SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14A
Information Required in Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ X ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ X ] Definitive Proxy Statement
[ X ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
MADISON BANCSHARES GROUP, LTD,
(Name of Registrant as Specified In Its Charter)
ALAN T. SCHIFFMAN
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
[ ] $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:
2) Aggregate number of securities to which transaction applies:
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):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ 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:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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ALAN T. SCHIFFMAN
790 PENLLYN PIKE, SUITE 302
BLUE BELL, PA 19422
215/646-2000
PROXY STATEMENT
This Proxy Statement and enclosed form of proxy are being
furnished to shareholders of Madison Bancshares Group, Ltd. (the "Company")
commencing on or about May 4, 1996, in connection with my solicitation of
proxies to vote for the election of an alternative slate of Directors (the
"Alternative Nominees") at the annual meeting of stockholders of the Company
(the "Annual Meeting") to be held on May 21, 1996.
A GREEN proxy is enclosed for your use. I URGE YOU TO
COMPLETE, SIGN, DATE AND RETURN THE GREEN PROXY IN THE ACCOMPANYING ENVELOPE,
which is postage-paid if mailed in the United States.
I URGE YOU NOT TO SIGN ANY PROXY CARD SENT TO YOU BY THE BOARD
OF DIRECTORS OF MADISON BANCSHARES GROUP, LTD. ("MANAGEMENT'S PROXY"). IF YOU
ALREADY HAVE SIGNED MANAGEMENT'S PROXY, YOU MAY REVOKE IT BY RETURNING TO ME
YOUR LATER DATED GREEN PROXY IN THE ENCLOSED ENVELOPE.
IF YOUR SHARES ARE HELD IN THE NAME OF A BANK, BROKER, OR
OTHER NOMINEE, ONLY IT CAN VOTE YOUR SHARES. PLEASE CONTACT THE PERSON
RESPONSIBLE FOR YOUR ACCOUNT AND INSTRUCT HIM OR HER TO VOTE THE GREEN PROXY AS
SOON AS POSSIBLE, AND FOLLOW THE ENCLOSED INSTRUCTIONS ON HOW TO VOTE FOR THE
ALTERNATIVE NOMINEES. IF YOU PREVIOUSLY HAVE GIVEN INSTRUCTIONS TO A BROKER OR
OTHER NOMINEE TO VOTE YOUR SHARES FOR THE NOMINEES NAMED IN MANAGEMENT'S PROXY,
AND WISH TO VOTE FOR THE ALTERNATIVE NOMINEES, (1) CONTACT YOUR ACCOUNT
REPRESENTATIVE AND INFORM HIM OR HER THAT YOU WISH TO CHANGE YOUR VOTE, AND (2)
CONTACT ME FOR ASSISTANCE.
ELECTION OF DIRECTORS
Background
On Wednesday, March 13, 1996, the Board of Directors received
offers from two area banks to purchase 100% of the outstanding common stock of
the Company on terms which, in my opinion, were extremely favorable, and at a
substantial premium to the market price of the Company's common stock.
The offers were presented to the Executive Committee for
consideration on March 14, 1996. In anticipation of the importance of the March
14, 1996 meeting, I, in my role as Chairman of the Board of Directors of the
Company and a member of the Executive Committee, asked a local investment
banking firm to analyze the two offers and present its
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findings to the Committee. Over my objection, the other Executive Committee
members voted to dismiss the representatives of this firm without hearing their
findings.
Another committee of the Board, consisting of Messrs. DePaul,
Horton, Hughes, Katz and O'Donoghue, was delegated the task of evaluating the
offers. Although designated as a Negotiating Committee, to my knowledge no
negotiations with the banks which extended the offers ever took place or were
attempted by this Committee. An investment banking firm with which the Company
already had a relationship concerning future financing (the "Investment Banker")
was engaged to advise the Board with respect to the offers. On March 20, 1996, I
spoke with and wrote to the Investment Banker expressing my concern over the
apparent conflict which that firm had in evaluating the acquisition offers,
given its other relationships with the Company. On March 25, 1996, the Board
removed me as Chairman on the grounds that this letter was inconsistent with the
Board's interests and policies, and that someone more "attuned" to those
interests and policies should perform the role of Chairman. Approximately two
weeks later, correcting what the new Chairman described as an "oversight", I
also was removed as President and Chief Executive Officer of the Company.
The Negotiating Committee met with the Investment Banker on at
least one occasion to review its findings and recommendations. I was precluded
from attending these meetings. On March 29, 1996, in a meeting held by
conference telephone call, the Negotiating Committee reported to the full Board
its recommendation that the offers be rejected, explaining its decision in part
by reference to the report and findings of the Investment Banker. Despite
repeated requests, I have not been furnished a copy of the Investment Banker's
report and, to my knowledge, no Board members, other than members of the
Negotiating Committee, had even seen the report prior to the time the Committee
presented its recommendation. After receiving the Committee's recommendation,
and over my opposition, the full Board accepted the recommendation.
Solicitation of Proxies for Alternative Nominees
It was not without concern, after serious deliberation, that I
undertook this challenge to incumbent management. Efforts such as this
frequently are described as "contests" or "battles", and I was under no illusion
that this "contest" would not be expensive, or lead to legal actions against me,
personally, to prevent me from going forward.
My concerns were proved well founded almost immediately when,
on April 18, 1996, the very day after I had notified the Company of my intention
to nominate the Alternative Nominees, I was served with a Complaint and Motion
for Special Injunction filed on behalf of the Company in the Montgomery County
Court of Common Pleas seeking damages against me and to enjoin me (1) from
divulging to you, the Company's shareholders, information regarding the
above-described offers to acquire the Bank in a solicitation of your proxies, or
(2) from using, for any purpose but mainly for the purpose of communicating with
you, a current
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list of the Company's shareholders that I had obtained from the Company's
Transfer Agent. Thankfully, the Court denied the request for injunctive relief
on April 22, 1996, thus making it possible for me to seek your vote.
With respect to expenses, Securities and Exchange Commission
regulations require that I disclose to you the names of the persons who will
bear the cost of this solicitation. I personally am paying all costs of this
solicitation, including printing, postage, telephone charges, legal fees, etc.
To the extent that personnel employed by my accounting firm assist me in the
preparation and distribution of the solicitation materials or otherwise in
connection with this solicitation, or that I employ facilities of my firm in the
solicitation, I will reimburse the firm for its costs or, if no measurable costs
are incurred, the reasonable value of the services and facilities used. If my
efforts are successful, and one or more of the Alternative Nominees is elected
at the Annual Meeting, I will ask the Company to reimburse the expenses that I
have incurred. Under the Pennsylvania Business Corporation Law, the Company may
grant or deny that request, in whole or in part, in its discretion. To date, my
expenses have amounted to approximately $15,000, including legal fees incurred
in the litigation that the Company has brought against me. I estimate that my
costs will total approximately $50,000 before the proxy solicitation, election
and related litigation are completed.
Information Concerning Alternative Nominees
At the Annual Meeting, four Directors will be elected to hold
office until the Annual Meeting of 1999. Directors are elected by a plurality of
the votes cast. If elected at the Annual Meeting, the Alternative Nominees are
prepared to act as Directors of the Company commencing immediately following the
Annual Meeting of shareholders. I and the Alternative Nominees, if elected,
would constitute only five of thirteen directors, and would be unable to pursue
negotiations with interested parties, or take any other action, without the
support of other directors. It is my hope and expectation, however, that
election of the Alternative Nominees would be viewed by incumbent directors as a
mandate from shareholders to reconsider the Board's recent rejection of offers
to acquire the Company, and that that mandate would be heeded. I can give no
assurances, however, in that regard.
Background information about the Alternative Nominees for
election is set forth below.
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Business Experience During Past
Name Age Five Years and Other Information
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Arthur R. Schmauder 61 A former founder and Director of
131 Madison Avenue Growth Financial Corp. (GFC) and
Morristown, NJ 07962 Growth Bank (a central New Jersey
commercial bank that was recently
merged), Arthur R. Schmauder is a
Senior Partner in the law firm of
Shanley and Fisher, P.C., located in
Morristown, New Jersey. He has been
associated with the firm for more
than thirty-two years. Mr. Schmauder,
as a member of the defense bar,
specializes in corporate tort defense.
He represents a number of "Big Six"
accounting firms with regards
to their litigation defense matters.
As a litigator, he is expert in contract
law. As a former Director of Growth
Financial Corp., Mr. Schmauder was
responsible for evaluating merger
opportunities offered to GFC, the
parent of Growth Bank. Mr. Schmauder
was the former Chairman of the Audit
Committee of GFC. Mr. Schmauder was
Chief Executive Officer and President
of the Board of Trustees of the Morris
Museum from 1987 through 1990 and
continues as a Trustee. A long time
resident of Barnardsville, New Jersey,
he is a Trustee and former President
of the Columbia Law School Association
of New Jersey.
Michael C. Erlbaum 50 A founder of and Investor in a number
44 West Lancaster Ave. of publicly held companies, Michael
Ardmore, PA 19003 Erlbaum is a principal in a venture
capital company specializing in
investing in real estate, banking,
merchandising, and other industries.
Mr. Erlbaum is the President and CEO
of a multi-store carpet retailer
trading as Floors USA. He is an
investor in several northeastern
commercial banks and is knowledgeable
concerning merger opportunities
available to financial institutions
today. He is the Chairman of the
Audit Committee of a large, national
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merchandising chain which is partially
owned by investors introduced by a
prominent firm of international
investment bankers. He is a member of
the Board of Directors of various
business organizations involved with
merchandising, research and
development, real estate, retailing,
manufacturing and other. He is on
the business advisory board of an
entity in the health care industry. He
also serves on the boards of various
charitable organizations including the
Cancer Institute of Hahnemann Medical
College Hospital.
Larry J. Krafft, Ph.d 55 During the past thirty years, Dr.
241 S. 6th Street Larry J. Krafft has served as a
Philadelphia, PA 19106 management and organizational
consultant to major U.S. corporations,
domestic and foreign governments, and
international agencies in North
and South America, the Caribbean,
Europe and Asia. He played an
important role in reorganizing the
educational system throughout
Indonesia over a six year period and
is an internationally prominent
consultant involved with counseling
management and organizing "for-profit"
organizations for success. As a
principal of a national management
consulting firm, Dr. Krafft has provided
strategic planning and organizational
development services for management of
Fortune 500 Companies. He is responsible
for training corporate managers and
consultants in organizational
assessment, strategic planning and
development. Since completing his
doctoral degree at Michigan State
University in 1967, he has been
Department Chair as well as director of
several research and training centers at
Temple University where he is a tenured
professor. Dr. Krafft beneficially owns
4,064 shares of common stock of the
Company.
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John Connolly 44 Mr. Connolly serves as President of
55 North Lane Actium Corporation (formerly ITI) and
Ste. 5040 its affiliated family of companies.
Conshohocken, PA 19428 Actium is a premier, award winning
client/server system integration
firm. The firm is comprised of three
business units providing professional
consulting services, training and
leading edge client/server tools.
Actium's focus is on organizations
that are committed to rapidly
implementing strategic business
solutions based on an open systems
computing environment.
Mr. Connolly has guided Actium from 9
employees and $1 million in revenue
in 1992 to over 250 employees with
$55 million in revenue. Mr. Connolly
performs key management roles as
required in sales and marketing,
financial, operations and technical
areas.
In 1996, Actium was selected as a
finalist for the Atlantic Capital
Conference as one of the "20 hottest,
up-and-coming, private technology
companies" in the Delaware Valley.
In 1995, Actium was number 18 in
the Philadelphia 100 of the fastest
growing companies and number 113 on
VAR Business 500 list of national
technology firms. In addition to his
duties with Actium, Mr. Connolly sits
on the Channel Advisory Boards of
leading technology companies including
Powersoft Corporation, Logicworks,
Software Quality Automation (SQA)
and Digital Equipment Corporation.
Additional Information
With the exception of Dr. Krafft who owns 4,064 shares of
common stock of the Company, none of the Alternative Nominees presently owns,
and none has purchased or sold within the past two years, any common stock of
the Company. Dr. Krafft purchased his stock in the Company in 1989, during its
initial public offering. I have not sold any stock of the Company within the
past two years, and have purchased a total of 4,723 shares within that period as
follows: May 24, 1995 --
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1,200 shares; September 5, 1995 -- 2,309 shares; December 28, 1995 -- 214
shares; and January 17, 1996 -- 1,000 shares.
None of the Alternative Nominees is a party to any contract,
arrangement or understanding with any person with respect to securities of the
Company. Apart from an understanding with me that I will bear all expenses
relating to this solicitation, as disclosed above, none of the Alternative
Nominees has any arrangement or understanding with any person relating to the
Company or its securities, including any arrangement or understanding with
respect to future employment by the Company or its affiliates, or any future
transactions to which the Company or any of its affiliates will or may be a
party.
Apart from stock options granted to me by the Company, as set
forth in the Company's Proxy Statement, described below, and as to payment of
expenses as described above, I am not a party to any contract, arrangement or
understanding with respect to the Company or its securities, including any
arrangement or understanding with respect to future employment by the Company or
its affiliates, or any future transactions to which the Company or any of its
affiliates will or may be a party.
THIS PROXY STATEMENT INCORPORATES BY REFERENCE INFORMATION
WHICH IS SET FORTH IN THE PROXY STATEMENT OF MADISON BANCSHARES GROUP, LTD.
DATED APRIL 21, 1996, IN RESPONSE TO ITEMS 5 (AS TO ME ONLY), 6, 10 AND 21 OF
SCHEDULE 14A PROMULGATED BY THE SECURITIES AND EXCHANGE COMMISSION UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AND WITH RESPECT TO THE ENGAGEMENT OF DELOITTE
& TOUCHE, LLP, THE COMPANY'S AUDITORS FOR 1996.
I believe the reelection of the four incumbent Directors
nominated by the current Board of Directors will be contrary to stockholders'
interests, and I again urge you not to return Management's Proxy. Please support
the Alternative Nominees by voting "FOR" the Alternative Nominees on the GREEN
proxy enclosed.
If you have any questions or need further assistance in voting your shares,
please call or write to me at:
790 PENLLYN PIKE, SUITE 302
BLUE BELL, PA 19422
215/646-2000 (DAYTIME)
215/233-2230 (EVENING)
May 4, 1996
--------------------------------------
Alan T. Schiffman
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HOW TO VOTE FOR THE ALTERNATIVE NOMINEES
1. If your shares are registered in your own name(s):
(a) Please sign, date and promptly mail the enclosed GREEN Proxy,
using the postage-paid envelope provided.
(b) Do not sign any white proxy cards you may receive from the
Company or its agents. Do not even vote "against" management's
slate of incumbent directors on the white proxy card; rather,
discard any white proxy cards received. Only return the GREEN
Proxy in the envelope provided.
(c) If you have previously signed and returned a white proxy card
to the Company, you may revoke that proxy by signing, dating
and mailing the enclosed GREEN Proxy in the postage-paid
envelope provided. Only your latest dated card will count.
2. If your shares are held in the name of a brokerage firm, bank nominee
or other institution, only it can vote your shares. You should recently
have received, or will soon be receiving, a request for voting
instructions from your broker, bank, etc. If the instructions do not
include the names of the Alternative Nominees in printed form, in order
to have your shares voted for the election of the Alternative Nominees
you should:
(a) Sign and date the instructions;
(b) Write on the face of the instructions "please vote all shares
for the election of the nominees named in the attached GREEN
Proxy";
(c) Sign and date a GREEN proxy and attach it to your instructions;
and
(d) Return the signed instructions and GREEN proxy in the envelope
furnished to you with the instructions.
(e) Sign, date and promptly mail the second copy of the GREEN proxy
using the postage-paid envelope provided.
If you have any questions about voting your shares or require
assistance, please call:
ALAN T. SCHIFFMAN
790 PENLLYN PIKE, SUITE 302
BLUE BELL, PA 19422
215/646-2000 (Day time)
215/233-2230 (Evening)
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ALAN T. SCHIFFMAN
790 PENLLYN PIKE, SUITE 302
BLUE BELL, PA 19422
215/646-2000
May 4, 1996
Dear Shareholder:
On April 29th, I wrote to you advising that I would be
requesting your proxy to vote for the election of an alternative slate of
nominees as directors of Madison Bancshares Group, Ltd. (the "Company") at the
Annual Meeting scheduled to be held on May 21, 1996. The Proxy Statement
referred to in that letter is enclosed, and I urgently request that you review
that Statement, and vote your shares for the Alternative Nominees.
As set forth in my prior letter and in the enclosed Proxy
Statement, the principal factor that led to my proposing an alternative slate of
nominees at this election is the Board of Directors' rejection, without further
discussion or negotiation, of offers to acquire the Company which were received
in March from two area banks. I opposed that action because I believed it was
contrary to the interests of shareholders, and was taken without proper or
adequate consideration.
The current Board's stated rationale for rejecting these
offers was a belief that the Company's future stock value (in five years) would
equal or exceed the value of stock which shareholders would receive in exchange
for shares in the Company. Obviously, however, this projection of the future
value of the Company's stock is not without risk. It is based upon assumptions
concerning growth that will not easily be realized, and, at least in part, upon
a report received by the Board's Negotiating Committee from an investment
banking firm which I believe had conflicting interests in evaluating the offers
received. In comparing the projected future value of the Company's stock to the
offers received, the Negotiating Committee also appears to have discounted the
potential for appreciation in the value of the stock of the prospective buyers
which, during the past several years, has been very favorable. In addition, both
of the prospective buyers have been paying annual cash dividends on their common
stock.
I understand, of course, that election of the Alternative
Nominees would not assure that the Board would reconsider its action, since the
Alternative Nominees and I together would constitute only five of thirteen
directors. It is my hope and expectation, however, with the issues in this
election having been framed so clearly, that a sufficient number of other
directors would view election of the Alternative Nominees as a shareholder
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mandate for further consideration of these offers, and negotiations with the
banks from which the offers were received.
While the Board's action in response to the offers described
above was the principal factor that led me to bring my opposition to Board
policies to the attention of shareholders, the current Board has taken other
actions, against my recommendation, which I believe are not in the best
interests of shareholders. For example, based upon the recommendation of its
Compensation Committee, the current Board recently authorized, upon a change of
control of the Company such as through a merger, the grant of options to
purchase 5% of the then outstanding common shares of the Company to the Bank's
President. I opposed and voted against this grant, which is in addition to a
cash payment equal to one year's salary or $200,000, whichever is less, that
this individual would receive if his employment were terminated.
I believe that it is critically important to let your voice be
heard on the important issues involved in this election, and hope that you will
agree with my views and vote your shares for the Alternative Nominees. Whatever
the result of the election on May 21st, however, I wish to thank all
shareholders, many of whom are personal friends and clients of mine, for their
past support.
Very truly yours,
ALAN T. SCHIFFMAN
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MADISON BANCSHARES GROUP LTD.
PROXY SOLICITED BY ALAN T. SCHIFFMAN
Annual Meeting of Shareholders - May 21, 1996
The undersigned shareholder of MADISON BANCSHARES GROUP LTD.
(the "Company"), revoking all previous proxies, hereby constitutes and appoints
Alan T. Schiffman as the attorney and proxy of the undersigned, with full power
of substitution, for and in the name and stead of the undersigned, to attend the
Annual Meeting of Shareholders of the Company to be held on Tuesday, May 21,
1996 at 10:00 A.M. at the Plymouth Country Club, Plymouth and Belvoir Roads,
Plymouth Meeting, Pennsylvania, and to vote all shares of Common Stock of the
Company which the undersigned would be entitled to vote if personally present at
such Annual Meeting, and at any adjournment or postponement thereof; provided
that said proxies are authorized and directed to vote as indicated with respect
to the following matters:
1. / / FOR all nominees for director named below (Mr. Schiffman
recommends voting for all nominees).
/ / WITHHOLD AUTHORITY to vote for all nominees for director
named below.
/ / FOR all nominees for director named below, except WITHHOLD
AUTHORITY to vote for the nominee(s) whose name(s) is (are)
lined through.
2. / / FOR the ratification of the selection of Deloitte & Touche,
L.L.P. as the Company's independent auditor for 1996.
/ / AGAINST
/ / ABSTAIN
3. In his discretion, Mr. Schiffman will vote on such other business as
may properly come before the meeting.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholders. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED "FOR" THE NOMINEES FOR DIRECTOR NAMED ABOVE AND "FOR" THE RATIFICATION
OF THE SELECTION OF AUDITOR. This proxy also delegates discretionary authority
to vote with respect to any other business which may properly come before the
meeting or any adjournment or postponement thereof.
The undersigned hereby ratifies all that the said attorney and proxy
may do by virtue hereof and hereby confirms that this proxy shall be valid and
may be voted whether or not the shareholder's name is signed as set forth below
or a seal is affixed or the description, authority or capacity of the person
signing is given or other defect of signature exists.
NOTE: PLEASE MARK, DATE AND SIGN THIS PROXY CARD AND RETURN IT IN
THE ENCLOSED ENVELOPE. Please sign this proxy exactly as it appears
below. If shares are registered in more than one name, all owners should sign.
If signing in a fiduciary or representative capacity, such as attorney-in-fact,
executor, administrator, trustee or guardian, please give full title and attach
evidence of authority. Corporations please sign with full corporate name by a
duly authorized officer and affix the corporate seal.
Date:_________________________________________, 1996
______________________________________________ (SEAL)
(Shareholder's Signature)
______________________________________________ (SEAL)
(Shareholder's Signature)
______________________________________________ SHARES
