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 ss. 240.14a-11(c) or ss. 240.14a-12
IPI, 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):
[X] No fee required.
[ ] 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, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
IPI
NOTICE OF FIRST SPECIAL MEETING OF SHAREHOLDERS
Minneapolis, Minnesota
August 7, 1997
TO THE SHAREHOLDERS OF IPI, INC.:
Notice is hereby given that a First Special Meeting of the Shareholders
of IPI, Inc. will be held on Tuesday, August 26, 1997 at 11:30 a.m. at the IPI,
Inc. corporate offices located at 15155 Technology Drive, Eden Prairie,
Minnesota to act upon the following proposal, as more fully described in the
accompanying Proxy Statement and Information Statement, required to be furnished
to shareholders pursuant to Section 302A.671 of the Minnesota Statutes:
Approval of the Shareholder Resolution to Accord Full Voting Rights to
Certain Shares of Common Stock to be Sold and Transferred to Marshall Financial
Group, Inc. pursuant to the Option, Security Agreement and Buy-Sell Agreement
described in the accompaning proxy statement.
In their discretion on any other matters properly coming before the
First Special Meeting or any adjournment(s) thereof.
Shareholders of record at the close of business on July 25, 1997 will
be entitled to notice of, and to vote at the First Special Meeting or any
postponements or adjournments thereof. Shareholders are cordially invited to
attend the First Special Meeting.
Approval of the Proposal will require both (1) approval by a majority
of all shares entitled to vote at the First Special Meeting and (2) approval by
a majority of all shares, excluding all interested shares, as that term is
defined in the accompanying Proxy Statement.
The Company also intends to call a second, separate and distinct
Special Meeting of Shareholders to be held on August 26, 1997, for which
separate Notice is being provided to all Shareholders entitled to vote at such
meeting, for the purpose of voting on the proposal set forth in such second
Notice.
Robert A. Sutter
Chief Executive Officer
EVEN THOUGH YOU MAY PLAN TO ATTEND THE FIRST SPECIAL MEETING IN PERSON, PLEASE
MARK, DATE AND EXECUTE THE ENCLOSED PROXY AND MAIL IT PROMPTLY. A POSTAGE-PAID
RETURN ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
Shareholders are urged to read carefully the attached Proxy Statement and
Information Statement for additional information concerning the proposal to be
voted on at the First Special Meeting.
IPI, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS
For First Special Meeting of Shareholders
11:30 a.m., August 26, 1997
The undersigned, revoking all prior proxies, hereby appoints Robert J.
Sutter and David A. Mahler, or either of them, as Proxy or Proxies, with full
power of substitution and revocation, to vote all shares of stock of IPI, Inc.
standing of record in the name of the undersigned at the close of business on
July 25, 1997 at the First Special Meeting of Shareholders to be held at 11:30
a.m. on August 26, 1997, or at any adjournment thereof, upon the following
matter:
Approval of the Shareholder Resolution to Accord Full Voting Rights to
Certain Shares of the Company's Common Stock to be Sold and Transferred
to Marshall Financial Group, Inc. Pursuant to the Option, Security
Agreement and Buy-Sell Agreement between Jacobs Industries, Inc. and
Marshall Financial Group, Inc. and the Option Agreement between Dorothy
Galloway and Marshall Financial Group, Inc.
FOR AGAINST ABSTAIN
|_| |_| |_|
In their discretion on any other matters properly coming before the
First Special Meeting or any adjournment(s) thereof.
(Please sign and date below.)
- --------------------------------------------------------------------------------
Please mark, date, sign and mail this proxy promptly in the enclosed
envelope.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE PROPOSAL.
The Board of Directors recommends a vote FOR the Proposals.
The undersigned hereby acknowledges receipt of the Notice of First
Special Meeting of Shareholders of IPI, Inc. and the proxy statement furnished
therewith dated August 7, 1997.
Please sign your name exactly as it appears below. In the case of
shares owned in joint tenancy or as tenants in common, all should sign.
Fiduciaries should indicate their title and authority.
Dated: ________________________________, 1997.
_____________________________________________
Signature
IPI
NOTICE OF SECOND SPECIAL MEETING OF SHAREHOLDERS
Minneapolis, Minnesota
August 7, 1997
TO THE SHAREHOLDERS OF IPI, INC.:
Notice is hereby given that a Second Special Meeting of the
Shareholders of IPI, Inc. will be held on Tuesday, August 26, 1997 at 12:30 p.m.
at the IPI, Inc. corporate offices located at 15155 Technology Drive, Eden
Prairie, Minnesota to act upon the following proposal, as more fully described
in the accompanying Proxy Statement and Information Statement, required to be
furnished to shareholders pursuant to Section 302A.671 of the Minnesota
Statutes:
Approval of an Amendment to the Amended and Restated Articles of
Incorporation of the Company to provide that Minn. Stat. ss.302A.671 shall not
apply to any future control share acquisition (as defined in the statutes) of
shares of the Company's Common Stock.
In their discretion on any other matters properly coming before the
Second Special Meeting or any adjournment(s) thereof.
Shareholders of record at the close of business on July 25, 1997 will
be entitled to notice of, and to vote at the Second Special Meeting or any
postponements or adjournments thereof. Shareholders are cordially invited to
attend the Second Special Meeting.
Approval of the Proposal will require approval by a majority of all
shares entitled to vote at the Second Special Meeting.
This Second Special Meeting shall follow, and be separate and distinct
from the Company's first Special Meeting of Shareholders to be held on August
26, 1997, for which separate Notice is being provided to all Shareholders
entitled to vote at such meeting, for the purpose of voting on the proposal set
forth in such first Notice.
Robert A. Sutter
Chief Executive Officer
EVEN THOUGH YOU MAY PLAN TO ATTEND THE SECOND SPECIAL MEETING IN PERSON, PLEASE
MARK, DATE AND EXECUTE THE ENCLOSED PROXY AND MAIL IT PROMPTLY. A POSTAGE-PAID
RETURN ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
Shareholders are urged to read carefully the attached Proxy Statement and
Information Statement for additional information concerning the proposal to be
voted on at the Second Special Meeting.
IPI, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS
For Second Special Meeting of Shareholders
12:30 p.m. on August 26, 1997
The undersigned, revoking all prior proxies, hereby appoints Robert J.
Sutter and David A. Mahler, or either of them, as Proxy or Proxies, with full
power of substitution and revocation, to vote all shares of stock of IPI, Inc.
standing of record in the name of the undersigned at the close of business on
July 25, 1997 at the Second Special Meeting of Shareholders to be held at 12:30
p.m. on August 26, 1997, or at any adjournment thereof, upon the following
matter:
Approval of an Amendment to the Amended and Restated Articles of
Incorporation of the Company to provide that Minn. Stat. ss.302A.671
shall not apply to any future control share acquisition (as defined) of
shares of the Company's Common Stock.
FOR AGAINST ABSTAIN
|_| |_| |_|
In their discretion on any other matters properly coming before the
Second Special Meeting or any adjournment(s) thereof.
(Please sign and date below.)
- --------------------------------------------------------------------------------
Please mark, date, sign and mail this proxy promptly in the enclosed
envelope.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE PROPOSAL.
The Board of Directors recommends a vote FOR the Proposal.
The undersigned hereby acknowledges receipt of the Notice of Second
Special Meeting of Shareholders of IPI, Inc. and the proxy statement furnished
therewith dated August 7, 1997.
Please sign your name exactly as it appears below. In the case of
shares owned in joint tenancy or as tenants in common, all should sign.
Fiduciaries should indicate their title and authority.
Dated: ________________________________, 1997.
_____________________________________________
Signature
IPI, INC.
15155 TECHNOLOGY DRIVE, EDEN PRAIRIE, MINNESOTA 55344
PROXY STATEMENT
FOR EACH OF THE TWO SPECIAL MEETINGS OF THE SHAREHOLDERS
TO BE HELD AUGUST 26, 1997 AT THE
IPI, INC. CORPORATE OFFICES
GENERAL INFORMATION
This proxy statement is furnished to the holders of Common Stock, par
value $.01 per share ("Common Stock") of IPI, Inc. (the "Company") in connection
with the solicitation of proxies for use in connection with two separate and
distinct Special Meetings of the Shareholders, both to be held August 26, 1997,
and all adjournments or postponements of either such meeting, for the separate
and distinct purposes set forth in each of the Notice of First Special Meeting
of the Shareholders and the Notice of Second Special Meeting of Shareholders.
Holders of record entitled to notice of and to vote at either such meeting are
hereinafter referred to as the "Shareholders."
The Company is first mailing this proxy statement and the enclosed
forms of proxy to the Shareholders on or about August 7, 1997.
Whether or not you expect to be present in person at either meeting,
you are requested to fill in, sign, date, and return the enclosed form of proxy.
If you attend either meeting, you may vote by ballot. If you do not attend
either meeting, your shares of Common Stock can be voted only when represented
by a properly executed proxy.
Any person giving such a proxy has the right to revoke it at any time
before it is voted by giving written notice or revocation to the Secretary of
the Company, by duly executing and delivering a proxy bearing a later date, or
by attending the Special Meeting for which such proxy applies and voting in
person.
The close of business on July 25, 1997 has been fixed as the record
date for the determination of the Shareholders entitled to vote at either
Special Meeting of the Shareholders. The Shareholders will be entitled to cast
one vote for each share of Common Stock held of record on the record date. A
quorum, consisting of a majority of the outstanding shares of the Common Stock
entitled to vote at the Special Meeting, must be present in person or
represented by proxy before action may be taken at either the First or Second
Special Meeting.
The affirmative vote of the requisite number of Shareholders, as set
forth herein, will be required to approve the proposals being presented at
either Special Meeting.
The solicitation of proxies for each of the First and the Second
Special Meeting is made by the Board of Directors of the Company; however, in
accordance with Minn. Stat. ss.302A.671, the costs and expenses of holding the
First Special Meeting, including the expense of the solicitation of proxies,
will be paid by Marshall Financial Group, Inc.
The solicitation for each Special Meeting will be by mail. Norwest Bank
Minnesota, N.A. will act as inspector to verify and tabulate the vote for each
Special Meeting.
Where a specification is made by the Shareholder as provided in the
form of proxy, the shares will be voted in accordance with such specification.
If no specification is made, the shares will be voted FOR the Proposals
presented at each Special Meeting.
Votes cast by proxy or in person at either Special Meeting will be
tabulated by the Inspector of Election appointed for that Special Meeting and
will determine if a quorum is present. When an executed proxy card is returned
and the Shareholder has abstained from voting on a matter, the shares of Common
Stock represented by such proxy will be considered present at the meeting for
purposes of determining a quorum and for purposes of calculating the vote, but
will not be considered to have been voted in favor of such matter. If an
executed proxy is returned by a broker holding shares of Common Stock in street
name which indicates that the broker does not have discretionary authority as to
certain shares of Common Stock to vote on one or more matters, such shares of
Common Stock will be considered present at the meeting for purposes of
determining quorum, but will not be considered to be represented at the meeting
for purposes of calculating the vote with respect to such matter.
PROPOSAL BEING PRESENTED AT THE FIRST SPECIAL MEETING OF
SHAREHOLDERS: APPROVAL OF CERTAIN VOTING RIGHTS PURSUANT TO
MINNESOTA STATUTES SECTION 302A.671
PROPOSAL
At the First Special Meeting, including any adjournment(s) thereof,
holders of the Common Stock will be asked to consider and vote on the following
proposed resolution of Shareholders:
SHAREHOLDER RESOLUTION APPROVING
CONTROL SHARE ACQUISITION
"RESOLVED, that pursuant to Section 302A.671, Subd. 4a, of the
Minnesota Business Corporation Act, full voting rights are
hereby granted to all shares of common stock, par value $.01
("Common Stock"), of IPI, Inc. (the "Company") that are, or
become, beneficially owned by Marshall Financial Group, Inc.
("MFG"), regardless of whether such shares were or are acquired
in a control share acquisition, as defined in Section 302A.011,
Subd. 38, or otherwise, provided that this resolution shall not
give MFG authority to exercise in excess of 50% of the total
voting power of the shares of the Company, regardless of the
number of shares that MFG shall beneficially own, without
further compliance with Section 302A.671 if such compliance is
required at the time of such further acquisition."
BACKGROUND
Pursuant to Section 302A.671 of the Minnesota Business Corporation Act,
and related definitions (the "Control Share Acquisition Provisions"), shares of
Common Stock of the Company acquired by an "acquiring person" (as defined) in a
"control share acquisition" (as defined) that exceed the voting threshold of a
certain percentage (E.G., at least 33 1/3 percent but less than or equal to 50
percent) shall have the same voting rights as other shares only if approved, by
the required votes, by resolution of the Company's shareholders. Pursuant to
such statute, the proposed acquiring person of shares of Common Stock of the
Company has requested that the Company hold a special meeting of shareholders
solely to consider such resolution.
A COPY OF MINN. STAT. SS.302A.671, AND RELATED DEFINITIONS, IS INCLUDED
ON APPENDIX A ATTACHED TO THIS PROXY STATEMENT.
Marshall Financial Group, Inc. ("MFG"), 903 North Third Street, Suite
300, Minneapolis, MN 55401 (612-338-1807), is the proposed acquirer of the
shares of the Company. Dennis M. Mathisen, 7283 Mission Hills Drive, Las Vegas,
Nevada 89113, is the President, Chief Executive Officer and sole shareholder of
MFG. MFG was formed in 1981 and is a corporation through which Mr. Mathisen
makes investments in other business entities.
In May 1997, Jacobs Industries, Inc. ("JII"), holder of approximately
68% of the Company's outstanding shares of Common Stock, and MFG entered into an
Option, Security Agreement and Buy-Sell Agreement (the "JII-MFG Agreement"),
pursuant to which JII sold to MFG an option to purchase, between January 1, 1998
and January 5, 1998, 1,608,500 shares of Common Stock (the "MFG Option") owned
by JII.
Pursuant to the requirements of Minn. Stat. ss.302A.671, MFG provided
to the Company an Information Statement, which more fully describes the JII-MFG
Agreement and the terms and conditions thereof, and requested that the Company
hold a special meeting of its shareholders to vote solely on the approval of a
shareholder resolution granting to MFG full voting rights, as described herein.
A COPY OF THE INFORMATION STATEMENT PREPARED BY MFG AND DELIVERED TO THE COMPANY
IS ATTACHED HERETO AS APPENDIX B. Shareholders are encouraged to read the
Information Statement prior to executing their proxy.
In addition to the JII-MFG Agreement, MFG entered into a similar option
agreement with Dorothy Galloway, a major shareholder of the Company
("Galloway"), pursuant to which Galloway sold to MFG an option to purchase
between January 1, 1998 and January 5, 1998 79,272 shares of Common Stock owned
by Galloway (the "MFG-Galloway Option"). JII has also advised the Company that
it has entered into a similar option agreement with Galloway (the "JII-Galloway
Option") for the purchase of 79,272 shares. Each of JII and MFG have agreed with
Galloway that upon exercise by MFG of the option to purchase shares from JII,
JII and MFG will each exercise their respective option with Galloway.
The JII-MFG Agreement also provides (i) MFG with the potential right to
acquire 1,608,500 additional shares of Common Stock currently held by JII, as
well as the 79,272 shares of Common Stock purchasable by JII from Galloway, and
(ii) JII with the potential right to reacquire the 1,608,500 shares transferred
to MFG pursuant to the JII-MFG Agreement, plus the 79,272 shares purchased by
MFG from Galloway (such provisions are referred to herein as the "buy-sell
agreement"). The buy-sell agreement may be exercised at any time after the
options are exercised in January 1998. Neither party may sell, transfer, assign
or dispose of its shares except pursuant to the buy-sell agreement. The JII-MFG
Agreement terminates only upon written agreement of the parties.
The terms of the JII-MFG Agreement and the MFG-Galloway Agreement are
more fully described in Appendix B hereto.
The JII-MFG Agreement provides that MFG will pay the expenses of this
special meeting. In addition, if the resolution being presented at the First
Special Meeting is not approved by the requisite vote on or before December 1,
1997, the option shall terminate and the option price must be refunded by JII to
MFG, together with interest, at 1% in excess of the prime rate at First Bank,
N.A., from the date of payment to the date of refund. In the event JII is
required to refund the option price paid to MFG, Galloway has agreed to refund
the option prices received from JII and MFG, plus interest at 1% over prime.
Prior to the consummation of the proposed transactions, MFG will not
directly own any shares of the Company's Common Stock; however, Mr. Mathisen
individually owns 9,000 shares. If the proposal being presented at the First
Special Meeting is approved by the requisite votes, and all three initial
options are exercised in full, MFG, together with it sole shareholder, will own
approximately 35.8%, of the outstanding shares of Common Stock, JII will own
approximately 35.7%, and Galloway will own 158,543 shares, approximately 3.3%.
See also "Security Ownership of Certain Beneficial Owners and Management."
In addition to the Control Share Acquisition Provisions described
herein, Minn. Stat. ss.302A.673 provides that the Company may not engage in a
"business combination" (as defined) with an "interested shareholder" (as
defined) for a period of four years following an interested shareholder's "share
acquisition date" (as defined) unless the business combination or the
acquisition of shares by the interested holder is approved by a committee of the
Board of Directors, in accordance with such statute.
In May 1997, prior to entering into the JII-MFG Agreement, MFG made a
written request, in accordance with ss.302A.673, for approval by a committee of
"disinterested directors" (as defined). The Board of Directors appointed such a
committee, comprised of one director, Howard Grodnick, as required by the
statute. The committee approved the proposed share acquisitions by MFG, as
described above.
The text of Minn. Stat. ss.302A.673, and related definitions, is
included on Appendix A attached hereto.
VOTE REQUIRED
Under Minn. Stat. ss.302A.671, the proposal being presented at the
First Special Meeting must receive the following affirmative votes to be
approved:
1. The affirmative vote of a majority of all shares entitled to vote;
and
2. The affirmative vote of a majority of all shares, excluding
"interested shares" as that term is defined in the Minnesota Statutes (I.E., all
shares owned by the "acquiring party," all officers of the Company and any
employee of the Company who is also a director of the Company).
As of the record date (i) 4,734,087 shares of Common Stock were
outstanding and entitled to be voted at such meeting, with approximately 335
holders of record, and (ii) 1,944,687 were considered "interested shares" (as
defined). See also "Security Ownership of Certain Beneficial Owners and
Management" below.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL BEING
PRESENTED AT THE FIRST SPECIAL MEETING.
PROPOSAL BEING PRESENTED AT THE SECOND SPECIAL MEETING OF
SHAREHOLDERS: APPROVAL OF AMENDMENT TO ARTICLES OF
INCORPORATION
PROPOSAL
At the Second Special Meeting, including any adjustment(s) thereof,
holders of the Common Stock will be asked to consider and vote on the following
proposed amendment to the Company's Amended and Restated Articles of
Incorporation:
"RESOLVED, that Article 4 of the Amended and Restated Articles
of Incorporation of IPI, Inc., as amended to date, be amended by adding
Article 4.4 to read in its entirety as follows:
Article 4.4. Control Share Acquisitions. Minn. Stat.
ss.302A.671 (the "Control Share Acquisition Provisions") shall
not apply to any "control share acquisition" (as defined in
Minn. Stat. ss.302A.011) of shares of Common Stock of the
Corporation, and any and all shares acquired by any "acquiring
person" (as defined in Minn. Stat. ss.302A.011) shall have
full and equal voting rights notwithstanding such Control
Share Acquisition Provisions."
BACKGROUND
Minn. Stat. ss.302A.671, Subd. 1, provides that the Control Share
Acquisition Provisions (as contained in ss.302A.671, the text of which is
attached hereto on Appendix A and which is further described above in the Proxy
Statement) do not apply to a company if the articles of incorporation or bylaws
approved by the shareholders expressly so provide. See the discussion above
concerning the proposal to be presented at the First Special Meeting and
Appendix A hereto.
If the proposal to be presented at the Second Special Meeting is
approved by the required vote of the Shareholders, the Amended and Restated
Articles of Incorporation of the Company shall be so amended, and any subsequent
"control share acquisition" of shares of Common Stock, transferring any
percentage of the Common Stock, including to JII or MFG pursuant to the buy-
sell provisions contained in the JII-MFG Agreement described above under the
background of the proposal being presented at the First Special Meeting, or
otherwise, or any other party, may be transferred at any time in the future
without additional Shareholder vote or approval.
If the proposal is not approved, any subsequent "control share
acquisition" of shares of Common Stock will require a vote of the Shareholders,
as described above with respect to the proposal being presented at the First
Special Meeting.
VOTE REQUIRED
The proposal being presented at the Second Special Meeting must receive
the affirmative vote of a majority of all shares entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL BEING
PRESENTED AT THE SECOND SPECIAL MEETING.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Common Stock as of July 25, 1997, (i) by each person
who is known by the Company to beneficially own more than five percent (5%) of
the outstanding Common Stock, (ii) by each of the officers of the Company and
its wholly-owned subsidiaries and directors of the Company, and (iii) by all
such officers and all directors of the Company as a group. Unless otherwise
noted, each person or group identified has sole voting and investment power with
respect to the shares shown. The table includes only options currently
exercisable or exercisable within 60 days.
<TABLE>
<CAPTION>
Number of Shares Percent of
Name and Address Beneficially Owned Outstanding Shares(1)
- ---------------- ------------------ ---------------------
<S> <C> <C>
Jacobs Industries, Inc. (2) 3,217,000 (3) 67.95%
100 South Fifth Street, Suite 2500
Minneapolis, MN 55402
Irwin L. Jacobs (2) 3,217,000 (4) 67.95%
100 South Fifth Street, Suite 2500
Minneapolis, MN 55402
Daniel T. Lindsay (5) 327,500 6.91%
100 South Fifth Street, Suite 2500
Minneapolis, MN 55402
Thomas S. Galloway 326,087 (6) 6.87%
129 West Trade Street, Suite 110
Charlotte, NC 28202
Robert J. Sutter 47,000 (7) *
15155 Technology Drive
Eden Prairie, MN 55344
Howard Grodnick *
901 Third Street North 14,000 (8)
Minneapolis, MN 55344
David A. Mahler 10,000 (9) *
100 South Fifth Street, Suite 2500
Minneapolis, MN 55402
David M. Engel 7,000 (10) *
15155 Technology Drive
Eden Prairie, MN 55344
David C. Oswald 6,100 (11) *
15155 Technology Drive
Eden Prairie, MN
Thomas Johnson 1,000 *
15155 Technology Drive
Eden Prairie, MN 55344
All directors and officers as a group 3,955,687(3)(4)(6)(12) 82.1%
* Less than one percent.
</TABLE>
(1) Applicable percentages are based on a total of 4,734,087 shares
outstanding, together with applicable options for each such shareholder
as though such individual options had been exercised and were
outstanding.
(2) The outstanding shares of Jacobs Industries, Inc. are owned by Irwin L.
Jacobs (66.7%), James O. Pohlad (11.1%), Robert C. Pohlad (11.1%) and
William M. Pohlad (11.1%).
(3) Of these shares, 1,608,500 are subject to the option provision of the
JII-MFG Agreement, described herein under the proposal being presented
at the First Special Meeting and in Appendix B hereto, and the
remaining 1,608,500 are subject to the buy-sell arrangement with MFG,
contained in the JII-MFG Agreement. This number excludes shares subject
to the JII-Galloway Option. See Note (6).
(4) Includes all 3,217,000 shares currently owned by Jacobs Industries,
Inc. of which Mr. Jacobs disclaims beneficial ownership. See also Notes
(2) and (3).
(5) Mr. Lindsay is an officer and director of JII (see Notes (2) and (3)),
and a shareholder of Jacobs Management Company. See also "Certain
Transactions."
(6) Includes 317,087 shares of Common Stock owned by Mr. Galloway's wife,
Dorothy (of which Mr. Galloway disclaims beneficial ownership), and
options held by Mr. Galloway which are currently exercisable for 9,000
shares. Includes 79,272 shares owned by Ms. Galloway which are subject
to the JII-Galloway Option with Jacobs Industries, Inc., described
herein and 79,272 shares subject to the MFG-Galloway Option with
Marshall Financial Group, Inc., described herein.
(7) Includes 5,000 shares and options currently exercisable for 42,000
shares.
(8) Includes 2,000 shares and options currently exercisable for 12,000
shares.
(9) Includes 1,000 shares and options currently exercisable for 9,000
shares.
(10) Includes 3,000 shares, of which 1,000 are held by Mr. Engel's wife and
as to which Mr. Engel disclaims beneficial ownership, and options which
are currently exercisable for 4,000 shares.
(11) Includes 100 shares and options currently exercisable for 6,000 shares.
(12) Includes 3,873,687 shares held by officers of the Company and its
wholly-owned subsidiaries and directors of the Company, and options
currently exercisable or exercisable within the next 60 days for 82,000
shares.
Of the 4,734,087 shares of Common Stock outstanding, 1,944,687 shares
are deemed by the Company to be "interested shares" which are disqualified from
the second part of the vote on the proposal being presented at the First Special
Meeting. Of the remaining 2,789,400 shares entitled to vote, 1,608,500 are held
by JII and 327,500 are held by a director who is not an employee of the Company
and is not affiliated with the acquiring party.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
JII-MFG AGREEMENT; MFG-GALLOWAY OPTION; JII-GALLOWAY OPTION.
The terms of the above referenced agreements and options, to which
several of the Company's major shareholders are party, are described above under
the background to the proposal being presented at the First Special Meeting and
in Appendix B hereto. The Company is not a party to any such agreements and will
not directly benefit from any of the transactions provided for, or described in,
this Proxy Statement. Two of the Company's directors, Irwin Jacobs and Thomas
Galloway, indirectly own or have an interest in the shares of Common Stock
subject to the agreements described herein. Such directors have, or may receive,
a benefit from the transactions provided for in this Proxy Statement, if
approved by the Shareholders.
CONSULTING AGREEMENT WITH E. KENNEN FISHER
On November 30, 1987, Insty-Prints, Inc. entered into a 10-year
consulting agreement with E. Kennen Fisher (the "Consulting Agreement"). Under
the Consulting Agreement, Mr. Fisher assists the Company in developing and
conducting training programs for new and existing franchisees, and advises the
Company on marketing the Company's quick print operations, products and
services. In addition, the Consulting Agreement provides for Mr. Fisher to be a
member of the Board of Directors of Insty-Prints, Inc. during the term of the
agreement. Mr. Fisher was also a Director of IPI, Inc. from March 1994 until his
retirement from the Board in March 1997. For his services, the Company currently
pays Mr. Fisher an annual fee equal to the greater of (i) four percent of
profits of the Company before income taxes and payment of any management fee to
Jacobs Management Corporation, an affiliate of Jacobs Industries, Inc., or (ii)
$25,000. Mr. Fisher is entitled to an additional fee in the event that during
the term of the Consulting Agreement (which expires December 1, 1997) more than
50% of the voting stock or substantially all the assets of Insty-Prints, Inc.
are sold to an entity in which Irwin L. Jacobs owns less than a 20% interest (a
"change of control"). Such fee is equal to six times Mr. Fisher's annual
compensation for the immediately preceding fiscal year.
The Consulting Agreement may be terminated upon notice in the event of
a change of control, as discussed above, or upon a default or the termination of
certain franchise agreements. In addition, the Consulting Agreement provides for
mutual indemnification for certain claims arising in connection with the
services provided under such agreement.
MANAGEMENT AGREEMENT WITH JACOBS MANAGEMENT CORPORATION
IPI, Inc. and Insty-Prints, Inc. have each entered into separate, but
substantially identical, one year Management Services Agreements each effective
as of December 1, 1990 (collectively, the Management Agreements") with Jacobs
Management Corporation, an affiliate of JII. The Management Agreements were
renewable for two additional one year terms, unless the parties otherwise
agreed. Both agreements have been renewed each year for an additional one-year
term. Jacobs Management Corporation is owned approximately 68% by Irwin L.
Jacobs and 32% by Daniel T. Lindsay, a director and major shareholder of the
Company. See also the descriptions under the proposal being presented at the
First Special Meeting and "Security Ownership of Certain Beneficial Owners and
Management."
Pursuant to the Management Agreements, each of IPI, Inc. and
Insty-Prints, Inc. has engaged Jacobs Management Corporation to provide
managerial and advisory services to both companies when required, including
services with respect to general management, financial management, general
accounting, marketing and sales assistance, insurance, tax matters, and
personnel administration and public relations. The Management Agreements provide
that Jacobs Management Corporation shall make available upon request qualified
personnel to assist the Company and that Jacobs Management Corporation personnel
shall monitor, examine and review the operations of the Company on a regular
basis.
For the services rendered under the Management Agreements, Jacobs
Management Corporation will receive a management fee, payable monthly, of
$55,000 from IPI, Inc. and $20,000 from Insty-Prints, Inc. for fiscal 1997 (the
same fees as paid in fiscal 1996). For the fiscal years 1994, and 1995, IPI,
Inc. and Insty-Prints, Inc. paid total annual management fees of $100,000 to
Jacobs Management Corporation. Robert J. Sutter, President and CEO, who was an
employee of Jacobs Management Corporation, received no salary from the Company
during fiscal 1994 or 1995, but was compensated by Jacobs Management
Corporation. David A. Mahler, Secretary, who is an employee of Jacobs Management
Corporation, received no salary from the Company during fiscal 1994, 1995, 1996,
or 1997, but was compensated by Jacobs Management Corporation.
STOCK PURCHASE AGREEMENT WITH THOMAS S. GALLOWAY
On March 14, 1994, the Company acquired all of the outstanding stock of
The Printhouse Express, Inc. ("Printhouse") from Thomas S. Galloway, the sole
stockholder, in exchange for 357,087 shares of Common Stock of the Company. Mr.
Galloway subsequently resold certain shares to the Company, and transferred all
his remaining shares to his wife, Dorothy Galloway. See also description under
the proposal being presented at the First Special Meeting and "Security
Ownership of Certain Beneficial Owners and Management."
The acquisition agreement provided that Mr. Galloway serve as Vice
President and a Director of the Company and Executive Vice President of
Insty-Prints, Inc. for a period of three years ending March 14, 1997, at a
salary of $100,000 per year plus all other customary fringe benefits provided to
Insty-Prints, Inc. employees. Mr. Galloway agreed not to compete with
Insty-Prints, Inc. within the United States for a period of five years after the
acquisition or two years after the termination of his employment with
Insty-Prints, Inc.
SHAREHOLDER PROPOSALS
A proposal of a Shareholder of the Company intended to be presented at the
Annual Meeting of Shareholders for fiscal 1998 must be received at the Company's
office on or before October 24, 1997 in order to be considered for inclusion in
the Company's Proxy Statement and form of proxy relating to that Annual Meeting.
OTHER MATTERS
There are no other matters to be presented at either Special Meeting
other than the respective proposal described in the Notice of First Special
Meeting of Shareholders and the Notice of Second Special Meeting of
Shareholders. Minnesota Statutes and the Company's by-laws require advance
notice of matters to be brought before a special meeting.
To the extent that information contained in the Proxy Statement is
peculiarly within the knowledge of persons other than the management of the
Company, it has relied on such persons for the accuracy and completeness
thereof.
APPENDIX A
MINN. STAT. SS.302A.671. CONTROL SHARE ACQUISITION
SUBDIVISION 1. APPLICATION. (a) Unless otherwise expressly provided in
the articles or in bylaws approved by the shareholders of an issuing public
corporation, this section applies to a control share acquisition.
(b) The shares of an issuing public corporation acquired by an
acquiring person in a control share acquisition that exceed the threshold of
voting power of any of the ranges specified in subdivision 2, paragraph (d),
shall have only the voting rights as shall be accorded to them pursuant to
subdivision 4a.
SUBD. 2. INFORMATION STATEMENT. An acquiring person shall deliver to
the issuing public corporation at its principal executive office an information
statement containing all of the following:
(a) the identity and background of the acquiring person, including the
identity and background of each member of any partnership, limited partnership,
syndicate, or other group constituting the acquiring person, and the identity
and background of each affiliate and associate of the acquiring person,
including the identity and background of each affiliate and associate of each
member of such partnership, syndicate, or other group; provided, however, that
with respect to a limited partnership, the information need only be given with
respect to a partner who is denominated or functions as a general partner and
each affiliate and associate of the general partner;
(b) a reference that the information statement is made under this
section;
(c) the number and class or series of shares of the issuing public
corporation beneficially owned, directly or indirectly, before the control share
acquisition by each of the persons identified pursuant to paragraph (a);
(d) the number and class or series of shares of the issuing public
corporation acquired or proposed to be acquired pursuant to the control share
acquisition by each of the persons identified pursuant to paragraph (a) and
specification of which of the following ranges of voting power in the election
of directors that, except for this section, resulted or would result from
consummation of the control share acquisition:
(1) at least 20 percent but less than 33-1/3 percent;
(2) at least 33-1/3 percent but less than or equal to 50 percent;
(3) over 50 percent; and
(e) the terms of the control share acquisition or proposed control
share acquisition, including, but not limited to, the source of funds or other
consideration and the material terms of the financial arrangements for the
control share acquisition; plans or proposals of the acquiring person (including
plans or proposals under consideration) to (1) liquidate or dissolve the issuing
public corporation, (2) sell all or a substantial part of its assets, or merge
it or exchange its shares with any other person, (3) change the location of its
principal place of business or its principal executive office or a material
portion of its business activities, (4) change materially its management or
policies of employment, (5) change materially its charitable or community
contributions or its policies, programs, or practices relating thereto, (6)
change materially its relationship with suppliers or customers or the
communities in which it operates, or (7) make any other material change in its
business, corporate structure, management or personnel; and other objective
facts as would be substantially likely to affect the decision of a shareholder
with respect to voting on the control share acquisition.
If any material change occurs in the facts set forth in the information
statement, including but not limited to any material increase or decrease in the
number of shares of the issuing public corporation acquired or proposed to be
acquired by the persons identified pursuant to paragraph (a), the acquiring
person shall promptly deliver to the issuing public corporation at its principal
executive office an amendment to the information statement containing
information relating to the material change. An increase or decrease or proposed
increase or decrease equal, in the aggregate for all persons identified pursuant
to paragraph (a), to one percent or more of the total number of outstanding
shares of any class or series of the issuing public corporation shall be deemed
"material" for purposes of this paragraph; an increase or decrease or proposed
increase or decrease of less than this amount may be material, depending upon
the facts and circumstances.
SUBD. 3. MEETING OF SHAREHOLDERS. If the acquiring person so requests
in writing at the time of delivery of an information statement pursuant to
subdivision 2, and has made, or has made a bona fide written offer to make, a
control share acquisition and gives a written undertaking to pay or reimburse
the issuing public corporation's expenses of a special meeting, except the
expenses of the issuing public corporation in opposing according voting rights
with respect to shares acquired or to be acquired in the control share
acquisition, within ten days after receipt by the issuing public corporation of
the information statement, a special meeting of the shareholders of the issuing
public corporation shall be called pursuant to section 302A.433, subdivision 1,
for the sole purpose of considering the voting rights to be accorded to shares
referred to in subdivision 1, paragraph (b), acquired or to be acquired pursuant
to the control share acquisition. The special meeting shall be held no later
than 55 days after receipt of the information statement and written undertaking
to pay or reimburse the issuing public corporation's expenses of the special
meeting, unless the acquiring person agrees to a later date. If the acquiring
person so requests in writing at the time of delivery of the information
statement, (1) the special meeting shall not be held sooner than 30 days after
receipt by the issuing public corporation of the information statement and (2)
the record date for the meeting must be at least 30 days prior to the date of
the meeting. If no request for a special meeting is made, consideration of the
voting rights to be accorded to shares referred to in subdivision 1, paragraph
(b), acquired or to be acquired pursuant to the control share acquisition shall
be presented at the next special or annual meeting of the shareholders, unless
prior thereto the matter of the voting rights becomes moot. The notice of the
meeting shall at a minimum be accompanied by a copy of the information statement
(and a copy of any amendment to the information statement previously delivered
to the issuing public corporation) and a statement disclosing that the board of
the issuing public corporation recommends approval of, expresses no opinion and
is remaining neutral toward, recommends rejection of, or is unable to take a
position with respect to according voting rights to shares referred to in
subdivision 1, paragraph (b), acquired or to be acquired in the control share
acquisition. The notice of meeting shall be given at least ten days prior to the
meeting. Any amendments to the information statement received after mailing of
the notice of the meeting must be mailed promptly to the shareholders by the
issuing public corporation.
SUBD. 4. FINANCING. Notwithstanding anything to the contrary contained
in this chapter, no call of a special meeting of the shareholders of the issuing
public corporation shall be made pursuant to subdivision 3 and no consideration
of the voting rights to be accorded to shares referred to in subdivision 1,
paragraph (b), acquired or to be acquired pursuant to a control share
acquisition shall be presented at any special or annual meeting of the
shareholders of the issuing public corporation unless at the time of delivery of
the information statement pursuant to subdivision 2, the acquiring person shall
have entered into, and shall deliver to the issuing public corporation a copy or
copies of, a definitive financing agreement or definitive financing agreements,
with one or more responsible financial institutions or other entities having the
necessary financial capacity, for any financing of the control share acquisition
not to be provided by funds of the acquiring person. A financing agreement is
not deemed not definitive for purposes of this subdivision solely because it
contains conditions or contingencies customarily contained in term loan
agreements with financial institutions.
SUBD. 4a. VOTING RIGHTS. (a) Shares referred to in subdivision 1,
paragraph (b), acquired in a control share acquisition shall have the same
voting rights as other shares of the same class or series only if approved by
resolution of shareholders of the issuing public corporation at a special or
annual meeting of shareholders pursuant to subdivision 3.
(b) The resolution of shareholders must be approved by (1) the
affirmative vote of the holders of a majority of the voting power of all shares
entitled to vote including all shares held by the acquiring person, and (2) the
affirmative vote of the holders of a majority of the voting power of all shares
entitled to vote excluding all interested shares. A class or series of shares of
the issuing public corporation is entitled to vote separately as a class or
series if any provision of the control share acquisition would, if contained in
a proposed amendment to the articles, entitle the class or series to vote
separately as a class or series.
(c) To have the voting rights accorded by approval of a resolution of
shareholders, any proposed control share acquisition not consummated prior to
the time of the shareholder approval must be consummated within 180 days after
the shareholder approval.
(d) Any shares referred to in subdivision 1, paragraph (b), acquired in
a control share acquisition that do not have voting rights accorded to them by
approval of a resolution of shareholders shall regain their voting rights upon
transfer to a person other than the acquiring person or any affiliate or
associate of the acquiring person unless the acquisition of the shares by the
other person constitutes a control share acquisition, in which case the voting
rights of the shares are subject to the provisions of this section.
SUBD. 5. RIGHTS OF ACTION. An acquiring person, an issuing public
corporation, and shareholders of an issuing public corporation may sue at law or
in equity to enforce the provisions of this section and section 302A.449,
subdivision 7.
SUBD. 6. REDEMPTION. Unless otherwise expressly provided in the
articles or in bylaws approved by the shareholders of an issuing public
corporation, the issuing public corporation shall have the option to call for
redemption all but not less than all shares referred to in subdivision 1,
paragraph (b), acquired in a control share acquisition, at a redemption price
equal to the market value of the shares at the time the call for redemption is
given, in the event (1) an information statement has not been delivered to the
issuing public corporation by the acquiring person by the tenth day after the
control share acquisition, or (2) an information statement has been delivered
but the shareholders have voted not to accord voting rights to such shares
pursuant to subdivision 4a, paragraph (b). The call for redemption shall be
given by the issuing public corporation within 30 days after the event giving
the issuing public corporation the option to call the shares for redemption and
the shares shall be redeemed within 60 days after the call is given.
MINN. STAT. SS.302A.673. BUSINESS COMBINATIONS.
SUBDIVISION 1. BUSINESS COMBINATION WITH INTERESTED SHAREHOLDER;
APPROVAL BY DIRECTORS. (a) Notwithstanding anything to the contrary contained in
this chapter (except the provisions of subdivision 3), an issuing public
corporation may not engage in any business combination, or vote, consent, or
otherwise act to authorize a subsidiary of the issuing public corporation to
engage in any business combination, with, with respect to, proposed by or on
behalf of, or pursuant to any written or oral agreement, arrangement,
relationship, understanding, or otherwise with, any interested shareholder of
the issuing public corporation or any affiliate or associate of the interested
shareholder for a period of four years following the interested shareholder's
share acquisition date unless the business combination or the acquisition of
shares made by the interested shareholder on the interested shareholder's share
acquisition date is approved before the interested shareholder's share
acquisition date, or on the share acquisition date but prior to the interested
shareholder's becoming an interested shareholder on the share acquisition date,
by a committee of the board of the issuing public corporation formed in
accordance with paragraph (d).
(b) If a good faith definitive proposal regarding a business
combination is made in writing to the board of the issuing public corporation, a
committee of the board formed in accordance with paragraph (d) shall consider
and take action on the proposal and respond in writing within 30 days after
receipt of the proposal by the issuing public corporation, setting forth its
decision regarding the proposal.
(c) If a good faith definitive proposal to acquire shares is made in
writing to the board of the issuing public corporation, a committee of the board
formed in accordance with paragraph (d), shall consider and take action on the
proposal and respond in writing within 30 days after receipt of the proposal by
the issuing public corporation, setting forth its decision regarding the
proposal.
(d)(1) When a business combination or acquisition of shares is proposed
pursuant to this subdivision, the board shall promptly form a committee composed
of all of the board's disinterested directors. The committee shall take action
on the proposal by the affirmative vote of a majority of committee members. No
larger proportion or number of votes shall be required. Notwithstanding the
provisions of section 302A.241, subdivision 1, the committee shall not be
subject to any direction or control by the board with respect to the committee's
consideration of, or any action concerning, a business combination or
acquisition of shares pursuant to this section.
(2) A committee formed pursuant to this subdivision shall be composed
of one or more members. Only disinterested directors may be members of a
committee formed pursuant to this subdivision. However, if the board has no
disinterested directors, the board shall select three or more disinterested
persons to be committee members. Committee members are deemed to be directors
for purposes of sections 302A.251, 302A.255, and 302A.521.
(3) For purposes of this subdivision, a director or person is
"disinterested" if the director or person is neither an officer nor an employee,
nor has been an officer or employee within five years preceding the formation of
the committee pursuant to this section, of the issuing public corporation, or of
a related organization.
Subd. 2. Repealed by Laws 1988, c. 692, ss.19.
SUBD. 3. APPLICATION. (a) Unless by express provision electing to be
subject to this section contained in the articles or in bylaws approved by the
shareholders of an issuing public corporation, this section does not apply to
any business combination of an issuing public corporation, that is not, at any
time during the period from June 1, 1987, until adoption of the article or bylaw
provision, a publicly held corporation.
(b) Except as provided in paragraph (c), this section does not apply to
any business combination of an issuing public corporation:
(1) if, prior to the time the issuing public corporation becomes a
publicly held corporation or becomes subject to this section by virtue of an
election under paragraph (a), including any time prior to the time that the
corporation becomes an issuing public corporation, articles or bylaws of the
corporation contain a provision expressly electing not to be subject to this
section;
(2) if the board of the issuing public corporation adopts, prior
to September 1, 1987, an amendment to the issuing public corporation's bylaws
expressly electing not to be subject to this section;
(3) if an amendment to the articles or bylaws of the issuing
public corporation is approved by the shareholders, other than interested
shareholders and their affiliates and associates, holding a majority of the
outstanding voting power of all shares entitled to vote, excluding the shares of
interested shareholders and their affiliates and associates, expressly electing
not to be subject to this section and the amendment provides that it is not to
be effective until 18 months after the vote of shareholders and provides that,
except as provided in paragraph (c), it does not apply to any business
combination of the issuing public corporation with an interested shareholder
whose share acquisition date is on or before the effective date of the
amendment; or
(4) if the business combination was consummated before, or if a
binding agreement for the business combination was entered into before, the day
following June 1, 1987.
(c) This section does not apply to any business combination of an
issuing public corporation with, with respect to, proposed by or on behalf of,
or pursuant to any written or oral agreement, arrangement, relationship,
understanding, or otherwise with:
(1) any person that would have been an interested shareholder on
June 1, 1987, had this section been in effect on this date and had the issuing
public corporation been an issuing public corporation on this date;
(2) any interested shareholder whose share acquisition date is
either before the effective date of the article or bylaw provision by which an
issuing public corporation that was not subject to this section immediately
prior to the election to be subject to this section, or on the effective date,
but prior to the effective time of the article or bylaw provision; or
(3) in the case of a corporation that was not subject to this
section immediately prior to becoming a publicly held corporation, any
interested shareholder whose share acquisition date is either before the date on
which the corporation becomes a publicly held corporation or on that date, but
prior to the time the corporation becomes a publicly held corporation, and to
whom the application of this section is expressly excluded by an amendment to
the articles or bylaws of the corporation approved by the shareholders before
the corporation becomes a publicly held corporation.
This section applies to any business combination of an issuing public
corporation to which it previously did not apply because of provisions in
articles or bylaws adopted or approved under paragraph (b), clause (1), (2), or
(3), upon an amendment to the articles or bylaws approved by shareholders
holding a majority of the outstanding voting power of all shares entitled to
vote expressly electing to be subject to this section becoming effective. Also,
this section does not apply to any business combination of the corporation with,
with respect to, proposed by or on behalf of, or pursuant to any written or oral
agreement, arrangement, relationship, understanding, or otherwise with any
person that would have been an interested shareholder at the effective time of
the amendment if this section had been applicable.
MINN. STAT. SS.302A.011. DEFINITIONS.
SUBD. 37. ACQUIRING PERSON. "Acquiring person" means a person that
makes or proposes to make a control share acquisition. When two or more persons
act as a partnership, limited partnership, syndicate, or other group pursuant to
any written or oral agreement, arrangement, relationship, understanding, or
otherwise for the purposes of acquiring, owning, or voting shares of an issuing
public corporation, all members of the partnership, syndicate, or other group
constitute a "person."
"Acquiring person" does not include (a) a licensed broker/dealer or
licensed underwriter who (1) purchases shares of an issuing public corporation
solely for purposes of resale to the public and (2) is not acting in concert
with an acquiring person, or (b) a person who becomes entitled to exercise or
direct the exercise of a new range of voting power within any of the ranges
specified in section 302A.671, subdivision 2, paragraph (d), solely as a result
of a repurchase of shares by, or recapitalization of, the issuing public
corporation or similar action unless (1) the repurchase, recapitalization, or
similar action was proposed by or on behalf of, or pursuant to any written or
oral agreement, arrangement, relationship, understanding, or otherwise with, the
person or any affiliate or associate of the person or (2) the person thereafter
acquires beneficial ownership, directly or indirectly, of outstanding shares
entitled to vote of the issuing public corporation and, immediately after the
acquisition, is entitled to exercise or direct the exercise of the same or a
higher range of voting power under section 302A.671, subdivision 2, paragraph
(d), as the person became entitled to exercise as a result of the repurchase,
recapitalization, or similar action.
SUBD. 38. CONTROL SHARE ACQUISITION. "Control share acquisition" means
an acquisition, directly or indirectly, by an acquiring person of beneficial
ownership of shares of an issuing public corporation that, except for section
302A.671, would, when added to all other shares of the issuing public
corporation beneficially owned by the acquiring person, entitle the acquiring
person, immediately after the acquisition, to exercise or direct the exercise of
a new range of voting power within any of the ranges specified in section
302A.671, subdivision 2, paragraph (d), but does not include any of the
following:
(a) an acquisition before, or pursuant to an agreement entered into
before, August 1, 1984;
(b) an acquisition by a donee pursuant to an inter vivos gift not made
to avoid section 302A.671 or by a distributee as defined in section 524.1-201,
clause (10);
(c) an acquisition pursuant to a security agreement not created to
avoid section 302A.671;
(d) an acquisition under sections 302A.601 to 302A.661, if the issuing
public corporation is a party to the transaction;
(e) an acquisition from the issuing public corporation;
(f) an acquisition for the benefit of others by a person acting in good
faith and not made to avoid section 302A.671, to the extent that the person may
not exercise or direct the exercise of the voting power or disposition of the
shares except upon the instruction of others;
(g) an acquisition pursuant to a savings, employee stock ownership, or
other employee benefit plan of the issuing public corporation or any of its
subsidiaries, or by a fiduciary of the plan acting in a fiduciary capacity
pursuant to the plan; or
(h) an acquisition subsequent to January 1, 1991, pursuant to an offer
to purchase for cash pursuant to a tender offer all shares of the voting stock
of the issuing public corporation:
(i) which has been approved by a majority vote of the members of a
committee comprised of the disinterested members of the board of the issuing
public corporation formed pursuant to section 302A.673, subdivision 1, paragraph
(d), before the commencement of, or the public announcement of the intent to
commence, the tender offer; and
(ii) pursuant to which the acquiring person will become the owner
of over 50 percent of the voting stock of the issuing public corporation
outstanding at the time of the transaction.
For purposes of this subdivision, shares beneficially owned by a plan
described in clause (g), or by a fiduciary of a plan described in clause (g)
pursuant to the plan, are not deemed to be beneficially owned by a person who is
a fiduciary of the plan. All shares the beneficial ownership of which is
acquired within a 120-day period, and all shares the beneficial ownership of
which is acquired pursuant to a plan to make a control share acquisition, shall
be deemed to have been acquired in the same acquisition.
SUBD. 39. ISSUING PUBLIC CORPORATION. "Issuing public corporation"
means a corporation which has at least 50 shareholders.
SUBD. 40. PUBLICLY HELD CORPORATION. "Publicly held corporation" means
a corporation that has a class of equity securities registered pursuant to
section 12, or is subject to section 15(d), of the Securities Exchange Act of
1934.
SUBD. 41. BENEFICIAL OWNER; BENEFICIAL OWNERSHIP. (a) "Beneficial
owner," when used with respect to shares or other securities, includes, but is
not limited to, any person who, directly or indirectly through any written or
oral agreement, arrangement, relationship, understanding, or otherwise, has or
shares the power to vote, or direct the voting of, the shares or securities or
has or shares the power to dispose of, or direct the disposition of, the shares
or securities, except that:
(1) a person shall not be deemed the beneficial owner of shares or
securities tendered pursuant to a tender or exchange offer made by the person or
any of the person's affiliates or associates until the tendered shares or
securities are accepted for purchase or exchange; and
(2) a person shall not be deemed the beneficial owner of shares or
securities with respect to which the person has the power to vote or direct the
voting arising solely from a revocable proxy given in response to a proxy
solicitation required to be made and made in accordance with the applicable
rules and regulations under the Securities Exchange Act of 1934 and is not then
reportable under that act on a Schedule 13D or comparable report, or, if the
corporation is not subject to the rules and regulations under the Securities
Exchange Act of 1934, would have been required to be made and would not have
been reportable if the corporation had been subject to the rules and
regulations.
(b) "Beneficial ownership" includes, but is not limited to, the right
to acquire shares or securities through the exercise of options, warrants, or
rights, or the conversion of convertible securities, or otherwise. The shares or
securities subject to the options, warrants, rights, or conversion privileges
held by a person shall be deemed to be outstanding for the purpose of computing
the percentage of outstanding shares or securities of the class or series owned
by the person, but shall not be deemed to be outstanding for the purpose of
computing the percentage of the class or series owned by any other person. A
person shall be deemed the beneficial owner of shares and securities
beneficially owned by any relative or spouse of the person or any relative of
the spouse, residing in the home of the person, any trust or estate in which the
person owns ten percent or more of the total beneficial interest or serves as
trustee or executor or in a similar fiduciary capacity, any corporation or
entity in which the person owns ten percent or more of the equity, and any
affiliate of the person.
(c) When two or more persons act or agree to act as a partnership,
limited partnership, syndicate, or other group for the purposes of acquiring,
owning, or voting shares or other securities of a corporation, all members of
the partnership, syndicate, or other group are deemed to constitute a "person"
and to have acquired beneficial ownership, as of the date they first so act or
agree to act together, of all shares or securities of the corporation
beneficially owned by the person.
SUBD. 42. INTERESTED SHARES. "Interested shares" means the shares of an
issuing public corporation beneficially owned by any of the following persons:
(1) the acquiring person, (2) any officer of the issuing public corporation, or
(3) any employee of the issuing public corporation who is also a director of the
issuing public corporation.
SUBD. 43. AFFILIATE. "Affiliate" means a person that directly or
indirectly controls, is controlled by, or is under common control with, a
specified person.
SUBD. 46. BUSINESS COMBINATION. "Business combination," when used in
reference to any issuing public corporation and any interested shareholder of
the issuing public corporation, means any of the following:
(a) any merger of the issuing public corporation or any subsidiary of
the issuing public corporation with (1) the interested shareholder or (2) any
other domestic or foreign corporation (whether or not itself an interested
shareholder of the issuing public corporation) that is, or after the merger
would be, an affiliate or associate of the interested shareholder, but excluding
(1) the merger of a wholly-owned subsidiary of the issuing public corporation
into the issuing public corporation, (2) the merger of two or more wholly-owned
subsidiaries of the issuing public corporation, or (3) the merger of a
corporation, other than an interested shareholder or an affiliate or associate
of an interested shareholder, with a wholly-owned subsidiary of the issuing
public corporation pursuant to which the surviving corporation, immediately
after the merger, becomes a wholly-owned subsidiary of the issuing public
corporation;
(b) any exchange, pursuant to a plan of exchange under section
302A.601, subdivision 2, or a comparable statute of any other state or
jurisdiction, of shares or other securities of the issuing public corporation or
any subsidiary of the issuing corporation or money, or other property for
shares, other securities, money, or property of (1) the interested shareholder
or (2) any other domestic or foreign corporation (whether or not itself an
interested shareholder of the issuing public corporation) that is, or after the
exchange would be, an affiliate or associate of the interested shareholder, but
excluding the exchange of shares of a corporation, other than an interested
shareholder or an affiliate or associate of an interested shareholder, pursuant
to which the corporation, immediately after the exchange, becomes a wholly-owned
subsidiary of the issuing public corporation;
(c) any sale, lease, exchange, mortgage, pledge, transfer, or other
disposition (in a single transaction or a series of transactions), other than
sales of goods or services in the ordinary course of business or redemptions
pursuant to section 302A.671, subdivision 6, to or with the interested
shareholder or any affiliate or associate of the interested shareholder, other
than to or with the issuing public corporation or a wholly-owned subsidiary of
the issuing public corporation, of assets of the issuing public corporation or
any subsidiary of the issuing public corporation (1) having an aggregate market
value equal to ten percent or more of the aggregate market value of all the
assets, determined on a consolidated basis, of the issuing public corporation,
(2) having an aggregate market value equal to ten percent or more of the
aggregate market value of all the outstanding shares of the issuing public
corporation, or (3) representing ten percent or more of the earning power or net
income, determined on a consolidated basis, of the issuing public corporation
except a cash dividend or distribution paid or made pro rata to all shareholders
of the issuing public corporation;
(d) the issuance or transfer by the issuing public corporation or any
subsidiary of the issuing public corporation (in a single transaction or a
series of transactions) of any shares of the issuing public corporation or any
subsidiary of the issuing public corporation that have an aggregate market value
equal to five percent or more of the aggregate market value of all the
outstanding shares of the issuing public corporation to the interested
shareholder or any affiliate or associate of the interested shareholder, except
pursuant to the exercise of warrants or rights to purchase shares offered, or a
dividend or distribution paid or made, pro rata to all shareholders of the
issuing public corporation other than for the purpose, directly or indirectly,
of facilitating or effecting a subsequent transaction that would have been a
business combination if the dividend or distribution had not been made;
(e) the adoption of any plan or proposal for the liquidation or
dissolution of the issuing public corporation, or any reincorporation of the
issuing public corporation in another state or jurisdiction, proposed by or on
behalf of, or pursuant to any written or oral agreement, arrangement,
relationship, understanding, or otherwise with, the interested shareholder or
any affiliate or associate of the interested shareholder;
(f) any reclassification of securities (including without limitation
any share dividend or split, reverse share split, or other distribution of
shares in respect of shares), recapitalization of the issuing public
corporation, merger of the issuing public corporation with any subsidiary of the
issuing public corporation, exchange of shares of the issuing public corporation
with any subsidiary of the issuing public corporation, or other transaction
(whether or not with or into or otherwise involving the interested shareholder),
proposed by or on behalf of, or pursuant to any written or oral agreement,
arrangement, relationship, understanding, or otherwise with, the interested
shareholder or any affiliate or associate of the interested shareholder, that
has the effect, directly or indirectly, of increasing the proportionate share of
the outstanding shares of any class or series of shares entitled to vote, or
securities that are exchangeable for, convertible into, or carry a right to
acquire shares entitled to vote, of the issuing public corporation or any
subsidiary of the issuing public corporation that is, directly or indirectly,
owned by the interested shareholder or any affiliate or associate of the
interested shareholder, except as a result of immaterial changes due to
fractional share adjustments;
(g) any receipt by the interested shareholder or any affiliate or
associate of the interested shareholder of the benefit, directly or indirectly
(except proportionately as a shareholder of the issuing public corporation), of
any loans, advances, guarantees, pledges, or other financial assistance, or any
tax credits or other tax advantages provided by or through the issuing public
corporation or any subsidiary of the issuing public corporation.
SUBD. 48. CONTROL. "Control," including the terms "controlling,"
"controlled by," and "under common control with," means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a person, whether through the ownership of voting securities, by
contract, or otherwise. A person's beneficial ownership of ten percent or more
of the voting power of a corporation's outstanding shares entitled to vote in
the election of directors creates a presumption that the person has control of
the corporation. Notwithstanding the foregoing, a person is not considered to
have control of a corporation if the person holds voting power, in good faith
and not for the purpose of avoiding section 302A.673, as an agent, bank, broker,
nominee, custodian, or trustee for one or more beneficial owners who do not
individually or as a group have control of the corporation.
SUBD. 49. INTERESTED SHAREHOLDER. (a) "Interested shareholder," when
used in reference to any issuing public corporation, means any person that is
(1) the beneficial owner, directly or indirectly, of ten percent or more of the
voting power of the outstanding shares entitled to vote of the issuing public
corporation or (2) an affiliate or associate of the issuing public corporation
and at any time within the four-year period immediately before the date in
question was the beneficial owner, directly or indirectly, of ten percent or
more of the voting power of the then outstanding shares entitled to vote of the
issuing public corporation. Notwithstanding anything stated in this subdivision,
if a person who has not been a beneficial owner of ten percent or more of the
voting power of the outstanding shares entitled to vote of the issuing public
corporation immediately prior to a repurchase of shares by, or recapitalization
of, the issuing public corporation or similar action shall become a beneficial
owner of ten percent or more of the voting power solely as a result of the share
repurchase, recapitalization, or similar action, the person shall not be deemed
to be the beneficial owner of ten percent or more of the voting power for
purposes of clause (1) or (2) unless:
(i) the repurchase, recapitalization, conversion, or similar
action was proposed by or on behalf of, or pursuant to any agreement,
arrangement, relationship, understanding, or otherwise (whether or not in
writing) with, the person or any affiliate or associate of the person; or
(ii) the person thereafter acquires beneficial ownership, directly
or indirectly, of outstanding shares entitled to vote of the issuing public
corporation and, immediately after the acquisition, is the beneficial owner,
directly or indirectly, of ten percent or more of the voting power of the
outstanding shares entitled to vote of the issuing public corporation.
(b) Interested shareholder does not include:
(1) the issuing public corporation or any of its subsidiaries; or
(2) a savings, employee stock ownership, or other employee benefit
plan of the issuing public corporation or its subsidiary, or a fiduciary of the
plan when acting in a fiduciary capacity pursuant to the plan.
For purposes of this subdivision, shares beneficially owned by a plan
described in clause (2), or by a fiduciary of a plan described in clause (2)
pursuant to the plan, are not deemed to be beneficially owned by a person who is
a fiduciary of the plan.
SUBD. 51. SHARE ACQUISITION DATE. "Share acquisition date," with
respect to any person and any issuing public corporation, means the date that
the person first becomes an interested shareholder of the issuing public
corporation; provided, however, that in the event a person becomes, on one or
more dates, an interested shareholder of the issuing public corporation, but
thereafter ceases to be an interested shareholder of the issuing public
corporation, and subsequently again becomes an interested shareholder, "share
acquisition date," with respect to that person means the date on which the
person most recently became an interested shareholder of the issuing public
corporation.
APPENDIX B
INFORMATION STATEMENT PROVIDED TO THE COMPANY
BY MARSHALL FINANCIAL GROUP, INC.
[Letterhead of Marshall Financial Group, Inc.]
July 21, 1997
Board of Directors
IPI, Inc.
15155 Technology Drive
Eden Prairie, MN 55344
Gentlemen:
The following information is provided in accordance with Minnesota
Statute ss.302A.671 with respect to an Option, Security Agreement and Buy-Sell
Agreement ("JII-MFG Agreement") entered into on May 23, 1997, between Jacobs
Industries, Inc. ("JII") and Marshall Financial Group, Inc. ("MFG") and the
potential acquisition thereunder of 1,608,500 shares of the common stock of IPI,
Inc. (34.0%). Thereafter, on May 27, 1997, MFG entered into a separate option
agreement with Dorothy Galloway ("Galloway") ("Galloway Option Agreement") for
an additional 79,272 shares of the common stock of IPI, Inc. (1.7%). The JII-MFG
Agreement also provides MFG with a right in certain circumstances to acquire the
remaining shares held by JII-- an additional 34.0% of IPI, Inc. and gives JII
the right to reacquire the 1,608,500 shares to be purchased by MFG.
a. IDENTITY AND BACKGROUND OF ACQUIRING PERSON:
Marshall Financial Group, Inc., 903 North Third Street, Suite
300, Minneapolis, MN 55401 (612-338-1807) is the proposed
acquirer of the shares of IPI, Inc. Dennis M. Mathisen, 7283
Mission Hills Drive, Las Vegas, Nevada 89113, is the
President, Chief Executive Officer and sole shareholder of
MFG. MFG was formed in 1981 and is a corporation through which
Mr. Mathisen makes investments in other business entities. No
other officer, director or any other person who would be
considered an "affiliate" of MFG directly or indirectly own
any shares of IPI, Inc.
b. RESPONSE TO STATUTORY SECTIONS
This information statement is made under Minn. Stat.
ss.302A.671 Subd. 2.
c. NUMBER AND CLASS OR SERIES OF SHARES OF THE ISSUING PUBLIC
CORPORATION BENEFICIALLY OWNED, DIRECTLY OR INDIRECTLY, BEFORE
THE CONTROL SHARE ACQUISITION.
Prior to the consummation of the proposed transactions, MFG
will not directly own any shares of IPI, Inc. common stock,
this being understood to be the only class of authorized and
outstanding capital stock of IPI, Inc.
Dennis M. Mathisen individually owns 9,000 shares of IPI, Inc.
common stock. Mr. Mathisen acquired these shares in June,
1994.
d. NUMBER AND CLASS OR SERIES OF SHARES OF THE ISSUING PUBLIC
CORPORATION ACQUIRED OR PROPOSED TO BE ACQUIRED PURSUANT TO
THE CONTROL SHARE ACQUISITION AND SPECIFICATION OF THE RANGE
OF VOTING POWER IN THE ELECTION OF DIRECTORS THAT, EXCEPT FOR
SECTION 302A.671, WOULD RESULT FROM THE CONSUMMATION OF THE
CONTROL SHARE ACQUISITION.
Immediately following the exercise of the option with JII
(assuming it is exercised), MFG, together with Mr. Mathisen,
will own directly and indirectly 1,617,500 shares of IPI, Inc.
common stock. Based upon IPI's 4,734,087 shares reported as
outstanding on July 11, 1997 in its Form 10-Q for the quarter
ended May 31, 1997, this would represent 34.2% of the total
issued and outstanding shares of IPI, Inc. This would
constitute voting power in the 33-1/3% to 50% range within the
meaning of Minn. Stat. ss.302A.671, Subd. 2(d). The exercise
of the option with Galloway will add an additional 79,272
shares constituting 1.7% of the total issued and outstanding
shares of IPI, Inc. common stock. The aggregate of the voting
power obtained from consummation of both the JII and Galloway
transactions is in the 33-1/3% to 50% range within the meaning
of Minn. Stat. ss.302A.671, Subd. 2(d).
Paragraph 10 of the JII-MFG Agreement with JII (which is
incorporated by reference in the Galloway Option Agreement)
provides MFG with the potential right to acquire the remaining
1,687,772 shares (35.7%) held by JII in IPI, Inc. (or for JII
to reacquire MFG's 1,687,772 shares (35.7%)). The aggregate of
the voting power obtained from consummation of the buy-sell
transaction, if it occurred, is in the 33-1/3 to 50% range and
the aggregate of the voting power obtained from consummation
of all of the transactions described in the over 50% range
within the meaning of Minn. Stat. ss.302A.671, Subd. 2(d).
e. TERMS OF THE CONTROL SHARE ACQUISITION
MFG has entered into the JII-MFG Agreement which granted MFG
an option to acquire, between January 1, 1998 and January 5,
1998, 1,608,500 shares of IPI, Inc. common stock for a total
purchase price of $6,755,700. Upon the execution of the
JII-MFG Agreement MFG paid JII $804,250. If the option is
ultimately exercised, MFG will pay JII $2,573,600 and will
execute a one year promissory note payable to JII in the
amount of $3,377,850. The note payable to JII will be
collateralized by the shares of IPI, Inc. being acquired by
MFG from JII.
MFG has also entered into the Galloway Option Agreement
granting MFG an option to acquire between January 1, 1998 and
January 5, 1998, 79,272 shares of IPI, Inc. common stock for a
total purchase price of $332,942.40. Upon execution of the
Galloway Option Agreement, MFG paid Galloway $39,636.00. If
the option is ultimately exercised, MFG will pay Galloway
$126,835.20 and will execute a one year promissory note
payable to Galloway in the amount of $166,471.20. The note
payable to Galloway will be collateralized by the shares of
IPI, Inc. being acquired by MFG from Galloway.
Paragraph 10 of the May 23, 1997 JII-MFG Agreement provides
MFG with the potential right to acquire 1,608,500 additional
shares held by JII in IPI, Inc. (referred to herein as the
"buy-sell agreement"). Such buy-sell agreement is incorporated
by reference in the Galloway Option Agreement and provides MFG
with the potential right to acquire 79,272 additional shares
in IPI, Inc. now held by Galloway. The buy-sell agreements may
be exercised at any time after the options are exercised in
January 1998. The buy-sell agreement gives either JII or MFG
the right to initiate the buy-sell procedures to sell all of
its up to 1,687,772 shares to the other party (or to purchase
shares held by the other party) at price to be specified by
the initiating party. The non-initiating party has 90 days to
accept the offer to sell or the offer to buy, at the election
of the non-initiating party, at the price specified by the
initiating party. The closing shall occur within 120 days
following receipt of the offer. Neither party may sell,
transfer, assign or dispose of its shares except pursuant to
the buy-sell agreement. The JII-MFG Agreement terminates upon
written agreement of the parties.
MFG obtained the funds paid to JII and Galloway at the
execution of the option agreements and, if the option is
exercised, will obtain those funds through borrowing from its
sole shareholder, Dennis M. Mathisen. Mr. Mathisen will obtain
the funds necessary to fund the acquisitions through credit
facilities currently available to him and/or from the sale of
other investments.
At the present time MFG does not have any definitive plans or
proposal to:
1. liquidate or dissolve IPI, Inc.,
2. sell all or a substantial part of its assets or merge
it or exchange its shares with any other person,
3. change the location of its principal place of
business or its principal executive office or a
material portion of its business activities,
4. change materially its management or policies of
employment,
5. change materially its charitable or community
contributions or its policies, programs, or practices
relating thereto,
6. change materially its relationship with suppliers or
customers or the communities in which it operates, or
7. make any other material change in its business,
corporate structure, management or personnel.
I am enclosing copies of the JII-MFG Agreement and the Galloway Option
Agreement. I would be pleased to answer any questions you may have concerning
the matters discussed above.
Very truly yours,
/s/ John A. Fischer
John A. Fischer
Executive Vice President
