SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ X ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
FIRSTMARK CORP.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] $125 per Exchange Act 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:
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2) Aggregate number of securities to which transaction applies:
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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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
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offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the
date of its filing.
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FIRSTMARK CORP.
One Financial Place
222 Kennedy Memorial Drive
Waterville, ME 04901
(207) 873-6362
SPECIAL MEETING OF STOCKHOLDERS
June __, 1996
Dear Fellow Stockholder:
You are cordially invited to attend a Special Meeting of Stockholders (the
"Meeting") of Firstmark Corp. (the "Company"), to be held at One Financial
Place, 222 Kennedy Memorial Drive, Waterville, Maine, on Thursday, July 18,
1996, commencing at 10:00 a.m.
The sole purpose of the Meeting will be to act on two amendments to the
Company's Articles of Incorporation (the "Amendments"). The first amendment
will increase from 5,000,000 to 30,000,000 the number of shares of common stock
that the Company is authorized to issue. The second amendment will opt the
Company out of Section 910 of the Maine Business Corporation Act.
Information concerning the Amendments is set forth in the attached Proxy
Statement. The formal Notice of Special Meeting of Stockholders and the Proxy
Statement are enclosed.
I ask that you promptly sign, date and mail the enclosed Proxy in the
enclosed postage-paid envelope provided for your convenience. This action will
not prevent you from voting in person should you decide to attend the meeting.
Since the vote of at least a majority of the shares outstanding is
required, regardless of whether you attend the meeting or how many shares you
own, it is extremely important that you vote your shares. Thank you for your
timely attention to this matter.
Sincerely,
James F. Vigue
Chairman of the Board, President
and Chief Executive Officer
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FIRSTMARK CORP.
One Financial Place
222 Kennedy Memorial Drive
Waterville, ME 04901
(207) 873-6362
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 18, 1996
To the Stockholders of FIRSTMARK CORP.:
NOTICE IS HEREBY GIVEN that a special meeting (the "Meeting") of
Stockholders of Firstmark Corp. (the "Company") will be held at One Financial
Place, 222 Kennedy Memorial Drive, Waterville, Maine, on Thursday, July 18,
1996, commencing at 10:00 a.m to act upon the following matters:
PROPOSAL NO. 1
To approve an amendment to the Company's Articles of Incorporation to
increase the amount of authorized Common Stock from 5,000,000 to 30,000,000
Shares (the full text of the amendment is attached to the Proxy Statement as
Exhibit A).
PROPOSAL NO. 2
To approve an amendment to the Company's Articles of Incorporation to opt
out of Section 910 of the Maine Business Corporation Act (the full text of the
amendment is attached to the Proxy Statement as Exhibit B).
The Board of Directors has established the close of business on June 23,
1996, as the record date for determining the stockholders entitled to notice of,
and to vote at, the Meeting and at any adjournments or postponements thereof.
Only those stockholders of record as of the close of business on that date will
be entitled to vote at the Meeting or any such adjournments or postponements
thereof.
Please sign, date, and promptly mail the enclosed Proxy to ensure the
presence of a quorum at the Meeting.
By Order of the Board of Directors
Ivy L. Gilbert, Secretary
Waterville, Maine
June __, 1996
YOU ARE CORDIALLY INVITED TO ATTEND THIS MEETING. IT IS IMPORTANT THAT YOUR
SHARES BE REPRESENTED REGARDLESS OF THE NUMBER OF SHARES YOU OWN. EVEN IF YOU
PLAN TO BE PRESENT, PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY AS PROMPTLY
AS POSSIBLE IN THE ENCLOSED ENVELOPE. IF YOU ATTEND THIS MEETING, YOU MAY VOTE
EITHER IN PERSON OR BY PROXY. YOU MAY REVOKE THE PROXY AT ANY TIME BEFORE IT
IS EXERCISED.
<PAGE>
FIRSTMARK CORP.
PROXY STATEMENT
The enclosed Proxy is solicited on behalf of the Board of Directors of
Firstmark Corp. (the "Company") for use at the Special Meeting of Stockholders
to be held on July 18, 1996, or any adjournments thereof (the "Meeting"). The
shares of the Company's common stock, par value $.20 per share (the "Common
Stock"), of record on ________, 1996 represented by all validly executed Proxies
received in time to be taken to the Meeting will be voted. It is the intention
of the persons named in the Proxy to vote as instructed by the Stockholders, or,
if no instructions are given with respect to the matters to be acted upon, the
shares represented by the Proxy will be voted FOR approval of the amendments to
the Company's Articles of Incorporation, which are set forth in Exhibits A and B
to this Proxy Statement (the "Amendments") and which are the only items on the
Proxy.
The principal executive offices of the Company are located at One Financial
Place, 222 Kennedy Memorial Drive, Waterville, Maine 04901. The approximate
date on which this Proxy Statement and the accompanying Proxy are being mailed
to the Company's stockholders is June __, 1996.
Any Proxy given pursuant to this solicitation may be revoked by the person
giving it any time before it is voted. Proxies may be revoked by filing with
the Secretary of the Company written notice of revocation bearing a later date
than the Proxy, by duly executing a subsequent Proxy relating to the same shares
of Common Stock or by attending the Meeting and voting in person. Attendance at
the Meeting will not in and of itself constitute revocation of a Proxy unless
the stockholder votes his or her shares of Common Stock in person at the
Meeting. Any notice revoking a Proxy should be sent to the Secretary of the
Company, Ivy L. Gilbert, at Firstmark Corp., One Financial Place, 222 Kennedy
Memorial Drive, Waterville, Maine 04901.
The cost of soliciting Proxies will be borne by the Company. In addition
to solicitation by mail, officers and regular employees of the Company may
solicit Proxies in person or by telephone.
As of June 23, 1996, the record date of the Meeting, the Company had
outstanding _________ shares of Common Stock. Each share is entitled to one
vote on the matters presented at the Meeting.
The affirmative vote of at least a majority of the Company's shares of
Common Stock which are entitled to vote at the Meeting is required for adoption
of the Amendments. Abstentions and broker non-votes will not be considered a
vote for, or a vote against, the Amendments.
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
The following table sets forth for (i) each Director, (ii) those persons
who, to the knowledge of the Company, own beneficially more than five percent of
the Common Stock of the Company, and (iii) the Company's Directors and executive
officers as a group the number of shares beneficially owned on June __, 1996,
and the percentage of outstanding shares held by such persons on such date. The
mailing address for five percent beneficial owners is also provided. Beneficial
ownership has been determined in accordance with the provisions of Rule 13d-3 of
the Securities Exchange Act of 1934 under which, in general, a person is deemed
to be the beneficial owner of a security if he or she has or shares the power to
vote or direct the voting of the security or the power to dispose of or direct
the disposition of the security, or if he or she has the right to acquire
beneficial ownership of the security within 60 days. Beneficial ownership also
includes shares, if any, held in the name of the spouse, minor children or other
relatives of a person living in such person's home.
Name Common Stock Percent
James F. Vigue 143,858 (1) 6.7%
Chairman of the Board,
President, Chief
Executive Officer and
Director
Ivy L. Gilbert 156,624 (2) 7.3%
Chief Financial
Officer, Corporate
Secretary, Treasurer
and Director
Robert A. Rice -- --
Vice President of
Trading and Director
H. William Coogan, Jr. -- --
Director
Donald V. Cruickshanks -- --
Director
Susan C. Coogan -- --
Director
R. Brian Ball -- --
Director
All Directors and
executive officers as 194,108 9.0%
a group (7 persons)
(1) Includes 37,484 shares held as trustee for various trusts and 4,599 shares
held by his spouse, Ivy L. Gilbert.
(2) Includes 50,250 shares held as custodian for her minor children and 101,775
shares held by her spouse, James F. Vigue.
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PROPOSAL ONE
AMENDMENT OF THE ARTICLES OF INCORPORATION
TO INCREASE THE AMOUNT OF AUTHORIZED COMMON STOCK
The Company's Board of Directors has unanimously approved and recommends to
the stockholders that they adopt an amendment to Article Fifth of the Company's
Articles of Incorporation that would increase the amount of authorized Common
Stock from 5,000,000 shares to 30,000,000 shares. See "Proposed Amendment to
Articles of Incorporation to Increase the Amount of Authorized Common Stock,"
attached hereto as Exhibit A. As of June __, 1996, the Company had issued and
outstanding ________ shares of Common Stock. The additional shares of Common
Stock for which authorization is sought would be a part of the existing class of
Common Stock and, if and when issued, would have the same rights and privileges
as the shares of Common Stock presently outstanding. No holder of Common Stock
has any preemptive rights to acquire additional shares of Common Stock.
The Company currently has outstanding 40,000 shares of cumulative,
non-convertible, non-voting preferred stock, designated by the Board of
Directors as Series B Preferred Stock (the "Preferred Stock"). The Preferred
Stock currently has certain features, including dividend and redeemable rights,
that could be adverse to the holders of Common Stock. See "The Consummated
Merger - Voting Rights; - Dividends; - Liquidation Preference; - Conversion; -
Redemption" and "Statement of Resolution Establishing Series of Shares of
Firstmark Corp.," attached hereto as Exhibit C. The Preferred Stock, however,
may be converted by the Company's Board of Directors into not less than
2,000,000 shares of Common Stock, and, at the present time, there are not enough
shares of Common Stock authorized to allow for such a conversion. The Preferred
Stock was issued in connection with the merger between Southern Capital
Acquisition Corp., a wholly-owned subsidiary of the Company, and Southern
Capital Corp., a Virginia corporation ("SCC"), that was consummated on June 7,
1996 (the "Southern Capital Merger"). See "The Consummated Merger."
In addition, the Board of Directors believes that an increase in the number
of shares of authorized Common Stock as contemplated by Proposal One would
benefit the Company and its stockholders by giving the Company needed
flexibility in its corporate planning and in responding to developments in the
Company's business, including possible financing and acquisition transactions,
stock splits or stock dividends and other general corporate purposes that
require the issuance of additional shares of Common Stock. Having such
authorized shares available for issuance would give the Company greater
flexibility to respond to future developments and allow Common Stock to be
issued without the expense and delay of a special stockholders' meeting. Unless
otherwise required by applicable law or regulation, the additional shares of
Common Stock will be issuable without further authorization by vote or consent
of the stockholders and on such terms and for such consideration as may be
determined by the Board of Directors.
Adoption of Proposal One requires the affirmative vote of the holders of at
least a majority of the outstanding shares of Common Stock.
THE BOARD OF DIRECTORS BELIEVES THAT ADOPTION OF THE AMENDMENT TO THE
ARTICLES OF INCORPORATION TO INCREASE THE AUTHORIZED COMMON STOCK OF THE COMPANY
TO 30,000,000 SHARES IS IN THE BEST INTEREST OF ALL STOCKHOLDERS AND,
ACCORDINGLY, RECOMMENDS A VOTE FOR THE PROPOSED AMENDMENT.
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<PAGE>
PROPOSAL TWO
AMENDMENT OF THE ARTICLES OF INCORPORATION
TO OPT OUT OF SECTION 910 OF
MAINE BUSINESS CORPORATION ACT
The Company's Board of Directors has unanimously approved and recommends to
the stockholders that they adopt an amendment to Article Eighth of the Company's
Articles of Incorporation pursuant to which the Company would opt out of Section
910 of the Maine Business Corporation Act. See "Proposed Amendment to Articles
of Incorporation to Opt Out of Section 910 of the Maine Business Corporation
Act," attached hereto as Exhibit B. Section 910 provides for the right of a
stockholder to receive payment for his or her shares following a "control
transaction." Specifically, following the acquisition by a person or group of
at least 25% of those shares of a corporation that are entitled to vote in an
election of directors, or of those shares within a class of shares that are
entitled to vote in an election of directors, a stockholder may make a written
demand on the person or group for payment of the fair value of that
stockholder's shares. The stockholder would then be entitled to receive cash
from the acquiring person or group in exchange for his or her shares. A
corporation may opt out of Section 910 by so providing in its articles of
incorporation.
The current holders of the Preferred Stock were unable to acquire shares of
Common Stock in the Southern Capital Merger because the Company did not have a
sufficient number of authorized shares of Common Stock at the time of the
merger. In addition, even if the appropriate number of shares had been
authorized, the shareholders of SCC were unwilling to accept Common Stock
because of a concern that one or more of them could have been considered a group
acting in concert under Section 910, thereby triggering the potential cash
payment obligations of that section. Accordingly, the shareholders of SCC
received the Preferred Stock, which is non-voting and non-convertible by the
holder. The Preferred Stock has certain features, including dividend and
redeemable rights, that are potentially unfavorable to the holders of Common
Stock. Under the terms of the Preferred Stock, only the Company's Board of
Directors can approve the conversion of the Preferred Stock into shares of
Common Stock. A vote by stockholders to opt the Company out of Section 910 will
permit the Company's Board of Directors to make such a conversion before, for
example, dividends and mandatory sinking fund payments on the Preferred Stock
accrue and before holders of the Preferred Stock acquire the right to require
the Company to redeem their shares. See "The Consummated Merger - Voting
Rights; - Dividends; - Liquidation Preference; - Conversion; - Redemption" and
"Statement of Resolution Establishing Series of Shares of Firstmark Corp.,"
attached hereto as Exhibit C.
In addition, Section 910, as currently implemented with respect to the
Company, could have the effect of discouraging corporations that may be
interested in merging with or acquiring the Company from entering into
discussions with management or making offers to stockholders for all or part of
the Company's shares at a premium above the current share price. Eliminating the
applicability of Section 910 to the Company would eliminate one means by which
the management of the Company could deter possible takeover bids.
Adoption of Proposal Two requires the affirmative vote of the holders of at
least a majority of the outstanding shares of Common Stock.
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<PAGE>
THE BOARD OF DIRECTORS BELIEVES THAT ADOPTION OF THE AMENDMENT TO THE
ARTICLES OF INCORPORATION TO OPT OUT OF SECTION 910 OF THE MAINE BUSINESS
CORPORATION ACT IS IN THE BEST INTEREST OF ALL STOCKHOLDERS AND, ACCORDINGLY,
RECOMMENDS A VOTE FOR THE PROPOSED AMENDMENT.
THE CONSUMMATED MERGER
The Company, through its wholly-owned subsidiary, Southern Capital
Acquisition Corp. ("SCAC"), acquired Southern Capital Corp., a Virginia
corporation ("SCC") in a transaction that was consummated on June 7, 1996. SCC
merged into SCAC, and stockholders of SCC received 40,000 shares of the
Preferred Stock.
SCC, through its subsidiary, Southern Title Insurance Corporation, is
principally engaged in the business of issuing title insurance. SCC is also
involved in providing financial consulting advice to corporations and reviews
investment opportunities for its own account. Currently, SCC is an investor in
Champion Broadcasting Corp., a small market radio acquisition company that
acquires multiple stations in single markets ranked below the top 150 markets by
Arbitron.
The parties began discussions concerning a possible acquisition of SCC by
the Company in early 1996. Negotiations continued over a period of several
months. The Company proposed that it acquire SCC by way of a merger for
2,000,000 shares of the Company's Common Stock. However, two factors prevented
the Company from concluding the acquisition as it had proposed. First, the
Company has 5,000,000 shares of Common Stock authorized. While only _______
shares are issued and outstanding, the Company has possible commitments to issue
up to an additional _______ shares of Common Stock in connection with stock
options, convertible preferred stock, warrants and convertible debentures. While
it is possible that the Company would not be required to issue all of the shares
called for by such instruments, if all such shares were issued, the Company
would have _______ shares of Common Stock issued and outstanding. Thus, if the
Company had issued 2,000,000 shares of its Common Stock in connection with the
acquisition of SCC, it might have breached its obligations to holders of
convertible preferred stock, warrants, convertible debentures and stock options.
Additionally, even if the Company had a sufficient number of authorized
shares of Common Stock to acquire SCC solely in exchange for Common Stock, the
stockholders of SCC, as a group, would have held approximately 46% of the
Company's issued and outstanding shares of Common Stock. Section 910 of the
Maine Business Corporation Act, generally, gives a stockholder of a publicly
held Maine corporation, such as the Company, the right to require any person or
group of persons that acquires 25% or more of the shares entitled to vote in the
election of directors, the right to require such person or group to purchase his
or her shares for cash at fair market value. Although none of the stockholders
of SCC, individually, would have held as much as 25% of the issued and
outstanding shares of Common Stock, they were unwilling to take the risk that
one or more of them would have been considered a group acting in concert, thus
triggering a potential obligation to buy a substantial number of the shares held
by other Company stockholders for cash.
It is possible for a Maine corporation to opt out of Section 910 of the
Maine Business Corporation Act by amending its articles of incorporation.
Likewise, a Maine corporation can increase its authorized
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<PAGE>
shares of common stock by amending its articles of incorporation. However, SCC
was unwilling to condition the acquisition on a favorable vote of the
stockholders of the Company on amendments to the Company's Articles of
Incorporation that would have permitted the acquisition to be completed solely
with shares of the Company's Common Stock.
Accordingly, the acquisition of SCC was accomplished through a merger of
SCC into SCAC in which the Company issued shares of the Preferred Stock, which
are not entitled to vote in elections of directors. The terms of the Preferred
Stock issued in the acquisition of SCC were structured to permit a prompt
conversion of those shares into shares of Common Stock following the proposed
amendments to the Company's Articles of Incorporation. Provided that the
stockholders of the Company approve the proposed amendments to the Articles of
Incorporation, the Company's Board of Directors will have the right at any time
thereafter, to require a conversion of all of the shares of the Preferred Stock
into Common Stock.
SCC and its stockholders were willing to accept the Preferred Stock only on
terms and conditions that provided them a high level of assurance that the
holders of Common Stock would vote in favor of the proposed amendments to the
Articles of Incorporation.
Exhibit C hereto is the Resolution adopted by the Board of Directors of the
Company that creates the rights and preferences of the Preferred Stock. Holders
of the Company's Common Stock are encouraged to review the Resolution carefully.
The Preferred Stock carries the following voting powers, rights and
preferences.
Voting Rights. Shares of the Preferred Stock are not entitled to vote for
the election of Directors. Holders of shares of the Preferred Stock do have the
right to vote on any amendment to the Company's Articles of Incorporation which
adversely affects the voting powers, rights or preferences of any of the
outstanding shares of the Preferred Stock. Additionally, the affirmative vote of
holders of a majority of the issued and outstanding shares of the Preferred
Stock is necessary to approve any merger, consolidation, other business
combination or other transaction or action in which the Company would issue any
of its capital stock or securities that are convertible into or exchangeable for
any shares of the Company's capital stock. Thus, while the holders of the
Preferred Stock have no right to vote for the election of Directors, without the
vote of a majority of the holders of the Preferred Stock, the Company may not
issue additional shares of its capital stock or any securities convertible into
shares of the Company's capital stock.
Dividends. No dividends will accrue on shares of the Preferred Stock until
January 1, 1997. Thus, if the Preferred Stock is converted into Common Stock
before January 1, 1997, no dividends will accrue or be payable with respect to
the Preferred Stock.
However, if the Preferred Stock has not been converted to Common Stock
before January 1, 1997, dividends will begin to accrue on the Preferred Stock.
Dividends will accrue at the rate of $16.00 per share per year in 1997; $20.00
per share per year in 1998; and $24.00 per share per year after 1998.
Accordingly, if the Preferred Stock is not converted to Common Stock, dividends
totalling $640,000 will accrue in 1997; dividends totalling $800,000 will accrue
in 1998; and dividends totalling $960,000 per year will accrue each year after
1998.
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<PAGE>
Dividends on the Preferred Stock are cumulative and are payable quarterly.
That is, no dividends may be paid on the Company Common Stock unless all
dividends that have accrued on the Preferred Stock have been declared and paid.
Additionally, if the Company does not declare and pay any quarterly
dividend on the Preferred Stock, holders of 80% of the issued and outstanding
shares of the Preferred Stock may require the Company to pay dividends on the
shares of the Preferred Stock in the form of additional shares of the Preferred
Stock, which payment would have the effect of compounding the Company's dividend
payment obligations.
Liquidation Preference. In any liquidation, dissolution or winding up of
the affairs of the Company, the holders of the Preferred Stock would be entitled
to a payment of $200 per share, plus dividends accrued and unpaid, before any
payment to holders of the Company's Common Stock. As a result, the liquidation
preference of the 40,000 shares of the Preferred Stock would be a minimum of
$8,000,000.
Conversion. Provided that the Company's Articles of Incorporation have
been amended to provide that Section 910 of the Maine Business Corporation Act
shall not apply to the Company and the Company has available a sufficient number
of authorized and unreserved shares of Common Stock, the Company has the right
to convert all of the shares of the Preferred Stock into Common Stock. The
number of shares of Common Stock into which each share of the Preferred Stock is
convertible is equal to the number arrived at by dividing $200, plus any accrued
and unpaid dividends, by the conversion price per share. The conversion price
per share is the lesser of $4.00 or the current market value of the Company's
Common Stock at the time of conversion. For this purpose, "current market
value" is defined to be the average of the asked and bid prices of Common Stock
as reported by NASDAQ for the twenty consecutive trading days commencing
twenty-five days before the conversion date. As a result, the minimum number of
shares of Common Stock issuable to holders of the Preferred Stock is 2,000,000
shares. If the "current market value" of Common Stock declines below $4.00 per
share, the number of shares of Common Stock issuable to the holders of the
Preferred Stock would increase as the current market value decreases. For
example, if the current market value at the conversion date were $3.00 per
share, the number of shares of Common Stock issuable upon conversion of the
Preferred Stock would be 2.67 million shares.
Redemption. If any shares of the Preferred Stock remain outstanding at
June 30, 1998, holders of a majority of such shares may require the Company to
redeem such shares at a price of $200 per share, plus dividends accrued to the
date fixed for redemption. If the holders of any shares of the Preferred Stock
outstanding after June 30, 1998 exercise their right to be redeemed, the Company
will have the right, instead of paying the redemption price in cash, to redeem
such shares of the Preferred Stock by distributing pro rata to the holders of
the Preferred Stock, 100% of the capital stock of SCAC.
So long as any the Preferred Stock is outstanding, the Company must set
aside as a sinking fund for redemption of the Preferred Stock, on or before
April 1 of each year, commencing April 1, 1997, the sum of $1.0 million.
However, the Company will not be required to set aside in any year an amount
greater than $25.00 multiplied by the number of shares of the Preferred Stock
then outstanding. It is unlikely that the Company will have the financial
resources to pay dividends on the Preferred Stock and make the required sinking
fund payment.
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<PAGE>
To provide the holders of the Preferred Stock with a high level of
assurance that the Company will be in a position, if necessary, to fulfill its
potential obligation to redeem the Preferred Stock, the Company has entered into
an Escrow Agreement with the holders of the Preferred Stock and the law firm of
Thompson & McMullan, P.C., Richmond, Virginia, as Escrow Agent (the "Escrow
Agreement"). Holders of the Company's Common Stock are encouraged to review the
Escrow Agreement, which is attached hereto as Exhibit D. Under the Escrow
Agreement, all of the issued and outstanding shares of SCAC have been delivered
to the Escrow Agent. Under the Escrow Agreement, the Escrow Agent will
redeliver the shares of SCAC to the Company upon the conversion of all of the
shares of the Preferred Stock into Common Stock, at which time the Escrow
Agreement will terminate.
If holders of the Preferred Stock exercise their right of redemption and
the Company elects to pay the redemption price in shares of SCAC Common Stock,
the Escrow Agent will deliver the shares of SCAC Common Stock to a
representative of holders of the Preferred Stock (the "Representative"), who
will split up and deliver the shares of SCAC Common Stock to the holders of the
Preferred Stock.
Under the Escrow Agreement, the Company retains the rights to receive
dividends and other distributions on the SCAC Common Stock and, in most cases,
to vote the SCAC Common Stock as long as the Company has not failed to declare
and pay any cash dividend or make any sinking fund payment with respect to the
Preferred Stock. However, even if the Company has made all required dividend
and sinking fund payments, it may not exercise any voting right with respect to
the SCAC Common Stock if, in the judgment of the Representative, such action
would have a material adverse effect on the value of the SCAC Common Stock or
any part thereof. Thus, as long as the Escrow Agreement is in effect, the
Company may not dispose of the SCAC Common Stock or, among other things, vote
the SCAC Common Stock in favor of any encumbrance or disposition of a
substantial portion of the assets of SCAC.
If the Company fails to make any dividend or sinking fund payment with
respect to the Preferred Stock, its right to vote the SCAC Common Stock and its
right to receive distributions with respect to the SCAC Common Stock terminate.
In such a case, the right to vote the SCAC Common Stock would pass to the
Representative and the Representative could be expected to immediately vote the
shares of SCAC Common Stock for the election of a new Board of Directors of
SCAC, who would operate SCAC in a manner designed to preserve its value, pending
delivery of the shares of SCAC Common Stock to the holders of the Preferred
Stock after June 30, 1998.
On the effective date of the Southern Capital Merger, the Board of
Directors of the Company was expanded by the appointment of H. William Coogan,
Jr., Donald V. Cruickshanks, Susan C. Coogan and R. Brian Ball to the Board of
Directors of the Company. Messrs. Coogan and Cruickshanks and Mrs. Coogan were
the sole stockholders of SCC. Mr. Ball is an attorney and was a Director of SCC
immediately prior to the Effective Date of the Acquisition. James F. Vigue, Ivy
L. Gilbert and Robert A. Rice were the Directors of the Company prior to the
effective date of the Southern Capital Merger and remain as Directors of the
Company. Messrs. Coogan, Cruickshanks and Ball and Mrs. Coogan were not
Directors of the Company prior to the effective date and, prior to the effective
date, owed no duty to the Company or its stockholders.
Messrs. Vigue and Rice and Ms. Gilbert considered the terms of the
transaction and concluded that it was in the best interests of the Corporation
and its stockholders and that the terms of the Preferred Stock and Escrow
Agreement involved risks that were reasonable for the Company to undertake in
light of the potential benefits of the Southern Capital Merger to the Company
and its stockholders. However, if the holders of the Company's Common Stock do
not vote in favor of the proposed amendments to its
-9-
<PAGE>
Articles of Incorporation and the Company, therefore, is unable to convert the
Preferred Stock into Common Stock, the effect on the Company and its
stockholders would be material and adverse. It is likely that the Company would
be unable to meet its dividend and sinking fund obligations to the holders of
the Preferred Stock; that the Company would be unable to pay dividends on its
Common Stock; that the Company would be unable to raise additional capital
through the issuance of Common Stock or Preferred Stock or securities
convertible into Common Stock or Preferred Stock; it would be unable to dispose
of SCAC or vote the shares of SCAC Common Stock; and, finally, that SCAC, which
presently represents more than half of the net worth of the Company, would be
operated by a Board of Directors selected by a representative of the holders of
the Preferred Stock which could be adverse to the Company.
STOCKHOLDER PROPOSALS
Any proposal which a stockholder wishes to have included in the Proxy
Statement and form of proxy relating to the next Annual Meeting of Stockholders,
to be held on or about November 15, 1996, must be received by the Corporation no
later than June 21, 1996. If such proposal complies with all of the
requirements of Rule 14a-8 of the Exchange Act, it will be included in the Proxy
Statement and set forth in the form of proxy issued for the next Annual Meeting
of Stockholders. It is urged that any such proposals be sent to the Secretary
of the Corporation by certified mail, return receipt requested.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WE URGE YOU TO FILL IN,
SIGN AND RETURN THE ACCOMPANYING PROXY CARD, NO MATTER HOW LARGE OR SMALL YOUR
HOLDINGS MAY BE.
By Order of the Board of Directors
Ivy L. Gilbert, Secretary
Waterville, Maine
June __, 1996
-10-
<PAGE>
Exhibit A
PROPOSED AMENDMENT TO ARTICLES OF INCORPORATION
TO INCREASE THE AMOUNT OF AUTHORIZED COMMON STOCK
RESOLVED, that the stockholders of Firstmark Corp. hereby approve a
proposal to amend Article Fifth of the Company's Articles of Incorporation so
that after amendment it shall read in its entirety as follows:
The number of shares that the corporation has authority to
issue is as follows:
1. Thirty million (30,000,000) shares of Common Stock, $.20 par
value per share.
2. Two hundred fifty thousand (250,000) shares of
Preferred Stock, $.20 par value per share.
The aggregate par value of all such shares (of all classes
and series) having par value is $6,050,000.
The total number of all such shares (of all classes and
series) without par value is zero shares.
<PAGE>
Exhibit B
PROPOSED AMENDMENT TO ARTICLES OF INCORPORATION
TO OPT OUT OF SECTION 910
OF THE MAINE BUSINESS CORPORATION ACT
RESOLVED, that the stockholders of Firstmark Corp. hereby approve a
proposal to amend Article Eighth of the Company's Articles of Incorporation so
that after amendment it shall include the following:
Section 910 of the Maine Business Corporation Act shall not be
applicable to the Corporation.
<PAGE>
Exhibit C
RESOLUTION
OF
BOARD OF DIRECTORS
FIRSTMARK CORP.
Creating the
SERIES B PREFERRED STOCK
At a meeting of the Board of Directors of Firstmark Corp. ("the
Corporation") held on April 29, 1996, the following resolution (herein referred
to as the "Resolution") creating the Series B Preferred Stock of the Corporation
and the relative rights and preferences thereof were duly adopted:
RESOLVED, that one hundred eighty-eight thousand (188,000) authorized but
unissued shares of this Corporation's Preferred Stock ($.20 par value) are
hereby designated as a series of Preferred Stock called the Cumulative
Nonconvertible Nonvoting Preferred Stock, Series B (the "Series B Preferred
Stock"), with the following voting powers, rights and preferences:
1. DIVIDENDS.
(a) The holders of the outstanding shares of Series B Preferred Stock
shall be entitled to receive (i) if, when and as declared by the Board of
Directors of the Corporation, out of any funds legally available therefor, cash
dividends at the rate and payable on the dates hereinafter set forth or (ii)
stock dividends payable in accordance with Section 1(b). Dividends shall be
cumulative and shall accrue on the Series B Preferred Stock from and after
January 1, 1997. The rate of cash dividends payable on the Series B Preferred
Stock shall be $16.00 per share per annum for dividends that accrue in 1997;
$20.00 per share per annum for dividends that accrue in 1998; and $24.00 per
share per annum for dividends that accrue after 1998. Dividends shall be
payable in equal quarterly installments on the last day of March, June,
September and December of each year, commencing on March 31, 1997. Dividends
payable on any date which is not the last day of March, June, September or
December shall be calculated on the basis of a 360 day year and the actual
number of days elapsed.
(b) If the Board of Directors shall not declare and pay a cash dividend
for any dividend period, the Corporation, upon receipt of a written demand
signed by holders of at least eighty percent (80%) of the issued and outstanding
shares of Series B Preferred Stock, shall pay a dividend to the holders of
Series B Preferred Stock in shares of Series B Preferred Stock for such dividend
period and any prior dividend period identified in such demand for which a cash
dividend was not declared and paid. The number of shares of Series B Preferred
Stock issuable as a dividend for any dividend period shall be determined by
dividing the cash dividend accrued for such dividend period by $200.00.
<PAGE>
(c) No dividend whatsoever shall be declared or paid upon, or any sum set
apart for the payment of dividends upon any shares of Parity Stock for any
dividend period unless a like proportionate dividend for the same dividend
period (in proportion to the respective annual dividend rates per share set
forth in the Articles of Incorporation or the respective Articles of Amendment)
shall have been declared and paid upon, or declared and a sufficient sum set
apart for the payment of such dividend upon, all shares of Series B Preferred
Stock outstanding.
(d) Unless Dividends Accrued on all outstanding shares of Series B
Preferred Stock and any outstanding shares of Parity Stock due for all past
dividend periods shall have been declared and paid, or declared and a sum
sufficient for the payment thereof set apart, and full dividends (to the extent
that the amount thereof shall have become determinable) on all outstanding
shares of such stock due on the respective next following payment dates shall
have been declared and a sum sufficient for the payment thereof set apart, then
(i) no dividend (other than a dividend payable solely in Common Stock) shall be
declared or paid upon, or any sum set apart for the payment of dividends on any
shares of Junior Stock; (ii) no other distribution shall be made upon any shares
of Junior Stock; (iii) no shares of Junior Stock shall be purchased, redeemed or
otherwise acquired for value by the Corporation or by any Subsidiary; and (iv)
no monies shall be paid into or set apart or made available for a sinking or
other like fund for the purchase, redemption or other acquisition for value of
any shares of Junior Stock by the Corporation or any Subsidiary.
2. VOTING RIGHTS.
(a) Shares of Series B Preferred Stock shall not be entitled to vote for
the election of directors.
The holders of the outstanding shares of the Series B Preferred Stock shall
have the voting rights described in Paragraph (b) of this Section 2 and such
additional voting rights as may be afforded under the laws of the State of Maine
in existence at the time any matter requiring their vote shall arise.
(b) The affirmative vote or consent of the holders of a majority of the
then issued and outstanding shares of the Series B Preferred Stock (voting in
person or by proxy at a meeting called for such purpose at which holders of such
shares shall vote separately as a class) shall be necessary to effect any of the
following:
(i) The authorization of any shares of Prior Stock or the
authorization of any shares that are convertible into Prior Stock;
(ii) Any amendment, alteration or repeal of any of the provisions of
this resolution or any of the other provisions of the Articles of
Incorporation which affects adversely the voting powers, rights or
preferences of any of the outstanding shares of Series B Preferred Stock or
the holders thereof, it being understood that any such amendment,
alteration or repeal in order to increase the number of directors of the
<PAGE>
Corporation shall not be deemed to affect adversely the voting powers,
rights or preferences of any shares of Series B Preferred Stock or the
holders thereof; or
(iii) Any merger, consolidation, other business combination or
other transaction or action in which the Corporation issues any of any
Capital Stock or securities that are convertible into or exchangeable for
any shares of the Corporation's Capital Stock.
3. LIQUIDATION.
In the event of liquidation, dissolution or winding up of the affairs of
the Corporation, the holders of shares of Series B Preferred Stock then
outstanding shall be entitled to be paid in cash out of the net assets of the
Corporation, including its capital, a liquidation price of $200 per share, plus
Dividends Accrued to the date of payment, and no more, before any distribution
or payment shall be made to the holders of shares of Junior Stock and after
payment to the holders of the outstanding shares of Series B Preferred Stock and
to the holders of shares of other classes and series of Parity Stock of the
amounts to which they are respectively entitled, the balance of such assets, if
any, shall be paid to the holders of the Junior Stock according to their
respective rights. For the purposes of the preceding sentence, neither the
consolidation of the Corporation with nor the merger of the Corporation into any
other corporation nor the sale, lease or other disposition of all or
substantially all of the Corporation's properties and assets shall, without
further corporate action, be deemed a liquidation, dissolution or winding up of
the affairs of the Corporation. In case the net assets of the Corporation are
insufficient to pay the holders of the outstanding shares of Series B Preferred
Stock and other series of Parity Stock the full preferential amounts to which
they are respectively entitled, the entire net assets of the Corporation shall
be distributed ratably to the holders of the outstanding shares of Series B
Preferred Stock and other series of Parity Stock in proportion to the full
preferential amounts to which they are respectively entitled.
4. CONVERSION.
(a) Provided (i) the Corporation's Articles of Incorporation have been
amended to effectively provide that Section 910 of the Maine Business
Corporation Act (13-A M.R.S.A. 910) shall not apply to the Corporation and (ii)
that the Corporation has available a sufficient number of authorized and
unreserved shares of Common Stock, the Corporation shall have the right, at any
time, to convert all, and not less than all, shares of Series B Preferred Stock
into Common Stock of the Corporation. The number of shares of Common Stock into
which each share of Series B Preferred Stock shall be convertible shall be equal
to the number arrived at by dividing $200.00, plus Dividends Accrued, by the
conversion price per share of the Common Stock fixed or determined as
hereinafter provided. Such conversion price shall be the lesser of (i) $4.00 per
share, subject to the adjustments hereinafter provided or (ii) the Current
Market Value per share of the Corporation's Common Stock--(such price as
adjusted at any time being hereinafter called the "Conversion Price".) For the
purposes of this Section 4(a), the "Current Market Value" per share of the
Corporation's Common Stock shall be deemed to be the average of the Fair Market
Value (as defined in Section 6 on each of the 20 consecutive trading days
commencing 25 trading days
<PAGE>
before the Conversion Date (a trading day, for the purpose of this resolution,
being a day on which securities are traded in the over-the-counter market or, if
the Common Stock is then listed on any national stock exchange, on such
exchange).
(b) The Corporation may exercise the conversion right provided in
Paragraph (a) above by delivering to each holder of record of Series B Preferred
Stock at the holder's address appearing in the Corporation's stock transfer
records a written notice stating that the Corporation elects to convert such
shares. Conversion shall be deemed to have been effected on the date (the
Conversion Date) when such delivery is made. Upon receipt of such notice, each
holder of Series B Preferred Stock shall deliver to the Corporation at the
address set forth in Section 5(b) all certificates held by him for shares of
Series B Preferred Stock, endorsed in blank. As promptly as practicable
thereafter the Corporation shall issue and deliver to or upon the written order
of such holder, at such office or other place designated by the Corporation, a
certificate or certificates for the number of full shares of Common Stock to
which he is entitled. The person in whose name the certificate or certificates
for shares of Common Stock are to be issued shall be deemed to have become a
stockholder of record on the Conversion Date, unless the transfer books of the
Corporation are closed on that date, in which event he shall be deemed to have
become a stockholder of record on the next succeeding date on which the transfer
books are open; but the Conversion Price shall be that in effect on the
Conversion Date.
(c) The Corporation shall not issue any fraction of a share upon
conversion of shares of the Series B Preferred Stock. If any fractional
interest in a share of Common Stock would be deliverable upon conversion, the
number of shares of Common Stock deliverable shall be rounded up to the nearest
full share.
(d) The issuance of Common Stock on conversion of outstanding shares of
Series B Preferred Stock shall be made by the Corporation without charge for
expenses or for any tax in respect of the issuance of such Common Stock, but the
Corporation shall not be required to pay any tax or expense which may be payable
in respect of any transfer involved in the issuance and delivery of shares of
Common Stock in any name other than that of the holder of record on the books of
the Corporation of the outstanding shares of Series B Preferred Stock converted,
and the Corporation shall not be required to issue or deliver any certificate
for shares of Common Stock unless and until the person requesting the issuance
shall have paid to the Corporation the amount of such tax or shall have
established to the satisfaction of the Corporation that such tax has been paid.
(e) The Conversion Price shall be subject to the following adjustments:
(i) Whenever the Corporation shall (A) pay a dividend on its
outstanding shares of Common Stock in shares of its Common Stock or
subdivide or otherwise split its outstanding shares of Common Stock, or (B)
combine its outstanding shares of Common Stock into a smaller number of
shares, the Conversion Price in effect at the effective date of the
happening of such event shall be adjusted so that the holders of the Series
B Preferred Stock, upon conversion of all thereof immediately following
such event, would be entitled to receive the same aggregate number of
<PAGE>
shares of Common Stock as they would have been entitled to receive
immediately following such event if such shares of Series B Preferred Stock
had been converted immediately prior to such event, or if there is a record
date in respect of such event, immediately prior to such record date.
(ii) In case the Corporation, after the effective date of this
amendment, shall issue rights, warrants or options to subscribe for or
purchase shares of Common Stock, or securities convertible into or
exchangeable for shares of Common Stock, at a price per share which is less
than the Conversion Price in effect immediately prior to such issuance, the
Conversion Price in effect immediately prior to such issuance shall be
adjusted so that the same shall equal the price determined by multiplying
the Conversion Price in effect immediately prior to the issuance of such
rights, warrants, options or convertible securities by a fraction, the
numerator of which shall be the number of shares of Common Stock
outstanding at the close of business on the date of issuance of such
rights, warrants, options or convertible securities plus (A) The number of
shares of Common Stock issuable upon the exercise of such rights, warrants
or options, or upon the conversion of convertible securities then
outstanding and which have been taken into account and determining the then
effective Conversion Price (excluding any theretofore exercised, converted
or exchanged), and (B) the number of shares which the aggregate exercise
price of the shares of Common Stock called for by all such rights,
warrants, options or convertible securities (excluding any theretofore
exercised, converted or exchanged) would purchase at the Conversion Price
then in effect and the denominator of which shall be the number of shares
of Common Stock outstanding at the close of business on the date of
issuance of such rights, warrants, options or convertible securities plus
(A) The number of shares of Common Stock issuable upon the exercise of
rights, warrants or options or upon the conversion of convertible
securities then outstanding and which have been taken into account in
determining the then effective Conversion Price (excluding any theretofore
exercised, converted or exchanged), and (B) the number of additional shares
of Common Stock called for by all such rights, warrants, options or
convertible securities (excluding any theretofore exercised, converted or
exchanged). Such adjustment shall be made on the date that such rights,
warrants or options are issued.
(iii) Whenever the Corporation shall make a distribution to
holders of Common Stock of evidences of its indebtedness or assets
(excluding dividends and distributions paid in cash out of funds available
for dividends in accordance with applicable law), the Conversion Price
immediately prior to such distribution shall be adjusted by multiplying
such Conversion Price by a fraction, (y) the numerator of which shall be
the denominator, hereinbelow described, less the fair value (as
conclusively determined in good faith by the Board of Directors of the
Corporation) at the time of such distribution of that portion of the
evidences of indebtedness or assets distributed which is applicable to one
share of Common Stock, and (z) the denominator of which shall be the
Conversion Price per share of Common Stock on the next full business day
after the record date fixed for the determination of the holders of the
Common Stock entitled to such distribution. Such adjustment shall be
retroactively effective as of immediately after such record date.
<PAGE>
(iv) If the Corporation shall sell any shares of Common Stock for cash
at a price per share which is less than the Conversion Price in effect
immediately prior to such sale, or issue shares of the Common Stock for a
consideration other than for cash, whether in a merger or other acquisition
or otherwise, for a gross consideration per share which is less than the
Conversion Price in effect immediately prior to such issuance, the
Conversion Price in effect immediately prior to such issue or sale shall be
adjusted to a new Conversion Price equal to that number determined by
dividing (A) the sum of (1) the number of shares of Common Stock
outstanding immediately prior to such issue or sale multiplied by the
Conversion Price then in effect and (2) the gross consideration received by
the Corporation upon such issue or sale by (B) the number of shares of
Common Stock outstanding immediately after such issue or sale. For
purposes of such computation, the gross consideration received by the
Corporation upon such issue or sale shall be the amount of cash and the
fair value of property received at the value determined in good faith by
the Board of Directors of the Corporation. The provisions of this
subparagraph shall not apply to the issuance of shares of Common Stock
pursuant to (x) the exercise of rights, warrants or options to purchase
shares of Common Stock, or (y) the exercise of conversion rights.
(f) Notwithstanding any of the foregoing provisions of this Section 4, no
adjustment of the Conversion Price shall be made if the Corporation shall issue
rights, warrants or options to purchase Common Stock, or issue Common Stock,
pursuant to one or more stock purchase plans, stock option plans, incentive
compensation plans, or other remuneration plans for employees (including
officers) of the Corporation or its Subsidiaries adopted or approved by the
Board of Directors of the Corporation before or after the adoption of this
resolution.
(g) In any case in which this Section 4 provides that an adjustment of the
Conversion Price shall become effective retroactively immediately after a record
date for an event, the Corporation may defer until the occurrence of such event
issuing to the holder of any shares of Series B Preferred Stock converted after
such record date and before the occurrence of such event that number of shares
of Common Stock issuable upon such conversion that shall be in addition to the
number of shares of Common Stock which were issuable upon such conversion
immediately before the adjustment in the conversion price required in respect of
such event.
(h) Whenever the Conversion Price and subsequent changes to be made
therein are adjusted pursuant to this Section 4, the Corporation shall (i)
promptly place on file at its principal office and at the office of each
transfer agent for the Series B Preferred Stock, if any, a statement, signed by
the Chairman or President of the Corporation and by its Treasurer, showing in
detail the facts requiring such adjustment and a computation of the adjusted
Conversion Price, and shall make such statement available for inspection by
shareholders of the Corporation, and (ii) cause a notice to be mailed to each
holder of record of the outstanding shares of Series B Preferred Stock stating
that such adjustment has been made and setting forth the adjusted Conversion
Price. It shall be accompanied by a letter from the Corporation's independent
public accountants stating that the change has been made in accordance with the
provisions of this resolution.
<PAGE>
(i) In the event of any reclassification or recapitalization of the
outstanding shares of Common Stock (except a change in par value, or from par
value to no par value, or subdivision or other split or combination of shares),
or in case of any consolidation or merger to which the Corporation is a party,
except a merger in which the Corporation is the surviving corporation and which
does not result in any such reclassification or recapitalization of the
outstanding Common Stock of the Corporation, or in case of any sale or
conveyance to another corporation of all or substantially all of the property of
the Corporation, effective provisions shall be made by the Corporation or by the
successor or purchasing corporation (i) that the holder of each share of Series
B Preferred Stock then outstanding shall thereafter have the right to convert
such share into the kind and amount of stock and other securities and property
receivable, upon such reclassification, recapitalization, consolidation, merger,
sale or conveyance, by a holder of the number of shares of Common Stock of the
Corporation into which such share of Series B Preferred Stock might have been
converted immediately prior thereto, and (ii) that there shall be subsequent
adjustments of the Conversion Price which shall be equivalent, as nearly as
practicable, to the adjustments provided for in this Section 4. The provisions
of this paragraph (j) shall similarly apply to successive reclassifications,
changes, consolidations, mergers, sales or conveyances.
(j) Shares of Common Stock issued on conversion of shares of Series B
Preferred Stock shall be issued as fully paid shares and shall be nonassessable
by the Corporation.
5. REDEMPTION.
(a) Holders of a majority of the issued and outstanding shares of Series B
Preferred Stock, by written notice to the Corporation at any time after June 30,
1998, may require the Corporation to redeem all of the outstanding shares of
Series B Preferred Stock. At the option of the Corporation, the redemption
price shall be payable (i) in cash in the amount of $200.00 per share, plus
Dividends Accrued to the date fixed for redemption, or (ii) by distributing pro
rata to the holders of Series B Preferred Stock, one hundred percent of the
capital stock of Southern Capital Acquisition Corp., a Virginia corporation
("SCAC").
(b) Notice of redemption shall be given by holders of a majority of the
issued and outstanding shares of Series B Preferred Stock to the Corporation by
first class mail, postage prepaid, to Corporation at the following address:
Firstmark Corp., One Financial Place, 222 Kennedy Memorial Drive, Waterville,
Maine 04901. If such notice is given, all shares of Series B Preferred Stock
shall be redeemed and all holders of Series B Preferred Stock shall be bound to
accept the redemption price. The notice of redemption shall set forth the date
fixed for redemption (which shall not be less than 30 days after the date the
notice is mailed to the Corporation), the applicable redemption price (including
the amount of Dividends Accrued to the date fixed for redemption), and the place
where the payment of the redemption price shall be made. Certificates
representing shares to be redeemed shall be surrendered against payment of the
redemption price.
<PAGE>
(c) When a notice of redemption of the outstanding shares of Series B
Preferred Stock shall have been duly mailed as hereinabove provided, on or
before the date fixed for redemption, the Corporation shall deposit (i) cash
funds sufficient to pay the redemption price (including Dividends Accrued to the
date fixed for redemption) of such shares in trust for the benefit of the
holders of the shares to be redeemed with any bank or trust company in the City
of Richmond, State of Virginia, having capital and surplus aggregating at least
$50,000,000 as of the date of its most recent report of financial condition and
named in such notice or (ii) stock certificates, duly endorsed, representing one
hundred percent of the capital stock of SCAC to be applied to the redemption of
the shares so called for redemption against surrender of the certificates
representing shares so redeemed for cancellation. From and after the time of
such deposit of all shares for the redemption of which such deposits shall have
been so made shall, whether or not the certificates therefor shall have been
surrendered for cancellation, be deemed no longer to be outstanding for any
purpose and all rights with respect to such shares shall thereupon cease and
determine except the right to receive payment of the redemption price (including
Dividends Accrued to the date fixed for redemption), but without interest. Any
interest accrued on such funds shall be paid to the Corporation from time to
time.
(d) So long as any Series B Preferred Stock is outstanding, the
Corporation shall set aside as a sinking fund for redemption of the Seriesk B
Preferred Stock on or before April 1 of each year commencing April 1, 1997, the
sum of $1,000,000; provided that in any year the Corporation shall not be
required to set aside an amount greater than the total of $25.00 multiplied by
the number of shares of Series B Preferred Stock then outstanding plus Dividends
Accrued.
Funds so set aside for the sinking fund shall be applied by or at the
direction of the Corporation only to the redemption of shares of Series B
Preferred Stock in the manner, upon notice and with the effect specified in this
Section 5. Accrued and unpaid dividends on shares of Series B Preferred Stock
to be redeemed through the sinking fund shall not be charged to funds deposited
in the sinking fund but shall be paid out of other funds of the Corporation.
6. DEFINITIONS.
For the purposes of this resolution, the following terms shall have the
following meanings:
"Capital Stock" means the Capital Stock of any class or series
(however designated) of the Corporation.
"Common Stock" means the Common Stock of the Corporation ($.20 par
value) as constituted on the date of this Resolution, or shares of any
other class of Capital Stock into which such Common Stock is reclassified
after such date.
"Dividends Accrued" means an amount equal to the sum of all cash
dividends required to be paid on the shares of Series B Preferred Stock
from the date of issue of the shares of Series B Preferred Stock to the
date to which the determination is to be made, whether or not such amount
or any part thereof shall have been declared as dividends and whether there
<PAGE>
shall be or have been any funds out of which such dividends might legally
be paid, less the sum of the amount of cash dividends declared and paid
under Section 1(a) and stock dividends declared and paid under Section 1(b)
and, if any dividends have been declared and set apart for payment but not
paid, the amount so set apart for the payment of such dividends. Accrued
Dividends for any period less than a full calendar quarter shall be
calculated on the basis of the actual number of days elapsed over a 360 day
year.
The "Fair Market Value" per share of Common Stock on any day shall be
deemed to be the mean between the asked and bid prices as reported by
NASDAQ or any similar service, or the last sale price as reported on the
NASDAQ National Market if the Common Stock is quoted on such system, but if
the Common Stock is listed and traded on a national stock exchange, the
"Fair Market Value" per share of Common Stock on any date shall be deemed
to be the last sale price for such day on the exchange on which it
generally has the highest trading volume; provided, however, that if the
Common Stock is not traded on any trading day, then the Fair Market Value
on such day shall be determined in the manner hereinabove set forth on the
most recent preceding trading day.
"Junior Stock" means any Capital Stock ranking as to dividends and as
to rights in liquidation, dissolution or winding up of the affairs of the
Corporation junior to the Series B Preferred Stock.
"Parity Stock" means shares of any series of the Corporation's
Preferred Stock, shares of the Corporation's Class B Preferred Stock and
any shares of Capital Stock ranking as to dividends and/or as to the rights
in liquidation, dissolution or winding up of the affairs of the Corporation
equally with the Series B Preferred Stock.
"Prior Stock" means any Capital Stock g as to dividends or as to
rights in liquidation, dissolution or winding up of the affairs of the
Corporation prior to the Series B Preferred Stock.
"Subsidiary" means any corporation, a majority of the outstanding
voting stock of which is owned, directly or indirectly, by the Corporation
or by the Corporation and one or more Subsidiaries.
Notice of the above meeting is expressly waived by the undersigned
directors, who are all of the directors, pursuant to 13-A M.R.S.A.(S) 709.
Dated: April 29, 1996 /s/ JAMES F. VIGUE
James F. Vigue
<PAGE>
/s/ IVY L. GILBERT
Ivy L. Gilbert
/s/ ROBERT A. RICE
Robert A. Rice
/s/ IVY L. GILBERT
Ivy L. Gilbert, Secretary
<PAGE>
Exhibit D
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (as amended, supplemented or modified from time
to time, this "Agreement") is dated as of ____________, 1996 and is by and among
Firstmark Corp. ("FMC"), a Maine Corporation; Thompson & McMullan, a Virginia
professional corporation (the "Agent"); H. William Coogan, Jr., Donald V.
Cruickshanks and Susan C. Coogan, trustee U/A dated December 30, 1992 (together
the "Shareholders"); and H. William Coogan, Jr. ("Representative").
Recitals:
1. FMC, Southern Capital Corp., a Virginia corporation ("SCC"), and
Southern Capital Acquisition Corp., a Virginia corporation ("SCAC"), entered
into an Agreement and Plan of Reorganization, dated April ___, 1996 (the
"Reorganization Agreement"). The Reorganization Agreement provides for the
merger of SCC into SCAC.
2. SCAC is a wholly-owned subsidiary of FMC.
3. The Shareholders are the only shareholders of SCC. Pursuant to the
Reorganization Agreement, upon the merger of SCC into SCAC, the Shareholders
will receive shares of Cumulative Nonconvertible Nonvoting Preferred Stock,
Series B, of FMC ("FMC Preferred Stock") in exchange for their shares of the
common stock of SCC. The terms and the relative rights and preferences of the
FMC Preferred Stock are set forth in Exhibit B to the Reorganization Agreement
(the "Articles of Amendment").
4. Subject to certain conditions, Section 4(a) of the Articles of
Amendment provides that FMC shall have the right to convert the shares of FMC
Preferred Stock into shares of common stock of FMC, par value $.20 per share
("FMC Common Stock").
5. Section 5(a) of the Articles of Amendment provides that after June
30, 1998 the holders of the FMC Preferred Stock shall have the right to require
FMC to redeem the FMC Preferred Stock. If such right of redemption is exercised,
FMC will have the right to pay the redemption price in cash or by delivering all
of the issued and outstanding shares of the capital stock of SCAC to the holders
of FMC Preferred Stock.
6. It is the desire and expectation of FMC and the Shareholders that
FMC will exercise its right to convert the FMC Preferred Stock into FMC Common
Stock before January 1, 1997, such that FMC will never be required to redeem the
FMC Preferred Stock.
<PAGE>
7. FMC and the Shareholders, however, realize that satisfaction of the
conditions precedent to the right of FMC to convert the FMC Preferred Stock into
FMC Common Stock, as set forth in Section 4(a) of the Articles of Amendment,
requires a vote of the shareholders of FMC to amend the Articles of
Incorporation of FMC and, therefore, is not within the control of FMC and the
Shareholders. Consequently, the parties are entering this Agreement to ensure
that, if the FMC Preferred Stock is not converted into FMC Common Stock before
June 30, 1998 and the holders of FMC Preferred Stock exercise their right of
redemption, all of the issued and outstanding shares of SCAC common stock will
be available for prompt delivery to the Shareholders, or their assigns, if FMC
does not elect to pay the redemption price in cash.
NOW THEREFORE, for and in consideration of Ten Dollars ($10.00) and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
ESCROW OF STOCK
SECTION 1.1. Delivery of Stock Certificates. Certificate Number ____
(the "Certificate") representing and evidencing five thousand (5,000) shares of
the common stock of SCAC, no par value ("SCAC Common Stock"), is hereby
delivered to and shall be held by the Agent pursuant to the terms of this
Agreement. The Certificate is in suitable form for transfer by delivery.
SECTION 1.2. Release of Certificate.
(a) Upon the conversion of all of the shares of FMC Preferred Stock
into FMC Common Stock, this Agreement shall terminate and the Certificate shall
be delivered by the Agent to FMC.
(b) If the holders of FMC Preferred Stock exercise their right of
redemption, as set forth in Section 5(a) of the Articles of Amendment, and FMC
elects to pay the redemption price in shares of SCAC Common Stock, the Agent
shall deliver, at such time as FMC and the Representative shall direct, the
Certificate to the Representative, who shall split up the Certificate and
deliver shares of SCAC Common Stock to each such holder of FMC Preferred Stock
in the proportion that the number of shares of FMC Preferred Stock held by each
person bears to the total number of shares of FMC Preferred Stock issued and
outstanding.
(c) This Agreement shall terminate when the Agent delivers the
Certificate to FMC pursuant to Section 1.2(a) or to the Representative pursuant
to Section 1.2(b).
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
FMC represents and warrants as follows:
SECTION 2.1. Contravention. The execution, delivery and performance by
FMC of this Agreement require no action by or in respect of, or filing with, any
governmental authority and do not contravene, or constitute (with or without the
giving of notice or lapse of time or both) a default under, any provision of
applicable law or of any agreement, judgment, injunction, order, decree or other
instrument binding upon or affecting FMC.
SECTION 2.2. Binding Effect. This Agreement constitutes a valid and
binding agreement of FMC, enforceable against FMC in accordance with its terms,
except as the enforceability hereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors rights generally and by equitable principles of
general applicability (regardless of whether such enforceability is considered
in a proceeding in equity or at law).
SECTION 2.3. Title to Stock. FMC owns all of the issued and outstanding
shares of SCAC Common Stock free and clear of any liens or encumbrances. All
issued and outstanding shares of SCAC Common Stock have been duly authorized and
validly issued, and are fully paid and non-assessable, and are subject to no
options to purchase or similar rights of any person or entity. There are no
shares of SCAC Common Stock issued or outstanding, except the shares evidenced
by the Certificate.
ARTICLE III
COVENANTS
FMC agrees that until this Agreement terminates FMC will not sell or
otherwise dispose of, or grant any option with respect to, any of the SCAC
Common Stock or create or suffer to exist any lien or encumbrance on any SCAC
Common Stock. FMC agrees that it will cause SCAC not to issue any stock or other
securities after the date hereof, except to the Agent.
ARTICLE IV
DISTRIBUTIONS ON COLLATERAL; VOTING
SECTION 4.1. Right to Receive Distributions: Voting.
(a) So long as FMC shall not have failed (i) to declare and pay any
cash dividend on the FMC Preferred Stock or (ii) to make any sinking fund
payment with respect to the FMC Preferred Stock:
(i) FMC shall be entitled to exercise any and all
voting and other consensual rights pertaining to the SCAC Common
Stock or any part thereof for any purpose not inconsistent with the terms of
this Agreement; provided, however, that FMC shall not exercise or shall refrain
from exercising any such right if, in the Representative's judgment, such action
would have a material adverse effect on the value of the SCAC Common Stock or
any part thereof.
(ii) FMC shall be entitled to receive and retain any and all
dividends and distributions made upon or with respect to the SCAC Common Stock.
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(iii) The Agent shall execute and deliver, or cause to be
executed and delivered, to FMC all such proxies, powers of attorney, consents,
ratifications and waivers and other instruments as FMC may reasonably request
for the purpose of enabling FMC to exercise the voting and other rights which
FMC is entitled to exercise pursuant to paragraph (i) above and to receive the
dividends which FMC is authorized to receive and retain pursuant to paragraph
(ii) above. Before taking any such action, the Agent shall have the right, but
not the obligation, to request confirmation from the Representative that FMC is
entitled to exercise such rights and/or receive such dividends.
(b) If FMC shall fail to (i) declare and pay any cash dividend on the
FMC Preferred Stock or (ii) to make any sinking fund payment with respect to the
Series B Preferred Stock:
(i) All rights of FMC to exercise the voting and other
consensual rights which FMC would otherwise be entitled to exercise pursuant to
Section 4(a)(i) and to receive the dividends which FMC would otherwise be
authorized to receive and retain pursuant to Section 4(a)(ii) shall cease, and
all such rights shall thereupon become vested in the Representative for the
benefit of the holders of the FMC Preferred Stock, who shall thereupon have the
sole right to exercise such voting and other consensual rights and to receive
and hold such dividends.
(ii) All dividends which are received by FMC contrary to the
provisions of paragraph (i) of this Section 4(b) shall be received in trust for
the benefit of the holders of the FMC Preferred Stock, shall be segregated from
other funds of FMC and shall be paid over to the Representative in the same form
as so received, with any necessary endorsement.
ARTICLE V
GENERAL AUTHORITY
SECTION 5.1. General Authority. FMC hereby irrevocably appoints the
Agent, with full power of substitution, as FMC's true and lawful
attorney-in-fact, in the name of FMC, for the sole use and benefit of the
holders of FMC Preferred Stock, at any time and from time to time, to take any
and all appropriate action and to execute any and all documents and instruments
which may be necessary or desirable to carry out the terms of this Agreement.
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<PAGE>
SECTION 5.2. Waiver and Estoppel. FMC agrees, to the extent it may
lawfully do so, that FMC will not at any time in any manner whatsoever claim or
take the benefit or advantage of, any appraisal, valuation, stay, extension,
moratorium, turnover or redemption law, or any law permitting FMC, now or at any
time hereafter in force which may delay, prevent or otherwise affect the
performance or enforcement of this Agreement, and hereby waives all benefit or
advantage of all such laws. FMC covenants that it will not hinder, delay or
impede the execution of any power granted to the Agent or the Representative in
this Agreement.
SECTION 5.3. Reliance on the Representative. The Shareholders hereby
authorize FMC and the Agent to rely on the actions of the Representative as
their own actions in connection with the protection of their interests under
this Agreement until such time as FMC and the Agent shall receive notice from
all of the Shareholders to the contrary.
ARTICLE VI
RIGHTS AND DUTIES OF AGENT
SECTION 6.1. Reliance. The Agent may conclusively rely, and shall be
protected in acting or refraining from acting, on any written notice, instrument
or signature believed by it to be genuine and to have been signed or presented
by the proper party or parties duly authorized to do so. The Agent shall have no
responsibility for the contents of any writing contemplated herein and may rely
without any liability upon the contents thereof. The Agent may assume the
validity and accuracy of any statement or assertion contained in such writing or
instrument that it does not actually know to be invalid or inaccurate and may
assume that any person purporting to give any writing, notice advice or
instructions in connection with the provisions of this Agreement has been duly
authorized to do so unless it has actual knowledge to the contrary.
SECTION 6.2. No Liability. The Agent shall not be liable for any action
taken or omitted by it in good faith and believed by it to be authorized hereby
or within the rights and powers conferred upon it hereunder, nor for action
taken or omitted by it in good faith, or in accordance with advice of counsel of
its own choosing, and it shall not be liable for any mistake of fact or error of
judgment or for any acts or omissions of any kind unless caused by its own gross
negligence or willful misconduct.
SECTION 6.3. Depository. The Agent acts hereunder as a depository
only, and its duties hereunder shall be limited to the safekeeping of the
Certificate in accordance with the provisions of this Agreement and the
performance of its obligations as expressly set forth herein. It shall undertake
to perform only such duties as are expressly set forth herein.
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<PAGE>
SECTION 6.4. Delivery of the Certificate. Upon receipt of and in
accordance with (i) joint written instructions from FMC and the Representative
or (ii) final order from a court of competent jurisdiction, the Agent shall
deliver the Certificate as provided in such instructions or order. In the event
that December 31, 1999 or such later time as FMC and the Representative or such
court shall have requested or ordered, shall have passed without the Agent
having received such instructions or order, the Agent shall deliver the
Certificate to FMC.
SECTION 6.5. Resignation. The Agent may resign and be discharged from
its duties hereunder at any time by giving written notice of such resignation to
the parties hereto, specifying the date when such resignation shall take effect.
Upon such notice, a successor agent shall be appointed with the unanimous
consent of the parties hereto, and the service of such successor agent shall be
effective as of the date of resignation specified in such notice, which date
shall not be less than thirty (30) days after the giving of such notice. If the
parties hereto are unable to agree upon a successor agent within thirty (30)
days after such notice, the Agent shall be authorized to appoint its successor.
The Agent shall continue to serve until its successor accepts such appointment
by written notice to the parties hereto and the Agent deposits the Certificate
with the successor agent.
SECTION 6.6. Reimbursement. The fees and charges of the Agent shall be
borne jointly by FMC and the Shareholders. In the event that the Agent is
required to appear before any court of competent jurisdiction in any proceedings
regarding or relating to the Certificate or this Agreement, its costs, including
reasonable attorneys' fees, shall be paid by the party who does not prevail in
such proceedings as determined by such court, and, if no such determination is
made, such costs shall be paid jointly by FMC and the Shareholders.
SECTION 6.7. Waiver of Conflicts. The parties hereto acknowledge that
the Agent has served as special Virginia counsel to SCAC in connection with its
execution and delivery of and performance under the Reorganization Agreement,
confirm that with such knowledge they have requested the Agent to serve as such
hereunder, and waive any conflict of interest that the Agent may now or
hereafter have as a result of serving as both special Virginia counsel to SCAC
and in its capacity hereunder.
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<PAGE>
SECTION 6.8. Right to Interplead. If at any time while this Agreement
remains in effect the Agent receives conflicting instructions from, or notice of
a dispute by, any of the parties hereto or has reason to question the
genuineness, validity or accuracy of any writing, notice, advice or instructions
received by it or the authority of the party giving such writing, notice, advice
or instructions, the Agent may deposit the Certificate and any other document,
instrument or proceeds received by it as Agent hereunder with a court of
competent Jurisdiction (which all of the parties hereto agree shall include,
without limitation, the Circuit Court of the City of Richmond, Virginia) and by
interpleader request such court to advise it as to how to proceed in the
performance of its duties hereunder.
ARTICLE VII
INDEMNIFICATION
Each of FMC and the Shareholders shall indemnify the Agent and hold it
harmless against any and all Claims that are a consequence of such party's
action, and FMC and the Shareholders shall jointly indemnify the Agent and hold
it harmless against any and all Claims that are not a consequence of any party's
actions, except in the case of any Claims resulting solely from the Agent's own
gross negligence or willful misconduct. As used herein, "Claims" shall mean and
include actions at law, suits in equity, causes of actions, damages,
liabilities, losses, demands, costs, fines, judgments, expenses, claims and
counterclaims, including, without limitation, all consequential or incidental
damages and all attorneys' fees, asserted against or incurred or sustained by
the Agent of any kind or nature which may now exist or hereafter arise that are
related to, based upon, on account of or connected in any way to or with the
Certificate or this Agreement. The indemnification extended hereunder shall
include, but is not limited to, all costs incurred by the Agent to investigate,
defend, or settle any Claims and any amounts necessary to put the Agent in the
same position and condition that it would have been in if such Claims had not
arisen.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. Notices. All notices, requests and other communications to
any party hereunder shall be in writing and shall be given to each other party
hereto at their respective addresses set forth on the signature page hereof or
to such other address as any such party may hereafter specify for the purpose by
notice to the others. Each such notice, request or other communication shall be
effective (i) five (5) business days after such communication is deposited in
the mails with first class postage prepaid, addressed as aforesaid or (ii) if
given by any other means, when delivered at the address specified under the
signatures of the parties hereto. Rejection or refusal to
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<PAGE>
accept, or the inability to deliver because of a changed address of which no
notice was given shall not affect the validity of notice given in accordance
with this Section 8.1.
SECTION 8.2. Successors and Assigns. This Agreement is for the benefit
of the Shareholders and their successors and assigns. This Agreement shall be
binding upon FMC and its successors and assigns.
SECTION 8.3. Amendments and Waivers. Any provision of this Agreement
may be amended or waived, if, but only if, such amendment or waiver is in
writing and is signed by FMC, the Agent, the Representative and the
Shareholders, or their assigns.
SECTION 8.4. Delivery and Virginia Law. This Agreement has been
delivered in Virginia and shall be governed by and construed in accordance with
the laws of the Commonwealth of Virginia, except as otherwise required by
mandatory provisions of law and except to the extent that remedies provided by
the laws of any jurisdiction other than Virginia are governed by the laws of
such jurisdiction.
SECTION 8.5. Limitation by Law; Severability.
(a) All rights, remedies and powers provided in this Agreement may be
exercised only to the extent that the exercise thereof does not violate any
applicable provision of law, and all the provisions of this Agreement are
intended to be subject to all applicable mandatory provisions of law which may
be controlling and be limited to the extent necessary so that they will not
render this Agreement invalid, unenforceable in whole or in part, or not
entitled to be recorded, registered or filed under the provisions of any
applicable law.
(b) If any provision hereof is invalid and unenforceable in any
jurisdiction, then, to the fullest extent permitted by law, (i) the other
provisions hereof shall remain in full force and effect in such jurisdiction and
shall be liberally construed in favor of the Shareholders in order to carry out
the intentions of the parties hereto as nearly as may be possible; and (ii) the
invalidity or unenforceability of any provision hereof in any jurisdiction shall
not affect the validity or enforceability of such provision in any other
jurisdiction.
SECTION 8.6. Counterparts; Effectiveness. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
FMC
Firstmark Corp.
By:
James F. Vigue, President
Address:
AGENT
Thompson & McMullan, a Virginia
professional corporation
By:
Title:
Address: 100 Shockoe Slip
Richmond, Virginia 23219
REPRESENTATIVE
Address:
SHAREHOLDERS
Donald V. Cruickshanks
Address: One James Center, 17th Floor
901 E. Cary Street
Richmond, Virginia 23219
H. William Coogan, Jr.
Address: One James Center, 17th Floor
901 E. Cary Street
Richmond, Virginia 23219
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<PAGE>
Susan C. Coogan, Trustee under H. William
Coogan, Jr., Irrevocable Trust
Agreement dated 12/30/92
Address: 4712 Charmain Road
Richmond, Virginia 23226
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<PAGE>
FIRSTMARK CORP.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints ______________ and ______________,
jointly and severally, proxies, with full power to act alone, and with full
power of substitution, to represent the undersigned and to vote, as
designated below and upon any and all other matters which may properly be
brought before such meeting, all shares of Common Stock which the
undersigned would be entitled to vote at the Special Meeting of
Stockholders of Firstmark Corp. (the "Corporation") to be held at One
Financial Place, 222 Kennedy Memorial Drive, Waterville, Maine on July 18,
1996 at 10:00 a.m., local time, or any adjournments thereof, for the
following purposes:
1. To approve an amendment to the Company's Articles of
Incorporation to increase the amount of authorized Common Stock from
5,000,000 to 30,000,000 Shares (the full text of the amendment is attached
to the Proxy Statement as Exhibit A).
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. To approve an amendment to the Company's Articles of
Incorporation to opt out of Section 910 of the Maine Business Corporation
Act (the full text of the amendment is attached to the Proxy Statement as
Exhibit B).
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED FOR ITEMS 1 AND 2.
Signature
Signature
Dated:
(In signing as Attorney, Administrator,
Executor, Guardian or Trustee, please
add your title as such)
PLEASE MARK, DATE, SIGN AND RETURN PROMPTLY
