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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Dignity Partners, Inc.
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(Name of Registrant as Specified In Its Charter)
RR Donnelley
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
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Notes:
DIGNITY PARTNERS, INC.
1700 MONTGOMERY STREET, SUITE 250
SAN FRANCISCO, CALIFORNIA 94111
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AND PROXY STATEMENT
JUNE 9, 1997
To the Stockholders of Dignity Partners, Inc. (the "Company"):
You are cordially invited to attend the annual meeting of stockholders
of the Company (the "Meeting") to be held at 8:00 a.m. on June 9, 1997 at
Business Wire, 44 Montgomery Street, 39th Floor, San Francisco, California 94104
to (i) elect two directors to serve until 2000 and until their successors are
elected (see "Election of Directors"), (ii) to act on a proposal to amend the
Company's Second Amended and Restated Certificate of Incorporation (the
"Certificate of Incorporation") to change the name of the Company to Point West
Capital Corporation (see "Name Change Amendment") and (iii) to transact such
other business as may properly come before the Meeting.
All stockholders are urged to attend the Meeting or to vote by proxy.
If you do not expect to attend the Meeting in person, please sign and return the
accompanying proxy in the enclosed postage prepaid envelope. If you later find
that you can be present or for any other reason desire to revoke your proxy, you
can do so at any time before the voting. See "General."
This Notice of Annual Meeting and Proxy Statement (this "Notice") is
furnished in connection with the solicitation of proxies by the Board of
Directors of the Company from the holders of the Company's common stock, $.01
par value (the "Common Stock"), in connection with the Meeting, and all
postponements or adjournments thereof. This Notice, the accompanying proxy card,
and the Company's Annual Report on Form 10-K (as amended by Form 10K/A) for the
year ended December 31, 1996 (the "Form 10-K") are first being mailed to
stockholders on or about May 9, 1997, for the purposes set forth above.
GENERAL
Only stockholders of record at the close of business on May 5, 1997
(the "Record Date") are entitled to receive notice of the Meeting and to vote
the shares of Common Stock held by them on the Record Date at the Meeting or any
postponements or adjournments thereof.
If the accompanying proxy card is properly signed and returned to the
Company and is not revoked, it will be voted in accordance with the instructions
contained therein. Unless contrary instructions are given, the persons
designated as proxy holders in the proxy card will vote the shares of Common
Stock represented thereby for the election as directors of the Company of those
nominees proposed by the Board of Directors, for the proposed amendment to the
Certificate of Incorporation and with regard to all other matters as may
properly come before the Meeting, as recommended by the Board of Directors or,
if no such recommendation is given, in their own discretion. Each stockholder
may revoke a previously granted proxy at any time before it is voted by filing
with the Secretary of the Company a revoking instruction or a duly executed
proxy bearing a later date. The powers of the
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proxy holders will also be suspended if the person executing the proxy attends
the Meeting and requests to vote in person. Attendance at the Meeting will not,
in itself, constitute revocation of a previously granted proxy.
The cost of soliciting proxies in the enclosed form will be borne by
the Company. The Company will also request brokerage firms, banks, nominees,
custodians and fiduciaries to forward proxy materials to the beneficial owners
of shares of Common Stock as of the Record Date and will reimburse the cost of
forwarding the proxy materials in accordance with customary practice.
The presence at the Meeting, in person or by proxy, of the holders of a
majority of the shares of Common Stock outstanding at the close of business on
the Record Date will constitute a quorum. As of the Record Date, 3,653,324
shares of Common Stock were outstanding. Each outstanding share entitles its
holder to cast one vote on each matter to be voted upon at the Meeting. Under
Delaware law, properly executed proxies that are marked "abstain" or are held in
"street name" by brokers that are not voted on one or more particular proposals
(if otherwise voted on at least one proposal) will be counted for purposes of
determining whether a quorum has been achieved at the Meeting. Abstentions will
have the same effect as a vote against the proposal to which such abstention
applies. Broker non-votes will be treated neither as a vote for nor as a vote
against any of the proposals to which such broker non-votes apply. Proxy cards
that are timely signed and returned with no other marking will be voted in
accordance with the recommendation of the Board of Directors. Proxies and
ballots will be received and tabulated by the transfer agent for the Common
Stock. A list of stockholders of record as of the Record Date will be available
at the Company's executive offices for 10 days prior to the Meeting and will
also be available at the Meeting. Such list may be examined during ordinary
business hours by any stockholder of record for any purpose germane to the
Meeting.
ELECTION OF DIRECTORS
The Board of Directors presently consists of five members, divided into
three classes, with one class of directors elected each year for a three-year
term. The terms of the directors in Class 2 expire in 1997. Alan B. Perper and
Paul A. Volberding, each of whom is currently serving as a director of the
Company in Class 2, have been nominated by the Board of Directors for
re-election to terms expiring in 2000.
At the Meeting, stockholders will elect two directors to Class 2.
Proxies cannot be voted for more than two persons. Under Delaware law, the two
nominees who receive the most votes at the meeting will be elected as directors.
Unless authority to do so is specifically withheld, the persons named in the
accompanying proxy will vote for the election of both Alan B. Perper and Paul A.
Volberding. See "Directors and Executive Officers" for information regarding Mr.
Perper, Dr. Volberding and the other three directors whose terms of office
extend beyond the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
ELECTION AS A DIRECTOR OF BOTH ALAN B. PERPER AND PAUL A. VOLBERDING.
NAME CHANGE AMENDMENT
The Board of Directors has determined that a change in the Company's
name is advisable. As discussed in the Form 10-K, the Company no longer engages
in the viatical settlement business. The Board of Directors believes that the
Company's current name is no longer appropriate because it is associated with
the Company's former viatical settlement business. The Board of Directors
believes a more generic name is now appropriate. Therefore, the Board of
Directors proposes that Article I of the Certificate of Incorporation be amended
to read in its entirety as follows:
"ARTICLE I
The name of the Corporation (the "Corporation") is Point West Capital
Corporation"
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Approval of the proposed amendment to the Certificate of Incorporation will
require the affirmative vote of a majority of the shares of outstanding Common
Stock.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
PROPOSAL TO AMEND THE COMPANY'S SECOND AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION TO CHANGE THE NAME OF THE COMPANY TO POINT WEST CAPITAL
CORPORATION.
COMPANY HISTORY
On September 30, 1995, the Company and its then sole stockholder, The
Echelon Group Inc. ("Echelon") entered into a series of transactions
(collectively, the "Reorganization") to separate the business of Dignity
Partners from Echelon's other business interests. Echelon, which was owned by
Bradley N. Rotter, Alan B. Perper and John Ward Rotter, the only executive
officers of the Company (collectively, the "Executive Officers"), conducted a
number of financial services businesses in addition to the business conducted by
Dignity Partners. As part of the Reorganization, the Executive Officers created
a newly formed limited liability company, The Echelon Group of Companies, LLC
("New Echelon LLC"), and contributed to New Echelon LLC the shares of common
stock of Echelon owned by them in return for equity interests in New Echelon
LLC. Echelon then sold to New Echelon LLC substantially all of its assets other
than the then outstanding shares of common stock of Dignity Partners (the
"Echelon Asset Sale"). Following the Echelon Asset Sale, Echelon was merged with
and into Dignity Partners (the "Merger").
DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS AND EXECUTIVE OFFICERS
The name, age and current position(s) of each director and executive
officer of the Company are as follows:
NAME AGE POSITIONS AND OFFICES WITH THE COMPANY
- ---- --- --------------------------------------
Bradley N. Rotter (1) 41 Director and Chairman of the Board of Directors
Alan B. Perper 38 Director and President
John Ward Rotter (1) 39 Director, Executive Vice President and Chief Financial
Officer
Stephen T. Bow 65 Director
Paul A. Volberding, M.D. 47 Director
- ---------------
(1) Bradley Rotter and John Ward Rotter are brothers.
Bradley N. Rotter has served as a director and as Chairman of the Board
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of Directors since the Company's formation in September 1992. Mr. Rotter is the
managing member of New Echelon LLC, a Delaware limited liability company which
provides investment and financial services. See "Security Ownership of Certain
Beneficial Owners and Management." He was the majority stockholder of Echelon
and served as a director and Chairman of the Board of Echelon from 1988 until
the Merger. From 1986 to 1988, he was a founding member of Rotter, Mawhorter &
Gruye, Inc., a fixed income trading firm. Prior thereto, Mr. Rotter served in
various positions with a number of financial services firms, including Merrill
Lynch, E.F. Hutton and A.G. Becker. He received an M.B.A. from the University of
Chicago.
Alan B. Perper has served as a director and as President since the
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Company's formation. Mr. Perper is a member of New Echelon LLC and was a
stockholder and director of Echelon and its Senior Vice President from 1991
until the Merger. From 1990 to 1991, he was a founding partner in Steinberg &
Perper, a partnership that traded in foreign currencies and stock index futures.
Prior thereto, he was a corporate associate at Jones, Day,
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Reavis & Pogue (from 1988 to 1990) and Isham, Lincoln & Beale (from 1985 to
1988). He received an M.B.A. from the University of Chicago and a J.D. from Duke
University.
John Ward Rotter has served as a director and as an executive officer
----------------
since the Company's formation. He has served as Executive Vice President (since
1994) and Chief Financial Officer (since September 1995). Mr. Rotter is a member
of New Echelon LLC, was a stockholder and director of Echelon and served as
Echelon's President from 1988 until the Merger. From 1987 to 1988, he was an
Administrator Researcher at Rotter, Mawhorter & Gruye, Inc. Prior thereto, Mr.
Rotter served as an officer in the United States Army (Corps of Engineers) after
graduating from the United States Military Academy in 1979. He has a
Professional Engineering license from the Commonwealth of Virginia.
Stephen T. Bow has served as a director of the Company since March 1996.
--------------
Mr. Bow has over 40 years of management experience in the insurance industry. He
has served as Chairman and Chief Executive Officer of Anthem Life Insurance
Companies from October 1995 to December 1996 (served as President and Chief
Executive Officer of Anthem from June 1993 to December 1996) and Community
National Assurance Company since October 1995. He also served as Executive Vice
President and a director of Associated Insurance Companies, Inc. (from June
1993-December 1996) and Chairman of Acordia of San Francisco, a subsidiary of
Acordia, Inc., an insurance broker (October 1993-August 1996). From 1993 to June
1994, Mr. Bow served as Chairman of the Board and Chief Executive Officer of
Southeastern Group, Inc. and Southeastern United Corporation, each of which is a
health insurance company. From 1989 to 1993, he was President and Chief
Executive Officer of Blue Cross and Blue Shield of Kentucky (renamed
Southeastern Mutual in 1990) and President and Chief Executive Officer of Delta
Dental of Kentucky. Prior to 1989, Mr. Bow held a number of management positions
with Metropolitan Life Insurance Company and its affiliated companies.
Paul A. Volberding, M.D. has served as a director of the Company since
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March 1996. Dr. Volberding has been a professor or associate professor of
medicine at the University of California, San Francisco since 1987 and the
director of the Center for AIDS Research at that institution since 1988. He has
also served as the chief of the Medical Oncology Division and the AIDS Program
at San Francisco General Hospital for over ten years. Dr. Volberding is a
leading expert on AIDS research whose publications include over 100 articles
related to viral research, most of which relate to HIV or AIDS.
The Board of Directors elects executive officers annually and such
officers serve at the discretion of the Board of Directors.
BOARD OF DIRECTORS
CLASSIFICATION OF BOARD
The Board of Directors, which presently consists of five members, is
divided into three classes (designated Class 1, Class 2 and Class 3) as nearly
equal in number as possible. Currently, Class 1 consists of Bradley N. Rotter
and Stephen T. Bow, Class 2 consists of Alan B. Perper and Paul A. Volberding,
and Class 3 consists of John Ward Rotter, who serve until the Company's annual
stockholders' meetings to be held in 1999, 1997 and 1998, respectively. At each
annual stockholders' meeting, directors nominated to the class of directors
whose term is expiring at that annual meeting will be elected for a term of
three years, and the remaining directors will continue in office until their
respective terms expire. Accordingly, approximately one-third of the Company's
directors is elected at each annual stockholders' meeting and generally a
director will stand for election only once every three years.
COMMITTEES
The Board of Directors has an Audit Committee, currently comprised of
Stephen T. Bow, John Ward Rotter and Paul A. Volberding, and a Compensation
Committee, currently comprised of Stephen T. Bow and Paul A. Volberding. The
functions of the Audit Committee are to recommend annually to the Board of
Directors the appointment of the independent public accountants of the Company,
discuss and review the scope and the fees of
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the prospective annual audit, review the results thereof with the Company's
independent public accountants, review compliance with existing major accounting
and financial policies of the Company, review the adequacy of the financial
organization of the Company, review management's procedures and policies
relative to the adequacy of the Company's internal accounting controls and
compliance with federal and state laws relating to accounting practices, and
review and approve (with the concurrence of a majority of the disinterested
directors, if any, of the Company) transactions, if any, with affiliated
parties. The functions of the Compensation Committee are to review and approve
annual salaries and bonuses for all officers, review, approve and recommend to
the Board of Directors the terms and conditions of all employee benefit plans or
changes thereto, and administer the Company's 1995 Stock Option Plan (the
"Option Plan"). The Board of Directors also has a Director Plan Committee,
currently comprised of Bradley Rotter and Alan Perper, the sole function of
which is to administer the Stock Option Plan for Non-Employee Directors (the
"Director Plan"). The Board of Directors does not have a nominating committee.
MEETINGS
During 1996, 13 meetings of the Board of Directors were held, one
meeting of the Audit Committee was held and four meetings of the Compensation
Committee were held. During 1996, all directors attended at least 75%, in the
aggregate, of the number of meetings of the Board of Directors and the
committees of which they were members during their periods of service as
directors and committee members.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based upon a review of Forms 3, 4 and 5 furnished to the Company by its
directors and executive officers and by persons known to the Company to
beneficially own 10% or more of the outstanding common stock, the Company notes
the following deficiencies in Section 16 reports related to 1996: (i) each of
Mr. Bow and Dr. Volberding filed one day late their Form 3, (ii) each of New
Echelon LLC, Bradley Rotter, John Ward Rotter and Alan Perper reported on a Form
5 four transactions by New Echelon that should have been reported earlier on
Forms 4, (iii) John Ward Rotter reported on a Form 5 one transaction by his
spouse that should have been reported earlier on a Form 4 and (iv) Heartland
Advisors, Inc., which beneficially owns more than 10% of the outstanding Common
Stock did not, to the Company's knowledge, file a Form 3 or report any
transactions on a Form 4 or Form 5.
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
The Company pays each non-employee director an annual retainer of
$15,000 and a fee of $750 for each board or committee meeting attended. All
directors are reimbursed for expenses incurred to attend meetings of the Board
of Directors or committees thereof. The Director Plan provides for the automatic
grant of certain options to non-employee directors. Any person who becomes a
non-employee director automatically receives at such time a non-qualified option
to purchase 10,000 shares of Common Stock at an exercise price equal to fair
market value on the date of grant (i.e. the date of becoming a director). Such
options vest 33%, 33% and 34% at the first, second and third annual
stockholder's meeting following the date of grant if the non-employee director
serves as such through such meeting. The Director Plan also provides that at
each annual stockholders' meeting, each non-employee director elected at or
continuing his term after such meeting receives automatically a non-qualified
option to purchase 5,000 shares of Common Stock at an exercise price equal to
fair market value on the date of grant (i.e. the date of the stockholders'
meeting). Such options vest 100% after the non-employee director has served as
such until the next annual stockholders' meeting. All options vest immediately
(to the extent they would have vested at the next annual stockholders' meeting)
upon a Change of Control (as defined in the Director Plan). Each option expires
after ten years or earlier upon certain events. During 1996, each of Mr. Bow and
Dr. Volberding received (i) an option to purchase 10,000 shares with an exercise
price of $13.50 upon joining the Board and (ii) an option to purchase 5,000
shares with an exercise price of $12.38 at the annual stockholders' meeting.
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SUMMARY COMPENSATION TABLE
The table below provides information relating to compensation for the
years ended December 31, 1996, 1995 and 1994, for each of the Executive
Officers. The amounts shown below reflect compensation which was earned in the
respective year by the Executive Officers.
ANNUAL COMPENSATION
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NAME AND ALL OTHER
PRINCIPAL POSITION YEAR SALARY ($)(1) BONUS ($) COMPENSATION ($)(2)
- ------------------ ---- ------------- --------- -------------------
Bradley N. Rotter 1996 115,000 17,250 16,928
Chairman of the Board 1995 115,000 -- 2,629
1994 115,000 -- --
Alan B. Perper 1996 115,000 17,250 16,928
President 1995 115,000 -- 25,638
1994 115,000 -- --
John W. Rotter 1996 115,000 17,250 14,476
Executive Vice President 1995 115,000 -- 19,707
1994 115,000 -- --
(1) Prior to October 1, 1995, all executive salaries were earned but
were not actually paid until the Company's initial public offering.
See "Certain Relationships and Related Transactions--Accrual of
Salaries."
(2) Represents contributions to the Company's profit sharing plan related
to compensation earned during the indicated year.
PROFIT-SHARING PLAN
Prior to the Merger, all individuals performing services on behalf of
Dignity Partners were employed by Echelon. Pursuant to the Reorganization all
but three of the Echelon employees became employees of Dignity Partners. Echelon
maintained a profit sharing plan (the "Plan") for its employees which Dignity
Partners assumed by virtue of the Merger. Each employee on January 1, 1993
became a participant in the Plan. Each employee hired after January 1, 1993 and
who has been employed for at least one year becomes a participant in the Plan.
The Plan provides for discretionary annual contributions by the Company for the
account of each participant. In any year in which the Plan is "top-heavy" within
the meaning of the Internal Revenue Code (the "Code"), the Plan requires,
consistent with the Code, that a minimum contribution be made for non-key
employees. The contribution is allocated among participants based on their
compensation under an allocation formula integrated with Social Security.
Participants vest 20% in their Plan accounts after two years of service
(excluding any service prior to 1993) and an additional 20% after each of the
next four years of service. Upon termination following permanent disability or
on retirement at or after age 65, all amounts credited to a participant's
account are distributable, in a lump sum payment or in installments, as directed
by the participant. Upon death, all amounts credited to a participant's account
become fully vested and are distributed to the participant's surviving spouse or
designated beneficiary.
OPTION PLAN
The Option Plan authorizes the granting of options to purchase shares
of Common Stock to employees (including officers) and consultants of the Company
and its subsidiaries. The Compensation Committee is authorized to grant options
with such terms, including price, vesting, termination and other, as they deem
appropriate. During 1996, none of the Executive Officers was granted stock
options under the Option Plan.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
From January to March 1996, the Compensation Committee was comprised
of Bradley N. Rotter and Alan B. Perper. During such time, the Committee did not
make any compensation decisions. Mr. Rotter and Mr. Perper had various
transactions with the Company during 1996. See "Certain Relationships and
Related Transactions." Since March 1996, the Compensation Committee has been
comprised of Mr. Bow and Dr. Volberding.
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is comprised of
two non-employee directors. This Committee's responsibilities include approving
annual salaries and bonuses for all officers, reviewing and recommending to the
Board of Directors the terms and conditions of all employee benefit plans and
changes thereto and administering the Option Plan.
The Compensation Committee's goals are to assure that executive
compensation is linked to the Company's business strategies, goals and
performance, and that the Company's programs attract, retain and motivate the
high quality executives required for the success of the business. These
objectives are achieved through the programs summarized below.
All three of the Executive Officers received essentially the same
compensation during 1996, since they contributed different, but equally valuable
services to the Company.
BASE SALARY
Base salaries for the Executive Officers were set in 1993 and have
remained the same through 1996. Given the uncertainty surrounding the Company's
future (see the Form 10-K (as amended)), the Committee decided not to raise the
Executive Officer's salaries during 1996. In the future, base salaries for the
Executive Officers will be determined by evaluating the responsibilities of the
respective position and comparing such salaries to those of other executive
positions in the marketplace. From time to time, the Compensation Committee may
survey executive salaries of companies in the financial services industries for
the purposes of such comparison.
ANNUAL INCENTIVES
The Executive Officers have an opportunity to earn annual bonuses based
on financial and non-financial goals. In addition, the Committee approves
adjustments to the bonus as may be necessary to insure against unmerited
windfalls or penalties due to accounting changes or other non-operating factors.
There are no set preferences for any financial or non-financial performance
measure, and the Committee's decision regarding the bonus is ultimately
subjective. The annual bonus payout can range between 0% and 15% of annual
salary. In 1996, the Committee awarded each of the Executive Officers an annual
bonus payout of 15% of annual salary. A significant factor in the decision for
the bonus was the quick action the Executive Officers took in 1996 to prevent a
liquidity crisis and/or possible bankruptcy of the Company.
PROFIT SHARING PLAN
A long term incentive for the Executive Officers and other employees is
the Company's profit sharing plan. The Compensation Committee decides the
Company's overall annual contribution percentage for all plan participants. In
1996, the Company made a 10% contribution. The contribution is allocated among
participants based on their compensation under an allocation formula integrated
with Social Security. See "Executive Compensation--Profit-Sharing Plan."
THE COMPENSATION COMMITTEE
Stephen T. Bow
Paul A. Volberding
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PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the
Company's cumulative return on its Common Stock during 1996 with that of the
Nasdaq Financial Index and the Nasdaq Stock Market Index. The comparison assumes
$100 was invested on February 14, 1996 (the date of the Company's initial public
offering) in the Company's common stock and in each of the foregoing indices and
that dividends were reinvested.
PERFORMANCE GRAPH APPEARS HERE
NASDAQ NASDAQ
Measurement Period DIGNITY FINANCIAL STOCK
(Fiscal Year Covered) PARTNERS STOCKS MARKET
- --------------------- --------------- --------- ----------
For Period Ending 2/14/96 $100 $100 $100
For Period Ending 12/31/96 $ 20 $126 $119
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of December 31, 1996, certain
information with respect to the beneficial ownership of the Company's Common
Stock by: (a) each person owning of record or known by the Company to own
beneficially more than five percent of the outstanding shares of Common Stock;
(b) each director; (c) each of the Executive Officers and (d) all of the
Executive Officers and directors of the Company as a group. All information with
respect to beneficial ownership has been furnished by the respective director,
executive officer or stockholder, as the case may be, or has been derived from
documents filed with the Securities and Exchange Commission. See "Directors and
Executive Officers" and "Certain Relationships and Related Transactions."
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NAME NUMBER (1) PERCENT(1)
- ---- ---------- ----------
The Echelon Group of Companies, LLC(2).............. 1,589,324 38.3%
Bradley N. Rotter(2)................................ 1,589,324 38.3
Alan B.Perper(2).................................... 1,589,324 38.3
John Ward Rotter(2(3)............................... 1,593,324 38.4
Stephen T. Bow(4)................................... 3,333 0.1
Paul A. Volberding, M.D(4).......................... 3,333 0.1
All directors and executive officers as a group..... 1,599,990 38.9
Heartland Advisors, Inc.(5)......................... 595,000 13.9
Fleet Financial Group, Inc(6)....................... 225,000 5.2
- -------------------
(1) Beneficial ownership was determined in accordance with Rule 13d-3 under
the Exchange Act.
(2) The Echelon Group of Companies, LLC (i.e., New Echelon LLC), a limited
liability company, is the record holder of 1,589,324 shares of Common
Stock. Bradley Rotter, Alan Perper and John Ward Rotter, who are the
only members of New Echelon LLC, share voting and investment power with
respect to these shares. Such individuals disclaim beneficial ownership
of these shares except to the extent of their equity interest in New
Echelon LLC. The address for New Echelon LLC and each of the Executive
Officers is 1700 Montgomery Street, Suite 250, San Francisco,
California 94111.
(3) Includes 4,000 shares of Common Stock subject to a stock option granted
to Mr. Rotter's wife and exercisable within 60 days of December 31,
1996.
(4) Represents shares issuable within 60 days of December 31, 1996 pursuant
to the exercise of stock options granted under the Director Plan.
(5) According to its most recently filed Schedule 13G, as of December 31,
1996, Heartland Advisors, Inc. had
sole voting and dispositive power over these shares of Common Stock.
Heartland Advisors, Inc. disclaims beneficial ownership of these
shares of Common Stock. Its address is 790 North Milwaukee Street,
Milwaukee, Wisconsin 53202.
(6) According to its most recently filed Schedule 13G, as of December 31,
1996, Fleet Financial Group, Inc. had sole voting and dispositive
power over these shares of Common Stock. Fleet Financial Group, Inc.
disclaims beneficial ownership of these shares of Common Stock.
Its address is One Federal Street, Boston, Massachusetts 02110.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ALLOCATION AND ACCRUAL OF EXPENSES
Echelon and the Company shared leased office space and other expenses
prior to the Merger, and the Company currently shares such expenses with New
Echelon LLC. Prior to the Merger, Echelon paid rent, salaries and other expenses
related to the Company's business and lent funds to the Company. Such amounts
were represented by a payable from Dignity Partners sold by Echelon to New
Echelon LLC in connection with the Reorganization. The Company used a portion of
the net proceeds to it in the initial public offering in February 1996 to pay to
New Echelon LLC such payable, which equaled $2,191,007 on the date of such
repayment.
In February 1996, the Company executed an agreement with New Echelon
LLC which governs the allocation of certain shared expenses. The agreement
provides that, so long as New Echelon LLC uses a portion of the space leased by
the Company in San Francisco, New Echelon LLC will pay an amount equal to 35% of
the amount of rent and required liability insurance premiums paid by the Company
in connection with such space. New Echelon LLC's right to use the space will
terminate on the earlier of (i) the date the agreement terminates, (ii) three
days after New Echelon LLC notifies the Company that New Echelon LLC no longer
desires to use any portion of the space, or (iii) three days after the Company
notifies New Echelon LLC that New Echelon LLC may no longer use any portion of
the space. The agreement also acknowledges that the Company currently employs,
and may hereafter hire, individuals who regularly perform functions on behalf of
both the Company and New Echelon LLC ("shared employees"). Pursuant to the
agreement, New Echelon LLC (i) will pay directly to (or on behalf of) each
shared employee a designated percentage of such shared employee's salary and any
contributions to defined benefit plans, and (ii) will reimburse the Company a
specified percentage of the Company's costs of all other benefits paid
9
to (or on behalf of) such shared employee. Such percentage will be determined by
reference to the percentage of time such shared employee devotes to each entity.
Once a month, the Company and New Echelon LLC will reassess the identity of
shared employees. The provisions regarding shared employees will terminate on
the date the agreement terminates, which will be the earlier of (i) April 1998,
subject to one-year automatic extensions in the absence of 30 days' written
notice of termination by the Company, or (ii) the date the lease for the shared
office space terminates or expires. Under the agreement, each party is
responsible for providing, at its sole cost and expense, all supplies it will
need. During 1996, pursuant to this agreement, New Echelon LLC paid rent and
insurance in the amount of $33,962 and paid $11,887 of compensation for shared
employees.
ACCRUAL OF SALARIES
Salaries payable to the Executive Officers for the fiscal years ended
December 31, 1993 and 1994 and for the nine months ended September 30, 1995 were
accrued but not paid. Salaries earned by each of the Executive Officers since
October 1, 1995 have been paid in accordance with the Company's standard payroll
arrangements. Salaries were accrued for Alan Perper and John Ward Rotter for the
fiscal year ended December 31, 1993, and for each of the Executive Officers
during the fiscal year ended December 31, 1994 and during the nine months ended
September 30, 1995, at the annual rate of $115,000. The Company paid to the
Executive Officers from the net proceeds of the initial public offering in
February 1996 the amount of accrued salaries through September 30, 1995 related
to their respective services. Such accrued unpaid salaries equaled $316,250 for
each of Alan Perper and John Ward Rotter and $201,250 for Bradley Rotter.
PROVISION OF WORKING CAPITAL
Prior to the Company's initial public offering, New Echelon LLC,
Echelon or the Executive Officers advanced funds to the Company to enable it to
purchase life insurance policies and pay operating expenses. The annual interest
rate on such advances was 8%. Each advance generally was repaid by the end of
the month in which the advance was made through borrowings under the Company's
revolving credit facility. From January 1995 through December 31, 1995, the
largest amount of funds advanced to the Company by Echelon or the Executive
Officers was $1,590,000. Approximately $1.0 million of the net proceeds received
by the Company in its initial public offering in February 1996 were used to
repay to New Echelon LLC funds advanced (and interest thereon) since the
Reorganization to fund policy purchases and operations by New Echelon LLC to the
Company. In October 1995, the Company borrowed $1.2 million under a working
capital facility to repay to Echelon advances made by Echelon which were
outstanding at September 30, 1995. All borrowings under such facility were
repaid in February 1996 with proceeds to the Company in its initial public
offering.
New Echelon LLC and each of the Executive Officers also executed
guarantees under the Company's revolving credit facility pursuant to which each
of them guaranteed the obligations of the Company under such facility. Prior to
the Reorganization, Echelon was also a guarantor of the Company's obligations
under such facility. In March 1996, New Echelon LLC and each of the Executive
Officers were released entirely from the guaranties they previously executed in
favor of the lender under such facility; however, each of the Executive Officers
executed a "validity guaranty." In August 1996, such facility was prepaid in
full and terminated, at which time the validity guaranties were terminated.
In addition, New Echelon LLC also guaranteed the Company's obligations
under its working capital facility. Such guarantee terminated upon the payment
and termination of such facility in February 1996.
INDEPENDENT ACCOUNTANTS
The Company has appointed KPMG Peat Marwick LLP ("Peat Marwick") as the
Company's independent accountants for the fiscal year ending December 31, 1997.
Peat Marwick served as the Company's independent accountants for the fiscal
years ended December 31, 1996 and 1995 and, in connection therewith, provided
assistance with respect to the Company's initial public offering.
Representatives of Peat Marwick are expected to be present at the Meeting to
respond to appropriate questions and to make such statements as they desire.
10
In July 1995, in anticipation of the Company's initial public offering,
the Company's Board of Directors appointed Peat Marwick as the Company's
independent certified public accountants. Prior thereto, Arthur F. Bell, Jr. &
Associates, L.L.C. served as the Company's independent accountants. After a
review of proposals from accounting firms and an evaluation of the Company's
needs in connection with the offering and its anticipated status as a public
company, the Board of Directors retained Peat Marwick.
During the Company's fiscal years ended December 31, 1993 and 1994,
and the subsequent interim period from January 1, 1995 through July 1995 (when
Peat Marwick was retained), there were no disagreements with Arthur F. Bell, Jr.
& Associates, L.L.C. on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure which, if not
resolved to its satisfaction, would have caused Arthur F. Bell, Jr. &
Associates, L.L.C. to make reference thereto in its report on the financial
statements for such years. Neither of the reports of Arthur F. Bell, Jr. &
Associates, L.L.C. on the Company's financial statements for the fiscal years
ended December 31, 1993 and 1994 contained an adverse opinion or a disclaimer of
opinion, or was qualified or modified as to uncertainty, audit scope or
accounting principles.
OTHER MATTERS
As of the date of this Notice, the Company knows of no business that
will be presented for consideration at the Meeting other than the election of
directors and the proposed amendment to the Certificate of Incorporation
referred to above. Proxies will be voted in respect of any other matters as may
properly come before the Meeting in accordance with the recommendation of the
Board of Directors or, if no such recommendation is given, in the discretion of
the person or persons voting the proxies.
STOCKHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING
Any proposal of a stockholder intended to be presented at the Company's
1998 annual meeting of stockholders (the "1998 Meeting") must be received by the
Secretary of the Company by January 16, 1998, to be included in the Company's
proxy, notice of meeting and proxy statement relating to the 1998 Meeting.
Any stockholder wishing to submit a proposal at the 1998 Meeting must
also comply with certain provisions of the Certificate of Incorporation and the
Company's Amended and Restated By-Laws (collectively, the "Charter Documents").
The Charter Documents require written notice of any such proposal (and certain
other information) to be delivered to the Secretary of the Company generally not
later than 60 days in advance of the date of the meeting. The Company will
provide (without charge) a copy of the Charter Documents to any holder of record
of Common Stock. Requests for copies should be directed to: Secretary, Dignity
Partners, Inc., 1700 Montgomery Street, Suite 250, San Francisco, California
94111.
By order of the Board of Directors,
John Ward Rotter
Secretary
May 12, 1997
11
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
DIGNITY PARTNERS, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS JUNE 9, 1997
The undersigned acknowledges receipt of the accompanying Notice of Annual
Meeting of Stockholders and Proxy Statement and the Annual Report on Form 10-K
for the year ended December 31, 1996 of DIGNITY PARTNERS, INC. (the "Company")
and hereby appoints Bradley N. Rotter, Alan B. Perper and John Ward Rotter, and
each of them, attorneys and proxies, with full power of substitution and
resubstitution, to vote all shares of common stock of the Company held of record
by the undersigned at the close of business on May 5, 1997, at the annual
meeting of stockholders of the Company to be held at 8:00 a.m. on June 9, 1997,
and at any adjournment thereof, as follows:
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
IF THIS PROXY IS PROPERLY EXECUTED, THE SHARES REPRESENTED HEREBY WILL BE VOTED
IN THE MANNER DIRECTED AND, IN THE ABSENCE OF DIRECTION AS TO THE MANNER OF
VOTING, WILL BE VOTED FOR THE ELECTION AS DIRECTOR OF BOTH NOMINEES
LISTED, AND FOR THE PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S SECOND
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO CHANGE THE NAME
OF THE COMPANY TO POINT WEST CAPITAL CORPORATION.
Please mark your votes as this [X]
1. ELECTION OF DIRECTORS:
AUTHORITY TO WITHHOLD
VOTE FOR authority to
both nominees vote for
listed (except both nominees
as indicated) listed.
[ ] [ ]
(INSTRUCTION: To withhold authority to vote for either nominee, write that
nominee's name in the space provided below.)
ALAN B. PERPER AND PAUL A. VOLBERDING
- --------------------------------------
FOR AGAINST ABSTAIN
2. Proposal to approve an amendment to the Company's
Second Amended and Restated Certificate of [ ] [ ] [ ]
Incorporation to change the name of the Company to
Point West Capital Corporation.
3. As recommended by the Board of Directors, or if no
such recommendation is given in their discretion, to vote
upon such other business as may properly come before
said meeting or any adjournment thereof.
I plan to attend
the meeting [ ]
STOCKHOLDERS ARE URGED TO MARK, DATE, SIGN AND RETURN THIS PROXY PROMPTLY IN THE
ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
SIGNATURE(S) DATE:
------------------------------- -------------------
Please date this proxy and sign exactly as name(s) appears above and return
signed proxy in enclosed envelope. When shares are held by joint tenants,
both should sign. When signing as attorney, executor, administrator, trustee
or guardian, please give full title as such. If a corporation, please sign in
full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.