<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2))
[_] Definitive Proxy Statement
[X] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
PS GROUP, INC.
-----------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
-----------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: N/A
(2) Aggregate number of securities to which transaction applies: N/A
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total fee paid: N/A
[X] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: N/A
(2) Form, Schedule or Registration Statement No.: N/A
(3) Filing Party: N/A
(4) Date Filed: N/A
Notes:
<PAGE>
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RULE 424(b)(3) SUPPLEMENT
[LOGO OF PS GROUP, INC.]
Suite 1050
4370 La Jolla Village Drive
San Diego CA 92122
(619) 642-2999
May 22, 1996
THIS LETTER CONTAINS IMPORTANT NEW INFORMATION REGARDING YOUR BOARD'S
UNANIMOUS RECOMMENDATION THAT YOU VOTE FOR THE REORGANIZATION AND FOR
--- ---
THE BOARD'S NOMINEES AT THE UPCOMING ANNUAL MEETING.
Dear Stockholders:
I AM PLEASED TO BE ABLE TO TELL YOU THAT PS GROUP HAS RECENTLY RESOLVED ITS
DIFFERENCES WITH SEVERAL STOCKHOLDERS REGARDING THE MATTERS TO BE VOTED ON AT
THE 1996 ANNUAL MEETING OF STOCKHOLDERS. THE UNDERSTANDINGS WE HAVE REACHED
WILL AVOID A PROXY CONTEST, UNITE OUR MAJOR STOCKHOLDERS BEHIND OUR
REORGANIZATION PLAN AND ALLOW THE BOARD TO GIVE ITS UNDIVIDED ATTENTION TO THE
ONGOING TASK OF ENHANCING STOCKHOLDER VALUE.
TAKING INTO ACCOUNT THE SHARES HELD BY THE STOCKHOLDERS WITH WHOM WE HAVE
RECENTLY REACHED THESE UNDERSTANDINGS, INCLUDING ESL PARTNERS, NORTH ATLANTIC
SMALLER COMPANIES INVESTMENT TRUST ("NASCIT") AND MR. JOSEPH E. PIRINEA, AS
WELL AS THE ADVICE WE HAD PREVIOUSLY RECEIVED REGARDING THE VOTING INTENTIONS
OF BERKSHIRE HATHAWAY AND THE VOTING INTENTIONS OF THE DIRECTORS AND OFFICERS
OF PS GROUP, HOLDERS OF OVER 50% OF PS GROUP STOCK (IN THE AGGREGATE) HAVE
SEPARATELY COMMITTED TO VOTE THEIR RESPECTIVE SHARES FOR THE PROPOSALS TO BE
ACTED ON AT THE 1996 ANNUAL MEETING. WE NOW EXPECT THAT THESE PROPOSALS WILL
BE ADOPTED. NEVERTHELESS, YOUR VOTE IS IMPORTANT. I HOPE THAT THESE RECENT
DEVELOPMENTS WILL ENCOURAGE YOU TO VOTE FOR THE PROPOSALS IF YOU HAVE NOT
---
ALREADY DONE SO.
The understandings we have reached, which are described in more detail in
the enclosed Supplement to our Prospectus/Proxy Statement, are summarized
below:
Agreement with Mr. Pirinea. Under an agreement with Mr. Pirinea, the owner
of 1% of PS Group stock who had been planning to run for election in
opposition to the Board's nominees, he will be appointed to a newly-created
directorship at the Board's organizational meeting to be held immediately
following the conclusion of the 1996 Annual Meeting. The Board's two nominees
for election to the class whose term will expire in 1999--Donald W. Killian
and I--are now the ONLY nominees for election at the 1996 Annual Meeting. Mr.
Pirinea has withdrawn his stockholder proposal and it will NOT be voted on at
the Meeting.
In addition, under the agreement Mr. Pirinea will serve on a new Strategic
Planning Committee along with Mr. Guerin and me. If the reorganization is
consummated, PS Group Holdings will have a
<PAGE>
Page 2
similar Committee. The Committee's charter will be to pursue the Board's
commitment to enhancing stockholder value by exploring alternatives for
achieving that goal, including alternatives that would enable the Company to
make prudent distributions to its stockholders in the future. The Committee
will continue to work with the specialized investment banking firm that has
been assisting us in evaluating the feasibility of a sale involving some or
all of our aircraft. In addition, the Committee will seriously consider
whether its work in evaluating all of our businesses would be enhanced by
retaining additional investment banking assistance. The Committee will be
directed to make periodic reports to the Board and submit any recommendations
for Board review and appropriate action.
The agreement also provides for two amendments to the certificate of
incorporation of PS Group Holdings if the reorganization is consummated.
First, stockholders will be able to amend or delete the restrictions on
transferring shares by a vote of a majority of the outstanding shares because
the requirement for a two-thirds vote will be deleted. Second, the
restrictions will lapse as to future transfers (if not earlier terminated by
the Board because, among other reasons, they are no longer necessary to
preserve PS Group's substantial tax benefits) at the annual meeting held in
the year 2000 (rather than after 15 years) unless, at that meeting, the
stockholders vote to continue the restrictions by a vote of a majority of the
outstanding shares.
Understanding With ESL Partners. The Board has made two public commitments,
beyond those contained in the agreement with Mr. Pirinea, on the basis of
which commitments ESL Partners--which owns over 19% of PS Group stock and had
previously indicated its intention to vote for Mr. Pirinea's nomination and
against the reorganization--has advised us that it intends to vote its shares
in favor of the proposals to be acted on at the 1996 Annual Meeting. First, we
have committed to create another new directorship at the Board's
organizational meeting to be held immediately following the conclusion of the
1996 Annual Meeting. We will appoint to this directorship Mr. Christopher H.B.
Mills, the Chief Executive Officer of NASCIT, a London-based publicly-traded
investment company that owns approximately 4.4% of PS Group stock and had
previously indicated its intention to vote against the reorganization.
Mr. Mills will join Messrs. Guerin and Pirinea in the class whose terms expire
in 1997.
Secondly, the Board has committed that after the 1996 Annual Meeting has
concluded, it will undertake a study of the possibility of proposing for
stockholder approval the elimination from its Certificate of Incorporation of
the present provisions for a classified board. The Board of Directors of PS
Group is currently divided into three classes, with the members of each class
serving for a three-year term, and if the reorganization is consummated the
Board of Directors of PS Group Holdings will be similarly classified. However,
the Board will evaluate the alternative of providing for all directors to be
elected annually. If the reorganization is consummated, this study will be
conducted with respect to the Board of PS Group Holdings.
We have also entered into a confidentiality agreement with ESL Partners
under which we will furnish data relevant to ESL's interest in investigating
an acquisition of the aircraft we lease to USAir. While there is no assurance
that any transaction will result, we will, as we have previously stated,
seriously consider any proposal ESL may make.
<PAGE>
Page 3
Understanding with Mr. Mills. The Board has reached an understanding with
Mr. Mills that, on the basis of the commitments described above, he is willing
to serve as an additional director and NASCIT's shares will be voted in favor
of the two proposals to be acted on at the 1996 Annual Meeting.
THESE RECENT DEVELOPMENTS REFLECT THE UNQUALIFIED COMMITMENT OF YOUR BOARD
TO A CAREFUL EVALUATION OF ANY CREDIBLE SUGGESTION FOR DELIVERING TO YOU A
RETURN ON YOUR INVESTMENT IN A PRUDENT MANNER. OUR AGENDA IS NOT TO HOARD THE
COMPANY'S CASH MERELY FOR THE SAKE OF STOCKPILING MONEY OR TO INVEST IN
UNPRODUCTIVE BUSINESSES. WE HAVE NO INTENTION OF ENTERING INTO NEW BUSINESSES,
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ALTHOUGH WE DO NOT INTEND TO ABANDON OUR CURRENT SUBSIDIARIES. WE WOULD LIKE
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NOTHING MORE THAN TO BE ABLE TO FIND A WAY TO DISTRIBUTE CASH, OR OTHERWISE
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GENERATE RETURNS, TO ALL STOCKHOLDERS AS SOON AS POSSIBLE. HOWEVER, WE HAVE TO
- ----------------------------------------------------------
BE REALISTIC IN EVALUATING OUR ALTERNATIVES FOR ACHIEVING THAT END. THIS MEANS
WE MUST RECOGNIZE (AS I DISCUSSED IN OUR 1995 ANNUAL REPORT) THAT THERE ARE
CONSTRAINTS ON WHAT IS FEASIBLE, IN PARTICULAR OUR DEPENDENCE ON OUR AIRCRAFT
LEASES FOR MOST OF OUR CURRENT REVENUE AND OUR CRITICAL NEED TO PRESERVE ALL
OF OUR SUBSTANTIAL TAX BENEFITS.
The Board will re-examine this challenging issue and we look forward to the
constructive contributions of Mr. Pirinea and Mr. Mills, as well as the
current Board members. But in the meantime, the Board reiterates its strongly-
held view that the reorganization is a vital IMMEDIATE step to protect your
economic self-interest.
Enclosed with this letter is another supplement to our Prospectus/Proxy
Statement relating to the Annual Meeting, together with the Prospectus/Proxy
Statement itself and the two prior supplements. We urge you to give this
material your careful consideration.
In order to enable all stockholders to review this information, when the
Annual Meeting convenes on May 28 I intend to present as the first item of
business, on behalf of the Board, a proposal to adjourn the meeting to 10:00
a.m., local time, on Wednesday, June 5, 1996, at the same location (the
Sheraton Grande Hotel in Los Angeles). Approval of the adjournment will
require approval of a majority of the shares represented (in person or by
proxy) at the meeting. Shares covered by proxies that have been received by
management will be voted, in the discretion of the proxy holders, in favor of
the adjournment except where contrary instructions have been given on any
proxy card.
THE BOARD UNANIMOUSLY REITERATES ITS RECOMMENDATION THAT YOU VOTE FOR THE
---
REORGANIZATION (ITEM 2 ON THE PROXY CARD). THE BOARD ALSO UNANIMOUSLY
RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THE TWO BOARD NOMINEES (ITEM 1 ON
---
THE PROXY CARD).
If you have any questions or need assistance with voting shares held by your
brokerage firm, please call our proxy solicitors MacKenzie Partners, Inc. at
(800) 322-2885, Toll Free, or at (212) 929-5500 (collect).
<PAGE>
Page 4
YOUR VOTE IS IMPORTANT IRRESPECTIVE OF THE NUMBER OF SHARES YOU OWN AND
WHETHER OR NOT YOU PLAN TO ATTEND THE 1996 ANNUAL MEETING IN PERSON. ENCLOSED
IS ANOTHER COPY OF THE COMPANY'S PROXY CARD. IF YOU HAVE NOT ALREADY VOTED,
PLEASE TAKE THIS OPPORTUNITY TO COMPLETE AND SIGN THE CARD AND RETURN IT IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.*
We sincerely hope we can count on your support at the 1996 Annual Meeting.
Sincerely,
/s/ Charles E. Rickershauser, Jr.
Charles E. Rickershauser, Jr.
Chairman of the Board and
Chief Executive Officer
- --------
*Because the enclosed proxy card is a duplicate of the ones previously sent to
you, it includes Mr. Pirinea's stockholder proposal as Item 3. As noted above,
this proposal will NOT be submitted at the Annual Meeting, so you need not vote
on it. However, it is important you vote "FOR" Items 1 and 2 on the card.
<PAGE>
PROSPECTUS SUPPLEMENT PURSUANT TO
RULE 424(b)(3) UNDER THE
SECURITIES ACT OF 1933
SUPPLEMENTING AMENDMENT NO. 2
DATED APRIL 17, 1996 TO
REGISTRATION STATEMENT NO. 333-00821
ORIGINALLY FILED ON FEBRUARY 9, 1996,
AS PREVIOUSLY SUPPLEMENTED
BY SUPPLEMENTS DATED
MAY 1 AND MAY 14, 1996
SUPPLEMENT DATED MAY 22, 1996
TO
PROSPECTUS OF PS GROUP HOLDINGS, INC.
AND TO
PROXY STATEMENT OF PS GROUP, INC.
GENERAL
This Supplement supplements the Prospectus/Proxy Statement dated April 17,
1996, as previously supplemented by the Supplements dated May 1, 1996 and May
14, 1996 (the "Prospectus/Proxy Statement"), furnished by the Company in
connection with the solicitation of proxies by the Company Board in connection
with the Annual Meeting. Attached to this Supplement are all prior documents
together constituting the Prospectus/Proxy Statement.
Capitalized terms used but not defined in this Supplement have the meanings
ascribed to them in the Prospectus/Proxy Statement. Except where otherwise
indicated, cross-references in this Supplement are to the cited sections of
the Prospectus/Proxy Statement.
This Supplement is intended to be read in conjunction with the
Prospectus/Proxy Statement. All information contained in the Prospectus/Proxy
Statement is hereby incorporated by reference into this Supplement.
CERTAIN ADDITIONAL INFORMATION
1. The Pirinea Agreement. The Company, Holdings and Mr. Joseph S. Pirinea
("Mr. Pirinea," previously referred to in the Prospectus/Proxy Statement as
the Proponent) have entered into an Agreement Relating to 1996 Annual Meeting
dated as of May 19, 1996 (the "Pirinea Agreement"). The following summary of
certain provisions of the Pirinea Agreement is qualified by the full text of
the Pirinea Agreement, which has been filed with the Commission as an exhibit
to the Company's Current Report on Form 8-K/A dated May 21, 1996.
The Pirinea Agreement provides, among other things, as follows:
(a) Mr. Pirinea has withdrawn his nomination for election (the "Pirinea
Nomination") to the Company Board in opposition to the candidacies of
Messrs. Killian and Rickershauser (the "Board Nominees"). Accordingly, the
Board Nominees are the only candidates for election at the Annual Meeting.
See "ELECTION OF DIRECTORS."
(b) At the organizational meeting of the Company Board to be held
immediately following the conclusion of the Annual Meeting (the
"Organizational Board Meeting"), Mr. Pirinea will be appointed to fill a
vacancy created on the Company Board, by its expansion from five to six
members, in the class whose terms expire at the 1997 Annual Meeting of
Stockholders, Mr. Guerin being the only current member of that class. See
"ELECTION OF DIRECTORS."
(c) If the Reorganization is consummated, Mr. Pirinea will be appointed as
a member of the Holdings Board with a term expiring at the 1997 Annual
Meeting of Stockholders. See "THE REORGANIZATION--Board of Directors and
Management of Holdings."
<PAGE>
(d) Mr. Pirinea will be entitled to the same rights (including
indemnification rights) as all other directors of the Company or Holdings,
as applicable (the "Applicable Company"), under the Delaware Corporate Law,
the Applicable Company's certificate of incorporation and bylaws,
indemnification agreements, and standing policies and resolutions of its
Board regarding director compensation and reimbursement of expenses. See
"ELECTION OF DIRECTORS--Compensation of Directors."
(e) Mr. Pirinea has withdrawn the Stockholder Proposal, which will not be
voted on at the Annual Meeting.
(f) The Company will create a deliberative (but not decision-making)
committee of the Board called the Strategic Planning Committee and Mr.
Pirinea will be appointed to this Committee when he becomes a director. If
Mr. Rickershauser is elected to the Company Board, he will also serve on
the Strategic Planning Committee, as will Mr. Guerin, and if the
Reorganization is consummated the Holdings Board will create an identically
constituted Strategic Planning Committee. The charter of the Strategic
Planning Committee will be to explore alternatives for enhancing
stockholder value, including, without limitation, alternatives that would
enable the Applicable Company to make prudent distributions to its
stockholders in the future. The Strategic Planning Committee will be
directed to continue to work with the specialized investment banking firm
that has been assisting the Company in evaluating the feasibility of a sale
of some or all of its aircraft and to consider, in the good faith exercise
of its business judgment, whether its work in evaluating all of the
Applicable Company's businesses would be enhanced by retaining additional
investment banking assistance. The Strategic Planning Committee will be
directed to make periodic reports to the Board of Directors of the
Applicable Company and submit any recommendations for review and
appropriate action by such Board.
(g) The Company and Holdings have represented to Mr. Pirinea that their
respective Boards will continue to meet no less frequently than quarterly
and that their respective Executive Committees will not exercise their
powers to bind the Applicable Company with respect to any material decision
unless, in the reasonable good faith judgment of such Executive Committee,
the interests of the Applicable Company or its stockholders would be
materially jeopardized by deferring the matter pending a decision of the
full Board.
(h) The Company and Holdings have agreed to amend the Transfer Restrictions
immediately following the effective date of the Reorganization. See
"2. Amendment to Transfer Restrictions."
(i) Mr. Pirinea will vote all shares of Company Common Stock over which he
exercises sole or shared voting power, which he has represented and
warranted as constituting approximately 1.00% of the outstanding shares, in
favor of the adoption of the Reorganization Agreement and the election of
the Board Nominees and he will, to the fullest extent consistent with the
federal securities laws, make such solicitations of proxies as he deems
appropriate and useful in favor of such adoption and election.
(j) Mr. Pirinea has been paid the amount of $10,000 in respect of
reimbursement of his actual out-of-pocket expenses in connection with the
Pirinea Nomination, the Stockholder Proposal and the Pirinea Agreement.
Certain information provided by Mr. Pirinea, pursuant to the Pirinea
Agreement, for inclusion herein is set forth on Annex B to this Supplement.
2. Amendment to Transfer Restrictions. Pursuant to the Pirinea Agreement,
the provisions of the Holdings Certificate of Incorporation to be in effect
immediately prior to the Reorganization (Appendix B to the Prospectus/Proxy
Statement) will be amended immediately following the consummation of the
Reorganization by the filing of a further Restated Certificate of
Incorporation containing the amendments set forth in Annex A to the Pirinea
Agreement. Such amendments will have been approved by the Company as the sole
stockholder of Holdings prior to the Effective Time and are not being
separately submitted for approval by the stockholders of the Company. The
following summary of the amendments to be made to the Holdings Certificate of
Incorporation is qualified by the full text of the amendments, which is set
forth in full in Annex A to this Supplement.
2
<PAGE>
(a) The provision relating to the amendment or deletion of the Transfer
Restrictions from the Holdings Certificate of Incorporation by the
stockholders of Holdings will be amended to delete the requirement for an
affirmative vote of two-thirds of the outstanding shares of Holdings Common
Stock. Accordingly, under the Delaware Corporation Law, such an amendment
or deletion will instead require the affirmative vote of a majority of the
outstanding shares of Holdings Common Stock entitled to vote at the
applicable stockholders' meeting. See "THE REORGANIZATION--Other Powers of
the Holdings Board."
(b) Notwithstanding anything to the contrary in the Transfer Provisions,
and subject to the power of the Holdings Board to accelerate the expiration
date of the Transfer Restrictions, the Transfer Restrictions will
be amended so that they will expire immediately following the conclusion of
Holdings's annual meeting of stockholders for the year 2000, unless the
stockholders, by the affirmative vote of the holders of not less than 50%
of the outstanding shares of Holdings Common Stock entitled to vote at the
meeting, pass a resolution extending such expiration date, in which case
such expiration date shall be extended as required by the terms of such
resolution. Accordingly, the Transfer Restrictions will no longer remain in
effect until the 15th anniversary of the effective date of the
Reorganization. However, under the interpretive power conferred on it by
the Transfer Restrictions the Holdings Board intends, should the issue
arise, to take the interpretive position that the expiration of the
Transfer Restrictions will not affect the provisions thereof which render
ineffective any non-exempt purported Transfer of Prohibited Shares that has
purportedly occurred prior to such expiration, provide that the Purported
Acquiror will not be entitled to any rights as a shareholder of Holdings
with respect to the Prohibited Shares and specify certain other
consequences of such purported Transfer. See "THE REORGANIZATION--Summary
of Transfer Restrictions--General" and "--Consequences of Purported
Prohibited Transfer."
3. Understanding With ESL. The Company Board has made two public
commitments, beyond those contained in the Pirinea Agreement, on the basis of
which commitments ESL--which owns approximately 19.7% of the Company Common
Stock (see "BENEFICIAL OWNERSHIP OF PRINCIPAL STOCKHOLDERS") and had
previously indicated its intention to vote for the Pirinea Nomination and
against the Reorganization--has advised the Company that it intends to vote
its shares in favor of the election of the Board Nominees and the adoption of
the Reorganization Agreement at the Annual Meeting. Such commitments by the
Company Board are as follows:
(i) The Company Board will create another new directorship at the
Organizational Board Meeting and will appoint to such directorship Mr.
Christopher H.B. Mills ("Mr. Mills"), the Chief Executive Officer of North
Atlantic Smaller Companies Investment Trust ("NASCIT"), a London-based
publicly-traded investment company that owns approximately 4.4% of the
Company Common Stock and had previously indicated its intention to vote
against the adoption of the Reorganization Agreement. Mr. Mills will join
Messrs. Guerin and Pirinea in the class whose terms expire in 1997.
(ii) After the Annual Meeting has concluded, the Company Board will
undertake a study of the possibility of proposing for stockholder approval
the elimination from the Company's Certificate of Incorporation of the
present provisions for a classified board. The Company Board is currently
divided into three classes and the members of each class serve for a three-
year term (sees "ELECTION OF DIRECTORS"). Under the Reorganization
Agreement, if the Reorganization is consummated the Holdings Board will be
similarly classified (see "THE REORGANIZATION--Board of Directors and
Management of Holdings--Board of Directors"). However, the Company Board
will evaluate the alternative of providing for all directors to be elected
annually. If the Reorganization is consummated, this study will be
conducted with respect to the Holdings Board.
In addition, the Company has entered into a confidentiality agreement with
ESL pursuant to which it will provide to ESL non-public information relevant
to ESL's interest in investigating an acquisition of the aircraft leased by
the Company to USAir. While there is no assurance that ESL will make any
proposal for a transaction, or that any proposal it makes will be viewed by
the Company Board as being viable and in the best interests of stockholders,
the Company Board will carefully consider any proposal ESL may make.
3
<PAGE>
4. Understanding with Mr. Mills. The Company Board has reached an
understanding with Mr. Mills that, on the basis of the commitments described
under "3. Understandings with ESL", he is willing to serve as an additional
director and NASCIT's shares of Company Common Stock will be voted in favor of
the election of the Board nominees and the adoption of the Reorganization
Agreement at the Annual Meeting.
Certain information provided by Mr. Mills for inclusion herein is set forth
on Annex C to this Supplement.
5. Votes Required. As indicated under "THE ANNUAL MEETING--Votes Required,"
the affirmative vote of a plurality of shares of the Company Common Stock
represented at the Annual Meeting in person or by proxy is required to elect
the Board Nominees and the affirmative vote of the holders of a majority of
the outstanding shares of Company Common Stock is required to approve the
Reorganization. By reason of the Pirinea Agreement (see "1. The Pirinea
Agreement" above), the understandings with ESL and Mr. Mills (see "3.
Understanding with ESL" and "4. Understanding with Mr. Mills" above), the fact
that Berkshire Hathaway has informed the Company of its intention to vote all
of its shares of Company Common Stock in favor of the election of the Board
Nominees and the adoption of the Reorganization Agreement, and the intention
of all directors and officers of the Company to so vote, the Company expects
that the Board Nominees will be elected and the Reorganization Agreement will
be adopted. See "BENEFICIAL OWNERSHIP OF DIRECTORS AND OFFICERS" and
"BENEFICIAL OWNERSHIP OF PRINCIPAL STOCKHOLDERS."
6. Treatment of Preexisting 5-Percent Shareholders. As indicated in the
Prospectus/Proxy Statement under the caption "THE REORGANIZATION--Summary of
Transfer Restrictions--Treatment of Preexisting 5-Percent Shareholders," under
the Transfer Restrictions any person or entity who established, on or before
April 30, 1996, to the satisfaction of the Holdings Board, that such person or
entity was a direct or indirect owner of 5% of the Company Common Stock on
February 8, 1996 would be entitled to be treated as a Preexisting 5-Percent
Shareholder and would receive different treatment, in two respects specified
therein, under the Transfer Restrictions from persons who became "5-percent
shareholders" (for purposes of Section 382) on or after February 9, 1996 and
before the Effective Time or who were such "5-percent shareholders" on
February 8, 1996, but who failed to establish by April 30, 1996, to the
satisfaction of the Holdings Board, that they owned their Company Common Stock
on February 8, 1996. Other than the holders of Company Common Stock identified
by name under the above-referenced caption of the Prospectus/Proxy Statement,
no such person or entity established to the satisfaction of the Holdings
Board, by April 30, 1996, its status as a Preexisting 5-Percent Shareholder.
7. Intended Adjournment of Annual Meeting. In order to enable stockholders
of the Company to review the information contained in this Supplement, the
Chairman of the Annual Meeting (Mr. Rickershauser) intends, on behalf of the
Company Board, to present as the first item of business, when the Annual
Meeting is called to order on May 28, 1996, a proposal to adjourn the Annual
Meeting to 10:00 a.m., local time, on Wednesday, June 5, 1996 at the same
location (the Sheraton Grande Hotel, Los Angeles, California). Approval of any
such adjournment proposal will require the affirmative vote of a majority of
the outstanding shares of Company Common Stock present in person or by proxy
at the Annual Meeting. See "ANNUAL MEETING--Shares Outstanding and Entitled To
Vote; Record Date" and"--Votes Required." Shares of Company Common Stock with
respect to which proxies have been received by the Company's designated proxy
holders will be voted, in the discretion of those proxy holders conferred by
Item 4 of the Notice of Annual Meeting contained in the Prospectus/Proxy
Statement and Item 4 on the Company's proxy card distributed therewith
(another copy of which is enclosed with this Supplement), in favor of such
adjournment except where contrary instructions have been given on any such
proxy cards.
4
<PAGE>
ANNEX A
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AMENDMENTS TO BE MADE TO RESTATED CERTIFICATE OF INCORPORATION
OF HOLDINGS PROMPTLY FOLLOWING THE EFFECTIVE TIME*
- --------
* An amendment to add language is indicated by an underscore of the added
words. An amendment to delete language is indicated by a strike-through of
the deleted words.
NOTE TO EDGAR VERSION: Deleted language is indicated by brackets, not
strike-throughs.
A-1
<PAGE>
ARTICLE X
The provisions set forth in this Article X and in Articles V, VI, VIII[,] and
---
IX [and XI] herein may not be repealed or amended in any respect, and no article
imposing cumulative voting in the election of directors may be added, unless
such action is approved by the affirmative vote of the holders of not less
than 66 2/3% of the outstanding shares of Common Stock of this corporation,
subject to the provisions of any series of Preferred Stock which may at the
time be outstanding; provided, however, that if there is a related person (as
defined in Article IX), such 66 2/3% vote must include the affirmative vote of
at least 50% of the outstanding shares of Common Stock held by stockholders
other than the related person.[; and provided further that, notwithstanding
-
this Article X, Article XI hereof may be amended or modified by the Board of
Directors as provided in Article XI.]
ARTICLE XI
(A) TRANSFER RESTRICTIONS. In order to preserve the net operating loss
carryforwards (including any "net unrealized built-in loss," as defined under
applicable law), capital loss carryforwards, general business credit
carryforwards, alternative minimum tax credit carryforwards and other tax
benefits (collectively, the "Tax Benefits") to which the corporation or any
member of the corporation's "affiliated group" as that term is used in Section
1504 of the Internal Revenue Code of 1986, as amended from time to time, or
any successor statute (collectively, the "Code"), is or becomes entitled prior
to the Expiration Date (as hereinafter defined) pursuant to the Code and the
Treasury Regulations promulgated thereunder, as amended from time to time
("Treasury Regulations") or any applicable state statute, the following
restrictions shall apply until the earlier of (w) immediately following the
-----------------------------
conclusion of the corporation's annual meeting of stockholders for the year
- ---------------------------------------------------------------------------
2000, unless the Expiration Date is extended as set forth in paragraph (H) of
- -----------------------------------------------------------------------------
this Article XI, (x) the day after the fifteenth (15th) anniversary of the
- ----------------
effective time of the merger of PSG Merger Subsidiary, Inc. with and into PS
Group, Inc. (the "Merger"), (y) the repeal of Section 382 of the Code if the
Board of Directors determines that the restrictions in this Article XI are no
longer necessary for the preservation of the Tax Benefits, and (z) the
beginning of a taxable year of the corporation to which the Board of Directors
determines that no Tax Benefits may be carried forward, unless the Board of
Directors shall fix an earlier or (subject to paragraph (H) of this Article
-----------------------------------------
XI) later date in accordance with Section (E) of this Article XI. (The date on
- ---
which the restrictions of this Article XI expire hereunder is sometimes
referred to herein as the "Expiration Date.")
(1) Definitions. For purposes of this Article XI:
(a) "Option" shall have the meaning set forth in Treasury Regulation
Section 1.382-4;
(b) a "Permitted Transferee" shall mean any Person if, and only for
so long as, all of the Stock owned (directly or indirectly) by such
Person was Transferred to such Person by a Preexisting 5-Percent
Shareholder in a Transfer with respect to which the consent of the
Board of Directors was obtained pursuant to the penultimate sentence of
subparagraph (A)(3).
(c) a "Person" shall mean any individual, corporation, estate, trust,
association, company, partnership, joint venture, or similar
organization (including the corporation), or any other entity described
in Treasury Regulation Section 1.382-3(a)(1)(i);
(d) a "Preexisting 5-Percent Shareholder" shall mean (i) Berkshire
Hathaway Inc. or any direct or indirect majority-owned subsidiary of
Berkshire Hathaway Inc.; (ii) J.P. Guerin, Fabienne M.
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Guerin, the John Patrick Guerin Trust, the Guerin Family Trust and the
J. Patrick Guerin III Trust; (iii) ESL Partners, L.P.; (iv) Donaldson,
Lufkin & Jenrette Securities Corporation, The Equitable Companies
Incorporated, AXA, AXA Assurances I.A.R.D. Mutuelle, AXA Assurances Vie
Mutuelle, Alpha Assurances I.A.R.D. Mutuelle, Alpha Assurances Vie
Mutuelle, Uni Europe Assurance Mutuelle, or any direct or indirect
majority-owned subidiary of the foregoing; (v) any other Person who
establishes, on or before April 30, 1996, to the satisfaction of the
Board of Directors of the corporation that such Person was a "5-percent
shareholder" of PS Group, Inc. within the meaning of Treasury
Regulation Section 1.382-2T(g)(1)(i) or a "first tier entity" of PS
Group, Inc. within the meaning of Treasury Regulation Section 1.382-
2T(f)(9) on February 8, 1996; and (vi) any "5-percent owner" or "higher
tier entity" (within the meaning of Treasury Regulation Section 1.382-
2T(f)(10) and 1.382-2T(f)(14), respectively) of any Person described in
clauses (i) through (v) above;
(e) a "Prohibited Ownership Percentage" shall mean any Stock
ownership that would cause a Person or Public Group to be a "5-percent
shareholder" of the corporation within the meaning of Treasury
Regulation Section 1.382-2T(g)(1)(i) or (ii); for this purpose, whether
a Person or Public Group would be a "5 percent shareholder" shall be
determined (i) without giving effect to the following provisions:
Treasury Regulation Sections 1.382-2T(g)(2), 1.382-2T(g)(3), 1.382-
2T(h)(2)(iii) and 1.382-2T(h)(6)(iii), (ii) by treating every Person or
Public Group which owns Stock, whether directly or by attribution, as
directly owning such Stock notwithstanding any further attribution of
such Stock to other Persons and notwithstanding Treasury Regulation
Section 1.382-2T(h)(2)(i)(A), (iii) by substituting the term "Person"
in place of "individual" in Treasury Regulation Section 1.382-2T(g)(1),
(iv) by taking into account ownership of Stock at any time during the
"testing period" as defined in Treasury Regulation Section 1.382-
2T(d)(1), and (v) by treating each day during the testing period as if
it were a "testing date" as defined in Treasury Regulation Section
1.382-2T(a)(4)(i); in addition, for the purpose of determining whether
any Person or Public Group has a Prohibited Ownership Percentage as of
any date, the definition of Stock set forth in part (e) of this
subparagraph (A)(1) shall be applied in lieu of the definition in
Treasury Regulation Section 1.382-2T(f)(18), except that any Option
shall be treated as Stock only to the extent treating it as Stock would
cause an increase in ownership of Stock by such Person and such Option
would be deemed exercised pursuant to Treasury Regulations effect for
time to time (disregarding whether treating such Option as exercised
would cause an ownership change);
(f) a "Public Group" shall have the meaning contained in Treasury
Regulation Section 1.382-2T(f)(13), excluding any "direct public group"
with respect to the corporation, as that term is used in Treasury
Regulation Section 1.382-2T(j)(2)(ii);
(g) "Stock" refers to all classes of stock of the corporation, all
Options to acquire stock of the corporation and all other interests
that would be treated as stock in the corporation pursuant to Treasury
Regulation Section 1.382-2T(f)(18)(iii), other than (i) stock described
in Section 1504(a)(4) of the Code and (ii) stock that would be
described in such Section 1504(a)(4) but is not so described solely
because it is entitled to vote as a result of dividend arrearages;
(h) "Transfer" shall mean any conveyance, by any means, of legal or
beneficial ownership (direct or indirect) of shares of Stock, whether
such means are direct or indirect, voluntary or involuntary, including,
without limitation, the transfer of any ownership interest in any
entity that owns (directly or indirectly) shares of Stock (and any
reference in this Article XI to a Transfer of Stock shall include any
Transfer of any interest in any such entity and references to the
Persons to whom Stock is Transferred shall include Persons to whom any
interest in any such entity shall have been Transferred); and
(i) "Transferee" means any Person to whom Stock is Transferred.
(2) Prohibited Transfers. From and after the effective time of the
Merger, no Person shall Transfer any Stock to any other Person to the
extent that such Transfer, if effected: (a) would cause the Transferee or
any Person or Public Group to have a Prohibited Ownership Percentage; (b)
would increase the Stock
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ownership percentage (determined in accordance with Section 382 of the Code
and the Treasury Regulations thereunder) of any Transferee or any Person or
Public Group having a Prohibited Ownership Percentage; or (c) would create,
under Treasury Regulation Section 1.382-2T(j)(3)(i), a new "public group"
as that term is used in Treasury Regulation Section 1.382-2T(f)(13);
provided, however, that (x) part (c) of this subparagraph (A)(2) shall not
prohibit any Transfer of Stock by (but not to) a Preexisting 5-Percent
Shareholder if such Transfer is not prohibited by part (a) or (b) of this
subparagraph (A)(2) and if such Stock was acquired by such Preexisting 5-
Percent Shareholder in exchange for shares of stock of PS Group, Inc. that
were owned by such Preexisting 5-Percent Shareholder on February 8, 1996,
(y) part (c) of this subparagraph (A)(2) shall not prohibit any Transfer of
Stock by (but not to) a Permitted Transferee if such Transfer is not
prohibited by part (a) or (b) of this subparagraph (A)(2), and (z) nothing
in this Article XI shall prohibit the Transfer of any interest in any
Preexisting 5-Percent Shareholder.
(3) Board of Directors Consent to Certain Transfers. The Board of
Directors may permit any Transfer of Stock that would otherwise be
prohibited pursuant to subparagraph (A)(2) of this Article XI if
information relating to a specific proposed transaction is presented to the
Board of Directors and the Board of Directors determines that, based on the
facts in existence at the time of such determination, such transaction will
not delay, prevent or otherwise jeopardize the corporation's full
utilization of the Tax Benefits. The Board of Directors may impose any
conditions that it deems reasonable and appropriate in connection with such
a Transfer, including without limitation, restrictions on the ability of
any Transferee to Transfer Stock acquired through such Transfer; provided,
however, that any such restrictions shall be consented to by such
Transferee and the certificates representing such Stock shall include an
appropriate legend. Notwithstanding the foregoing, the Board of Directors
shall consent to any proposed Transfer of Stock by (but not to) a
Preexisting 5-Percent Shareholder that is otherwise prohibited by part (a)
of subparagraph (A)(2) (but is not prohibited by part (b) of subparagraph
(A)(2)) without the imposition of any conditions if the Board of Directors
determines that (i) the Percentage Point Change In Ownership immediately
following such Transfer of Stock would not exceed the Percentage Point
Change In Ownership immediately prior to such Transfer, and (ii) the Stock
to be Transferred was acquired by such Preexisting 5-Percent Shareholder in
exchange for shares of stock of PS Group, Inc. that were owned by such
Preexisting 5-Percent Shareholder on February 8, 1996; provided, however,
such consent shall not constitute consent with respect to any subsequent
Transfer or any Transfer of any other Stock. "Percentage Point Change in
Ownership" shall mean, on any date, the aggregate of the increase
(expressed in terms of percentage points) of the total amount of Stock
owned by each of those "5-percent shareholders" of the corporation (within
the meaning of Treasury Regulation Section 1.382-2T(g)(1)) whose percentage
ownership of Stock has increased as of such date over the lowest percentage
of Stock owned by each such 5-percent shareholder at any time during the
three-year period preceding such date, such determination to be made in
accordance with Treasury Regulation Section 1.382-2T(c) as if such date
were a "testing date."
(4) Waiver of Restrictions. Notwithstanding anything herein to the
contrary, the Board of Directors may waive any of the restrictions
contained in subparagraph (A)(2) of this Article XI in any instance in
which the Board of Directors determines that a waiver would be in the best
interests of the corporation, notwithstanding the effect of such waiver on
the Tax Benefits.
(B) PURPORTED TRANSFER IN VIOLATION OF TRANSFER RESTRICTION. Unless the
approval or waiver of the Board of Directors is obtained as provided in
subparagraphs (A)(3) or (A)(4) of this Article XI, any purported Transfer of
Stock in excess of the shares that could be Transferred to the Transferee
without restriction under subparagraph (A)(2) of this Article XI shall not be
effective to Transfer record, legal, beneficial or any other ownership of such
excess shares (the "Prohibited Shares") to the purported acquiror of any form
of such ownership (the "Purported Acquiror"), who shall not be entitled to any
rights as a stockholder of the corporation with respect to the Prohibited
Shares (including, without limitation, the right to vote or to receive
dividends with respect thereto). Any purported record, beneficial, legal or
other owner of Prohibited Shares shall be deemed to be a "Purported Acquiror"
of such Prohibited Shares. If there is more than one Purported Acquiror with
respect to certain Prohibited Shares (for example, if the Purported Acquiror
of record
A-4
<PAGE>
ownership of such Prohibited Shares is not the Purported Acquiror of
beneficial ownership of such Prohibited Shares), then references to "Purported
Acquiror" shall include any or all of such Purported Acquirors, as
appropriate. Subparagraphs (B)(1) and (B)(2) below shall apply only in the
case of violations of the restrictions contained in parts (a) and (b) of
subparagraph (A)(2) of this Article XI.
(1) Transfer of Prohibited Shares and Prohibited Distributions to Agent.
Upon demand by the corporation, the Purported Acquiror shall transfer or
cause the transfer of any certificate or other evidence of purported
ownership of the Prohibited Shares within the Purported Acquiror's
possession or control, along with any dividends or other distributions paid
by the corporation with respect to the Prohibited Shares that were received
by the Purported Acquiror (the "Prohibited Distributions"), to an agent
designated by the corporation (the "Agent"). The Agent shall sell in an
arms-length transaction (through the New York Stock Exchange, if possible,
but in any event consistent with applicable law) any Prohibited Shares
transferred to the Agent by the Purported Acquiror. (The proceeds of such
sale shall be referred to as "Sales Proceeds.") If the Purported Acquiror
has sold the Prohibited Shares to an unrelated party in an arms-length
transaction after purportedly acquiring them, the Purported Acquiror shall
be deemed to have sold the Prohibited Shares for the Agent, and in lieu of
transferring the Prohibited Shares and Prohibited Distributions to the
Agent shall transfer to the Agent the Prohibited Distributions and the
proceeds of such sale (the "Resale Proceeds"), except to the extent that
the Agent grants written permission to the Purported Acquiror to retain a
portion of the Resale Proceeds not exceeding the amount that would have
been payable by the Agent to the Purported Acquiror pursuant to
subparagraph (B)(2) below if the Prohibited Shares had been sold by the
Agent rather than by the Purported Acquiror. Any purported Transfer of the
Prohibited Shares by the Purported Acquiror other than a transfer which (a)
is described in the preceding sentences of this subparagraph (B)(1) and (b)
does not itself violate the provisions of this Article XI shall not be
effective to transfer any ownership of the Prohibited Shares.
(2) Allocation of Sale Proceeds, Resale Proceeds and Prohibited
Distributions. The Sale Proceeds or the Resale Proceeds, if applicable,
shall be allocated to the Purported Acquiror up to the following amount:
(a) where applicable, the purported purchase price paid or value of
consideration surrendered by the Purported Acquiror for the Prohibited
Shares, or (b) where the purported Transfer of the Prohibited Shares to the
Purported Acquiror was by gift, inheritance, or any similar purported
Transfer, the fair market value of the Prohibited Shares at the time of
such purported Transfer. Any Resale Proceeds or Sales Proceeds in excess of
the Agent's expenses incurred in performing its duties hereunder and the
amount allocable to the Purported Acquiror pursuant to the preceding
sentence, together with any Prohibited Distributions (such excess amount
and Prohibited Distributions are collectively the "Subject Amounts"), shall
be paid over to an entity designated by the corporation that is described
in Section 501(c)(3) of the Code. In no event shall any such Prohibited
Shares or Subject Amounts inure to the benefit of the corporation or the
Agent, but such amounts may be used to cover expenses incurred by the Agent
in performing its duties hereunder.
(3) Prompt Enforcement Against Purported Acquiror. Within thirty (30)
business days of learning of the purported Transfer of Prohibited Shares to
a Purported Acquiror or a Transfer of Stock which would cause a Person or
Public Group to become a Prohibited Party (as hereinafter defined), the
corporation through its Secretary shall demand that the Purported Acquiror
or the Prohibited Party Group (as hereinafter defined) surrender to the
Agent the certificates representing the Prohibited Shares, or any Resale
Proceeds, and any Prohibited Distributions, and if such surrender is not
made by the Purported Acquiror or Prohibited Party Group within thirty (30)
business days from the date of such demand, the corporation shall institute
legal proceedings to compel such transfer; provided, however, that nothing
in this subparagraph (B)(3) shall preclude the corporation in its
discretion from immediately bringing legal proceedings without a prior
demand, and provided further that failure of the corporation to act within
the time periods set out in this subparagraph (B)(3) shall not constitute a
waiver of any right of the corporation to compel any transfer required by,
or take any action permitted by, this Article XI. Upon a determination by
the Board of Directors that there has been or is threatened a purported
Transfer of Prohibited Shares to a Purported Acquiror or a Transfer of
Stock which would cause a Person or Public Group to become a Prohibited
Party or any other
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violation of Section (A) of this Article XI, the Board of Directors may
authorize such additional action as it deems advisable to give effect to
the provisions of this Article XI, including, without limitation, refusing
to give effect on the books of the corporation to any such purported
Transfer or instituting proceedings to enjoin any such purported Transfer.
(4) Other Remedies. In the event that the Board of Directors determines
that a Person proposes to take any action in violation of subparagraph
(A)(2) of this Article XI, or in the event that the Board of Directors
determines after the fact that an action has been taken in violation of
subparagraph (A)(2) of this Article XI, the Board of Directors, subject to
subparagraph (B)(5) of this Article XI, may take such action as it deems
advisable to prevent or to refuse to give effect to any purported Transfer
or other action which would result, or has resulted, in such violation,
including, but not limited to, refusing to give effect to such purported
Transfer or other action on the books of the corporation or instituting
proceedings to enjoin such purported Transfer or other action. If any
Person shall knowingly violate, or knowingly cause any other Person under
the control of such Person ("Controlled Person") to violate, subparagraph
(A)(2) of this Article XI, then that Person and any Controlled Person shall
be jointly and severally liable for, and shall pay to the corporation, such
amount as will, after taking account of all taxes imposed with respect to
the receipt or accrual of such amount and all costs incurred by the
corporation as a result of such violation, put the corporation in the same
financial position as it would have been in had such violation not
occurred.
(5) No Restriction on Settlement of Exchange Transactions. Nothing
contained in this Article XI shall preclude the settlement of any
transaction involving Stock entered into through the facilities of the New
York Stock Exchange, the Pacific Stock Exchange or any other national
securities exchange. The application of the provisions and remedies
described in this Section (B) of this Article XI shall be deemed not to so
preclude any such settlement.
(6) Modification of Remedies For Certain Indirect Transfers. In the event
of any Transfer of Stock which does not involve a transfer of "securities"
of the corporation within the meaning of the Delaware General Corporation
Law, as amended ("Securities"), but which would cause a Person or Public
Group (the "Prohibited Party") to violate a restriction provided for in
part (a) or (b) of subparagraph (A)(2) of this Article XI, the application
of subparagraphs (B)(1) and (B)(2) shall be modified as described in this
subparagraph (B)(6). In such case, the Prohibited Party and/or any Person
or Public Group whose ownership of the corporation's Securities is
attributed to the Prohibited Party pursuant to Section 382 of the Code and
the Treasury Regulations thereunder (collectively, the "Prohibited Party
Group") shall not be required to dispose of any interest which is not a
Security, but shall be deemed to have disposed of, and shall be required to
dispose of, sufficient Securities (which Securities shall be disposed of in
the inverse order in which they were acquired by members of the Prohibited
Party Group), to cause the Prohibited Party, following such disposition,
not to be in violation of part (a) or (b) of subparagraph (A)(2) of this
Article XI. Such disposition shall be deemed to occur simultaneously with
the Transfer giving rise to the application of this provision, and such
number of Securities which are deemed to be disposed of shall be considered
Prohibited Shares and shall be disposed of through the Agent as provided in
subparagraphs (B)(1) and (B)(2) of this Article XI, except that the maximum
aggregate amount payable to the Prohibited Party Group in connection with
such sale shall be the fair market value of the Prohibited Shares at the
time of the Prohibited Transfer.
(C) OBLIGATION TO PROVIDE INFORMATION. The corporation may require as a
condition to the registration of the Transfer of any Stock that the proposed
Transferee furnish to the corporation all information reasonably requested by
the corporation with respect to all the direct or indirect beneficial or legal
ownership of Stock or Options to acquire Stock by the proposed Transferee and
by Persons controlling, or controlled by or under common control with the
proposed Transferee.
(D) LEGENDS. All certificates issued by the corporation evidencing ownership
of shares of Stock of this corporation that are subject to the restrictions on
Transfer contained in this Article XI shall bear a conspicuous legend
referencing the restrictions set forth in this Article XI.
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<PAGE>
(E) FURTHER ACTIONS. Subject to subparagraph (B)(5) of this Article XI,
nothing contained in this Article XI shall limit the authority of the Board of
Directors to take such other action to the extent permitted by law as it deems
necessary or advisable to protect the corporation in preserving the Tax
Benefits. Without limiting the generality of the foregoing, in the event of a
change in law (including applicable regulations) making one or more of the
following actions necessary or desirable or in the event that the Board of
Directors believes one or more of such actions is in the best interest of the
corporation, the Board of Directors may (1) accelerate or, subject to
------------
paragraph (H) of this Article XI, extend the Expiration Date, (2) modify the
- ---------------------------------
definitions of any terms set forth in this Article XI or (3) conform any
provisions of Section (A) of this Article XI to the extent necessary to make
such provisions consistent with the Code and Treasury Regulations following
any changes therein; provided that the Board of Directors shall determine in
writing that such acceleration, extension, change or modification is
reasonably necessary or desirable to preserve the Tax Benefits or that the
continuation of these restrictions is no longer reasonably necessary for the
preservation of the Tax Benefits, as the case may be, which determination may
be based upon an opinion of legal counsel to the corporation and which
determination shall be filed with the Secretary of the corporation and mailed
by the Secretary to the stockholders of this corporation within ten (10) days
after the date of any such determination. In addition, the Board of Directors
may, to the extent permitted by law, from time to time establish, modify,
amend or rescind By-laws, regulations and procedures of the corporation not
inconsistent with the express provisions of this Article XI for purposes of
determining whether any acquisition of Stock would jeopardize the
corporation's ability to preserve and use the Tax Benefits, and for the
orderly application, administration and implementation of the provisions of
this Article XI. Such procedures and regulations shall be kept on file with
the Secretary of the corporation and with its transfer agent and shall be made
available for inspection by the public and, upon request, shall be mailed to
any holder of Stock. The Board of Directors of the corporation shall have the
exclusive power and authority to administer this Article XI and to exercise
all rights and powers specifically granted to the Board of Directors or the
corporation, or as may be necessary or advisable in the administration of this
Article XI, including without limitation, the right and power to (1) interpret
the provisions of this Article XI, and (2) make all calculations and
determinations deemed necessary or advisable for the administration of this
Article XI. All such actions, calculations, interpretations and determinations
which are done or made by the Board of Directors in good faith shall be final,
conclusive and binding on the corporation, the Agent, and all other parties;
provided, however, the Board of Directors may delegate all or any portion of
its duties and powers under this Article XI to a committee of the Board of
Directors as it deems necessary or advisable.
(F) BENEFITS OF THIS ARTICLE XI. Nothing in this Article XI shall be
construed to give to any Person other than the corporation or the Agent any
legal or equitable right, remedy or claim under this Article XI. This Article
XI shall be for the sole and exclusive benefit of the corporation and the
Agent.
(G) SEVERABILITY. If any provision of this Article XI or the application of
any such provision to any Person or under any circumstance shall be held
invalid, illegal, or unenforceable in any respect by a court of competent
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision of this Article XI.
(H) AUTOMATIC EXPIRATION UNLESS STOCKHOLDER APPROVAL OBTAINED.
--------------------------------------------------------------
Notwithstanding anything to the contrary in this Article XI, and subject to
- ---------------------------------------------------------------------------
the power of the Board of Directors to accelerate the Expiration Date pursuant
- ------------------------------------------------------------------------------
to paragraph (E) of this Article XI, the Expiration Date shall occur
- --------------------------------------------------------------------
immediately following the conclusion of the corporation's annual meeting of
- ---------------------------------------------------------------------------
stockholders for the year 2000, unless the stockholders, by the affirmative
- ---------------------------------------------------------------------------
vote of the holders of not less than 50% of the outstanding shares of Common
- ----------------------------------------------------------------------------
Stock of the corporation entitled to vote at such annual meeting, pass a
- ------------------------------------------------------------------------
resolution extending the Expiration Date, in which case the Expiration Date
- ---------------------------------------------------------------------------
shall be extended as required by the terms of such resolution.
- --------------------------------------------------------------
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ANNEX B
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CERTAIN INFORMATION REGARDING MR. PIRINEA
The following information has been provided by Mr. Pirinea for inclusion
herein:
Joseph S. Pirinea, age 41, is President, Chief Executive Officer and a
director of Pirinea, Cozzolino & Kelly, Certified Public Accountants, P.C.,
119 Jackson Street, Hempstead, New York 11550, with which he has been
associated since 1987. Mr. Pirinea received a Bachelor of Science Degree in
Accounting in 1975 from Brooklyn College, of The City University of New York.
The clients he serves primarily consist of private corporations engaged in the
construction industry. He also provides accountancy services to non-profit
organizations and individuals.
Mr. Pirinea is the beneficial owner of 65,400 shares of Company Common
Stock, as follows: (i) 27,000 shares owned jointly with Mr. Pirinea's wife;
(ii) 23,100 shares owned jointly with Mr. Pirinea's mother; (iii) 8,700 shares
owned jointly with Robert Oliveri; (iv) 200 shares held in the Pirinea,
Cozzolino & Kelly P.C. Retirement Fund for Mr. Pirinea; (v) 1,000 shares held
in a custodial account for Mr. Pirinea's daughter; (vi) 3,100 shares held in
Mr. Pirinea's Individual Retirement Account ("IRA"); and (vii) 2,300 shares
held in Mr. Pirinea's wife's IRA.
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ANNEX C
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CERTAIN INFORMATION REGARDING MR. MILLS
The following information has been provided by Mr. Mills for inclusion
herein:
Christopher Harwood Bernard Mills, age 43, is Chief Executive Officer of
North Atlantic Smaller Companies Investment Trust ("NASCIT"), a United Kingdom
publicly-traded investment company, the headquarters address of which is 10
Park Place, London, England. Mr. Mills has held this position for more than
the past five years. He is also the Chief Investment Officer of J O Hambro &
Partners Limited, which manages various investment funds and performs certain
administrative services for NASCIT. He is a director of the following
companies, the stock of which is publicly traded in the United States: Oak
Industries Inc. (electronics); DS Bancor, Inc. (bank); Horace Small Apparel
p.l.c. (textiles); and Midstates p.l.c. (autoparts distribution).
NASCIT is the beneficial owner of 265,000 shares of Company Common Stock.
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