<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. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or
Rule 14a - 12
Dominion Bridge Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) filing Proxy Statement, if other than Registrant)
Payment of filing fee (check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
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:
(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 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:
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(2) Form, Schedule or Registration Statement no.:
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(4) Date Filed:
<PAGE> 3
[Letterhead of Dominion Bridge Corporation]
June 19, 1997
Dear Fellow Stockholders:
We, all the members of your Board of Directors, are writing to urge you
to reject the consent solicitation being conducted by the committee calling
itself "The Committee to Revitalize Dominion Bridge Corporation" (hereinafter
referred to as the "Committee" or the "Kuhns Group") and, whether or not
you have previously given the Committee your consent, to sign and return the
enclosed green Revocation of Consent on behalf of the Board of Directors of
Dominion Bridge Corporation.
The Board strongly opposes the Committee's efforts to wrest control of
your Company for a number of reasons:
JOHN KUHNS, THE MAN SPEARHEADING THE COMMITTEE'S EFFORTS
TO TAKE CONTROL OF THE COMPANY,
HAS IN THE PAST LEFT A TRAIL OF SEC VIOLATIONS,
SELF ENRICHMENT AND EXTRAORDINARY LOSSES FOR INVESTORS.
- A 1984 New York Times article regarding Catalyst Energy
Corporation said that as President and Chief Executive Officer
of that company, Kuhns "alienated key investors and sent
Catalyst's stock into a tailspin." Catalyst's share price went
from a high of $29 to a low of $3.75.
- In 1987, while an executive of Catalyst, Kuhns made a hostile
bid for a broker/dealer, Stifel Financial Corporation, which
he later abandoned. For this takeover effort, Kuhns has been
called a "corporate raider."
- Also while an executive at Catalyst, Kuhns acquired control of
a broker/dealer known as Laidlaw, Adams & Peck, which suffered
such massive losses that in 1988, Kuhns abandoned Laidlaw with
unsatisfied judgments from customers and other creditors
amounting to over $2 million. Subsequently, Laidlaw had its
broker/dealer registration revoked for failure to make
required filings and to respond to administrative complaints.
- In 1989, following Kuhns' failures with Catalyst and Laidlaw,
Kuhns founded The New World Power Corporation. During his
tenure as Chairman and Chief Executive Officer, New World
Power raised $63.3 million of equity and $20 million of debt.
During the same period, New World Power lost an aggregate of
<PAGE> 4
$65.3 million, including a stunning net loss of $41.3 million
on its 1995 operations based on revenues of only $16.4
million. In May 1996, NASDAQ moved to discontinue New World
Power's listing on the NASDAQ National Market System due to
its failure to make required SEC filings. New World Power's
shares fell from a reverse-split adjusted basis of 65 to 3/8.
- Kuhns' history of delinquency with respect to New World Power
culminated in SEC enforcement proceedings and a cease and
desist order under the securities laws enjoining Kuhns from
violations of Sections 13(d) and 16(a) of the Securities
Exchange Act, and Rules 13d-1, 13d-2, 16a-2 and 16a-3
thereunder, following his failure to file reports reflecting
his sales of over $3,105,000 of New World Power stock while
its share price was falling.
- Kuhns was ultimately removed by the board of directors of New
World Power as CEO in April 1996. The Company believes that he
was removed under pressure from that company's principal
stockholders and creditors. Subsequently, he was not
renominated to serve as a director of New World Power because,
the Company believes, he had lost credibility with the
stockholders and creditors of that company.
- While the stockholders and creditors of companies with which
Kuhns has been associated have met with disastrous results,
Kuhns has reaped enormous personal benefits. According to SEC
reports, during three years as CEO of Catalyst, Kuhns received
$1.3 million in salary, bonuses and benefits. Additionally,
Kuhns received $912,550 in connection with the cancellation of
options to purchase 274,600 shares of Catalyst common stock.
Kuhns repeated this performance with New World Power, taking
salaries and benefits from 1993 to 1995 of $1.5 million and
grants of New World Power stock and options to purchase an
additional 1.29 million shares. Most egregiously, Kuhns
arranged for New World Power to purchase and substantially
renovate, at a cost of $2.5 million, a house in Litchfield
County, Connecticut for his office, which it subsequently
transferred to Kuhns as part of his severance package.
- The Committee has NOT made an economic proposal to acquire the
Company, but is rather seeking a cheap takeover, one which
would put into control persons with a track record of wrecking
companies and violating the law without paying the Company's
stockholders a single dime. Moreover, the Committee has not
put forth any plan for enhancing stockholder value at Dominion
Bridge.
By contrast to Kuhns' record, look at the record of the current
management of Dominion Bridge:
<PAGE> 5
THE CURRENT MANAGEMENT HAS BUILT DOMINION
BRIDGE INTO A MAJOR INTERNATIONAL ENGINEERING, PROJECT
MANAGEMENT AND CONSTRUCTION FIRM. THESE
OPERATIONAL STRENGTHS SHOULD NOW BEGIN TO TRANSLATE INTO PROFITABILITY.
- Under the leadership of its current senior management,
Dominion Bridge has become a major international provider of
large scale engineering, procurement, construction, steel
fabrication and shipbuilding services. Revenues have grown
from $7 million in 1993 to $363 million in 1996, and are on
track to reach $600 million in fiscal 1997.
- Through its strategy of acquisitions and internal growth,
management has increased the Company's asset base to more than
$250 million and employment to more than 6,500. In 1996, the
Company acquired a controlling stake in McConnell Dowell
Corporation, which is one of the premier engineering and
construction firms in Asia-Pacific. The combined strength and
synergies of the companies that Dominion Bridge has acquired
have made Dominion Bridge a global force.
- Integration of the construction skills of Dominion Bridge Inc.
with the engineering experience of McDonnell Dowell and the
project management expertise of Davie Industries Inc. assures
that there is no job in the infrastructure industry that is
too complex for Dominion Bridge, whether onshore or offshore.
- Dominion Bridge has grown significantly in size and scope
while maintaining a strong balance sheet that is currently
free of long-term debt and is investing available financial
resources in the business. The balance on a loan from Bankers
Trust Co. has been reduced from $30 million to $15 million
and management has recently engaged a major international bank
to provide the Company with a $25 million line of credit,
subject to due diligence and customary closing conditions.
- The Company has taken steps to improve profitability through
stringent cost controls and elimination of non-essential
expenses. Management is also implementing a comprehensive plan
designed to achieve greater efficiencies in marketing
worldwide.
- Having consolidated the 1996 acquisitions and instituted
measures that are expected to improve each business segment's
internal operations, Dominion Bridge is positioned to benefit
from the synergies it has created. Management's
<PAGE> 6
primary goal for 1997 is to begin translating its new
operational strengths into consistent long-term profitability.
- Just recently, the Company announced that it has retained the
investment banking firm of Legg Mason Wood Walker,
Incorporated to assist the Company in exploring strategic
alternatives to enhance stockholder value.
- While the Company's stock price has suffered as management
has implemented its growth strategy, no one is more aware of
the stock price than the Company's senior officers, who
beneficially own an aggregate of 3,811,792 shares of the
Company's Common Stock. COMPARE THIS STAKE IN THE COMPANY TO
THE KUHNS GROUP, WHICH OWNS ONLY 2,000 SHARES OF DOMINION
BRIDGE COMMON STOCK. Given their significant equity stake in
the Company, senior management is committed to enhancing
stockholder value and believes that they have in place the
plan to do so.
AS OPPOSED TO THESE REAL SUCCESSES BY
THE COMPANY'S MANAGEMENT AND ITS TANGIBLE FUTURE PLANS,
WHAT DOES THE KUHNS GROUP HAVE TO OFFER?
The Kuhns Group is seeking to wrest control of your Company from
current management by (i) removing, without cause, members of senior management;
(ii) electing to positions of senior management the members of the Committee;
and (iii) amending the Company's By-Laws to make it effectively impossible for
the Board to function and place the power of the Board in Kuhns.
YOUR BOARD UNANIMOUSLY OPPOSES THE KUHNS SOLICITATION. THE BOARD URGES
YOU NOT TO SIGN ANY WHITE CONSENT CARD SENT TO YOU BY HIS COMMITTEE.
IF YOU HAVE PREVIOUSLY SIGNED AND RETURNED THE WHITE CONSENT CARD YOU
HAVE EVERY RIGHT TO CHANGE YOUR MIND. WHETHER OR NOT YOU HAVE SIGNED THE WHITE
CONSENT CARD, THE BOARD URGES YOU TO SIGN, DATE AND MAIL THE ENCLOSED GREEN
REVOCATION OF CONSENT CARD IN THE POSTAGE-PAID ENVELOPE PROVIDED. ALTHOUGH
SUBMITTING A CONSENT REVOCATION WILL NOT HAVE ANY LEGAL EFFECT IF YOU HAVE NOT
SUBMITTED A CONSENT CARD, IT WILL HELP US KEEP TRACK OF THE PROGRESS OF THE
STOCKHOLDER VOTE. REGARDLESS OF THE NUMBER OF SHARES YOU OWN, YOUR REVOCATION OF
CONSENT IS IMPORTANT. PLEASE ACT TODAY.
IF YOUR SHARES ARE HELD IN THE NAME OF A BANK, BROKER OR OTHER NOMINEE,
WE URGE YOU TO CONTACT THE PERSON RESPONSIBLE FOR YOUR ACCOUNT AND DIRECT HIM OR
HER TO EXECUTE A GREEN REVOCATION OF CONSENT CARD ON YOUR BEHALF, VOTING AS
RECOMMENDED BY DOMINION
<PAGE> 7
BRIDGE CORPORATION'S BOARD OF DIRECTORS. YOU SHOULD ALSO SIGN, DATE AND MAIL
YOUR GREEN REVOCATION OF CONSENT CARD WHEN YOU RECEIVE IT IN THE MAIL. PLEASE DO
SO AT ONCE.
Thank you for your support.
Very truly yours,
The Board of Directors
Dominion Bridge Corporation
If you have any questions about giving your revocation of consent or
require assistance, please call:
Morrow & Co., Inc.
909 Third Avenue, 20th Floor
New York, New York 10022
1-800-662-5200
<PAGE> 8
June 19, 1997
REVOCATION OF CONSENT STATEMENT OF THE
BOARD OF DIRECTORS OF
DOMINION BRIDGE CORPORATION
IN OPPOSITION TO A CONSENT SOLICITATION
BY CERTAIN STOCKHOLDERS
This Revocation of Consent Statement is furnished by the Board of Directors (the
"Board") of Dominion Bridge Corporation, a Delaware corporation ("Dominion
Bridge" or the "Company"), to the holders of outstanding shares of the Company's
Common Stock, par value $.001 per share (the "Common Stock"), in connection with
the Board's opposition to the solicitation (the "Kuhns Solicitation") of written
stockholders' consents by a committee of John D. Kuhns, Kenneth W. Mariash and
John M. Dutton, who call themselves "The Committee to Revitalize Dominion Bridge
Corporation" and are referred to herein as the "Committee" or the "Kuhns Group."
The Company believes that the Kuhns Group is seeking to effect a cheap take-over
of the Company by (i) removing, without cause, members of senior management;
(ii) electing to positions of senior management the members of the Committee;
and (iii) amending the Company's By-Laws to make it effectively impossible for
the Board to function and place the power of the Board in Kuhns. This statement
and the enclosed GREEN Revocation of Consent Card are first being mailed to
stockholders on or about June 20, 1997.
THE BOARD UNANIMOUSLY OPPOSES THE KUHNS SOLICITATION. THE BOARD URGES
YOU NOT TO SIGN ANY WHITE CONSENT CARD SENT TO YOU BY HIS COMMITTEE.
IF YOU HAVE PREVIOUSLY SIGNED AND RETURNED THE WHITE CONSENT CARD YOU
HAVE EVERY RIGHT TO CHANGE YOUR MIND. WHETHER OR NOT YOU HAVE SIGNED THE WHITE
CONSENT CARD, THE BOARD URGES YOU TO SIGN, DATE AND MAIL THE ENCLOSED GREEN
REVOCATION OF CONSENT CARD IN THE POSTAGE-PAID ENVELOPE PROVIDED. ALTHOUGH
SUBMITTING A CONSENT REVOCATION WILL NOT HAVE ANY LEGAL EFFECT IF YOU HAVE NOT
SUBMITTED A CONSENT CARD, IT WILL HELP US KEEP TRACK OF THE PROGRESS OF THE
STOCKHOLDER VOTE. REGARDLESS OF THE NUMBER OF SHARES YOU OWN, YOUR REVOCATION
OF CONSENT IS IMPORTANT. PLEASE ACT TODAY.
IF YOUR SHARES ARE HELD IN THE NAME OF A BANK, BROKER OR OTHER
NOMINEE, WE URGE YOU TO CONTACT THE PERSON RESPONSIBLE FOR YOUR ACCOUNT AND
DIRECT HIM OR HER TO EXECUTE A GREEN REVOCATION OF CONSENT CARD ON YOUR BEHALF,
VOTING AS RECOMMENDED BY DOMINION BRIDGE CORPORATION'S BOARD OF DIRECTORS. YOU
SHOULD ALSO SIGN, DATE AND MAIL YOUR GREEN REVOCATION OF CONSENT CARD WHEN YOU
RECEIVE IT IN THE MAIL. PLEASE DO SO AT ONCE.
<PAGE> 9
If you have any questions about giving your revocation of consent or
require assistance, please call:
Morrow & Co., Inc.
909 Third Avenue, 20th Floor
New York, New York 10022
1-800-662-5200
<PAGE> 10
REASONS TO REJECT THE
KUHNS SOLICITATION
In furtherance of their goal of taking over the Company WITHOUT MAKING
AN ECONOMIC PROPOSAL TO THE STOCKHOLDERS, the Kuhns Group is seeking written
consents of the Company's stockholders to make it effectively impossible for
the duly elected Board of Directors to fulfill their responsibilities to the
stockholders, to remove without cause the existing senior management of the
Company and to replace them with the members of the Committee, notwithstanding
that they have not articulated any business plan for the Company, they have no
meaningful experience in the Company's businesses and they have no
relationships with the Company's suppliers, customers, financing sources or
government agencies which have been and are providing support to the Company.
In response to the Kuhns Solicitation, the Board of Directors is asking
stockholders not to provide their consent and is soliciting from the Company's
stockholders revocations of any consents that may have been given.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY BELIEVES THAT THE
KUHNS GROUP PROPOSAL IS NOT IN THE BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS
AND URGES STOCKHOLDERS TO REJECT THE PROPOSAL. YOUR BOARD OF DIRECTORS
THEREFORE REQUESTS THAT YOU SIGN, DATE AND RETURN THE ENCLOSED GREEN REVOCATION
OF CONSENT CARD, WHETHER OR NOT YOU HAVE PREVIOUSLY SIGNED AND RETURNED THE
WHITE CONSENT CARD.
REASONS TO SUPPORT
THE BOARD OF DIRECTORS
The Board of Directors strongly believes that the arguments set forth
by the Kuhns Group are seriously flawed and misleading, and that the Kuhns
Group's proposal lacks any plan for the Company.
Furthermore, the Kuhns Group's attempts to take over Dominion Bridge
would, the Board believes, deprive the Dominion Bridge stockholders of the
opportunity to benefit from the progress now underway at Dominion Bridge.
In furtherance of its commitment to increase long-term stockholder
value, the Board recently approved the retention of a leading investment banking
firm to assist the Board in exploring strategic alternatives to enhance
stockholder value. These alternatives could include the formation of strategic
alliances, joint ventures or a merger or business combination involving the
Company or any of its subsidiaries. Successful implementation of this strategy
requires, among other things, a responsive and nimble Board. The Committee's
proposal would paralyze your Board and unreasonably restrict the Board's ability
to effectuate its plan to increase value for all stockholders. Although the
Board is committed to enhancing stockholder value, as of the date of this
statement, no transaction has been identified and there can be no assurance that
the Company's initiative will result in a transaction.
The fruits of the Company's strategy are becoming more and more
apparent and hold, the Board believes, the potential to significantly improve
future performance. Now is not the time to interrupt this strategy and the
work of current management.
THEREFORE, THE BOARD URGES THAT STOCKHOLDERS NOT SUPPORT THE
KUHNS GROUP AND URGES STOCKHOLDERS TO REVOKE ANY CONSENT THAT
MAY HAVE BEEN GIVEN.
<PAGE> 11
DESCRIPTION OF THE KUHNS GROUP PROPOSAL
As set forth in their consent materials (the "Consent Materials") filed
with the United States Securities and Exchange Commission (the "Commission"),
the Kuhns Group is seeking nothing less than a total and complete immobilization
of the Board in favor of Kuhns as Chairman. The proposed amendments to the
By-Laws contain no less than eleven (11) impractical, onerous and exceedingly
burdensome procedural mechanisms calculated to make effective Board action on
any issue a near impossibility. The Kuhns Group's proposal (the "Proposal")
expressly and unequivocally divests the Board of any authority to manage the
affairs of Dominion Bridge including the basic and fundamental right to appoint
its principal executive officers. By creating the office of "Chairman" with all
encompassing powers to appoint and remove any and all other officers and manage
the affairs of Dominion Bridge unchecked by its duly elected Board, the Kuhns
Group will have created a "super manager", a concept which is foreign
to both Delaware law and to well-managed public companies.
The Kuhns Group's proposal contains a number of substantive provisions which
effectively prohibit the Board from managing the business of Dominion Bridge.
Most disturbing is the Kuhns Group's proposal to delete Article 2 Section 1 of
the existing By-Laws which provides in its entirety as follows:
Section 1. General Powers. The business and affairs of the
Corporation shall be managed by or under the direction of the
board of directors.
By eliminating this By-Law, the Kuhns Group seeks to deprive Dominion Bridge's
duly elected Board of any express authority to manage the affairs of Dominion
Bridge Corporation which, the Company believes, violates the framework for
corporate governance established under Delaware law. In its place, the Kuhns
Group proposes to create the office of "Chairman" with unfettered authority to
perform the management function which is entrusted by statute to the Board.
Specific proposed amendments prohibit the Board from appointing any of
the officers of Dominion Bridge and empowers the stockholders to elect "three
senior officers." The most senior of these officers will be the "Chairman" who
will have the power to appoint, remove and determine the compensation for all
other officers. In a veiled attempt to classify the "Chairman" as a garden
variety officer, throughout its Consent Materials, the Kuhns Group characterizes
the "Chairman's" responsibilities as managing the "day-to-day" affairs of
Dominion Bridge. As explained herein, the "Chairman" is a virtual substitute
for the Board with powers and responsibilities beyond any corporate officer
envisioned by or contemplated within the Delaware law and beyond the reach of
your duly elected Board.
To insure that the Board does not interfere in any way with the
appointment of Dominion Bridge's officers and Kuhns' management of Dominion
Bridge, the Kuhns Group proposes to prohibit the Board from removing, filling
any vacancies or setting the compensation of any corporate officers.
<PAGE> 12
In addition to depriving the Board of any role in managing the affairs
of Dominion Bridge on behalf of its stockholders, the Kuhns Group is seeking to
make it nearly impossible for the Board to take any legitimate corporate action.
The Consent Materials propose the following procedural amendments governing the
internal operating procedures of the Board:
1. Unanimous attendance required for a quorum;
2. Unanimous vote to effectuate any Board action;
3. Meetings may only be held in Delaware at Dominion Bridge's
registered office;
4. Elimination of the Board's right to act by written consent;
5. Prohibiting the compensation of, and the reimbursement of
expenses incurred by directors;
6. Prohibiting telephonic Board meetings;
7. Setting the number of directors at eight and thereafter, as
established by the "Chairman;"
8. Requiring seven days notice for regular meetings;
9. Requiring unanimous Board consent to form a Board committee;
10. Requiring committees to consist of at least two-thirds of the
total number of directors; and
11. Requiring unanimous attendance for quorum and unanimous vote
to effectuate any action of any Board committee and requiring
that all committee meetings be held at Dominion Bridge's
registered office in Delaware.
Reflecting the global scale of its operations, the Company has
directors in Asia, Europe and North America. These provisions serve no
legitimate purpose other than to thwart any reasonable effort by the Board to
fulfill their fiduciary duties on behalf of the stockholders of Dominion
Bridge. For example, the simple task of approving a single resolution, no
matter how inconsequential, would entail the expenditure of substantial
non-reimbursable expenses by every director, cross-country, international,
transatlantic and transpacific travel, seven days written notice and the
retention of facilities in Wilmington, Delaware.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT STOCKHOLDERS REJECT THE KUHNS GROUP PROPOSAL.
<PAGE> 13
LEGAL PROCEEDINGS
On May 23, 1997, the Kuhns Group commenced a lawsuit against the Company in
Federal District Court in Wilmington, Delaware seeking a declaration that it
should be permitted to solicit written consents from the Company's stockholders
without violating federal securities laws and that the Company's Second Amended
and Restated By-laws, particularly those provisions relating to the
stockholder's right to take action by written consent and requiring advance
notice of stockholders in order to submit a nominee to serve on the Company's
Board of Directors, are invalid. The Committee alleges that the description of
these provisions appearing in certain public filings, including the Company's
1997 Proxy Statement, render the election of directors at the Company's 1997
Annual Meeting void. With the exception of its claim that stockholders have the
right to act by written consent, the Company believes that all claims asserted
by the Kuhns Group are entirely without merit and is vigorously defending this
matter. In that regard, on June 4, 1997 the Company filed its answer
affirmatively denying the factual allegations and legal theories of the
Committee along with a nine (9) count counterclaim. The counterclaim seeks
declaratory and injunctive relief against the Committee for its illegal and
improper consent solicitation in contravention of Delaware law and its
violation of federal securities laws by disseminating materially false and
misleading information to stockholders. The Company is also seeking damages for
the Committee's unjustified and tortuous interference with the Company's
contractual and prospective relations and its conspiracy to harm the Company's
business and prospects.
On June 2, 1997, the Company filed a complaint against Kuhns Group
member John M. Dutton in the United States District Court for the District of
Delaware seeking a preliminary and permanent injunction against Mr. Dutton, and
all other persons acting in concert with him, to prevent Mr. Dutton from
continuing to disseminate material non-public information about the Company in
furtherance of his conspiracy to illegally obtain control of the Company.
During his eight month tenure with the Company, Mr. Dutton maintained a
position of trust and was privy to proprietary and confidential non-public
information about the Company, its financial prospects, prospective projects
and strategic business plans. Upon his resignation from the Company on May
12, 1997, Mr. Dutton took his laptop computer, which contained numerous
confidential files, and illegally retained other confidential documents
including financial statements and stockholder lists. The Company believes that
he has been disseminating this confidential nonpublic information in his efforts
to illegally gain control of the Company and jeopardize the Company's current
and potential contractual relationships. The Company is seeking injunctive and
monetary relief based on Mr. Dutton's breaches of his fiduciary and common law
duties to the Company and his misappropriation and misuse of confidential
information.
On June 3, 1997, Kuhns filed a suit in equity against the Company in the
Court of Chancery of the State of Delaware to compel the Company to provide
Kuhns with a list of the Company's stockholders as of May 23, 1997. Since Kuhns
was not a stockholder of record on May 23, under Delaware law, he had no right
to the Company's stockholder list. The Company further objected to Kuhns'
request on equitable grounds inasmuch as Kuhns or those persons acting in
concert with him have illegally obtained and retained various corporate records
of the Company, including portions of its stockholder list and that he is
seeking the list for the improper purpose of furthering his illegal solicitation
of stockholder consents. Kuhns subsequently filed a request for the stockholder
list as of June 10, 1997, a date on which he was a record holder. On the basis
of his subsequent demand, on June 18, 1997, the Company entered into a
stipulation of settlement with Kuhns pursuant to which the Company agreed to
provide the stockholder list and related materials.
<PAGE> 14
THE CONSENT PROCEDURE
The record date for determination of the stockholders of the Company
entitled to execute, withhold or revoke consents relating to the Kuhns
Solicitation is the close of business on June 10, 1997 (the "Record Date").
Under Delaware law, unrevoked consents from the holders of record of a majority
of the outstanding shares of Common Stock on the Record Date are necessary for
the Company's stockholders to act by written consent to (i) remove, without
cause, certain members of the senior management, (ii) replace them with the
members of the Kuhns Group and (iii) amend the Company's By-Laws as proposed by
the Committee. As of the Record Date, there were 29,003,648 shares of Common
Stock outstanding, each entitled to one vote per share.
Under Section 228 of the Delaware General Corporation Law, all consents
will expire unless valid, unrevoked consents representing a majority of the
outstanding shares of Common Stock of the Company are delivered to the Company
within 60 days of the earliest-dated consent. A consent signed by Kuhns was
filed with the registered agent of the Company in Delaware on June 10, 1997
establishing the Record Date and August 9, 1997 as the expiration date.
The Company believes that the operation of the Proposal violates
Delaware corporate law because, among other things, it divests your elected
Board of responsibilities for managing the affairs of the Company.
Section 141 of the Delaware General Corporation Law ("DGCL") sets
forth the fundamental principle that the business and affairs of Delaware
corporations are to be managed by a board of directors and that any deviations
from this mandate must be expressly set forth in the DGCL or the certificate of
incorporation. A board carries out these duties by, among other things,
delegating authority to the officers of the corporation. As described herein,
the proposed by-law amendments are designed to prevent your elected Board from
managing the affairs of the Company and vests such power in Kuhns thereby
turning this basic principle of corporate governance established by the DGCL on
its head by inverting the relative positions of the Board and the officers.
This cornerstone of corporate governance has been consistently cited
and recognized in the decisions of Delaware and other courts. In fact, almost
every landmark decision by Delaware courts regarding the DGCL contains express
reference to and is based, in part, on the fundamental principle that the board
has a fiduciary duty to manage the business and affairs of Delaware
corporations. See, for example Paramount Communications, Inc. v. QVC Network,
Inc., 637 A.2d 34, 41-42 (Del. 1993), Paramount Communications, Inc. v. Time,
Inc., 571 A.2d 1140, 1154 (Del. 1989), Unocal Corporation v. Mesa Petroleum,
Inc., 493 A.2d 946 (Del. 1985) and Aronson v. Lewis, 473 A.2d 805, 812 (Del.
1984). In addition, courts interpreting Delaware law routinely invalidate
extreme infringements on a board's inherent authority to manage Delaware
corporations that are purportedly effected outside of the certificate of
incorporation. See, for example Lehrman v. Cohen, 222 A.2d 800, 808 (Del. 1966)
and Abercrombie v. Davis, 123 A.2d 893 (Del. Ch. 1960).
The Company firmly believes that the Committee's proposal to radically
alter the fundamental framework of corporate governance by placing the power of
the entire Board in Kuhns and articulating its plan to seek additional
stockholder action in the future as circumstances require without, at the very
least, amending the Company's certificate of incorporation, is violative of
applicable Delaware law. The question of the legality of the proposed by-law
amendments is presently pending before the Federal District Court for the
District of Delaware, but has not been decided. Ultimately, the question of the
legality of the by-law amendments is expected to be determined by the courts
and even if sufficient consents are obtained, the Board will take no action
pursuant to the consents until a final decision has been rendered.
A stockholder may revoke any previously signed consent by signing,
dating and returning to the Company a GREEN Revocation of Consent Card. A
consent may also be revoked by delivery of a written revocation of consent to
the Committee. Stockholders are urged, however, to deliver all revocations of
consents to Morrow & Co., Inc., 909 Third Avenue, 20th Floor, New York, New York
10022 (Facsimile No. 212-754-8300). The Company requests that if a revocation is
instead delivered to the Committee, a photostatic copy of the revocation also be
delivered to the Company, c/o Morrow & Co., Inc., at the address set forth
above, so that the Company will be aware of all revocations. Any revocation of
consent may itself be revoked at any time by signing, dating and returning to
the Committee a subsequently dated white consent card sent to you by the
Committee, or by delivery of a written revocation of such revocation of consent
to the Company or the Committee.
The Company will retain an independent inspector of elections in
connection with the Kuhns Solicitation.
Only stockholders as of the Record Date are eligible to execute,
withhold or revoke consents in connection with this solicitation. Persons
owning Common Stock beneficially (but not of record), such as persons whose
ownership of Common Stock is through a broker, bank or other financial
institution, should contact such broker, bank or financial institution and
instruct such person to execute the GREEN revocation card on their behalf or
to have such broker's, bank's or financial institution's nominee (such as Cede
& Co.) execute such a revocation card.
If you have any questions concerning this Revocation of Consent
Statement or need assistance in executing the enclosed GREEN revocation card,
please contact Morrow &
<PAGE> 15
Co., Inc., 909 Third Avenue, 20th Floor, New York, New York 10022 (Telephone No.
1-800-662-5200).
Carefully review this Revocation of Consent Statement. YOUR RESPONSE IS
IMPORTANT. You are urged NOT to sign any WHITE consent cards. Instead, reject
the Committee's solicitation efforts by promptly completing, signing, dating and
mailing the enclosed GREEN revocation card. Please be aware that if you sign a
white card but do not check any of the boxes thereon, you will be deemed to have
consented to the Kuhns Group's proposals.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth, as of June 10, 1997, 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 executive
officers and directors, individually and as a group.
<TABLE>
<CAPTION>
Shares Owed Beneficially Percentage of
Name and Address of Beneficial Owner and of Record Outstanding Shares(1)
- ------------------------------------ ------------- ---------------------
<S> <C> <C>
Michel L. Marengere 2,484,792(2) 8.5%
500 Rue Notre Dame
Lachine
Quebec, Canada H8S 2B2
Rene Amyot 161,000(3) (4)
523 Cote Ste. Anne
Ste. Anne de Beaupre
Sante-Foy
Quebec, Canada G0A 3C0
Nicolas Matossian 590,000(5) 2.0%
500 Rue Notre Dame
Lachine
Quebec, Canada H8S 2B2
Reynald Lemieux 26,000(6) (4)
1340 Duquet
Sillery
Quebec, Canada G1S 1A9
Louis Berlinquet 25,000(7) (4)
500 Rue Notre Dame
Lachine
Quebec, Canada H8S 2B2
Peter P. Gil 25,000(7) (4)
500 Rue Notre Dame
Lachine
Quebec, Canada H8S 2B2
Andrew Choa -- --
3801-4 Edinburgh Tower
The Landmark
16 Queens Road
Hong Kong
</TABLE>
<PAGE> 16
<TABLE>
<CAPTION>
Shares Owed Beneficially Percentage of
Name and Address of Beneficial Owner and of Record Outstanding Shares(1)
- ------------------------------------ ------------- ---------------------
<S> <C> <C>
Ladislas O. Rice -- --
19 Redington Road
London, England NW3 7QX
Robert Chartier 125,000(8) (4)
500 Rue Notre Dame
Lachine
Quebec, Canada H8S 2B2
J. Arthur Gelinas 200,000(7) (4)
500 Rue Notre Dame
Lachine
Quebec, Canada H8S 2B2
Olivier Despres 175,000(7) (4)
500 Rue Notre Dame
Lachine
Quebec, Canada H8S 2B2
Credit Suisse 1,531,131(9) 5.3%
Paradeplatz 8
8070 Zurich, Switzerland
All Directors and Officers 3,811,792 12.4%
as a group (11 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-K and Rule 13d-3(d)(1), promulgated under the Securities
and Exchange Act of 1934, as amended (the "Exchange Act"). 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 to acquire within 60 days.
(2) Includes 1,659,792 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 675,000 shares of Common Stock that may be issued pursuant to
stock options exercisable at $2.00 and 150,000 shares of Common Stock
which may be received upon the exercise of 75,000 unit options granted
under Mr. Marengere's service agreement.
(3) Includes 125,000 shares of Common Stock that may be issued pursuant to
stock options exercisable at $2.00.
(4) Less than 1%.
(5) Includes 300,000 shares of Common Stock that may be issued pursuant to
stock options exercisable at $2.00 and 100,000 shares of Common Stock
which may be received upon the exercise of 50,000 unit options granted
under Mr. Matossian's service agreement.
(6) Includes 25,000 shares of Common Stock that may be issued pursuant to
stock options exercisable at $2.00.
(7) Consists of shares of Common Stock that may be issued pursuant to stock
options exercisable at $2.00.
(8) Includes 110,000 shares of Common Stock that may be issued pursuant to
stock options exercisable at $2.00.
(9) Based upon a Schedule 13G filed by Credit Suisse with the Securities
and Exchange Commission on February 12, 1997.
<PAGE> 17
SOLICITATION OF REVOCATIONS
Cost and Method
The cost of the solicitation of revocations of consent will be borne by
the Company. The Company estimates that the total expenditures relating to such
solicitation (other than salaries and wages of officers and employees, but
including costs of litigation related to the solicitation) will be
approximately $500,000, of which approximately $195,000 has been spent as of the
date hereof. In addition to solicitation by mail, directors, officers and other
employees of the Company may, without additional compensation, solicit
revocations by mail, in person or by telecommunication.
The Company has retained Morrow & Co., Inc. ("Morrow"), professional
consent revocation solicitors, at an estimated fee of $200,000 plus reasonable
out-of-pocket expenses, to assist in the solicitation of revocations. The
Company will reimburse brokerage houses, banks, custodians and other nominees
and fiduciaries for out-of-pocket expenses incurred in forwarding the Company's
consent revocation materials to, and obtaining instructions relating to such
materials from, beneficial owners of Common Stock. Morrow has advised the
Company that approximately 40 employees of Morrow will be involved in the
solicitation by Morrow on behalf of the Company.
Participants in the Solicitation
Under applicable regulations of the SEC, each of the directors of the
Company, executive officer Olivier Despres and Morrow may be deemed to be a
"participant" in the Company's solicitation of revocations of consent. The
business address of each director and Mr. Despres is provided above under
"Security Ownership of Certain Beneficial Owners and Management." Morrow's
business address is set forth on page 7.
The following is a listing of transactions in Common Stock by the
Company's participants during the last two years: (1) On March 31, 1997 Rene
Amyot acquired 1,000 shares of Common Stock in open market transactions at a
purchase price of $1.625 per share; (2) On April 15, 1997 Reynald Lemieux
acquired 1,000 shares of Common Stock in open market transactions at a purchase
price of $1.7875 per share; and (3) On March 13, 1997 Nicolas Matossian
acquired 25,000 shares of Common Stock in open market transactions at a
purchase price of $1.875 per share. Morrow does not own any stock of the
Company. Information about the present stock ownership interest of the Company's
other participants is provided in "Security Ownership of Certain Beneficial
Owners and Management."
Other Contracts, Arrangements and Understandings with Participants
Service Agreements
Effective February 1, 1995, the Company entered into three year service
agreements with Michel L. Marengere as Chairman and Chief Executive Officer and
Nicolas Matossian as President and Chief Operating Officer.
The service agreements with Messrs. Marengere and Matossian
(individually an "executive") contain "change in control" language which
provides the executive with certain
<PAGE> 18
benefits, including payment to the executive in the amount of three times his
base compensation, if the executive is terminated for "good reason," as that
term is defined in the service agreements, following a change in control of the
Company. The service 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
thereof, promulgated under 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 service 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 the
executive, alone or with other officers of the Company, or any entity in which
an executive (alone 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 as of the end of the Company's last fiscal
year ("Fiscal 1996"), Messrs. Marengere and Matossian would have been entitled
to receive $1,080,000 and $720,000, respectively, based on their base
compensations pursuant to their respective service agreements. In addition,
since their service 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 service agreements.
Pursuant to the Company's 1995 Stock Option Plan (the "1995 Plan"),
nonqualified and incentive stock options and limited stock appreciation rights
may be granted to each of the named executive officers. Under the 1995 Plan,
upon a "change in control" of the Company, as defined in the 1995 Plan (which is
defined in essentially the same manner as in the service agreements), optionees
are entitled, upon approval by the Compensation Committee, to receive, upon
surrender of the related stock option and exercise of any limited stock
appreciation right,
<PAGE> 19
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 on September 30, 1996, based on a
market price of $2.00 per share on that date, no payment would have been
required to be made.
Certain Relationships and Related Transactions
As of September 30, 1996, a subscription receivable in the aggregate
amount of $1,824,000 was owed to the Company by Mr. Marengere or his affiliates.
During Fiscal 1996, Mr. Marengere was indebted to the Company in maximum amount
of $781,000. 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 ("Fidutech"), which are controlled by Messrs. Marengere
and Amyot. As of July 1, 1994, $1,155,000 of this amount was assumed by the
acquirer of Edinov. The balance of $579,000 was non-interest bearing and has
been paid in full. In connection with the Settlement of a derivative action
brought against the Company and Messrs. Marengere and Amyot, Messrs. Marengere
and Amyot have agreed to cause Fidutech to guarantee the payment of the assumed
debt.
During Fiscal 1996, the Company paid $80,418 in fees to Rene Amyot, a
director, for consulting and legal services provided to the Company.
Other Agreements
Except as otherwise set forth in this Revocation of Consent Statement,
to the best of the Company's knowledge, (i) no participant referred to above is,
or was within the past year, a party to any contract, arrangement or
understanding with any person with respect to any shares of Common Stock, and
(ii) neither any of the participants referred to above nor any of their
respective associates has any arrangement or understanding with any person with
respect to any future employment by the Company or its affiliates, or with
respect to any future transaction as to which the Company or any of its
affiliates will or may be a party.
<PAGE> 20
1998 STOCKHOLDER PROPOSALS
In order for stockholder proposals for the 1998 Annual Meeting of
Stockholders to be eligible for inclusion in the Company's proxy statement, they
must be received by the Company as its principal office in Lachine, Quebec, on
or before October 2, 1997.
We appreciate your support and encouragement.
On Behalf of the Board of Directors,
Olivier Despres
Secretary
IMPORTANT
The Board of Directors urges you NOT to return any WHITE consent card
solicited from you. If you have previously returned any such consent card you
have every right to change your vote. Simply sign, date and mail the enclosed
GREEN Revocation of Consent Card in the postage-paid envelope provided, whether
or not you previously returned the white consent card.
If your Shares are held in "Street" name at a brokerage firm, custodian
bank or other nominee and you wish to support your current Board of Directors,
you must either (a) sign and date the GREEN Revocation of Consent Card and mail
it in the envelope provided to you by such organization, or (b) call the person
responsible for your account at that organization and instruct that person to
execute and mail a GREEN Revocation of Consent Card representing your shares.
For additional information or assistance, please call Morrow & Co.,
Inc., our soliciting agent, toll free at 1-800-662-5200. Morrow & Co., Inc.'s
address is 909 Third Avenue, 20th Floor, New York, New York 10022.
<PAGE> 21
REVOCATION OF CONSENT
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
DOMINION BRIDGE CORPORATION
The undersigned, a holder of shares of Common Stock, par value $.001
per share (the "Common Stock"), of Dominion Bridge Corporation (the "Company"),
acting with respect to all shares of Common Stock held by the undersigned at the
close of business on June 10, 1997, hereby acts as follows concerning the
proposal of the Committee to Revitalize Dominion Bridge Corporation (the
"Committee") set forth below.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY URGES YOU TO EXECUTE THE "YES,
REVOKE MY CONSENT" BOX.
PROPOSAL OF THE COMMITTEE OF CERTAIN STOCKHOLDERS
RESOLVED, that the Bylaws of the Company are hereby repealed in their
entirety; and it is further
RESOLVED, that the Bylaws included as Appendix A to the Consent
Statement dated May __, 1997 of the Committee to Revitalize Dominion
Bridge Corporation, as same may be hereafter amended, are
approved and adopted as and for the Company's Bylaws (the "Bylaws");
and it is further
RESOLVED, that in accordance with Article III, Section 3 of the
Bylaws and in the best interests of the Company, Michel L. Marengere,
Nicolas Matossian and Oliver Despres are hereby removed as Chairman
and Chief Executive Officer, President and Chief Operating Officer,
and Vice President and Corporate Secretary, respectively.
RESOLVED, that in accordance with Article III, Section 2 of the
Bylaws, John D. Kuhns, Kenneth W. Mariash and John M. Dutton are
hereby elected Chairman, President and Secretary, respectively.
/ / YES, REVOKE MY CONSENT / / NO, DO NOT REVOKE MY CONSENT
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY URGES YOU TO EXECUTE THE "YES,
REVOKE MY CONSENT" BOX.
<PAGE> 22
UNLESS OTHERWISE INDICATED ABOVE, THIS REVOCATION CARD REVOKES ALL
PRIOR CONSENTS GIVEN WITH RESPECT TO THE PROPOSAL SET FORTH HEREIN.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE REVOCATION OF
CONSENT STATEMENT OF THE COMPANY, DATED JUNE 19, 1997, IN OPPOSITION TO THE
SOLICITATION OF THE COMMITTEE. UNLESS YOU SPECIFY OTHERWISE, BY SIGNING AND
DELIVERING THIS REVOCATION CARD TO THE COMPANY, YOU WILL BE DEEMED TO HAVE
REVOKED CONSENT TO ALL OF THE PROPOSALS SET FORTH HEREIN.
Dated: _________________________, 1997
_____________________________________________________
Signature (Title, if any)
_____________________________________________________
Signature, if held jointly
Please sign exactly as your name appears hereon.
Persons signing as Executors, Administrators,
Trustees, etc. give full title as such. Joint owners
should both sign.
