<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
<TABLE>
<S> <C>
Filed by the Registrant / xxxxx /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/xx/ 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
</TABLE>
CEDAR GROUP, INC.
- --------------------------------------------------------------------------------
(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):
/xx/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act
Rules 14a-6(i)(4) and 0-11.
/ / 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:
/ / 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 of 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:
- --------------------------------------------------------------------------------
<PAGE> 2
PRELIMINARY COPY
CEDAR GROUP, INC.
March 20, 1996
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of Cedar Group, Inc. (the "Company") which will be held at 11 A.M. on Thursday,
April 18, 1996, at the Ritz Carlton Hotel, 1228 Rue Sherbrooke Ouest, Montreal,
Quebec. Your Board of Directors and management look forward to personally
greeting those stockholders able to attend.
As part of our effort to improve the quality and effectiveness of
communications with our stockholders, we have changed the presentation of
certain information in this year's Proxy Statement. Management's Discussion
and Analysis of the Company's Financial Condition and Results of Operations,
which is included in the Company's filing with the Securities Exchange
Commission each year, is included as Exhibit "B" to the Proxy Statement.
At the meeting, stockholders will be asked to elect two directors, to
approve a change in the Company's name to "Dominion Bridge Corporation", to
approve an amendment to the Company's Certificate of Incorporation to increase
the numbers of shares of common stock and the Preferred Stock the Company is
authorized to issue, to ratify the appointment of Ernst & Young as the
Company's auditors and to consider such other matters as may properly come
before the meeting. These matters are discussed in greater detail in the
accompanying proxy statement.
Your Board of Directors recommends a vote FOR the election of
directors, FOR the change in name, FOR the amendment to the Company's
Certificate of Incorporation to increase the amount of authorized common stock
and preferred stock and FOR the ratification of Ernst & Young as the Company's
independent auditors.
Regardless of the number of shares you own or whether you plan to
attend, it is important that your shares be represented and voted at the
meeting. You are requested to sign, date and mail the enclosed proxy promptly.
<PAGE> 3
PRELIMINARY COPY
We wish to thank our stockholders for their participation and continued
support.
Sincerely,
Michel L. Marengere
Chairman of the Board
and Chief Executive Officer
<PAGE> 4
PRELIMINARY COPY
CEDAR GROUP, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held April 18, 1996
March 20, 1996
To the Stockholders of CEDAR GROUP, INC.:
The Annual Meeting of Stockholders of Cedar Group, Inc. (the
"Company") will be held at the Ritz Carlton Hotel, 1228 Rue Sherbrooke Ouest,
Montreal, Quebec, on Thursday, April 18, 1996, at 11 A.M. for the following
purposes:
(1) to elect two directors in accordance with the By-Laws;
(2) to change the name of the Company to "Dominion Bridge
Corporation";
(3) to consider and vote for an amendment to the Company's
Certificate of Incorporation to increase the number of shares
of common stock and preferred stock the Company is authorized
to issue;
(4) to ratify the appointment of Ernst & Young, independent
auditors, as auditors for the Company; and
(5) to transact such other business as may properly come before
the meeting and at any adjournment(s) thereof.
A copy of the Annual Report for the fiscal year ended September 30,
1995 is enclosed for your information.
Only stockholders of record as of the close of business on March 8,
1996 will be entitled to vote at the meeting. Stockholders are entitled to
vote at the Annual Meeting either in person or by proxy. THOSE WHO ARE UNABLE
TO ATTEND THE MEETING ARE REQUESTED TO READ, COMPLETE, SIGN AND MAIL THE
ENCLOSED FORM OF PROXY IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors
Micheline Prud'homme
Secretary
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO SIGN, DATE AND PROMPTLY
RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE.
<PAGE> 5
PRELIMINARY COPY
PROXY STATEMENT
SOLICITATION OF PROXIES
This proxy statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Cedar Group, Inc. (the "Company") to be
voted at the Annual Meeting of Stockholders of the Company on April 18, 1996
and at any adjournment or adjournments of the meeting (the "Meeting") for the
purposes described in the foregoing notice of the Meeting. Proxies which are
validly executed by stockholders and which are received by the Company no later
than the business day preceding the Meeting will be voted in accordance with
the instructions contained thereon. If no instructions are given, a proxy will
be voted for the election of the two nominees proposed for election as
directors, for the amendment to change the name of the Company to "Dominion
Bridge Corporation," for the approval of an amendment to the Company's
Certificate of Incorporation to increase the number of authorized shares of
Common Stock and Preferred Stock and for the ratification of Ernst & Young as
auditors of the Company.
The securities entitled to vote at the Meeting consist of shares of
Common Stock of the Company. The number of outstanding shares of Common Stock
at the close of business on March 8, 1996 was 15,897,582. Each share of Common
Stock is entitled to one vote, and nominees receiving a plurality of the votes
cast will be elected as directors. Only holders of record at the close of
business on March 8, 1996 will be entitled to vote at the Meeting. The holders
of a majority of the outstanding shares of Common Stock must be present in
person or represented by proxy at the Annual Meeting in order to constitute a
quorum for the transaction of business. Abstentions and broker non-votes will
be counted for the purpose of determining a quorum but neither will be counted
in the election of directors, in the voting on the change of the Company's name
and the amendment to the Certificate of Incorporation to authorize additional
shares of Common and Preferred Stock as described herein or in the voting on
the ratification of Ernst & Young as auditors of the Company.
A copy of the Company's Annual Report for the fiscal year ended
September 30, 1995 accompanies this Proxy Statement. No material contained in
the Annual Report is to be considered a part of the proxy solicitation
material.
The mailing address of the Company's executive office is 500 Rue Notre
Dame, Lachine, Quebec H8S 2B2. The approximate date on which this Proxy
Statement and the form of proxy was first mailed or given to stockholders was
March 20, 1996.
APPOINTMENT AND REVOCATION OF PROXIES
The persons named in the form of proxy accompanying this Proxy
Statement are officers of the Company. A stockholder of the Company has the
right to appoint a person other than the persons specified in such form of
proxy, who need not be a stockholder of the Company, to attend and act for him
and on his behalf at the Meeting. Such right may be exercised by striking out
the names of the persons specified in the form of proxy, inserting the name of
the person to be appointed in the blank space so provided, signing the form of
proxy and returning it in the reply envelope or otherwise to the Company at 500
Rue Notre Dame, Lachine, Quebec, H8S 2B2.
Any stockholder who executes and returns a form of proxy may revoke
it:
(a) by depositing an instrument in writing executed by him or by
his attorney authorized in writing at the principal office of
the Company, 500 Rue Notre Dame, Lachine, Quebec, H8S 2B2, at
any time up to and including the last business day preceding
the Meeting or any
<PAGE> 6
adjournment thereof;
(b) by depositing such instrument in writing with the Chairman of
the Meeting on the day of the Meeting or any adjournment
thereof; or
(c) by any other manner permitted by law.
2
<PAGE> 7
PRELIMINARY COPY
ELECTION OF DIRECTORS
The two persons listed below have been nominated by the Board of
Directors to serve as directors until the 1999 Annual Meeting of Stockholders.
It is the intention of the persons named in the accompanying form of proxy to
vote such proxy for the election as directors of the following nominees. In
the event that any nominee is unable to serve or will not serve as a director,
it is intended that the proxies solicited hereby will be voted for such other
person or persons as may be nominated by management. Vacancies in the Board of
Directors may be filled by the Board of Directors, and any director chosen to
fill a vacancy would hold office until the next election of the class for which
such director had been chosen.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------
Directors Whose Terms Year in Which
Expire at the 1999 Service as a
Annual Meeting Principal Occupation Director Began
- ----------------------------------------------------------------
<S> <C> <C>
Reynald Lemieux, 69 President, Placement 1995
R.N.S, Inc.
Rene Amyot, 68 Attorney (self-employed) 1993
</TABLE>
Reynald Lemieux was elected Director of the Company in February 1995.
Mr. Lemieux graduated in commerce from Laval University and has been involved
in real estate as an owner and developer for the past 40 years. He is
currently a director of a number of privately-held corporations in the real
estate sector and is also the President and majority shareholder of Placement
R.N.S., Inc., a firm specializing in real estate and other investments. Mr.
Lemieux is a member of the Audit Committee of the Board of Directors.
Rene Amyot was elected Director of the Company in October 1993. Mr.
Amyot graduated in law from Laval University in Quebec City and in
international law from Harvard University. Mr. Amyot is a Queen's Counsel in
Canada, a member of the Order of Leopold in Belgium, a former Attache
d'Affaires to the King of Belgium and to the Vatican. Mr. Amyot was formerly
Chairman of Air Canada, and has served on the Board of Directors of the Bank of
Nova Scotia, Rothman's International and several other large international
companies.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
Directors Whose Terms Year in Which
Expire at the 1997 Service as a
Annual Meeting Principal Occupation Director Began
- ------------------------------------------------------------------------
<S> <C> <C>
Michel L. Marengere, 48 Chief Executive Officer 1993
and President of the
Company
Louis Berlinguet, 69 President, Conseil de la
Science et de la Technol-
ogie du Quebec 1995
</TABLE>
Michel L. Marengere was elected Chairman and Chief Executive
3
<PAGE> 8
PRELIMINARY COPY
Officer of the Company effective as of October 7, 1993. Mr. Marengere
graduated from the University of Ottawa in business administration. During the
previous five years, prior to his appointment as Chairman and Chief Executive
Officer of the Company, Mr. Marengere was President and Chief Executive Officer
of Edinov Corporation.
Louis Berlinguet was elected Director of the Company in August, 1995.
Dr. Berlinguet obtained a B.Sc. (Honours) from the University of Montreal in
1947 and a Ph.D. in Chemistry from Laval University in 1950. Dr. Berlinguet
became an officer of the Order of Canada (1974), an officer of the Order of
Quebec (1990), was elected to the Royal Society of Canada (1969) and was named
a Fellow of the Chemical Institute of Canada (1957). He has received honorary
degrees from the Universite du Quebec and the Universite du Sherbrooke. In
1981 he was awarded the Jacques Rousseau Prize and in 1991 was elected member
"Emeritus" by l' ACFAS. In 1992, the Order of Professional Chemists made him a
"Compagnon de Lavoisier". He is now President of the "Conseil de la Science et
de la Technologie du Quebec" (1990-), President of the Order of Quebec, (1994-)
and President of the Quebec Advisory Committee on the Information Highway
(1995-).
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Directors Whose Terms Year in Which
Expire at the 1998 Service as a
Annual Meeting Principal Occupation Director Began
- --------------------------------------------------------------------------
<S> <C> <C>
The Honourable Marc Lalonde, Partner in the law firm of
C.P., O.C., C.R., 65 Stikeman, Elliot in Montreal 1995
</TABLE>
The Honourable Marc Lalonde was elected as Director of the Company on
March 3, 1995. Mr. Lalonde graduated in law from the University of Ottawa and
received a Masters Degree in Law from the University of Montreal. He also
attended Oxford University and received a Masters Degree in political and
economic sciences. During 1968-1972, Mr. Lalonde served as a director in the
office of the then Canadian Prime Minister, The Honourable Pierre E. Trudeau.
He was elected a member of the Canadian Parliament in 1972 for the District of
Outremont and was also appointed Minister of Health and Welfare. Mr. Lalonde
was then appointed and served as Minister responsible for the status of Women
in Canada from 1974 to 1979. In 1977 and 1978 he also served as Minister
responsible for Federal Provincial Relations. In 1978 he was appointed
Minister of Justice and Attorney General of Canada, and in 1980 Mr. Lalonde
was appointed Minister of Energy, Mines and Resources. Mr. Lalonde served as
Canada's Finance Minister from 1982-1984, and in December, 1989 he received
from the Governor General of Canada the Order of Canada. In 1984, Mr. Lalonde
joined the law firm of Stikeman, Elliot, an international law firm with offices
in Montreal and other locations. In addition to his law practice, Mr. Lalonde
is a member of the Board of Directors of Citibank Canada, Candev, Inc.,
North-South Institute, Resource Orleans, Inc., The Hotel Dieu Hospital in
Montreal, and is also a member of the International Advisory Council and the
Presidium of Ukraine. In 1992, he received an Honourary Doctorate Degree from
the University of Limbourg in Maastricht for his innovative contributions to
the health sector.
4
<PAGE> 9
PRELIMINARY COPY
BOARD MEETINGS AND COMMITTEES
There are currently five members of the Board of Directors. During
the fiscal year ended September 30, 1995, there were _______ meetings of the
Board. All members of the Board attended at least 75% of the total number of
meetings of the Board and any committee of which they are a member. The only
committee of the Board of Directors is the Audit Committee which was appointed
in February 1995. During the fiscal year ended September 30, 1995, there were
________ meetings of the Audit Committee. All members of the Audit Committee
attended at least 75% of the total number of Audit Committee meetings.
The Audit Committee has primary responsibility to review accounting
procedures and methods employed in connection with audit programs and related
management policies. Its duties include (1) selecting the independent auditors
for the Company, (2) reviewing the scope of the audit to be conducted by them,
(3) meeting with the independent auditors concerning the results of their audit
and (4) overseeing the scope and accuracy of the Company's system of internal
accounting controls. The Audit Committee is the principal liaison between the
Board of Directors and the independent auditors for the Company. The members
of the Audit Committee are Messrs. Amyot (Chairman), Marengere and Lemieux.
5
<PAGE> 10
PRELIMINARY COPY
EXECUTIVE COMPENSATION
The following table discloses, for the fiscal year ended September 30,
1995 ("Fiscal 1995") and September 30, 1994, individual compensation
information relating to the Chief Executive Officer and the President and Chief
Operating Officer of the Company. No other executive officer received
compensation in excess of $100,000 during Fiscal 1995. Neither of the named
individuals were employed by the Company prior to October 1, 1993.
6
<PAGE> 11
PRELIMINARY COPY
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION AWARDS
------------------- -----------------------------
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OTHER RESTRICTED LTIP
--------------------------- ---- ------ --- --------- ANNUAL STOCK OPTIONS /SARS
COMPENSATION AWARD(S)($) (#) ($)
------------ ----------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Michel L. Marengere 1995 360,000 0 0 0 500,000 0
Chairman of the Board of Directors, 1994 0 0 0 0 175,000 0
Chief Executive Officer and Director
Nicolas Matossian 1995 240,000 0 0 0 300,000 0
President and Chief Operating Officer 1994 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
PAYOUTS
-------
NAME AND PRINCIPAL POSITION ALL OTHER
--------------------------- PAYOUTS
COMPENSATION
------------
<S> <C>
Michel L. Marengere 0
Chairman of the Board of Directors, 228,883
Chief Executive Officer and Director
Nicolas Matossian 0
President and Chief Operating Officer 0
</TABLE>
7
<PAGE> 12
PRELIMINARY COPY
The following table discloses individual grants of stock options and
freestanding SARs made to the named executive officers.
GRANT OF STOCK OPTIONS
OPTION/SAR GRANTS IN LAST FISCAL YEAR
(INDIVIDUAL GRANTS)
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF TOTAL OPTIONS/
SECURITIES SARS GRANTED
UNDERLYING FOR EMPLOYEES EXERCISE OR
OPTIONS/SARS IN FISCAL BASE PRICE
NAME GRANTED(#) YEAR ($/SH) EXPIRATION DATE
---- ---------- ---- ------ ---------------
<S> <C> <C> <C> <C>
Michel L. Marengere 500,000 35.9% $4.125 February 1, 1998
Nicolas Matossian 365,000 26.2% $4.125 February 1, 1998
</TABLE>
AGGREGATED OPTIONS EXERCISED IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES TABLE
The following table shows information regarding the exercise of stock
options during Fiscal 1995 by the named executives and the number and value of
any unexercised stock options held by them as of September 30, 1995:
AGGREGATED OPTION EXERCISES IN 1995 FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES TABLE
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
SHARES VALUE AT FY-END (#) AT FY-END ($)
ACQUIRED ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) ($) UNEXERCISABLE UNEXERCISABLE(1)
---- ----------- --- ------------- ----------------
<S> <C> <C> <C> <C>
Michel L. Marengere 0 $0 675,000/0 $1,349,750/0
Nicolas Matossian 0 $0 300,000/0 $ 487,500/0
</TABLE>
(1) The value of the options is calculated based upon the market price of
the Company's Common Stock as of September 30, 1995, $5.75 per share,
as reported on NASDAQ.
The Company has no retirement, pension or profit-sharing plans
covering its officers and directors and does not contemplate implementing any
such plans at this time. Although the Company has no formal bonus
arrangements, bonuses will be granted at the discretion of the Board of
Directors or by a compensation committee that may be appointed by the Board of
Directors.
DIRECTORS' COMPENSATION
Directors of the Company who are not employees of the Company are paid
an annual stipend of $10,000, plus a fee of $500 for each Board meeting
attended.
8
<PAGE> 13
PRELIMINARY COPY
CHANGE IN CONTROL ARRANGEMENTS
EMPLOYMENT AGREEMENTS
Effective February 1, 1995, the Company entered into agreements with
Michel L. Marengere as Chairman and Chief Executive Officer and Nicolas
Matossian as President and Chief Operating Officer.
The employment agreements with Messrs. Marengere and Matossian contain
"change in control" language which provides the executive with certain benefits
if the executive is terminated for "good reason", as that term is defined in
the employment agreements, following a change in control of the Company. The
employment agreements provide that a "change in control" shall mean a change in
control of a nature that would be required to be reported in response to Item
6(e) of Schedule 14A of Regulation 14A, as in effect on the date hereof,
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"); provided, however that, without limitation, such a change in
control shall be deemed to have occurred if (A) any "Person" (as such term is
used in Sections 13(d) and 14(d) of the Exchange Act), except for Michel L.
Marengere, or a company controlled by him, is or becomes the beneficial owner,
directly or indirectly, of securities of the Company representing 10% or more
of the combined voting power of the Company's then outstanding securities; (B)
there occurs a contested proxy solicitation of the Company's stockholders that
results in the contesting party obtaining the ability to vote securities
representing 20% or more of the combined voting power of the Company's then
outstanding securities; (C) there occurs a sale, exchange, transfer or other
disposition of substantially all of the assets of the Company to another
entity, except to an entity controlled directly or indirectly by the Company,
or a merger, consolidation or other reorganization of the Company in which the
Company is not the surviving entity, or a plan of liquidation or dissolution of
the Company other than pursuant to bankruptcy or insolvency laws is adopted; or
(D) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors cease for any
reason to constitute at least a majority thereof unless the election, or the
nomination for election by the Company's stockholders, of each new director was
approved by a vote of at least two-thirds of the directors then still in office
who were directors at the beginning of the period. Notwithstanding the
foregoing, a "change in control" shall not be deemed to have occurred for
purposes of the employment agreements (i) in the event of a sale, exchange,
transfer or other disposition of substantially all of the assets of the
Company, or a merger, consolidation or other reorganization involving the
Company and an executive, alone or with other officers of the Company, or any
entity in which an executive (along or with other officers) has, directly or
indirectly, at least a 25% equity or ownership interest or (ii) in a
transaction otherwise commonly referred to as a "management leveraged buy-out".
If a "change in control" had occurred during Fiscal 1995, Michel L.
Marengere and Nicolas Matossian, the two reporting officers, would have been
entitled to receive $1,080,000 and $720,000, respectively, based on their base
salaries pursuant to the employment agreements of $360,000 and $240,000 per
annum, respectively. In addition, since their employment agreements are for
three year terms ending January 31, 1998, they would also be entitled to
receive their base compensation during the terms of their respective employment
agreements.
9
<PAGE> 14
PRELIMINARY COPY
Pursuant to the Company's 1995 Stock Option Plan, non-qualified and
incentive stock options and limited stock appreciation rights may be granted to
Messrs. Marengere and Matossian. Under the Stock Option Plan, limited stock
appreciation rights entitle the optionee upon a "change in control" of the
Company, as defined in the stock option plan, to receive, upon surrender of the
related stock option and exercise of any limited stock appreciation right, cash
in an amount equal to the difference between the exercise price per share of
Common Stock. Under the option and the fair market value of a share of Common
Stock.
If a change in control had occurred during Fiscal 1995, based on a
market price per share of Common Stock of $5.75, and assuming Messrs. Marengere
and Matossian exercised all of their stock options, the Company would have been
required to pay $812,500 to Mr. Marengere and $593,125 to Mr. Matossian.
10
<PAGE> 15
PRELIMINARY COPY
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of March 8, 1996, certain
information concerning the stock ownership of all persons known by the Company
to own beneficially more than 5% of the Company's outstanding Common Stock,
based upon filings with the Securities and Exchange Commission, as well as the
beneficial ownership of such Common Stock, as of such date, of all officers and
directors, individually and as a group.
<TABLE>
<CAPTION>
Name and Address of Shares Owned Beneficially Percentage of
Beneficial Owner and of Record Outstanding Shares(1)
- ---------------- ------------- ------------------
<S> <C> <C>
Michel Marengere 2,109,403(2) 11.3%
500 Rue Notre Dame
Lachine
Quebec, Canada H8S 2B2
Rene Amyot 85,000(3) (4)
2960 Blvd. Laurier
Suite 500
Sante-Foy
Quebec, Canada GIY451
Nicolas Matossian 415,000(6) 25%
500 Rue Notre Dame
Lachine
Quebec, Canada H8S 2B2
Reynald Lemieux 0 0
1340 Duquet
Sillery
Quebec, Canada G1S 1A9
Hon. Marc Lalonde 0 0
Stikeman, Elliot
1155 Rene-Levesque Blvd. West,
36th Floor
Montreal, Quebec,
Canada H8S 2B2
Louis Berlinguet 0 0
500 Rue Notre Dame
Lachine
Quebec, Canada H8S 2B2
All Directors and Officers 3,054,703 15%
as a group ([6] persons)
</TABLE>
- ---------------------------
(1) Except as otherwise indicated, percentages are presented after
rounding to the nearest tenth, and include the total number of shares
outstanding and the number of shares which each person has the right
to acquire, within 60 days through the exercise of options, pursuant
to Item 403 of Regulation S-B and Rule 13d-3(d)(1), promulgated under
the Securities Exchange Act of 1934. Percentages for the total of all
persons and the total of all officers and directors include all
outstanding shares and all shares which such persons have the right
11
<PAGE> 16
PRELIMINARY COPY
to acquire within 60 days.
(2) Includes 1,631,766 shares held of record by Fidutech Technologies,
Inc. as to which Mr. Marengere has shared voting and investment power.
Mr. Marengere is the sole stockholder of Gestion Edinov Inc. and
Services M.L. Marengere, Inc. which own, in the aggregate, 75% of
Fidutech. Also includes 175,000 immediately exercisable stock options
to purchase shares of the Company's Common Stock held of record by Mr.
Marengere. Also includes 500,000 shares of common stock that may be
issued pursuant to stock options exercisable at $4.125.
(3) 50,000 of which represent immediately exercisable options to purchase
shares of the Company's Common Stock.
(4) Less than 1%
(5) Includes 300,000 shares of common stock that may be issued pursuant to
stock options exercisable at $4.125.
LEGAL PROCEEDINGS
By Complaint dated November 7, 1995, certain stockholders (the
"Plaintiffs") brought a stockholders derivative suit in the Chancery Court of
the State of Delaware against the Company and Michel L. Marengere, Micheline
Prud'homme, a former director of the Company, and Rene Amyot, individually.
The Complaint alleges certain interested and self dealing transactions by Mr.
Marengere. Plaintiffs seek judgment for the damages suffered by the Company as
a result of the alleged transactions, costs and expenses of the action,
including reasonable attorneys' fees and any other relief that the Court may
deem just and proper. The Company and the individual defendants have filed a
Motion to Dismiss, which is currently pending in the Chancery Court.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During Fiscal 1995, the Company advanced $994,000 to a shareholder,
Groupe Fidutech International, Inc. ("GFI"). Of this amount, $577,000 was
repaid during Fiscal 1995. The balance of $417,000 was non-interest bearing
and had no fixed repayment terms. The advance was repaid in December 1995.
As of September 30, 1995, a subscription receivable in the aggregate
amount of $1,885,000 was owed to the Company by Mr. Marengere or his
affiliates.
At September 30, 1994, Mr. Marengere was indebted to the Company in
the amount of $565,000. This outstanding debt has been satisfied in full.
During Fiscal 1994, the Company advanced $1,734,000 to a stockholder,
Fidutech Technologies, Inc. and its affiliates. As of July 1, 1994, $1,155,000
of this amount was assumed by the acquiror of Edinov. The balance of $781,000
is non-interest bearing and has no fixed repayment terms. In December, 1995,
Fidutech Technologies, Inc. repaid $84,000 of the balance.
12
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In December 1994, the Company sold to GFI Cdn. $2,700,000 of Class A
Preferred Shares of Dominion Bridge, Inc. which it held. Subsequently,
pursuant to the terms of the Class A Preferred Shares of Dominion Bridge, Inc.,
GFI exchanged the Cdn. $2,700,000 of Class A Preferred Shares into 450,000
shares of Common Stock of the Company. Mr. Marengere who is the Chairman and
Chief Executive Officer of the Company, is also the Chairman of GFI and through
his share ownership, beneficially owns 75% of GFI. Additionally, Mr. Amyot who
is a director of the Company, is also a director of GFI and beneficially owns
25% of GFI.
PROPOSAL 1
CHANGE OF COMPANY NAME
At the meeting, stockholders will vote on a proposal to amend the
Certificate of Incorporation of the Company to change the name of the Company
from "Cedar Group, Inc." to "Dominion Bridge Corporation". The Board of
Directors unanimously approved a resolution amending the Company's Certificate
of Incorporation as follows:
"First: The name of the Corporation is Dominion Bridge Corporation."
The Board of Directors unanimously recommends that the stockholders vote FOR
this proposal at the meeting.
The Company proposes to change its name to more nearly identify the
Company with its principal operating subsidiary, Dominion Bridge, Inc.
Dominion Bridge, Inc. has been in operation for over 140 years and has
developed significant goodwill associated with its name which the Company
expects to take advantage of by changing its name as proposed.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE CHANGE IN THE COMPANY NAME.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of holders of at least the majority of the shares of
Common Stock which are entitled to vote at the meeting is required in order to
approve this proposal. If approved, this change of name will be effective upon
filing with the Secretary of State of Delaware of a Certificate of Amendment to
the Certificate of Incorporation of the Company, which is expected to follow
shortly after the meeting.
PROPOSAL 2
RELATING TO THE PROPOSED AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK AND PREFERRED
STOCK THE COMPANY IS AUTHORIZED TO ISSUE
On March 1, 1996, the Board of Directors of the Company authorized,
subject to approval by the Company's stockholders, an amendment to the
Company's Certificate of Incorporation increasing the number of shares of
Common Stock the Company is authorized to issue from 20,000,000 to 50,000,000
and the number of shares of Preferred Stock the Company is authorized to issue
from 5,000,000 to 25,000,000. The resolution of the Board of Directors,
subject to approval by the Company's stockholders, amends Article Fourth of the
Company's Certificate of Incorporation as provided in Exhibit A to the Proxy
Statement
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DESCRIPTION AND REASON FOR THE PROPOSED AMENDMENT
The Certificate of Incorporation of the Company presently authorizes
the issuance of up to 20,000,000 shares of Common Stock, par value $.001 per
share and 5,000,000 shares of "blank check" Preferred Stock, par value $.001 per
share. At March 8, 1996, there were ____________ shares of Common Stock issued
and no shares of Preferred Stock, issued and outstanding, approximately
___ shares reserved for issuance under the Company's 1995 stock option plan, and
15,897,582 shares reserved for issuance in connection with the exercise of
various stock options and warrants granted pursuant to various employment
agreements between the Company and its executive officers and other key
employees, and ________ shares reserved for issuance pursuant to outstanding
warrants and other securities convertible into Common Stock. As a result, as
of March 8, 1996 only approximately ___ shares of Common Stock remain
authorized and available for issuance.
On or about October 31, 1995, Cedar Group (TCI) Inc., LLC, ("TCI"), a
limited life company duly incorporated and established under the laws of the
Turks and Caicos Islands, British West Indies, a wholly owned subsidiary of the
Company, accepted subscriptions in the amount of $8.5 million of 6% Cumulative
Convertible Preferred Shares of TCI at $8.50 per share (the "Preferred
Shares"), and intends to continue the offering up to an additional $15 million.
The net proceeds realized by TCI from the offering of the Preferred Shares have
been utilized to fund a $8.5 million loan to the Company, with interest
calculated and payable semi-annually by the Company to TCI at a rate of 6% per
annum, which the Company is required to repay on October 31, 1988 ("the Loan").
The Company intends to utilize the net proceeds of the Loan to finance its
tender offer for McConnell Dowell Corporation and to provide additional working
capital and for targeted acquisitions.
If the proposal is approved and certain other conditions are
satisfied, the Company intends to repay the Loan through the conversion of the
Preferred Shares into shares of Common Stock of the Company. Each Preferred
Share is convertible into one share of Company Common Stock at a price of
$7.375 per share. Holders of the Preferred Shares will be able convert their
Preferred Shares into shares of Common Stock of the Company at the option of
the holder at any time during the Conversion Period which runs from May 31,
1996 up to and including October 31, 1988 (the "Maturity Date").
On the day following the Maturity Date (the "Redemption Date"), all of
the remaining unconverted Preferred Shares will automatically be converted into
shares of common stock of the Company at a price equal to the lesser of the
weighted average of the closing price of the Company's Common Stock traded on
NASDAQ during the twenty (20) trading days proceeding the Maturity Date and
$7.375.
As a result of the above described offering of TCI Preferred Shares,
the Company is obligated to issue at least 1,152,542 shares of Common Stock
between May 31, 1996 and November 1, 1998. The Board of Directors believes
that increasing the number of authorized shares of Common Stock in order to
effectuate the issuance of Company Common stock as described above, and for the
additional reasons described below, is in the best interest of the Company. By
doing so, the Company will have the ability
14
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to convert approximately $8.5 million of debt into capital of the Company
thereby increasing stockholders equity by $8.5 million. This also relieves the
Company from the posibility of borrowing additional funds to repay the Loan.
The Board of Directors believes that in order to meet the Company's
continued capital needs, it is likely that offerings of Common Stock or
Preferred Stock, or other securities convertible into or exchangeable for
Common Stock will be desirable. While the Company has not made definite
arrangements to engage in an offering of this type, except as described above,
it is likely that the Company will seek to raise capital by offering and
selling securities during 1996 and thereafter. Increasing the authorized
number of shares of Common Stock and/or Preferred Stock the Company may issue
will provide the Company with the ability to take prompt advantage of market
conditions and avoid the expense and delay, and possible loss of opportunity,
that could result if a need for additional authorized Common Stock or Preferred
Stock arose but a special meeting of stockholders had to be held prior to the
issuance of the stock. The Board of Directors further believes that if the
proposed amendment to the Company's Certificate of Incorporation is not
approved by the stockholders, the Company's ability to raise capital will be
unduly restricted.
VOTE REQUIRED
Stockholder authorization of the proposed Amendment to the Certificate
of Incorporation requires the affirmative vote of the holders of a majority of
the outstanding shares of Common Stock of the Company on the record date, that
is, March 8, 1996. Therefore, failure to vote has the same effect as a
negative vote. Accordingly, if stockholders are in favor of this proposal and
do not vote their shares either in person or by proxy, such stockholders will
have effectively voted against the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF AN AMENDMENT TO
THE COMPANY'S CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF SHARES OF
COMMON STOCK AND PREFERRED STOCK THE COMPANY IS AUTHORIZED TO ISSUE.
PROPOSAL 3
RELATING TO THE RATIFICATION OF ERNST & YOUNG, INDEPENDENT AUDITORS, AS
AUDITORS TO THE COMPANY
Ernst & Young, has been selected by the Board of Directors as auditors
for the Company for the fiscal year ended September 30, 1996. This election is
being presented to the stockholders for ratification. The Board of Directors
recommends ratification of the selection of Ernst & Young as the Company's
auditors. If the stockholders do not ratify this election, the appointment of
other auditors will be considered by the Board of Directors. A representative
of Ernst & Young is expected to be present at the annual meeting to make a
statement if desired and to be available to respond to appropriate questions.
On September 27, 1994, the Company engaged Ernst & Young as the
Company's principal independent accountant. Prior to Ernst & Young's
engagement, BDO Seidman, independent certified public accountants, had
15
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served as the principal accountant for the Company. The recommendation to
change accountants was made by management of the Company and was approved by
the Board of Directors.
In connection with the most recent fiscal years preceding the Board's
actions, there were no disagreements with BDO Seidman on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements if not resolved to their satisfaction
would have caused them to make reference in connection with their opinion on
the subject matter of disagreement. BDO Seidman's reports on the Company's
financial statements for the most recent fiscal years did not contain any
adverse opinion or disclaimer of opinion, nor were such reports qualified in
any respect.
VOTE REQUIRED. The affirmative vote of a majority of the shares
present in person or by proxy is required for approval of the ratification of
Ernst & Young.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF ERNST
& YOUNG.
OTHER MATTERS
The Board of Directors does not know of any other matter which is
intended to be brought before the meeting, but if such matter is presented, the
persons named in the enclosed proxy intend to vote the same according to their
best judgment.
The enclosed proxy may be revoked by a later-dated proxy, by giving
notice to the Secretary of the Company in writing prior to the meeting or by
personal notification at the meeting prior to the voting.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
To the knowledge of the Company, each of the Company's directors,
executive officers and 10% beneficial owners has complied with the requirements
of Section 16(a) of the Securities Exchange Act of 1934, except that Mr.
Berlinguet failed to file timely a Form 3 upon his election to the Board of
Directors, and Messrs. Marengere and Matossian failed to file Form 4's upon the
grant of options under the Company's 1995 Stock Option Plan.
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EXPENSES OF SOLICITATION
The cost of this proxy solicitation will be borne by the Company. In
addition to the use of mail, proxies may be solicited in person or by telephone
by employees of the Corporation without additional compensation. The Company
will reimburse brokers and other persons holding stock in their names or in the
names of nominees for their expenses incurred in sending proxy material to
principals and obtaining their proxies.
1997 STOCKHOLDER PROPOSALS AND
CERTAIN PROVISIONS OF THE BY-LAWS
In order for stockholder proposals for the 1997 Annual Meeting of
Stockholders to be eligible for inclusion in the Company's proxy statement,
they must be received by the Company at its principal office in Lachine,
Quebec, on or before November 3, 1996. The Company's By-Laws provide that a
stockholder may nominate a person for election as a director if written notice
of the stockholder's intent to nominate a person for election as a director at
a meeting is received by the Secretary of the Company (1) in the case of an
Annual Meeting, not less than 150 days prior to the date of the Annual Meeting
or (2) in the case of a special meeting at which directors are to be elected,
not later than seven days following the day on which notice of the meeting was
first mailed to stockholders. The notice must contain specified information
about the stockholder and the nominee, including such information as would be
required to be included in a proxy statement pursuant to the rules and
regulations established by the Securities and Exchange Commission under the
Securities Exchange Act of 1934.
By Order of the Board of Directors
MICHELINE PRUD'HOMME
Secretary
Dated: March 20, 1996
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EXHIBIT A
FOURTH: CAPITAL STOCK.
(a) Authorized Shares. The total of shares of all classes of capital
stock which the Corporation shall have authority to issue is seventy-five
million (75,000,000), consisting of fifty million (50,000,000) shares of Common
Stock, par value $.001 per share ("Common Stock"), and twenty-five million
(25,000,000) shares of Preferred Stock, par value $.001 per share ("Preferred
Stock").
(b) Preferred Stock: The Board of Directors of the Corporation is
hereby authorized to issue from time to time shares of Preferred Stock in
series and to fix the number of shares in each series and the designations,
powers, preferences and relative, participating, optional or other special
rights thereof and the qualifications, limitations, or restrictions thereon,
including, without limitation, any of the following: (i) provisions relating to
voting rights of each share in such series including multiple or fractional
votes per share, (ii) provisions relating to the call or redemption thereof,
including, without limitation, the times and prices for such calls or
redemptions and provisions relating to sinking funds therefor and the
retirement thereof, if any, (iii) provisions relating to the right to receive
dividends, including without limitation, participation in dividends with shares
of any other class or series of capital stock of the Corporation and/or
preferential dividends, the rate of such dividends, whether such dividends
shall be cumulative or noncumulative and the conditions on which such dividends
shall be accrued and paid, and any preferential rights thereto or rights in
relation to dividends payable on any other classes or series of stock of the
Corporation, (iv) the rights thereof upon the dissolution of, or upon any
distribution of the assets of the Corporation, and (v) except as otherwise
explicitly prohibited by the Certificate of Incorporation, provisions relating
to the conversion thereof into, or the exchange thereof for shares of any class
or any other series of the same class of stock of the Corporation or exchange
for any other security of the Corporation or any other company.
<PAGE> 23
EXHIBIT B
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
BACKGROUND
From its inception, the Company has operated in the industrial
fasteners segment. However, since the effectiveness of the Plan of
Reorganization with the shareholders of Edinov on September 30, 1993, all of
the Company's growth has been as a result of various acquisitions, principally
in the infrastructure engineering and manufacturing services segment. In
Fiscal 1994, the Company acquired Dominion Bridge and Unimetric and in Fiscal
1995 it acquired Steen. Each of these acquisitions was accounted for in the
Result of Operations from the effective dates of the acquisition which were
March 9, 1994, January 1, 1994 and April 1, 1995, respectively.
During Fiscal 1994, the Company divested its Canadian commodity
fastener distribution businesses that were carried on by Edinov and its
subsidiaries. The divestiture was completed on December 22, 1994 (effective
July 1, 1994) and the Company sold all of the shares that it held in Edinov and
all of the shares of George Hegedus Enterprises Ltd., Atto-Renaud Industries
Inc. and Specialty Fasteners Ltd., which were owned directly or indirectly by
Edinov.
Currently, the infrastructure engineering and manufacturing services
business accounts for approximately 97% of all of the revenues of the Company.
The industrial fasteners segment of the Company's business, which accounted for
approximately 3% of sales, has been unprofitable and adversely impacted the
Company's operating income by $1,316,000, decreasing the Company's earnings per
share by $0.09. In an effort to return this segment to profitability, the
Company has made key management changes and marketing and production
improvements which it believes will return this segment to profitability in the
short term.
RESULTS OF OPERATIONS
FISCAL 1995 COMPARED TO FISCAL 1994
Net sales for Fiscal 1995 of $155,750,000 were 129% higher than those
for Fiscal 1994 of $67,959,000. This increase is primarily attributable to the
inclusion of a full year of Dominion Bridge's operations during Fiscal 1995 as
opposed to seven months during Fiscal 1994, as well as the acquisition of
Steen. On a pro-forma basis (as though each of the acquisitions had occurred
on October 1, 1993) net sales increased 11% in Fiscal 1995 to $177,459,000 from
$159,162,000 in Fiscal 1994.
Gross margin as a percentage of sales was 10.5% in Fiscal 1995 versus
12.7% in Fiscal 1994. Gross margin declined due to the acquisition of Steen,
which operates with a lower gross margin than Dominion Bridge.
Selling, general and administrative expenses increased 90% from
$8,107,000 in Fiscal 1994 to $15,433,000 in Fiscal 1995. The increase was
primarily due to the expending of approximately $1,691,000 of marketing and
development costs in Asia and Latin America as well as the inclusion of twelve
months of such expenses in Fiscal 1995 for Dominion Bridge versus seven months
in Fiscal 1994. Excluding the extraordinary marketing and development costs
referred to above, selling, general and administrative expenses declined from
11.9% of sales in Fiscal 1994 to 8.8% of sales in Fiscal 1995.
During Fiscal 1995 the Company undertook certain one-time adjustments
which significantly reduced the Company's net income and its earnings per
share.
<PAGE> 24
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These adjustments included:
i) The expending in the period of most of the previous and
current year costs associated with various foreign joint
ventures aggregating a total of $1,691,000;
ii) A write-off of $348,000 of certain assets that remained on the
books of the Company at the time of its September 30, 1993
plan of arrangement which resulted in Cedar Group, Inc.'s
exiting from Chapter 11;
iii) A write-down of $283,000 for certain pension assets that had
been overstated in Fiscal 1994; and
iv) The expending of $682,000 of financing costs representing the
Company's costs on the Steen transaction.
Furthermore, the Company's income did not include the following
deferred income items;
i) The sum of approximately $2,054,000 of contract gains not
included in income as they are considered contingent gains;
and
ii) The deferral by Dominion Bridge of the value of its interests
in a judgement pertaining to mining assets and mineral claims
by approximately $778,000 which the Company plans to realize
in fiscal 1996.
Although the above one-time adjustments have decreased the Company's
income and earnings for the period, management believes that this decision will
enhance the Company's financial position and its balance sheet while
positioning it strongly for its planned expansion program.
Exchange rates used in this discussion for the translation of
financial results for the periods 1994 and 1995 from Canadian to U.S. dollars
were Cdn $1.00 equals US $.7387 and US $.7270 respectively.
A significant portion of the operating profit earned by Steen is
generated by the joint venture, which is scheduled to complete the Hibernia
Project during 1997. Steen is actively pursuing large scale projects to
replace the income which will be lost with the completion of the Hibernia
Project, such as the Atlantic City District Heating and Cooling Plant, although
there can be no assurance that the completion of the Hibernia Project will not
have a material effect on the Company's results of operations.
FISCAL 1994 COMPARED TO 1993
Net sales for Fiscal 1994 of $67,959,000 were 870% higher than those
for Fiscal 1993 of $7,003,000. This increase is primarily attributable to the
purchase of Dominion Bridge.
In accordance with technical requirements for consolidation under U.S.
GAAP, the Company was obligated to consolidate the results of Dominion Bridge
as of March 9, 1994 and not as at January 1, 1994 as the parties presumed. On
a pro forma basis (as though the Dominion Bridge and Unimetric acquisitions had
occurred as of October 1, 1992), net sales declined to $118,999,000 from
136,049,000. The decline would be attributable to the Company streamlining its
operations and being more selective in the projects that it undertakes with a
<PAGE> 25
view to increasing its profit margins.
Gross margin as a percentage of sales was 12.7% in Fiscal 1994 versus
32.1% in Fiscal 1993. Gross margin declined due to the change in the Company's
business as a result of the acquisition of Dominion Bridge.
Selling, general and administrative expenses increased 225.8% from
$2,488,000 in Fiscal 1993 to $8,107,000 in Fiscal 1994. The increase was
primarily due to acquisition and financing costs related to Dominion Bridge and
to the overall increase in the size of the Company.
A comparative analysis of Dominion Bridge, the Company's principal
operating subsidiary, is as follows:
In 1993, Dominion Bridge before the Company obtained control, lost
$11,293,000 on sales of $125,994,000, and in 1992, it lost $2,926,000 on sales
of $174,672,000. Dominion Bridge, for the seven months since acquisition by
the Company realized an operating profit of $860,000 on sales of $58,181,000
thus achieving an effective turnaround of over $12,153,000 in operating income.
The main components of this turnaround consist of:
a) A reduction in variable costs as a percentage of
sales from 88.4% in 1993 to 76.3% in 1994, reflecting
significant productivity improvements.
b) Significant improvement in gross margin, from a 2.3%
gross margin in 1993 to 10.3% in 1994. In addition,
Dominion Bridge's backlog at September 30, 1994 is
estimated to reflect margins consistent with those
achieved in 1994.
Exchange rates used in this discussion for the translation of
financial results for the periods 1994 and 1995 from Canadian to U.S. dollars
were Cdn $1.00 equals US $.7387 and US $.7270 respectively.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal sources of operating capital have
traditionally been the private placements of the Company's Common Stock and
cash generated by operations. Currently, the Company's cash flow is being
generated by the operations of Dominion Bridge and Steen which are expected to
cover the cash flow requirements of the Company. In addition to the cash
generated from operations, the Company has received a line of credit from a
Canadian chartered bank to provide Dominion Bridge with a $12 million revolving
line of credit for working capital purposes. No funds have been advanced on
this line of credit which is guaranteed by the Company. Steen presently has a
line of credit of Cdn $7 million, of which Cdn $2.4 million has been drawn down
to date. Furthermore, the Company is continuing to pursue expansion internally
as well as through acquisitions, and, accordingly, may require additional
capital in the form of convertible debt or equity.
In order to complete the transactions for the purchase of Dominion
Bridge and Unimetric, the Company obtained approximately $10.9 million in cash
in March 1994 through a private placement of the Company's securities
consisting of 3,354,346 shares of Common Stock and 3,354,346 two-year share
purchase warrants. The warrants were exercisable on a one for one basis for
shares of Common Stock at US $3.75 for the first year and at US $4.00
thereafter. In July and August 1994, all of the 3,354,346 warrants were
exercised at US $3.75, thereby adding approximately $12.6 million to the
Company's capital resources.
<PAGE> 26
Additionally, the Company has established Cedar Group (TCI) Inc. LLC,
a limited life company under the laws of the Turks and Caicos Islands, which is
in the process of finalizing an offering consisting of 3,000,000 6% Convertible
Preferred Shares at $8.50 per share. The Preferred Shares are convertible into
shares of Common Stock of the Company, at the option of the holder, at any time
after January 31, 1997 and up until maturity on October 31, 1998 at a price of
$8.50 per share. On the day following the maturity date of October 31, 1998,
all of the remaining unconverted 6% Convertible Preferred Shares will
automatically convert into shares of Common Stock of the Company at a price
equal to the weighted average price of the Company's shares traded on NASDAQ
during the 20 previous trading days. Accordingly, if the weighted average
price of the shares of Common Stock of the Company is greater than $8.50, the
conversion will be $8.50. If the weighted average price is less than $8.50,
then the weighted average price will be the actual conversion price.
Consequently, investors will receive a number of shares of Common Stock of the
Company such that the actual value of those shares is equivalent to an
investor's full investment of $8.50 per Preferred Share.
The proposed private placement by Cedar Group (TCI) Inc., LLC has not
been fully completed, however, $11 million has been received to date in
subscriptions.
The Company is subject to a risk of claims for product liability. If
a product liability claim exceeding the Company's insurance coverage or its own
available resources was to be successfully asserted against the Company, it
could have a material adverse effect on the Company's financial condition. The
Company has general liability insurance of approximately $5 million per
occurrence, with a maximum of $5 million of claims payable during any policy
year. There is no assurance that such coverage will be sufficient to fully
insure against claims brought against the Company and its subsidiaries, or that
the Company will be able to maintain such insurance at affordable rates or
obtain additional insurance covering the products.
EFFECT OF INFLATION
The Company's operating costs are subject to general economic and
inflationary pressures. While operating costs have increased during the past
years, the Company does not believe that its operations have been significantly
affected by inflation.
<PAGE> 27
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[FRONT SIDE]
P
R CEDAR GROUP, INC.
O
X THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Y
The undersigned hereby appoints ___________________ and
__________________ and each of them, Proxies with power to appoint a substitute
and hereby authorizes them to represent and to vote all shares of Common Stock
of Cedar Group, Inc. held of record by the undersigned on March 8, 1996, at the
Annual Meeting of Stockholders of Cedar Group, Inc. to be held on April 18,
1996, and at any adjournments thereof, and to vote as directed on the reverse
side of this card and, in their discretion, upon such other matters not
specified as may come before said meeting.
ELECTION OF DIRECTORS Change of Address and Comments
Nominees: Rene Amyot
Reynald Lemieux -----------------------------------
-----------------------------------
-----------------------------------
(If you have written in the above
space, please mark the corresponding
box on the reverse side of this card.)
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICE BY MARKING THE APPROPRIATE BOX, SEE
REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOX IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS.
THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
SEE REVERSE
SIDE
<PAGE> 28
PRELIMINARY COPY
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF
DIRECTORS, FOR APPROVAL OF THE CHANGE IN THE NAME OF THE COMPANY, FOR APPROVAL
OF AN AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF
SHARES OF COMMON STOCK AND PREFERRED STOCK THE COMPANY IS AUTHORIZED TO ISSUE,
FOR APPROVAL OF THE RATIFICATION OF ERNST & YOUNG AS AUDITORS FOR CEDAR GROUP,
INC.
-------------------------------------------
- --------------------------------------------------------------------------------
Directors recommend a vote FOR all Nominees
- -------------------------------------------
<TABLE>
<S> <C>
FOR WITHHELD
1. Election of Directors / / / / Change of Address/ / /
Comments on
(See reverse) Reverse Side
For, except vote withheld from
the following nominee(s):
------------------------------
------------------------------
FOR AGAINST ABSTAIN
2. Proposal 1 - / / / / / /
Approval of change in Company
name to "Dominion Bridge
Corporation.
FOR AGAINST ABSTAIN
3. Proposal 2 - / / / / / /
Approval of an amendment to the
Certificate of Incorporation to
increase the number of shares of
common stock the Company is
authorized to issue.
FOR AGAINST ABSTAIN
4. Proposal 3 - / / / / / /
Approval of the ratification
of Ernst & Young as auditors
for Cedar Group, Inc.
</TABLE>
PLEASE SIGN, DATE AND RETURN YOUR PROXY
PROMPTLY IN THE ENCLOSED ENVELOPE. NO
POSTAGE REQUIRED IF MAILED IN THEUNITED
STATES.
NOTE: Please sign name(s)
exactly as printed hereon.
<PAGE> 29
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Joint owners should each sign. When
signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such.
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SIGNATURE(S) DATE
