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Home My WebLink About92-1202 Sig Holdings RESOLUTION AUTHORIZING ACCEPTANCE. OF TENDER OFFER FOR CITY SHARES • .IN SIG HOLDINGS, INC. WHEREAS, the City of Elgin has received certain shares of preferred stock in Sig Holdings, Inc. as a result of the conversion of a mutual insurance company, of which the City of Elgin was a policy holder, to the stock company; and WHEREAS, Sig Holdings, Inc. has offered to purchase said shares, for which there is no established trading market; and WHEREAS, the sale of said shares is in the city's best interest. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN, ILLINOIS, that James Bolerjack, Jr. be and is hereby authorized to accept the offer of Sig Holdings, Inc. dated November 12, 1992, and to execute such documents as may be necessary and appropriate for such purposes . - s/ George VanDeVoorde George VanDeVoorde, Mayor Presented: December 2, 1992 Adopted: December 2, 1992 Vote: Yeas 7 Nays 0 Recorded: Attest: s/ Dolonna Mecum Dolonna Mecum, City Clerk • 4 in Agenda Item No. c ( q) November 23, 1992 TO: Mayor and City Council FROM: Larry L. Rice, City Manager SUBJECT: Sale of Preferred Stock - Sig Holdings, Inc. PURPOSE: To consider the sale of 62,772 shares of preferred stock and 125,544 non-detachable warrants of Sig Holdings, Inc. at $0.30 to $0.40 per share of preferred stock or $18,831.60 to $25,108.80. BACKGROUND: The City had the excess workers compensation insurance on September 28, 1991, with Safety Mutual Casualty Corporation. As a mutual company, policy holders are considered owners and as the mutual corporation became a stock company the City received 59,613 preferred shares and 119,226 shares of eik warrants on November 7 , 1991. An additional 3,159 preferred shares and 6,318 shares of warrants were received on October 15, 1992 as a stock dividend. There is no market for the Sig' s preferred stock nor non-detachable warrants, so the value has not been established. On November 12, 1992, Sig Holdings, Inc. adopted a plan to purchase up to 8,750,000 shares of the Company' s Preferred Stock, $1.00 par value with attached warrants at a price not less than $0.30 nor in excess of $0. 40 per Preferred Share in cash pursuant to the attached offering. The Company is conducting the offer through a procedure commonly referred to as a "Dutch Auction" which allows you to select a price between $0.30 and $0. 40 per share and when they reach the 8,750,000 shares at the lowest price, all at that price and less will receive the same amount per share. This tender offer expires at 5:00 PM on December 18, 1992. FISCAL IMPACT: The City will receive a minimum of $18,831.60 for the 62,772 shares owned if a total of 8,750,000 shares are tendered. This money will be deposited in the Risk Management Fund. RECOMMENDATION: Adopt the resolution to accept this tender offer at the $0.30 rate on your regular council agenda. The staff will respond to -�'�s.„ estions you may have. r A a.,cti . -c- City Manage rib' ::;' .:.1.. SIG Holdings, ../Eto. Inc. November 12, 1992 Dear Shareholder: I am pleased to inform you that the Board of Directors has unanimously adopted a plan to purchase up to 8,750,000 shares of the Company's Preferred Stock, $1.00 par value ("Preferred Shares"), with attached warrants to purchase the Company's Class A Common Stock, $.02 par value ("Warrants"), at a price not less than $.30 nor in excess of 5.40 per Preferred Share with attached Warrants in cash, pursuant to the enclosed Offer to Purchase which, together with the accompanying Letter of Transmittal, constitutes the "Offer." The Company is conducting the Offer through a procedure commonly referred to as a "Dutch Auction" which allows you to select a price, within the range of $.30 and $.40 per Preferred Share with attached Warrants, at which you are willing to sell your Preferred Shares with attached Warrants. The Company intends to select the lowest purchase price within the range that will allow the Company to purchase 8,750,000 Preferred Shares with attached Warrants(or such lesser number of Preferred Shares with attached Warrants as are properly tendered), and the same price will be paid for all Preferred Shares with attached Warrants tendered at or below such price, subject to the terms and conditions of the Offer, including proration among the Preferred Shares with attached Warrants if more than 8,750,000 Preferred Shares with attached Warrants are tendered and conditional tender provisions. (IlkThe Offer has been developed by the Company to provide holders of the Preferred Shares with attached Warrants, for which there is no established trading market, the opportunity to sell all or a portion of their Preferred Shares with attached Warrants (without the usual transaction costs associated with market sales), while retaining a continuing equity interest in the Company if they so desire. In addition, the Company believes the Offer represents an effective use of its current excess cash and cash equivalents. While neither the Company nor its Board of Directors makes any recommendation to you as to whether to tender all or any portion of your Preferred Shares with attached Warrants,or as to the price at which you should tender, you should consider that the Company intends to select the lowest purchase price, not less than 5.30 nor in excess of$.40 per Preferred Share with attached Warrants, that will enable it to purchase 8,750,000 Preferred Shares with attached Warrants(or such lesser number of Preferred Shares with attached Warrants as are properly tendered) pursuant to the Offer. The Offer expires at 5:00 p.m., Eastern time, on Friday, December 18, 1992, unless the Offer is extended by the Company (the"Expiration Date"). In order to properly accept the Offer,shareholders must, prior to the Expiration Date, complete and sign the enclosed green Letter of Transmittal and deliver the Letter of Transmittal pursuant to its instructions, along with the Preferred Stock certificates and the Warrant certificates, to Chemical Bank, the Depositary for the Offer. If you have any questions regarding the Offer, please contact Mark Services Inc., the Information Agent, at (800) 638-4880. Details of the Offer are contained in the enclosed Offer to Purchase and related Letter of Transmittal, which you are urged to review carefully before making any decision as to whether to tender your Preferred Shares with attached Warrants and the price at which you wish to tender. Very truly yours, ..4 rib' tif.141,1 HAROLD F. IL° President and Chief Executive Officer 8151 Clayton Road St. Louis, Missouri 63117 (314)862.4500 Offer by SIG HOLDINGS, INC. To Purchase for Cash Up To 8,750,000 Shares of Its Preferred Stock With Attached Warrants THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M. EASTERN TIME, ON DECEMBER 18, 1992 UNLESS THE OFFER IS EXTENDED SIG Holdings,Inc., a Missouri corporation(the 'Company"), invites the holders of its Preferred Stock, $1.00 par value("Preferred Shares"), with attached warrants to purchase the Company's Class A Common Stock, $.02 par value ("Warrants"), of the Company to tender up to 8,750,000 Preferred Shares with attached Warrants (constituting approximately 22% of the shares currently outstanding)at prices not less than $.30 nor in excess of$.40 per Preferred Share with attached Warrants in cash, specified by holders tendering their Preferred Shares with attached Warrants, subject to the terms and conditions set forth herein and in the related Letter of Transmittal (which together constitute the "Offer"). The Company will determine the single purchase price, not less than $.30 nor in excess of$.40 per Preferred Share with attached Warrants (the "Purchase Price"), that it will pay for Preferred Shares with attached Warrants properly tendered pursuant to the Offer, taking into account the number of Preferred Shares with attached Warrants so tendered and the prices specified by tendering shareholders. The Company will select the lowest Purchase Price sufficient to purchase 8,750,000 Preferred Shares with attached Warrants (or such lesser number of Preferred Shares with attached Warrants as are properly tendered). All Preferred Shares with attached Warrants properly tendered at prices at or below the Purchase Price and not r. withdrawn will be purchased at the Purchase Price, subject to the terms and conditions of the Offer, including the proration and conditional tender provisions. All Preferred Shares with attached Warrants acquired in the Offer will be acquired at the Purchase Price. There is currently no established trading market for the Preferred Shares with attached Warrants. THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF PREFERRED SHARES WITH ATTACHED WARRANTS BEING TENDERED,BUT IS SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 6. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MAKING OF THE OFFER. HOWEVER, NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO ANY SHAREHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING PREFERRED SHARES WITH ATTACHED WARRANTS. EACH SHAREHOLDER MUST MAKE THE DECISION WHETHER TO TENDER PREFERRED SHARES WITH ATTACHED WARRANTS,AND,IF SO,HOW MANY PREFERRED SHARES WTTH ATTACHED WARRANTS AND AT WHAT PRICE TO TENDER. SEE SECTION 3. r • November 12, 1992 IMPORTANT Any shareholder wishing to accept the Offer should complete and sign the enclosed Letter of Transmittal (or a facsimile thereof) in accordance with the instructions in the Letter of Transmittal and deliver it with any required signature guarantee and any other required documents to the Depositary(as hereinafter defined) and deliver the stock certificates for tendered Preferred Shares with attached Warrants to the Depositary as set forth in Section 3. Holders of Preferred Shares with attached Warrants registered in the name of a broker, dealer, commercial bank, trust company or other nominee should contact such person if they desire to tender their Preferred Shares with attached Warrants. TO PROPERLY TENDER PREFERRED SHARES WITH ATTACHED WARRANTS, SHAREHOLDERS MUST COMPLETE THE SECTION OF THE LEL(I R OF TRANSMITTAL RELATING TO THE PRICE AT WHICH THEY ARE TENDERING PREFERRED SHARES WITH ATTACHED WARRANTS. Questions and requests for assistance or for additional copies of the Offer to Purchase and the Letter of Transmittal may be directed to Mark Services Inc. (the "Information Agent")at its address and telephone number set forth on the back cover of this Offer to Purchase. NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE COMPANY AS TO WHETHER SHAREHOLDERS SHOULD TENDER OR REFRAIN FROM TENDERING PREFERRED SHARES WITH ATTACHED WARRANTS PURSUANT TO THE OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY I FORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED frik HEREIN OR IN THE RELATED LETTER OF TRANSMITTAL, IF GIVEN OR MADE, SUCH RECOMMENDATION, INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. t� TABLE OF CONTENTSrjt'� Page INTRODUCTION 1 THE OFFER 2 1. Number of Preferred Shares with Attached Warrants; Proration 2 2. Extension of Offer; Termination; Amendment 4 3. Procedures for Tendering Preferred Shares with Attached Warrants 4 4. Withdrawal Rights 6 5. Purchase of Preferred Shares with Attached Warrants and Payment of Purchase Price 6 6. Certain Conditions of the Offer 7 7. Source and Amount of Funds 8 8. Certain Information Concerning the Company 8 9. Background and Purpose of the Offer; Certain Effects of the Offer 13 10. Transactions and Arrangements Concerning Preferred Shares with Attached Warrants 14 11. Certain Federal Income Tax Consequences 15 12. Fees and Expenses 17 13. Miscellaneous 18 /"k To the Shareholders of [ SIG Holdings, Inc.: INTRODUCTION SIG Holdings,Inc., a Missouri corporation (the 'Company"), invites the holders of its Preferred Stock, $1.00 par value("Preferred Shares"), with attached warrants to purchase the Company's Class A Common Stock, $.02 par value("Warrants"), of the Company, to tender up to 8,750,000 Preferred Shares with attached Warrants (constituting approximately 22% of the Preferred Shares currently outstanding)at prices not less than $.30 nor in excess of $.40 per Preferred Share with attached Warrants in cash, specified by shareholders tendering their Preferred Shares with attached Warrants, subject to the terms and conditions set forth herein and in the related Letter of Transmittal (which together constitute the "Offer"). The Company will determine the single purchase price, not less than $.30 nor in excess of$.40 per Preferred Share with attached Wan-ants (the "Purchase Price"), that it will pay for Preferred Shares with attached Warrants properly tendered pursuant to the Offer, taking into account the number of Preferred Shares with attached Warrants so tendered and the prices specified by tendering shareholders. The Company will select the lowest Purchase Price sufficient to purchase 8,750,000 shares (or such lesser number of Preferred Shares with attached Warrants as are properly tendered). All Preferred Shares with attached Warrants acquired in the Offer will be acquired at the Purchase Price. All Preferred Shares with attached Warrants properly tendered at prices at or below the Purchase Price and not withdrawn will be purchased at the Purchase Price, subject to the terms and conditions of the Offer, including the proration and conditional tender provisions. The Company reserves the right, in its sole discretion, to purchase more than 8,750,000 Preferred Shares with attached Warrants, although it has no current intention to do so. THIS OFFER IS NOT CONDITIONED UPON THE TENDER OF ANY MINIMUM NUMBER OF PREFERRED SHARES WITH ATTACHED WARRANTS BUT IS SUBJECT TO CERTAIN OTHER jook CONDITIONS. SEE SECTION 6. If, before the Expiration Date (as defined in Section 1), more than 8,750,000 Preferred Shares with attached Warrants (or such greater number of Preferred Shares with attached Warrants as the Company may elect to purchase pursuant to the Offer) are properly tendered at or below the Purchase Price and not withdrawn, the Company will buy Preferred Shares with attached Warrants, first, on a pro rata basis from all other shareholders who properly tender Preferred Shares with attached Warrants at or below the Purchase Price and do not make a conditional tender (with appropriate adjustments to avoid purchases of fractional Preferred Shares with attached Warrants)and, second, from shareholders who make a conditional tender, selected by lot if necessary. See Section 1. All Preferred Shares with attached Warrants not purchased pursuant to the Offer, including Preferred Shares with attached Warrants tendered at prices greater than the Purchase Price and not withdrawn and Preferred Shares with attached Warrants not purchased because of proration or conditional tenders,will be returned at the Company's expense to the shareholders who tendered such Preferred Shares with attached Warrants. The Purchase Price will be paid to the tendering shareholder in cash for all Preferred Shares with attached Warrants purchased. Tendering shareholders will not be obligated to pay brokerage commissions, solicitation fees or, subject to Instruction 7 of the Letter of Transmittal, stock transfer taxes on the purchase of Preferred Shares with attached Warrants by the Company. HOWEVER,ANY TENDERING SHAREHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE, SIGN AND RETURN TO THE DEPOSITARY THE SUBSTITUTE FORM W-9 THAT IS INCLUDED IN THE LEI-1 Elt OF TRANSMITTAL MAY BE SUBJECT TO A REQUIRED BACKUP FEDERAL INCOME TAX WITHHOLDING OF 20% OF THE GROSS PROCEEDS PAYABLE TO SUCH SHAREHOLDER OR OTHER PAYEE PURSUANT TO THE OFFER. SEE SECTION 3. The Company will pay all fees and expenses of Chemical Bank (the "Depositary")and Mark Services Inc. (the 'Information Agent') incurred in connection with the Offer. See Section 12. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE irk MAKING OF THE OFFER. HOWEVER,NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO SHAREHOLDERS AS TO WHETHER TO TENDER ALL OR ANY PORTION OF THEIR PREFERRED SHARES WITH ATTACHED WARRANTS, OR AS TO THE PRICE AT WHICH THEY SHOULD TENDER. EACH SHAREHOLDER MUST MAKE THE DECISION WHETHER TO TENDER PREFERRED SHARES WITH ATTACHED WARRANTS AND, IF SO, HOW • MANY PREFERRED SHARES WITH ATTACHED WARRANTS AND AT WHAT PRICE TO TENDER. SHAREHOLDERS SHOULD CONSIDER THAT THE COMPANY INTENDS TO SELECT THE LOWEST PURCHASE PRICE,NOT LESS THAN$.30 NOR IN EXCESS OF$.40 PER PREFERRED SHARE WITH ATTACHED WARRANTS, THAT WILL ENABLE IT TO PURCHASE 8,750,000 PREFERRED SHARES WITH ATTACHED WARRANTS (OR SUCH LESSER NUMBER OF PREFERRED SHARES WITH ATTACHED WARRANTS AS ARE PROPERLY TENDERED) PURSUANT TO THE OFFER. SEE SECTION 3. Since the issuance of the Preferred Shares with attached Warrants, the Company has recognized the need of certain of its shareholders for a source to liquidate all or a portion of their securities holdings in the Company. No public trading market has developed for the Preferred Stock with attached Warrants and the Company can give no assurance that such a market will develop in the future. The Company believes that the Offer is an effective use of its current excess cash and cash equivalents as well as a source of liquidity for those shareholders who wish to sell all or part of their securities holdings in the Company. As of October 15, 1992, the Company had issued and outstanding 40,121,479 Preferred Shares with attached Warrants. There is currently no established trading market for the Preferred Shares with attached Warrants. The Warrants are attached to the Preferred Shares with which they are associated. The tender of any Preferred Shares pursuant to the Offer will include the tender of the attached Warrants. No separate consideration will be paid for such Warrants. Upon the purchase of Preferred Shares with attached Warrants by the Company pursuant to the Offer, the sellers of the Preferred Shares so purchased will no longer own the Warrants associated with such Preferred Shares and will no longer bold any right to exercise the Warrants. See Section 9. THE OFFER 1. Number of Preferred Shares with Attached Warrants; Proration. Upon the terms and subject to the conditions of the Offer, the Company will purchase 8,750,000 Preferred Shares with attached Warrants (approximately 22% of the total Preferred Shares outstanding as of October 15, 1992), or such lesser number of Preferred Shares with attached Warrants as are properly tendered, which are validly tendered (and not withdrawn in accordance with Section 4) prior to the Expiration Date at a price not less than $.30 nor in excess of$.40 per Preferred Share with attached Warrants in cash. The term "Expiration Date" means 5:00 p.m., Eastern Time, on December 18, 1992, unless and until the Company, in its sole discretion, shall have extended the period of time during which the Offer is open, in which event the term "Expiration Date" shall refer to the latest time and date at which time the Offer, as so extended by the Company, shall expire. For a description of the Company's right to extend, delay, terminate or amend the Offer, see Section 2. In the event of an over-subscription of the Offer as described below, Pre rred Sb es th t �Varrantftender o tPurcbase P1iceprior tom Expiration Date will be subjecct`_proration. The proration period also expires on the Expiration Date. THE OFFER IS NOT CONDITIONED UPON THE TENDER OF ANY M.LNIMUM NUMBER OF PREFERRED SHARES WITH ATTACHED WARRANTS, BUT IS SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 6. In accordance with Instruction 5 of the Letter of Transmittal, shareholders desiring to tender Preferred Shares with attached Warrants must specify the price, not less than$.30 nor in excess of$.40 per Preferred Share with attached Warrants, at which they are willing to sell their Preferred Shares with attached Warrants to the Company. As promptly as practicable following the Expiration Date, the Company will, in its sole discretion, determine the Purchase Price that it will pay for Preferred Shares with attached Warrants properly tendered pursuant to the Offer and not withdrawn,taking into account the number of Preferred Shares with attached Warrants tendered and the prices specified by tendering shareholders. The Company intends to select the lowest Purchase Price,not less than $.30 nor in excess of $.40 per Preferred Share with attached Warrants in cash, that will enable it to purchase 8,750,000 Preferred Shares with attached Warrants (or such lesser number of Preferred Shares with attached Warrants as are properly tendered) pursuant to the Offer. Preferred Shares with attached Warrants -2- properly tendered pursuant to the Offer at or below the Purchase Price and not withdrawn will be purchased at the Purchase Price, subject to the terms and conditions of the Offer, including the proration and conditional tender provisions. The Company reserves the right to purchase more than 8,750,000 Preferred Shares with attached Warrants pursuant to the Offer, although it has no current intention to do so. All Preferred Shares with attached Warrants tendered and not purchased pursuant to the Offer, including Preferred Shares with attached Warrants tendered at prices in excess of the Purchase Price and Preferred Shares with attached Warrants not purchased because of proration or conditional tenders,will be returned to the tendering shareholders at the Company's expense as promptly as practicable following the Expiration Date. Priority of Purchases. Subject to the terms and conditions of the Offer, if more than 8,750,000 Preferred Shares with attached Warrants have been properly tendered at or below the Purchase Price and not withdrawn prior to the Expiration Date, the Company will purchase properly tendered Preferred Shares with attached Warrants on the basis set forth below: (a) first, Preferred Shares with attached Warrants tendered unconditionally at or below the Purchase Price and not withdrawn prior to the Expiration Date, on a pro rata basis (with appropriate adjustments to avoid purchases of fractional Preferred Shares with attached Warrants); and (b) second, Preferred Shares with attached Warrants conditionally tendered at or below the Purchase Price and not withdrawn prior to the Expiration Date, selected by lot if necessary. • Conditional Tenders. As discussed in Section 11, the number of Preferred Shares with attached Warrants to be purchased from a particular shareholder might affect the tax consequences to such shareholder of such purchase and such shareholder's decision whether to tender. Accordingly, a shareholder may tender Preferred Shares with attached Warrants subject to the condition that a specified minimum number,if any,must be purchased, and any shareholder desiring to make such a conditional tender should so indicate on the box captioned "Conditional Tender" on the Letter of Transmittal. Any tendering shareholder wishing to make a conditional tender must calculate and appropriately indicate such minimum number of Preferred Shares with attached Warrants. As stated in Section 11, each shareholder is strongly urged to consult with a tax advisor in connection with making any such calculation. If the effect of accepting tenders on a pro rata basis is to reduce the number of Preferred Shares with attached Warrants to be purchased from any shareholder below the minimum number so specified,such tender will automatically be regarded as withdrawn, except as provided in the next paragraph, and all Preferred Shares with attached Warrants tendered by such shareholder will be returned at the Company's expense as soon as practicable thereafter. If so many conditional tenders are deemed to be withdrawn that the total number of Preferred Shares with attached Warrants to be purchased falls below 8,750,000, then to the extent feasible the Company will accept enough of such conditional tenders which would otherwise have been withdrawn to allow the Company to purchase at least 8,750,000 Preferred Shares with attached Warrants. In selecting among such conditional tenders, the Company will select by lot and will limit its purchase in each case to the designated minimum number of Preferred Shares with attached Warrants to be purchased. In the event that proration of tendered Preferred Shares with attached Warrants is required, because of the difficulty in determining the number of Preferred Shares with attached Warrants properly tendered and not withdrawn, and because of the conditional tender procedures, the Company does not expect that it will be able to announce the final proration factor or to commence payment for any Preferred Shares with attached Warrants purchased pursuant to the Offer until approximately ten business days after the Expiration Date. The preliminary results of any proration will be announced by a notice sent by the Company to the shareholders as promptly as practicable after the Expiration Date. Shareholders may obtain such preliminary information from the Information Agent. This Offer to Purchase and the related Letter of Transmittal will be mailed to record holders of Preferred Shares with attached Warrants and will be furnished to brokers, banks and similar persons whose names, or the -3 - • (16.' . names of whose nominees,appear on the Company's shareholder list or,if applicable,who are listed as participants in a clearing agency's security position listing for subsequent transmittal to beneficial owners of Preferred Shares with attached Warrants. As of October 15, 1992, the Company had issued and outstanding 40,121,479 Preferred Shares with attached Warrants and there were approximately 1,111 shareholders of record. 2. Extension of Offer; Termination; Amendment. The Company expressly reserves the right, in its sole discretion, at any time and from time to time, and regardless of whether or not any of the events set forth in Section 6 shall have occurred or been determined by the Company to have occurred, (a) to extend the period of time during which the Offer is open by giving oral or written notice of such extension to the Depositary and making a public announcement thereof no later than 10:00 A.M., Eastern Time, on the next business day after the previously scheduled Expiration Date, (b) to delay payment for any Preferred Shares with attached Warrants, regardless of whether any Preferred Shares with attached Warrants were theretofore accepted for payment, as the Company may deem necessary to consummate the Offer and (c) to amend the Offer in any respect (including, without limitation,by increasing or decreasing the price to be paid for Preferred Shares with attached Warrants or the number of Preferred Shares with attached Warrants being sought in the Offer)by giving oral or written notice of such amendment to the Depositary and, as promptly as practicable thereafter, making a public announcement thereof. If(i)the Company increases or decreases the price to be paid for Preferred Shares with attached Warrants or the number of Preferred Shares with attached Warrants being sought in the Offer and, in the event of an increase in the number of Preferred Shares with attached Warrants being sought, such increase exceeds two percent of the outstanding Preferred Shares with attached Warrants and(ii)the Offer is scheduled to expire at any time earlier than the expiration of a period ending on the tenth business day from, and including, the date that such notice of an increase or decrease is first published, sent or given in the manner specified in this Section 2, the Offer will be too extended until the expiration of such period of ten business days. For purposes of the Offer, a "business day" means any day other than a Saturday, Sunday or federal holiday and consists of the time period from 12:01 A.M. through 12:00 Midnight, Eastern Time. The Company also expressly reserves the right, in its sole and absolute discretion, to terminate the Offer and not to accept for payment or pay for Preferred Shares with attached Warrants upon the occurrence of any of the conditions specified in Section 6 by giving oral or written notice of such termination to the Depositary and, as promptly as practicable thereafter, making a public announcement thereof. Without limiting the manner in which the Company may choose to make a public announcement, the Company shall have no obligation to publish, advertise or otherwise communicate any such public announcement other than as required by applicable law (including Rule 13e-4(e) under the Securities Exchange Act of 1934, as amended (the 'Exchange Act")). The rights reserved by the Company in this paragraph are in addition to the Company's rights under Section 6. Payment for Preferred Shares with attached Warrants accepted for payment pursuant to the Offer may be delayed in the event of proration due to the difficulty of determining the number of properly tendered Preferred Shares with attached Warrants. See Sections 1 and 4. 3. Procedures for Tendering Preferred Shares with Attached Warrants. Proper Tender of Preferred Shares With Attached Warrants. For shares to be tendered properly pursuant to the Offer, the certificates for such Preferred Shares with attached Warrants, together with a properly completed and duly executed Letter of Transmittal (or manually signed facsimile thereof) with any required signature guarantees and any other documents required by the Letter of Transmittal, must be received prior to 5:00 p.m., Eastern time, on the Expiration Date by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase. IN ACCORDANCE WITH INSTRUCTION S OF THE LETTER OF TRANSMITTAL, SHAREHOLDERS DESIRING TO TENDER PREFERRED SHARES WITH ATTACHED WARRANTS PURSUANT TO THE OFFER MUST PROPERLY INDICATE IN THE SECTION CAPTIONED "PRICE PER SHARE AT WHICH PREFERRED SHARES WITH ATTACHED WARRANTS ARE BEING TENDERED" ON THE LETTER OF TRANSMITTAL THE PRICE(IN INCREMENTS OF 5.01)AT WHICH THEIR PREFERRED SHARES WITH ATTACHED WARRANTS ARE BEING TENDERED. Shareholders who desire to tender Preferred Shares with attached Warrants at more than one price must complete a separate Letter of Transmittal for each price at which Preferred Shares with attached Warrants are tendered, provided that the same Preferred Shares with attached Warrants cannot be tendered (unless properly withdrawn previously in accordance with the terms of -4- the Offer) at more than one price. IN ORDER TO PROPERLY TENDER PREFERRED SHARES WITH irk ATTACHED WARRANTS, ONE AND ONLY ONE PRICE BOX MUST BE CHECKED IN THE APPROPRIATE SECTION ON EACH LETTER OF TRANSMITTAL. Shareholders desiring to make a conditional tender of their Preferred Shares with attached Warrants must complete the box captioned 'Conditional Tender" on the Letter of Transmittal. Signature Guarantees Method of Delivery. No signature guarantee is required if the Letter of Transmittal is signed by the registered holder of the Preferred Shares with attached Warrants tendered therewith and payment is to be made directly to such registered holder, or if Preferred Shares with attached Warrants are tendered for the account of a member firm of a registered national securities exchange, a member of the National Association of Securities Dealers, Inc., a commercial bank or trust company or other "eligible guarantor institution"as that term is defined in Rule 17Ad-15 promulgated by the Securities and Exchange Commission (the "Commission") under the Exchange Act (each such entity being hereinafter referred to as an "Eligible Institution"). In all other cases, all signatures on the Letter of Transmittal must be guaranteed by an Eligible Institution. See Instruction 1 of the Letter of Transmittal. If a certificate for Preferred shares is registered in the name of a person other than the person executing a Letter of Transmittal, or if payment is to be made, or Preferred Shares with attached Warrants not purchased or tendered are to be issued, to a person other than the registered owner, then the certificate must be endorsed or accompanied by an appropriate stock power, in either case, signed exactly as the name of the registered owner appears on the certificate, with the signature on the certificate or stock power guaranteed by an Eligible Institution. In all cases, payment for shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of certificates for such Preferred Shares with attached Warrants, a properly completed and duly executed Letter of Transmittal (or manually signed facsimile thereof) and any other documents required by the Letter of Transmittal. The method of delivery of all documents, including certificates for Preferred Shares with attached Warrants, is at the election and risk of the tendering shareholder. If delivery is by mail, then elk registered mail with return receipt requested, properly insured, is recommended. Backup Federal Income Tax Withholding. TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING ON PAYMENTS MADE TO SHAREHOLDERS FOR PREFERRED SHARES WITH ATTACHED WARRANTS PURCHASED PURSUANT TO THE OFFER,EACH SHAREHOLDER WHO DOES NOT OTHERWISE ESTABLISH AN EXEMPTION FROM SUCH WITHHOLDING MUST PROVIDE THE DEPOSITARY WITH THE SHAREHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER AND PROVIDE CERTAIN OTHER INFORMATION BY COMPLETING THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL. See Instruction 12 of the Letter of Transmittal; for a discussion of certain federal income tax consequences to tendering shareholders, see Section 11. • Tendering Shareholder's Representation and Warranty;Company's Acceptance Constitutes an Agreement. A tender of Preferred Shares with attached Warrants pursuant to any of the procedures described above will constitute the tendering shareholder's acceptance of the terms and conditions of the Offer, as well as the tendering shareholder's representation and warranty to the Company that (a) such shareholder has a net long position in the Preferred Shares with attached Warrants being tendered within the meaning of Rule 14e-4 promulgated by the Commission under the Exchange Act and (b) the tender of such Preferred Shares with attached Warrants complies with Rule 14e-4. It is a violation of Rule 14e-4 for a person, directly or indirectly,to tender Preferred Shares with attached Warrants for such person's own account unless,at the time of tender and at the end of the proration period, the person so tendering(i)has a net long position equal to or greater than the amount of(x)Preferred Shares with attached Warrants tendered or(y)other securities convertible into or exchangeable or exercisable for the Preferred Shares with attached Warrants tendered and will acquire such Preferred Shares with attached Warrants for tender by conversion,exchange or exercise and(ii)will cause such Preferred Shares with attached Warrants to be delivered in accordance with the terms of the Offer. Rule 14e-4 provides a similar restriction applicable to the tender or guarantee of a tender on behalf of another person. The Company's acceptance for payment of Preferred Shares with attached Warrants tendered pursuant to the Offer will constitute a binding agreement between the tendering shareholder and the Company upon the terms and conditions of the Offer. -5- Determination of Validity;Rejection of Prefened Shares with Attached Warrants; Waiver of Defects; No Obligation to Give Notice of Defects. All questions as to the number of Preferred Shares with attached Warrants to be accepted, the price to be paid for Preferred Shares with attached Warrants to be accepted and the validity, form,eligibility(including time of receipt)and acceptance of any tender of Preferred Shares with attached Warrants will be determined by the Company, in its sole discretion, and its determination shall be final and binding. The Company reserves the absolute right to reject any or all tenders of any Preferred Shares with attached Warrants that it determines are not in appropriate form or the acceptance for payment of or payment for which would, in the opinion of the Company's counsel, be unlawful. The Company also reserves the absolute right to waive any of the conditions of the Offer or any defect or irregularity in any tender with respect to any particular Preferred Shares with attached Warrants of any particular shareholder. No tender of Preferred Shares with attached Warrants will be deemed to have been properly made until all defects or irregularities have been cured by the tendering shareholder or waived by the Company. None of the Company, the Depositary,the Information Agent or any other person shall be obligated to give notice of any defects or irregularities in tenders, nor shall any of them incur any liability for failure to give any such notice. 4. Withdrawal Rights. Except as otherwise provided in this Section 4, tenders of Preferred Shares '. with attached Warrants pursuant to the Offer are irrevocable. Preferred Shares with attached Warrants tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date and, unless theretofore accepted for payment by the Company pursuant to the Offer, may also be withdrawn at any time after 12:00 Midnight, Eastern Time, on January 12, 1993. To be effective,a notice of withdrawal must be in written,telegraphic, telex or facsimile transmission form and must be received in a timely manner by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase. Any such notice of withdrawal must specify the name of the tendering shareholder, the riik name of the registered bolder,if different, the number of Preferred Shares with attached Warrants tendered and the number of Preferred Shares with attached Warrants to be withdrawn. Prior to the release of such certificates, the tendering shareholder must also submit the serial numbers shown on the particular certificates for Preferred Shares with attached Warrants to be withdrawn and the signature on the notice of withdrawal must be guaranteed by an Eligible Institution (except in the case of Preferred Shares with attached Warrants withdrawn by an Eligible Institution). None of the Company, the Depositary, the Information Agent or any other person shall be obligated to give notice of any defects or irregularities in any notice of withdrawal nor shall any of them incur liability for failure to give any such notice. All questions as to the form and validity (including time of receipt) of notices of withdrawal will be determined by the Company, in its sole discretion, which determination shall be final and binding. Withdrawals may not be rescinded and any Preferred Shares with attached Warrants withdrawn will thereafter be deemed not properly tendered for purposes of the Offer. However,withdrawn Preferred Shares with attached Warrants may be re-tendered prior to the Expiration Date by again following one of the procedures described in Section 3. If the Company is delayed in its purchase of Preferred Shares with attached Warrants or is unable to purchase Preferred Shares with attached Warrants pursuant to the Offer for any reason, then,without prejudice to the Company's rights under the Offer, the Depositary may, subject to applicable law, retain tendered Preferred Shares with attached Warrants on behalf of the Company for ten business days after the Expiration Date, and such Preferred Shares with attached Warrants may not be withdrawn except to the extent tendering shareholders are entitled to withdrawal rights as described in this Section 4. S. Purchase of Preferred Shares with Attached Warrants and Payment of Purchase Price. The Company intends to select the lowest Purchase Price, not less than$.30 nor in excess of$.40, that will enable it • to purchase 8,750,000 Preferred Shares with attached Warrants (or such lesser number of Preferred Shares with attached Warrants as are properly tendered)pursuant to the Offer. For purposes of the Offer, the Company will be deemed to have purchased Preferred Shares with attached Warrants which are tendered at or below the Purchase Price and not withdrawn (subject to the proration and conditional tender provisions of the Offer)when, as and if it gives oral or written notice to the Depositary of its acceptance of such Preferred Shares with attached Warrants -6- for payment pursuant to the Offer. Subject to the terms and conditions of the Offer, the Company will purchase eilh4 and pay for 8,750,000 Preferred Shares with attached Warrants (or such lesser number of Preferred Shares with attached Warrants as are properly tendered) pursuant to the Offer and not withdrawn as permitted in Section 4 as soon as practicable after the Expiration Date. The Company will pay for Preferred Shares with attached Warrants purchased pursuant to the Offer by depositing the aggregate Purchase Price therefor with the Depositary,which will act as agent for tendering shareholders for the purpose of receiving payment from the Company and transmitting payment to the tendering shareholders. In the event of proration,the Company will determine the proration factor and pay for those tendered Preferred Shares with attached Warrants accepted for payment as soon as practicable after the Expiration Date,but in any event does not expect to be able to announce the final results of such proration and commence payment for Preferred Shares with attached Warrants purchased until at least ten business days after the Expiration Date. Certificates for all Preferred Shares with attached Warrants tendered and not purchased, including all Preferred Shares with attached Warrants tendered at prices in excess of the Purchase Price and Preferred Shares with attached Warrants not purchased due to proration or conditional tenders, will be returned to the tendering shareholder at the Company's expense as promptly as practicable after the Expiration Date. Under no circumstances will interest on the Purchase Price be paid by the Company by reason of any delay in making payment. The Company will pay all stock transfer taxes, if any,payable on the transfer to it of Preferred Shares with attached Warrants purchased pursuant to the Offer. If, however, payment of the Purchase Price is to be made to, or(in the circumstances permitted by the Offer) if unpurcbased Preferred Shares with attached Warrants are to be registered in the name of, any person other than the registered holder, or if tendered certificates are registered in the name of any person other than the person signing the Letter of Transmittal, the amount of all stock transfer taxes, if any (whether imposed on the registered holder or such other person), payable on account of the transfer to such person will be deducted from the Purchase Price unless satisfactory evidence of the payment of the stock transfer taxes, or exemption therefrom, is submitted. See Instruction 7 of the Letter of Transmittal. ANY TENDERING SHAREHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE, SIGN AND rah RETURN TO THE DEPOSITARY THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL MAY BE SUBJECT TO REQUIRED BACKUP FEDERAL INCOME TAX WITHHOLDING OF 20% OF THE GROSS PROCEEDS PAID TO SUCH SHAREHOLDER OR OTHER PAYEE PURSUANT TO THE OFFER. SEE SECTION 3. ALSO SEE SECTION 11 REGARDING CERTAIN FEDERAL INCOME TAX CONSEQUENCES. 6. Certain Conditions of the Offer. Notwithstanding any other provision of the Offer,the Company shall not be required to accept for payment, purchase or pay for any Preferred Shares with attached Warrants tendered, and may terminate or amend the Offer and may postpone the acceptance for payment of, the purchase of and the payment for Preferred Shares with attached Warrants tendered, if at any time on or after November 12, 1992 and prior to the time of payment for any such Preferred Shares with attached Warrants (whether or not any Preferred Shares with attached Warrants have theretofore been accepted for payment,purchased or paid for pursuant to the Offer) any of the following events shall have occurred (or shall have been determined by the Company to have occurred): (a) there shall have been proposed(including any proposal or pending legislation in existence as of the date hereof)or enacted into law legislation that would materially increase the after-tax cost of the Offer or the transactions contemplated thereby; or (b) there shall have been any action threatened, pending or taken, or any law, statute, rule, regulation,judgment, order or injunction threatened, proposed, sought, promulgated, enacted, entered, enforced or deemed to be applicable to the Offer, by any court or any government or governmental, regulatory or administrative agency or authority (federal, state, local or foreign)or tribunal, domestic or foreign, which, in the sole judgment of the Company, would or might directly or indirectly(i)make the acceptance for payment of, or payment for, some or all of the Preferred Shares with attached Warrants illegal or otherwise restrict or prohibit the consummation of the Offer, (ii) delay or restrict the ability of the Company,or render the Company unable,to accept for payment or pay for some or all of the Preferred -7 - -j Shares with attached Warrants or (iii) materially impair the contemplated benefits of the Offer to the Company; or (c) there shall have occurred any of the following events: (i)the commencement of any state of war, international crisis or national emergency, (ii) the declaration of any banking moratorium or suspension of payments by banks in the United States or any limitation on the extension of credit by lending institutions in the United States, (iii)any general suspension of trading or limitation of prices for securities on any securities exchange or in the over-the-counter market in the United States, or(iv)in the case of any of the foregoing existing at the time of the commencement of the Offer, in the sole judgment of the Company, a material acceleration or worsening effect thereof; or (d) a tender or exchange offer with respect to some or all of the Preferred Shares with attached Warrants (other than the Offer), or a merger or acquisition proposal for the Company, shall have been proposed, announced or made by another person or shall have been publicly disclosed, or the Company shall have learned that(i)any person or 'group' (within the meaning of Section 13(d)(3)of the Exchange Act) shall have acquired or proposed to acquire beneficial ownership of more than five percent of the outstanding Preferred Shares with attached Warrants, other than acquisitions solely for bona fide arbitrage purposes and other than as disclosed in a Schedule 13D or 13G on file with the Commission on November 12, 1992, or(iii)any such person or group which,prior to November 12, 1992,had filed such a Schedule with the Commission thereafter has acquired or proposed to acquire, through the acquisition of stock, the formation of a group or otherwise, beneficial ownership of an additional one percent or more of the Preferred Shares with attached Warrants or shall have been granted any right, option or warrant, conditional or otherwise, to acquire beneficial ownership of an additional one percent or more of the Preferred Shares with attached Warrants; or (1114 (e) there shall have occurred any event which, in the sole judgment of the Company, has resulted in an actual or threatened material adverse change in the business, financial condition, assets, income,operations,prospects or stock ownership of the Company or which may adversely affect the value of the Preferred Shares with attached Warrants; and, in the sole judgment of the Company, such event makes it inadvisable to proceed with the Offer or with acceptance for payment of or payment for any Preferred Shares with attached Warrants. The foregoing conditions are for the sole benefit of the Company and may be asserted by the Company regardless of the circumstances(including any action or inaction by the Company)giving rise to any such condition, and may be waived by the Company, in whole or in part, at any time and from time to time in its sole discretion. Any determination by the Company concerning the events described above will be final and binding. 7. Source and Amount of Funds. Assuming that the Company purchases 8,750,000 Preferred Shares with attached Warrants pursuant to the Offer at a price not less than$.30 nor in excess of$.40 per Preferred Share with attached Warrants, the cost to the Company (including all fees and expenses relating to the Offer, but excluding interest expense on any funds borrowed to finance such purchase of the Preferred Shares with attached Warrants) is estimated to be between approximately $2,675,000 and $3,550,000. The Company presently intends that funds for the purchase of the Preferred Shares with attached Warrants pursuant to the Offer and the payment • of related fees and expenses will be provided from the Company's available cash and cash equivalents and retained earnings. 8. Certain Information Concerning the Company. The Company was organized as a Missouri corporation in June 1990 for the purpose of facilitating the conversion of Safety Mutual Casualty Corporation ('Safety Mutual") from a mutual insurance company to a stock insurance company (the 'Conversion"). In the Conversion,policyholders'membership rights and surplus interests in Safety Mutual were exchanged for Preferred Shares with attached Warrants and an additional $25,000,000 of surplus was added to the insurance company. Additionally,Safety Mutual was acquired in the Conversion as the wholly owned subsidiary of the Company and -8- its corporate name changed to Safety National Casualty Corporation. Safety National is a property and casualty insurance company specializing in the issuance of excess workers'compensation policies for self-insured employers. Set forth below is certain selected consolidated financial information with respect to the Company, excerpted or derived from the audited financial statements contained in the Company's Annual Report on Form 10-K for the year ended December 31, 1991, and from the unaudited financial statements contained in the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1992. The selected information below is qualified in its entirety by reference to such Reports (which may be inspected or obtained at the offices of the Commission in the manner set forth below)and the financial information and related notes contained therein. SELECTED CONSOLIDATED FINANCIAL INFORMATION (The data for the nine months ended September 30, 1992 and 1991 is derived from unaudited financial statements. The data for the fiscal years ended December 31, 1990 and 1991 is derived from audited financial statements.) (dollars in thousands, except per share data) Nine Months Ended Year Ended September 30, December 31, (Unaudited) Dal 1990 19_/9 1V1 Income Statement Data • Total revenues $103,298 $97,798 $80,760 $75,731 Total expenses 87,192 87,299 67,651 66,864 Provision for income taxes 4,717 3.822 3.064 2.760 Net income ; 11,389 66,6= $10,045 LUIZ Net income per common share _ ; 0.12 S (0.0w Balance Sheet Datg Total investments $368,704 $294,458 $392,762 $355,717 Deferred policy acquisition costs 3,903 3,794 4,449 4,633 Total assets 387,622 310,453 418,868 376,414 Reserve for unpaid losses and loss adjustment expenses 258,004 221,414 278,647 248,973 Unearned premiums 23,652 22,700 31,261 27,822 Long-term debt 21,750 - 21,750 25,000 Total liabilities 331,395 267,272 352,690 325,841 -9- Nine Months Ended Year Ended September 30, December 31, (Unaudited) 1221 1224 1222 1291 Redeemable preferred stock 38,102 - 38,102 38,102 Total surplus as regards policyholders - 43,181 - - • Stockholders'equity $ 18,125 - $ 28,076 $ 12,471 Book value per common share $ 0 .73 $ 0 .29 Statement of Cash Flow Date Paid losses and loss adjustment expenses $14,410 $23,556 $16,018 $12,420 Net cash provided by operating activities 46,660 37,600 23,647 34,217 Net cash (used)by rbk investing activities (71,327) (38,410) (24,020) (60,240) Net cash provided by financing activities 23,899 - 373 25,500 Net (decrease) in cash (768) (810) - (523) Cash, beginning period 768 1,578 - 768 Cash, end of period $ - $ 768 $ - $ 245 • Summary Unaudited Consolidated Pro Forma Financial Information. The following summary unaudited consolidated pro forma financial information of the Company for the fiscal year ended December 31, 1991 and the period ended September 30, 1992 shows the effects of the purchase of 8,750,000 Preferred Shares with attached Warrants pursuant to the Offer on the terms described in Section 1. The income statement data give effect to the purchase of Preferred Shares with attached Warrants pursuant to the Offer as if it had occurred at the beginning of each period presented. The balance sheet data give effect to the purchase of Preferred Shares with attached Warrants pursuant to the Offer as if it had occurred as of the date of the respective balance sheets. The summary unaudited consolidated pro forma financial information should be read in conjunction with the audited and unaudited financial statements and related notes contained in the Company's Annual Report on Form 10-K for the year ended December 31, 1991 and Quarterly Report on Form 10-Q for the quarter ended September 30, 1992. The summary unaudited consolidated pro forma financial information does not purport to be indicative of the results - 10- that would actually have been attained had the purchases of the Preferred Shares with attached Warrants been completed at the dates indicated or that may be attained in the future. SUMMARY UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION Balance Sheet Data December 31, 1991 Historical Estimated Pro Forma Financial Pro Forma Financial Information Adjustments Information Total assets $ 387,622 $3,500 $ 384,122 Total liabilities 331,395 331,395 Redeemable preferred stock 38,102 8,750 29,352 Stockholders' equity 18,125 5,250 23,375 Total liabilities, redeemable preferred stock and stockholders' equity $ 387,622 $3,500 $384,122 elk Book value per/common share S 0.73 $ 0.94 September 30, 1992 Historical Estimated Pro Forma Financial Pro Forma Financial Information Adjustments Information Total assets $ 418,869 $ 3,500 $ 415,369 Total liabilities 352,690 352,690 Redeemable preferred stock 38,102 8,750 29,352 Stockholders' equity 28,076 5,250 33,326 Total liabilities,redeemable preferred stock and stockholders' equity $ 418,869 $ 3,500 $ 415,369 Book value per common share $ 0.29 $ 0.42 rik - 11 - SUMMARY UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION Income Statement Data For the year ended December 31, 1991 Historical Estimated Pro Forms Financial Pro Forma Financial Information Adjustments Information Total revenues $103,298 $245 $103,053 Total expenses 87,192 87,192 Provision for federal income taxes 4,717 83 4,634 Net income $ 11,389 $162 $ 11,227 Net income per common share $ 0.20 $ 0.20 For the nine months ended September 30, 1992 Historical Estimated Pro Forma Financial Pro Forma Financial Information Adjustments Information Total revenues $80,760 $117 $ 80,643 Total expenses 67,651 67,650 Provision for federal income taxes 3,064 40 3,024 Net income $10,045 $77 $ 9,968 Net income per common share $ 0.12 $ 0.14 NOTES TO SUMMARY UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL LNFORMATION The following assumptions regarding the Offer and Stock Purchase Agreements were made in determining the summary unaudited consolidated pro forma financial information: (a) The Offer is fully subscribed and results in the purchase of 8,750,000 Preferred Shares with attached Warrants for cash at the maximum purchase price of$.40 per share. (b) Investment income is reduced due to the cash outlay for the purchase of Preferred Shares with attached Warrants at the beginning of the period. The interest rate is assumed to be the yield on a one-year U.S. Treasury bond purchased at the beginning of the period on the income statements. (c) The provision for federal income taxes reflects the effect of item(b)above at a marginal tax rate of 34%. The Company is subject to the informational filing requirements of the Exchange Act and, in accordance therewith,is obligated to file reports and other information with the Commission relating to its business, - 12- financial condition and other matters. Information,as of particular dates, concerning the Company's directors and officers, their renumeration, options granted to them, the principal holders of the Company's securities and any material interest of such persons in transactions with the Company is required to be disclosed in proxy statements distributed to the Company's shareholders and filed with the Commission. Such reports,proxy statements and other information are available for inspection at the public reference facilities of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549; and at the regional offices of the Commission, located at Room 1400, 75 Park Place, New York, New York 10007 and Room 1400, 500 West Madison Street, Chicago, Illinois 60661. Copies of such materials may also be obtained from the Public Reference Section of the Commission 450 Fifth Street, N.W.,Washington, D.C. 20549, at prescribed rates. 9. Background and Purpose of the Offer; Certain Effects of the Offer. The Preferred Shares with attached Warrants were initially issued by the Company to the former policyholders of Safety Mutual in conversion of their policyholders' membership rights and surplus interests in Safety Mutual. Through the date of this Offer, no public trading market for the Preferred Shares and attached Warrants has developed. To the Company's knowledge, there has been not more than one arm's length transfer of the Preferred Shares and attached Warrants, the financial terms of which were not disclosed to the Company. A substantial majority of the holders of the Preferred Shares and attached Warrants continue to be policyholders of the Company as well and the Company has received a number of inquiries from these policyholders regarding their desire to transfer their securities. In certain cases, the bolder is a city or municipality with either specific regulations, ordinances or internal policies prohibiting the investment or holding of equity securities. In other cases, the holders of the Preferred Shares with attached Warrants wish to sell all or a portion of their securities holdings in the Company. The Company has considered a number of possible alternatives to provide liquidity to the holders of the Preferred Shares with attached Warrants. In light of its current cash position,the Company decided that an offer by the Company to purchase the securities would provide temporary liquidity to the holders and be an effective use of excess cash and cash equivalents in the Company. The Company determined that the "dutch auction" Offer jak method outlined in the Offer is a non-discriminatory method for it to decide which of the securities should be purchased by the Company and the price (within a pre-established range) at which the securities should be purchased. THE COMPANY MAKES NO REPRESENTATION AS TO THE CURRENT FAIR MARKET VALUE OF THE PREFERRED SHARES WITH ATTACHED WARRANTS OR ITS RELATION TO THE RANGE OF PRICES IN THE OFFER. The Company believes that the purchase of the Preferred Shares with attached Warrants pursuant to the Offer provides the Company with the opportunity to use a portion of its excess cash and cash equivalents in an attractive use of cash. At the same time, the Offer provides the Company's shareholders with the opportunity to sell a portion of their Preferred Shares with attached Warrants (without the usual transaction costs associated with market sales), while retaining a continuing equity interest in the Company if they so desire. Currently, there is no established trading market for the Preferred Shares with attached Warrants. The Company's Board of Directors believes the Company's current cash position and available credit facilities are adequate for its short-term needs, including the purchase of Preferred Shares with attached Warrants pursuant to the Offer. The reduction in the number of outstanding Preferred Shares with attached Warrants pursuant to the Offer will increase the interests in the Company of holders of Company's Common Stock and of shareholders whose Preferred Shares with attached Warrants are not tendered or not purchased in the Offer, including such persons' interests in the Company's earnings. After consummation of the Offer, future increases or declines in earnings per Preferred Share will be greater because of the smaller number of Preferred Shares outstanding. In addition, to the extent the purchase of Preferred Shares with attached Warrants pursuant to the Offer results in a reduction in the number of shareholders of record, the costs to the Company for services to shareholders will be reduced. • Dividends and Warrants. The Preferred Shares were issued in September 1991 in connection with the Conversion. In the Conversion, the Company issued two non-detachable Warrants with each Preferred Share, rwith each Warrant entitling the holder to purchase one share of the Company's Class A Common Stock at an exercise price of$1.00. In general, each Warrant is exercisable at any time prior to the expiration of the Warrants - 13 - in October, 1998. Regardless of the expiration date, however, the Warrants may be exercised for a period of 30 days following notice by the Company of redemption of the Preferred Shares or the occurrence of a change of control of the Company. Until October 1998, each Preferred Share is entitled to an annual stock dividend equal to 5.3% of the par value of the Preferred Shares; payable in additional Preferred Shares, with Warrants attached. After 1998, each Preferred Share is entitled to an annual cash dividend at a rate which shall be equivalent to the dividend rates then prevailing for comparable securities. The tender of any Preferred Shares in the Offer will include a tender of the attached Warrants. No separate consideration will be paid for the Warrants. Upon purchase of the Preferred Shares by the Company pursuant to the Offer, the sellers of the Preferred Shares will no longer own the Warrants associated with such Preferred Shares and will not be entitled to any dividend paid on such Preferred Shares. Additionally,the sellers of the Preferred Shares will no longer hold any right to exercise the Warrants associated with such Preferred Shares. Although the Company has no present plans to acquire additional Preferred Shares with attached Warrants, the Company may in the future purchase additional Preferred Shares with attached Warrants on the open market, in private transactions, through tender offers or otherwise. Any such purchases may be on the same terms or on terms which are more or less favorable to shareholders than the terms of the Offer. However, Rule 13e-4 under the Exchange Act prohibits the Company and its affiliates from purchasing any Preferred Shares with attached Warrants, other than pursuant to the Offer, until at least 10 business days after the Expiration Date. Any possible future purchases by the Company will depend on many factors, including the market price of the Preferred Shares with attached Warrants, the Company's business and financial position and general economic and market conditions. Except as disclosed in this Offer to Purchase, the Company bas no current plans or proposals which relate to or would result in any extraordinary corporate transaction involving the Company, such as a merger, a reorganization, the sale or transfer of a material amount of its assets, any change in its present Board of Directors or management, any change in its policy of paying dividends,any material change in its indebtedness or capitalization, any material change in its Amended and Restated Articles of Incorporation or By-laws, any other material change in its business or corporate structure, or any change which would cause the Preferred Shares with attached Warrants to become eligible for termination of registration under the Exchange Act, or any action similar to any of the foregoing. Any Preferred Shares with attached Warrants acquired by the Company pursuant to the Offer will be cancelled and will be available for issuance by the Company without further shareholder action except as required by applicable law. Such Preferred Shares with attached Warrants could be issued in connection with the acquisition of other businesses, the raising of additional capital for use in the Company's business, the distribution of stock dividends and the implementation of employee stock benefit programs. The reduction in the Company's cash and cash equivalents following the consummation of the Offer might lessen the attractiveness of the Company to persons who would have otherwise considered an acquisition of the Company. The Preferred Shares with attached Warrants are registered under the Exchange Act, which requires that the Company furnish certain information to its shareholders and the Commission and comply with the Commission's proxy rules in connection with meetings of the Company's shareholders. The Company believes that the purchase of Preferred Shares with attached Warrants pursuant to the Offer will not result in the Preferred Shares with attached Warrants becoming eligible for deregistration under the Exchange Act. There is currently no established trading market for the Preferred Shares with attached Warrants. 10. Transactions and Arrangements Concerning Preferred Shares with Attached Warrants. Based upon the Company's records and upon information provided to the Company by its directors, executive officers and affiliates, neither the Company nor, to the best of the Company's knowledge, any of the directors or executive officers of the Company, nor any associates of any of the foregoing, has effected any transactions in the Preferred Shares with attached Warrants during the 40 business days prior to the date hereof. Neither the Company nor, to the best of the Company's knowledge, any of its directors or executive officers, is a party to any contract, arrangement, understanding or relationship with any other person - 14- • relating, directly or indirectly,to the Offer including,but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or the voting of any such securities, joint venture, loan or option arrangements, puts or calls, guaranties of loans, guaranties against loss or the giving or withholding of proxies, consents or authorizations. 11. Certain Federal Income Tax Consequences. The following discussion summarizes certain of the material federal income tax consequences of a sale of Preferred Shares with attached Warrants pursuant to the Offer. The discussion does not address all aspects of federal income taxation that may be relevant to particular shareholders. The discussion assumes that shareholders hold their Preferred Shares and attached Warrants as a capital asset within the meaning Section 1221 of the Code. Certain shareholders(including insurance companies, tax-exempt organizations, and foreign persons) may be subject to special rules not discussed below. The discussion does not address the effect of any applicable foreign, state, local or other tax laws. The Company has neither requested nor obtained a written opinion of counsel with respect to the tax matters discussed below. IN VIEW OF THE INDIVIDUAL NATURE OF FEDERAL INCOME TAX CONSEQUENCES, EACH SHAREHOLDER IS STRONGLY URGED TO CONSULT A TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES OF THE OFFER TO SUCH SHAREHOLDER, INCLUDING THE APPLICATION OF FOREIGN, STATE, LOCAL OR OTHER TAX LAWS. A sale of the Preferred Shares together with the attached Warrants will be treated for federal income tax purposes as two separate, taxable transactions,and each shareholder will be required to allocate the total Purchase Price received between the Preferred Shares sold and the Warrants sold based upon the relative fair market values of each. In general, the Purchase Price allocable to Preferred Shares sold will equal the product of(x) the total Purchase Price received by the shareholder, multiplied by (y) a fraction, the numerator of which is the fair market value of the Preferred Shares sold pursuant to the Offer(determined as if no Warrants were attached to such Preferred Shares), and the denominator of which is the total Purchase Price received by the shareholder. Any portion of the Purchase Price not allocated to Preferred Shares sold will be allocated to the Warrants sold. Preferred Shares. Provided that the receipt of the portion of the Purchase Price allocated to Preferred Shares sold does not have the effect of a distribution of a dividend,a shareholder will realize gain or loss for federal income tax purposes (determined separately as to each block of Preferred Shares exchanged) in an amount equal to the difference between (x) the portion of the Purchase Price received by such shareholder in exchange for Preferred Shares, and (y) such shareholder's tax basis for the Preferred Shares surrendered in exchange therefor. Any such gain or loss will be recognized for federal income tax purposes, and will be treated as capital gain or loss. However, if the receipt of the Purchase Price does have the effect of the distribution of a dividend, the amount of gain recognized will equal the amount of the Purchase Price received; such gain will be taxable as a dividend; and no loss (or other recovery of such shareholder's tax basis for the Preferred Shares surrendered in the exchange) will be recognized by such shareholder. The determination of whether the receipt of the Purchase Price in return for Preferred Shares pursuant to the Offer has the effect of the distribution of a dividend will be made in accordance with the provisions and limitations of Section 302 of the Code, taking into account the constructive ownership rules of Section 318 of the Code. Under Section 302 of the Code, a sale of Preferred Shares pursuant to the Offer will not be treated as having the effect of a dividend for federal income tax purposes if such sale(r) results in a 'complete redemption' of all of the shareholder's stock in the Company, or (ii) is 'not essentially equivalent to a dividend'with respect to the shareholder. In determining whether either of these tests is satisfied, shareholders must take into account not only Preferred Shares and Common Stock of the Company which they actually own,but also any Preferred Shares and Common Stock of the Company which they are deemed to own pursuant to the constructive ownership rules of Section 318 of the Code. Pursuant to these constructive ownership rules, a shareholder constructively owns Preferred Shares and Common Stock of the Company actually owned, and in some cases constructively owned,by certain related individuals or entities and Preferred Shares and Common Stock of the Company which the r. shareholder has the right to acquire by exercise of an option or by conversion or exchange of a security. - 15- • eak A sale of Preferred Shares pursuant to the Offer will result in • 'complete redemption' of the shareholder's stock in the Company if, pursuant to the Offer, the Company purchases all of the Preferred Shares with attached Warrants actually and constructively owned by the shareholder, and the shareholder neither actually nor constructively owns any Common Stock of the Company. If the shareholder's sale of Preferred Shares with attached Warrants pursuant to the Offer would satisfy the complete redemption requirement but for the shareholder's constructive ownership of Preferred Shares or Common Stock of the Company held by family members (Le., the shareholder actually owns no Common Stock of Company and sells, pursuant to the Offer, all Preferred Shares actually owned), such shareholder may, under certain circumstances, be entitled to waive such constructive ownership provided the shareholder complies with the provisions of Section 302(c)of the Code. A sale of Preferred Shares pursuant to the Offer will be 'not essentially equivalent to a dividend" if, as a result of the sale of Preferred Shares pursuant to the Offer, the shareholder experiences a "meaningful reduction"in his proportionate interest in the Company, taking into account the constructive ownership rules. The Internal Revenue Service has indicated in a published ruling that even a small reduction in the proportionate interest of a small minority shareholder who does not exercise any control over company affairs may constitute a 'meaningful reduction" in the shareholder's interest in the company. If either of the tests described above is satisfied, the tendering shareholder will recognize capital gain or loss equal to the difference between the amount of cash received by the shareholder pursuant to the Offer and the shareholder's tax basis in the Preferred Shares sold. Such gain or loss must be determined separately for each block of Preferred Shares sold (i.e., Preferred Shares with attached Warrants acquired at the same time in a single transaction)and will be long-term capital gain or loss if the Preferred Shares were held for more than one year. Long term capital gains of individuals, estates and trusts currently are subject to federal income tax at the maximum statutory rate of 28%. The tax treatment of a redemption will depend upon the particular facts and circumstances pertaining to each shareholder, and each tendering shareholder should consult a tax advisor as to the particular tax consequences to such shareholder of the sale of Preferred Shares with attached Warrants pursuant to the Offer. If neither of the tests described above is satisfied, the tendering shareholder generally will be treated as having received a dividend in an amount equal to the Purchase Price allocated to the Preferred Shares, if the Company has sufficient earnings and profits. The Company presently anticipates that its current and accumulated earnings and profits will be sufficient to cover the amount of all distributions pursuant to the Offer, if any, that are taxable as dividends. Dividend income of individuals, estates and trusts currently is subject to federal income tax at the maximum statutory rate of 31%. To the extent that the purchase of Preferred Shares with attached Warrants from any shareholder pursuant to the Offer is treated as a dividend, such shareholder's tax basis in any Preferred Shares which the shareholder retains after consummation of the Offer will be increased by the shareholder's tax basis in Preferred Shares with attached Warrants purchased pursuant to the Offer. In the case of a corporate shareholder, if the cash paid pursuant to the Offer is treated as a dividend,the dividend income may be eligible for the 70% dividends-received deduction. The dividends-received deduction is subject to certain limitations and may not be available if the corporate shareholder does not satisfy certain holding period requirements with respect to the Preferred Shares with attached Warrants or if the Preferred Shares with attached Warrants are treated as 'debt-financed portfolio stock.' If a dividends-received deduction is available, the dividend may be treated as an "extraordinary dividend,"as defined by Section 1059 of the Code, in which case the corporate shareholder's tax basis in the Preferred Shares with attached Warrants would be reduced (but not below zero) by the amount of any "extraordinary dividend,"which is not taxed because of the dividends- received deduction. Any amount in excess of the corporate shareholder's tax basis for the Preferred Shares with attached Warrants generally will be subject to tax on the sale or disposition of those Preferred Shares with attached Warrants. Corporate shareholders should consult their tax advisors as to the availability of the dividends-received deduction and the application of Section 1059 of the Code to the Offer. Each shareholder should be aware that his or her ability to satisfy the requirements of Code Section 302 may be affected by any proration pursuant to the Offer. Therefore, a shareholder can be given no assurance, even if he tenders all of his Preferred Shares with attached Warrants, that the Company will purchase a sufficient - 16- number of such Preferred Shares with attached Warrants to permit him to satisfy such requirements. See Section 1 as to the ability of a shareholder to make a conditional tender for a minimum number of Preferred Shares with attached Warrants. Shareholders who determine to make conditional tenders are strongly urged to calculate the minimum number of Preferred Shares with attached Warrants to be tendered in consultation with their tax advisors. Each shareholder also should be aware that an acquisition or disposition of Preferred Shares or Common Stock of Company(either by such shareholder or by a person whose stock is deemed to be constructively owned by such shareholder under Section 318 of the Code) the Offer may be taken into account in determining whether the requirements of Code Section 302 are satisfied. The foregoing discussion assumes that Preferred Shares are not described in Code Section 306. Accordingly, such discussion may be inapplicable to any shareholder that owned, either actually or constructively under Code Section 318, any Common Stock of Company at the time of the Conversion, and such discussion may also be inapplicable to any shareholder that owned, either actually or constructively under Code Section 318, any Common Stock of Company that was acquired in a transaction that may be integrated with the Conversion for federal income tax purposes. Because the determination of whether a payment will be treated as having the effect of the distribution of a dividend will generally depend upon the facts and circumstances of each shareholder, shareholders are strongly advised to consult their own tax advisors regarding the tax consequences of the Offer. Warrants. A shareholder will recognize gain or loss for federal income tax purposes (determined separately with regard to each Warrant exchanged)in an amount equal to the difference between (x) the portion of rthe Purchase Price received by such shareholder in exchange for the Warrants, and(y) such shareholder's tax basis for the Warrants surrendered in exchange therefor. Such gain or loss should be capital (unless the shareholder is a securities dealer subject to Section 1236 of the Code) and will be long-term if the Warrants were held for more than one year. SEE SECTION 3 WITH RESPECT TO THE APPLICATION OF BACKUP FEDERAL INCOME TAX WITHHOLDING. THE FOREGOLNG SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES IS INCLUDED HERELN FOR GENERAL INFORMATION ONLY AND IS BASED UPON CURRENT LAW. SUCH SUMMARY DOES NOT ADDRESS THE FEDERAL INCOME TAX CONSEQUENCES TO ALL SHAREHOLDERS OF THE COMPANY. EACH SHAREHOLDER SHOULD CONSULT HIS OR HER OWN TAX ADVISOR REGARDL'siG THE SPECIFIC TAX CONSEQUENCES OF THE OFFER TO SUCH SHAREHOLDER,INCLUDING THE APPLICATION AND EFFECT OF FEDERAL,STATE,LOCAL AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL AND OTHER TAX LAWS. 12. Fees and Expenses. The Company bas retained Mark Services Inc. to act as Information Agent and Chemical Bank to act as Depositary in connection with the Offer. The Information Agent may contact holders of Preferred Shares with attached Warrants by mail, telephone,telex, telegraph and personal interviews and may request brokers, dealers and other nominee shareholders to forward materials relating to the Offer to beneficial owners. Mark Services Inc. and Chemical Bank will each receive reasonable and customary compensation for their respective services, will be reimbursed by the Company for their reasonable out-of-pocket expenses, including attorneys' fees, and will be indemnified against certain liabilities in connection with the Offer, including certain liabilities under the federal securities laws. riak No fees or commissions will be payable to brokers, dealers or other persons (other than fees to the Information Agent or the Depositary as described above)for soliciting holders of Preferred Shares with attached • Warrants pursuant to the Offer. No broker, dealer, commercial bank or trust company has been authorized to act as the agent of the Company, the Information Agent or the Depositary for purposes of the Offer. The Company - 17- • will pay or cause to be paid all stock transfer taxes, if any, on its purchase of Preferred Shares with attached Warrants except as otherwise provided in Instruction 7 in the Letter of Transmittal. 13. Miscellaneous. The Company is not aware of any license or regulatory permit that appears to be material to the Company's business that might be adversely affected by the Company's acquisition of Preferred Shares with attached Warrants as contemplated herein or of any approval or other action by any government or governmental, administrative or regulatory authority or agency, domestic or foreign, that would be required for the acquisition or ownership of Preferred Shares with attached Warrants by the Company as contemplated herein. Should any such approval or other action be required, the Company currently contemplates that such approval or other action will be sought. The Company is unable to predict whether it may determine that it is required to delay the acceptance for payment of or payment for Preferred Shares with attached Warrants tendered pursuant to the Offer pending the outcome of any such matter. There can be no assurance that any such approval or other action, if needed, would be obtained or would be obtained without substantial conditions or that the failure to obtain any such approval or other action might not result in adverse consequences to the Company's business. The Company's obligations under the Offer to accept for payment and pay for Preferred Shares with attached Warrants are subject to certain conditions. See Section 6. Pursuant to Rule 13e-4 of the General Rules and Regulations under the Exchange Act, the Company has filed with the Commission an Issuer Tender Offer Statement on Schedule 13E-4 which contains additional information with respect to the Offer. Such Schedule 13E-4, including the exhibits and any amendments thereto, may be examined, and copies may be obtained, at the same places and in the same manner as is set forth in Section 8 with respect to information concerning the Company. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION ON BEHALF OF THE COMPANY IN CONNECTION WITH THE OFFER OTHER elik THAN THOSE CONTALNED IN THIS OFFER TO PURCHASE OR LN THE RELATED LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH LNFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. SIG HOLDINGS, INC. November 12, 1992 • - 18 - Manually signed photocopies of the Letter of Transmittal will be accepted. The Letter of Transmittal and certificates for Preferred Shares with attached Warrants should be sent or delivered by each shareholder or his broker, dealer, commercial bank, trust company or nominee to the Depositary at one of its addresses set forth below. The Depositary: Chemical Bank Telephone Number: (212)613-7149 (call collect) • • Facsimile Transmission By Hand or By Mail: Copy Numbers: Overnight Courier: Chemical Bank (212)629-8015 Chemical Bank Reorganization Department (212) 629-8016 55 Water Street- 2nd Floor P.O. Box 1916 -G.P.O. Station Room 234 New York, New York 10116-1916 Confirm Facsimile by Telephone: Attention: Reorganization Department (212)613-7137 New York, New York 10041 (212)613-7608 Any questions or requests for assistance or additional copies of this Offer to Purchase and the Letter of Transmittal may be directed to the Information Agent at the telephone number and location listed below. The Information Agent for the Offer is: Mark Services Inc. 7155 SW 47th Street, t311 Miami, Florida 33155 For Information Call: (800) 638-4880 r • LETTER OF TRANSMITTAL To Tender Shares of Preferred Stock With Attached Warrants of SIG HOLDINGS, INC. Pursuant to the Offer to Purchase Dated November 12, 1992 THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., EASTERN TIME, ON DECEMBER 18, 1992 UNLESS THE OFFER IS EXTENDED. The Depositary: Chemical Bank Telephone Number: (212)613-7149 (call collect) By Mail: Facsimile Transmission By Hand or Chemical Bank Copy Numbers: Overnight Courier: Reorganization Department (212)629-8015 Chemical Bank P.O.Box 1916-G.P.O. Station (212)629-8016 55 Water Street-2nd Floor New York,New York 10116-1916 Room 234 Confrm Facsimile by Telephone: Attn: Reorganization Dept. (212)613-7137 New York,New York 10041 • • (212)613-7608 For Information Call: Mark Services Inc. (800) 6384880 Delivery of this Instrument to an address, or transmission to a telephone or telex number, other than as set forth above, . not constitute a valid delivery. The Instructions accompanying this Letter of Transmittal should be read carefully before the Letter of Transmittal is completed. This Letter of Transmittal is to be completed and delivered prior to the Expiration Date by shareholders whose certificates are forwarded herewith pursuant to the procedures set forth in Section 3 of the Offer to Purchase. The term "Expiration Date" means 5:00 p.m., Eastern Time, on December 18, 1992, unless the Company, in its sole discretion, shall have extended the period durine which time the Offer is peen_ in which event the term 'Fv.... +:�.. nom•."�ti�n •••-�" DESCRIPTION OF PREFERRED SHARES WITH ATTACHED WARRANTS TENDERED (See Instructions 3 and 4) Name(s),address(es)and number of shares of registered bolder(s).Please see Tendered Certificates pre-addressed label or till in exactly as name(s)appear(s)oo certificate(s). (Attach signed list If necessary) — —- - -- 2191 1579-2-84560 62,772 No.of CCIITT ATTYMppICHEEAEtt LIA SARRO _ Preferred 150 DEXTER COURT ELGIN, IL 60120-5570 Shares (includingtwo Warrants(W) No.of attached Certificate Preferred warrants per 4 No(s). Shares share)* -- P _ f. Initial - - � w . :. "4— P .4— Dividend j car.=- - s-T. azkaek jr.e Total Preferred Shares Tendered �— •If you wish to tender fewer than all Preferred Shares evidenced by any certificate listed above,please indicate in this column the number you wish to tender;otherwise,all Preferred Shares evidenced by such certificate will be deemed to have been tendered. IMPORTANT: THE ATTACHED WARRANT CERTIFICATES ASSOCIATED WITH THE PREFERRED SHARES MUST BE ENCLOSED HEREWITH. PRICE PER PREFERRED SHARE WITH ATTACHED WARRANTS AT WHICH el PREFERRED SHARES WITH ATTACHED WARRANTS ARE BEING TENDERED (See Instruction S) CHECK ONLY ONE BOX IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED, THERE IS NO PROPER TENDER OF PREFERRED SHARES WITH ATTACHED WARRANTS. 0 $.30 0 $.31 0S.32 0 S.33 0 $.34 0 $.35 -4' f El $.36 0 $.37 0 $.38 0 $.39 0 $.40 CONDITIONAL TENDER (See Instruction 9) A tendering shareholder may condition the tender of Preferred Shares with attached Warrants upon the purchase by the Company of a specified minimum number of Preferred Shares with attached Warrants tendered hereby, all as described in the Offer to Purchase, particularly Section 1 thereof. Unless at least such specified minimum number of Preferred Shares with attached Warrants are purchased by the Company pursuant to the terms of the Offer, none of the Preferred Shares with attached Warrants tendered hereby will be purchased. It is the tendering shareholder's responsibility to calculate such minimum number of Preferred Shares with attached Warrants,and each shareholder is strongly urged to consult a tax advisor. Unless a minimum number is specified in the blank at the bottom of this box, the tender will be deemed unconditional. Minimum number of Preferred Shares with attached Warrants that must be purchased if any are purchased: Preferred Shares with attached Warrants NOTE: SIGNATURES MUST BE PROVIDED BELOW. _- .. ____ PI.F.ASF. READ CAREFULLY THE ACCOMPANYING INSTRUCTIONS. - 1 Chemical Bank: The undersigned tenders to SIG Holdings, Inc. (the"Company")the certificates described above representing shares of its Preferred Stock, $1.00 par value per share ("Preferred Shares"),with attached warrants to purchase the Company's Class A Common Stock, $.02 par value (the"Warrants"), of the Company at the price per Preferred Share with attached Warrants indicated in this Letter of Transmittal, to the seller in cash, upon the terms and subject to the conditions set th in the Offer to Purchase dated November 12, 1992(the"Offer to Purchase"), receipt of which is acknowledged, and his Letter of Transmittal (which together constitute the "Offer"). . Subject to and effective upon acceptance for payment of the tendered Preferred Shares with attached Warrants, in accordance with the terms and subject to the conditions of the Offer, the undersigned hereby sells, assigns and transfers to, or upon the order of, the Company all right, title and interest in and to the tendered Preferred Shares with attached Warrants that are accepted for payment pursuant to the Offer and irrevocably constitutes and appoints the Depositary as attorney-in-fact for the undersigned with respect to such Preferred Shares with attached Warrants, with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to (a) deliver certificates for such Preferred Shares with attached Warrants, together with all accompanying evidences of transfer and authenticity,to or upon the order of the Company upon receipt by you, as the undersigned's agent, of the Purchase Price (as defined below), (b) present such certificates for transfer or cancellation of such Preferred Shares with attached Warrants on the Company's books and(c) receive all benefits and otherwise exercise all rights of beneficial ownership of such Preferred Shares with attached Warrants, all in accordance with the terms and subject to the conditions of the Offer. The undersigned represents and warrants that (a) the undersigned has a net long position in the Preferred Shares with attached Warrants within the meaning of Rule 14e-4 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and (b) the tender of such Preferred Shares with attached Warrants complies with Rule 14e-4. The undersigned understands that the Company will determine the single purchase price, not less than $.30 nor in excess of$.40 per Preferred Share with attached Warrants (the"Purchase Price"),that will enable it to purchase 8,750,000 Preferred Shares with attached Warrants (or such lesser number of Preferred Shares with attached Warrants as are properly tendered) pursuant to the Offer, taking into account the number of Preferred Shares with attached Warrants so tendered and the prices specified by tendering shareholders. The undersigned understands that the Company expressly reserves the right, in its sole discretion, and regardless of whether any of the events set forth in Section 6 of the Offer to Purchase shall have occurred or been determined by the Company to have occurred, to amend the Offer in any respect (including, without limitation, by increasing or decreasing the range of prices which may be paid for the Preferred Shares with attached Warrants or the number of Preferred Shares with attached Warrants being sought in the Offer). See Section 2 of the Offer to Purchase. The undersigned understands that all Preferred Shares with attached Warrants properly tendered at prices at or below the Purchase Price and not withdrawn will be purchased at the Purchase Price, upon the terms and subject to the conditions of the Offer, including the proration and the conditional tender provisions of the Offer to Purchase. The Purchase Price will be paid to the tendering shareholder in cash for all Preferred Shares with attached ek, an-ants purchased. The undersigned understands that all Preferred Shares with attached Warrants tendered and not -chased pursuant to the Offer, including Preferred Shares with attached Warrants tendered at prices in excess of the ..,rchase Price and Preferred Shares with attached Warrants not purchasedbecause of proration or conditional tenders, will be returned to the undersigned at the Company's expense as promptly as practicable following the Expiration Date. The undersigned recognizes that under certain circumstances set forth in the Offer to Purchase, the Company may not be required to purchase any of the Preferred Shares with attached Warrants tendered hereby or may purchase, pro rata with Preferred Shares with attached Warrants tendered by other shareholders, fewer than all of the Preferred Shares with attached Warrants tendered hereby. In either event, the undersigned understands that the certificates for any Preferred Shares with attached Warrants tendered and not purchased by the Company will be returned to the undersigned at the address indicated above unless otherwise indicated under the "Special Payment Instruction" or the "Special Delivery Instructions" below. The undersigned understands that tenders of Preferred Shares with attached Wan-ants pursuant to any of`the procedures described in Section 3 of the Offer to Purchase or in the accompanying Instructions will constitute an agreement between the undersigned and the Company upon the terms and subject to the conditions of the Offer. The check for the Purchase Price for tendered Preferred Shares with attached Warrants that are purchased will be issued to the order of the undersigned and mailed to the address above unless otherwise indicated under the "Special Payment Instruction"or the "Special Delivery Instructions,"below. Similarly, unless otherwise indicated under"Special Payment Instructions"any certificates for Preferred Shares with attached Wan-ants not tendered or accepted for payment (and any accompanying documents,as appropriate)will be returned to the undersigned at the address shown above. In the event that both the "Special Delivery Instructions"and the "Special Payment Instructions"are completed, the check for the Purchase Price and/or any Preferred Shares with attached Warrants not tendered or accepted for payment in the name(s)of,and said check and/or such Preferred Shares with attached Warrants will be issued and delivered to the person or persons so indicated. The undersigned recognizes that the Company has no obligation pursuant to the "Special Payment Instructions" to transfer any Preferred Shares with attached Warrants from the name of the registered holder thereof if the Company purchases none of the Preferred Shares with attached Warrants so tendered. All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned,and any obligations of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Except as stated in the Offer, this tender is irrevocable. r. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MAKING OF THE FER. HOWEVER, NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDA- iON TO SHAREHOLDERS AS TO WHETHER TO TENDER ALL OR ANY PORTION OF THEIR PREFERRED SHARES WITH ATTACHED WARRANTS, OR AS TO THE PRICE AT WHICH THEY SHOULD TENDER. SHAREHOLDERS SHOULD CONSIDER THAT THE COMPANY INTENDS TO SELECT THE LOWEST PURCHASE PRICE NOT LESS THAN $.30 NOR IN EXCESS OF $.40 PER PREFERRED SHARE WITH ATTACHED WARRANTS, THAT WILL ENABLE IT TO PURCHASE 8,750,000 PREFERRED SHARES WITH ATTACHED WARRANTS (OR SUCH LESSER NUMBER OF PREFERRED SHARES WITH ATTACHED WARRANTS AS ARE PROPERLY TEN- DERED) PURSUANT TO THE OFFER. SEE SECTION 5 OF THE OFFER TO PURCHASE. (See Instructions I and 6) (Important:complete substitute W-9 below) Must be signed by registered holder(s)exactly as name(s)appear(s)on stock certificate(s)or on a security position listing or by person(s) authorized to become registered holder(s) by certificates and documents transmitted herewith. If signature is by officers of a corporation, (L. representatives of cities or municipalities, trustees, executors, administrators, guardians, attorneys-in-fact or other acting in a fiduciary or representative capacity,please set forth full title. Holder Name(s): (Please Type or Print) x x • (Signature(s)of Owner(s)or Representative(s)) Capacity(Full Title): Dated: , 1992 Address: Zip Code Area Code and Tel.No.: GUARANTEE OF SIGNATURE(S) (Not required for officers of corporations or representatives of cities or municipalities signing in such capacity) (See Instructions 1 and 6) Authorized Signature: Name: (Please Type or Print) Title: Name of Firm: Address: tip Code Area Code and Tel. No.: Dated: , 1992 • I SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS (See Instructions 1,6,7 and 8) (See Instructions 1,6,7,and 8) To be completed ONLY if certificates for Preferred To be completed ONLY if certificates for Pre- Shares with attached Warrants not tendered or not ferred Shares with attached Warrants not tendered purchased, or the check for the Purchase Price of or not purchased, or any check issued in the name Preferred Shares with attached Warrants purchased, of the undersigned for the Purchase Price of Pre- are to be issued in the name of someone other than the ferred Shares with attached Warrants to be pur- undersigned. chased, are to be delivered to someone other than the undersigned or to the undersigned at an address other Issue ❑ check and/or ❑ certificates to: than that shown above. Name: Mail 0 check and/or ❑ certificates to: (Please Type or Print) Name Address: (Please Type or Print) Address: Zip Code (Zip Code) PAYER'S NAME: CHEMICAL BANK SUBSTITUTE Part I—PLEASE PROVIDE YOUR TIN IN Social Security No. OR Employer Form W-9 THE BOX AT RIGHT AND CERTIFY BY Identification Number Department of the Treasury SIGNING AND DATING BELOW 4 Internal Revenue Service Payer's Request for Taxpayer Part II—For Payees exempt from backup withholding, see the enclosed Guidelines Identification Number(TIN) for Certification of Taxpayer Identification Number on Substitute Form W-9. Certification—Under penalties of perjury, I certify that: (I) The number shown on this form is my correct Taxpayer Identification Number, and (2) I am not subject to backup withholding either because I have not been notified by the Internal Revenue Service (IRS)that I am subject to backup withholding as a result of failure to report all interest or dividends,or the IRS has notified me that I am no longer subject to backup withholding. Certification Instructions—You must cross out item (2) above if you have been notified by the IRS that you are subject to backup withholding because of underreporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding you received another notification from the IRS that you are no longer subject to backup withholding, do not cross out item (2). • SI "`1TURE _ DATE TOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF r"" 20% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE • ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. a enEI K or INSTRUCTIONS • Forming Part of the Terms and Conditions of the Offer 1. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of Transmittal is required (i) if this Letter of Transmittal is signed by the registered holder(s) of the Preferred Shares with attached Warrants tendered herewith, unless such holder has completed either the box entitled "Special Payment Instructions" or the box entitled "Special Delivery Instructions" or (ii) if Preferred Shares with attached Warrants are tendered for the account of a member firm of a registered national securities exchange, a member of the National Association of Securities Dealers, Inc.,or a commercial bank or trust company or other"eligible guarantor institution"as that term is defined in Rule l7Ad-5 of the Exchange Act (each being hereinafter referred to as an "Eligible Institution"). In all other cases, all signatures on this Letter of Transmittal must be guaranteed by an Eligible Institution. See Instruction 6. 2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of Transmittal is to be completed by shareholders if certificates are forwarded herewith. Certificates for all physically tendered Preferred Shares with attached Warrants, together with a properly completed and duly executed Letter of Transmittal(or a manually signed facsimile thereof) with any required signature guarantee and any other documents required by this Letter of Transmittal, = should be mailed or delivered to the Depositary at its address set forth herein and must be received by the Depositgry prior to the Expiration Date (as defined in the Offer). THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE CERTIFICATES FOR PRE- FERRED SHARES WITH ATTACHED WARRANTS AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED • MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. No alternative, conditional (other than as permitted in Section 1 of the Offer to Purchase)or contingent tenders will be accepted, and no fractional Preferred Shares with attached Warrants will be purchased. All tendering shareholders, by executing this Letter of Transmittal,waive any right to receive any notice of the acceptance of their Preferred Shares with attached Warrants for payment. Any shareholder wishing to tender Preferred Shares with attached Warrants for which the certificate(s) have been lost, stolen or mutilated should contact the Depositary for instructions for obtaining replacement certificate(s). • 3. INADEQUATE SPACE. If the space provided in the box captioned "Description of Tendered Preferred Shares with Attached Warrants"is inadequate, the certificate numbers, the number of Preferred Shares with attached Warrants represented by each certificate and the number of the Preferred Shares with attached Warrants tendered from each certificate (for partial tenders only) should be listed on a separate signed schedule and attached to this Letter of rTransmittal. 4. PARTIAL TENDERS. If fewer than all of the Preferred Shares with attached Warrants evidenced by any certificate submitted are to be tendered, fill in the number of Preferred Shares with attached Warrants that are to be tendered in the column entitled "No. of Preferred Shares with Attached Warrants Tendered (including two attached warrants per share)" in the box captioned "Description of Preferred Shares with Attached Warrants Tendered." In such case, if some or all of the tendered Preferred Shares with attached Warrants are purchased, new certificates for the remainder of the Preferred Shares with attached Warrants evidenced by your old certificates will be sent to you, unless otherwise specified in the "Special Payment Instructions" or "Special Delivery Instructions" boxes on this Letter of Transmittal, as soon as practicable after the Expiration Date of the Offer. All Preferred Shares with attached Warrants represented by certificates listed are deemed to have been tendered unless otherwise indicated. S. INDICATION OF PRICE FOR TENDERED PREFERRED SHARES WITH ATTACHED WARRANTS. For Preferred Shares with attached Warrants to be tendered properly, shareholders must check the appropriate box indicating the price per Preferred Share with attached Warrants at which they are tendering Preferred Shares with attached Warrants under"Price Per Preferred Share With Attached Warrants At Which Preferred Shares With Attached Warrants Are Being Tendered"on this Letter of Transmittal. Shareholders must check one and only one box. If more than one box is checked or if no box is checked, the tender of the Preferred Shares with attached Warrants will be improper. Shareholders who desire to tender portions of their Preferred Shares with attached Warrants at different prices must complete a separate Letter of Transmittal for each price at which they wish to tender each such portion of their Preferred Shares with attached Warrants. • r 1 • 6. SltiNAl'URES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. (a) If this Letter of Transmittal is signed by the registered holder(s) of the certificates tendered hereby, the signature(s)must correspond with the name(s) as written on the face of the certificates without any change whatsoever. (b) If any of the Preferred Shares with attached Warrants tendered hereby are held of record by two or more joint holders, all such holders must sign this Letter of Transmittal. (c) If any tendered Preferred Shares with attached Warrants are registered in different names on several certificates, pkit will be necessary to complete, sign and submit as many separate Letters of Transmittal (or manually signed facsimiles :hereof) as there are different registrations of certificates. (d) When this Letter of Transmittal is signed by the registered holder(s)of the certificates listed and tendered hereby, no endorsements of certificates or separate stock powers are required. If, however, payment is to be made or the certificates for unpurchased Preferred Shares with attached Warrants are to be issued to a person other than the registered holder(s), then the certificates transmitted hereby must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear(s) on the certificates. Signature(s) on such certificates or stock powers must be guaranteed by an Eligible Institution. See also Instruction 1. (e) If this Letter of Transmittal or any certificates or stock powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact or others acting in a fiduciary or representative capacity, such persons should so indicate when signing and must submit proper evidence satisfactory to the Company of their authority so to act. (f) If this Letter of Transmittal is signed by a person other than the registered holder(s) of the certificates listed and tendered hereby, the certificates must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear on the certificates. Signatures on such certificates or stock powers must be guaranteed by an Eligible Institution. See also Instruction 1. 7. STOCK TRANSFER TAXES. The Company will pay all stock transfer taxes, if any, payable on the transfer to it of Preferred Shares with attached Warrants purchased pursuant to the Offer. If, however, payment of the Purchase Price is to be made to,or(in the circumstances permitted by the Offer)if unpurchased Preferred Shares with attached Warrants are to be registered in the name of, any person other than the registered holder,or if tendered certificates are registered in the name of any person other than the person(s) signing this Letter of Transmittal, the amount of any stock transfer taxes (whether imposed on the registered holder(s)or such other person(s))payable on account of the transfer to such person(s) will be deducted from the Purchase Price unless satisfactory evidence of the payment of such taxes, or exemption therefrom, is submitted to the Company. 8. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If checks are to be issued in the name of, and/or certificates for unpurchased Preferred Shares with attached Warrants are to be issued to, a person other than the signer of the Letter of Transmittal, or if checks are to be sent and/or such certificates are to be returned to someone other than the signer of the Letter of Transmittal or to an address other than the one shown above in the box captioned "Description of Preferred Shares with Attached Warrants Tendered," then the boxes captioned "Special Payment Instructions" and/or "Special Delivery Instructions" on this Letter of Transmittal should be completed. 9. CONDITIONAL TENDER. As described in Section 1 of the Offer to Purchase, any shareholder who does not wish that Preferred Shares with attached Warrants purchased pursuant to the Offer be subject to proration may tender Preferred Shares with attached Warrants subject to the condition that a specified minimum number of such holder's Preferred Shares with attached Warrants must be purchased if any such Preferred Shares with attached Warrants so tendered are purchased. This preference will not be available unless the box captioned "Conditional Tender" on this Letter of Transmittal is completed. It is the tendering shareholder's responsibility to calculate such minimum number of Preferred Shares with attached Warrants and each such shareholder is strongly urged to consult with a tax advisor in connection with making any such calculation. 10. IRREGULARITIES. All questions as to the number of Preferred Shares with attached Warrants to be accepted, the Purchase Price and the validity, form, eligibility (including time of receipt) and acceptance of any tender of Preferred Shares with attached Warrants will be determined by the Company, in its sole discretion, which determination shall be final and binding. The Company reserves the absolute right to reject any or all tenders determined by it not to be in appropriate form or the acceptance for payment of or payment for which would, in the opinion of the Company's counsel, be unlawful. The Company also reserves the absolute right to waive any of the conditions set forth in the Offer or any defect or irregularity in any tender with respect to any particular Preferred Shares with attached Warrants or any particular shareholder. Neither the Company,the Depositary,the Information Agent nor any other person will be obligated to give notice of defects or irregularities in tenders, nor shall any of them incur any liability for failure to give any notice. Tenders will not . be deemed to have been made until all defects and irregularities have been cured by the tendering shareholder or waived by the Company. 11. QUESTIONS AND REUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for assistance and additional copies ofthe Offer to Purchase and this Letter of Transmittal may be directed to the Information Agent at its address set forth below. 12. SUBSTITUTE FORM W-9. Shareholders other than corporations and certain foreign individuals may be subject to backup federal income tax withholding. Each such tendering shareholder or other payee who does not otherwise establish to the satisfaction of the Depositary an exemption from backup federal income tax withholding is required to rrovide the Depositary with a correct taxpayer identification number("TIN")on Substitute Form W-9, which is provided s a part of this Letter of Transmittal, and to indicate that the shareholder or other payee is not subject to backup withholding by certifying the information in Part 2 of the Form W-9. For an individual, his TIN will generally be his social security number. Failure to complete and return the Form W-9 may subject the tendering shareholder or other payee to 20% backup federal income tax withholding on the payments made to the shareholder or other payee with respect to Preferred Shares with attached Warrants purchased pursuant to the Offer and to a$50.00 penalty imposed by the Internal Revenue Service. Backup withholding is not an additional tax. Rather, the tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained. For additional information concerning Substitute Form W-9, see the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9." .4111 IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED FACSIMILE THEREOF), TO- GETHER WITH CERTIFICATES AND OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE OF THE OFFER. The In ormation Agent for the Offer is: Mark Services, Inc. 7155 SW 47th Street,#1311 Miami,Florida 33155 For Information Call: (800)638-4880 r r