and
expanded its Tampa, Florida office. Chatfield succeeded in significantly
enlarging its client base and concluded 1991 with over 500 account executives.
In fiscal 1992, Chatfield had gross revenues of over $54 million, including
approximately $42 million in retail commissions. In that year, Chatfield
underwrote or participated in a total of 55 common stock and closed-end mutual
fund issues, raising for its clients a total of $41.7 million. Chatfield
expanded its offices in Irvine and San Diego, California, Atlanta, Georgia, and
Stamford, Connecticut and upgraded its telephone system nationwide. Chatfield
retained the services of Mr. David S. Ruder, former Chairman of the SEC and Mr.
Daniel L. Goelzer, former General Counsel of the SEC and their firm, Baker &
McKenzie, a major international law firm, to assist with its compliance
activities. Baker & McKenzie's representation of Chatfield concluded in
mid-1996.
In fiscal 1993, Chatfield achieved gross revenues of $53 million, including
approximately $39 million in retail commissions. In that year, Chatfield
underwrote or participated in a total of 56 common stock issues and closed-end
mutual fund issues, raising for its clients a total of $73.9 million. In that
year, Chatfield moved its Long Island office to Manhattan, further expanded the
Tampa branch and began expansion of its Orlando office. In addition, it
completed the transition from a single function terminal system to a PC-based
quotation system nationwide; initiated a maintenance fee program for all active
accounts; introduced a 401(k) employee benefit program; and adopted a 5% maximum
account executive commission policy.
In fiscal 1994, Chatfield had gross revenues of $31 million, including
approximately $23 million in retail commissions, underwrote or participated in
26 common stock issues and closed-end mutual fund issues, raising for its
clients a total of $25.1 million. In addition, Chatfield collected over
$1,000,000 in maintenance fees, divided equally with its clearing agency, added
a New York City retail office and initiated a 401(k) service for corporate
customers. Chatfield also completed expansion of its Orlando, Florida branch
office and saw its client base expand to more than 60,000.
In fiscal 1995, Chatfield achieved gross revenues of $31 million, including
approximately $25 million in retail sales and gross revenues of approximately
$1.2 million from its newly-established merchant banking department and related
activities. Chatfield began creating its employee stock bonus plan which was
completed and implemented after the end of the fiscal year. See " - Chatfield's
Employee Stock Bonus Plan."
During fiscal 1996, Chatfield closed its unprofitable Atlanta, Georgia
office and consolidated its office located in Irvine, California with its office
in San Diego. Chatfield's gross revenues after nine months was almost $25
million, which includes $21 million in retail commissions. Chatfield raised
money through the sale of preferred stock and added more experienced brokers to
its sales force. Chatfield's consolidation and contract negotiations with major
vendors resulted in lower overhead.
PREVIOUS REGULATORY PROCEEDINGS AND RELATED MATTERS
Subsequent to Chatfield's acquisition of certain assets, offices and
employees of another broker-dealer in December 1990, Chatfield became the
subject of regulatory investigations, which, to a great extent, were prompted by
the activities of some of these employees and Chatfield's supervision of them.
These investigations resulted in proceedings by the SEC and the NASD which
alleged violations of federal
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securities laws and NASD rules by certain of these employees, by Chatfield and
by certain supervisory personnel of Chatfield. These proceedings resulted in
two settlements with the NASD and related orders, both dated December 6, 1993.
In these settlements and related NASD orders, Chatfield consented, without
admission or denial of the NASD charges, that Chatfield violated the NASD Rules
of Fair Practice by charging some customers excessive markups in certain stocks;
making unauthorized trades; delaying prompt execution of certain customer
orders; failing to establish and maintain an effective supervisory system
and failure to enforce supervisory procedures to ensure compliance with federal
securities laws and NASD rules. As a result, Chatfield and certain employees
were fined, in aggregate, approximately $800,000, and Chatfield made
approximately $1,725,000 in restitution payments to its customers; certain of
its officers and employees, including Messrs. Sanford Greenberg and Robert
Lemon, principal officers of Chatfield, were censured and suspended; Chatfield
was required to retain its compliance consultant for an additional two years;
and other operating restrictions were imposed.
In addition, Chatfield and certain of its employees made an offer of
settlement which was accepted by and made an order of the SEC on February 2,
1994. In its offer, Chatfield, without admitting or denying allegations made by
the SEC, agreed to accept findings that Chatfield, through certain of its
employees, had violated federal securities laws by delaying and matching
customer orders, failing to supervise and prevent such occurrences, and using
compliance procedures which were not reasonably calculated to prevent such
violations. As a result, the SEC censured Chatfield and imposed a fine of
$750,000; barred five employees (none of whom now are employed by Chatfield)
from certain securities activities, with a right to reapply for licensure;
suspended Messrs. Sanford Greenberg and Robert Lemon for six months each; and
levied fines against the employees in an aggregate amount of $400,000. In
addition, the SEC also required Chatfield to retain its compliance consultant
for two years and to install a telephone tape recording system.
As a result of the settlements with the NASD and the SEC, Mr. Sanford
Greenberg served a suspension from January 1, 1994 to August 2, 1994, and Mr.
Robert Lemon served a suspension from August 2, 1994 to February 2, 1995.
Settlements of governmental and private claims significantly impaired
Chatfield's profitability. In those settlements, Chatfield agreed to pay fines
and restitution to its customers aggregating $678,000 in fiscal 1992, $3,218,000
in fiscal 1993, $1,790,000 in fiscal 1994 and $262,000 in fiscal 1995.
As the result of the sanctions imposed by the NASD and SEC settlements,
Chatfield and certain of its officers were also censured by the States of
Colorado and Illinois.
In 1994, Chatfield's chief executive officer, Mr. Sanford Greenberg, agreed
to limit his compensation in years in which the firm was not profitable.
Specifically, Mr. Greenberg endorsed and accepted a policy whereby he would
forego his override compensation of 2.5% of certain gross revenues in any year
in which Chatfield earned no gross profits.
Chatfield has taken substantial actions and instituted many new policies
which it believes significantly lessen the risk that future regulatory problems
will occur. Chatfield has spent significant sums establishing an extensive
compliance department and has created a committee to institute procedures to
identify and avoid job applicants whose prior work history indicates a
possibility of future regulatory violations. See " - Chatfield - Compliance."
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As part of its compliance activities, Chatfield installed a telephone
recording system in all of its offices at significant expense and disruption in
business. The telephone recording system is now fully operational. The NASD
has recently requested comment on a proposed Rule requiring each member firm
whose work force is comprised of a specified number of persons that have been
associated with a disciplined firm, or each member firm that is itself a
disciplined firm, to record telephone conversations of all its associated
persons. The NASD's proposed Rule responds to concerns expressed in the
SEC/SRO/NASAA Joint Regulatory Sales Practice Sweep Report regarding the need
for heightened supervision of certain registered representatives. Chatfield
management believes that the enhanced compliance requirements undertaken by it
facilitates its ability to compete under current market and regulatory
conditions. Three of the branch offices acquired by Chatfield in 1990 have been
closed, and fewer than 30 of the approximately 300 registered representatives
hired from those offices remain employed by Chatfield.
In mid-1993, Chatfield changed its commission payment policy with respect
to non-prospectus securities sales to eliminate incentives to recommend the
purchase or sale of securities with large spreads or in which Chatfield made a
market. Chatfield also revised its compliance manual in accordance with
recommendations of its compliance consultant, expanded compliance and training
activities and instituted a variety of computerized reports and other warning
devices to alert its compliance staff to questionable practices.
- State of Florida Administrative Proceeding
On January 10, 1996, the Florida Department of Banking and Finance,
Division of Securities and Investor Protection, commenced an administrative
proceeding against Chatfield, two of its principal officers (Messrs. Sanford
Greenberg and Robert Lemon) and four prior employees. The Florida proceeding
resulted from a review by the Florida Securities Division in June and July 1992
of certain of Chatfield's records and alleged that, between December 1991 and
April 1992, Chatfield engaged in, and certain of its officers and supervisors
failed to prevent and stop, excessive markups and illegal cross-trades in the
securities of two companies for which Chatfield then was a market-maker.
Chatfield no longer makes a market in any security of either company. Chatfield
and the State of Florida have agreed in principle to a settlement regarding the
Florida proceeding pursuant to which Chatfield and its employees do not admit
the charges, but have agreed to make refunds totalling $66,000 to various
Florida customers and reimbursements of $40,000 to the Florida regulator towards
the costs in the case. Two of Chatfield's officers and employees named in the
Florida proceeding have also agreed to each contribute $5,000 towards cost.
- Department of Labor Matters
In 1992 and 1993, Chatfield entered into agreements with the United States
Department of Labor ("DOL") with respect to overtime, minimum wage and related
issues asserted by the DOL. As a result of these agreements, Chatfield paid to
employees approximately $1,250,000 between 1992 and 1994. In January 1996,
the DOL informed various former employees of Chatfield that it would not
undertake any further action against Chatfield with respect to claims that
Chatfield failed to pay minimum wages as specified in the Fair Labor Standards
Act ("FLSA"). In May 1996, a suit brought by one such former employee was
dismissed, with the court finding that such employee's activities at Chatfield
were exempted under the FLSA. Another suit is pending containing the same
claims made in the May 1996 litigation. The pending litigation is being pursued
by three former employees alleging an immaterial amount in damages. It is not
known if other former employees whose claims were abandoned by the DOL
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will also file suit. However, Chatfield believes that any such suits will also
be dismissed, although no such assurance can be made.
- NASD Net Capital Matters
As a registered broker-dealer and member of the NASD, Chatfield is subject
to the net capital rules of the SEC and the NASD and the various states.
These rules, which specify minimum net capital requirements for registered
broker-dealers and NASD members, are designed to assure that broker-dealers
maintain adequate capital and have the effect of requiring that at least a
substantial portion of their assets are kept in cash or highly liquid
investments. Compliance with such requirements may limit operations of
Chatfield that require the intensive use of capital, such as underwriting,
trading activities and merchant banking activities.
District 3 of the NASD on June 17, 1996, accepted and signed an Acceptance,
Waiver and Consent ("AWC") relating to net capital violations charged against
Chatfield for November and December 1994 and May through November 1995 when
Chatfield failed to maintain various net capital requirements, ranging from
approximately $34,500 to $600,000 (with a median value of $168,000). Chatfield
paid a fine of $25,000 with respect to the AWC and its financial principal, Mr.
Scott Carothers, served a 10 day suspension and was required to requalify as a
financial and operations principal.
- On-Going Regulation
Chatfield's registration with the SEC, membership in the NASD and
registration in all states except Massachusetts subjects it to overlapping
schemes of regulation. Chatfield is also affected by the Board of Governors of
the Federal Reserve System which promulgates regulations applicable to
securities credit transactions.
CURRENT OPERATIONS
Chatfield currently employs approximately 300 individuals at its six branch
offices, corporate finance office, and corporate headquarters:
CORPORATE OFFICES:
Corporate Headquarters Greenwood Village, Colorado
Corporate Finance Greenwood Village, Colorado
BRANCH OFFICES:
Chicago, Illinois Greenwood Village, Colorado
New York, New York Orlando, Florida
San Diego, California Tampa, Florida
REVENUE PRODUCTION
- Retail Distribution and Products
Chatfield employs over 200 account executives at its six branch offices.
Each brokerage office is headed by an experienced Vice President of Sales who
also works in coordination with the recruiters, trainers, branch compliance
officers and branch administrative managers. Most account executives
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prospect for and service individual investor accounts and focus their marketing
on professionals, business owners and high net worth investors. In the past
five years, income from retail sales has represented nearly 75% of Chatfield's
revenues. Each new broker undertakes Chatfield's "ProBroker" training program
for sales training, product knowledge, compliance concerns and administrative
and operational procedures. See "Chatfield - Support Services - Training."
Chatfield's account executives offer to customers investment ideas
generated by Chatfield's research department, as well as a range of mutual fund
products, fixed income instruments, common stocks and bonds. Chatfield's
account executives are trained to assist clients in selecting suitable
investments. Recommendations are based upon such matters as client's income,
net worth, personal situations, risk preference, other financial obligations and
amounts of investable capital.
Account executives typically recommend that customers develop an investment
portfolio in the following order of importance: conservative securities (e.g.,
annuities, other insurance products and certificates of deposit), fixed income
securities and managed equity (e.g., bonds and mutual funds), growth securities
with risk (e.g., debt and equity securities of established, medium to large
companies), and more aggressive growth securities (e.g., emerging small cap
entities).
Specific investment ideas are contained in reports produced by Chatfield's
research department in the form of buy recommendations, monthly newsletters and
corporate profiles, and occasionally through an underwriting in which Chatfield
participates.
Chatfield utilizes managed equity and managed fixed income products from a
variety of managed money sources to provide more conservative investments.
Account executives may recommend from approximately 70 families of funds
appropriate vehicles for this segment of their clients' money.
- Internet WebSite
WWW.CHATFIELD.COM acts as a twenty-four-hour-a-day advertisement for
Chatfield on the World Wide Web for new business and employment possibilities.
The "web" page offers information on investment services and strategies, a
market commentary updated twice daily and free investment research
recommendations. It also provides information on Chatfield Dean Capital Corp.'s
merchant banking criteria as well as information on the corporate finance
department. Also included on the web page are career opportunities, not only in
retail brokerage, but also in the sale of insurance and retirement products.
Finally, the web page discusses Chatfield's philosophy and vision, and provides
links to other financial and business sites.
- Investment Banking
The investment banking group provides a full range of investment banking
services for a middle market, emerging growth company client base. The group
also works with smaller, less mature companies in which Chatfield sees strong
management, market potential and a likelihood for equity appreciation.
Chatfield occasionally may advise large corporate clients where Chatfield
possesses expertise in a particular industry or aspect of investment banking.
Professional advice and assistance is available to corporate clients in the
following areas:
- Public Offerings
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- Private Placements
- Merger and Acquisition Advisory Services
- Valuations of Private Companies
- Fairness Opinions for Corporate Transactions
- General Financial Advisory Work
- Guided Exposure to the Marketplace
- Merchant Banking
Chatfield's merchant banking business is conducted through CDCC as well as
its corporate finance department. Chatfield typically identifies and obtains
engagements from companies which are appropriate acquisition candidates or buy
or sell candidates. These clients are typically established businesses with
sales and positive cash flow. On some occasions, Chatfield may be retained by
shareholder or other groups seeking to sell control of an existing company;
however, occasionally Chatfield and investors, including CDCC and officers,
directors, and employees of Chatfield, will acquire control of a candidate. In
the future, CDCC may invest from time to time in leveraged buy-outs and other
transactions originated by Max Capital LLC, a company headed and principally
owned by Mr. Russell Greenberg, a former Executive Vice President and director
of Chatfield.
Chatfield's personnel analyze, among other factors, the purchase price, mix
of debt and equity and amount of control which must be given to debt and equity
sources. Chatfield then locates and negotiates with institutional and/or large
individual investors and assists in documenting and closing the transaction.
Chatfield sometimes receives fees for such services.
On September 20, 1996, CDCC purchased a $54,000 membership interest in
Durand Investment LLC and received for no consideration 28% of the manager's
"carried" economic interest in that entity, which was formed to acquire the
business and assets of Durand Equipment and Manufacturing Company, a Michigan-
based maker of aluminum forms for the building products industry.
- Equity Trading
The Equity Trading department provides Chatfield with a full complement of
agency and principal trading capabilities. The department, composed of two
principal traders and two agency traders, is based in Chatfield's headquarters,
in Greenwood Village, Colorado. The agency traders execute retail buy and sell
orders for all of Chatfield's brokerage offices in New York Stock Exchange
stocks, American Stock Exchange stocks and The Nasdaq Stock Market stocks. The
principal traders are active in a small number of select stocks which they trade
using Chatfield's own capital. Chatfield's basic trading strategy is to limit
capital risk and to facilitate its retail sales business.
Chatfield believes that its largely automated, "paperless" order routing
system provides an advantage over firms of similar size who have not made the
same significant capital investment in such a system. Chatfield's paperless
routing system allows two major advantages over the old paper ticket system:
electronic execution and limit order file monitoring. Electronic execution
allows trades entered at the branch office level to be executed at the best
available market price, reported to Chatfield's clearing agent for comparison,
posted to the client account, and reported to the electronic ticker within
moments.
Access to limit orders is immediate and sorted by security and price.
Orders move to an alert screen if the market trades at a limit price, all but
eliminating trades which exceed limits. Efficient sorting
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and retention of limit orders allow entry of good-until-cancelled orders in
principal stocks, which is nearly impossible under paper ticket systems.
- Insurance
Chatfield Dean Insurance Corp., a wholly-owned subsidiary of Chatfield,
serves as agent for Chatfield in connection with the sales of life insurance
products and annuities (acting both directly and through its own wholly-owned
subsidiaries). The goal of Chatfield Dean Insurance Corp. (and each of its
subsidiaries), is to provide Chatfield's clients with immediate access to life
insurance, annuities and other insurance investment products, commissions on
which would otherwise be paid to outside entities. Chatfield's marketing of
insurance and annuity products relies to a large extent on the ability of its
employees to establish personal relationships and is complementary to its
brokerage operations.
- Real Estate
In 1995, Chatfield formed Chatfield Real Estate, LLC ("Chatfield Realty"),
a Colorado limited liability company, to offer real estate brokerage services in
conjunction with its investment and merchant banking activities, as well as to
provide real estate services to Chatfield. Chatfield owns 80% of Chatfield
Realty, and expects a manager to be named to own the remaining 20% interest.
Previously, Chatfield retained outside professionals to assist corporate
clients in sales of property as well as in structuring and marketing of real
estate based offerings. Such matters, as well as real estate brokerage
activities, may now be referred to Chatfield Realty. In addition, the
manager of the subsidiary will be expected to seek clients for commercial
real estate transactions and will obtain commissions for assisting Chatfield
in obtaining new retail brokerage office locations. Previously, all such
commissions were paid to unaffiliated real estate brokers.
SUPPORT SERVICES
- Research
Chatfield believes that research is the cornerstone of a successful
securities firm. Chatfield's research department monitors the securities
markets and makes buy, sell and hold recommendations to account executives,
along with detailed analyses for those recommendations. Research personnel
utilize research tools from such recognized sources as Bloomberg Financial
Services, Dow Jones & Company, and AIQ Systems. The department creates indices
to assess relative sector and group performance for comparative analyses, and it
monitors and provides information on financial, business and economic
developments for retail account executives.
A variety of reports and publications are produced by the department to
provide incisive and timely information to account executives and their clients.
Chatfield's newsletter provides its customers with investment insights, company
profiles and mutual fund information on a monthly basis. Specific buy, sell
and hold recommendations issued by the department are based upon analysis of the
issues and upon economic and industry trends. Typically, individual
recommendations are formulated after interviews with company management through
one or more on-site visits and economic modeling.
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- Compliance
Chatfield's Compliance Department is staffed by employees with extensive
experience and, in some cases, numerous years of former employment at the SEC or
NASD. The Compliance Department conducts periodic audits of the branch offices,
each of which is staffed with a compliance officer. Because of Chatfield's
development of automated compliance reports, daily monitoring of trading
activity now occurs at its corporate office and at each branch office. Customer
conversations are recorded on the firm-wide digital recording system. Chatfield
has made a significant capital investment in its state-of-the-art compliance
systems and has instituted continuing education and compliance testing programs.
Chatfield also created a screening committee and has instituted procedures to
identify and avoid job applicants whose prior work history indicates a potential
for future regulatory violations.
From early 1992 through mid-1996, Chatfield retained as its compliance
consultants David Ruder, former Chairman of the SEC, and Dan Goelzer, former
chief counsel to the SEC, each a partner at the law firm of Baker & McKenzie.
- Training
Each Chatfield branch office has a designated principal whose
responsibilities include implementing "ProBroker" (Chatfield's sales training
program) in conjunction with the branch compliance officer and the branch
administrative manager.
ProBroker was developed by Chatfield to train and provide continuing
education for account executives. This four-phase program is an interactive,
"hands on" approach intended to teach account executives to identify prospective
investors and to determine their investment needs. Training is supplemented by
proprietary videos, weekly audio conferences, outside speakers and product
presentations. Management believes that continued improvement of its training
program is pivotal to improving account executive performance and quickly
transforming new hires into productive account executives.
- Legal Department
Chatfield's legal department manages Chatfield's legal matters, including
securities litigation and customer and account executive arbitration. The
legal department consults with Chatfield's compliance department in interpreting
pertinent rules and regulations and regulatory inquiries. Chatfield had used,
previous to 1994, outside counsel to conduct or otherwise advise it concerning a
significant portion of its litigation and other legal activities. Most of that
representation is now in-house.
- Clearing Operations
Chatfield currently clears, on a fully-disclosed basis, through Hanifen
Imhoff Clearing Corp. ("Hanifen"), a leading New York Stock Exchange broker-
dealer in Denver, Colorado. Hanifen holds all securities and cash proceeds for
Chatfield's customers and provides margin and money market capability and
checking. Through Hanifen, all accounts are insured for up to $10 million,
providing significant protection for accounts beyond SIPC provisions. The
operations department coordinates with Hanifen and monitors the accuracy of
record preparation and transmittal. Chatfield is currently negotiating with
Hanifen to reduce its clearing charges. See " - Cost Saving Measures."
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- Proposed Technological Improvements
Management believes that technological improvements are an integral
component of Chatfield's ability to successfully implement its retail sales
strategy. Chatfield believes that its recent investment in (i) computer hardware
(intended to give each account executive the ability to retrieve individual
account information and track current market data simultaneously); (ii)
productivity software (specifically designed to improve the productivity of
account executives); (iii) individual workstations (expected to increase
productivity and improve morale); (iv) call management system (in the form of a
computer-assisted approach to efficient telephone use); and (v) video
conferencing (to enhance uniform communication and training) will all function
in conjunction to make the Surviving Corporation among one of the more
technologically advanced brokerage and banking firms.
COST SAVING MEASURES
Management of Chatfield has recently initiated a series of cost cutting
measures which it estimates will result in significant savings to the company.
Effective August 28, 1996, Chatfield adjusted the broker payout by rasing
production levels and lowering payout percentages, resulting in a 2% to 5%
savings in commission expense per month. Management estimates this will result
in savings to Chatfield of approximately $400,000 per year.
Management has also divested Chatfield's New York merchant banking division
to Max Capital LLC ("Max Capital"), a new unrelated entity headed by Mr. Russell
Greenberg, a former Executive Vice President and director of Chatfield. As part
of the divestiture terms, Chatfield retained the option, through its wholly-
owned subsidiary Chatfield Dean Capital Corp., to invest in any leveraged buy-
outs arranged by Max Capital. Management of Chatfield anticipates that the
divestiture will result in an annual cost savings to Chatfield of approximately
$400,000 to $600,000. Chatfield has retained the right to, and management
expects that Chatfield will, originate its own leveraged buy-outs through its
Denver corporate finance group and will offer Max Capital a reciprocal right to
invest in its leveraged buy-out transactions if and when developed. As
Chatfield management believes underwritings are a more consistent and
reliable source of revenue for the firm, it is management's intention to
focus more heavily on underwriting.
In a further streamlining measure, Chatfield has renegotiated its telephone
contract with MCI with a $300,000 in savings per year expected. Additionally,
as Chatfield has now finished paying for its DVL digital telephone recording
system, it should experience a $423,000 annual savings, beginning January 1,
1997.
Finally, Chatfield has negotiated a new clearing agreement with its
clearing firm that will reduce clearing charges by approximately 20% which
is expected to result in estimated savings of $360,000. If such a reduction
is achieved, Chatfield can expect a reduction of 2.5% to 3% in overall costs,
equivalent to approximately $570,000 per year in savings.
REVENUE ENHANCEMENT
In an effort to increase revenues and attract more and better customers,
Chatfield has initiated various revenue enhancement strategies. Specifically,
management in Chatfield's San Diego, New York and Tampa retail branches has been
upgraded so that the managers in these branches now have an aggregate of over 40
years in the securities business.
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In addition, Chatfield has added an institutional sales group in its New
York City and Denver offices, and a municipal bond department in its Tampa
office. Chatfield's management expects that the institutional sales group in
New York and Denver will grant Chatfield employees access to more institutional
clients than previously. Management further anticipates that more immediate
access to municipal bonds by Tampa employees will allow the Tampa brokers and
others located in the Southeastern United States to service Chatfield's client
orders more quickly, and to offer a broader range of investments to clients
presently not in the municipal bond business.
In keeping with advancements in technology, Chatfield has established a
significant presence on the Internet which it is developing daily in terms of
design, sophistication and customer visits. The Chatfield web page allows
customers and other web users to access research news, merchant banking
information and cross-links to other important sites.
Chatfield has also entered into the annuity and insurance sales markets.
In an effort to offer its clients the broadest range of investment and
portfolio-balancing investments, Chatfield has licensed over 50 of its
representatives in the last seven months for annuity and insurance sales.
COMPETITION
Chatfield competes directly with both domestic and foreign securities
firms, many of which have greater capital, financial, and other resources than
Chatfield, and increasingly with non-traditional competitors, including
commercial banks and insurance companies. The securities industry may be
divided into six categories: (i) national New York Stock Exchange ("NYSE")
Member firms (wirehouses); (ii) national discount firms; (iii) regional NYSE
member firms; (iii) National Association of Securities Dealers, Inc. ("NASD")
member firms; (iv) national regional NASD member firms; and (v) boutique
firms and financial planners.
Chatfield is best characterized as a national NASD member firm. To varying
degrees, however, Chatfield competes for customers and employees with firms in
all six categories. Management believes that Chatfield can compete successfully
against national and regional NASD member firms and more specialized competitors
by offering investors a wide array of financial products and services and by
providing its account executives with state-of-the-art technology and support
services. Management also believes that it can provide more personalized
service to clients, and through the firm's competitive commission structure, it
can effectively compete with industry discounters and wirehouses.
LITIGATION
During 1996, Chatfield settled litigation with John Hancock Funds, Inc.
("John Hancock") over John Hancock's termination of its selling agreement with
Chatfield, by accepting payment of $850,000 from John Hancock. See "RISK
FACTORS - Termination of Selling Agreement with John Hancock Mutual Funds."
Chatfield and two of its principal officers, Messrs. Sanford Greenberg and
Robert Lemon, have finalized a settlement in principle with the Florida
Department of Banking and Finance, Division of Securities and Investor
Protection, commenced on January 10, 1996 against them and four former
employees. The Florida proceeding involves transactions occurring between
December 1991 and March 1992 in the securities of two companies for which
Chatfield then was a market maker. Chatfield no longer makes a market in any
security of either company. The settlement agreed to in principle provides
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that Chatfield, without admitting the charges levied against it, make refunds
totalling $66,000 to its Florida customers and reimbursement of $40,000 to the
Florida regulator toward the cost of the case. In additional, several of
Chatfield's officers and employees named in the Florida proceeding have also
agreed to each contribute $5,000 toward costs.
Chatfield is engaged in arbitration proceedings and litigation arising from
its business activities, which matters are considered to be common to the
securities industry. Chatfield believes that it has meritorious defenses to
these claims and that adverse results will not have a materially adverse impact
on its business and revenues.
PROPERTIES
Chatfield's office leases comprise an aggregate of 87,243 square feet
(including approximately 13,408 square feet leased in Stamford, Connecticut and
Irvine, California, which offices have been closed) at an average rent of $15.63
per square foot under terms of varying length. The largest office is
Chatfield's headquarters in Greenwood Village, Colorado, which covers 26,622
square feet at $11.72 per square foot under a lease which terminates on June 30,
1998. The earliest termination of an existing lease is in 1998 and the longest
term ends in July 2001. Chatfield is currently negotiating a new lease for the
space located in Greenwood Village. All leases are with unaffiliated third
parties, the terms of which were arrived at through arms-length negotiations.
REGULATION
Chatfield's registration with the SEC, membership in the NASD and
registration in all states except Massachusetts subjects it to overlapping
schemes of regulation. Chatfield is also affected by the Board of Governors of
the Federal Reserve System which promulgates regulations applicable to
securities credit transactions. Chatfield must comply with the regulations of
such agencies relating to, INTER ALIA, use and safekeeping of customers' funds
and securities, record keeping and reporting, supervisory and organizational
procedures, insider trading restrictions, employee related matters, limitations
on extensions of credit in securities transaction and clearance and settlement
procedures.
CHATFIELD'S EMPLOYEE STOCK BONUS PLAN
Pursuant to Chatfield's employee stock bonus plan, all grants of Chatfield
Plan Common Stock are deemed immediately vested in the recipient thereof,
subject to forfeiture in certain instances. Specifically, for each year an
employee remains employed by Chatfield, 20% of his or her Chatfield Plan Common
Stock is freed from forfeiture, resulting in full vesting with no forfeiture at
the end of the fifth year of employment. The Chatfield Dean Holdings employee
stock bonus plan will contain the same restrictions.
SHAREHOLDERS ENTITLED TO VOTE
Approval by 66 2/3% of the outstanding shares of Chatfield common stock
entitled to vote (including the vote of the Chatfield Series A Stock at a ratio
of 3.33:1), 66 2/3% of the outstanding shares of Chatfield Series A Stock
entitled to vote (voting as a class) and 66 2/3% of the outstanding shares of
Chatfield Series B Stock entitled to vote (voting as a class), is required for
Chatfield to approve the Merger and the transactions contemplated thereby. 59%
of such Chatfield common stock vote (including the vote of the holders of
Chatfield Series A Stock at a ratio of 3.33:1 and the vote of the
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holders of Chatfield Plan Common Stock) is held by directors and executive
officers of Chatfield, 0% of such Chatfield Series A Stock vote is held by
directors and executive officer of Chatfield, and 63% of such Chatfield Series B
Stock vote is held by directors and executive officers of Chatfield. For a
discussion of the tax consequences of this transactions, See "THE MERGER -
Certain Federal Income Tax Consequences."
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UNICO BUSINESS
UNICO: DESCRIPTION OF BUSINESS ACTIVITIES
Unico was incorporated in the State of New Mexico in April 1979.
Currently, Unico is engaged in four separate lines of business which are
conduced by Unico directly (natural gas production), and through two wholly-
owned operating subsidiaries - Intermountain Chemical, Inc. ("IC"), which
manages and operates a methanol production facility, owed by others; and
Intermountain Refining Co., Inc. ("IRC") which owns and operates a petroleum
refinery and co-generation facility. A third non-operating subsidiary, Gas
Technology Group, Inc. ("GTI"), owns certain limited partnership interests in
the methanol production facility which is managed and operated by IC.
UNICO: NATURAL GAS PRODUCTION: THE KANSAS GAS PROPERTIES
Unico has various mineral interests in, and is the operator of, 20
producing natural gas wells located on 11,568 gross acres in the Hugoton basin
in Western Kansas (the "Kansas Gas Properties"). Unico estimates that proven
developed reserves as of February 29, 1996 were 2.6 billion cubic feet, net to
its interest. Natural gas produced from the properties is currently gathered by
and sold to K.N. Energy of Lakewood, Colorado. There is no outstanding debt
against the properties. The Kansas Gas Properties will continue as an active
business of Chatfield Dean Holdings at the Effective Time.
IC AND GTI; OPERATION AND MANAGEMENT OF METHANOL PRODUCTION FACILITY
In July 1988, IC initiated a project to construct a 250 ton-per-day
methanol production facility in the Denver, Colorado area. The facility
converts natural gas and steam into chemical grade methanol which is marketed to
petroleum refiners and chemical distributors. IC is the managing general
partner of IC Partners, Limited ("IC-PL") which is the general partner of Sand
Creek Chemical, Limited Partnership ("SCCLP"). The SCCLP methanol production
facility is owned by Fleet Bank, as owner trustee, and is leased to SCCLP under
a 15 year operating lease. In December 1994, GTI acquired certain limited
partnership interests in IC-PL. As a general partner, IC performs management,
operations, marketing and accounting functions for SCCLP and receives various
payments and expense reimbursements for these services. In addition, IC and GTI
receive allocations of SCCLP income and loss in proportion to their interests in
IC-PL.
As a condition precedent to Closing of the Merger, Unico is to divest its
ownership in IC and GTI through a distribution of stock in these subsidiaries to
Unico's current shareholders. At Unico's annual meeting on November 15, 1996,
shareholders approved a plan to (i) consolidate GTI with IC; and (ii) distribute
shares in IC pro rata to all current Unico shareholders.
IRC; PETROLEUM REFINING AND CO-GENERATION
In the past, IRC has refined low-cost, heavy crude oil and other raw
materials to produce naphtha, diesel fuel, fuel oil and asphalt. However, IRC
has experienced a sharp reduction in the availability of crude oil and other raw
materials and has operated the refinery only on a limited basis during the past
three years. Efforts to locate a suitable supply of feedstock for the refinery
have thus far been unsuccessful. In addition, IRC has been unable to obtain a
contract for the sale of electrical energy from its 3,000 kilowatt co-generation
facility due to the competitive climate in the power generation
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industry. The foregoing notwithstanding, IRC's management continues to seek
solutions to these problems.
It is a condition precedent to the Merger that Unico divest itself of IRC
through the distribution of its stock in IRC pro rata to all current Unico
shareholders.
EMPLOYEES
Unico, its subsidiaries and affiliates currently have 21 full time
employees and 1 part time employee, including officers. While it its
anticipated that none of these employees will remain as employees of Chatfield
Dean Holdings, Mr. William Hagler, in his capacity as director of Chatfield Dean
Holdings, will assist in the management of the Kansas Gas Properties. See
"MERGER - Background of the Merger;" and "- Unico: Natural Gas Production: The
Kansas Gas Properties."
PROPERTIES
Except for the Kansas Gas Properties which operate on leases held by
production and the SCCLP methanol production facility, all properties used by
Unico and its subsidiaries in the conduct of their respective businesses are
owned in fee. Unico also owns outright a 7,000 square foot office building in
Farmington, New Mexico. Approximately 30% of the office is being fully utilized
by Unico for its corporate office, tenants are leasing another 20%, while the
remainder is currently vacant and offered for lease to others.
LITIGATION
Unico is not party to any pending legal proceedings.
SHAREHOLDERS ENTITLED TO VOTE
Approval by 66 2/3% of the outstanding shares entitled to vote is required
to approve the Merger and the transactions contemplated thereby. Approximately
44% of such vote is held by directors and executive officers of Unico.
INVESTMENT POLICIES
It is not Unico's policy to invest in real estate or interests in real
estate other than such real estate required by and incidental to Unico's
business operations. It is not Unico's policy to invest in real estate
mortgages, securities of or interests in persons primarily engaged in real
estate activities.
RESEARCH AND DEVELOPMENT
Unico does not spend material sums on research and development activities.
GOVERNMENT REGULATIONS
Unico's gas production business is, and Chatfield Dean Holdings' gas
production business will be, regulated by certain federal, state and local
environmental and health agencies, as well as laws and regulations relating to
the development, production, handling, storage, marketing, transportation and
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disposal of gas and related products. Unico's past operations and Chatfield
Dean Holdings' future operations could also result in liability for spills,
discharges of hazardous nature and other environmental damages. From time to
time, regulatory agencies have imposed price controls and limitations on
production by restricting the rate of flow of gas wells below actual production
capacity in order to conserve supplies of gas. See "RISK FACTORS - Government
Regulations."
ENVIRONMENTAL CONCERNS
Unico and, post-Merger, Chatfield Dean Holdings, may be liable for
environmental damages caused by previous owners of its properties, which
liabilities might not be covered by insurance.
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BUSINESS OF CHATFIELD DEAN HOLDINGS
Following the Merger, Chatfield Dean Holdings' principal business
operations will consist of the business currently conducted by Chatfield. See
"BUSINESS - Chatfield: Description of Business Activities." Chatfield Dean
Holdings will also conduct the business of Unico presently undertaken with
respect to the Kansas Gas Properties. See "BUSINESS - Unico Business -
Unico: Natural Gas Production: The Kansas Gas Properties." See "Business -
Unico Business - Unico: Natural Gas Production: The Kansas Gas Properties."
Prior to consummation of the Merger, both IRC and IC will be divested in the
Spin-Offs. Shortly after the Merger, Chatfield Dean Holdings intends to move
Unico's present headquarters to Chatfield's headquarters in Greenwood
Village, Colorado.
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MANAGEMENT OF CHATFIELD
Name Age Position
- ---- --- ---------
Sanford Greenberg 38 Chief Executive Officer; Director
Robert Lemon 40 President; Director
Richard O'Donnell 52 Executive Vice President; Director
Scott Carothers 36 Vice President; Director
Kenneth Greenberg 36 Vice President; Director
Barry Cheren 54 Senior Vice President; Director
Background information concerning the directors and executive officers of
Chatfield is as follows:
SANFORD GREENBERG has been Chief Executive Officer of Chatfield since 1994
and was President of Chatfield from 1989 through such date. Mr. Greenberg has
over 17 years experience in the securities industry.
ROBERT LEMON joined Chatfield in 1989 and has been its President since
1995. Mr. Lemon has worked in the securities industry for over 13 years. Mr.
Lemon received a B.A. in accounting from Loyola University in 1979, and
subsequently became licensed as a certified public accountant.
RICHARD O'DONNELL joined Chatfield in 1991 and became an Executive Vice
President in 1994. Mr. O'Donnell has over 20 years experience in the
brokerage industry. He has also taught marketing and management at the college
level. Mr. O'Donnell graduated from San Jose State University in 1967 with a BS
in Business and Industrial Management and, in 1969, received an MBA degree with
emphasis in sales management.
SCOTT CAROTHERS joined Chatfield in 1991 as a financial principal and
became a Vice President in 1992. Mr. Carothers graduated from Colorado State
University in 1982 with a BS in Business Administration and subsequently became
licensed as a certified public accountant.
KENNETH GREENBERG joined Chatfield in September 1990 as a Vice President in
its Corporate Finance Department. Mr. Greenberg graduated from Colorado College
in 1982 with a BA degree in political economics and, in 1983, received an MBA
from the University of Denver.
BARRY CHEREN joined Chatfield in May 1996 as Senior Vice President. He has
worked in the securities industry since 1964. From 1990 through May 1996, Mr.
Cheren was employed at Rauscher Pierce Refsnes, Inc. as branch manager of its
North Dallas office. Mr. Cheren graduated in 1963 with a BS in Economics from
the Wharton School of Finance of the University of Pennsylvania.
Sanford Greenberg and Kenneth Greenberg are brothers. Otherwise, there are
no family relationships among the directors and executive officers of Chatfield.
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CHATFIELD SECURITIES OWNERSHIP BY MANAGEMENT
As of December 31, 1996, Chatfield's directors and executive officers,
individually and as a group, owned or controlled the following amounts and
percentages of Chatfield's capital stock.
<TABLE>
<CAPTION>
Title of Class Name of Amount and Nature Percent of
- --------------- Beneficial of Beneficial Class
Owner Ownership -----
----- ---------
<S> <C> <C> <C>
DIRECTORS AND EXECUTIVE OFFICERS
INDIVIDUALLY
Chatfield Sanford Greenberg 2,549,550 53.12%
common stock Robert Lemon 655,500 13.66%
and Chatfield Plan Richard O'Donnell 100,000 2.08%
Common Stock(1) Russell Greenberg(2) 90,479 1.89%
Scott Carothers 50,000 1.04%
Kenneth Greenberg 50,000 1.04%(3)
Barry Cheren 100,000 2.08%
Chatfield Series B Sanford Greenberg 100,000 52.63%
Stock Robert Lemon 10,000 5.26%
Russell Greenberg 10,000 5.26%(2)
Chatfield Warrants As a condition to the Merger, all Chatfield Warrants must be exercised prior
to the Effective Time and are deemed so exercised for Chatfield common stock
in the ownership figures above.
Chatfield common Directors and officers as a Group 3,595,529 76%(4)
stock and Chatfield
Plan Common Stock
Chatfield Series B Directors and officers as a Group 120,000 63%
Stock
</TABLE>
CERTAIN TRANSACTIONS WITH CHATFIELD MANAGEMENT
On November 22, 1995, in order to remedy a possible net capital deficiency,
Mr. Sanford Greenberg made a capital contribution to Chatfield of $1,000,000 by
purchasing 100,000 shares of Chatfield Series B Stock. On January 12, 1996,
Messrs. Russell Greenberg and Robert Lemon each
- ----------------
(1) Reflects ownership of Chatfield common stock issued as part of
Chatfield's employee stock bonus plan as well as outright holding of Chatfield
common stock. Also assumes exercise of Chatfield Warrants for Chatfield common
stock (Sanford Greenberg, 100,000; Robert Lemon, 10,000; Russell Greenberg,
10,000).
(2) Resigned as director and officer effective December 31, 1996.
(3) Does not include an option granted to Mr. Kenneth Greenberg by Mr.
Sanford Greenberg pursuant to which Mr. Kenneth Greenberg has the right to
purchase 100,000 shares of Chatfield common stock held by Mr. Sanford Greenberg
immediately prior to the Effective Time.
(4) Rounded Figures
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purchased 10,000 shares of the Chatfield Series B Stock at $10 per share. In
connection with the purchase of the Chatfield Series B Stock, Messrs. Sanford
Greenberg, Robert Lemon and Russell Greenberg(1) also received warrants (the
"Chatfield Warrants") to purchase one share of Chatfield common stock for each
share of Chatfield Series B Stock purchased (Sanford Greenberg, 100,000 shares;
Robert Lemon, 10,000 shares; and Russell Greenberg, 10,000 shares). The
Chatfield Warrants afford the right to purchase common stock at $.01 per
share, beginning one year from the issue date of the Chatfield Warrants for a
period of 10 years; HOWEVER as set forth above, these Chatfield Warrants must
be exercised prior to the Effective Time as a condition to the Merger.
Chatfield's By-laws incorporate certain provisions of the Colorado Business
Corporation Act providing for indemnification of Chatfield's officers and
directors if certain claims are made against them in their corporate capacities.
Such indemnification may be required even if Chatfield is damaged by such
actions, so long as the actions were taken within the scope of the officers' or
directors' duties and did not involve fraud or gross malfeasance. These
indemnification requirements, however, are not effective with respect to
violations of federal securities laws.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons pursuant to the foregoing provisions, or otherwise, they and Chatfield
have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore unenforceable.
Mr. Kenneth Greenberg was granted an option by Mr. Sanford Greenberg in
1996 pursuant to which Mr. Kenneth Greenberg has the right to purchase 100,000
shares of Chatfield common stock held by Mr. Sanford Greenberg immediately prior
to the Effective Time. Pursuant to the option, the purchase price for such
100,000 shares is $100. If such option is not exercised by the Effective Time,
it shall be of no value.
___________________________
(5) Resigned as director and officer effective December 31, 1996.
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CHATFIELD SUMMARY COMPENSATION TABLE
Annual Compensation(1)
-----------------------------------------
Name and Principal Year Salary(2) Bonus Other
Position Annual
Compensation
Sanford Greenberg 1996 $155,023 $0 $0
Chief Executive 1995 $144,339 $0 $0
Officer 1994 $480,040 $0 $0
Russell 1996 $237,729 $0 $0
Greenberg(3) 1995 $605,029 $0 $0
Senior Executive 1994 $20,160 $0 $0
Vice President
David Graven 1996 $186,925 $0 $0
Vice President 1995 $170,500 $0 $0
1994 $15,000 $0 $0
Robert Lemon 1996 $149,329 $0 $0
President 1995 $61,290 $0 $0
1994 $112,993 $0 $0
Richard O'Donnell 1996 $122,569 $0 $0
Secretary 1995 $95,517 $0 $0
1994 $86,048 $0 $0
- --------------------
(1) Long term compensation and all other compensation is not applicable.
(2) All numbers in Salary column include incentive-based compensation,
except with respect to Mr. Graven.
(3) Resigned as director and officer effective December 31, 1996.
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MANAGEMENT OF UNICO
Name Age Position
- ---- --- --------
William Hagler 64 President and Director
Rick Hurt 43 Controller, Secretary
Treasurer and Director
Background information concerning the directors and executive officers of
Unico is as follows:
WILLIAM HAGLER founded Unico in 1979 and has served as Chairman, President
and Chief Executive Officer of Unico and its subsidiaries - Intermountain
Chemical, Inc., Gas Technologies Group, Inc. and Intermountain Refining Co.,
Inc. - since their respective inceptions. In addition, he is President of
Hagler Oil and Gas Company and a director of Consolidated Oil and Transportation
Company, Inc., Saba Petroleum Company ("Saba"), an American Stock Exchange
listed company and Santa Maria Refining Company, a subsidiary of Saba. From
1955 to 1979, Mr. Hagler was employed by Esso Standard Oil, Cities Service Oil
Co., Riffe Petroleum Co., and Plateau Inc. in various petroleum refining,
marketing and management positions. Mr. Hagler has served for approximately
10 years on the Public Utility Commission for the City of Farmington, New
Mexico. He received a BS Degree in industrial engineering from North Carolina
State University in 1955.
RICK HURT joined Unico as Assistant Controller in March 1985 and became
its Controller, Secretary, Treasurer and a director on May 20, 1985. From 1979
to 1982, he was employed as a staff accountant and later as a senior accountant
by the accounting firm of Fox & Company in its Albuquerque, New Mexico, office.
From 1982 until March 1985 he was employed as chief accountant for the law
firm of Davis and Davis in Austin, Texas. Mr. Hurt is certified as a public
accountant in the states of New Mexico and Texas and in 1979 received a BBA
degree in Accounting from the University of New Mexico.
No family relationship exists between any officer or director of Unico.
UNICO SECURITIES OWNERSHIP BY MANAGEMENT
On September 18, 1996 the ownership by Unico's management of its common
stock, its only voting security, was as follows:
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Title of Name of Beneficial Amount and Nature of Percent of
Class Owner Beneficial Ownership Class
----- ----- -------------------- -----
Common Stock William Hagler 428,811 shares(1) 43%(2)
par value Rick Hurt 6,902 shares(3) .69%
.20 CENTS Directors and Officers 435,713 shares 44%
as a Group
CERTAIN TRANSACTIONS WITH UNICO MANAGEMENT
Since the beginning of Unico's last fiscal year, there were no
transactions, or series of similar transactions, or currently proposed
transactions, to which Unico or its subsidiaries was or is to be a party, in
which the amount involved exceeded $60,000, and in which any director or
executive officer, nominee for election as a director, security holder known by
Unico to own 5% or more of any class of the Unico's voting securities or any
member of the immediate family of any of the foregoing, had or will have a
director or indirect material interest.
Unico's By-laws incorporate certain provisions of the New Mexico Business
Corporation Act providing for indemnification of Unico's officers and directors
if certain claims are made against them in their corporate capacities. Such
indemnification may be required even if Unico is damaged by such actions, so
long as the actions were taken within the scope of the officers' or directors'
duties and did not involve fraud or gross malfeasance. These indemnification
requirements, however, are not effective with respect to violations of federal
securities laws.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of Unico pursuant to the foregoing provisions, or
otherwise, they and Unico have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable.
________________________
(1) Shares of record and beneficially owned. Includes 406,375 shares of
record and 11,311 shares held by Unico's employee stock option plan on behalf of
Mr. Hagler and 500 on behalf of Rick Hurt. Also includes Mr. Hagler's 11,125
Debenture Warrants to purchase shares.
(2) Column represents rounded figure.
(3) Shares of record and beneficially owned. Includes 500 shares of
record and 6,402 shares held by Unico's employee stock option plan on behalf
of Mr. Hurt.
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UNICO SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning the
remuneration paid by Unico to its Chief Executive Officer for the last three
fiscal years and other executives who received compensation in excess of
$100,000.
Annual Compensation(1)
---------------------------------------
Name and Principal Year Salary Bonus Other
Position Annual
Compensation(2)
William Hagler 1996 94,783 0 1,441
Chief Executive 1995 91,467 18,900 1,435
Officer and 1994 86,608 1,624 0
Director
____________________________
(1) Long term compensation and all other compensation is not applicable.
(2) Includes discretionary employer 401(k) contributions totalling $1,441
and $1,435 in 1996 and 1995, respectively.
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MANAGEMENT OF CHATFIELD DEAN HOLDINGS
MANAGEMENT OF CHATFIELD DEAN HOLDINGS
EXECUTIVE OFFICERS
Pursuant to the terms and conditions of the Merger Agreement, from and
after the Effective Time, the following individuals are expected to be the
executive officers of Chatfield Dean Holdings.
Executive Officer Position with Chatfield Dean Holdings
----------------- -------------------------------------
Sanford Greenberg Chairman of the Board, Chief Executive Officer
Robert Lemon President
Scott Carothers Secretary & Treasurer
DIRECTORS
Pursuant to the terms of the Merger Agreement, at the Effective Time, all
the directors of Unico (at that time to be renamed "Chatfield Dean Holdings,
Inc.") will resign except for Mr. William Hagler who will remain on the Board of
Chatfield Dean Holdings and will nominate the following individuals as the
remaining directors of Chatfield Dean Holdings (or nominate such other persons
as are subsequently designated by the Surviving Corporation to be directors of
Chatfield Dean Holdings).
Name
----
Sanford Greenberg
Robert Lemon
[ ]
[ ]
CERTAIN TRANSACTIONS WITH CHATFIELD DEAN HOLDINGS MANAGEMENT
See "PRINCIPAL SHAREHOLDERS OF CHATFIELD DEAN HOLDINGS."
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PRINCIPAL SHAREHOLDERS OF CHATFIELD
On December 31, 1996, the only persons known to Chatfield to own 5% or more
of the issued and outstanding Chatfield capital stock, are as follows:
<TABLE>
<CAPTION>
Title of Class Name and Address of Amount and Nature of Percent of Class
-------------- Beneficial Owner Beneficial Ownership ----------------
---------------- --------------------
<S> <C> <C> <C>
Chatfield common stock Sanford Greenberg 2,549,550 53.12%
and Chatfield Plan 80 Cherry Hills Farm
Common Stock (1) Drive Englewood, Colorado
80110
Robert Lemon 655,500 13.66%
8228 Lodgepole Trail
Littleton, Colorado 80124
Chatfield Series A 7% American United Global, 25,000 7%
Cumulative Preferred Inc.
Stock [Address]
Rosanne Hyde 20,000 6%
[Address]
Chatfield Series B Sanford Greenberg 100,000 52.63%
Stock Unico
1921 Bloomfield Boulevard 50,000 26.32%
Farmington, New Mexico
87401
[Address]
Robert Lemon 10,000 5.26%
Russell Greenberg 10,000 5.26%
271 Central Park West
Number 2E
New York, New York 10024
Jeff and Sharon Martin
</TABLE>
_________________________
(1) Reflects ownership of Chatfield common stock issued as part of
Chatfield's employee stock bonus plan as well as outright holdings of Chatfield
common stock. Also assumes exercise of Chatfield Warrants for Chatfield common
stock (Sanford Greenberg, 100,00; Robert Lemon, 10,000; Russell Greenberg,
10,000).
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Chatfield Warrants All Chatfield Warrants must be exercised prior to the
Effective Time and are deemed so exercised for
Chatfield common stock in the ownership figures above.
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<PAGE>
PRINCIPAL SHAREHOLDERS OF UNICO
On September 18, 1996, the only persons known to Unico to own 5% or more of
the issued and outstanding Unico common stock, its only voting security, are as
follows:
Title of Class Name and Address of Amount and Nature Percent of
-------------- Beneficial Owner of Beneficial Class
----------------- Ownership -----
---------
Common Stock, William Hagler 428,811 shares (1) 43%
.20 CENTS par 603 Merino Kraal
value Farmington, NM 87401
William & Helen 138,624 14%
Braddock
P.O. Box 403
Dorado, PR 00646
___________________________
(1) Shares of record and beneficially owned. Includes 406,375 shares of
record, 11,311 shares held by Unico's employee stock option plan on behalf of
Mr. Hagler and 11,125 Debenture Warrants to purchase shares.
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<PAGE>
PRINCIPAL SHAREHOLDERS OF CHATFIELD DEAN HOLDINGS
The following table sets forth certain information with respect to
beneficial ownership of Chatfield Dean Holdings common stock, as adjusted to
reflect the consummation of the Merger, including (i) distribution of the
Unico Three Year Warrants, Unico Four Year Warrants and Unico Five Year Warrants
and conversion thereof into Unico common stock; (ii) full conversion of all
Unico Series A Shares into Unico common stock within 60 days of the Effective
Time; (iii) issuance and conversion of the Debenture Warrants; and (iv) issuance
and conversion of the Compensation Options. The table further assumes that no
shareholders have elected to exercise dissenters' rights.
The table lists (i) each person who is projected to own beneficially more
that 5% of the outstanding common shares of Chatfield Dean Holdings; (ii) the
beneficial ownership of the designated directors of Chatfield Dean Holdings;
(iii) the beneficial ownership of each of the designated executive officers of
Chatfield Dean Holdings; and (iv) the beneficial ownership of all of the
designated directors and officers of Chatfield Dean Holdings as a group.
Name of Beneficial Owner Number of Shares Percent of Beneficial
------------------------ ---------------- Ownership of Post-Merger
Common Stock
------------------------
5% OR GREATER
SHAREHOLDERS
Sanford Greenberg ___ ___%
William Hagler ___ ___%
Robert Lemon ___ ___%
Each of Messrs. Sanford Greenberg and Robert Lemon are expected to be
elected as directors of Chatfield Dean Holdings (as above), in addition to two
directors to be named. Mr. William Hagler will remain as a director after the
Effective Time.
DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP ___%
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<PAGE>
ELECTION OF DIRECTORS OF CHATFIELD DEAN HOLDINGS
Pursuant to the Merger Agreement, from and after the Effective Time, the
Board of Directors of Chatfield Dean Holdings will be comprised of five members.
Upon consummation of the Merger, all directors of Unico (at that time to be
renamed "Chatfield Dean Holdings, Inc.") will resign except for Mr. William
Hagler who will remain on the Board of Directors of Chatfield Dean Holdings
and will nominate the below individuals as the remaining directors of
Chatfield Dean Holdings (or such other individuals as are subsequently
designated by the Surviving Corporation to be Chatfield Dean Holdings
Directors). Each such nominee will take office upon the consummation of the
Merger and hold office until the next annual meeting of shareholders and
until his successor is duly elected and qualified. The present Unico Board
of Directors does not expect that any of the nominees named below will be
unable to stand for election, but, in the event that vacancies in the slate
of nominees should occur unexpectedly, the Unico shares represented at the
Unico Meeting by proxies granting discretion to the Unico Board of Directors
will be voted for the nominees chosen by Chatfield.
The election of the nominees set forth below is conditioned upon the
approval by the shareholders of Unico and Chatfield, respectively, and
consummation of the Merger. Therefore, if the Merger is not approved, the Unico
shares represented by proxies will be voted for the present Board of Directors
of Unico. THE BOARD OF DIRECTORS OF UNICO RECOMMENDS THAT UNICO'S SHAREHOLDERS
VOTE IN FAVOR OF EACH OF THE NOMINEES NAMED BELOW FOR ELECTION TO THE BOARD OF
CHATFIELD DEAN HOLDINGS.
The following table sets forth certain information with respect to each
nominee for election to the Board of Directors of Chatfield Dean Holdings (in
addition to Mr. William Hagler who will remain as a director after the Effective
Time):
Present Position within
Directors Age; Board Position Chatfield
--------- ------------------- -----------------------
Sanford Greenberg 38; Director Chief Executive Officer of Chatfield
Robert Lemon 40; Director President of Chatfield
[ ]
[ ]
For biographical and other information concerning Chatfield's nominees, see
"MANAGEMENT OF CHATFIELD." For biographical and other information concerning
Mr. William Hagler, see "MANAGEMENT OF UNICO."
If the Merger is not approved, the following individuals, who stood for
election to the Unico Board at Unico's November 15, 1996 annual meeting, will
remain as the directors of Unico.
Directors Age; Board Position Present Position with Unico
--------- ------------------- ---------------------------
William Hagler 64; Director President
Rick Hurt 43; Director Controller, Secretary and Treasurer
MEETINGS OF THE UNICO BOARD OF DIRECTORS
The Unico Board of Directors held 3 meetings during fiscal 1996. All
directors attended each of the meetings.
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<PAGE>
DESCRIPTION OF CHATFIELD DEAN HOLDINGS' CAPITAL STOCK
Following consummation of the Merger, Chatfield Dean Holdings' authorized
capital stock will consist of:
(i) 20,000,000 authorized shares of Unico common stock, of which ___ will
be issued and outstanding, of which ____ will be reserved for future
issuance under Chatfield Dean Holdings' newly created employee stock bonus
plan, and of which 1,000,000 will be reserved for future issuance under
Chatfield Dean Holdings' EIP (assuming no exercise of dissenters' rights by
holders of Unico common stock and full conversion of the Chatfield common
stock, Chatfield Plan Common Stock, Chatfield Series A Stock and Chatfield
Series B Stock, timely conversion of the Unico Series A Stock, exercise of
the Chatfield Warrants and Unico Warrants and exercise of the Compensation
Options and Debenture Warrants);
(ii) 20,0000,000 authorized shares of Unico preferred stock, of which
1,405,677 shares of Unico Series A Stock will be issued and outstanding
(assuming no exercise of dissenters' rights and full conversion of the
Chatfield Series A Stock and Chatfield Series B Stock), and of which no
shares of "blank check" preferred will be issued and outstanding; and
(iii) 997,715 Unico Three Year Warrants (which will convert into 299,315
shares of Chatfield Dean Holdings common stock); 997,715 Unico Four Year
Warrants (which will convert into 399,086 shares of Chatfield Dean Holdings
common stock), and 997,715 Unico Five Year Warrants (which will convert
into 498,858 shares of Chatfield Dean Holdings common stock) (assuming no
exercise of dissenters' rights by holders of the Unico common stock and
assuming the granting of such Unico Warrants to Mr. William Hagler with
respect to his Debenture Warrants outstanding, but not with respect to
Compensation Options to be issued in connection with the Merger).
The following summary of the rights and preferences of the Unico common
stock, Unico preferred stock (including the Unico Series A Stock) and the Unico
Warrants is qualified in its entirety by reference to the Amended and Restated
Articles attached as an Appendix to this Information Statement/Prospectus.
Shareholders are encouraged to read the Amended and Restated Articles in their
entirety. See "PROPOSAL TO ADOPT AMENDED AND RESTATED ARTICLES OF
INCORPORATION."
UNICO COMMON STOCK
Unico is currently authorized to issue 2,500,000 shares of $.20 par value
common stock. Each share of Unico common stock is entitled to one vote on all
matters on which such shares are entitled to vote. Holders of shares of Unico
common stock do not have preemptive rights to purchase additional shares of
common stock or preferred stock of Unico, or other subscription rights. The
Unico common stock carries no conversion rights and is subject neither to
redemption nor to any sinking fund provisions. All shares of Unico common stock
are entitled to share equally in dividends from sources legally available
therefor, when as and if declared by the Unico Board of Directors and, upon
liquidation or dissolution of Unico, whether voluntary or involuntary, to share
equally in the assets of Unico available for distribution to holders of Unico
common stock.
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<PAGE>
UNICO PLAN COMMON STOCK
The Chatfield Dean Holdings common stock to be issued to current holders of
Chatfield Plan Common Stock and to be issued in the future under Chatfield Dean
Holdings' employee stock bonus plan will have the same rights and privileges as
holders of Unico common stock, but shall contain various restrictions. Pursuant
to Chatfield's present employee stock bonus plan, to which Chatfield Dean
Holdings' employee stock bonus plan will be substantially similar, all grants of
Chatfield Plan Common Stock are deemed immediately vested in the recipient
thereof, subject to forfeiture in certain instances. Specifically, for each
year an employee remains employed by Chatfield, 20% of his or her Chatfield Plan
Common Stock is freed from forfeiture, resulting in full vesting with no
forfeiture at the end of the fifth year of employment. The shares of Chatfield
Dean Holdings common stock issued under its employee incentive plan (EIP) will
also contain the same forfeiture provisions.
UNICO PREFERRED STOCK
Pursuant to the Merger, the shareholders of Unico will be asked to grant
the Board of Directors of Unico (Chatfield Dean Holdings post-Merger) the
authority to issue without further action by the shareholders up to
20,000,000 shares of preferred stock (to include the Unico Series A Stock) in
one or more series and to fix the rights, preferences, privileges and
restrictions thereof, including dividend rights, conversion rights, voting
rights, terms of redemption, liquidation preferences and the number of shares
constituting any series or the designation of such series. The Merger
contemplates the designation and issuance of the Unico Series A Stock (as
described below). The issuance of Chatfield Dean Holdings preferred stock
(other than the Unico Series A Stock) could adversely affect the voting power
of holders of Chatfield Dean Holdings common stock and could have the effect
of delaying, deferring or preventing a change of control. See "RISK FACTORS
- - Authorization and Issuance of Preferred Stock." None of the holders of
Chatfield will receive any preferred stock (other than the Unico Series A
Stock) in the Merger.
- Unico Series A Stock
Unico's Articles of Incorporation presently authorize it to issue up to
8,000,000 shares of preferred stock on terms to be determined by its Board of
Directors. Its Board of Directors has not yet authorized the creation or
issuance of any Unico Series A Stock. The Amended and Restated Articles of
Incorporation will authorize the Unico Board (Chatfield Dean Holdings' Board
post-Merger) to create and issue up to 20,000,000 shares of Unico preferred
stock, of which 1,405,677 will be designated Unico Series A Stock. Holders of
Chatfield Series A Stock and Chatfield Series B Stock will be entitled to 2.66
shares of Unico Series A Stock for each share of Chatfield Series A Stock or
Chatfield Series B Stock held. Each share of Unico Series A Stock shall
thereafter be convertible into one and one-quarter (1.25) shares of Unico common
stock for each share of Unico Series A Stock surrendered. However, each holder
of Unico Series A Stock issued and outstanding at the Effective Time who fails
to surrender his or her Unico Series A Stock for conversion into Unico common
stock within sixty (60) days following the Effective Time shall be entitled to
receive, upon conversion, only one (1) share of Unico common stock for each
share of Unico Series A Stock surrendered. The conversion rate will be adjusted
to prevent the dilutive effects on the Unico common stock of stock splits, stock
dividends, combinations of shares, stock exchanges and exchanges caused by
reclassifications, reorganizations, mergers, consolidations, recapitalizations
or similar events.
Holders of the Unico Series A Stock will be entitled to vote on all matters
for consideration by the shareholders of Chatfield Dean Holdings at a rate of
2.66 votes for each one share of Unico Series A Stock held; the voting ratio to
be adjusted in the same manner and at the same time as the exchange
89
<PAGE>
ratio may be adjusted. The terms of the Unico Series A Stock shall be similar
to those of the Chatfield Series A Stock and shall provide, INTER ALIA, that if
such Unico Series A Stock is not converted, any due and unpaid dividends will
accrue on such shares and will be declared when Chatfield Dean Holdings has
sufficient funds to make such dividend payment. Until 50% of the shares of
Unico Series A Stock have been converted, the holders of Unico Series A Stock
will vote as a class for the election of one of Chatfield Dean Holdings
directors to represent that class. In addition, the holders of Unico Series
A Stock will have one vote per share held.
Dividends at the rate of 7% per annum will be paid on the Unico Series A
Stock in cash on June 1 and December 1 of each year if Chatfield Dean Holdings
has available funds and if such payment will not violate any applicable
corporate laws. Declared but unpaid dividends will accrue without interest
until paid. Holders of the Unico Series A Shares will have no right to demand
payment of accrued dividends.
Chatfield Dean Holdings may redeem all or some of the Unico Series A Stock
for cash in an amount (the "Redemption Price") of the purchase price plus
accrued and unpaid dividends and a premium based on the purchase price and
increasing annually from the date of issuance of the Chatfield Series A Stock or
Chatfield Series B Stock, as the case may be, on the following basis:
Year Premium
----- -------
1 10%
2 20%
3 30%
4 40%
5 and thereafter 50%
Upon a liquidation, dissolution or winding up of Chatfield Dean Holdings,
holders of the Unico Series A Stock will have the right to receive, out of the
assets of Chatfield Dean Holdings available for distribution to shareholders, if
any, on a pro rata basis with the holders of the Unico common stock, an amount
up to the Redemption Price. This right is senior to that of holders of Unico
common stock, and is junior to that of all creditors.
UNICO WARRANTS
Each holder of Unico common stock issued and outstanding immediately before
the Effective Time shall be entitled to receive three newly created Unico
warrants; one Unico Three Year Warrant, one Unico Four Year Warrant and one
Unico Five Year Warrant, for each share of Chatfield Dean Holdings common stock
held.
* UNICO THREE YEAR WARRANTS
The Unico Three Year Warrant evidences the right of the holder thereof to
purchase .3 (three-tenths) of a share of Chatfield Dean Holdings common stock at
the price of $1.20 per the .3 share of Chatfield Dean Holdings common stock (or
$4.00 for full share) for a period of 5 years commencing on the third
anniversary of the Effective Time and ending on the same date 5 years
thereafter.
* UNICO FOUR YEAR WARRANTS
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<PAGE>
The Unico Four Year Warrant evidences the right of the holder thereof to
purchase .4 (four-tenths) of a share of Chatfield Dean Holdings common stock at
the price of $1.94 per the .4 share of Chatfield Dean Holdings common stock (or
$4.85 for full share) for a period of 5 years commencing on the fourth
anniversary of the Effective Time and ending on the same date 5 years
thereafter.
* UNICO FIVE YEAR WARRANTS
The Unico Five Year Warrant evidences the right of the holder thereof to
purchase .5 (five-tenths) of a share of Chatfield Dean Holdings common stock at
the price of $2.85 per the .5 share of Chatfield Dean Holdings common stock (or
$5.70 for full share) for a period of 5 years commencing on the fifth
anniversary of the Effective Time and ending on the same date 5 years
thereafter.
Unico Warrants which remain unexercised at expiry shall be of no value.
COMPENSATION OPTIONS
The Compensation Options to be issued to Messrs. Kenneth Greenberg, William
Hagler and Rick Hurt shall evidence the right of the holder thereof to purchase,
respectively, 100,000, 37,500 and 12,500 shares of Chatfield Dean Holdings
common stock at the price of such stock at the Effective Time of the Merger.
The Compensation Options shall have a 5 year duration beginning at the Effective
Time of the Merger, contain one demand registration right and perpetual piggy
back registration rights.
Compensation Options which remain unexercised at expiry shall be of no
value.
CHATFIELD WARRANTS
Pursuant to the Merger terms, Chatfield Warrants which remain unexercised
at the Effective Time shall be of no value.
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<PAGE>
PROPOSAL TO ADOPT AMENDED AND RESTATED ARTICLES OF INCORPORATION
GENERAL
The Merger Agreement requires that the shareholders of Unico (A) adopt the
Amended and Restated Articles which will (1) change the name of Unico to
"Chatfield Dean Holdings, Inc.;" (2) increase the number of authorized shares of
Unico common stock from 2,500,000 to 20,000,000 and increase the number of
authorized preferred shares from 8,000,000 preferred to 20,000,000 preferred
shares (to include the Unico Series A Stock); (3) approve the spin-off by Unico
of its subsidiary Intermountain Refining Co. Inc. ("IRC") by pro rata
distribution to current Unico shareholders (the shareholders of Unico have
previously approved the spin-off of IC and its consolidation with Gas Technology
Group, Inc. ("GTI")); and (4) authorize the Unico Three Year Warrants, Unico
Four Year Warrants and Unico Five Year Warrants. Approval and adoption of the
Amended and Restated Articles is conditioned upon the approval of the Merger
Agreement and the other proposals submitted for a vote of the shareholders of
Unico in connection therewith. Accordingly, although Unico's shareholders may
vote separately on the Amended and Restated Articles, the Merger Agreement must
be approved and the directors nominated for election at the Unico Meeting must
be elected in order for the Amended and Restated Articles to be adopted. If the
shareholders of Unico fail to approve the Merger Agreement, or elect such
directors, the Amended and Restated Articles will not be adopted. See "UNICO
MEETING;" and "THE MERGER - Conditions of the Merger Agreement."
SUMMARY OF THE MATERIAL CHANGES EFFECTED BY THE AMENDED AND RESTATED ARTICLES
The following is a summary of the material changes effected by the Amended
and Restated Articles and is qualified in its entirety by reference to the copy
or the Amended and Restated Articles attached as an Appendix to this Information
Statement/Prospectus. Shareholders are encouraged to read the Amended and
Restated Articles in their entirety.
CHANGE OF NAME
The Amended and Restated Articles would change the name of Unico to
"Chatfield Dean Holdings, Inc." The name change is intended to identify
Chatfield Dean Holdings with the business of Chatfield, which will constitute
the principal business operations of the combined entity following the Merger.
INCREASE IN AUTHORIZED COMMON STOCK; INCREASE IN ISSUED COMMON STOCK
Unico's Articles of Incorporation presently authorize the issuance of up to
2,500,000 shares of Unico common stock, par value $.20. The Amended and
Restated Articles would increase the number of authorized shares of Unico common
stock to 20,000,000 shares of common stock and 20,000,000 shares of Unico
preferred stock, from which, INTER ALIA, the Unico Series A Stock and Unico
"blank check" preferred stock would be designated. The Amended and Restated
Articles do not change the terms of the Unico common stock, which does not have
preemptive rights. The additional shares of authorized Unico common stock would
be identical to the shares of Unico common stock now authorized. See
"DESCRIPTION OF CHATFIELD DEAN HOLDINGS' CAPITAL STOCK - Unico Common Stock;"
and " - Unico Preferred Stock."
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<PAGE>
If the Merger is consummated, assuming there are no requests for
dissenters' rights, ____ shares of Unico common stock (at the Effective Time
Chatfield Dean Holdings common stock) will be issued in exchange for all the
outstanding shares of Chatfield common stock; _____ shares of Chatfield Dean
Holdings common stock will be issued in exchange for all the outstanding shares
of Chatfield Plan Common Stock; 1,125,346 shares of Chatfield Dean Holdings
common stock will be issued upon conversion of the Unico Series A Stock issued
to holders of Chatfield Series A Stock; ____ shares of Chatfield Dean Holdings
common stock will be issued upon conversion of the Unico Series A Stock issued
to holders of Chatfield Series B Stock; 1,197,259 shares of Chatfield Dean
Holdings common stock will be reserved for future issuance upon exercise of the
Unico Warrants; ___ shares of Chatfield Dean Holdings common stock will be
reserved for future issuance under Chatfield Dean Holdings' newly created
employee stock bonus plan; 1,000,000 shares will be reserved for future issuance
under the EIP; 150,000 shares of Chatfield Dean Holdings common stock will be
reserved for future issuance upon exercise of the Compensation Options granted
to Messrs. William Hagler, Rick Hurt and Kenneth Greenberg; and 11,125 shares of
Chatfield Dean Holdings common stock will be reserved for future issuance upon
exercise of the Debenture Warrants granted to Mr. William Hagler.
The authorization of additional shares of Unico common stock would permit
Chatfield Dean Holdings, following consummation of the Merger, to issue
additional shares of common stock (which will be shares of Chatfield Dean
Holdings common stock after giving effect to the Merger) at the discretion of
its then Board of Directors for future acquisitions, stock splits, stock
dividends, equity financings, future employee stock bonus plan grants and/or
future EIP grants and other corporate purposes. The Unico Board of Directors
has no present intention to issue any additional shares following the Merger,
other than in connection with Chatfield's present, and post-Merger, Chatfield
Dean Holdings' future, obligations under their respective employee stock bonus
plans and the EIP.
Although the increase in the number of shares of authorized Unico common
stock is not intended as means of dissuading a future change in control or
takeover of Chatfield Dean Holdings, use of these shares for any such purpose is
possible. Shares of authorized but unissued or unreserved common stock, for
example, could be issued in an effort to dilute the stock, ownership and voting
power of persons seeking to obtain control of Chatfield Dean Holdings, or could
be issued to purchasers who would support the Chatfield Dean Holdings Board of
Directors in opposing a takeover.
ISSUANCE OF NEWLY CREATED UNICO SERIES A STOCK AND UNICO WARRANTS
Unico's Articles presently do not authorize the issuance of the Unico
Series A Stock. The Amended and Restated Articles would authorize the creation
of additional preferred shares, from which the Unico Series A Stock could be
designated. The issuance of the Unico Series A Stock would be vested with the
Chatfield Dean Holdings' Board of Directors, without the necessity of a vote or
further action or authorization by the shareholders. The Chatfield Dean
Holdings' Board of Directors would cause Chatfield Dean Holdings to issue the
Unico Series A Stock to holders of the Chatfield Series A Stock and Chatfield
Series B Stock in accordance with the terms of the Merger.
Unico's Articles do not presently authorize the issuance of the Unico
Warrants. The Amended and Restated Articles would authorize creation of 997,715
Unico Three Year Warrants, 997,715 Unico Four Year Warrants and 997,715 Unico
Five Year Warrants. The issuance of the Unico Warrants would vest with the
Chatfield Dean Holdings' Board of Directors, without the necessity of a vote or
further action or authorization by the shareholders. The Chatfield Dean
Holdings' Board of Directors would
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<PAGE>
cause Chatfield Dean Holdings to issue the Unico Warrants to present holders of
Unico common stock in accordance with the terms of the Merger.
AUTHORIZATION OF CHATFIELD DEAN HOLDINGS PREFERRED STOCK
The authorization of the Chatfield Dean Holdings preferred stock (other
than the Unico Series A Stock) would permit Chatfield Dean Holdings, following
the consummation of the Merger, to have additional shares of Chatfield Dean
Holdings preferred stock available for issuance at the discretion of the
Board of Directors for future acquisitions, equity financing and other
corporate purposes, without further approval of the shareholders unless
required by applicable law, and for such consideration as the Chatfield Dean
Holdings' Board of Directors may determine and as may be permitted by
applicable law. Possible effects of such issuances could include: (1)
reduction of the amount otherwise available for payment of dividends on the
Chatfield Dean Holdings common stock; (ii) restriction of dividends on the
Chatfield Dean Holdings common stock; (iii) dilution of the voting power of
the Chatfield Dean Holdings common stock; and (iv) restriction of the rights
of holders of the Chatfield Dean Holdings common stock to share in Chatfield
Dean Holdings' assets upon liquidation until satisfaction of any liquidation
preference granted to the holders of Chatfield Dean Holdings preferred stock.
In addition, authorization of the Chatfield Dean Holdings preferred
stock is not intended as a means of preventing or discouraging a future
change in control or takeover of Chatfield Dean Holdings, although use of
such shares for any such purpose is possible. Shares of authorized but
undesignated and unissued Chatfield Dean Holdings preferred stock, for
example, could be issued in an effort to dilute the stock ownership and
voting power of persons seeking to obtain control of Chatfield Dean Holdings
or could be issued to purchasers who would support the Chatfield Dean
Holdings Board of Directors in opposing a takeover proposal.
VOTE REQUIRED
The affirmative vote of 66 2/3% of the outstanding shares of Unico common
stock is required for the adoption of the Amended and Restated Articles. THE
BOARD OF DIRECTORS OF UNICO RECOMMENDS THAT UNICO'S SHAREHOLDERS APPROVE THE
PROPOSAL TO ADOPT THE AMENDED AND RESTATED ARTICLES OF INCORPORATION. Mr.
William Hagler, who owns approximately 43% of the outstanding shares of Unico
common stock entitled to vote, has determined to vote in favor of the Merger and
adoption of the Amended and Restated Articles of Incorporation. Approval of the
Amended and Restated Articles is conditioned upon approval of the Merger
Agreement and election of Chatfield's proposed slate of directors.
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LEGAL MATTERS
The validity of the shares of Unico common stock, Unico Series A Stock and
Unico Warrants to be issued in connection with the Merger will be passed upon by
Thad W. Turk, Esq. Subject to certain conditions and assumptions described
herein, the federal income tax consequences of the Merger will be passed upon
by Watson, Farley & Williams, New York, New York.
Lohf, Shaiman & Jacobs, P.C. will pass upon certain matters under the
Merger Agreement, as counsel for Chatfield.
OTHER MATTERS
The Unico Board and the Chatfield Board are not aware of any matters not
set forth herein that may properly come before either of the Unico Meeting or
Chatfield Meeting. If, however, further business properly comes before the Unico
Meeting or Chatfield Meeting, the persons present or represented at such
Meetings will have the right to vote thereon in accordance with their best
judgement.
EXPERTS
The audited financial statements of Chatfield included in this Information
Statement/Prospectus and elsewhere in the Registration Statement, to the extent
and for the periods indicated in their report, have been audited by Spicer,
Jeffries & Co., independent certified public accountants, and are included
herein upon the authority of said firm as experts in accounting and auditing in
giving said report.
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INDEX TO FINANCIAL STATEMENTS
Independent Auditors' Report F-2
Consolidated Statements of Financial Condition
as of September 30, 1996 and 1995 F-3
Consolidated Statements of Operations
for the years ended September 30, 1996, 1995 and 1994 F-4
Consolidated Statements of Changes in Shareholders' Equity
for the years ended September 30, 1996, 1995 and 1994 F-5
Consolidated Statements of Cash Flows
for the years ended September 30, 1996, 1995 and 1994 F-6 to F-7
Notes to Consolidated Financial Statements
for the years ended September 30, 1996, 1995 and 1994 F-8 to F-12
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Chatfield Dean & Co., Inc.
We have audited the accompanying consolidated statements of financial condition
of Chatfield Dean & Co., Inc. as of September 30, 1996 and 1995, and the related
consolidated statements of operations, changes in shareholders' equity, and cash
flows for the years ended September 30, 1996, 1995 and 1994. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
of supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Chatfield Dean &
Co., Inc. as of September 30, 1996 and 1995, and the results of their operations
and their cash flows for the years ended September 30, 1996, 1995 and 1994 in
conformity with generally accepted accounting principles.
As discussed in Note 7 to the consolidated financial statements, the Company is
involved in various litigation and disputes. The ultimate outcome of these
matters cannot presently be determined.
SPICER, JEFFRIES & CO.
Denver, Colorado
November 13, 1996
F-2
<PAGE>
CHATFIELD DEAN & CO., INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
September 30,
ASSETS
1996 1995
------------------------------
Cash and cash equivalents $ 718,209 $185,685
Receivable:
Clearing Broker 1,296,794 $1,349,456
Employees 560,702 207,995
Note Receivable (Note 8) 95,833 271,528
Securities owned, at market value 210,674 275,473
Deposit with clearing broker 1,330,369 1,120,000
Furniture and equipment, at cost
[net of accumulated depreciation of 270,730 240,545
$562,793 and $424,557 in 1996
and 1995, respectively (Note 3)]
Other assets 593,448 296,805
------------------------------
TOTAL ASSETS $5,076,759 $3,947,487
------------------------------
------------------------------
LIABILITIES AND SHAREHOLDERS'
EQUITY LIABILITIES
Commissions payable $794,554 $1,129,276
Securities sold but not yet
purchased, at market value 61,612 163,250
Trade accounts payable 945,852 1,122,437
Other accrued liabilities 335,279 544,263
Note payable (note 9) 283,985 0
Obligations under capital lease 64,615 106,816
(Note 3)
------------------------------
TOTAL LIABILITIES 2,485,897 3,066,042
------------------------------
COMMITMENTS AND CONTINGENCIES
(Notes 3 and 7)
LIABILITIES SUBORDINATED TO CLAIMS OF
GENERAL CREDITORS (Note 6) 1,100,000 350,000
------------------------------
SHAREHOLDERS' EQUITY (Notes 4 and 10)
Preferred stock, no par value,
authorized 5,000,000 shares
Series A, 338,450 shares issued
and outstanding 3,131,341 0
Series B, 190,000 shares issued
and outstanding 1,839,469 0
Common stock, no par value,
authorized 20,000,000 shares
[4,979,450 & 2,964,746 shares
issued and outstanding in
1996 and 1995, respectively] 1,762,517 1,659,138
Deficit (5,242,465) (1,127,693)
------------------------------
TOTAL SHAREHOLDERS' EQUITY 1,490,862 531,445
------------------------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $5,076,759 $3,947,487
------------------------------
------------------------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-3
<PAGE>
CHATFIELD DEAN & CO., INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended September 30,
1996 1995 1994
REVENUES
-----------------------------------------------
Commissions $20,734,369 $24,926,458 $23,135,765
Trading profits, net 424,298 1,924,016 3,337,944
Corporate finance income 651,684 1,362,688 1,255,629
Other 3,097,818 3,182,646 3,401,061
-----------------------------------------------
TOTAL REVENUES 24,908,169 31,395,808 31,130,399
-----------------------------------------------
EXPENSES
Commissions 12,440,856 13,748,042 13,121,459
Clearing Charges 2,894,536 3,257,413 2,470,256
Occupancy and equipment
costs 2,845,203 3,100,882 2,470,583
Salaries and Wages 3,680,007 4,178,079 5,657,726
General and
administrative 3,187,682 3,757,308 3,561,302
Communications 1,709,219 2,140,068 2,742,827
Postage and printing 531,055 503,671 908,551
Legal and professional 884,039 1,429,838 1,346,029
Advertising and promotion 372,230 273,771 608,443
Settlements 478,114 262,178 1,790,351
-----------------------------------------------
TOTAL EXPENSES 29,022,941 32,651,250 34,677,527
-----------------------------------------------
LOSS BEFORE TAXES (4,114,772) (1,255,442) (3,547,128)
Income tax benefit 0 33,738 1,026,554
(Note 2)
-----------------------------------------------
NET LOSS (4,114,772) ($1,221,704) ($2,520,574)
-----------------------------------------------
-----------------------------------------------
NET LOSS PER COMMON
SHARE
(Note 1) ($.90) ($.73) ($3.92)
-----------------------------------------------
-----------------------------------------------
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING
(Note 1) 4,582,582 1,680,947 643,281
-----------------------------------------------
-----------------------------------------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-4
<PAGE>
CHATFIELD DEAN & CO., INC
Consolidated Statements of Changes in Shareholders' Equity
For the Years Ended September 30, 1996, 1995 and 1994
<TABLE>
<CAPTION>
Common Stock Preferred Stock Retained
------------ --------------- Earnings
Shares Amount Shares Shares (Deficit)
Series A Amount Series B Amount
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCES,
September 30, 1993
1,747 $370,512 0 $0 0 $0 $2,614,585
Issuance of
common stock 1,152 500,000
Net loss (2,520,574)
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCES,
September 30, 1994 2,899 870,512 0 0 0 0 94,011
Conversion of
subordinated loan
to common stock
(Note 6) 5,506 750,000
Sale of common
stock 89 38,626
Net loss (1,221,704)
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCES,
September 30, 1995 8,494 1,659,138 0 0 0 0 (1,127,693)
Common stock
forward split
(Note 10) 2,956,252
Retirement of
common stock
(Note 10) (440,501)
Common stock 45,626
issued, stock
bonus plan, net
(Note 10) 2,307,212
Issuance of stock, 57,753 338,450 3,181,430 190,000 1,900,000
net of offering
costs of $203,070
(Note 10) 147,993
Dividends paid (50,089) (60,531)
Net loss (4,114,772)
------------------------------------------------------------------------------------------------
BALANCES,
September 30, 1996 4,979,450 $1,762,517 338,450 $3,131,341 190,000 $1,839,469 ($5,242,465)
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-5
<PAGE>
CHATFIELD DEAN & CO., INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended September 30,
1996 1995 1994
----------------------------------------------
----------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss ($4,114,772) ($1,221,704) ($2,520,574)
Adjustments to reconcile net loss
to net cash used in operating activities:
Common stock issued as compensation 45,626 0 0
Abandoned lease 0 260,000 0
Depreciation 113,847 117,687 93,135
(Increase) decrease in
receivables - clearing broker 52,662 (717,528) 1,105,507
(Increase) decrease in deposit
with clearing broker (210,369) (420,000) 775,000
(Increase) decrease in securities
owned, at market 64,799 222,459 (239,692)
(Increase) decrease in other
assets (296,643) (80,920) 9,759
Increase (decrease) in trade
accounts payable 370,951 197,108 (2,510,431)
Increase (decrease) in securities
sold but not yet purchased,
at market (101,638) (108,927) (254,438)
Increase (decrease) in accrued
commissions payable (334,722) 154,917 (756,615)
Increase (decrease) in accrued
income taxes 0 (104,000) (11,730)
Increase (decrease) in other
accrued liabilities (208,984) 121,781 (172,601)
(Increase) decrease income taxes receivable 0 1,028,000 (1,028,000)
---------------------------------------------
NET CASH USED IN OPERATING ACTIVITIES (4,619,243) (551,127) (5,510,680)
---------------------------------------------
CASH FLOW FROM INVESTING ACTIVITIES
(Increase) decrease in employee
receivables, net (352,707) 98,759 117,930
Purchase of furniture and equipment (144,032) (27,565) 0
(Increase) decrease in note receivable, net 175,695 (271,528) 0
---------------------------------------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (321,044) (200,334) 117,930
---------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in subordinated liabilities, net 925,000 0 1,100,000
Issuance of stock, net of offering costs 5,139,183 38,626 500,000
Payments on note payable (438,552) 0 0
Payments on capital lease obligations (42,200) (39,521) 0
Dividends paid (110,620) 0 0
---------------------------------------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 5,472,811 (895) 1,600,000
---------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 532,524 (752,356) (3,792,750)
CASH AND CASH EQUIVALENTS, beginning of year 185,685 938,041 4,730,791
---------------------------------------------
CASH AND CASH EQUIVALENTS, end of year $718,209 $185,685 $938,041
---------------------------------------------
---------------------------------------------
</TABLE>
F-6
<PAGE>
<TABLE>
<CAPTION>
Year Ended September 30,
1996 1995 1994
----------------------------------------------
----------------------------------------------
<S> <C> <C> <C>
SUPPLEMENTAL DISCLOSURE OF INVESTING AND FINANCING
ACTIVITIES
Conversion of subordinated loan
to common stock $0 $750,000 $0
Conversion of subordinated loan to note payable $175,000 $0 $0
Conversion of accounts payable to note payable $547,536 $0 $0
Common stock issued as compensation $45,626 $0 $0
Equipment acquired through
capital leases $0 $146,337 $0
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-7
<PAGE>
CHATFIELD DEAN & CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Chatfield Dean & Co., Inc. (the "Company") was organized on November 14, 1983 as
a Colorado corporation and is engaged in business as a securities broker-dealer.
The consolidated financial statements include the accounts of Chatfield Dean &
Co., Inc. and its 80% owned subsidiary, Chatfield Real Estate, LLC, and its
wholly-owned subsidiary, Chatfield Dean Insurance Corp. and Chatfield Dean
Capital Corp. These subsidiaries have had minimal operations as of September
30, 1996 and all intercompany accounts and transactions have been eliminated in
consolidation.
Securities owned or sold, but not yet purchased by the Company (substantially
common stocks) are recorded at market value and related changes in market value
are reflected in income. For the years ended September 30, 1996, 1995 and 1994,
the Company has recorded proprietary transactions on a trade date basis.
Commission revenue and related expenses have been recorded on a trade date
basis.
The Company under Rule 15c3-3(k)(2)(ii) is exempt from the reserve and
possession or control requirements of Rule 15c3-3 of the Securities and Exchange
Commission. The Company does not carry or clear customer accounts.
Accordingly, all customer transactions are executed and cleared on behalf of the
Company by its clearing broker on a fully disclosed basis. The Company's
agreement with its clearing broker provides that as clearing broker, that firm
will make and keep such records of the transactions effected and cleared in the
customer accounts as are customarily made and kept by a clearing broker pursuant
to the requirements of Rules 17a-3 and 17a-4 of the Securities Exchange Act of
1934, as amended (the "Act"). It also performs all services customarily
incident thereon, including the preparation and distribution of customer's
confirmations and statements and maintenance margin requirements under the Act
and the rules of the Self Regulatory Organizations for which the Company is a
member. As of September 30, 1996 and 1995, substantially all the securities
owned and the receivables/payables from the clearing broker reflected on the
statements of financial condition are positions with and amounts due from/to
this clearing broker. The Company has agreed to indemnify its clearing broker
for losses that the clearing broker may sustain from the customer accounts
introduced by the Company.
The Company provides for depreciation of furniture and equipment on the
straight-line method based on estimated lives of three to five years.
Net loss per share of common stock is based on the weighted average number of
shares of common stock outstanding, giving effect to the forward stock split
discussed in Note 10. Common stock equivalents are not included in the weighted
average calculation since their effect would be anti-dilutive.
For purposes of the statement of financial condition and cash flows, the Company
considers money market funds to be cash equivalents.
F-8
<PAGE>
CHATFIELD DEAN & CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 2 - INCOME TAXES
The income tax benefit reflected in the statement of operations in 1995 is
substantially comprised of the reversal of the prior years' deferred income tax
payable. The income tax benefit in 1994 is due to the carryback of the 1994 net
operating loss to prior years. The income tax benefit in 1994 differs from the
statutory rates due to certain expenses not being deductible for income tax
purposes. As of September 30, 1996, the Company has a net operating loss
carryforward for income tax purposes of approximately $4,800,000 available to
offset future income taxes, and a net operating loss for book purposes of
approximately $5,200,000 expiring in 2011.
Temporary income tax differences arise from the timing of the reporting of
income, expenses, contingencies and depreciation for income tax purposes versus
financial reporting purposes,
NOTE 3 - COMMITMENTS
The Company leases office space and equipment under various operating and
capital leases and has subleases on office space. Future minimum lease
payments under noncancelable leases net of sublease rentals of approximately
$603,000 as of September 30, 1996 are as follows:
Principal due on
Year ending Capital
September 30, Operating Capital Lease
------------- --------- ------- -----
1997 $1,393,000 $61,663 $42,229
1998 1,070,000 18,249 22,386
1999 339,000
2000 283,000
2001 287,000
Thereafter 24,000
---------- ------- -------
$3,396,000 $79,912 $64,615
-------
-------
Less amount
representing ----------
interest ---------- (15,297)
-------
Present value
on net $64,615
minimum lease -------
payments -------
F-9
<PAGE>
CHATFIELD DEAN & CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Total rent expense for operating leases was approximately $2,400,000, $2,454,000
and $1,675,000 for the years ended September 30, 1996, 1995 and 1994,
respectively, net of sublease rentals of approximately $148,000 and $9,000 for
the years ended September 30, 1996 and 1995, respectively.
NOTE 4 - NET CAPITAL REQUIREMENTS
Pursuant to the net capital provisions of Rule 15c3-1 of the Securities Exchange
Act of 1934, as amended, the Company is required to maintain a minimum net
capital, as defined under such provisions. As of September 30, 1996, the
Company had net capital and net capital requirements of $1,509,468 and $250,000,
respectively. the Company's net capital ratio (aggregate indebtedness to net
capital) was 1.40 to 1. According to Rule 15c3-1, the Company's net capital
ratio shall not exceed 15 to 1.
NOTE 5 - SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest during the year ended September 30, 1996, 1995 and 1994
was $117,425, $76,503 and 41,279, respectively. Income taxes paid during the
years ended September 30,1995 and 1994 was $10,141 and $13,535, respectively.
NOTE 6 - LIABILITIES SUBORDINATED TO CLAIMS OF GENERAL CREDITORS
As of September 30, 1994 the Company had borrowed money under a $750,000
subordinated agreement bearing interest at 12% per annum, from the major
shareholder of the Company due May 31, 1995 and a $350,000 subordinated
agreement from an unrelated entity, bearing interest at 7% annum, which was due
September 30, 1995. The $750,000 subordinated agreement was converted into
5,506 shares of common stock on May 31, 1995 by the major shareholder. The
$350,000 subordinated note payable carries an interest rate of seven percent and
was due September 30, 1995.
On September 30, 1995, a $350,000 subordinated note payable had matured.
However, due to the Company's net capital requirements on that date, its
repayment was suspended and was not repaid until fiscal 1996. Effective January
31, 1996, the Company borrowed $1,000,000 and $100,000 under two separate
subordinated loan agreements from unrelated entities, bearing interest at 12%
per annum and which mature on January 31, 1997 and February 1, 1997,
respectively.
The subordinated borrowings are covered by agreements approved by the National
Association of Securities Dealers, Inc. and are thus available in computing net
capital under the Securities and Exchange Commission's uniform net capital rule.
To the extent that such borrowings are required for the Company's continued
compliance with minimum net capital requirements, they may not be repaid. The
agreements require the Company to make monthly payments of interest.
F-10
<PAGE>
CHATFIELD DEAN & CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 7 - CONTINGENCIES
The Company is involved in various litigations and disputes arising in the
normal course of business, some of which are in the preliminary or early stages.
In certain of these matters, large and/or indeterminate amounts are sought.
Management, after review and discussion with counsel, believes the Company has
meritorious defenses and intends to vigorously defend itself in these various
matters, but it is not feasible to predict or determine the final outcomes at
the present time,
NOTE 8 - NOTE RECEIVABLE
On September 15, 1995, the Company received a favorable settlement in the amount
of $287,500 from an unrelated entity and certain individuals. The note is non-
interest bearing and is payable in 18 monthly installments of $15,972.
NOTE 9 - NOTE PAYABLE
In April of 1996, the Company converted a vendor's subordinated loan and certain
amounts included in accounts payable due this vendor into a note payable. The
note payable is due in monthly installments of $75,268 bears interest at nine
percent per annum, secured by all physical assets of the Company, and is due on
January 20, 1997.
NOTE 10 - SHAREHOLDERS' EQUITY
During the year ended September 30, 1996, the Company issued two classes of
preferred stock. Series A 7% Cumulative Convertible Preferred Stock and Series
B 7% Cumulative Preferred Stock. Both Series A and B shareholders are entitled
to receive cash dividends at a rate of 7% per annum payable semi-annually and if
not paid, are cumulative. Each share of Series A stock is convertible at the
option of the holder into 3.33 shares of common stock. Upon liquidation, the
preferred shareholders are entitled to receive $10 per share plus a premium of
10-50% depending upon the period held by each such preferred shareholder.
In addition, during the year ended September 30, 1996, the Company authorized a
forward stock split of its common stock. Each shareholder of record received
349.04 shares of common stock for each share owned. In connection with the
forward split the majority shareholder of the Company's common stock agreed to
retire 440,501 shares of his common stock (after giving effect to the forward
stock split).
During November 1995, the Company adopted an employee stock bonus plan. The
Company reserved 2,327,762 shares of common stock pursuant to the plan. Shares
issued under the plan are subject to forfeiture if an employee terminates before
five years of service.
F-11
<PAGE>
CHATFIELD DEAN & CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 11 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
In the normal course of business, the Company's client activities ("clients")
through its clearing broker involve the execution, settlement and financing of
various client securities transactions. These activities may expose the Company
to off-balance and sheet risk. In the event the client fails to satisfy its
obligations, the Company may be required to purchase or sell financial
instruments at prevailing market prices in order to fulfill the client's
obligations.
The Company has sold securities that it does not own and it will, therefore, be
obligated to purchase such securities at a future date. The Company has
recorded this obligation in the financial statements at the September 30, 1996
market value of the securities. The Company may incur a loss if the market
value
of the securities increases subsequent to September 30, 1996.
The Company has deposits in banks in excess of the FDIC insured amount of
$100,000. The amounts in excess of the $100,000 are subject to loss should the
bank cease business.
F-12
<PAGE>
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Unico's bylaws and the New Mexico Business Corporation Act and Chatfield's
bylaws and the Colorado Business Corporate Act provide for indemnification of
officers and directors if certain claims are made against them in their
corporate capacity.
INFORMATIONAL UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the small business issuer pursuant to the foregoing provisions, or
otherwise, the small business issuer has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, enforceable.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are best made, a
post-effective amendment to this registration statement;
(2) To include any prospectus required by Section 10(a)(3) of the Securities
Act;
(ii) To reflect in the prospectus any facts or events assure after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20 percent change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement active to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereto.
File a post-effective amendment to remove from registration any of the
securities remain unsold at the end of the offering.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference herein, within one business day
of receipt of such request, and to send the incorporated documents by first
class mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.
The undersigned hereby undertakes to supply by means of a post-effective
amendment all information concerning a transaction, and the company being
acquired involved therein, that was not the subject of and included in the
registration statement when it became effective.
II-1
<PAGE>
EXHIBITS AND FINANCIAL STATEMENTS
Financial Statements (as attached)
(a) Exhibits:
The following exhibits are filed herewith or will be delivered by amendment,
for filing:
2.1+ Agreement and Plan of Merger dated as of July 30, 1996, as amended
_______ (included as Appendix A to the Information
Statement/Prospectus)
2.2+ Further Amendment to Agreement and Plan of Merger, dated _____, 1997
(included as Appendix A to the Information Statement/Prospectus)
3.1(i)* Unico Articles of Incorporation
3.1(ii)* Unico By-Laws
3.2+ Unico Amendment and Restated Articles of Incorporation (included as
Appendix D to the Information Statement/Prospectus)
4.1+ Certificate of Designations for the Unico Series A Stock
4.2+ Unico Three Year Warrant Agreement
4.3+ Unico Four Year Warrant Agreement
4.4+ Unico Five Year Warrant Agreement
5.1+ Opinion and consent of Thad W. Turk, Esq. regarding legality of the
securities
8.1+ Opinion and consent of Watson, Farley & Williams regarding tax matters
10.1+ K.N. Energy Contract
10.2+ Chatfield Office Lease Schedule
10.3+ Chatfield's Subordinated Loan with Hanifen Imhoff Clearing Corp.
10.4+ Subordinated Loan with Lohf, Shaiman & Jacobs, P.C.
10.5+ MCI Agreement
10.6+ Hanifen Imhoff Clearing Corp. Clearing Agreement
10.7+ Automated Securities Clearance Trading System Agreement
10.8+ Amended and Restated Fully Disclosed Correspondent Agreement
10.9+ Chatfield Dean & Co., Inc. Stock Bonus Plan
11.1+ Statement re: computation of per share earnings
12.1+ Statement of ratios to fixed charges
13.1* Unico's 1996 Annual Report
21.1 List of Unico Subsidiaries
23.1+ Consent of Thad W. Turk regarding legality of the securities (included
in Exhibit 5.1)
23.2+ Consent of Watson, Farley & Williams regarding tax matters (included
in Exhibit 8.1)
II-2
<PAGE>
23.3+ Consent of Lohf, Shaiman & Jacobs, P.C. regarding various corporate
issues pursuant to the Agreement and Plan of Merger (included in
Exhibit 99.1)
23.4 Consent of Independent Accountants, Spicer, Jeffries & Co. relating to
financial statements
24.1 Dissenters' Rights Statute of New Mexico
24.2+ Dissenters' Rights Statute of Colorado
99.1+ Opinion of and consent of Lohf, Shaman & Jacobs. P.C. regarding
various corporate issues pursuant to the Agreement and Plan of Merger
* Incorporated by Reference
+ To be filed by Amendment
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Information Statement/Prospectus to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Farmington, State of New
Mexico, on February 3, 1997.
UNICO, INC.
/s/ William N. Hagler
---------------------
By: William N. Hagler
Title: Chairman of the Board, President, Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacity and on the
dates indicated:
/s/ William N. Hagler
---------------------
William N. Hagler
Chairman of the Board, President, Chief Executive Officer
(principal executive officer)
February 3, 1997
/s/ Rick L. Hurt
----------------
Rick L. Hurt
Secretary, Treasurer and Controller
(principal financial officer
controller and principal accounting officer)
February 3, 1997
II-4
<PAGE>
INDEX TO EXHIBITS
2.1+ Agreement and Plan of Merger dated as of July 30, 1996, as amended
_______ (included as Appendix A to the Information
Statement/Prospectus)
2.2+ Further Amendment to Agreement and Plan of Merger, dated _____, 1997
(included as Appendix A to the Information Statement/Prospectus)
3.1(i)* Unico Articles of Incorporation
3.1(ii)* Unico By-Laws
3.2+ Unico Amendment and Restated Articles of Incorporation (included as
Appendix D to the Information Statement/Prospectus)
4.1+ Certificate of Designations for the Unico Series A Stock
4.2+ Unico Three Year Warrant Agreement
4.3+ Unico Four Year Warrant Agreement
4.4+ Unico Five Year Warrant Agreement
5.1+ Opinion and consent of Thad W. Turk, Esq. regarding legality of the
securities
8.1+ Opinion and consent of Watson, Farley & Williams regarding tax matters
10.1+ K.N. Energy Contract
10.2+ Chatfield Office Lease Schedule
10.3+ Chatfield's Subordinated Loan with Hanifen Imhoff Clearing Corp.
10.4+ Subordinated Loan with Lohf, Shaiman & Jacobs, P.C.
10.5+ MCI Agreement
10.6+ Hanifen Imhoff Clearing Corp. Clearing Agreement
10.7+ Automated Securities Clearance Trading System Agreement
10.8+ Amended and Restated Fully Disclosed Correspondent Agreement
10.9+ Chatfield Dean & Co., Inc. Stock Bonus Plan
11.1+ Statement re: computation of per share earnings
12.1+ Statement of ratios to fixed charges
13.1* Unico's 1996 Annual Report
21.1 List of Unico Subsidiaries
23.1+ Consent of Thad W. Turk regarding legality of the securities (included
in Exhibit 5.1)
23.2+ Consent of Watson, Farley & Williams regarding tax matters (included
in Exhibit 8.1)
* Incorporated by Reference
+ To be filed by Amendment
<PAGE>
Exhibit 21.1
LIST OF SUBSIDIARIES OF UNICO, INC.
Unico, Inc. has three subsidiaries, each doing business under their
individual corporate name. Each subsidiary listed below will be spun-off by
Unico by pro rata distribution to current Unico shareholders at the Effective
Time of the Merger.
Name of Subsidiary State of Incorporation
- -------------------------------------------------------------------------------
1. Intermountain Refining Co., Inc.+ New Mexico
2. Intermountain Chemical, Inc.* Colorado
3. Gas Technologies Group, Inc. Colorado
+ The shareholders of Unico, Inc. have been asked to approve the spin-off of
Intermountain Refining do., Inc. in connection with the Merger.
* The shareholders of Unico, Inc. have previously approved the spin-off of
Intermountain Chemical, Inc. and its consolidation with Gas Technologies Group,
Inc.
<PAGE>
Exhibit 23.4
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the use in the Unico, Inc. registration statement on Form
S-4 of our report dated November 13, 1996 accompanying the consolidated
financial statements of Chatfield Dean & Co., Inc. for the years ended September
30, 1996, 1995 and 1994 which is part of the registration statement and to the
reference to us under the heading "Experts" in such registration statement.
February 3, 1997 SPICER JEFFRIES & CO.
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Exhibit 24.1
NEW MEXICO STATUTES
CHAPTER 53, CORPORATIONS
ARTICLE 15, BUSINESS CORPORATIONS; SALE OF ASSETS
Section 53-15-3. Right of shareholders to dissent and obtain payment for shares
A. Any shareholder of a corporation may dissent from, and obtain payment
for the shareholder's shares in the event of, any of the following
corporate actions:
(1) any plan of merger or consolidation to which the corporation is a
party, except as provided in Subsection C of this section;
(2) any sale or exchange of all or substantially all of the property
and assets of the corporation not made in the usual and regular course
of its business, including a sale in dissolution, but not including a
sale pursuant to an order of a court having jurisdiction in the
premises or a sale for cash on terms requiring that all or
substantially all of the net proceeds of sale be distributed to the
shareholders in accordance with their respective interests within one
year after the date of sale;
(3) any plan of exchange to which the corporation is a party as the
corporation the shares of which are to be acquired;
(4) any amendment of the articles of incorporation which materially
and adversely affects the rights appurtenant to the shares of the
dissenting shareholder in that it:
(a) alters or abolishes a preferential right of such shares;
(b) creates, alters or abolishes a right in respect of the redemption
of such shares, including a provision respecting a sinking fund for
the redemption or repurchase of such shares;
(c) alters or abolishes an existing preemptive right of the holder of
such shares to acquire shares or other securities; or
(d) excludes or limits the right of the holder of such shares to vote
on any matter, or to cumulate his votes, except as such right may be
limited by dilution through the issuance of shares or other securities
with similar voting rights; or
(5) any other corporate action taken pursuant to a shareholder vote
with respect to which the articles of incorporation, the bylaws or a
resolution of the board of directors directs that dissenting
shareholders shall have a right to obtain payment for their shares.
B. (1) A record holder of shares may assert dissenters' rights as to less
than all of the shares registered in his name only if the holder
dissents with respect to all of the shares beneficially owned by any
one person and discloses the name and address of the person or persons
on whose behalf the holder dissents. In that event, his rights shall
be determined as if the shares as to
E-24.1(i)
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which he has dissented and his other shares were registered in the
names of different shareholders.
(2) A beneficial owner of shares who is not the record holder may
assert dissenters' rights with respect to shares held on his behalf,
and shall be treated as a dissenting shareholder under the terms of
this section and Section 53-15-4 NMSA 1978 if he submits to the
corporation at the time of or before the assertion of these rights a
written consent of the record holder.
C. The right to obtain payment under this section shall not apply to the
shareholders of the surviving corporation in a merger if a vote of the
shareholders of such corporation is not necessary to authorize such
merger.
D. A shareholder of a corporation who has a right under this section to
obtain payment for his shares shall have no right at law or in equity
to attack the validity of the corporate action that gives rise to his
right to obtain payment, nor to have the action set aside or
rescinded, except when the corporate action is unlawful or fraudulent
with regard to the complaining shareholder or to the corporation.
Section 53-15-4 Rights of dissenting shareholders
A. Any shareholder electing to exercise his right of dissent shall file
with the corporation, prior to or at the meeting of shareholders at
which the proposed corporate action is submitted to a vote, a written
objection to the proposed corporate action. If the proposed corporate
action is approved by the required vote and the shareholder has not
voted in favor thereof, the shareholder may, within ten days after the
date on which the vote was taken or if a corporation is to be merged
without a vote of its shareholders into another corporation any of its
shareholders may, within twenty-five days after the plan of the merger
has been mailed to the shareholders, make written demand on the
corporation, or, in the case of a merger or consolidation, on the
surviving or new corporation, domestic or foreign, for payment of the
fair value of the shareholder's shares, and, if the proposed corporate
action is effected, the corporation shall pay to the shareholder, upon
the determination of the fair value, by agreement or judgment as
provided herein, and, in the case of shares represented by
certificates, the surrender of such certificates the fair value
thereof as of the day prior to the date on which the vote was taken
approving the proposed corporate action, excluding any appreciation or
depreciation in anticipation of the corporate action. Any shareholder
failing to make demand within the prescribed ten-day or twenty-five
day period shall be bound by the terms of the proposed corporate
action. Any shareholder making such demand shall thereafter be
entitled only to payment as in this section provided and shall not be
entitled to vote or to exercise any other rights of a shareholder.
B. No such demand may be withdrawn unless the corporation consents
thereto. If, however, the demand is withdrawn upon consent, or if the
proposed corporate action is abandoned or rescinded or the
shareholders revoke the authority to effect the action, or if, in the
case of a merger, on the date of the filing of the articles of merger
the surviving corporation is the owner of all the outstanding shares
of the other corporation, domestic and foreign, that are parties to
the merger, or if no demand or petition for the determination of fair
value by a court has been made or filed within the time provided in
this section, or if a court of competent jurisdiction
E-24.1(ii)
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determines that the shareholder is not entitled to the relief provided
by this section, then the right of the shareholder to be paid the fair
value of his shares ceases and his status as a shareholder will be
restored, without prejudice, to any corporate proceedings which may
have been taken during the interim.
C. Within ten days after such corporate action is effected, the
corporation, or, in the case of a merger or consolidation, the
surviving or new corporation, domestic or foreign, shall give written
notice thereof to each dissenting shareholder who has made demand as
provided in this section and shall make a written offer to each such
shareholder to pay for such shares at a specified price deemed by the
corporation to be the fair value thereof. The notice and offer shall
be accompanied by a balance sheet of the corporation, the shares of
which the dissenting shareholder holds, as of the latest available
date and not more than twelve months prior to the making of the offer,
and a profit and loss statement of the corporation for the twelve-
months' period ended on the date of the balance sheet.
D. If within thirty days after the date on which the corporate action was
effected the fair value of the shares is agreed upon between any
dissenting shareholder and the corporation, payment therefor shall be
made within ninety days after the date on which the corporate action
was effected, and, in the case of shares represented by certificates,
upon surrender of the certificates. Upon payment of the agreed value,
the dissenting shareholder shall cease to have any interest in the
shares.
E. If, within the period of thirty days, a dissenting shareholder and the
corporation do not so agree, then the corporation, within thirty days
after receipt of written demand from any dissenting shareholder, given
within sixty days after the date on which corporate action was
effected, shall, or at its election at any time within the period of
sixty days may, file a petition in any court of competent jurisdiction
in the county in this state where the registered office of the
corporation is located praying that the fair value of the shares be
found and determined. If, in the case of the merger or consolidation,
the surviving or new corporation is a foreign corporation without a
registered office in this state, the petition shall be filed in the
county where the registered office of the domestic corporation was
last located. If the corporation fails to institute the proceeding as
provided in this section, any dissenting shareholder may do so in the
name of the corporation. All dissenting shareholders, wherever
residing, shall be made parities to the proceeding as an action
against their shares quasi in rem. A copy of the petition shall be
served on each dissenting shareholder who is a resident of this state
and shall be served by registered or certified mail on each dissenting
shareholder who is a nonresident. Service on nonresidents shall also
be made by publication as provided by law. The jurisdiction of the
court shall be plenary and exclusive. All shareholders who are
parties to the proceeding shall be entitled to judgment against the
corporation for the amount of the fair value of their shares. The
court may, if it so elects, appoint one or more persons as appraisers
to receive evidence and recommend a decision on the question of fair
value. The appraisers shall have such power and authority as
specified in the order of their appointment or on an amendment
thereof. The judgment shall be payable to the holders of
uncertificated shares immediately, but to the holders of shares
represented by certificates only upon and concurrently with the
surrender to the corporation of certificates. Upon payment of the
judgment, the dissenting shareholder ceases to have any interest in
the shares.
E-24.1(iii)
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F. The judgment shall include an allowance for interest at such rate as
the court may find to be fair and equitable, in all the circumstances,
from the date on which the vote was taken on the proposed corporate
action to the date of payment.
G. The costs and expenses of any such proceeding shall be determined by
the court and shall be assessed against the corporation, but all or
any part of the costs and expenses may be apportioned and assessed as
the court deems equitable against any or all of the dissenting
shareholders who are parties to the proceeding to whom the corporation
made an offer to pay for the shares if the court finds that the action
of the shareholders in failing to accept the offer was arbitrary or
vexatious or not in good faith. Such expenses include reasonable
compensation for and reasonable expenses of the appraisers, but
exclude the fees and expenses of counsel for and experts employed by
any party; but if the fair value of the shares as determined
materially exceeds the amount which the corporation offered to pay
therefor, or if no offer was made, the court in its discretion may
award to any shareholder who is a party to the proceeding such sum as
the court determines to be reasonable compensation to any expert
employed by the shareholder in the proceeding, together with
reasonable fees of legal counsel.
H. Upon receiving a demand for payment from any dissenting shareholder,
the corporation shall make an appropriate notation thereof in its
shareholder records. Within twenty days after demanding payment for
his shares, each holder of shares represented by certificates
demanding payment shall submit the certificates to the corporation for
notation thereon that such demand has been made. His failure to do so
shall, at the option of the corporation, terminate his rights under
this section unless a court of competent jurisdiction, for good and
sufficient cause shown, otherwise directs. If uncertificated shares
for which payment has been demanded or shares represented by a
certificate on which notation has been so made is [are] transferred,
any new certificate issued therefor shall bear similar notation,
together with the name of the original dissenting holder of the
shares, and transferee of the shares acquires by such transfer no
rights in the corporation other than those which the original
dissenting shareholder had after making demand for payment of the fair
value thereof.
I. Shares acquired by a corporation pursuant to payment of the agreed
value therefor or to payment of the judgment entered therefor, as in
this section provided, may be held and disposed of by the corporation
as in the case of other treasury shares, except that, in the case of a
merger or consolidation, they may be held and disposed of as the plan
of merger or consolidation may otherwise provide.
E-24.1(iv)