92-1202 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.
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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.
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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.
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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
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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
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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
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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
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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).
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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.
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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."
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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
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