<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 14, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
<TABLE>
<S> <C> <C>
EXACT NAME OF THE REGISTRANTS AS STATE OR OTHER JURISDICTION OF PRIMARY STANDARD INDUSTRIAL
SPECIFIED IN THEIR CHARTERS INCORPORATION OR ORGANIZATION CLASSIFICATION CODE NUMBER
SUPERIOR TELECOM INC. Delaware 3357
SUPERIOR TRUST I Delaware 9999
<CAPTION>
EXACT NAME OF THE REGISTRANTS AS I.R.S. EMPLOYER
SUPERIOR TELECOM INC. 55-2248978
SUPERIOR TRUST I [Pending]
<CAPTION>
SPECIFIED IN THEIR CHARTERS IDENTIFICATION NO.
</TABLE>
1790 BROADWAY
NEW YORK, NEW YORK 10019-1412
(212) 757-3333
(Address, including zip code, and telephone number, including area code, of
Registrants' principal executive offices)
----------------------------------
STEVEN S. ELBAUM
SUPERIOR TELECOM INC.
SUPERIOR TRUST I
1790 BROADWAY
NEW YORK, NEW YORK 10019-1412
(212) 757-3333
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
----------------------------------
COPIES TO:
RONALD R. PAPA, ESQ. RICHARD CLIMAN, ESQ.
PROSKAUER ROSE LLP PAUL QUINLAN, ESQ.
1585 BROADWAY COOLEY GODWARD LLP
NEW YORK, NEW YORK 10036 FIVE PALO ALTO SQUARE
(212) 969-3000 3000 EL CAMINO REAL
PALO ALTO, CALIFORNIA 94306
(650) 843-5000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the registration statement becomes effective and the effective
time of the proposed merger of SUT Acquisition Corp. with and into Essex
International Inc., as described in the Agreement and Plan of Merger dated as of
October 21, 1998, attached as Appendix A to the Joint Proxy Statement/Prospectus
forming a part of this registration statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / / ________
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier
registration statement for the same offering. / / ______________________________
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / _____________________________________________________
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE
SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT(1) OFFERING PRICE(1)(2)
<S> <C> <C> <C>
8 1/2% Trust Convertible Preferred Securities of
Superior Trust I................................... 3,332,254 $50 $166,612,700
8 1/2% Convertible Subordinated Debentures of
Superior TeleCom Inc. due 2014..................... (3) (3) (3)
Common Stock, $0.01 par value, of Superior TeleCom
Inc. .............................................. 2,975,369 (4) (4)
Guarantee of Superior TeleCom Inc.................. (5) (5) (5)
<CAPTION>
TITLE OF EACH CLASS OF AMOUNT OF
SECURITIES TO BE REGISTERED REGISTRATION FEE
<S> <C>
8 1/2% Trust Convertible Preferred Securities of
Superior Trust I................................... $46,319
8 1/2% Convertible Subordinated Debentures of
Superior TeleCom Inc. due 2014..................... --
Common Stock, $0.01 par value, of Superior TeleCom
Inc. .............................................. --
Guarantee of Superior TeleCom Inc.................. --
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(f)(1) under the Securities Act of 1933, as amended
(the "Securities Act").
(2) Exclusive of accrued interest and distributions, if any.
(3) Up to $171,765,650 in aggregate principal amount of 8 1/2% Convertible
Subordinated Debentures due 2014 (the "Convertible Subordinated Debt
Securities") of Superior TeleCom Inc., a Delaware corporation ("Superior"),
to be issued to Superior Trust I, a Delaware statutory business trust (the
"Trust"), in connection with the issuance by the Trust of 8 1/2% Trust
Convertible Preferred Securities (the "Trust Preferred Securities"). The
Convertible Subordinated Debt Securities may be distributed, under certain
circumstances, to the holders of Trust Preferred Securities for no
additional consideration.
(4) The Trust Preferred Securities are convertible into shares of common stock,
par value $0.01 per share ("Superior Common Stock"), of Superior. Each Trust
Preferred Security is initially convertible into 0.8929 shares of Superior
Common Stock, subject to adjustment under certain circumstances. This
registration statement includes such additional shares of Superior Common
Stock as may be issuable pursuant to such adjustments. The shares of
Superior Common Stock issued upon conversion of the Trust Preferred
Securities will be issued for no additional consideration. The provisions of
Rule 416 under the Securities Act shall apply to this registration statement
and the number of shares of Superior Common Stock registered on this
registration statement automatically shall increase or decrease as a result
of any future stock split, stock dividend, reverse stock split,
reclassification, recapitalization or other similar transaction.
(5) Includes the obligation of Superior under the Guarantee (as defined herein)
and certain back-up undertakings under (i) the Indenture (as defined herein)
pursuant to which the Convertible Subordinated Debt Securities are to be
issued and (ii) the Amended and Restated Declaration of Trust (as defined
herein), including Superior's obligation to pay costs, expenses, debts and
liabilities of the Trust (other than with respect to the Trust Preferred
Securities and common securities of the Trust), which in the aggregate
provide a full and unconditional guarantee of amounts due on the Trust
Preferred Securities, to the extent the Trust has funds available therefor.
No separate consideration will be received for the Guarantee and such
back-up undertakings. The Guarantee is not traded separately.
----------------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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[LOGO]
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[LOGO] [LOGO]
</TABLE>
____________, 1999
Dear Stockholder:
The Boards of Directors of Superior TeleCom Inc. and Essex International
Inc. have agreed to merge these two companies. If the merger is completed, Essex
will become a wholly owned subsidiary of Superior.
In the merger, Essex stockholders will receive 0.64 of a share of 8 1/2%
trust convertible preferred securities of Superior Trust I, a business trust in
which Superior owns all the common equity interests, for each share of Essex
common stock that they own. The trust preferred securities will be convertible
into shares of Superior common stock on the terms and conditions described in
the attached Joint Proxy Statement/Prospectus. We estimate that the trust
preferred securities to be issued to Essex stockholders will be convertible into
approximately 17% of the outstanding common stock of Superior after the merger.
The merger cannot be completed unless the stockholders of Essex approve it.
In addition, Superior and Essex have agreed that Superior will request that its
stockholders approve the amendment of Superior's certificate of incorporation to
increase the number of authorized shares of preferred stock and common stock of
Superior and the issuance of trust preferred securities to Essex stockholders in
the merger. Superior will also request that its stockholders approve an
amendment to the Superior 1996 Stock Option Plan.
The merger is also subject to other conditions, all of which may be waived.
We have scheduled special meetings for our stockholders to vote on these
matters.
AS A RESULT OF THE COMPLETION OF A TENDER OFFER FOR SHARES OF ESSEX COMMON
STOCK ON NOVEMBER 27, 1998, A SUBSIDIARY OF SUPERIOR OWNS AND HAS THE RIGHT TO
VOTE AT THE ESSEX MEETING SUFFICIENT SHARES TO APPROVE THE MERGER WITHOUT THE
VOTE OF ANY OTHER STOCKHOLDER AND HAS AGREED TO VOTE ITS SHARES IN FAVOR OF THE
MERGER. IN ADDITION, THE ALPINE GROUP, INC., THE MAJORITY STOCKHOLDER OF
SUPERIOR, OWNS AND HAS THE RIGHT TO VOTE AT THE SUPERIOR MEETING SUFFICIENT
SHARES TO APPROVE THE PROPOSALS DESCRIBED ABOVE WITHOUT THE VOTE OF ANY OTHER
STOCKHOLDER AND HAS AGREED TO VOTE ITS SHARES IN FAVOR OF SUCH PROPOSALS.
THEREFORE, THE APPROVAL OF THE MERGER AND THE OTHER PROPOSALS DESCRIBED ABOVE IS
ASSURED.
Whether or not you plan to attend your stockholders' meeting, please take
the time to vote on the proposal(s) to be submitted at your meeting by
completing and mailing the enclosed proxy card to us. If you sign, date and mail
your proxy card without indicating how you wish to vote, your proxy will be
counted as a vote in favor of the proposal(s) submitted at your meeting. If you
fail to return your proxy card, the effect in most cases will be a vote against
the proposal(s) submitted at your meeting unless you attend your meeting and
vote in person for the proposal(s).
The dates, times and places of the stockholders' meetings are as follows:
FOR ESSEX INTERNATIONAL INC. STOCKHOLDERS:
___________, 1999 AT ____ A.M., LOCAL TIME
____________________________
____________________________
FOR SUPERIOR TELECOM INC. STOCKHOLDERS:
___________, 1999 AT ____ A.M., LOCAL TIME
____________________________
____________________________
<PAGE>
This Joint Proxy Statement/Prospectus provides you with detailed information
about the proposed merger to be considered by the stockholders of Essex and the
proposals to be considered by the stockholders of Superior. In addition, you may
obtain information about our companies from documents that we have filed with
the Securities and Exchange Commission. We encourage you to read this entire
document carefully.
<TABLE>
<S> <C>
Steven R. Abbott Steven S. Elbaum
President of Essex International Inc. Chairman of the Board and Chief
Executive Officer of Superior TeleCom
Inc.
</TABLE>
YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE 22. NEITHER
THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATOR HAS
APPROVED OR DISAPPROVED OF THE SECURITIES TO BE ISSUED UNDER THIS JOINT PROXY
STATEMENT/ PROSPECTUS OR DETERMINED IF THIS JOINT PROXY STATEMENT/PROSPECTUS IS
ACCURATE OR ADEQUATE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE INFORMATION IN THIS JOINT PROXY STATEMENT/PROSPECTUS IS NOT COMPLETE AND
MAY BE CHANGED. A REGISTRATION STATEMENT RELATING TO THE SECURITIES HAS BEEN
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THE SECURITIES MAY NOT BE
SOLD UNTIL THE REGISTRATION STATEMENT HAS BECOME EFFECTIVE. THIS JOINT PROXY
STATEMENT/PROSPECTUS IS NOT AN OFFER TO SELL SECURITIES AND IT IS NOT SOLICITING
AN OFFER TO BUY SECURITIES IN ANY STATE WHERE OFFERS OR SALES ARE NOT PERMITTED.
This Joint Proxy Statement/Prospectus is dated ___________, 1999 and is
first being mailed to stockholders on or about ___________, 1999.
<PAGE>
PRELIMINARY JOINT PROXY STATEMENT
ESSEX INTERNATIONAL INC.
1601 WALL STREET
FORT WAYNE, INDIANA 46802
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON , 1999
TO THE STOCKHOLDERS OF
ESSEX INTERNATIONAL INC.:
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of Essex
International Inc., a Delaware corporation ("Essex"), will be held at a.m.,
local time, on , 1999, at (together with all
adjournments and postponements thereof, the "Essex Meeting"), for the following
purposes:
1. To consider and vote upon a proposal to approve and adopt the Agreement and
Plan of Merger, dated as of October 21, 1998, by and among Superior TeleCom
Inc., a Delaware corporation ("Superior"), SUT Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of Superior ("Merger Sub"), and
Essex. The merger agreement provides for the merger of Merger Sub with and
into Essex with the result that Essex will become a wholly owned subsidiary
of Superior, and the issuance of 0.64 of a share of 8 1/2% trust convertible
preferred securities of Superior Trust I, a business trust in which Superior
owns all the common equity interests, in exchange for each outstanding share
of Essex common stock. The merger is described more fully in the attached
Joint Proxy Statement/Prospectus, which includes a copy of the merger
agreement.
2. To consider and act upon such other business and matters or proposals as may
properly come before the Essex Meeting.
The Board of Directors of Essex has fixed the close of business on
, 1999 as the record date for determining the holders of Essex common
stock having the right to receive notice of, and to vote at, the Essex Meeting.
Only holders of record of Essex common stock at the close of business on such
date are entitled to notice of, and to vote at, the Essex Meeting. A list of
Essex's stockholders entitled to vote at the Essex Meeting will be available
during normal business hours at Essex's executive offices, 1601 Wall Street,
Fort Wayne, Indiana 46802, for ten days prior to the Essex Meeting for
examination by any Essex stockholder for purposes germane to the Essex Meeting.
THE BOARD OF DIRECTORS OF ESSEX RECOMMENDS THAT YOU VOTE "FOR" APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT AND THE OTHER PROPOSALS PRESENTED AT THE ESSEX
MEETING.
Adoption of the merger agreement requires the affirmative vote of the
holders of a majority of the outstanding shares of Essex common stock entitled
to vote at the Essex Meeting. All stockholders are cordially invited to attend
the Essex Meeting in person. Whether or not you expect to attend the Essex
Meeting, please sign and mail promptly the enclosed proxy that is being
solicited on behalf of the Board of Directors of Essex. A return envelope that
requires no postage if mailed in the United States is enclosed for that purpose.
The proxies of stockholders who attend the meeting in person may be withdrawn
and such stockholders may vote personally at the meeting.
BECAUSE MERGER SUB OWNS A MAJORITY OF THE OUTSTANDING SHARES OF ESSEX COMMON
STOCK, MERGER SUB HAS SUFFICIENT VOTING POWER TO APPROVE AND ADOPT THE MERGER
AGREEMENT EVEN IF NO OTHER STOCKHOLDER OF ESSEX VOTES IN FAVOR OF THE ADOPTION
OF THE MERGER AGREEMENT. MERGER SUB HAS AGREED TO VOTE ITS SHARES IN FAVOR OF
THE ADOPTION OF THE MERGER AGREEMENT. THEREFORE, APPROVAL AND ADOPTION OF THE
MERGER AGREEMENT AND APPROVAL OF THE MERGER AT THE ESSEX MEETING IS ASSURED.
By Order of the Board of Directors
Debra F. Minott
Senior Vice President, General Counsel
and Secretary
Fort Wayne, Indiana
, 1999
YOUR VOTE IS IMPORTANT TO US.
PLEASE COMPLETE, SIGN, DATE AND RETURN YOUR PROXY.
HOLDERS OF ESSEX COMMON STOCK SHOULD NOT
SEND STOCK CERTIFICATES WITH THEIR PROXY CARDS.
<PAGE>
PRELIMINARY PROXY STATEMENT
SUPERIOR TELECOM INC.
1790 BROADWAY
NEW YORK, NEW YORK 10019
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD , 1999
TO THE STOCKHOLDERS
OF SUPERIOR TELECOM INC.:
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of Superior
TeleCom Inc., a Delaware corporation ("Superior"), will be held at a.m.,
local time, on , 1999, at (together with all
adjournments and postponements thereof, the "Superior Meeting"), for the
following purposes:
1. To consider and vote upon a proposal (a) to amend Superior's
certificate of incorporation to increase the number of authorized shares of
preferred stock and common stock of Superior and (b) to authorize the
issuance of shares of 8 1/2% trust convertible preferred securities of
Superior Trust I, a business trust in which Superior owns all the common
equity interests, and the common stock of Superior issuable upon conversion
of the trust preferred securities, as set forth in the Agreement and Plan of
Merger, dated as of October 21, 1998, by and among Superior, SUT Acquisition
Corp., a Delaware corporation and a wholly owned subsidiary of Superior, and
Essex International Inc., a Delaware corporation ("Essex"). The terms of the
trust preferred securities are described more fully in the attached Joint
Proxy Statement/Prospectus, which includes a copy of the merger agreement.
2. To consider and vote upon a proposal to approve an amendment to the
Superior 1996 Stock Option Plan.
3. To consider and act upon such other business and matters or proposals
as may properly come before the Superior Meeting.
The Board of Directors of Superior has fixed the close of business of
, 1999 as the record date for determining the holders of Superior
common stock having the right to receive notice of, and to vote at, the Superior
Meeting. Only holders of record of Superior common stock at the close of
business on such date are entitled to notice of, and to vote at, the Superior
Meeting. A list of Superior's stockholders entitled to vote at the Superior
Meeting will be available during normal business hours at Superior's executive
offices, 1790 Broadway, New York, New York 10019, for ten days prior to the
Superior Meeting for examination by any Superior stockholder for purposes
germane to the Superior Meeting.
THE BOARD OF DIRECTORS OF SUPERIOR RECOMMENDS THAT YOU VOTE "FOR" APPROVAL
OF PROPOSALS 1 AND 2 DESCRIBED ABOVE AND THE OTHER PROPOSALS PRESENTED AT THE
SUPERIOR MEETING.
Approval of Proposal 1 described above requires the affirmative vote of the
holders of a majority of the outstanding shares of Superior common stock
entitled to vote at the Superior Meeting. Approval of Proposal 1 is a condition
to the merger with Essex. Approval of Proposal 2 above requires the affirmative
vote of holders of the majority of the outstanding shares of Superior present in
person or represented by proxy at the Superior Meeting and entitled to vote on
the proposal, provided that the total vote cast represents over 50% in interest
of all shares entitled to vote on the proposal. All stockholders are cordially
invited to attend the Superior Meeting in person. Whether or not you plan to
attend the Superior Meeting, please sign and mail promptly the enclosed proxy
that is being solicited on behalf of the Board of Directors of Superior. A
return envelope that requires no postage if mailed in the United States is
enclosed for that purpose. The proxies of stockholders who attend the meeting in
person may be withdrawn and such stockholders may vote personally at the
meeting.
<PAGE>
THE ALPINE GROUP, INC., THE MAJORITY STOCKHOLDER OF SUPERIOR, OWNS AND HAS
THE RIGHT TO VOTE AT THE SUPERIOR MEETING SUFFICIENT SHARES TO APPROVE PROPOSALS
1 AND 2 WITHOUT THE AFFIRMATIVE VOTE OF ANY OTHER STOCKHOLDER AND HAS AGREED TO
VOTE ITS SHARES IN FAVOR OF PROPOSALS 1 AND 2 AT THE SUPERIOR MEETING, THEREBY
ENSURING APPROVAL THEREOF.
By Order of the Board of Directors
Stewart H. Wahrsager
Secretary
New York, New York
, 1999
YOUR VOTE IS IMPORTANT TO US.
PLEASE COMPLETE, SIGN, DATE AND RETURN YOUR PROXY.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
WHERE YOU CAN FIND MORE INFORMATION........................................................................ 1
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................................................ 1
FORWARD-LOOKING STATEMENTS................................................................................. 3
QUESTIONS AND ANSWERS ABOUT THE MERGER..................................................................... 4
SUMMARY.................................................................................................... 6
SELECTED HISTORICAL FINANCIAL INFORMATION.................................................................. 12
RISK FACTORS............................................................................................... 22
Risks Relating to the Combined Company................................................................... 22
Risks Relating to the Trust Preferred Securities......................................................... 25
THE MEETINGS............................................................................................... 29
Purpose of the Meetings.................................................................................. 29
Record Date and Voting Rights............................................................................ 29
Proxies.................................................................................................. 30
Solicitation and Revocation of Proxies................................................................... 31
THE MERGER................................................................................................. 32
General.................................................................................................. 32
Background of the Merger................................................................................. 32
Recommendation of the Essex Board and the Reasons for the Recommendation................................. 34
Opinions of the Essex Financial Advisors................................................................. 37
Superior's Reasons for the Merger........................................................................ 44
Merger Consideration..................................................................................... 44
Stock Options and Benefit Plans.......................................................................... 44
Appraisal Rights......................................................................................... 44
Financing of The Offer and The Merger.................................................................... 47
Effective Time........................................................................................... 49
Conversion of Shares; Procedures for Exchange of Certificates; Dividends; No Fractional Shares........... 49
NYSE Listing............................................................................................. 50
Expenses................................................................................................. 50
Interests of Certain Persons in The Merger............................................................... 50
Material Federal Income Tax Consequences................................................................. 52
Receipt of Merger Consideration.......................................................................... 52
Classification of the Debentures......................................................................... 53
Classification of the Trust.............................................................................. 53
Alien Holders............................................................................................ 56
Possible Tax Law Changes................................................................................. 56
Accounting Treatment..................................................................................... 57
Regulatory Matters....................................................................................... 57
Resale of Trust Preferred Securities and Superior Common Stock Following the Merger...................... 57
THE MERGER AGREEMENT AND RELATED AGREEMENTS................................................................ 58
General.................................................................................................. 58
Consideration to Be Received in the Merger............................................................... 58
Corporate Matters........................................................................................ 59
Conditions to the Merger................................................................................. 59
Representations and Warranties........................................................................... 60
</TABLE>
i
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<TABLE>
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PAGE
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<S> <C>
Certain Covenants........................................................................................ 60
Termination.............................................................................................. 62
Fees and Expenses........................................................................................ 63
Stockholders' Agreement.................................................................................. 63
Voting Agreement......................................................................................... 64
Confidentiality Agreement................................................................................ 64
Agreements of Essex Affiliates........................................................................... 64
THE COMPANIES.............................................................................................. 65
Essex International Inc.................................................................................. 65
Superior TeleCom Inc..................................................................................... 66
DESCRIPTION OF SUPERIOR CAPITAL STOCK...................................................................... 67
Common Stock............................................................................................. 67
Preferred Stock.......................................................................................... 67
Possible Anti-Takeover Effect of Certain Certificate of Incorporation and Bylaw Provisions............... 67
DESCRIPTION OF THE TRUST PREFERRED SECURITIES.............................................................. 70
General.................................................................................................. 70
Distributions............................................................................................ 70
Conversion Rights........................................................................................ 72
Conversion Rate Adjustments.............................................................................. 73
Special Event Exchange................................................................................... 74
Optional Redemption...................................................................................... 75
Mandatory Redemption..................................................................................... 76
Redemption Procedures.................................................................................... 76
Redemption Upon Change of Control........................................................................ 77
Subordination of Trust Common Securities................................................................. 78
Distribution of Debentures Upon Dissolution.............................................................. 78
Declaration Events of Default; Enforcement of Certain Rights By Holders of Trust Preferred Securities.... 79
Voting Rights; Amendment of the Declaration.............................................................. 79
Additional Voting Rights................................................................................. 81
Payment and Paying Agency................................................................................ 82
Transfer Agent, Registrar and Paying, Conversion and Exchange Agent...................................... 82
Information Concerning the Property Trustee.............................................................. 82
Miscellaneous............................................................................................ 83
DESCRIPTION OF THE GUARANTEE............................................................................... 84
General.................................................................................................. 84
Status of the Guarantee.................................................................................. 84
Amendments and Assignment................................................................................ 85
Certain Covenants of Superior............................................................................ 85
Guarantee Events of Default.............................................................................. 85
Information Concerning the Guarantee Trustee............................................................. 86
Termination of the Guarantee............................................................................. 86
DESCRIPTION OF THE DEBENTURES.............................................................................. 86
General.................................................................................................. 86
Interest................................................................................................. 86
Payment and Paying Agent................................................................................. 87
</TABLE>
ii
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Option to Defer Interest Payments........................................................................ 87
Mandatory Redemption..................................................................................... 88
Optional Redemption...................................................................................... 88
Redemption Procedures.................................................................................... 89
Redemption Upon Change of Control........................................................................ 89
Conversion of the Debentures............................................................................. 89
Modification of Indenture................................................................................ 90
Debenture Events of Default; Enforcement of Certain Rights by Holders of Trust Preferred Securities...... 91
Consolidation, Merger, Sale of Assets and Other Transactions............................................. 92
Satisfaction and Discharge............................................................................... 92
Subordination............................................................................................ 92
Information Concerning the Indenture Trustee............................................................. 94
RELATIONSHIP AMONG THE TRUST PREFERRED SECURITIES, THE DEBENTURES AND THE GUARANTEE........................ 95
Full and Unconditional Guarantee......................................................................... 95
Sufficiency of Payments.................................................................................. 95
Limited Purpose of Issuer................................................................................ 95
Rights Upon Dissolution.................................................................................. 96
COMPARISON OF STOCKHOLDERS' RIGHTS......................................................................... 96
General.................................................................................................. 96
Authorized Capital Stock................................................................................. 96
Preemptive Rights........................................................................................ 97
Quorum................................................................................................... 97
Stockholder Voting....................................................................................... 97
Special Meetings of Stockholders......................................................................... 98
Directors................................................................................................ 98
Removal of Directors..................................................................................... 98
Vacancies on the Board of Directors...................................................................... 99
Certain Business Combinations............................................................................ 99
Amendment to Certificates of Incorporation............................................................... 99
Amendment of Bylaws...................................................................................... 99
Appraisal/Dissenters' Rights............................................................................. 100
Indemnification of Directors and Officers................................................................ 100
Insurance................................................................................................ 101
PROPOSAL TO AMEND SUPERIOR'S CERTIFICATE OF INCORPORATION TO INCREASE THE AUTHORIZED STOCK AND TO ISSUE THE
TRUST PREFERRED SECURITIES............................................................................... 102
PROPOSAL TO AMEND THE SUPERIOR 1996 STOCK OPTION PLAN...................................................... 103
Purpose of the Superior 1996 Stock Option Plan........................................................... 104
Available Shares......................................................................................... 104
Eligibility and Types of Awards.......................................................................... 104
Administration........................................................................................... 105
Amendment and Termination of Plan........................................................................ 105
Non-Employee Director Stock Option Grants................................................................ 105
Miscellaneous............................................................................................ 106
</TABLE>
iii
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<CAPTION>
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<S> <C>
Certain Federal Income Tax Consequences Relating to the Superior 1996 Stock Option Plan.................. 106
Future Plan Awards....................................................................................... 107
Vote Required and Board Recommendation................................................................... 107
OTHER MATTERS.............................................................................................. 108
EXPERTS.................................................................................................... 108
LEGAL MATTERS.............................................................................................. 108
RELATIONSHIP WITH INDEPENDENT AUDITORS..................................................................... 108
STOCKHOLDERS PROPOSALS..................................................................................... 109
Appendix A Agreement and Plan of Merger
Appendix B-1 Opinion of Goldman, Sachs & Co.
Appendix B-2 Opinion of Chase Securities Inc.
Appendix C Section 262 of the Delaware General Corporation Law
</TABLE>
iv
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
Superior and Essex each file annual, quarterly and special reports, proxy
statements and other information with the Securities and Exchange Commission
(the "Commission") under the Securities Exchange Act of 1934. You may read and
copy this information at the following locations of the Commission:
<TABLE>
<S> <C> <C>
Securities and Exchange Commission Securities and Exchange Commission Securities and Exchange Commission
Judiciary Plaza, Room 10024 Seven World Trade Center, Citicorp Center
450 Fifth Street, N.W. Suite 1300 500 West Madison Street, Suite 1400
Washington, D.C. 20549 New York, New York 10048 Chicago, Illinois 60661
</TABLE>
You can also obtain copies of this information by mail from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Room 10024,
Washington D.C. 20549, at prescribed rates.
The Commission also maintains an internet world wide web site that contains
reports, proxy statements and other information about issuers, like Essex and
Superior, who file electronically with the Commission. The address of that site
is http://www.sec.gov.
You can also inspect reports, proxy statements and other information about
Essex and Superior at the offices of the New York Stock Exchange, Inc., 20 Broad
Street, New York, New York 10005.
Superior and Superior Trust I have filed with the Commission a registration
statement on Form S-4 that registers the shares of 8 1/2% trust convertible
preferred securities of Superior Trust I to be issued in exchange for shares of
Essex common stock upon completion of the merger, the 8 1/2% convertible
subordinated debentures of Superior to be issued to Superior Trust I and the
shares of common stock of Superior to be issued upon conversion of the trust
preferred securities or the convertible subordinated debentures (the
"Registration Statement"). The Registration Statement, including the attached
exhibits and schedules, contains additional relevant information about Superior,
Superior Trust I, the trust preferred securities, the convertible subordinated
debentures and the common stock of Superior. The rules and regulations of the
Commission allow us to omit certain information included in the Registration
Statement from this Joint Proxy Statement/Prospectus.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Commission allows Essex and Superior to "incorporate by reference"
information into this Joint Proxy Statement/Prospectus. This means that the
companies can disclose important information to you by referring you to another
document filed separately with the Commission. The information incorporated by
reference is considered to be part of this Joint Proxy Statement/Prospectus,
except for any information that is superseded by information that is included
directly in this document.
This Joint Proxy Statement/Prospectus includes by reference the documents
listed below that Essex and Superior have previously filed with the Commission
and that are not included in or delivered with this document. They contain
important information about our companies and their financial condition.
<TABLE>
<CAPTION>
SUPERIOR FILINGS PERIOD
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
Annual Report on Form 10-K Year ended April 30, 1998
Quarterly Reports on Form 10-Q Quarter ended July 31, 1998
Quarter ended October 31, 1998
</TABLE>
The description of Superior common stock
set forth in the Superior Form 8-A filed on
<PAGE>
October 2, 1996, including any amendment or report filed with
the Commission for purposes of updating such description.
<TABLE>
<CAPTION>
ESSEX FILINGS PERIOD
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
Annual Report on Form 10-K Year ended December 31, 1997
Quarterly Reports on Form 10-Q Quarter ended March 31, 1998
Quarter ended June 30, 1998
Quarter ended September 30, 1998
</TABLE>
The description of Essex common stock set forth
in the Essex Form 8-A filed on April 15, 1997, including
any amendment or report filed with the Commission
for purposes of updating such description.
<TABLE>
<S> <C>
Current Report on Form 8-K Filed December 11, 1998
</TABLE>
Superior and Essex incorporate by reference additional documents that either
company may file with the Commission between the date of this Joint Proxy
Statement/Prospectus and the date of the Essex meeting and the Superior meeting.
These documents include periodic reports, such as Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as proxy
statements.
Superior has supplied all information contained or incorporated by reference
in this Joint Proxy Statement/Prospectus relating to Superior, and Essex has
supplied all such information relating to Essex.
You can obtain any of the documents incorporated by reference in this
documents through the companies without charge, excluding any exhibits to those
documents unless the exhibit is specifically incorporated by reference as an
exhibit to this Joint Proxy Statement/Prospectus. You can obtain documents
incorporated by reference in this Joint Proxy Statement/Prospectus by requesting
them in writing or by telephone from the appropriate company at the following
addresses.
<TABLE>
<S> <C>
Superior TeleCom Inc. Essex International Inc.
1790 Broadway 1601 Wall Street
New York, New York 10019 Fort Wayne, Indiana 46802
(212) 757-3333 (219) 461-4000
Attention: Suzanne Fernandez Attention: Michael Smith
</TABLE>
If you would like to request documents, please do so by , 1999 to
receive them before the stockholders' meetings.
WE HAVE NOT AUTHORIZED ANYONE TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ABOUT THE MERGER OR OUR COMPANIES THAT IS DIFFERENT FROM, OR IN
ADDITION TO, THAT CONTAINED IN THIS JOINT PROXY STATEMENT/ PROSPECTUS OR IN ANY
OF THE MATERIALS THAT WE HAVE INCORPORATED BY REFERENCE INTO THIS DOCUMENT.
THEREFORE, IF ANYONE DOES GIVE YOU INFORMATION OF THIS SORT, YOU SHOULD NOT RELY
ON IT. IF YOU ARE IN A JURISDICTION WHERE OFFERS TO EXCHANGE OR SELL, OR
SOLICITATIONS OF OFFERS TO EXCHANGE OR PURCHASE, THE SECURITIES OFFERED BY THIS
DOCUMENT OR THE SOLICITATION OF PROXIES IS UNLAWFUL, OR IF YOU ARE A PERSON TO
WHOM IT IS UNLAWFUL TO DIRECT THESE TYPES OF ACTIVITIES, THEN THE OFFER
PRESENTED IN THIS DOCUMENT DOES NOT EXTEND TO YOU. THE INFORMATION CONTAINED IN
THIS DOCUMENT SPEAKS ONLY AS OF THE DATE OF THIS DOCUMENT, UNLESS THE
INFORMATION SPECIFICALLY INDICATES THAT ANOTHER DATE APPLIES.
2
<PAGE>
FORWARD-LOOKING STATEMENTS
This Joint Proxy Statement/Prospectus contains forward-looking statements.
These statements relate to future events or the future financial performance of
Superior and Essex. In some cases, you can identify forward-looking statements
by terminology such as "may," "will," "should," "expects," "plans,"
"anticipates," "believes," "estimates," "predicts," "potential" or "continue" or
the negative of such terms and other comparable terminology. These statements
only reflect management's expectations and estimates. Actual events or results
may differ materially. In evaluating these statements, you should specifically
consider various factors, including the risks outlined on pages 22 to 28 under
"Risk Factors." These factors may cause our actual results to differ materially
from any forward-looking statements. We are not undertaking any obligations to
update any forward-looking statements contained in this Joint Proxy
Statement/Prospectus to reflect any future events or developments.
3
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q. WHY ARE THE TWO COMPANIES PROPOSING TO MERGE?
A. The acquisition of Essex by means of a merger with a subsidiary of
Superior will complete a two step process whereby Essex will become a wholly
owned subsidiary of Superior. The first step of the process was the tender offer
commenced on October 28, 1998 by a subsidiary of Superior for up to 22,562,135
shares of Essex common stock as a result of which, on November 27, 1998, the
subsidiary acquired all 22,562,135 shares of Essex common stock at a cash price
of $32.00 per share. We believe that the merger of Superior and Essex will
create a stronger company capable of achieving certain synergies and will
diversify the product range of the individual companies.
Q. AS AN ESSEX STOCKHOLDER, WHAT WILL I RECEIVE IN THE MERGER?
A. If the merger is completed, you will receive 0.64 of a share of
preferred securities ("Trust Preferred Securities") to be issued by a trust
formed by Superior in exchange for each share of Essex common stock that you
own. These Trust Preferred Securities will be convertible upon certain terms and
conditions into shares of common stock of Superior. For example, if you own
1,000 shares of Essex common stock, you will receive 640 Trust Preferred
Securities in exchange for your Essex shares, and the Trust Preferred Securities
you receive will be convertible upon certain terms and conditions into common
stock of Superior. No fractional shares will be issued. Instead, stockholders
will receive cash for any fractional shares they would have otherwise received.
Q. AS A SUPERIOR STOCKHOLDER, WILL I RECEIVE TRUST PREFERRED SECURITIES AFTER
THE MERGER?
A. No. Shares of Trust Preferred Securities will be issued in the merger
only to Essex stockholders.
Q. WHAT DO I NEED TO DO NOW?
A. After carefully reading and considering the information contained in
this document and its appendices, indicate on your proxy card how you want to
vote, and sign and mail the proxy card in the enclosed return envelope as soon
as possible, so that your shares may be represented at your special meeting. If
you sign and send in your proxy card and do not indicate how you want to vote,
we will count your proxy card as a vote in favor of the proposal or proposals to
be voted upon at your special meeting. If you do not vote or you abstain, it
will in most cases have the effect of a vote against the proposal or proposals
presented to your special meeting. The Board of Directors of Essex recommends
voting in favor of the merger agreement and the merger. The Board of Directors
of Superior recommends voting in favor of the amendment to the certificate of
incorporation to increase the authorized shares of preferred stock and common
stock, the issuance of shares of trust preferred securities in connection with
the merger and the amendment to the 1996 stock option plan.
Q. IF MY BROKER HOLDS MY SHARES IN "STREET NAME," WILL MY BROKER VOTE MY SHARES
FOR ME?
A. Your broker will vote your shares only if you provide instructions on
how to vote. You should instruct your broker to vote your shares according to
your directions. Without instructions, your broker will not vote your shares.
Q. IF I AM NOT GOING TO ATTEND THE STOCKHOLDER MEETING, SHOULD I RETURN MY PROXY
CARD INSTEAD?
A. Yes. Please fill out your proxy card and mail it to us in the enclosed
return envelope as soon as possible. Returning your proxy card ensures that your
shares will be represented at your special meeting.
4
<PAGE>
Q. WHAT DO I DO IF I WANT TO CHANGE MY VOTE?
A. You should send in a later, dated, signed proxy card to your company's
corporate secretary before your special meeting or attend your special meeting
in person and vote.
Q. SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A. No. After the merger is completed, we will send Essex stockholders
written instructions for exchanging their stock certificates. Superior
stockholders do not need to exchange their certificates.
Q. WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?
A. We hope to complete the merger in the first quarter of 1999 shortly
after the special meetings.
Q. WHAT ARE THE TAX CONSEQUENCES TO STOCKHOLDERS OF THE MERGER?
A. The merger is a taxable event for federal income tax purposes for Essex
stockholders. Superior stockholders will not recognize any gain or loss in
connection with the merger. Tax matters, however, are very complicated and the
tax consequences of the merger to you will depend on the facts of your
particular situation. We encourage you to contact your tax advisors to determine
the tax consequences of the merger to you. To review the tax consequences to
Essex stockholders in greater detail, see pages 52 to 57 of this Joint Proxy
Statement/Prospectus.
Q. WHO CAN HELP ANSWER MY QUESTIONS?
A. If you would like additional copies of this Joint Proxy
Statement/Prospectus or if you have questions about the merger and you are an
Essex stockholder, you can contact us at Essex International Inc., 1601 Wall
Street, Fort Wayne, Indiana 46802, Attention: Michael Smith, or you can call us
at (219) 461-4000.
If you would like additional copies of this Joint Proxy Statement/Prospectus
or if you have questions about the merger and you are a Superior stockholder,
you can contact us at Superior TeleCom Inc., 1790 Broadway, New York, New York
10019, Attention: Suzanne Fernandez, or you can call us at (212) 757-3333.
5
<PAGE>
SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS JOINT PROXY
STATEMENT/PROSPECTUS AND MAY NOT CONTAIN ALL OF THE INFORMATION THAT IS
IMPORTANT TO YOU. TO BETTER UNDERSTAND THE MERGER AND RELATED TRANSACTIONS AND
FOR A MORE COMPLETE DESCRIPTION OF THE LEGAL TERMS OF THE MERGER AND RELATED
TRANSACTIONS, YOU SHOULD READ CAREFULLY THIS ENTIRE DOCUMENT AND THE DOCUMENTS
TO WHICH WE HAVE REFERRED YOU. SEE "WHERE YOU CAN FIND MORE INFORMATION" ON PAGE
1. WE HAVE INCLUDED PAGE REFERENCES PARENTHETICALLY TO DIRECT YOU TO A MORE
COMPLETE DESCRIPTION OF THE TOPICS PRESENTED IN THIS SUMMARY.
ON NOVEMBER 27, 1998, A WHOLLY OWNED SUBSIDIARY OF SUPERIOR ACQUIRED
APPROXIMATELY 81% OF THE OUTSTANDING COMMON STOCK OF ESSEX THROUGH A TENDER
OFFER THAT WAS COMMENCED ON OCTOBER 28, 1998. THIS JOINT PROXY
STATEMENT/PROSPECTUS RELATES TO THE MERGER BY WHICH SUPERIOR WILL ACQUIRE THE
REMAINING OUTSTANDING SHARES OF ESSEX AND TO THE TRUST PREFERRED SECURITIES OF
SUPERIOR TRUST I (THE "TRUST") THAT ESSEX STOCKHOLDERS WILL RECEIVE IN EXCHANGE
FOR THEIR SHARES OF ESSEX COMMON STOCK UPON COMPLETION OF THE MERGER.
THE COMPANIES (PAGE 65)
ESSEX INTERNATIONAL INC.
1601 Wall Street
Fort Wayne, Indiana 46802
(219) 461-4000
Essex is a Delaware holding company that operates through its subsidiary,
Essex Group, Inc. Essex Group develops, manufactures and distributes wire and
cable and insulation products, including building wire for commercial and
residential construction applications, magnet wire and insulation materials for
electromechanical devices, copper voice and datacom wire, industrial wire and
automotive wire. After the merger, Essex's principal executive officers will be
located at 1601 Wall Street, Fort Wayne, Indiana 46802.
SUPERIOR TELECOM INC.
1790 Broadway
New York, New York 10019
(212) 757-3333
Superior is a Delaware holding company that operates through its
subsidiaries and is the largest North American manufacturer of copper
telecommunications cable, which is the most widely used medium for voice and
data transmission in the local loop (the segment of the telecommunications
network that connects the customer's premises to the nearest telephone switching
center or central office). Superior's customers include four of the five
regional Bell operating companies, Sprint Corporation and GTE Corporation.
SUT ACQUISITION CORP.
1790 Broadway
New York, New York 10019
(212) 757-3333
SUT Acquisition Corp. is a newly formed Delaware corporation and is an
indirect wholly owned subsidiary of Superior that has not, to date, conducted
any activities other than those incident to its formation, its execution of the
merger agreement and related matters.
THE ESSEX BOARD RECOMMENDATIONS TO STOCKHOLDERS AND REASONS FOR THE
RECOMMENDATIONS (PAGE 34)
The Board of Directors of Essex believes that the merger is in the best
interests of the Essex stockholders and recommends that the Essex stockholders
vote FOR the proposal to adopt the merger agreement and approve the merger (the
terms of the merger agreement are summarized on pages 53 to 63 of this Joint
Proxy Statement/Prospectus).
6
<PAGE>
The Board of Directors of Essex recommends the merger because:
- the merger will conclude a two-step process whereby Essex will become a
wholly owned subsidiary of Superior;
- the merger will allow the combined company greater flexibility to operate
than would be the case if Essex continued with a 19% public float; and
- the Trust Preferred Securities to be provided to Essex stockholders
represent a more beneficial continuing security than an equity interest in
an 81% owned subsidiary of Superior.
THE SUPERIOR BOARD RECOMMENDATIONS TO STOCKHOLDERS
The Board of Directors of Superior believes that the merger is in the best
interests of the Superior stockholders and, therefore, to facilitate the merger
and related transactions, unanimously recommends that the Superior stockholders
vote FOR the proposals to:
- approve and adopt the amendment of Superior's certificate of incorporation
to increase the authorized shares of preferred stock and common stock of
Superior (the amendment is summarized on pages 102 to 103 of this Joint
Proxy Statement/Prospectus);
- approve the issuance of shares of Trust Preferred Securities to Essex
stockholders in the merger and the common stock of Superior issuable upon
conversion of the Trust Preferred Securities (the terms of the Trust
Preferred Securities are summarized on pages 70 to 83 of this Joint Proxy
Statement/ Prospectus); and
- approve and adopt the amendment to the Superior 1996 Stock Option Plan
(the amendment is summarized on pages 103 to 107 of this Joint Proxy
Statement/Prospectus).
THE ESSEX MEETING (PAGE 29)
The special meeting of stockholders of Essex will be held at a.m.,
local time, on , 1999, at . At the Essex meeting,
holders of Essex common stock will consider and vote upon:
- a proposal to adopt the merger agreement which provides for the merger of
Essex and a wholly owned subsidiary of Superior with the result that Essex
will become a wholly owned subsidiary of Superior; and
- any other matters that may properly come before the Essex meeting.
Adoption of the merger agreement and approval of the merger requires the
affirmative vote of a majority of the outstanding shares of Essex common stock
entitled to vote at the Essex meeting. AS A RESULT OF THE COMPLETION OF A TENDER
OFFER FOR SHARES OF ESSEX COMMON STOCK ON NOVEMBER 27, 1998, SUPERIOR AND ITS
WHOLLY OWNED ACQUISITION SUBSIDIARY HAVE SUFFICIENT VOTING POWER TO CAUSE THE
ADOPTION OF THE MERGER AGREEMENT AND THE APPROVAL OF THE MERGER WITHOUT THE
AFFIRMATIVE VOTE OF ANY OTHER STOCKHOLDER AND HAVE AGREED IN THE MERGER
AGREEMENT TO VOTE THEIR SHARES IN FAVOR OF THE MERGER AGREEMENT AND THE MERGER.
THEREFORE, ADOPTION OF THE MERGER AGREEMENT AND APPROVAL OF THE MERGER AT THE
ESSEX MEETING IS ASSURED.
Only holders of record of outstanding shares of Essex common stock at the
close of business on will be entitled to notice of, and to vote at,
the Essex meeting. As of , directors and executive officers of Essex
and their affiliates beneficially owned in the aggregate shares, or
% of the outstanding shares, of Essex common stock.
As of , a total of shares of Essex common stock were
outstanding and entitled to vote at the Essex meeting.
7
<PAGE>
THE SUPERIOR MEETING (PAGE 29)
The special meeting of stockholders of Superior will be held at a.m.,
local time, on , 1999, at . At the Superior
meeting, holders of Superior common stock will consider and vote upon:
- a proposal to approve and adopt an amendment to Superior's certificate of
incorporation to increase the authorized number of shares of preferred
stock and common stock of Superior and the issuance of the Trust Preferred
Securities to stockholders of Essex in the merger and the common stock of
Superior issuable upon conversion of the Trust Preferred Securities;
- a proposal to approve and adopt an amendment to the Superior 1996 Stock
Option Plan; and
- any other matters that may properly come before the Superior meeting.
Approval of the first proposal described above requires the affirmative vote
of the holders of a majority of the outstanding shares of Superior common stock
entitled to vote at the Superior meeting. Approval of the second proposal
described above requires the affirmative vote of holders of the majority of the
outstanding shares of Superior present in person or represented by proxy at the
Superior meeting and entitled to vote on the proposal, provided that the total
vote cast represents over 50% of all shares entitled to vote on the proposal.
THE ALPINE GROUP, INC., THE MAJORITY STOCKHOLDER OF SUPERIOR, HAS AGREED TO VOTE
ITS SHARES IN FAVOR OF THE APPROVAL AND ADOPTION OF BOTH PROPOSALS (THE TERMS OF
THIS VOTING AGREEMENT ARE SUMMARIZED ON PAGE 64 OF THIS JOINT PROXY
STATEMENT/PROSPECTUS). THEREFORE, A VOTE IN FAVOR OF THE APPROVAL AND ADOPTION
OF BOTH PROPOSALS AT THE SUPERIOR MEETING IS ASSURED WITHOUT THE VOTE OF ANY
OTHER STOCKHOLDER.
Only holders of record of Superior common stock at the close of business on
will be entitled to notice of, and to vote at, the Superior meeting.
As of , directors and executive officers of Superior and their
affiliates beneficially owned in the aggregate shares, or % of
the outstanding shares of Superior common stock.
As of , a total of shares of Superior common stock were
outstanding and entitled to vote at the Superior meeting.
THE MERGER (PAGE 32)
THE MERGER AGREEMENT IS ATTACHED AS APPENDIX A TO THIS JOINT PROXY
STATEMENT/PROSPECTUS. WE ENCOURAGE YOU TO READ THE MERGER AGREEMENT, BECAUSE IT
IS THE LEGAL DOCUMENT THAT GOVERNS THE MERGER.
WHAT ESSEX STOCKHOLDERS WILL RECEIVE (PAGE 58)
In the merger, Essex stockholders (other than Superior, its acquisition
subsidiary and Essex stockholders who choose to exercise their appraisal rights)
will receive 0.64 of a Trust Preferred Security for each share of Essex common
stock that they own. The Trust Preferred Securities are preferred securities to
be issued by a trust formed by Superior. The Trust Preferred Securities will:
- bear a dividend at an annual rate of $4.25 per share;
- be convertible into common stock of Superior beginning six months after
the date they are issued;
- be redeemable under certain circumstances;
- be exchangeable by Superior for convertible subordinated debentures of
Superior having payment terms substantially identical to those applicable
to the Trust Preferred Securities; and
- be subordinate to all existing and future senior debt of Superior.
No fractional shares of Trust Preferred Securities will be issued and
instead Essex stockholders will receive an amount in cash, without interest,
equal to the product of such fraction, multiplied by the average closing price
of the Trust Preferred Securities for a specified period.
8
<PAGE>
ESSEX STOCKHOLDERS SHOULD NOT SEND IN THEIR STOCK CERTIFICATES UNTIL
INSTRUCTED TO DO SO AFTER THE MERGER IS COMPLETED.
EFFECTIVE TIME OF THE MERGER (PAGE 49)
Under Delaware law, the merger will be effective when a certificate of
merger is filed with the Delaware Secretary of State, unless we specify another
time. Superior and Essex expect that the merger will be completed as soon as
practicable after the stockholders of Essex approve the merger and the
stockholders of Superior approve related matters at their respective
stockholders' meetings, if all other conditions to the merger have been
satisfied.
BOARD OF DIRECTORS AND MANAGEMENT FOLLOWING THE MERGER
When the tender offer was completed, Steven R. Abbott, W.L. Lyons Brown,
Jr., Rodney A. Cohen, Edward O. Gaylord, Stuart S. Janney, III and Ward W. Woods
resigned from the Board of Directors of Essex and Superior nominated three new
directors, Steven S. Elbaum, Bragi F. Schut and David S. Aldridge, who were
appointed to the Board of Directors of Essex. Superior's management expects that
Essex's operating management generally will remain in place after the merger
with Essex operating as a business unit of Superior.
OTHER INTERESTS OF ESSEX OFFICERS AND DIRECTORS IN THE MERGER (PAGE 50)
In considering the recommendation of the Board of Directors of Essex that
you vote in favor of the merger, stockholders of Essex should be aware that a
number of executive officers and directors have benefit plans and other
arrangements that provide them with interests in the merger that are different
from, or in addition to, your interests.
CONDITIONS TO THE MERGER (PAGE 59)
The obligations of Essex and Superior to complete the merger depend upon the
satisfaction or waiver of various conditions, including the following:
- the adoption by the stockholders of Essex of the merger agreement;
- the approval by the stockholders of Superior of the amendment of
Superior's certificate of incorporation and the issuance of Trust
Preferred Securities as set forth in the merger agreement; and
- the absence of any injunction or other court order that would prohibit or
prevent the merger.
In addition, Essex's obligation to complete the merger depends on the
approval for listing on the New York Stock Exchange of the Trust Preferred
Securities and the shares of Superior common stock to be issued upon conversion
of the Trust Preferred Securities.
TERMINATION OF THE MERGER AGREEMENT (PAGE 62)
Essex and Superior may agree in writing to terminate the merger agreement
before the merger has been completed, and either Essex or Superior may terminate
the merger after it has been approved by the Essex stockholders:
- if the merger has not happened by October 31, 2000 (provided that neither
party can terminate the merger agreement if its failure to fulfill any
obligation under the merger agreement caused the failure of the merger to
occur by October 31, 2000); and
- if a court or governmental authority has permanently restrained or
prohibited the merger.
Under the merger agreement, the approval of a majority of directors of Essex
who are not executive officers of Essex is required for Essex to authorize the
termination of the merger agreement.
9
<PAGE>
REGULATORY APPROVALS (PAGE 57)
The Hart-Scott-Rodino Antitrust Improvements Act of 1976 prohibits parties
to a transaction that is reportable under the Act, as this one was, from
completing the transaction until after the expiration of a statutory waiting
period. The waiting period has expired, and thus we may complete the
transaction.
ACCOUNTING TREATMENT (PAGE 57)
Superior expects to account for the acquisition of Essex using purchase
accounting. In general, under purchase accounting, assets acquired and
liabilities assumed are recorded at their fair value.
OPINIONS OF THE ESSEX FINANCIAL ADVISORS (PAGE 37)
Goldman, Sachs & Co. and Chase Securities Inc. have acted as financial
advisors to Essex in connection with the merger agreement and have delivered to
the Board of Directors of Essex written opinions, dated October 21, 1998, to the
effect that, as of such date, the consideration to be received by holders of
Essex common stock in the tender offer and the merger, taken together as a
unitary transaction, is fair from a financial point of view to such holders. The
full text of the written opinions of Goldman, Sachs & Co. and Chase Securities
Inc., which set forth the assumptions made, matters considered and limitations
on the review undertaken, are attached as Appendices B-1 and B-2, respectively,
to this Joint Proxy Statement/Prospectus and you should read them carefully.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES TO ESSEX STOCKHOLDERS (PAGE 52)
The receipt of Trust Preferred Securities in the merger will be a taxable
transaction for federal income tax purposes to the Essex stockholders and may
also be a taxable transaction under applicable state, local or foreign tax laws.
An Essex stockholder who receives Trust Preferred Securities in the merger will
recognize gain or loss at the effective time of the merger in an amount equal to
the difference between (1) the sum of the amount of cash (for fractional shares)
and the fair market value at the effective time of the merger of the Trust
Preferred Securities received by the stockholder in the merger and (2) the
stockholder's tax basis in the Essex common stock surrendered. A stockholder's
tax basis in Trust Preferred Securities will be equal to the fair market value
of the Trust Preferred Securities at the effective time of the merger.
Gain or loss will be capital gain or loss if the Essex common stock was a
capital asset in the hands of the stockholder and will be long-term capital gain
or loss if, at the time of the exchange, the Essex common stock was held by the
stockholder for more than 12 months. Under present U.S. federal law, long-term
capital gains are generally taxable at a maximum rate of 20% for individuals and
35% for corporations.
THIS TAX TREATMENT MAY NOT APPLY TO CERTAIN ESSEX STOCKHOLDERS, SUCH AS
STOCKHOLDERS WHO ACQUIRED SHARES BY EXERCISING STOCK OPTIONS OR AS OTHER
COMPENSATION, INDIVIDUALS WHO ARE NOT CITIZENS OR RESIDENTS OF THE UNITED STATES
AND FOREIGN CORPORATIONS. DETERMINING THE ACTUAL TAX CONSEQUENCES OF THE MERGER
TO YOU MAY BE COMPLICATED. THESE TAX CONSEQUENCES WILL DEPEND ON YOUR SPECIFIC
SITUATION AND ON VARIABLES NOT WITHIN OUR CONTROL. YOU SHOULD CONSULT YOUR OWN
TAX ADVISOR FOR A FULL UNDERSTANDING OF THE MERGER'S TAX CONSEQUENCES.
APPRAISAL RIGHTS (PAGE 44)
Under Section 262 of the Delaware General Corporation Law, a stockholder of
Essex may dissent from the merger and seek to obtain payment for the fair value
of that stockholder's shares. In order to dissent, the dissenting stockholder
must deliver to Essex, prior to the vote on the merger at the Essex meeting, a
written demand for appraisal of that stockholder's shares and the dissenting
stockholder must not vote in favor of the merger agreement.
Beneficial owners of shares of Essex common stock whose shares are held of
record by another person, such as a broker, bank or nominee, and who wish to
seek appraisal, should instruct the record
10
<PAGE>
holder to follow the procedures in Section 262 of the Delaware General
Corporation Law, a copy of which is included as Appendix C to this Joint Proxy
Statement/Prospectus. Failure to take any necessary step may result in a
termination or waiver of appraisal rights under Delaware law.
NEW YORK STOCK EXCHANGE LISTING (PAGE 50)
Superior will cause the Trust Preferred Securities to be issued in the
merger and the Superior common stock issuable upon conversion of the Trust
Preferred Securities to be listed on the New York Stock Exchange.
FINANCING (Page 47)
The total amount of funds required to consummate the tender offer and the
merger (including the refinancing of certain existing indebtedness of Superior
and Essex) and to pay related fees and expenses is estimated to be approximately
$1.35 billion. Superior provided the funds needed for the tender offer, and will
provide other required funds, from amounts borrowed under Superior's bank credit
facilities.
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE
Each of Essex and Superior has made forward-looking statements in this Joint
Proxy Statement/ Prospectus (and in documents that are incorporated by reference
in this Joint Proxy Statement/Prospectus) that are subject to risks and
uncertainties. Forward-looking statements include the information concerning
possible or assumed future results of operations of Essex and Superior,
including the anticipated benefits from the merger. Also, when Essex and
Superior use words such as "believes," "expects," "anticipates" or similar
expressions, we are making forward-looking statements. Stockholders should note
that many factors could affect the future financial results of Essex and
Superior and could cause the results to differ materially from those expressed
in our forward looking statements. Such factors include, without limitation,
those disclosed in the "Risk Factors" section of this Joint Proxy
Statement/Prospectus.
COMPARATIVE PER SHARE MARKET PRICE INFORMATION
Superior and Essex common stock are both listed on the New York Stock
Exchange. The following table sets forth the closing price per share of Superior
common stock and Essex common stock and the equivalent per share price of Essex
common stock as of October 21, 1998, the last trading day before Superior and
Essex publicly announced the execution of the merger agreement, and on
, 1999, the last trading day prior to the date of this Joint Proxy
Statement/Prospectus. The "equivalent per share price" of Essex common stock as
of each date equals the closing price per share of Superior common stock on such
date multiplied by the exchange ratio used in the merger, and then by the rate
at which the Trust Preferred Securities are convertible into Superior common
stock.
<TABLE>
<CAPTION>
MARKET PRICES PER SHARE
-------------------------------------
SUPERIOR ESSEX EQUIVALENT
COMMON COMMON PER SHARE
STOCK STOCK PRICE
----------- ----------- -----------
<S> <C> <C> <C>
October 21, 1998.......................................................... $ 46.0 $ 23.1875 $ 26.29
, 1999.........................................................
</TABLE>
11
<PAGE>
SELECTED HISTORICAL FINANCIAL INFORMATION
Superior and Essex are providing the following selected financial
information to assist you in your analysis of the merger. This information is
only a summary and you should read it in conjunction with the historical
financial statements of Superior and Essex and the related notes contained in
the annual and quarterly reports and other information that Superior and Essex
have filed with the Commission. Results of operations for unaudited interim
periods are not necessarily indicative of the results that may occur for any
other interim or annual period. See "Where You Can Find More Information" on
page 1.
SUPERIOR AND SUBSIDIARIES
The following table presents summary selected historical consolidated
financial data of Superior as of and for each of its five fiscal years ended
April 30, 1998 and the six months ended October 31, 1998 and 1997.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTHS ENDED
------------------------------------------------------------- ------------------------
MAY 1, APRIL 30, APRIL 28, APRIL 30, APRIL 30, OCTOBER 31, OCTOBER 31,
1994 1995 1996 1997 1998 1997 1998
--------- ----------- ----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF OPERATIONS DATA:
Net sales......................... $ 68,510 $ 164,485 $ 410,413 $ 463,840 $ 516,599 $ 270,445 $ 302,971
Cost of goods sold................ 56,250 142,114 362,854 384,271 417,358 220,761 235,203
--------- ----------- ----------- ----------- ----------- ----------- -----------
Gross profit.................... 12,260 22,371 47,559 79,569 99,241 49,684 67,768
Selling, general and
administrative expenses......... 8,884 11,632 14,223 17,166 22,181 10,854 16,368
Amortization of goodwill.......... 2,186 1,124 1,556 1,726 1,715 860 884
--------- ----------- ----------- ----------- ----------- ----------- -----------
Operating income................ 1,190 9,615 31,780 60,677 75,345 37,970 50,516
Interest expense.................. (1,742) (3,700) (17,006) (12,869) (8,053) (4,656) (4,252)
Preferred stock dividends of
subsidiary...................... -- -- -- (319) (37) (18) (18)
Other income (expense), net....... (61) 231 55 (24) 206 81 (691)
--------- ----------- ----------- ----------- ----------- ----------- -----------
Income (loss) from continuing
operations before income taxes
and minority interest........... (613) 6,146 14,829 47,465 67,461 33,377 45,555
Provision for income taxes........ (521) (2,240) (6,722) (18,989) (26,786) (13,147) (18,026)
--------- ----------- ----------- ----------- ----------- ----------- -----------
Income (loss) from continuing
operations before minority
interest........................ (1,134) 3,906 8,107 28,476 40,675 20,230 27,529
Minority interest in earnings of
subsidiary...................... -- -- -- -- -- -- (628)
--------- ----------- ----------- ----------- ----------- ----------- -----------
Income (loss) from continuing
operations.................... (1,134) 3,906 8,107 28,476 40,675 20,230 26,901
(Loss) from discontinued
operations...................... (287) (176) -- -- -- -- --
--------- ----------- ----------- ----------- ----------- ----------- -----------
Income (loss) before
extraordinary (loss).......... (1,421) 3,730 8,107 28,476 40,675 20,230 26,901
Extraordinary (loss) on early
extinguishment of debt.......... -- -- (2,645) -- -- -- --
--------- ----------- ----------- ----------- ----------- ----------- -----------
Net income (loss)............... $ (1,421) $ 3,730 $ 5,462 $ 28,476 $ 40,675 $ 20,230 $ 26,901
--------- ----------- ----------- ----------- ----------- ----------- -----------
Net income per share of common
stock:
Basic........................... 1.13(1) 2.52 1.25 1.67
Diluted......................... 1.12(1) 2.46 1.23 1.62
<CAPTION>
MAY 1, APRIL 30, APRIL 28, APRIL 30, APRIL 30, OCTOBER 31, OCTOBER 31,
1994 1995 1996 1997 1998 1997 1998
--------- ----------- ----------- ----------- ----------- ----------- -----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA (AT END OF
PERIOD):
Working capital................... $ 23,558 $ 22,750 $ 58,726 $ 47,617 $ 38,532 $ 43,203 $ 49,600
Total assets...................... 115,338 120,127 244,065 238,108 232,243 237,566 325,507
Total debt, including
intercompany.................... 39,095 37,067 125,760 122,089 75,380 91,176 104,593
Total stockholders' equity........ 48,123 49,854 51,656 44,028 82,206 64,469 99,103
</TABLE>
12
<PAGE>
(1) Superior completed an initial public offering in October 1996. Superior thus
determines basic and diluted net income per share for the period from
October 1996 to April 30, 1997 based on net income for the seven months
ended April 30, 1997 of $17,390.
ESSEX AND SUBSIDIARIES
The following table presents summary selected historical consolidated
financial data of Essex as of and for each of the five years ended December 31,
1997 and the nine months ended September 30, 1998 and 1997.
<TABLE>
<CAPTION>
YEARS ENDED NINE MONTHS ENDED
DECEMBER31, SEPTEMBER 30,
----------------------------------------------------- ------------------------
1993 1994 1995 1996 1997 1998 1997
--------- --------- --------- --------- --------- ----------- -----------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales..................... $ 858,846 $1,010,075 $1,201,650 $1,332,049 $1,701,329 $1,142,354 $1,309,275
Cost of goods sold............ 745,875 846,611 1,030,511 1,102,460 1,370,232 913,169 1,059,504
--------- --------- --------- --------- --------- ----------- -----------
Gross profit................ 122,971 163,464 171,139 229,589 331,097 229,185 249,771
Selling, general and
administrative expenses..... 71,684 81,145 89,324 116,887 149,925 107,556 109,779
Amortization of goodwill...... 4,064 4,064 4,077 4,167 4,222 3,210 3,162
--------- --------- --------- --------- --------- ----------- -----------
Operating income............ 47,223 78,255 77,738 108,535 176,950 118,419 136,830
Interest expense.............. (56,723) (60,155) (49,055) (39,994) (37,711) (20,166) (29,836)
Other income (expense), net... 196 (1,114) (1,032) (2,045) 515 (4,457) 634
--------- --------- --------- --------- --------- ----------- -----------
Income (loss) from continuing
operations before income
taxes....................... (9,304) 16,986 27,651 66,496 139,754 93,796 107,628
Provision for income taxes.... (1,552) (9,500) (14,380) (28,988) (55,800) (37,591) (42,900)
--------- --------- --------- --------- --------- ----------- -----------
Income (loss) before
extraordinary (loss)...... (10,856) 7,486 13,271 37,508 83,954 56,205 64,728
Extraordinary (loss) on early
extinguishment of debt...... (3,367) -- (2,971) (1,183) -- (7,487) --
--------- --------- --------- --------- --------- ----------- -----------
Net income (loss)........... $ (14,223) $ 7,486 $ 10,300 $ 36,325 $ 83,954 $ 48,718 $ 64,728
--------- --------- --------- --------- --------- ----------- -----------
PER SHARE DATA:
Basic earnings:
Income before extraordinary
charge...................... $ (0.91) $ 0.04 $ 0.32 $ 1.32 $ 3.03 $ 1.90 $ 2.39
Extraordinary charge.......... 0.19 -- 0.17 0.06 -- 0.25 --
--------- --------- --------- --------- --------- ----------- -----------
Net Income.................... $ (1.10) $ 0.04 $ 0.15 $ 1.26 $ 3.03 $ 1.65 $ 2.39
--------- --------- --------- --------- --------- ----------- -----------
--------- --------- --------- --------- --------- ----------- -----------
DILUTED EARNINGS:
Income before extraordinary
charge...................... $ (0.91) $ 0.04 $ 0.30 $ 1.22 $ 2.83 1.85 2.21
Extraordinary charge.......... 0.19 -- 0.16 0.05 -- 0.25 --
--------- --------- --------- --------- --------- ----------- -----------
Net Income.................... $ (1.10) $ 0.04 $ 0.14 $ 1.17 $ 2.83 $ 1.60 $ 2.21
--------- --------- --------- --------- --------- ----------- -----------
--------- --------- --------- --------- --------- ----------- -----------
<CAPTION>
DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER SEPTEMBER SEPTEMBER
31, 31, 31, 31, 31, 30, 30,
1993 1994 1995 1996 1997 1998 1997
--------- --------- --------- --------- --------- ----------- -----------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA (AT END OF
PERIOD):
Working capital............... $ 176,001 $ 221,480 $ 171,166 $ 231,707 $ 259,434 $ 195,079 $ 260,825
Total assets.................. 712,051 750,930 746,063 842,755 863,752 929,324 883,429
Total debt, including
intercompany................ 428,942 458,960 424,510 463,829 353,502 419,122 376,526
Total stockholders' equity.... 59,667 60,828 64,300 146,090 294,096 298,994 273,399
</TABLE>
13
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Superior and Essex are providing the following unaudited pro forma financial
information to give you a picture of what the results of operations and
financial position of Superior and Essex would have looked like, absent any
operational or other changes, if our businesses had been combined for the
periods and at the dates indicated.
The unaudited pro forma condensed combined financial statements of Superior
give effect to the acquisitions of Essex and Cables of Zion United Works Ltd.
("Cables of Zion") as if they had occurred on May 1, 1997. The acquisitions are
reflected using the purchase method of accounting for business combinations. The
pro forma adjustments have been applied to (i) the historical financial
statements of Superior for the fiscal year ended April 30, 1998, which
statements have been derived from Superior's audited consolidated financial
statements, (ii) the unaudited condensed historical financial statements of
Superior as of October 31, 1998 and for the six months then ended, (iii) the
unaudited condensed historical financial statements of Essex for the
twelve-month period ended March 31, 1998, (iv) the unaudited condensed
historical financial statements of Essex as of September 30, 1998 and for the
six months then ended and (v) the unaudited condensed historical financial
statements of Cables of Zion for the twelve-month period ended March 31, 1998.
The unaudited pro forma condensed combined financial information is provided
for comparative purposes only and does not purport to be indicative of the
results that actually would have been achieved if the events set forth above had
been effected on the dates indicated or of those results that may be achieved in
the future. These pro forma financial statements are based on estimates of
values and transaction costs, among other things. Accordingly, the actual
recording of the transactions can be expected to differ from these pro forma
financial statements.
14
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED APRIL 30, 1998 (SUPERIOR),
MARCH 31, 1998 (ESSEX) AND MARCH 31, 1998 (CABLES OF ZION)
<TABLE>
<CAPTION>
HISTORICAL
HISTORICAL HISTORICAL CABLES OF PRO FORMA
SUPERIOR ESSEX ZION ADJUSTMENTS PRO FORMA
------------- ------------ ----------- ------------ -------------
<S> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Net sales..................................... $ 516,599 $ 1,675,969 $ 84,678 $ 2,277,246
Cost of goods sold............................ 417,358 1,343,228 70,370 134(a) 1,831,090
------------- ------------ ----------- ------------ -------------
Gross profit................................ 99,241 332,741 14,308 134 446,156
Selling, general and administrative
expenses.................................... 22,181 150,872 8,199 (690)(b) 179,562
(1,000)(b)
Amortization of goodwill...................... 1,715 4,233 79(a) 24,829
18,802(c)
------------- ------------ ----------- ------------ -------------
Operating income............................ 75,345 177,636 6,109 (17,325) 241,765
Interest expense.............................. (8,090) (33,946) (1,697) (80,296)(d) (124,029)
Other income (expense), net................... 206 703 (1,416) (507)
------------- ------------ ----------- ------------ -------------
Income before income taxes, minority
interest and Distributions on
Company-obligated Mandatorily Redeemable
Trust Convertible Preferred Securities of
Superior Trust I holding solely
Convertible Debentures.................... 67,461 144,393 2,996 (97,621) 117,229
Provision for income taxes.................... (26,786) (58,000) (441) 35,617(e) (49,610)
------------- ------------ ----------- ------------ -------------
Income before minority interest and
Distributions on Company-obligated
Mandatorily Redeemable Trust Convertible
Preferred Securities of Superior Trust I
holding solely Convertible Debentures..... 40,675 86,393 2,555 (62,004) 67,619
Distributions on Company-obligated Mandatorily
Redeemable Trust Convertible Preferred
Securities of Superior Trust I holding
solely Convertible Debentures............... (14,161)(d) (14,161)
------------- ------------ ----------- ------------ -------------
Income before minority interest in
subsidiary................................ 40,675 86,393 2,555 (76,165) 53,458
Minority interest in earnings of subsidiary... (79) (1,012)(f) (1,091)
------------- ------------ ----------- ------------ -------------
Net income.................................. $ 40,675 $ 86,393 $ 2,476 $ (77,177) $ 52,367
------------- ------------ ----------- ------------ -------------
------------- ------------ ----------- ------------ -------------
Net income per share of common stock:
Basic:
Basic net income per share of common
stock................................... $2.52 $3.24
------------- -------------
------------- -------------
Average common shares outstanding......... 16,164,000 16,164,000
------------- -------------
------------- -------------
Diluted:
Diluted net income per share of common
stock................................... $2.46 $3.12
------------- -------------
------------- -------------
Average common shares outstanding......... 16,546,000 19,521,000
------------- -------------
------------- -------------
</TABLE>
See accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements
15
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED OCTOBER 31, 1998 (SUPERIOR)
AND SEPTEMBER 30, 1998 (ESSEX)
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL PRO FORMA
SUPERIOR ESSEX ADJUSTMENTS PRO FORMA
------------- ---------- ------------ -------------
<S> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Net sales................................................. $ 302,971 $ 756,936 $ 1,059,907
Cost of goods sold........................................ 235,203 609,266 844,469
Gross profit............................................ 67,768 147,670 215,438
------------- ---------- -------------
Selling, general and administrative expenses.............. 16,368 70,697 (500)(b) 86,565
Unusual charges (1)....................................... 6,003 6,003
Amortization of goodwill.................................. 884 2,150 9,401(c) 12,435
------------- ---------- ------------ -------------
Operating income........................................ 50,516 68,820 (8,901) 110,435
Interest expense.......................................... (4,270) (12,804) (44,051)(d) (61,125)
Other income (expense), net............................... (691) 1,298 607
------------- ---------- ------------ -------------
Income before income taxes, minority interest and
Distributions on Company-obligated Mandatorily
Redeemable Trust Convertible Preferred Securities of
Superior Trust I holding solely Convertible
Debentures............................................ 45,555 57,314 (52,952) 49,917
Provision for income taxes................................ (18,026) (22,791) 19,261(e) (21,556)
------------- ---------- ------------ -------------
Income before minority interest and Distributions on
Company-obligated Mandatorily Redeemable Trust
Convertible Preferred Securities of Superior Trust I
holding solely Convertible Debentures................. 27,529 34,523 (33,691) 28,361
Distributions on Company-obligated Mandatorily Redeemable
Trust Convertible Preferred Securities of Superior Trust
I holding solely Convertible Debentures................. (7,080)(d) (7,080)
------------- ---------- ------------ -------------
Income before minority interest in subsidiary........... 27,529 34,523 (40,771) 21,281
Minority interest in earnings of subsidiary............... (628) (628)
------------- ---------- ------------ -------------
Net income.............................................. $ 26,901 $ 34,523 $ (40,771) $ 20,653
------------- ---------- ------------ -------------
------------- ---------- ------------ -------------
Net income per share of common stock:
Basic:
Income before unusual charges......................... $1.67 $1.50
Unusual charges(1).................................... -- (0.23)
------------- -------------
Net income per basic share of common stock.......... $1.67 $1.28
------------- -------------
------------- -------------
Average common shares outstanding..................... 16,121,000 16,121,000
------------- -------------
------------- -------------
Diluted:
Income before unusal charges.......................... $1.62 $1.46
Unusual charges(1).................................... -- (0.18)
------------- -------------
Net income per diluted share of common stock........ $1.62 $1.27
------------- -------------
------------- -------------
Average common shares outstanding..................... 16,589,000 19,561,000
------------- -------------
------------- -------------
</TABLE>
- ------------------------
(1) During its quarter ended September 30, 1998, Essex recorded unusual charges
of $3,600 ($6,003 before tax) with respect to an early retirement program
offered to certain senior executives of the company and plant closing costs.
See accompanying Notes to the Unaudited Pro Forma Condensed Combined Financial
Statements
16
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF OCTOBER 31, 1998 (SUPERIOR) AND SEPTEMBER 30, 1998 (ESSEX)
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL PRO FORMA
SUPERIOR ESSEX ADJUSTMENTS PRO FORMA
---------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
ASSETS
Current assets:
Cash and cash equivelents..................................... $ 12,734 $ 7,626 $ 20,360
Accounts receivable, net...................................... 61,974 204,871 266,845
Inventories................................................... 58,679 268,377 327,056
Other curent assets........................................... 10,285 13,162 23,447
---------- ---------- ------------
Total current assets........................................ 143,672 494,036 637,708
Property, plant equipment, net................................ 126,588 298,377 424,965
Other assets.................................................. 10,086 6,361 (1,358 (g) 45,762
(2,127 (g)
32,800(h)
Goodwill, net................................................. 45,161 130,550 665,664(i) 841,375
---------- ---------- ------------ ------------
Total assets................................................ $ 325,507 $ 929,324 $ 694,979 $ 1,949,810
---------- ---------- ------------ ------------
---------- ---------- ------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable.............................................. $ 58,265 $ 64,068 $ $ 122,333
Accrued expenses.............................................. 28,939 74,659 10,000(i) 113,598
Notes payable to banks........................................ 157,730 (25,630 (g) 132,100
Current portion of long-term debt............................. 6,868 2,500 9,368
---------- ---------- ------------ ------------
Total current liabilities:.................................. 94,072 298,957 (15,630) 377,399
Long-term debt, less current portion.......................... 96,222 258,892 1,189,600(h) 1,210,244
(334,470 (g)
Minority interest in subsidiary............................... 16,283 16,283
Other long-term liabilities................................... 19,827 72,481 92,308
---------- ---------- ------------ ------------
Total liabilities........................................... 226,404 630,330 839,500 1,696,234
---------- ---------- ------------ ------------
---------- ---------- ------------ ------------
Company-obligated Mandatorily Redeemable Trust Convertible
Preferred Securities of Superior Trust I holding solely
Convertible Debentures...................................... 166,600(j) 166,600
Stockholders equity:
Common stock.................................................. 162 302 (302 (i) 162
Capital in excess of par value................................ 28,355 198,379 (198,379 (i) 28,355
Accumulated comprehensive income.............................. (4,218) (4,218)
Retained earnings............................................. 80,921 154,434 (154,434 (i) 68,794
(2,127 (g)
(10,000 (k)
---------- ---------- ------------ ------------
105,220 353,115 (365,242) 93,093
Shares of common stock in treasury............................ (6,117) (54,121) 54,121 (6,117)
---------- ---------- ------------ ------------
Total stockholders' equity.................................. 99,103 298,994 (311,121) 86,976
---------- ---------- ------------ ------------
Total liabilities and stockholders' equity................ $ 325,507 $ 929,324 $ 694,979 $ 1,949,810
---------- ---------- ------------ ------------
---------- ---------- ------------ ------------
</TABLE>
See accompanying Notes to Pro Forma Condensed Combined Financial Statements.
17
<PAGE>
NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(a) Reflects the changes to historical depreciation and the incremental goodwill
amortization resulting from the acquisition of Cables of Zion which was
completed in May 1998.
(b) Reflects the elimination of management fees allocated by the controlling
shareholders of Cables of Zion ($690,000) and Essex ($1 million) for the
twelve months ended March 31, 1998.
(c) Reflects the incremental goodwill amortization resulting from the
acquisition of Essex.
(d) Reflects the adjustment to interest expense resulting from debt incurred and
the issuance of the Trust Preferred Securities in connection with the
acquisition as more fully described in Notes (h) and (j) below.
(e) Reflects the pro forma adjustment to income tax expense resulting from the
Cables of Zion and Essex transactions. The pro forma effective tax rate of
48.1% and 50.3% for the twelve months ended April 30, 1998 and the six
months ended October 31, 1998, respectively, reflects the non-deductibility
of purchased goodwill and includes the tax impact of the Trust Preferred
Securities' distributions.
(f) Reflects the adjustment to minority interest in earnings of subsidiaries to
reflect the 49% minority interest in Cables of Zion for the twelve months
ended April 30, 1998.
(g) Reflects the debt extinguished in connection with the financing described in
Note (h) and the write-off of $1.4 million and $2.1 million, respectively,
in deferred financing charges previously capitalized by Essex and Superior.
(h) Represents the proceeds from Superior's initial borrowings under the new
facilities as follows:
<TABLE>
<CAPTION>
AMOUNT
(IN
MILLIONS)
-----------
<S> <C>
Term Loan A...................................................................... $ 500.0
Term Loan B...................................................................... 425.0
Revolving credit facility*....................................................... 64.6
Senior subordinated notes........................................................ 200.0
-----------
$ 1,189.6
-----------
-----------
</TABLE>
*Total availability under Superior's revolving credit facility amounts to
$225 million.
In connection with the above facilities, Superior estimates that deferred
financing charges will amount to approximately $32.8 million.
(i) Reflects the preliminary allocation of the purchase price to the net assets
of Essex based upon estimated fair values of such assets:
<TABLE>
<CAPTION>
AMOUNT
(IN
MILLIONS)
-----------
<S> <C>
Estimated acquisition cost (including $12.2m in expense)......................... $ 953.3
Less: historical book values of net assets at September 30, 1998................. (299.0)
Add: accrual of expenses......................................................... 10.0
write-off of Essex's deferred financing charges............................. 1.4
-----------
Acquisition goodwill (to be amortized over 35 years)............................. $ 665.7
-----------
-----------
</TABLE>
(j) Reflects the issuance of 3,332,254 Trust Preferred Securities to Essex
stockholders in the merger. See "The Merger Agreement and Related
Agreements--Consideration to be Received in the Merger."
(k) Reflects the impact to retained earnings for the $10.0 million transaction
fee paid to The Alpine Group, Inc. with respect to the Essex acquisition.
See "The Companies--Superior TeleCom Inc."
18
<PAGE>
UNAUDITED COMPARATIVE PER SHARE DATA
We have summarized below the per share information for our respective
companies on a historical, pro forma combined and pro forma diluted equivalent
basis for the periods and as of the dates indicated below. The pro forma
information gives effect to the merger accounted for on a purchase basis. You
should read this information in conjunction with our historical financial
statements (and related notes) contained in the reports and other information
that we have filed with the Commission. See "Where You Can Find More
Information" on page 1. You should also read this information in connection with
the pro forma financial information under the heading "Unaudited Pro Forma
Combined Financial Information" on page 14. You should not rely on the pro forma
information as being indicative of the historical results that we would have had
if the merger had occured prior to such periods or the future results that we
will experience after the merger.
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS
APRIL 30, ENDED OCTOBER
1998 31, 1998
------------- ---------------
<S> <C> <C>
Statement of Income Data:
Cash dividends declared per diluted share:
Superior..................................................................... $ 0.125 $ 0.125
Essex........................................................................ -- --
Superior pro forma........................................................... 0.125 0.125
Essex merger equivalent...................................................... 0.071 0.071
Income per diluted share before extraordinary items:
Superior..................................................................... 2.46 1.62
Essex........................................................................ 2.82 1.15
Superior pro forma........................................................... 3.12 1.27
Essex merger equivalent...................................................... 1.78 0.72
</TABLE>
<TABLE>
<CAPTION>
OCTOBER 31,
1998
---------------
<S> <C>
Balance Sheet Data:
Net book value per diluted share:
Superior..................................................................................... $ 6.00
Essex........................................................................................ 10.50
Superior pro forma........................................................................... 4.46
Essex merger equivalent...................................................................... 2.54
</TABLE>
NOTES TO COMPARATIVE UNAUDITED PER SHARE DATA
(1) The pro forma combined dividends declared assume no changes in the
historical dividends declared per share of Superior common stock. The pro
forma equivalent dividends per share of Essex common stock represent the
cash dividends declared on a share of Superior common stock multiplied by
the exchange ratio and then by the conversion rate of the Trust Preferred
Securities into Superior common stock. See "The Merger--General--The Merger"
and "Description of Trust Preferred Securities--Conversion Rights."
(2) The pro forma combined income per share from continuing operations has been
computed based on the diluted average number of outstanding shares and
common equivalent shares of Superior, and the diluted average number of
outstanding shares and common equivalent shares of Essex adjusted for the
exchange ratio. The pro forma equivalent income from continuing operations
per share of Essex stock represents the pro forma combined income per share
from continuing operations multiplied by the exchange ratio and then by the
conversion rate of the Trust Preferred Securities into Superior common
stock. See "The Merger--General--The Merger" and "Description of Trust
Preferred Securities--Conversion Rights."
19
<PAGE>
(3) The pro forma combined book values per share of Superior common stock are
based upon the pro forma total common equity for Superior and Essex, divided
by the total pro forma diluted shares of Superior common stock assuming
conversion of the remaining outstanding shares of Essex common stock at the
exchange ratio and then by the conversion rate of the Trust Preferred
Securities into Superior Common Stock. The diluted pro forma equivalent book
values per share of Essex common stock represents the remaining outstanding
shares as a percentage of the Trust Preferred Securities conversion to
Superior common stock. See "The Merger--General--The Merger."
(4) The historical earnings per common share for Essex were based on the average
number of common shares outstanding. The following table summarizes the
Essex average common shares and Essex average common shares and common
equivalent shares referenced in Note (2).
<TABLE>
<CAPTION>
ESSEX AVERAGE
COMMON SHARE AND
ESSEX AVERAGE COMMON SHARES COMMON EQUIVALENT SHARES
---------------------------- -------------------------
<S> <C> <C>
September 30, 1998...................................... 28,751,040 29,465,214
December 31, 1997....................................... 27,699,888 29,614,489
</TABLE>
20
<PAGE>
RATIOS OF COMBINED FIXED CHARGES AND
PREFERENCE DIVIDENDS TO EARNINGS
The following are the consolidated ratios of combined fixed charges and
preference dividends to earnings for Superior for the six months ended October
31, 1998 and for each of the years in the five fiscal years ended April 30,
1998.
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
SIX MONTHS ENDED -----------------------------------------------------
OCTOBER 31, 1998 1998 1997 1996 1995 1994
----------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Ratio of combined fixed charges and preference
dividends to earnings:
Superior--historical.......................... 11.00x 8.88x 4.59x 1.84x 2.58x -- (a)
Superior--pro forma........................... 1.61x 1.72x
</TABLE>
- ------------------------
(a) During the year ended April 30, 1994, fixed charges and preference dividends
exceeded earnings by $613,000.
21
<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION CONTAINED OR INCORPORATED BY REFERENCE
IN THIS JOINT PROXY STATEMENT/ PROSPECTUS, ESSEX STOCKHOLDERS SHOULD CONSIDER
THE FOLLOWING RISK FACTORS BEFORE THEY DECIDE WHETHER OR NOT TO VOTE IN FAVOR OF
THE APPROVAL AND ADOPTION OF THE MERGER AGREEMENT. UNLESS THE CONTEXT INDICATES
OTHERWISE, REFERENCES TO SUPERIOR OR THE COMPANY INCLUDE ESSEX SINCE SUPERIOR
ALREADY OWNS APPROXIMATELY 81% OF ESSEX.
RISKS RELATING TO THE COMBINED COMPANY
CHALLENGES OF COMBINING ESSEX AND SUPERIOR AND INTEGRATING THEIR
OPERATIONS. On November 27, 1998, Superior acquired shares representing
approximately 81% of the outstanding stock of Essex. In order to combine Essex
and Superior, we will need to integrate and coordinate the management and
administrative functions, product offerings and sales, marketing, and research
and development efforts of each company. This will present a number of
challenges, including the management of businesses with different customer bases
and different approaches to manufacturing, sales and service, and the
integration of a number of geographically separated research and development and
other facilities. Whether or not this will succeed will depend largely on the
companies' ability to retain key management, sales and research and development
personnel. We cannot assure you that the companies will be smoothly and
successfully integrated. Our management will be occupied with integrating the
companies' operations following the merger and this may temporarily distract
management from the companies' day-to-day businesses. If we cannot successfully
integrate the companies' operations, our business and the results of operations
of the combined businesses could be adversely affected.
SUPERIOR WILL HAVE SUBSTANTIAL DEBT OBLIGATIONS UPON CONSUMMATION OF THE
MERGER. In connection with its acquisition of approximately 81% of the
outstanding stock of Essex on November 27, 1998, Superior increased its debt
level to about $1.4 billion through borrowings under new credit facilities.
Subject to the restrictions set forth in Superior's credit agreements, Superior
expects to continue to incur indebtedness from time to time in the ordinary
course of business and for different purposes, such as acquisitions and business
expansion. As of October 31, 1998, Superior would have had total debt of $1.4
billion on a pro forma basis after giving effect to the merger.
The level of Superior's indebtedness could have important consequences to
holders of the Trust Preferred Securities, including the following:
- a significant portion of Superior's cash flow from operations must be
dedicated to repaying debt and will not be available for other purposes;
- Superior's ability to obtain additional debt financing in the future for
working capital, capital expenditures or acquisitions will be limited;
- Superior may be more indebted than its competitors and this may place
Superior at a competitive disadvantage by increasing the relative cost of
future borrowings;
- Superior's level of indebtedness will limit its flexibility in reacting
to adverse economic conditions; and
- certain of Superior's borrowings are, or in the future may be, at
variable interest rates that may make Superior vulnerable to interest
rate increases.
If Superior cannot generate sufficient cash flow from operations to repay its
debt obligations or if its business deteriorates substantially, then it may need
to refinance its debt, raise additional capital or take other actions such as
reducing its capital expenditures. We cannot assure you that any of these
actions could be completed on terms satisfactory to Superior or that they would
be permitted by the terms of any future credit arrangements.
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THE DEPENDENCE OF SUPERIOR'S BUSINESS UPON SIGNIFICANT
CUSTOMERS. Superior's copper telecommunications wire and cable business is
dependent on the regional Bell operating companies and two major independent
telephone companies. For the fiscal year ended April 30, 1998, the regional Bell
operating companies and two independent telephone companies with which Superior
currently has multi-year arrangements accounted for 85.2% of Superior's copper
telecommunications wire and cable net sales. Five of these customers, GTE
Corporation, Bell Atlantic, Sprint Corporation, SBC Corporation and BellSouth
Corporation, accounted for 19.4%, 19.0%, 17.3%, 16.2% and 13.3%, respectively,
of Superior's net sales for that period. These percentages will, of course, be
reduced when Essex's results are included. As a result of announced industry
consolidations, it is expected that the number of regional Bell operating
companies will be reduced. Continued consolidation among the regional Bell
operating companies could alter these customers' purchasing patterns and affect
the pricing in the copper telecommunications wire and cable business.
Adverse conditions affecting any of the industries in which the company's
customers are engaged, such as the loss of any of its significant customers,
could materially and adversely affect its results of operations and financial
condition.
RAPID TECHNOLOGICAL CHANGE. The commercial development of fiber optics has
had and is expected to continue to have an effect on the copper
telecommunications wire and cable business. Fiber optic technology has had a
major impact on certain components of the telecommunications network where its
use is cost-effective, particularly in trunk lines and the long distance
network. To a lesser degree, fiber optic cable has been used in certain
high-density feeder applications between telephone central offices or remote
locations and major distribution points. This has, to some degree, reduced the
total market for certain products manufactured by Superior and Essex.
Superior's telecommunications wire and cable business is concentrated in the
local loop portion of the telecommunications network where copper wire has
remained the most widely used medium for transmission. Telephone companies are
evaluating (and in isolated cases installing on a test basis) alternative
technologies, including coaxial and fiber optic cable for providing video
entertainment or other new services. Because the telecommunications industry is
undergoing rapid and intense technological change, we cannot predict the impact
that these developments may have on the total demand for copper wire in the
local loop. A decline in the level of purchases of copper telecommunications
wire and cable by the regional Bell operating companies and other independent
telephone companies could have an adverse effect on the copper
telecommunications wire and cable industry and Superior. Wireless technologies
such as microwave, satellite and cellular transmission, along with other,
newly-developed technologies, could also have an adverse impact on the market
for copper telecommunications wire and cable products in the future.
The other business areas in which Essex is engaged are also experiencing
technological advancements in their product development and manufacturing
processes. For example, to address the demand for more energy-efficient products
and smaller products, we need to design more efficient components, including
wire and cable components of these products. We cannot assure you that the
company will successfully introduce new products or product enhancements that
will meet with commercial acceptance or that our technology will not be
superseded by new technological breakthroughs introduced by competitors.
OPERATION OF MANUFACTURING FACILITIES AT HIGH UTILIZATION RATES. Superior
and Essex are currently operating their manufacturing facilities at high
utilization rates. In order to meet growing customer demand, they will need to
invest in additional manufacturing equipment. Failure to have new equipment
operational in a timely manner or shut-downs of existing capacity due to
breakdowns or other reasons could adversely affect the company's results of
operations and financial condition. In addition, the terms of the company's
credit facilities limit the amount that the company can spend on capital
expenditures. Limitations on capital expenditures may affect the ability of the
company to expand capacity in its businesses.
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COMPETITION. The market for wire and cable products is highly competitive.
Each of the company's businesses competes with at least one major competitor.
Many of the company's products are made to industry specifications and therefore
may be interchangeable with competitors' products.
The company is subject to competition in many markets on the basis of price,
delivery time, customer service and its ability to meet specialty needs. In
particular, with respect to building wire, we believe that price is an important
competitive factor and has lead to, and may continue to lead to, earnings and
revenue volatility in the company's building wire business. Such volatility
could adversely affect the company's results of operations and financial
condition. Also, the company believes that increased capacity in the building
wire segment of the U.S. wire and cable industry may reduce prices for building
wire products.
The company believes that over the next two years certain of its competitors
plan to bring into operation additional capacity in the magnet wire business.
Since demand for magnet wire is not expected to keep pace with such expanded
capacity, this added supply could increase competition and lead to reduced
prices for the company's magnet wire products.
In our telecommunications wire and cable business, several regional Bell
operating companies have adopted policies of limiting the number of their
suppliers and requiring that these suppliers provide additional services. As a
result, the degree of competition based on service has increased. In addition,
Essex and Superior have been subject to competition from foreign manufacturers
from time to time and this competition may continue in the future.
CYCLICAL NATURE OF BUSINESSES. Superior and Essex supply certain products
primarily to customers in industries that are particularly sensitive to
fluctuations in the general business cycles of the United States and world
economies. For example, demand for copper telecommunications wire and cable is
dependent on several factors, including the rate at which new access lines are
installed in homes and businesses; the level of infrastructure spending for
items such as road-widenings and bridges, which generally necessitates
replacement of existing utilities, including telephone cable; and the level of
general maintenance spending by telephone companies. The installation of new
access lines in turn depends partly on the level of new home construction and
expansion of business and, increasingly in recent years, on demand for
additional telephone lines and lines dedicated to fax machines and computer
modems which are used for business communications, access to the internet and
other things. Similarly, demand for building wire fluctuates based, in part, on
the level of new construction and building renovation, both of which tend to be
cyclical. The magnet wire business is also subject, in part, to the cyclical
nature of light vehicle sales and consumer product and appliance purchases.
VOLATILITY IN THE COST AND AVAILABILITY OF RAW MATERIALS. The principal raw
materials used in the manufacture of wire and cable products are copper,
aluminum, bronze, steel and plastics, such as polyethylene and polyvinyl
chloride. The cost of copper, the most significant raw material used by Superior
and Essex in their wire and cable businesses, has been subject to considerable
volatility over the years. Volatility in the price of copper will in turn lead
to significant fluctuations in the net sales of the company. Sharp increases in
the price of copper can reduce demand and thus overall profitability if
customers decide to defer their purchases of copper wire and cable products or
seek to purchase substitute products until copper prices decline. Although the
company attempts to reflect copper price changes in the sale price of its
products, to the extent it cannot do so, sudden increases in the price of copper
may adversely affect profitability. In addition, particular plastics have, at
times, been difficult to obtain. The inability of the company to obtain
sufficient quantities of necessary raw materials could adversely affect its
operating results.
EXTENSIVE REGULATION OF ENVIRONMENTAL MATTERS. Superior and Essex are
subject to extensive and evolving federal, foreign, state and local
environmental and land use laws and regulations relating to the storage,
handling, disposal, emission, transportation and discharge of hazardous
substances, materials and
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waste products. These laws and regulations often impose stringent permitting
requirements. The companies' operations have resulted in releases of hazardous
substances or wastes at sites currently or formerly owned or operated by them
and at sites to which wastes may have been sent for disposal. Superior and Essex
are presently involved in investigatory and remedial activities at certain
sites, some of which are being conducted under the oversight of governmental
authorities. In connection with certain acquisitions and divestitures, Superior
and Essex have also assumed responsibility for and indemnified purchasers
against certain liabilities associated with contamination, if any, existing at
certain of its or its predecessors' current and former facilities. Essex has
also been named as a potentially responsible party in proceedings that involve
environmental remediation and as a defendant in lawsuits alleging exposure to
asbestos in Essex's products. The costs of complying with environmental, health
and safety laws in Superior's and Essex's current operations or the liabilities
arising from past releases of, or exposure to, hazardous substances could result
in future expenditures by the company that could materially and adversely affect
its results of operations, cash flows or financial condition.
YEAR 2000 COMPLIANCE. The year 2000 problem is the result of computer
programs having been written using two digits (rather than four) to define the
applicable year. The six-digit date (YYMMDD) has become the standard for date
representations and is embedded in a multitude of computer programs and computer
chips. Information technology hardware, "embedded" technology, such as
microprocessors, or software that is date-sensitive may recognize a date using
"00" as the year 1900 rather than the year 2000, which could result in
miscalculations or system and mechanical failures. The company does not
manufacture or sell products with embedded technology. Superior and Essex are
modifying their computer systems to be year 2000 compliant. We do not expect
that the cost of modifying these systems will be material. To the extent that
any of our software is unable to recognize the year 2000 properly, the company
may incur expenses in connection with modifying such software or handling any
disruptions that may be caused by the software's impaired functioning. These
efforts may not be successful and the company's operations could be adversely
affected during the process of implementing new systems. If any of the company's
significant customers or suppliers do not successfully and timely achieve year
2000 compliance, the company's business could also be materially affected.
RISKS RELATING TO THE TRUST PREFERRED SECURITIES
You will receive the Trust Preferred Securities in the merger in exchange
for your shares of Essex common stock. Superior has formed Superior Trust I, a
trust that will issue the Trust Preferred Securities. At the same time that the
trust issues the Trust Preferred Securities, Superior will issue debt
(represented by debentures) to the trust. The debentures will have
"back-to-back" terms with the Trust Preferred Securities, which means that
Superior will make payments on the debt at the same time, and in the same
amounts, as payments due on the Trust Preferred Securities. If Superior does not
pay interest or other amounts due on the debt, the trust will not be able to pay
distributions or other amounts due on the Trust Preferred Securities. Superior
will guarantee the trust's obligations to make these payments, but only to the
extent Superior makes payments on the debt. There are certain risks associated
with this structure.
RISKS ASSOCIATED WITH HOLDING COMPANY STRUCTURE. Superior is a holding
company whose principal assets are its investments in its subsidiaries,
including Essex. Therefore, Superior's ability to meet its financial
obligations, including its obligations under the debentures and the guarantee,
depends on the flow of cash to Superior from its subsidiaries in the form of
dividends and other distributions. Certain covenants in Superior's bank credit
facilities limit the ability of Superior's subsidiaries to pay dividends to
Superior. The ability of these subsidiaries to make distributions to Superior
may also be restricted by law or by new loan or other agreements that they may
enter into in the future. If Superior's subsidiaries are unable to make
distributions to Superior, Superior may be unable to pay amounts owed on the
debt to the trust. If Superior cannot make payments on this debt, the trust will
be unable to pay amounts due on the Trust Preferred Securities. As a result, as
explained above, you would be unable to rely on Superior's guarantee in this
case.
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SUBORDINATION OF THE DEBENTURE AND THE GUARANTEE. Superior's obligations
under the debentures and the guarantee will be unsecured and will be subordinate
and junior in right of payment to all existing and future senior indebtedness of
Superior. In addition, the debentures and the guarantee are obligations of
Superior and not of its subsidiaries. As a result, Superior's obligations under
the debentures and the guarantee will be structurally subordinated to all
obligations of Superior's subsidiaries. The effect is that creditors of
Superior's subsidiaries would be entitled to a claim on the assets of these
subsidiaries prior to any claims by Superior. In the event of a liquidation or
reorganization of any of Superior's subsidiaries, creditors of such subsidiary
are likely to be paid in full before any distribution is made to Superior,
except to the extent that Superior itself is recognized as a creditor of such
subsidiary, in which case the claims of Superior would still be subordinate to
any security interest in the assets of such subsidiary and any indebtedness of
such subsidiary senior to that held by Superior.
As of October 31, 1998, on a pro forma basis after giving effect to the
completion of the merger, Superior would have had outstanding $1.4 billion of
senior indebtedness and Superior's subsidiaries would have had outstanding
approximately $166 million of obligations. The terms of the Trust Preferred
Securities will not limit the amount of senior indebtedness or other
indebtedness that Superior or its subsidiaries may incur.
OPTION TO DEFER PAYMENT OF INTEREST; TAX CONSEQUENCES. Unless certain
events of bankruptcy, insolvency or reorganization of Superior have occurred and
are continuing, Superior may defer its payment of interest on the debentures for
up to 20 consecutive quarters, but not beyond the stated maturity of the
debentures. Any period during which Superior defers the payment of interest is
called an "extension period." Once an extension period ends and Superior pays
all amounts then due, Superior can begin a new extension period. Because
Superior will not pay interest on the debentures to the trust during an
extension period, the trust will not pay distributions on the Trust Preferred
Securities (although interest will accumulate on the unpaid distributions at an
annual rate of 8 1/2% during the extension period).
Even though you would not receive distributions from the trust during an
extension period, you would be taxed as though you did receive this income. You
would be required to include this income (in the form of original issue discount
("OID")) in your gross income for U.S. federal income tax purposes before you
may actually receive the cash distribution from the trust. And, if you were to
convert your Trust Preferred Securities into Superior common stock during an
extension period, you would not receive from the trust the cash distribution
that you have reported as income. Also, the conversion rate would not take into
account the unpaid distribution.
During an extension period, accrued but unpaid distributions will increase
your basis in the Trust Preferred Securities. If you sell the Trust Preferred
Securities during an extension period, your increased tax basis will decrease
the amount of any capital gain, or increase the amount of any capital loss, that
you may have otherwise realized on the sale. A capital loss, except in limited
circumstances and to a limited extent, cannot be applied to offset ordinary
income for U.S. federal income tax purposes.
If Superior does elect to defer interest payments in the future, this may
affect the market price of the Trust Preferred Securities. Therefore, if you
were to dispose of your Trust Preferred Securities during an extension period,
you might not receive the same return on your investment as someone who
continues to hold his, her or its Trust Preferred Securities. In addition,
Superior's right to defer interest payments may cause the trading prices of the
Trust Preferred Securities to be more volatile than the trading prices of other
securities, the distributions on which may not be deferred.
For more information regarding the tax consequences of the Trust Preferred
Securities, please refer to "The Merger--Material Federal Income Tax
Consequences" on page 52 of this Joint Proxy Statement/ Prospectus.
POSSIBLE EXCHANGE OF TRUST PREFERRED SECURITIES FOR DEBENTURES. Superior
can dissolve the trust at any time and, after satisfying liabilities to
creditors of the trust as provided by law, cause the debentures to be
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distributed to the holders of Trust Preferred Securities in liquidation of the
trust. Additionally, in certain circumstances, such as where it is likely that
the trust will be required to register as an "investment company" or certain
adverse tax consequences will occur, the Trust Preferred Securities will or may
be exchanged, in whole or in part, for the debentures. Because you may receive
debentures if any of these events occurs, you are also making an investment
decision about the debentures. Therefore, you should carefully review all the
information about the debentures in this document.
RIGHTS UNDER THE GUARANTEE. Superior will guarantee that certain payments
on the Trust Preferred Securities will be made, such as accumulated and unpaid
distributions on the Trust Preferred Securities, the redemption price of Trust
Preferred Securities called for redemption, as well as amounts that may be
payable upon the dissolution or liquidation of the trust. However, Superior will
guarantee these payments only if, and to the extent, the trust has funds on hand
to make these payments. If Superior does not pay amounts owed on the debentures
when due, the trust will not have funds with which to make these payments. In
that case, you would not be able to rely on Superior's guarantee.
LIMITATION ON DIRECT ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED
SECURITIES. If Superior fails to make any required payments under its
guarantee, you must rely on the trustee under the guarantee to enforce the
guarantee. If the trustee fails to enforce the guarantee, only then may you
bring suit directly against Superior to enforce the guarantee.
If an event of default occurs with respect to either the debentures or the
Trust Preferred Securities, you must rely on a trustee of the trust to enforce
your rights. The trustee may declare the entire principal of, premium, if any,
and interest on the debentures to be immediately due and payable. You will then
receive your pro rata share of these amounts as a holder of the Trust Preferred
Securities. You may only proceed directly against Superior if the trustee fails
to enforce these rights after a request from any holder.
LIMITED VOTING RIGHTS. You will have limited voting rights as a holder of
Trust Preferred Securities to direct the activities of the trustees of the trust
and no voting rights with respect to the activities of Superior. You also may
not appoint or remove any of the trustees. Only Superior or certain of the other
trustees may do this. Superior and the trustees of the trust can also act
without your consent to ensure that the trust will be classified for U.S.
federal income tax purposes as a grantor trust, even if this action adversely
affects your interests as a holder of Trust Preferred Securities.
POSSIBLE TAX LAW CHANGES. The U.S. Congress has introduced legislation in
the past that, if enacted, would have denied an interest deduction to issuers
for instruments such as the debentures that were issued after the date such
legislation was proposed. No such legislation is pending now. We cannot assure
you that similar legislation will not ultimately be enacted, possibly with
retroactive effect, or that there will not be other developments (such as an
adverse judicial decision in the Enron Corporation case, discussed below, or
some other similar case) that would adversely affect the tax treatment of the
debentures and that could consequently result in the exchange of the Trust
Preferred Securities for debentures.
We are aware of at least one case, involving Enron Corporation, now pending
before the U.S. Tax Court, where the Internal Revenue Service is seeking to
disallow the deduction for interest expense on securities that are similar in
some ways to the debentures. See "The Merger--Material Federal Income Tax
Consequences--Possible Tax Law Changes."
ABSENCE OF PUBLIC MARKET FOR THE TRUST PREFERRED SECURITIES; TRADING PRICE
OF TRUST PREFERRED SECURITIES. Prior to today, there has been no trading market
for the Trust Preferred Securities. We have applied to have the Trust Preferred
Securities approved for trading on the New York Stock Exchange. However, we
cannot assure you that any market for the Trust Preferred Securities will
develop or, if one does develop, that it will be maintained. Failure to develop
or sustain an active market for the Trust Preferred Securities could adversely
affect their trading price. See "The Merger--Opinions of the Essex Financial
Advisors."
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We cannot assure you as to the market prices for the Trust Preferred
Securities, the debentures that may be distributed in exchange for Trust
Preferred Securities or the Superior common stock issuable upon conversion of
the Trust Preferred Securities or the debentures. The Trust Preferred
Securities, the debentures or the Superior common stock may trade at a discount
to the value allocated to the Trust Preferred Securities in the merger.
In addition, the Trust Preferred Securities may trade at a price that does
not fully reflect the value of accrued but unpaid interest on the underlying
debentures. If you dispose of Trust Preferred Securities between record dates
for payments of distributions, you will nevertheless be required, for U.S.
federal income tax purposes, to include accrued but unpaid interest (i.e., OID)
on the debentures through the date of disposition in income as ordinary income,
and to add that amount to your adjusted tax basis in your Trust Preferred
Securities. To the extent the selling price is less than your adjusted tax
basis, you will recognize a capital loss. A capital loss, except in limited
circumstances and to a limited extent, cannot be applied to offset ordinary
income for U.S. federal income tax purposes. See "The Merger--Material Federal
Income Tax Consequences--Sales of Trust Preferred Securities."
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THE MEETINGS
This Joint Proxy Statement/Prospectus is being furnished to (1) holders of
common stock, par value $0.01 per share ("Essex Common Stock"), of Essex in
connection with the solicitation of proxies by its Board of Directors for use at
Essex's Special Meeting of Stockholders to be held at a.m., local time, on
, 1999, at , or any adjournment or postponement
thereof (the "Essex Meeting"), and (2) holders of common stock, par value $0.01
per share ("Superior Common Stock"), of Superior in connection with the
solicitation of proxies by its Board of Directors for use at Superior's Special
Meeting of Stockholders to be held at a.m., local time, on ,
1999, at , or any adjournment or postponement
thereof (the "Superior Meeting"). This Joint Proxy Statement/Prospectus is first
being mailed to Essex and Superior stockholders on or about , 1999.
PURPOSE OF THE MEETINGS
ESSEX. The Essex Meeting has been called to consider and vote upon (1) a
proposal to approve and adopt the Agreement and Plan of Merger, dated as of
October 21, 1998 (the "Merger Agreement"), by and among Superior, SUT
Acquisition Corp., a wholly owned subsidiary of Superior ("Merger Sub"), and
Essex, which provides for the merger (the "Merger") of Merger Sub with and into
Essex as a result of which Essex will become a wholly owned subsidiary of
Superior; and (2) to transact such other business as may properly come before
the Essex Meeting.
SUPERIOR. The Superior Meeting has been called to consider and vote upon
(1) a proposal to approve (a) an amendment to Superior's certificate of
incorporation to increase the number of authorized shares of preferred stock,
par value $0.01 per share ("Superior Preferred Stock"), of Superior from one
million to five million and to increase the number of authorized shares of
Superior Common Stock from 25 million to 35 million and, in connection
therewith, (b) the issuance of the Trust Preferred Securities and the Superior
Common Stock issuable upon conversion of the Trust Preferred Securities in the
Merger (the "Charter Amendment Proposal"); (2) a proposal to approve and adopt
an amendment to the Superior 1996 Stock Option Plan (the "Plan Amendment
Proposal" and, together with the Charter Amendment Proposal, the "Superior
Proposals"); and (3) to transact such other business as may properly come before
the Superior Meeting.
RECORD DATE AND VOTING RIGHTS
ESSEX. Essex has fixed the close of business on , 1999 as the
record date (the "Essex Record Date") for determining holders of Essex Common
Stock entitled to notice of, and to vote at, the Essex Meeting. Only holders of
record of Essex Common Stock on the Essex Record Date will be entitled to notice
of, and to vote at, the Essex Meeting. On the Essex Record Date, shares
of Essex Common Stock were outstanding and entitled to vote. Each record holder
of Essex Common Stock on such date is entitled to cast one vote per share,
exercisable in person or by properly executed proxy, on each matter properly
submitted for the vote of the Essex stockholders at the Essex Meeting.
The presence, in person or by properly executed proxy, of the holders of a
majority of the outstanding shares of Essex Common Stock entitled to vote at the
Essex Meeting is necessary to constitute a quorum at the Essex Meeting. The
adoption of the Merger Agreement will require the affirmative vote of the
holders of at least a majority of the outstanding shares of Essex Common Stock
entitled to vote thereon. Abstentions will be counted for purposes of
determining a quorum, but will have the effect of a vote against approval of the
matters being voted upon. If a broker holding shares in street name returns an
executed proxy that indicates that the broker does not have discretionary
authority as to certain shares to vote on one or more matters, such shares will
be considered represented at the Essex Meeting for purposes of determining a
quorum, but have the effect of a vote against approval of the matters being
voted upon.
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BECAUSE MERGER SUB HAS ACQUIRED A MAJORITY OF THE OUTSTANDING SHARES OF
ESSEX COMMON STOCK, MERGER SUB HAS SUFFICIENT VOTING POWER TO CONSTITUTE A
QUORUM AT THE ESSEX MEETING AND TO APPROVE AND ADOPT THE MERGER AGREEMENT AND
APPROVE THE MERGER EVEN IF NO OTHER STOCKHOLDER OF ESSEX VOTES IN FAVOR OF THIS
PROPOSAL. MERGER SUB HAS AGREED TO VOTE ITS SHARES IN FAVOR OF THE APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT AND THE APPROVAL OF THE MERGER. THEREFORE,
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND APPROVAL OF THE MERGER AT THE
ESSEX MEETING IS ASSURED.
On the Essex Record Date, Essex's directors, executive officers and
affiliates (including Merger Sub) beneficially owned in the aggregate
shares, or of the outstanding shares, of Essex Common Stock. Except for
stockholders identified under "The Companies--Essex Principal Stockholders," as
of the Essex Record Date, to the knowledge of Essex, no other person
beneficially owned more than five percent of the outstanding Essex Common Stock.
SUPERIOR. Superior has fixed the close of business on , 1999 as
the record date (the "Superior Record Date") for determining holders of Superior
Common Stock entitled to notice of, and to vote at, the Superior Meeting. Only
holders of record of Superior Common Stock on the Superior Record Date will be
entitled to notice of, and to vote at, the Superior Meeting. On the Superior
Record Date, shares of Superior Common Stock were outstanding and
entitled to vote. Each record holder of Superior Common Stock on such date is
entitled to cast one vote per share, exercisable in person or by properly
executed proxy, on each matter submitted for the vote of the Superior
stockholders at the Superior Meeting.
The presence, in person or by properly executed proxy, of the holders of a
majority of the outstanding shares of Superior Common Stock entitled to vote at
the Superior Meeting is necessary to constitute a quorum at the Superior
Meeting. Approval of the Charter Amendment Proposal will require the affirmative
vote of the holders of a majority of the outstanding shares of Superior Common
Stock entitled to vote thereon. Approval of the Plan Amendment Proposal will
require the affirmative vote of holders of the majority of the outstanding
shares of Superior Common Stock present in person or represented by proxy at the
Superior Meeting and entitled to vote on the proposal, provided that the total
vote cast represents over 50% in interest of all shares entitled to vote on the
proposal. Abstentions will be counted for purposes of determining a quorum, but,
in the case of approval of the Charter Amendment Proposal, will have the effect
of a vote against approval of the proposal. If a broker holding shares in street
name returns an executed proxy that indicates that the broker does not have
discretionary authority as to certain shares to vote on one or more matters,
such shares will be considered represented at the Superior Meeting for purposes
of determining a quorum, but have the effect of a vote against approval of the
Charter Amendment Proposal.
The Alpine Group, Inc., a Delaware corporation and the majority stockholder
of Superior, has agreed with Essex to vote all shares of Superior Common Stock
held of record by Alpine or which it has the right to vote in favor of the
Superior Proposals. The terms of this agreement are described in more detail on
page 64. BECAUSE ALPINE OWNS A MAJORITY OF THE OUTSTANDING SHARES OF SUPERIOR
COMMON STOCK, ALPINE HAS SUFFICIENT VOTING POWER TO CONSTITUTE A QUORUM AT THE
SUPERIOR MEETING AND TO APPROVE THE SUPERIOR PROPOSALS EVEN IF NO OTHER
STOCKHOLDER VOTES IN FAVOR OF THEM. ACCORDINGLY, APPROVAL OF THE SUPERIOR
PROPOSALS IS ASSURED.
PROXIES
ESSEX. All shares of Essex Common Stock that are entitled to vote and are
represented at the Essex Meeting by properly executed proxies received prior to
or at the Essex Meeting, and not duly and timely revoked, will be voted at the
Essex Meeting in accordance with the instructions indicated on such proxies. If
no instructions are indicated, such proxies will be voted FOR approval and
adoption of the Merger Agreement and approval of the Merger. If any other
matters are properly presented for consideration at the Essex Meeting,
including, among other things, consideration of a motion to adjourn or postpone
the
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Essex Meeting to another time and/or place (including, without limitation, for
the purpose of soliciting additional proxies), the persons named in the enclosed
form of proxy and voting thereunder will have discretion to vote on such matters
in accordance with their best judgment.
SUPERIOR. All shares of Superior Common Stock that are entitled to vote and
are represented at the Superior Meeting by properly executed proxies received
prior to or at the Superior Meeting, and not duly and timely revoked, will be
voted at the Superior Meeting in accordance with the instructions indicated on
such proxies. If no instructions are indicated, such proxies will be voted FOR
approval of the Superior Proposals. If any other matters are properly presented
for consideration at the Superior Meeting, including, among other things,
consideration of a motion to adjourn or postpone the Superior Meeting to another
time and/or place (including, without limitation, for the purpose of soliciting
additional proxies), the persons named in the enclosed form of proxy and voting
thereunder will have discretion to vote on such matters in accordance with their
best judgment.
SOLICITATION AND REVOCATION OF PROXIES
REVOCATION. A stockholder of Essex or Superior may revoke his, her or its
proxy at any time prior to its use by delivering to the Secretary of Essex or
Superior, as the case may be, a signed notice of revocation or a later, dated,
signed proxy or by attending the Essex Meeting or the Superior Meeting, as the
case may be, and voting in person. All written notices of revocation and other
communications with respect to revocation of Essex proxies should be sent to:
Essex International Inc., 1601 Wall Street, Fort Wayne, Indiana 46802,
Attention: Corporate Secretary. All written notices of revocation and other
communications with respect to revocation of Superior proxies should be sent to:
Superior TeleCom Inc., 1790 Broadway, New York, New York 10019, Attention:
Corporate Secretary. Attendance at the Essex Meeting or the Superior Meeting
will not, in itself, constitute the revocation of a proxy.
COST OF SOLICITATION. The cost of solicitation of proxies will be paid by
Essex for the Essex proxies and by Superior for the Superior proxies. In
addition to solicitation by mail, proxies may be solicited in person by
directors, officers and employees of Essex or Superior, as the case may be,
without additional compensation, and by telephone, telegram, facsimile or
similar method. Arrangements will be made with brokerage houses and other
custodians, nominees and fiduciaries to send proxy material to beneficial
owners; and Essex or Superior, as the case may be, will, upon request, reimburse
them for their reasonable expenses in doing so.
HOLDERS OF ESSEX COMMON STOCK SHOULD NOT SEND ANY CERTIFICATES REPRESENTING
ESSEX COMMON STOCK WITH THE ENCLOSED PROXY CARD. IF THE MERGER IS APPROVED, A
LETTER OF TRANSMITTAL WILL BE MAILED AFTER THE EFFECTIVE TIME OF THE MERGER TO
EACH PERSON WHO IS A HOLDER OF OUTSTANDING ESSEX COMMON STOCK IMMEDIATELY PRIOR
TO THE EFFECTIVE TIME. ESSEX STOCKHOLDERS SHOULD SEND CERTIFICATES REPRESENTING
ESSEX COMMON STOCK TO THE EXCHANGE AGENT ONLY AFTER THEY RECEIVE, AND IN
ACCORDANCE WITH, THE INSTRUCTIONS CONTAINED IN THE LETTER OF TRANSMITTAL.
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THE MERGER
SET FORTH BELOW IS A SUMMARY OF THE MATERIAL TERMS AND PROVISIONS OF THE
MERGER AGREEMENT INSOFAR AS IT RELATES TO THE MERGER. THIS SUMMARY IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO THE MERGER AGREEMENT, WHICH IS ATTACHED AS
APPENDIX A TO THIS JOINT PROXY STATEMENT/PROSPECTUS AND WHICH IS INCORPORATED
HEREIN BY REFERENCE.
GENERAL
THE OFFER. The Merger Agreement provides for the commencement and
consummation of a tender offer (the "Offer") by Merger Sub for up to 22,562,135
shares of Essex Common Stock, at a price of $32.00 per share, net to the seller
in cash (subject to applicable withholding of taxes), without interest. The
Offer was commenced on October 28, 1998 and, on November 27, 1998, Merger Sub
accepted for payment and subsequently purchased 22,562,135 shares of Essex
Common Stock, on a pro rata basis, for an aggregate purchase price of
$721,988,320.
THE MERGER. The Merger Agreement further provides that, following the
consummation of the Merger and subject to the terms and conditions applicable
thereto, Merger Sub will merge with and into Essex, which will continue as the
surviving corporation and a wholly owned subsidiary of Superior (the "Surviving
Corporation"). At the effective time of the Merger, (1) each outstanding share
of Essex Common Stock (other than shares owned by Superior and Merger Sub
(collectively, "Ineligible Shares") and shares owned by holders who are
exercising appraisal rights under Delaware law (such shares, "Dissenting
Shares")), will be converted into the right to receive 0.64 of a fully paid and
nonassessable share of Trust Preferred Securities, (2) each treasury share of
Essex and each share of Essex Common Stock owned by Superior, Merger Sub or any
direct or indirect wholly owned subsidiary of Superior or Essex will be canceled
and (3) each outstanding share of common stock of Merger Sub will be converted
into one share of the Surviving Corporation. No fractional shares of Trust
Preferred Securities will be issued in the Merger and instead Essex stockholders
will receive an amount in cash, without interest, equal to the product of such
fraction multiplied by the average of the closing prices of the Trust Preferred
Securities for a 10 day period either immediately prior to, or immediately
after, the effective date of the Merger. See "Conversion of Shares; Procedures
for Exchange of Certificates; Dividends; No Fractional Shares."
BACKGROUND OF THE MERGER
In March 1998, Steven S. Elbaum, then Chairman of the Board of Directors,
President and Chief Executive Officer of Superior, and Robert D. Lindsay, a
representative of Bessemer Holdings, L.P. ("Bessemer"), a principal stockholder
of Essex, had a meeting during which Mr. Elbaum suggested a possible transaction
between Superior and Essex. Following this meeting, representatives of Superior
and Essex met to begin exploration of such a possible transaction, and Superior
retained BT Wolfensohn to act as its financial advisor. While no specific terms
were discussed, the general terms of a range of possible transactions were
reviewed, all involving the receipt of a mix of Superior stock and cash by
stockholders of Essex in exchange for their shares of Essex Common Stock. On
April 24, 1998, Superior and a subsidiary of Essex entered into a mutual
confidentiality agreement. By mid-May 1998, because of a widening disparity
between the price of the stock of Essex and that of the stock of Superior,
representatives of both Superior and Essex agreed to halt negotiations regarding
a possible transaction.
In June 1998, a representative of another company ("Company A") contacted
Mr. Lindsay in order to explore Bessemer's interest in a possible transaction
between Company A and Essex. In light of the then-recent fall in Essex's stock
price, and given Bessemer's belief that Essex's stock would increase in price in
the near future, Bessemer determined that the time was not right for such a
transaction and deferred any further conversation regarding such a transaction.
In early August 1998, Mr. Elbaum called Mr. Lindsay to request a meeting.
Messrs. Elbaum and Lindsay met on August 11, 1998, at which time Mr. Elbaum
suggested that the parties reopen negotiations
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regarding a possible transaction between Superior and Essex. Messrs. Elbaum and
Lindsay discussed the increased disparity between the respective prices of the
stocks of the two companies since April. Mr. Lindsay indicated that the
transaction structure under consideration in April remained problematic in
current market conditions. It was agreed that Mr. Elbaum would consider
alternative transaction structures designed to give full value to stockholders
of Essex in the current market environment.
On September 15, 1998, Mr. Elbaum called Mr. Lindsay to propose a
transaction between Superior and Essex in which the stockholders of Essex would
receive consideration with a value of between $30-$35 per share of Essex Common
Stock, with a significant portion of such consideration to be paid in cash. Mr.
Lindsay subsequently informed the management of Essex of this proposal.
On September 16, 1998, representatives of Company A met with representatives
of Bessemer to discuss Bessemer's interest in a possible transaction between
Company A and Essex.
On September 25, 1998, representatives from Bessemer met with Mr. Elbaum to
discuss a possible transaction between Superior and Essex. The parties agreed
that a transaction similar to that suggested by Mr. Elbaum on September 15 was
worth exploring. Over the course of the next few weeks, representatives of
Essex, Bessemer and their financial advisors met with representatives of
Superior, BT Wolfensohn and Bankers Trust Company (Superior's lead bank lender)
to discuss the prospective transaction between Superior and Essex and to
exchange information, including a presentation by Essex's management.
On October 7, 1998, Company A sent a letter to Essex that reiterated Company
A's continued interest in a transaction with Essex and included various
financial analyses prepared by the financial advisor to Company A. Although no
particular structure was identified in the letter, the financial analyses
suggested a stock-for-stock transaction at then-prevailing market prices,
implying that the stockholders of Essex would receive consideration valued in
the mid-teens per share. The financial advisor to Company A also contacted Mr.
Lindsay inquiring as to Bessemer's interest in a transaction involving Company A
and Essex.
On October 12, 1998, representatives of Essex, Bessemer, Superior and their
respective legal and financial advisors met to discuss the terms and conditions
and structure of the proposed transaction, including the terms and conditions of
the proposed non-cash consideration and the terms of any agreement by Bessemer
to commit to support the transaction.
Also on October 12, 1998, a meeting between representatives of Essex,
Superior, BT Wolfensohn and BT Alex. Brown was held in Indianapolis at which
various due diligence matters were discussed.
On October 14, 1998, at a regularly scheduled meeting of the Board of
Directors of Superior (the "Superior Board"), the directors discussed the
proposed transaction with Essex. The members of the Superior Board discussed the
valuation and structure of the proposed transaction, as well as the strategic
and other benefits and risks presented by it, and examined and discussed a
report on Essex that had been previously prepared by BT Wolfensohn. The Superior
Board determined that it would be advisable for management of Superior to
continue its discussions with representatives of Essex.
On October 15, 1998, representatives of Essex, Bessemer and Essex's
financial advisors met with representatives of Superior and Alpine, who
presented an overview of Superior's business, including a description of the
lines of business, historical financial performance and recent acquisitions.
On or around October 15, 1998, the chief executive officer of Company A
called both Steven R. Abbott, then Chairman and Chief Executive Officer of
Essex, and Mr. Lindsay regarding Essex's interest in discussions concerning a
transaction between Company A and Essex.
During the period from October 12 to October 21, 1998, Superior, Essex and
their respective legal and financial advisors conducted further negotiations of
the terms of the transaction and conducted additional due diligence.
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On October 19, 1998, Essex held a telephonic meeting of its Board of
Directors (the "Essex Board"). The Essex Board, with the assistance of financial
advisors and legal counsel, discussed the principal terms of the proposed
transaction. Representatives of Goldman, Sachs & Co. ("Goldman Sachs") and Chase
Securities Inc. ("Chase") (Essex's financial advisors) discussed the proposed
transaction from a financial point of view.
On October 19, 1998, the Superior Board met again. A representative of BT
Wolfensohn made a presentation and orally expressed to the Superior Board BT
Wolfensohn's opinion (subsequently confirmed in writing) that the consideration
to be paid by Superior pursuant to the Merger Agreement in the Offer and the
Merger, taken together, was fair from a financial point of view to Superior.
Following discussion among the directors of the terms of the proposed
transaction, the Superior Board determined that the transaction was in the best
interests of the stockholders of Superior and approved the Merger Agreement, the
Offer and the Merger.
On October 21, 1998, the Essex Board met again. Essex's legal advisors
discussed the terms of the definitive documentation for the transaction.
Representatives of Goldman Sachs and Chase made a financial presentation and
orally expressed to the Essex Board their respective fairness opinions
(subsequently confirmed in writing). Representatives of management discussed
with the Essex Board their views as to the implications of the proposed
transaction on Essex. The Essex Board thereafter approved, declared advisable
and adopted the Merger Agreement and the Merger and approved the Offer. The
Essex Board determined that the Offer and the Merger, taken together as a
unitary transaction, are fair to, and in the best interests of, Essex's
stockholders.
On October 21, 1998, following the special meeting of the Essex Board, Essex
and Superior executed the Merger Agreement and the Offer and the Merger were
publicly announced before U.S. financial markets opened on October 22, 1998.
On October 28, 1998, Superior and Merger Sub commenced the Offer.
On November 27, 1998, Merger Sub accepted for purchase and subsequently
purchased 22,562,135 shares of Essex Common Stock, on a pro rata basis, pursuant
to the Offer. The aggregate purchase price for the shares of Essex Common Stock
purchased pursuant to the Offer was $721,988,320. Merger Sub obtained the funds
to acquire the Essex Common Stock through a capital contribution from Superior
and Superior obtained the necessary funds for such capital contribution from
cash on hand and from its credit facilities. See "--Financing of the Offer and
the Merger."
On November 27, 1998, Steven R. Abbott, W.L. Lyons Brown, Jr., Rodney A.
Cohen, Edward O. Gaylord, Stuart S. Janney, III and Ward W. Woods resigned from
the Essex Board and three new directors nominated by Superior, Steven S. Elbaum,
Bragi F. Schut and David S. Aldridge, were appointed to the Essex Board.
RECOMMENDATION OF THE ESSEX BOARD AND THE REASONS FOR THE RECOMMENDATION
At its meeting held on October 21, 1998, as discussed above, the Essex Board
approved, declared advisable and adopted the Merger Agreement and the Merger,
approved the Offer, determined that the terms of the Offer and the Merger, taken
together as a unitary transaction, were fair to and in the best interests of the
stockholders of Essex and recommended that the stockholders of Essex accept the
Offer and tender their shares to Merger Sub pursuant to the Offer. In making its
recommendations to the stockholders of Essex with respect to the Offer and the
Merger, the Essex Board considered a number of factors, the material ones being
the following:
HISTORICAL STOCK PRICE PERFORMANCE. The Essex Board reviewed the historical
stock price performance of Essex relative to comparable companies in the wire
and cable business and to the broader stock market as a whole. The Essex Board
noted that Essex had historically underperformed both the comparable companies
and the broader stock market as a whole, primarily because of the perception of
the financial
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community that Essex's earnings had become relatively unpredictable and volatile
due to its exposure to the recent volatility in building wire prices. The Essex
Board did not believe that Essex's magnet wire, industrial wire and
telecommunications wire businesses were being accorded appropriate stock trading
multiples by the financial community. In this regard, the Essex Board noted that
the price being offered by Superior in the Offer and the Merger represented a
very attractive blended multiple for Essex relative to comparable companies and
Essex's historical price performance.
The Essex Board noted that the consideration to be received by Essex's
stockholders pursuant to the Offer and the Merger, taken together as a unitary
transaction, would represent a substantial premium over (1) the closing price of
the shares of Essex Common Stock on the New York Stock Exchange (the "NYSE") on
October 21, 1998 (the last full trading day prior to announcement of the
execution of the Merger Agreement), (2) the average closing price of the shares
during the week preceding October 21, 1998 and (3) the average closing price of
the shares for the previous three months. The Essex Board did note that the
shares had traded in excess of the price being offered in the Offer and the
Merger within the prior 12 month period, but the Essex Board concluded that the
recent downturn in general stock market valuation and, in particular, the
decline in the valuations of comparable wire companies made it unlikely that the
shares would return to those trading levels in the near future.
STRATEGIC FIT. Essex's long-term strategy for several years has been based
upon the development of the three principal aspects of Essex's business:
building wire, magnet wire and telecommunications wire. Over the last several
years, Essex's sales of building wire had increased to 45% of net sales in 1997,
as opposed to 24% for magnet wire and 11% for telecommunications wire. In
addition, the rapid growth of the internet and other forms of electronic
communication had led to a growth in demand for Essex's telecommunications wire
products. For these reasons, the Essex Board had independently concluded that a
significant expansion of Essex's datacom telecommunications wire capacity was
strategically desirable and had approved major capital expenditures in this
area. The combination with Superior would represent a significant
diversification of the combined companies' product range and permit the combined
companies to better weather volatility in any individual business segment.
Within the telecommunications wire segment, the Essex Board noted that Essex
and Superior conducted business in complementary, and not overlapping, ways. The
Essex Board noted that Superior would be able to use Essex's independent
distributor channel to offer a broader range of telecommunications wire, because
Superior is not currently actively involved in that distribution channel. The
Essex Board also noted that the combined operations would be able to use
efficiently Essex's telecommunications wire production capacity to create
flexibility to continue to effectively service Essex's existing distributor
customers as well as assist in managing the long-term contracts already in
existence between Superior and its principal customers.
OPERATIONAL BENEFITS FOR COMBINED COMPANIES. The Essex Board noted that,
through the Merger, the current stockholders of Essex would retain an ongoing
equity interest in the combined company. The Essex Board noted that there were
significant opportunities for synergies between Essex and Superior, particularly
in the area of raw product purchasing savings, production capacity, management
and distributional efficiencies.
OTHER POTENTIAL TRANSACTIONS. The Essex Board considered whether any other
person would be interested in an acquisition of Essex at this time on more
attractive terms. The Essex Board discussed the other significant wire and cable
companies and concluded for various reasons that none of such firms would be
likely to propose an acquisition transaction more attractive than that proposed
by Superior. In this connection, the Essex Board reviewed information regarding
the preliminary discussions between Essex and Company A (see "--Background of
the Merger").
CONDITIONS TO THE OFFER. The Essex Board discussed with its financial and
legal advisors the various conditions to the Offer. The Essex Board noted, in
particular, the presence of the financing condition,
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which rendered the consummation of the Offer conditional upon Superior's ability
to obtain financing. The Essex Board discussed with its financial advisors the
risks associated with seeking financing of this kind in the current financial
markets and also discussed the terms of the commitment that had been obtained by
Superior from Bankers Trust with respect to the financing. The Essex Board noted
several customary conditions to the Bankers Trust financing commitment, and
further noted Bankers Trust's reputation with respect to its ability to finance
transactions of this type. The Essex Board also considered whether Superior
would have been willing to proceed with this transaction structure without a
financing condition.
FINANCIAL CONDITION, RESULTS OF OPERATIONS, BUSINESS AND PROSPECTS OF
ESSEX. The Essex Board considered the financial condition, results of
operations, business and prospects of Essex, including its prospects if it were
to remain independent. The Essex Board also discussed Essex's current strategic
plan and the competitive environment in which Essex operates.
COMPETING OFFERS; BREAKUP FEE. The Essex Board noted that if Essex receives
an offer superior in its terms to the Offer and the Merger, Essex could provide
information to, and negotiate with, such competing bidder and approve or
recommend a tender offer competing with the Offer, provided that under the
circumstances described in the Merger Agreement, Essex may be required to pay
Superior a termination fee of $25 million, plus expenses; although the Essex
Board noted that the presence of the Stockholders' Agreement entered into among
Superior, Merger Sub, Bessemer and certain affiliates of Bessemer in connection
with the Merger Agreement made it significantly less likely that any third party
would make a proposal to acquire Essex as, prior to the consummation of the
Offer, the Bessemer entities owned in the aggregate, approximately 47.7% of the
outstanding shares of Essex Common Stock and had agreed to tender their shares
to the Offer and otherwise support the Offer and the Merger.
FINANCIAL ADVISORS' PRESENTATION. The Essex Board took into account the
advice and the financial presentation of Goldman Sachs and Chase and the oral
opinions of Goldman Sachs and Chase, subsequently confirmed in writing as of
October 21, 1998, to the effect that, as of such date, and based upon and
subject to the various considerations set forth in such opinions, the
consideration to be received, pursuant to the Merger Agreement, by holders of
shares of Essex Common Stock in the Offer and the Merger, taken together as a
unitary transaction, is fair from a financial point of view to such holders.
TERMS OF THE OFFER AND THE MERGER. The Essex Board also considered the
other terms and conditions of the Offer and the Merger as well as the terms of
the Stockholders' Agreement with the Bessemer entities. The Essex Board noted
that the transaction was being structured as a cash tender offer for
approximately 81% of the outstanding shares of Essex Common Stock, and it would
permit all holders of shares to participate on the same basis. Equally, the
consideration to be received in the Merger would be available to holders of
shares on the same basis. The Essex Board noted that the Bessemer entities, as
principal stockholders, were committing to the transaction but were not being
afforded any preferential treatment in connection with the Offer or the Merger.
The Essex Board also considered the implications of the Stockholders' Agreement
for the minority stockholders of Essex.
The foregoing discussion of the information and factors considered and given
weight by the Essex Board is not intended to be exhaustive. In view of the
variety of factors considered in connection with its evaluation of the Offer and
the Merger, the Essex Board did not find it practicable to, and did not,
quantify or otherwise assign relative weights to the specific factors considered
in reaching its determination. In addition, individual members of the Essex
Board may have given different weights to different factors.
FOR THE REASONS DESCRIBED ABOVE, THE ESSEX BOARD, BY UNANIMOUS VOTE OF THOSE
DIRECTORS PRESENT AT A MEETING ON OCTOBER 21, 1998, APPROVED AND DECLARED
ADVISABLE THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY AND
RECOMMENDS THAT THE ESSEX STOCKHOLDERS VOTE FOR APPROVAL AND ADOPTION OF THE
MERGER AGREEMENT.
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OPINIONS OF THE ESSEX FINANCIAL ADVISORS
GOLDMAN, SACHS & CO.
At the October 21, 1998 meeting of the Essex Board, Goldman Sachs rendered
its oral opinion, which was subsequently confirmed by a written opinion dated
the same date, to the effect that, as of such date, and based upon and subject
to the various considerations set forth in the opinion, the consideration to be
received pursuant to the Merger Agreement by holders of Essex Common Stock in
the Offer and the Merger, taken together as a unitary transaction, is fair from
a financial point of view to such holders.
THE FULL TEXT OF THE WRITTEN OPINION OF GOLDMAN SACHS, DATED OCTOBER 21,
1998, WHICH SETS FORTH THE ASSUMPTIONS MADE, PROCEDURES FOLLOWED AND MATTERS
CONSIDERED IN, AND THE LIMITATIONS ON, THE REVIEW UNDERTAKEN IN CONNECTION WITH
SUCH OPINION, IS ATTACHED TO THIS JOINT PROXY STATEMENT/ PROSPECTUS AS APPENDIX
B-1 AND IS INCORPORATED HEREIN BY REFERENCE.
In connection with its opinion, Goldman Sachs reviewed, among other things,
the Merger Agreement, including the form of Superior's Certificate of
Designation of the Series A Cumulative Convertible Exchangeable Preferred Stock
(the "Parent Preferred Stock") (subsequent to the rendering of the opinion of
Goldman Sachs, Superior advised that it intended to exercise its right pursuant
to the Merger Agreement to substitute for the Parent Preferred Stock securities
having economic and other material terms and conditions equivalent to the Parent
Preferred Stock, as determined by the Superior Board with the concurrence of a
majority of the directors of Essex who are not executive officers of Essex, but
representing undivided beneficial interests in the assets of Superior Trust I, a
statutory business trust created under the laws of the State of Delaware, of
which all of the beneficial interests in the assets of such trust represented by
common securities are owned by Superior (see "The Merger Agreement and Related
Agreements--Consideration to be Received in the Merger")) and the form of the
Stockholders' Agreement attached as exhibits thereto; the form of Superior's
Indenture for the 8 1/2% Subordinated Convertible Exchange Debentures due 2013;
Essex's Prospectus for the initial public offering of Essex Common Stock dated
April 17, 1997; Essex's Prospectus for the secondary offering of Essex Common
Stock dated September 17, 1997; Superior's Prospectus for the initial public
offering of Superior Common Stock dated October 11, 1996; Annual Report to
Stockholders of Essex for the year ended December 31, 1997 and Annual Reports on
Form 10-K of Essex and its predecessor for the five years ended December 31,
1997; Annual Reports to Stockholders and Annual Reports on Form 10-K of Superior
for the two fiscal years ended April 30, 1998; certain interim reports to
stockholders and Quarterly Reports on Form 10-Q of Essex and Superior; certain
other communications from Essex and Superior to their respective stockholders;
and certain internal financial analyses and forecasts for Essex through the
calendar year ending December 31, 1999, and for Superior through the calendar
year ending December 31, 2002, prepared by their respective managements. Goldman
Sachs also held discussions with members of the senior management of Essex and
Superior regarding the past and current business operations, financial condition
and future prospects of their respective companies and the companies combined
pursuant to the Merger Agreement. In addition, Goldman Sachs reviewed the
reported price and trading activity of the Essex Common Stock, the Superior
Common Stock and convertible securities generally, compared certain financial
and stock market information for Essex and Superior with similar information for
certain other companies the securities of which are publicly traded, reviewed
the financial terms of certain business combinations in the cable and wire
industry specifically and in other industries generally, and performed such
other studies and analyses as Goldman Sachs considered appropriate.
Goldman Sachs relied upon the accuracy and completeness of all of the
financial and other information reviewed by it and assumed such accuracy and
completeness for purposes of rendering its opinion. Goldman Sachs did not make
an independent evaluation or appraisal of the assets and liabilities of Essex,
Superior or any of their respective subsidiaries and was not furnished with any
such evaluation or appraisal. In addition, Goldman Sachs was not requested to
solicit, and did not solicit, interest from other
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parties with respect to an acquisition of or other business combination with
Essex. Goldman Sachs's advisory services and its opinion were provided for the
information and assistance of the Essex Board in connection with its
consideration of the transactions contemplated by the Merger Agreement and such
opinion did not constitute a recommendation as to whether or not any holder of
Essex Common Stock should tender such common stock in connection with the Offer,
nor does it constitute a recommendation as to how any such holder should vote,
or whether such holder should seek appraisal rights, in connection with the
Merger.
Goldman Sachs noted that under then current market conditions, there may be
a limited trading market for the Parent Preferred Stock and that any estimate of
the future trading value of the Parent Preferred Stock would be speculative and
subject to substantial uncertainties and contingencies. Goldman Sachs did not
express a view as to the actual trading price of the Parent Preferred Stock,
which would be dependent upon and fluctuate with dividend rates generally, the
market price of Superior Common Stock into which the Parent Preferred Stock is
convertible, market conditions, general economic conditions, the financial
condition and prospects of Superior after the Merger and other factors which
generally influence the price of similar securities.
Goldman Sachs did not opine on the fairness from a financial point of view
of the Parent Preferred Stock to be received by holders of Essex Common Stock
pursuant to the Merger if viewed as a separate and distinct transaction from the
Offer.
Goldman Sachs, as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. Goldman Sachs is
familiar with Essex having provided certain investment banking services to Essex
from time to time, including having acted as managing underwriter of public
offerings of Essex Common Stock in April 1997 and September 1997 (in which
certain affiliates of Goldman Sachs, having previously owned approximately 14.5%
of the then outstanding shares of Essex Common Stock, sold all of their
ownership interest in Essex), and having acted as its co-financial advisor in
connection with the Merger Agreement.
For information concerning Goldman Sachs's fee arrangement with Essex, see
"--The Essex Financial Advisors Fee Arrangement."
CHASE SECURITIES INC.
At the October 21, 1998 meeting of the Essex Board, Chase rendered its oral
opinion, which was subsequently confirmed by a written opinion dated the same
date, to the effect that, as of such date, and based upon and subject to the
various considerations set forth in its opinion, the consideration to be
received pursuant to the Merger Agreement by holders of Essex Common Stock in
the Offer and the Merger, taken together as a unitary transaction, is fair from
a financial point of view to such holders.
THE FULL TEXT OF THE WRITTEN OPINION OF CHASE, DATED OCTOBER 21, 1998, WHICH
SETS FORTH THE ASSUMPTIONS MADE, PROCEDURES FOLLOWED AND MATTERS CONSIDERED IN,
AND THE LIMITATIONS ON, THE REVIEW UNDERTAKEN IN CONNECTION WITH SUCH OPINION,
IS ATTACHED TO THIS JOINT PROXY/PROSPECTUS AS APPENDIX B-2 AND IS INCORPORATED
HEREIN BY REFERENCE.
In connection with its opinion, Chase reviewed, among other things, the
Merger Agreement, including the form of Superior's Certificate of Designation of
the Parent Preferred Stock and the form of the Stockholders' Agreement attached
as exhibits thereto (as noted above in "--Opinion of the Essex Financial
Advisors--Goldman, Sachs & Co." subsequent to the rendering of the opinion of
Chase, Superior advised that it intended to exercise its right pursuant to the
Merger Agreement to substitute for the Parent Preferred Stock securities having
economic and other material terms and conditions equivalent
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to the Parent Preferred Stock (see "The Merger Agreement and Related
Agreements--Consideration to be Received in the Merger")); the form of
Superior's Indenture for the 8 1/2% Subordinated Convertible Exchange Debentures
due 2014; Essex's Prospectus for the initial public offering of Essex Common
Stock dated April 17, 1997; Essex's Prospectus for the secondary offering of
Essex Common Stock dated September 17, 1997; Superior's Prospectus for the
initial public offering of Superior Common Stock dated October 11, 1996; Annual
Report to Stockholders of Essex for the year ended December 31, 1997 and Annual
Reports on Form 10-K of Essex and its predecessor for the five fiscal years
ended December 31, 1997; Annual Reports to Stockholders and Annual Reports on
Form 10-K of Superior for the two fiscal years ended April 30, 1998; certain
interim reports to stockholders and Quarterly Reports on Form 10-Q of Essex and
Superior; certain other communications from Essex and Superior to their
respective stockholders; and certain internal financial analyses and forecasts
for Essex through the calendar year ending December 31, 1999 and for Superior
through December 31, 2002 prepared by their respective managements. Chase also
held discussions with members of the senior management of Essex and Superior
regarding the past and current business operations, financial condition and
future prospects of their respective companies and the companies combined
pursuant to the Merger Agreement. In addition, Chase reviewed the reported price
and trading activity of the Essex Common Stock, the Superior Common Stock and
convertible securities generally, compared certain financial and stock market
information for Essex and Superior with similar information for certain other
companies the securities of which are publicly traded, reviewed the financial
terms of certain business combinations in the cable and wire industry
specifically, and in other industries generally, and reviewed such other
information and performed such other studies and analyses as Chase considered
appropriate.
Chase assumed and relied upon, without assuming any responsibility for
verification, the accuracy and completeness of all of the financial and other
information provided to, discussed with, or reviewed by or for Chase, or
publicly available, for purposes of its opinion. Chase neither made nor obtained
any independent evaluations or appraisals of the assets or liabilities of Essex
or Superior or any of their subsidiaries, nor did Chase conduct a physical
inspection of the properties and facilities of Essex or Superior or any of their
subsidiaries. Chase's advisory services and its opinion were provided for the
information and assistance of the Essex Board in connection with its
consideration of the transactions contemplated by the Merger Agreement and such
opinion did not constitute a recommendation as to whether or not any holder of
Essex Common Stock should tender such common stock in connection with the Offer,
nor does it constitute a recommendation as to how any such holder should vote,
or whether such holder should seek appraisal rights, in connection with the
Merger.
For purposes of rendering its opinion, Chase assumed that, in all respects
material to its analysis, the representations and warranties of each party
contained in the Merger Agreement were true and correct, that each party will
perform all of the covenants and agreements required to be performed by it under
the Merger Agreement and that all material conditions to the consummation of the
Merger will be satisfied without waiver thereof. Chase further assumed that in
the course of obtaining any necessary governmental, regulatory or other consents
and approvals, including any necessary amendments, modifications or waivers to
any documents to which any of Essex or Superior is a party, as contemplated by
the Merger Agreement, no restrictions will be imposed or amendments,
modifications or waivers made that would have any material adverse effect on the
contemplated benefits to Essex or Superior of the Merger. Chase further assumed
that the Merger will be accounted for as a purchase under generally accepted
accounting principles.
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Chase noted that under then current market conditions, there may be a
limited trading market for the Parent Preferred Stock and that any estimate of
the future trading value of the Parent Preferred Stock would be speculative and
subject to substantial uncertainties and contingencies. Chase did not express a
view as to the actual trading price of the Parent Preferred Stock, which would
be dependent upon and fluctuate with dividend rates generally, the market price
of Superior Common Stock into which the Parent Preferred Stock is convertible,
market conditions, general economic conditions, the financial condition and
prospects of Superior after the Merger and other factors which generally
influence the price of similar securities.
Chase's opinion was necessarily based on market, economic and other
conditions as they existed and could be evaluated as of the date of its opinion.
Chase did not opine on the fairness from a financial point of view of the
consideration to be received by holders of Essex Common Stock pursuant to the
Merger if viewed as a separate and distinct transaction from the Offer.
Chase, as part of its investment banking business, is continually engaged in
the valuation of businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes. Chase is familiar with
Essex having provided certain banking services to Essex including having acted
as administrative agent for various debt financings, having acted as an
underwriter of public offerings of Essex Common Stock in April 1997 and
September 1997 (in which certain affiliates of Chase, having previously owned
approximately 6.78% of the then outstanding shares of Essex Common Stock, sold
all of their ownership interest in Essex) and having acted as its financial
advisor in connection with the Merger Agreement. Chase was not requested to
solicit, and did not solicit, interest from other parties with respect to an
acquisition of or other business combination with Essex.
Chase provides a full range of financial advisory and securities services
and, in the course of its normal trading activities, may from time to time
effect transactions and hold securities, including derivative securities, of
Essex or Superior for its own account and for the accounts of customers and at
any time may have a long or short position in such securities. Chase may provide
investment banking services to Essex, Superior or any of their respective
subsidiaries in the future.
For information concerning Chase's fee arrangement with Essex, see "--The
Essex Financial Advisors Fee Arrangement."
THE ESSEX FINANCIAL ADVISORS PRESENTATION
The following is a summary of various financial analyses presented to the
Essex Board by Goldman Sachs and Chase (the "Essex Financial Advisors") on
October 21, 1998 in a joint presentation in connection with their respective
opinions and does not purport to be a complete description of the analyses
performed by Goldman Sachs and Chase, respectively.
SUMMARY OF TERMS OF PROPOSED TRANSACTIONS. The Essex Financial Advisors
reviewed the consideration to be received by holders of Essex Common Stock
pursuant to the Offer and the Merger. The Essex Financial Advisors calculated
that: (i) the nominal consideration to be received for each share of Essex
Common Stock would be $32.00 per share, based on $26 per share cash
consideration and the face value of the Parent Preferred Stock; (ii) the fully
diluted equity consideration would be $947.5 million, based on the product of
the nominal consideration and the number of shares of Essex Common Stock
outstanding (including 27.768 million of primary shares and 1.842 million of
in-the-money options); and (iii) the fully diluted enterprise consideration
would be $1.3476 billion, based on the sum of the fully diluted equity
consideration and the face value of debt ($419.1 million) less cash ($7.6
million) and proceeds to be received from the exercise of all in-the-money
options ($11.4 million).
IMPLIED TRANSACTION PREMIUMS AND MULTIPLES. The Essex Financial Advisors
reviewed certain implied transaction premiums and multiples using a range of
total consideration per Essex Common Stock of
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$26.00 to $32.00 (the "Consideration Range"). The Essex Financial Advisors noted
that the Consideration Range represented a premium of 19.5% to 47.1% to the
closing price of Essex Common Stock on October 20, 1998 and a premium of 80.8%
to 122.5% to the closing price of Essex Common Stock on October 14, 1998 (one
week prior to the announcement of the Offer and the Merger).
Using the Consideration Range, the Essex Financial Advisors calculated the
corresponding fully diluted enterprise consideration as multiples of (i) the
last twelve months ("LTM") net sales, (ii) LTM earnings before interest, taxes,
depreciation and amortization ("EBITDA"), (iii) estimated 1998 EBITDA and (iv)
estimated 1999 EBITDA for Essex. Estimates for Essex were supplied by the
management of Essex (the "Essex Estimates"). The analysis indicated that the
fully diluted enterprise consideration represented a multiple of: (i) 0.73x to
0.85x LTM net sales; (ii) 5.9x to 6.8x LTM EBITDA; (iii) 6.1x to 7.0x estimated
1998 EBITDA; and (iv) 5.4x to 6.3x estimated 1999 EBITDA.
Using the Consideration Range, the Essex Financial Advisors also calculated
the corresponding fully diluted equity consideration as multiples of estimated
1998 and 1999 earnings per share ("EPS") of Essex Common Stock. The analysis
indicated that, for Essex Common Stock, the fully diluted equity consideration
represented a multiple of: (i) 10.1x to 12.4x estimated 1998 EPS based on the
Essex Estimates and a multiple of 9.8x to 12.1x based on estimates of the
Institutional Brokers Estimate System (IBES) as of October 20, 1998 (the "IBES
Estimates") for Essex; and (ii) 8.3x to 10.2x estimated 1999 EPS based on the
Essex Estimates and a multiple of 9.0x to 11.0x based on the IBES Estimates for
Essex.
INDICATIVE PARENT PREFERRED STOCK CONSIDERATION. The Essex Financial
Advisors performed an analysis to consider the impact of variances in 1999
estimated EPS and forward price/earnings ("P/E") multiples of the common stock
of the pro forma combined company on the implied per share value of the Parent
Preferred Stock, assuming that the Parent Preferred Stock was immediately
converted into Superior Common Stock. Based on a range of 1999 pro forma EPS of
$3.49 (assuming no accretion) to $4.18 (assuming 20% accretion) and 1999 pro
forma forward P/E multiples of 8.5x to 13.0x, the analysis indicated implied per
share values of the Parent Preferred Stock ranging from 52.9% to 97.1% of its
face value.
HISTORICAL STOCK TRADING ANALYSIS. The Essex Financial Advisors reviewed
the historical trading prices of Essex Common Stock for the period from April
18, 1997, the date of the initial public offering of Essex Common Stock, to
October 20, 1998. The review showed that Essex Common Stock has average closing
trading prices of $29.50 since its initial public offering, $29.40 for the
one-year period ended October 20, 1998, $23.84 for the six-month period ended
October 20, 1998 and $16.87 for the one-month period ended October 20, 1998.
The Essex Financial Advisors also reviewed the historical trading prices of
Superior Common Stock for the period from October 11, 1996, the date of the
initial public offering of Superior Common Stock, to October 20, 1998. The
review showed that Superior Common Stock has average closing trading prices of
$28.64 since its initial public offering, $36.86 for the one-year period ended
October 20, 1998, $40.41 for the six-month period ended October 20, 1998 and
$44.74 for the one-month ended October 20, 1998.
COMPARABLE PUBLIC COMPANIES ANALYSIS. The Essex Financial Advisors reviewed
certain financial and operating information of six public companies consisting
of (i) AFC Cable Systems, Inc., (ii) Belden Inc., (iii) Cable Design
Technologies Corporation, (iv) Commscope, Inc., (v) Encore Wire Corporation and
(vi) General Cable Corporation (collectively, the "Comparable Companies"). In
the review, estimated 1998 and 1999 EPS and five year growth forecasts were
based on the IBES Estimates.
The review indicated that: (i) the October 20, 1998 closing price per share
as a multiple of estimated 1998 EPS ranged from 6.8x to 17.1x, with a mean of
11.2x and a median of 9.6x, for the Comparable Companies and Superior as a group
(collectively, the "Group"), compared to 8.2x for Essex; (ii) the October 20,
1998 closing price per share as a multiple of estimated 1999 EPS ranged from
5.1x to 14.0x, with a mean of 9.6x and a median of 8.6x, for the Group, compared
to 7.5x for Essex; (iii) enterprise value as a multiple of LTM revenue ranged
from 0.57x to 1.54x, with a mean of 0.97x and a median of 0.87x, for
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the Group, compared to 0.64x for Essex; (iv) enterprise value as a multiple of
LTM EBITDA ranged from 3.3x to 9.6x, with a mean of 6.5x and a median of 6.5x,
for the Group, compared to 5.1x for Essex; (v) enterprise value as a multiple of
LTM EBIT ranged from 3.9x to 13.4x, with a mean of 7.7x and a median of 7.3x,
for the Group, compared to 6.2x for Essex; (vi) projected five-year EPS growth
rates ranged from 11.0% to 17.7% for the Comparable Companies, compared to 12.0%
for Essex; (vii) LTM gross profit margins ranged from 20.9% to 29.8% for the
Comparable Companies, compared to 19.8% for Essex; (viii) LTM EBITDA margins
ranged from 11.5% to 17.3% for the Comparable Companies, compared to 12.5% for
Essex; (ix) the ratio of LTM debt to capitalization ranged from 5.3% to 62.9%
for the Comparable Companies, compared to 58.4% for Essex; (x) the ratio of LTM
debt to EBITDA ranged from 0.3x to 2.6x for the Comparable Companies, compared
to 2.1x for Essex; and (xi) the ratio of LTM capital expenditures as a
percentage of sales ranged from 3.6% to 12.9% for the Comparable Companies,
compared to 2.8% for Essex.
The Essex Financial Advisors also compared the daily closing trading prices
of Essex Common Stock, Superior Common Stock and an index composed of the common
stock of the Comparable Companies (the "Peer Index") from April 18, 1997, the
date of the initial public offering of the Essex Common Stock, to October 20,
1998. The analysis indicated that: (i) for the one year period ended October 20,
1998, the closing trading price of Essex Common Stock decreased by 41.4%,
compared to an increase of 53.9% for Superior Common Stock and a decrease of
37.6% for the Peer Index; (ii) for the six month period ended October 20, 1998,
the closing trading price of Essex Common Stock decreased by 45.3%, compared to
an increase of 10.9% for Superior Common Stock and a decrease of 48.7% for the
Peer Index; (iii) for the three month period ended October 20, 1998, the closing
trading price of Essex Common Stock decreased by 20.5%, compared to an increase
of 16.0% for Superior Common Stock and a decrease of 43.0% for the Peer Index;
(iv) for the one month period ended October 20, 1998, the closing trading price
of Essex Common Stock increased by 20.8%, compared to an increase of 2.2% for
Superior Common Stock and an increase of 4.3% for the Peer Index; and (v) for
the one week period ended October 20, 1998, the closing trading price of Essex
Common Stock increased by 51.3%, compared to an increase of 7.0% for Superior
Common Stock and an increase of 11.9% for the Peer Index.
COMPARABLE TRANSACTIONS ANALYSIS. Using publicly available information, the
Essex Financial Advisors reviewed nine transactions in the wire and cable
industry (the "Selected Acquisitions"). The Selected Acquisitions were (i)
Essex/Bessemer, (ii) Wirekraft Industries Inc./Hicks, Muse, Tate & Furst Inc.,
(iii) Superior/The Alpine Group, Inc., (iv) General Cable Inc./Wasall Inc., (v)
Omega Wire Inc./Hicks, Muse, Tate & Furst Inc., (vi) Alcatel's NA Cable Systems,
Inc. and Alcatel's Canada Wire, Inc./The Alpine Group, Inc., (vii) Wirekraft
Industries Inc., Omega Wire Inc. and ECM Holding Co./International Wire Group,
Inc., (viii) Dekko Wire Technology Group/International Wire Group, Inc. and (ix)
Triangle Wire and Cable, Inc./Essex. The Essex Financial Advisors noted that
there have been a limited number of sizable transactions in the wire and cable
industry. The review showed that for the Selected Acquisitions, the transaction
value as a multiple of (i) LTM net sales ranged from 0.34x to 1.30x, (ii) LTM
EBITDA ranged from 5.0x to 9.0x and (iii) LTM EBIT ranged from 7.5x to 10.6x.
The review further indicated that EBITDA margins ranged from 3.8% to 19.0% for
the Selected Acquisitions.
Based on Mergerstat Review, the Essex Financial Advisors also reviewed the
average annual premiums (to one week prior to announcement price) paid in
transactions over $100 million from January 1, 1987 to year-to-date. The review
indicated that during the above period, such average annual premiums ranged from
35% to 45%.
PRO FORMA INCOME STATEMENT ANALYSIS. The Essex Financial Advisors performed
a pro forma EPS analysis of the financial impact of the Merger using the Essex
Estimates and estimates supplied by the management of Superior (the "Superior
Estimates"). The analysis was adjusted for non-recurring items and assumed (i)
the refinancing of all existing indebtedness of Essex and Superior, (ii) an
8.23% average interest rate on transaction debt based on the three-month LIBOR
rate of 5.19% as of September 20, 1998, (iii) the amortization of transaction
goodwill over 35 years and (iv) an equity consideration based on
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the face value of the Parent Preferred Stock. The Essex Financial Advisors noted
that, without taking synergies into account, the Merger would be 9.6% dilutive
in 1998 and 14.2% accretive in 1999 on EPS for Superior Common Stock.
INDICATIVE PRO FORMA SUPERIOR COMMON STOCK PRICE SENSITIVITY ANALYSIS. The
Essex Financial Advisors performed an analysis to consider the impact of
variances in 1999 estimated EPS and forward P/E multiples of the common stock of
the pro forma combined company on the implied share price of Superior Common
Stock on a pro forma basis, using the Essex Estimates and Superior Estimates.
Based on a range of 1999 pro forma EPS of $3.49 (assuming no accretion) to $4.18
(assuming 20% accretion) and 1999 forward P/E multiples of 8.5x to 13.0x, the
analysis indicated implied pro forma per share prices of the Superior Common
Stock ranging from $29.64 to $54.39.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Selecting
portions of the analyses or the summary set forth above, without considering the
analyses as a whole, could create an incomplete view of the processes underlying
the opinions of the Essex Financial Advisors. In arriving at their fairness
opinions, the Essex Financial Advisors considered the results of all such
analyses and did not attribute any particular weight to any analysis or factor
considered by them; rather the Essex Financial Advisors made their determination
as to fairness on the basis of their experience and professional judgment, after
considering the results of all such analyses. No company or transaction used in
the above analyses as a comparison is identical to Essex. The analyses were
prepared solely for the purpose of the Essex Financial Advisors providing their
opinions to the Essex Board and do not purport to be appraisals or necessarily
reflect the prices at which businesses or securities actually may be sold.
Analyses based upon forecasts of future results are not necessarily indicative
of actual future results, which may be significantly more or less favorable than
suggested by such analyses. Because such analyses are inherently subject to
uncertainty, being based upon numerous factors or events beyond the control of
the parties or their respective advisors, none of the Essex Financial Advisors,
Essex, Superior or any other person assumes responsibility if future results are
materially different from those forecasted. See "Forward-Looking Statements." As
described above, the opinions of the Essex Financial Advisors to the Essex Board
were one of many factors taken into consideration by the Essex Board in making
its determination to approve the Offer and the Merger.
THE ESSEX FINANCIAL ADVISORS FEE ARRANGEMENT
Pursuant to a letter agreement dated October 19, 1998 between Essex and
Goldman Sachs, Essex has agreed to pay Goldman Sachs (i) a fee of $250,000 upon
announcement of the Offer, (ii) a fee of $3,187,500 upon successful completion
of the Offer and (iii) a fee of $562,000 upon consummation of the Merger.
Essex has agreed to reimburse Goldman Sachs for its reasonable out-of-pocket
expenses, including the fees and disbursements of Goldman Sachs's attorneys;
PROVIDED, HOWEVER, that upon the consummation of the Merger, Essex shall be
liable pursuant to the foregoing sentence for reimbursement of such expenses
only to the extent they exceed $50,000 in the aggregate. Essex has also agreed
to indemnify Goldman Sachs and certain related persons against certain
liabilities in connection with its engagement, including certain liabilities
under federal securities laws.
Pursuant to a letter agreement dated October 19, 1998 between Essex and
Chase, Essex has agreed to pay Chase (i) a fee of $250,000 upon announcement of
the Offer (the "Announcement Fee") and (ii) a fee of $4,000,000 (the
"Transaction Fee"), payable in two installments as set forth below. The initial
installment of the Transaction Fee, which is equal to $3,187,500 (the "Initial
Installment"), is payable upon the expiration date of a successful Offer, and
the final installment of the Transaction Fee, which is equal to $4,000,000 less
amounts paid in regard to the Announcement Fee and the Initial Installment, is
payable upon the closing of the Merger.
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Essex has agreed to reimburse Chase for its reasonable expenses, including
the fees and disbursements of legal counsel and other professional advisors;
PROVIDED, HOWEVER, that (i) Chase shall not be entitled to reimbursement for any
legal fees or related disbursements incurred by it in connection with the
preparation or negotiation of the terms of the engagement letter and (ii) if the
Transaction Fee becomes payable to Chase, then Essex shall be obligated to
reimburse Chase only for those expenses which, in the aggregate, exceed the
amount of $50,000. Essex has also agreed to indemnify Chase and certain related
persons against certain liabilities in connection with its engagement, including
certain liabilities under federal securities laws.
SUPERIOR'S REASONS FOR THE MERGER
Superior is engaging in the Merger in order to acquire all of the
outstanding shares of Essex Common Stock not purchased by Merger Sub in the
Offer.
MERGER CONSIDERATION
Upon consummation of the Merger, each outstanding share of Essex Common
Stock (other than Ineligible Shares and Dissenting Shares) will be converted
automatically into the right to receive 0.64 of a fully paid and non-assessable
share of Trust Preferred Securities (the "Merger Consideration"). Prior to the
effective time of the Merger, there has been no public market for the Trust
Preferred Securities.
STOCK OPTIONS AND BENEFIT PLANS
Pursuant to the Merger Agreement, as of the date of the consummation of the
Offer, all outstanding unexercised options to purchase shares of Essex Common
Stock granted under Essex's Amended and Restated Stock Option Plan and Essex's
1997 Stock Option Plan for Nonemployee Directors were canceled and each holder
of an unexercised option became entitled to receive a cash payment equal to the
product of (x) the number of shares of Essex Common Stock underlying such
unexercised option and (y) the excess of (1) $32.00 over (2) the per share
exercise price of the unexercised option. All such payments have been made to
the respective optionholders.
The Merger Agreement also provides that, for not less than one year
following the effective time of the Merger, Superior will cause Essex, as the
surviving corporation, to maintain compensation and employee benefits plans and
arrangements and perquisites for employees of Essex and its subsidiaries that,
in the aggregate, are substantially comparable to those provided pursuant to
their compensation and employee benefit plans and arrangements and perquisites
in effect on the date of the Merger Agreement. However, Superior and Essex, as
the surviving corporation, will have the right, in the good faith exercise of
their managerial discretion, to terminate or make changes or cause changes to be
made in the compensation, benefits and other terms of employment of any employee
and to terminate the employment of any employee.
APPRAISAL RIGHTS
Any stockholder who does not vote in favor of the Merger Agreement and who
properly demands appraisal of his, her or its shares of Essex Common Stock will
be entitled to appraisal rights in connection with the Merger under Section 262
of the Delaware General Corporation Law (the "DGCL").
THE FOLLOWING DISCUSSION IS NOT A COMPLETE STATEMENT OF THE LAW PERTAINING
TO APPRAISAL RIGHTS UNDER THE DGCL AND IS QUALIFIED IN ITS ENTIRETY BY THE FULL
TEXT OF SECTION 262 WHICH IS ATTACHED AS APPENDIX C TO THIS JOINT PROXY
STATEMENT/PROSPECTUS. ALL REFERENCES IN SECTION 262 AND IN THIS SUMMARY TO A
"STOCKHOLDER" ARE TO THE RECORD HOLDER OF THE SHARES AS TO WHICH APPRAISAL
RIGHTS ARE ASSERTED. A PERSON HAVING A BENEFICIAL INTEREST IN SHARES HELD OF
RECORD IN THE NAME OF ANOTHER PERSON, SUCH AS A
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BROKER OR NOMINEE, MUST ACT PROMPTLY TO CAUSE THE RECORD HOLDER TO FOLLOW THE
STEPS SUMMARIZED BELOW PROPERLY AND IN A TIMELY MANNER TO PERFECT APPRAISAL
RIGHTS.
Under the DGCL, holders of shares who follow the procedures set forth in
Section 262 will be entitled to have their shares appraised by the Delaware
Court of Chancery and to receive payment of the "fair value" of such shares,
exclusive of any element of value arising from the accomplishment or expectation
of the Merger, together with a fair rate of interest, as determined by such
Court.
Under Section 262, where a merger is to be submitted for approval at a
meeting of stockholders, as in the case of the Essex Meeting, the corporation,
not less than 20 days prior to the meeting, must notify each of its stockholders
entitled to appraisal rights that such appraisal rights are available and
include in such notice a copy of Section 262. This Joint Proxy
Statement/Prospectus will constitute such notice to the holders of shares, and
the applicable statutory provisions are attached as Appendix C to this Joint
Proxy Statement/Prospectus. Any holder of shares who wishes to exercise such
appraisal rights or who wishes to preserve such holder's right to do so should
review the following discussion and Appendix C carefully because failure to
timely and properly comply with the procedures specified will result in the loss
of appraisal rights under the DGCL.
A holder of shares wishing to exercise appraisal rights must deliver to
Essex, before the vote on the Merger at the Essex Meeting, a written demand for
appraisal and must not vote in favor of the Merger. Because a duly executed
proxy which does not contain voting instructions will, unless revoked, be voted
for the Merger, a holder of shares of Essex Common Stock who votes by proxy and
who wishes to exercise appraisal rights must either (1) vote against the Merger
or (2) abstain from voting on the Merger. A vote against the Merger, in person
or by proxy, will not in and of itself constitute a written demand for appraisal
satisfying the requirements of Section 262. In addition, a holder of shares
wishing to exercise appraisal rights must hold of record such shares on the date
the written demand for appraisal is made and must continue to hold such shares
until the effective time of the Merger. If any holder of shares fails to comply
with any of these conditions and the Merger becomes effective, the holder of
shares will be entitled to receive the consideration receivable with respect to
such shares in the absence of a valid assertion of appraisal rights in
accordance with the Merger Agreement.
Only a holder of record of shares is entitled to assert appraisal rights for
the shares registered in that holder's name. A demand for appraisal should be
executed by or on behalf of the holder of record, fully and correctly, as such
holder of record's name appears on such holder of record's stock certificates,
and must state that the stockholder intends thereby to demand appraisal of such
stockholder's shares in connection with the Merger. If the shares are owned of
record in a fiduciary capacity, such as by a trustee, guardian or custodian,
execution of the demand should be made in that capacity, and if the shares are
owned of record by more than one person, as in a joint tenancy and tenancy in
common, the demand should be executed by or on behalf of all joint owners. An
authorized agent, including two or more joint owners, may execute a demand for
appraisal on behalf of a holder of record; however, the agent must identify the
record owner or owners and expressly disclose the fact that, in executing the
demand, the agent is agent for such owner or owners. A record holder such as a
broker who holds shares as nominee for several beneficial owners may exercise
appraisal rights with respect to the shares held for one or more beneficial
owners while not exercising such rights with respect to the shares held for
other beneficial owners. Stockholders who hold their shares in brokerage
accounts or other nominee forms and who wish to exercise appraisal rights are
urged to consult with their brokers to determine the appropriate procedures for
making of a demand for appraisal by such a nominee.
All written demands for appraisal pursuant to Section 262 should be sent or
delivered to Essex International Inc. at 1601 Wall Street, Fort Wayne, Indiana,
46802, Attention: Corporate Secretary.
Within 10 days after the effective time of the Merger, Essex, as the
surviving corporation, must notify each holder of shares who has complied with
Section 262 and has not voted in favor of or consented to the
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Merger of the date that the Merger has become effective. Within 120 days after
the effective time of the Merger, but not thereafter, Essex or any holder of
shares who is entitled to appraisal rights under Section 262 may file a petition
in the Delaware Court of Chancery demanding a determination of the fair value of
such holder's shares. Notwithstanding the foregoing, at any time within 60 days
after the effective time of the Merger, any stockholder has the right to
withdraw his demand for appraisal and to accept the terms offered in respect of
the Merger. Essex is under no obligation to and has no present intention to file
such a petition. Accordingly, it is the obligation of the holders of shares to
initiate all necessary action to perfect their appraisal rights within the time
prescribed in Section 262.
Within 120 days after the effective time of the Merger, any holder of shares
who has complied with the requirements for exercise of appraisal rights will be
entitled, upon written request, to receive from Essex a statement setting forth
the aggregate number of shares not voted in favor of the Merger and with respect
to which demands for appraisal have been received and the aggregate number of
holders of such shares. Such statement must be mailed to the stockholders within
ten days after a written request therefor has been received by Essex or within
ten days after the expiration of the period for delivery of demands for
appraisal, whichever is later.
If a petition for an appraisal is timely filed by a holder of shares and a
copy thereof is served upon Essex, Essex will then be obligated within 20 days
to file with the Delaware Register in Chancery a duly verified list containing
the names and addresses of all holders of shares who have demanded an appraisal
of their shares and with whom agreements as to the value of their shares have
not been reached. After notice to such stockholders as required by the Court,
the Delaware Court of Chancery is empowered to conduct a hearing on such
petition to determine those holders of shares who have complied with Section 262
and who have become entitled to appraisal rights thereunder. The Delaware Court
of Chancery may require the holders of shares who demanded payment for their
shares to submit their stock certificates to the Register in Chancery for
notation thereon of the pendency of the appraisal proceeding; and if any
stockholder fails to comply with such direction, the Court of Chancery may
dismiss the proceedings as to such stockholder.
After determining the holders of shares entitled to appraisal, the Delaware
Court of Chancery will appraise the "fair value" of their shares, exclusive of
any element of value arising from the accomplishment or expectation of the
Merger, together with a fair rate of interest, if any, to be paid upon the
amount determined to be the fair value. Holders of shares considering seeking
appraisal should be aware that the fair value of their shares as determined by
Section 262 could be more than, the same as or less than the consideration they
would receive pursuant to the Merger if they did not seek appraisal of their
shares and that investment banking opinions as to fairness from a financial
point of view are not necessarily opinions as to fair value under Section 262.
Section 262 provides that "fair value" is to be "exclusive of any element of
value arising from the accomplishment or expectation of the merger." The
Delaware Supreme Court has stated, in CEDE & CO. V. TECHNICOLOR, INC., 684 A.2d
289, 299, that this "narrow exclusion does not encompass known elements of
value, including those which exist on the date of the merger because of a
majority acquiror's interim acquisition in a two-step cash-out transaction." In
WEINBERGER V. UOP, INC., 457 A.2d 701 (Del. 1983), the Delaware Supreme Court
held that "elements of future value, including the nature of the enterprise,
which are known or susceptible of proof as of the date of the merger and not the
product of speculation, may be considered." The Delaware Supreme Court has
stated that "proof of value by any techniques or methods which are generally
considered acceptable in the financial community and otherwise admissible in
court" should be considered in the appraisal proceedings. In addition, Delaware
courts have decided that the statutory appraisal remedy, depending on factual
circumstances, may or may not be a dissenter's exclusive remedy. The Court of
Chancery will also determine the amount of interest, if any, to be paid upon the
amounts to be received by persons whose shares have been appraised. The costs of
the action may be determined by the Court and taxed upon the parties as the
Court deems equitable. The Court may also order that all or a portion of the
expenses incurred by any stockholder in connection with an appraisal, including,
without limitation, reasonable attorneys' fees and the fees and expenses of
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experts utilized in the appraisal proceeding, be charged pro rata against the
value of all the shares entitled to be appraised.
Any holder of shares who has duly demanded an appraisal in compliance with
Section 262 will not, after the effective time of the Merger, be entitled to
vote the shares subject to such demand for any purpose or be entitled to the
payment of dividends or other distributions on those shares (except dividends or
other distributions payable to holders of record of shares as of a date prior to
the effective time of the Merger).
If any stockholder who demands appraisal of such stockholder's shares under
Section 262 fails to perfect, or effectively withdraws or loses, such
stockholder's right to appraisal, as provided in the DGCL, the shares of such
stockholder will be converted into the right to receive the Merger Consideration
pursuant to the Merger Agreement (without interest). A stockholder will fail to
perfect, or effectively lose or withdraw, such stockholder's right to appraisal
if no petition for appraisal is filed by such holder within 120 days after the
effective time of the Merger, or if the stockholder delivers to Essex a written
withdrawal of his, hers or its demand for appraisal and an acceptance of the
Merger, except that any such attempt to withdraw made more than 60 days after
the effective time of the Merger will require the written approval of Essex and,
once a petition for appraisal is filed, the appraisal proceeding may not be
dismissed as to any holder absent court approval. It is not necessary that each
holder of shares properly demanding appraisal file a petition for appraisal in
the Delaware Court of Chancery. Rather, a single valid petition suffices for the
petitioning and non-petitioning holders of shares who have properly demanded
appraisal.
FAILURE TO FOLLOW THE STEPS REQUIRED BY SECTION 262 OF THE DGCL FOR
PERFECTING APPRAISAL RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS (IN WHICH
EVENT A STOCKHOLDER WILL BE ENTITLED TO RECEIVE THE MERGER CONSIDERATION IN
ACCORDANCE WITH THE MERGER AGREEMENT FOR EACH SHARE OWNED BY SUCH STOCKHOLDER).
FINANCING OF THE OFFER AND THE MERGER
The total amount of funds required by Superior and Merger Sub to consummate
the Offer (including the refinancing of certain existing indebtedness of
Superior and Essex) and to pay related fees and expenses is estimated to be
approximately $1.35 billion.
Superior provided the funds required to complete the Offer from loans
available pursuant to (1) an Amended and Restated Credit Agreement (the "Credit
Agreement") entered into on November 27, 1998 by Superior/Essex Corp., a wholly
owned subsidiary of Superior ("Superior Holding"), and Essex Group, Inc., a
wholly owned subsidiary of Essex, as borrowers; Superior, as a guarantor;
certain subsidiary guarantors; various lenders; Merrill Lynch & Co., as
documentation agent; Fleet National Bank, as syndication agent; and Bankers
Trust Company, as administrative agent; and (2) a $200,000,000 Senior
Subordinated Credit Agreement (the "Subordinated Credit Agreement") entered into
on November 27, 1998 by Superior Holding, as borrower; Superior, as a guarantor;
certain subsidiary guarantors (including Essex and Essex Group); various
lenders; Fleet National Bank, as syndication agent; and Bankers Trust, as
administrative agent. Superior also expects to provide for the working capital
requirements of Superior and its subsidiaries (including Essex) from loans
available pursuant to the Credit Agreement. The following summary of the
material terms and conditions of the Credit Agreement and the Subordinated
Credit Agreement does not purport to be complete and is subject to the detailed
provisions of the Credit Agreement and the Subordinated Credit Agreement and the
various related documents entered into in connection therewith.
The Credit Agreement provides for total borrowings of up to $1.15 billion.
Approximately $ of the total proceeds available under the Credit Agreement
were used to finance the Offer (including the refinancing of certain
indebtedness of Superior and Essex Group) and to pay related fees and expenses.
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The Credit Agreement is comprised of two tranches of term loans and a
revolving credit facility. Interest on amounts outstanding under the Credit
Agreement is based upon either (i) the Federal Funds rate, Bankers Trust's prime
lending rate or an adjusted certificate of deposit rate or (ii) the rate in the
Eurodollar market for deposits in dollars or the rate in the London market for
deposits in pounds sterling plus, in each case, an applicable margin, a variable
component which, in certain circumstances, is subject to adjustment based on the
leverage ratio maintained by Superior Holding and its subsidiaries. Superior
Holding and Essex Group also paid Bankers Trust underwriting and administrative
fees, reimbursed certain expenses and provided certain indemnities. The two
tranches of term loans have five and one-half and seven year terms,
respectively, and the revolving credit facility has a five and one-half year
term. Each of the term loans requires periodic mandatory amortization payments.
The obligations of each of Superior Holding and Essex Group under the Credit
Agreement are unconditionally guaranteed by the other party and their respective
obligations are guaranteed by certain of their respective subsidiaries as well
as by Superior. The indebtedness incurred under the Credit Agreement is secured
by a first priority lien on substantially all the assets of Superior, Superior
Holding, Essex Group and their respective subsidiaries.
Superior, Superior Holding, Essex Group and certain of their respective
subsidiaries are subject to certain customary affirmative and negative covenants
under the Credit Agreement, including, without limitation, covenants that
restrict, subject to specified exceptions, (i) the incurrence of additional
indebtedness and other obligations, (ii) mergers and acquisitions, (iii) asset
sales, (iv) the granting of liens, (v) prepayment or repurchase of other
indebtedness, (vi) engaging in transactions with affiliates, (vii) capital
expenditures, (viii) the making of investments, (ix) dividends and other
payments with respect to equity interests and (x) certain changes in the
business in which they are engaged.
The Subordinated Credit Agreement provides for total borrowings of up to
$200 million. Proceeds of the Subordinated Credit Agreement were used to finance
the Offer, to refinance certain existing indebtedness of Superior and Essex
Group and to pay related fees and expenses.
The Subordinated Credit Agreement is a general unsecured obligation of
Superior Holding, which ranks PARI PASSU in right of payment with all future
senior subordinated indebtedness and senior to all other subordinated
indebtedness. The indebtedness incurred under the Subordinated Credit Agreement
is guaranteed by Superior and by certain subsidiaries of Superior (including
Essex and Essex Group), on a joint and several basis. The Subordinated Credit
Agreement matures in 2006 and is prepayable at the option of Superior Holding at
any time. Upon a change of control (as defined in the Subordinated Credit
Agreement), Superior Holding is required to offer to repurchase the loans under
the Subordinated Credit Agreement at a purchase price equal to 101% of the
principal amount thereof, plus accrued interest thereon to the date of
repurchase. Mandatory prepayments are required from: (i) the net proceeds from
issuances of debt to the extent not required to repay senior indebtedness (I.E.,
the Credit Agreement) and (ii) the net proceeds from equity issuances with
customary exceptions.
Interest on the Subordinated Credit Agreement is payable quarterly. For the
first six months after the borrowing date, interest is based upon LIBOR plus
4.25% and, if LIBOR rate loans are not available, the alternate base rate (the
higher of prime or 1/2 of 1% over the Federal Funds Rate) plus 3.25%. Upon the
six month anniversary of the borrowing date, interest is based upon LIBOR plus
4.50% and, if LIBOR rate loans are not available, the alternate base rate plus
3.50%. Upon the 12 month anniversary of the borrowing date, interest is based
upon LIBOR plus 5.00% and, if LIBOR rate loans are not available, the alternate
base rate plus 4.00%. After the 12 month anniversary of the borrowing date, the
interest rate will increase by 0.25% per quarter, but the maximum interest rate
will be LIBOR plus 5.50% and, if LIBOR rate loans are not available, the
alternate base rate plus 4.50%.
The Subordinated Credit Agreement provides for the acceleration of payment
thereunder in the event of acceleration of the indebtedness under the Credit
Agreement and contains customary covenants including, without limitation,
covenants that restrict the ability of Superior Holding and its subsidiaries
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(including Essex Group) to (i) pay dividends or make other restricted payments,
(ii) make investments, (iii) incur additional indebtedness, (iv) permit liens,
(v) enter into any consolidation, merger, conveyance or lease transactions, (vi)
make asset sales, (vii) enter into transactions with affiliates and (viii)
engage in unrelated lines of business.
It is anticipated that the indebtedness incurred through borrowings under
the Credit Agreement and the Subordinated Credit Agreement will be repaid from
funds generated internally by Superior and its subsidiaries, including Essex
Group and its subsidiaries, and from other sources that may include the proceeds
of the private or public sale of debt or equity securities. No final decisions
have been made concerning the method Superior will employ to repay such
indebtedness. Such decisions when made will be based upon Superior's review from
time to time of the advisability of particular actions, as well as on prevailing
interest rates and financial and other economic conditions.
EFFECTIVE TIME
The Merger will become effective upon the filing of a Certificate of Merger
with the Secretary of State of the State of Delaware, or such other time as the
parties may specify. Such filings are anticipated to take place as soon as
practicable after receipt of Essex stockholder approval and Superior stockholder
approval, all required regulatory approvals and the satisfaction or waiver of
the other conditions to the Merger. It is currently anticipated that the
effective time of the Merger will occur during the first quarter of 1999. There
can be no assurance, however, that each condition to the Merger will be
satisfied by such date. See "The Merger Agreement and Related
Agreements--Conditions to the Merger."
CONVERSION OF SHARES; PROCEDURES FOR EXCHANGE OF CERTIFICATES; DIVIDENDS; NO
FRACTIONAL SHARES
As promptly as practicable after the effective time of the Merger, Superior
will cause to be sent to each stockholder of record of Essex as of the effective
time of the Merger (other than holders of Ineligible Shares and Dissenting
Shares) transmittal materials for use in exchanging certificates of Essex Common
Stock for certificates of Trust Preferred Securities. The transmittal materials
will contain information and instructions with respect to the surrender of Essex
Common Stock certificates in exchange for new certificates representing Trust
Preferred Securities and cash in payment for any fractional shares resulting
from the exchange. Pending delivery to Superior of Essex Common Stock
certificates, any dividends on the Trust Preferred Securities that are payable
prior to the delivery of such certificates will be held by the Trust. Such
dividends will be paid, without interest, to the persons entitled thereto upon
delivery of such Essex Common Stock certificates. No fractional shares of Trust
Preferred Securities will be issued to holders of Essex Common Stock in the
Merger. Instead Essex stockholders will receive an amount in cash, without
interest, equal to the product of the fraction of Trust Preferred Securities
such stockholders would have otherwise received multiplied by the average of the
closing price for the Trust Preferred Securities as of each of the 10
consecutive trading days immediately preceding the effective time of the Merger
if the Trust Preferred Securities are traded on a "when issued" basis, or for
the 10 consecutive trading days immediately succeeding the effective time of the
Merger if the Trust Preferred Securities are not traded on a "when issued"
basis, in either case, as quoted in The Wall Street Journal or other reliable
financial newspaper or publication. Until a holder of Essex Common Stock
surrenders his, her or its certificates representing shares of Essex Common
Stock, such certificates will, after the effective time of the Merger, represent
for all purposes only the right to receive the Merger Consideration and the
other amounts, if any, specified in the Merger Agreement.
ESSEX STOCKHOLDERS SHOULD NOT SURRENDER THEIR STOCK CERTIFICATES FOR
EXCHANGE UNTIL THEY RECEIVE A TRANSMITTAL FORM.
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NYSE LISTING
Superior will apply for the listing of Trust Preferred Securities and the
Superior Common Stock to be issued upon conversion of the Trust Preferred
Securities on the NYSE and it is anticipated that such shares will trade on such
exchange upon official notice of issuance. It is a condition to the consummation
of the Merger that the Trust Preferred Securities and the Superior Common Stock
shall have been approved for listing on the NYSE, subject only to official
notice of issuance.
EXPENSES
Except for the costs of this Joint Proxy Statement/Prospectus (which will be
shared equally by Superior and Essex), all costs and expenses incurred in
connection with the Merger Agreement and the transactions contemplated thereby
will be paid by the party incurring such costs or expenses.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Essex Board with respect to the
Merger, stockholders of Essex should be aware that certain executive officers
and directors of Essex at the time of the approval of the Merger Agreement had
interests in the Merger, including those referred to below, that presented them
with potential conflicts of interest. The Essex Board was aware of these
potential interests and considered them, among other matters, in approving the
Merger Agreement and the transactions contemplated thereby.
TERMINATION BENEFITS AGREEMENTS. Pursuant to the terms of individual
termination benefits agreements entered into between Essex and seven of its
executive officers (collectively, the "Termination Benefits Agreements"), each
such executive officer of Essex is entitled to a lump sum cash payment equal to
a multiple of his or her annual base salary and incentive compensation bonus
paid within the 12 months preceding the consummation of the Offer ("Termination
Benefits") if he or she is terminated by Essex or the Surviving Corporation
within twenty-four months of the consummation of the Offer (the
"change-in-control") other than termination (a) by reason of the executive's
death, (b) by reason of the executive's "disability" (as defined therein), (c)
as a result of reaching the retirement age of 65 or (d) for "cause" (as defined
therein). Each executive is also entitled to Termination Benefits if the
executive terminates his or her employment for "good reason" within twenty-four
months of the consummation of the Offer. Good reason includes: (i) the
assignment of duties that are materially inconsistent with the executive's
duties prior to the change-in-control; (ii) a reduction in the executive's
annual salary from that in effect immediately prior to the change-in-control;
(iii) failure to maintain incentive compensation programs for such executive;
(iv) failure to maintain benefit programs for such executive; (v) the relocation
of the executive's place of employment to a place other than the metropolitan
area of the Essex office where the executive was located immediately prior to
the change-in-control, except for required travel on Essex's business in
accordance with past practice; (vi) the failure by Essex to obtain an agreement
from any successor to assume and agree to perform Essex's obligations under the
applicable Termination Benefits Agreement; (vii) failure to reappoint the
executive to the corporate office(s) held immediately prior to the
change-in-control excluding any seat held at such time on the Essex Board;
(viii) a request by Essex, or the person obtaining control of Essex in a
change-in-control, for the resignation of the executive; (ix) if terminated,
failure to terminate the executive's employment in accordance with the
applicable Termination Benefits Agreement; and (x) breach by Essex of any
provision of the applicable Termination Benefits Agreement.
The multiples payable under the Termination Benefits Agreement are as
follows: Mr. Abbott three times; and for the remaining executive officers
(Messrs. Faucher, Lucenta, McGregor, Norton, Owen and Schriefer and Ms. Minott),
two times. Following the consummation of the Offer, Mr. Abbott resigned as Chief
Executive Officer of Essex and Mr. Owen resigned as Chief Financial Officer of
Essex. Although
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Messrs. Abbott and Owen intend to remain employees of Essex, each of them will
have the right to terminate his employment by Essex for "good reason" and
receive Termination Benefits.
Pursuant to the Merger Agreement, Superior agreed that it will cause Essex,
as the surviving corporation, to perform Essex's obligations under the
Termination Benefits Agreements entered into between Essex and each named
executive, unless any such executive agrees otherwise. In connection with the
consummation of the Offer, Mr. McGregor has waived his rights under his
Termination Benefits Agreement in exchange, in part, for a two year employment
agreement that includes a retention bonus of $570,000, payable in three equal
annual installments commencing on November 30, 1998.
STOCK OPTIONS. As described under "--Stock Options and Benefit Plans", all
options to purchase shares of Essex Common Stock (whether vested or unvested)
were cashed out as a result of the Offer. Each executive officer and each
director owned options that as a result of the consummation of the Offer were
cancelled in exchange for cash as described under "--Stock Options and Benefit
Plans." Such cash payments were made in accordance with the stock option
agreements and option plans under which the options were granted. The value of
unvested options cashed-out as a result of the Offer for executive officers and
directors of Essex was: Mr. Abbott, $985,500; Mr. Faucher, $657,000; Mr.
Lucenta, $98,550; Mr. McGregor, $854,100; Ms. Minott, $438,500; Mr. Norton,
$131,400; Mr. Owen, $657,000; and Mr. Schriefer, $714,250. The value of the
cash-out represents the shares of Essex Common Stock that as of November 27,
1998 were unvested but that were cancelled as a result of the consummation of
the Offer, multiplied by the "Option Spread". The Option Spread is equal to the
difference between the exercise price of each such option and $32.00.
STOCK OWNERSHIP. As of , 1998, current and former executive
officers and directors of Essex may be deemed to be beneficial owners of an
aggregate of approximately shares of Essex Common Stock, or
approximately % of the shares of Essex Common Stock outstanding as of the
Essex Record Date.
INDEMNIFICATION. The Merger Agreement provides that the Certificate of
Incorporation of the Surviving Corporation will contain the provisions with
respect to indemnification set forth in the Certificate of Incorporation and
Bylaws of Essex, which provisions will not be amended, repealed or otherwise
modified for a period of six years from the effective time of the Merger in any
manner that would adversely affect the rights of individuals who between the
date of the Merger Agreement and the effective time of the Merger were directors
or officers of Essex, unless such modification is required by law.
The Merger Agreement also provides that the Surviving Corporation will, to
the fullest extent permitted under applicable law or under the Surviving
Corporation's Certificate of Incorporation or Bylaws, indemnify and hold
harmless each director and officer of Essex or any of its subsidiaries
(collectively, the "Indemnified Parties") against any costs or expenses
(including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to any action or omission by such
director or officer by virtue of his holding the office of director or officer
occurring at or prior to the effective time of the Merger (including, without
limitation, the transactions contemplated by the Merger Agreement) for a period
of six years after the effective time of the Merger. In the event of any such
claim, action, suit, proceeding or investigation (whether arising before or
after the effective time of the Merger), (1) any counsel retained by the
Indemnified Parties for any period after the effective time of the Merger will
be reasonably satisfactory to the Surviving Corporation and Superior and (2)
neither the Surviving Corporation nor Superior will be liable for any settlement
effected without its written consent (which consent will not be unreasonably
withheld).
DIRECTORS' AND OFFICERS' LIABILITY INSURANCE. The Merger Agreement further
provides that, for a period of six years after the effective time of the Merger,
Superior will cause to be maintained in effect the current
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policies of directors' and officers' liability insurance maintained by Essex
(provided that Superior may substitute policies with reputable and financially
sound carriers of at least the same coverage and amounts containing terms and
conditions that are no less advantageous) with respect to claims arising from or
related to facts or events that occurred at or before the effective time of the
Merger. However, Superior will not be obligated to make annual premium payments
for such insurance to the extent such premiums exceed 150% of the annual
premiums paid by Essex as of the date of the Merger Agreement for such insurance
(such 150% amount (currently represented to be $288,000), the "Maximum
Premium"). If such insurance coverage cannot be obtained at all, or can only be
obtained at an annual premium in excess of the Maximum Premium, Superior will
maintain the most advantageous policies of directors' and officers' insurance
obtainable for an annual premium equal to the Maximum Premium. Nevertheless, if
such insurance coverage cannot be obtained at all, Superior will purchase all
available extended reporting periods with respect to pre-existing insurance in
an amount that, together with all other insurance purchased, does not exceed the
Maximum Premium. Superior has agreed not to take any action that would have the
effect of limiting the aggregate amount of insurance coverage required to be
maintained for the individuals referred to in this paragraph.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Proskauer Rose LLP, counsel to Superior and the Trust
("Tax Counsel"), the following is a summary of the material United States
federal income tax consequences of the receipt pursuant to the Merger,
ownership, disposition and conversion of the Trust Preferred Securities. This
summary is for general information purposes only and does not consider all
aspects of federal income taxation that may be relevant to a particular
stockholder in light of his, her or its particular circumstances.
This discussion is generally limited to the United States federal income tax
consequences to stockholders who hold the Trust Preferred Securities as capital
assets ("Holders") within the meaning of Section 1221 of the Internal Revenue
Code of 1986, as amended (the "Code").
This summary does not deal with the United States federal income tax
consequences to persons subject to special treatment under the Code such as
banks, thrifts, real estate investment trusts, regulated investment companies,
insurance companies, dealers in securities or currencies, tax-exempt investors,
or persons that will hold the Trust Preferred Securities as a position in a
"straddle," or as part of a "synthetic security" or "hedge," "conversion
transaction" or other integrated investment, persons that have a "functional
currency" other than the U.S. Dollar and investors in pass-through entities,
such as partnerships. Further, it does not include any description of any
alternative minimum tax consequences or the consequences arising under United
States federal gift and estate taxes or the tax laws of any state, local or
foreign government that may be applicable to the Trust Preferred Securities. The
material United States federal income tax consequences to Holders who are
individuals and who are not citizens or residents of the United States and to
foreign corporations ("Alien Holders") are discussed separately below. See "--
Alien Holders."
This summary is based on the Code, final and proposed Treasury regulations
thereunder and administrative and judicial interpretations thereof, as of the
date hereof, all of which are subject to change, possibly on a retroactive
basis.
STOCKHOLDERS ARE ADVISED TO CONSULT THEIR TAX ADVISORS AS TO THE UNITED
STATES FEDERAL INCOME TAX CONSEQUENCES OF THE RECEIPT PURSUANT TO THE MERGER,
OWNERSHIP, DISPOSITION AND CONVERSION OF TRUST PREFERRED SECURITIES IN LIGHT OF
THEIR PARTICULAR CIRCUMSTANCES, AS WELL AS THE EFFECT OF ANY STATE, LOCAL,
FOREIGN OR OTHER TAX LAWS AND OF POTENTIAL CHANGES IN APPLICABLE TAX LAWS.
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RECEIPT OF MERGER CONSIDERATION
The receipt of cash, Trust Preferred Securities or a combination of these
pursuant to the Merger will be a taxable transaction for United States federal
income tax purposes to the stockholders of Essex and may also be a taxable
transaction under applicable state, local or foreign tax laws. A stockholder
participating in the Merger will recognize gain or loss at the effective time of
the Merger in an amount equal to the difference between (i) the sum of the
amount of cash (for fractional shares) and the fair market value at the
effective time of the Merger of the Trust Preferred Securities received by the
stockholder in the Merger and (ii) such stockholder's tax basis in the Essex
Common Stock surrendered. A stockholder's tax basis in Trust Preferred
Securities will be equal to the fair market value of the Trust Preferred
Securities at the effective time of the Merger.
Gain or loss will be capital gain or loss if the Essex Common Stock was a
capital asset in the hands of the stockholder and will be long-term capital gain
or loss if, at the time of the exchange, the Essex Common Stock was held by the
stockholder for more than 12 months. Under present United States federal law,
long-term capital gains are generally taxable at a maximum rate of 20% for
individuals and 35% for corporations.
The Merger will not be a taxable transaction to Superior, Merger Sub or
Essex.
CLASSIFICATION OF THE DEBENTURES
In the opinion of Tax Counsel, assuming full compliance with the Indenture
(as defined under "Description of the Debentures"), the Debentures will be
classified for United States federal income tax purposes as indebtedness of
Superior under current law and, by acceptance of Trust Preferred Securities,
each holder covenants to treat the Debentures for such purposes as indebtedness
and the Trust Preferred Securities as evidence of an undivided ownership
interest in the Debentures. No assurance can be given, however, that such
position of Superior will not be challenged by the Internal Revenue Service (the
"IRS") or, if challenged, that such a challenge will not be successful. See
"--Possible Tax Law Changes." The remainder of this discussion assumes that the
Debentures will be classified as indebtedness of Superior for United States
federal income tax purposes.
CLASSIFICATION OF THE TRUST
In the opinion of Tax Counsel, under current law and assuming full
compliance with the terms of the Declaration (as defined under "Description of
the Trust Preferred Securities"), the Trust will be classified as a grantor
trust for United States federal income tax purposes. Accordingly, for United
States federal income tax purposes, each Holder of Trust Preferred Securities
generally will be considered the owner of an undivided interest in the
Debentures, and each Holder will be required to include in his, her or its gross
income his, her or its pro rata share of interest income (i.e., original issue
discount) with respect to those Debentures. See "--Interest Income and Original
Issue Discount."
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under the Indenture, so long as no event of default thereunder (relating
solely to certain events of bankruptcy, insolvency or reorganization of
Superior) has occurred and is continuing, Superior has the option to defer the
payment of interest on the Debentures at any time or from time to time for a
period not exceeding 20 consecutive quarters with respect to each Extension
Period (as defined under "Description of the Trust Preferred Securities"),
provided that no Extension Period may extend beyond the stated maturity of the
Debentures. Superior believes, and will take the position, that its option to
extend the interest period will cause the Debentures to be subject to the OID
rules for United States federal income tax purposes. Tax counsel believes that
the occurrence of an Extension Period is not "remote" within the meaning of the
applicable Treasury regulations, and that this position is therefore correct (if
the likelihood of such occurrence were remote, the OID rules would not apply
unless the Trust Preferred Securities
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initially trade at a discount to their liquidation amount, as discussed below,
or unless and until an Extension Period occurred), although there is no
authority directly on point and the Internal Revenue Service IRS could take a
contrary position. Accordingly, all of a Holder's taxable interest income with
respect to the Debentures will be accounted for as OID on a constant yield
method regardless of such Holder's method of accounting, and actual
distributions of interest will not be reported as taxable income. A Holder's tax
basis for the Trust Preferred Securities will be increased by the amounts of OID
accrued into income, and decreased by cash distributions of interest. The amount
of OID that will be recognized in any quarter will approximately equal the
amount of income that accrues on the Debentures in that quarter at the stated
interest rate. Should the OID rules not apply, stated interest will be
includible in a Holder's gross income in accordance with such Holder's regular
method of accounting.
In the event that the fair market value of Trust Preferred Securities, on
the date they are issued (as measured by the mean between the highest and lowest
trading prices on the NYSE), is less than their liquidation amount, the
Debentures will be deemed to have been issued with additional OID equal to such
difference. Such OID will be includible in a Holder's taxable income on a
constant yield basis over the term of the Debentures. Conversely, if the fair
market value of the Trust Preferred Securities (computed as described above)
exceeds their liquidation amount, the Debentures will be deemed to be acquired
with acquisition premium, which, at the election of the Holder, may be amortized
over the term of the Debentures.
If Superior exercises its option to defer a payment of interest, a Holder
will be required to continue to include OID in gross income even though the
Trust will not make any actual cash payments during the Extension Period.
Holders who dispose of Trust Preferred Securities or whose Trust Preferred
Securities are redeemed prior to the record date for payment of a Distribution
following such Extension Period will include interest (i.e., OID) in gross
income but will not receive any cash related thereto from the Trust. The same is
true of Holders who convert Trust Preferred Securities into Superior Common
Stock prior to the payment of a Distribution (except where the conversion occurs
after a call for a redemption that will occur after the record date for that
payment).
Because income on the Trust Preferred Securities will constitute OID (or if
the OID rules do not apply, interest) rather than dividends, corporate Holders
of the Trust Preferred Securities will not be entitled to a dividends-received
deduction with respect to any income recognized with respect to the Trust
Preferred Securities.
REDEMPTION OF TRUST PREFERRED SECURITIES FOR DEBENTURES UPON LIQUIDATION OF
THE TRUST
Under certain circumstances, the Debentures may be distributed to Holders in
exchange for the Trust Preferred Securities. Under current law, such a
distribution to Holders will be treated, for United States federal income tax
purposes, as a nontaxable event and each Holder will receive an aggregate tax
basis in the Debentures distributed equal to such Holder's aggregate tax basis
in his, her or its Trust Preferred Securities exchanged therefor. A Holder's
holding period in the Debentures so received would include the period during
which the Trust Preferred Securities were held by such Holder. If, however, the
exchange is caused by a Tax Event and the Trust is treated as an association
taxable as a corporation, the distribution would likely constitute a taxable
event to both the Trust and Holders of the Trust Preferred Securities, and each
Holder would recognize gain or loss as if the Holder had exchanged his, her or
its Trust Preferred Securities for the Debentures received by the Holder. A
Holder will include interest income on a Debenture received from the Trust in
the manner described above under "--Interest Income and Original Issue
Discount."
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SALES OF TRUST PREFERRED SECURITIES
A Holder that sells Trust Preferred Securities will be considered to have
disposed of all or part of such Holder's pro rata share of the Debentures, and
will recognize gain or loss equal to the difference between the amount realized
on the sale of the Trust Preferred Securities and the Holder's adjusted tax
basis in such Trust Preferred Securities. The tax basis of a Trust Preferred
Security will be increased by the amount of any OID that is included in the
Holder's income, and will be decreased by the amount of any payments (including
stated interest) made by Superior on the Debentures. In general, such gain or
loss will be a capital gain or loss and will be a long-term capital gain or loss
if the Trust Preferred Securities have been held for more than one year at the
time of sale. The 20% maximum tax rate on long-term capital gains would apply to
capital assets held by an individual Holder for more than one year.
The Trust Preferred Securities may trade at a price that does not accurately
reflect accrued but unpaid interest with respect to the underlying Debentures. A
Holder who disposes of his, her or its Trust Preferred Securities between record
dates for payments of distributions thereon will be required to include in
income as ordinary income any accrued but unpaid interest (i.e., OID) on the
Debentures to the day before the date of disposition and to add such amount to
its adjusted tax basis in its pro rata share of the underlying Debentures deemed
disposed of. To the extent the selling price is less than the Holder's adjusted
tax basis, such Holder will recognize a capital loss. Subject to certain limited
exceptions, capital losses cannot be applied to offset ordinary income for
United States federal income tax purposes.
CONVERSION OF TRUST PREFERRED SECURITIES INTO SUPERIOR COMMON STOCK
A Holder of Trust Preferred Securities generally will not recognize income,
gain or loss upon the conversion of the Trust Preferred Securities into Superior
Common Stock. A Holder of Trust Preferred Securities will, however, recognize
gain upon the receipt of cash in lieu of a fractional share of Superior Common
Stock generally equal to the amount of cash received less such Holder's tax
basis in such fractional share. Such a Holder's tax basis in Superior Common
Stock received upon conversion should generally be equal to such Holder's tax
basis in the Trust Preferred Securities exchanged therefor less the basis
allocated to any fractional share for which cash is received, and such Holder's
holding period in the Superior Common Stock received upon conversion should
generally begin on the date such Holder acquired those Trust Preferred
Securities.
ADJUSTMENT OF CONVERSION PRICE
Section 305 of the Code treats as a distribution taxable as a dividend (to
the extent of the issuing corporation's current or accumulated earnings and
profits) certain actual or constructive distributions of stock with respect to
stock or convertible securities. Under the Treasury Regulations, an adjustment
in the conversion price of the Debentures may, under certain circumstances, be
treated as a constructive dividend. A Holder of Trust Preferred Securities would
be required to include the amount of any such constructive dividend in gross
income but would not receive any cash related thereto. In addition, a Holder's
tax basis in Trust Preferred Securities would be increased by the amount of any
such constructive dividend.
INFORMATION REPORTING AND BACKUP WITHHOLDING
In general, information reporting to the IRS with respect to certain Holders
will apply to payments made in exchange for Essex Common Stock, for OID accruing
on, and payments of principal and proceeds from the sale of, the Trust Preferred
Securities (or the Debentures, if distributed to and held directly by Holders),
as well as distributions with respect to and proceeds from the sale of Superior
Common Stock received on conversion of Trust Preferred Securities.
A Holder may be subject to backup withholding at a rate of 31% with respect
to payments made in exchange for Essex Common Stock and for payments on, and
proceeds from the sale of, the Trust
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Preferred Securities (or the Debentures, if distributed to and held directly by
Holders), as well as on and from the sale of any Superior Common Stock received
on conversion, unless the Holder (i) is a corporation or comes within certain
other exempt categories of recipients and, when required, demonstrates that
status, or (ii) provides a correct taxpayer identification number, certifies as
to no loss of exemption from backup withholding and otherwise complies with the
applicable requirements of the backup withholding rules. Holders should consult
with their tax advisors as to their qualification for exemption from backup
withholding and the procedure for obtaining such exemption.
Backup withholding is not an additional tax. Any amount withheld as backup
withholding would be refunded or credited against the Holder's United States
federal income tax liability, provided that the required information is provided
to the IRS.
ALIEN HOLDERS
For purposes of this discussion, an "Alien Holder" is any individual,
corporation, partnership, estate or trust that is, as to the United States, a
non-resident alien individual or a foreign corporation, partnership, estate or
trust.
Under present United States federal income tax law:
(i) payments by the Trust or any of its paying agents to any Holder of Trust
Preferred Securities who or which is an Alien Holder will not be subject
to United States federal income or withholding tax, provided that (a)
the beneficial owner of the Trust Preferred Security does not actually
or constructively own 10% or more of the total combined voting power of
all classes of stock of Superior entitled to vote; (b) the beneficial
owner of the Trust Preferred Security is not a controlled foreign
corporation that is related to Superior through stock ownership; (c)
either (A) the beneficial owner of the Trust Preferred Security
certifies to the Trust or its agent, under penalties of perjury, that
he, she or it is not a United States holder and provides his, her or its
name and address or (B) a securities clearing organization, bank or
other financial institution that holds customers' securities in the
ordinary course of its trade or business (a "Financial Institution") and
holds the Trust Preferred Security certifies to the Trust or its agent
under penalties of perjury that such statement has been received by him,
her or it from the beneficial owner or by an intermediary Financial
Institution and furnishes the Trust or its agent with a copy thereof;
and (d) such payments are not effectively connected with the conduct by
the Alien Holder of a trade or business in the United States; and
(ii) An Alien Holder of Essex Common Stock, or a Trust Preferred Security
will not be subject to United States federal income or withholding tax
on any gain realized upon the sale or other disposition of such Essex
Common Stock or a Trust Preferred Security unless (i) the Alien Holder
is an individual who is present in the United States for 183 days or
more in the taxable year of disposition, and certain other conditions
apply, or (ii) the gain is effectively connected with the conduct by
the Alien Holder of a trade or business in the United States.
Under recently finalized Treasury regulations, the certification requirement
referred to in (i) (c) above may also be satisfied with other documentary
evidence for payments made after December 31, 1999 with respect to an offshore
account or through certain foreign intermediaries.
POSSIBLE TAX LAW CHANGES
Legislation has been introduced in the United States Congress in the past
that, if enacted, would have denied an interest deduction to issuers of
instruments such as the Debentures that were issued after the date such
legislation was proposed. No such legislation is currently pending. There can be
no assurance, however, that similar legislation will not ultimately be enacted
into law, possibly with retroactive effect, or that there will not be other
developments that would adversely affect the tax treatment of the Debentures
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and could result in the occurrence of a Tax Event, possibly leading to the
distribution of the Debentures to the Holders of the Trust Preferred Securities
in exchange for the Trust Preferred Securities.
Moreover, Superior is aware of at least one case, involving Enron
Corporation, now pending before the United States Tax Court where the IRS is
seeking to disallow the deduction for interest expense on securities that are
similar to, although different in a number of respects from, the Debentures.
Such securities were issued in 1993 and 1994 to partnerships that, in turn,
issued "monthly income preferred securities." An adverse judicial decision in
that case (or some other similar case) could result in the occurrence of a Tax
Event, possibly leading to the distribution of the Debentures in exchange for
Trust Preferred Securities. See "Description of the Trust Preferred
Securities--Special Event Exchange."
ACCOUNTING TREATMENT
The acquisition of Essex will be accounted for under the purchase method.
Generally, under the purchase method, assets acquired and liabilities assumed
are recorded at their fair value.
REGULATORY MATTERS
Under the Hart-Scott-Rodino Act and the rules promulgated thereunder, the
Merger may not be consummated unless notification has been given and certain
information has been furnished to the Antitrust Division of the United State
Department of Justice (the "Antitrust Division") and the United States Federal
Trade Commission ("FTC") and specified waiting period requirements have been
satisfied. The required notification has been given, and the required
information has been furnished, to both the Antitrust Division and the FTC. The
required waiting period under the Hart-Scott-Rodino Act with respect to the
Merger expired on November 13, 1998. At any time before or after the effective
time of the Merger, the FTC or the Antitrust Division could take such action
under the United States antitrust laws as it deems necessary or desirable in the
public interest, including seeking to enjoin the Merger or seeking the
divestiture of Essex by Superior, in whole or in part, or the divestiture or
compulsory licensing of substantial assets of Superior, Essex or their
respective subsidiaries. State attorneys general and private parties may also
bring legal actions under the federal or state antitrust laws under certain
circumstances.
RESALE OF TRUST PREFERRED SECURITIES AND SUPERIOR COMMON STOCK FOLLOWING THE
MERGER
The Trust Preferred Securities to be received in connection with the Merger,
and the Superior Common Stock issuable upon conversion of the Trust Preferred
Securities, will be freely transferable, except that securities retained by any
stockholder who is an "affiliate" (as defined under the Securities Act and
generally including, without limitation, directors, certain executive officers
and beneficial owners of 10% or more of a class of capital stock) of Essex for
purposes of Rule 145 under the Securities Act will not be transferable except
pursuant to an effective registration statement or an exemption from the
registration requirements of the Securities Act. This Joint Proxy
Statement/Prospectus does not cover sales of Trust Preferred Securities issued
to any person who is an affiliate of Essex or sales by such persons of Superior
Common Stock issuable upon conversion of the Trust Preferred Securities.
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THE MERGER AGREEMENT AND RELATED AGREEMENTS
THE FOLLOWING DESCRIPTION OF THE MERGER AGREEMENT DOES NOT PURPORT TO BE
COMPLETE, OMITS PROVISIONS THAT HAVE BEEN RENDERED INAPPLICABLE AS A RESULT OF
THE CONSUMMATION OF THE OFFER AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
THE MERGER AGREEMENT, A COPY OF WHICH IS ATTACHED HERETO AS APPENDIX A AND
INCORPORATED BY REFERENCE HEREIN. STOCKHOLDERS ARE URGED TO READ THE MERGER
AGREEMENT IN ITS ENTIRETY FOR A MORE COMPLETE DESCRIPTION OF THE MERGER.
GENERAL
THE OFFER. The Merger Agreement provides for the commencement and
consummation of a tender offer by Merger Sub for up to 22,562,135 shares of
Essex Common Stock, on the terms and subject to the conditions applicable
thereto, at a price of $32.00 per share, net to the seller in cash (subject to
applicable withholding of taxes), without interest. The Offer was commenced on
October 28, 1998 and, on November 27, 1998, Merger Sub accepted for payment and
subsequently purchased 22,562,135 shares of the outstanding Essex Common Stock
for an aggregate purchase price of $721,988,320.
THE MERGER. The Merger Agreement further provides that, after the
consummation of the Offer and on the terms and subject to the conditions
applicable thereto, Merger Sub will merge with and into Essex. As a result of
the Merger, Essex will become a wholly owned subsidiary of Superior. In the
Merger, stockholders of Essex will receive the consideration described below.
The Merger will become effective upon the filing of a Certificate of Merger with
the Secretary of State of the State of Delaware, or such other time as the
parties may specify. Such filings are anticipated to take place as soon as
practicable after receipt of Essex stockholder approval and Superior stockholder
approval and the satisfaction or waiver of the other conditions to the Merger.
It is currently anticipated that the effective time of the Merger will occur
during the first quarter of 1999. There can be no assurance, however, that each
condition to the Merger will be satisfied by such date.
CONSIDERATION TO BE RECEIVED IN THE MERGER
Section 2.06(b) of the Merger Agreement provides that, upon consummation of
the Merger, each remaining outstanding share of Essex (other than Ineligible
Shares and Dissenting Shares) will be converted automatically into the right to
receive 0.64 of a fully paid and non-assessable share of Series A Cumulative
Convertible Exchangeable Preferred Stock, par value $.01 per share ("Parent
Preferred Stock"), of Superior having certain powers, preferences, rights,
qualifications, limitations and restrictions. Section 2.06(g) of the Merger
Agreement further provides that, notwithstanding anything in the Merger
Agreement to the contrary, at the sole option of Superior and with the consent
of the member or members of the Essex Board who are not executive officers of
Essex (the "Essex Independent Directors"), (1) Superior may substitute for the
Parent Preferred Stock convertible preferred securities having economic and
other material terms and conditions equivalent to the Parent Preferred Stock as
determined by the Superior Board with the concurrence of a majority of the Essex
Independent Directors, but representing undivided beneficial interests in the
assets of a Delaware statutory business trust, of which all of the beneficial
interests in the assets of such trust represented by common securities are owned
by Superior, and (2) in the event of such substitution, all references in the
Merger Agreement to Parent Preferred Stock will be deemed to refer to such
convertible preferred securities.
BY WRITTEN CONSENT DATED DECEMBER 14, 1998, THE SUPERIOR BOARD APPROVED THE
EXERCISE BY SUPERIOR OF THE OPTION PURSUANT TO SECTION 2.06(G) OF THE MERGER
AGREEMENT TO SUBSTITUTE THE TRUST PREFERRED SECURITIES FOR THE PARENT PREFERRED
STOCK AS THE CONSIDERATION TO BE RECEIVED BY ESSEX STOCKHOLDERS IN THE MERGER,
AND THE SOLE ESSEX INDEPENDENT DIRECTOR HAS CONSENTED TO SUCH SUBSTITUTION. THE
SUPERIOR BOARD ALSO DETERMINED THAT THE ECONOMIC AND OTHER MATERIAL TERMS AND
CONDITIONS OF THE TRUST PREFERRED SECURITIES ARE EQUIVALENT TO THOSE OF THE
PARENT PREFERRED STOCK, AND THE SOLE ESSEX INDEPENDENT DIRECTOR HAS CONCURRED
WITH SUCH DETERMINATION. ONCE ISSUED, THE TRUST PREFERRED SECURITIES WILL
REPRESENT UNDIVIDED BENEFICIAL
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INTERESTS IN THE ASSETS OF SUPERIOR TRUST I, A DELAWARE STATUTORY BUSINESS TRUST
IN WHICH SUPERIOR OWNS ALL OF THE COMMON EQUITY INTERESTS. SUPERIOR AND ESSEX
INTEND TO AMEND THE MERGER AGREEMENT TO PROVIDE THAT, UPON CONSUMMATION OF THE
MERGER, EACH REMAINING OUTSTANDING SHARE OF ESSEX (OTHER THAN INELIGIBLE SHARES
AND DISSENTING SHARES) WILL BE CONVERTED AUTOMATICALLY INTO THE RIGHT TO RECEIVE
0.64 OF A FULLY PAID AND NON-ASSESSABLE TRUST PREFERRED SECURITY AND TO
OTHERWISE REFLECT THE SUBSTITUTION OF THE TRUST PREFERRED SECURITIES FOR THE
PARENT PREFERRED STOCK AS THE MERGER CONSIDERATION.
EXCHANGE OF SHARES. As promptly as practicable after the effective time of
the Merger, Superior will cause to be sent to each stockholder of record of
Essex as of the effective time of the Merger (other than holders of Ineligible
Shares and Dissenting Shares) transmittal materials for use in exchanging
certificates of Essex Common Stock for certificates of Trust Preferred
Securities. The transmittal materials will contain information and instructions
with respect to the surrender of Essex Common Stock certificates in exchange for
new certificates representing Trust Preferred Securities and cash in payment for
any fractional shares resulting from the exchange. Pending delivery to Superior
of Essex Common Stock certificates, any dividends on the Trust Preferred
Securities to be issued as a result of the Merger that are payable prior to the
delivery of such certificates will be held by the Trust. Such dividends will be
paid, without interest, to the persons entitled thereto upon delivery of such
Essex Common Stock certificates to Superior. No fractional shares of Trust
Preferred Securities will be issued to holders of Essex Common Stock. Instead,
Essex stockholders will receive an amount in cash, without interest, equal to
the product of such fraction multiplied by the average of the closing prices of
the Trust Preferred Securities for a specified period. See "The Merger
Agreement--Conversion of Shares; Procedures for Exchange of Certificates;
Dividends; No Fractional Shares." Until a holder of Essex Common Stock so
surrenders his, her or its certificates representing shares of Essex Common
Stock, such certificates will, after the effective time of the Merger, represent
for all purposes only the right to receive the Merger Consideration and the
other amounts, if any, specified in the Merger Agreement.
ESSEX STOCKHOLDERS SHOULD NOT SURRENDER THEIR STOCK CERTIFICATES FOR
EXCHANGE UNTIL THEY RECEIVE A TRANSMITTAL FORM.
CORPORATE MATTERS
The Merger Agreement provides that the directors of Merger Sub immediately
prior to the effective time of the Merger will be the initial directors of the
Surviving Corporation and that the officers of Essex immediately prior to the
effective time of the Merger will be the initial officers of the Surviving
Corporation.
CONDITIONS TO THE MERGER
Under the Merger Agreement, the respective obligations of each party to
effect the Merger are subject to the satisfaction at or prior to the effective
time of the Merger of each of the following conditions: (1) the Registration
Statement has become effective under the Securities Act, no stop order
suspending the effectiveness of the Registration Statement has been issued by
the Commission and no proceedings for that purpose and no similar proceeding in
respect of the Joint Prospectus/Proxy Statement has been initiated or threatened
by the Commission; (2) the Merger Agreement and the transactions contemplated by
the Merger Agreement have been approved and adopted by the requisite vote of the
stockholders of Essex and the Charter Amendment Proposal has been approved and
adopted by the requisite vote of the stockholders of Superior; and (3) no
temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other similar binding legal
restraint or prohibition preventing the consummation of the Merger is in effect,
and there has not been any action taken, or any statute, rule, regulation or
order enacted, entered, enforced or deemed applicable to the Merger, which makes
the consummation of the Merger illegal.
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In addition, the obligation of Essex to effect the Merger is subject to the
condition that the shares of Trust Preferred Securities to be issued in the
Merger and the shares of Superior Common Stock to be issued upon conversion the
Trust Preferred Securities have been approved for listing on the NYSE, subject
to official notice of issuance.
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains various customary representations and
warranties of the parties thereto, including the following representations by
Essex: organization and qualification; subsidiaries; Certificate of
Incorporation and Bylaws; capitalization; authority relative to the Merger
Agreement; material contracts; no conflict, required filings and consents;
compliance with law, permits; Commission filings, financial statements; absence
of certain changes or events; no undisclosed liabilities; absence of litigation;
employee benefit plans; employment agreements; labor matters; restrictions on
business activities; taxes; environmental matters; brokers; intellectual
property; vote required; opinions of financial advisors; and year 2000
compliance.
The following representations were also made by Superior and Merger Sub:
organization and qualification; authority relative to the Merger Agreement; no
conflict, required filings and consents; Certificates of Incorporation and
Bylaws; capitalization; Commission filings, financial statements; absence of
certain changes or events; restrictions on business activities; compliance with
law, permits; no undisclosed liabilities; absence of litigation; environmental
matters; and opinions of financial advisor.
CERTAIN COVENANTS
NON-SOLICITATION. Pursuant to the Merger Agreement, Essex has agreed that
it will not, and will not permit or cause any of its subsidiaries or any of the
officers and directors of it or its subsidiaries to, and will direct its and its
subsidiaries' employees, agents and representatives (including any investment
banker, attorney or accountant retained by it or any of its subsidiaries) not
to, directly or indirectly, initiate, solicit, encourage or otherwise facilitate
any inquiries or the making of any proposal or offer with respect to a merger,
reorganization, share exchange, consolidation or similar transaction involving,
or any purchase of 15% or more of the consolidated assets or equity securities
of Essex or any of its subsidiaries, other than transfers of Essex Common Stock
between and among entities associated or affiliated with the Bessemer
Stockholders (as defined under "--Stockholders' Agreement") (any such proposal
or offer being hereinafter referred to as an "Acquisition Proposal"). Essex has
further agreed that it will not, and will not permit or cause any of its
subsidiaries or any of the officers and directors of it or its subsidiaries to,
and will direct its and its subsidiaries' employees, agents and representatives
(including any investment banker, attorney or accountant retained by it or any
of its subsidiaries) not to, directly or indirectly, engage in any negotiations
concerning, or provide any confidential information or data to, or have any
discussions with, any person relating to an Acquisition Proposal, whether made
before or after the date of the Merger Agreement, or otherwise facilitate any
effort or attempt to make or implement an Acquisition Proposal; provided,
however, that nothing contained in the Merger Agreement prevents Essex or the
Essex Board from (i) complying with Rule 14e-2 promulgated under the Exchange
Act with regard to an Acquisition Proposal or (ii) at any time prior to the
earlier to occur of (x) payment for shares of Essex Common Stock pursuant to the
Offer or (y) the approval of the Merger by the requisite vote of the
stockholders of Essex (A) providing information in response to a request
therefor by a person who has made an unsolicited bona fide written Acquisition
Proposal if the Essex Board receives from the person so requesting such
information an executed confidentiality agreement on terms substantially
equivalent to those contained in the Confidentiality Agreement (as defined under
"--Confidentiality Agreement"); (B) engaging in any negotiations or discussions
with any person who has made an unsolicited bona fide written Acquisition
Proposal; or (C) recommending such an Acquisition Proposal to the stockholders
of Essex, if and only to the extent that, (i) in each such case referred to in
clause (A), (B) or (C) above, the Essex Board determines in good faith after
consultation with outside legal counsel that such action is necessary in order
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for its directors to comply with their fiduciary duties under applicable law and
(ii) in each case referred to in clause (B) or (C) above, the Essex Board
determines in good faith (after consultation with its financial advisor) that
such Acquisition Proposal is reasonably likely to be consummated, taking into
account all legal, financial and regulatory aspects of the proposal and the
person making the proposal and would, if consummated, result in a more favorable
transaction than the transaction contemplated by the Merger Agreement (any such
more favorable Acquisition Proposal being referred to as a "Superior Proposal").
Essex has agreed to immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted before the
date of the Merger Agreement with respect to any of the foregoing. Essex has
further agreed that it will take the necessary steps to promptly inform the
individuals or entities referred to in the first sentence of this paragraph of
the above obligations as well as those contained in the Confidentiality
Agreement. Essex will notify Superior immediately if any inquiries, proposals or
offers are received by, any information requested from, or any discussions or
negotiations are sought to be initiated or continued with, any of its
representatives indicating, in connection with such notice, the name of such
person and the material terms and conditions of any proposals or offers and
thereafter will keep Superior informed, on a current basis, of the status and
terms of any such proposals or offers and the status of any such negotiations or
discussions. Essex also will promptly request each person that has previously
executed a confidentiality agreement in connection with its consideration of an
Acquisition Proposal to return all confidential information that has been
furnished to such person by or on behalf of it or any of its subsidiaries.
MEETINGS OF STOCKHOLDERS. Pursuant to the Merger Agreement, Essex has
agreed to call and hold a meeting of its stockholders as promptly as
practicable, but in no event more than 45 days after the Registration Statement
is declared effective, for the purpose of considering and voting upon the
approval of the Merger. Subject to its fiduciary duties under applicable law,
Essex has agreed to take all lawful actions to solicit the approval of the
Merger by Essex's stockholders. Superior and Essex have agreed to cause all
shares of Essex Common Stock purchased pursuant to the Offer and all other
shares owned by them or any of their subsidiaries or affiliates to be voted in
favor of the Merger Agreement and the Merger. In addition, Superior has agreed
to take all action necessary to convene a meeting of its stockholders for the
purpose of considering and voting upon the approval of the Superior Proposals.
INDEMNIFICATION AND INSURANCE. The Merger Agreement provides that the
Certificate of Incorporation of the Surviving Corporation will contain the
provisions with respect to indemnification set forth in the Certificate of
Incorporation and Bylaws of Essex, which provisions will not be amended,
repealed or otherwise modified for a period of six years from the effective time
of the Merger in any manner that would adversely affect the rights of
individuals who between the date of the Merger Agreement and the effective time
of the Merger were directors or officers of Essex, unless such modification is
required by law.
The Merger Agreement also provides that the Surviving Corporation will, to
the fullest extent permitted under applicable law or under the Surviving
Corporation's Certificate of Incorporation or Bylaws, indemnify and hold
harmless each director and officer of Essex or any of its subsidiaries against
any costs or expenses (including attorneys' fees), judgments, fines, losses,
claims, damages, liabilities and amounts paid in settlement in connection with
any claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or pertaining to any action or
omission by such director or officer by virtue of his holding the office of
director or officer occurring at or prior to the effective time of the Merger
(including, without limitation, the transactions contemplated by the Merger
Agreement) for a period of six years after the effective time of the Merger. In
the event of any such claim, action, suit, proceeding or investigation (whether
arising before or after the effective time of the Merger), (1) any counsel
retained by the indemnified parties for any period after the effective time of
the Merger will be reasonably satisfactory to the Surviving Corporation and
Superior and (2) neither the Surviving Corporation nor Superior will be liable
for any settlement effected without its written consent (which consent will not
be unreasonably withheld).
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The Merger Agreement further provides that, for a period of six years after
the effective time of the Merger, Superior will cause to be maintained in effect
the current policies of directors' and officers' liability insurance maintained
by Essex (provided that Superior may substitute policies with reputable and
financially sound carriers of at least the same coverage and amounts containing
terms and conditions which are no less advantageous) with respect to claims
arising from or related to facts or events that occurred at or before the
effective time of the Merger. However, Superior will not be obligated to make
annual premium payments for such insurance to the extent such premiums exceed
150% of the annual premiums paid by Essex as of the date of the Merger Agreement
for such insurance (such 150% amount currently represented to be $288,000, the
"Maximum Premium"). If such insurance coverage cannot be obtained at all, or can
only be obtained at an annual premium in excess of the Maximum Premium, Superior
will maintain the most advantageous policies of directors' and officers'
insurance obtainable for an annual premium equal to the Maximum Premium.
Nevertheless, if such insurance coverage cannot be obtained at all, Superior
will purchase all available extended reporting periods with respect to
pre-existing insurance in an amount that, together with all other insurance
purchased, does not exceed the Maximum Premium. Superior has agreed not to take
any action that would have the effect of limiting the aggregate amount of
insurance coverage required to be maintained for the individuals referred to in
this paragraph.
EMPLOYEE BENEFITS. Under the Merger Agreement, for not less than one year
following the effective time of the Merger, Superior will cause the Surviving
Corporation to maintain compensation and employee benefits plans and
arrangements and perquisites for employees of Essex and its subsidiaries that,
in the aggregate, are substantially comparable to those provided pursuant to
their compensation and employee benefit plans and arrangements and perquisites
in effect on the date of the Merger Agreement. However, Superior and the
Surviving Corporation will have the right, in the good faith exercise of their
managerial discretion, to terminate or make changes or cause changes to be made
in the compensation, benefits and other terms of employment of any employee and
to terminate the employment of any employee. Superior will also cause the
Surviving Corporation to perform Essex's obligations under individual
Termination Benefits Agreements entered into between Essex and each of its
executive officers, unless any such officer agrees otherwise.
CERTAIN OTHER COVENANTS. The Merger Agreement contains certain other
covenants including covenants relating to preparation and filing of proxy
statements, access to information, notice of certain events, coordination and
cooperation with respect to stockholders' meetings, preparing and filing of
disclosure documents, actions and filings with governmental bodies, agencies,
officials or other authorities and third parties, public announcements, letters
from persons deemed "affiliates" for purposes of Rule 145 under the 1933 Act,
filing of a Form S-4 registration statement, government authorizations and the
listing of Trust Preferred Securities and Superior Common Stock.
FURTHER ACTION. The Merger Agreement provides that upon the terms and
subject to the conditions hereof, each of the parties to the Merger Agreement
will in good faith use all commercially reasonable efforts to take, or cause to
be taken, all actions and to do, or cause to be done, all other things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by the Merger Agreement, to obtain in
a timely manner all necessary waivers, consents and approvals and to effect all
necessary registrations and filings, and to otherwise satisfy or cause to be
satisfied all conditions precedent to its obligations under the Merger
Agreement.
TERMINATION
The Merger Agreement provides that it may be terminated and the Merger may
be abandoned at any time prior to the effective time of the Merger,
notwithstanding approval thereof by the stockholders of Essex: (1) by mutual
written consent duly authorized by the respective boards of directors of
Superior and Essex; (2) by either Superior or Essex if the Merger has not been
consummated by October 31, 2000 (provided that such right to terminate the
Merger Agreement will not be available to any party whose failure to fulfill any
obligation under the Merger Agreement has been the cause of or resulted in the
failure
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of the Merger to occur on or before such date); (3) by either Superior or Essex
if a court of competent jurisdiction or governmental, regulatory or
administrative agency has issued a non-appealable final order, decree or ruling
or taken any other action, in each case having the effect of permanently
restraining, enjoining or otherwise prohibiting the Merger.
In the event of the termination of the Merger Agreement, the Merger
Agreement provides that it will become void and there will be no liability
thereunder on the part of any party thereto (or any of its affiliates,
directors, officers, employees, agents, legal and financial advisors or other
representatives) except (a) under the provisions of the Merger Agreement related
to fees and expenses described below and under certain other provisions of the
Merger Agreement which survive termination and (b) nothing contained in the
Merger Agreement will relieve any party from liability or damages resulting from
any breach of the Merger Agreement.
FEES AND EXPENSES
The Merger Agreement provides that except for certain expenses related to
the conversion of the shares of Essex Common Stock in the Merger (which shall be
paid by the Surviving Corporation) and expenses incurred in connection with the
filing fee for the Registration Statement and the printing and mailing of the
Joint Prospectus/Proxy Statement and the Registration Statement (which shall be
shared equally by Superior and Essex) and as otherwise discussed in this
section, all fees and expenses incurred in connection with the Merger Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such expenses, whether or not the Merger is consummated.
STOCKHOLDERS' AGREEMENT
In connection with the Merger Agreement, Superior and Merger Sub entered
into a Stockholders' Agreement with certain stockholders of Essex, including
Bessemer Holdings, L.P. and certain affiliates thereof (the "Bessemer
Stockholders"), who beneficially owned prior to the consummation of the Offer in
the aggregate approximately 47.7% of the outstanding shares of Essex Common
Stock. Under the Stockholders' Agreement, the Bessemer Stockholders agreed to
validly tender (and not withdraw), pursuant to and in accordance with the terms
of the Offer, all the shares of Essex Common Stock owned by the Bessemer
Stockholders. Those shares were tendered pursuant to the Offer and were acquired
by Merger Sub on a pro rata basis.
The Bessemer Stockholders also granted to Merger Sub an irrevocable option
to purchase their shares of Essex Common Stock for an amount equal to $32.00 per
share that would have been exercisable under certain circumstances.
The Bessemer Stockholders have also agreed that during the period commencing
on the date of the Stockholders' Agreement and continuing until the first to
occur of the effective time of the Merger or the termination of the Merger
Agreement in accordance with its terms, at any meeting of the holders of shares
of Essex Common Stock or in connection with any written consent of the holders
of shares of Essex Common Stock, the Bessemer Stockholders will vote (or cause
to be voted) the shares of Essex Common Stock held of record or of which the
Bessemer Stockholders have "beneficial ownership" (as determined pursuant to
Rule 13d-3 under the Exchange Act, including pursuant to any agreement,
arrangement or understanding, whether or not in writing), (i) in favor of the
Merger, the execution and delivery by Essex of the Merger Agreement and the
approval of the terms thereof and each of the other actions contemplated by the
Merger Agreement and the Stockholders' Agreement and any actions required in
furtherance thereof and (ii) against any Acquisition Proposal or other takeover
proposal and against any action or agreement that would impede, frustrate,
prevent or nullify the Stockholders' Agreement or result in a breach in any
respect of any covenant, representation or warranty or any other obligation or
agreement of Essex under the Merger Agreement or that would result in any of the
conditions to the Offer or any of the conditions set forth under "--Conditions
to the Merger" not being fulfilled. In addition, the Bessemer
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Stockholders appointed representatives of Superior as proxies to vote their
shares of Essex Common Stock or grant a consent or approval in respect of such
shares of Essex Common Stock in favor of the various transactions contemplated
by the Merger Agreement and against any Acquisition Proposal. The Bessemer
Stockholders also agreed not to transfer their shares of Essex Common Stock,
except to another Bessemer Stockholder and agreed that neither they nor any of
their subsidiaries or affiliates would, directly or indirectly, encourage,
solicit, participate in or initiate discussions or negotiations with, or provide
any information to, any corporation, partnership, person or other entity or
group (other than Superior, any of its affiliates or representatives) concerning
any Acquisition Proposal.
The Stockholders' Agreement terminated in accordance with the terms thereof
upon the payment by Merger Sub for shares of Essex Common Stock pursuant to the
Offer.
VOTING AGREEMENT
In connection with the Merger Agreement, Alpine entered into a Voting
Agreement with Essex. Under the Voting Agreement, Alpine has agreed that it
will, at any meeting of the stockholders of Superior, however called, or in
connection with any written consent of such stockholders, vote (or cause to be
voted) all shares of Superior Common Stock then held of record by it or which it
has the right to vote (A) in favor of (1) an amendment to Superior's Certificate
of Incorporation to authorize additional shares of Superior Preferred Stock; (2)
the issuance of Trust Preferred Securities; in the case of clauses (1) and (2)
in accordance with the terms of the Merger Agreement, the DGCL and the
Certificate of Incorporation and Bylaws of Superior; and (3) any other matters
submitted to the stockholders of Superior to authorize or facilitate the
transactions contemplated by the Merger Agreement; and (B) against any matters
submitted to the stockholders of Superior inconsistent with the transactions
contemplated by the Merger Agreement.
CONFIDENTIALITY AGREEMENT
Essex Group, Inc., a wholly owned subsidiary of Essex, and Superior entered
into a mutual confidentiality agreement (the "Confidentiality Agreement") on
April 24, 1998 that provides for, among other things, the confidential treatment
of the discussions regarding the Offer and the Merger and the exchange of
certain confidential information concerning Essex and Superior. Essex and
Superior subsequently entered into a letter agreement, dated September 29, 1998,
that confirmed the obligations contained in the Confidentiality Agreement.
AGREEMENTS OF ESSEX AFFILIATES
Rule 145 promulgated under the Securities Act regulates the disposition of
securities of "affiliates" of Essex in connection with the Merger. Essex has
delivered to Superior a letter (the "Affiliate Letter") identifying all persons
who are or may be deemed to be, at the time of the Essex Meeting, "affiliates"
of Essex for purposes of Rule 145 under the Securities Act. Such Affiliate
Letter may be further updated prior to the effective time of the Merger. Essex
has agreed to use its best efforts to cause each person (an "Affiliate") who is
identified as an Affiliate in the Affiliate Letter to deliver to Superior, prior
to the effective time of the Merger, a written agreement (an "Affiliate
Agreement"). Under such Affiliate Agreements, every Affiliate will represent
that he, she or it has been advised that the Affiliate may not sell, transfer or
otherwise dispose of Trust Preferred Securities issued to the Affiliate in the
Merger unless such sale, transfer or other disposition (1) has been registered
under the Securities Act, (2) is made in compliance with the requirements of
Rule 145 under the Securities Act, or (3) in the opinion of counsel reasonably
acceptable to Superior, is otherwise exempt from registration under the
Securities Act.
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THE COMPANIES
ESSEX INTERNATIONAL INC.
GENERAL. Essex is a corporation organized and existing under the laws of
the State of Delaware with its principal executive offices located at 1601 Wall
Street, Fort Wayne, Indiana 46802. Essex is a holding company that operates
exclusively through Essex Group, Inc., a Michigan corporation and a wholly owned
subsidiary of Essex. Essex Group was founded in 1930 and is principally engaged
in the development, manufacture and distribution of electrical wire and cable
and insulation products to over 11,000 customers worldwide in a wide range of
industrial markets from its manufacturing facilities and service centers located
throughout the United States and Canada. Among its products are: building wire
for commercial and residential construction applications; magnet wire and
insulation materials for electromechanical devices such as motors, transformers
and electrical controls; copper voice and datacom wire; industrial wire for
applications in construction, appliances, recreational vehicles and industrial
facilities; and automotive wire and specialty wiring assemblies for automobiles
and trucks.
MANAGEMENT AND ADDITIONAL INFORMATION. Certain information relating to
executive compensation, various benefit plans, voting securities and principal
holders thereof, certain relationships and related transactions and other
related matters as to Essex is incorporated by reference or set forth in Essex's
Annual Report on Form 10-K for the year ended December 31, 1997, incorporated
herein by reference. Stockholders desiring copies of such documents may contact
Essex at its address or telephone number indicated under "Where You Can Find
More Information" on page 1.
PRINCIPAL SECURITY OWNERSHIP. As of December 11, 1998, management of Essex
knew of no person, other than those below, who is the beneficial owner of more
than 5% of Essex Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP OF CLASS
- ------------------------------------------------------------ ------------------- -------------
<S> <C> <C>
SUT Acquisition Corp........................................ 22,562,135(1) 81%
Bessemer Holdings, L.P...................................... 2,005,643(2) 7%
</TABLE>
- ------------------------
(1) 22,562,135 shares of Essex Common Stock were acquired by SUT Acquisition
Corp. for an aggregate purchase price of $721,988,320 on or about November
27, 1998 pursuant to a tender offer commenced by SUT Acquisition Corp. on
October 28, 1998 for up to 22,562,135 shares of Essex Common Stock, at a
price of $32.00 per share, net to the seller in cash (subject to applicable
withholding of taxes), without interest.
(2) Bessemer Holdings, L.P. ("Bessemer") is a limited partnership the only
activity of which is to make private structured investments. Each of Mr.
Robert D. Lindsay, a director of Essex, and Messrs. Ward W. Woods, Rodney A.
Cohen and Adam P. Godfrey, is a sole shareholder of a corporation that is a
manager and controls a family partnership or corporation that is a member of
the limited liability company that is the sole general partner of Bessemer.
That limited liability company is also the sole general partner of Bessec
Holdings, L.P. ("Bessec"), a limited partnership that holds 40,006 of the
shares listed for Bessemer. Bessemer Securities Corporation ("BSC") is a
principal limited partner of Bessemer and Bessec. Bessemer Securities LLC
("BSLLC") is a principal limited partner of Bessec. Mr. Woods is the
President and Chief Executive Officer of BSLLC and BSC. Each of Messrs.
Woods, Lindsay, Cohen and Godfrey disclaims beneficial ownership of the
shares of Essex Common Stock owned or controlled by Bessemer or Bessec.
Messrs. Woods, Lindsay and Cohen, individually and together, hold less than
5% of the outstanding shares of Essex Common Stock directly, and indirectly
through entities controlled by each of them for their own benefit or for the
benefit of their respective families.
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SUPERIOR TELECOM INC.
GENERAL. Superior is a corporation organized and existing under the laws of
the State of Delaware. Its principal offices are located at 1790 Broadway, New
York, New York 10019. Superior is a holding company that operates through its
subsidiaries and is the largest manufacturer of copper telecommunications cable
in North America. Superior's customers include four of the five regional Bell
operating companies, Sprint Corporation and GTE Corporation. Copper
telecommunications cable is the most widely used medium for voice and data
transmission in the local loop, the segment of the telecommunications network
that connects the customer's premises to the nearest telephone switching center
or central office, which comprises approximately 173 million residential and
business access lines in the United States.
MANAGEMENT AND ADDITIONAL INFORMATION. Certain information relating to
executive compensation, various benefit plans, voting securities and principal
holders thereof, certain relationships and related transactions and other
related matters as to Superior is incorporated by reference or set forth in
Superior's Annual Report on Form 10-K for the year ended April 30, 1998,
incorporated herein by reference. Stockholders desiring copies of such documents
may contact Superior at its address or telephone number indicated under "Where
You Can Find More Information" on page 1.
In connection with the Offer and the Merger, the financing of the Offer and
related transactions, Alpine provided extensive consulting, financial advisory
and other services to Superior, including active assistance in originating,
structuring and negotiating these transactions and Superior's financing. In
addition, a majority stockholder of Superior, Alpine agreed to support these
transactions, including the issuance of the Trust Preferred Securities
convertible into Superior Common Stock. In consideration of such services and
support, Superior paid Alpine a fee of $10 million following completion of the
Offer. The amount of the fee and the terms of its payment were reviewed and
approved by each of the Superior Board and Superior's Audit Committee.
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DESCRIPTION OF SUPERIOR CAPITAL STOCK
The following brief description of Superior's capital stock does not purport
to be complete and is subject in all respects to applicable Delaware law and to
the provisions of Superior's Certificate of Incorporation and Bylaws.
Prior to the amendment of Superior's Certificate of Incorporation, the
authorized capital stock of Superior consists of 25,000,000 shares of Superior
Common Stock and 1,000,000 shares of Superior Preferred Stock. The Superior
Common Stock is traded on the NYSE under the ticker symbol "SUT." As of December
14, 1998, there were issued and outstanding 16,057,832 shares of Superior Common
Stock and no shares of Superior Preferred Stock. The outstanding shares of
Superior Common Stock are validly issued, fully paid and non-assessable.
COMMON STOCK
Each holder of Superior Common Stock is entitled to one vote per share on
any issue requiring a vote at any meeting. Holders of shares of Superior Common
Stock do not have cumulative voting rights in the election of directors. All
shares of Superior Common Stock are non-assessable and, subject to the rights of
holders of any series of Superior Preferred Stock having a preference over the
Superior Common Stock, are entitled to share equally in such dividends as the
Board of Directors of Superior may declare on the Superior Common Stock from
sources legally available therefor. Upon any liquidation, dissolution or winding
up of Superior, subject to the prior liquidation rights of the holders of any
series of Superior Preferred Stock, the net assets of Superior remaining after
payment of creditors will be distributed to the holders of Superior Common Stock
in proportion to their interests. Holders of Superior Common Stock do not have
preemptive rights to subscribe for additional shares of Superior Common Stock if
additional shares are offered for sale by Superior.
PREFERRED STOCK
The Board of Directors of Superior is authorized without further stockholder
action to provide for the issuance from time to time of up to 1,000,000 shares
of Superior Preferred Stock, in one or more series, with such powers,
designations, preferences and relative, participating, optional or other special
rights, qualifications, limitations or restrictions as will be set forth in the
resolutions adopted by the Board of Directors of Superior providing for the
issue of such classes or series of Superior Preferred Stock. The holders of
Superior Preferred Stock will have no preemptive rights (unless otherwise
provided in the applicable certificate of designation) and will not be subject
to future assessments by Superior. Such Superior Preferred Stock may have voting
or other rights which could adversely affect the rights of holders of the
Superior Common Stock. In addition, the issuance of Superior Preferred Stock,
while providing flexibility in connection with possible acquisitions and other
corporate purposes, could, under certain circumstances, make it more difficult
for a third party to gain control of Superior, discourage bids for the Superior
Common Stock at a premium, or otherwise adversely affect the market price of the
Superior Common Stock.
POSSIBLE ANTI-TAKEOVER EFFECT OF CERTAIN CERTIFICATE OF INCORPORATION AND BYLAW
PROVISIONS
Superior's Certificate of Incorporation and Bylaws contain several
provisions that may be deemed to have the effect of making more difficult the
acquisition of control of Superior by means of a hostile tender offer, open
market purchases, a proxy contest or otherwise.
The provisions of Superior's Certificate of Incorporation and Bylaws
discussed below are designed to help ensure that holders of Superior Common
Stock are treated fairly and equally in a multi-step acquisition. In addition,
they are intended to encourage persons seeking to acquire control of Superior to
initiate such an acquisition through arms'-length negotiations with Superior's
Board of Directors. Superior's Certificate of Incorporation and Bylaws may have
the effect of discouraging a third party from
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making a tender offer or otherwise attempting to obtain control of Superior,
even though such an attempt might be economically beneficial to Superior and its
stockholders. In addition, because Superior's Certificate of Incorporation and
Bylaws are designed to discourage the accumulation of large blocks of the voting
shares of Superior by purchasers whose objective it is to have such stock
repurchased by Superior at a premium, the anti-takeover provisions of Superior's
Certificate of Incorporation and Bylaws could tend to reduce the price of the
voting shares of Superior caused by such accumulations. In addition, these
provisions may also have the effect of precluding a contest for the election of
directors.
STOCKHOLDER MEETINGS. Subject only to the rights of holders of Superior
Preferred Stock, if any, only a majority of Superior's Board of Directors (other
than those directors affiliated with or elected by an Interested Stockholder, as
defined below), the Chairman of the Board, the Vice Chairman or the Chief
Executive Officer of Superior will be able to call an annual or special meeting
of stockholders. In addition, subject only to the rights of Superior Preferred
Stock, if any, stockholders may not take any action by written consent.
RESTRICTIONS ON CERTAIN BUSINESS COMBINATIONS. Superior's Certificate of
Incorporation provides that certain business combinations, such as mergers and
stock and asset sales, with an Interested Stockholder, as defined below, or an
affiliate or associate of an Interested Stockholder must be approved by (1) the
holders of at least two-thirds or more of the voting power of the then
outstanding voting shares, voting together as a single class, and (2) at least a
majority of the voting power of the then outstanding voting shares, voting as a
single class, which are not owned beneficially, directly or indirectly, by the
Interested Stockholder, unless the transaction is approved by a majority of
certain directors or meets certain fair price provisions. Superior's Certificate
of Incorporation defines an Interested Stockholder to be any person (other than
Messrs. Elbaum and Schut (directors of Superior), their lineal descendants,
affiliates and associates, or trusts for their benefit, and certain other
persons) who is the beneficial owner of more than 15% of the combined voting
power of the then outstanding voting shares or who is an assignee of any voting
shares which were beneficially owned by an Interested Stockholder at any time
during the prior two years.
REQUIREMENTS FOR ADVANCE NOTIFICATION OF STOCKHOLDER NOMINATION AND
PROPOSALS. Superior's Certificate of Incorporation and Bylaws establish advance
notice procedures with regard to stockholder proposals and the nomination, other
than by or at the direction of the Board of Directors or a committee thereof, of
candidates for election as directors.
VOTE REQUIRED TO AMEND OR REPEAL CERTAIN PROVISIONS OF SUPERIOR'S
CERTIFICATE OF INCORPORATION AND BYLAWS. Superior's Certificate of
Incorporation establishes certain supermajority voting requirements to amend or
repeal certain provisions of Superior's Certificate of Incorporation or Bylaws.
DIRECTOR'S LIABILITY. Superior's Certificate of Incorporation provides that
to the fullest extent permitted by the DGCL, a director of Superior shall not be
liable to Superior or its stockholders for monetary damages for breach of
fiduciary duty as a director. Under current Delaware law, liability of a
director may not be limited (1) for any breach of the director's duty of loyalty
to Superior or its stockholders, (2) for acts or omissions not in good faith or
that involve intentional misconduct or a knowing violation of law, (3) in
respect of certain unlawful dividend payments or stock redemptions or
repurchases, and (4) for any transaction from which the director derives an
improper personal benefit. The effect of this provision of Superior's
Certificate of Incorporation is to eliminate the rights of Superior and its
stockholders (through stockholders' derivative suits on behalf of Superior) to
recover monetary damages against a director for breach of the fiduciary duty of
care as a director (including breaches resulting from negligent or grossly
negligent behavior) except in the situations described in clauses (1) through
(4) above. This provision does not limit or eliminate the rights of Superior or
any stockholder to seek non-monetary relief such as an injunction or rescission
in the event of a breach of a director's duty of care. In addition, Superior's
Certificate of Incorporation provides that Superior shall indemnify its
directors and executive officers to the fullest extent permitted by Delaware
law.
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SECTION 203 OF THE DGCL. Superior is subject to Section 203 of the DGCL. In
general, Section 203 prevents an "interested stockholder" (defined by the DGCL
as a person who is the owner of 15% or more of a corporation's voting stock, or
who is an affiliate or associate of a corporation, and was the owner of 15% or
more of that corporation's voting stock within the prior three years) from
engaging in a "business combination" (as defined under the DGCL) with a Delaware
corporation for three years following the date such person became an interested
stockholder unless: (1) before such person became an interested stockholder the
board of directors of the corporation approved the transaction or the business
combination in which the interested stockholder became an interested
stockholder; (2) upon consummation of the transaction that resulted in the
interested stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced (excluding shares owned by
persons who are both officers and directors of the corporation and shares held
by certain employee stock ownership plans in which employee participants do not
have the right to determine confidentially whether shares held subject to the
plan will be tendered in a tender or exchange offer); or (3) following the
transaction in which such person became an interested stockholder, the business
combination is approved by the board of directors of the corporation and
authorized at a meeting of stockholders by the affirmative vote of the holders
of at least two-thirds of the outstanding voting stock of the corporation not
owned by the "interested stockholder." A "business combination" generally
includes mergers, stock or asset sales and other transactions resulting in a
financial benefit to the "interested stockholders."
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DESCRIPTION OF THE TRUST PREFERRED SECURITIES
As stated elsewhere herein, the Essex stockholders will receive 0.64 of a
share of Trust Preferred Securities in exchange for each share of Essex Common
Stock in the Merger. The following summary of certain terms of the Trust
Preferred Securities and the Amended and Restated Declaration of Trust pursuant
to which the Trust Preferred Securities will be issued (the "Declaration") does
not purport to be complete and is qualified in its entirety by reference to the
Trust Preferred Securities and the Declaration, and the Delaware Business Trust
Act and the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"),
which are incorporated by reference in the Declaration. Copies of the Indenture
and the Declaration can be obtained upon written request to Superior. See "Where
You Can Obtain More Information" on page 1. Whenever particular defined terms of
the Declaration are referred to herein, such defined terms are incorporated
herein by reference.
GENERAL
The Declaration authorizes the issuance by the Trust of the Trust Preferred
Securities and Trust Common Securities (collectively, the "Trust Securities") in
consideration for the issuance by Superior of the Debentures to the Trust. The
Trust Preferred Securities represent preferred undivided beneficial interests in
the assets of the Trust and entitle the holders thereof to a preference over the
Trust Common Securities with respect to Distributions and amounts payable on
redemption or, in certain circumstances, liquidation, as well as other benefits
described in the Declaration.
All of the Trust Common Securities are owned by Superior. The Trust
Preferred Securities rank pari passu, and payments will be made thereon pro
rata, with the Trust Common Securities except as described under
"--Subordination of Trust Common Securities" and "--Distribution of Debentures
Upon Dissolution." Legal title to the Debentures is held by the Property Trustee
for the benefit of the holders of the Trust Securities. The Declaration does not
permit the issuance by the Trust of any securities other than the Trust
Preferred Securities and the Trust Common Securities or the incurrence of any
indebtedness by the Trust. The payment of Distributions out of money held by the
Trust, and payments upon redemption of the Trust Preferred Securities or
liquidation of the Trust, are guaranteed by Superior under the Guarantee
Agreement (the "Guarantee") described under "Description of the Guarantee." The
Guarantee is held by , as the Guarantee Trustee, for the benefit of
the holders of the Trust Preferred Securities. The Guarantee does not cover
payment of Distributions when the Trust does not have sufficient available funds
to pay such Distributions. The remedy of a holder of Trust Preferred Securities
in such event is described under "--Declaration Events of Default; Enforcement
of Certain Rights by Holders of Trust Preferred Securities."
DISTRIBUTIONS
Distributions on the Trust Securities are payable at the annual rate of
8 1/2% of the liquidation preference of $50 per Trust Security. Distributions
accumulate, without interest, from the date of original issuance of the Trust
Securities ( , 1999), or the most recent date to which Distributions
have been paid in full, and are payable quarterly in arrears on ,
, , and of each year, commencing on ,
1999, to the holders of record of the Trust Securities on the applicable record
date, when, as and if available for payment, except as otherwise described
below. The amount of Distributions payable for any period is computed on the
basis of a 360-day year of twelve 30-day months. In the event that any date on
which Distributions are payable on the Trust Securities is not a Business Day,
the payment of the Distributions payable on such date will be made on the next
succeeding day that is a Business Day and without any additional Distributions
or other payment in respect of any such delay, except that, if such Business Day
is in the next succeeding calendar year, such payment will be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on the relevant Distribution payment date (each date on which
Distributions are payable in accordance with the foregoing, a "Distribution
Date"). A "Business Day" means any day other than a Saturday or a Sunday or
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a day on which banking institutions in the City of New York are authorized or
required by law or executive order to remain closed or a day on which the
corporate trust office of the Property Trustee or the Indenture Trustee is
closed for business.
So long as no Debenture Event of Default (relating solely to certain events
of bankrupty, insolvency or reorganization of Superior) has occurred and is
continuing, Superior has the right under the Indenture to defer payment of
interest (including Additional Interest and Additional Sums, if any) under the
Debentures, at any time, or from time to time, for a period not exceeding 20
consecutive quarters with respect to each deferral period, but not to extend
beyond the stated maturity of the Debentures (each such deferral period, an
"Extension Period"). If such payments on the Debentures are so deferred,
quarterly Distributions on the Trust Securities will also be deferred by the
Trust during any such Extension Period. Distributions to which holders of the
Trust Securities would otherwise be entitled during any such Extension Period
will continue to accumulate, and Additional Interest will accrue thereon, at the
rate per annum set forth herein during such Extension Period. The term
"Distributions" as used herein includes any Additional Interest and Additional
Sums, if any, as defined herein. During any such Extension Period, Superior may
not, and will not permit any of its subsidiaries to, (i) declare or pay, or set
apart for payment, any dividends on or other distributions with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect to, any
shares of Superior's capital stock or (ii) make any payment of principal,
interest or premium, if any, on or repay, repurchase or redeem any debt
securities (including guarantees of indebtedness) issued by Superior that rank
pari passu with or junior to the Debentures (other than with respect to both (i)
and (ii)), (a) any dividend, redemption, liquidation, interest, principal or
guarantee payment by Superior where the payment is made with securities
(including capital stock) that rank pari passu with or junior to the securities
on which such dividend, redemption, liquidation, interest, principal or
guarantee payment is being made, (b) payments under the Guarantee, (c) payments
under the Subordinated Credit Agreement and any refinancings thereof, (d)
purchases of Superior Common Stock related to the issuance of Superior Common
Stock under any of Superior's benefit plans for its directors, officers or
employees, (e) as a result of a reclassification of Superior's capital stock or
the exchange or conversion of one series or class of Superior's capital stock
for another series or class of Superior's capital stock and (f) the purchase of
fractional interests in shares of Superior's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged). Prior to the termination of any such Extension Period,
Superior may further extend the interest payment period; provided, however, that
no such Extension Period as so extended may exceed 20 consecutive quarters or
extend beyond the stated maturity of the Debentures. Upon the termination of any
Extension Period and the payment of all amounts then accrued and unpaid,
Superior may elect to begin a new Extension Period, subject to the above
requirements. See "Description of the Debentures--Option to Defer Interest
Payments" and "Certain Federal Income Tax Consequences--Interest Income and
Original Issue Discount." If Distributions are deferred, the deferred
Distributions will be paid on the next Distribution Date to the holders of
record of Trust Securities as they appear on the books and records of the Trust
on the record date next following the termination of such Extension Period.
Superior has no current intention to exercise its right to defer payments of
interest on the Debentures.
Distributions with respect to the Trust Securities must be paid on the dates
payable to the extent that the Trust has funds on hand and available for the
payment of such Distributions. The funds of the Trust available for distribution
to holders of the Trust Securities will be limited to payments actually received
under the Debentures. See "Description of the Debentures." If Superior does not
make interest payments on the Debentures, the Property Trustee will not have
funds available to pay Distributions on the Trust Securities. The payment of
Distributions (if and to the extent the Trust has funds on hand and available
and sufficient for the payment of such Distributions) has been guaranteed by
Superior as set forth herein under "Description of the Guarantee."
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Distributions on the Trust Securities are payable to the holders thereof as
they appear on the register of the Trust on the relevant record dates, which is
the fifteenth day (whether or not a Business Day) next preceding the relevant
Distribution Date.
No Distributions made after the effective time of the Merger with respect to
the Trust Preferred Securities will be paid to the holder of any unsurrendered
certificate representing Essex common stock until the holder thereof surrenders
such certificate. Subject to applicable law, following surrender of any such
certificate, there will be paid to the record holder of the certificates
representing Trust Preferred Securities issued in exchange for Essex Common
Stock, without interest, at the time of such surrender, the amount of
Distributions theretofore paid with respect to such Trust Preferred Securities.
CONVERSION RIGHTS
The holders of Trust Securities have the right at any time after six months
following the first date of original issuance of the Trust Securities, but not
later than the close of business on the date which is 10 days preceding any date
fixed for redemption thereof (if there is no default in payment of the
redemption price), at their option, to convert any or all of their Trust
Securities into shares of Superior Common Stock at an initial conversion rate of
.8929 shares of Superior Common Stock for each Trust Security, subject to
adjustment as described under "--Conversion Rate Adjustments." Accrued but
unpaid Distributions (including Distributions accruing during Extension Periods,
if any) will not, in certain circumstances, be paid to a holder of Trust
Securities in the event of conversion. Nevertheless, a holder will be subject to
tax on such accrued but unpaid Distributions (in the form of original issue
discount). See "Certain Federal Income Tax Consequences--Interest Income and
Original Issue Discount."
A holder of Trust Securities wishing to exercise his, her or its conversion
right must surrender certificates representing such Trust Securities, together
with an irrevocable conversion notice, to the Conversion Agent, which will, on
behalf of such holder, exchange the Trust Securities for a portion of the
Debentures held by the Trust having a principal amount equal to the aggregate
liquidation preference of the Trust Securities being converted and immediately
convert such Debentures into Superior Common Stock at the conversion rate then
in effect. On the date of conversion, the person converting will be deemed to be
the holder of record of the Superior Common Stock issuable upon conversion of
the Debentures, and all rights with respect to the Trust Securities surrendered
will terminate, except the right to receive such Superior Common Stock.
Superior's delivery upon conversion of the fixed number of shares of Superior
Common Stock into which the Debentures are convertible (together with the cash
payment, if any, in lieu of any fractional shares) will be deemed to satisfy
Superior's obligation to pay the principal amount at maturity of the portion of
the Debentures so converted and any unpaid interest (including Additional
Interest and Additional Sums, if any) accrued on such Debentures at the time of
such conversion. For a discussion of the taxation of such an exchange to
holders, including the fact that holders who exchange their Trust Preferred
Securities for Superior Common Stock will be subject to income tax on the amount
of accrued but unpaid original issue discount on the Debentures at the time of
conversion into Superior Common Stock, see "The Merger--Material Federal Income
Tax Consequences--Interest Income and Original Issue Discount; Conversion of
Trust Preferred Securities into Superior Common Stock." Holders may obtain
copies of the required form of the conversion notice from the Conversion Agent.
Except as provided below, no payment or adjustment is to be made on
conversion for accrued and unpaid Distributions on the Trust Securities,
including as a result of Superior's exercise of its right to defer payment of
amounts due under the Debentures, or for dividends on the Superior Common Stock
issued on conversion. The holder of record of Trust Securities on a record date
with respect to the payment of a Distribution on the Trust Securities will be
entitled to receive the Distribution on such Trust Securities on the
corresponding Distribution Date notwithstanding the conversion of such Trust
Securities after such record date or any default by the Trust in the payment of
the Distribution on that Distribution Date. However, Trust Securities
surrendered for conversion during the period from the close of business on any
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record date for the payment of a Distribution to the opening of business on the
corresponding Distribution Date (except Trust Securities called for redemption
during such period) must be accompanied by payment by the holder of record on
the record date of an amount equal to the Distribution payable on such
Distribution Date. The Distribution with respect to Trust Securities called for
redemption during the period from the close of business on a record date with
respect to the payment of a Distribution on the Trust Securities to the opening
of business on the corresponding Distribution Date will be payable on that
Distribution Date to the holder of record of such Trust Securities on such
record date notwithstanding the conversion of the Trust Securities after the
record date and prior to the Distribution Date, and the holder of record of such
Trust Securities on such record date need not include a payment of such
Distribution amount upon surrender of such Trust Securities for conversion.
Holders of record of Trust Securities on a record date with respect to the
payment of a Distribution on the Trust Securities who convert their Trust
Securities on or after the corresponding Distribution Date will receive the
Distribution payable by the Trust on that date and need not include payment in
the amount of the Distribution upon surrender of such Trust Securities for
conversion. Each conversion will be deemed to have been effected upon the
surrender to the Conversion Agent of certificates representing the Trust
Securities to be converted.
Shares of Superior Common Stock issued upon conversion of Trust Securities
will be validly issued, fully paid and non-assessable. No fractional shares of
Superior Common Stock will be issued as a result of conversion, but in lieu
thereof, such fractional interest will be paid in cash in an amount equal to the
product of (i) the Closing Price (as defined below) of a share of Superior
Common Stock on the last trading day before the date of conversion and (ii) such
fraction of a share.
CONVERSION RATE ADJUSTMENTS
As provided in the Indenture, the conversion rate for the Trust Securities
is subject to adjustment from time to time under certain circumstances,
including, without duplication, in cases in which Superior: (A) pays a dividend
or makes a distribution on the Superior Common Stock in shares of its capital
stock; (B) subdivides the outstanding Superior Common Stock into a greater
number of shares; (C) combines the shares of outstanding Superior Common Stock
into a smaller number of shares; or (D) issues by reclassification of the
Superior Common Stock any shares of its capital stock. In each such case, the
conversion rate in effect immediately prior to such event will be
proportionately adjusted so that the holder of any Trust Securities thereafter
surrendered for conversion will be entitled to receive, to the extent permitted
by applicable law, the number and kind of shares of capital stock of Superior
which he, she or it would have owned or have been entitled to receive after the
happening of such event had such Trust Securities been converted immediately
prior to the record date for such event (or if no record date has been
established in connection with such event, the effective date for such action).
The conversion rate will also be subject to appropriate adjustment if any of
the following events occurs: (a) Superior issues rights or warrants to all
holders of the Superior Common Stock entitling such holders to subscribe for or
purchase Superior Common Stock at a price per share less than the average daily
Closing Prices of the Superior Common Stock on the 30 consecutive business days
commencing 45 business days before the record date for the determination of
stockholders entitled to receive such rights or warrants; or (b) Superior, by
dividend or otherwise, distributes to all holders of Superior Common Stock
evidences of its indebtedness or assets (including securities, but excluding any
warrants or subscription rights referred to in clause (a) above, any ordinary
dividend paid in cash out of the retained earnings of Superior and any dividend
or distribution referred to in clause (A) of the preceding paragraph).
The Indenture provides that no change in the conversion rate will actually
be made until the cumulative effect of the adjustments described above since the
date of the last change in the conversion rate would change the conversion rate
by more than 1%. However, once the cumulative effect would result in such a
change, the conversion rate will actually be changed to reflect all adjustments
not previously made.
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The Indenture provides that, in case of any consolidation or merger of
Superior with any other corporation or in case of any sale or transfer of all or
substantially all of Superior's assets, or in the case of any share exchange, in
each case, pursuant to which all of the outstanding shares of Superior Common
Stock are converted into other securities, cash or other property, Superior will
make appropriate provision or cause appropriate provision to be made so that
each holder of Trust Securities then outstanding will have the right thereafter
to convert such Trust Securities into the kind and amount of securities, cash
and other property receivable upon such consolidation, merger, sale, transfer or
share exchange by a holder of the number of shares of Superior Common Stock into
which such Trust Securities could have been converted immediately prior to the
effective date of such consolidation, merger, sale, transfer or share exchange.
If, in connection with any such consolidation, merger, sale, transfer or share
exchange, each holder of shares of Superior Common Stock is entitled to elect to
receive either securities, cash or other property upon completion of such
transaction, Superior will provide or cause to be provided to each holder of
Trust Securities the right to elect the securities, cash or other property into
which the Trust Securities held by such holder will be convertible after
completion of any such transaction on the same terms and subject to the same
conditions applicable to holders of Superior Common Stock (including, without
limitation, notice of the right to elect, limitations on the period in which
such election may be made and the effect of failing to exercise the election).
Superior will not effect any such transaction unless it has complied with the
above requirements, which similarly apply to successive consolidations, mergers,
sales, transfers or share exchanges.
Under the Indenture, "Closing Price", with respect to the Superior Common
Stock, means for each day the last reported sales price, regular way or, in case
no sale takes place on such day, the average of the closing bid and asked prices
regular way on such day, in either case as reported on The New York Stock
Exchange Composite Tape, or, if the Superior Common Stock is not listed or
admitted to trading on the New York Stock Exchange, on the principal national
securities exchange on which the Superior Common Stock is listed or admitted to
trading, or, if not listed or admitted to trading on any national securities
exchange, on the Nasdaq National Market, or, if not admitted for quotation on
the Nasdaq National Market, the average of the high bid and low asked prices on
such day as recorded by The Nasdaq Stock Market, or, if The Nasdaq Stock Market
has not reported any bid and asked prices for the Superior Common Stock on such
day, the average of the bid and asked prices for such day as furnished by any
New York Stock Exchange member firm selected from time to time by Superior for
such purpose, or, if no such bid and asked prices can be obtained from any such
firm, the fair market value of the Superior Common Stock on such day as
determined in good faith by the Board of Directors of Superior, which
determination will be conclusive.
SPECIAL EVENT EXCHANGE
At any time following the occurrence and during the continuation of a
Special Event, the Administrative Trustees will direct the Conversion Agent to
exchange all outstanding Trust Securities for Debentures having a principal
amount equal to the aggregate liquidation preference of the Trust Securities to
be exchanged and to dissolve the Trust; provided, however, that, in the case of
a Tax Event, Superior has the right to direct that less than all, or none, of
the Trust Securities be so exchanged if and for so long as Superior elects to
pay any Additional Sums such that the net amount received by the holders of
Trust Securities not so exchanged in respect of Distributions is not reduced as
a result of such Tax Event, and so long as Superior has not revoked any such
election or failed to make such payments.
A "Special Event" means a Tax Event or an Investment Company Event. A "Tax
Event" means the receipt by the Property Trustee, on behalf of the Trust, of an
opinion of counsel, rendered by a law firm having a national tax and securities
practice (which opinion has not been rescinded by such law firm), to the effect
that, as a result of any amendment to, or change (including any announced
prospective change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or therein
affecting taxation, or as a result of any official administrative pronouncement
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or judicial decision interpreting or applying such laws or regulations, which
amendment or change is effective or such pronouncement or decision is announced
on or after , 1999, there is more than an insubstantial risk in each case
after such date that (i) the Trust is, or will be within 90 days of the date
thereof, subject to United States federal income tax with respect to income
received or accrued on the Debentures, (ii) interest paid by Superior on the
Debentures is not, or within 90 days of the date thereof will not be, deductible
by Superior when paid, in whole or in part, for United States federal income tax
purposes, or (iii) the Trust is, or will be within 90 days of the date thereof,
subject to more than a de minimis amount of other taxes, duties or other
governmental charges. "Investment Company Event" means the receipt by the
Property Trustee, on behalf of the Trust, of an opinion of counsel, rendered by
a law firm having a recognized national tax and securities practice (which
opinion has not been rescinded by such law firm), to the effect that, as a
result of the occurrence of a change in law or regulation or a change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in 1940 Act Law"),
there is more than an insubstantial risk that the Trust is or will be considered
an "investment company" that is required to be registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), which Change in 1940 Act Law
becomes effective on or after , 1999.
"Additional Sums" means such additional amounts (which constitute part of
the Distributions) as may be necessary in order that the net amount of
Distributions received by holders of the outstanding Trust Securities is not
reduced as a result of any additional taxes, duties and other governmental
charges to which the Trust has become subject as a result of a Tax Event.
Holders of Trust Preferred Securities, upon receipt of the Trust Preferred
Securities, will be deemed to have agreed to be bound by the provisions
described above for the exchange of such Trust Preferred Securities for
Debentures under the circumstances described above.
OPTIONAL REDEMPTION
Except as provided below, under "--Mandatory Redemption" or under
"--Redemption Upon Change of Control," the Trust Securities are not redeemable
by the Trust prior to , 2003.
On and after such date, upon any optional redemption by Superior of
Debentures, the proceeds from such redemption, to the extent actually received
by the Property Trustee, will be applied to redeem Trust Securities having an
aggregate liquidation preference equal to the aggregate principal amount of the
Debentures so redeemed by Superior at the following cash redemption prices per
Trust Security, plus an amount per Trust Security in cash equal to all
accumulated and unpaid Distributions on such Trust Security, if any, to the date
fixed for redemption, if redeemed during the twelve-month period beginning
[the first day after the fourth anniversary of the issue date of the
Trust Preferred Securities] of the year specified below:
<TABLE>
<CAPTION>
REDEMPTION PRICE
PER TRUST
YEAR SECURITY
- ---------------------------------------------------------------------------- ----------------
<S> <C>
[Assuming issuance of the Trust Preferred Securities occurs in 1999]
2003........................................................................ $ 52.550
2004........................................................................ $ 52.125
2005........................................................................ $ 51.700
2006........................................................................ $ 51.275
2007........................................................................ $ 50.850
2008........................................................................ $ 50.425
and thereafter.............................................................. $ 50.000
</TABLE>
During the one-year period commencing on , 2002 [the third
anniversary of the issuance of the Trust Preferred Securities], Superior, at its
option, may redeem at any time all, or from time to time a portion, of the Trust
Securities (upon any contemporaneous redemption of Debentures) on any date set
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by its Board of Directors at a cash redemption price of $52.975, plus accrued
and unpaid Distributions, if any, to the date fixed for redemption, provided
that the product of (i) the average Closing Price of a share of Superior Common
Stock, for any 10 consecutive trading days preceding the date of such call for
redemption, multiplied by (ii) the then effective conversion rate, equals or
exceeds $65.00 per share of Superior Common Stock.
The Trust may not redeem less than all of the Trust Securities at any time
outstanding until all accrued and unpaid Distributions upon all Trust Preferred
Securities then outstanding have been paid in full. If fewer than all the
outstanding Trust Preferred Securities are to be redeemed, the Trust Preferred
Securities to be so redeemed will be selected as described under "--Redemption
Procedures."
MANDATORY REDEMPTION
Upon repayment at maturity or as a result of the acceleration of the
Debentures upon the occurrence of a "Debenture Event of Default" described under
"Description of the Debentures--Debenture Events of Default," the Debentures
will be subject to mandatory redemption, in whole, but not in part, by Superior,
and the proceeds from such redemption will be applied to redeem Trust Securities
having an aggregate liquidation preference equal to the aggregate principal
amount of Debentures so repaid or redeemed, at a cash redemption price per Trust
Security equal to the liquidation preference of the Trust Securities, plus an
amount per Trust Security in cash equal to all accumulated and unpaid
Distributions on such Trust Securities, if any, to the date of redemption. In
the case of acceleration of the Debentures, the Trust Securities will be
redeemed only when repayment of the Debentures has actually been received by the
Trust. Unless earlier redeemed, the stated maturity of the Debentures will be
, 2014.
REDEMPTION PROCEDURES
Trust Securities redeemed on each date fixed for redemption will be redeemed
at the applicable redemption price with the proceeds from the contemporaneous
redemption of Debentures. Redemption of the Trust Securities will be made and
the redemption price will be payable on each redemption date only to the extent
that the Trust has funds on hand available for the payment of such redemption
price, and if the Trust does not have sufficient funds, then such funds will be
applied to redeem Trust Securities pro rata, by lot or in such other manner as
the Property Trustee determines. See also "--Subordination of Trust Common
Securities."
Notice of any redemption (optional or mandatory) of Trust Securities will be
given by the Property Trustee to each record holder of Trust Securities that are
being redeemed not less than 30 nor more than 60 days prior to the redemption
date. If the Property Trustee gives a notice of redemption in respect of any
Trust Securities, then, by 12:00 noon, New York City time, on the redemption
date, to the extent the Trust has funds available, the Property Trustee will
irrevocably deposit with the Paying Agent funds sufficient to pay the applicable
redemption price and will give the Paying Agent irrevocable instructions and
authority to pay the redemption price to the holders of such Trust Securities
upon surrender of their certificates. If notice of redemption has been given and
funds necessary for the redemption are available and have been deposited as
required, then Distributions with respect to the Trust Securities called for
redemption will cease to accrue after the redemption date, the Trust Securities
will no longer be deemed outstanding and all rights whatsoever with respect to
the Trust Securities so called for redemption (except the right of the holders
thereof to receive the applicable redemption price, without interest, upon
surrender of their certificates) will terminate. In the event that any date
fixed for redemption of Trust Securities is not a Business Day, then payment of
the redemption price payable on such date will be made on the next succeeding
day which is a Business Day (without any interest or other payment in respect of
any such delay), except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business Day, in
each case, with the same force and effect as if made on such date.
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Subject to applicable law (including, without limitation, United States
federal securities law), Superior, or its subsidiaries, may at any time and from
time to time purchase and hold outstanding Trust Preferred Securities by tender,
in the open market or by private agreement, which purchases may result in
cancellation of indebtedness income to Superior for federal income tax purposes.
In case of redemption of less than all the Trust Preferred Securities, the
particular Trust Preferred Securities to be redeemed will be selected not more
than 60 days prior to the redemption date by the Property Trustee from the
outstanding Trust Preferred Securities not previously called for redemption, pro
rata, by lot or by such method as the Property Trustee deems fair and
appropriate.
REDEMPTION UPON CHANGE OF CONTROL
In the event of a Change of Control (as defined below), the Trust will, to
the extent of funds legally available therefor and subject to the prior payment
in full of all other obligations of the Trust and Superior that are then due or
become due as a result of such Change of Control (or similar event), make an
offer to redeem (the "Change of Control Offer") all of the then outstanding
Trust Preferred Securities at a purchase price in cash equal to 101% of the
liquidation preference thereof, plus accrued and unpaid Distributions to the
date of redemption (the "Change of Control Redemption Price"). Notice of the
Change of Control Offer will be given by the Property Trustee within 30 days
following the occurrence of any Change of Control to the holders of record of
the Trust Preferred Securities. On or after the date fixed for redemption as
stated in such notice of a Change of Control Offer, each holder of Trust
Preferred Securities electing to accept such Change of Control Offer may
surrender the certificate (or certificates) evidencing such Trust Preferred
Securities to the Paying Agent at the place designated in such notice and will
thereupon be entitled to receive payment of the Change of Control Redemption
Price.
The Trust Preferred Securities redeemed on or after each such redemption
date will be redeemed at the Change of Control Redemption Price with the
proceeds from the contemporaneous redemption of Debentures. Redemption of Trust
Preferred Securities will be made and the Change of Control Redemption Price
will be payable only to the extent that the Trust has funds then on hand and
available for the payment of such Change of Control Redemption Price, and if the
Trust does not have sufficient funds, then such funds will be applied to redeem
such Trust Preferred Securities pro rata, by lot or in such other manner as the
Property Trustee determines.
"Change of Control" means the occurrence of any of the following events:
(a) any "person" or "group" (as such terms are used in Sections 13(d) and
14(d) of the Exchange Act), other than The Alpine Group, Inc., a Delaware
corporation and Superior's 50.1% owner, or its affiliates (the "Permitted
Holders"), becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5
under the Exchange Act), directly or indirectly, of more than 50% of the total
voting power represented by the outstanding capital stock of Superior pursuant
to which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the Board of Directors of Superior
(irrespective of whether or not at the time the stock of any other class has or
might have voting power by reason of the happening of any contingency) ("Voting
Stock");
(b) Superior consolidates with, or merges with or into, another entity or
conveys, transfers, leases or otherwise disposes of all or substantially all of
its assets to any person or entity, or any entity consolidates with, or merges
with or into, Superior, in any such event pursuant to a transaction in which the
outstanding Voting Stock of Superior is converted into or exchanged for cash,
securities or other property, other than any such transaction where (i) the
outstanding Voting Stock of Superior is not converted or exchanged at all
(except to the extent necessary to reflect a change in the jurisdiction of
incorporation of Superior) or is converted into or exchanged for Voting Stock of
the surviving or transferee corporation and (ii) immediately after such
transaction, the condition described in clause (a) above has not occurred with
respect to the outstanding Voting Stock of the surviving or transferee
corporation;
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(c) during any consecutive two-year period, individuals who at the beginning
of such period constituted the Board of Directors of Superior (together with any
new directors whose election by the Board of Directors of Superior or whose
nomination for election by the stockholders of Superior was approved by (x) a
vote of at least a majority of the directors then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved (as described in this clause (x) or in
the following clause (y)) or (y) the Permitted Holders) cease for any reason to
constitute a majority of the Board of Directors of Superior then in office; or
(d) Superior is liquidated or dissolved or adopts a plan of liquidation or
dissolution.
SUBORDINATION OF TRUST COMMON SECURITIES
On any Distribution Date, no payment of any Distribution on any Trust Common
Security may be made unless payment in full in cash of all accumulated and
unpaid Distributions on all outstanding Trust Preferred Securities for all
Distribution periods terminating on or prior thereto have been made or provided
for, and all funds must first be applied to the payment in full in cash of all
Distributions on Trust Preferred Securities then due and payable. No redemption,
repurchase, exchange or conversion of the Trust Common Securities may be
effected at any time that Trust Preferred Securities are outstanding.
DISTRIBUTION OF DEBENTURES UPON DISSOLUTION
Pursuant to the Declaration, the Trust will automatically dissolve upon
expiration of its stated term in 2014 and will dissolve on the first to occur of
any of the following events: (i) certain events of bankruptcy, dissolution or
liquidation of Superior; (ii) the occurrence of a Special Event, except in the
case of a Tax Event following which Superior has elected to pay any Additional
Sums such that the net amount received by holders of Trust Securities not
exchanged for Debentures in respect of Distributions is not reduced as a result
of such Tax Event and Superior has not revoked any such election or failed to
make such payments; (iii) the redemption, conversion or exchange of all of the
Trust Securities; (iv) the entry by a court of competent jurisdiction of an
order for the dissolution of the Trust; and (v) receipt by the Property Trustee
of written notice from Superior at any time (which direction is optional and
wholly within the discretion of Superior) of its intention to dissolve the Trust
and distribute the Debentures in exchange for the Trust Securities. Superior
thus has the right to dissolve the Trust at any time.
Upon the dissolution of the Trust, the Trust will be liquidated by
distributing, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, to each holder of Trust Securities an aggregate
principal amount of Debentures equal to the aggregate liquidation preference of
the Trust Securities held by such holder. Notice of liquidation will be given by
the Property Trustee not less than 30 nor more than 60 days prior to the
liquidation date to each record holder of Trust Securities. From and after the
liquidation date fixed for any distribution of Debentures in exchange for Trust
Securities, the Trust Securities will no longer be deemed to be outstanding and
any certificates representing such Trust Securities will be deemed to represent
Debentures having a principal amount equal to the aggregate liquidation
preference of such Trust Securities, and bearing accrued and unpaid interest in
an amount equal to, and at the same annual rate as, the accrued and unpaid
Distributions on such Trust Securities, until such certificates are presented to
the Property Trustee for transfer or reissuance.
There can be no assurance that a trading market will develop for, or as to
the market price of, the Debentures distributed to the holders of the Trust
Securities after such a dissolution of the Trust. Under current United States
federal income tax law and interpretations and assuming, as expected, that the
Trust is treated as a grantor trust, a distribution of the Debentures should not
be a taxable event to the Trust and holders of the Trust Securities. Should
there be a change in law, a change in legal interpretation or other
circumstances, however, the distribution could be a taxable event to holders of
the Trust Preferred Securities. See "The Merger--Material Federal Income Tax
Consequences--Redemption of Trust Preferred Securities for Debentures or Cash
Upon Liquidation of the Trust."
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In the event that, whether because of an order for dissolution entered by a
court of competent jurisdiction or otherwise, distribution of the Debentures as
provided above is determined by the Property Trustee not to be practicable,
then, on the date of dissolution of the Trust, the holders of the Trust
Securities will be entitled to receive out of the assets of the Trust available
for distribution to such holders, after satisfaction of liabilities to creditors
of the Trust as provided by applicable law, an amount equal to the liquidation
preference of $50 per Trust Security plus accrued and unpaid Distributions
thereon to the liquidation date (such amount being the "Liquidation
Distribution"). If such Liquidation Distribution can be paid only in part
because the Trust has insufficient assets legally available to pay in full the
aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on the Trust Securities will be paid on a pro rata basis (based on
liquidation preference). Superior will be entitled to receive, in respect of the
Trust Common Securities held by it, Liquidation Distributions upon any such
dissolution pro rata with the holders of the Trust Preferred Securities, except
that if a Declaration Event of Default has occurred and is continuing, the Trust
Preferred Securities will have priority over the Trust Common Securities.
DECLARATION EVENTS OF DEFAULT; ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF TRUST
PREFERRED SECURITIES
A Debenture Event of Default constitutes an event of default under the
Declaration with respect to the Trust Preferred Securities and the Trust Common
Securities (a "Declaration Event of Default").
Within ten days after the occurrence of any Declaration Event of Default
actually known to the Property Trustee, the Property Trustee must transmit
notice of such Declaration Event of Default to the holders of the Trust
Preferred Securities, the Administrative Trustees and Superior, as depositor,
unless the Property Trustee has actual knowledge that such Declaration Event of
Default has been cured or waived, provided that, except for a default in the
payment of principal of (or premium, if any) or interest (including Additional
Sums, if any) on any of the Debentures, the Property Trustee will be protected
in withholding such notice if and so long as it determines in good faith that
the withholding of such notice is in the interests of the holders of the Trust
Preferred Securities. Superior, as depositor, and the Administrative Trustees,
on behalf of the Trust, are required to file annually with the Property Trustee
a certificate as to whether or not they are in compliance with all the
conditions and covenants applicable to them under the Declaration.
If a Declaration Event of Default has occurred and is continuing, the
Property Trustee, as the sole holder of the Debentures, has the right under the
Indenture to declare the principal of, premium, if any, and interest on the
Debentures to be immediately due and payable, and, accordingly, the holders of
Trust Preferred Securities would rely on the enforcement against Superior by the
Property Trustee of its rights as holder of the Debentures. The existence of a
Declaration Event of Default does not entitle the holders of Trust Preferred
Securities to accelerate the maturity thereof. In addition, until any such
Declaration Event of Default has been cured, waived or otherwise eliminated, the
holders of a majority in aggregate liquidation preference of the Trust Preferred
Securities will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Property Trustee or to
direct the exercise of any trust or power conferred upon the Property Trustee
under the Declaration, including the right to direct the Property Trustee to
exercise the remedies available to it as a holder of the Debentures. If the
Property Trustee fails to enforce its rights as holder of the Debentures after a
request therefor by a holder of Trust Preferred Securities, such holder may
proceed to enforce such rights directly against Superior. The holders of Trust
Preferred Securities will not be able to exercise directly against Superior any
other remedy available to the Property Trustee unless the Property Trustee first
fails to do so.
VOTING RIGHTS; AMENDMENT OF THE DECLARATION
Except as provided below, in the Indenture and under "Description of the
Guarantee--Amendments and Assignment" and as otherwise required by law or by the
rules of any stock exchange on which the Trust Preferred Securities are listed
or admitted for trading, the holders of the Trust Preferred Securities have no
voting rights.
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The Declaration may be amended from time to time by Superior and the
Trustees, without the consent of the holders of the Trust Preferred Securities,
(i) to cure any ambiguity, correct or supplement any provisions in the
Declaration that may be inconsistent with any other provisions, or to make any
other provisions with respect to matters or questions arising under the
Declaration consistent with the other provisions of the Declaration, (ii) to
modify, eliminate or add to any provision of the Declaration to such extent as
is necessary to ensure that the Trust will be classified for United States
federal income tax purposes as a grantor trust at all times that any Trust
Securities are outstanding or to ensure that the Trust will not be required to
register as an "investment company" under the 1940 Act or (iii) to qualify or
maintain the qualification of the Declaration under the Trust Indenture Act;
provided, however, that in the case of clause (i), such action may not adversely
affect in any material respect the interests of any holder of Trust Securities,
and any amendments of the Declaration will become effective when notice thereof
is given to the holders of Trust Securities.
The Declaration may be amended by Superior and the Trustees with (i) the
consent of holders representing not less than a majority (based upon liquidation
preference) of the outstanding Trust Preferred Securities and Trust Common
Securities, acting as a single class, and (ii) receipt by the Trustees of an
opinion of counsel having a national tax and securities practice (which opinion
has not been rescinded) to the effect that such amendment or the exercise of any
power granted to the Trustees in accordance with such amendment will not affect
the Trust's status as a grantor trust for United States federal income tax
purposes or the Trust's exemption from the status of an "investment company"
under the 1940 Act; provided, further, that (a) without the consent of each
holder of Trust Securities, the Declaration may not be amended to (i) change the
amount or timing of any Distribution on the Trust Securities or otherwise
adversely affect the amount of any Distribution required to be made in respect
of the Trust Securities as of a specified date or (ii) restrict the right of a
holder of Trust Preferred Securities to institute suit for the enforcement of
any such payment on or after such date.
If any proposed amendment of the Declaration provides for, or the Trustees
otherwise propose to effect, the dissolution, winding-up or termination of the
Trust, other than pursuant to the terms of the Declaration, then the holders of
the then outstanding Trust Preferred Securities, as a class, will be entitled to
vote on such amendment or proposal and such amendment or proposal will not be
effective except with the approval of the holders of a majority in aggregate
liquidation preference of the outstanding Trust Preferred Securities.
Subject to the terms of the Declaration, the holders of a majority in
aggregate liquidation preference of the Trust Preferred Securities have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Property Trustee or to direct the exercise of any trust
or power conferred upon the Property Trustee under the Declaration, including
the right to direct the Property Trustee to exercise the remedies available to
it as a holder of the Debentures, but excluding the right to direct the Property
Trustee to consent to an amendment, modification or termination of the Indenture
(which is as provided below); provided that (x) such direction is not in
conflict with any rule of law or with the Declaration; (y) the Property Trustee
may take any other action deemed proper by it which is not inconsistent with
such direction; and (z) the Property Trustee has the right to decline to follow
such direction if it in good faith determines that the proceeding so directed
would be unjustly prejudicial to the holders not joining in any such direction
or would involve the Property Trustee in personal liability. So long as any
Debentures are held by the Property Trustee, the Trustees may not (i) direct the
time, method and place of conducting any proceeding for any remedy available to
the Indenture Trustee or executing any trust or power conferred on the Indenture
Trustee with respect to such Debentures, (ii) waive any past default that is
waivable by the holders of not less than a majority in principal amount of the
outstanding Debentures under the Indenture, (iii) exercise any right to rescind
or annul a declaration making the principal of all the Debentures due and
payable or (iv) consent to any amendment, modification or termination of the
Indenture or the Debentures where such consent is required, without, in each
case, obtaining the prior approval of the holders of a majority in aggregate
liquidation preference of all
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outstanding Trust Preferred Securities (except in the case of clause (iv), which
consent, in the event that no Declaration Event of Default has occurred and is
continuing, must be of the holders of all outstanding Trust Securities, voting
together as a single class); provided, however, that where a consent under the
Indenture would require the consent of each holder of Debentures affected
thereby, no such consent may be given by the Property Trustee without the prior
written consent of each holder of the Trust Preferred Securities. The Trustees
may not revoke any action previously authorized or approved by a vote of the
holders of the Trust Preferred Securities except by subsequent vote of the
holders of the Trust Preferred Securities. The Property Trustee is required to
notify each holder of the Trust Preferred Securities of any notice of default
received by it with respect to the Debentures.
A waiver of a Debenture Event of Default will constitute a waiver of the
corresponding Declaration Event of Default.
Any required vote, consent, approval or direction of holders of Trust
Preferred Securities may be taken or given at a meeting of holders of Trust
Preferred Securities convened for such purpose or by written consent. The
Administrative Trustees will cause a notice of any meeting at which holders of
Trust Preferred Securities are entitled to vote, or of any matter upon which
action by written consent has been taken, to be given to each holder of record
of Trust Preferred Securities in the manner set forth in the Declaration.
Holders of record of a majority of the outstanding Trust Preferred Securities
(based upon liquidation preference), present in person or by proxy, constitute a
quorum at any meeting of such holders, and an affirmative vote by the holders of
record of a majority of the outstanding Trust Preferred Securities (based upon
their liquidation preference) constitutes the action of such holders.
Securityholders are entitled to one vote for each $50 of liquidation preference
represented by their Trust Preferred Securities in respect of any matter as to
which such holders are entitled to vote. No annual meeting of holders of Trust
Preferred Securities is required to be held.
No vote or consent of the holders of Trust Preferred Securities will be
required for the Trust to redeem the Trust Preferred Securities in accordance
with the optional and mandatory redemption provisions of the Declaration.
Notwithstanding that holders of Trust Preferred Securities are entitled to
vote or consent under any of the circumstances described above, any Trust
Preferred Securities that are owned at such time by Superior, any affiliate of
Superior, the Trustees or any affiliate of any Trustee will, for purposes of
such vote or consent, be treated as if such Trust Preferred Securities were not
outstanding.
Holders of the Trust Preferred Securities have no rights to appoint or
remove the Trustees, who may be appointed or removed either by the
Administrative Trustees or by Superior, as holder of all the Trust Common
Securities.
ADDITIONAL VOTING RIGHTS
If (i) Distributions on the Trust Preferred Securities are in arrears and
unpaid for six or more quarters (whether or not consecutive); (ii) Superior
fails to pay all amounts due on the Debentures upon their stated maturity; or
(iii) Superior fails to redeem all of the Trust Preferred Securities which the
holders thereof elect to tender pursuant to a Change of Control Offer, then the
number of directors constituting the Board of Directors of Superior will be
increased by two, the holders of the then outstanding Trust Preferred
Securities, voting separately and as a class, will have the right and power to
designate such two additional directors, and Superior will cause such two
additional directors to be elected to its Board of Directors. Each such event
described in clause (i), (ii) or (iii) is a "Voting Rights Triggering Event." A
Voting Rights Triggering Event will not be deemed to have occurred if at the
time of such event there are less than 300,000 Trust Preferred Securities then
outstanding.
The voting rights set forth above will continue until such time as (x) in
the case of a default in the payment of Distributions, all Distributions in
arrears on the Trust Preferred Securities are paid in full in
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cash, (y) in all other cases, any failure, breach or default giving rise to such
Voting Rights Triggering Event is remedied or waived by the holders of a
majority of the Trust Preferred Securities then outstanding or (z) at any time
there are fewer than 300,000 Trust Preferred Securities outstanding, at which
time the term of any directors elected as provided above will terminate and the
number of directors constituting the Board of Directors of Superior will be
decreased by two (until the occurrence of any subsequent Voting Rights
Triggering Event).
Any vacancy occurring in the office of a director designated by the holders
of Trust Preferred Securities may be filled by the remaining director designated
by the holders of Trust Preferred Securities unless and until the holders of
Trust Preferred Securities designate a director to fill such vacancy, which
director Superior will cause to be elected to its Board of Directors.
At any time after voting power to designate directors has become vested and
is continuing in the holders of Trust Preferred Securities, or if any vacancies
exist in the offices of directors designated by such holders, the Administrative
Trustees or the Property Trustee may, and upon the written request of the
holders of record of at least 25% of the Trust Preferred Securities then
outstanding must, call a special meeting of the holders of Trust Preferred
Securities for the purpose of designating such directors. If such meeting is not
called by the Administrative Trustees or the Property Trustee within 20 days
after personal service to such Trustee(s), then the holders of record of at
least 25% of the outstanding Trust Preferred Securities may designate in writing
one of their members to call such meeting at the expense of the Trust, and such
meeting may be called by the person so designated after giving notice in the
manner provided in the Declaration. Any holder of Trust Preferred Securities so
designated will have, and the Trust will provide, access to the lists of
securityholders of the Trust.
PAYMENT AND PAYING AGENCY
Payments in respect of the Trust Preferred Securities will be made by check
mailed to the address of the holder entitled thereto at such address as appears
on the Securities Register. The Paying Agent will initially be the Property
Trustee and any co-paying agent chosen by the Property Trustee and acceptable to
the Administrative Trustees and Superior. The Paying Agent will be permitted to
resign as Paying Agent upon 30 days' written notice to the Property Trustee and
Superior. In the event that the Property Trustee is no longer the Paying Agent,
the Trustees will appoint a successor (which will be a bank or trust company) to
act as Paying Agent.
TRANSFER AGENT, REGISTRAR AND PAYING, CONVERSION AND EXCHANGE AGENT
The Property Trustee will act as transfer agent, registrar and paying,
conversion and exchange agent for the Trust Preferred Securities.
Registration of transfers or exchanges of Trust Preferred Securities will be
effected without charge by or on behalf of the Trust, but may require payment of
any tax or other governmental charges that may be imposed in connection with any
transfer or exchange. The Trust will not be required to register or cause to be
registered the transfer or exchange of any Trust Preferred Securities after such
Trust Preferred Securities have been called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
Superior and its subsidiaries may maintain deposit accounts and conduct
other banking and corporate securities transactions and relationships with the
Property Trustee in the ordinary course of their businesses. The Property
Trustee, before the occurrence of a Declaration Event of Default and after the
curing or waiving of all Declaration Events of Default that may have occurred,
undertakes to perform only such duties and obligations as are specifically set
forth in the Declaration and the Trust Indenture Act. In case a Declaration
Event of Default has occurred (and has not been cured or waived) of which the
Property Trustee has actual knowledge, the Property Trustee will exercise such
rights and powers vested in it by the
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Declaration and the Trust Indenture Act, using the same degree of care and skill
as a prudent individual would exercise or use under the circumstances in the
conduct of his or her own affairs. The Property Trustee will be under no
obligation to exercise any of the rights or powers vested in it by the
Declaration at the request or direction of any holder of Trust Preferred
Securities, unless such holder offers to the Property Trustee security and
indemnity, reasonably satisfactory to the Property Trustee, against the costs,
expenses and liabilities that might be incurred by it in compliance with such
request or direction, including such reasonable advances as may be requested by
the Property Trustee. The Property Trustee will also be the Indenture Trustee.
MISCELLANEOUS
The Administrative Trustees are authorized and directed to conduct the
affairs of the Trust in such a way that the Trust will not be deemed to be an
"investment company" required to be registered under the 1940 Act or classified
for United States federal income tax purposes as an association taxable as a
corporation and so that the Debentures will be treated as indebtedness of
Superior for United States federal income tax purposes. In this connection,
Superior and the Administrative Trustees are authorized to take any action, not
inconsistent with applicable law, the certificate of trust of the Trust or the
Declaration, that Superior and the Administrative Trustees determine in their
discretion is necessary, advisable or convenient for such purposes, as long as
such action does not adversely affect in any material respect the interests of
the holders of the Trust Preferred Securities.
Holders of the Trust Preferred Securities have no preemptive or similar
rights.
The Trust may not borrow money, issue debt or mortgage or pledge any of its
assets.
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DESCRIPTION OF THE GUARANTEE
The Guarantee will be executed and delivered by Superior concurrently with
the issuance by the Trust of the Trust Preferred Securities for the benefit of
the holders from time to time of such Trust Preferred Securities. is
the initial trustee (the "Guarantee Trustee") under the Guarantee. The following
summary of certain terms of the Guarantee does not purport to be complete and is
qualified in its entirety by reference to the Guarantee, a copy of which can be
obtained upon written request to Superior's Investor Relations Department. See
"Where You Can Find More Information" on page . The Guarantee Trustee holds
the Guarantee for the benefit of the holders of the Trust Preferred Securities.
GENERAL
Superior has irrevocably and unconditionally agreed to pay in full, subject
to the subordination provisions set forth in the Guarantee, the Guarantee
Payments (as defined below) to the holders of the Trust Preferred Securities
(without duplication of amounts theretofore paid by or on behalf of the Trust),
as and when due, regardless of any defense, right of set-off or counterclaim
that the Trust may have or assert, other than the defense of payment. The
following payments or distributions, without duplication, with respect to the
Trust Preferred Securities, to the extent not paid or made by or on behalf of
the Trust (the "Guarantee Payments"), are subject to the Guarantee: (a) any
accumulated and unpaid Distributions required to be paid on the Trust Preferred
Securities, but only if and to the extent that the Trust has funds on hand
available therefor at such time; (b) the redemption price of any Trust Preferred
Securities called for redemption, but only if and to the extent that the Trust
has funds on hand available therefor at such time; and (c) upon a voluntary or
involuntary dissolution, winding up or liquidation of the Trust (unless the
Debentures are distributed to holders of the Trust Preferred Securities), the
lesser of (i) the Liquidation Distribution, but only if and to the extent that
the Trust has funds on hand available therefor at such time and (ii) the amount
of assets of the Trust remaining available for distribution to holders of Trust
Preferred Securities. Superior's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by Superior to the holders
of the Trust Preferred Securities or by causing the Trust to pay such amounts to
such holders.
The Guarantee is an irrevocable guarantee, on a subordinated basis, of the
Trust's obligations under the Trust Preferred Securities, but applies only if
and to the extent that the Trust has funds on hand available therefor. If
Superior does not make interest payments on the Debentures held by the Trust,
the Trust will not have funds available for the payment of Distributions on the
Trust Preferred Securities and the Guarantee will not apply in such case.
Superior has, through the Guarantee, the Declaration, the Debentures and the
Indenture, taken together, fully, irrevocably and unconditionally guaranteed, on
a subordinated basis, all of the Trust's obligations under the Trust Preferred
Securities. No single document standing alone or operating in conjunction with
fewer than all of the other documents constitutes such guarantee. It is only the
combined operation of these documents that has the effect of providing a full,
irrevocable and unconditional guarantee of the Trust's obligations under the
Trust Preferred Securities. See "Relationship Among the Trust Preferred
Securities, the Debentures and the Guarantee."
STATUS OF THE GUARANTEE
The Guarantee constitutes an unsecured obligation of Superior and ranks
subordinate in right of payment to the Senior Debt (as defined herein) and ranks
pari passu with any guarantee now or hereafter entered into by Superior in
respect of any preferred or preference stock of any affiliate of Superior that
is senior to the Superior Common Stock. The terms of the Trust Preferred
Securities provide that each holder, by receipt and acceptance thereof, consents
and agrees to the subordination provisions and other terms of the Guarantee. The
Guarantee does not place a limitation on the amount of additional indebtedness
that may be incurred by Superior or any of its subsidiaries.
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The Guarantee constitutes a guarantee of payment and not of collection
(i.e., the guaranteed party may institute a legal proceeding directly against
Superior to enforce its rights under the Guarantee without first instituting a
legal proceeding against any other person or entity). The Guarantee will not be
discharged except by payment of the Guarantee Payments in full (without
duplication of amounts theretofore paid by the Trust) or upon distribution of
the Debentures to the holders of the Trust Preferred Securities as provided in
the Declaration.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not materially adversely affect
the rights of holders of the Trust Preferred Securities (in which case no vote
will be required), the Guarantee may not be amended without the prior approval
of the holders of not less than a majority in aggregate liquidation preference
of the outstanding Trust Preferred Securities. The manner of obtaining any such
approval is as set forth under "Description of the Trust Preferred
Securities--Voting Rights; Amendment of the Declaration." All guarantees and
agreements contained in the Guarantee will bind the successors, assigns,
receivers, trustees and representatives of Superior and will inure to the
benefit of the holders of the Trust Preferred Securities then outstanding.
CERTAIN COVENANTS OF SUPERIOR
Superior covenanted in the Guarantee that if and so long as (i) the Trust is
the holder of all the Debentures, (ii) a Tax Event in respect of the Trust has
occurred and is continuing and (iii) Superior has elected, and has not revoked
such election, to pay Additional Sums in respect of the Trust Preferred
Securities and Trust Common Securities, Superior will pay to the Trust such
Additional Sums.
Superior also covenanted for so long as Trust Preferred Securities are
outstanding (i) not to convert Debentures except pursuant to a notice of
conversion delivered to the Conversion Agent by a holder of Trust Securities,
(ii) to maintain directly or indirectly 100% ownership of the Trust Common
Securities, provided that certain successors which are permitted pursuant to the
Indenture may succeed to Superior's ownership of the Trust Common Securities,
(iii) not to voluntarily dissolve, wind-up, liquidate or terminate the Trust,
except in accordance with the terms of the Declaration, (iv) to maintain the
reservation for issuance of the number of shares of Superior Common Stock that
would be required from time to time upon the conversion of all the Debentures
then outstanding, (v) to use its reasonable best efforts, consistent with the
terms and provisions of the Declaration, to cause the Trust to remain classified
as a grantor trust and not as an association taxable as a corporation for United
States federal income tax purposes and (vi) to deliver shares of Superior Common
Stock as promptly as practicable on or after any date of conversion of Trust
Preferred Securities into Superior Common Stock.
GUARANTEE EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of
Superior to perform any of its payment or other obligations thereunder, unless
such payment is prohibited by the subordination provisions in the Guarantee. The
holders of a majority in aggregate liquidation preference of the Trust Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of the
Guarantee or to direct the exercise of any trust or power conferred upon the
Guarantee Trustee under the Guarantee. If the Guarantee Trustee fails to enforce
the Guarantee, any holder of Trust Preferred Securities may institute a legal
proceeding directly against Superior to enforce its rights under the Guarantee,
without first instituting a legal proceeding against the Trust, the Guarantee
Trustee or any other person or entity.
Superior, as guarantor, is required to file annually with the Guarantee
Trustee a certificate as to whether or not Superior is in compliance with all
the conditions and covenants applicable to it under the Guarantee.
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INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, before the occurrence of any event of default by
Superior in the performance of its obligations under the Guarantee, has
undertaken to perform only such duties as are specifically set forth in the
Guarantee. In case an event of default has occurred under the Guarantee (that
has not been cured or waived) and is actually known to the Guarantee Trustee,
the Guarantee Trustee will exercise such of the rights and powers vested in it
by the Guarantee, using the same degree of care and skill in its exercise
thereof as a prudent person would exercise or use under the circumstances in the
conduct of his or her own affairs. The Guarantee Trustee is under no obligation
to exercise any of the rights or powers vested in it by the Guarantee at the
request or direction of any holder of Trust Preferred Securities, unless such
holder provides to the Guarantee Trustee such security and indemnity, reasonably
satisfactory to the Guarantee Trustee, against the costs, expenses and
liabilities that might be incurred by it in complying with such request or
direction, including such reasonable advances as may be requested by the
Guarantee Trustee.
TERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and effect upon (i)
full payment of the redemption price of all Trust Preferred Securities, (ii) the
distribution of Debentures to the holders in exchange for all of the Trust
Preferred Securities, (iii) full payment of the amounts payable in accordance
with the Declaration upon dissolution or liquidation of the Trust or (iv) the
distribution, if any, of Superior Common Stock to the holders of the Trust
Preferred Securities in respect of the conversion of all such holders' Trust
Preferred Securities into Superior Common Stock. Nevertheless, the Guarantee
will continue to be effective or will be reinstated, as the case may be, if at
any time any holder must restore payment of any sums paid with respect to Trust
Preferred Securities or the Guarantee.
DESCRIPTION OF THE DEBENTURES
The Debentures will be issued under an Indenture (the "Indenture") between
Superior and , as trustee (the "Indenture Trustee") The terms of the
Debentures include those stated in the Indenture and made a part thereof by
reference to the Trust Indenture Act in effect on the date of the Indenture. The
following summary of certain terms and provisions of the Debentures and the
Indenture does not purport to be complete and is qualified in its entirety by
reference to the Indenture. Whenever particular defined terms of the Indenture
are referred to herein, such defined terms are incorporated herein by reference.
GENERAL
The Debentures are unsecured debt under the Indenture, subordinate in right
of payment to all Senior Debt. The Debentures are limited in aggregate principal
amount to $171,765,650, such amount being the sum of the aggregate stated
liquidation preference of the Trust Preferred Securities and the Trust Common
Securities, and will be issued in denominations of $50 and integral multiples
thereof. The Indenture does not limit the incurrence or issuance of other
secured or unsecured debt of Superior.
The entire principal amount of the Debentures matures, and becomes due and
payable, together with any accrued and unpaid interest thereon, on ,
2014.
INTEREST
The Debentures bear interest on the principal sum thereof from ,
1999, or from the most recent Interest Payment Date (as defined below) on which
interest has been paid or duly provided for, quarterly until the principal of
the Debentures is paid or duly provided for or made available for payment,
subject to deferral as set forth below, in arrears, on ,
, and of each year (each such date, an
"Interest Payment Date"), commencing ,
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1999, at the rate of 8 1/2% per annum. Each interest installment will be paid to
the person in whose name each Debenture is registered at the close of business
on the fifteenth day (whether or not a Business Day) preceding such Interest
Payment Date (the "Regular Record Date"), except that interest payable on the
maturity of the Debentures will be paid to the person to whom principal is paid.
It is anticipated that, until the liquidation or dissolution, if any, of the
Trust, each Debenture will be held in the name of the Property Trustee in trust
for the benefit of the holders of the Trust Preferred Securities and the Trust
Common Securities. The amount of interest payable for any period is computed on
the basis of a 360-day year of twelve 30-day months. In the event that any date
on which interest is payable on the Debentures is not a Business Day, then the
payment of interest on such date will be made on the next succeeding day that is
a Business Day (and without any interest or other payment in respect of any such
delay), except that if such Business Day is in the next succeeding calendar
year, then such payment will be made on the immediately preceding Business Day,
in each case with the same force and effect as if made on the date the payment
was originally payable. If Superior defaults in a payment of interest on the
Debentures, it will pay the defaulted amounts, plus (to the extent permitted by
law) any interest payable on defaulted amounts (which default interest will only
accrue with respect to any interest payment period, or part thereof, occurring
from and after the liquidation of the Trust) at the stated rate per annum, to
the persons in whose names the Debentures are registered on a subsequent special
record date fixed by Superior. The term "interest" as used herein includes
quarterly interest payments, interest on quarterly interest payments not paid on
the applicable Interest Payment Date and Additional Sums, as applicable.
PAYMENT AND PAYING AGENT
Principal of, premium, if any, and any interest on Debentures will be
payable, the transfer of the Debentures will be registrable, and the Debentures
will be exchangeable for a like aggregate principal amount of Debentures of a
different authorized denomination at the corporate trust office of the Indenture
Trustee or at the office of such Paying Agent or Paying Agents as Superior may
designate, except that at the option of Superior payment of interest may be made
(i) by check mailed to the address of the person entitled thereto at such
address as appears in the Securities Register or (ii) by wire transfer of
immediately available funds to an account maintained by the person entitled
thereto as specified in the Securities Register, provided that proper transfer
instructions have been received by the Regular Record Date. Superior may at any
time designate additional Paying Agents or rescind the designation of any Paying
Agent.
Any money deposited with the Indenture Trustee or any Paying Agent, or then
held by Superior, in trust for the payment of the principal of (and premium, if
any) or interest on any Debenture and remaining unclaimed for two years after
such principal (and premium, if any) or interest has become due and payable
will, at the request of Superior, be paid to Superior or (if then held by
Superior) will be discharged from such trust, and the holder of such Debenture
will thereafter look, as a general unsecured creditor, only to Superior for
payment thereof.
OPTION TO DEFER INTEREST PAYMENTS
So long as no Debenture Event of Default (relating solely to certain events
of bankruptcy, insolvency or reorganization of Superior) has occurred and is
continuing, Superior will have the right under the Indenture to defer the
payment of interest under the Debentures, at any time or from time to time, for
a period not exceeding 20 consecutive quarters with respect to each Extension
Period, but not to extend beyond the stated maturity of the Debentures. At the
end of such Extension Period, Superior must pay all amounts then accrued and
unpaid (together with interest thereon at the stated rate per annum, to the
extent permitted by applicable law). During an Extension Period, interest will
continue to accrue and holders of Debentures (or holders of Trust Preferred
Securities while the Trust Preferred Securities are outstanding) will be
required to accrue interest income (as original issue discount) for United
States
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federal income tax purposes. See "Certain Federal Income Tax
Consequences--Interest Income and Original Issue Discount."
During any such Extension Period, Superior may not, and may not permit any
of its subsidiaries to, (i) declare or pay, or set apart for payment, any
dividends on or other distributions with respect to, or redeem, purchase,
acquire or make a liquidation payment with respect to, any shares of Superior's
capital stock or (ii) make any payment of principal of, premium, if any, or
interest on or repay, repurchase or redeem any debt securities (including
guarantees of indebtedness) issued by Superior that rank pari passu with or
junior to the Debentures (other than with respect to both (i) and (ii) (a) any
dividend, redemption, liquidation, interest, principal or guarantee payment by
Superior where the payment is made with securities (including capital stock)
that rank pari passu with or junior to the securities on which such dividend,
redemption, liquidation, interest, principal or guarantee payment is being made,
(b) payments under the Guarantee, (c) payments under the Subordinated Credit
Agreement and any refinancings thereof, (d) purchases of Superior Common Stock
related to the issuance of Superior Common Stock under any of Superior's benefit
plans for its directors, officers or employees, (e) as a result of a
reclassification of Superior's capital stock or the exchange or conversion of
one series or class of Superior's capital stock for another series or class of
Superior's capital stock and (f) the purchase of fractional interests in shares
of Superior's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged).
Prior to the termination of any such Extension Period, Superior may further
extend the interest payment period; provided, however, that no Extension Period
may exceed 20 consecutive quarters or extend beyond the stated maturity of the
Debentures. Upon the termination of any such Extension Period and the payment of
all amounts then accrued and unpaid, Superior may elect to begin a new Extension
Period, subject to the above requirements. No interest, including Additional
Interest and Additional Sums, if any, will be due and payable during an
Extension Period, except at the end thereof; however, interest and Additional
Interest will continue to accrue.
Superior has no current intention to exercise its right to defer payments of
interest on the Debentures.
"Additional Interest" means the interest, if any, that accrues on any
interest on the Debentures that is (1) in arrears for more than one interest
payment period or (2) not paid during any Extension Period, which in either case
(to the extent permitted by law) will accrue at the stated rate per annum
specified or determined as specified in such Debenture; provided, however, that
with respect to the foregoing clause (i), Additional Interest will accrue only
for such interest payment periods, or any part thereof, occurring from and after
the liquidation date of the Trust.
MANDATORY REDEMPTION
Upon repayment at maturity or as a result of acceleration of the Debentures
upon the occurrence of a Debenture Event of Default, Superior will be required
to redeem the Debentures, in whole, but not in part, at a redemption price equal
to 100% of the principal amount thereof, together with any accrued and unpaid
interest thereon. The Debentures are not subject to the operation of any
purchase, retirement or sinking fund or, except as set forth above or as a
result of acceleration, any other provision for mandatory prepayment.
OPTIONAL REDEMPTION
Except as provided below, under "--Mandatory Redemption" or under
"--Redemption Upon Change of Control," Superior may not redeem the Debentures
prior to , 2003 [the fourth anniversary of issuance of the Trust
Preferred Securities]. Superior, at its option, may, on or after ,
2003, redeem at any time all, or from time to time a portion, of the Debentures
on any date set by its Board of Directors, if redeemed during the twelve-month
period beginning , 2003 [the first day after the fourth anniversary of
issuance of the Trust Preferred Securities] of the year specified below, at
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the following redemption prices (expressed as a percentage of principal amount
at stated maturity), together, in each case, with accrued and unpaid interest
(including Additional Interest and Additional Sums, if any) to the date fixed
for redemption:
<TABLE>
<CAPTION>
PERCENTAGE OF
YEAR PRINCIPAL AMOUNT
- ---------------------------------------------------------------------------- ----------------
<S> <C>
[Assuming issuance of the Trust Preferred Securities occurs in 1999]
2003........................................................................ 105.100%
2004........................................................................ 104.250%
2005........................................................................ 103.400%
2006........................................................................ 102.550%
2007........................................................................ 101.700%
2008........................................................................ 100.850%
and thereafter.............................................................. 100.000%
</TABLE>
During the one-year period commencing on [the third anniversary
of the issuance of the Trust Preferred Securities], Superior, at its option, may
redeem at any time all, or from time to time a portion, of the Debentures on any
date set by its Board of Directors at a cash redemption price of 105.95% of
principal amount at stated maturity, plus accrued and unpaid interest (including
Additional Interest and Additional Sums, if any) to the redemption date,
provided that the product of (i) the average Closing Price of a share of
Superior Common Stock, for any 10 consecutive trading day preceding the date of
such call for redemption, multiplied by (ii) the conversion rate then in effect,
equals or exceeds $65.00 per share of Superior Common Stock.
As long as the Trust is the holder of all the outstanding Debentures, the
proceeds of any such redemption will be used by the Trust to redeem Trust
Preferred Securities and Trust Common Securities in accordance with their terms.
Superior may not redeem less than all of the Debentures at any time outstanding
until all accrued but unpaid interest (including Additional Interest and
Additional Sums, if any) upon all Debentures then outstanding have been paid.
See "Description of the Trust Preferred Securities--Optional Redemption."
REDEMPTION PROCEDURES
Notices of any redemption of Debentures and the procedures for such
redemption are as provided with respect to the Trust Securities under
"Description of the Trust Preferred Securities--Redemption Procedures." Notice
of any redemption will be given at least 30 days but not more than 60 days
before the redemption date to each holder of Debentures to be redeemed at its
registered address. On and after any redemption date, if money sufficient to pay
the redemption price of and accrued interest on Debentures called for redemption
has been made available and payment thereof is not prohibited under the terms of
the Indenture, the Debentures to be redeemed will cease to accrue interest and
the only right of the holders of such Debentures will be to receive payment of
the redemption price of and accrued and unpaid interest (and Additional Interest
and Additional Sums, if any) on such Debentures to the redemption date.
REDEMPTION UPON CHANGE OF CONTROL
The rights of holders of Debentures to elect to have Debentures redeemed
upon a Change of Control of Superior occurring after the liquidation date of the
Trust, and the procedures for such redemption, are as described in the first
paragraph under "Description of the Trust Preferred Securities--Redemption Upon
Change of Control."
CONVERSION OF THE DEBENTURES
Debentures are convertible, in whole or in part, at the option of any
holder, at any time after six months following the date of original issuance of
the Debentures, but not later than the close of business
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on the date which is 10 days preceding the date fixed for redemption thereof (if
there is no default in payment of the redemption price), into fully paid and
non-assessable shares of Superior Common Stock at an initial conversion rate of
17.858 shares of Superior Common Stock for each $1,000 of principal amount at
stated maturity of the Debentures, subject to the conversion rate adjustments
described under "Description of the Trust Preferred Securities--Conversion Rate
Adjustments." Except as provided in the Indenture, which contains provisions
correlative to those described under "Description of the Trust Preferred
Securities--Conversion Rights," no payment or adjustment is to be made on
conversion for accrued and unpaid interest on the Debentures, including as a
result of Superior's exercise of its right to defer payment of amounts due under
the Debentures, or for dividends on the Superior Common Stock issued on
conversion. The Trust has covenanted that for so long as the Trust Preferred
Securities are outstanding, the Trust will not convert any Debentures except
pursuant to a notice of conversion delivered to the Conversion Agent by a holder
of Trust Preferred Securities.
After the liquidation or dissolution of the Trust, a holder of Debentures
may convert all or a portion of the Debentures into Superior Common Stock by
delivering to the Conversion Agent an irrevocable notice of conversion to
convert Debentures, together with the actual Debentures to be converted.
Superior's delivery to the holder of the Debentures upon conversion of the fixed
number of shares of Superior Common Stock into which the Debentures are
convertible (together with a cash payment, if any, in lieu of fractional shares)
will be deemed to satisfy Superior's obligation to pay the principal amount at
maturity of the portion of Debentures so converted and any unpaid interest
(including Additional Interest and Additional Sums, if any) accrued on such
Debentures at the time of such conversion.
MODIFICATION OF INDENTURE
Without the consent of or notice to any holder of Debentures, Superior and
the Indenture Trustee, at any time and from time to time, may modify, waive any
provision of, amend or supplement the Indenture or the Debentures for specified
purposes, including: (i) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee; (ii) to cure any ambiguity, defect,
omission or inconsistency; (iii) to make provision with respect to the
conversion rights of holders of Debentures; (iv) to evidence and provide for the
acceptance of appointment by a successor Indenture Trustee and to add to or
change any of the provisions of the Indenture as may be necessary to provide for
or facilitate the administration of the Trust by more than one Indenture
Trustee; (v) to comply with the requirements of the Trust Indenture Act; or (vi)
to make any other change that does not materially adversely affect the interest
and rights of the holders of Debentures and, for so long as any of the Trust
Preferred Securities remain outstanding, the holders of such Trust Preferred
Securities.
The Indenture also contains provisions permitting Superior and the Indenture
Trustee, with the written consent of the holders of not less than a majority in
aggregate principal amount of the outstanding Debentures, to modify, amend,
waive any provision of or supplement the Indenture in a manner affecting the
rights of the holders of the Debentures. However, without the consent of each
holder of Debentures affected, an amendment, supplement or waiver may not: (i)
except with respect to any Extension Period, extend the stated maturity of the
principal of, or any installment of interest (including any Additional Interest)
on, the Debentures, or reduce the principal amount thereof or the rate of
interest thereon or reduce any premium payable upon the redemption thereof, or
change the place of payment where, or the coin or currency in which, any
Debenture or interest thereon is payable; (ii) materially and adversely affect
any right to convert or exchange any Debenture, including increasing the
conversion price of any Debenture; (iii) reduce the amount of Debentures whose
holders must consent to an amendment, modification, waiver of any provision or
supplement of the Indenture or the Debentures; or (iv) modify the provisions of
the Indenture with respect to the subordination of outstanding Debentures in a
manner materially adverse to the holders thereof or modify certain other
material provisions of the Indenture; provided, however, that, so long as any
Trust Preferred Securities remain outstanding, no such amendment, modification
or supplement of the Indenture that materially adversely affects the holders of
the Trust
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Preferred Securities may be entered into, no termination of the Indenture may
occur and no waiver under the Indenture will be effective without the prior
consent of the holders of at least a majority of the aggregate liquidation
preference of such Trust Preferred Securities then outstanding unless and until
the principal (and premium, if any) of the Debentures and all accrued and unpaid
interest (including Additional Interest and Additional Sums, if any) thereon
have been paid in full; provided, further, that where a consent under the
Indenture would require the consent of each holder of Debentures affected
thereby, no such consent may be given by the Property Trustee without the prior
consent of each holder of Trust Preferred Securities.
DEBENTURE EVENTS OF DEFAULT; ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF TRUST
PREFERRED SECURITIES
The Indenture provides that any one of the following events that has
occurred and is continuing constitutes a "Debenture Event of Default" with
respect to the Debentures: (i) failure to pay any interest upon the Debentures,
including any Additional Interest and any Additional Sums, if any, when such
amounts become due and payable and continuance of such failure for a period of
30 days (unless such interest payment is subject to deferral in the case of an
Extension Period or to any prohibition on the payment thereof, including,
without limitation, as a result of the subordination provisions of the
Indenture); (ii) failure to pay any principal of (or premium, if any, on) the
Debentures when due and payable, whether at maturity, upon redemption,
acceleration or otherwise, unless such payment is prohibited, including, without
limitation, as a result of the subordination provisions of the Indenture; (iii)
failure by Superior to observe or perform in any material respect any of its
other covenants or agreements contained in the Debentures or in the Indenture
and continuance of such failure for a period of 60 days after written notice
thereof has been given to Superior by the Indenture Trustee, or to Superior and
the Indenture Trustee by holders of at least a majority in aggregate principal
amount of the outstanding Debentures or the holders of at least a majority in
aggregate liquidation preference of the outstanding Trust Preferred Securities;
(iv) the dissolution, winding up or termination of the Trust, except in
connection with the distribution of Debentures or the making of a full
Liquidation Distribution to the holders of Trust Securities, upon the
redemption, conversion or exchange of all the outstanding Trust Securities, upon
certain mergers, consolidations or amalgamations of the Trust permitted by the
Declaration or in any other manner permitted under the Declaration; or (v)
certain events of bankruptcy, insolvency or reorganization of Superior.
The holders of a majority in principal amount of the outstanding Debentures
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Indenture Trustee or exercising any trust or
power conferred on the Indenture Trustee with respect to the Debentures, subject
to certain limitations. If a Debenture Event of Default has occurred and is
continuing, then the Indenture Trustee or the holders of not less than a
majority in aggregate principal amount of the outstanding Debentures may declare
the aggregate principal amount of all the outstanding Debentures to be
immediately due and payable. If the Indenture Trustee or the holders of the
Debentures fail to make such declaration, the holders of at least a majority in
aggregate liquidation preference of the Trust Preferred Securities then
outstanding will have such right. Upon such declaration, the principal amount of
(any premium, if any) and the accrued and unpaid interest (including Additional
Interest and Additional Sums, if any) on all the Debentures then outstanding
will become immediately due and payable, provided that the payment of principal,
premium, if any, and interest will remain subordinated to the payment of any
Senior Debt as provided in the Indenture.
The holders of a majority in principal amount of the Debentures then
outstanding may rescind and cancel a declaration of acceleration if all existing
Debenture Events of Default have been cured or waived (except for the
non-payment of principal of or interest on the Debentures which has become due
solely by such declaration of acceleration), any interest on overdue
installments of interest and overdue payments of principal, which has become due
otherwise than by such declaration of acceleration, has been paid or provided
for (to the extent permitted by law), and certain other conditions have been
met. If the holders of
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the Debentures fail to rescind and annul such declaration, the holders of a
majority in aggregate liquidation preference of the Trust Preferred Securities
then outstanding will have such right.
The holders of not less than a majority in principal amount of the
outstanding Debentures may, on behalf of the holders of all the Debentures,
waive any Debenture Event of Default. If the holders of the Debentures fail to
waive such Debenture Event of Default, the holders of a majority in aggregate
liquidation preference of the outstanding Trust Preferred Securities will have
such right.
Superior is required by law to file annually with the Indenture Trustee a
certificate as to whether or not Superior is in compliance with all the
conditions and covenants applicable to it under the Indenture.
In case a Debenture Event of Default has occurred and is continuing, the
Indenture Trustee will have the right to declare the principal of and the
interest on the Debentures, and any other amounts payable under the Indenture,
to be immediately due and payable and to enforce its other rights as a creditor
with respect to the Debentures.
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Indenture provides that Superior will not, in a single transaction or
series of related transactions, consolidate with or merge into any other person
or entity, or sell, assign, convey, transfer, lease or otherwise dispose of all
or substantially all of its properties and assets to any person or entity, or
adopt a plan of liquidation, unless: (a) either (i) Superior is the survivor of
such merger or consolidation or (ii) the surviving or transferee entity is
organized and existing under the laws of the United States of America or any
state or the District of Columbia and expressly assumes all of Superior's
obligations under the Debentures and the Indenture; (b) immediately after giving
effect to such transaction, no Debenture Event of Default has occurred and is
continuing; (c) such transaction is permitted under the Declaration and the
Guarantee and does not give rise to any breach or violation of the Declaration
or the Guarantee; and (iv) certain other conditions as prescribed in the
Indenture are met.
The general provisions of the Indenture do not afford holders of the
Debentures protection in the event of a highly leveraged or other transaction
involving Superior that may adversely affect holders of the Debentures.
SATISFACTION AND DISCHARGE
The Indenture provides that when, among other things, all Debentures not
previously delivered to the Indenture Trustee for cancellation (i) have become
due and payable, (ii) will become due and payable at their stated maturity
within one year or are to be called for redemption within one year under
irrevocable arrangements satisfactory to the Indenture Trustee for the giving of
notice of redemption, and Superior has irrevocably deposited or caused to be
deposited with the Indenture Trustee funds, in trust, for the purpose and in an
amount sufficient to pay and discharge the entire indebtedness on the Debentures
not previously delivered to the Indenture Trustee for cancellation, equal to the
outstanding and unpaid principal (and premium, if any) and interest (including
Additional Interest and Additional Sums, if any) to the date of the deposit or
to the stated maturity, as the case may be, or (iii) have been redeemed or
tendered for conversion, then the Indenture will cease to be of further effect
(except as to surviving rights of transfer, substitution and exchange of
Debentures, rights of holders to receive payment of principal of (and premium,
if any) and interest (including Additional Interest and Additional Sums, if any)
on the Debentures and the rights of the Indenture Trustee under the Indenture),
and Superior will be deemed to have satisfied and discharged the Indenture.
SUBORDINATION
Superior has covenanted and agreed, and each holder of Debentures, by its
acceptance thereof, likewise covenants and agrees, that all obligations
represented by the Debentures (including the payment
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of the principal of, premium, if any, and interest (including Additional
Interest and Additional Sums, if any) on the Debentures) are expressly made
subordinate in right of payment to the prior payment and satisfaction in full in
cash of all existing and future Senior Debt.
In the event of (a) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or proceeding in
connection therewith, relative to Superior or to its creditors, as such, or to
its assets, whether voluntary or involuntary, or (b) any total or partial
liquidation, dissolution or other winding-up of Superior, whether voluntary or
involuntary and whether or not involving insolvency or bankruptcy, or (c) any
general assignment for the benefit of creditors or any other marshaling of
assets or liabilities of Superior, then: (i) the holders of Senior Debt will be
entitled to receive payment and satisfaction in full in cash of all amounts due
on or in respect of all Senior Debt before the holders of the Debentures are
entitled to receive or retain any payment or distribution of any kind or
character on account of the Debentures (including, without limitation, with
respect to principal of, premium, if any, or interest (including Additional
Interest and Additional Sums, if any)); and (ii) in the event that,
notwithstanding the foregoing, the Indenture Trustee or the holder of any
Debenture has received any payment or distribution of assets of Superior of any
kind or character in respect of the Debentures before all Senior Debt is paid
and satisfied in full in cash, then such payment or distribution will be held by
the Indenture Trustee or the holder of such Debenture, as the case may be, in
trust for the benefit of the holders of such Senior Debt and will be immediately
paid over or delivered to the liquidating trustee or agent or other person
making payment or distribution of assets of Superior for application to the
payment of all Senior Debt remaining unpaid.
Unless the above paragraph applies, after the occurrence of a Payment
Default or Non-Payment Event of Default on Senior Debt, no payment or
distribution of any assets or securities of Superior of any kind or character
may be made by or on behalf of Superior for or on account of the Debentures
(including, without limitation, principal, premium or interest (including
Additional Interest and Additional Sums, if any) thereon), or for or on account
of the purchase, redemption, defeasance or other acquisition of the Debentures,
and neither the Indenture Trustee nor any holder of any Debenture may take or
receive from Superior or any subsidiary of Superior payment in respect of all or
any portion of Debentures (including, without limitation, principal, premium or
interest (including Additional Interest and Additional Sums, if any) thereon).
In any such event, such prohibition will continue until such Payment Default or
Non-Payment Event of Default is cured, waived or ceases to exist and any related
acceleration has been rescinded or otherwise cured, at which time Superior will
resume making any required payments in respect of the Debentures, including any
missed payments. In the event that, notwithstanding the foregoing, the Indenture
Trustee or the holder of any Debenture has received any prohibited payment, then
such payment will be paid over and delivered to the representatives of the
holders of Senior Debt, in trust for distribution to the holders of Senior Debt,
or, if no amounts are then due in respect of Senior Debt, promptly returned to
Superior, or otherwise as a court of competent jurisdiction may direct.
"Senior Debt" means all monetary obligations (including with respect to the
principal, premium, if any, interest (including interest accruing subsequent to
the filing of a petition in bankruptcy or insolvency at the rate specified in
the document relating to such Senior Debt, whether or not such interest is an
allowed claim permitted to be enforced against Superior under applicable law),
fees, penalties, expenses, indemnities, damages or other liabilities) (i) under
the Credit Agreement (including any commodity agreement, currency agreement or
interest rate agreement in respect of monetary obligations under the Credit
Agreement) and (ii) on any other indebtedness or other obligations of Superior,
whether currently outstanding or hereafter created, incurred or assumed;
provided that the indebtedness or other obligations under clause (ii) above will
constitute Senior Debt only to the extent such indebtedness or other obligations
are secured by interests in property or assets and the chief financial officer
of Superior delivers a certificate to the Indenture Trustee at the time of the
incurrence of such indebtedness or other obligations stating that, after due
inquiry, such indebtedness or other obligations are secured by interests in
property or assets which have, and such officer has no reason to believe that
such property or assets will
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not continue to have, a fair market value that equals or exceeds the principal
amount of such indebtedness or other obligations, giving due regard to the type
and amount of any other indebtedness secured by such property or assets (such
certificate constituting conclusive evidence, binding for all purposes, that
such indebtedness or other obligations are secured).
"Credit Agreement" means the Amended and Restated Credit Agreement, dated as
of November 27, 1998, among Superior/Essex Corp., Essex Group, Inc., the
guarantors named therein (including, without limitation, Superior), the lenders
party thereto in their capacities as lenders thereunder, Bankers Trust Company,
as administrative agent, Merrill Lynch & Co., as documentation agent, and Fleet
National Bank, as syndication agent, together with the related documents thereto
(including, without limitation, any guarantee agreements and security
documents), in each case as such agreements may be amended (including any
amendment and restatement thereof), supplemented or otherwise modified from time
to time, including any agreement extending the maturity of, refinancing,
replacing or otherwise restructuring (including increasing the amount of
available borrowings thereunder or adding subsidiaries as additional borrowers
or guarantors thereunder) all or any portion of the indebtedness and other
obligations under such agreement or any successor or replacement agreement and
whether by the same or any other agent, lender or group of lenders.
"Non-Payment Event of Default" means any event (other than a Payment
Default) the occurrence of which entitles one or more persons (whether or not
dependent upon the giving of notice, the lapse of time or both or any other
condition) to accelerate the maturity of any Senior Debt.
"Payment Default" means any default, whether or not dependent upon the
giving of notice, the lapse of time or both, or any other condition to such
default becoming an event of default, in the payment of principal of (or
premium, if any) or interest on or any other amount payable in connection with
Senior Debt.
The Indenture places no limitation on the amount of additional Senior Debt
that may be incurred by Superior.
INFORMATION CONCERNING THE INDENTURE TRUSTEE
Except during the continuance of a Debenture Event of Default, the Indenture
Trustee undertakes to perform only such duties as are specifically set forth in
the Indenture. In case a Debenture Event of Default has occurred and is
continuing, the Indenture Trustee will exercise such of the rights and powers
vested in it by the Indenture, using the same degree of care and skill in their
exercise as a prudent person would exercise or use under the circumstances in
the conduct of his own affairs. The Indenture Trustee will be under no
obligation to exercise any of the rights or powers vested in it by the Indenture
at the request or direction of any of the holders of Debentures, unless such
holders have offered to the Indenture Trustee security and/or indemnity
reasonably satisfactory to the Indenture Trustee against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction.
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RELATIONSHIP AMONG THE TRUST PREFERRED
SECURITIES, THE DEBENTURES AND THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Trust Preferred
Securities (if and to the extent the Trust has funds available for the payment
of such Distributions and other amounts) have been irrevocably and
unconditionally guaranteed by Superior as and to the extent set forth under
"Description of the Guarantee." Taken together, Superior's obligations under the
Debentures, the Indenture, the Declaration and the Guarantee provide, in the
aggregate, a full, irrevocable and unconditional guarantee, on a subordinated
basis, of payments of Distributions and other amounts due on the Trust Preferred
Securities. No single document standing alone or operating in conjunction with
fewer than all of the other documents constitutes such guarantee. It is only the
combined operation of these documents that has the effect of providing a full,
irrevocable and unconditional guarantee of the Trust's obligations under the
Trust Preferred Securities. If and to the extent that Superior does not make
payments on the Debentures, the Trust will not pay Distributions or other
amounts due on the Trust Preferred Securities. The Guarantee does not cover
payment of Distributions when the Trust does not have sufficient funds to pay
such Distributions. In such event, the holders of Trust Preferred Securities
would rely on the enforcement against Superior by the Property Trustee of its
rights as holder of the Debentures. The holders of Trust Preferred Securities
will not be able to exercise directly against Superior any remedy available to
the Property Trustee unless the Property Trustee first fails to do so. See
"Description of the Trust Preferred Securities--Declaration Events of Default;
Enforcement of Certain Rights by Holders of Trust Preferred Securities."
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on the
Debentures, such payments will be sufficient to cover Distributions and other
payments due on the Trust Securities, primarily because: (i) the aggregate
principal amount of the Debentures is equal to the sum of the aggregate stated
liquidation preference of the Trust Preferred Securities and the Trust Common
Securities; (ii) the interest rate and interest and other payment dates for the
Debentures match the Distribution rate and Distribution and other payment dates
for the Trust Securities; (iii) Superior will pay for any and all costs,
expenses and liabilities of the Trust except the Trust's obligations to holders
of the Trust Securities; and (iv) the Declaration further provides that the
Trust will not engage in any activity that is not consistent with the limited
purposes of the Trust.
Notwithstanding anything to the contrary in the Indenture, Superior has the
right to set-off any payment it is otherwise required to make thereunder with
and to the extent Superior has theretofore made, or is concurrently on the date
of such payment making, a payment under the Guarantee.
LIMITED PURPOSE OF ISSUER
The Trust Securities evidence a beneficial interest in the assets of the
Trust, and the Trust exists for the sole purpose of issuing the Trust Preferred
Securities and the Trust Common Securities in consideration for the issuance by
Superior of the Debentures. A principal difference between the rights of a
holder of Trust Preferred Securities and a holder of Debentures is that a holder
of Debentures is entitled to receive from Superior the principal amount of and
interest accrued on Debentures held, while a holder of Trust Preferred
Securities is entitled to receive Distributions from the Trust (or from Superior
under the Guarantee) only if and to the extent the Trust has funds on hand
available for the payment of such Distributions.
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RIGHTS UPON DISSOLUTION
Upon any voluntary or involuntary dissolution, winding-up, liquidation or
termination of the Trust involving the liquidation of the Debentures, the
holders of the Trust Preferred Securities will be entitled to receive, after
satisfaction of liabilities to creditors of the Trust as provided by applicable
law, out of the assets of the Trust, the Liquidation Distribution in cash. See
"Description of the Trust Preferred Securities--Distribution of Debentures Upon
Dissolution." Upon any voluntary or involuntary liquidation or bankruptcy of
Superior, the Property Trustee, as holder of the Debentures, would be a
subordinated creditor of Superior, subordinated in right of payment to all
Senior Debt, but entitled to receive payment in full of principal and interest
before any stockholders of Superior receive payments or distributions. Since
Superior is the guarantor under the Guarantee and has agreed to pay all costs,
expenses and liabilities of the Trust (other than the Trust's obligations to the
holders of the Trust Securities), the positions of a holder of Trust Preferred
Securities and a holder of Debentures relative to other creditors and to
stockholders of Superior in the event of a liquidation or bankruptcy of Superior
would be substantially the same.
COMPARISON OF STOCKHOLDERS' RIGHTS
GENERAL
If the Merger is consummated, the stockholders of Essex, whose rights are
governed by Essex's Second Amended and Restated Certificate of Incorporation
("Essex's Certificate of Incorporation"), Essex's Amended and Restated Bylaws
("Essex's Bylaws") and the DGCL, will, at the effective time of the Merger,
receive the Trust Preferred Securities in exchange for their shares of Essex
Common Stock. The Trust Preferred Securities will be exchangeble at Superior's
option for the Debentures, and the Trust Preferred Securities and the Debentures
will be convertible at the option of the holder into Superior Common Stock. The
rights of holders of Superior Common Stock are governed by the DGCL, Superior's
Certificate of Incorporation, as amended ("Superior's Certificate of
Incorporation"), and Superior's Bylaws ("Superior's Bylaws").
Summarized below are the material differences between the rights of the
common stockholders of Essex and Superior. Essex and Superior are both organized
under the laws of the State of Delaware and are subject to the provisions of the
DGCL. Any differences, therefore, in the rights of the Essex and Superior
stockholders arise solely from the differences in their respective certificates
of incorporation and bylaws. The following discussion does not purport to be a
complete discussion of, and is qualified in its entirety by reference to, the
DGCL, Essex's Certificate of Incorporation, Essex's Bylaws, Superior's
Certificate of Incorporation and Superior's Bylaws.
The rights of the holders of Trust Preferred Securities are described in the
section entitled "Description of Trust Preferred Securities." A discussion of
the rights of holders of the Debentures is found in the section entitled
"Description of the Debentures."
AUTHORIZED CAPITAL STOCK
SUPERIOR. Prior to the amendment of Superior's Certificate of Incorporation
described in this Joint Proxy Statement/Prospectus, Superior's total number of
authorized shares of capital stock was 26,000,000 shares, consisting of
25,000,000 shares of common stock, par value $0.01 per share, and 1,000,000
shares of preferred stock, par value $0.01 per share.
ESSEX. Essex's total number of authorized shares of capital stock is
155,000,000, consisting of 5,000,000 shares of preferred stock, par value $0.01
per share, and 150,000,000 shares of common stock, par value $0.01 per share.
The number of authorized shares of any of Essex's preferred or common stock may
be increased or decreased (but not below the number of shares then outstanding)
by the affirmative vote of the holders of a majority in voting power of Essex's
stock entitled to such vote, irrespective of the
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provisions of section 242(b)(2) of the DGCL (or any successor provision
thereto), and such vote will not require the holders of the preferred stock and
common stock to vote separately as a class.
PREEMPTIVE RIGHTS
Under the DGCL, stockholders have no preemptive rights unless such rights
are provided for in the corporation's certificate of incorporation. Neither
Superior nor Essex's certificates of incorporation provides for preemptive
rights.
QUORUM
SUPERIOR. Superior's Bylaws provide that at any stockholders' meeting, the
holders of a majority of the outstanding shares of each class of stock entitled
to vote at the meeting must be present or represented by proxy in order to
constitute a quorum for the transaction of any business. In the absence of a
quorum, a majority in voting interest of the stockholders present or the
chairman of the meeting may adjourn the meeting from time to time in the manner
provided by Superior's Bylaws, until a quorum is able to attend.
ESSEX. Essex's Bylaws provide that a majority of all then outstanding
shares of voting stock entitled to vote, represented in person or by proxy,
constitutes a quorum at a stockholders' meeting. When the holders of a class or
series of stock must vote on a specified item of business, a majority of the
shares of such class or series constitutes a quorum for the transaction of such
item of business by that class or series.
After a quorum has been established at a stockholders' meeting, the
subsequent withdrawal of stockholders, so as to reduce the number of
stockholders entitled to vote at the meeting below the number required for a
quorum, will not affect the validity of any action taken at the meeting or any
adjournment of such meeting.
STOCKHOLDER VOTING
SUPERIOR. Superior's Certificate of Incorporation states that any action
required or permitted to be taken by stockholders may be effected only at a duly
called annual or special meeting of stockholders with prior notice and with a
vote, and may not be effected by consent in writing. Each share of Superior
Common Stock entitles the stockholder to one vote per share on all matters
submitted to a vote of stockholders. Superior's Bylaws provide that at any
meeting duly called and held at which a quorum is present, a majority of the
votes cast at such meeting upon a given question by the holders of outstanding
shares of stock of all classes of Superior stock entitled to vote on that
question who are present in person or by proxy will decide such question. The
DGCL requires a higher vote for sales or leases of all or substantially all of a
corporation's assets, mergers, consolidations and certain other transactions, as
set forth in the DGCL, between a corporation and an interested stockholder (as
defined in the DGCL).
At any meeting duly called and held for the election of directors at which a
quorum is present, directors shall be elected by a plurality of the votes cast
by the holders of shares of stock of Superior entitled to elect such directors.
ESSEX. Essex's Bylaws provide that any action required or permitted to be
taken by the stockholders must be effected at a duly called annual or special
meeting. If a quorum is present, the affirmative vote of the majority of the
shares represented at the meeting and entitled to vote on the subject matter
will be the act of the stockholders unless otherwise provided by law or by
Essex's Certificate of Incorporation. However, if such action is approved by a
majority of the Essex Board, such action may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth the
action so taken, is signed by the holders of outstanding shares having not less
than the minimum number of votes that would be necessary to authorize or take
such action at a meeting of stockholders at which all shares entitled to vote
thereon were present and voted. If any class of shares is entitled to vote
thereon as a class, such
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written consent is required of the holders of a majority of the shares of each
class of shares entitled to vote thereon.
At each election for directors, every stockholder entitled to vote at such
election will have the right to vote, in person or by proxy, the number of votes
represented by the shares owned by him or her for as many persons as there are
directors to be elected at that time and for whose election he or she has a
right to vote.
SPECIAL MEETINGS OF STOCKHOLDERS
SUPERIOR. Superior's Bylaws provide that subject to the rights of holders
of any series of preferred stock, a special meeting of stockholders for any
purpose or purposes may be held at any time only upon call of the Superior Board
pursuant to a resolution approved by a majority of the Continuing Directors (as
defined below), or by the Chairman of the Board, the Vice-Chairman of the
Superior Board, the Chief Executive Officer or any Co-Chief Executive Officer.
Stockholders are not permitted to call an annual meeting or to call a special
meeting of stockholders or to require that the Superior Board call such annual
or special meeting. Superior's Certificate of Incorporation defines a Continuing
Director as any director who is unaffiliated with, and not a nominee of, an
Interested Stockholder and was a director prior to the time that such Interested
Stockholder became an Interested Stockholder and certain successors thereof.
ESSEX. Essex's Bylaws provide that a special meeting of the stockholders
may be called by either the Chief Executive Officer or by a majority of the
Essex Board. A special meeting may not be called by any other person.
DIRECTORS
SUPERIOR. Superior's Bylaws provide that the number of directors
constituting the Board of Directors is six, or that the Superior Board may
establish the number of directors by a resolution adopted by vote of a majority
of the then authorized number of directors. Each director serves until the next
annual meeting of stockholders and until his or her respective successor has
been elected and qualified.
ESSEX. Essex's Bylaws provide that the number of directors that constitutes
the whole Essex Board is fixed from time to time exclusively pursuant to a
resolution adopted by a majority of the Essex Board. Under the DGCL, a
corporation's certificate of incorporation or bylaws may provide that directors
be elected in one, two or three classes whose terms expire at different times,
provided that no single term exceeds three years. The Essex Board, other than
directors who may be elected by the holders of any shares of preferred stock
under specified circumstances, is divided into three classes of approximately
equal size, with directors serving staggered three-year terms. Each director
holds office for a three-year term and until the election and qualification of
his respective successor.
REMOVAL OF DIRECTORS
SUPERIOR. Superior's Certificate of Incorporation provides that a director
may be removed only for cause. A director may be removed only by the holders of
a majority of the outstanding shares of all classes of Superior's capital stock
entitled to vote in the election of directors, considered for this purpose as
one class. However, because Superior does not have a classified board, the
requirement for removal only for cause may not be enforceable under the DGCL.
ESSEX. Subject to the rights of the preferred stockholders to elect
directors under certain circumstances, and unless otherwise provided by law,
Essex's Bylaws provide that a director may be removed from office only for
cause.
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VACANCIES ON THE BOARD OF DIRECTORS
SUPERIOR. Superior's Certificate of Incorporation provides that
newly-created directorships resulting from death, resignation, retirement,
disqualification, removal from office or other cause may be filled by a majority
vote of the remaining directors then in office, though less than a quorum, or by
the sole remaining director, and each director so chosen shall hold office until
such director's successor shall have been duly elected and qualified. No
decrease in the authorized number of directors shall shorten the term of any
incumbent director.
ESSEX. Essex's Bylaws provide that unless otherwise provided in connection
with rights to elect additional directors under specified circumstances which
may be granted to Essex's preferred stockholders, newly created directorships
resulting from any increase in the number or directors, or any vacancies on the
Essex Board, may be filled only by a majority vote of all remaining directors,
even though less than a quorum. The term of office of any director elected to
fill such a vacancy expires at the expiration of the term of office of the
director of the class which he replaced and until such director's successor has
been elected and qualified or until such director's death, resignation or
removal, whichever first occurs. No decrease in the authorized number of
directors shall shorten the term of any incumbent director.
CERTAIN BUSINESS COMBINATIONS
SUPERIOR. Superior's Certificate of Incorporation contains provisions
relating to business combinations with persons who are Interested Stockholders.
These provisions are in addition to the provisions of Section 203 of the DGCL
relating to similar transactions. See "Description of Superior Capital Stock."
ESSEX. Essex's Certificate of Incorporation does not contain such additional
provisions. Essex has expressly opted out a Section 203 of the DGCL.
AMENDMENT TO CERTIFICATES OF INCORPORATION
SUPERIOR. The DGCL provides that amendments to a corporation's certificate
of incorporation must be approved by the Board of Directors and by the
affirmative vote of the holders of at least a majority of the outstanding shares
entitled to vote.
Notwithstanding the above statement, the sections of Superior's Certificate
of Incorporation relating to the Board of Directors, stockholder action, certain
business combinations, director liability, indemnification, arrangements with
creditors and amendment of the bylaws and the certificate of incorporation
cannot be amended or repealed, and no provision inconsistent with those sections
can be adopted, without the affirmative vote of the holders of record of
outstanding shares representing (1) at least two-thirds of the voting power of
Superior's then outstanding voting shares, voting together as a single class,
and (2) if there is then an Interested Stockholder, at least a majority of the
voting power of Superior's then outstanding voting shares, voting together as a
single class, which are not beneficially owned, directly or indirectly, by an
Interested Stockholder. Any such amendment, repeal or adoption must be effected
at a duly called annual or special meeting of the stockholders, with prior
notice, and with a vote and not by written consent. However, this provision does
not apply to any amendment, repeal or adoption of any inconsistent provision
which the Superior Board has declared advisable by the affirmative vote of a
majority of the total number of directors which Superior would have if there
were no vacancies and, if there is an Interested Stockholder, a majority of the
Continuing Directors.
ESSEX. Essex's Certificate of Incorporation provides that amendments to its
substantive provisions relating to its capital stock, Board of Directors,
Bylaws, stockholder meetings, liability of directors, indemnity and Section 203
of the DGCL may not be repealed, rescinded, altered or amended, and no other
provision may be adopted which is inconsistent with it or in any way impairs its
operation or effect, except by the affirmative vote of holders of not less than
66 2/3% of Essex's voting stock.
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AMENDMENT OF BYLAWS
SUPERIOR. Superior's Certificate of Incorporation states that the Superior
Board has the power to make, amend and repeal Superior's Bylaws. Any bylaws made
by the Superior Board under the powers conferred by the Superior's Certificate
of Incorporation may be amended or repealed by the Superior Board or by the
stockholders.
Notwithstanding the above statement, the sections of Superior's Bylaws
pertaining to annual meetings, special meetings, stockholders, nominations,
elections and terms of directors and amendments cannot be amended or repealed,
and no provision inconsistent with those sections can be adopted, without the
affirmative vote of the holders of record of outstanding shares representing (1)
at least two-thirds of the voting power of the then outstanding voting shares,
voting together as a single class and (2) if there is then an Interested
Stockholder, at least a majority of the voting power of the then outstanding
voting shares, voting together as a single class which are not beneficially
owned, directly or indirectly, by an Interested Stockholder. Any such amendment,
repeal or adoption of any inconsistent provision must be effected at a duly
called annual or special meeting of the above-mentioned stockholders, with prior
notice as is required by the Bylaws. However, this provision does not apply to
any amendment, repeal or adoption of any inconsistent provision which the
Superior Board has declared advisable by the affirmative vote of a majority of
the total number of directors which Superior would have if there were no
vacancies and, if there is an Interested Stockholder, a majority of the
Continuing Directors.
ESSEX. Essex's Bylaws may be altered, amended or repealed or new Bylaws may
be adopted by the stockholders or by the Essex Board at any regular meeting of
the stockholders or of the Essex Board or at any special meeting of the
stockholders or of the Essex Board if notice of such alteration, amendment,
repeal or adoption of new Bylaws is contained in the notice of such special
meeting. If in the case of amendments by stockholders, however, the affirmative
vote of the holders of at least 66 2/3% of all then outstanding shares of voting
stock of the company, voting together as a single class, is required to alter,
amend or repeal any provision of Essex's Bylaws.
The Essex Board may adopt bylaws to be effective only in an emergency. An
emergency exists for the purposes of Essex's Bylaws if a quorum of Essex's
directors cannot readily be assembled because of some catastrophic event. The
emergency bylaws, which are subject to amendment or repeal by the stockholders,
may make all provisions necessary for managing the corporation during an
emergency, including: (1) procedures for calling a meeting of the Essex Board;
(2) quorum requirements for the meeting; and (3) designation of additional or
substitute directors.
APPRAISAL/DISSENTERS' RIGHTS
Under the DGCL, no appraisal rights are granted to stockholders who dissent
from a sale, lease, or exchange of all or substantially all of the assets of a
corporation. The DGCL further provides that generally no appraisal rights are
granted to stockholders who dissent from a merger or consolidation for which a
stockholder vote is required and the shares of the class of stock voting are
listed on a national securities exchange or the NASDAQ National Market System or
held of record by more than 2,000 stockholders. However, stockholders will have
appraisal rights if they are required in connection with the merger or
consolidation to accept for their stock anything other than: (1) stock of the
corporation surviving or resulting from the merger or consolidation; (2) stock
of any other corporation listed on a national securities exchange or the NASDAQ
National Market System or held of record by more than 2,000 stockholders; (3)
cash in lieu of fractional shares; or (4) any combination of (1), (2) and (3)
above. Pursuant to the Merger Agreement, the stockholders of Essex are entitled
to appraisal rights.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
SUPERIOR. Superior's Certificate of Incorporation provides that Superior
will indemnify, to the fullest extent permitted by law, each person who was or
is made or threatened to be made a party to, or is
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involved in, any threatened, pending or completed action or proceeding by reason
of the fact that such person is or was a director or officer of Superior, or had
agreed to serve in as a director or officer on behalf of Superior, or is or was
or has agreed to serve as a director, officer, employee or agent of another
entity at Superior's request.
Notwithstanding the other indemnification provisions in Superior's
Certificate of Incorporation, to the extent that a director or officer of
Superior has been successful on the merits or otherwise, including without
limitation, the dismissal of an action without prejudice, in defense of any
action, suit or proceeding, he or she will be indemnified against all costs,
charges and expenses (including attorneys' fees) actually and reasonably
incurred by him or her or on his or her behalf. Such indemnification shall
include the advancement of expenses.
ESSEX. Essex's Certificate of Incorporation and Bylaws provide that Essex
will indemnify any person who was or is a party or is threatened to be made a
party to any action or proceeding by reason of the fact that he or she is or was
a director, officer, employee or agent of Essex, or is or was serving in one of
the above-mentioned positions at another entity at Essex's request, against
expenses (including attorneys' fees), judgments, fines and amounts in connection
with such action or proceeding, to the fullest extent permitted by the DGCL,
provided that he or she acted in good faith. Such indemnification will not be
deemed exclusive of any other rights to which those seeking indemnification may
be entitled under any bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, including insurance purchased and maintained by Essex,
both as to action in his or her official capacity and as to action in another
capacity while holding such office, and shall continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs and executors and administrators of such a person. Such
indemnification shall include the advancement of expenses.
INSURANCE
SUPERIOR. Superior may purchase and maintain insurance, at its expense, to
protect itself and any of its directors, officers, employees or agents or
serving at Superior's request as a director, officer, employee or agent of
another business entity against any expense, liability or loss, whether or not
Superior would have the power to indemnify such person pursuant to the DGCL.
ESSEX. Essex's Bylaws provide that Essex has the power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of Essex, or is or was serving at Essex's request as a
director, partner, officer employee or agent of another entity, against any
liability asserted against or incurred by him or her in any such capacity, or
arising out of his or her status as such. This insurance is valid whether or not
Essex would have the power to indemnify him or her against such liability under
the indemnification provisions of Essex's Bylaws.
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PROPOSAL TO AMEND SUPERIOR'S CERTIFICATE OF INCORPORATION
TO INCREASE THE AUTHORIZED STOCK AND TO ISSUE THE TRUST
PREFERRED SECURITIES
The Board of Directors proposes that the stockholders of Superior consider
and adopt an amendment to Article Fourth of its Certificate of Incorporation to
(1) increase the total authorized number of shares from 26 million to 40
million, (2) increase the authorized number of shares of Superior Preferred
Stock from one million to five million, and (3) increase the authorized number
of shares of Superior Common Stock from 25 million to 35 million, and in
connection therewith, to authorize the issuance of the Trust Preferred
Securities, as provided in the Merger Agreement, and the Superior Common Stock
issuable upon conversion of the Trust Preferred Securities.
Pursuant to Article Fourth of the Certificate of Incorporation, the Board of
Directors is authorized to issue Superior Common Stock and Superior Preferred
Stock from time to time. As of December 14, 1998, no shares of Superior
Preferred Stock were issued and outstanding 16,057,832 shares of Superior Common
Stock were issued and outstanding and approximately 104,938 shares of Superior
Common Stock had been issued or reserved or designated for specific issuance. If
this proposal is approved, 3,079,307 shares of Superior Common Stock will be
reserved for issuance upon conversion of the Trust Preferred Securities. In
addition, if the proposals contained in this Joint Proxy Statement/Prospectus
relating to increasing the number of shares available for issuance under the
Stock Option Plan are approved, an additional shares of Superior Common
Stock will be reserved for issuance. This would leave approximately shares of
Superior Common Stock available for future issuance. Approval of the proposed
increases would give Superior five million shares of Superior Preferred Stock
and approximately shares of Superior Common Stock available for future
issuance.
The proposed additional shares of Superior Preferred Stock and Superior
Common Stock could be issued for any proper corporate purpose, including the
acquisition of other businesses, the raising of additional capital for use in
Superior's business, stock splits, the payment of stock dividends or other
distributions in shares of stock, or in connection with employee stock incentive
programs. While Superior currently has no arrangements, understandings or
commitments with respect to the issuance of any of the additional shares, it is
considered advisable to have the authorization to issue such additional shares
in order to enable Superior, as the need may arise, to move promptly to take
advantage of market conditions and the availability of other favorable
opportunities without the delay and expense involved in calling a special
stockholders meeting for such purpose.
The authorization of additional shares of Superior Preferred Stock and
Superior Common Stock will not, by itself, have any effect on the rights of
holders of existing Superior Common Stock. Depending on the circumstances, any
issuance of additional shares of Superior Preferred Stock or Superior Common
Stock may dilute the present equity ownership of current stockholders. In the
resolutions establishing a particular series of Superior Preferred Stock, the
Board of Directors is authorized to fix the designation and the relative rights
and preferences of that series to the fullest extent permitted under Delaware
law. This includes, among other things, the authority to establish dividend
rates and dividend payment dates, redemption prices and conditions, if any,
sinking fund provisions, if any, liquidation preferences, voting rights, if any,
conversion features, if any, priority, and transfer restrictions, if any.
Holders of the Superior Preferred Stock and the Superior Common Stock have no
preemptive rights to participate in any such issuance.
If the proposed amendment to Superior's Certificate of Incorporation is
approved, the Board of Directors will have the authority to issue the additional
authorized shares or any part thereof to such persons and for such consideration
as it may determine without further action by the stockholders except as
required by law, the Certificate of Incorporation or the rules of any stock
exchange on which Superior's securities may then be listed. The New York Stock
Exchange, on which the issued shares of Superior
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Common Stock are listed, currently requires specific stockholder approval as a
prerequisite to listing shares in certain limited circumstances.
Although the proposed amendment is not intended to be an anti-takeover
measure, stockholders should note that, under certain circumstances, the
additional shares of Superior Preferred Stock or Superior Common Stock could be
used to make any attempt to gain control of Superior or the Board of Directors
more difficult or time-consuming. The Board could authorize holders of the
additional Superior Preferred Stock to vote as a class, either separately or
with the holders of Superior Common Stock or other series of Superior Preferred
Stock, on any merger, sale of exchange of assets by Superior or any other
extraordinary corporate transaction or could grant multiple voting rights to
such shares. Also, any of the additional shares of Superior Preferred Stock or
Superior Common Stock could be privately placed with purchasers who might side
with the Board in opposing a hostile takeover bid. It is possible that such
shares could be sold with or without an option, on the part of Superior, to
repurchase such shares or, on the part of the purchaser, to put such shares to
Superior.
The amendment to increase the authorized stock might be considered to have
the effect of discouraging an attempt by another person or entity, through the
acquisition of a substantial number of shares of Superior's stock, to acquire
control of Superior, since the issuance of the additional shares of Superior
Preferred Stock or Superior Common Stock could be used to dilute the stock
ownership of a person or entity seeking to obtain control and to increase the
cost to a person or entity seeking to acquire a majority of the voting power of
Superior. If so used, the effect of the additional authorized shares of Superior
Preferred Stock or Superior Common Stock might be (i) to deprive shareholders of
an opportunity to sell their stock at a temporarily higher price as a result of
a tender offer or other purchase of shares by a person seeking to obtain control
of Superior or (ii) to assist incumbent management in retaining its present
position.
The Board of Directors believes that adoption of the proposed Amendment to
Article Fourth of Superior's Certificate of Incorporation and the authorization
of the issuance of Trust Preferred Securities and the Superior Common Stock into
which the Trust Preferred Securities are convertible are in the best interest of
Superior and its stockholders. Approval of this proposal requires the
affirmative vote of the holders of a majority of outstanding shares of Superior
Common Stock entitled to vote at the Superior Meeting.
With respect to this proposal, the Board of Directors recommends that the
stockholders vote FOR the proposed amendment to Article Fourth of Superior's
Certificate of Incorporation to (1) increase the total authorized number of
shares from 26 million to 40 million, (2) increase the authorized number of
shares of Superior Preferred Stock from one million to five million, and (3)
increase the authorized number of shares of Superior Common Stock from 25
million to 35 million and, in connection therewith, to authorize the issuance of
the Trust Preferred Securities as set forth in the Merger Agreement and the
Superior Common Stock issuable upon conversion of the Trust Preferred
Securities.
PROPOSAL TO AMEND THE SUPERIOR 1996 STOCK OPTION PLAN
At the Superior Meeting, the stockholders of Superior will be asked to
approve the adoption of an amendment to the Superior 1996 Stock Option Plan.
The Superior Board approved the amendment to the Superior 1996 Stock Option
Plan, subject to stockholder approval, to provide that the aggregate number of
shares of Superior Common Stock subject to awards under the Superior 1996 Stock
Option Plan be increased from 1,562,500 to . The Superior Board also
amended the Superior 1996 Stock Option Plan, subject to stockholder approval, to
(i) increase the maximum number of shares of Superior Common Stock with respect
to which stock options could be granted to any individual in any calendar year
during the term of the Superior 1996 Stock Option Plan from 312,500 to
; (ii) provide that if shares of Superior Common Stock are exchanged
by a participant as full or partial payment to Superior, or for payment of
withholding taxes, in connection with
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the exercise of a stock option or the number shares of Superior Common Stock
otherwise deliverable has been reduced for payment withholding taxes, such
shares exchanged or reduced will again be available for purposes of granting
nonqualified stock options under the Superior 1996 Stock Option Plan; (iii)
broaden the group eligible to receive stock options to include employees of, and
consultants to, affiliates of Superior, including, but not limited to, parent
corporations as defined in Section 424 of the Internal Revenue Code of 1986, as
amended (the "Code"), non-corporate entities (such as partnerships or limited
liability companies) that own at least 50% of Superior or are at least 50% owned
by Superior and other entities designated by the Superior Board in which
Superior has a material equity interest; and (iv) allow the Committee (as
defined below) to set the fair market value (for purposes of setting the
exercise price) by utilizing an average of closing prices as reported on the
applicable exchange or other reasonable methods.
The Superior Board also amended the Superior 1996 Stock Option Plan to
incorporate certain minor miscellaneous changes which do not legally require
stockholder approval (such as permitting participants to defer delivery of
Superior Common Stock acquired pursuant to the exercise of a nonqualified stock
option and permitting the Committee at the time of grant or thereafter to make a
nonqualified stock option transferable under limited circumstances set by the
Committee).
The following description of the Superior 1996 Stock Option Plan is a
summary of the principal provisions of the Superior 1996 Stock Option Plan and
is qualified in its entirety by reference to the Superior 1996 Stock Option
Plan, a copy of which may be obtained upon written request to Superior's
Investor Relations Department. See "Where You Can Obtain More Information" on
page 1.
PURPOSE OF THE SUPERIOR 1996 STOCK OPTION PLAN
Superior adopted the Superior 1996 Stock Option Plan for the benefit of its
stockholders by enabling Superior (i) to offer employees and consultants of
Superior and its affiliates stock based incentives, thereby creating a means to
raise the level of stock ownership by employees and consultants in order to
attract, retain and reward such employees and consultants and strengthen the
mutuality of interests between employees and consultants and Superior's
stockholders and (ii) to make equity based awards to non-employee directors
thereby attracting, retaining and rewarding such non-employee directors and
strengthening the mutuality of interests between non-employee directors and
Superior's stockholders.
AVAILABLE SHARES
Under the Superior 1996 Stock Option Plan, as amended, options to purchase
an aggregate of not more than shares of Superior Common Stock
(subject to certain adjustments to reflect changes in Superior's capital
structure or business by reason of certain corporate transactions or events) may
be granted from time to time to employees of, and consultants to, Superior or
its affiliates, and directors who are neither officers nor employees of Superior
or its affiliates ("Eligible Directors"). In general, if options are for any
reason cancelled, or expire or terminate unexercised, the shares covered by such
options will again be available for the grant of options. In addition, if shares
of Superior Common Stock are exchanged by a participant as full or partial
payment to Superior, or for withholding, in connection with the exercise of a
stock option or the number shares of Superior Common Stock otherwise deliverable
has been reduced for withholding, such shares exchanged or reduced will again be
available for purposes of granting nonqualified stock options under the Superior
1996 Stock Option Plan. No options may be granted after 10 years from the
effective date of the Superior 1996 Stock Option Plan. The maximum number of
shares of Superior Common Stock with respect to which options may be granted to
any individual under the Superior Stock Option Plan during any fiscal year may
not exceed .
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ELIGIBILITY AND TYPES OF AWARDS
The Superior 1996 Stock Option Plan provides for the grant of incentive
stock options ("ISOs") to employees and nonqualified stock options ("NQSOs") to
employees, consultants and directors who are neither officers nor employees of
Superior. In the case of ISOs, the exercise price of an option may not be less
than 100% of the fair market value of a share of Superior Common Stock at the
time of grant (or 110% of such fair market value if the optionee owns more than
10% of the shares of Superior Common Stock outstanding at the time of grant). In
the case of NQSOs, the exercise price of an option may not be less than 100% of
the fair market value of a share of Superior Common Stock at the time of grant.
Unless otherwise provided in the applicable option agreement, all options
granted and not previously exercised will become vested and immediately
exercisable upon a change in control of Superior (as defined in the Superior
1996 Stock Option Plan).
ADMINISTRATION
The Superior 1996 Stock Option Plan is administered and interpreted by a
committee (the "Committee") appointed by the Superior Board consisting of two or
more members of the Superior Board, each of whom is intended to be a
"non-employee director" as provided by Rule 16b-3 under the Securities Exchange
Act of 1934 and an outside director as defined under Section 162(m) of the Code
to the extent then required. If no Committee exists which has the authority to
administer the Superior 1996 Stock Option Plan, the functions of the Committee
will be exercised by the Superior Board.
The Committee generally is empowered to administer and interpret the
Superior 1996 Stock Option Plan, prescribe rules and regulations relating
thereto, determine the terms of the option agreements, amend them (in certain
cases only with the consent of the optionee), determine the individuals to whom
options are to be granted, determine the number of shares subject to each option
and the exercise price thereto, and take all actions in connection with the
Superior 1996 Stock Option Plan and the options thereunder as the Committee, in
its sole discretion, deems necessary or desirable. Options will be exercisable
for a term determined by the Committee. Any decision, interpretation or other
action taken in good faith by the Committee is final, binding and conclusive.
AMENDMENT AND TERMINATION OF PLAN
The Superior Board may modify, suspend or terminate (retroactively or
otherwise) the Superior 1996 Stock Option Plan; provided, however, that certain
material modifications affecting the Superior 1996 Stock Option Plan must be
approved by the Superior stockholders, and any change in the Superior 1996 Stock
Option Plan that may adversely affect an optionee's rights under an option
previously granted under the Superior 1996 Stock Option Plan requires the
consent of the optionee. The Committee may amend the terms of any option (other
than options granted to Eligible Directors) prospectively or retroactively;
provided, however, that any change to an option that may adversely affect an
optionee's rights under an option previously granted requires the consent of the
optionee.
NON-EMPLOYEE DIRECTOR STOCK OPTION GRANTS
Eligible Directors may receive nondiscretionary grants of nonqualified stock
options under the Superior 1996 Stock Option Plan in accordance with the terms
thereof. Each Eligible Director will receive an initial grant of an option to
purchase 18,750 shares of Superior Common Stock as of the date he or she begins
service as a director on the Superior Board at an exercise price equal to 100%
of the fair market value of Superior Common Stock at the time of grant. Each
year thereafter, other than with respect to the year in which an Eligible
Director receives an initial grant of options, as of the anniversary of the date
he or she begins service as a director on the Superior Board, each Eligible
Director will receive a nonqualified stock option to purchase 9,375 shares of
Superior Common Stock at an exercise price equal to 100% of the fair market
value of such shares at the time of grant.
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The options granted to Eligible Directors to purchase shares of Superior
Common Stock will vest evenly in three equal annual installments. Options may be
exercised only after the Eligible Director has served as a director of Superior
for at least one year. In addition, options granted and not previously
exercisable will become vested and fully exercisable immediately upon a change
in control of Superior (as defined in the Superior 1996 Stock Option Plan).
Each option granted to Eligible Directors will expire upon the tenth
anniversary of the date of grant.
If an Eligible Director terminates his service on the Superior Board for any
reason other than for "cause", including disability, death, resignation, failure
to stand for reelection or failure to be reelected, any exercisable option which
has not expired may be exercised with respect to the number of shares of
Superior Common Stock which were exercisable on the date the Eligible Director
terminated his service with Superior at any time during the remaining term of
the option. Any unexpired but unexercisable option shall terminate and become
null and void as of the date the Eligible Director terminates his service with
Superior.
MISCELLANEOUS
Awards under the Superior 1996 Stock Option Plan are generally
nontransferable, except that the Committee may, in its sole discretion, permit
the transfer of nonqualified stock options (other than those granted to Eligible
Directors) at the time of grant or thereafter.
The Superior 1996 Stock Option Plan is not subject to any of the
requirements of the Employee Retirement Income Security Act of 1974, as amended.
The Superior 1996 Stock Option Plan is not, nor is it intended to be, qualified
under Section 401(a) of the Code.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES RELATING TO THE SUPERIOR 1996 STOCK
OPTION PLAN
The rules concerning the federal income tax consequences with respect to
options granted and to be granted pursuant to the Superior 1996 Stock Option
Plan are quite technical. Moreover, the applicable statutory provisions are
subject to change (possibly with retroactive effect), as are their
interpretations and applications which may vary in individual circumstances.
Therefore, the following is designed to provide a general understanding of the
federal income tax consequences. In addition, the following discussion does not
set forth any state or local income tax or estate tax consequences that may be
applicable. This discussion is limited to the U.S. federal income tax
consequences to individuals who are citizens or residents of the United States,
other than those individuals who are taxed on a residence basis in a foreign
country.
INCENTIVE STOCK OPTIONS. In general, an employee will not realize taxable
income upon either the grant or the exercise of an ISO and Superior will not
realize an income tax deduction at either such time. If the recipient does not
sell the Superior Common Stock received pursuant to the exercise of an ISO
within either (i) two years after the date of the grant of the ISO or (ii) one
year after the date of exercise, a subsequent sale of the Superior Common Stock
will result in long-term capital gain or loss to the recipient and will not
result in a tax deduction to Superior. Capital gains rates may be reduced in the
case of a longer holding period.
If the recipient disposes of the Superior Common Stock acquired upon
exercise of the ISO within either of the above mentioned time periods, the
recipient will generally realize as ordinary income an amount equal to the
lesser of (i) the fair market value of the Superior Common Stock on the date of
exercise over the exercise price, or (ii) the amount realized upon disposition
over the exercise price. In such event, Superior generally will be entitled to
an income tax deduction equal to the amount recognized as ordinary income. Any
gain in excess of such amount realized by the recipient as ordinary income would
be taxed at the rates applicable to short-term or long-term capital gains
(depending on the holding period).
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In addition, (i) officers and directors of Superior subject to Section 16(b)
of the Exchange Act may be subject to special rules regarding the income tax
consequences concerning their ISOs, (ii) any entitlement to a tax deduction on
the part of Superior is subject to the applicable federal tax rules (including,
without limitation, Section 162(m) of the Code regarding the $1,000,000
limitation on deductible compensation), (iii) the exercise of an ISO may have
implications in the computation of alternative minimum taxable income, and (iv)
in the event that the exercisability or vesting of any award is accelerated
because of a change in control, payments relating to the awards (or a portion
thereof), either alone or together with certain other payments, may constitute
parachute payments under Section 280G of the Code, which excess amounts may be
subject to excise taxes.
NONQUALIFIED STOCK OPTIONS. A recipient will not realize any taxable income
upon the grant of a nonqualified stock option and Superior will not receive a
deduction at the time of such grant unless such option has a readily
ascertainable fair market value (as determined under applicable tax law) at the
time of grant. Upon exercise of a nonqualified stock option, the recipient
generally will realize ordinary income in an amount equal to the excess of the
fair market value of the Superior Common Stock on the date of exercise over the
exercise price. Upon a subsequent sale of the Superior Common Stock by the
recipient, the recipient will recognize short-term or long-term capital gain or
loss depending upon his or her holding period for the Superior Common Stock.
Superior will generally be allowed a deduction equal to the amount recognized by
the recipient as ordinary income.
In addition, (i) any officers and directors of Superior subject to Section
16(b) of the Exchange Act may be subject to special tax rules regarding the
income tax consequences concerning their nonqualified stock options, (ii) any
entitlement to a tax deduction on the part of Superior is subject to the
applicable tax rules (including, without limitation, Section 162(m) of the Code
regarding a $1,000,000 limitation on deductible compensation), and (iii) in the
event that the exercisability or vesting of any award is accelerated because of
a change in control, payments relating to the awards (or a portion thereof),
either alone or together with certain other payments, may constitute parachute
payments under Section 280G of the Code, which excess amounts may be subject to
excise taxes.
In general, Section 162(m) of the Code denies a publicly held corporation a
deduction for federal income tax purposes for compensation in excess of
$1,000,000 per year per person to its chief executive officer and the four other
officers whose compensation is disclosed in its proxy statement, subject to
certain exceptions. Stock options will generally qualify under one of these
exceptions if they are granted under a plan that states the maximum number of
shares with respect to which options may be granted to any recipient during a
specified period and the plan under which the options are granted is approved by
stockholders and is administered by a compensation committee comprised of
outside directors. The Superior 1996 Stock Option Plan is intended to satisfy
these requirements with respect to stock options.
FUTURE PLAN AWARDS
Because future awards under the Superior 1996 Stock Option Plan will be
based upon prospective factors including the nature of services to be rendered
by prospective key employees and officers of, advisors and independent
consultants to, Superior or its affiliates, and directors who are neither
officers nor employees of Superior or its affiliates and their potential
contributions to the success of Superior, actual awards cannot be determined at
this time.
VOTE REQUIRED AND BOARD RECOMMENDATION
Approval of the amendment to the Superior 1996 Stock Option Plan requires
the affirmative vote of the majority of the outstanding shares of Superior
present in person or represented by proxy at the Superior Meeting and entitled
to vote on the proposal, provided that the total vote cast on such proposal
represents over 50% in interest of all shares entitled to vote on the proposal.
The Superior Board
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recommends that stockholders of Superior vote their shares FOR approval of the
amendment to the Superior 1996 Stock Option Plan.
OTHER MATTERS
As of the date of this Joint Proxy Statement/Prospectus, the Essex Board and
the Superior Board know of no matters that will be presented for consideration
at the Essex Meeting or the Superior Meeting, respectively, other than as
described in this Joint Proxy Statement/Prospectus. If any other matters shall
properly come before the Essex Meeting or the Superior Meeting and be voted
upon, the enclosed proxies will be deemed to confer discretionary authority on
the individuals named as proxies therein to vote the shares represented by such
proxies as to any such matters. The individuals named as proxies intend to vote
or not to vote in accordance with the recommendation of the management of Essex
or Superior, as the case may be.
EXPERTS
The consolidated financial statements of Superior TeleCom Inc. and
subsidiaries as of April 30, 1997 and 1998 and for each of the three years in
the period ended April 30, 1998 incorporated in this Joint Proxy
Statement/Prospectus by reference have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in accounting and auditing in giving said reports.
The consolidated financial statements of Essex International Inc. at
December 31, 1997 and 1996, and for each of the three years in the period ended
December 31, 1997, incorporated by reference in the Joint Proxy Statement of
Essex International Inc. and Superior TeleCom Inc., which is made a part of this
Prospectus and Registration Statement, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their reports thereon incorporated by
reference herein, and are included in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
LEGAL MATTERS
The validity of the Trust Preferred Securities to be issued in connection
with the Merger will be passed upon for the Trust by Proskauer Rose LLP, New
York, New York. Cooley Godward LLP, Palo Alto, California is acting as counsel
for Essex in connection with certain legal matters relating to the Merger and
the transactions contemplated thereby.
Proskauer Rose LLP, New York, New York, counsel to Superior and the Trust,
will pass upon for Superior and the Trust certain federal income tax
consequences relating to the Merger, the Debentures and the Trust Preferred
Securities.
RELATIONSHIP WITH INDEPENDENT AUDITORS
Representatives of Ernst & Young LLP will be present at the Essex Meeting
and will be available to respond to appropriate questions and have the
opportunity to make a statement if they desire. Representatives of Arthur
Andersen LLP will be present at the Superior Meeting and will be available to
respond to appropriate questions and have the opportunity to make a statement if
they desire.
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STOCKHOLDERS PROPOSALS
Stockholder proposals for inclusion in the proxy statement of Superior in
connection with the 1999 annual meeting of Superior stockholders must be
delivered to or mailed and received at the principal executive offices of
Superior not later than the close of business on the 60th day, nor earlier than
the 90th day prior to the first anniversary of the preceding year's annual
meeting, which for 1999 will be between June 18, 1999 and July 20, 1999 (unless
such matters are included in Superior's proxy statement pursuant to Rule 14a-8
under the Securities Exchange Act of 1934, as amended.) A stockholder who
intends to submit a proposal in connection with the 1999 annual meeting of
Superior stockholders that the stockholder does not intend to request to be
included in the proxy statement of Superior in accordance with the rules and
regulations of the Commission must give notice to Superior prior to June 29,
1999. If the stockholder does not provide Superior with timely notice of such a
proposal, the persons designated as proxies on Superior's proxy card may
exercise their discretionary authority to vote on that proposal. If the
stockholder does provide Superior with timely notice of such a proposal,
depending upon the circumstances, proxies may not be able to exercise their
discretionary authority to vote on the proposal. Stockholder proposals must be
mailed to the Secretary of Superior at the Superior principal executive offices.
In the event that the Merger is not consummated before such time, Essex
expects to hold an annual meeting during May 1999. Pursuant to the Essex Bylaws,
stockholders who wish to bring matters or propose nominees for director at
Essex's 1999 annual meeting of stockholders must provide specified information
to Essex not later than the close of business on the 60th day, nor earlier than
the close of business on the 90th day prior to the first anniversary of the
preceding year's annual meeting, which for 1999 will be between January 29, 1999
and February 28, 1999 (unless such matters are included in Essex's proxy
statement pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as
amended). Stockholder proposals must be mailed to the Secretary of Essex at the
Essex principal offices.
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APPENDIX A
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SUPERIOR TELECOM INC.
SUT ACQUISITION CORP.
AND
ESSEX INTERNATIONAL INC.
DATED AS OF OCTOBER 21, 1998
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TABLE OF CONTENTS
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ARTICLE I THE OFFER................................................................................... 1
SECTION 1.01. The Offer............................................................... 1
SECTION 1.02. Company Action.......................................................... 3
SECTION 1.03. Directors............................................................... 4
ARTICLE II THE MERGER.................................................................................. 5
SECTION 2.01. The Merger.............................................................. 5
SECTION 2.02. Effective Time.......................................................... 5
SECTION 2.03. Effect of the Merger.................................................... 5
SECTION 2.04. Certificate of Incorporation; By-Laws................................... 5
SECTION 2.05. Directors and Officers.................................................. 5
SECTION 2.06. Effect on Capital Stock................................................. 5
SECTION 2.07. Exchange of Certificates; Exchange Agent................................ 7
SECTION 2.08. Stock Transfer Books.................................................... 8
SECTION 2.09. Dissenting Shares....................................................... 8
SECTION 2.10. No Further Ownership Rights in Company Common Stock..................... 9
SECTION 2.11. Lost, Stolen or Destroyed Certificates.................................. 9
SECTION 2.12. Taking of Necessary Action; Further Action.............................. 9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................................... 10
SECTION 3.01. Organization and Qualification; Subsidiaries............................ 10
SECTION 3.02. Certificate of Incorporation and By-Laws................................ 10
SECTION 3.03. Capitalization.......................................................... 10
SECTION 3.04. Authority Relative to This Agreement.................................... 11
SECTION 3.05. Material Contracts; No Conflict, Required Filings and Consents.......... 11
SECTION 3.06. Compliance, Permits..................................................... 12
SECTION 3.07. SEC Filings, Financial Statements....................................... 12
SECTION 3.08. Absence of Certain Changes or Events.................................... 13
SECTION 3.09. No Undisclosed Liabilities.............................................. 13
SECTION 3.10. Absence of Litigation................................................... 13
SECTION 3.11. Employee Benefit Plans; Employment Agreements........................... 13
SECTION 3.12. Labor Matters........................................................... 16
SECTION 3.13. Restrictions on Business Activities..................................... 16
SECTION 3.14. Taxes................................................................... 16
SECTION 3.15. Environmental Matters................................................... 17
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SECTION 3.16. Brokers................................................................. 18
SECTION 3.17. Intellectual Property................................................... 18
SECTION 3.18. Vote Required........................................................... 19
SECTION 3.19. Opinions of Financial Advisors.......................................... 19
SECTION 3.20. Year 2000 Compliance.................................................... 19
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUB.............................................................................. 20
SECTION 4.01. Organization and Qualification.......................................... 20
SECTION 4.02. Authority Relative to this Agreement.................................... 20
SECTION 4.03. No Conflict, Required Filings and Consents.............................. 20
SECTION 4.04. Certificate of Incorporation and By-Laws................................ 21
SECTION 4.05. Capitalization.......................................................... 21
SECTION 4.06. SEC Filings, Financial Statements....................................... 22
SECTION 4.07. Absence of Certain Changes or Events.................................... 22
SECTION 4.08. Restrictions on Business Activities..................................... 22
SECTION 4.09. Compliance, Permits..................................................... 22
SECTION 4.10. No Undisclosed Liabilities.............................................. 23
SECTION 4.11. Absence of Litigation................................................... 23
SECTION 4.12. Environmental Matters................................................... 23
SECTION 4.13. Opinion of Financial Advisor............................................ 24
ARTICLE V CONDUCT OF BUSINESS BY THE COMPANY.......................................................... 24
SECTION 5.01. Conduct of Business by the Company...................................... 24
SECTION 5.02. No Solicitation......................................................... 25
SECTION 5.03. Information Supplied.................................................... 26
ARTICLE VI ADDITIONAL AGREEMENTS....................................................................... 27
SECTION 6.01. Filings, Other Actions; Notification.................................... 27
SECTION 6.02. Stockholders' Meetings.................................................. 28
SECTION 6.03. Access to Information; Confidentiality.................................. 28
SECTION 6.04. Consents, Approvals..................................................... 29
SECTION 6.05. Stock Options........................................................... 29
SECTION 6.06. Employment Matters...................................................... 29
SECTION 6.07. Agreements of Affiliates................................................ 29
SECTION 6.08. Indemnification......................................................... 29
SECTION 6.09. Notification of Certain Matters......................................... 30
SECTION 6.10. Further Action.......................................................... 30
</TABLE>
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SECTION 6.11. Public Announcements.................................................... 30
SECTION 6.12. Listing and Delisting................................................... 31
SECTION 6.13. Expenses................................................................ 31
SECTION 6.14. Financing............................................................... 31
ARTICLE VII CONDITIONS TO THE MERGER.................................................................... 31
SECTION 7.01. Conditions to Obligation of Each Party to Effect the Merger............. 31
SECTION 7.02. Additional Condition to Obligation of the Company....................... 31
ARTICLE VIII TERMINATION................................................................................. 32
SECTION 8.01. Termination............................................................. 32
SECTION 8.02. Effect of Termination................................................... 32
SECTION 8.03. Fees and Expenses....................................................... 33
ARTICLE IX GENERAL PROVISIONS.......................................................................... 34
SECTION 9.01. Effectiveness of Representations, Warranties and Agreements............. 34
SECTION 9.02. Notices................................................................. 34
SECTION 9.03. Certain Definitions..................................................... 35
SECTION 9.04. Amendment............................................................... 37
SECTION 9.05. Waiver.................................................................. 37
SECTION 9.06. Headings................................................................ 37
SECTION 9.07. Severability............................................................ 37
SECTION 9.08. Entire Agreement........................................................ 37
SECTION 9.09. Assignment, Merger Sub.................................................. 37
SECTION 9.10. Parties in Interest..................................................... 37
SECTION 9.11. Failure or Indulgence Not Waiver; Remedies Cumulative................... 37
SECTION 9.12. Governing Law........................................................... 38
SECTION 9.13. Counterparts............................................................ 38
SECTION 9.14. Waiver of Jury Trial.................................................... 38
</TABLE>
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<S> <C> <C>
EXHIBIT A CONDITIONS TO THE OFFER.............................................. A-1
EXHIBIT B CERTIFICATE OF DESIGNATION........................................... B-1
EXHIBIT C STOCKHOLDERS AGREEMENT............................................... C-1
EXHIBIT D RESTATED CERTIFICATE OF INCORPORATION................................ D-1
EXHIBIT E FORM OF AFFILIATE AGREEMENT.......................................... E-1
EXHIBIT F FORM OF INDENTURE.................................................... F-1
</TABLE>
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of October 21, 1998 (this
"Agreement"), among SUPERIOR TELECOM INC., a Delaware corporation ("Parent"),
SUT ACQUISITION CORP., a Delaware corporation and a wholly owned subsidiary of
Parent ("Merger Sub"), and ESSEX INTERNATIONAL INC., a Delaware corporation (the
"Company").
W I T N E S S E T H:
WHEREAS, each of the boards of directors of Parent, Merger Sub and the
Company has determined that it is advisable and in the best interests of their
respective stockholders for Parent to enter into a business combination with the
Company upon the terms and subject to the conditions set forth herein;
WHEREAS, in furtherance of such combination, it is proposed that Merger Sub
shall make a cash tender offer (the "Offer") to acquire up to 22,562,135 of the
issued and outstanding shares of common stock, par value $0.01 per share, of the
Company ("Company Common Stock") for $32.00 per share of Company Common Stock
(such amount, or any greater amount per share of Company Common Stock paid
pursuant to the Offer, being hereinafter referred to as the "Per Share Amount")
net to the seller in cash (subject to applicable withholding of taxes), upon the
terms and subject to the conditions of this Agreement and the Offer;
WHEREAS, the board of directors of the Company (the "Board") has approved
the making of the Offer and resolved and agreed to recommend that holders of
Company Common Stock tender their shares of Company Common Stock pursuant to the
Offer;
WHEREAS, also in furtherance of such combination, each of the boards of
directors of Parent, Merger Sub and the Company has approved the merger (the
"Merger") of Merger Sub with and into the Company in accordance with the
applicable provisions of the Delaware General Corporation Law ("Delaware Law"),
and upon the terms and subject to the conditions set forth herein;
WHEREAS, pursuant to the Merger, each outstanding share of Company Common
Stock other than shares of Company Common Stock owned directly or indirectly by
Parent, Merger Sub or the Company and Dissenting Shares (as defined in Section
2.09(a)) shall be converted into the right to receive the Merger Consideration
(as defined in Section 2.07(b)), consisting of shares of Series A Cumulative
Convertible Exchangeable Preferred Stock, par value $.01 per share, of Parent
("Parent Preferred Stock") having the powers, preferences, rights,
qualifications, limitations and restrictions in the form set forth in Exhibit B
hereto and, if applicable, cash upon the terms and subject to the conditions set
forth herein;
WHEREAS, concurrently with the execution and delivery of this Agreement and
as a condition and inducement to Parent's willingness to enter into this
Agreement, Parent, Merger Sub and certain stockholders of the Company (the
"Stockholders") are entering into a stockholders agreement ("Stockholders
Agreement") in the form attached hereto as Exhibit C pursuant to which such
Stockholders are agreeing to take certain actions to support the transactions
contemplated by this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Parent, Merger Sub and the Company hereby agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01. The Offer. (a) Provided that this Agreement shall not have
been terminated in accordance with Article VIII, Merger Sub shall commence
(within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) the Offer as promptly as reasonably practicable
after the date hereof, but in no event later than five business days after the
initial public announcement on the date hereof or the following day of Merger
Sub's intention to commence the Offer. The obligation of Merger Sub to accept
for payment and pay for shares of Company Common Stock tendered pursuant to the
Offer shall only be subject to (i) the condition (the "Minimum Condition") that
<PAGE>
at least the number of shares of Company Common Stock (together with the shares
of the Company Common Stock, if any, then owned by Parent or Merger Sub)
constituting a majority of the then outstanding shares of Company Common Stock
on a fully diluted basis shall have been validly tendered and not withdrawn
prior to the expiration of the Offer and (ii) the satisfaction or waiver of the
other conditions set forth in Exhibit A. As used herein, "fully diluted basis"
means issued and outstanding shares of Company Common Stock and shares of
Company Common Stock subject to issuance under vested Options (as defined in
Section 2.06(c)) and shares of Company Common Stock subject to issuance upon
exercise of outstanding warrants, calls, subscriptions or other rights,
agreements, arrangements or commitments of any character relating to the issued
or unissued capital stock of the Company or securities convertible or
exchangeable for such capital stock, but shall not include unvested Options.
Merger Sub expressly reserves the right, subject to compliance with the Exchange
Act, to waive any such condition, to increase the Per Share Amount and to make
any other changes in the terms and conditions of the Offer; provided, however,
that unless Parent and Merger Sub shall have obtained the prior written approval
of the Company, no change may be made in the Offer which (i) decreases the Per
Share Amount, (ii) changes the form of consideration to be paid in the Offer,
(iii) reduces the maximum number of shares of Company Common Stock to be
purchased in the Offer, (iv) modifies the conditions to the Offer set forth in
Exhibit A or imposes conditions to the Offer in addition to those set forth in
Exhibit A, (v) modifies or waives the Minimum Condition or (vi) except as
provided in Section 1.01(b), extends the Offer. The Per Share Amount shall,
subject to applicable withholding of taxes, be net to the seller in cash, upon
the terms and subject to the conditions of the Offer. Subject to the terms and
conditions of the Offer (including, without limitation, the Minimum Condition),
Merger Sub shall, and Parent shall cause Merger Sub to, accept for payment and
pay for, as promptly as practicable after expiration of the Offer, all shares of
Company Common Stock validly tendered and not withdrawn.
(b) Notwithstanding the foregoing, Merger Sub may, without the consent of
the Company, (A) extend the Offer in increments of up to 10 business days each
if at the scheduled or any extended expiration date of the Offer the Minimum
Condition has not been satisfied or any of the other conditions set forth in
Exhibit A shall not be satisfied or waived, until such time as such conditions
are satisfied or waived and (B) extend the Offer for any period required by any
rule, regulation, interpretation or position of the SEC (as defined in Section
1.01(c)) or the staff thereof applicable to the Offer. Without limiting the
right of Merger Sub to extend the Offer pursuant to the immediately preceding
sentence, in the event that (i) the Minimum Condition shall not have been
satisfied or (ii) the condition set forth in paragraph (a) of Exhibit A with
respect to any action or proceeding by a Governmental Entity, the condition set
forth in paragraph (j) of Exhibit A or the HSR Condition (as defined in Exhibit
A) shall not have been satisfied or waived at the scheduled or any extended
expiration date of the Offer, at the request of the Company Merger Sub shall,
and Parent shall cause Merger Sub to, extend the expiration date of the Offer in
increments of five business days each until the earliest to occur of (x) the
satisfaction or waiver of the Minimum Condition or such other condition, (y) the
termination of this Agreement in accordance with its terms and (z) April 30,
1999.
(c) As soon as practicable on the date of commencement of the Offer, Parent
and Merger Sub shall file with the Securities and Exchange Commission (the
"SEC") a Tender Offer Statement on Schedule 14D-1 (together with all amendments
and supplements thereto, the "Schedule 14D-1") with respect to the Offer. The
Schedule 14D-1 shall contain or shall incorporate by reference an offer to
purchase (the "Offer to Purchase") and forms of the related letter of
transmittal and any related summary advertisement (the Schedule 14D-1, the Offer
to Purchase and such other documents, together with all supplements and
amendments thereto, being referred to herein collectively as the "Offer
Documents"). Parent and Merger Sub shall mail the Schedule 14D-1 to the
stockholders of the Company as soon as practicable after filing with the SEC.
The Offer Documents shall comply in all material respects with the provisions of
applicable federal securities laws. Each of Parent, Merger Sub and the Company
agrees to correct promptly any information provided by it for use in the Offer
Documents which shall have become false or misleading, and Parent and Merger Sub
further agree to take all steps necessary to cause the Schedule 14D-1, as so
2
<PAGE>
corrected, to be filed with the SEC and the other Offer Documents, as so
corrected, to be disseminated to holders of shares of Company Common Stock, in
each case as and to the extent required by applicable federal securities laws.
Parent and Merger Sub shall give the Company and its counsel reasonable
opportunity to review and comment upon the Offer Documents prior to their being
filed with, or sent to, the SEC. Parent and Merger Sub agree to provide the
Company and its counsel any comments Parent, Merger Sub or their counsel may
receive from the SEC or its staff with respect to the Offer Documents promptly
after the receipt of such comments.
(d) Parent shall provide or cause to be provided to Merger Sub on a timely
basis the funds necessary to purchase any and all shares of Company Common Stock
that Merger Sub becomes obligated to purchase pursuant to the Offer.
SECTION 1.02. Company Action. (a) The Company hereby approves of and
consents to the Offer and represents that the Board, at a meeting duly called
and held on October 21, 1998, by the affirmative vote of all members of the
Board present at such meeting, has (i) determined that each of the Agreement,
the Offer and the Merger are fair to and in the best interests of the
stockholders of the Company, (ii) approved, found advisable and adopted this
Agreement and the transactions contemplated hereby, including the Offer and the
Merger (the "Transactions") and (iii) recommended that the stockholders of the
Company accept the Offer and tender their shares of Company Common Stock to
Merger Sub and approve and adopt this Agreement and the Transactions. The
Company hereby consents to the inclusion in the Offer Documents of the
recommendation of the Board described in the immediately preceding sentence,
subject to the second sentence of Section 5.02.
(b) Concurrently with the commencement of the Offer, the Company shall file
with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 (together
with all amendments and supplements thereto, the "Schedule 14D-9") containing
the recommendation of the Board described in Section 1.02(a) and shall
disseminate the Schedule 14D-9 to the extent required by Rule 14D-9 promulgated
under the Exchange Act and any other applicable federal securities laws. The
Schedule 14D-9 shall comply in all other material respects with the provisions
of applicable federal securities laws. Each of the Company, Parent and Merger
Sub agrees to correct promptly any information provided by it for use in the
Schedule 14D-9 which shall have become false or misleading, and the Company
further agrees to take all steps necessary to cause the Schedule 14D-9, as so
corrected, to be filed with the SEC and disseminated to holders of shares of
Company Common Stock, in each case as and to the extent required by applicable
federal securities laws. Parent and its counsel shall be given reasonable
opportunity to review the Schedule 14D-9 before it is filed with the SEC. The
Company agrees to provide Parent and Merger Sub and their counsel any comments
the Company or its counsel may receive from the SEC or its staff with respect to
the Schedule 14D-9 promptly after the receipt of such comments.
(c) The Company shall cause its transfer agent to promptly furnish Merger
Sub with mailing labels containing the names and addresses of all record holders
of shares of Company Common Stock and with security position listings of shares
of Company Common Stock held in stock depositories, each as of a recent date,
together with all other available listings and computer files containing names,
addresses and security position listings of record holders and beneficial owners
of shares of Company Common Stock. The Company shall furnish Merger Sub with
such additional information, including, without limitation, updated listings and
computer files of stockholders, mailing labels and security position listings,
and such other assistance as Parent, Merger Sub or their agents may reasonably
request. Subject to the requirements of applicable law, and except for such
steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Offer or the Merger, Parent and Merger Sub
shall, and each of Parent and Merger Sub shall cause its affiliates, associates,
agents and advisors to, (i) hold in confidence the information contained in such
labels, listings and files, (ii) use such information only in connection with
the Offer and the Merger and (iii) if this Agreement is terminated in accordance
with Article VIII, promptly deliver to the Company all copies (whether in human
or machine readable form) of such information then in their possession.
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SECTION 1.03. Directors. (a) Promptly upon the acceptance for payment by
Merger Sub for shares of Company Common Stock purchased pursuant to the Offer,
and from time to time thereafter as shares of Company Common Stock are acquired
by Merger Sub, Merger Sub shall be entitled, subject to compliance with Section
14(f) of the Exchange Act, to designate such number of directors, rounded up to
the next greatest whole number, on the Board as will give Merger Sub
representation on the Board equal to that number of directors which equals the
product of the total number of directors on the Board (giving effect to the
directors appointed or elected pursuant to this sentence and including current
directors serving as officers of the Company) multiplied by the percentage that
the aggregate number of shares of Company Common Stock beneficially owned by
Merger Sub or any affiliate of Merger Sub (including for purposes of this
Section 1.03 such shares of Company Common Stock as are accepted for payment
pursuant to the Offer, but excluding shares of Company Common Stock held by the
Company or any of its affiliates) bears to the number of shares of Company
Common Stock outstanding; provided, however, that in the event that Merger Sub's
designees are appointed or elected to the Board, until the Effective Time (as
defined in Section 2.02) the Board shall have at least one director who is a
director on the date of this Agreement and who is not an executive officer of
the Company (the "Independent Director"). At such times, the Company will also
cause (i) each committee of the Board, (ii) if requested by Merger Sub, the
board of directors of each of the Company's subsidiaries and (iii) if requested
by Merger Sub, each committee of such subsidiaries' boards to include persons
designated by Merger Sub constituting the same percentage of each such committee
or board as Merger Sub's designees are of the Board. The Company shall, upon
request by Merger Sub, promptly increase the size of the Board or exercise its
best efforts to secure the resignations of such number of directors as is
necessary to enable Merger Sub's designees to be elected to the Board and shall
cause Merger Sub's designees to be so elected. The Board shall approve, and by
approving the execution and delivery of this Agreement by the Company, hereby
does approve the taking of action by stockholders of the Company, by written
consent, to amend the By-Laws of the Company as may be necessary or desirable to
effect the provisions of this Section 1.03.
(b) Following the election or appointment of Merger Sub's designees pursuant
to this Section 1.03, and prior to the Effective Time, the approval of a
majority of the Independent Directors shall be required to authorize (i) any
termination of this Agreement by the Company, (ii) any amendment of this
Agreement requiring action by the Board (other than an amendment to eliminate
cash from the Merger Consideration (as defined in Section 2.07(b)) in the event
Merger Sub accepts for payment and pays for the Offered Number (as defined in
Section 2.06(b)) of shares of Company Common Stock in the Offer), (iii) any
consent by the Company to any extension of the time for performance of any of
the obligations or other acts of Parent or Merger Sub, (iv) any waiver by the
Company of compliance with any of the covenants or conditions contained in this
Agreement for the benefit of the Company or any other rights of the Company
under this Agreement and (v) any amendment or withdrawal by the Board of its
recommendation of the Merger pursuant to Section 5.02.
(c) Subject to applicable law, the Company shall promptly take all action
necessary pursuant to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder in order to fulfill its obligations under this Section
1.03 and shall include in the Schedule 14D-9 mailed to stockholders promptly
after the commencement of the Offer (or an amendment thereof or an information
statement pursuant to Rule 14f-1 if Merger Sub has not theretofore designated
directors) such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 in order to fulfill
its obligations under this Section 1.03. Parent and Merger Sub shall furnish to
the Company and be solely responsible for any information with respect to itself
and its nominees, officers, directors and affiliates required by Section 14(f)
and Rule 14f-1.
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ARTICLE II
THE MERGER
SECTION 2.01. The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with Delaware Law, at the Effective
Time (as defined in Section 2.02) Merger Sub shall be merged with and into the
Company. As a result of the Merger, the separate corporate existence of Merger
Sub shall cease and the Company shall continue as the surviving corporation of
the Merger (the "Surviving Corporation") and shall succeed to and assume all the
rights and obligations of Merger Sub in accordance with Delaware Law. Unless
this Agreement has been terminated and the transactions herein contemplated have
been abandoned pursuant to Article VIII and subject to the satisfaction or
waiver of the conditions set forth in Article VII, the consummation of the
Merger will take place as promptly as practicable (and in any event within two
business days) after satisfaction or waiver of the conditions set forth in
Article VII, at the offices of Proskauer Rose LLP, 1585 Broadway, New York, New
York 10036, unless another date, time or place is agreed to in writing by the
parties hereto.
SECTION 2.02. Effective Time. As promptly as practicable after the
satisfaction or waiver of the conditions set forth in Article VII, the parties
hereto shall file this Agreement or a certificate of merger or certificate of
ownership and merger (in either case, the "Certificate of Merger") with the
Secretary of State of the State of Delaware, in such form as required by, and
executed in accordance with the relevant provisions of, Delaware Law and shall
make all other filings or recordings required under Delaware Law. The Merger
shall become effective at such time as the Certificate of Merger is duly filed
with such Secretary of State, or at such other time as Parent and the Company
shall agree and specify in the Certificate of Merger (the time the Merger
becomes effective being the "Effective Time").
SECTION 2.03. Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in this Agreement, the Certificate of Merger and
the applicable provisions of Delaware Law. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time all the property,
rights, privileges, powers and franchises of the Company and Merger Sub shall
vest in the Surviving Corporation, and all debts, liabilities and duties of the
Company and Merger Sub shall become the debts, liabilities and duties of the
Surviving Corporation.
SECTION 2.04. Certificate of Incorporation; By-Laws. At the Effective Time,
the Certificate of Incorporation of the Surviving Corporation shall be amended
to read in its entirety as set forth on Exhibit D hereto, until thereafter
amended as provided by Delaware Law and such Certificate of Incorporation.
The By-Laws of Merger Sub, as in effect immediately prior to the Effective
Time, shall be the By-Laws of the Surviving Corporation until thereafter amended
as provided by Delaware Law, the Certificate of Incorporation of the Surviving
Corporation and such By-Laws.
SECTION 2.05. Directors and Officers. The directors of Merger Sub
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-Laws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
SECTION 2.06. Effect on Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of Parent, Merger Sub, the Company
or the holders of any of the following securities:
(a) Cancellation. Each share of Company Common Stock held in the
treasury of the Company and each share of Company Common Stock owned by
Parent, Merger Sub or any direct or indirect wholly owned subsidiary of the
Company or Parent immediately prior to the Effective Time ("Ineligible
Shares") shall, by virtue of the Merger and without any action on the part
of the holder thereof, cease to be outstanding, be canceled and retired
without payment of any consideration therefor and cease to exist.
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(b) Conversion of Securities. Subject to Sections 2.06(e) and 2.06(f),
each remaining outstanding share of Company Common Stock, other than
Dissenting Shares (as defined in Section 2.09), shall be converted into the
right to receive (i) 0.64 fully paid and non-assessable share of Parent
Preferred Stock (the "Exchange Ratio"); provided, however, that if Merger
Sub accepts for payment and pays for less than 22,562,135 (the "Offered
Number") shares of Company Common Stock in the Offer (the number of shares
of Company Common Stock so accepted for payment and paid for being referred
to herein as the "Accepted Share Number"), then the Exchange Ratio shall be
adjusted (the "Adjusted Exchange Ratio") and the Adjusted Exchange Ratio
shall be equal to the product of the Exchange Ratio and a fraction where (A)
the numerator of which is equal to (x) the number of outstanding shares of
Company Common Stock immediately prior to the Effective Time (excluding
Ineligible Shares) (the "Final Outstanding Number") plus (y) the Accepted
Share Number minus (z) the Offered Number and (B) the denominator of which
is the Final Outstanding Number and (ii) if the Exchange Ratio has been
adjusted pursuant to the immediately preceding proviso, an amount in cash
equal to the product of the Per Share Amount and a fraction where (A) the
numerator of which is the amount by which the Offered Number exceeds the
Accepted Share Number and (B) the denominator of which is the Final
Outstanding Number.
(c) Stock Options. All options to purchase Company Common Stock granted
under the Company's Amended and Restated Stock Option Plan, as amended to
date (the "Employee Plan") and the Company's 1997 Stock Option Plan for
Nonemployee Directors (the "Directors' Plan" and, with the Employee Plan,
the "Stock Option Plans") or pursuant to any other arrangement adopted by
the Board to provide options, warrants or other rights to purchase capital
stock of the Company to directors, officers or employees of the Company (in
any such case, an "Option") then outstanding shall be subject to the
provisions of Section 6.05.
(d) Capital Stock of Merger Sub. Each share of common stock, par value
$.01 per share, of Merger Sub issued and outstanding immediately prior to
the Effective Time shall be converted into and exchanged for one validly
issued, fully paid and non-assessable share of common stock, par value $.01
per share, of the Surviving Corporation. Each stock certificate of Merger
Sub evidencing ownership of any such shares shall continue to evidence
ownership of such shares of capital stock of the Surviving Corporation.
(e) Adjustments to Exchange Ratio. The Exchange Ratio shall be adjusted
to reflect fully the effect of any stock split, reverse split, stock
dividend (including any dividend or distribution of securities convertible
into Company Common Stock), reorganization, recapitalization or other like
change with respect to Company Common Stock, the record date for which shall
occur after the date hereof and prior to the Effective Time. The conversion
ratio of Parent Preferred Stock into Parent Common Stock (as defined in
Section 4.05) shall be adjusted to reflect fully the effect of any stock
split, reverse split, stock dividend (including any dividend or distribution
of securities convertible into Parent Common Stock), reorganization,
recapitalization or other like change with respect to Parent Common Stock,
the record date of which shall occur after the date hereof and prior to the
Effective Time.
(f) Fractional Shares. No fraction of a share of Parent Preferred Stock
will be issued, but in lieu thereof each holder of Company Common Stock who
would otherwise be entitled to a fraction of a share of Parent Preferred
Stock (after aggregating all fractional shares of Parent Preferred Stock to
be received by such holder) shall receive from Parent an amount of cash
(rounded to the nearest whole cent), without interest, equal to the product
of (i) such fraction, multiplied by (ii) the average of the closing price
for the Parent Preferred Stock as of each of the 10 consecutive trading days
immediately preceding the Effective Time if the Parent Preferred Stock is
traded on a "when issued" basis, or for the 10 consecutive trading days
immediately succeeding the Effective Time if the Parent Preferred Stock is
not traded on a "when issued" basis, in either case, as quoted in The Wall
Street Journal or other reliable financial newspaper or publication. For the
purposes of the preceding sentence, a
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"trading day" means a day on which trading generally takes place on the New
York Stock Exchange (the "NYSE") and on which trading in Parent Preferred
Stock has occurred.
(g) Notwithstanding anything herein to the contrary, at the sole option
of Parent and with the consent of the Independent Directors, which consent
shall not be unreasonably withheld, Parent may, prior to the mailing of the
Prospectus/Proxy Statement (as defined in Section 5.03) to the stockholders
of the Company, substitute for the Parent Preferred Stock convertible
preferred securities having economic and other material terms and conditions
equivalent to the Parent Preferred Stock as determined by the board of
directors of Parent with the concurrence of a majority of the Independent
Directors, but representing undivided beneficial interests in the assets of
a statutory business trust created under the laws of the State of Delaware,
of which all of the beneficial interests in the assets of such trust
represented by common securities are owned by Parent. In the event of such
substitution, all references in this Agreement to Parent Preferred Stock
shall be deemed to refer to such convertible preferred securities.
SECTION 2.07. Exchange of Certificates; Exchange Agent. (a) Prior to the
Effective Time, Parent shall deposit, or shall cause to be deposited, to or for
the account of a bank or trust company designated by Parent (the "Exchange
Agent"), which designation shall require the consent of the Company, which
consent shall not be unreasonably withheld, in trust for the benefit of the
holders of Company Common Stock (other than Dissenting Shares), for exchange in
accordance with this Section 2.07, through the Exchange Agent, certificates
evidencing the Parent Preferred Stock and, if applicable, the cash portion of
the Merger Consideration (as defined in Section 2.07(b)), issuable pursuant to
Section 2.06 in exchange for outstanding shares of Company Common Stock.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, Parent will instruct the Exchange Agent to mail to each holder
of record of a certificate or certificates which immediately prior to the
Effective Time evidenced outstanding shares of Company Common Stock (other than
Dissenting Shares) (the "Certificates") (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to the
Exchange Agent and shall be in such form and have such other provisions as
Parent may reasonably specify) and (ii) instructions to effect the surrender of
the Certificates in exchange for the certificates evidencing shares of Parent
Preferred Stock and, in lieu of any fractional shares thereof, cash, and, if
applicable, the cash portion of the Merger Consideration payable pursuant to
Section 2.06(b). Upon surrender of a Certificate for cancellation to the
Exchange Agent together with such letter of transmittal, duly executed, and such
other customary documents as may be required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in exchange therefor (A)
certificates evidencing that number of whole shares of Parent Preferred Stock
which such holder has the right to receive in accordance with the Exchange Ratio
or, if applicable, the Adjusted Exchange Ratio, in respect of the shares of
Company Common Stock formerly evidenced by such Certificate, (B) the amount of
cash, if any, payable with respect to such shares pursuant to Section 2.06(b),
(C) any dividends or other distributions to which such holder is entitled
pursuant to Section 2.07(c) and (D) cash in lieu of fractional shares of Parent
Preferred Stock to which such holder is entitled pursuant to Section 2.06(f)
(the Parent Preferred Stock, cash, dividends and distributions described in
clauses (A), (B), (C) and (D) being, collectively, the "Merger Consideration"),
and the Certificate so surrendered shall forthwith be canceled. In the event of
a transfer of ownership of shares of Company Common Stock which is not
registered in the transfer records of the Company as of the Effective Time, the
Merger Consideration may be issued and paid in accordance with this Article II
to a transferee if the Certificate evidencing such shares of Company Common
Stock is presented to the Exchange Agent, accompanied by all documents required
to evidence and effect such transfer pursuant to this Section 2.07(b) and by
evidence that any applicable stock transfer taxes have been paid. Until so
surrendered, each outstanding Certificate that, prior to the Effective Time,
represented shares of Company Common Stock will be deemed from and after the
Effective Time, for all corporate purposes, other than the payment of dividends,
to evidence the right to receive the number of full shares of
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Parent Preferred Stock into which such shares of Company Common Stock shall have
been so converted, the right to receive the cash portion of the Merger
Consideration payable with respect thereto pursuant to Section 2.06(b) and the
right to receive an amount in cash in lieu of the issuance of any fractional
shares in accordance with Section 2.06(f).
(c) Distributions With Respect to Unexchanged Shares. No dividends or other
distributions declared or made after the Effective Time with respect to Parent
Preferred Stock with a record date after the Effective Time shall be paid to the
holder of any unsurrendered Certificate until the holder of such Certificate
shall surrender such Certificate. Subject to applicable law, following surrender
of any such Certificate, there shall be paid to the record holder of the
certificates representing whole shares of Parent Preferred Stock issued in
exchange therefor, without interest, at the time of such surrender, the amount
of dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such whole shares of Parent Preferred Stock.
(d) Transfers of Ownership. If any certificate for shares of Parent
Preferred Stock is to be issued in a name other than that in which the
Certificate surrendered in exchange therefor is registered, it will be a
condition of the issuance thereof that the Certificate so surrendered will be
properly endorsed and otherwise in proper form for transfer and that the person
requesting such exchange will have paid to Parent or any person designated by it
any transfer or other taxes required by reason of the issuance of a certificate
for shares of Parent Preferred Stock in any name other than that of the
registered holder of the Certificate surrendered, or established to the
satisfaction of Parent or any agent designated by it that such tax has been paid
or is not payable.
(e) No Liability. Neither Parent, Merger Sub nor the Company shall be liable
to any holder of Company Common Stock for any Merger Consideration (or dividends
or distributions with respect thereto) delivered to a public official pursuant
to any applicable abandoned property, escheat or similar law.
(f) Withholding Rights. Subject to Section 8.03(e) and taking into account
Sections 3.14(f) and 6.01(f), Parent, Merger Sub, the Surviving Corporation and
the Exchange Agent shall be entitled to deduct and withhold from the Merger
Consideration otherwise payable pursuant to this Agreement to any holder of
Company Common Stock such amounts as Parent, Merger Sub, the Surviving
Corporation or the Exchange Agent is required to deduct and withhold with
respect to the making of such payment under the Code, or any provision of state,
local, provincial or foreign tax law; provided, however, that Parent, Merger
Sub, the Surviving Corporation or the Exchange Agent, as applicable, shall
promptly pay any amounts deducted and withheld hereunder to the applicable
Governmental Entity, shall promptly file all Tax Returns (as defined in Section
9.03(o)) required to be filed in respect of such deductions and withholding, and
shall promptly provide to the Company proof of such payment and a copy of all
such Tax Returns. To the extent that amounts are so withheld, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the shares of Company Common Stock in respect of which such
deduction and withholding was made.
SECTION 2.08. Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed, and there shall be no further
registration of transfers of Company Common Stock thereafter on the records of
the Company. If, after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they shall be canceled and exchanged as
provided in this Article II.
SECTION 2.09. Dissenting Shares. (a) Notwithstanding any provision of this
Agreement to the contrary, shares of Company Common Stock that are outstanding
immediately prior to the Effective Time and which are held by stockholders who
shall have not voted in favor of the Merger or consented thereto in writing and
who shall have available to them and who shall have demanded properly in writing
appraisal for such shares of Company Common Stock in accordance with Section 262
of Delaware Law (collectively, the "Dissenting Shares") shall not represent the
right to receive the Merger Consideration. Such stockholders shall be entitled
to receive payment of the appraised value of such shares of Company
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Common Stock held by them in accordance with the provisions of such Section 262,
except that all Dissenting Shares held by stockholders who shall have failed to
perfect or who effectively shall have withdrawn or lost their rights to
appraisal of such shares of Company Common Stock under such Section 262 shall
thereupon be deemed to have been converted into and to have become exchangeable
for, as of the Effective Time, the right to receive the Merger Consideration,
without any interest thereon, upon surrender, in the manner provided in Section
2.07, of the certificate or certificates that formerly evidenced such shares of
Company Common Stock.
(b) The Company shall give Parent (i) prompt notice of any demands for
appraisal received by the Company, withdrawals of such demands, and any other
instruments served pursuant to Delaware Law and received by the Company and (ii)
the opportunity to participate in all negotiations and proceedings with respect
to demands for appraisal under Delaware Law. The Company shall not, except with
the prior written consent of Parent, make any payment with respect to any
demands for appraisal or offer to settle or settle any such demands.
SECTION 2.10. No Further Ownership Rights in Company Common Stock. The
Merger Consideration delivered upon the surrender for exchange of shares of
Company Common Stock in accordance with the terms hereof shall be deemed to have
been issued in full satisfaction of all rights pertaining to such shares of
Company Common Stock, and there shall be no further registration of transfers on
the records of the Surviving Corporation of shares of Company Common Stock which
were outstanding immediately prior to the Effective Time.
SECTION 2.11. Lost, Stolen or Destroyed Certificates. If any Certificates
shall have been lost, stolen or destroyed, the Exchange Agent shall issue in
exchange for such lost, stolen or destroyed Certificates, upon the making of an
affidavit of that fact by the holder thereof, such Merger Consideration as may
be required pursuant to Section 2.07; provided, however, that Parent may, in its
discretion and as a condition precedent to the issuance and delivery thereof,
require the owner of such lost, stolen or destroyed Certificates to deliver a
bond in such sum as it may reasonably direct as indemnity against any claim that
may be made against Parent or the Exchange Agent with respect to the
Certificates alleged to have been lost, stolen or destroyed.
SECTION 2.12. Taking of Necessary Action; Further Action. Each of Parent,
Merger Sub and the Company in good faith will take all such commercially
reasonable and lawful action as may be necessary or appropriate in order to
effectuate the Merger in accordance with this Agreement as promptly as possible.
If, at any time after the Effective Time, any such further action is necessary
or desirable to carry out the purposes of this Agreement and to vest the
Surviving Corporation with full right, title and possession to all assets,
property, rights, privileges, powers and franchises of the Company and Merger
Sub, the officers and directors of the Company and Merger Sub are fully
authorized in the name of their respective corporations or otherwise to take,
and will take, all such lawful and necessary action.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub that:
SECTION 3.01. Organization and Qualification; Subsidiaries. Each of the
Company and its subsidiaries (as defined in Section 9.03(m)) is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite corporate power and
authority and is in possession of all franchises, grants, authorizations,
licenses, permits, easements, consents, certificates, approvals and orders
("Approvals") necessary to own, lease and operate the properties it purports to
own, operate or lease and to carry on its business as it is now being conducted,
except where the failure to be so organized, existing and in good standing or to
have such power, authority and Approvals would not have a Company Material
Adverse Effect (as defined in Section 9.03(d)). Each of the Company and its
subsidiaries is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
its properties owned, leased or operated by it or the nature of its activities
makes such qualification or licensing necessary, except for such failures to be
so duly qualified or licensed and in good standing that would not have a Company
Material Adverse Effect. A true and complete list of all of the Company's
subsidiaries, together with the jurisdiction of incorporation of each subsidiary
and the percentage of each subsidiary's outstanding capital stock owned by the
Company or another subsidiary, is set forth in Section 3.01 of the written
disclosure schedule previously delivered by the Company to Parent (the "Company
Disclosure Schedule"). Except as set forth in Section 3.01 of the Company
Disclosure Schedule, the Company does not directly or indirectly own any equity
or similar interest in, or any interest convertible into or exchangeable or
exercisable for, any equity or similar interest in, any corporation,
partnership, joint venture or other business association or entity.
SECTION 3.02. Certificate of Incorporation and By-Laws. The Company has
heretofore furnished to Parent a complete and correct copy of its Certificate of
Incorporation and By-Laws, as amended to date, and a complete and correct copy
of the equivalent organizational documents of each of its subsidiaries. Such
Certificate of Incorporation, By-Laws and equivalent organizational documents of
each of its subsidiaries are in full force and effect. The Company is not in
violation of any of the provisions of its Certificate of Incorporation or
By-Laws. None of the Company's subsidiaries is in violation of any of the
provisions of its Certificate of Incorporation or By-Laws or equivalent
organizational documents, except for any such violations as would not have a
Company Material Adverse Effect.
SECTION 3.03. Capitalization. The authorized capital stock of the Company
consists of 150,000,000 shares of Company Common Stock and 5,000,000 shares of
preferred stock, par value $0.01 per share. As of October 20, 1998, (i)
27,768,782 shares of Company Common Stock were issued and outstanding, all of
which have been duly authorized and validly issued and are fully paid and
non-assessable, (ii) no shares of preferred stock were issued or outstanding,
(iii) 2,469,900 shares of Company Common Stock were held in the treasury of the
Company, (iv) 2,142,638 shares of Company Common Stock were reserved for future
issuance pursuant to outstanding Options granted under the Employee Plan, (v)
746,844 shares of Company Common Stock were reserved for future issuance
pursuant to future option grants under the Employee Plan, (vi) 4,290 shares of
Company Common Stock were reserved for future issuance pursuant to outstanding
Options granted under the Directors' Plan, (vii) 94,867 shares of Company Common
Stock were reserved for future issuance pursuant to future option grants under
the Directors' Plan, and (viii) no shares of preferred stock were reserved for
issuance. No change in such capitalization has occurred between October 20, 1998
and the date hereof other than any change associated with the exercise of vested
Options. Except as set forth in this Section 3.03 or Section 3.11 hereof or in
Section 3.03 or Section 3.11 of the Company Disclosure Schedule, there are no
options, warrants or other rights, agreements, arrangements or commitments of
any character relating to the issued or unissued capital stock of the Company or
any of its subsidiaries or obligating the Company or any of its subsidiaries to
issue or sell any shares of capital stock of, or other equity interests in, the
Company or any of its subsidiaries. All shares of Company
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Common Stock subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and non-assessable. Except
as is set forth in Section 3.03 of the Company Disclosure Schedule, there are no
obligations, contingent or otherwise, of the Company or any of its subsidiaries
to repurchase, redeem or otherwise acquire any shares of capital stock of the
Company or the capital stock of any subsidiary or to provide funds to or make
any investment (in the form of a loan, capital contribution or otherwise) in any
such subsidiary or any other entity other than guarantees of bank obligations of
subsidiaries entered into in the ordinary course of business. All of the
outstanding shares of capital stock of each of the Company's subsidiaries are
duly authorized, validly issued, fully paid and non-assessable, and, other than
as pledged pursuant to the Credit Agreement, dated as of October 31, 1996, as
amended and restated as of March 27, 1998, among the Company, Essex Group, Inc.,
the lenders named therein and The Chase Manhattan Bank and other than directors'
or similar de minimis statutory qualifying shares, all such shares are owned by
the Company or another subsidiary, free and clear of all security interests,
liens, claims, pledges, agreements, limitations in the Company's voting rights,
charges or other encumbrances of any nature whatsoever.
SECTION 3.04. Authority Relative to This Agreement. (a) The Company has all
necessary corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the Company
and the consummation by the Company of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action and no other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the transactions so contemplated (other than the
adoption of this Agreement by the holders of at least a majority of the
outstanding shares of the Company Common Stock entitled to vote in accordance
with Delaware Law and the Company's Certificate of Incorporation and By-Laws).
This Agreement has been duly and validly executed and delivered by the Company
and, assuming the due authorization, execution and delivery of this Agreement by
Parent and Merger Sub, constitutes the legal, valid and binding obligation of
the Company.
(b) The Board (i) has declared that this Agreement, the Offer, the Merger
and the other transactions contemplated hereby and thereby are advisable and in
the best interests of the stockholders of the Company, (ii) has authorized,
approved and adopted this Agreement, the Merger and the other transactions
contemplated hereby and thereby and (iii) has approved the Offer.
(c) As of the date hereof and pursuant to Section 203(b)(3) of the Delaware
Law, the restrictions contained in Section 203 of Delaware Law are, and at all
times on or prior to the Effective Time such restrictions shall be, inapplicable
to the Offer, the Merger and the transactions contemplated by this Agreement.
SECTION 3.05. Material Contracts; No Conflict, Required Filings and
Consents. (a) All agreements which, as of the date hereof are required to
befiled with the SEC pursuant to the requirements of the Exchange Act as
"material contracts" (collectively, the "Material Contracts") of the Company and
its subsidiaries are filed as Exhibits to the Company SEC Reports (as defined in
Section 3.07) filed in 1998. All of the Material Contracts are valid, binding
and in fullforce and effect. The Company is not in material default of any of
its obligations under the Material Contracts. No contracting party to any
Material Contract has indicated to the Company its intention to terminate,
cancel or modify such Material Contract or otherwise to reduce or change its
activity thereunder so as to affect adversely the benefits derived, or currently
expected to be derived, by the Company.
(b) Except as set forth in Section 3.05(b) of the Company Disclosure
Schedule, the execution and delivery of this Agreement by the Company do not,
and the performance of this Agreement by the Company will not, (i) conflict with
or violate the Certificate of Incorporation or By-Laws or equivalent
organizational documents of the Company or any of its subsidiaries, (ii)
conflict with or violate any law, rule, regulation, order, judgment or decree
applicable to the Company or any of its subsidiaries or by which
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its or any of their respective properties is bound or affected or (iii) result
in any breach of or constitute a default (or an event that with notice or lapse
of time or both would become a default), or impair the Company's or any of its
subsidiaries' rights or alter the rights or obligations of any third party
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any Material Contract, or result in the creation of a lien or
encumbrance on any of the properties or assets of the Company or any of its
subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or its or any of their respective properties
is bound or affected except, in the case of clauses (ii) and (iii), for such
breaches, violations or defaults that would not have a Company Material Adverse
Effect.
(c) The execution and delivery of this Agreement by the Company does not,
and the performance of this Agreement by the Company will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, domestic or foreign, except (i)
for applicable requirements, if any, of the Securities Act of 1933, as amended
(the "Securities Act"), the Exchange Act, state securities laws ("Blue Sky
Laws"), the pre-merger notification requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), any non-United
States competition, antitrust and investment laws and the filing of appropriate
merger or other documents as required by Delaware Law, and (ii) where the
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not prevent or delay consummation of
the Merger, or otherwise prevent or delay the Company from performing its
obligations under this Agreement, or would not otherwise have a Company Material
Adverse Effect.
SECTION 3.06. Compliance, Permits. (a) Except as disclosed in Section
3.06(a) of the Company Disclosure Schedule, except for such conflicts, defaults
and violations as have not had and would not have a Company Material Adverse
Effect, neither the Company nor any of its subsidiaries is in conflict with, or
in default or violation of, (i) any law, rule, regulation, order, judgment or
decree applicable to the Company or any of its subsidiaries or by which its or
any of their respective properties is bound or affected or (ii) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to whichthe Company or any of its subsidiaries is
a party or by which the Company or any of its subsidiaries or its or any of
their respective properties is bound oraffected.
(b) The Company and its subsidiaries hold all permits, licenses, easements,
variances, exemptions, consents, certificates, orders and approvals from
governmental authorities necessary for the operation of the business of the
Company and its subsidiaries taken as a whole (collectively, the "Company
Permits"), except to the extent that failure to have any such Company Permit
would not have a Company Material Adverse Effect. The Company and its
subsidiaries are in compliance with the terms of the Company Permits, except
where the failure so to comply would not have a Company Material Adverse Effect.
SECTION 3.07. SEC Filings, Financial Statements. (a) The Company has filed
all forms, reports and documents required to be filed by it with the SEC since
May 1, 1997. The Company has delivered to Parent, in the form filed with the
SEC, (i) its Annual Report on Form 10-K for the year ended December 31, 1997,
(ii) its Quarterly Reports on Form 10-Q for the periods ended March 31 and June
30, 1998, (iii) all proxy statements relating to the Company's meetings of
stockholders (whether annual or special) held since May 1, 1997, (iv) all
reports or registration statements filed by the Company with the SEC (other than
Reports on Form 10-Q, Reports on Form 3, 4 or 5 and Schedules 13G filed on
behalf of affiliates of the Company) since May 1, 1997 and (v) all amendments
and supplements to all such reports and registration statements filed by the
Company with the SEC (collectively, the "Company SEC Reports"). The Company SEC
Reports (i) were prepared in accordance with the requirements of the Securities
Act or the Exchange Act, as the case may be, and (ii) did not at the time they
were filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they
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were made, not misleading. None of the Company's subsidiaries is required to
file any forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each case,
any related notes thereto) contained in the Company SEC Reports was prepared in
accordance with United States Generally Accepted Accounting Principles ("GAAP")
applied on a consistent basis throughout the periods involved (except as may be
indicated therein or in the notes thereto) and each fairly presents in all
material respects the consolidated financial position of the Company and its
subsidiaries as at the respective dates thereof and the consolidated results of
its operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments and such statements do not contain notes thereto.
(c) The Company has heretofore furnished to Parent a complete and correct
copy of any amendments or modifications, which have not yet been filed with the
SEC but which are required to be filed, to agreements, documents or other
instruments which previously had been filed by the Company with the SEC pursuant
to the Securities Act or the Exchange Act.
SECTION 3.08. Absence of Certain Changes or Events. Except as set forth in
Section 3.08 of the Company Disclosure Schedule, between June 30, 1998 and the
date of this Agreement, the Company has conducted its business in the ordinary
course and there has not occurred: (i) any amendments or changes in the
Certificate of Incorporation or By-Laws of the Company; (ii) any material damage
to, destruction or loss of any assets of the Company (whether or not covered by
insurance); (iii) any change by the Company in its accounting methods,
principles or practices; (iv) any revaluation by the Company of any of its
assets, including, without limitation, writing down the value of capitalized
software or inventory or writing off notes or accounts receivable, other than in
the ordinary course of business; or (v) any sale of a material amount of assets
of the Company, except for the sale of inventory in the ordinary course of
business.
SECTION 3.09. No Undisclosed Liabilities. Except as is disclosed in Section
3.09 of the Company Disclosure Schedule or the Company SEC Reports, neither the
Company nor any of its subsidiaries has any liabilities (absolute, accrued,
contingent or otherwise) of the type that are required to be disclosed in
financial statements, including the notes thereto, prepared in accordance with
GAAP which are, in the aggregate, material to the business, operations or
financial condition of the Company and its subsidiaries taken as a whole, except
liabilities (i) adequately provided for or referred to in the Company's balance
sheet and the related notes thereto as of June 30, 1998 included in Section 3.09
of the Company Disclosure Schedule (the "June 30, 1998 Balance Sheet"),
(ii)incurred in the ordinary course of business and not required under GAAP to
be reflected on the the June 30, 1998 Balance Sheet or (iii) incurred since June
30, 1998 in the ordinary course of business and consistent with past practice,
and liabilities incurred in connection with this Agreement.
SECTION 3.10. Absence of Litigation. Except as set forth in Section 3.10 of
the Company Disclosure Schedule or in the Company SEC Reports filed prior to the
date of this Agreement, there are no claims, actions, suits, proceedings or
investigations pending or, to the knowledge of the Company, threatened against
the Company or any of its subsidiaries, or any properties or rights of the
Company or any of its subsidiaries, before any court, arbitrator or Governmental
Entity that is reasonably likely to have a Company Material Adverse Effect.
SECTION 3.11. Employee Benefit Plans; Employment Agreements. (a)Section
3.11(a) of the Company Disclosure Schedule lists all material employee benefit
plans (as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")), all other material plans, including bonus, stock
option, stock purchase, incentive, deferred compensation, supplemental
retirement, severance or termination pay, post-retirement, medicalor life
insurance, disability, supplemental unemployment benefits, change-in-control or
parachute plans, profit-sharing, pension or retirement plans or agreements and
other similar material fringe or employee benefit plans, programs or
arrangements (whether written or
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unwritten, insured or self-insured), and any employment or executive
compensation or severance agreements, regardless of whether ERISA is applicable
thereto, for the benefit of, or relating to, any employee, director or
stockholder of the Company (whether current, former or retired) or any trade or
business (whether or not incorporated) which is a member of a controlled group
including the Company or which is under common control with the Company
(an"ERISA Affiliate") within the meaning of Section 414(b), (c), (m) or (o) of
the Code (the "Employee Plans").
(b) Except as set forth in Section 3.11(b) of the Company Disclosure
Schedule, none of the Company (including any subsidiary thereof), any ERISA
Affiliate or any of their respective predecessors has, within the past five
years, contributed to, contributes to, is required to contribute to, or
otherwise participates in or in any way, directly or indirectly, has any
liability with respect to any plan subject to Section 412 of the Code, Section
302 of ERISA or Title IV of ERISA, including, without limitation, any
"multiemployer plan" (within the meaning of Sections (3)(37) or 4001(a)(3) of
ERISA or Section 414(f) of the Code) (a "Multiemployer Plan"), or any single
employer pension plan (within the meaning of Section 4001(a)(15) of ERISA) which
is subject to Sections 4063 and 4064 of ERISA (a "Multiple Employer Plan").
Except as set forth on Schedule 3.11(b) of the Company Disclosure Schedule, if
the Company or any subsidiary thereof or any ERISA Affiliate were to have a
complete or partial withdrawal as of the Effective Time, no obligation to pay
any material withdrawal liability would exist with respect to any Multiemployer
Plan and no material liability, whether direct or contingent, exists with regard
to any Multiemployer Plan or Multiple Employer Plan. All premiums due to the
Pension Benefit Guaranty Corporation (the "PBGC") by the Company or any ERISA
Affiliate have been paid on a timely basis. No "reportable event" within the
meaning of Section 4043(c) of ERISA (with respect to which the 30-day notice
period would not be waived) has occurred or is expected to occur, and the
consummation of the transaction contemplated by this Agreement will not result
in a reportable event.
(c) With respect to each of the Employee Plans: (i) none of the Employee
Plans provides retiree medical, death or other retiree welfare benefits (whether
or not insured) to any current or future retiree or terminee (other than under
Section 4980 of the Code, the Federal Social Security Act or a plan qualified
under Section 401(a) of the Code); (ii) all Employee Plans are in compliance in
all material respects with the terms thereof and the requirements prescribed by
any and all applicable statutes (including, without limitation, the Code and
ERISA), orders or governmental rules and regulations currently in effect with
respect thereto (including, without limitation, the pass-through voting and
tender provisions of any Employee Plan with respect to any Company Common Stock
held thereunder), and the Company, each of its subsidiaries and any ERISA
Affiliate have performed all material obligations required to be performed by
them under, are not in any material respect in default under or in violation of,
and have no knowledge of any default or violation by any other party to, any of
the Employee Plans; (iii) each Employee Plan intended to qualify under Section
401(a) of the Code (or similar provisions for tax-registered or tax-favored
plans of foreign jurisdictions) is the subject of a favorable determination
letter from United States Internal Revenue Service (the "IRS") (or, if
applicable, similar approvals of Governmental Entities (as defined in Section
9.03(i)), and nothing has occurred or could reasonably be expected to occur that
impaired or could reasonably be expected to impair such determination or result
in the imposition of any penalty or tax liability; (iv) allcontributions
required to be made to any Employee Plan under the terms of the Employee Plan or
any collective bargaining agreement or as required by law have been timely made
and, to the extent required by GAAP, a reasonable amount has been accrued for
contributions to each Employee Plan for the current plan years; (v) no
"accumulated funding deficiency" (within the meaning of Section 412 of the Code
and Section 302 of ERISA) has been or could be expected to be incurred, whether
or not waived, and no excise tax or other taxes have been or could be expected
to be incurred or are due and owing with respect to the Employee Plan because of
any failure to comply with the minimum funding standards of ERISA and the Code;
(vi) no" prohibited transaction," within the meaning of Section 4975 of the Code
or Section 406 of ERISA, has occurred or is expected to occur with respect to
any Employee Plan which would result in material liability; and (vii) to the
knowledge of the Company, the present value of all unfunded "benefit
liabilities" (whether or not vested) (within the meaning of Section 4001(a)(16)
of
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ERISA) with respect to any Employee Plans subject to Title IV of ERISA has not
materially increased above the amount disclosed in the most recent SEC Reports.
(d) To the knowledge of the Company, (i) there are no pending audits,
investigations, litigation or other enforcement actions against the Company with
respect to any of the Employee Plans and (ii) no proceeding has been or is
expected to be initiated to terminate any Employee Plan subject to Title IV of
ERISA.
(e) There are no material actions, suits or claims pending or, to the
knowledge of the Company, threatened by former or present employees of the
Company (or their beneficiaries) with respect to Employee Plans, the Company,
any ERISA Affiliate, any director, officer or employee thereof, or the trustee,
assets or fiduciaries of the Employee Plans (other than non-material routine
claims for benefits) and, to the knowledge of the Company, no set of
circumstances or facts exist that could reasonably be expected to give rise to
any such action, suit or claim.
(f) Section 3.11(f) of the Company Disclosure Schedule sets forth a true and
complete list of each current or former employee, officer or director of the
Company or any of its subsidiaries who holds an Option as of the date here of,
together with the number of shares of Company Common Stock subject to such
Option, the date of grant of such Option, the exercise price of such Option (to
the extent determined as of the date hereof), and the expiration date of such
Option. Section 3.11(f) of the Company Disclosure Schedule also sets forth the
total number of outstanding Options. No Option is intended to qualify as an
"incentive stock option" within the meaning of Section 422(b) of the Code.
(g) To the knowledge of the Company, with respect to each scheme or
arrangement mandated by a government other than the United States and with
respect to each Employee Plan maintained or contributed to by any subsidiary of
the Company that is not subject to United States law (a "Foreign Employee
Plan"), there are no material liabilities.
(h) The Company has made available to Parent: (i) copies of all employment
agreements with officers of the Company; (ii) copies of all agreements with
consultants who are individuals obligating the Company to make annual cash
payments in an amount exceeding $100,000 and which are not terminable on less
than 60 days' notice without penalty; (iii) copies of all plans, programs,
agreements and other arrangements of the Company with or relating to its
employees which contain change in control provisions; and (iv) the various forms
of employment agreements, if any, of the Company for its nonexecutive employees.
(i) Except as set forth in Section 3.11(i)(1) of the Company Disclosure
Schedule, the consummation of the transactions contemplated by this Agreement
will not give rise to any liability, including, without limitation, liability
for severance pay, unemployment compensation, termination pay or withdrawal
liability, or accelerate the time of payment or vesting or increase the amount
of compensation or benefits due to any employee, director or stockholder of the
Company (whether current, former or retired) or their beneficiaries solely by
reason of such transactions. Except as set forth in Section 3.11(i)(2) of the
Company Disclosure Schedule, no amounts payable under any Employee Plan will
fail to be deductible for federal income tax purposes by virtue of Sections
162(m) or 280G of the Code. Except as set forth in Section 3.11(i)(3) of the
Company Disclosure Schedule, neither the Company, any ERISA Affiliate, nor any
officer or employee thereof, has made any promises or commitments, whether
legally binding or not, to create any additional plan, agreement or arrangement,
or to modify or change any existing Employee Plan. No event, condition or
circumstance exists that could reasonably be expected to result in a material
increase of the benefits provided under any Employee Plan or the expense of
maintaining any Employee Plan from the level of benefits or expense incurred for
the most recent fiscal year ended before the Effective Time. Except as set forth
in Section 3.11(i)(4) of the Company Disclosure Schedule, neither the Company
nor any ERISA Affiliate has any unfunded liabilities pursuant to any Employee
Plan that is not intended to be qualified under Section 401(a) of the Code, and
that is an employee pension benefit plan within the meaning of Section 3(2) of
ERISA, a nonqualified deferred compensation plan or excess benefit
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plan. Except as required by law, no event, condition or circumstance exists that
would prevent the amendment or termination of any Employee Plan.
SECTION 3.12. Labor Matters. There are no labor disputes pending or, to the
knowledge of the Company, threatened, between the Company or any of its
subsidiaries and any of their respective employees, which disputes are
reasonably likely to have a Company Material Adverse Effect. Neither the Company
nor any of its subsidiaries has knowingly engaged in any unfair labor practices
within the meaning of the National Labor Relations Act or similar such
legislation of foreign jurisdictions. Except as set forth in Section 3.12 of the
Company Disclosure Schedule, neither the Company nor any of its subsidiaries is
presently a party to, or bound by, any collective bargaining agreement or union
contract with respect to any persons employed by the Company or its subsidiaries
and no collective bargaining agreement is being negotiated by the Company or any
of its subsidiaries. Except as would not reasonably be expected to have a
Company Material Adverse Effect, neither the Company nor any of its subsidiaries
has any knowledge of any strikes, slowdowns, work stoppages or lockouts, or
threats thereof, by or with respect to any employees of the Company or any of
its subsidiaries, and there have been no such strikes, slowdowns, work stoppages
or lockouts within the past three years. Each of the Company and its
subsidiaries is in compliance in all material respects with all applicable laws,
regulations and orders relating to workers' compensation and the Worker
Adjustment and Retraining Notification Act or similar such legislation of
foreign jurisdictions.
SECTION 3.13. Restrictions on Business Activities. Other than this
Agreement, there is no material agreement, judgment, injunction, order or decree
binding upon the Company or any of its subsidiaries which has or could
reasonably be expected to have (after giving effect to the consummation of the
Offer and the Merger) the effect of prohibiting or impairing any material
business operations of the Company or any of its subsidiaries, as currently
conducted.
SECTION 3.14. Taxes. Except as set forth in Section 3.14 of the Company
Disclosure Schedule or except as have not had and would not reasonably be
expected to have a Company Material Adverse Effect:
(a) The Company and each of its subsidiaries, and any consolidated,
combined, unitary or aggregate group for Tax (as defined in Section 9.03(n))
purposes of which the Company or any of its subsidiaries is a member, have
timely filed all United States federal income Tax Returns (as defined in Section
9.03(o)) and all other material Tax Returns required to be filed by them or any
of them (taking into account applicable extensions), and have timely paid and
discharged all Taxes shown therein to be due, except with respect to which the
Company is maintaining reserves in accordance with GAAP in its financial
statements that are in all material respects adequate for their payment. All
federal income Tax Returns and all other material Tax Returns filed by the
Company and each of its subsidiaries with respect to Taxes were true and correct
in all material respects as of the date on which they were filed or as
subsequently amended to the date hereof. The Company and each of its
subsidiaries have disclosed to the relevant taxing authority any position taken
where the failure to make such disclosure would enable the taxing authority to
subject such person to any material penalties or additions to Tax. As of the
date hereof, neither the IRS nor any other taxing authority or agency is now
asserting or, to the best of the Company's knowledge, threatening to assert
against the Company or any of its subsidiaries any deficiency or claim for
material additional Taxes. As of the date hereof, except for routine requests
for information in connection with pending audits, there are no requests for
information from the IRS or any other taxing authority or agency currently
outstanding. As of the date hereof, no material federal Tax Return of either the
Company or any of its subsidiaries is currently being audited by any taxing
authority nor are any proceedings (whether administrative or judicial) currently
being conducted with respect to any issues relating to Taxes. No material tax
claim has become a lien on any assets of the Company or any subsidiary thereof.
Neither the Company nor any of its subsidiaries is required to include in income
(i) any material items in respect of any change in accounting principles or any
deferred intercompany transactions or (ii) any installment sale gain, where the
inclusion in income would result in a material tax liability in excess of the
reserves therefor.
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(b) (i) Neither the Company nor any of its subsidiaries has been subject to
any accumulated earnings tax or personal holding company tax; (ii) neither the
Company nor any of its subsidiaries is obligated under any agreement with
respect to industrial development bonds or other obligations with respect to
which the excludability from gross income of the holder for United States
federal or state income tax purposes could be affected by the transactions
contemplated hereunder; (iii) as of the date hereof, there are no waivers or
extensions of any applicable statute of limitations for the assessment or
collection of Taxes with respect to anymaterial Tax Return that relates to the
Company or any of its subsidiaries which remain in effect; (iv) there are no tax
rulings, closing agreements or changes of accounting method relating to the
Company or any of its subsidiaries which would materially affect their liability
for Taxes for any period after the Effective Time; (v) all federal and all
material state and local income Tax Returns of the Company and each of its
subsidiaries with respect to taxable periods through the year ended December 31,
1994 have been examined and closed or are Tax Returns with respect to which the
applicable statute of limitations has expired; (vi) neither the Company nor any
subsidiary has filed a consent under Section 341(f) of the Code or any
comparable provision of state revenue statutes; (vii) no material property of
the Company or its subsidiaries is" tax-exempt use property "within the meaning
of Section 168(h) of the Code; and (viii) neither the Company nor its
subsidiaries is a party to any material lease made pursuant to Section 168(f) of
the Code.
(c) No power of attorney has been granted by the Company or any of its
subsidiaries with respect to any material matter relating to Taxes which is
currently in force, other than any power given to outside counsel to the Company
or any of its subsidiaries in connection with any tax audit.
(d) Neither the Company nor any of its subsidiaries is a party to any
material agreement (written or oral) providing for the allocation or sharing of
Taxes, with any party other than the Company and/or one or more of its
subsidiaries.
(e) The Company and each of its subsidiaries have withheld from each payment
made to any of their respective past or present employees, officers or
directors, or any other person, the amount of all Taxes and other deductions
required to be withheld therefrom and paid the same to the proper tax or other
receiving officers within the time required by law.
(f) The Company is not, nor was it any time during each of the five-year
periods ending on the dates on which the Offer is consummated and the Effective
Time occurs, a "United States real property holding corporation" within the
meaning of Section 897(c) of the Code.
SECTION 3.15. Environmental Matters. Except as set forth in Section 3.15 of
the Company Disclosure Schedule or except as have not had and would not
reasonably be expected to have a Company Material Adverse Effect:
(a) All of the current operations of the Company and each of its
subsidiaries and their respective assets, businesses and real property,
including any operations at or from any real property presently owned, used,
leased, occupied, managed or operated by the Company or any of its subsidiaries
(collectively, the "Real Property"), comply and have at all times complied with
all applicable Environmental Laws (as defined in Section 9.03(g)).
(b) To the knowledge of the Company, none of the assets of the Company or
any of its subsidiaries, nor any of the Real Property, contains any Hazardous
Substances (as defined in Section 9.03(j)) in, on, over, under or at it, in
concentrations which would violate any applicable Environmental Laws (as defined
in Section 9.03(g)) or reasonably would be likely to result in the imposition of
liability or obligations on Company or any of its subsidiaries under any
applicable Environmental Laws, including any liability or obligations for the
investigation, corrective action, remediation or monitoring of Hazardous
Substances in, on, over, under or at the Real Property.
(c) None of the Real Property is listed or proposed for listing on the
National Priorities List pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), 42 U.S.C.
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ss.9601 et seq., or any similar inventory of sites requiring investigation or
remediation maintained by any state or locality. Neither the Company, nor any of
its subsidiaries has received any notice, whether oral or written, from any
Governmental Entity or third party of any actual or threatened Environmental
Liabilities (as defined in Section 9.03(h)).
(d) To the knowledge of the Company, each of the Company and its
subsidiaries has all the permits, licenses, authorizations and approvals
necessary for the conduct of their businesses and for the operations on, in or
at the Real Property (the "Environmental Permits"), which are required under
applicable Environmental Laws and they are in compliance in all material
respects with the terms and conditions of all such Environmental Permits. To the
best knowledge of the Company and each of its subsidiaries, no reason exists why
the Company and each of its subsidiaries would not be capable of continued
operation of their businesses in compliance in all material respects with the
Environmental Permits and the applicable Environmental Laws.
(e) Neither the Company nor any of its subsidiaries has contractually
assumed or succeeded to, or received any written notice that it has assumed or
succeeded to by operation of law, including the Environmental Laws and common
law, or otherwise, any Environmental Liabilities of any predecessors or any
other person or entity.
SECTION 3.16. Brokers. No broker, finder or investment banker (other than
Goldman, Sachs & Co. ("GS") and Chase Securities Inc. ("Chase")), is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company. The Company has heretofore furnished to Parent a
complete and correct copy of all agreements among the Company, GS and Chase
pursuant to which such firms would be entitled to any payment relating to the
transactions contemplated hereunder.
SECTION 3.17. Intellectual Property. (a) The Company owns, or is licensed
or otherwise possesses legally enforceable rights to use, all patents,
trademarks, trade names, service marks, copyrights and any applications
therefor, technology, know-how, computer software programs or applications and
tangible or intangible proprietary information or material that are used or
proposed to be used in the business of the Company, each of which, where
applicable, is to the Company's knowledge valid and subsisting. Section 3.17 of
the Company Disclosure Schedule lists all current patents, registered and
material unregistered trademarks and service marks, registered and material
unregistered copyrights, trade names and any applications therefor owned by the
Company (the "Company Intellectual Property Rights"), and specifies the
jurisdictions in which each such Company Intellectual Property Right has been
issued or registered or in which an application for such issuance and
registration has been filed, including the respective registration or
application numbers and the names of all registered owners. Section 3.17 of the
Company Disclosure Schedule includes and specifically identifies all material
third-party patents, trademarks or copyrights (the "Third Party Intellectual
Property Rights") which, to the knowledge of the Company, are incorporated in,
are, or form a part of, any product of the Company. Section 3.17 of the Company
Disclosure Schedule lists (i) all material licenses, sublicenses and other
agreements as to which the Company is a party and pursuant to which any person
is authorized to use any Company Intellectual Property Right, or any trade
secret material to the Company and (ii) all material licenses, sublicenses and
other agreements as to which the Company is a party and pursuant to which the
Company is authorized to use any Third Party Intellectual Property Rights, or
other trade secret of a third party in or as any product, and includes the
identity of all parties thereto, a description of the nature and subject matter
thereof, the applicable royalty and the term thereof.
(b) The Company is not, nor will it be as a result of the execution and
delivery of this Agreement or the performance of its obligations hereunder, in
violation of any Third Party Intellectual Property Rights license, sublicense or
agreement described in Section 3.17 of the Company Disclosure Schedule. No
claims with respect to the Company Intellectual Property Rights, any trade
secret material to the Company or Third Party Intellectual Property Rights to
the extent arising out of any use, reproduction or distribution of
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such Third Party Intellectual Property Rights by or through the Company, are
currently pending or, are threatened by any person, nor, to the Company's
knowledge, do any valid grounds for any bona fide claims exist: (i) to the
effect that the manufacture, sale, licensing or use of any product as now used,
sold or licensed or proposed for use, sale or license by the Company infringes
on any copyright, patent, trademark, service mark or trade secret; (ii) against
the use by the Company of any trademarks, trade names, trade secrets,
copyrights, patents, technology, know-how or computer software programs and
applications used in the Company's business as currently conducted or as
proposed to be conducted by the Company; (iii) challenging the ownership,
validity or effectiveness of any of the Company Intellectual Property Rights or
other trade secret material to the Company; or (iv) challenging the Company's
license or legally enforceable right to use of the Third Party Intellectual
Rights. To the Company's knowledge, there is no material unauthorized use,
infringement or misappropriation of any of the Company Intellectual Property by
any third party. Neither the Company nor any of its subsidiaries (i) has been
sued or charged in writing as a defendant in any claim, suit, action or
proceeding which involves a claim or infringement of trade secrets, any patents,
trademarks, service marks, maskworks or copyrights and which has not been
finally terminated prior to the date hereof or been informed or notified by any
third party that the Company may be engaged in such infringement or (ii) has
knowledge of any infringement liability with respect to, or infringement by, the
Company or any of its subsidiaries of any trade secret, patent, trademark,
service mark, maskwork or copyright of another party.
SECTION 3.18. Vote Required. The affirmative vote of the holders of at
least a majority of the outstanding shares of Company Common Stock is the only
vote of the holders of any class or series of the Company's capital stock
necessary to approve the Merger.
SECTION 3.19. Opinions of Financial Advisors. The Company has been advised
by its financial advisors, that in their opinion as of the date hereof, the
consideration to be received, pursuant to this Agreement, by holders of Company
Common Stock in the Offer and the Merger taken as a unitary transaction, are
fair from a financial point of view to such holders, and will deliver a written
copy of such opinions to Parent, it being understood and acknowledged that such
opinions have been rendered for the benefit of the Board of Directors of the
Company and may not be relied upon by Parent, its affiliates or any of their
respective stockholders.
SECTION 3.20. Year 2000 Compliance. The Company has taken affirmative steps
to fully assess, address and correct any and all potential problems and
liabilities relating to year 2000 compliance and its impact on any Employee Plan
and its participants and beneficiaries, and to cause the computer systems of the
Company and its subsidiaries to be Year 2000 Compliant by April 1, 1999, except
as would not reasonably be expected to have a Company Material Adverse Effect.
The term "Year 2000 Compliant" as used herein means that the computer systems
(i) are capable of recognizing, processing, managing, representing, interpreting
and manipulating correctly date related data for dates earlier and later than
January 1, 2000; (ii) have the ability to provide date recognition for any data
element without limitation; (iii) have the ability to function automatically
into and beyond the year 2000 without human intervention and without any change
in operations associated with the advent of the year 2000; (iv) have the ability
to interpret data, dates and time correctly into and beyond the year 2000; (v)
have the ability not to produce noncompliance in existing information, nor
otherwise corrupt such data into and beyond the year 2000; (vi) have the ability
to process correctly after January 1, 2000 data containing dates before that
date; and (vii) have the ability to recognize all "leap years," including
February 29, 2000.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub each hereby represent and warrant to the Company that:
SECTION 4.01. Organization and Qualification. Each of Parent and Merger Sub
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has the requisite corporate
power and authority and is in possession of all Approvals necessary to own,
lease and operate the properties it purports to own, operate or lease and to
carry on its business as it is now being conducted, except where the failure to
be so organized, existing and in good standing or to have such power, authority
and Approvals would not have a Parent Material Adverse Effect (as defined in
Section 9.03(k)). Each of Parent and Merger Sub is duly qualified or licensed as
a foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned, leased or operated by
it or the nature of its activities makes such qualification or licensing
necessary, except for such failures to be so duly qualified or licensed and in
good standing that would not have a Parent Material Adverse Effect.
SECTION 4.02. Authority Relative to this Agreement. (a) Each of Parent and
Merger Sub has all necessary corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Parent and Merger Sub and the consummation by Parent and
Merger Sub of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of Parent and Merger
Sub, and no other corporate proceedings on the part of Parent or Merger Sub are
necessary to authorize this Agreement or to consummate the transactions so
contemplated (other than the approval ("Parent Stockholder Approval") by the
holders of at least a majority of the outstanding shares of Parent Common Stock
(as hereinafter defined) of an amendment to the Certificate of Incorporation of
Parent to authorize additional shares of Parent Preferred Stock and the issuance
of Parent Preferred Stock in accordance with the terms of this Agreement, all in
accordance with Delaware Law and Parent's Certificate of Incorporation and
By-Laws (the "Parent Preferred Stock Matters")). This Agreement has been duly
and validly executed and delivered by Parent and Merger Sub and, assuming the
due authorization, execution and delivery of this Agreement by the Company,
constitutes a legal, valid and binding obligation of Parent and Merger Sub.
(b) The board of directors of Parent (i) has declared that this Agreement,
the Offer, the Merger, the Parent Preferred Stock Matters and the other
transactions contemplated hereby and thereby are advisable and in the best
interests of the stockholders of Parent, (ii) has authorized, approved and
adopted this Agreement (including the Parent Preferred Stock Matters and
substantially the form of Indenture attached hereto as Exhibit F), the Offer,
the Merger and the other transactions contemplated hereby and thereby, and (iii)
has taken appropriate action, pursuant to Section 203(a)(1) of the Delaware Law,
to cause the restrictions contained in Section 203 of Delaware Law to be
inapplicable to the Offer, the Merger and the transactions contemplated by this
Agreement, and to approve the agreement (the "Alpine Agreement") by The Alpine
Group, Inc. to vote (or cause to be voted) the shares of Parent Common Stock (as
defined in Section 4.05) held of record by it or which it has the right to vote
(A) in favor of (1) an amendment to the Certificate of Incorporation of Parent
to authorize additional shares of preferred stock, par value $.01 per share, of
Parent; (2) the issuance of Parent Preferred Stock, in the case of clauses (1)
and (2) hereof in accordance with the terms of the Merger Agreement, Delaware
Law and the Certificate of Incorporation and By-Laws of Parent; and (3) any
other matters submitted to the stockholders of Parent to authorize or facilitate
the transactions contemplated by the Alpine Agreement; and (B) against any
matters submitted to the stockholders of Parent inconsistent with the
transactions contemplated by this Agreement.
SECTION 4.03. No Conflict, Required Filings and Consents. (a) Except asset
forth in Section 4.03(b) hereof or Section 4.03(a) of the written disclosure
schedule previously delivered by Parent and Merger Sub to the Company
(the"Parent Disclosure Schedule"), the execution and delivery of this Agreement
by
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Parent and Merger Sub do not, and the performance of this Agreement by Parent
and Merger Sub will not, (i) conflict with or violate the Certificate of
Incorporation or By-Laws of Parent or the Certificate of Incorporation or
By-Laws of Merger Sub, (ii) conflict with or violate any law, rule, regulation,
order, judgment or decree applicable to Parent or any of its subsidiaries or by
which its or their respective properties are bound or affected or (iii) result
in any breach of or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or impair Parent's or Merger
Sub's rights or alter the rights or obligations of any third party under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, any contracts material to the business of Parent and Merger Sub
taken as a whole (a "Parent Material Contract") or result in the creation of a
lien or encumbrance on any of the properties or assets of Parent or Merger Sub
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which Parent or
Merger Sub is a party or by which Parent or Merger Sub or its or any of their
respective properties are bound or affected, except in any such case for any
such breaches, defaults or other occurrences that would not have a Parent
Material Adverse Effect.
(b) The execution and delivery of this Agreement by Parent and Merger Sub
will not require any consent, approval, authorization or permit of, or filing
with or notification to, any Governmental Entity except (i) for applicable
requirements, if any, of the Securities Act, the Exchange Act, the Blue Sky
Laws, the NYSE and the pre-merger notification requirements of the HSR Act and
(ii) where the failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not prevent or delay
consummation of the Merger, or otherwise prevent Parent or Merger Sub from
performing their respective obligations under this Agreement, and would not have
a Parent Material Adverse Effect.
SECTION 4.04. Certificate of Incorporation and By-Laws. Parent has
heretofore furnished to the Company a complete and correct copy of Parent's and
Merger Sub's Certificate of Incorporation and By-Laws, each as amended to date.
Such Certificates of Incorporation and By-Laws are in full force and effect.
Neither Parent nor Merger Sub is in violation of any of the provisions of its
Certificate of Incorporation or By-Laws, except for any such violations as would
not have a Parent Material Adverse Effect.
SECTION 4.05. Capitalization. The authorized capital stock of Parent
consists of 25,000,000 shares of common stock, par value $.01 per share ("Parent
Common Stock"), of which 16,057,295 shares were issued and outstanding, as of
the close of business on October 20, 1998, and 1,000,000 shares of preferred
stock, par value $.01 per share, none of which was outstanding as of the close
of business on October 20, 1998. The authorized capital stock of Merger Sub
consists of 1,000 shares of common stock, par value $.01 per share, 100 shares
of which are issued and outstanding. All of the outstanding shares of Parent's
and Merger Sub's respective capital stock have been duly authorized and validly
issued and are fully paid and non-assessable. Subject to obtaining Parent
Stockholder Approval: (i) the shares of Parent Preferred Stock to be issued in
the Merger have been duly authorized and, when so issued in accordance with the
terms hereof, such shares will be validly issued, fully paid and
non-assessable;(ii) the shares of Parent Common Stock issuable upon conversion
of the Parent Preferred Stock issuable in the Merger, in accordance with the
terms of the Parent Preferred Stock, have been duly authorized and such shares
of Parent Common Stock, when so issued upon such conversion will be validly
issued, fully paid and non-assessable; and (iii) the shares of Parent Common
Stock issuable upon exercise of Options assumed pursuant to Section 2.06(c) have
been duly authorized and, when so issued upon such exercise of the Options in
accordance with their respective terms, will be validly issued, fully paid and
non-assessable. Except as set forth in this Section 4.05 and except for those
options granted pursuant to Parent's 1996 Stock Option Plan and Employee Stock
Purchase Plan, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of Parent or Merger Sub or obligating Parent or Merger Sub to
issue or sell any shares of capital stock of, or other equity interests in,
Parent or Merger Sub. Except as is set forth in Section 4.05 of Parent
Disclosure Schedule,
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there are no obligations, contingent or otherwise, of Parent or Merger Sub to
repurchase, redeem or otherwise acquire any shares of capital stock of Parent or
Merger Sub or to provide funds to or make any investment (in the form of a loan,
capital contribution or otherwise) in Merger Sub or any other entity other than
guarantees of bank obligations of subsidiaries entered into in the ordinary
course of business.
SECTION 4.06. SEC Filings, Financial Statements. (a) Parent has filed all
forms, reports and documents required to be filed by it with the SEC since at
least December 31, 1995. Parent has heretofore delivered to the Company, in the
form filed with the SEC, (i) its Annual Report on Form 10-K for the fiscal year
ended April 30, 1998 and its Quarterly Report on Form 10-Q for the fiscal
quarter ended July 31, 1998, (ii) all proxy statements relating to Parent's
meetings of stockholders (whether annual or special) held since December 31,
1997, (iii) all other reports or registration statements (other than Reports on
Form 10-Q and Reports on Form 3, 4 or 5 filed on behalf of affiliates of the
Parent) filed by Parent with the SEC since December 31, 1997 and (iv) all
amendments and supplements to all such reports and registration statements filed
by Parent with the SEC (collectively, the "Parent SEC Reports"). The Parent SEC
Reports (i) were prepared in accordance with the requirements of the Securities
Act or the Exchange Act, as the case may be and (ii) did not at the time they
were filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(b) Each of the consolidated financial statements (including, in each case,
any related notes thereto) contained in the Parent SEC Reports was prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto) and each fairly
presents in all material respects the consolidated financial position of Parent
and its subsidiaries as at the respective dates thereof and the consolidated
results of its operations and cash flows for the periods indicated, except that
the unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments and such statements do not contain notes thereto.
(c) Parent has heretofore furnished to the Company a complete and correct
copy of any amendments or modifications, which have not yet been filed with the
SEC but which are required to be filed, to agreements, documents or other
instruments which previously had been filed by Parent with the SEC pursuant to
the Securities Act or the Exchange Act.
SECTION 4.07. Absence of Certain Changes or Events. Except as set forth on
Section 4.07 of the Parent Disclosure Schedule or the Parent SEC Reports,
between July 31, 1998 and the date of this Agreement, Parent has conducted its
business in the ordinary course and there has not occurred: (i) any amendments
or changes in the Certificate of Incorporation or By-Laws of Parent; (ii) any
material damage to, destruction or loss of any assets of the Parent (whether or
not covered by insurance); (iii) any revaluation by Parent of any of its assets,
including, without limitation, writing down the value of capitalized software or
inventory or writing off notes or accounts receivable other than in the ordinary
course of business; or (iv) any sale of a material amount of assets of Parent,
except in the ordinary course of business.
SECTION 4.08. Restrictions on Business Activities. Other than this
Agreement, there is no material agreement, judgment, injunction, order or decree
binding upon Parent or Merger Sub which has or could reasonably be expected to
have the effect of prohibiting or impairing any material business of Parent or
Merger Sub as currently conducted.
SECTION 4.09. Compliance, Permits. (a) Except for such conflicts, defaults
and violations as have not had and would not have a Parent Material Adverse
Effect, neither Parent nor any of its subsidiaries is in conflict with, or in
default or violation of, (i) any law, rule, regulation, order, judgment or
decree applicable to Parent or any of its subsidiaries or by which its or any of
their respective properties is bound or affected or (ii) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit,
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franchise or other instrument or obligation to which Parent or any of its
subsidiaries is a party or by which Parent or any of its subsidiaries or its or
any of their respective properties is bound or affected.
(b) Parent and its subsidiaries hold all permits, licenses, easements,
variances, exemptions, consents, certificates, orders and approvals from
governmental authorities necessary for the operation of the business of Parent
and its subsidiaries taken as a whole (collectively, the "Parent Permits"),
except to the extent that failure to have any such Parent Permit would not have
a Parent Material Adverse Effect. Parent and its subsidiaries are in compliance
with the terms of the Parent Permits, except where the failure so to comply
would not have a Parent Material Adverse Effect.
SECTION 4.10. No Undisclosed Liabilities. Except as disclosed in the Parent
SEC Reports, Parent does not have any liabilities (absolute, accrued, contingent
or otherwise) of the type that are required to be disclosed in financial
statements, including the notes thereto, prepared in accordance with GAAP which
are, in the aggregate, material to the business, operations or financial
condition of Parent and its subsidiaries taken as a whole, except liabilities
(i) adequately provided for or referred to in Parent's balance sheet and the
related notes thereto as of July 31, 1998 included in Section 4.10 of the Parent
Disclosure Schedule (the "July 31 Balance Sheet"), (ii) incurred in the ordinary
course of business and not required under GAAP to be reflected on the July 31,
1998 Balance Sheet or (iii) incurred since July 31, 1998 in the ordinary course
of business and consistent with past practice, and liabilities incurred in
connection with this Agreement.
SECTION 4.11. Absence of Litigation. Except as disclosed in the Parent SEC
Reports filed prior to the date of this Agreement, as of the date hereof, there
are no claims, actions, suits, proceedings or investigations pending or, to the
knowledge of Parent, threatened against Parent or any of its subsidiaries, or
any properties or rights of the Company or any of its subsidiaries, before any
court, arbitrator or Governmental Entity that is reasonably likely to have a
Parent Material Adverse Effect.
SECTION 4.12. Environmental Matters. Except as have not had and would not
reasonably be expected to have a Parent Material Adverse Effect:
(a) All of the current operations of Parent and each of its subsidiaries
and their respective assets, businesses and real property, including any
operations at or from any real property presently or formerly owned, used,
leased, occupied, managed or operated by Parent or any of its subsidiaries
(collectively, the "Parent Real Property"), comply with all applicable
Environmental Laws.
(b) To the knowledge of Parent, none of the assets of Parent or any of
its subsidiaries, nor any of the Parent Real Property, contains any
Hazardous Substances in, on, over, under or at it, in concentrations which
would violate any applicable Environmental Laws or reasonably would be
likely to result in the imposition of liability or obligations on Parent or
any of its subsidiaries under any applicable Environmental Laws, including
any liability or obligations for the investigation, corrective action,
remediation or monitoring of Hazardous Substances in, on, over, under or at
the Parent Real Property.
(c) None of the Parent Real Property is listed or proposed for listing
on the National Priorities List pursuant to the CERCLA, 42 U.S.C. Section
9601 et seq., or any similar inventory of sites requiring investigation or
remediation maintained by any state or locality. Neither Parent nor any of
its subsidiaries has received any notice, whether oral or written, from any
Governmental Entity or third party of any actual or threatened Environmental
Liabilities.
(d) To the knowledge of Parent, each of Parent and its subsidiaries has
all the permits, licenses, authorizations and approvals necessary for the
conduct of their businesses and for the operations on, in or at the Parent
Real Property (the "Parent Environmental Permits"), which are required under
applicable Environmental Laws and they are in compliance in all material
respects with the terms and conditions of all such Parent Environmental
Permits. To the best knowledge of Parent and each of its subsidiaries, no
reason exists why Parent and each of its subsidiaries would not be capable
of continued operation of their businesses in compliance in all material
respects with the Parent Environmental Permits and the applicable
Environmental Laws.
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SECTION 4.13. Opinion of Financial Advisor. Parent has been advised by its
financial advisor, BT Wolfensohn, that in its opinion, as of the date thereof,
the consideration to be paid by Parent to the holders of Company Common Stock in
the Offer and the Merger, taken together, is fair from a financial point of view
to Parent, and will deliver a written copy of such opinion to the Company; it
being understood and acknowledged that such opinion has been rendered for the
benefit of the board of directors of Parent and may not be relied upon by the
Company, its affiliates or any of their respective stockholders.
ARTICLE V
CONDUCT OF BUSINESS BY THE COMPANY
SECTION 5.01. Conduct of Business by the Company. During the period from
the date of this Agreement and continuing until the earlier to occur of the
termination of this Agreement or the election of Merger Sub's designees
representing at least a majority of the members of the Board in accordance with
Section 1.03, the Company covenants and agrees that, unless Parent shall
otherwise agree in writing and unless otherwise expressly permitted hereunder,
the Company shall conduct its business and shall cause the businesses of its
subsidiaries to be conducted, and the Company and its subsidiaries shall not
take any action except, in the ordinary course of business and in a manner
consistent with past practice; and the Company shall use reasonable commercial
efforts to preserve substantially intact the business organization of the
Company and its subsidiaries, to keep available the services of the present
officers, employees and consultants of the Company and its subsidiaries, and to
preserve the present relationships of the Company and its subsidiaries with
customers, suppliers and other persons with which the Company or any of its
subsidiaries has significant business relations. By way of amplification and not
limitation, neither the Company nor any of its subsidiaries shall, during the
period from the date of this Agreement and continuing until the earlier to occur
of the termination of this Agreement or the election of Merger Sub's designees
representing at least a majority of the members of the Board in accordance with
Section 1.03, directly or indirectly, do or propose to do, any of the following
without the prior written consent of Parent, unless otherwise expressly
permitted hereunder:
(a) amend or otherwise change the Company's or any of its subsidiaries'
Certificate of Incorporation or By-Laws;
(b) issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any shares of capital
stock of any class, or any options, warrants, convertible securities or
other rights of any kind to acquire any shares of capital stock, or any
other ownership interest (including, without limitation, any phantom
interest) of the Company, any of its subsidiaries or affiliates (except for
the issuance of shares of the Company Common Stock issuable pursuant to the
exercise of Options under the Stock Option Plans, which Options are
outstanding on the date hereof);
(c) sell, pledge, dispose of or encumber any assets of the Company or
any of its subsidiaries (except for (i) sales of assets in the ordinary
course of business and in a manner consistent with past practice and (ii)
dispositions of obsolete or worthless assets);
(d) amend or change the period (or permit any acceleration, amend mentor
change) of exercisability of Options granted under the Stock Option Plans or
authorize cash payments in exchange for any such Options;
(e) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof)
in respect of any of its capital stock, except that a wholly owned
subsidiary of the Company may declare and pay a dividend to its parent, (ii)
split, combine orreclassify any of its capital stock or issue or authorize
or propose the issuance of any other securities in respect of, in lieu of or
in substitutionfor shares of its capital stock or (iii) amend the terms of,
repurchase, redeem or otherwise acquire, or permit any subsidiary to
repurchase, redeem or otherwise acquire, any of its securities or any
securities of its subsidiaries, or propose to do any of the foregoing;
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(f) sell, transfer, license, sublicense or otherwise dispose of any
material Company Intellectual Property (other than in the ordinary course of
business consistent with past practice) or amend or modify any existing
agreements with respect to any material Company Intellectual Property or
Third Party Intellectual Property Rights;
(g) (i) acquire (by merger, consolidation or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof; (ii) incur any indebtedness for borrowed money (other than
indebtedness incurred under existing credit facilities in the ordinary
course of business consistent with past practices) or issue any debt
securities or assume, guarantee or endorse or otherwise as an accommodation
become responsible for, the obligations of any person, or make any loans or
advances except to employees in the ordinary course consistent with past
practice; (iii) enter into or amend any contract or agreement other than in
the ordinary course of business; (iv) authorize or make any capital
expenditures or purchase of fixed assets that are not currently budgeted and
that in the aggregate exceed $500,000; (v) terminate any Material Contract
or amend any of its material terms (other than amendments to existing credit
arrangements designed to remedy defaults thereunder); or (vi) enter into or
amend any contract, agreement, commitment or arrangement to effect any of
the matters prohibited by this Section 5.01(g);
(h) except as set forth in Section 3.11(a) of the Company Disclosure
Schedule, increase the compensation payable or to become payable to its
officers or directors or grant any severance or termination pay to, or enter
into any employment or severance agreement with any director or officer of
the Company or any of its subsidiaries or establish, adopt, enter into or,
except as required by law, terminate or amend in any material respect any
Employee Plan;
(i) take any action, other than as required by GAAP, to change
accounting policies or procedures or cash maintenance policies or procedures
(including, without limitation, procedures with respect to revenue
recognition, capitalization of development costs, payments of accounts
payable and collection of accounts receivable);
(j) make any material Tax election inconsistent with past practice or
settle or compromise any material Tax liability, except to the extent the
amount of any such settlement or compromise has been reserved for on the
consolidated financial statements contained in the Company SEC Reports, or
would not have a Company Material Adverse Effect;
(k) pay, discharge, settle, or satisfy any lawsuits, claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business and consistent with past practice of liabilities
reflected or reserved against in the financial statements of the Company or
incurred in the ordinary course of business and consistent with past
practice;
(l) except as may be required by law, take any action to terminate or
amend any Employee Plan;
(m) permit any material increase in the number of employees of the
Company or any of its subsidiaries employed by the Company or any of its
subsidiaries, as the case may be, on the date hereof other than pursuant to
an employee plan to be agreed to by the Company and Parent as promptly as
practicable after the date hereof acting reasonably and in good faith; or
(n) take or fail to take, or agree in writing or otherwise to take or
fail to take, any of the actions described in Section 5.01(a) through (m)
above, or any action which would make any of the representations or
warranties of the Company contained in this Agreement untrue or incorrect or
prevent the Company from performing or cause the Company not to perform its
covenants hereunder or result in any of the conditions to the Merger set
forth herein not being satisfied.
SECTION 5.02. No Solicitation. The Company will not, and will not permit or
cause any of its subsidiaries or any of the officers and directors ofit or its
subsidiaries to, and shall direct it and its subsidiaries, employees, agents and
representatives (including any investment banker, attorney or accountant
retained
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by it or any of its subsidiaries) not to, directly or indirectly, initiate,
solicit, encourage or otherwise facilitate any inquiries or the making of any
proposal or offer with respect to a merger, reorganization, share exchange,
consolidation or similar transaction involving, or any purchase of 15% or more
of the consolidated assets or equity securities of the Company or any of its
subsidiaries, other than transfers of Company Common Stock between and among
entities associated or affiliated with the Stockholders (any such proposal or
offer being hereinafter referred to as an "Acquisition Proposal"). The Company
will not, and will not permit or cause any of its subsidiaries or any of the
officers and directors of it or its subsidiaries to, and shall direct its and
its subsidiaries' employees, agents and representatives (including any
investment banker, attorney or accountant retained by it or any of its
subsidiaries) not to, directly or indirectly, engage in any negotiations
concerning, or provide any confidential information or data to, or have any
discussions with, any person relating to an Acquisition Proposal, whether made
before or after the date of this Agreement, or otherwise facilitate any effort
or attempt to make or implement an Acquisition Proposal; provided, however, that
nothing contained in this Agreement shall prevent the Company or the Board from
(i) complying with Rule14e-2 promulgated under the Exchange Act with regard to
an Acquisition Proposal or (ii) at any time prior to the earlier to occur of (x)
payment for shares of Company Common Stock pursuant to the Offer or (y) the
approval of the Merger by the requisite vote of the stockholders of the Company
(A) providing information in response to a request therefor by a person who has
made an unsolicited bona fide written Acquisition Proposal if the Board receives
from the person so requesting such information an executed confidentiality
agreement on terms substantially equivalent to those contained in the
Confidentiality Agreement (as defined in Section 6.03); (B) engaging in any
negotiations or discussions with any person who has made an unsolicited bona
fide written Acquisition Proposal; or (C) recommending such an Acquisition
Proposal to the stockholders of the Company, if and only to the extent that, (i)
in each such case referred to in clause (A), (B) or (C) above, the Board
determines in good faith after consultation with outside legal counsel that such
action is necessary in order for its directors to comply with their fiduciary
duties under applicable law and(ii) in each case referred to in clause (B) or
(C) above, the Board of Directors of the Company determines in good faith (after
consultation with its financial advisor) that such Acquisition Proposal is
reasonably likely to be consummated, taking into account all legal, financial
and regulatory aspects of the proposal and the person making the proposal and
would, if consummated, result in a more favorable transaction than the
transaction contemplated by this Agreement (any such more favorable Acquisition
Proposal being referred to in this Agreement as a "Superior Proposal"). The
Company will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing. The Company agrees that it will take the
necessary steps to promptly inform the individuals or entities referred to in
the first sentence hereof of the obligations undertaken in this Section 5.02 and
in the Confidentiality Agreement. The Company will notify Parent immediately if
any such inquiries, proposals or offers are received by, any such information
requested from, or any such discussions or negotiations are sought to be
initiated or continued with, any of its representatives indicating, in
connection with such notice, the name of such person and the material terms and
conditions of any proposals or offers and thereafter shall keep Parent informed,
on a current basis, on the status and terms of any such proposals or offers and
the status of any such negotiations or discussions. The Company also will
promptly request each person that has heretofore executed a confidentiality
agreement in connection with its consideration of an Acquisition Proposal to
return all confidential information heretofore furnished to such person by or on
behalf of it or any of its subsidiaries.
SECTION 5.03. Information Supplied. Each of the Company and Parent agrees,
as to itself and its subsidiaries, that none of the information supplied or to
be supplied by it or its subsidiaries for inclusion or incorporation by
reference in (i) the Offer Documents, the Schedule 14D-1 and the Schedule 14D-9
will, at the time of filing thereof and at the time of distribution thereof,
contain any untrue statement of material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, (ii) the Registration Statement onForm S-4 filed with the SEC by
Parent in connection with the issuance of shares
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of Parent Preferred Stock in the Merger (including the information statement or
proxy statement (as applicable) and prospectus (the "Prospectus/Proxy
Statement") constituting a part thereof) (the "S-4 Registration Statement")
will, at the time the S-4 Registration Statement becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading and (iii) the Prospectus/Proxy Statement and any amendment or
supplement thereto will, at the date of mailing to stockholders of the Company
and of Parent and at the times of the meetings of stockholders of the Company
and of Parent to be held in connection with the Merger, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Filings, Other Actions; Notification. (a) Parent and the
Company shall as promptly as practicable prepare and file with the SEC the
Prospectus/Proxy Statement, and Parent shall prepare and file with the SEC the
S-4 Registration Statement as promptly as practicable. Parent and the Company
each shall use all reasonable efforts to have the S-4 Registration Statement
declared effective under the Securities Act as promptly as practicable after
such filing, and promptly thereafter mail the Prospectus/ Proxy Statement to the
stockholders of the Company and of Parent. Parent shall also use all reasonable
efforts to obtain prior to the effective date of the S-4 Registration Statement
all necessary state securities law or "blue sky" permits and approvals required
in connection with the Merger and to consummate the other transactions
contemplated by this Agreement and will pay all expenses incident thereto.
(b) Parent and the Company shall promptly prepare and file as soon as
practicable after the date hereof all documents required to be filed with the
United States Federal Trade Commission and the Department of Justice in order to
comply with the HSR Act. Parent and the Company shall promptly furnish all
materials thereafter required in connection therewith.
(c) Each of the Company and Parent shall cooperate with each other and use
(and shall cause its subsidiaries to use) all best efforts (i) to cause to be
done all things necessary, proper or advisable on its part under this Agreement
and applicable laws to consummate and make effective the Offer, the Merger and
the other transactions contemplated by this Agreement as soon as practicable,
including preparing and filing as promptly as practicable all documentation to
effect all necessary notices, reports and other filings and(ii) to obtain as
promptly as practicable all consents, registrations, approvals, permits and
authorizations necessary or advisable to be obtained from any third party and/or
any Governmental Entity in connection with, as a resultof or in order to
consummate the Offer, the Merger or any of the other transactions contemplated
by this Agreement, including, without limitation, upon request ofParent, all
material consents required in connection with the consummation of the Offer and
the Merger; provided, however, that nothing in this Section 6.01 shall require,
or be construed to require, Parent, in connection with the receipt of any
regulatory approval, to proffer to, or agree to (i) sell or hold separate and
agree to sell or to discontinue to or limit, before or after the Effective Time,
any assets, businesses or interest in any assets or businesses of Parent, the
Company or any of their respective affiliates (or to consent to any sale, or
agreement to sell, or discontinuance or limitation by the Company of any of its
assets or businesses) or (ii) agree to any conditions relating to, or changes or
restriction in, the operations of any such asset or businesses which, in either
case, could, in the judgment of Parent, materially and adversely impact the
economic or business benefits to Parent of the transactions contemplated by this
Agreement. Subject to applicable laws relating to the exchange of information,
Parent and the Company shall have the right to review in advance, and to the
extent practicable each will consult the other on, all the information relating
to Parent or the Company, as the case may be, and any of their respective
subsidiaries, that appear in any filing made with, or written materials
submitted to, any third party or any Governmental Entity in connection with the
Offer, the Merger and the other transactions contemplated by this Agreement. In
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exercising the foregoing right, each of the Company and Parent shall act
reasonably and as promptly as practicable.
(d) Each of the Company and Parent shall, upon request by the other, furnish
the other with all information concerning itself, its subsidiaries, directors,
officers and stockholders and such other matters as may be reasonably necessary
or advisable in connection with the Offer Documents, the Schedule 14D-1, the
Schedule 14D-9, the Prospectus/Proxy Statement, the S-4 Registration Statement
or any other statement, filing, notice or application made by or on behalf of
Parent, the Company or any of their respective subsidiaries to any third party
or Governmental Entity in connection with the Offer, the Merger and the other
transactions contemplated by this Agreement.
(e) Each of the Company and Parent shall keep the other apprised of the
status of matters relating to completion of the transactions contemplated
hereby, including promptly furnishing the other with copies of notices or other
communications received by Parent or the Company, as the case may be, or any of
its subsidiaries, from any third party or any Governmental Entity with respect
to the Offer, the Merger and the other transactions contemplated by this
Agreement. The Company and Parent each shall give prompt notice to the other
ofany change that is reasonably likely to result in a Company Material Adverse
Effect or a Parent Material Adverse Effect, as applicable.
(f) The Company shall provide Parent with a certificate, satisfying the
requirements of Treasury Regulations Sections 1.897-2(h) and 1.1445-3, that the
Company was not a United States real property holding corporation within the
meaning of Section 897(c) of the Code within any time during each of the
five-year periods ending on the dates the Offer is consummated and the Effective
Time occurs.
SECTION 6.02. Stockholders' Meetings. (a) The Company shall, in accordance
with Delaware Law and the Company's Certificate of Incorporation and By-Laws,
take all actionnecessary to convene a meeting of holders of Company Common Stock
(the "Company Stockholders' Meeting") as promptly as practicable but in no event
more than 45 days after the S- 4 Registration Statement is declared effective,
to consider and vote upon the approval of the Merger. Subject to fiduciary
obligations under applicable law, the Board shall recommend such approval, shall
not withdraw or modify such recommendation and shall take all lawful action to
solicit such approval. Without limiting the generality of the foregoing, if the
Board withdraws or modifies its recommendation, the Company nonetheless shall
cause the Company Stockholders' Meeting to be convened and a vote taken with
respect to the Merger and the Board shall communicate to the Company's
stockholders its basis for such withdrawal or modification as contemplated by
Section 251 of the Delaware Law. Parent and Merger Sub shall cause all shares of
Company Common Stock purchased pursuant to the Offer and all other shares of
Company Common Stock owned by them or any of their subsidiaries or affiliates to
be voted to adopt and approve this Agreement and the Merger at the Company
Stockholders'Meeting.
(b) Parent shall, in accordance with Delaware Law and Parent's Certificate
of Incorporation and By-Laws, take all action necessary to convene a meeting of
holders of Parent Common Stock as promptly as practicable but in no event more
than 45 days after the S-4 Registration Statement is declared effective, to
consider and vote upon the approval of the Parent Preferred Stock Matters.
Parent's board of directors shall recommend such approval, shall not withdraw or
modify such recommendation and shall take all lawful action to solicit such
approval.
SECTION 6.03. Access to Information; Confidentiality. Upon reasonable
notice and subject to restrictions contained in confidentiality agreements to
which such party is subject, the Company and Parent shall (and they shall cause
each of their respective subsidiaries to) afford to the officers, employees,
accountants, counsel and other representatives of the other party, reasonable
access, during the period prior to the Effective Time, to all its properties,
books, contracts, commitments and records and, during such period, the Company
and Parent shall (and they shall cause each of their respective subsidiaries to)
furnish promptly to the other party all information concerning its business,
properties and personnel as such party may reasonably request, and shall make
available to the other party the appropriate individuals (including
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attorneys, accountants and other professionals) for discussion of its business,
properties and personnel as such party may reasonably request. The Company and
Parent shall keep such information confidential in accordance with the terms of
the confidentiality agreement dated April 23, 1998 (the "Confidentiality
Agreement") between Parent and the Company's subsidiary. Notwithstanding the
foregoing, no such review, inquiry or investigation shall affect any
representations or warranties of any parties herein or the conditions to the
obligations of any parties.
SECTION 6.04. Consents, Approvals. Each of the Company and Parent shall use
reasonable efforts to obtain all consents, waivers, approvals,authorizations or
orders (including, without limitation, all approvals of Governmental Entities),
and the Company and Parent shall make all filings (including, without
limitation, all filings with United States and foreign governmental or
regulatory agencies) required in connection with the authorization, executionand
delivery of this Agreement by the Company and Parent and the consummation by
them of the transactions contemplated hereby.
SECTION 6.05. Stock Options. The Board (or a committee thereof) shall adopt
such resolutions and take such other actions, if any, as may be required to
provide that as soon as practicable after the date of the consummation of the
Offer, and contingent upon the Offer, all outstanding unexercised options
granted under the Employee Plan and the Directors' Plan shall be canceled
andeach holder of an unexercised stock option shall be entitled to receive a
cash payment equal to the product of (x) the number of shares of Company Common
Stock underlying such unexercised stock option and (y) the excess of (1) the Per
Share Amount over (2) the per share exercise price of the unexercised stock
option.
SECTION 6.06. Employment Matters. (a) Except as contemplated by this
Agreement, for not less than one year following the Effective Time, Parent shall
cause the Surviving Corporation to maintain compensation and employee benefits
plans and arrangements and perquisites for employees of the Company and its
subsidiaries that, in the aggregate, are substantially comparable to those
provided pursuant to their compensation and employee benefit plans and
arrangements and perquisites in effect on the date hereof. Notwithstanding the
above, Parent and Surviving Corporation shall have the right in the good faith
exercise of their managerial discretion, to terminate or make changes or cause
changes to be made in compensation, benefits and other terms of employment of
any employee and to terminate the employment of any employee.
(b) Parent shall cause the Surviving Corporation to perform the Company's
obligations under the Termination Benefits Agreements, dated as of April 11,
1997, between the Company and each of its executive officers unless any such
officer agrees otherwise.
SECTION 6.07. Agreements of Affiliates. The Company shall deliver to
Parent, prior to the date the S-4 Registration Statement becomes effective under
the Securities Act, a letter (an "Affiliate Letter") identifying all persons who
are, or may be deemed to be, at the time of the Company Stockholders' Meeting,"
affiliates" of the Company for purposes of Rule 145 under the Securities Act.
The Company shall use its best efforts to cause each person who is identified as
an "affiliate" in the Affiliate Letter to deliver to Parent, prior to the
Effective Time, a written agreement (an "Affiliate Agreement") in substantially
the form of Exhibit E hereto.
SECTION 6.08. Indemnification. (a) The Certificate of Incorporation of the
Surviving Corporation shall contain the provisions with respect to
indemnification set forth in the Certificate of Incorporation and By-Laws of the
Company, which provisions shall not be amended, repealed or otherwise modified
for a period of six years from the Effective Time in any manner that would
adversely affect the rights thereunder of individuals who between the date
hereof and the Effective Time were directors or officers of the Company, unless
such modification is required by law.
(b) After the election of Merger Sub's designees representing at least a
majority of the members of the Board in accordance with Section 1.03, the
Surviving Corporation shall, and Parent shall cause the Surviving Corporation,
to the fullest extent permitted under applicable law or under the Surviving
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Corporation's Certificate of Incorporation or By-Laws, indemnify and hold
harmless, each director and officer of the Company or any of its subsidiaries
(collectively, the "Indemnified Parties") against any costs or expenses
(including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to any action or omission by such
director or officer by virtue of their holding the office of director or officer
occurring at or prior to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement) for a period of six years after the
Effective Time. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i) any
counsel retained by the Indemnified Parties for any period after the Effective
Time shall be reasonably satisfactory to the Surviving Corporation and Parent
and (ii) neither the Surviving Corporation nor Parent shall be liable for any
settlement effected without its written consent (which consent shall not beun
reasonably withheld).
(c) For a period of six years after the Effective Time, Parent shall cause
to be maintained in effect the current policies of directors' and officers'
liability insurance maintained by the Company (provided that Parent may
substitute therefor policies with reputable and financially sound carriers of at
least the same coverage and amounts containing terms and conditions which are no
less advantageous) with respect to claims arising from or related to facts or
events that occurred at or before the Effective Time; provided, however, that
Parent shall not be obligated to make annual premium payments for such insurance
to the extent such premiums exceed 150% of the annual premiums paid as of the
date hereof by the Company for such insurance (such 150% amount, the "Maximum
Premium"). If such insurance coverage cannot be obtained at all, or can only be
obtained at an annual premium in excess of the Maximum Premium, Parent shall
maintain the most advantageous policies of directors' and officers' insurance
obtainable for an annual premium equal to the Maximum Premium; provided further,
if such insurance coverage cannot be obtained at all, Parent shall purchase all
available extended reporting periods with respect to pre-existing insurance in
an amount that, together with all other insurance purchased pursuant to this
Section 6.08(c), does not exceed the Maximum Premium. The Company represents to
Parent that the Maximum Premium is $288,000. Parent agrees, and will cause the
Company, not to take any action that would have the effect of limiting the
aggregate amount of insurance coverage required to be maintained for the
individuals referred to in this Section 6.08(c).
SECTION 6.09. Notification of Certain Matters. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
(i) the occurrence, or non-occurrence, of any event the occurrence, or
non-occurrence, of which would be likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate and (ii) any failure of
the Company, Parent or Merger Sub, as the case may be, materially to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by ithereunder; provided, however, that the delivery of any notice pursuant to
this Section shall not limit or otherwise affect the remedies available
hereunder tothe party receiving such notice.
SECTION 6.10. Further Action. Upon the terms and subject to the conditions
hereof, each of the parties hereto in good faith shall use all commercially
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all other things necessary, proper or advisable to consummate
and make effective as promptly as practicable the transactions contemplated by
this Agreement, to obtain in a timely manner all necessary waivers, consents and
approvals and to effect all necessary registrations and filings, and to
otherwise satisfy or cause to be satisfied all conditions precedent to its
obligations under this Agreement.
SECTION 6.11. Public Announcements. The initial press release with respect
to the execution of this Agreement shall be a joint press release acceptable to
Parent and the Company. Thereafter, so long as this Agreement is in effect,
Parent and the Company shall consult with each other before issuing any press
release or otherwise making any public statements with respect to the Merger or
this Agreement and shall not issue any such press release or make any such
public statement without the prior consent of the other party, which shall not
be unreasonably withheld; provided, however, that a party may, without the prior
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consent of the other party, issue such press release or make such public
statement as may upon the advice of counsel be required by law or the NYSE if it
has used all reasonable efforts to consult with the other party.
SECTION 6.12. Listing and Delisting. Parent shall use its best efforts to
cause the shares of Parent Preferred Stock to be issued in the Merger, the
shares of Parent Common Stock issuable upon conversion of the Parent Preferred
Stock issuable in the Merger, and the Exchange Debentures (as defined in Exhibit
B) prior to or upon issuance thereof, to be approved for listing on the NYSE.
The Surviving Corporation shall use its best efforts to cause the Common Stock
to be de-listed from the NYSE and de-registered under the Exchange Act as soon
as practicable following the Effective Time.
SECTION 6.13. Expenses. The Surviving Corporation shall pay all charges and
expenses, including those of the Exchange Agent, in connection with the
transactions contemplated in Article II. Except as otherwise provided in Section
8.03, whether or not the Merger is consummated, all other costs and expenses
incurred in connection with this Agreement and the Offer, the Merger and the
other transactions contemplated by this Agreement shall be paid by the party
incurring such expense, except that expenses incurred in connection with the
filing fee for the S-4 Registration Statement and printing and mailing the
Prospectus/ Proxy Statement and the S-4 Registration Statement shall be shared
equally by Parent and the Company.
SECTION 6.14. Financing. Parent shall use its best efforts to put in place
the financing described in the letter dated October 21, 1998 (the "Commitment
Letter") from Bankers Trust Company to Parent. Parent shall use its best efforts
to ensure that the conditions described in the Commitment Letter are fulfilled
in a timely manner, including, without limitation, the condition that the
recommendation of the board of directors of Parent with respect to the
transactions referred to therein shall not have been modified in any material
respect or withdrawn. The Company shall cooperate with all reasonable requests
of Parent, and take all actions as may be reasonably requested by Parent, in
connection with obtaining such financing.
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01. Conditions to Obligation of Each Party to Effect the Merger.
The respective obligations of each party to effect the Merger shall be subject
to the satisfaction at or prior to the Effective Time of each of the following
conditions:
(a) Effectiveness of the Registration Statement. The S-4 Registration
Statement shall have become effective under the Securities Act. No stop
order suspending the effectiveness of the S-4 Registration Statement shall
have been issued by the SEC and no proceedings for that purpose and no
similar proceeding in respect of the Prospectus/Proxy Statement shall have
been initiated or threatened by the SEC;
(b) Stockholder Approvals. This Agreement and the Transactions shall
have been approved and adopted by the requisite vote of the stockholders of
the Company and the Parent Preferred Stock Matters shall have been approved
and adopted by the requisite vote of the stockholders of Parent;
(c) No Injunctions or Restraints; Illegality. No temporary restraining
order, preliminary or permanent injunction or other order issued by any
court of competent jurisdiction or other similar binding legal restraint or
prohibition preventing the consummation of the Merger shall be in effect,
and there shall not be any action taken, or any statute, rule, regulation or
order enacted, entered, enforced or deemed applicable to the Merger, which
makes the consummation of the Merger illegal; and
(d) Offer. Parent, Merger Sub or their affiliates shall have purchased,
or caused to be purchased, shares of Company Common Stock pursuant to the
Offeror pursuant to the Stockholders Agreement.
SECTION 7.02. Additional Condition to Obligation of the Company. The
obligation of the Company to effect the Merger is also subject to the condition
that the shares of Parent Preferred Stock to be issued in the Merger and the
shares of Parent Common Stock issuable upon conversion of Parent Preferred Stock
shall have been approved for listing, subject to official notice of issuance, on
the NYSE.
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ARTICLE VIII
TERMINATION
SECTION 8.01. Termination. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time, notwithstanding
approval thereof by the stockholders of the Company:
(a) by mutual written consent duly authorized by the respective boards
of directors of Parent and the Company; or
(b) by either Parent or the Company if the Merger shall not have been
consummated by October 31, 2000 (provided that the right to terminate this
Agreement under this Section 8.01(b) shall not be available to any party
whose failure to fulfill any obligation under this Agreement has been the
cause of or resulted in the failure of the Merger to occur on or before such
date); or
(c) by either Parent or the Company if a court of competent jurisdiction
or Governmental Entity shall have issued a non-appealable final order,
decree or ruling or taken any other action, in each case having the effect
of permanently restraining, enjoining or otherwise prohibiting the Merger;
or
(d) by Parent or the Company, if Company Common Stock has not been
purchased pursuant to the Offer or pursuant to the Stockholders Agreement
prior to April 30, 1999 (provided that Parent or the Company, as applicable,
is not then in material breach hereof); or
(e) as long as Company Common Stock has not been purchased pursuant to
the Offer or pursuant to the Stockholders Agreement, by Parent, if (i) the
Board shall withdraw, modify or change its recommendation of this Agreement,
the Offer or the Merger in a manner adverse to Parent or shall have resolved
to do so; or (ii) the Board shall have recommended, taken a "neutral"
position with respect to, resolved to accept or accepted an Acquisition
Proposal; or
(f) as long as Company Common Stock has not been purchased pursuant to
the Offer or pursuant to the Stockholders Agreement, by Parent, upon a
breach of any representation, warranty, covenant or agreement on the part of
the Company, set forth in this Agreement or if any representation or
warranty of the Company, shall have become untrue, in either case, such that
the breach would give rise to the failure of a condition set forth in
Exhibit A (a "Terminating Breach"), provided that, if such Terminating
Breach is curable prior to the expiration of 30 days from its occurrence
(but in no event later than April 30, 1999) by the Company through the
exercise of its reasonable best efforts and for so long as the Company
continues to exercise such reasonable best efforts, Parent may not terminate
this Agreement under this Section 8.01(f) until the expiration of such
period without such Terminating Breach having been cured; or
(g) by the Company if, as of any scheduled or extended expiration date
of the Offer occurring later than 150 days after the commencement by Merger
Sub of the Offer, all of the conditions to the Offer set forth in Exhibit A
have been satisfied or waived except for the condition set forth in
paragraph (j) of Exhibit A; provided, that the Company may not terminate
this Agreement pursuant to this Section 8.01(g) if the Company's failure to
fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure to satisfy the condition set forth in paragraph (j)
of Exhibit A; or
(h) by Parent if the Offer has expired or has been terminated in
accordance with the terms set forth in this Agreement (including Exhibit A)
without Company Common Stock having been purchased pursuant to the Offer.
SECTION 8.02. Effect of Termination. In the event of the termination of
this Agreement and the abandonment of the Merger pursuant to Section 8.01, this
Agreement shall forthwith become void and there shall be no liability on the
part of any party hereto (or any of its affiliates, directors, officers,
employees, agents, legal and financial advisors or other representatives)
except(i) as set forth in Sections
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6.13, 8.03 and 9.01 and (ii) nothing herein shall relieve any party from
liability or damages resulting from any breach of this Agreement.
SECTION 8.03. Fees and Expenses. (a) Except as set forth in Section 6.13
and this Section 8.03, all fees and expenses incurred in connection withth is
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses, whether or not the Merger is consummated.
(b) The Company shall pay Parent a fee of $25,000,000, plus actual,
documented and reasonable out-of-pocket expenses of Parent, not in excess of
$5,000,000, relating to the transactions contemplated by this Agreement
(including, but not limited to, fees and expenses of Parent's counsel), upon the
earliest to occur of the following events:
(i) the termination of this Agreement by Parent pursuant to Section
8.01(e) and the Minimum Condition shall not have been satisfied at the
scheduled or any extended expiration date of the Offer following the
occurrence of the event giving rise to Parent's right to terminate this
Agreement pursuant to Section 8.01(e); or
(ii) the termination of this Agreement by Parent pursuant to Section
8.01(h) if any person or "group" (within the meaning of Section 13(d)(3) of
the Exchange Act) shall have publicly made an Acquisition Proposal, the
Offer shall have remained open until at least the scheduled or any extended
expiration date following the date such Acquisition Proposal is made and the
Minimum Condition shall not have been satisfied at the scheduled or any
extended expiration date of the Offer; or
(iii) the termination of this Agreement by Parent pursuant to Section
8.01(f) if any person or "group" (within the meaning of Section 13(d)(3) of
the Exchange Act) shall have publicly made an Acquisition Proposal and the
Company enters into a binding written agreement concerning a transaction
that constitutes an Acquisition Proposal within one year after the date of
such termination;
provided, however, that no fee or expense reimbursement shall be payable
pursuant to this Section 8.03(b) if Parent or Merger Sub shall then be in
willful material breach of its obligations hereunder.
(c) Parent shall pay the Company a fee of $10,000,000, plus actual,
documented and reasonable out-of-pocket expenses of the Company, not in excess
of $2,000,000, relating to the transactions contemplated by this Agreement
(including, but not limited to, fees and expenses of the Company's counsel),
upon the termination of this Agreement by the Company pursuant to Section
8.01(g) if the condition set forth in paragraph (j) of Exhibit A has not been
satisfied due solely to the failure of one or more of the Excluded Conditions;
provided, however, that no fee or expense reimbursement shall be payable
pursuant to this Section 8.03(c) if the Company shall then be in willful
material breach of its obligations hereunder. For purposes of this Section
8.03(c), "Excluded Conditions" means the conditions precedent identified in the
following paragraphs under the heading "Conditions Precedent to the Initial
Loans" in Exhibit B to the Commitment Letter: (iii) (to the extent it relates to
the recommendation of the board of directors of Parent), (v) (change of control
of Parent), (vii) (material adverse effect to the extent it relates to Parent),
(xiii) (indebtedness of Parent) and (xiv) (material adverse effect on markets).
(d) The fee payable pursuant to Section 8.03(b) or Section 8.03(c) shall be
paid within one business day after the first to occur of the events described in
Section 8.03(b)(i), (ii) or (iii) or Section 8.03(c).
(e) All transfer, documentary, sales, use, stamp, registration and other
such taxes (including, without limitation, any penalties and interest) incurred
in connection with this Agreement by the Company and its stockholders
(including, without limitation, any New York States Real Estate Transfer Tax,
New York City Real Property Transfer Tax and New York State Stock Transfer Tax
and other similar taxes imposed by any other State of the United States or other
taxing jurisdiction) shall be borne and paid by Parent, and Parent will, at its
own expense, file all necessary Tax Returns with respect to all such taxes and,
if required by
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applicable law, the Company will, and will cause its subsidiaries to, join in
the execution of any such Tax Returns.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Effectiveness of Representations, Warranties and Agreements.
Except as otherwise provided in this Section 9.01, the representations,
warranties and agreements of each party hereto shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
any other party hereto, any person controlling any such party or any of their
officers or directors, whether prior to or after the execution of this
Agreement. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 8.01, as the case may be, except that the agreements set
forth in Article II and in Section 6.05 (Stock Options), 6.08 (Indemnification)
and 6.12 (Listing and Delisting) shall survive the consummation of the Merger
and those set forth in Section 6.13 (Expenses), Section 8.02 (Effect of
Termination) and Section 8.03 (Fees and Expenses) shall survive termination of
this Agreement. The Confidentiality Agreement shall survive termination of this
Agreement as provided therein.
SECTION 9.02. Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered or mailed if delivered personally or mailed by
registered or certified mail (postage prepaid, return receipt requested) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like changes of address shall be effective upon receipt)
or sent by electronic transmission, with confirmation received, to the telecopy
number specified below:
(a) If to Parent or Merger Sub:
Superior Telecom Inc.
1790 Broadway
New York, New York 10019-1412
Telecopier No.: (212) 757-3423
Attention: General Counsel
With a copy to:
Proskauer Rose LLP
585 Broadway
New York, New York 10036
Telecopier No.: (212) 969-2900
Attention: Ronald R. Papa, Esq.
(b) If to the Company:
Essex International Inc.
1601 Wall Street
Fort Wayne, Indiana 46802
Telecopier No.: (219) 461-4565
Attention: General Counsel
With a copy to:
Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, California 94306
34
<PAGE>
Telecopier No.: (650) 857-0663
Attention: Richard Climan, Esq.
and
Bessemer Partners & Co.
630 Fifth Avenue
New York, New York 10111
Telecopier No.: (212) 969-9032
Attention: Robert D. Lindsay
and
Cravath, Swaine & Moore
825 Eighth Avenue
New York, New York 10019
Telecopier No.: (212) 474-3700
Attention: Richard Hall, Esq.
SECTION 9.03. Certain Definitions. For purposes of this Agreement, the
term:
(a) "affiliates" means a person that directly or indirectly, through one
or more intermediaries, controls, is controlled by, or is under common
control with, the first mentioned person; including, without limitation, any
partnership or joint venture in which the first mentioned person (either
alone, or through or together with any other subsidiary) has, directly or
indirectly, an interest of 10 percent or more;
(b) "beneficial owner" with respect to any shares of Company Common
Stock, means a person who shall be deemed to be the beneficial owner of such
shares (i) which such person or any of its affiliates or associates
beneficially owns, directly or indirectly, (ii) which such person or any of
its affiliates or associates (as such term is defined in Rule 12b-2 under
the Exchange Act) has, directly or indirectly, (A) the right to acquire
(whether such right is exercisable immediately or subject only to the
passage of time), pursuant to any agreement, arrangement or understanding or
upon the exercise of consideration rights, exchange rights, warrants or
options, or otherwise, or (B) the right to vote pursuant to any agreement,
arrangement or understanding or (iii) which are beneficially owned, directly
or indirectly, by any other persons with whom such person or any of its
affiliates or person with whom such person or any of its affiliates or
associates has any agreement, arrangement or understanding for the purpose
of acquiring, holding, voting or disposing of any shares;
(c) "business day" means any day other than a day on which banks in New
York City are required or authorized to be closed;
(d) "Company Material Adverse Effect" means any change or effect that,
individually or when taken together with all other such changes or effects
that have occurred prior to the date of determination of the occurrence of
the Company Material Adverse Effect, is materially adverse to the business,
results of operations, or financial condition of the Company and its
subsidiaries, taken as a whole; provided, however, that in determining
whether there has been a Company Material Adverse Effect, any adverse effect
attributable to the following shall be disregarded: (i) general economic or
business conditions; (ii) general industry conditions; (iii) the taking of
any action permitted or required by this Agreement; (iv) the announcement or
pendency of the Offer, the Merger or any of the other transactions
contemplated by this Agreement; (v) the breach by Parent or Merger Sub of
this Agreement; and (vi) a decline in the Company's stock price; in each
case, to the extent that such adverse effect is attributable to such event;
(e) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction
35
<PAGE>
of the management or policies of a person, whether through the ownership of
stock, as trustee or executor, by contract or credit arrangement or
otherwise;
(f) "Environment" means any surface or subsurface physical medium or
natural resources, including air, land, soil, surface waters, ground waters,
stream and river sediments, biota and any indoor area, surface or physical
medium;
(g) "Environmental Laws" means any applicable federal, foreign, state,
local or common law, rule, regulation, ordinance, code, order or judgment
(including any binding judicial or administrative interpretations,
guidances, directives, policy statements or opinions) relating to the injury
to, or the pollution or protection of, human health and safety or the
Environment;
(h) "Environmental Liabilities" means any claims, judgments, damages
(including punitive damages), losses, penalties, fines, liabilities,
encumbrances, liens, violations, costs and expenses (including attorneys'
and consultants' fees) of investigation, remediation, monitoring or defense
of any matter relating to human health, safety or the Environment of
whatever kind or nature by any party, entity or authority, (A) which are
incurred as a result of (i) the existence of Hazardous Substances generated
by the Company or any of its subsidiaries or in, on, under, at or emanating
from any Real Property, (ii) the Company's or any of its subsidiary's
offsite transportation, treatment, storage or disposal of Hazardous
Substances or (iii) the violation of any Environmental Laws or (B) which
arise under Environmental Laws;
(i) "Governmental Entity" means any United States or foreign
governmental, administrative or regulatory authority, commission, body,
agency or other authority;
(j) "Hazardous Substances" means petroleum, petroleum products,
petroleum-derived substances, radioactive materials, hazardous wastes,
polychlorinated biphenyls, lead based paint, radon, urea formaldehyde,
asbestos or any materials containing asbestos, and any materials or
substances regulated or defined as or included in the definition of
"hazardous substances," "hazardous materials," "hazardous constituents,"
"toxic substances," "pollutants," "contaminants" or regulated under any
Environmental Law by reason of toxicity, carcinogenicity, ignitability,
corrosivity or reactivity;
(k) "Parent Material Adverse Effect" means any change or effect that,
individually or when taken together with all other such changes or effects
that have occurred prior to the date of determination of the occurrence of
the Parent Material Adverse Effect, is materially adverse to the business,
results of operations, or financial condition of Parent and its
subsidiaries, taken as a whole; provided, however, that in determining
whether there has been a Parent Material Adverse Effect, any adverse effect
attributable to the following shall be disregarded: (i) general economic or
business conditions; (ii) general industry conditions; (iii) the taking if
any action permitted or required by this Agreement; (iv) the announcement or
pendency of the Offer, the Merger or any of the other transactions
contemplated by this Agreement; (v) the breach by the Company of this
Agreement; and (vi) a decline in Parent's stock price; in each case, to the
extent that such adverse effect is attributable to such event;
(l) "person" means an individual, corporation, partnership,association,
trust, unincorporated organization, other entity or group (as defined in
Section 13(d)(3) of the Exchange Act);
(m) "subsidiary" or "subsidiaries" of the Company, the Surviving
Corporation, Parent or any other person means any corporation, partnership,
joint venture or other legal entity of which the Company, the Surviving
Corporation, Parent or such other person, as the case may be (either alone
or through or together with any other subsidiary), owns, directly or
indirectly, more than 50% of the stock or other equity interests the holders
of which are generally entitled to vote for the election of the board of
directors or other governing body of such corporation or other legal entity;
(n) "Tax" or "Taxes" shall mean taxes, fees, levies, duties, tariffs,
imposts and governmental impositions or charges of any kind in the nature of
(or similar to) taxes, payable to any federal, state,
36
<PAGE>
provincial, local or foreign taxing authority, including (without
limitation) (i) income, franchise, profits, gross receipts, ad valorem, net
worth, value added, sales, use, service, real or personal property, special
assessments, capital stock, license, payroll, withholding, employment,
social security, workers' compensation, unemployment compensation, utility,
severance, production, excise, stamp, occupation, premiums, windfall
profits, transfer and gains taxes and (ii) interest, penalties, additional
taxes and additions to tax imposed with respect thereto; and
(o) "Tax Returns" shall mean returns, reports and information statements
with respect to Taxes required to be filed with the IRS or any other taxing
authority, domestic or foreign, including, without limitation, consolidated,
combined and unitary tax returns.
SECTION 9.04. Amendment. Subject to 1.03(b), this Agreement may be amended
by the parties hereto by action taken by or on behalf of their respective boards
of directors at any time prior to the Effective Time; provided, however, that,
after approval of the Merger by the stockholders of the Company, no amendment
may be made which by law requires further approval by such stockholders without
such further approval. This Agreement may not be amended except by an instrument
in writing signed by the parties hereto.
SECTION 9.05. Waiver. Subject to Section 1.03(b), at any time prior to the
Effective Time, any party hereto may with respect to any other party hereto (a)
extend the time for the performance of any of the obligations or other acts, (b)
waive any inaccuracies in the representations and warranties contained herein or
in any document delivered pursuant hereto or (c) waive compliance with any of
the agreements or conditions contained herein. Any such extension or waiver
shall be valid if set forth in an instrument in writing signed by the party or
parties to be bound thereby.
SECTION 9.06. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 9.07. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
SECTION 9.08. Entire Agreement. This Agreement (including any exhibits
hereto), the Company Disclosure Schedule, the Parent Disclosure Schedule and the
Confidentiality Agreement constitute the entire agreement and supersede all
prior agreements and undertakings both written and oral, among the parties, or
any of them, with respect to the subject matter hereof.
SECTION 9.09. Assignment, Merger Sub. This Agreement shall not be assigned
by operation of law or otherwise, except that Merger Sub may assign all of its
rights hereunder to any direct or indirect wholly owned subsidiary of Parent,
provided that no such assignment shall relieve Merger Sub of its obligations
hereunder.
SECTION 9.10. Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied (including, without limitation, Section 6.06 (Employment
Matters)), is intended to or shall confer upon any other person any right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement,
other than Article II and Sections 6.05 (Stock Options), 6.08 (Indemnification)
and 6.12 (Listing and Delisting).
37
<PAGE>
SECTION 9.11. Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of any party hereto in the exercise of any right
here under shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
SECTION 9.12. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF DELAWARE.
SECTION 9.13. Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 9.14. Waiver of Jury Trial. EACH OF PARENT, MERGER SUB AND THE
COMPANY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL
RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED
UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
<TABLE>
<S> <C> <C>
SUPERIOR TELECOM INC.
By: /s/ STEVEN S. ELBAUM
-----------------------------------------
Name: Steven S. Elbaum
Title: Chairman of the Board
President and Chief Executive
Officer
SUT ACQUISITION CORP.
By: /s/ STEVEN S. ELBAUM
-----------------------------------------
Name: Steven S. Elbaum
Title: Chairman of the Board,
President and Chief Executive
Officer
ESSEX INTERNATIONAL INC.
By: /s/ STEVEN R. ABBOTT
-----------------------------------------
Name: Steven R. Abbott
Title: President and Chief Executive
Officer
</TABLE>
38
<PAGE>
EXHIBIT A
CONDITIONS TO THE OFFER
Notwithstanding any other provisions of the Offer, subject to the terms of
the Agreement, Merger Sub shall not be required to accept for payment or pay for
any shares of Company Common Stock tendered pursuant to the Offer, and may
terminate or amend the Offer and may postpone the acceptance for payment of, or
payment for, shares of Company Common Stock tendered, if, at any scheduled or
extended expiration date of the Offer, (i) the Minimum Condition shall not have
been satisfied, (ii) any applicable waiting period under the HSR Act shall not
have expired or been terminated prior to the expiration of the Offer (the
"HSRCondition") or (iii) any of the following conditions shall exist:
(a) there shall have been instituted or be pending or threatened any
action or proceeding by any Governmental Entity or any other person (in the
case of any suit, action or proceeding by a person other than a Governmental
Entity,such suit, action or proceeding having a reasonable likelihood of
success in regard to the relief sought in any of clauses (i) through (v)
below): (i) challenging or seeking to make illegal, materially delay or
otherwise directly or indirectly restrain or prohibit or make materially
more costly the making of the Offer, the acceptance for payment of, or
payment for, any shares of Company Common Stock by Parent, Merger Sub or any
other affiliate of Parent, or the consummation of any other Transaction, or
seeking to obtain material damages in connection with any Transaction; (ii)
seeking to prohibit or limit materially the ownership or operation by the
Company, Parent or any of their subsidiaries of all or any material portion
of the business or assets of the Company, Parent or any of their
subsidiaries, or to compel the Company, Parent or any of their subsidiaries
to dispose of or hold separate all or any material portion of the business
or assets of the Company, Parent or any of their subsidiaries, as a result
of the Transactions; (iii) seeking to impose or confirm material limitations
on the ability of Parent, Merger Sub or any other affiliate of Parent to
exercise effectively full rights of ownership of any shares of Company
Common Stock, including, without limitation, the right to vote any shares of
Company Common Stock acquired by Merger Sub pursuant to the Offer or
otherwise on all matters properly presented to the Company's stockholders,
including, without limitation, the approval and adoption of this Agreement
and the transactions contemplated hereby; (iv) seeking to require
divestiture by Parent, Merger Sub or any other affiliate of Parent of any
shares of Company Common Stock; or (v) which otherwise has a Company
Material Adverse Effect;
(b) there shall have been any action taken, or any statute, rule,
regulation, legislation, interpretation, judgment, order or injunction
enacted, entered, enforced, promulgated, amended, issued or deemed
applicable to (i) Parent, the Company or any subsidiary or affiliate of
Parent or the Company or (ii) the Offer, the Merger or any Transaction, by
any legislative body, court, government or Governmental Entity, domestic or
foreign, other than the routine application of the waiting period provisions
of the HSR Act to the Offer or the Merger, which is reasonably likely in the
good faith judgment of the Parent to result, directly or indirectly, in any
of the consequences referred to in clauses (i) through (v) of paragraph (a)
above;
(c) after the date of the Agreement, there shall have occurred any
change, condition, event or development that has a Company Material Adverse
Effect;
(d) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on the NYSE for a period in
excess of 24 hours (excluding suspensions or limitations resulting solely
from physical damage or interference with such exchange not related to
market conditions), (ii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States, (iii) a
commencement of a war or armed hostilities or other similar national or
international crisis directly or indirectly involving the United States
having, or which could reasonably be expected to have, a substantial
continuing general effect on business and financial
A-1
<PAGE>
conditions in the United States or (iv) in the case of any of the foregoing
existing on the date hereof, in the good faith judgment of the Parent a
material acceleration or worsening thereof;
(e) (i) the Board or any committee thereof shall have withdrawn or
modified in a manner adverse to Parent or Merger Sub the approval or
recommendation of the Offer, the Merger or the Agreement, or approved or
recommended any takeover proposal or any other acquisition of shares of
Company Common Stock other than the Offer and the Merger or (ii) the Board
or any committee thereof shall have resolved to do any of the foregoing;
(f) any representation or warranty of the Company in the Agreement shall
not be true and correct as if such representation and warranty was made as
of the date of the expiration of the Offer, except for (i) changes
contemplated by the Agreement, (ii) those representations and warranties
which address matters only as of a particular date (which shall be
determined as of such date) and (iii) where the failure to be true and
correct would not, together with all other such failures, have a Company
Material Adverse Effect;
(g) the Company or any other person (other than Parent and Merger Sub)
shall have failed to perform in any material respect any obligation or to
comply in any material respect with any agreement or covenant of the Company
to be performed or complied with by it under the Agreement;
(h) the Agreement shall have been terminated in accordance with its
terms;
(i) Merger Sub and the Company shall have agreed that Merger Sub shall
terminate the Offer or postpone the acceptance for payment of or payment for
shares of Company Common Stock thereunder; or
(j) the conditions set forth in the Commitment Letter shall not have
been satisfied or waived or the financing contemplated thereby shall not
have been effected;
which, in the sole judgment of Merger Sub in any such case, and regardless of
the circumstances (including any action or inaction by Parent or any of its
affiliates) giving rise to any such condition, makes it inadvisable to proceed
with the Offer and/or with such acceptance for payment of or payment for the
shares of Company Common Stock.
The foregoing conditions are for the sole benefit of Merger Sub and Parent
and may be asserted by Merger Sub or Parent regardless of the circumstances
giving rise to any such condition or may, subject to Section 1.01 of the
Agreement, be waived by Merger Sub or Parent in whole or in part at any time and
from time to time in their sole discretion. The failure by Parent or Merger Sub
at any time to exercise any of the foregoing rights shall not be deemed a waiver
of any such right; the waiver of any such right with respect to particular facts
and other circumstances shall not be deemed a waiver with respect to any other
facts and circumstances; and each such right shall be deemed an ongoing right
that may be asserted at any time and from time to time.
A-2
<PAGE>
Exhibit 7
APPENDIX B-1
PERSONAL AND CONFIDENTIAL
- --------------------------------------------------------------------------------
October 21, 1998
Board of Directors
Essex International Inc.
1601 Wall Street
Fort Wayne, IN 46802
Gentlemen:
You have requested our opinion as to the fairness from a financial point of view
to the holders of the outstanding shares of common stock, par value $0.01 per
share (the "Shares"), of Essex International Inc. (the "Company") of the
consideration proposed to be paid by Superior TeleCom Inc. ("Buyer") in the
Tender Offer and the Merger (each as defined below) pursuant to the Agreement
and Plan of Merger, dated as of October 21, 1998, by and among Buyer, SUT
Acquisition Corp. ("Merger Sub"), a wholly-owned subsidiary of Buyer, and the
Company (the "Agreement"), taken together as a unitary transaction. The
Agreement provides for a tender offer for up to 22,562,135 Shares (the "Tender
Offer") pursuant to which Merger Sub will pay $32.00 per Share in cash for each
Share accepted. The Agreement further provides that following completion of the
Tender Offer, Merger Sub will be merged with and into the Company (the "Merger")
and each outstanding Share (other than Shares already owned by Buyer and Merger
Sub and Shares owned by holders who have properly exercised their appraisal
rights) will be exchanged for 0.64 of a share of Series A Cumulative Convertible
Exchangeable Preferred Stock, par value $0.01 per share, of Buyer (the
"Convertible Preferred Stock"), or a combination of cash and Convertible
Preferred Stock, as provided in the Agreement in the event that the Tender Offer
is not fully subscribed.
Goldman, Sachs & Co., as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. We are familiar with
the Company having provided certain investment banking services to the Company
from time to time, including having acted as managing underwriter of public
offerings of Shares in April 1997 and September 1997 (in which certain
affiliates of Goldman, Sachs & Co., having previously owned approximately 14.5%
of the then outstanding Shares, sold all of their ownership interest in the
Company), and having acted as its financial advisor in connection with the
Agreement.
B-1-1
<PAGE>
Essex International Inc.
October 21, 1998
Page Two
In connection with this opinion, we have reviewed, among other things, the
Agreement, including the form of Certificate of Designation of the Convertible
Preferred Stock and the form of the Stockholders
Agreement among Buyer, Merger Sub and certain stockholders of the Company
attached as exhibits thereto; the form of Buyer's Indenture for the 8.5%
Subordinated Convertible Exchange Debentures due 2013; the Company's Prospectus
for the initial public offering of Shares dated April 17, 1997; the Company's
Prospectus for the secondary offering of Shares dated September 17, 1997;
Buyer's Prospectus for the initial public offering of Buyer's common stock dated
October 11, 1996; Annual Report to Stockholders of the Company for the year
ended December 31, 1997 and Annual Reports on Form 10-K of the Company and its
predecessor for the five years ended December 31, 1997; Annual Reports to
Stockholders and Annual Reports on Form 10-K of Buyer for the two fiscal years
ended April 30, 1998; certain interim reports to stockholders and Quarterly
Reports on Form 10-Q of the Company and Buyer; certain other communications from
the Company and Buyer to their respective stockholders; and certain internal
financial analyses and forecasts for the Company through the calendar year ended
December 31, 1999, and for Buyer through the calendar year ended December 31,
2002 prepared by their respective managements. We also have held discussions
with members of the senior management of the Company and Buyer regarding the
past and current business operations, financial condition and future prospects
of their respective companies and the companies combined pursuant to the
Agreement. In addition, we have reviewed the reported price and trading activity
of Shares, the common stock of Buyer and convertible securities generally,
compared certain financial and stock market information for the Company and
Buyer with similar information for certain other companies the securities of
which are publicly traded, reviewed the financial terms of certain business
combinations in the cable and wire industry specifically and in other industries
generally, and performed such other studies and analyses as we considered
appropriate.
We have relied upon the accuracy and completeness of all of the financial and
other information reviewed by us and have assumed such accuracy and completeness
for purposes of rendering this opinion. We have not made an independent
evaluation or appraisal of the assets and liabilities of the Company, Buyer or
any of their respective subsidiaries and we have not been furnished with any
such evaluation or appraisal. In addition, we were not requested to solicit, and
did not solicit, interest from other parties with respect to an acquisition of
or other business combination with the Company. Our advisory services and the
opinion expressed herein are provided for the information and assistance of the
Board of Directors of the Company in connection with its consideration of the
transactions contemplated by the Agreement and such opinion does not constitute
a recommendation as to whether or not any holder of Shares should tender such
Shares in connection with the Tender Offer or how any holder of Shares should
vote, or whether such holder should seek appraisal rights, in connection with
the Merger.
We note that under current market conditions, there may be a limited trading
market for the
Convertible Preferred Stock. Any estimate of the future trading value of the
Convertible Preferred Stock would be speculative and subject to substantial
uncertainties and contingencies. We are not
B-1-2
<PAGE>
Essex International Inc.
October 21, 1998
Page Three
expressing a view as to the actual trading price of the Convertible Preferred
Stock, which will be dependent upon and fluctuate with dividend rates generally,
the market price of the common stock of Buyer into which the Convertible
Preferred Stock is convertible, market conditions, general economic conditions,
the financial condition and prospects of Buyer after the Merger and other
factors which generally influence the price of similar securities.
We are not opining on the fairness from a financial point of view of the
Convertible Preferred Stock to be received by holders of Shares pursuant to the
Merger if viewed as a separate and distinct transaction from the Tender Offer.
Based upon and subject to the foregoing and based upon such other matters as we
consider relevant, it is our opinion that as of the date hereof the
consideration to be received pursuant to the Agreement by the holders of Shares
in the Tender Offer and the Merger, taken together as a unitary transaction, is
fair from a financial point of view to such holders.
Very truly yours,
B-1-3
<PAGE>
Exhibit 8
APPENDIX B-2
PERSONAL AND CONFIDENTIAL
October 21,1998
Board of Directors
Essex International Inc.
1601 Wall Street
Fort Wayne, IN 46802
Gentlemen:
You have requested our opinion as to the fairness, from a financial point of
view, to the holders of the outstanding shares of common stock, par value $0.01
per share (the "Shares"), of Essex International Inc. (the "Company") of the
consideration proposed to be paid by Superior TeleCom Inc. ("Buyer") in the
Tender Offer (as defined below) and the Merger (as defined below) pursuant to
the Agreement and Plan of Merger, dated as of October 21, 1998, by and among
Buyer, SUT Acquisition Corp. ("Merger Sub"), a wholly owned subsidiary of Buyer,
and the Company (the "Agreement"), taken together as a unitary transaction. The
Agreement provides for a tender offer for up to 22,562,135 Shares (the "Tender
Offer") pursuant to which Merger Sub will pay $32.00 per Share in cash for each
Share accepted. The Agreement further provides that following completion of the
Tender Offer, Merger Sub will be merged with and into the Company (the "Merger")
and each outstanding Share (other than Shares already owned by Buyer and Merger
Sub and Shares owned by holders who have properly exercised their appraisal
rights) will be exchanged for 0.64 of a share of Series A Cumulative Convertible
Exchangeable Preferred Stock, par value $0.01 per share (the "Convertible
Preferred Stock"), of Buyer, or a combination of cash and Convertible Preferred
Stock, as provided in the Agreement in the event that the Tender Offer is not
fully subscribed.
In connection with this opinion, we have reviewed, among other things, the
Agreement, including the form of Certificate of Designation of the Convertible
Preferred Stock and the form of Stockholders Agreement among Buyer, Merger Sub
and certain stockholders of the Company attached as exhibits thereto; the form
of Indenture for the 8 1/2% Subordinated Convertible Exchange Debentures due
2013; the Company's Prospectus for the initial public offering of the Company's
Shares dated April 17, 1997; the Company's Prospectus for the secondary offering
of the Shares dated September 17,
B-2-1
<PAGE>
1997; Buyer's Prospectus for the initial public offering of Buyer's common stock
dated October 11, 1996; Annual Report to Stockholders of the Company for the
year ended December 31, 1997 and Annual Reports on Form 10-K of the Company and
its predecessor for the five fiscal years ended December 31, 1997; Annual
Reports to Stockholders and Annual Reports on Form 10K of Buyer for the two
fiscal years ended April 30, 1998; certain interim reports to stockholders and
Quarterly Reports on Form 10-Q of the Company and Buyer; certain other
communications from the Company and Buyer to their respective stockholders; and
certain internal financial analyses and forecasts for the Company through the
calendar year ended December 31, 1999 and for Buyer through December 31, 2002
prepared by their respective managements. We also have held discussions with
members of the senior management of the Company and Buyer regarding the past and
current business operations, financial condition and future prospects of their
respective companies and the combined company. In addition, we have reviewed the
reported price and trading activity of the Shares, the common stock of Buyer and
convertible securities generally, compared certain financial and stock market
information for the Company and Buyer with similar information for certain other
companies the securities of which are publicly traded, reviewed the financial
terms of certain business combinations in the cable and wire industry
specifically, and in other industries generally, and reviewed such other
information and performed such other studies and analyses as we considered
appropriate.
We have assumed and relied upon, without assuming any responsibility for
verification, the accuracy and completeness of all of the financial and other
information provided to, discussed with, or reviewed by or for us, or publicly
available, for purposes of this opinion. We have neither made nor obtained any
independent evaluations or appraisals of the assets or liabilities of the
Company or Buyer or any of their subsidiaries, nor have we conducted a physical
inspection of the properties and facilities of the Company or Buyer or any of
their subsidiaries. Our advisory services and the opinion expressed herein are
provided for the information and assistance of the Board of Directors of the
Company in connection with its consideration of the transactions contemplated by
the Agreement and such opinion does not constitute a recommendation as to
whether or not any holder of Shares should tender such Shares in connection with
the Tender Offer or how any holder of Shares should vote, or whether such holder
should seek appraisal rights, in connection with the Merger.
For purposes of rendering our opinion, we have assumed that, in all respects
material to our analysis, the representations and warranties of each party
contained in the Agreement are true and correct, that each party will perform
all of the covenants and agreements required to be performed by it under the
Agreement and that all material conditions to the consummation of the Merger
will be satisfied without waiver thereof. We have further assumed that in the
course of obtaining any necessary governmental, regulatory or other consents and
approvals, including any necessary amendments, modifications or waivers to any
documents to which any of the Company or Buyer are a party, as contemplated by
the Agreement, no restrictions will be imposed or amendments, modifications or
waivers made that would have any material adverse
B-2-2
<PAGE>
effect on the contemplated benefits to the Company or Buyer of the Merger. We
have further assumed that the Merger will be accounted for as a purchase under
generally accepted accounting principles.
We note that under current market conditions, there may be a limited trading
market for the Convertible Preferred Stock. Any estimate of the future trading
value of the Convertible Preferred Stock would be speculative and subject to
substantial uncertainties and contingencies. We are not expressing a view as to
the actual trading price of the Convertible Preferred Stock, which will be
dependent upon and fluctuate with dividend rates generally, the market price of
the common stock of Buyer into which the Convertible Preferred Stock is
convertible, market conditions, general economic conditions, the financial
condition and prospects of Buyer after the Merger and other factors which
generally influence the price of similar securities.
Our opinion herein is necessarily based on market, economic and other conditions
as they exist and can be evaluated on the date of this letter. We are not
opining on the fairness from a financial point of view of the consideration to
be received by holders of Shares pursuant to the Merger if viewed as a separate
and distinct transaction from the Tender Offer.
Chase Securities Inc. ("CSI"), as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes. We are
familiar with the Company having provided certain banking services to the
Company including having acted as administrative agent for various debt
financings, having acted as an underwriter of public offerings of the Shares in
April 1997 and September 1997 (in which certain affiliates of CSI, having
previously owned approximately 6.78% of the then outstanding Shares, sold all of
their ownership interest in the Company) and having acted as its financial
advisor in connection with the Agreement. CSI was not requested to solicit, and
did not solicit, interest from other parties with respect to an acquisition of
or other business combination with the Company.
CSI provides a full range of financial advisory and securities services and, in
the course of its normal trading activities, may from time to time effect
transactions and hold securities, including derivative securities, of the
Company or Buyer for its own account and for the accounts of customers and at
any time may have a long or short position in such securities. CSI may provide
investment banking services to the Company, Buyer or any of their respective
subsidiaries in the future.
Based upon and subject to the foregoing and based upon such matters as we
consider relevant, it is our opinion that as of the date hereof the
consideration to be received pursuant to the Agreement by holders of Shares in
the Tender Offer and the Merger,
B-2-3
<PAGE>
taken together as a unitary transaction, is fair from a financial point of view
to such holders.
This opinion has been provided at the request of and is for the use and benefit
of the Board of Directors of the Company in its evaluation of the consideration
to be received by holders of Shares in the Tender Offer and the Merger, taken
together as a unitary transaction, and shall not be used for any other purpose
without the prior written consent of CSI.
Very truly yours,
B-2-4
<PAGE>
APPENDIX C
DELAWARE GENERAL CORPORATION LAW
SECTION 262 APPRAISAL RIGHTS.--(a) Any stockholder of a corporation of this
State who holds shares of stock on the date of the making of a demand pursuant
to subsection (d) of this section with respect to such shares, who continuously
holds such shares through the effective date of the merger or consolidation, who
has otherwise complied with subsection (d) of this section and who has neither
voted in favor of the merger or consolidation nor consented thereto in writing
pursuant to Section 228 of this title shall be entitled to an appraisal by the
Court of Chancery of the fair value of the stockholder's shares of stock under
the circumstances described in subsections (b) and (c) of this section. As used
in this section, the word "stockholder" means a holder of record of stock in a
stock corporation and also a member of record of a nonstock corporation; the
words "stock "and "share" mean and include what is ordinarily meant by those
words and also membership or membership interest of a member of a nonstock
corporation; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation
to be effected pursuant to ss.251 (other than a merger effected pursuant
to Section 251(g) of this title), Section 252, Section 254, Section 257,
Section 258, Section 263 or Section 264 of this title:
(1) Provided, however, that no appraisal rights under this section shall be
available for the shares of any class or series of stock, which stock, or
depository receipts in respect thereof, at the record date fixed to determine
the stockholders entitled to receive notice of and to vote at the meeting of
stockholders to act upon the agreement of merger or consolidation, were
either(i) listed on a national securities exchange or designated as a national
market system security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or (ii) held of record by more than
2,000 holders; and further provided that no appraisal rights shall be available
for any shares of stock of the constituent corporation surviving merger if the
merger did not require for its approval the vote of the stockholders of the
surviving corporation as provided in subsection (f) of Section 251 of this
title.
(2)Notwithstanding paragraph (1) of this subsection, appraisal rights under
this section shall be available for the shares of any class or series of stock
of a constituent corporation if the holders thereof are required by the terms of
an agreement of merger or consolidation pursuant to Sections 251, 252, 254, 257,
258, 263 and 264 of this title to accept for such stock anything except:
a. Shares of stock of the corporation surviving or resulting from such
merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts in
respect thereof, which shares of stock (or depository receipts in respect
thereof) or depository receipts at the effective date of the merger or
consolidation will be either listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or held of record
by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a. and b. of this paragraph; or
d. Any combination of the shares of stock, depository receipts and cash in
lieu of fractional shares or fractional depository receipts described in the
foregoing subparagraphs a., b. and c. of this paragraph.
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(3) In the event all of the stock of a subsidiary Delaware corporation party
to a merger effected under Section 253 of this title is not owned by the parent
corporation immediately prior to the merger, appraisal rights shall be available
for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting, shall
notify each of its stockholders who was such on the record date for such meeting
with respect to shares for which appraisal rights are available pursuant to
subsections (b) or (c) hereof that appraisal rights are available for any or all
of the shares of the constituent corporations, and shall include in such notice
a copy of this section. Each stockholder electing to demand the appraisal of
such stockholder's shares shall deliver to the corporation, before the taking of
the vote on the merger or consolidation, a written demand for appraisal of such
stockholder's shares. Such demand will be sufficient if it reasonably informs
the corporation of the identity of the stockholder and that the stockholder
intends thereby to demand the appraisal of such stockholder's shares. A proxy or
vote against the merger or consolidation shall not constitute such a demand. A
stockholder electing to take such action must do so by a separate written demand
as herein provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become effective;
or
(2) If the merger or consolidation was approved pursuant to Section 228 or
Section 253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days thereafter,
shall notify each of the holders of any class or series of stock of such
constituent corporation who are entitled to appraisal rights of the approval of
the merger or consolidation and that appraisal rights are available for any or
all shares of such class or series of stock of such constituent corporation, and
shall include in such notice a copy of this section; provided that, if the
notice is given on or after the effective date of the merger or consolidation,
such notice shall be given by the surviving or resulting corporation to all such
holders of any class or series of stock of a constituent corporation that are
entitled to appraisal rights. Such notice may, and if given on or after the
effective date of the merger or consolidation, shall, also notify such
stockholders of the effective date of the merger or consolidation. Any
stockholder entitled to appraisal rights may, within 20 days after the date of
mailing of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the appraisal of
such holder's shares. If such notice did not notify stockholders of the
effective date of the merger or consolidation, either (i) each such constituent
corporation shall send a second notice before the effective date of the merger
or consolidation notifying each of the holders of any class or series of stock
of such constituent corporation that are entitled to appraisal rights of the
effective date of the merger or consolidation or (ii) the surviving or resulting
corporation shall send such a second notice to all such holders on or within 10
days after such effective date; provided, however, that if such second notice is
sent more than 20 days following the sending of the first notice, such second
notice need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with this
subsection. An affidavit of the secretary or assistant secretary or of the
transfer agent of the corporation that is required to give either notice that
such notice has been given shall, in the absence of fraud, be prima facie
evidence of the facts
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stated therein. For purposes of determining the stockholders entitled to receive
either notice, each constituent corporation may fix, in advance, a record date
that shall be not more than 10 days prior to the date the notice is given,
provided, that if the notice is given on or after the effective date of the
merger or consolidation, the record date shall be such effective date. If no
record date is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next preceding the day on
which the notice is given.
(e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger or
consolidation, any stockholder shall have the right to withdraw such
stockholder's demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not voted
in favor of the merger or consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders of such shares.
Such written statement shall be mailed to the stockholder within 10 days after
such stockholder's written request for such a statement is received by the
surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in Chancery
in which the petition was filed a duly verified list containing the names and
addresses of all stockholders who have demanded payment for their shares and
with whom agreements as to the value of their shares have not been reached by
the surviving or resulting corporation. If the petition shall be filed by the
surviving or resulting corporation, the petition shall be accompanied by such a
duly verified list. The Register in Chancery, if so ordered by the Court, shall
give notice of the time and place fixed for the hearing of such petition by
registered or certified mail to the surviving or resulting corporation and to
the stockholders shown on the list at the addresses therein stated. Such notice
shall also be given by 1 or more publications at least 1 week before the day of
the hearing, in a newspaper of general circulation published in the City of
Wilmington, Delaware or such publication as the Court deems advisable. The forms
of the notices by mail and by publication shall be approved by the Court, and
the costs thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on
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the list filed by the surviving or resulting corporation pursuant to subsection
(f) of this section and who has submitted such stockholder's certificates of
stock to the Register in Chancery, if such is required, may participate fully in
all proceedings until it is finally determined that such stockholder is not
entitled to appraisal right sunder this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that
if no petition for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder shall deliver to the
surviving or resulting corporation a written withdrawal of such stockholder's
demand for an appraisal and an acceptance of the merger or consolidation, either
within 60 days after the effective date of the merger or consolidation as
provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court
of Chancery shall be dismissed as to any stockholder without the approval of the
Court, and such approval may be conditioned upon such terms as the Court deems
just.
(l) The shares of the surviving or resulting corporation to which the shares
of such objecting stockholders would have been converted had they assented to
the merger or consolidation shall have the status of authorized and unissued
shares of the surviving or resulting corporation.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law authorizes a court to
award, or a corporation's board of directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933. Superior TeleCom Inc.'s
Certificate of Incorporation and Bylaws provide for indemnification of its
directors, officers, employees and other agents to the maximum extent permitted
by the Delaware General Corporation Law. Superior TeleCom Inc. has also
purchased and maintains insurance for its officers, directors, employees or
agents against liabilities which an officer, a director, an employee or an agent
may incur in his or her capacity as such.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS
The following exhibits are filed herewith or incorporated herein by
reference.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
2.1 Agreement and Plan of Merger, dated as of October 21, 1998, by and among Superior TeleCom Inc., SUT
Acquisition Corp. and Essex International Inc. (incorporated by reference to Appendix A to the Joint
Proxy Statement/Prospectus filed as part of this Registration Statement).
4.1* Certificate of Trust of Superior Trust I, as filed on December 9, 1998.
4.2* Form of Amended and Restated Declaration of Trust of Superior Trust I.
4.3* Form of Indenture for the 8 1/2% Convertible Subordinated Debentures.
4.4* Form of Preferred Securities Guarantee Agreement.
5.1 Opinion of Proskauer Rose LLP, counsel to Superior TeleCom Inc., as to the legality of the 8 1/2%
Convertible Subordinated Debentures, the Superior Common Stock and the Preferred Securities Guarantee
Agreement being registered hereby.
5.2 Opinion of Proskauer Rose LLP, special counsel to Superior Trust I, as to the legality of the 8 1/2%
Trust Convertible Preferred Securities being registered hereby.
8.1 Opinion of Proskauer Rose LLP, counsel to Superior TeleCom Inc. and special counsel to Superior Trust I,
as to the federal tax consequences of the Merger.
10.1 Stockholders' Agreement, dated as of October 21, 1998, among Superior TeleCom Inc., SUT Acquisition
Corp. and certain stockholders of Essex International Inc. named therein (incorporated herein by
reference to Exhibit (c)(2) to the Tender Offer Statement on Schedule 14D-1 filed by Superior TeleCom
Inc. and SUT Acquisition Corp. with the Commission on October 28, 1998).
10.2* Registration Rights Agreement, dated as of October 21, 1998, among Steven R. Abbott, Superior TeleCom
Inc. and the individuals and entities named in Schedule I thereto.
10.3* Voting Agreement, dated as of October 21, 1998, between The Alpine Group, Inc. and Essex International
Inc.
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
10.4 Amended and Restated Credit Agreement, dated as of November 27, 1998, among Superior/ Essex Corp., Essex
Group, Inc., the guarantors named therein, various lenders, Merrill Lynch & Co., as documentation agent,
Fleet National Bank, as syndication agent, and Bankers Trust Company, as administrative agent
(incorporated herein by reference to Exhibit 99.7 to the Schedule 13D/A filed by The Alpine Group, Inc.,
Superior TeleCom Inc., Superior/Essex Corp. and SUT Acquisition Corp. on December 7, 1998 (the "Schedule
13D")).
10.5 Senior Subordinated Credit Agreement, dated as of November 27, 1998, among Superior/ Essex Corp., as
borrower, Superior TeleCom Inc., as Parent, the subsidiary guarantors named therein, various lenders,
Fleet Corporate Finance, Inc., as syndication agent, and Bankers Trust Company, as administrative agent
(incorporated herein by reference to Exhibit 99.8 to the Schedule 13D).
12.1 Statement of ratios of combined fixed charges and preference dividends to earnings (included on page 21
of this Registration Statement).
23.1 Consent of Proskauer Rose LLP with respect to the legality of securities being registered (contained in
Exhibits 5.1 and 5.2).
23.2* Consent of Arthur Andersen LLP, independent auditors, with respect to financial statements of Superior
TeleCom Inc.
23.3* Consent of Ernst & Young LLP, independent auditors, with respect to financial statements of Essex
International Inc.
23.4 Consent of Goldman, Sachs & Co. with respect to its fairness opinion.
23.5 Consent of Chase Securities Inc. with respect to its fairness opinion.
24.1* Power of Attorney (included on pages II-4 and II-5 of this Registration Statement).
25.1 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of the Property
Trustee.
25.2 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of the Indenture
Trustee.
25.3 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of the Guarantee
Trustee.
99.1 Form of Proxy to be used in conneciton with special meeting of stockholders of Superior TeleCom Inc.
99.2 Form of Proxy to be used in connection with meeting of stockholders special & Essex International Inc.
</TABLE>
- ------------------------
* Filed herewith.
(B) FINANCIAL STATEMENT SCHEDULES
All schedules have been omitted as not applicable or not required under the
rules of Regulation S-X.
(C) REPORTS, OPINIONS AND APPRAISALS
The opinions of Goldman, Sachs & Co. and Chase Securities Inc (attached as
Appendices B-1 and B-2, respectively, to the Joint Proxy Statement/Prospectus
filed as a part of this Registration Statement).
II-2
<PAGE>
ITEM 22. UNDERTAKINGS
(a) The undersigned Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the Registration Statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective Registration Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement.
PROVIDED, HOWEVER, that paragraphs (i) and (ii) do not apply if the
Registration Statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
(c) The undersigned Registrants hereby undertake as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of the Registration Statement, by any person or party
who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer
undertakes that such reoffering prospectus will contain the information called
for by the applicable registration form with respect to reofferings by persons
who may be deemed underwriters, in addition to the information called for by the
other items of the applicable form.
(d) The Registrants undertake that every prospectus: (i) that is filed
pursuant to paragraph (c) immediately preceding or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
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<PAGE>
amendment to the Registration Statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
(e) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrants have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that such a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrants will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(f) The undersigned Registrants hereby undertake to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through the
date of responding to the request.
(g) The undersigned Registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF NEW YORK, STATE OF NEW
YORK, ON THE 14TH DAY OF DECEMBER, 1998.
SUPERIOR TELECOM INC.
By /s/ STEVEN S. ELBAUM
------------------------------------------
Steven S. Elbaum
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
II-4
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Steven S. Elbaum, David S. Aldridge and Stewart
H. Wahrsager, jointly and severally, his or her attorneys-in-fact, each with the
power of substitution, for him or her in any and all capacities to sign any
amendments (including post-effective amendments, exhibits thereto and other
documents in connection therewith) to this Registration Statement and any
subsequent Registration Statement filed by the registrant pursuant to Securities
and Exchange Commission Rule 462, which relates to this Registration Statement,
and to file the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that each of said
attorneys-in-fact, or his substitute or substitutes, may do or cause to be done
by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Chairman of the Board and
/s/ STEVEN S. ELBAUM Chief Executive Officer
- ------------------------------ (Principal Executive December 14, 1998
Steven S. Elbaum Officer)
/s/ EUGENE P. CONNELL
- ------------------------------ Director December 14, 1998
Eugene P. Connell
/s/ ROBERT T. LEVENSON
- ------------------------------ Director December 14, 1998
Robert T. Levenson
/s/ CHARLES Y.C. TSE
- ------------------------------ Director December 14, 1998
Charles Y.C. Tse
/s/ BRAGI F. SCHUT
- ------------------------------ Director December 14, 1998
Bragi F. Schut
Chief Financial Officer
/s/ DAVID S. ALDRIDGE and Treasurer (Principal
- ------------------------------ Accounting and Financial December 14, 1998
David S. Aldridge Officer)
</TABLE>
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on the 14th day of December, 1998.
SUPERIOR TRUST I
By /S/ STEWART H. WAHRSAGER__________
Stewart H. Wahrsager, Trustee
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
2.1 Agreement and Plan of Merger, dated as of October 21, 1998, by and among Superior TeleCom Inc., SUT
Acquisition Corp. and Essex International Inc. (incorporated by reference to Appendix A to the Joint
Proxy Statement/Prospectus filed as part of this Registration Statement).
4.1* Certificate of Trust of Superior Trust I, as filed on December 9, 1998.
4.2* Form of Amended and Restated Declaration of Trust of Superior Trust I.
4.3* Form of Indenture for the 8 1/2% Convertible Subordinated Debentures.
4.4* Form of Preferred Securities Guarantee Agreement.
5.1 Opinion of Proskauer Rose LLP, counsel to Superior TeleCom Inc., as to the legality of the 8 1/2%
Convertible Subordinated Debentures, the Superior Common Stock and the Preferred Securities Guarantee
Agreement being registered hereby.
5.2 Opinion of Proskauer Rose LLP, special counsel to Superior Trust I, as to the legality of the 8 1/2%
Trust Convertible Preferred Securities being registered hereby.
8.1 Opinion of Proskauer Rose LLP, counsel to Superior TeleCom Inc. and special counsel to Superior Trust I,
as to the federal tax consequences of the Merger.
10.1 Stockholders' Agreement, dated as of October 21, 1998, among Superior TeleCom Inc., SUT Acquisition
Corp. and certain stockholders of Essex International Inc. named therein (incorporated herein by
reference to Exhibit (c)(2) to the Tender Offer Statement on Schedule 14D-1 filed by Superior TeleCom
Inc. and SUT Acquisition Corp. with the Commission on October 28, 1998).
10.2* Registration Rights Agreement, dated as of October 21, 1998, among Steven R. Abbott, Superior TeleCom
Inc. and the individuals and entities named in Schedule I thereto.
10.3* Voting Agreement, dated as of October 21, 1998, between The Alpine Group, Inc. and Essex International
Inc.
10.4 Amended and Restated Credit Agreement, dated as of November 27, 1998, among Superior/ Essex Corp., Essex
Group, Inc., the guarantors named therein, various lenders, Merrill Lynch & Co., as documentation agent,
Fleet National Bank, as syndication agent, and Bankers Trust Company, as administrative agent
(incorporated herein by reference to Exhibit 99.7 to the Schedule 13D/A filed by The Alpine Group, Inc.,
Superior TeleCom Inc., Superior/Essex Corp. and SUT Acquisition Corp. on December 7, 1998 (the "Schedule
13D")).
10.5 Senior Subordinated Credit Agreement, dated as of November 27, 1998, among Superior/ Essex Corp., as
borrower, Superior TeleCom Inc., as Parent, the subsidiary guarantors named therein, various lenders,
Fleet Corporate Finance, Inc., as syndication agent, and Bankers Trust Company, as administrative agent
(incorporated herein by reference to Exhibit 99.8 to the Schedule 13D).
12.1 Statement of ratios of combined fixed charges and preference dividends to earnings (included on page 21
of this Registration Statement).
23.1 Consent of Proskauer Rose LLP with respect to the legality of securities being registered (contained in
Exhibits 5.1 and 5.2).
23.2* Consent of Arthur Andersen LLP, independent auditors, with respect to financial statements of Superior
TeleCom Inc.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
23.3* Consent of Ernst & Young LLP, independent auditors, with respect to financial statements of Essex
International Inc.
23.4 Consent of Goldman, Sachs & Co. with respect to its fairness opinion.
23.5 Consent of Chase Securities Inc. with respect to its fairness opinion.
24.1* Power of Attorney (included on pages II-4 and II-5 of this Registration Statement).
25.1 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of the Property
Trustee.
25.2 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of the Indenture
Trustee.
25.3 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of the Guarantee
Trustee.
99.1 Form of Proxy to be used in connection with special meeting of stockholders of Superior Telecom Inc.
99.2 Form of Proxy to be used in connection with special meeting of stockholders of Essex International Inc.
</TABLE>
- ------------------------
* Filed herewith.
<PAGE>
CERTIFICATE OF TRUST
OF
SUPERIOR TRUST I
This Certificate of Trust is being executed as of December 9, 1998 for the
purposes of organizing a business trust pursuant to the Delaware Business Trust
Act, 12 Del. C. Section 3801 et seq. (the "Act").
The undersigned hereby certify as follows:
1) NAME. The name of the business trust is "Superior Trust I" (the
"Trust").
2) DELAWARE TRUSTEE. The name and business address of the Delaware
resident trustee of the Trust meeting the requirements of Section 3807 of the
Act are as follows:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
3) EFFECTIVE. This Certificate of Trust shall be effective immediately
upon filing in the Office of the Secretary of the State of Delaware.
IN WITNESS WHEREOF, the undersigned, as trustees of the Trust, have duly
executed this Certificate of Trust as of the day and year first above written.
WILMINGTON TRUST COMPANY,
as Delaware Trustee
<TABLE>
<S> <C>
By:___________________________ ____________________________________
Name: David S. Aldridge
Title: in his capacity as Administrative Trustee
____________________________________ ____________________________________
Steven S. Elbaum Stewart H. Wahrsager
in his capacity as Administrative Trustee in his capacity as Administrative Trustee
</TABLE>
<PAGE>
Exhibit 4.2
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AMENDED AND RESTATED DECLARATION OF TRUST
AMONG
SUPERIOR TELECOM INC.
AS DEPOSITOR,
[ ]
AS PROPERTY TRUSTEE,
[ ]
AS DELAWARE TRUSTEE,
AND
THE ADMINISTRATIVE TRUSTEES NAMED HEREIN
DATED AS OF ____________, 1999
SUPERIOR TRUST I
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUPERIOR TRUST I*
Certain Sections of this Declaration relating to Sections 310 through 318
of the Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
TRUST INDENTURE DECLARATION
ACT SECTION SECTION
<S> <C> <C> <C>
Section 310 (a) (1)...............................................8.7
(a) (2)...............................................8.7
(a) (4)........................................2.6(a)(ii)
(b) ..........................................8.8
Section 311 (a) .........................................8.12
(b) .........................................8.12
Section 312 (a) ..........................................5.7
(b) ..........................................5.7
(c) ..........................................5.7
Section 313 (a) ......................................8.13(a)
(c) .........................................10.8
(d) ......................................8.13(c)
(a) (4)...........................................8.13(b)
(b) ......................................8.13(b)
Section 314 (a) .........................................8.14
(b) ...............................Not Applicable
(c) (1)..............................................8.15
(c) (2)..............................................8.15
(c) (3)....................................Not Applicable
(d) ...............................Not Applicable
(e) ....................................1.1, 8.15
Section 315 (a) ...............................8.1(a), 8.3(a)
(b) ....................................8.2, 10.8
(c) .......................................8.1(a)
(d) .....................................8.1, 8.3
(e) ...............................Not Applicable
Section 316 (a) ...............................Not Applicable
(a) (1)(A).................................Not Applicable
(a) (1)(B).................................Not Applicable
(a) (2)....................................Not Applicable
(b) ...............................Not Applicable
(c) ..........................................6.7
Section 317 (a) (1)....................................Not Applicable
(b) ..........................................5.9
Section 318 (a) ........................................10.10
</TABLE>
- --------
* Note: This reconciliation and tie sheet shall not, for any purpose, be
deemed to be a part of the Declaration.
<PAGE>
AMENDED AND RESTATED DECLARATION OF TRUST, dated as of __________,
1999, among (i) Superior TeleCom Inc., a Delaware corporation (including any
successors or assigns, the "DEPOSITOR"), (ii) __________, a __________ banking
corporation, as property trustee (in such capacity, the "PROPERTY TRUSTEE," and,
in its personal capacity and not in its capacity as Property Trustee, the
"BANK"), (iii) __________, a Delaware banking corporation, as Delaware trustee
(in such capacity, the "DELAWARE TRUSTEE"), (iv) __________, an individual,
__________, an individual, and __________, an individual, each of whose address
is c/o Superior TeleCom Inc., 1790 Broadway, New York, New York 10019 (each, an
"ADMINISTRATIVE TRUSTEE," and, collectively, the "ADMINISTRATIVE TRUSTEES," and,
collectively with the Property Trustee and the Delaware Trustee, the
"TRUSTEES"), and (v) the several Holders as hereinafter defined.
W I T N E S S E T H:
WHEREAS, the Depositor has entered into an Agreement and Plan of
Merger, dated as of October 21, 1998 (the "MERGER AGREEMENT"), with SUT
Acquisition Corp., a Delaware corporation and a subsidiary of Depositor
("PURCHASER"), and Essex International Inc., a Delaware corporation ("ESSEX"),
pursuant to which (i) Purchaser commenced, on October 28, 1998, a tender offer
to acquire up to 22,562,135 of the issued and outstanding shares of common
stock, par value $0.01 per share ("ESSEX COMMON STOCK"), of Essex for $32.00 per
share, net to the seller in cash, and (ii) following completion of the tender
offer, Purchaser will be merged with and into Essex, which will continue as the
surviving corporation, and the remaining outstanding shares of Essex Common
Stock will be converted into the right to receive the Preferred Securities (as
defined herein) issued hereby;
WHEREAS, the Depositor and certain of the Trustees have heretofore
duly declared and established a business trust, under the Delaware Business
Trust Act, by entering into a Declaration of Trust, dated as of ____________,
1998 (the "ORIGINAL DECLARATION"), and by executing and filing with the
Secretary of State of the State of Delaware a Certificate of Trust, filed on
___________, 1998 and attached hereto as Exhibit A (the "CERTIFICATE OF TRUST"),
the primary purpose of which is to issue such Preferred Securities;
WHEREAS, as of the date hereof, no interests in the Trust have been
issued;
WHEREAS, the Depositor and the Trustees desire to amend and restate
the Original Declaration in its entirety to provide for, among other things, the
issuance of the Preferred Securities and the Common Securities by the Trust to
the Depositor (and the subsequent delivery of such Preferred Securities by the
Depositor to holders of Essex Common Stock in accordance with the Merger
Agreement) in consideration for the acquisition by the Trust from the Depositor
of all of the right, title and interest in and to the Debentures (as such terms
are defined herein);
NOW THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each party, for the benefit of
<PAGE>
the other parties hereto and for the benefit of the Holders of the Preferred
Securities, hereby amends and restates the Original Declaration in its entirety
and agrees as follows:
ARTICLE 1
DEFINED TERMS
Section 1.1. Definitions. For all purposes of this Declaration, except as
otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to them in
this Article and include the plural as well as the singular;
(b) all other terms used herein that are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to them
therein;
(c) unless the context otherwise requires, any reference to an "Article" or
a "Section" refers to an Article or a Section, as the case may be, of this
Declaration;
(d) the words "herein," "hereof" and "hereunder" and other words of similar
import refer to this Declaration as a whole and not to any particular Article,
Section or other subdivision;
(e) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles,
and the term "generally accepted accounting principles," with respect to any
computation required or permitted hereunder, shall mean such accounting
principles which are generally accepted at the date or time of such computation;
(f) "or" is not exclusive;
(g) provisions apply to successive events and transactions; and
(h) each reference herein to a rule or form of the Commission shall mean
such rule or form and any rule or form successor thereto, in each case as
amended from time to time.
"ACT" has the meaning specified in Section 6.8.
"ADDITIONAL AMOUNT" means, with respect to the Trust Securities, the amount
of Additional Interest (as defined in the Indenture) paid and identified as such
to the Property Trustee or other holders of the Debentures by the Depositor on
the Debentures.
"ADDITIONAL SUMS" means, with respect to the Trust Securities, the
amount of Additional Sums (as defined in the Indenture) paid and identified
as such, to the Property Trustee or other holders of the Debentures, by the
Depositor on the Debentures.
2
<PAGE>
"ADMINISTRATIVE TRUSTEE" means each of __________, __________ and
__________, each solely in his capacity as Administrative Trustee of the Trust
heretofore formed and continued hereby and not in his individual capacity, or
such Administrative Trustee's successor in interest in such capacity, or any
successor in interest in such capacity, or any successor administrative trustee
appointed as herein provided.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person; provided, however, that an Affiliate of the
Depositor shall not be deemed to include the Trust. For the purposes of this
definition, "control" when used with respect to any specified Person means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by contract or otherwise; provided, however,
that beneficial ownership of 10% or more of the Voting Stock of an entity will
be deemed to be control; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"BANK" has the meaning specified in the preamble to this Declaration.
"BANKRUPTCY EVENT" means, with respect to any Person:
(a) the entry by a court of competent jurisdiction of (i) a decree or order
for relief in respect of such Person in an involuntary case or proceeding under
United States bankruptcy laws, as now or hereafter constituted, or any other
applicable federal, state or foreign bankruptcy, insolvency or other similar law
or (ii) a decree or order adjudging such Person a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization, arrangement,
adjustment or composition of, or in respect of, such Person under any United
States bankruptcy laws, as now or hereafter constituted, or any other applicable
federal, state or foreign bankruptcy, insolvency or similar law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of such Person or of any substantial part of such Person's
property or assets, or ordering the winding-up or liquidation of the affairs of
such Person, and the continuance of any such decree or order for relief or any
such other decree or order unstayed and in effect for a period of 180
consecutive days; or
(b) (i) the commencement by such Person of a voluntary case or proceeding
under United States bankruptcy laws, as now or hereafter constituted, or any
other applicable federal, state or foreign bankruptcy, insolvency or other
similar law or of any other case or proceeding to be adjudicated a bankrupt or
insolvent; or (ii) the consent by such Person to the entry of a decree or order
for relief in respect of such Person in an involuntary case or proceeding under
United States bankruptcy laws, as now or hereafter constituted, or any other
applicable federal, state or foreign bankruptcy, insolvency or other similar law
or to the commencement of any bankruptcy or insolvency case or proceeding
against such Person; or (iii) the filing by such Person of a petition or answer
or consent seeking reorganization or relief under United States bankruptcy laws,
as now or hereafter constituted, or any other applicable federal, state or
foreign bankruptcy, insolvency or other similar law; or (iv) the consent by such
Person to the filing of such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee,
3
<PAGE>
trustee, sequestrator or similar official of such Person or any substantial part
of such Person's property or assets, or the making by such Person of an
assignment for the benefit of creditors; or (v) the taking of corporate action
by such Person in furtherance of any such actions.
"BANKRUPTCY LAWS" has the meaning specified in Section 10.9.
"BOARD OF DIRECTORS" means either the board of directors of the Depositor
or any committee of that board duly authorized to act hereunder.
"BOARD RESOLUTION" means a copy of the resolution certified by the
Secretary of the Depositor to have been duly adopted by the Board of Directors,
or such committee of the Board of Directors or officers of the Depositor to
which authority to act on behalf of the Board of Directors has been delegated,
and to be in full force and effect on the date of such certification, and
delivered to the Property Trustee.
"BUSINESS DAY" means any day other than a Saturday or Sunday or a day on
which banking institutions in the City of New York are authorized or required by
law or executive order to remain closed or a day on which the Corporate Trust
Office or the corporate trust office of the Indenture Trustee is closed for
business.
"CAPITAL STOCK" means, with respect to any Person, any and all shares,
interests, participations, rights in or other equivalents (however designated)
of such Person's capital stock, and any rights (other than debt securities
convertible into capital stock), warrants or options exchangeable for or
convertible into such capital stock.
"CERTIFICATE OF TRUST" has the meaning specified in the preamble to this
Declaration.
"CHANGE IN 1940 ACT LAW" has the meaning specified in the definition of
Investment Company Event.
"CHANGE OF CONTROL" means the occurrence of any of the following events:
(a) any "person" or "group" (as such terms are used in Sections 13(d) and
14(d) of the Exchange Act), other than The Alpine Group, Inc., a Delaware
corporation, or its Affiliates (the "PERMITTED HOLDERS"), becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act),
directly or indirectly, of more than 50% of the total voting power represented
by the outstanding Capital Stock of the Depositor pursuant to which the holders
thereof have the general voting power under ordinary circumstances to elect at
least a majority of the Board of Directors (irrespective of whether or not at
the time the stock of any other class shall or might have voting power by reason
of the happening of any contingency) ("VOTING STOCK");
(b) the Depositor consolidates with, or merges with or into, another entity
or conveys, transfers, leases or otherwise disposes of all or substantially all
of its assets to any person or
4
<PAGE>
entity, or any entity consolidates with, or merges with or into, the Depositor,
in any such event pursuant to a transaction in which the outstanding Voting
Stock of the Depositor is converted into or exchanged for cash, securities or
other property, other than any such transaction where (I) the outstanding Voting
Stock of the Depositor is not converted or exchanged at all (except to the
extent necessary to reflect a change in the jurisdiction of incorporation of the
Depositor) or is converted into or exchanged for Voting Stock of the surviving
or transferee corporation and (II) immediately after such transaction, the
condition described in (A) above has not occurred with respect to the
outstanding Voting Stock of the surviving or transferee corporation;
(c) during any consecutive two-year period, individuals who at the
beginning of such period constituted the Board of Directors (together with any
new directors whose election by the Board of Directors or whose nomination for
election by the stockholders of the Depositor was approved by (x) a vote of at
least a majority of the directors then still in office who were either directors
at the beginning of such period or whose election or nomination for election was
previously so approved (as described in this clause (x) or in the following
clause (y)) or (y) the Permitted Holders) cease for any reason to constitute a
majority of the Board of Directors then in office; or
(d) the Depositor is liquidated or dissolved or adopts a plan of
liquidation or dissolution.
"CHANGE OF CONTROL OFFER" has the meaning specified in Section 4.5.
"CHANGE OF CONTROL PURCHASE DATE" has the meaning specified in Section 4.5.
"CHANGE OF CONTROL REDEMPTION PRICE" has the meaning specified in Section
4.5.
"CLOSING DATE" means the date of execution and delivery of this
Declaration.
"CLOSING PRICE", with respect to the Common Stock of the Depositor, means
for each day the last reported sales price, regular way or, in case no sale
takes place on such day, the average of the closing bid and asked prices regular
way on such day, in either case as reported on The New York Stock Exchange
Composite Tape, or, if the Common Stock is not listed or admitted to trading on
the NYSE, on the principal national securities exchange on which the Common
Stock is listed or admitted to trading, or, if not listed or admitted to trading
on any national securities exchange, on the Nasdaq National Market, or, if not
admitted for quotation on the Nasdaq National Market, the average of the high
bid and low asked prices on such day as recorded by The Nasdaq Stock Market, or,
if The Nasdaq Stock Market shall not have reported any bid and asked prices for
the Common Stock on such day, the average of the bid and asked prices for such
day as furnished by any NYSE member firm selected from time to time by the
Depositor for such purpose, or, if no such bid and asked prices can be obtained
from any such firm, the fair market value of the Common Stock on such day as
determined in good faith by the Board of Directors. Such determination by the
Board of Directors shall be conclusive.
5
<PAGE>
"COMMISSION" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"COMMON SECURITIES CERTIFICATE" means a certificate evidencing ownership of
Common Securities, substantially in the form attached as Exhibit B.
"COMMON SECURITY" means an undivided beneficial interest in the assets of
the Trust, having a Liquidation Amount with respect to the assets of the Trust
of $50 and having the rights provided therefor in this Declaration, including
the right to receive Distributions and a Liquidation Distribution as provided
herein.
"COMMON STOCK" means common stock, par value $0.01 per share, of the
Depositor or shares of any class or classes resulting from any reclassification
or reclassifications thereof and which have no preference in respect of
dividends or of amounts payable in the event of any voluntary or involuntary
liquidation, dissolution or winding-up of the Depositor and which are not
subject to redemption by the Depositor.
"CONVERSION AGENT" has the meaning specified in Section 4.3.
"CONVERSION DATE" has the meaning specified in Section 4.3.
"CONVERSION RATE" has the meaning specified in Section 4.3.
"CORPORATE TRUST OFFICE" means the principal corporate trust office of the
Property Trustee at which at any particular time its corporate trust business
shall be administered, which office at the date hereof is located at
________________________________________.
"DEBENTURE EVENT OF DEFAULT" means an "Event of Default" as defined in the
Indenture.
"DEBENTURE REDEMPTION DATE" means, with respect to any Debentures to be
redeemed under the Indenture, the date fixed for redemption thereof under the
Indenture.
"DEBENTURES" means $[171,765,650] aggregate principal amount of the
Depositor's 8 1/2% Convertible Subordinated Debentures due 2014 issued or to be
issued pursuant to the Indenture.
"DECLARATION" means this Amended and Restated Declaration of Trust, as the
same may be modified, amended or supplemented in accordance with the applicable
provisions hereof, including all exhibits hereto, including, for all purposes of
this Declaration, any such modification, amendment or supplement, the provisions
of the Trust Indenture Act that are
6
<PAGE>
deemed to be a part of and govern this Declaration and any such modification,
amendment or supplement, respectively.
"DELAWARE BUSINESS TRUST ACT" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. C. ss.ss. 3801, et seq., as may be amended from time to time.
"DELAWARE TRUSTEE" means the Person identified as the "Delaware Trustee" in
the preamble to this Declaration solely in its capacity as Delaware Trustee of
the Trust heretofore formed and continued hereby and not in its individual
capacity, or its successor in interest in such capacity, or any successor
Delaware trustee appointed as herein provided.
"DEPOSITOR" has the meaning specified in the preamble to this Declaration.
"DISTRIBUTION DATE" has the meaning specified in Section 4.1(a).
"DISTRIBUTIONS" means amounts payable in respect of the Trust Securities as
provided in Section 4.1. Distributions include, but are not limited to,
Additional Sums and Additional Amounts.
"EARLY DISSOLUTION EVENT" has the meaning specified in Section 9.2.
"ESSEX" has the meaning specified in the preamble to this Declaration.
"ESSEX COMMON STOCK" has the meaning specified in the preamble to this
Declaration.
"EVENT OF DEFAULT" means the occurrence of a Debenture Event of Default.
"EXCHANGE ACT" means the Securities Exchange Act f 1934, as amended, and
the rules and regulations promulgated thereunder.
"EXCHANGE NOTICE" has the meaning specified in Section 4.4(b).
"EXPIRATION DATE" has the meaning specified in Section 9.1.
"GUARANTEE" means the Guarantee Agreement executed and delivered by the
Depositor and ____________________, a __________ banking corporation, as
guarantee trustee, contemporaneously with the execution and delivery of this
Declaration, for the benefit of the Holders of the Preferred Securities, as
amended from time to time.
"HOLDER" or "SECURITYHOLDER" means a Person in whose name a Trust Security
or Securities is registered in the Securities Register, such Person being a
beneficial owner within the meaning of the Delaware Business Trust Act.
7
<PAGE>
"INDENTURE" means the Indenture, dated as of __________, 1999, between the
Depositor and the Indenture Trustee, relating to the Debentures, as amended or
supplemented from time to time.
"INDENTURE TRUSTEE" means ____________________, a __________ banking
corporation, as trustee under the Indenture, until a successor Indenture Trustee
shall have become such pursuant to the applicable provisions of the Indenture,
and thereafter "Indenture Trustee" shall mean such successor trustee and shall
include each Person who is then an Indenture Trustee hereunder if at any time
there is more than one such Person.
"INVESTMENT COMPANY EVENT" means the receipt by the Property Trustee, on
behalf of the Trust, of an Opinion of Counsel, rendered by a law firm having a
recognized national tax and securities practice (which opinion shall not have
been rescinded by such law firm), to the effect that, as a result of the
occurrence of a change in law or regulation or a change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority (a "Change in 1940 Act Law"), there is more than
an insubstantial risk that the Trust is or will be considered an "investment
company" that is required to be registered under the 1940 Act, which Change in
1940 Act Law becomes effective on or after the date hereof.
"LIEN" means any lien, pledge, charge, encumbrance, mortgage, deed of
trust, adverse ownership interest, hypothecation, assignment, security interest
or preference, priority or other security agreement or preferential arrangement
of any kind or nature whatsoever.
"LIQUIDATION AMOUNT" means an amount with respect to the assets of the
Trust equal to $50 per Trust Security.
"LIQUIDATION DATE" means each date on which Debentures or cash are to be
distributed to Holders of Trust Securities in connection with a termination and
liquidation of the Trust pursuant to Section 9.4.
"LIQUIDATION DISTRIBUTION" has the meaning specified in Section 9.4(d).
"MERGER AGREEMENT" has the meaning specified in the preamble to this
Declaration.
"1940 ACT" means the Investment Company Act of 1940, as amended, and the
rules and regulations promulgated thereunder.
"NOTICE OF CONVERSION" means the notice given by a Holder of Trust
Securities to the Conversion Agent directing the Conversion Agent to exchange
such Holder's Trust Securities for Debentures and to convert such Debentures
into Common Stock on behalf of such Holder. Such notice is substantially in the
form set forth in Exhibit D.
"NYSE" means the New York Stock Exchange.
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<PAGE>
"OFFICER'S CERTIFICATE" means a certificate signed by the Chairman of the
Board, the Chief Executive Officer, the President, any Vice President, the Chief
Financial Officer or the Secretary of the Depositor, and delivered to the
Property Trustee. The officer signing an Officer's Certificate given pursuant to
Section 8.15 shall be the principal executive, financial or accounting officer
of the Depositor. Any Officer's Certificate delivered with respect to compliance
with a condition or covenant provided for in this Declaration shall include:
(a) a statement that each officer signing the Officer's Certificate has
read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officer's Certificate;
(c) a statement that each officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.
"OPINION OF COUNSEL" means a written opinion of counsel, who may be counsel
for the Trust, the Property Trustee or the Depositor, and who may be an employee
of any thereof, and who shall be reasonably acceptable to the Property Trustee.
Any Opinion of Counsel delivered with respect to compliance with a condition or
covenant provided for in this Declaration shall include:
(a) a statement that each individual signing the Opinion of Counsel has
read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each individual in rendering the Opinion of Counsel;
(c) a statement that each individual has made such examination or
investigation as is necessary to enable such individual to express an informed
opinion as to whether or not such covenant or condition has been complied with;
and
(d) a statement as to whether, in the opinion of each such individual, such
condition or covenant has been complied with.
"OPTIONAL REDEMPTION PRICE" means, except as set forth below, with respect
to the Trust Securities, the following cash redemption prices per share, plus an
amount per share in cash equal to all accumulated and unpaid Distributions on
such share, if any, pro rata to the date fixed for redemption if redeemed during
the twelve-month period beginning ___________ [the first day after the fourth
anniversary of the issue date of the trust preferred stock] of the year
specified below:
9
<PAGE>
<TABLE>
<CAPTION>
Year Redemption Price
- ---- ----------------
[Assuming issuance of the trust preferred stock
occurs in 1999]
<S> <C>
2003...................................................... $52.550
2004...................................................... $52.125
2005...................................................... $51.700
2006...................................................... $51.275
2007...................................................... $50.850
2008...................................................... $50.425
and thereafter............................................ $50.000
</TABLE>
In the event of a redemption of Trust Securities as a result of an optional
redemption of Debentures pursuant to Section 11.7(b) of the Indenture, the
Optional Redemption Price shall be $52.975 per share, plus an amount per share
in cash equal to all accumulated and unpaid Distributions on such share, if any,
pro rata to the date fixed for redemption, provided that the product of (i) the
average Closing Price of a share of Common Stock, for any 10 consecutive trading
days preceding the date of such call for redemption, multiplied by (ii) the
Conversion Rate, shall have equaled or exceeded $65.00 per share.
"ORIGINAL DECLARATION" has the meaning specified in the recitals to this
Declaration.
"OUTSTANDING" when used with respect to Trust Securities, means, as of the
date of determination, all Trust Securities theretofore executed and delivered
under this Declaration, except:
(a) Trust Securities theretofore canceled by the Securities Registrar or
delivered to the Securities Registrar for cancellation or tendered for
conversion;
(b) Trust Securities for whose payment or redemption money in the necessary
amount has been theretofore deposited with the Property Trustee or any Paying
Agent for the Holders of such Trust Securities; provided that, if such Trust
Securities are to be redeemed, notice of such redemption has been duly given
pursuant to this Declaration; and
(c) Trust Securities which have been paid or in exchange for or in lieu of
which other Trust Securities have been executed and delivered pursuant to
Section 5.5, unless proof satisfactory to the Property Trustee is presented that
any Trust Securities are held by Holders in whose hands such Trust Securities
are valid, binding and legal obligations of the Trust.
provided, however, that in determining whether the Holders of the requisite
Liquidation Amount of the Outstanding Trust Securities have given any request,
demand, authorization, direction, notice, consent or waiver hereunder, any Trust
Securities owned by the Depositor, any Trustee or any Affiliate of the Depositor
or any Trustee shall be disregarded and deemed not to be Outstanding, except
that (a) in determining whether any Trustee shall be protected in relying upon
any such request, demand, authorization, direction, notice, consent or waiver,
only Trust
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<PAGE>
Securities that such Trustee actually knows to be so owned shall be so
disregarded and (b) the foregoing shall not apply at any time when all of the
Outstanding Trust Securities are owned by the Depositor, one or more of the
Trustees and/or any such Affiliate. Trust Securities so owned which have been
pledged in good faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Securities Registrar the pledgee's right so to act
with respect to such Trust Securities and that the pledgee is not the Depositor
or any Affiliate of the Depositor.
"PAYING AGENT" means any paying agent or co-paying agent appointed pursuant
to Section 5.9.
"PERMITTED HOLDERS" has the meaning specified in the definition of Change
of Control.
"PERSON" means any individual, corporation, partnership, joint venture,
trust, limited liability company, association, joint stock company,
unincorporated organization or government or any agency or political subdivision
thereof or other entity.
"PREFERRED SECURITIES CERTIFICATE" means a certificate evidencing ownership
of Preferred Securities, substantially in the form attached as Exhibit C.
"PREFERRED SECURITY" means an undivided beneficial interest in the assets
of the Trust, having a Liquidation Amount with respect to the assets of the
Trust of $50 and having the rights provided therefor in this Declaration,
including the right to receive Distributions and a Liquidation Distribution as
provided herein.
"PROPERTY ACCOUNT" means a segregated, non-interest bearing corporate trust
account maintained by the Property Trustee with the Bank (or any successor
appointed by the Property Trustee) in its trust department for the benefit of
the Holders of the Trust Securities in which all amounts paid in respect of the
Debentures will be held and from which the Property Trustee shall make payments
to the Securityholders in accordance with Section 4.1.
"PROPERTY TRUSTEE" means the Person identified as the "Property Trustee" in
the preamble to this Declaration solely in its capacity as Property Trustee of
the Trust heretofore formed and continued hereby and not in its individual
capacity, or its successor in interest in such capacity, or any successor
property trustee appointed as herein provided.
"PURCHASER" has the meaning specified in the preamble to this Declaration.
"REDEMPTION DATE" means, with respect to any Trust Security to be redeemed,
each Debenture Redemption Date.
"REDEMPTION PRICE" means, with respect to any Trust Security, $50 per Trust
Security, plus accumulated and unpaid Distributions to the date of redemption.
"RELEVANT RECORD DATE" has the meaning specified in Section 4.1(d).
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<PAGE>
"RESPONSIBLE OFFICER" means any officer within the Corporate Trust Office
of the Property Trustee with direct responsibility for the administration of
this Declaration and also means, with respect to a particular corporate trust
matter, any other officer of the Property Trustee to whom such matter is
referred because of that officer's knowledge of and familiarity with the
particular subject.
"SECURITIES REGISTER" and "SECURITIES REGISTRAR" have the respective
meanings specified in Section 5.4.
"SPECIAL EVENT" means a Tax Event or an Investment Company Event.
"SUCCESSOR PROPERTY TRUSTEE" has the meaning specified in Section 8.9.
"SUCCESSOR DELAWARE TRUSTEE" has the meaning specified in Section 8.9.
"SUCCESSOR SECURITIES" has the meaning specified in Section 9.5.
"TAX EVENT" means the receipt by the Property Trustee, on behalf of the
Trust, of an Opinion of Counsel, rendered by a law firm having a national tax
and securities practice (which opinion shall not have been rescinded by such law
firm), to the effect that, as a result of any amendment to, or change (including
any announced prospective change) in, the laws (or any regulations thereunder)
of the United States or any political subdivision or taxing authority thereof or
therein affecting taxation, or as a result of any official administrative
pronouncement or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or such pronouncement or
decision is announced on or after the date hereof, there is more than an
insubstantial risk in each case after the date hereof that (i) the Trust is, or
will be within 90 days of the date thereof, subject to United States federal
income tax with respect to income received or accrued on the Debentures, (ii)
interest paid by the Depositor on the Debentures is not, or within 90 days of
the date thereof will not be, deductible by the Depositor when paid, in whole or
in part, for United States federal income tax purposes, or (iii) the Trust is,
or will be within 90 days of the date thereof, subject to more than a de minimis
amount of other taxes, duties or other governmental charges.
"TRUST" means the Delaware business trust heretofore formed and
continued hereby and identified on the cover page of this Declaration.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbb), as amended and as in force at the date as of which this
instrument was executed; provided, however, that in the event the Trust
Indenture Act of 1939 is amended after such date, "Trust Indenture Act" means,
to the extent required by any such amendment, the Trust Indenture Act of 1939 as
so amended.
"TRUST PROPERTY" means (a) the Debentures, (b) any cash on deposit in, or
owing to, the Property Account and (c) all proceeds and rights in respect of the
foregoing to be held by the Property Trustee pursuant to the terms of this
Declaration for the benefit of the Securityholders.
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<PAGE>
"TRUST SECURITY" means any one of the Common Securities or the Preferred
Securities.
"TRUST SECURITIES CERTIFICATE" means any one of the Common Securities
Certificate or the Preferred Securities Certificates.
"TRUSTEES" means, collectively, the Property Trustee, the Delaware Trustee
and the Administrative Trustees.
"VOTING RIGHTS TRIGGERING EVENT" has the meaning specified in Section
6.2(a).
"VOTING STOCK" has the meaning specified in the definition of Change of
Control.
ARTICLE 2
ESTABLISHMENT OF THE TRUST
Section 2.1. Name. The Trust heretofore formed and continued hereby shall
be known as "SUPERIOR TRUST I", as such name may be modified from time to time
by the Administrative Trustees following written notice to the Holders of Trust
Securities and the other Trustees, in which name the Trustees may conduct the
business of the Trust, make and execute contracts and other instruments on
behalf of the Trust and sue and be sued.
Section 2.2. Office of the Delaware Trustee; Principal Place of Business.
The address of the Delaware Trustee in the State of Delaware is
____________________, or such other address in the State of Delaware as the
Delaware Trustee may designate by written notice to the Securityholders and the
Depositor. The principal executive office of the Trust is c/o Superior TeleCom
Inc., 1790 Broadway, New York, New York 10019.
Section 2.3. Organizational Expenses. The Depositor shall pay
organizational expenses of the Trust as they arise or shall, upon request of any
Trustee, promptly reimburse such Trustee for any such expenses paid by such
Trustee; provided, however, that such expenses paid by any Trustee shall have
been paid in accordance with the limitations enumerated in Section 2.5 hereof.
The Depositor shall make no claim upon the Trust Property for the payment of
such expenses.
Section 2.4. Subscription and Purchase of Debentures; Issuance of Trust
Securities. Contemporaneously with the execution and delivery of this
Declaration, the Administrative Trustees, on behalf of the Trust, shall
subscribe for and purchase from the Depositor the Debentures, registered in the
name of the Property Trustee (in its capacity as such), having an aggregate
principal amount equal to $[171,765,650], and in satisfaction of the purchase
price thereof, an Administrative Trustee, on behalf of the Trust, shall execute
in accordance with Section 5.2 and deliver to the Depositor (i) Preferred
Securities Certificates, to be issued and
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<PAGE>
delivered to holders of the outstanding shares of Essex Common Stock in
accordance with the procedures described in Section 2.07 of the Merger
Agreement, in an aggregate amount of [3,332,254] Preferred Securities having an
aggregate Liquidation Amount of $[166,612,700] and (ii) a Common Securities
Certificate, registered in the name of the Depositor, in an amount of [103,059]
Common Securities having an aggregate Liquidation Amount of $[5,152,950].
Section 2.5. Declaration of Trust; Intent Clause. The exclusive purposes
and functions of the Trust are (a) to issue the Trust Securities in
consideration for the Debentures, (b) to distribute the Trust's income as
provided in this Declaration and (c) to engage in only those other activities
necessary or incidental thereto, including, without limitation, those activities
specified in Sections 2.6(a), 2.6(c), 8.1 and 8.3. The Trust shall not borrow
money, issue debt or reinvest proceeds derived from investments, mortgage or
pledge any of its assets or otherwise undertake (or permit to be undertaken) any
activity that would cause the Trust not to be classified for United States
federal income tax purposes as a grantor trust. It is the intent of the parties
hereto that the Trust qualify as a grantor trust for United States federal
income tax purposes. Securityholders, by their receipt of Trust Securities in
accordance with the terms of the Merger Agreement, agree to treat the Trust as
such in all tax and accounting filings. Any ambiguity in this Agreement shall be
interpreted in a manner consistent with such classification. The Depositor
hereby appoints the Trustees as trustees of the Trust, to have all the rights,
powers and duties to the extent set forth herein, and the Trustees hereby accept
such appointment. The Property Trustee hereby declares that it will hold the
Trust Property in trust upon and subject to the conditions set forth herein for
the benefit of the Trust and the Securityholders. The Administrative Trustees
shall have all rights, powers and duties set forth herein and in accordance with
applicable law with respect to accomplishing the purposes of the Trust. The
Delaware Trustee shall not be entitled to exercise any powers of, nor shall the
Delaware Trustee have any of the duties and responsibilities of, the Property
Trustee or the Administrative Trustees set forth herein. The Delaware Trustee
shall be a Trustee of the Trust for the sole and limited purpose of fulfilling
the requirements of Section 3807 of the Delaware Business Trust Act. In the
event the Delaware Trustee shall at any time be required to take any action or
perform any duty under this Declaration, the Delaware Trustee shall be entitled
to the benefits of Sections 8.1 and 8.3. No implied covenants or obligations
shall be read into this Declaration against the Delaware Trustee.
Section 2.6. Authorization to Enter into Certain Transactions. (a) The
Trustees shall conduct the affairs of the Trust in accordance with the terms of
this Declaration. Subject to the limitations set forth in Section 2.5 and
paragraph (b) of this Section 2.6, and in accordance with the following
provisions (i) and (ii), the Property Trustee and the Administrative Trustees
shall have the exclusive power and authority, and are hereby authorized and
directed to, cause the Trust to engage in the following activities:
(i) As among the Trustees, each Administrative Trustee shall have
the power and authority and is hereby authorized and directed to act on behalf
of the Trust with respect to the following matters:
(A) to execute, deliver and issue the Trust Securities;
provided, however, that the Trust may issue no more than one series
of Preferred Securities
14
<PAGE>
and no more than one series of Common Securities; and, provided,
further, that there shall be no interests in the Trust other than
the Trust Securities; and, provided, further, that the issuance
of Trust Securities shall be limited to simultaneous issuance of
both Preferred Securities and Common Securities on the Closing
Date, subject to the issuance of Trust Securities pursuant to
Section 5.5 and Successor Securities pursuant to Section 9.5;
(B) to acquire the Debentures as provided herein; provided,
however, that the Administrative Trustees shall cause legal title to
the Debentures to be held of record in the name of the Property
Trustee for the benefit of the Securityholders;
(C) to cause the Trust to enter into, and to execute, deliver
and perform on behalf of the Trust, any agreement or instrument
(including, without limitation, such certificates and cross-receipts
as may be necessary in connection with the issuance of the Trust
Securities and the purchase of the Debentures) as such
Administrative Trustee deems necessary or incidental to the purposes
and function of the Trust;
(D) to assist in the qualification of this Declaration as a
trust indenture under the Trust Indenture Act, and to cause the
Trust to take any action deemed in such Administrative Trustee's
discretion to be necessary, advisable or convenient to comply with
the Trust's obligations under the Trust Indenture Act;
(E) to appoint a Paying Agent, Conversion Agent, authenticating
agent and a Securities Registrar in accordance with this
Declaration;
(F) to the extent provided in this Declaration, to wind up the
affairs of and liquidate the Trust and prepare, execute and file the
certificate of cancellation with the Secretary of State of the State
of Delaware;
(G) to execute on behalf of the Trust (either acting alone or
together with any other Administrative Trustees) any documents that
the Administrative Trustees have the power to execute pursuant to
this Declaration; and
(H) to take any action incidental to the foregoing as the
Administrative Trustees may from time to time determine in their
discretion is necessary, advisable or convenient to give effect to
the terms of this Declaration, including, but not limited to:
(i) causing the Trust not to be deemed to be an "investment
company" required to be registered under the 1940 Act;
(ii) causing the Trust not to be classified for United
States federal income tax purposes as a corporation; and
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<PAGE>
(iii) cooperating with the Depositor to ensure that the
Debentures will be treated as indebtedness of the Depositor for
United States federal income tax purposes; provided that such
action does not adversely affect in any material respect the
interests of Securityholders, except as otherwise provided in
Section 10.2(a).
(ii) As among the Trustees, the Property Trustee shall have the
power and authority and is hereby authorized and directed to act on behalf of
the Trust with respect to the following matters:
(A) the establishment of the Property Account;
(B) to authenticate Preferred Securities delivered to it for
authentication by or on behalf of an Administrative Trustee;
(C) the receipt of and taking title to the Debentures;
(D) the collection in the Property Account of interest,
principal and any other payments made in respect of the Debentures;
(E) the distribution from the Trust Property of amounts owed to
the Securityholders in respect of the Trust Securities pursuant to
this Declaration;
(F) the exercise of all of the rights, powers and privileges of
a holder of the Debentures;
(G) the sending of notices of default, other notices and other
information regarding the Trust Securities and the Debentures to the
Securityholders in accordance with this Declaration;
(H) the distribution of the Trust Property in accordance with
the terms of this Declaration;
(I) to the extent provided in this Declaration, the winding up
of the affairs of and liquidation of the Trust and the preparation,
execution and filing of the certificate of cancellation with the
Secretary of State of the State of Delaware;
(J) the taking of any action incidental to the foregoing
(including executing any certificate or acknowledgment of the
Property Trustee's receipt of the Debentures) as the Property
Trustee may from time to time determine is necessary or advisable to
give effect to the terms of this Declaration and protect and
conserve the Trust Property for the benefit of the Securityholders
(without consideration of the effect of any such action on any
particular Securityholder);
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<PAGE>
(K) subject to this Section 2.6(a)(ii), the Property Trustee
shall have none of the duties, liabilities, powers or the authority
of the Administrative Trustees set forth in Section 2.6(a)(i);
(L) to act as Paying Agent, Conversion Agent and/or Securities
Registrar to the extent appointed as such hereunder; and
(M) to appoint an authenticating agent in accordance with this
Declaration.
(b) So long as this Declaration remains in effect, the Trust (or the
Trustees acting on behalf of the Trust) shall not undertake any business,
activities or transaction except as expressly provided herein or contemplated
hereby. In particular, the Trust shall not, the Trustees shall not and the
Administrative Trustees shall cause the Trust not to (i) invest any proceeds
received by the Trust from holding the Debentures (rather, the Trustees shall
distribute all such proceeds to the Securityholders pursuant to the terms of
this Declaration and the Trust Securities), acquire any investments or engage in
any activities not authorized by this Declaration, (ii) sell, assign, transfer,
exchange, mortgage, pledge, set-off or otherwise dispose of any of the Trust
Property or interests therein, including to Securityholders, except as expressly
provided herein, (iii) take any action that, to such Trustee's actual knowledge,
would cause the Trust to fail or cease to qualify as a "grantor trust" for
United States federal income tax purposes, (iv) make any loans or incur any
indebtedness for borrowed money or issue any other debt, (v) take or consent to
any action that would result in the placement of a Lien on any of the Trust
Property, (vi) possess any power or otherwise act in such a way as to vary the
Trust assets or the terms of the Trust Securities in any way whatsoever except
as permitted by the terms of this Declaration, or (vii) issue any securities or
other evidences of beneficial ownership of, or beneficial interest in, the Trust
other than the Trust Securities. The Administrative Trustees shall defend all
claims and demands of all Persons at any time claiming any Lien on any of the
Trust Property adverse to the interests of the Trust or the Securityholders in
their capacity as Securityholders.
(c) In connection with the issue of the Preferred Securities, the Depositor
shall have the right and responsibility to assist the Trust with respect to, or
effect on behalf of the Trust, the following actions (and any actions taken by
the Depositor in furtherance of the following prior to the date of this
Declaration are hereby ratified and confirmed in all respects):
(i) to cause the Trust to file, at the expense of the Depositor,
with the Commission and to execute on behalf of the Trust a
registration statement on the appropriate form in relation to the
Preferred Securities, including any amendments thereto;
(ii) to determine the states and foreign jurisdictions in which
to take appropriate action to qualify or register for sale all or
part of the Preferred Securities and to do any and all such acts,
other than actions which must be taken by or on behalf of the Trust,
and advise the Trustees of actions which they must take on behalf of
the Trust, and prepare for execution and filing any documents to be
executed and filed by the Trust or on behalf of the Trust, as the
Depositor deems necessary or advisable in order to comply with the
applicable laws of any such states and foreign jurisdictions;
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<PAGE>
(iii) to the extent the Administrative Trustees deem necessary,
to prepare for filing by the Trust with the Commission and to
execute on behalf of the Trust a registration statement on Form 8-A
relating to the registration of the Preferred Securities under
Section 12(b) or 12(g) of the Exchange Act, including any amendments
thereto (it being understood that neither the Trust nor the
Depositor has any obligation under the Indenture, the Merger
Agreement or the Declaration to register any Trust Securities under
the Exchange Act);
(iv) to cause the Trust to enter into, and execute, deliver and
perform on behalf of the Trust, any agreements as may be necessary
or incidental to the purposes and functions of the Trust; and
(v) any other actions necessary or incidental to carry out any
of the foregoing activities.
(d) Notwithstanding anything herein to the contrary, the Administrative
Trustees are authorized and directed to conduct the affairs of the Trust and to
operate the Trust so that the Trust will not be deemed to be an "investment
company" required to be registered under the 1940 Act or be taxed as a
corporation for United States federal income tax purposes and so that the
Debentures will be treated as indebtedness of the Depositor for United States
federal income tax purposes. In this connection, the Depositor and the
Administrative Trustees are authorized to take any action, not inconsistent with
applicable law, the Certificate of Trust or this Declaration, that each of the
Depositor and the Administrative Trustees determines in their discretion to be
necessary or desirable for such purposes, so long as such action does not
adversely affect in any material respect the interests of the Holders of the
Preferred Securities, except as otherwise provided in Section 10.2(a).
Section 2.7. Assets of Trust. The assets of the Trust shall consist of only
the Trust Property.
Section 2.8. Title to Trust Property. Legal title to all Trust Property
shall be vested at all times in the Property Trustee (in its capacity as such)
and shall be held and administered by the Property Trustee for the benefit of
the Trust and the Securityholders in accordance with this Declaration. The
Securityholders shall not have legal title to any part of the assets of the
Trust, but shall have an undivided beneficial interest in the assets of the
Trust.
ARTICLE 3
PROPERTY ACCOUNT
Section 3.1. Property Account. (a) On or prior to the Closing Date, the
Property Trustee shall establish the Property Account. The Property Trustee and
any agent of the Property Trustee shall have exclusive control and sole right of
withdrawal with respect to the Property Account for the purpose of making
deposits in and withdrawals from the Property Account in
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<PAGE>
accordance with this Declaration. All monies and other property deposited or
held from time to time in the Property Account shall be held by the Property
Trustee in the Property Account for the exclusive benefit of the Securityholders
and for distribution as herein provided, including (and subject to) any priority
of payments provided for herein.
(b) The Property Trustee shall deposit in the Property Account, promptly
upon receipt, all payments of principal of or interest on, and any other
payments or proceeds with respect to, the Debentures. Amounts held in the
Property Account shall not be invested by the Property Trustee pending
distribution thereof.
ARTICLE 4
DISTRIBUTIONS; REDEMPTION; EXCHANGE; CONVERSION
Section 4.1. Distributions. (a) Distributions on the Trust Securities will
accumulate, without interest, from __________, 1999 [the issue date of the trust
securities], or the most recent Distribution Date to which Distributions have
been paid in full, and, except in the event that the Depositor exercises its
right to defer the payment of amounts due under the Debentures pursuant to the
Indenture, shall be payable quarterly in arrears on __________, __________,
__________ and __________ [the 1st or 15th day of the month in which the issue
date occurs and the third, sixth and ninth months thereafter] of each year,
commencing on __________, 1999 [the first Distribution Date after the issue
date] (which dates correspond to the interest payment dates on the Debentures),
to the holders of record of the Trust Securities on the Relevant Record Date,
when, as and if available for payment by the Property Trustee, as further
described in paragraph (c) of this Section 4.1. In the event any date on which
Distributions are payable on the Trust Securities is not a Business Day, the
payment of such Distributions payable on such date shall be made on the next
succeeding day that is a Business Day and without any additional Distributions
or other payment in respect of any such delay, except that, if such Business Day
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on the relevant Distribution payment date (each date on which
Distributions are payable in accordance with this Section 4.1(a), a
"DISTRIBUTION DATE"). The right of any Holder to receive payment of a
Distribution on any Distribution Date shall be subject to the provisions of
Section 2.07(c) of the Merger Agreement.
(b) The Trust Securities represent undivided beneficial interests in the
Trust Property, and the Distributions on the Trust Securities shall be payable
at the rate of 8 1/2% per annum of the Liquidation Amount of the Trust
Securities. The amount of Distributions payable for any period shall be computed
on the basis of a 360-day year of twelve 30-day months. For periods less than
three months, Distributions shall reflect interest on Debentures computed on the
basis of the actual number of elapsed days in such period based on 30-day
months. The amount of Distributions payable for any period shall include any
accrued and unpaid Additional Sums and Additional Amounts, if any.
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(c) Distributions on the Trust Securities shall be made by the Property
Trustee from the Property Account and shall be payable on each Distribution Date
only to the extent that the Trust has funds actually received by the Property
Trustee and then on hand and available in the Property Account for the payment
of such Distributions.
(d) Distributions on the Trust Securities with respect to a Distribution
Date or Redemption Date, if applicable, shall be payable to the Holders thereof
as they appear on the Securities Register for the Trust Securities on the
relevant record date, which shall be the date which is the fifteenth day
(whether or not a Business Day) next preceding such Distribution Date or
Redemption Date (the "RELEVANT RECORD DATE"). Subject to Section 4.6 hereof, all
Distributions shall be made pro rata.
Section 4.2. Redemption. (a) Upon an optional redemption (as provided for
in the Indenture) of Debentures, the proceeds from such redemption to the extent
actually received by the Property Trustee shall be applied to redeem Trust
Securities having an aggregate Liquidation Amount equal to the aggregate
principal amount of the Debentures so redeemed by the Depositor, including
pursuant to Section 4.4, at the Optional Redemption Price, and upon a mandatory
redemption (as set forth in the Indenture) of Debentures, the proceeds from such
redemption shall be applied to redeem Trust Securities, pro rata, having an
aggregate Liquidation Amount equal to the aggregate principal amount of the
Debentures so redeemed by the Depositor, at the Redemption Price. The Trust
shall not redeem less than all of the Trust Securities at any time Outstanding
until all accrued and unpaid Distributions upon all Preferred Securities then
Outstanding shall have been paid.
(b) Notice of any redemption of Trust Securities shall be prepared by or on
behalf of the Administrative Trustees and delivered to the Property Trustee, and
shall then be given by the Property Trustee by first-class mail, postage
prepaid, mailed to the Depositor and each Holder of Trust Securities to be
redeemed not less than 30 nor more than 60 days prior to the Redemption Date, at
such Holder's address as it appears in the Securities Register. All notices of
redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price or the Optional Redemption Price, as the case
may be;
(iii) the applicable CUSIP number;
(iv) if less than all of the Outstanding Trust Securities are to be
redeemed, the identification and the aggregate Liquidation Amount of the
particular Trust Securities to be redeemed in accordance with Section
4.2(e);
(v) that a Holder of Trust Securities who desires to convert such Trust
Securities called for redemption must satisfy the requirements for
conversion contained in Section 4.3 below, (B) the Conversion Rate and (C)
that the right of Holders of Trust
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Securities being redeemed to exercise their conversion right shall
terminate as to such Trust Securities at the close of business on the date
that is 10 days prior to the Redemption Date (provided that no default in
the payment of the Redemption Price or the Optional Redemption Price, as
the case may be, shall have occurred and be continuing);
(vi) that on the Redemption Date the Redemption Price or the Optional
Redemption Price, as the case may be, will become due and payable upon each
such Trust Security to be redeemed and that Distributions thereon will
cease to accrue on and after said date; and
(vii) the place or places where such Trust Securities are to be
surrendered for payment of the Redemption Price or the Optional Redemption
Price, as the case may be.
(c) Any notice which is mailed as herein provided shall be conclusively
presumed to have been duly given, whether or not the Holder of Trust Securities
receives such notice; and failure to give such notice by mail, or any defect in
such notice, to the Holders of any Trust Securities designated for redemption
shall not affect the validity of the proceedings for the redemption of any other
Trust Securities.
(d) The Trust Securities redeemed on each Redemption Date shall be redeemed
at the Redemption Price or the Optional Redemption Price, as the case may be,
with the proceeds from the contemporaneous redemption of Debentures. Redemption
of the Trust Securities shall be made and the Redemption Price or the Optional
Redemption Price, as the case may be, shall be payable on each Redemption Date
only to the extent that the Trust has funds actually received by the Property
Trustee and then on hand and available in the Property Account for the payment
of such Redemption Price or the Optional Redemption Price, as the case may be,
and if the Trust does not have sufficient funds, then such funds shall be
applied to redeem such Trust Securities as the Property Trustee may select, pro
rata, by lot or in such other manner as the Property Trustee determines.
(e) If the Property Trustee gives a notice of redemption in respect of any
Trust Securities, then, by 12:00 noon, New York City time, on the Redemption
Date, subject to Section 4.2(d), the Property Trustee shall irrevocably deposit
with the Paying Agent funds sufficient to pay the applicable Redemption Price or
Optional Redemption Price, as the case may be, on such Trust Securities and will
give the Paying Agent irrevocable instructions and authority to pay the
Redemption Price or the Optional Redemption Price, as the case may be, to the
Holders thereof upon surrender of their Trust Securities Certificates. On or
after the Redemption Date, each Holder of Trust Securities called for redemption
shall surrender the Trust Securities Certificate (or Certificates) evidencing
such Trust Securities to the Paying Agent at the place designated in the notice
of redemption and shall thereupon be entitled to receive payment of the
Redemption Price or the Optional Redemption Price, as the case may be. If fewer
than all the Trust Securities represented by any such surrendered Trust
Securities Certificate (or Certificates) are redeemed, a new Trust Securities
Certificate shall be issued representing the unredeemed Trust Securities. If, on
the Redemption Date, funds necessary for the redemption shall be available
therefor and shall have been irrevocably deposited as provided above, then,
notwithstanding that the Trust
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Securities Certificates evidencing Trust Securities so called for redemption
shall not have been surrendered, the Distributions with respect to the Trust
Securities so called shall cease to accrue after the Redemption Date, the Trust
Securities shall no longer be deemed Outstanding, the Holders thereof shall
cease to be Securityholders, and all rights whatsoever with respect to the Trust
Securities so called for redemption (except the right of the Holders to receive
the Redemption Price or the Optional Redemption Price, as the case may be,
without interest, upon surrender of their Trust Securities Certificates
therefor) shall terminate. Any monies deposited with the Paying Agent pursuant
to this paragraph and unclaimed at the end of one year from the Redemption Date
shall, to the extent permitted by law, be returned to the Trust, after which the
Holders of Trust Securities so called for redemption shall look only to the
Trust for the payment thereof. In the event that any date fixed for redemption
of Trust Securities is not a Business Day, then payment of the Redemption Price
or the Optional Redemption Price, as the case may be, payable on such date shall
be made on the next succeeding day which is a Business Day (without interest or
other payment in respect of any such delay), except that, if such Business Day
falls in the next calendar year, such payment shall be made on the immediately
preceding Business Day, in each case, with the same force and effect as if made
on such date.
(f) If less than all the Outstanding Preferred Securities are to be
redeemed on a Redemption Date, then the particular Preferred Securities to be
redeemed shall be selected not more than 60 days prior to the Redemption Date by
the Property Trustee from the Outstanding Preferred Securities not previously
called for redemption, pro rata, by lot or by such other method as the Property
Trustee shall deem fair and appropriate and which may provide for the selection
for redemption of portions (equal to $50 or an integral multiple of $50 in
excess thereof) of the Liquidation Amount of the Preferred Securities. The
Property Trustee shall promptly notify the Securities Registrar and the
Conversion Agent (unless the Property Trustee is then serving as the Securities
Registrar and Conversion Agent) in writing of the Preferred Securities selected
for partial redemption and, in the case of any Preferred Securities selected for
redemption, the Liquidation Amount thereof to be redeemed. For all purposes of
this Declaration, unless the context otherwise requires, all provisions relating
to the redemption of Trust Securities shall relate, in the case of any Trust
Securities redeemed or to be redeemed only in part, to the portion of the
Liquidation Amount of Trust Securities which has been or is to be redeemed. In
the event of any redemption in part, the Trust shall not be required to (i)
issue, or register the transfer of or exchange of, any Preferred Security during
a period beginning at the opening of business 15 days before any selection of
the Preferred Securities to be redeemed and ending at the close of business on
the earliest date in which the relevant notice of redemption is deemed to have
been given to all Holders of Preferred Securities to be so redeemed pursuant to
Section 10.8 or (ii) register the transfer of or exchange of any Preferred
Securities so selected for redemption, in whole or in part, except for the
unredeemed portion of any Preferred Securities being redeemed in part.
(g) This Section 4.2 does not apply to any redemption of the Debentures
pursuant to Section 11.9 of the Indenture, which redemption is the subject of
Section 4.5.
Section 4.3. Conversion. The Holders of Trust Securities, subject to this
Section 4.3, shall have the right at any time after six months following the
first date of original issuance of
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the Trust Securities, but not later than the close of business on the date which
is 10 days preceding the date fixed for redemption thereof in any notice of
redemption given pursuant to the provisions of Section 4.2(b) hereof if there is
no default in payment of the Redemption Price or Optional Redemption Price, as
the case may be, at their option, to cause the Conversion Agent to convert any
or all of their Trust Securities, on behalf of the converting Holders, into
shares of Common Stock in the manner described herein on and subject to the
following terms and conditions:
(a) The Trust Securities will be convertible into fully paid and
nonassessable shares of Common Stock (and, if applicable, other securities, cash
or property) pursuant to the Holder's direction to the Conversion Agent to
exchange such Trust Securities for a portion of the Debentures equal in
principal amount to the aggregate Liquidation Amount of the Trust Securities to
be converted, and to immediately convert such amount of Debentures into that
number of fully paid and nonassessable shares of Common Stock (calculated to the
nearest 1/100th of a share) as shall be equal to the Conversion Rate in effect
at the time of conversion. Trust Securities may initially be converted into full
shares of Common Stock at the rate of .8929 shares of Common Stock for each
Trust Security, subject to the adjustments set forth in Sections 13.3 and 13.4
of the Indenture (the "CONVERSION RATE").
(b) In order to convert Trust Securities into Common Stock, the Holder of
such Trust Securities shall submit to the Conversion Agent an irrevocable Notice
of Conversion (in substantially the form of Exhibit D hereto) to convert Trust
Securities on behalf of such Holder, together with Trust Securities Certificates
representing Trust Securities to be converted, duly endorsed in blank or
accompanied by proper instruments of transfer. The Notice of Conversion shall
(i) set forth the number of Trust Securities to be converted and the name or
names, if other than the Holder, in which the shares of Common Stock should be
issued and (ii) direct the Conversion Agent (a) to exchange such Trust
Securities for a portion of the Debentures equal in principal amount to the
aggregate Liquidation Amount of the Trust Securities to be converted (at the
Conversion Rate) and (b) to immediately convert such Debentures, on behalf of
such Holder, into Common Stock and, if applicable, other securities, cash or
property (at the Conversion Rate). The Conversion Agent shall notify the
Property Trustee of the Holder's election to exchange Trust Securities for a
portion of the Debentures held by the Property Trustee and the Property Trustee
shall, upon receipt of such notice, deliver to the Conversion Agent the
appropriate principal amount of Debentures for exchange in accordance with this
Section 4.3. The Conversion Agent shall thereupon notify the Depositor of the
Holder's election to convert such Debentures into shares of Common Stock.
(c) Except as described herein or in the Indenture, no payment or
adjustment is to be made on conversion for accrued and unpaid Distributions on
the Trust Securities, including as a result of the Depositor's exercise of its
right to defer payment of amounts due under the Debentures pursuant to the
Indenture or otherwise, or for dividends on the Common Stock issued on
conversion. The Holder of record of Trust Securities on a Relevant Record Date
with respect to the payment of a Distribution on the Trust Securities will be
entitled to receive the Distribution on such Trust Securities on the
corresponding Distribution Date notwithstanding the conversion of such Trust
Securities after such Relevant Record Date or any default by the Trust
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in the payment of the Distribution on that Distribution Date. Notwithstanding
the foregoing, Trust Securities surrendered for conversion during the period
from the close of business on any Relevant Record Date for the payment of a
Distribution on the Trust Securities to the opening of business on the
corresponding Distribution Date (except Trust Securities called for redemption
on a Redemption Date during such period) must be accompanied by payment by the
Holder of record on the Relevant Record Date of an amount equal to the
Distribution payable on such Distribution Date. The Distribution with respect to
Trust Securities called for redemption on a Redemption Date during the period
from the close of business on a Relevant Record Date with respect to the payment
of a Distribution on the Trust Securities to the opening of business on the
corresponding Distribution Date will be payable on that Distribution Date to the
Holder of record of such Trust Securities on such Relevant Record Date
notwithstanding the conversion of the Trust Securities after the Relevant Record
Date and prior to the Distribution Date, and the Holder of record of such Trust
Securities on such Relevant Record Date need not include a payment of such
Distribution amount upon surrender of such Trust Securities for conversion.
Holders of record of Trust Securities on a Relevant Record Date with respect to
the payment of a Distribution on the Trust Securities who convert their Trust
Securities on or after the corresponding Distribution Date will receive the
Distribution payable by the Trust on that date and need not include payment in
the amount of the Distribution upon surrender of such Trust Securities for
conversion.
(d) Trust Securities shall be deemed to have been converted upon the
surrender of Trust Securities Certificates representing such Trust Securities
(the "CONVERSION DATE"). On the Conversion Date, the Person or Persons
converting shall be deemed to be the holder or holders of record of the Common
Stock issuable upon conversion of the Debentures, and all rights with respect to
the Trust Securities surrendered shall forthwith terminate except the right to
receive the Common Stock or other securities, cash or other property as provided
herein or in the Indenture (including the provisions of Section 4.3(c)). As
promptly as practicable on or after the Conversion Date, the Depositor shall
issue and deliver at the office of the Conversion Agent a certificate or
certificates for the number of full shares of Common Stock issuable upon such
conversion, together with the cash payment, if any, in lieu of any fraction of
any share to the Person or Persons entitled to receive the same in accordance
with Section 4.3(f), and the Conversion Agent shall distribute such certificate
or certificates to such Person or Persons.
(e) Each Holder of a Trust Security by its acceptance thereof initially
appoints the Property Trustee as conversion agent (the "CONVERSION AGENT") for
the purpose of effecting the conversion of Trust Securities in accordance with
this Section 4.3. In effecting the conversion described in this Section 4.3, the
Conversion Agent shall be acting as agent of the Holders of Trust Securities
directing it to effect such conversion. The Conversion Agent is hereby
authorized (i) to exchange Trust Securities from time to time for Debentures
held by the Trust in connection with the conversion of such Trust Securities in
accordance with this Section 4.3 and (ii) to convert all or a portion of the
Debentures into Common Stock and thereupon to deliver such shares of Common
Stock in accordance with the provisions of this Section 4.3 and to deliver to
the Property Trustee any new Debenture or Debentures for any resulting
unconverted principal amount delivered to the Conversion Agent by the Indenture
Trustee.
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(f) No fractional shares of Common Stock will be issued as a result of
conversion, but, in lieu thereof, such fractional interest will be paid in cash
by the Depositor to the Conversion Agent in an amount equal to the product of
(i) the Closing Price of a share of Common Stock on the last trading day before
the Conversion Date and (ii) such fraction of a share, and the Conversion Agent
will in turn make such payment to the Holder or Holders of Trust Securities so
converted.
(g) Nothing in this Section 4.3 shall limit the requirement of the Trust to
withhold taxes pursuant to the terms of the Trust Securities or as set forth in
this Declaration or otherwise require the Property Trustee or the Trust to pay
any amounts on account of such withholdings, except that such amounts will not
be withheld if Securityholders satisfy the Property Trustee in its sole
discretion that no taxes are due.
(h) The provisions of this Declaration, including Sections 8.1, 8.3 and
8.6, shall apply to the Property Trustee also in its capacity as Conversion
Agent.
Section 4.4. Special Event Exchange. (a) If a Special Event shall occur and
be continuing, the Administrative Trustees shall direct the Conversion Agent to
exchange all Outstanding Trust Securities for Debentures having a principal
amount equal to the aggregate Liquidation Amount of the Trust Securities to be
exchanged and to dissolve the Trust; provided, however, that, in the case of a
Tax Event, the Depositor shall have the right to direct that less than all, or
none, as appropriate, of the Trust Securities be so exchanged if and for so long
as the Depositor shall have elected to pay any Additional Sums such that the net
amount received by Holders of Trust Securities not so exchanged in respect of
Distributions is not reduced as a result of such Tax Event, and shall not have
revoked any such election or failed to make such payments.
(b) Notice of any exchange pursuant to this Section 4.4 (an "EXCHANGE
NOTICE") of the Trust Securities, which Exchange Notice shall be irrevocable,
will be given by the Property Trustee by first-class mail, postage prepaid, to
the Depositor and to each record Holder of Trust Securities to be exchanged not
fewer than 30 nor more than 60 days prior to the date fixed for exchange
thereof. For purposes of the calculation of the date of exchange and the dates
on which notices are given pursuant to this paragraph (b), an Exchange Notice
shall be deemed to be given on the day such notice is first mailed by
first-class mail, postage prepaid, to each Holder. Each Exchange Notice shall be
addressed to each Holder of Trust Securities at the address of such Holder
appearing in the Securities Register. Each Exchange Notice shall state: (A) the
exchange date; (B) the aggregate Liquidation Amount of the Trust Securities to
be exchanged and the aggregate principal amount of the Debentures to be
exchanged therefor; (C) that on the exchange date the Trust Securities to be so
exchanged shall be exchanged for Debentures and that Distributions on the Trust
Securities so exchanged will cease to accumulate on and after said date; and (D)
the identity of the Conversion Agent, if any, and the place or places where each
Trust Securities Certificate to be exchanged is to be surrendered in exchange
for Debentures. No defect in the Exchange Notice or in the mailing thereof with
respect to any Trust Security shall affect the validity of the exchange
proceedings for any other Trust Security.
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(c) In the event that fewer than all the Outstanding Preferred Securities
are to be exchanged, then, on the exchange date, the particular Preferred
Securities to be exchanged will be selected by the Property Trustee from the
Outstanding Preferred Securities not previously called for redemption or
exchange on a pro rata basis (based on Liquidation Amounts). Any Preferred
Securities Certificate that is to be exchanged only in part shall be surrendered
with due endorsement or by a written instrument of transfer fully executed by
the Holder thereof (or its attorney duly authorized in writing) and the
Administrative Trustees shall prepare and the Property Trustee shall
authenticate and deliver to such Holder, without service charge, a new Preferred
Securities Certificate or Certificates in aggregate stated Liquidation Amount
equal to, and in exchange for, the unexchanged portion of the Preferred
Securities Certificate so surrendered. The Common Securities shall be exchanged
in a similar manner.
(d) In the event of an exchange pursuant to this Section 4.4, on the date
fixed for any such exchange, (i) the Preferred Securities Certificates
representing the Preferred Securities to be so exchanged will be deemed to
represent Debentures having a principal amount equal to the aggregate stated
Liquidation Amount of such Preferred Securities until such certificates are
presented to the Conversion Agent for exchange for definitive certificates
representing Debentures and (ii) all rights of the Holders of the Preferred
Securities so exchanged will cease, except for the right of such Holders to
receive Debentures. The Common Securities shall be exchanged in a similar
manner.
(e) Each Holder, by becoming a party to this Declaration pursuant to
Section 10.11 of this Declaration, will be deemed to have agreed to be bound by
these exchange provisions in regard to the exchange of Trust Securities for
Debentures pursuant to the terms described above.
(f) Nothing in this Section 4.4 shall limit the requirement of the Trust to
withhold taxes pursuant to the terms of the Trust Securities or as set forth in
this Declaration or otherwise require the Property Trustee or the Trust to pay
any amounts on account of such withholdings.
Section 4.5. No Sinking Fund; Redemption upon Change of Control.
(a) Subject to Section 4.5(b), the Preferred Securities shall not be
subject to the operation of a purchase, retirement or sinking fund.
(b) If the Trust is the record holder of the Debentures, then, in the event
of a Change of Control, the Trust will, to the extent of funds legally available
therefor and subject to the prior payment in full of all other obligations of
the Trust and the Depositor that are then due or become due as a result of such
Change of Control (or similar event), make an offer to redeem (the "CHANGE OF
CONTROL OFFER") all of the then Outstanding Preferred Securities at a purchase
price in cash equal to 101% of the Liquidation Amount thereof, plus accrued and
unpaid Distributions, to the date of redemption. Notice of the Change of Control
Offer shall be prepared by or on behalf of the Administrative Trustees and
delivered to the Property Trustee, and shall be given by the Property Trustee
within 30 days following the occurrence of any Change of Control, by first-class
mail, postage prepaid, to the Holders of record of the Preferred Securities,
addressed to such Holders at their last address as shown on the Securities
Register.
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Such notice shall state: (i) that a Change of Control has occurred and that the
Holders of the Preferred Securities have the right to require the Trust to
redeem all or a portion of their Preferred Securities at a purchase price in
cash equal to 101% of the Liquidation Amount thereof, plus accrued and unpaid
Distributions (the "CHANGE OF CONTROL REDEMPTION PRICE") to the date of purchase
(the "CHANGE OF CONTROL PURCHASE DATE"), which shall be a Business Day,
specified in such notice, that is not earlier than 30 days or later than 60 days
from the date such notice is mailed; (ii) the then effective Conversion Rate;
(iii) that payment will be made upon presentation and surrender of the Preferred
Securities Certificates; (iv) that accrued but unpaid Distributions to the
Change of Control Purchase Date will be paid; (v) that on and after the Change
of Control Purchase Date, Distributions will cease to accrue on such Preferred
Securities so redeemed; and (vi) such other information as is specified in
Section 4.2(b).
(c) Any notice of a Change of Control Offer which is mailed as herein
provided shall be conclusively presumed to have been duly given, whether or not
a Holder of Preferred Securities receives such notice. On or after the date
fixed for redemption as stated in such notice of a Change of Control Offer, each
Holder of Preferred Securities electing to accept such Change of Control Offer
shall surrender the Preferred Securities Certificate (or Certificates)
evidencing such Preferred Securities to the Paying Agent at the place designated
in such notice and shall thereupon be entitled to receive payment of the Change
of Control Redemption Price. If the Holder elects to have redeemed fewer than
all the Preferred Securities represented by any such surrendered Preferred
Securities Certificate (or Certificates), a new Preferred Securities Certificate
shall be issued representing the unredeemed Preferred Securities.
(d) The Preferred Securities redeemed on each Change of Control Purchase
Date shall be redeemed at the Change of Control Redemption Price with the
proceeds from the contemporaneous redemption of Debentures, as provided in
Section 11.9(d) of the Indenture, which proceeds shall be deposited with the
Paying Agent by the Property Trustee promptly upon their receipt. Redemption of
Preferred Securities shall be made and the Change of Control Redemption Price
shall be payable on each Change of Control Purchase Date only to the extent that
the Trust has funds actually received by the Property Trustee and then on hand
and available in the Property Account for the payment of such Change of Control
Redemption Price, and if the Trust does not have sufficient funds, then such
funds shall be applied to redeem such Preferred Securities as the Property
Trustee may select, pro rata, by lot or in such other manner as the Property
Trustee determines.
Section 4.6. Subordination of Common Securities. On any Distribution Date,
no payment of any Distribution on any Common Security shall be made unless
payment in full in cash of all accumulated and unpaid Distributions on all
Outstanding Preferred Securities for all Distribution periods terminating on or
prior thereto shall have been made or provided for, and all funds immediately
available to the Property Trustee shall first be applied to the payment in full
in cash of all Distributions on Preferred Securities then due and payable. No
redemption, repurchase, exchange or conversion of the Common Securities shall be
effected at any time that Preferred Securities are Outstanding.
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Section 4.7. Payment Procedures. Payments in respect of the Preferred
Securities shall be made by check mailed to the address of the Person entitled
thereto at such address as shall appear on the Securities Register. Payments, if
any, in respect of the Common Securities shall be made in such manner as shall
be mutually agreed between the Property Trustee and the Holder of the Common
Securities.
Section 4.8. Tax Returns and Reports. The Administrative Trustees shall
prepare (or cause to be prepared), at the Depositor's expense, and file all
United States federal, state and local tax and information returns and reports
required to be filed by or in respect of the Trust. In this regard, the
Administrative Trustees shall (a) prepare and file (or cause to be prepared or
filed) Form 1041 or the appropriate Internal Revenue Service form required to be
filed in respect of the Trust in each taxable year of the Trust and (b) prepare
and furnish (or cause to be prepared and furnished) to each Holder a Form 1099
or the appropriate Internal Revenue Service form required to be furnished to
such Holder or the information required to be provided on such form. The
Administrative Trustees shall provide the Depositor and the Property Trustee
with a copy of all such returns, reports and schedules promptly after such
filing or furnishing. The Administrative Trustees and the Property Trustee shall
comply with United States federal withholding and backup withholding tax laws
and information reporting requirements with respect to any payments to
Securityholders under the Trust Securities.
Section 4.9. Payment of Taxes, Duties, Etc. of the Trust. Upon receipt
under the Debentures of Additional Sums, the Property Trustee, upon receipt of
written notice from the Depositor or the Administrative Trustees, shall promptly
pay from such Additional Sums any taxes, duties or governmental charges of
whatsoever nature (other than withholding taxes) imposed on the Trust by the
United States or any other taxing authority.
Section 4.10. Payments under Indenture. Any amount payable hereunder to any
Holder of Preferred Securities shall be reduced by the amount of any
corresponding payment such Holder has directly received pursuant to Section 5.8
of the Indenture in accordance with the terms of Section 6.8 hereof.
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ARTICLE 5
TRUST SECURITIES CERTIFICATES
Section 5.1. Initial Ownership. Upon the formation of the Trust and until
the issuance of the Trust Securities, and at any time during which no Trust
Securities are Outstanding, the Depositor shall be the sole beneficial owner of
the Trust.
Section 5.2. The Trust Securities Certificates. The Preferred Securities
Certificates shall be issued in minimum denominations of $50 Liquidation Amount
and integral multiples of $50 in excess thereof, and the Common Securities
Certificate shall be issued in an aggregate Liquidation Amount of $[5,152,950].
The Depositor directs that the Preferred Securities Certificates shall not be
registered in the name of the Depositor, but that such Preferred Securities
Certificates shall be issued and delivered to holders of the outstanding shares
of Essex Common Stock in accordance with the procedures described in Section
2.07 of the Merger Agreement. The Preferred Securities Certificates shall be
executed on behalf of the Trust by manual or facsimile signature of at least one
Administrative Trustee and shall be authenticated by the Property Trustee. The
Common Securities Certificate shall be executed on behalf of the Trust by manual
signature of at least one Administrative Trustee. Trust Securities Certificates
bearing the manual or facsimile signatures of individuals who were, at the time
such signatures were affixed, authorized to sign on behalf of the Trust, shall
be validly issued and entitled to the benefit of this Declaration,
notwithstanding the fact that such individuals or any of them shall have ceased
to be so authorized prior to the delivery of such Trust Securities Certificates
or did not hold such offices at the date of delivery of such Trust Securities
Certificates. A transferee of a Trust Securities Certificate shall become a
Securityholder, and shall be entitled to the rights and subject to the
obligations of a Securityholder hereunder, upon due registration of such Trust
Securities Certificate in such transferee's name pursuant to Section 5.4.
Section 5.3. Delivery of Trust Securities Certificates. On the Closing
Date, the Administrative Trustees shall cause Trust Securities Certificates, in
an aggregate Liquidation Amount as provided in Section 2.4, to be executed by an
Administrative Trustee on behalf of the Trust and delivered to or upon the
written order of an Administrative Trustee or authorized agent thereof without
further action by the Trust.
A Preferred Security Certificate shall not be valid until placement of the
appropriate authorized denomination thereon and authentication by the manual
signature of an authorized signatory of the Property Trustee and shall be dated
as of the date of such authentication. The signature shall be conclusive
evidence that the Trust Security Certificate has been authenticated under this
Declaration. Upon a written order of the Trust signed by one Administrative
Trustee, the Property Trustee shall authenticate the Trust Security Certificates
for original issue.
The Property Trustee may appoint an authenticating agent acceptable to the
Administrative Trustees to authenticate Preferred Security Certificates. An
authenticating agent may authenticate Preferred Security Certificates whenever
the Property Trustee may do so. Each reference in this Declaration to
authentication by the Property Trustee includes authentication by
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such agent. An authenticating agent has the same rights as the Property Trustee
to deal with the Depositor or an Affiliate with respect to the authentication of
Preferred Securities.
Section 5.4. Registration of Transfer and Exchange of Preferred Securities;
Restrictions on Transfer. The Securities Registrar shall keep or cause to be
kept, at the office or agency maintained pursuant to Section 5.8, a register in
which, subject to such reasonable regulations as it may prescribe, the
Securities Registrar shall provide for the registration of Preferred Securities
Certificates and Common Securities Certificates (subject to Section 5.10 in the
case of the Common Securities Certificates) and registration of transfers and
exchanges of Preferred Securities Certificates as herein provided (such register
is herein sometimes referred to as the "SECURITIES REGISTER"). The Property
Trustee shall be the initial Securities Registrar. The provisions of this
Declaration, including Sections 8.1, 8.3 and 8.6, shall apply to the Property
Trustee in its role as Securities Registrar.
Upon surrender for registration of transfer of any Preferred Security at an
office or agency of the Securities Registrar designated pursuant to Section 5.8
for such purpose, an Administrative Trustee shall execute, and the Property
Trustee shall authenticate and deliver, in the name of the designated transferee
or transferees, one or more new Preferred Securities of any authorized
denominations and of a like aggregate principal amount.
At the option of the Holder, and subject to the other provisions of this
Section 5.4, Preferred Securities may be exchanged for other Preferred
Securities of any authorized denomination and of a like Liquidation Amount upon
surrender of the Preferred Securities to be exchanged at any such office or
agency of the Securities Registrar. Whenever any Preferred Securities are so
surrendered for exchange, an Administrative Trustee shall execute, and the
Property Trustee shall authenticate and deliver, the Preferred Securities which
the Holder making the exchange is entitled to receive.
All Preferred Securities issued upon any registration of transfer or
exchange of Preferred Securities shall be entitled to the same benefits under
this Declaration as the Preferred Securities surrendered upon such transfer or
exchange.
Every Preferred Security presented or surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Depositor and the Securities
Registrar duly executed, by the Holder thereof or his attorney duly authorized
in writing.
No service charge shall be made for any registration of transfer or
exchange of Preferred Securities Certificates, but the Securities Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Preferred
Securities Certificates, other than exchanges pursuant to Sections 4.2(d) and
4.4.
Section 5.5. Mutilated, Destroyed, Lost or Stolen Trust Securities
Certificates. If (a) any mutilated Trust Securities Certificate shall be
surrendered to the Securities Registrar or if the
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Securities Registrar shall receive evidence to its satisfaction of the
destruction, loss or theft of any Trust Securities Certificate and (b) there
shall be delivered to the Securities Registrar and the Administrative Trustees
such security or indemnity as may be required by them to save each of them
harmless, then in the absence of notice that such Trust Securities Certificate
shall have been acquired by a protected purchaser, the Administrative Trustees,
or any one of them, on behalf of the Trust shall execute and make available to
the Property Trustee for authentication in the case of the Preferred Securities
Certificates and delivery, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Trust Securities Certificate, and the Property Trustee
shall authenticate, a new Trust Securities Certificate of like denomination. In
connection with the issuance of any new Trust Securities Certificate under this
Section 5.5, the Securities Registrar may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith. Any duplicative Trust Securities Certificate issued
pursuant to this Section 5.5 shall constitute conclusive evidence of an
undivided beneficial interest in the assets of the Trust, as if originally
issued, whether or not the lost, stolen or destroyed Trust Securities
Certificate shall be found at any time.
The provisions of this Section 5.5 are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Trust Securities.
Section 5.6. Persons Deemed Securityholders. The Property Trustee and the
Securities Registrar shall treat the Person in whose name any Trust Securities
Certificate shall be registered in the Securities Register as the owner of such
Trust Securities Certificate for the purpose of receiving Distributions and for
all other purposes whatsoever, and neither the Property Trustee nor the
Securities Registrar shall be bound by any notice to the contrary.
Section 5.7. Access to List of Securityholders' Names and Addresses. The
Administrative Trustees or the Depositor shall furnish or cause to be furnished
(unless the Property Trustee is acting as Securities Registrar with respect to
the Trust Securities under the Declaration) a list, in such form as the Property
Trustee may reasonably require, of the names and addresses of the
Securityholders as of the most recent record date (a) to the Property Trustee,
quarterly at least five Business Days before each Distribution Date, and (b) to
the Property Trustee, promptly after receipt by the Depositor of a request
therefor from the Property Trustee in order to enable the Property Trustee to
discharge its obligations under this Declaration, in each case to the extent
such information is in the possession or control of the Administrative Trustees
or the Depositor and is not identical to a previously supplied list or has not
otherwise been received by the Property Trustee in its capacity as Securities
Registrar. The rights of Securityholders to communicate with other
Securityholders with respect to their rights under this Declaration or under the
Trust Securities, and the corresponding rights of the Property Trustee, shall be
as provided in the Trust Indenture Act, except to the extent Section 3819 of the
Delaware Business Trust Act would require greater access to such information, in
which case the latter shall apply. Each Holder, by receiving and holding a Trust
Securities Certificate, shall be deemed to have agreed not to hold the
Depositor, the Property Trustee or the Administrative Trustees accountable by
reason of the disclosure of its name and address, regardless of the source from
which such information was derived.
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Section 5.8. Maintenance of Office or Agency. The Securities Registrar
shall maintain an office or offices or agency or agencies where Preferred
Securities Certificates may be surrendered for registration of transfer,
exchange or conversion and where notices and demands to or upon the Trustees in
respect of the Trust Securities Certificates may be served. The Securities
Registrar initially designates ______________________________ as its principal
corporate trust office for such purposes. The Securities Registrar shall give
prompt written notice to the Depositor and to the Securityholders of any change
in the location of the Securities Register or any office or agency maintained by
the Securities Registrar.
Section 5.9. Appointment of Paying Agent. The Trust shall maintain an
office or agency (the "PAYING AGENT") where the Trust Securities may be
presented for payment. The Paying Agent shall make Distributions to
Securityholders from the Property Account and shall report the amounts of such
Distributions to the Property Trustee and the Administrative Trustees. Any
Paying Agent shall have the revocable power to withdraw funds from the Property
Account for the purpose of making the Distributions referred to above. The
Administrative Trustees may revoke such power and remove the Paying Agent if
such Trustees determine in their sole discretion that the Paying Agent shall
have failed to perform its obligations under this Declaration in any material
respect. The Paying Agent shall initially be the Property Trustee and any
co-paying agent chosen by the Property Trustee and acceptable to the
Administrative Trustees and the Depositor. Any Person acting as Paying Agent
shall be permitted to resign as Paying Agent upon 30 days' written notice to the
Property Trustee and the Depositor. In the event that the Property Trustee shall
no longer be the Paying Agent or a successor Paying Agent shall resign or its
authority to act be revoked, the Administrative Trustees shall appoint a
successor, which is acceptable to the Property Trustee and the Depositor, to act
as Paying Agent (which shall be a bank or trust company). Each successor Paying
Agent or any additional Paying Agent shall agree with the Trustees that, as
Paying Agent, such successor Paying Agent or additional Paying Agent will hold
all sums, if any, held by it for payment to the Securityholders in trust for the
benefit of the Securityholders entitled thereto until such sums shall be paid to
each Securityholder. The Paying Agent shall return all unclaimed funds to the
Property Trustee, and upon removal of a Paying Agent such Paying Agent shall
also return all funds in its possession to the Property Trustee. The provisions
of this Declaration, including Sections 8.1, 8.3 and 8.6, shall apply to the
Property Trustee also in its role as Paying Agent, for so long as the Property
Trustee shall act as Paying Agent and, to the extent applicable, to any other
paying agent appointed hereunder. Any reference in this Declaration to the
Paying Agent shall include any co-paying agent unless the context requires
otherwise.
Section 5.10. Ownership of Common Securities by Depositor. On the Closing
Date, the Depositor shall acquire and retain beneficial and record ownership of
the Common Securities. Except in connection with mergers or consolidations
provided for in Section 8.1 of the Indenture, any attempted transfer of the
Common Securities shall be void. The Administrative Trustees shall cause a
single Common Securities Certificate representing the Common Securities to be
issued to the Depositor containing a legend stating: "THIS COMMON SECURITY HAS
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT
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PURSUANT TO SECTION 8.1 OF THE INDENTURE, DATED AS OF __________, 1999, BETWEEN
SUPERIOR TELECOM INC. AND ____________, AS INDENTURE TRUSTEE."
Section 5.11. Rights of Securityholders. The legal title to the Trust
Property is vested exclusively in the Property Trustee (in its capacity as such)
in accordance with Section 2.8, and the Securityholders shall not have any right
or title therein other than the undivided beneficial interest in the assets of
the Trust conferred by their Trust Securities, and they shall have no right to
call for any partition or division of property, profits or rights of the Trust
except as described below. The Trust Securities shall be personal property
giving only the rights specifically set forth therein and in this Declaration.
The Trust Securities shall have no preemptive or similar rights to subscribe for
additional Trust Securities and, when issued and delivered to Securityholders,
will be validly issued, fully paid and non-assessable beneficial interests in
the assets of the Trust. The Holders of the Trust Securities, in their
capacities as such, shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware.
ARTICLE 6
ACT OF SECURITYHOLDERS; MEETINGS; VOTING;
AMENDMENT OF THE DECLARATION
Section 6.1. Limitations on Voting Rights. (a) Except as provided in this
Section 6.1 and Sections 8.9 and 10.2, in the Indenture, in the Guarantee and as
otherwise required by law or by the rules of any stock exchange on which the
Preferred Securities are listed or admitted for trading, no Holder of Preferred
Securities shall have any right to vote or in any manner otherwise control the
administration, operation and management of the Trust or the obligations of the
parties hereto, nor shall anything herein set forth, or contained in the terms
of the Trust Securities Certificates, be construed so as to constitute the
Securityholders from time to time as partners or members of an association.
(b)(i) The Declaration may be amended from time to time by the Depositor
and the Trustees, without the consent of the Holders of the Preferred
Securities, (i) to cure any ambiguity, correct or supplement any provisions in
the Declaration that may be inconsistent with any other provisions, or to make
any other provisions with respect to matters or questions arising under the
Declaration consistent with the other provisions of the Declaration, (ii) to
modify, eliminate or add to any provision of the Declaration to such extent as
shall be necessary to ensure that the Trust will be classified for United States
federal income tax purposes as a grantor trust at all times that any Trust
Securities are outstanding or to ensure that the Trust will not be required to
register as an "investment company" under the 1940 Act or (iii) to qualify or
maintain the qualification of the Declaration under the Trust Indenture Act;
provided, however, that in the case of clause (i), such action shall not
adversely affect in any material respect the interests of any Holder of Trust
Securities, and any amendments of the Declaration shall become effective when
notice thereof is given to the Holders of Trust Securities.
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(ii) The Declaration may be amended by the Depositor and the Trustees
with (A) the consent of Holders representing not less than a majority (based
upon Liquidation Amounts) of the Outstanding Trust Securities, acting as a
single class, and (B) receipt by the Trustees of an Opinion of Counsel having
a national tax and securities practice (which opinion shall not have been
rescinded) to the effect that such amendment or the exercise of any power
granted to the Trustees in accordance with such amendment will not affect the
Trust's status as a grantor trust for United States federal income tax
purposes or the Trust's exemption from the status of an "investment company"
under the 1940 Act; provided, however, that without the consent of each
Holder of Trust Securities, the Declaration may not be amended to (i) change
the amount or timing of any Distribution on the Trust Securities or otherwise
adversely affect the amount of any Distribution required to be made in
respect of the Trust Securities as of a specified date or (ii) restrict the
right of a Holder of Preferred Securities to institute suit for the
enforcement of any such payment on or after such date; provided, further,
that the voting rights of the Holders of the Common Securities may not be
amended without the consent of Holders of a majority in Liquidation Amount of
the Common Securities.
(iii) Subject to Section 8.2 hereof: (A) if an Event of Default with
respect to the Preferred Securities has occurred and been subsequently cured,
waived or otherwise eliminated, the provisions of Section 6.1(b)(iii)(2) hereof
shall apply; and (B) during (x) the period commencing on the date of the
occurrence of an Event of Default with respect to the Preferred Securities and
ending on the date when such Event of Default is cured, waived or otherwise
eliminated, or (y) any period not described in either the preceding sentence or
the preceding clause (x), the provisions of this Section 6.1(b)(iii)(1) shall
apply.
(1) The Holders of a majority in aggregate Liquidation Amount of the
Preferred Securities will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Property
Trustee or to direct the exercise of any trust or power conferred upon the
Property Trustee under the Declaration, including the right to direct the
Property Trustee to exercise the remedies available to it as a holder of
the Debentures, but excluding the right to direct the Property Trustee to
consent to an amendment, modification or termination of the Indenture
(which shall be as provided below); provided that (x) such direction shall
not be in conflict with any rule of law or with this Declaration; (y) the
Property Trustee may take any other action deemed proper by the Property
Trustee which is not inconsistent with such direction; and (z) subject to
the provisions of Section 8.1, the Property Trustee shall have the right to
decline to follow such direction if the Property Trustee in good faith
shall, by a Responsible Officer or Responsible Officers of the Property
Trustee, determine that the proceeding so directed would be unjustly
prejudicial to the Holders not joining in any such direction or would
involve the Property Trustee in personal liability. So long as any
Debentures are held by the Property Trustee, the Administrative Trustees
and the Property Trustee shall not (A) direct the time, method and place of
conducting any proceeding for any remedy available to the Indenture Trustee
or executing any trust or power conferred on the Indenture Trustee with
respect to such Debentures, (B) waive any past default that is waivable
under Section 5.13 of the Indenture, (C) exercise any right to rescind or
annul a declaration that the principal of all the Debentures shall be due
and
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payable or (D) consent to any amendment modification or termination of
the Indenture or the Debentures where such consent shall be required,
without, in each case, obtaining the prior approval of the Holders of a
majority in aggregate Liquidation Amount of all Outstanding Preferred
Securities (except in the case of clause (D), which consent, in the event
that no Event of Default shall occur and be continuing, shall be of the
Holders of all Outstanding Trust Securities, voting together as a single
class); provided, however, that where the Indenture expressly provides
that a consent thereunder would require the consent of each holder of
Debentures affected thereby, no such consent shall be given by the
Property Trustee without the prior written consent of each Holder of
Preferred Securities. The Administrative Trustees and the Property
Trustee shall not revoke any action previously authorized or approved by
a vote of the Holders of the Preferred Securities except by a subsequent
vote of the Holders of the Preferred Securities. The Property Trustee
shall notify each Holder of the Preferred Securities of any notice of
default received from the Indenture Trustee with respect to the
Debentures. In addition to obtaining the foregoing approvals of the
Holders of the Preferred Securities, prior to taking any of the foregoing
actions, the Administrative Trustees and the Property Trustee shall, at
the expense of the Depositor, obtain an Opinion of Counsel experienced in
such matters to the effect that the Trust will not be classified as an
association taxable as a corporation for United States federal income tax
purposes on account of such action.
(2) The Holders of a majority in aggregate Liquidation Amount of the
Common Securities will have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Property
Trustee or to direct the exercise of any trust or power conferred upon the
Property Trustee under the Declaration, including the right to direct the
Property Trustee to exercise the remedies available to it as a holder of
the Debentures, but excluding the right to direct the Property Trustee to
consent to an amendment, modification or termination of the Indenture
(which shall be as provided below); provided that (x) such direction shall
not be in conflict with any rule of law or with this Declaration; (y) the
Property Trustee may take any other action deemed proper by the Property
Trustee which is not inconsistent with such direction; and (z) subject to
the provisions of Section 8.1, the Property Trustee shall have the right to
decline to follow such direction if the Property Trustee in good faith
shall, by a Responsible Officer or Responsible Officers of the Property
Trustee, determine that the proceeding so directed would be unjustly
prejudicial to the Holders not joining in any such direction or would
involve the Property Trustee in personal liability. So long as any
Debentures are held by the Property Trustee, the Administrative Trustees
and the Property Trustee shall not (A) direct the time, method and place of
conducting any proceeding for any remedy available to the Indenture
Trustee, or executing any trust or power conferred on the Indenture Trustee
with respect to such Debentures, (B) waive any past default that is
waivable under Section 5.13 of the Indenture, (C) exercise any right to
rescind or annul a declaration that the principal of all the Debentures
shall be due and payable or (D) consent to any amendment, modification or
termination of the Indenture or the Debentures where such consent shall be
required, without, in each case, obtaining the prior approval of the
Holders of a majority in aggregate Liquidation Amount of all Common
Securities (except in the case of clause (D), which consent, in the event
that no
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Event of Default shall occur and be continuing, shall be of the Holders of
all Outstanding Trust Securities, voting together as a single class);
provided, however, that where the Indenture expressly provides that a
consent thereunder would require the consent of each holder of Debentures
affected thereby, no such consent shall be given by the Property Trustee
without the prior written consent of each Holder of Common Securities. The
Administrative Trustees and the Property Trustee shall not revoke any
action previously authorized or approved by a vote of the Holders of the
Common Securities, except by a subsequent vote of the Holders of the Common
Securities. The Property Trustee shall notify all Holders of record of the
Common Securities of any notice of default received from the Indenture
Trustee with respect to the Debentures. In addition to obtaining the
foregoing approvals of the Holders of the Common Securities, prior to
taking any of the foregoing actions, the Administrative Trustees and the
Property Trustee shall, at the expense of the Depositor, obtain an Opinion
of Counsel experienced in such matters to the effect that the Trust will
not be classified as an association taxable as a corporation for United
States federal income tax purposes on account of such action.
(c) If any proposed amendment of the Declaration provides for, or the
Administrative Trustees and the Property Trustee otherwise propose to effect,
the dissolution, winding-up or termination of the Trust, other than pursuant to
the terms of this Declaration, then the Holders of Outstanding Preferred
Securities, as a class, will be entitled to vote on such amendment or proposal
and such amendment or proposal shall not be effective except with the approval
of the Holders of a majority in aggregate Liquidation Amount of the Outstanding
Preferred Securities.
Section 6.2. Additional Voting Rights. (a) If (i) Distributions on the
Preferred Securities are in arrears and unpaid for six or more quarters (whether
or not consecutive); (ii) the Depositor fails to pay all amounts due on the
Debentures upon Maturity (as defined in the Indenture); or (iii) the Depositor
fails, pursuant to Section 4.5(b), to redeem all of the Preferred Securities
which the Holders thereof elect to tender pursuant to a Change of Control Offer,
then the number of directors constituting the Board of Directors will be
increased by two, the Holders of the then Outstanding Preferred Securities,
voting separately and as a class, shall have the right and power to designate
such two additional directors, and the Depositor shall cause such two additional
directors to be elected to the Board of Directors. Each such event described in
clause (i), (ii) or (iii) is a "VOTING RIGHTS TRIGGERING EVENT." A Voting Rights
Triggering Event shall not be deemed to have occurred if at the time of such
event there are less than 300,000 Preferred Securities then Outstanding.
(b) The voting rights set forth in Section 6.2(a) will continue until such
time as (x) in the case of a default in the payment of Distributions, all
Distributions in arrears on the Preferred Securities are paid in full in cash,
(y) in all other cases, any failure, breach or default giving rise to such
Voting Rights Triggering Event is remedied or waived by the Holders of a
majority of the Preferred Securities then Outstanding or (z) at any time there
are fewer than 300,000 Preferred Securities Outstanding, at which time the term
of any directors elected pursuant to the provisions of Section 6.2(a) shall
terminate and the number of directors constituting the Board of Directors shall
be decreased by two (until the occurrence of any subsequent Voting Rights
Triggering Event).
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(c) Any vacancy occurring in the office of a director designated by the
Holders of Preferred Securities may be filled by the remaining director
designated by the Holders of Preferred Securities unless and until the Holders
of Preferred Securities shall designate a director to fill such vacancy, which
director the Depositor shall cause to be elected to the Board of Directors.
Section 6.3. Notice of Meetings. Notice of all meetings of the Holders of
the Preferred Securities, stating the time, place and purpose of the meeting,
shall be given by the Administrative Trustees pursuant to Section 10.8 to each
such Holder of record, at its registered address, at least 15 days and not more
than 90 days before the meeting. Whenever a vote, consent or approval of the
Holders is permitted or required under this Declaration or the rules of any
stock exchange on which the Preferred Securities are listed or admitted for
trading, such vote, consent or approval may be given at a meeting of the
Holders. At any such meeting, any business properly before the meeting may be so
considered whether or not stated in the notice of the meeting. Any adjourned
meeting may be held as adjourned without further notice.
Section 6.4. Meetings of Holders of Preferred Securities. No annual meeting
of Holders of Preferred Securities is required to be held. The Administrative
Trustees or the Property Trustee may, at any time, call a meeting of the Holders
of Preferred Securities to consider and act on any matters as to which such
Holders are entitled to act under the terms of this Declaration or the rules of
any stock exchange on which the Preferred Securities are listed or admitted for
trading.
At any time after voting power to designate directors shall have become
vested and be continuing in the Holders of Preferred Securities pursuant to
Section 6.2(a), or if vacancies shall exist in the offices of directors
designated by such Holders, the Administrative Trustees or the Property Trustee
may, and upon the written request of the Holders of record of at least 25% of
the Preferred Securities then Outstanding addressed to such Trustee(s) shall,
call a special meeting of the Holders of Preferred Securities for the purpose of
designating such directors. If such meeting shall not be called by the
Administrative Trustees or the Property Trustee within 20 days after personal
service to such Trustee(s) at his or its address contained herein, then the
Holders of record of at least 25% of the Outstanding Preferred Securities may
designate in writing one of their members to call such meeting at the expense of
the Trust, and such meeting may be called by the Person so designated upon the
notice required by Section 6.3. Any Holder of Preferred Securities so designated
shall have, and the Trust shall provide, access to the lists of Securityholders,
subject to Section 6.9.
Holders of record of a majority of the Outstanding Preferred Securities
(based upon their Liquidation Amount), present in person or by proxy, shall
constitute a quorum at any meeting of Securityholders.
If a quorum is present at a meeting, an affirmative vote by the Holders of
record of a majority of the Outstanding Preferred Securities (based upon their
Liquidation Amount) shall constitute the action of such Securityholders, unless
otherwise provided.
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Section 6.5. Voting Rights. Securityholders shall be entitled to one vote
for each $50 of Liquidation Amount represented by their Trust Securities in
respect of any matter as to which such Securityholders are entitled to vote.
Section 6.6. Proxies, Etc. At any meeting of Securityholders, any
Securityholders entitled to vote thereat may vote by proxy, provided that no
proxy shall be voted at any meeting unless it shall have been placed on file
with the Administrative Trustees, or with such other officer or agent of the
Trust as the Administrative Trustees may direct, for verification prior to the
time at which such vote shall be taken. Only Securityholders of record shall be
entitled to vote. When Trust Securities are held jointly by several Persons, any
one of them may vote at any meeting in person or by proxy in respect of such
Trust Securities, but if more than one of them shall be present at such meeting
in person or by proxy, and such joint owners or their proxies so present
disagree as to any vote to be cast, such vote shall not be received in respect
of such Trust Securities. A proxy purporting to be executed by or on behalf of a
Securityholder shall be deemed valid unless challenged at or prior to its
exercise, and the burden of proving invalidity shall rest on the challenger. No
proxy shall be valid more than three years after its date of execution. Every
proxy shall be revocable at the pleasure of the Holder(s) executing it at any
time prior to its use by filing with the Administrative Trustees a written
revocation or a duly executed proxy bearing a later date or by attending the
meeting and voting in person. Except as otherwise provided herein, all matters
relating to the giving, voting or validity of proxies shall be governed by the
General Corporation Law of the State of Delaware relating to proxies, and
judicial interpretations thereunder, as if the Trust were a Delaware corporation
and the Holders were stockholders of a Delaware corporation.
Section 6.7. Securityholder Action by Written Consent. Any action which may
be taken by Securityholders at a meeting may be taken without a meeting if
Securityholders holding more than a majority of all Outstanding Trust Securities
(based upon their Liquidation Amount) entitled to vote in respect of such action
(or such larger proportion thereof as shall be required by any express provision
of this Declaration) shall consent to the action in writing. Prompt notice of
the taking of action without a meeting shall be given to the Holders entitled to
vote who have not consented in writing.
Section 6.8. Record Date for Voting and Other Purposes; Discretion of
Property Trustee Relating to Meetings of Holders. For the purposes of
determining the Securityholders who are entitled to notice of and to vote at any
meeting or by written consent, or to participate in any Distribution on the
Trust Securities in respect of which a record date is not otherwise provided for
in this Declaration, or for the purpose of any other action, the Property
Trustee on behalf of the Trust may from time to time fix a date, not more than
90 days prior to the date of any meeting of Securityholders or the payment of
Distributions or other action, as the case may be, as a record date for the
determination of the identity of the Securityholders of record for such
purposes. Unless the Delaware Business Trust Act, this Declaration, the Trust
Indenture Act or the listing rules of any stock exchange on which the Preferred
Securities are then listed or trading otherwise provides, the Property Trustee,
in its sole discretion, shall establish all other provisions relating to
meetings of Holders, including notice of the time, place or purpose of any
meeting at which any matter is to be voted on by any Holders, waiver of such
notice, action by consent
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without a meeting, the establishment of a record date, voting in person or by
proxy or any other matter with respect to the exercise of any such right to
vote.
Section 6.9. Acts of Securityholders. Any request, demand, authorization,
direction, notice, consent, waiver or other action provided or permitted by this
Declaration to be given, made or taken by Securityholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Securityholders in person or by an agent duly appointed in writing; and,
except as otherwise expressly provided herein, such action shall become
effective when such instrument or instruments is or are delivered to an
Administrative Trustee. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the "ACT" of
the Securityholders signing such instrument or instruments. Proof of execution
of any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Declaration and (subject to Section 8.1)
conclusive in favor of the Trustees, if made in the manner provided in this
Section 6.8.
The fact and date of the execution by any Person of any such instrument or
writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the Person executing the same, may also be proved in any
other manner which any Trustee receiving the same deems sufficient.
The ownership of Preferred Securities shall be proved by the Securities
Register.
Any request, demand, authorization, direction, notice, consent, waiver or
other Act by the Holder of any Trust Security shall bind every future Holder of
the same Trust Security and the Holder of every Trust Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustees or the
Trust in reliance thereon, whether or not notation of such action is made upon
such Trust Security.
Without limiting the foregoing, a Securityholder entitled hereunder to take
any action hereunder with regard to any particular Trust Security may do so with
regard to all or any part of the Liquidation Amount of such Trust Security or by
one or more duly appointed agents, each of which may do so pursuant to such
appointment with regard to all or any part of such Liquidation Amount.
If any dispute shall arise between the Securityholders and the
Administrative Trustees or among such Securityholders or Trustees with respect
to the authenticity, validity or binding nature of any request, demand,
authorization, direction, consent, waiver or other Act of such Securityholder or
Trustee under this Article 6, then the determination of such matter by the
Property Trustee shall be conclusive with respect to such matter.
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Upon the occurrence and continuation of an Event of Default, the Holders of
Preferred Securities shall rely on the enforcement by the Property Trustee of
its rights as holder of the Debentures against the Depositor. If the Property
Trustee fails to enforce its rights as holder of the Debentures after a request
therefor by a Holder of Preferred Securities, such Holder may proceed to enforce
such rights directly against the Depositor, subject to the terms of Article 5 of
the Indenture.
If the Guarantee Trustee (as defined in the Guarantee) fails to enforce the
Guarantee, any Holder of the Preferred Securities may institute a legal
proceeding directly against the Depositor under the Guarantee to enforce its
rights under the Guarantee without first instituting a legal proceeding against
the Guarantee Trustee, the Trust or any other Person.
Section 6.10. Inspection of Records. Upon reasonable notice to the
Administrative Trustees and the Property Trustee, the records of the Trust shall
be open to inspection by Securityholders during normal business hours for any
purpose reasonably related to such Securityholder's interest as a
Securityholder.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
Section 7.1. Representations and Warranties of the Property Trustee and the
Delaware Trustee. The Property Trustee and the Delaware Trustee, each severally
on behalf of and as to itself, hereby represents and warrants for the benefit of
the Depositor and the Securityholders that (each such representation and
warranty made by the Property Trustee and the Delaware Trustee being made only
with respect to itself):
(a) the Property Trustee is a banking corporation duly organized, validly
existing and in good standing under the laws of the State of __________;
(b) the Delaware Trustee is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware;
(c) each of the Property Trustee and the Delaware Trustee has full
corporate power, authority and legal right to execute, deliver and perform its
obligations under this Declaration and has taken all necessary action to
authorize the execution, delivery and performance by it of this Declaration;
(d) this Declaration has been duly authorized, executed and delivered by
each of the Property Trustee and the Delaware Trustee and constitutes the valid
and legally binding agreement of the Property Trustee and the Delaware Trustee,
enforceable against each in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles;
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(e) the execution, delivery and performance by each of the Property Trustee
and the Delaware Trustee of this Declaration have been duly authorized by all
necessary corporate or other action on the part of the Property Trustee and the
Delaware Trustee and do not require any approval of stockholders of the Property
Trustee or the Delaware Trustee, and such execution delivery and performance
will not (i) violate either of the Property Trustee's or the Delaware Trustee's
charter or by-laws, (ii) violate any provision of, or constitute, with or
without notice or lapse of time, a default under, or result in the creation or
imposition of any Lien on any properties included in the Trust Property pursuant
to the provisions of, any indenture, mortgage, credit agreement, license or
other agreement or instrument which is not related to the transactions
contemplated by this Declaration and to which the Property Trustee or the
Delaware Trustee is a party or by which it is bound, or (ii) violate any law,
governmental rule or regulation of the United States or the State of Delaware,
as the case may be, governing the banking or trust powers of the Property
Trustee or the Delaware Trustee (as appropriate in context), or any order,
judgment or decree applicable to the Property Trustee or the Delaware Trustee;
(f) neither the authorization, execution or delivery by the Property
Trustee or the Delaware Trustee of this Declaration nor the consummation of any
of the transactions by the Property Trustee or the Delaware Trustee (as
appropriate in context) contemplated herein requires the consent or approval of,
the giving of notice to, the registration with or the taking of any other action
with respect to, any Delaware or United States federal governmental authority or
agency under the laws of the United States or the State of Delaware governing
the banking or trust powers of the Property Trustee or the Delaware Trustee, as
the case may be;
(g) there are no proceedings pending or, to the best of each of the
Property Trustee's and the Delaware Trustee's knowledge, threatened against or
affecting the Property Trustee or the Delaware Trustee in any court or before
any governmental authority, agency or arbitration board or tribunal which,
individually or in the aggregate, would materially and adversely affect the
Trust or would question the right, power and authority of the Property Trustee
or the Delaware Trustee, as the case may be, to enter into or perform its
obligations as one of the Trustees under this Declaration.
Section 7.2. Representations and Warranties of Depositor. The Depositor
hereby represents and warrants for the benefit of the Securityholders that:
(a) the Trust Securities Certificates to be issued on behalf of the Trust
have been duly authorized and will be duly and validly executed, issued and
delivered by the Trustees pursuant to the terms and provisions of, and in
accordance with the requirements of, this Declaration, and, subject to the terms
of the Merger Agreement, the Securityholders will be, as of the Closing Date,
entitled to the benefits of this Declaration; and
(b) there are no taxes, fees or other governmental charges payable by the
Trust (or the Trustees on behalf of the Trust) under the laws of the State of
Delaware or any political subdivision thereof in connection with the execution,
delivery and performance by the Property Trustee or the Delaware Trustee, as the
case may be, of this Declaration.
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ARTICLE 8
THE TRUSTEES
Section 8.1. Certain Duties and Responsibilities. (a) The duties and
responsibilities of the Trustees shall be as provided by this Declaration and,
in the case of the Property Trustee, by the Trust Indenture Act. The Property
Trustee, before the occurrence of any Event of Default and after the curing or
waiving of all Events of Default that may have occurred, shall undertake to
perform only such duties and obligations as are specifically set forth in this
Declaration and the Trust Indenture Act, and no implied covenants shall be read
into this Declaration against the Property Trustee. In case an Event of Default
has occurred (and has not been cured or waived pursuant to Section 8.2) of which
a Responsible Officer of the Property Trustee has actual knowledge, the Property
Trustee shall exercise such rights and powers vested in it by this Declaration
and the Trust Indenture Act, and use the same degree of care and skill in its
exercise, as a prudent individual would exercise or use under the circumstances
in the conduct of his or her own affairs. Notwithstanding the foregoing, no
provision of this Declaration shall require the Trustees to expend or risk their
own funds or otherwise incur any financial liability in the performance of any
of their duties hereunder, or in the exercise of any of their rights or powers,
if they shall have reasonable grounds for believing that repayment of such funds
or adequate indemnity against such risk or liability is not reasonably assured
to them. Whether or not herein expressly so provided, every provision of this
Declaration relating to the conduct or affecting the liability of or affording
protection to the Trustees shall be subject to the provisions of this Section
8.1. Nothing in this Declaration shall be construed to release the
Administrative Trustees from liability for their own grossly negligent action,
their own grossly negligent failure to act or their own willful misconduct. To
the extent that, at law or in equity, an Administrative Trustee has duties
(including fiduciary duties) and liabilities relating to the Trust or to the
Securityholders, such Administrative Trustee shall not be liable to the Trust or
to any Securityholder for such Administrative Trustee's good faith reliance on
the provisions of this Declaration. The provisions of this Declaration, to the
extent that they restrict the duties and liabilities of the Administrative
Trustees otherwise existing at law or in equity, are agreed by the Depositor and
the Securityholders to replace such other duties and liabilities of the
Administrative Trustees.
(b) All payments made by the Property Trustee or a Paying Agent in respect
of the Trust Securities shall be made only from the revenue and proceeds from
the Trust Property and only to the extent that there shall be sufficient revenue
or proceeds from the Trust Property to enable the Property Trustee or a Paying
Agent to make payments in accordance with the terms hereof. Each Securityholder,
by its acceptance of a Trust Security, agrees that it will look solely to the
revenue and proceeds from the Trust Property to the extent legally available for
distribution to it as herein provided and that the Trustees are not personally
liable to it for any amount distributable in respect of any Trust Security or
for any other liability in respect of any Trust Security. This Section 8.1(b)
does not limit the liability of the Trustees expressly set forth elsewhere in
this Declaration or, in the case of the Property Trustee, in the Trust Indenture
Act.
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(c) No provision of this Declaration shall be construed to relieve the
Property Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:
(i) this subsection shall not be construed to limit the
effectiveness of Subsection (a) of this Section 8.1;
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Property
Trustee, unless it shall be proved that the Property Trustee was
negligent in ascertaining the pertinent facts upon which such judgment
was made;
(iii) the Property Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of a majority of the
aggregate Liquidation Amount of the Trust Securities relating to the
time, method and place of conducting any proceeding for any remedy
available to the Property Trustee or exercising any trust or power
conferred upon the Property Trustee under this Declaration; and
(iv) the Property Trustee shall not be responsible for monitoring
the compliance by the Administrative Trustees or the Depositor with
their respective duties under this Declaration, nor shall the Property
Trustee be liable for the default or misconduct of the Administrative
Trustees or the Depositor.
(d) The Property Trustee's sole duty with respect to the custody,
safekeeping and physical preservation of the Debentures and the Property Account
shall be to deal with such property as fiduciary assets, subject to the
protections and limitations on liability afforded to the Property Trustee under
this Declaration and the Trust Indenture Act.
(e) The Property Trustee shall not be liable for any interest on any money
received by it except as it may otherwise agree in writing with the Depositor,
and money held by the Property Trustee need not be segregated from other funds
held by it except in relation to the Property Account maintained by the Property
Trustee pursuant to Section 3.l and except to the extent otherwise required by
law.
Section 8.2. Notice of Defaults. (a) Within ten days after a Responsible
Officer shall obtain actual knowledge of the occurrence of any Event of Default,
the Property Trustee shall transmit, in the manner and to the extent provided in
Section 10.8, notice of such Event of Default to the Holders of Preferred
Securities, the Administrative Trustees and the Depositor, unless such
Responsible Officer shall have actual knowledge that such Event of Default shall
have been cured or waived, provided that, except for a default in the payment of
principal of (or premium, if any) or interest (including Additional Sums and
Additional Amounts, if applicable) on any of the Debentures, the Property
Trustee shall be protected in withholding such notice if and so long as a
Responsible Officer in good faith determines that the withholding of such notice
is in the interests of the Holders of the Preferred Securities.
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(b) Within ten days after the receipt of written notice of the Depositor's
exercise of its right to defer the payment of interest on the Debentures
pursuant to the Indenture, the Property Trustee shall transmit, in the manner
and to the extent provided in Section 10.8, notice of such exercise to the
Securityholders, unless such exercise shall have been revoked.
(c) The Holders of a majority of the aggregate Liquidation Amount of
Outstanding Preferred Securities may, by vote, on behalf of the Holders of all
of the Preferred Securities, waive any past Event of Default in respect of the
Preferred Securities and its consequences, provided that, if the underlying
Debenture Event of Default:
(i) is not waivable under the Indenture, the Event of Default under the
Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a majority in
principal amount of the holders of the Debentures (a "SUPER MAJORITY") to
be waived under the Indenture, the Event of Default under the Declaration
may only be waived by the vote of the Holders of the same proportion in
aggregate Liquidation Amount of the Preferred Securities that the relevant
Super Majority represents of the aggregate principal amount of the
Debentures outstanding.
The provisions of Sections 6.1(b) and 8.2(d) and this Section 8.2(c)
shall be in lieu of Section 316(a)(1)(B) of the Trust Indenture Act and such
Section 316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded
from this Declaration and the Preferred Securities, as permitted by the Trust
Indenture Act. Upon such waiver, any such default shall cease to exist, and any
Event of Default with respect to the Preferred Securities arising therefrom
shall be deemed to have been cured for every purpose of this Declaration, but no
such waiver shall extend to any subsequent or other default or Event of Default
with respect to the Preferred Securities or impair any right consequent thereon.
Any waiver by the Holders of the Preferred Securities of an Event of Default
with respect to the Preferred Securities shall also be deemed to constitute a
waiver by the Holders of the Common Securities of any such Event of Default with
respect to the Common Securities for all purposes of this Declaration without
any further act, vote or consent of the Holders of the Common Securities.
(d) The Holders of a majority in aggregate Liquidation Amount of the
Common Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Debenture
Event of Default:
(i) not waivable under the Indenture, except where the Holders of the
Common Securities are deemed to have waived such Event of Default under the
Declaration as provided below in this Section 8.2(d), the Event of Default
under the Declaration shall also not be waivable; or
(ii) requires the consent or vote of a Super Majority to be waived,
except where the Holders of the Common Securities are deemed to have waived
such Event of
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Default under the Declaration as provided below in this Section 8.2(d), the
Event of Default under the Declaration may only be waived by the vote of
the Holders of the same proportion in aggregate Liquidation Amount of the
Common Securities that the relevant Super Majority represents of the
aggregate principal amount of the Debentures outstanding;
provided, further, that each Holder of Common Securities will be deemed to have
waived any such Event of Default and all Events of Default with respect to the
Common Securities and its consequences until all Events of Default with respect
to the Preferred Securities have been cured, waived or otherwise eliminated. In
such a case, the Property Trustee will be deemed to be acting solely on behalf
of the Holders of the Preferred Securities and only the Holders of the Preferred
Securities will have the right to direct the Property Trustee in accordance with
the terms of the Preferred Securities to act on their behalf. The provisions of
Section 6.1(b) and 8.2(c) and this Section 8.2(d) shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Preferred Securities, as permitted by the Trust Indenture Act. Subject to the
foregoing provisions of this Section 8.2(d), upon such waiver, any such default
shall cease to exist and any Event of Default with respect to the Common
Securities arising therefrom shall be deemed to have been cured for every
purpose of this Declaration, but no such waiver shall extend to any subsequent
or other default or Event of Default with respect to the Common Securities or
impair any right consequent thereon.
(e) A waiver of an Event of Default under the Indenture by the Property
Trustee at the direction of the Holders of the Preferred Securities constitutes
a waiver of the corresponding Event of Default under this Declaration. The
foregoing provisions of this Section 8.2(e) shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Preferred Securities, as permitted by the Trust Indenture Act.
Section 8.3. Certain Rights of Property Trustee. Subject to the provisions
of Section 8.1:
(a) the Property Trustee may conclusively rely and shall be protected in
acting or refraining from acting in good faith upon any resolution, Opinion of
Counsel, certificate, written representation or instruction of a Holder or
transferee, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal, bond,
debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed, sent or presented by the
proper party or parties;
(b) if, (i) in performing its duties under this Declaration the Property
Trustee is required to decide between alternative courses of action or (ii) in
construing any of the provisions in this Declaration the Property Trustee finds
the same ambiguous or inconsistent with any other provisions contained herein or
(iii) the Property Trustee is unsure of the application of any provision of this
Declaration, then, except as to any matter as to which the Holders of Preferred
Securities are specifically entitled to vote under the terms of this
Declaration, the Property
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Trustee shall deliver a notice to the Depositor requesting written instructions
of the Depositor as to the course of action to be taken and the Property Trustee
shall take such action, or refrain from taking such action, as the Property
Trustee shall be instructed in writing to take, or to refrain from taking, by
the Depositor and shall have no liability whatsoever for such action or inaction
except for its own bad faith, negligence or willful misconduct; provided,
however, that if the Property Trustee does not receive such instructions of the
Depositor within ten Business Days after it has delivered such notice, or such
shorter period of time set forth in such notice (which to the extent practicable
shall not be less than two Business Days), it may, but shall be under no duty
to, take or refrain from taking such action not inconsistent with this
Declaration as it shall deem advisable and in the best interests of the
Securityholders, in which event the Property Trustee shall have no liability
except for its own bad faith, negligence or willful misconduct;
(c) if a Responsible Officer of the Property Trustee has obtained actual
knowledge that an Event of Default has occurred and is continuing and (i) in
performing its duties under this Declaration the Property Trustee is required to
decide between alternative courses of action or (ii) in construing any of the
provisions in this Declaration the Property Trustee finds the same ambiguous or
inconsistent with any other provisions contained herein or (iii) the Property
Trustee is unsure of the application of any provision of this Declaration, then,
except as to any matter as to which the Holders of Preferred Securities are
specifically entitled to vote under the terms of this Declaration, the Property
Trustee may deliver a notice to the Holders of Preferred Securities requesting
written instructions of such Holders as to the course of action to be taken and
the Property Trustee shall take such action, or refrain from taking such action,
as the Property Trustee shall be instructed in writing to take, or to refrain
from taking, by a majority in interest of the Outstanding Preferred Securities
and shall have no liability whatsoever for such action or inaction; provided,
however, that if the Property Trustee does not receive such instructions of the
Holders of Preferred Securities within ten Business Days after it has delivered
such notice, or such shorter period of time set forth in such notice (which to
the extent practicable shall not be less than two Business Days), it may, but
shall be under no duty to, take or refrain from taking such action not
inconsistent with this Declaration as it shall deem advisable and in the best
interests of such Holders, in which event the Property Trustee shall have no
liability except for its own bad faith, negligence or willful misconduct;
(d) any direction or act of the Depositor or the Administrative Trustees
contemplated by this Declaration shall be sufficiently evidenced by an Officer's
Certificate and any resolution of the Board of Directors may be sufficiently
evidenced by a Board Resolution;
(e) whenever in the administration of this Declaration, the Property
Trustee shall deem it desirable that a matter be established before undertaking,
suffering or omitting any action hereunder, the Property Trustee (unless other
evidence is herein specifically prescribed) may, in the absence of bad faith on
its part, request and rely upon an Officer's Certificate and an Opinion of
Counsel which, upon receipt of such request, shall be promptly delivered by the
Depositor or the Administrative Trustees;
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(f) the Property Trustee shall have no duty to accomplish any recording,
filing or registration of any instrument (including any financing or
continuation statement or any filing under tax or securities laws) or any
re-recording, re-filing or re-registration thereof;
(g) the Property Trustee may consult with counsel and other experts of its
selection (which counsel may be counsel to the Depositor or any of its
Affiliates, and may include any of its employees) and the advice or opinion of
such counsel and experts or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon and in accordance with
such advice or opinion; and the Property Trustee shall have the right at any
time to seek instructions concerning the administration of this Declaration from
any court of competent jurisdiction;
(h) the Property Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Declaration at the request or
direction of any of the Securityholders pursuant to this Declaration, unless
such Securityholders shall have offered to the Property Trustee security and
indemnity, reasonably satisfactory to the Property Trustee, against the costs,
expenses (including reasonable attorneys' fees and expenses and the expenses of
the Property Trustee's agents, nominees or custodians) and liabilities which
might be incurred by it in compliance with such request or direction, including
such reasonable advances as may be requested by the Property Trustee;
(i) the Property Trustee shall not be bound to make an investigation into
the facts or matters stated in any resolutions, certificate, statement,
instrument, opinion, report, notice, request, consent, direction, order,
approval, bond, debenture, note or other evidence of indebtedness or other paper
or document, unless specifically requested and directed in writing to do so by
Holders of record of 25% or more of the Preferred Securities (based upon their
aggregate Liquidation Amount), but the Property Trustee may in its discretion
make such further inquiry or investigation into such facts or matters as it may
see fit;
(j) the Property Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through its agents,
custodians, nominees or attorneys or an Affiliate, provided that the Property
Trustee shall be responsible for its own negligence with respect to the
selection of any agent or attorney appointed by it hereunder but shall not be
responsible for any misconduct or negligence on the part of such Person;
(k) whenever in the administration of this Declaration the Property Trustee
shall deem it desirable to receive instructions with respect to enforcing any
remedy or right or taking any other action hereunder, the Property Trustee (i)
may request instructions from the Holders which instructions may only be given
by the Holders of the same proportion in Liquidation Amount of the Securities as
would be entitled to direct the Property Trustee under the terms of the
Securities in respect of such remedy, right or action, (ii) may refrain from
enforcing such remedy or right or taking such other action until such
instructions are received and (iii) shall be protected in conclusively relying
on or acting in accordance with such instructions;
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(l) except as otherwise expressly provided by this Declaration, the
Property Trustee shall not be under any obligation to take any action that is
discretionary under the provisions of this Declaration; and
(m) the Property Trustee shall not be liable for any action taken, suffered
or omitted to be taken by it in good faith, without negligence or willful
misconduct, and reasonably believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Declaration.
No provision of this Declaration shall be deemed to impose any duty or
obligation on the Property Trustee to perform any act or acts, or exercise any
right, power, duty or obligation conferred or imposed on it, in any jurisdiction
in which it shall be illegal, or in which the Property Trustee shall be
unqualified or incompetent in accordance with applicable law, to perform any
such act or acts, or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Property Trustee shall be
construed to be a duty.
Section 8.4. Not Responsible for Recitals or Issuance of Securities. The
recitals contained herein and in the Trust Securities Certificates shall not be
taken as the statements of the Trustees, and the Trustees do not assume any
responsibility for their correctness. The Trustees shall not be accountable for
the use or application by the Depositor of the proceeds of the Debentures. The
Trustees make no representations as to the value or condition of the Trust
Property or any part thereof. The Trustees make no representations as to the
validity or sufficiency of this Declaration or the Trust Securities.
Section 8.5. May Hold Securities. Except as provided in the definition of
the term"OUTSTANDING" in Article 1, any Trustee or any other agent of any
Trustee or the Trust, in its individual or any other capacity, may become the
owner or pledgee of Trust Securities and, subject to Section 8.8 and 8.12, may
otherwise deal with the Trust with the same rights it would have if it were not
a Trustee or such other agent.
Section 8.6. Compensation; Indemnity; Fees.
The Depositor agrees:
(a) to pay each of the Trustees from time to time such compensation for all
services rendered by such Trustee hereunder as the Depositor and such Trustee
may agree upon in writing from time to time (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust);
(b) except as otherwise expressly provided herein, to reimburse each
Trustee upon request for all reasonable expenses, disbursements and advances
incurred or made by such Trustee in accordance with any provision of this
Declaration (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad faith;
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(c) to the fullest extent permitted by applicable law, to indemnify and
hold harmless (i) the Bank, (ii) each Trustee, (iii) any Affiliate of the Bank
or any Trustee, (iii) any officer, director, shareholder, employee,
representative or agent of any Trustee, and (iv) any employee or agent of the
Trust or its Affiliates (each referred to herein as an "INDEMNIFIED PERSON")
from and against any loss, damage, liability, tax, penalty, expense or claim of
any kind or nature whatsoever incurred by such Indemnified Person by reason of
the creation, operation, dissolution or termination of the Trust or any act or
omission performed or omitted by such Indemnified Person in good faith on behalf
of the Trust and in a manner such Indemnified Person reasonably believed to be
within the scope of authority conferred on such Indemnified Person by this
Declaration, except that no Indemnified Person shall be entitled to be
indemnified in respect of any loss, damage or claim to the extent incurred by
such Indemnified Person by reason of its own negligence or willful misconduct
with respect to such acts or omissions;
(d) to the fullest extent permitted by applicable law, to advance, from
time to time, prior to the final disposition of any claim, demand, action, suit
or proceeding for which indemnification is authorized pursuant to subsection (c)
above, any expenses (including reasonable legal fees) incurred by an Indemnified
Person in defending such claim, demand, action, suit or proceeding upon receipt
by the Depositor of an undertaking by or on behalf of the Indemnified Person to
repay such amount if it shall be determined that the Indemnified Person is not
entitled to be indemnified as authorized in subsection (c) above. This
indemnification shall survive the termination of this Declaration.
(e) no Trustee may claim any lien or charge on any Trust Property as a
result of any amount due pursuant to this Section 8.6; and
(f) The obligations to indemnify and hold harmless, to advance expenses and
to provide reimbursement and pay compensation as set forth in this Section 8.6
shall survive the resignation or removal of the Property Trustee or the Delaware
Trustee and the satisfaction and discharge of this Declaration.
Section 8.7. Property Trustee Required; Eligibility of Trustees. (a) There
shall at all times be a Property Trustee, which is a corporation organized and
doing business under the laws of the United States of America or of any State,
Territory or the District of Columbia, authorized under such laws to exercise
corporate trust powers and subject to supervision or examination by federal,
state, territorial or District of Columbia authority with respect to the Trust
Securities. The Property Trustee shall be a Person that is eligible pursuant to
the Trust Indenture Act to act as such and has a combined capital and surplus of
at least $100,000,000. If any such Person publishes reports of condition at
least annually, pursuant to law or to the requirements of its supervising or
examining authority, then for the purposes of this Section 8.7, the combined
capital and surplus of such person shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published. If
at any time the Property Trustee with respect to the Trust Securities shall
cease to be eligible in accordance with the provisions of this Section 8.7, it
shall resign immediately in the manner and with the effect hereinafter specified
in this Article.
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(b) There shall at all times be one or more Administrative Trustees
hereunder with respect to the Trust Securities. Each Administrative Trustee
shall be either a natural person who is at least 21 years of age or a legal
entity that shall act through one or more persons authorized to bind that
entity.
(c) There shall at all times be a Delaware Trustee with respect to the
Trust Securities. The Delaware Trustee shall either be (i) a natural person who
is at least 21 years of age and a resident of the State of Delaware or (ii) a
legal entity with its principal place of business in the State of Delaware and
that otherwise meets the requirements of applicable Delaware law that shall act
through one or more persons authorized to bind such entity.
Section 8.8. Disqualification: Conflicting Interest. The Property Trustee
shall be subject to the provisions of Section 310(b) of the Trust Indenture Act.
Nothing herein shall prevent the Property Trustee from filing with the
Commission the application referred to in the second to last paragraph of
Section 310(b) of the Trust Indenture Act. The Indenture and the Guarantee shall
be deemed to be specifically described in this Declaration for the purposes of
clause (i) of the first proviso contained in Section 310(b) of the Trust
Indenture Act.
Section 8.9. Resignation and Removal; Appointment of Successor. (a) Subject
to Sections 8.9(b) and 8.9(c), Trustees may be appointed or removed without
cause at any time:
(i) until the issuance of any Trust Securities, by written instrument
executed by the Depositor; and
(ii) after the issuance of any Securities, (1) if the Property
Trustee or the Delaware Trustee, by the Administrative Trustees and (2) if
an Administrative Trustee, by vote of the Holders of a majority in
Liquidation Amount of the Common Securities voting as a class.
(b) The Trustee that acts as Property Trustee shall not be removed in
accordance with Section 8.9(a) until a successor possessing the qualifications
to act as a Property Trustee under Section 8.7 (a "SUCCESSOR PROPERTY TRUSTEE")
has been appointed and has accepted such appointment by instrument executed by
such Successor Property Trustee and delivered to the Trust, the Depositor and
the removed Property Trustee.
(c) The Trustee that acts as Delaware Trustee shall not be removed in
accordance with Section 8.9(a) until a successor possessing the qualifications
to act as Delaware Trustee under Section 8.7 (a "SUCCESSOR DELAWARE TRUSTEE")
has been appointed and has accepted such appointment by instrument executed by
such Successor Delaware Trustee and delivered to the Trust, the Depositor and
the removed Delaware Trustee.
(d) A Trustee appointed to office shall hold office until his, her or its
successor shall have been appointed or until his, her or its death, removal,
resignation, dissolution or liquidation. Any Trustee may resign from office
(without need for prior or subsequent accounting) by an instrument in writing
signed by the Trustee and delivered to the Depositor and the Trust, which
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resignation shall take effect upon such delivery or upon such later date as is
specified therein; provided, however, that:
(i) No such resignation of the Trustee that acts as the Property
Trustee shall be effective:
(1) until a Successor Property Trustee has been appointed and has
accepted such appointment by instrument executed by such Successor
Property Trustee and delivered to the Trust, the Depositor and the
resigning Property Trustee; or
(2) until the assets of the Trust have been completely liquidated
and the proceeds thereof distributed to the Holders of the Trust
Securities; and
(ii) no such resignation of the Trustee that acts as the Delaware
Trustee shall be effective until a Successor Delaware Trustee has been
appointed and has accepted such appointment by instrument executed by such
Successor Delaware Trustee and delivered to the Trust, the Depositor and
the resigning Delaware Trustee.
(e) The Administrative Trustees shall use their best efforts to promptly
appoint a Successor Property Trustee or Successor Delaware Trustee, as the case
may be, if the Property Trustee or the Delaware Trustee delivers an instrument
of resignation in accordance with Section 8.9(d).
(f) If no Successor Property Trustee or Successor Delaware Trustee shall
have been appointed and accepted appointment as provided in this Section 8.9
within 60 days after delivery pursuant to this Section 8.9 of an instrument of
resignation or removal, the Property Trustee or Delaware Trustee resigning or
being removed, as applicable, may petition any court of competent jurisdiction
for appointment of a Successor Property Trustee or Successor Delaware Trustee.
Such court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Property Trustee or Successor Delaware Trustee, as
the case may be.
(g) No Property Trustee or Delaware Trustee shall be liable for the acts or
omissions to act of any Successor Property Trustee or Successor Delaware
Trustee, as the case may be.
(h) The Property Trustee shall give notice of each resignation and each
removal of a Trustee and each appointment of a successor Trustee to all
Securityholders in the manner provided in Section 10.8 and shall give notice to
the Depositor. Each notice shall include the name of the successor Trustee and
the address of its Corporate Trust Office if it is the Property Trustee.
(i) Notwithstanding the foregoing or any other provision of this
Declaration, in the event any Administrative Trustee or a Delaware Trustee who
is a natural person dies or becomes, in the opinion of the Depositor,
incompetent or incapacitated, the vacancy created by such death, incompetence or
incapacity may be filled by (a) the unanimous act of the remaining
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Administrative Trustees if there are at least two of them or (b) otherwise by
the Depositor (with the successor in each case being a Person who satisfies the
eligibility requirement for Administrative Trustees or the Delaware Trustee, as
the case may be, set forth in Section 8.7).
(j) The indemnity provided to a Trustee under Section 8.6 shall survive any
Trustee's resignation or removal.
Section 8.10. Acceptance of Appointment by Successor. In case of the
appointment hereunder of a successor Trustee, such successor Trustee so
appointed shall execute, acknowledge and deliver to the Trust and to the
retiring Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee shall become effective and such
successor Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Trustee;
but, on the request of the Depositor or the successor Trustee, such retiring
Trustee shall, upon payment of all amounts due to it under this Declaration,
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee and, if the Property Trustee
is the resigning Trustee, it shall duly assign, transfer and deliver to the
successor Trustee all property and money held by such retiring Property Trustee
hereunder.
In case of the appointment hereunder of a successor Trustee, the retiring
Trustee and each successor Trustee shall execute and deliver an amendment hereto
wherein each successor Trustee shall accept such appointment and which (a) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee and (b) shall add to or change any of
the provisions of this Declaration as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than one relevant
Trustee, it being understood that nothing herein or in such amendment shall
constitute such relevant Trustees co-trustees, and upon the execution and
delivery of such amendment the resignation or removal of the retiring Trustee
shall become effective to the extent provided therein and each such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee; but, on
request of the Trust or any successor Trustee, such retiring Trustee shall, upon
payment of all amounts due to it under this Declaration, duly assign, transfer
and deliver to such successor Trustee all Trust Property, all proceeds thereof
and money held by such retiring Trustee hereunder.
Upon request of any such successor Trustee, the Trust shall execute any and
all instruments for more fully and certainly vesting in and confirming to such
successor Trustee all such rights, powers and trusts referred to in the first or
second preceding paragraph, as the case may be.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
Section 8.11. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Property Trustee, or the Delaware Trustee or any
Administrative
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Trustee that is not a natural person, may be merged or converted or with which
it may be consolidated, or any corporation resulting from any merger, conversion
or consolidation to which any such Trustee shall be a party, or any corporation
succeeding to all or substantially all the corporate trust business of such
Trustee, shall be the successor of such Trustee hereunder, provided that such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto.
Section 8.12. Preferential Collection of Claims Against Depositor or Trust.
If and when the Property Trustee shall be or become a creditor of the Depositor
or the Trust (or any other obligor upon the Debentures or the Trust Securities),
the Property Trustee shall be subject to and shall take all actions necessary in
order to comply with the provisions of the Trust Indenture Act regarding the
collection of claims against the Depositor or the Trust (or any such other
obligor).
Section 8.13. Reports by Property Trustee. (a) To the extent required by
the Trust Indenture Act, within 60 days after May 15 of each year commencing
with May 15, 1999 the Property Trustee shall transmit to all Securityholders in
accordance with Section 10.8 and to the Depositor, a brief report dated as of
such December 31 with respect to:
(i) its eligibility under Section 8.7 or, in lieu thereof, if to
the best of its knowledge it has continued to be eligible under said
Section, a written statement to such effect;
(ii) a statement that the Property Trustee has complied with all
of its obligations under this Declaration during the twelve-month
period (or, in the case of the initial report, the period since the
Closing Date) ending with such December 31 or, if the Property Trustee
has not complied in any material respects with such obligations, a
description of such noncompliance; and
(iii) any change in the property and funds in its possession as
Property Trustee since the date of its last report and any action taken
by the Property Trustee in the performance of its duties hereunder
which it has not previously reported and which in its opinion
materially affects the Trust Securities.
(b) In addition, the Property Trustee shall transmit to Securityholders
such reports concerning the Property Trustee and its actions under this
Declaration as may be required pursuant to the Trust Indenture Act at the times
and in the manner provided pursuant thereto.
(c) A copy of such reports required by Section 8.13(b) shall, at the time
of such transmissions to Holders, be filed by the Property Trustee with each
national securities exchange or self-regulatory organization upon which the
Trust Securities are listed, with the Commission and with the Depositor.
Section 8.14. Reports to the Property Trustee. The Depositor and the
Administrative Trustees on behalf of the Trust shall provide to the Property
Trustee such documents, reports and
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information as required by Section 314 of the Trust Indenture Act (if any) and
the compliance certificate required by Section 314(a) of the Trust Indenture Act
in the form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.
Section 8.15. Evidence of Compliance with Conditions Precedent. Each of the
Depositor and the Administrative Trustees on behalf of the Trust shall provide
to the Property Trustee such evidence of compliance with any conditions
precedent, if any, provided for in this Declaration that relate to any of the
matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate
or opinion required to be given by an officer pursuant to Section 314(c) (1) of
the Trust Indenture Act shall be given in the form of an Officer's Certificate.
Section 8.16. Number of Trustees. (a) The number of Trustees shall be five,
provided that the Holder of all of the Common Securities by written instrument
may increase or decrease the number of Administrative Trustees. The Property
Trustee and the Delaware Trustee may be the same Person.
(b) If a Trustee ceases to hold office for any reason and the number of
Administrative Trustees is not reduced pursuant to Section 8.16(a), or if the
number of Trustees is increased pursuant to Section 8.16(a), a vacancy shall
occur.
(c) The death, resignation, retirement, removal, bankruptcy, incompetence
or incapacity to perform the duties of a Trustee shall not operate to annul the
Trust. Whenever a vacancy in the number of Administrative Trustees shall occur,
such vacancy shall be filled by the appointment of an Administrative Trustee in
accordance with Section 8.9. The Administrative Trustees in office, regardless
of their number (and notwithstanding any other provision of this Declaration),
shall have all the powers granted to the Administrative Trustees and shall
discharge all the duties imposed upon the Administrative Trustees by this
Declaration.
Section 8.17. Delegation of Power. (a) Any Administrative Trustee may, by
power of attorney consistent with applicable law, delegate to any other natural
person over the age of 21 his or her power for the purpose of executing any
documents contemplated in Section 2.6(a), including any registration statement
or amendment thereof filed with the Commission, or making any other governmental
filing.
(b) The Administrative Trustees shall have power to delegate from time to
time to such of their number or to the Depositor the doing of such things and
the execution of such instruments either in the name of the Trust or the names
of the Administrative Trustees or otherwise as the Administrative Trustees may
deem expedient, to the extent such delegation is not prohibited by applicable
law or contrary to the provisions of the Trust, as set forth herein.
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ARTICLE 9
DISSOLUTION, LIQUIDATION, TERMINATION AND MERGER
Section 9.1. Dissolution upon Expiration Date. Unless earlier dissolved,
the Trust shall automatically dissolve on __________, 2014 (the "EXPIRATION
DATE").
Section 9.2. Early Dissolution. The first to occur of any of the following
events is an "EARLY DISSOLUTION EVENT":
(a) the occurrence of a Bankruptcy Event in respect of, or the dissolution
or liquidation of, the Depositor;
(b) the occurrence of a Special Event except in the case of a Tax Event
following which the Depositor has elected to pay any Additional Sums (in
accordance with Section 4.4) such that the net amount received by Holders of
Trust Securities not exchanged for Debentures in respect of Distributions is not
reduced as a result of such Tax Event and the Depositor has not revoked any such
election or failed to make such payments;
(c) the redemption, conversion or exchange of all of the Trust Securities;
(d) an order for dissolution of the Trust shall have been entered by a
court of competent jurisdiction; and
(e) receipt by the Property Trustee of written notice from the Depositor at
any time (which direction is optional and wholly within the discretion of the
Depositor) of its intention to dissolve the Trust and distribute the Debentures
in exchange for the Trust Securities.
Section 9.3. Termination. The respective obligations and responsibilities
of the Trustees and the Trust created and continued hereby shall terminate upon
the latest to occur of the following: (a) the distribution by the Property
Trustee to Securityholders upon the liquidation of the Trust pursuant to Section
9.4, or upon the redemption of all of the Trust Securities pursuant to Section
4.2, of all amounts required to be distributed hereunder upon the final payment
of the Trust Securities; (b) the payment of all expenses owed by the Trust; and
(c) the discharge of all administrative duties of the Administrative Trustees,
including the performance of any tax reporting obligations with respect to the
Trust or the Securityholders.
Section 9.4. Liquidation. (a) If an Early Dissolution Event specified in
clause (a), (b), (d) or (e) of Section 9.2 occurs or upon the Expiration
Date, the Trust shall be liquidated by the Administrative Trustees as
expeditiously as the Administrative Trustees determine to be possible by
distributing, after paying or making reasonable provision to pay all claims
and obligations of the Trust in accordance with Section 3808(e) of the
Business Trust Act, to each Securityholder an aggregate principal amount of
Debentures equal to the aggregate Liquidation Amount of Trust Securities held
by such Holder, subject to Section 9.4(d). Notice of liquidation shall be
prepared by or on behalf of the Administrative Trustees and given by the
Property Trustee by first-class
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mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to
the Liquidation Date to each Holder of Trust Securities at such Holder's address
as it appears in the Securities Register. All notices of liquidation shall:
(i) state the Liquidation Date;
(ii) state that, from and after the Liquidation Date, the Trust
Securities will no longer be deemed to be Outstanding and any Trust
Securities Certificates not surrendered for exchange will be deemed to
represent an aggregate principal amount of Debentures equal to the
aggregate Liquidation Amount of Trust Securities held by such Holder;
and
(iii) provide such information with respect to the mechanics by
which Holders may exchange Trust Securities Certificates for
Debentures, or, if Section 9.4(d) applies, receive a Liquidation
Distribution, as the Administrative Trustees or the Property Trustee
shall deem appropriate.
(b) Except where Section 9.2(b) or 9.4(d) applies, in order to effect the
liquidation of the Trust and distribution of the Debentures to Securityholders,
the Property Trustee shall establish a record date for such distribution (which
shall be not more than 45 days prior to the Liquidation Date) and, either itself
acting as exchange agent or through the appointment of a separate exchange
agent, shall establish such procedures as it shall deem appropriate to effect
the distribution of Debentures in exchange for the Outstanding Trust Securities
Certificates.
(c) Except where Section 9.2(b) or 9.4(d) applies, from and after the
Liquidation Date, (i) the Trust Securities will no longer be deemed to be
Outstanding and (ii) any Trust Securities Certificates will be deemed to
represent an aggregate principal amount of Debentures equal to the aggregate
Liquidation Amount of Trust Securities held by such Holders, and bearing accrued
and unpaid interest in an amount equal to the accrued and unpaid Distributions
on such Trust Securities to the Liquidation Date.
(d) In the event that, notwithstanding the other provisions of this Section
9.4, whether because of an order for dissolution entered by a court of competent
jurisdiction or otherwise, distribution of the Debentures in the manner provided
herein is determined by the Property Trustee not to be practicable, the Trust
Property shall be liquidated, and the Trust shall be dissolved, wound-up and
terminated, by the Property Trustee after paying or making reasonable provision
to pay all claims and obligations of the Trust in accordance with Section
3808(e) of the Business Trust Act in such manner as the Property Trustee
determines. In such event, on the date of the dissolution, Securityholders will
be entitled to receive out of the assets of the Trust available for distribution
to Securityholders, after paying or making reasonable provision to pay all
claims and obligations of the Trust in accordance with Section 3808(e) of the
Business Trust Act, an amount equal to the Liquidation Amount per Trust Security
plus accrued and unpaid Distributions thereon to the Liquidation Date (such
amount being the "LIQUIDATION DISTRIBUTION"). If, upon any such dissolution, the
Liquidation Distribution can be paid only in part because the Trust has
insufficient assets legally available to pay in full the aggregate
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Liquidation Distribution, then, subject to the next succeeding sentence, the
amounts payable by the Trust on the Trust Securities shall be paid on a pro rata
basis (based upon Liquidation Amounts). The Holders of the Common Securities
will be entitled to receive Liquidation Distributions upon any such dissolution
pro rata (determined as aforesaid) with Holders of Preferred Securities, except
that, if an Event of Default has occurred and is continuing, the Preferred
Securities shall have priority over the Common Securities.
(e) As soon as is practicable after the occurrence of an Early Dissolution
Event or the Expiration Date and upon completion of the winding up of the Trust,
the Trustees (each of whom is authorized to take such action) shall terminate
the Trust by filing a certificate of cancellation with the Secretary of State of
the State of Delaware.
Section 9.5. Mergers, Consolidations, Amalgamations or Replacements of the
Trust. The Trust may not merge with or into, consolidate, amalgamate, be
replaced by or convey, transfer or lease its properties and assets substantially
as an entirety to any corporation or other Person, except as described below.
The Trust may, at the request of the Depositor, with the consent of the
Administrative Trustees and without the consent of the Property Trustee, the
Delaware Trustee or the Holders of the Trust Securities, merge with or into,
consolidate, amalgamate, be replaced by or convey, transfer or lease its
properties and assets substantially as an entirety to a trust organized as such
under the laws of any state; provided, however, that (i) such successor entity
either (a) expressly assumes all of the obligations of the Trust with respect to
the Trust Securities or (b) substitutes for the Preferred Securities other
securities having substantially the same terms as the Preferred Securities (the
"SUCCESSOR SECURITIES"), so long as the Successor Securities rank the same as
the Preferred Securities rank in priority with respect to Distributions and
payments upon liquidation, redemption and otherwise, (ii) the Depositor
expressly appoints a trustee of such successor entity possessing the same powers
and duties as the Property Trustee as the holder of the Debentures, (iii) the
Successor Securities are listed, or any Successor Securities will be listed upon
notification of issuance, on any national securities exchange or other
organization on which the Preferred Securities are then listed, if any, (iv)
such merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease does not cause the Preferred Securities (including any Successor
Securities) to be downgraded by any nationally recognized statistical rating
organization, (v) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights, preferences
and privileges of the holders of the Preferred Securities (including any
Successor Securities) in any material respect (other than with respect to any
dilution of the holders' interest in the new entity), (vi) such successor entity
has a purpose identical to that of the Trust, (vii) prior to such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease, the
Depositor has received an Opinion of Counsel to the Trust (which may be counsel
to the Depositor) having a national tax and securities law practice (which
opinion shall not have been rescinded) to the effect that (a) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does not
adversely affect the rights, preferences and privileges of the holders of the
Preferred Securities (including any Successor Securities) in any material
respect (other than with respect to any dilution of the holders' interest in the
new entity) and (b) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither the Trust nor such successor
entity will be required to register as an "investment
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company" under the 1940 Act, and (viii) the Depositor or any permitted successor
or assignee owns all of the Common Securities of such successor entity and
guarantees the obligations of such successor entity under the Successor
Securities at least to the extent provided by the Guarantee. Notwithstanding the
foregoing, the Trust shall not, except with the consent of holders of 100% in
aggregate Liquidation Amount of the Preferred Securities, consolidate,
amalgamate, merge with or into, be replaced by or convey, transfer or lease its
properties and assets substantially as an entirety to any other entity or permit
any other entity to consolidate, amalgamate, merge with or into, or replace it
if such consolidation, amalgamation, merger, replacement, conveyance, transfer
or lease would for United States federal income tax purposes cause (i) the
holders of the Preferred Securities to recognize gain or loss or (ii) the Trust
or the successor entity to be classified as an association taxable as a
corporation.
ARTICLE 10
MISCELLANEOUS PROVISIONS
Section 10.1. Limitation of Rights of Securityholders. The death or
incapacity of any person having an interest, beneficial or otherwise, in Trust
Securities shall not operate to terminate this Declaration, nor entitle the
legal representatives or heirs of such person or any Securityholder for such
person to claim an accounting, take any action or bring any proceeding in any
court for a partition or winding-up of the arrangements contemplated hereby, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
Section 10.2. Amendment. (a) Notwithstanding anything in this Declaration
to the contrary, without the consent of the Depositor, this Declaration may not
be amended in a manner which imposes any additional obligation on the Depositor.
(b) In the event that any amendment to this Declaration is made, the
Administrative Trustees shall promptly provide to the Depositor a copy of such
amendment.
(c) None of the Bank, the Property Trustee or the Delaware Trustee shall be
required to enter into any amendment to this Declaration, including to this
Section 10.2(c), which affects its own rights, power, duties, obligations or
immunities under this Declaration, without its prior written consent, and any
such amendment or purported amendment, including to this Section 10.2(c), shall
be void and ineffective without such prior written consent, which consent may be
withheld in its sole discretion. The Property Trustee shall be entitled to
receive an Opinion of Counsel and an Officer's Certificate stating that any
amendment to this Declaration is in compliance with this Declaration.
Section 10.3. Separability. In case any provision in this Declaration or in
the Trust Securities Certificates shall be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.
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Section 10.4. GOVERNING LAW. THIS DECLARATION AND THE RIGHTS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF DELAWARE AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED BY SUCH LAWS
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS OF THE STATE OF DELAWARE OR
ANY OTHER JURISDICTION THAT WOULD CALL FOR THE APPLICATION OF THE LAW OF ANY
JURISDICTION OTHER THAN THE STATE OF DELAWARE; PROVIDED, HOWEVER, THAT, TO THE
FULLEST EXTENT PERMITTED BY LAW, THERE SHALL NOT BE APPLICABLE TO THE PARTIES
HEREUNDER OR THIS DECLARATION ANY PROVISION OF THE LAWS (COMMON OR STATUTORY) OF
THE STATE OF DELAWARE PERTAINING TO TRUSTS THAT RELATE TO OR REGULATE, IN A
MANNER INCONSISTENT WITH THE TERMS HEREOF, (A) THE FILING WITH ANY COURT OR
GOVERNMENTAL BODY OR AGENCY OF TRUSTEE ACCOUNTS OR SCHEDULES OF TRUSTEE FEES AND
CHARGES, (B) AFFIRMATIVE REQUIREMENTS TO POST BONDS FOR TRUSTEES, OFFICERS,
AGENTS OR EMPLOYEES OF A TRUST, (C) THE NECESSITY FOR OBTAINING COURT OR OTHER
GOVERNMENTAL APPROVAL CONCERNING THE ACQUISITION, HOLDING OR DISPOSITION OF REAL
OR PERSONAL PROPERTY, (D) FEES OR OTHER SUMS PAYABLE TO TRUSTEES, OFFICERS,
AGENTS OR EMPLOYEES OF A TRUST, (E) THE ALLOCATION OF RECEIPTS AND EXPENDITURES
TO INCOME OR PRINCIPAL, (F) RESTRICTIONS OR LIMITATIONS ON THE PERMISSIBLE
NATURE, AMOUNT OR CONCENTRATION OF TRUST INVESTMENTS OR REQUIREMENTS RELATING TO
THE TITLING, STORAGE OR OTHER MANNER OF HOLDING OR INVESTING TRUST ASSETS OR (G)
THE ESTABLISHMENT OF FIDUCIARY OR OTHER STANDARDS OF RESPONSIBILITY OR
LIMITATIONS ON THE ACTS OR POWERS OF TRUSTEES THAT ARE INCONSISTENT WITH THE
LIMITATIONS OR AUTHORITY AND POWERS OF THE TRUSTEES HEREUNDER AS SET FORTH OR
REFERENCED IN THIS DECLARATION. SECTION 3540 OF TITLE 12 OF THE DELAWARE CODE
SHALL NOT APPLY TO THE TRUST.
Section 10.5. Payments Due on Non-Business Day. If the date fixed for any
payment on any Trust Security shall be a day which is not a Business Day, then
such payment need not be made on such date but may be made on the next
succeeding day which is a Business Day (except as otherwise provided herein),
with the same force and effect as though made on the date fixed for such
payment, and no interest shall accrue thereon for the period after such date.
Section 10.6. Successors. This Declaration shall be binding upon and shall
inure to the benefit of any successor to the Depositor, the Trust or the
relevant Trustee, including any successor by operation of law. Except in
connection with a consolidation, merger or sale involving the Depositor that is
permitted under Article 8 of the Indenture and pursuant to which the assignee
agrees in writing to perform the Depositor's obligations hereunder, the
Depositor shall not assign its obligations hereunder.
Section 10.7. Headings. The Article and Section headings are for
convenience only and shall not affect the construction of this Declaration
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Section 10.8. Reports, Notices and Demands. Any report, notice, demand or
other communications which by any provision of this Declaration is required or
permitted to be given or served to or upon any Securityholder or the Depositor
may be given or served in writing by deposit thereof, first-class postage
prepaid, in the United States mail, hand delivery or facsimile transmission, in
each case, addressed, (a) in the case of a Holder of Preferred Securities, and
(b) in the case of the Holder of the Common Securities, to such Holder as such
Holder's name and address may appear on the Securities Register. Such notice,
demand or other communication to or upon a Securityholder shall be deemed to
have been sufficiently given or made, for all purposes, upon hand delivery,
mailing or transmission.
Any notice, demand or other communication which by any provision of this
Declaration is required or permitted to be given or served to or upon the Trust,
the Property Trustee, the Delaware Trustee or the Administrative Trustees shall
be given in writing addressed (until another address is published by the Trust)
as follows: (a) with respect to the Property Trustee, to ____________________
(b) with respect to the Delaware Trustee, to ____________________, with a copy
of any such notice to the Property Trustee at its address above, and (c) with
respect to the Administrative Trustees, to them at the address for notices to
the Depositor, marked "Attention: General Counsel." Such notice, demand or other
communication to or upon the Trust or the Property Trustee shall be deemed to
have been sufficiently given or made only upon actual receipt of the writing by
the Trust or the Property Trustee.
Section 10.9. Agreement Not to Petition. Each of the Trustees and the
Depositor agrees for the benefit of the Securityholders that, until at least one
year and one day after the Trust has been terminated in accordance with Article
9, it shall not file, or join in the filing of, a petition against the Trust
under any bankruptcy, insolvency, reorganization or other similar law
(including, without limitation, the United States Bankruptcy Code)
(collectively, "BANKRUPTCY LAWS") or otherwise join in the commencement of any
proceeding against the Trust under any Bankruptcy Law. In the event the
Depositor takes action in violation of this Section 10.9, the Property Trustee
agrees, for the benefit of Securityholders, that, at the expense of the
Depositor, it shall file an answer with the bankruptcy court or otherwise
properly contest the filing of such petition by the Depositor against the Trust
or the commencement of such action and raise the defense that the Depositor has
agreed in writing not to take such action and should be stopped and precluded
therefrom and such other defenses, if any, as counsel for the Trustee or the
Trust may assert. The provisions of this Section 10.9 shall survive the
termination of this Declaration.
Section 10.10. Trust Indenture Act; Conflict with Trust Indenture Act. (a)
This Declaration is subject to the provisions of the Trust Indenture Act that
are required to be part of this Declaration and shall, to the extent applicable,
be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is the trustee for
the purposes of the Trust Indenture Act.
(c) If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Declaration by any of
the provisions of the Trust
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Indenture Act, such required provision shall control. If any provision of this
Declaration modifies or excludes any provision of the Trust Indenture Act which
may be so modified or excluded, the latter provision shall be deemed to apply to
this Declaration as so modified or excluded, as the case may be.
(d) The application of the Trust Indenture Act to this Declaration shall
not affect the nature of the Trust Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
Section 10.11. ACCEPTANCE OF TERMS OF DECLARATION, GUARANTEE AND INDENTURE.
THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN BY OR ON
BEHALF OF A SECURITYHOLDER OR BENEFICIAL OWNER, WITHOUT ANY SIGNATURE OR FURTHER
MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL ACCEPTANCE BY THE
SECURITYHOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN SUCH TRUST
SECURITY OF ALL THE TERMS AND PROVISIONS OF THIS DECLARATION AND THEIR AGREEMENT
TO THE SUBORDINATION PROVISIONS AND OTHER TERMS OF THE GUARANTEE AND THE
INDENTURE, AND SHALL CONSTITUTE THE AGREEMENT OF THE TRUST, SUCH SECURITYHOLDER
AND SUCH OTHERS THAT THE TERMS AND PROVISIONS OF THIS DECLARATION SHALL BE
BINDING, OPERATIVE AND EFFECTIVE ON THE TRUST AND SUCH SECURITYHOLDER AND SUCH
OTHERS.
Section 10.12. Counterparts. This Declaration may contain more than one
counterpart of the signature page and this Declaration may be executed by the
affixing of the signature of each of the Trustees and the Depositor to one of
such counterpart signature pages. All of such counterpart signature pages shall
be read as though one, and they shall have the same force and effect as though
all of the signers had signed a single signature page.
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IN WITNESS WHEREOF, the parties hereto have caused this Declaration to be
duly executed as of the day and year first above written.
SUPERIOR TELECOM INC.,
as Depositor
By:
-----------------------------
Name:
Title:
[Property Trustee],
not in its individual capacity but solely as
Property Trustee
By:
-----------------------------
Name:
Title:
[Delaware Trustee],
not in its individual capacity but solely as
Delaware Trustee
By:
-----------------------------
Name:
Title:
--------------------------------
not in his individual capacity but solely as
Administrative Trustee
--------------------------------
not in his individual capacity but solely as
Administrative Trustee
--------------------------------
not in his individual capacity but solely as
Administrative Trustee
62
<PAGE>
EXHIBIT A
CERTIFICATE OF TRUST
OF
SUPERIOR TRUST I
A-1
<PAGE>
EXHIBIT B
THIS COMMON SECURITY HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED, EXCEPT PURSUANT TO
SECTION 8.1 OF THE INDENTURE, DATED AS OF __________, 1999,
BETWEEN SUPERIOR TELECOM INC. AND ____________,
AS INDENTURE TRUSTEE.
Certificate Number Number of Common Securities
[ ] [ ]
Certificate Evidencing Common Securities
of
Superior Trust I
8 1/2% Trust Convertible Common Securities
(Liquidation Amount $50 per Common Security)
Superior Trust I, a statutory business trust formed under the laws of the
State of Delaware (the "Trust"), hereby certifies that Superior TeleCom Inc.
(the "Holder") is the registered owner of [ ] 8 1/2% Trust Convertible Common
Securities of the Trust representing undivided beneficial interests in the
assets of the Trust (the "Common Securities"). In accordance with Section 5.10
of the Declaration (as defined below), the Common Securities are not
transferable (except in connection with mergers, acquisitions, consolidations or
other transactions provided for in Section 8.1 of the Indenture (as defined in
the Amended and Restated Declaration of Trust dated as of __________, 1999, as
the same may be amended from time to time (the "Declaration")) and the pledge of
the Common Securities by the Depositor to secure indebtedness) and any attempted
transfer hereof shall be void. The designations, rights, privileges,
restrictions, preferences and other terms and provisions of the Common
Securities are set forth in, and this certificate and the Common Securities
represented hereby are issued and shall in all respects be subject to the terms
and provisions of, the Declaration, including the designation of the terms of
the Common Securities as set forth therein. The Trust will furnish a copy of the
Declaration to the Holder without charge upon written request to the Trust at
its principal place of business or registered office.
As set forth in the Declaration, where an Event of Default has occurred and
is continuing, the rights of Holders of Common Securities to payment in respect
of Distributions and payments upon liquidation, redemption or otherwise are
subordinated to the rights of payment of Holders of the Preferred Securities.
Upon receipt of this certificate, the Holder is bound by the Declaration
and is entitled to the benefits thereunder.
B-1
<PAGE>
By acceptance of this Certificate, the Holder agrees to treat, for United
States federal income tax purposes, the Debentures as indebtedness and the
Common Securities as evidence of undivided beneficial ownership in the
Debentures.
B-2
<PAGE>
IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has
executed this certificate this _____ day of __________, 1999.
SUPERIOR TRUST I
By:
--------------------
Name:
As Administrative Trustee
B-3
<PAGE>
EXHIBIT C
Certificate Number Number of Preferred Securities
CUSIP NO.
Certificate Evidencing Preferred Securities
of
Superior Trust I
8 1/2% Trust Convertible Preferred Securities
(Liquidation Amount $50 per Preferred Security)
Superior Trust I, a statutory business trust formed under the laws of
the State of Delaware (the "Trust"), hereby certifies that
_____________________ (the "Holder") is the registered owner of _____________
preferred securities of the Trust representing an undivided beneficial
interest in the assets of the Trust and designated the Superior Trust I 8
1/2% Trust Convertible Preferred Securities (Liquidation Amount $50 per
Preferred Security) (the "Preferred Securities"). The Preferred Securities
are transferable on the books and records of the Trust, in person or by a
duly authorized attorney, upon surrender of this certificate duly endorsed
and in proper form for transfer as provided in Section 5.4 of the Declaration
(as defined below). The designations, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Securities are
set forth in, and this certificate and the Preferred Securities represented
hereby are issued and shall in all respects be subject to the terms and
provisions of, the Amended and Restated Declaration of Trust, dated as of
__________, 1999, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of Preferred
Securities as set forth therein. The Holder is entitled to the benefits of
the Guarantee Agreement entered into by Superior TeleCom Inc., a Delaware
corporation, and __________, as Guarantee Trustee, dated as of __________,
1999 (the "Guarantee"), to the extent provided therein. The Trust will
furnish a copy of the Declaration and the Guarantee to the Holder without
charge upon written request to the Trust at its principal place of business
or registered office.
Upon receipt of this certificate, the Holder is bound by the Declaration
and is entitled to the benefits thereunder.
C-1
<PAGE>
IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has
executed this certificate.
SUPERIOR TRUST I
By:
---------------------------
Name:
As Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Preferred Securities referred to in the within-mentioned
Declaration.
Dated:
[ ],
as Property Trustee
By:
---------------------------
Authorized Signatory
C-2
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security to:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
agent to transfer this Preferred Security Certificate on the books of the Trust.
The agent may substitute another to act for him or her.
Date:
----------------------
Signature:
--------------------------
(Sign exactly as your name appears on the other side of this
Preferred Security Certificate)
C-3
<PAGE>
EXHIBIT D
IRREVOCABLE NOTICE OF CONVERSION
(pursuant to Section 4.3)
To: [ ]
as Property Trustee of
Superior Trust I
and Conversion Agent
The undersigned owner of these Preferred Securities hereby irrevocably
exercises the option to convert these Preferred Securities, or the portion below
designated, into Common Stock, par value $0.01 per share, of SUPERIOR TELECOM
INC. (the "Superior Common Stock") in accordance with the terms of the Amended
and Restated Declaration of Trust of Superior Trust I, dated as of __________,
1999 (the "Declaration"), among Superior TeleCom Inc., as Depositor, the
Trustees of the Trust named therein and the Holders, from time to time, of
undivided beneficial interests in the Trust to be issued pursuant to the
Declaration. Pursuant to the aforementioned exercise of the option to convert
these Preferred Securities, the undersigned hereby directs the Conversion Agent
to (i) exchange such Preferred Securities for a portion of the Debentures held
by the Trust (at the conversion rate specified in the terms of the Preferred
Securities set forth in the Declaration) and (ii) immediately convert such
Debentures on behalf of the undersigned into Superior Common Stock (at the
conversion rate specified in the terms of the Preferred Securities set forth in
the Declaration). Unless otherwise defined herein, capitalized terms used in
this Notice shall have the respective meanings assigned to such terms in the
Declaration.
The undersigned does also hereby direct the Conversion Agent that the
shares of Superior Common Stock issuable and deliverable upon conversion,
together with any check in payment for fractional shares, be issued in the name
of and delivered to the undersigned, unless a different name has been indicated
in the assignment below. If shares of Superior Common Stock are to be issued in
the name of a person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto.
D-1
<PAGE>
Date:
-----------------------
in whole in part
-------- -------
Number of Preferred Securities
to be converted: _____________________
If a name or names other than the
undersigned, please indicate in the
spaces below the name or names in which
the shares of Superior Common Stock are to
be issued, along with the address or
addresses of such person or persons
-------------------------------
-------------------------------
-------------------------------
-------------------------------
Signature (for conversion only)
Please Print or Type Name and
Address, Including Zip Code, and Social
Security or Other Identifying Number
-------------------------------
-------------------------------
-------------------------------
Signature Guarantee:*
- ------------------
* (Signature must be guaranteed by an institution which is a member of the
following recognized Signature Guaranty Programs: (i) The Securities
Transfer Agent Medallion Program (STAMP); (ii) the New York Stock Exchange
Medallion Program (MSP); (iii) The Stock Exchange Medallion Program (SEMP);
or (iv) such other guarantee programs acceptable to the Trustee.)
D-2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE 1
DEFINED TERMS................................................................................2
Section 1.1. Definitions...................................................................2
ARTICLE 2
ESTABLISHMENT OF THE TRUST...................................................................13
Section 2.1. Name..........................................................................13
Section 2.2. Office of the Delaware Trustee; Principal Place of Business...................13
Section 2.3. Organizational Expenses.......................................................13
Section 2.4. Subscription and Purchase of Debentures; Issuance of Trust Securities
.....................................................................................14
Section 2.5. Declaration of Trust; Intent Clause...........................................14
Section 2.6. Authorization to Enter into Certain Transactions..............................14
Section 2.7. Assets of Trust...............................................................18
Section 2.8. Title to Trust Property.......................................................18
ARTICLE 3
PROPERTY ACCOUNT.............................................................................19
Section 3.1. Property Account..............................................................19
ARTICLE 4
DISTRIBUTIONS; REDEMPTION; EXCHANGE; CONVERSION..............................................19
Section 4.1. Distributions.................................................................19
Section 4.2. Redemption....................................................................20
Section 4.3. Conversion....................................................................23
Section 4.4. Special Event Exchange........................................................25
Section 4.5. No Sinking Fund; Redemption upon Change of Control............................26
Section 4.6. Subordination of Common Securities............................................28
Section 4.7. Payment Procedures............................................................28
Section 4.8. Tax Returns and Reports.......................................................28
Section 4.9. Payment of Taxes, Duties, Etc. of the Trust...................................28
Section 4.10. Payments under Indenture......................................................28
ARTICLE 5
TRUST SECURITIES CERTIFICATES................................................................29
Section 5.1. Initial Ownership.............................................................29
Section 5.2. The Trust Securities Certificates.............................................29
Section 5.3. Delivery of Trust Securities Certificates.....................................29
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Section 5.4. Registration of Transfer and Exchange of Preferred Securities;
Restrictions on Transfer.............................................................30
Section 5.5. Mutilated, Destroyed, Lost or Stolen Trust Securities Certificates............30
Section 5.6. Persons Deemed Securityholders................................................31
Section 5.7. Access to List of Securityholders' Names and Addresses........................31
Section 5.8. Maintenance of Office or Agency...............................................32
Section 5.9. Appointment of Paying Agent...................................................32
Section 5.10. Ownership of Common Securities by Depositor...................................32
Section 5.11. Rights of Securityholders.....................................................33
ARTICLE 6
ACT OF SECURITYHOLDERS; MEETINGS; VOTING;
AMENDMENT OF THE DECLARATION.................................................................33
Section 6.1. Limitations on Voting Rights..................................................33
Section 6.2. Additional Voting Rights......................................................36
Section 6.3. Notice of Meetings............................................................37
Section 6.4. Meetings of Holders of Preferred Securities...................................37
Section 6.5. Voting Rights.................................................................38
Section 6.6. Proxies, Etc..................................................................38
Section 6.7. Securityholder Action by Written Consent......................................38
Section 6.8. Record Date for Voting and Other Purposes; Discretion of Property
Trustee Relating to Meetings of Holders..............................................38
Section 6.9. Acts of Securityholders.......................................................39
Section 6.10. Inspection of Records.........................................................40
ARTICLE 7
REPRESENTATIONS AND WARRANTIES...............................................................40
Section 7.1. Representations and Warranties of the Property Trustee and the
Delaware Trustee.....................................................................40
Section 7.2. Representations and Warranties of Depositor...................................41
ARTICLE 8
THE TRUSTEES.................................................................................42
Section 8.1. Certain Duties and Responsibilities...........................................42
Section 8.2. Notice of Defaults............................................................43
Section 8.3. Certain Rights of Property Trustee............................................45
Section 8.4. Not Responsible for Recitals or Issuance of Securities........................48
Section 8.5. May Hold Securities...........................................................48
Section 8.6. Compensation; Indemnity; Fees.................................................48
Section 8.7. Property Trustee Required; Eligibility of Trustees............................49
Section 8.8. Disqualification: Conflicting Interest........................................50
Section 8.9. Resignation and Removal; Appointment of Successor.............................50
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
Section 8.10. Acceptance of Appointment by Successor........................................52
Section 8.11. Merger, Conversion, Consolidation or Succession to Business...................52
Section 8.12. Preferential Collection of Claims Against Depositor or Trust..................53
Section 8.13. Reports by Property Trustee...................................................53
Section 8.14. Reports to the Property Trustee...............................................53
Section 8.15. Evidence of Compliance with Conditions Precedent..............................54
Section 8.16. Number of Trustees............................................................54
Section 8.17. Delegation of Power...........................................................54
ARTICLE 9
DISSOLUTION, LIQUIDATION, TERMINATION AND MERGER.............................................55
Section 9.1. Dissolution upon Expiration Date..............................................55
Section 9.2. Early Dissolution.............................................................55
Section 9.3. Termination...................................................................55
Section 9.4. Liquidation...................................................................55
Section 9.5. Mergers, Consolidations, Amalgamations or Replacements of the Trust
.....................................................................................57
ARTICLE 10
MISCELLANEOUS PROVISIONS.....................................................................58
Section 10.1. Limitation of Rights of Securityholders.......................................58
Section 10.2. Amendment.....................................................................58
Section 10.3. Separability..................................................................58
Section 10.4. GOVERNING LAW.................................................................59
Section 10.5. Payments Due on Non-Business Day..............................................59
Section 10.6. Successors....................................................................59
Section 10.7. Headings......................................................................59
Section 10.8. Reports, Notices and Demands..................................................60
Section 10.9. Agreement Not to Petition.....................................................60
Section 10.10. Trust Indenture Act; Conflict with Trust Indenture Act........................60
Section 10.11. ACCEPTANCE OF TERMS OF DECLARATION, GUARANTEE
AND INDENTURE........................................................................61
Section 10.12. Counterparts..................................................................61
EXHIBIT A........................................................................................A-1
EXHIBIT B........................................................................................B-1
EXHIBIT C........................................................................................C-1
ASSIGNMENT.......................................................................................C-3
EXHIBIT D........................................................................................D-1
</TABLE>
iii
<PAGE>
EXHIBIT 4.3
SUPERIOR TELECOM INC.
to
[ ]
as Indenture Trustee
INDENTURE
Dated as of ____________, 1999
8 1/2% CONVERTIBLE SUBORDINATED DEBENTURES
DUE 2014
<PAGE>
RECONCILIATION AND TIE
This reconciliation and tie is between the Trust Indenture Act of 1939,
as amended (including cross-references to provisions of Section 310 to and
including 317 which, pursuant to Section 318(c) of the Trust Indenture Act of
1939, as amended by the Trust Reform Act of 1990, are a part of and govern the
Indenture whether or not physically contained therein), and the Indenture, dated
as of ___________, 1999.
<PAGE>
<TABLE>
<CAPTION>
TRUST INDENTURE ACT SECTION INDENTURE SECTION
<S> <C>
(Section) 310(a)(1), (2) and (5)...........................................6.9
(a)(3)..........................................................Not Applicable
(a)(4)..........................................................Not Applicable
(b)........................................................................6.8
(c).............................................................Not Applicable
(Section) 311(a)..........................................................6.13
(b).......................................................................6.13
(b)(2)..................................................................7.3(a)
(c).............................................................Not Applicable
(Section) 312(a)...........................................................7.1
(b).....................................................................7.2(b)
(c).....................................................................7.2 c)
(Section) 313 (a)...............................................7.3(a); 7.3(b)
(b).....................................................................7.3(a)
(c).....................................................................7.3(a)
(d).....................................................................7.3(c)
(Section) 314(a)(1), (2), (3) and (4)......................................7.4
(b).............................................................Not Applicable
(c) (1)....................................................................1.2
(c) (2)....................................................................1.2
(c) (3).........................................................Not Applicable
(d).............................................................Not Applicable
(e)........................................................................1.2
(f).............................................................Not Applicable
(Section) 315(a)........................................................6.1(a)
(b)........................................................................6.2
(c).....................................................................6.1(b)
(d).....................................................................6.1(c)
(d) (1).................................................................6.1(a)
(d) (2).............................................................6.l(c)(ii)
(e).......................................................................5.14
(Section) 316 (a).........................................................5.12
(a)(1)(A).................................................................5.13
(a)(1)(B).................................................................5.13
(a)(2)..........................................................Not Applicable
(b)........................................................................5.8
(c).....................................................................1.4(f)
(Section) 317(a)(1)........................................................5.3
(a)(2).....................................................................5.4
(b).......................................................................10.3
(Section) 318(a)...........................................................1.7
</TABLE>
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
-i-
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C> <C>
ARTICLE 1.
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION............. 1
SECTION 1.1 DEFINITIONS......................................... 1
SECTION 1.2 COMPLIANCE CERTIFICATE AND OPINIONS................. 11
SECTION 1.3 FORMS OF DOCUMENTS DELIVERED TO INDENTURE TRUSTEE... 12
SECTION 1.4 ACTS OF HOLDERS..................................... 13
SECTION 1.5 NOTICES, ETC. TO INDENTURE TRUSTEE AND COMPANY...... 14
SECTION 1.6 NOTICE TO HOLDERS; WAIVER........................... 14
SECTION 1.7 CONFLICT WITH TRUST INDENTURE ACT................... 14
SECTION 1.8 EFFECT OF HEADINGS AND TABLE OF CONTENTS............ 14
SECTION 1.9 SUCCESSORS AND ASSIGNS.............................. 15
SECTION 1.10 SEPARABILITY CLAUSE................................. 15
SECTION 1.11 BENEFITS OF INDENTURE............................... 15
SECTION 1.12 GOVERNING LAW....................................... 15
SECTION 1.13 NON-BUSINESS DAYS................................... 15
SECTION 1.14 NO RECOURSE AGAINST OTHERS.......................... 15
SECTION 1.15 DUPLICATE ORIGINALS................................. 15
ARTICLE 2.
DEBENTURE FORM...................................................... 15
SECTION 2.1 FORMS GENERALLY..................................... 15
SECTION 2.2 FORM OF FACE OF DEBENTURE........................... 16
SECTION 2.3 FORM OF REVERSE OF DEBENTURE........................ 17
SECTION 2.4 FORM OF INDENTURE TRUSTEE'S CERTIFICATE OF
AUTHENTICATION...................................................... 23
SECTION 2.5 INITIAL ISSUANCE TO PROPERTY TRUSTEE................ 23
ARTICLE 3.
THE DEBENTURES...................................................... 23
SECTION 3.1 TITLE AND AMOUNT OF DEBENTURES...................... 23
SECTION 3.2 DENOMINATIONS....................................... 24
SECTION 3.3 EXECUTION, AUTHENTICATION, DELIVERY AND DATING...... 24
SECTION 3.4 TEMPORARY DEBENTURES................................ 24
SECTION 3.5 REGISTRATION, TRANSFER AND EXCHANGE................. 25
SECTION 3.6 MUTILATED, DESTROYED, LOST AND STOLEN DEBENTURES.... 26
SECTION 3.7 PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED...... 26
SECTION 3.8 PERSONS DEEMED OWNERS............................... 27
SECTION 3.9 CANCELLATION........................................ 27
SECTION 3.10 COMPUTATION OF INTEREST............................. 28
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C> <C> <C>
SECTION 3.11 DEFERRALS OF INTEREST PAYMENT DATES................. 28
SECTION 3.12 RIGHT OF SET-OFF.................................... 29
SECTION 3.13 AGREED TAX TREATMENT................................ 29
SECTION 3.14 CUSIP NUMBERS....................................... 29
SECTION 3.15 DISTRIBUTION OF DEBENTURES.......................... 29
ARTICLE 4.
SATISFACTION AND DISCHARGE.......................................... 30
SECTION 4.1 SATISFACTION AND DISCHARGE OF INDENTURE............. 30
SECTION 4.2 APPLICATION OF TRUST MONEY.......................... 31
ARTICLE 5.
REMEDIES............................................................ 31
SECTION 5.1 EVENTS OF DEFAULT................................... 31
SECTION 5.2 ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.. 33
SECTION 5.3 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT
BY INDENTURE TRUSTEE............................... 34
SECTION 5.4 INDENTURE TRUSTEE MAY FILE PROOFS OF CLAIM.......... 34
SECTION 5.5 INDENTURE TRUSTEE MAY ENFORCE CLAIM WITHOUT
POSSESSION OF DEBENTURES........................... 35
SECTION 5.6 APPLICATION OF MONEY COLLECTED...................... 35
SECTION 5.7 LIMITATION ON SUITS................................. 36
SECTION 5.8 UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL,
PREMIUM AND INTEREST............................... 36
SECTION 5.9 RESTORATION OF RIGHTS AND REMEDIES.................. 37
SECTION 5.10 RIGHTS AND REMEDIES CUMULATIVE...................... 37
SECTION 5.11 DELAY OR OMISSION NOT WAIVER........................ 37
SECTION 5.12 CONTROL BY HOLDERS.................................. 37
SECTION 5.13 WAIVER OF PAST DEFAULTS............................. 38
SECTION 5.14 UNDERTAKING FOR COSTS............................... 38
ARTICLE 6.
THE INDENTURE TRUSTEE............................................... 38
SECTION 6.1 CERTAIN DUTIES AND RESPONSIBILITIES................. 38
SECTION 6.2 NOTICE OF DEFAULTS.................................. 39
SECTION 6.3 CERTAIN RIGHTS OF INDENTURE TRUSTEE................. 40
SECTION 6.4 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF
DEBENTURES......................................... 41
SECTION 6.5 MAY HOLD DEBENTURES................................. 41
SECTION 6.6 MONEY HELD IN TRUST................................. 41
SECTION 6.7 COMPENSATION AND REIMBURSEMENT...................... 41
SECTION 6.8 DISQUALIFICATION; CONFLICTING INTERESTS............. 42
SECTION 6.9 CORPORATE INDENTURE TRUSTEE REQUIRED; ELIGIBILITY... 42
SECTION 6.10 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR... 43
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C> <C> <C>
SECTION 6.11 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.............. 44
SECTION 6.12 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION
TO BUSINESS........................................ 45
SECTION 6.13 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY... 45
SECTION 6.14 APPOINTMENT OF AUTHENTICATING AGENT................. 46
ARTICLE 7.
HOLDERS LISTS AND REPORTS BY INDENTURE TRUSTEE AND COMPANY.......... 47
SECTION 7.1 COMPANY TO FURNISH NAMES AND ADDRESSES OF HOLDERS... 47
SECTION 7.2 PRESERVATION OF INFORMATION; COMMUNICATIONS TO
HOLDERS............................................ 47
SECTION 7.3 REPORTS BY INDENTURE TRUSTEE........................ 48
SECTION 7.4 REPORTS BY COMPANY.................................. 48
ARTICLE 8.
CONSOLIDATION, MERGER, CONTINUANCE,
CONVEYANCE, TRANSFER OR LEASE....................................... 49
SECTION 8.1 COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN
TERMS.............................................. 49
SECTION 8.2 SUCCESSOR PERSON SUBSTITUTED........................ 49
ARTICLE 9.
SUPPLEMENTAL INDENTURES............................................. 50
SECTION 9.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.. 50
SECTION 9.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS..... 51
SECTION 9.3 EXECUTION OF SUPPLEMENTAL INDENTURES................ 52
SECTION 9.4 EFFECT OF SUPPLEMENTAL INDENTURES................... 52
SECTION 9.5 CONFORMITY WITH TRUST INDENTURE ACT................. 52
SECTION 9.6 REFERENCE IN DEBENTURES TO SUPPLEMENTAL INDENTURES.. 52
ARTICLE 10.
COVENANTS........................................................... 53
SECTION 10.1 PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.......... 53
SECTION 10.2 MAINTENANCE OF OFFICE OR AGENCY..................... 53
SECTION 10.3 MONEY FOR DEBENTURE PAYMENTS TO BE HELD IN TRUST.... 53
SECTION 10.4 EXISTENCE........................................... 55
SECTION 10.5 ADDITIONAL SUMS..................................... 55
SECTION 10.6 ADDITIONAL COVENANTS................................ 55
ARTICLE 11.
REDEMPTION OR EXCHANGE OF DEBENTURES................................ 56
</TABLE>
-iii-
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C> <C> <C>
SECTION 11.1 ELECTION TO REDEEM; NOTICE TO INDENTURE TRUSTEE..... 56
SECTION 11.2 SELECTION OF DEBENTURES TO BE REDEEMED.............. 56
SECTION 11.3 NOTICE OF REDEMPTION................................ 56
SECTION 11.4 DEPOSIT OF REDEMPTION PRICE......................... 57
SECTION 11.5 DEBENTURES PAYABLE ON REDEMPTION DATE............... 57
SECTION 11.6 DEBENTURES REDEEMED IN PART......................... 58
SECTION 11.7 OPTIONAL REDEMPTION................................. 58
SECTION 11.8 EXCHANGE OF TRUST SECURITIES FOR DEBENTURES......... 59
SECTION 11.9 NO SINKING FUND; REDEMPTION UPON CHANGE OF CONTROL.. 60
ARTICLE 12.
SUBORDINATION OF DEBENTURES......................................... 61
SECTION 12.1 DEBENTURES SUBORDINATE TO SENIOR DEBT............... 61
SECTION 12.2 PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC...... 61
SECTION 12.3 SUSPENSION OF PAYMENT WHEN SENIOR DEBT IN DEFAULT... 62
SECTION 12.4 INDENTURE TRUSTEE'S RELATION TO SENIOR DEBT......... 63
SECTION 12.5 SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR DEBT..... 63
SECTION 12.6 PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS......... 64
SECTION 12.7 INDENTURE TRUSTEE TO EFFECTUATE SUBORDINATION....... 64
SECTION 12.8 NO WAIVER OF SUBORDINATION PROVISIONS............... 64
SECTION 12.9 NOTICE TO INDENTURE TRUSTEE......................... 65
SECTION 12.10 RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF
LIQUIDATING AGENT.................................. 66
SECTION 12.11 RIGHTS OF INDENTURE TRUSTEE AS A HOLDER OF SENIOR
DEBT; PRESERVATION OF INDENTURE TRUSTEE'S RIGHTS... 66
SECTION 12.12 ARTICLE APPLICABLE TO PAYING AGENTS. ............... 66
ARTICLE 13.
CONVERSION OF DEBENTURES............................................ 66
SECTION 13.1 CONVERSION RIGHTS................................... 66
SECTION 13.2 CONVERSION PROCEDURES............................... 67
SECTION 13.3 CONVERSION PRICE ADJUSTMENTS........................ 70
SECTION 13.4 FUNDAMENTAL CHANGE.................................. 72
SECTION 13.5 NOTICE OF ADJUSTMENTS OF CONVERSION PRICE........... 72
SECTION 13.6 PRIOR NOTICE OF CERTAIN EVENTS...................... 73
SECTION 13.7 CIRCUMSTANCES NOT REQUIRING CONVERSION RATE
ADJUSTMENT......................................... 73
SECTION 13.8 INDENTURE TRUSTEE'S DISCLAIMER...................... 73
</TABLE>
-iv-
<PAGE>
THIS INDENTURE, dated as of _________, 1999 between SUPERIOR TELECOM INC.,
a Delaware corporation (hereinafter called the "Company") having its principal
office at 1790 Broadway, New York, New York 10019, and [ ], a [ ]
banking corporation, as Indenture Trustee (hereinafter called the "Indenture
Trustee").
RECITALS OF THE COMPANY
WHEREAS, The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance of its 8 1/2% Convertible Subordinated
Debentures due 2014 (hereinafter called the "Debentures") as hereinafter
provided in consideration for the issuance by Superior Trust I, a Delaware
statutory business trust (the "Trust"), of preferred undivided beneficial
interests in the assets of the Trust (the "Preferred Securities") and common
undivided beneficial interests in the assets of the Trust (the "Common
Securities"), and to provide the terms and conditions upon which the Debentures
are to be authenticated, issued and delivered.
WHEREAS, all things necessary to make the Debentures, when executed by the
Company, authenticated and delivered by the Indenture Trustee hereunder and duly
issued by the Company, the valid obligations of the Company, and to make this
Indenture a valid agreement of the Company, in accordance with their and its
respective terms, have been done.
NOW THEREFORE:
In consideration of the agreements and obligations set forth herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, each party, for the benefit of the other party hereto, and
for the benefit of the Holders of the Debentures, agrees as follows:
ARTICLE 1.
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.1 DEFINITIONS. For all purposes of this Indenture, except as
otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to them in
this Article and include the plural as well as the singular;
(b) all other terms used herein which are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to them
therein;
(c) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles,
and the term "generally accepted accounting principles," with respect to any
computation required or permitted hereunder, shall mean such accounting
principles which are generally accepted at the date or time of such computation;
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(d) the words "herein," "hereof" and "hereunder" and other words of similar
import refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision;
(e) unless the context otherwise requires, any reference to an "Article" or
a "Section" refers to an Article or Section, as the case may be, of this
Indenture;
(f) "or" is not exclusive;
(g) provisions apply to successive events and transactions; and
(h) each reference herein to a rule or form of the Commission shall mean
such rule or form and any rule or form successor thereto, in each case as
amended from time to time.
"ACT", when used with respect to any Holder, has the meaning specified in
Section 1.4.
"ADDITIONAL INTEREST" means the interest, if any, that shall accrue on
any interest on the Debentures that is (i) in arrears for more than one
interest payment period or (ii) not paid during any Extension Period, which
in either case (to the extent permitted by law) shall accrue at the stated
rate per annum specified or determined as specified in such Debenture;
provided, however, that with respect to the foregoing clause (i), Additional
Interest shall accrue only for such interest payment periods, or any part
thereof, occurring from and after the Liquidation Date.
"ADDITIONAL SUMS" has the meaning specified in Section 10.5.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person; provided, however, that an Affiliate of the
Company shall not be deemed to include the Trust. For the purposes of this
definition, "control" when used with respect to any specified Person means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by contract or otherwise; provided, however,
that beneficial ownership of 10% or more of the Voting Stock of an entity will
be deemed to be control. The terms "controlling" and "controlled" have meanings
correlative to "control."
"AUTHENTICATING AGENT" means any Person authorized by the Indenture Trustee
pursuant to Section 6.14 to act on behalf of the Indenture Trustee to
authenticate Debentures.
"BOARD OF DIRECTORS" means either the board of directors of the Company or
any committee thereof duly authorized to act hereunder.
"BOARD RESOLUTION" means a copy of the resolution certified by the
Secretary of the Company to have been duly adopted by the Board of Directors, or
such committee of the Board of Directors or officers of the Company to which
authority to act on behalf of the Board of
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Directors has been delegated, and to be in full force and effect on the date of
such certification, and delivered to the Indenture Trustee.
"BUSINESS DAY" means any day other than a Saturday or Sunday or a day on
which banking institutions in the City of New York are authorized or required by
law or executive order to remain closed or a day on which the Corporate Trust
Office of the Indenture Trustee, or the corporate trust office of the Property
Trustee under the Declaration, is closed for business.
"CAPITAL LEASE OBLIGATION" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
generally accepted accounting principles.
"CAPITAL STOCK" means, with respect to any Person, any and all shares,
interests, participations, rights in or other equivalents (however designated)
of such Person's capital stock, and any rights (other than debt securities
convertible into capital stock), warrants or options exchangeable for or
convertible into such capital stock.
"CHANGE IN 1940 ACT LAW" has the meaning specified in the definition of
Investment Company Event.
"CHANGE OF CONTROL" means the occurrence of any of the following events:
(A) any "person" or "group" (as such terms are used in Sections
13(d) and 14(d) of the Exchange Act), other than The Alpine Group, Inc., a
Delaware corporation, or its Affiliates (the "PERMITTED HOLDERS"), becomes
the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act), directly or indirectly, of more than 50% of the total
voting power represented by the outstanding Capital Stock of the Company
pursuant to which the holders thereof have the general voting power under
ordinary circumstances to elect at least a majority of the Board of
Directors (irrespective of whether or not at the time the stock of any
other class shall or might have voting power by reason of the happening of
any contingency) ("VOTING STOCK");
(B) the Company consolidates with, or merges with or into, another
entity or conveys, transfers, leases or otherwise disposes of all or
substantially all of its assets to any person or entity, or any entity
consolidates with, or merges with or into, the Company, in any such event
pursuant to a transaction in which the outstanding Voting Stock of the
Company is converted into or exchanged for cash, securities or other
property, other than any such transaction where (I) the outstanding Voting
Stock of the Company is not converted or exchanged at all (except to the
extent necessary to reflect a change in the jurisdiction of incorporation
of the Company) or is converted into or exchanged for Voting Stock of the
surviving or transferee corporation and (II) immediately after such
transaction, the condition described in (A) above has not occurred with
respect to the outstanding Voting Stock of the surviving or transferee
corporation;
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(C) during any consecutive two-year period, individuals who at the
beginning of such period constituted the Board of Directors (together with
any new directors whose election by the Board of Directors or whose
nomination for election by the stockholders of the Company was approved by
(x) a vote of at least a majority of the directors then still in office
who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved (as
described in this clause (x) or in the following clause (y)) or (y) the
Permitted Holders) cease for any reason to constitute a majority of the
Board of Directors then in office; or
(D) the Company is liquidated or dissolved or adopts a plan of
liquidation or dissolution.
"CHANGE OF CONTROL OFFER" has the meaning specified in Section 11.9.
"CHANGE OF CONTROL PURCHASE DATE" has the meaning specified in Section
11.9.
"CHANGE OF CONTROL REDEMPTION PRICE" has the meaning specified in Section
11.9.
"CLOSING PRICE", with respect to the Common Stock of the Company, means for
each day the last reported sales price, regular way or, in case no sale takes
place on such day, the average of the closing bid and asked prices regular way
on such day, in either case as reported on The New York Stock Exchange Composite
Tape, or, if the Common Stock is not listed or admitted to trading on the New
York Stock Exchange, on the principal national securities exchange on which the
Common Stock is listed or admitted to trading, or, if not listed or admitted to
trading on any national securities exchange, on the Nasdaq National Market, or,
if not admitted for quotation on the Nasdaq National Market, the average of the
high bid and low asked prices on such day as recorded by The Nasdaq Stock
Market, or, if The Nasdaq Stock Market shall not have reported any bid and asked
prices for the Common Stock on such day, the average of the bid and asked prices
for such day as furnished by any New York Stock Exchange member firm selected
from time to time by the Company for such purpose, or, if no such bid and asked
prices can be obtained from any such firm, the fair market value of the Common
Stock on such day as determined in good faith by the Board of Directors. Such
determination by the Board of Directors shall be conclusive.
"COMMISSION" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"COMMODITY AGREEMENT" means any commodity purchase agreement, commodity
swap agreement or other similar agreement of any Person designed to protect such
Person or any of its Subsidiaries against fluctuations in commodity values.
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"COMMON SECURITIES" has the meaning specified in the first recital of this
Indenture.
"COMMON STOCK" means common stock, par value $0.01 per share, of the
Company or shares of any class or classes resulting from any reclassification or
reclassifications thereof and which have no preference in respect of dividends
or of amounts payable in the event of any voluntary or involuntary liquidation,
dissolution or winding-up of the Company and which are not subject to redemption
by the Company.
"COMPANY" means the Person named as the "Company" in the introductory
paragraph of this Indenture until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"COMPANY REQUEST" and "Company Order" means, respectively, the written
request or order signed in the name of the Company by its Chairman of the Board,
its President, any Vice President, its Treasurer, its Controller or its
Secretary, and delivered to the Indenture Trustee.
"CONVERSION AGENT" has the meaning specified in Section 13.2(a).
"CONVERSION DATE" has the meaning specified in Section 13.2(c).
"CONVERSION RATE" has the meaning specified in Section 13.1.
"CORPORATE TRUST OFFICE" means the principal corporate trust office of the
Indenture Trustee at which at any particular time its corporate trust business
shall be administered, which office at the date hereof is located at
_______________________________.
"CURRENCY AGREEMENT" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement of any Person designed to
protect such Person or any of its Subsidiaries against fluctuations in currency
values.
"CURRENT MARKET PRICE" has the meaning specified in Section 13.3.
"DEBENTURES" or "DEBENTURE" means any debt securities or debt security, as
the case may be, authenticated and delivered under this Indenture.
"DEBT" means, with respect to any Person, without duplication, (i) all
liabilities, contingent or otherwise, of such Person (a) for borrowed money
(whether or not the recourse of the lender is to the whole of the assets of such
Person or only to a portion thereof), (b) evidenced by bonds, notes, debentures,
drafts accepted or similar instruments or letters of credit or representing the
balance deferred and unpaid of the purchase price of any property or (c) for the
payment of money relating to a Capital Lease Obligation; (ii) obligations under
reimbursement agreements of such Person with respect to letters of credit; (iii)
obligations of such Person with respect to Interest Rate Agreements, Currency
Agreements or Commodity Agreements; (iv) all
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liabilities of others of the kind described in the preceding clauses (i), (ii)
or (iii) that (a) such Person has guaranteed, (b) have been incurred by a
partnership in which it is a general partner (to the extent such Person is
liable, contingently or otherwise therefor) or (c) are otherwise its legal
liability (other than endorsements for collection in the ordinary course of
business); and (v) all obligations of others secured by a Lien to which any of
the properties or assets (including, without limitation, leasehold interests and
any other tangible or intangible property rights) of such Person are subject,
whether or not the obligations secured thereby shall have been assumed by such
Person or shall otherwise be such Person's legal liability.
"DECLARATION" means the Declaration of Trust for the Trust pursuant to
which the Preferred Securities and Common Securities were issued, substantially
in the form attached hereto as Annex A, as amended from time to time.
"DEFAULT" means any event that after notice or passage of time, or both,
would be an Event of Default.
"EVENT OF DEFAULT" has the meaning specified in Section 5.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"EXTENSION PERIOD" has the meaning specified in Section 3.11.
"GUARANTEE" means the Guarantee Agreement executed and delivered by the
Company and _______, a _______ banking corporation, as guarantee trustee, for
the benefit of the holders of the Preferred Securities, substantially in the
form attached hereto as Annex B, as amended from time to time.
"HOLDER" means a Person in whose name a Debenture is registered in the
Securities Register.
"INDENTURE" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof, including, for
all purposes of this instrument and any such supplemental indenture, the
provisions of the Trust Indenture Act that are deemed to be a part of and govern
this instrument and any such supplemental indenture, respectively.
"INDENTURE TRUSTEE" means the Person named as the "Indenture Trustee" in
the introductory paragraph of this instrument until a successor Indenture
Trustee shall have become such pursuant to the applicable provisions of this
Indenture, and thereafter "Indenture Trustee" shall mean such successor
Indenture Trustee, and shall include each Person who is then an Indenture
Trustee hereunder if at any time there is more than one such Person.
"INTEREST PAYMENT DATE" means as to the Debentures the Stated Maturity of
an installment of interest on such Debentures.
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"INTEREST RATE AGREEMENT" means any swap agreement, interest rate cap or
collar agreement or other similar agreement or arrangement of any Person
designed to protect such Person or any of its Subsidiaries against fluctuations
in interest rates.
"INVESTMENT COMPANY EVENT" means, in respect of the Trust, the receipt by
the Property Trustee, on behalf of the Trust, of an Opinion of Counsel, rendered
by a law firm having a recognized national tax and securities practice (which
opinion shall not have been rescinded by such law firm), to the effect that, as
a result of the occurrence of a change in law or regulation or a change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in 1940 Act Law"),
there is more than an insubstantial risk that the Trust is or will be considered
an "investment company" that is required to be registered under the 1940 Act,
which Change in 1940 Act Law becomes effective on or after the date hereof.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"LIQUIDATION DATE" means each date on which Debentures are to be
distributed to holders of Trust Securities in connection with a termination and
liquidation of the Trust pursuant to Section 9.4 of the Declaration.
"MATURITY" when used with respect to the Debentures, means the date on
which the principal of the Debentures becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
"1940 ACT" means the Investment Company Act of 1940, as amended and the
rules promulgated thereunder.
"NON-PAYMENT EVENT OF DEFAULT" means any event (other than a Payment
Default) the occurrence of which entitles one or more Persons (whether or not
dependent upon the giving of notice, the lapse of time or both or any other
condition) to accelerate the maturity of any Senior Debt.
"NOTICE OF CONVERSION" means the notice given by a holder of Trust
Securities to the Conversion Agent directing the Conversion Agent to exchange
such holder's Trust Securities for Debentures and to convert such Debentures
into Common Stock on behalf of such holder, or the notice given by a Holder of
Debentures to the Conversion Agent directing the Conversion Agent to convert
such Holder's Debentures into Common Stock, as the case may be.
"NOTICE OF DEFAULT" has the meaning specified in Section 5.2.
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"OFFICER'S CERTIFICATE" means a certificate signed by the Chairman of the
Board of Directors, the President, the Chief Executive Officer, any Vice
President, the Chief Financial Officer or the Secretary of the Company, and
delivered to the Indenture Trustee.
"OPINION OF COUNSEL" means a written opinion of counsel, who may be counsel
for the Company, the Trust, or the Indenture Trustee, and who also may be an
employee thereof, and who shall be reasonably acceptable to the Indenture
Trustee.
"OUTSTANDING" means, as of the date of determination, all Debentures
theretofore authenticated and delivered under this Indenture, except:
(i) Debentures theretofore canceled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation or tendered for
conversion;
(ii) Debentures for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Indenture Trustee
or any Paying Agent (other than the Company or any Affiliate of the
Company) for the Holders of such Debentures; provided, however, that, if
such Debentures are to be redeemed, notice of such redemption has been
duly given pursuant to this Indenture; and
(iii) Debentures in substitution for or in lieu of which other
Debentures have been authenticated and delivered or which have been paid
pursuant to Section 3.6, or which have been converted into Common Stock
pursuant to Section 13.1, unless proof satisfactory to the Indenture
Trustee is presented that any Debentures are held by Holders in whose
hands such Debentures are valid, binding and legal obligations of the
Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Debentures have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Debentures owned
by the Company or any other obligor upon the Debentures or any Affiliate of the
Company or such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Indenture Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Debentures which the Indenture Trustee actually
knows to be so owned shall be so disregarded. Debentures so owned which have
been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Indenture Trustee the pledgee's right so
to act with respect to such Debentures and that the pledgee is not the Company
or any other obligor upon the Debentures or any Affiliate of the Company or such
other obligor.
"PAYING AGENT" means the Indenture Trustee or any Person authorized by the
Company to pay the principal of (premium, if any) or interest on any Debentures
on behalf of the Company.
"PAYMENT DEFAULT" means any default, whether or not dependent upon the
giving of notice, the lapse of time or both, or any other condition to such
default becoming an Event of
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Default, in the payment of principal of (or premium, if any) or interest on or
any other amount payable in connection with Senior Debt.
"PERMITTED HOLDERS" has the meaning specified in the definition of Change
of Control.
"PERSON" means any individual, corporation, partnership, joint venture,
limited liability company, association, joint stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or other entity.
"PREDECESSOR DEBENTURE" of any particular Debenture means every previous
Debenture evidencing all or a portion of the same debt as that evidenced by such
particular Debenture, and, for the purposes of this definition, any Debenture
authenticated and delivered under Section 3.6 in lieu of a lost, destroyed or
stolen Debenture shall be deemed to evidence the same debt as the lost,
destroyed or stolen Debenture.
"PREFERRED SECURITIES" has the meaning specified in the first recital of
this Indenture.
"PROPERTY TRUSTEE" means, in respect of the Trust, the Person identified as
the "Property Trustee" in the Declaration, solely in its capacity as Property
Trustee of the Trust under the Declaration and not in its individual capacity,
or its successor in interest in such capacity, or any successor property trustee
appointed as therein provided.
"REDEMPTION DATE", when used with respect to any Debenture to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"REDEMPTION PRICE", when used with respect to any Debenture to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"REGULAR RECORD DATE" means for the interest payable on any Interest
Payment Date the fifteenth day next preceding such Interest Payment Date.
"REPRESENTATIVE" means any representative or agent acting as such on behalf
of the holders of Senior Debt.
"RESPONSIBLE OFFICER" when used with respect to the Indenture Trustee means
any officer of the Indenture Trustee within the Corporate Trust Office of the
Indenture Trustee with direct responsibility for the administration of this
Indenture and also means, with respect to a particular corporate trust matter,
any other officer of the Indenture Trustee to whom such matter is referred
because of that officer's knowledge of and familiarity with the particular
subject.
"SECURITIES REGISTER" and "SECURITIES REGISTRAR" have the respective
meanings specified in Section 3.5.
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"SENIOR DEBT" means all monetary obligations (including with respect to the
principal, premium, if any, interest (including interest accruing subsequent to
the filing of a petition in bankruptcy or insolvency at the rate specified in
the document relating to such Senior Debt, whether or not such interest is an
allowed claim permitted to be enforced against the Company under applicable
law), fees, penalties, expenses, indemnities, damages or other liabilities) (i)
under the Senior Secured Credit Agreement (including any Commodity Agreement,
Currency Agreement or Interest Rate Agreement in respect of monetary obligations
under the Senior Secured Credit Agreement) and (ii) on any other indebtedness or
other obligations of the Company, whether outstanding on the date hereof or
hereafter created, incurred or assumed; provided that the indebtedness or other
obligations under clause (ii) above shall constitute Senior Debt only to the
extent such indebtedness or other obligations are secured by interests in
property or assets and the chief financial officer of the Company delivers a
certificate to the Indenture Trustee at the time of the incurrence of such
indebtedness or other obligations stating that, after due inquiry, such
indebtedness or other obligations are secured by interests in property or assets
which have, and such officer has no reason to believe that such property or
assets will not continue to have, a fair market value that equals or exceeds the
principal amount of such indebtedness or other obligations, giving due regard to
the type and amount of any other indebtedness secured by such property or assets
(such certificate constituting conclusive evidence, binding for all purposes,
that such indebtedness or other obligations are secured).
"SENIOR SECURED CREDIT AGREEMENT" means the Amended and Restated Credit
Agreement, dated as of November 27, 1998, among Superior/Essex Corp., Essex
Group, Inc., the guarantors named therein (including, without limitation, the
Company), the lenders party thereto in their capacities as lenders thereunder,
Bankers Trust Company, as administrative agent, Merrill Lynch & Co., as
documentation agent, and Fleet National Bank, as syndication agent, together
with the related documents thereto (including, without limitation, any guarantee
agreements and security documents), in each case as such agreements may be
amended (including any amendment and restatement thereof), supplemented or
otherwise modified from time to time, including any agreement extending the
maturity of, refinancing, replacing or otherwise restructuring (including
increasing the amount of available borrowings thereunder or adding subsidiaries
as additional borrowers or guarantors thereunder) all or any portion of the
indebtedness and other obligations under such agreement or any successor or
replacement agreement and whether by the same or any other agent, lender or
group of lenders.
"SENIOR SUBORDINATED CREDIT AGREEMENT" means the Senior Subordinated Credit
Agreement, dated as of November 27, 1998, among Superior/Essex Corp., as
borrower, the guarantors named therein (including, without limitation, the
Company), the lenders party thereto in their capacities as lenders thereunder,
Bankers Trust Company, as administrative agent, and Fleet Corporate Finance,
Inc., as syndication agent, together with the related documents thereto
(including, without limitation, any guarantee agreements), in each case as such
agreements may be amended (including any amendment and restatement thereof),
supplemented or otherwise modified from time to time, including any agreement
extending the maturity of, refinancing, replacing or otherwise restructuring
(including increasing the amount of available borrowings thereunder or adding
subsidiaries as additional borrowers or guarantors thereunder) all or any
portion of the indebtedness and other obligations under such agreement or
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any successor or replacement agreement and whether by the same or any other
agent, lender or group of lenders.
"SPECIAL EVENT" means a Tax Event or an Investment Company Event.
"STATED MATURITY" means, when used with respect to any Debenture or any
installment of principal thereof or interest thereon, the date specified in such
Debenture or this Indenture as the fixed date on which any principal of such
Debenture or such installment of interest is due and payable, and when used with
respect to any other Debt or any installment of interest thereon, means any date
specified in the instrument governing such Debt as the fixed date on which the
principal of such Debt, or such installment of interest thereon, is due and
payable.
"SUBSIDIARY", with respect to any Person, means (i) any corporation of
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
(without regard to the occurrence of any contingency) shall at the time be
owned, directly or indirectly, by such Person or (ii) any other Person of which
at least a majority of the voting interests under ordinary circumstances is at
the time owned, directly or indirectly, by such Person.
"TAX EVENT" means the receipt by the Property Trustee, on behalf of the
Trust, of an Opinion of Counsel, rendered by a law firm having a national tax
and securities practice (which opinion shall not have been rescinded by such law
firm), to the effect that, as a result of any amendment to, or change (including
any announced prospective change) in, the laws (or any regulations thereunder)
of the United States or any political subdivision or taxing authority thereof or
therein affecting taxation, or as a result of any official administrative
pronouncement or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or such pronouncement or
decision is announced on or after the date hereof, there is more than an
insubstantial risk in each case after the date hereof that (i) the Trust is, or
will be within 90 days of the date thereof, subject to United States federal
income tax with respect to income received or accrued on the Debentures, (ii)
interest paid by the Company on the Debentures is not, or within 90 days of the
date thereof will not be, deductible by the Company, in whole or in part, for
United States federal income tax purposes, or (iii) the Trust is, or will be
within 90 days of the date thereof, subject to more than a de minimis amount of
other taxes, duties or other governmental charges.
"TRUST" has the meaning specified in the first recital of this Indenture.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbb), as amended and as in effect on the date as of this
Indenture; provided, however, that in the event the Trust Indenture Act of 1939
is amended after such date, "Trust Indenture Act" means, to the extent required
by any such amendment, the Trust Indenture Act of 1939 as so amended.
"TRUST SECURITIES" means the Common Securities and Preferred Securities.
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"VOTING STOCK" has the meaning specified in the definition of Change of
Control.
SECTION 1.2 COMPLIANCE CERTIFICATE AND OPINIONS. Upon any application or
request by the Company to the Indenture Trustee to take any action under any
provision of this Indenture, the Company shall furnish to the Indenture Trustee
an Officer's Certificate stating that all conditions precedent (including
covenants, compliance with which constitutes a condition precedent), if any,
provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent (including covenants, compliance with
which constitute a condition precedent), if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished. The Company covenants that each such Officer's
Certificate and Opinion of Counsel shall comply with the requirements of the
Trust Indenture Act.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of each such individual, he or
she has made such examination or investigation as is necessary to enable
him or her to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 1.3 FORMS OF DOCUMENTS DELIVERED TO INDENTURE TRUSTEE. In any case
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons
as to other matters, and any such Person may certify or give an opinion as to
such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or
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representations with respect to matters upon which his certificate or opinion is
based are erroneous. Any certificate of counsel or Opinion of Counsel may be
based, insofar as it relates to factual matters, upon a certificate or opinion
of, or representations by, an officer or officers of the Company stating that
the information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 1.4 ACTS OF HOLDERS.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided or permitted by this Indenture to be given
to or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in
person or by an agent duly appointed in writing; and, except as herein
otherwise expressly provided, such action shall become effective when such
instrument or instruments is or are delivered to the Indenture Trustee,
and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "ACT" of the Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 6.1(a)(ii))
conclusive in favor of the Indenture Trustee and the Company and any agent
of the Indenture Trustee or the Company, if made in the manner provided in
this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the
execution thereof. Where such execution is by a Person acting in other
than his or her individual capacity, such certificate or affidavit shall
also constitute sufficient proof of his authority.
(c) The fact and date of the execution by any Person of any such
instrument or writing, or the authority of the Person executing the same,
may also be proved in any other manner which the Indenture Trustee deems
sufficient and in accordance with such reasonable rules as the Indenture
Trustee may determine.
(d) The ownership of Debentures shall be proved by the Securities
Register.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act by the Holder of any Debenture shall bind every future
Holder of the same Debenture and the Holder of every Debenture issued upon
the transfer thereof or in
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exchange therefor or in lieu thereof in respect of anything done, omitted
or suffered to be done by the Indenture Trustee or the Company in reliance
thereon, whether or not notation of such action is made upon such
Debenture.
(f) The Indenture Trustee may make reasonable rules for action by or
meetings of the Holders. The Securities Registrar and Paying Agent may
make reasonable rules for their functions.
(g) Without limiting the foregoing, a Holder entitled hereunder to
give or take any action with regard to any particular Debenture may do so
with regard to all or any part of the principal amount of such Debenture
or by one or more duly appointed agents, each of which may do so pursuant
to such appointment with regard to all or any part of such principal
amount.
SECTION 1.5 NOTICES, ETC. TO INDENTURE TRUSTEE AND COMPANY. Any request,
demand, authorization, direction, notice, consent, waiver or Act of Holders or
other document provided or permitted by this Indenture to be made upon, given or
furnished to, or filed with the following:
(a) the Indenture Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or filed
in writing to or with the Indenture Trustee at its Corporate Trust Office;
or
(b) the Company by the Indenture Trustee or by any Holder shall be
sufficient for every purpose (except as otherwise provided in Section 5.1
hereof) hereunder if in writing and mailed, first-class, postage prepaid,
to the Company addressed to it at the address of its principal office
specified in the first paragraph of this instrument or at any other
address previously furnished in writing to the Indenture Trustee by the
Company.
SECTION 1.6 NOTICE TO HOLDERS; WAIVER. Where this Indenture provides for
notice to Holders of any event, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and mailed, first-class
postage prepaid, to each Holder affected by such event, at the address of such
Holder as it appears in the Securities Register on the date such notice is
mailed, which shall be not later than the latest date (if any), and not earlier
than the earliest date (if any), prescribed for the giving of such notice. In
any case where notice to Holders is given by mail, neither the failure to mail
such notice, nor any defect in any notice so mailed, to any particular Holder
shall affect the sufficiency of such notice with respect to other Holders. Where
this Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Indenture Trustee, but such filing
shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver. In case by reason of the suspension of regular mail
service or by reason of any other cause it shall be impracticable to give such
notice by mail, then such notification as shall be made with the approval of the
Indenture Trustee shall constitute a sufficient notification for every purpose
hereunder.
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SECTION 1.7 CONFLICT WITH TRUST INDENTURE ACT. If any provision of this
Indenture limits, qualifies or conflicts with a provision of the Trust Indenture
Act that is required under the Trust Indenture Act to be a part of and govern
this Indenture, the latter provision shall control. If any provision of this
Indenture modifies or excludes any provision of the Trust Indenture Act that may
be so modified or excluded, the former provision shall be deemed to apply.
SECTION 1.8 EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and
Section headings herein and the table of contents are for convenience only and
shall not affect the construction hereof.
SECTION 1.9 SUCCESSORS AND ASSIGNS. All covenants and agreements in this
Indenture by the Company shall bind its successors, whether so expressed or not.
SECTION 1.10 SEPARABILITY CLAUSE. In case any provision in this Indenture
or in the Debentures shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 1.11 BENEFITS OF INDENTURE. Nothing in this Indenture or in the
Debentures, express or implied, shall give to any Person, other than the parties
hereto or thereto, any Paying Agent and their successors and assigns and the
Holders of the Debentures, any benefit or any legal or equitable right, remedy
or claim under this Indenture.
SECTION 1.12 GOVERNING LAW. This Indenture and the Debentures shall be
governed by and construed in accordance with the laws of the State of New York
without regard to its principles of conflicts of laws.
SECTION 1.13 NON-BUSINESS DAYS. In any case where any Interest Payment
Date, Redemption Date or Stated Maturity of any Debenture shall not be a
Business Day, then (notwithstanding any other provision of this Indenture or the
Debentures) payment of interest or principal payable on such date will be made
on the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay), except that if any Interest Payment
Date is in the next succeeding calendar year, then such payment shall be made on
the immediately preceding Business Day, in each case with the same force and
effect as if made on the Interest Payment Date or Redemption Date or at the
Stated Maturity; provided that no interest shall accrue for the period from and
after such Interest Payment Date, Redemption Date or Stated Maturity.
SECTION 1.14 NO RECOURSE AGAINST OTHERS. A director, officer, employee,
stockholder or incorporator, as such, of the Company shall not have any
liability for any obligations of the Company under the Debentures or this
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Holder by accepting a Debenture waives and
releases all such liability. Such waiver and release are part of the
consideration for the issuance of the Debentures.
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SECTION 1.15 DUPLICATE ORIGINALS. All parties may sign any number of copies
or counterparts of this Indenture. Each signed copy or counterpart shall be an
original, but all of them together shall represent the same agreement.
ARTICLE 2.
DEBENTURE FORM
SECTION 2.1 FORMS GENERALLY. The Debentures and the Indenture Trustee's
certificate of authentication shall be in substantially the forms set forth in
this Article with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture, and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with applicable tax
laws or the rules of any securities exchange or as may, consistently herewith,
be determined by the officers executing such Debentures, as evidenced by their
execution of the Debentures.
The definitive Debentures shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods, if required by any
securities exchange on which the Debentures may be listed, on a steel engraved
border or steel engraved borders, or may be produced in any other manner
permitted by the rules of any securities exchange on which the Debentures may be
listed, all as determined by the officers executing such Debentures, as
evidenced by their execution of such Debentures.
SECTION 2.2 FORM OF FACE OF DEBENTURE.
SUPERIOR TELECOM INC.
8 1/2% CONVERTIBLE SUBORDINATED DEBENTURE DUE 2014, $_________
NO. CUSIP NO.
Superior TeleCom Inc., a corporation organized and existing under the laws
of Delaware (hereinafter called the "Company," which term includes any successor
corporation under the Indenture hereinafter referred to), for value received,
hereby promises to pay to _____________________, or registered assigns, the
principal sum of ____________________ on _______, 2014 and to pay interest, plus
Additional Interest and Additional Sums, if any, on said principal sum from
_________, 1999, or from the most recent Interest Payment Date on which interest
has been paid or duly provided for, quarterly until the principal hereof is paid
or duly provided for or made available for payment, subject to deferral as set
forth herein, in arrears, on _________, _________, _________ and _________ of
each year (each such date, an "Interest Payment Date"), commencing _________,
1999, at the rate of eight and one-half percent (8 1/2%) per annum, until the
principal hereof shall have become due and payable, and thereafter such interest
shall be payable on demand.
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Reference is hereby made to the further provisions of this Debenture set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee referred to on the reverse hereof by manual signature, this
Debenture shall not be entitled to any benefit under the Indenture or be valid
or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
SUPERIOR TELECOM INC.
By:
----------------------------------
Title:
SECTION 2.3 FORM OF REVERSE OF DEBENTURE. This Debenture is one of a duly
authorized issue of Debentures of the Company (herein called the "DEBENTURES"),
limited to the aggregate principal amount of $[171,765,650], issued and to be
issued under an Indenture, dated as of _________, 1999 (herein called the
"INDENTURE"), between the Company and ____________________, as Indenture Trustee
(herein called the "INDENTURE TRUSTEE," which term includes any successor
Indenture Trustee under the Indenture). Reference is hereby made to the
Indenture and all indentures supplemental thereto for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Indenture Trustee, the Company and the Holders of the Debentures, and of the
terms upon which the Debentures are, and are to be, authenticated and delivered.
All terms used in this Debenture that are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. For periods of less than three
months, interest shall be computed on the actual number of elapsed days in such
period based on 30-day months. In the event that any date on which interest is
payable on this Debenture is not a Business Day, then the payment of interest on
such date will be made on the next succeeding day which is a Business Day (and
without any interest or other payment in respect of any such delay), except that
if any Interest Payment Date is in the next succeeding calendar year, then such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on the date the payment was originally
payable. A "BUSINESS DAY" shall mean any day other than a Saturday or a Sunday
or a day on which banking institutions in the City of New York are authorized or
required by law or executive order to remain closed or a day on which the
Corporate Trust Office of the Indenture Trustee, or the principal office of the
Property Trustee under the Declaration, is closed for business. The interest
installment so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture, be paid to the Person
in whose name this Debenture (or one or more Predecessor Debentures, as defined
in the Indenture) is registered at the close of business on the Regular Record
Date for such interest installment, which shall be the date which is the
fifteenth day preceding such
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Interest Payment Date. The term "interest" as used herein shall include
quarterly interest payments, interest on quarterly interest payments not paid on
the applicable Interest Payment Date and Additional Sums, as applicable. If the
Company defaults in a payment of interest on the Debentures, it shall pay the
defaulted amounts, plus (to the extent provided in the Indenture and permitted
by law) any interest payable on defaulted amounts at the rate specified herein,
to the Persons in whose names the Debentures (or their respective Predecessor
Debentures) are registered on a subsequent special record date. The Company
shall fix the special record date and payment date in a manner satisfactory to
the Indenture Trustee and provide the Indenture Trustee at least 20 days' notice
of the proposed amount of default interest, if any, to be paid and the special
payment date. At least 15 days before the special record date, the Company shall
mail or cause to be mailed to each Holder at his address as it appears on the
Securities Register a notice that states the special record date, the payment
date (which shall be not less than five nor more than ten days after the special
record date) and the amount to be paid. In lieu of the foregoing procedures, the
Company may pay defaulted interest in any other lawful manner satisfactory to
the Indenture Trustee and not inconsistent with the requirements of any
securities exchange on which the Debentures may be listed, upon such notice as
may be required by such exchange.
So long as no Event of Default under the Indenture (relating solely to
clauses (e) and (f) under the definition thereof in Section 5.1 thereof) has
occurred and is continuing, the Company shall have the right under the Indenture
to defer the payment of interest (including any Additional Interest and
Additional Sums, if any) under this Debenture, at any time or from time to time,
for a period not exceeding 20 consecutive quarters with respect to each deferral
period, but not to extend beyond the Stated Maturity (each such deferral period,
an "EXTENSION PERIOD"). During any such Extension Period, the Company shall not,
and shall not permit any Subsidiary to, (a) declare or pay, or set apart for
payment, any dividends on or other distributions with respect to, or redeem,
purchase, acquire, or make a liquidation payment with respect to, any shares of
the Company's Capital Stock or (b) make any payment of principal of, premium, if
any, or interest on, or repay, repurchase or redeem any debt securities
(including guarantees of indebtedness) issued by the Company that rank pari
passu with or junior to this Debenture (other than with respect to both (a) and
(b) (i) any dividend, redemption, liquidation, interest, principal or guarantee
payment by the Company where the payment is made with securities (including
Capital Stock) that rank pari passu with or junior to the securities on which
such dividend, redemption, liquidation, interest, principal or guarantee payment
is being made, (ii) payments under the Guarantee, (iii) payments under the
Senior Subordinated Credit Agreement, (iv) purchases of Common Stock related to
the issuance of Common Stock under any of the Company's benefit plans for its
directors, officers or employees, (v) as a result of a reclassification of the
Company's Capital Stock or the exchange or conversion of one series or class of
the Company's Capital Stock for another series or class of the Company's Capital
Stock and (vi) the purchase of fractional interests in shares of the Company's
Capital Stock pursuant to the conversion or exchange provisions of such Capital
Stock or the security being converted or exchanged). Prior to the termination of
any such Extension Period, the Company may further extend the interest payment
period; provided, however, that no such Extension Period as so extended shall
exceed 20 consecutive quarters or extend beyond the Stated Maturity of this
Debenture. Upon the termination of any such Extension Period and upon the
payment of all
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amounts then accrued and unpaid, the Company may elect to begin a new Extension
Period, subject to the above requirements. No interest, including Additional
Interest and Additional Sums, if any, shall be due and payable during an
Extension Period except at the end thereof; however, interest and Additional
Interest shall continue to accrue. The Company shall give the Indenture Trustee
and the Property Trustee under the Declaration notice of its election to begin
any Extension Period at least one Business Day prior to the earlier of (i) the
record date for the date the distributions on the Preferred Securities (or if no
Preferred Securities are outstanding, for the date interest on the Debentures)
would have been payable except for the election to begin such Extension Period
and (ii) the date the Property Trustee under the Declaration is (or if no
Preferred Securities are outstanding, the Indenture Trustee is) required to give
notice to the New York Stock Exchange or other applicable self-regulatory
organizations or to holders of such Preferred Securities (or, if no Preferred
Securities are outstanding, to the holders of such Debentures) of such election.
Payment of the principal of (and premium, if any) and interest on this
Debenture will be made at the Corporate Trust Office of the Indenture Trustee or
at the office or agency of the Paying Agent or Paying Agents as the Company may
designate maintained for that purpose in the United States, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts; provided, however, that at the
option of the Company payment of interest may be made (i) by check mailed to the
address of the Person entitled thereto at such address as shall appear in the
Securities Register or (ii) by wire transfer in immediately available funds at
such place and to such account as may be designated by the Person entitled
thereto as specified in the Securities Register, provided that proper transfer
instructions have been received by the Regular Record Date.
All obligations with respect to the Debentures are, to the extent and in
the manner provided in the Indenture, subordinated in right of payment to the
prior indefeasible payment and satisfaction in full in cash of all existing and
future Senior Debt as defined in the Indenture, and this Debenture is issued
subject to such provisions. Each Holder of this Debenture, by accepting the
same, (a) agrees to and shall be bound by such provisions, (b) authorizes and
directs the Indenture Trustee, on behalf of such Holder, to take such action as
may be necessary or appropriate to effectuate the subordination as provided in
the Indenture and (c) appoints the Indenture Trustee attorney-in-fact of such
Holder for such purpose.
After _________, 200[3], the Company may, at its option, subject to the
terms and conditions of Article 11 of the Indenture, redeem this Debenture in
whole at any time or in part from time to time, at the Redemption Prices set
forth in Section 11.7 of the Indenture.
In the event of redemption of this Debenture in part only, a new Debenture
or Debentures for the unredeemed portion hereof will be issued in the name of
the Holder hereof upon the cancellation hereof.
If a Special Event shall occur and be continuing, this Debenture may be
distributed to holders of Trust Securities in accordance with Section 11.8 of
the Indenture or, in certain circumstances, redeemable by the Company in
accordance with Section 11.7 of the Indenture.
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Subject to the terms and conditions set forth in Article 13 of the
Indenture, this Debenture is convertible, at the option of the Holder hereof,
into shares of Common Stock (and/or such other cash, securities or property as
then provided for by the Indenture), all as provided in Article 13 of the
Indenture.
If an Event of Default shall occur and be continuing, the principal of the
Debentures may be declared due and payable in the manner, with the effect and
subject to the conditions provided in the Indenture.
As provided in and subject to the provisions of the Indenture, if an Event
of Default occurs and is continuing, then and in every such case the Indenture
Trustee or the Holders of not less than a majority in aggregate principal amount
of the Outstanding Debentures may declare the aggregate principal amount of all
the Outstanding Debentures to be due and payable, by a notice in writing to the
Company (and to the Indenture Trustee if given by Holders) specifying the
respective Event of Default and that it is a "Notice of Default"; provided,
however, that, if upon an Event of Default, the Indenture Trustee or the Holders
of not less than a majority in aggregate principal amount of the Outstanding
Debentures fail to declare the principal of all the Debentures to be immediately
due and payable, the holders of at least a majority in aggregate liquidation
amount of the Preferred Securities then outstanding shall have such right to
make the declaration by a notice in writing to the Company and the Indenture
Trustee. Upon any such notice, such principal amount of (including premium, if
any) and the accrued and unpaid interest (including any Additional Interest and
Additional Sums, if any) on all the Debentures then Outstanding shall become
immediately due and payable, provided that the payment of principal (including
premium, if any) and interest (including any Additional Interest and Additional
Sums, if any) on such Debentures shall remain subordinated to the extent
provided in Article 12 of the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Debentures to be affected under the
Indenture at any time by the Company and the Indenture Trustee with the consent
of the Holders of a majority in principal amount of the Debentures. In addition,
without the consent of any Holder of a Debenture, the Indenture and the
Debentures may be amended and supplemented to cure any ambiguity or
inconsistency, make other changes which will not adversely affect in any
material aspect the rights of the Holders or certain other matters specified in
the Indenture. The Indenture also contains provisions permitting Holders of
specified percentages in principal amount of the Debentures at the time
Outstanding, on behalf of the Holders of all Debentures, to waive compliance by
the Company with certain provisions of the Indenture and certain past Defaults
and Events of Default under the Indenture and their consequences, and, should
the Holders of the Debentures fail to annul and rescind such declaration, the
holders of a majority in liquidation amount of the Preferred Securities then
outstanding shall have the right. Any such consent or waiver shall be conclusive
and binding upon the Holder of this Debenture and upon all future Holders of
this Debenture and of any Debenture issued upon the registration of transfer
hereof or in exchange therefor or in lieu hereof, whether or not notation of
such consent or wavier is made upon this Debenture.
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No reference herein to the Indenture and no provision of this Debenture or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest (including Additional Interest and Additional Sums, if any) on this
Debenture at the times, place and rate, and in the coin or currency, herein
prescribed.
As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Debenture is registrable in the Securities
Register, upon surrender of this Debenture for registration of transfer, at the
office or agency of the Company maintained under Section 10.2 of the Indenture,
duly endorsed by or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Securities Registrar duly executed by the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Debentures, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees. No
service charge shall be made for any such registration of transfer or exchange,
but the Company may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith.
Prior to due presentment of this Debenture for registration of transfer,
the Company, the Indenture Trustee and any agent of the Company or the Indenture
Trustee may treat the Person in whose name this Debenture is registered as the
owner hereof for all purposes, whether or not this Debenture be overdue, and
neither the Company, the Indenture Trustee nor any such agent shall be affected
by notice to the contrary.
The Debentures are issuable only in registered form without coupons in
denominations of $50 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Debentures are
exchangeable for a like aggregate principal amount of Debentures of a different
authorized denomination, as requested by the Holder surrendering the same.
The Company and, by its acceptance of this Debenture or a beneficial
interest therein, the Holder of, and any Person that acquires a beneficial
interest in, this Debenture agree that for United States federal, state and
local tax purposes it is intended that this Debenture constitute indebtedness.
No director, officer, employee, stockholder or incorporator of the Company
shall have any liability for any obligations of the Company under this Debenture
or the Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Holder by accepting this Debenture waives
and releases all such liability. Such waiver and release are part of the
consideration for the issuance of this Debenture.
THE INDENTURE AND THIS DEBENTURE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
CONFLICTS OF LAW PRINCIPLES THEREOF.
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ASSIGNMENT FORM
To assign this Debenture, fill in the form below:
(I) or (we) assign and transfer this Debenture to
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint _____________________agent to transfer this Debenture on
the books of the Company. The agent may substitute another to act for him.
Your Signature:
-----------------------------
(Sign exactly as your name appears on the
other side of this Debenture)
Date:
-----------------------------------
Signature Guarantee:(1)
----------------------------------
NOTICE OF CONVERSION
To: Superior TeleCom Inc.
The undersigned owner of this Debenture hereby irrevocably exercises the
option to convert this Debenture, or the portion below designated, into Common
Stock of Superior TeleCom Inc. in accordance with the terms of the Indenture
referred to in this Debenture, and directs that the shares issuable and
deliverable upon conversion, together with any check in payment for fractional
shares, be issued in the name of and delivered to the undersigned, unless a
different name has been indicated in the assignment below. If shares are to be
issued in the name
- --------
1 Signature must be guaranteed by an institution which is a member of one of
the following recognized Signature Guaranty Programs: (i) The Securities
Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange
Medallion Program (MSP); (iii) The Stock Exchange Medallion Program
(SEMP); or (iv) such other guarantee programs acceptable to the Indenture
Trustee.
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of a person other than the undersigned, the undersigned will pay all transfer
taxes payable with respect thereto.
Date:_____________________
in whole ___
in part ___ Portions of Debenture to be
converted ($50 or integral
multiples thereof):
$
----------------
Signature (for conversion only)
Please Print or Type Name and
Address, Including Zip Code,
and Social Security or Other
Identifying Number
-----------------------------
-----------------------------
-----------------------------
Signature Guarantee:(1)
SECTION 2.4 FORM OF INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION. The
form of Indenture Trustee's Certificate of Authentication shall be as follows
(or in the form provided in Section 6.15 in the event that a separate
Authenticating Agent is appointed pursuant thereto):
This is one of the Debentures designated therein referred to in the within
mentioned Indenture.
[ ]
as Indenture Trustee
By:
- -----------------------------
- --------
1 Signature must be guaranteed by an institution which is a member of one of
the following recognized Signature Guaranty Programs: (i) The Securities
Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange
Medallion Program (MSP); (iii) The Stock Exchange Medallion Program
(SEMP); or (iv) such other guarantee programs acceptable to the Indenture
Trustee.
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Authorized Signatory
Dated:
----------------------
SECTION 2.5 INITIAL ISSUANCE TO PROPERTY TRUSTEE. The Debentures initially
issued to the Property Trustee of the Trust shall be in the form of one or more
individual certificates in definitive, fully registered form without coupons.
ARTICLE 3.
THE DEBENTURES
SECTION 3.1 TITLE AND AMOUNT OF DEBENTURES. The aggregate principal amount
at Stated Maturity of Debentures which may be authenticated and delivered under
this Indenture is $[171,765,650], except for Debentures authenticated and
delivered upon registration of, transfer of, or in exchange for, or in lieu of,
other Debentures pursuant to Sections 3.4, 3.5, 3.6, 3.15, 9.6, 11.7 or 11.8.
The Debentures shall be known and designated as "8 1/2% Convertible Subordinated
Debentures due 2014." Their Maturity shall be __________, 2014 and they shall
bear interest as provided in the form of Debenture and as herein provided.
SECTION 3.2 DENOMINATIONS. The Debentures shall be in registered form
without coupons and shall be issuable in denominations of $50 and any integral
multiple thereof.
SECTION 3.3 EXECUTION, AUTHENTICATION, DELIVERY AND DATING. The Debentures
shall be executed on behalf of the Company by its President, Chief Executive
Officer, Chief Financial Officer or one of its Executive Vice Presidents. The
signature of any of these officers on the Debentures may be manual or facsimile.
Debentures bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Debentures or did not
hold such offices at the date of such Debentures. Upon the execution and
delivery of this Indenture, and at any time from time to time after the
execution and delivery of this Indenture, Debentures may be executed by the
Company and delivered to the Indenture Trustee for authentication, together with
a Company Order for the authentication and delivery of such Debentures, and the
Indenture Trustee, in accordance with the Company Order, shall thereupon
authenticate and make said Debentures available for delivery without any further
action by the Company. Debentures may be authenticated on original issuance from
time to time and delivered pursuant to such procedures acceptable to the
Indenture Trustee ("Procedures") as may be specified from time to time by
Company Order. Procedures may authorize authentication and delivery pursuant to
oral instructions of the Company or a duly authorized agent, which instructions
shall be promptly confirmed in writing.
Each Debenture shall be dated the date of its authentication.
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No Debenture shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Debenture a
certificate of authentication substantially in the form provided for herein
executed by the Indenture Trustee (or the Authenticating Agent) by the manual
signature of one of its authorized officers, and such certificate upon any
Debenture shall be conclusive evidence, and the only evidence, that such
Debenture has been duly authenticated and delivered hereunder.
SECTION 3.4 TEMPORARY DEBENTURES. Pending the preparation of definitive
Debentures, the Company may execute, and upon Company Order the Indenture
Trustee shall authenticate and deliver, temporary Debentures which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in any
denomination, substantially of the tenor of the definitive Debentures in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Debentures may
determine, as evidenced by their execution of such Debentures.
If temporary Debentures are issued, the Company will cause definitive
Debentures to be prepared without unreasonable delay. After the preparation of
definitive Debentures, the temporary Debentures shall be exchangeable for
definitive Debentures upon surrender of the temporary Debentures at the office
or agency of the Company designated for the purpose, without charge to the
Holder. Upon surrender for cancellation of any one or more temporary Debentures,
the Company shall execute and the Indenture Trustee shall authenticate and make
available for delivery in exchange therefor a like principal amount of
definitive Debentures of authorized denominations. Until so exchanged, the
temporary Debentures shall in all respects be entitled to the same benefits
under this Indenture as definitive Debentures.
SECTION 3.5 REGISTRATION, TRANSFER AND EXCHANGE. The Company shall cause to
be kept at the Corporate Trust Office of the Indenture Trustee a register in
which, subject to such reasonable regulations as it may prescribe, the Company
shall provide for the registration of Debentures and of transfers and exchanges
of Debentures (such register is herein sometimes referred to as the "Securities
Register"). The Indenture Trustee is hereby appointed "Securities Registrar" for
the purpose of the registering Debentures and transfers and exchanges of
Debentures as herein provided.
Upon surrender for registration of transfer of any Debenture at the office
or agency of the Company designated pursuant to Section 10.2 for that purpose,
the Company shall execute, and the Indenture Trustee shall authenticate and make
available for delivery, in the name of the designated transferee or transferees,
one or more new Debentures of any authorized denominations, of a like aggregate
principal amount.
At the option of the Holder, Debentures may be exchanged for other
Debentures of any authorized denominations, of a like aggregate principal
amount, upon surrender of the Debentures to be exchanged at such office or
agency. Whenever any Debentures are so surrendered for exchange, the Company
shall execute, and the Indenture Trustee shall authenticate and make available
for delivery, the Debentures which the Holder making the exchange is entitled to
receive.
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All Debentures issued upon any transfer or exchange of Debentures shall be
the valid obligations of the Company, evidencing the same debt, and entitled to
the same benefits under this Indenture, as the Debentures surrendered upon such
transfer or exchange.
Every Debenture presented or surrendered for transfer or exchange shall (if
so required by the Company or the Securities Registrar) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Securities Registrar, duly executed by the Holder thereof or his
attorney duly authorized in writing.
No service charge shall be made to a Holder for any transfer or exchange of
Debentures, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with any
transfer or exchange of Debentures, other than exchanges pursuant to Sections
3.4, 3.15, 9.6, 11.7 and 11.8.
Neither the Company, the Securities Registrar nor the Indenture Trustee
shall be required, pursuant to the provisions of this Section, (a) to issue,
transfer or exchange any Debenture during a period beginning at the opening of
business 15 days before the day of selection for redemption of Debentures
pursuant to Article 11 and ending at the close of business on the day of mailing
of notice of redemption or (b) to transfer or exchange any Debenture so selected
for redemption in whole or in part, except, in the case of any Debenture to be
redeemed in part, any portion thereof not to be redeemed.
SECTION 3.6 MUTILATED, DESTROYED, LOST AND STOLEN DEBENTURES. If any
mutilated Debenture is surrendered to the Indenture Trustee, the Company shall
execute and the Indenture Trustee shall authenticate and make available for
delivery in exchange therefor a new Debenture and bearing a number not
contemporaneously outstanding.
If there shall be delivered to the Company and to the Indenture Trustee (a)
evidence to their satisfaction of the destruction, loss or theft of any
Debenture, and (b) such security or indemnity as may be required by them to save
each of them harmless, then, in the absence of actual notice to the Company or
the Indenture Trustee that such Debenture has been acquired by a protected
purchaser, the Company shall execute and upon a Company Order, the Indenture
Trustee shall authenticate and make available for delivery, in lieu of any such
destroyed, lost or stolen Debenture, a new Debenture bearing a number not
contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Debenture has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Debenture, pay such Debenture.
Upon the issuance of any new Debenture under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Indenture Trustee) connected therewith.
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Every new Debenture issued pursuant to this Section in lieu of any
destroyed, lost or stolen Debenture shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Debenture shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Debentures duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Debentures.
SECTION 3.7 PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED. Interest
(including Additional Interest and Additional Sums, if any) on any Debenture
which is payable, and is punctually paid or duly provided for, on any Interest
Payment Date, shall be paid to the Person in whose name that Debenture (or one
or more Predecessor Debentures) is registered at the close of business on the
Regular Record Date for such interest payment, except that interest payable on
the Maturity of the Debentures shall be paid to the Person to whom principal is
paid.
If the Company defaults in a payment of interest on the Debentures, it
shall pay the defaulted amounts, plus (to the extent permitted by law) any
interest payable on defaulted amounts (which default interest shall only accrue
with respect to any interest payment period, or part thereof, occurring from and
after the Liquidation Date) at the rate specified in the Debentures, to the
Persons in whose names the Debentures (or their respective Predecessor
Debentures) are registered on a subsequent special record date. The Company
shall fix the special record date and payment date in a manner satisfactory to
the Indenture Trustee and provide the Indenture Trustee at least 20 days' notice
of the proposed amount of default interest, if any, to be paid and the special
payment date. At least 15 days before the special record date, the Company shall
mail or cause to be mailed to each Holder at his address as it appears on the
Securities Register a notice that states the special record date, the payment
date (which shall be not less than five nor more than ten days after the special
record date) and the amount to be paid. In lieu of the foregoing procedures, the
Company may pay defaulted interest in any other lawful manner satisfactory to
the Indenture Trustee and not inconsistent with the requirements of any
securities exchange on which the Debentures may be listed, upon such notice as
may be required by such exchange.
Subject to the foregoing provisions of this Section, each Debenture
delivered under this Indenture upon transfer of or in exchange for or in lieu of
any other Debenture shall carry the rights to interest accrued and unpaid, and
to accrue, which were carried by such other Debenture.
SECTION 3.8 PERSONS DEEMED OWNERS. Prior to due presentment of a Debenture
for registration of transfer or exchange, the Company, the Indenture Trustee,
the Paying Agent and any agent of the Company, the Indenture Trustee or the
Paying Agent may treat the Person in whose name any Debenture is registered as
the owner of such Debenture for the purpose of receiving payment of principal of
(and premium, if any) and (subject to Section 3.7) interest (including
Additional Interest and Additional Sums, if any) on such Debenture and
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for all other purposes whatsoever, whether or not such Debenture be overdue, and
neither the Company, the Indenture Trustee, the Paying Agent nor any agent of
the Company, the Indenture Trustee or the Paying Agent shall be affected by
notice to the contrary.
SECTION 3.9 CANCELLATION. All Debentures surrendered for payment,
redemption, conversion, transfer or exchange shall, if surrendered to any Person
other than the Indenture Trustee, be delivered to the Indenture Trustee, and any
such Debentures and Debentures surrendered directly to the Indenture Trustee for
any such purpose shall be promptly canceled by the Indenture Trustee. The
Company may at any time deliver or cause to be delivered to the Indenture
Trustee for cancellation any Debentures previously authenticated and delivered
hereunder which the Company may have acquired in any manner whatsoever, and all
Debentures so delivered shall be promptly canceled by the Indenture Trustee. No
Debentures shall be authenticated in lieu of or in exchange for any Debentures
canceled as provided in this Section, except as expressly permitted by this
Indenture. All canceled Debentures shall be returned to the Company by the
Indenture Trustee.
SECTION 3.10 COMPUTATION OF INTEREST. Interest on the Debentures shall be
computed on the basis of a 360-day year of twelve 30-day months. For periods of
less than three months, interest shall be computed on the actual number of
elapsed days in such period based on 30-day months.
SECTION 3.11 DEFERRALS OF INTEREST PAYMENT DATES. So long as no Event of
Default (relating solely to clauses (e) and (f) under Section 5.1 hereof) has
occurred and is continuing, the Company shall have the right to defer the
payment of interest (including Additional Interest and Additional Sums, if any)
under the Debentures, at any time, or from time to time, for a period not
exceeding 20 consecutive quarters with respect to each deferral period, but not
to extend beyond the Stated Maturity (each such deferral period, an "EXTENSION
PERIOD"). During any such Extension Period, the Company shall not, and shall not
permit any Subsidiary to, (a) declare or pay, or set apart for payment, any
dividends on or other distributions with respect to, or redeem, purchase,
acquire or make a liquidation payment with respect to, any shares of the
Company's Capital Stock or (b) make any payment of principal of, premium, if
any, or interest on, or repay, repurchase or redeem any debt securities
(including guarantees of indebtedness) issued by the Company that rank pari
passu with or junior to the Debentures (other than with respect to both (a) and
(b) (i) any dividend, redemption, liquidation, interest, principal or guarantee
payment by the Company where the payment is made with securities (including
Capital Stock) that rank pari passu with or junior to the securities on which
such dividend, redemption, liquidation, interest, principal or guarantee payment
is being made, (ii) payments under the Guarantee, (iii) payments under the
Senior Subordinated Credit Agreement, (iv) purchases of Common Stock related to
the issuance of Common Stock under any of the Company's benefit plans for its
directors, officers or employees, (v) as a result of a reclassification of the
Company's Capital Stock or the exchange or conversion of one series or class of
the Company's Capital Stock for another series or class of the Company's Capital
Stock and (vi) the purchase of fractional interests in shares of the Company's
Capital Stock pursuant to the conversion or exchange provisions of such Capital
Stock or the security being converted or exchanged). Prior to the termination of
any such Extension Period, the Company may further
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extend the interest payment period; provided, however, that no such Extension
Period as so extended shall exceed 20 consecutive quarters or extend beyond the
Stated Maturity of the Debentures. Upon the termination of any Extension Period
and upon the payment of all amounts then accrued and unpaid, the Company may
elect to begin a new Extension Period, subject to the above requirements. No
interest, including Additional Interest and Additional Sums, if any, shall be
due and payable during an Extension Period, except at the end thereof; however,
interest and Additional Interest shall continue to accrue. The Company shall
give the Indenture Trustee and the Property Trustee under the Declaration notice
of its election to begin any Extension Period at least one Business Day prior to
the earlier of (i) the record date for the date the distributions on the
Preferred Securities (or if no Preferred Securities are outstanding, for the
date interest on the Debentures) would have been payable except for the election
to begin such Extension Period and (ii) the date the Property Trustee under the
Declaration (or if no Preferred Securities are outstanding, the Indenture
Trustee) is required to give notice to the New York Stock Exchange or other
applicable self-regulatory organization or to holders of such Preferred
Securities (or, if no Preferred Securities are outstanding, to the holders of
such Debentures) of such election. Such notice shall specify the Extension
Period selected.
The Indenture Trustee, upon receipt of notice thereof from the Company,
shall promptly give notice, in the name and at the expense of the Company, of
the Company's election to begin an Extension Period to the Holders of the
Outstanding Debentures.
SECTION 3.12 RIGHT OF SET-OFF. Notwithstanding anything to the contrary in
this Indenture, the Company shall have the right to set-off any payment it is
otherwise required to make in respect of the Debentures to the extent the
Company has theretofore made, or is concurrently on the date of such payment
making, a payment relating to the Debentures under the Guarantee.
SECTION 3.13 AGREED TAX TREATMENT. Each Debenture issued hereunder shall
provide that the Company and, by its acceptance of a Debenture or a beneficial
interest therein, the Holder of, and any Person that acquires a beneficial
interest in, such Debenture agree that, subject to any applicable change in law,
for United States federal, state and local tax purposes it is intended that such
Debenture constitute indebtedness of the Company, and will be treated in a
manner consistent therewith.
SECTION 3.14 CUSIP NUMBERS. The Company in issuing the Debentures may use
"CUSIP" numbers (if then generally in use), and, if so, the Indenture Trustee
shall use such "CUSIP" number provided to it by the Company in notices of
redemption as a convenience to Holders; provided, that any such notice may state
that no representation is made as to the correctness of such number either as
printed on the Debentures or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Debentures, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Company will promptly notify the Indenture Trustee
of any change in CUSIP numbers.
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SECTION 3.15 DISTRIBUTION OF DEBENTURES.
In connection with distribution of Debentures to holders of the Preferred
Securities in connection with the involuntary or voluntary dissolution,
winding-up or liquidation of the Trust as a result of the occurrence of a
Special Event or otherwise, the Debentures may be presented to the Indenture
Trustee by the Property Trustee under the Declaration and any Preferred Security
certificate will be deemed to represent beneficial interests in Debentures
presented to the Indenture Trustee by the Property Trustee having an aggregate
principal amount equal to the aggregate liquidation amount of the Preferred
Securities until such Preferred Security certificates are presented to the
Securities Registrar for transfer or reissuance, at which time such Preferred
Security certificates will be canceled and a Debenture, registered in the name
of the holder of the Preferred Security certificate or the transferee of the
holder of such Preferred Security certificate, as the case may be, with an
aggregate principal amount equal to the aggregate liquidation amount of the
Preferred Security certificate so canceled, will be executed by the Company and
delivered to the Indenture Trustee for authentication and delivery in accordance
with this Indenture. On issue of such Debentures, Debentures with an equivalent
aggregate principal amount that were presented by the Property Trustee to the
Indenture Trustee will be deemed to have been canceled.
ARTICLE 4.
SATISFACTION AND DISCHARGE
SECTION 4.1 SATISFACTION AND DISCHARGE OF INDENTURE. This Indenture shall
cease to be of further effect (except as to (i) any surviving rights of
transfer, substitution and exchange of Debentures, (ii) rights hereunder of
Holders to receive payments of principal of (and premium, if any) and interest
(including Additional Interest and Additional Sums, if any) on the Debentures
and other rights, duties and obligations of the Holders as beneficiaries hereof
with respect to the amounts, if any, so deposited with the Indenture Trustee and
(iii) the rights of the Indenture Trustee hereunder), and the Indenture Trustee,
on written demand of and at the expense of the Company, shall execute
instruments supplied by the Company acknowledging satisfaction and discharge of
this Indenture, when
(a) either
(i) all Debentures theretofore authenticated and delivered
(other than (i) Debentures which have been destroyed, lost or stolen
and which have been replaced or paid as provided in Section 3.6 and
(ii) Debentures for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the Company
and thereafter repaid to the Company or discharged from such trust,
as provided in Section 10.3) have been delivered to the Indenture
Trustee for cancellation; or
(ii) all such Debentures not theretofore delivered to the
Indenture Trustee for cancellation
(A) have become due and payable, or
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(B) will become due and payable at their Stated Maturity
within one year of the date of deposit or are to be called for
redemption within one year under irrevocable arrangements
satisfactory to the Indenture Trustee for the giving of notice
of redemption by the Company to the Indenture Trustee in the
name, and at the expense, of the Company, and the Company has
irrevocably deposited or caused to be deposited with the
Indenture Trustee (in the case of Debentures that have become
due and payable) funds in trust for such purpose in an amount
sufficient (without regard to investment of such amount
deposited) to pay and discharge the entire indebtedness on the
Debentures not theretofore delivered to the Indenture Trustee
for cancellation, for principal (and premium, if any) and
interest (including Additional Interest and Additional Sums,
if any) to the date of such deposit (in the case of Debentures
that have become due and payable) or to the Stated Maturity,
as the case may be, or
(C) have been redeemed or tendered for conversion;
(b) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(c) the Company has delivered to the Indenture Trustee an Officer's
Certificate and an Opinion of Counsel each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge
of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, (i) the
obligations of the Company to the Indenture Trustee under Section 6.7 and the
obligations of the Company to any Authenticating Agent under Section 6.14, (ii)
the conversion provisions contained in Article 13 and the redemption provisions
of Article 11 prior to the Redemption Date or date of Maturity, and (iii) if
money shall have been deposited with the Indenture Trustee pursuant to subclause
(ii) of clause (a) of this Section, the obligations of the Indenture Trustee
under Section 4.2 and the last paragraph of Section 10.3 shall survive.
SECTION 4.2 APPLICATION OF TRUST MONEY. Subject to the provisions of the
last paragraph of Section 10.3, all money deposited with the Indenture Trustee
pursuant to Section 4.1 shall be held in trust and applied by the Indenture
Trustee, in accordance with the provisions of the Debentures and this Indenture,
to the payment, either directly or through any Paying Agent (including the
Company acting as its own Paying Agent) as the Indenture Trustee may determine,
to the Persons entitled thereto, of the principal (and premium, if any) and
interest (including Additional Interest and Additional Sums, if any) for whose
payment such money has been deposited with or received by the Indenture Trustee;
provided, however, that if any Debenture is converted after the deposit of money
with the Indenture Trustee pursuant to Section 4.1, the Indenture Trustee shall
pay over to the Company out of the money so deposited an amount equal to the
money deposited in respect of the Debenture so converted and not previously paid
with respect to the Debenture so converted; and provided, further, such money
need not be segregated from other funds maintained by the Indenture Trustee
except to the extent required by law. If the Indenture Trustee or Paying Agent
is unable to apply any money in
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accordance with Section 4.1 by reason of any legal proceeding or by reason of
any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, the Company's obligations
under this Indenture and the Debentures shall be revived and reinstated as
though no deposit had occurred pursuant to Section 4.1 until such time as the
Indenture Trustee or Paying Agent is permitted to apply all such money in
accordance with the first sentence of this Section 4.2; provided, however, that
if the Company has made any payment of interest on or principal of any Debenture
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Debentures to receive such payment from the
assets held by the Indenture Trustee or Paying Agent.
ARTICLE 5.
REMEDIES
SECTION 5.1 EVENTS OF DEFAULT. "Event of Default," wherever used herein
with respect to the Debentures, means any one of the following events:
(a) failure to pay any interest upon the Debentures, including any
Additional Interest and any Additional Sums, if any, in respect thereof,
when such amounts become due and payable and continuance of such failure
for a period of 30 days (unless such interest payment is subject to
deferral in the case of an Extension Period or to any prohibition on the
payment of interest hereunder, including, without limitation, as a result
of the subordination provisions of Article 12); or
(b) failure to pay any principal of (or premium, if any, on) the
Debentures when due and payable, whether at Maturity, upon redemption,
acceleration or otherwise, unless such payment is prohibited hereunder,
including, without limitation, as a result of the subordination provisions
of Article 12; or
(c) failure to observe or perform in any material respect any other
covenants or agreements of the Company contained in the Debentures or
contained in this Indenture and continuance of such failure for a period
of 60 days after the date on which written notice of such failure shall
have been given to the Company by the Indenture Trustee, or to the Company
and the Indenture Trustee by Holders of at least a majority in aggregate
principal amount of the Debentures at the time Outstanding or the Holders
of at least a majority in aggregate liquidation amount of the Preferred
Securities at the time outstanding; or
(d) the dissolution, winding up or termination of the Trust, except
in connection with the distribution of Debentures or the making of a full
Liquidation Distribution (as defined in the Declaration) to the holders of
Trust Securities in liquidation of the Trust, upon the redemption,
conversion or exchange of all the outstanding Trust Securities, upon
certain mergers, consolidations or amalgamations permitted by Section 9.5
of the Declaration or in any other manner permitted under the Declaration;
or
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(e) the entry by a court of competent jurisdiction of (i) a decree
or order for relief in respect of the Company in an involuntary case or
proceeding under United States bankruptcy laws, as now or hereafter
constituted, or any other applicable federal, state or foreign bankruptcy,
insolvency or other similar law or (ii) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of, or in
respect of, the Company under United States bankruptcy laws, as now or
hereafter constituted, or any other applicable federal, state or foreign
bankruptcy, insolvency or similar law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or of any substantial part of the property or
assets of the Company, or ordering the winding-up or liquidation of the
affairs of the Company, and the continuance of any such decree or order
for relief or any such other decree or order unstayed and in effect for a
period of 180 consecutive days; or
(f) (i) the commencement by the Company of a voluntary case or
proceeding under United States bankruptcy laws, as now or hereafter
constituted, or any other applicable federal, state or foreign bankruptcy,
insolvency or other similar law or of any other case or proceeding to be
adjudicated a bankrupt or insolvent; or (ii) the consent by the Company to
the entry of a decree or order for relief in respect of the Company in an
involuntary case or proceeding under United States bankruptcy laws, as now
or hereafter constituted, or any other applicable federal, state or
foreign bankruptcy, insolvency, or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against
the Company; or (iii) the filing by the Company of a petition or answer or
consent seeking reorganization or relief under United States bankruptcy
laws, as now or hereafter constituted, or any other applicable federal,
state or foreign bankruptcy, insolvency or other similar law; or (iv) the
consent by the Company to the filing of such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or similar official of the Company or of
any substantial part of the property or assets of the Company, or the
making by the Company of an assignment for the benefit of creditors; or
(v) the taking of corporate action by the Company in furtherance of any
such action.
SECTION 5.2 ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If an Event
of Default occurs and is continuing, then and in every such case the Indenture
Trustee or the Holders of not less than a majority in aggregate principal amount
of the Outstanding Debentures may declare the aggregate principal amount of all
the Outstanding Debentures to be due and payable, by a notice in writing to the
Company (and to the Indenture Trustee if given by Holders) specifying the
respective Event of Default and that it is a "NOTICE OF DEFAULT"; provided,
however, that, if upon an Event of Default, the Indenture Trustee or the Holders
of not less than a majority in aggregate principal amount of the Outstanding
Debentures fail to declare the principal of all the Debentures to be immediately
due and payable, the holders of at least a majority in aggregate liquidation
amount of the Preferred Securities then outstanding shall have the right to make
the declaration by such notice in writing to the Company and the Indenture
Trustee; and upon any such notice such principal amount of (including premium,
if any) and the accrued and unpaid interest (including Additional Interest and
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Additional Sums, if any), on all the Debentures then Outstanding shall become
immediately due and payable, provided that the payment of principal (including
premium, if any) and interest (including Additional Interest and Additional
Sums, if any), on the Debentures shall remain subordinated to the extent
provided in Article 12.
The Holders of a majority in principal amount of the Debentures then
Outstanding (by notice to the Company and the Indenture Trustee) may rescind and
cancel a declaration of acceleration and its consequences if (i) the rescission
would not conflict with any judgement or decree of a court of competent
jurisdiction, (ii) all existing Events of Default have been cured or waived,
except non-payment of the principal of or interest (including Additional
Interest and Additional Sums, if any) on the Debentures which have become due
solely by such declaration of acceleration, (iii) to the extent the payment of
such interest is lawful, interest (at the rate specified in the Debentures) on
overdue installments of interest and overdue payments of principal (which
default interest shall only accrue with respect to any interest payment period,
or part thereof, or with respect to any payment of principal upon Maturity,
occurring from and after the Liquidation Date), which has become due otherwise
than by such declaration of acceleration, has been paid or a sum sufficient to
pay such interest has been deposited with the Indenture Trustee, (iv) the
Company has paid the Indenture Trustee its reasonable compensation and
reimbursed the Indenture Trustee for its expenses, disbursements and advances
and (v) in the event of the cure or waiver of a Default or Event of Default of
the type described in Section 5.1(e) or (f), the Indenture Trustee shall have
received an Officer's Certificate and an Opinion of Counsel that such Default or
Event of Default has been cured or waived and the Indenture Trustee shall be
entitled to conclusively rely upon such Officer's Certificate and Opinion of
Counsel. No such rescission shall affect any subsequent default or impair any
right consequent thereon. If the holders of a majority in aggregate principal
amount of the Outstanding Debentures fail to rescind and annul such declaration
and its consequences, the holders of a majority in aggregate liquidation amount
of the Preferred Securities then outstanding shall have such right.
SECTION 5.3 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
INDENTURE TRUSTEE. The Company covenants that if an Event of Default under
Section 5.1(a) or Section 5.1(b) occurs and is continuing, the Company will,
upon demand of the Indenture Trustee, pay to it, for the benefit of the Holders
of the Debentures, the whole amount then due and payable on the Debentures for
principal (and premium, if any) and interest (including Additional Interest and
Additional Sums, if any), including, to the extent that payment of such interest
shall be lawful, interest on any overdue principal (and premium, if any) and on
any overdue installments of interest (which default interest shall only accrue
with respect to any interest payment period, or part thereof, or with respect to
any payment of principal upon Maturity, occurring from and after the Liquidation
Date), in each case at the rate specified in the Debentures, and, in addition
thereto, all amounts owing the Indenture Trustee under Section 6.7.
If the Company fails to pay such amounts forthwith upon such demand, the
Indenture Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and
unpaid, and may prosecute such proceeding to judgment or final decree, and may
enforce the same against the Company or any other obligor upon the
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Debentures and, subject to the provisions of Article 12, collect the moneys
adjudged or decreed to be payable in the manner provided by law out of the
property of the Company or any other obligor upon the Debentures, wherever
situated.
If an Event of Default occurs and is continuing, the Indenture Trustee may
in its discretion proceed to protect and enforce its rights and the rights of
the Holders of the Debentures by such appropriate judicial proceedings as the
Indenture Trustee shall deem most effectual to protect and enforce any such
rights, whether for the specific enforcement of any covenant or agreement in
this Indenture or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy.
SECTION 5.4 INDENTURE TRUSTEE MAY FILE PROOFS OF CLAIM. The Indenture
Trustee may file such proofs of claim and other papers or documents as may be
necessary or advisable in order to have the claims of the Indenture Trustee
(including any claim for the reasonable compensation, expenses, disbursements
and advances of the Indenture Trustee, its agents and counsel) and the Holders
allowed in any judicial proceedings relative to the Company (or any other
obligor upon the Debentures), its creditors or its property and shall be
entitled and empowered to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute the same after
deduction of its reasonable charges and expenses to the extent that any such
charges and expenses are not paid out of the estate in any such proceedings, and
any custodian in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Indenture Trustee, and in the event that the
Indenture Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Indenture Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Indenture Trustee, its
agents and counsel, and any other amounts due the Indenture Trustee under
Section 6.7 hereof.
Nothing herein contained shall be deemed to authorize the Indenture Trustee
to authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or composition affecting the
Debentures or the rights of any Holder thereof, or to authorize the Indenture
Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 5.5 INDENTURE TRUSTEE MAY ENFORCE CLAIM WITHOUT POSSESSION OF
DEBENTURES. All rights of action and claims under this Indenture or the
Debentures may be prosecuted and enforced by the Indenture Trustee without the
possession of any of the Debentures or the production thereof in any proceeding
relating thereto, and any such proceeding instituted by the Indenture Trustee
shall be brought in its own name as a trustee of an express trust, and any
recovery of judgment shall, after provision for the payment of all the amounts
owing the Indenture Trustee (and any predecessor Indenture Trustee) under
Section 6.7, its agents and counsel, be for the ratable benefit of the Holders
of the Debentures in respect of which such judgment has been recovered.
SECTION 5.6 APPLICATION OF MONEY COLLECTED. Any money or property collected
or to be applied by the Indenture Trustee with respect to the Debentures
pursuant to this
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Article shall be applied in the following order, at the date or dates fixed by
the Indenture Trustee, and, in case of the distribution of such money or
property on account of principal (or premium, if any) or interest (including
Additional Interest and Additional Sums, if any), upon presentation of the
Debentures and the notation thereon of the payment if only partially paid and
upon surrender thereof if fully paid:
FIRST: To the holders of Senior Debt in accordance with the terms of
Article 12,
SECOND: To the payment of all amounts due the Indenture Trustee and any
predecessor Indenture Trustee under Section 6.7,
THIRD: To the payment of the amounts then due and unpaid upon the
Debentures for principal (and premium, if any) and interest (including
Additional Interest and Additional Sums, if any), in respect of which or for the
benefit of which such money has been collected, ratably, without preference or
priority of any kind, according to the amounts due and payable on the Debentures
for principal (and premium, if any) and interest (including Additional Interest
and Additional Sums, if any), respectively; and
FOURTH: The balance, if any, to the Company or other Person or Persons
entitled thereto.
SECTION 5.7 LIMITATION ON SUITS. No Holder of the Debentures, including any
holder of Preferred Securities acting to enforce the rights of the Property
Trustee as a Holder of the Debentures pursuant to Section 6.8 of the
Declaration, shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Indenture or for the appointment of a receiver,
assignee, trustee, liquidator, sequestrator (or other similar official), or for
any other remedy hereunder, unless:
(a) such Holder has previously given written notice to the Indenture
Trustee of a continuing Event of Default;
(b) if the Trust is not the sole Holder of the Outstanding
Debentures, the Holders of not less than 25% in aggregate principal amount
of the Outstanding Debentures shall have made written request to the
Indenture Trustee to institute proceedings in respect of such Event of
Default in its own name as Indenture Trustee hereunder;
(c) such Holder or Holders have offered and, if requested, provided
to the Indenture Trustee security and/or indemnity reasonably satisfactory
to the Indenture Trustee against the costs, expenses and liabilities to be
incurred in compliance with such request;
(d) the Indenture Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute any such
proceeding; and
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(e) no direction inconsistent with such written request has been
given to the Indenture Trustee during such 60-day period by the Holders of
a majority in aggregate principal amount of the Outstanding Debentures or
by the holders of a majority in aggregate liquidation amount of the
outstanding Preferred Securities;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of any provision
of, this Indenture to affect, disturb or prejudice the rights of any other
Holders of the Debentures, or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and ratable
benefit of all such Holders.
SECTION 5.8 UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM
AND INTEREST. Notwithstanding any other provision in this Indenture, the Holder
of any Debenture shall have the right which is absolute and unconditional to
receive payment of the principal of (and premium, if any) and (subject to
Section 3.7) interest (including any Additional Interest and Additional Sums, if
any) on such Debenture on the Maturity or to convert such Debenture in
accordance with Article 13 and to institute suit for the enforcement of any such
payment and right to convert, and such right shall not be impaired without the
consent of such Holder. Except as set forth in this Article, the other holders
of Preferred Securities shall have no right to exercise directly any other
rights or remedy available to the Holders of or in respect of, the Debentures.
SECTION 5.9 RESTORATION OF RIGHTS AND REMEDIES. If the Indenture Trustee or
any Holder has instituted any proceeding to enforce any right or remedy under
this Indenture and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Indenture Trustee or to such
Holder, then and in every such case the Company, the Indenture Trustee and the
Holders shall, subject to any determination in such proceeding, be restored
severally and respectively to their former positions hereunder, and thereafter
all rights and remedies of the Indenture Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 5.10 RIGHTS AND REMEDIES CUMULATIVE. Except as otherwise provided
in Section 3.6, no right or remedy herein conferred upon or reserved to the
Indenture Trustee or to the Holders is intended to be exclusive of any other
right or remedy, and every right and remedy shall, to the extent permitted by
law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
SECTION 5.11 DELAY OR OMISSION NOT WAIVER. No delay or omission of the
Indenture Trustee or of any Holder of the Debentures to exercise any right or
remedy accruing upon any Event of Default shall impair any such right or remedy,
or constitute a waiver of any such Event of Default or an acquiescence therein.
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Every right and remedy given by this Article or by law to the Indenture
Trustee or to the Holders may be exercised from time to time, and as often as
may be deemed expedient, by the Indenture Trustee or by the Holders, as the case
may be.
SECTION 5.12 CONTROL BY HOLDERS. The Holders of a majority in principal
amount of the Outstanding Debentures shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Indenture Trustee or exercising any trust or power conferred on the Indenture
Trustee, with respect to the Debentures, provided that:
(a) such direction shall not be in conflict with any rule of law or
with this Indenture;
(b) the Indenture Trustee may take any other action deemed proper by
the Indenture Trustee which is not inconsistent with such direction; and
(c) subject to the provisions of Section 6.1, the Indenture Trustee
shall have the right to decline to follow such direction if the Indenture
Trustee in good faith shall, by a Responsible Officer or Responsible
Officers of the Indenture Trustee, determine that the proceeding so
directed would be unjustly prejudicial to the Holders not joining in any
such direction or would involve the Indenture Trustee in personal
liability.
SECTION 5.13 WAIVER OF PAST DEFAULTS. Subject to Section 9.2 hereof, the
Holders of not less than a majority in principal amount of the Outstanding
Debentures may on behalf of the Holders of all the Debentures waive any existing
Event of Default or Default hereunder or compliance with any provision of this
Indenture or the Debentures. Upon any such waiver, such Event of Default or
Default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been cured, for every purpose of this Indenture, but no such
waiver shall extend to any subsequent or other Event of Default or Default or
impair any right consequent thereon. If the Holders of a majority in aggregate
principal amount of the Outstanding Debentures fail to waive such Event of
Default, the Holders of a majority in aggregate liquidation amount of the
outstanding Preferred Securities shall have such right.
SECTION 5.14 UNDERTAKING FOR COSTS. All parties to this Indenture agree,
and each Holder of any Debenture by his acceptance thereof shall be deemed to
have agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Indenture Trustee for any action taken or omitted by it as Indenture
Trustee, the filing by any party litigant in such suit of an undertaking to pay
the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the provisions of this
Section shall not apply to any suit instituted by the Indenture Trustee or to
any suit instituted by any Holder, or group of Holders, holding in the aggregate
more than 25% in principal amount of the Outstanding Debentures.
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ARTICLE 6.
THE INDENTURE TRUSTEE
SECTION 6.1 CERTAIN DUTIES AND RESPONSIBILITIES.
(a) Except during the continuance of an Event of Default,
(i) the Indenture Trustee undertakes to perform such duties
and only such duties as are specifically set forth in this
Indenture, and no implied covenants or obligations shall be read
into this Indenture against the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates
or opinions furnished to the Indenture Trustee and conforming to the
requirements of this Indenture, but in the case of any such
certificates or opinions which by any provisions hereof are
specifically required to be furnished to the Indenture Trustee, the
Indenture Trustee shall be under a duty to examine the same to
determine whether or not on their face they conform to the
requirements of this Indenture.
(b) In case an Event of Default has occurred and is continuing, the
Indenture Trustee shall exercise such of the rights and powers vested in
it by this Indenture, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Indenture Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct except as follows:
(i) this subsection shall not be construed to limit the effect
of subsection (a) or (b) of this Section;
(ii) the Indenture Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer, unless it
shall be proved that the Indenture Trustee was negligent in
ascertaining the pertinent facts; and
(iii) the Indenture Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in
accordance with the direction of Holders pursuant to Section 5.12
relating to the time, method and place of conducting any proceeding
for any remedy available to the Indenture Trustee, or exercising any
trust or power conferred upon the Indenture Trustee, under this
Indenture.
(d) No provision of this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of
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its duties hereunder, or in the exercise of any of its rights or powers,
if the Indenture Trustee reasonably believes that repayment of such funds
or adequate indemnity against such risk or liability is not reasonably
assured to it.
(e) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Indenture Trustee shall be subject to the
provisions of this Section.
SECTION 6.2 NOTICE OF DEFAULTS. Within 90 days after a Responsible Officer
of the Indenture Trustee obtains actual knowledge of the occurrence of any Event
of Default or Default hereunder, the Indenture Trustee shall transmit by mail to
all Holders of Debentures, as their names and addresses appear in the Securities
Register, notice of such Event of Default or Default hereunder known to the
Indenture Trustee, unless such Default shall have been cured or waived;
provided, however, that, except in the case of an Event of Default or Default in
the payment of the principal of (or premium, if any) or interest (including
Additional Interest and Additional Sums, if any) on any Debenture, the Indenture
Trustee shall be protected in withholding such notice if and so long as a
Responsible Officer of the Indenture Trustee in good faith determines that the
withholding of such notice is in the interests of the Holders of Debentures;
provided, further, that, except in the case of any Event of Default or Default
of the character specified in Section 5.1(c), no such notice to Holders of the
Debentures shall be given until at least 30 days after the occurrence thereof.
SECTION 6.3 CERTAIN RIGHTS OF INDENTURE TRUSTEE. Subject to the provisions
of Section 6.1:
(a) the Indenture Trustee may rely and shall be protected in acting
or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(b) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(c) whenever in the administration of this Indenture the Indenture
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the Indenture
Trustee (unless other evidence be herein specifically prescribed) may, in
the absence of bad faith on its part, rely upon an Officer's Certificate
and an Opinion of Counsel;
(d) the Indenture Trustee may consult with counsel of its selection
and the advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon;
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(e) the Indenture Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the request
or direction of any of the Holders pursuant to this Indenture, unless such
Holders shall have offered to the Indenture Trustee security and/or
indemnity reasonably satisfactory to the Indenture Trustee against the
costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction;
(f) the Indenture Trustee is not required to expend or risk its own
funds or otherwise incur personal financial liability in the performance
of its duties if the Indenture Trustee reasonably believes that repayment
or adequate indemnity is not reasonably assured to it.
(g) the Indenture Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, indenture, Debenture or other paper or
document, but the Indenture Trustee in its discretion may make such
inquiry or investigation into such facts or matters as it may see fit,
and, if the Indenture Trustee shall determine to make such inquiry or
investigation, it shall be entitled to examine the books, records and
premises of the Company, personally or by agent or attorney; and
(h) the Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys, and the Indenture Trustee shall not be responsible
for any misconduct or negligence on any part of any agent or attorney
appointed with due care by it hereunder.
(i) the Indenture Trustee shall not be liable for any action taken,
suffered or omitted to be taken by it in good faith, without negligence
and reasonably believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Indenture.
SECTION 6.4 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF DEBENTURES. The
recitals contained herein and in the Debentures, except the Indenture Trustee's
certificates of authentication, shall be taken as the statements of the Company,
and neither the Indenture Trustee nor any Authenticating Agent assumes any
responsibility for their correctness. The Indenture Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Debentures. Neither the Indenture Trustee nor any Authenticating Agent shall be
accountable for the use or application by the Company of the Debentures or the
proceeds thereof.
SECTION 6.5 MAY HOLD DEBENTURES. The Indenture Trustee, any Paying Agent,
any Securities Registrar, any Authenticating Agent or any other agent of the
Company, in its individual or any other capacity, may become the owner or
pledgee of Debentures and, subject to Sections 6.8 and 6.13, may otherwise deal
with the Company with the same rights it would have if it were not Indenture
Trustee, Paying Agent, Securities Registrar, Authenticating Agent or such other
agent.
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SECTION 6.6 MONEY HELD IN TRUST. Money held by the Indenture Trustee in
trust hereunder need not be segregated from other funds except to the extent
required by law. The Indenture Trustee shall be under no liability for interest
on any money received by it hereunder except as otherwise agreed in writing with
the Company.
SECTION 6.7 COMPENSATION AND REIMBURSEMENT. The Company agrees as follows:
(a) to pay to the Indenture Trustee from time to time such
compensation for all services rendered by it hereunder in such amounts as
the Company and the Indenture Trustee shall agree in writing from time to
time (which compensation shall not be limited by any provision of law in
regard to the compensation of an Indenture Trustee of an express trust);
(b) to reimburse the Indenture Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by the
Indenture Trustee in accordance with any provision of this Indenture
(including the reasonable compensation and the expenses and disbursements
of its agents and counsel) in connection with the Indenture Trustee's
discharge of its duties hereunder; and
(c) to the fullest extent permitted by law to indemnify the
Indenture Trustee (including in its individual capacity) for, and to hold
it harmless against, any loss, liability, damage, claim or expense
(including the reasonable compensation and expenses and disbursements of
its agents and counsel), to the extent incurred without negligence or bad
faith on its part, arising out of or in connection with the acceptance or
administration of this Indenture or the performance of its duties
hereunder, including the reasonable costs and expenses of defending itself
against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The Indenture
Trustee shall notify the Company in writing promptly of any claim asserted
against it for which it may seek indemnity. However, the failure by the
Indenture Trustee to so notify the Company shall not relieve the Company
of its obligations hereunder.
To secure the Company's payment obligations in this Section, the Company
and the Holders agree that the Indenture Trustee shall have a lien prior to the
Debentures on all money or property held or collected by the Indenture Trustee
except assets held in trust to pay principal and premium, if any, or interest on
particular Debentures or pursuant to any redemption pursuant to Article 11
hereof if monies have been deposited for such redemption and notice has been
given and the Redemption Date has passed. Such lien shall survive the
satisfaction and discharge of this Indenture.
When the Indenture Trustee incurs expenses or renders services after an
Event of Default specified in Section 5.1(e) or (f) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any bankruptcy law or a successor statute.
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The provisions of this Section 6.7 shall survive the discharge or
termination of this Indenture and shall survive the resignation or removal of
the Indenture Trustee.
SECTION 6.8 DISQUALIFICATION; CONFLICTING INTERESTS. The Indenture Trustee
shall be subject to the provisions of Section 310(b) of the Trust Indenture Act.
Nothing herein shall prevent the Indenture Trustee from filing with the
Commission the application referred to in the second to last paragraph of
Section 310(b) of the Trust Indenture Act. The Declaration and the Guarantee
shall be deemed to be specifically described in this Indenture for the purposes
of clause (i) of the first proviso contained in Section 310(b) of the Trust
Indenture Act.
SECTION 6.9 CORPORATE INDENTURE TRUSTEE REQUIRED; ELIGIBILITY. There shall
at all times be a Indenture Trustee hereunder which shall be as follows:
(a) a corporation, banking corporation, national banking association
or other Person organized and doing business under the laws of the United
States of America or of any state, territory or the District of Columbia,
authorized under such laws to exercise corporate trust powers and subject
to supervision or examination by federal, state, territorial or District
of Columbia authority; or
(b) a corporation or other Person organized and doing business under
the laws of a foreign government that is permitted to act as Indenture
Trustee pursuant to a rule, regulation or order of the Commission,
authorized under such laws to exercise corporate trust powers, and subject
to supervision or examination by authority of such foreign government or a
political subdivision thereof substantially equivalent to supervision or
examination applicable to United States institutional Indenture Trustees;
in either case having a combined capital and surplus of at least $100,000,000,
subject to supervision or examination by federal or state authority. If such
corporation, banking corporation, national banking association or other Person
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then, for the
purposes of this Section, the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time the Indenture Trustee
shall cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect hereinafter specified
in this Article. Neither the Company nor any Affiliate of the Company shall
serve as Indenture Trustee hereunder.
SECTION 6.10 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Indenture Trustee and no
appointment of a successor Indenture Trustee pursuant to this Article
shall become effective until the acceptance of appointment by the
successor Indenture Trustee under Section 6.11.
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(b) The Indenture Trustee may resign at any time by giving written
notice thereof to the Company. If an instrument of acceptance by a
successor Indenture Trustee shall not have been delivered to the Indenture
Trustee, with a copy for the Company, within 30 days after the giving of
such notice of resignation, the resigning Indenture Trustee may petition
any court of competent jurisdiction for the appointment of a successor
Indenture Trustee.
(c) The Indenture Trustee may be removed at any time by Act of the
Holders of a majority in principal amount at Stated Maturity of the
Outstanding Debentures, delivered to the Indenture Trustee and to the
Company.
(d) If at any time:
(i) the Indenture Trustee shall fail to comply with Section
6.8 after written request therefor by the Company or by any Holder
who has been a bona fide Holder of a Debenture for at least six
months, or
(ii) the Indenture Trustee shall cease to be eligible under
Section 6.9 and shall fail to resign after written request therefor
by the Company or by any such Holder, or
(iii) the Indenture Trustee shall become incapable of acting
or shall be adjudged as bankrupt or insolvent or a receiver of the
Indenture Trustee or of its property shall be appointed or any
public officer shall take charge or control of the Indenture Trustee
or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, (A) the Company by Board Resolution may remove the
Indenture Trustee, or (B) subject to Section 5.14, any Holder who has been a
bona fide Holder of a Debenture for at least six months may, on behalf of
himself and all other similarly situated Holders, petition any court of
competent jurisdiction for the removal of the Indenture Trustee and the
appointment of a successor Indenture Trustee.
(e) If the Indenture Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of
Indenture Trustee for any cause, the Company, by a Board Resolution, shall
promptly appoint a successor Indenture Trustee. If, within one year after
such resignation, removal or incapability, or the occurrence of such
vacancy, a successor Indenture Trustee with respect to the Debentures
shall be appointed by Act of the Holders of a majority in principal amount
of the Outstanding Debentures delivered to the Company and the retiring
Indenture Trustee, the successor Indenture Trustee so appointed shall,
forthwith upon its acceptance of such appointment, become the successor
Indenture Trustee and supersede the successor Indenture Trustee appointed
by the Company. If no successor Indenture Trustee shall have been so
appointed by the Company or the Holders and accepted appointment in the
manner hereinafter provided, any Holder who has been a bona fide Holder of
a Debenture for at
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least six months may, subject to Section 5.14, on behalf of himself and
all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Indenture Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Indenture Trustee and each appointment of a successor
Indenture Trustee by mailing written notice of such event by first-class
mail, postage prepaid, to the Holders of the Debentures as their name and
addresses appear in the Securities Register. Each notice shall include the
name of the successor Indenture Trustee and the address of its Corporate
Trust Office.
SECTION 6.11 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) In case of the appointment hereunder of a successor Indenture
Trustee, every such successor Indenture Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring
Indenture Trustee an instrument accepting such appointment, and thereupon
the resignation or removal of the retiring Indenture Trustee shall become
effective and such successor Indenture Trustee, without any further act,
deed or conveyance, shall become vested with all the rights, powers,
trusts and duties of the retiring Indenture Trustee, but, on the request
of the Company or the successor Indenture Trustee, such retiring Indenture
Trustee shall, upon payment of all amounts then due under Section 6.7,
execute and deliver an instrument transferring to such successor Indenture
Trustee all the rights, powers and trusts of the retiring Indenture
Trustee and shall duly assign, transfer and deliver to such successor
Indenture Trustee all property and money held by such retiring Indenture
Trustee hereunder, subject however to its lien, if any, provided for in
Section 6.7.
(b) Upon request of any such successor Indenture Trustee, the
Company shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Indenture Trustee all rights,
power and trusts referred to in paragraph (a) of this Section.
(c) No successor Indenture Trustee shall accept its appointment
unless at the time of such acceptance such successor Indenture Trustee
shall be qualified and eligible under this Article.
SECTION 6.12 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any corporation, banking corporation, national banking association or other
Person into which the Indenture Trustee may be merged or converted or with which
it may be consolidated, or any corporation, banking corporation, national
banking association or other Person resulting from any merger, conversion or
consolidation to which the Indenture Trustee shall be a party, or any
corporation, banking corporation, national banking association or other Person
succeeding to all or substantially all of the corporate trust business of the
Indenture Trustee, shall be the successor of the Indenture Trustee hereunder;
provided, however, that such corporation, banking corporation, national banking
association or other Person shall be otherwise
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qualified and eligible under this Article and the Trust Indenture Act, without
the execution or filing of any paper or any further act on the part of any of
the parties hereto. In case any Debentures shall have been authenticated, but
not delivered, by the Indenture Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Indenture Trustee may adopt
such authentication and deliver the Debentures so authenticated, and in case any
Debentures shall not have been authenticated, any successor to the Indenture
Trustee may authenticate such Debentures either in the name of any predecessor
Indenture Trustee or in the name of such successor Indenture Trustee, and in all
cases the certificate of authentication shall have the full force which it is
provided anywhere in the Debentures or in this Indenture that the certificate of
the Indenture Trustee shall have.
SECTION 6.13 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. If and when
the Indenture Trustee shall be or become a creditor of the Company (or any other
obligor upon the Debentures), the Indenture Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
SECTION 6.14 APPOINTMENT OF AUTHENTICATING AGENT. The Indenture Trustee may
appoint an Authenticating Agent or Agents with respect to the Debentures which
shall be authorized to act on behalf of the Indenture Trustee to authenticate
the Debentures issued upon original issue, exchange, registration of transfer or
partial redemption or conversion thereof, and Debentures so authenticated shall
be entitled to the benefits of this Indenture and shall be valid and obligatory
for all purposes as if authenticated by the Indenture Trustee hereunder.
Wherever reference is made in this Indenture to the authentication and delivery
of Debentures by the Indenture Trustee or the Indenture Trustee's certificate of
authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Indenture Trustee by an Authenticating Agent. Each
Authenticating Agent shall be acceptable to the Company and shall at all times
be a corporation, banking corporation, national banking association or other
Person organized and doing business under the laws of the United States of
America, or of any state, territory or the District of Columbia, authorized
under such laws to act as Authenticating Agent, having a combined capital and
surplus of not less than $100,000,000 and subject to supervision or examination
by federal or state authority. If such Authenticating Agent publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section the
combined capital and surplus of such Authenticating Agent shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section, such Authenticating
Agent shall resign immediately in the manner and with the effect specified in
this Section.
Any corporation, banking corporation, national banking association or other
Person into which an Authenticating Agent may be merged or converted or with
which it may be consolidated, or any corporation, banking corporation, national
banking association or other Person resulting from any merger, conversion or
consolidation to which such Authenticating Agent shall be a party, or any
corporation, banking corporation, national banking association or other Person
succeeding to all or substantially all of the corporate trust business of an
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Authenticating Agent, shall be the successor Authenticating Agent hereunder;
provided, however, that such corporation, banking corporation, national banking
association or other Person shall be otherwise eligible under this Section,
without the execution or filing of any paper or any further act on the part of
the Indenture Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Indenture Trustee and to the Company. The Indenture Trustee may
at any time terminate the agency of an Authenticating Agent by giving written
notice thereof to such Authenticating Agent and to the Company. Upon receiving
such a notice of resignation or upon such a termination, or in case at any time
such Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Indenture Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Company and shall give
notice of such appointment in the manner provided in Section 1.6 to all Holders
of the Debentures. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers and duties
of its predecessor hereunder, with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed
unless eligible under the provisions of this Section.
The Company agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section.
If an appointment is made pursuant to this Section, the Debentures may have
endorsed thereon, in addition to the Indenture Trustee's certificate of
authentication, an alternative certificate of authentication in the following
form:
This is one of the Debentures referred to in the within-mentioned
Indenture.
-----------------------------
[ ] Dated:
As Indenture Trustee
By:
--------------------------
As Authenticating Agent
By:
--------------------------
Authorized Signatory
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ARTICLE 7.
HOLDERS LISTS AND REPORTS BY INDENTURE TRUSTEE AND COMPANY
SECTION 7.1 COMPANY TO FURNISH NAMES AND ADDRESSES OF HOLDERS. The Company
will furnish or cause to be furnished to the Indenture Trustee the following:
(a) quarterly at least five Business Days before each Interest
Payment Date, a list, in such form as the Indenture Trustee may reasonably
require, of the names and addresses of the Holders as of the related
Regular Record Date; and
(b) at such other times as the Indenture Trustee may request in
writing, within 30 days after the receipt by the Company of any such
request, a list of similar form and content as of a date not more than 15
days prior to the time such list is furnished; excluding from any such
list names and addresses received by the Indenture Trustee in its capacity
as Securities Registrar.
SECTION 7.2 PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS.
(a) The Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in
the most recent list furnished to the Indenture Trustee as provided in
Section 7.1 and the names and addresses of Holders received by the
Indenture Trustee in its capacity as Securities Registrar. The Indenture
Trustee may destroy any list furnished to it as provided in Section 7.1
upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Debentures, and
the corresponding rights and privileges of the Indenture Trustee, shall be
as provided in the Trust Indenture Act.
(c) Every Holder of Debentures, by receiving and holding the same,
agrees with the Company and the Indenture Trustee that neither the Company
nor the Indenture Trustee nor any agent of either of them shall be held
accountable by reason of the disclosure of information as to the names and
addresses of the Holders made pursuant to the Trust Indenture Act.
SECTION 7.3 REPORTS BY INDENTURE TRUSTEE.
(a) The Indenture Trustee shall transmit to Holders such reports
concerning the Indenture Trustee and its actions under this Indenture as
may be required pursuant to the Trust Indenture Act, at the times and in
the manner provided pursuant thereto.
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(b) Reports so required to be transmitted at stated intervals of not
more than 12 months shall be transmitted no later than May 15 in each
calendar year, commencing with the first May 15 after the first issuance
of Debentures under this Indenture.
(c) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Indenture Trustee with each stock
exchange or self regulatory organization upon which the Debentures are
listed and also with the Commission. The Company will notify the Indenture
Trustee whenever the Debentures are listed on any stock exchange or
self-regulatory organization.
SECTION 7.4 REPORTS BY COMPANY. The Company shall file with the Indenture
Trustee and with the Commission, and transmit to Holders, such information,
documents and other reports, and such summaries thereof, as may be required
pursuant to the Trust Indenture Act at the times and in the manner provided in
the Trust Indenture Act, provided that any such information, documents or
reports required to be filed with the Commission pursuant to Section 13 or
Section 15(d) of the Exchange Act shall be filed with the Indenture Trustee
within 15 days after the same is required to be filed with the Commission.
Notwithstanding that the Company may not be required to remain subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company
shall continue to file with the Commission and provide the Indenture Trustee and
Holders with the annual reports and the information, documents and other reports
which are specified in Sections 13 and 15(d) of the Exchange Act (without
exhibits). The Company also shall comply with the other provisions of Section
314(a) of the Trust Indenture Act.
ARTICLE 8.
CONSOLIDATION, MERGER, CONTINUANCE,
CONVEYANCE, TRANSFER OR LEASE
SECTION 8.1 COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS. The
Company shall not, in a single transaction or series of related transactions,
consolidate with or merge into any other Person, or sell, assign, convey,
transfer, lease or otherwise dispose of all or substantially all of its
properties and assets to any Person, or adopt a plan of liquidation, unless:
(a) either (i) the Company is the survivor of such merger or
consolidation or (ii) the surviving or transferee Person is an entity
organized and existing under the laws of the United States of America or
any state or the District of Columbia, and shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Indenture
Trustee, in form satisfactory to the Indenture Trustee, all the
obligations of the Company under the Debentures and this Indenture;
(b) immediately after giving effect to such transaction, no Event of
Default and no Default shall have occurred and be continuing;
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(c) such transaction is permitted under the Declaration and
Guarantee and does not give rise to any breach or violation of the
Declaration or Guarantee; and
(d) the Company has delivered to the Indenture Trustee an Officer's
Certificate and an Opinion of Counsel each stating that such transaction
and any such supplemental indenture comply with this Article and that all
conditions precedent herein relating to such transaction have been
complied with, and the Indenture Trustee, subject to Section 6.1, may rely
upon such Officer's Certificate and Opinion of Counsel as conclusive
evidence that such transaction complies with this Section 8.1.
SECTION 8.2 SUCCESSOR PERSON SUBSTITUTED. Upon any consolidation or merger
by the Company with or into any other Person, or any disposition of all or
substantially all of the assets of the Company in accordance with Section 8.1,
the successor Person formed by such consolidation or into which the Company is
merged or to which such disposition is made shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under this Indenture
with the same effect as if such successor Person had been named as the Company
herein; and thereafter the predecessor Company shall be discharged from all
obligations and covenants under the Indenture and the Debentures.
Such successor Person may cause to be signed, and may issue either in its
own name or in the name of the Company, any or all of the Debentures issuable
hereunder which theretofore shall not have been signed by the Company and
delivered to the Indenture Trustee, and, upon the Company Order of such
successor Person instead of the Company and subject to all the terms, conditions
and limitations in this Indenture, the Indenture Trustee shall authenticate and
shall make available for delivery any Debentures which previously shall have
been signed and delivered by the officers of the Company to the Indenture
Trustee for authentication pursuant to such Company Order and such provisions
and any Debentures which such successor Person thereafter shall cause to be
signed and delivered to the Indenture Trustee on its behalf for the purpose
pursuant to such provisions. All the Debentures so issued shall in all respects
have the same legal rank and benefit under this Indenture as the Debentures
theretofore or thereafter issued in accordance with the terms of this Indenture
as though all of such Debentures had been issued at the date of the execution
hereof.
In case of any such transaction described above, such changes in
phraseology and form may be made in the Debentures thereafter to be issued as
may be appropriate and reasonably agreed to by the successor Person and the
Indenture Trustee.
ARTICLE 9.
SUPPLEMENTAL INDENTURES
SECTION 9.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS. Without the
consent of or notice to any Holder, the Company, when authorized by a Board
Resolution, and the Indenture Trustee, at any time and from time to time, may
modify, waive any provision of, amend or supplement this Indenture or the
Debentures for any of the following purposes:
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(a) to comply with Section 8.1 hereof; or
(b) to convey, transfer, assign, mortgage or pledge any property to
or with the Indenture Trustee; or
(c) to cure any ambiguity, defect, omission or inconsistency; or
(d) to make provision with respect to the conversion rights of
Holders pursuant to the requirements of Article 13; or
(e) to make any other change that does not materially adversely
affect the interest and rights of the Holders of Debentures and, for so
long as any of the Preferred Securities shall remain outstanding, the
holders of such Preferred Securities; or
(f) to evidence and provide for the acceptance of appointment
hereunder by a successor Indenture Trustee and to add to or change any of
the provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the Trust hereunder by more than one
Indenture Trustee, pursuant to the requirements of Section 6.11(b); or
(g) to comply with the requirements of the Commission under the
Trust Indenture Act; or
(h) to make provision for any matters required pursuant to Section
3.5 or otherwise necessary, desirable or appropriate in connection with
the issuance of Debentures to holders of Trust Securities in the event of
a distribution of Debentures by the Trust if a Special Event occurs and is
continuing.
SECTION 9.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS. The Company
and the Indenture Trustee may modify, amend, waive any provision of or
supplement this Indenture with the written consent of the Holders of not less
than a majority in aggregate principal amount of the Outstanding Debentures
without notice to any Holder. The Holders of not less than a majority in
aggregate principal amount of the Outstanding Debentures may waive compliance in
a particular instance by the Company with any provision of this Indenture or the
Debentures without notice to any Holder. However, without the consent of each
Holder affected, an amendment, supplement or waiver, including a waiver pursuant
to Section 5.13, may not:
(a) except to the extent permitted by Section 3.11 with respect to
the extension of the interest payment period of the Debentures, extend the
Stated Maturity of the principal of, or any installment of interest
(including any Additional Interest) on, the Debentures, or reduce the
principal amount thereof or the rate of interest thereon or reduce any
premium payable upon the redemption thereof, or change the place of
payment where, or the coin or currency in which, any Debenture or interest
thereon is payable; or
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(b) materially and adversely affect any right to convert or exchange
any Debenture, including increasing the conversion price of any Debenture;
or
(c) reduce the amount of Debentures whose Holders must consent to an
amendment, modification, waiver of any provision or supplement of this
Indenture or the Debentures; or
(d) modify any of the provisions of this Section, Section 5.8 or
Section 5.13; or
(e) modify the provisions in Article 12 of this Indenture with
respect to the subordination of Outstanding Debentures in a manner
materially adverse to the Holders thereof;
provided, however, that, so long as any Preferred Securities remain outstanding,
no such amendment, modification or supplement of the Indenture that materially
adversely affects the holders of the Preferred Securities shall be entered into,
no termination of this Indenture shall occur and no waiver under this Indenture
shall be effective, without the prior consent of the holders of at least a
majority of the aggregate liquidation amount of such Preferred Securities then
outstanding unless and until the principal (and premium, if any) of the
Debentures and all accrued and unpaid interest (including Additional Interest
and Additional Sums, if any) thereon have been paid in full; provided, however,
that where a consent under the Indenture would require the consent of each
Holder of Debentures affected thereby, no such consent shall be given by the
Property Trustee without the prior consent of each holder of Preferred
Securities.
After a modification, amendment, supplement or waiver under this Section
9.2 becomes effective, the Company shall mail to the Holders a notice briefly
describing the modification, amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such modification, amendment,
supplement or waiver.
It shall not be necessary for the consent of Holders under this Section to
approve the particular form of any proposed amendment, modification, supplement
or waiver, but it shall be sufficient if such consent shall approve the
substance thereof.
SECTION 9.3 EXECUTION OF SUPPLEMENTAL INDENTURES. The Indenture Trustee is
hereby authorized to join with the Company in the execution of any supplemental
indenture authorized or permitted by the terms of this Indenture and to make any
further appropriate agreements and stipulations which may be therein contained.
In executing or accepting the additional trusts created by any supplemental
indenture permitted by this Article or the modifications thereby of the trust
created by this Indenture, the Indenture Trustee shall be entitled to receive,
and (subject to Section 6.1) shall be fully protected in relying upon, an
Officer's Certificate and an Opinion of Counsel stating that the execution of
such supplemental indenture is authorized or permitted by this Indenture, and
that all conditions precedent have been complied with. The Indenture Trustee
may, but shall not be obligated to, enter into any
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such supplemental indenture which affects the Indenture Trustee's own rights,
duties or immunities under this Indenture or otherwise.
SECTION 9.4 EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution of any
supplemental indenture under this Article, this Indenture shall be modified in
accordance therewith, and such supplemental indenture shall form a part of this
Indenture for all purposes, and every Holder of the Debentures theretofore or
thereafter authenticated and delivered hereunder shall be bound thereby unless
it makes a change described in any of clauses (a) through (e) of Section 9.2, in
which case the supplemental indenture shall bind only each Holder of a Debenture
who has consented to it and every subsequent Holder of a Debenture or portion of
a Debenture that evidences the same Debt as the consenting Holder's Debenture.
SECTION 9.5 CONFORMITY WITH TRUST INDENTURE ACT. Every supplemental
indenture executed pursuant to this Article shall conform to the requirements of
the Trust Indenture Act as then in effect.
SECTION 9.6 REFERENCE IN DEBENTURES TO SUPPLEMENTAL INDENTURES. Debentures
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article may, and shall if required by the Company, bear a
notation in form approved by the Indenture Trustee as to any matter provided for
in such supplemental indenture. If the Company shall so determine, new
Debentures so modified as to conform, in the opinion of the Company, to any such
supplemental indenture may be prepared and executed by the Company and
authenticated and made available for delivery by the Indenture Trustee in
exchange for Outstanding Debentures presented to the Indenture Trustee. Any
failure to make the appropriate notation shall not affect the validity of such
Debenture.
ARTICLE 10.
COVENANTS
SECTION 10.1 PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The Company shall,
subject to Article 12 and Section 3.11, pay the principal of and interest
(including Additional Interest and Additional Sums, if any) on the Debentures on
the dates and in the manner provided in the Debentures and this Indenture. An
installment of principal or interest shall be considered paid on the date it is
due if the Indenture Trustee or Paying Agent holds on that date money designated
for and sufficient to pay such installment and is not prohibited from paying
such money to the Holders on that date pursuant to Article 12.
The Company shall, subject to Article 12, pay interest on overdue principal
(including post-petition interest in a proceeding under any bankruptcy law) and
overdue interest, to the extent lawful, at the rate specified in the Debentures
(which default interest shall only accrue with respect to any interest payment
period, or part thereof, or with respect to any payment of principal upon
Maturity, occurring from and after the Liquidation Date).
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SECTION 10.2 MAINTENANCE OF OFFICE OR AGENCY. The Company will maintain in
the United States an office or agency where Debentures may be presented or
surrendered for payment and an office or agency where Debentures may be
surrendered for transfer or exchange and where notices and demands to or upon
the Company in respect of the Debentures and this Indenture may be served. The
Company initially appoints the Indenture Trustee, acting through its Corporate
Trust Office, as its agent for said purposes. The Company will give prompt
written notice to the Indenture Trustee of any change in the location of any
such office or agency. If at any time the Company shall fail to maintain such
office or agency or shall fail to furnish the Indenture Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Indenture Trustee, and the Company
hereby appoints the Indenture Trustee as its agent to receive all such
presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other offices
or agencies where the Debentures may be presented or surrendered for any or all
of such purposes, and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the United States
for such purposes. The Company will give prompt written notice to the Indenture
Trustee of any such designation and any change in the location of any such
office or agency.
SECTION 10.3 MONEY FOR DEBENTURE PAYMENTS TO BE HELD IN TRUST. If the
Company shall at any time act as its own Paying Agent with respect to the
Debentures, it will, on or before each due date of the principal of (and
premium, if any) or interest on any of the Debentures, segregate and hold in
trust for the benefit of the Persons entitled thereto a sum sufficient to pay
the principal (and premium, if any) or interest (including Additional Interest
and Additional Sums, if any) so becoming due until such sums shall be paid to
such Persons or otherwise disposed of as herein provided, and will promptly
notify the Indenture Trustee of its failure so to act.
Whenever the Company shall have one or more Paying Agents, it will, on or
before 10:00 a.m. New York City time on each due date of the principal of or
interest on the Debentures, deposit with a Paying Agent a sum sufficient to pay
the principal (and premium, if any) or interest (including Additional Interest
and Additional Sums, if any) so becoming due, such sum to be held in trust for
the benefit of the Persons entitled to such principal and premium (if any) or
interest, and (unless such Paying Agent is the Indenture Trustee) the Company
will promptly notify the Indenture Trustee of its failure so to act.
The Company will cause each Paying Agent other than the Indenture Trustee
to execute and deliver to the Indenture Trustee an instrument in which such
Paying Agent shall agree with the Indenture Trustee, subject to the provisions
of this Section, that such Paying Agent will:
(a) hold all sums held by it for the payment of the principal of
(and premium, if any) or interest (including Additional Interest and
Additional Sums, if any) on
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Debentures in trust for the benefit of the Persons entitled thereto until
such sums shall be paid to such Persons or otherwise disposed of as herein
provided;
(b) give the Indenture Trustee notice of any default by the Company
(or any other obligor upon the Debentures) in the making of any payment of
principal (and premium, if any) or interest (including Additional Interest
and Additional Sums, if any);
(c) at any time during the continuance of any such default, upon the
written request of the Indenture Trustee, forthwith pay to the Indenture
Trustee all sums so held in trust by such Paying Agent; and
(d) comply with the provisions of the Trust Indenture Act applicable
to it as a Paying Agent.
The Company may, at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Indenture Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Indenture
Trustee upon the same trusts as those upon which such sums were held by the
Company or such Paying Agent, and, upon such payment by the Company or any
Paying Agent to the Indenture Trustee, such Paying Agent shall be released from
all further liability with respect to such money.
Any money deposited with the Indenture Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of (and premium,
if any) or interest on any Debenture and remaining unclaimed for two years after
such principal (and premium, if any) or interest has become due and payable
shall (unless otherwise required by mandatory provision of applicable escheat or
abandoned or unclaimed property law) be paid on Company Request, after all
payments owing the Indenture Trustee have been paid, to the Company or (if then
held by the Company) shall (unless otherwise required by mandatory provision of
applicable escheat or abandoned or unclaimed property law) be discharged from
such trust; and the Holder of such Debenture shall thereafter, as an unsecured
general creditor, look only to the Company for payment thereof, and all
liability of the Indenture Trustee or such Paying Agent with respect to such
trust money, and all liability of the Company as trustee thereof, shall
thereupon cease; provided, however, that the Indenture Trustee or such Paying
Agent, before being required to make any such repayment, may at the expense of
the Company cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general circulation
in the City of New York, notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days after the
date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
SECTION 10.4 EXISTENCE. Subject to Article 8, the Company will do or cause
to be done all things necessary to preserve and keep in full force and effect
its corporate existence.
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SECTION 10.5 ADDITIONAL SUMS. In the event that (a) the Trust is the Holder
of all of the Outstanding Debentures, (b) a Tax Event in respect of the Trust
shall have occurred and be continuing and (c) the Company shall not have
terminated the Trust pursuant to Section 9.2(b) of the Declaration, the Company
shall pay to the Trust (and its permitted successors or assigns under the
Declaration) for so long as the Trust (or its permitted successor or assignee)
is the registered holder of the Debentures, such additional amounts as may be
necessary in order that the net amount of Distributions received by holders of
the outstanding Trust Securities shall not be reduced as a result of any
additional taxes, duties and other governmental charges to which the Trust has
become subject as a result of a Tax Event (the "ADDITIONAL SUMS"), unless the
Company shall have revoked such election or failed to make such payments.
Whenever in this Indenture or the Debentures there is a reference in any context
to the payment of principal of or interest on the Debentures, such mention shall
be deemed to include mention of the payments of the Additional Sums provided for
in this paragraph to the extent that, in such context, Additional Sums are, were
or would be payable in respect thereof pursuant to the provisions of this
paragraph, and express mention of the payment of Additional Sums (if applicable)
in any provisions hereof shall not be construed as excluding Additional Sums in
those provisions hereof where such express mention is not made.
SECTION 10.6 ADDITIONAL COVENANTS. The Company covenants with each Holder
of the Debentures that for so long as Preferred Securities are outstanding (a)
not to convert the Debentures except pursuant to a Notice of Conversion
delivered to the Conversion Agent by a holder of Trust Securities, (b) to
maintain directly or indirectly 100% ownership of the Common Securities of the
Trust; provided, however, that any permitted successor of the Company hereunder
may succeed to the Company's ownership of such Common Securities, (c) not to
voluntarily dissolve, terminate, wind-up or liquidate the Trust, except in
accordance with the terms of the Declaration and (d) to use its reasonable
efforts, consistent with the terms and provisions of the Declaration, to cause
the Trust to remain classified as a grantor trust and not as an association
taxable as a corporation for United States federal income tax purposes.
ARTICLE 11.
REDEMPTION OR EXCHANGE OF DEBENTURES
SECTION 11.1 ELECTION TO REDEEM; NOTICE TO INDENTURE TRUSTEE. The election
of the Company to redeem any Debentures shall be evidenced by or pursuant to a
Board Resolution. In case of any redemption at the election of the Company, the
Company shall, not less than 30 days nor more than 60 days prior to the date
fixed for redemption (unless a shorter notice shall be satisfactory to the
Indenture Trustee), notify the Indenture Trustee in writing of such date and of
the principal amount of Debentures to be redeemed.
SECTION 11.2 SELECTION OF DEBENTURES TO BE REDEEMED. If less than all the
Debentures are to be redeemed, the particular Debentures to be redeemed shall be
selected not more than 60 days prior to the Redemption Date by the Indenture
Trustee from the Outstanding Debentures not previously called for redemption.
The Indenture Trustee shall select the Debentures to be redeemed, if the
Debentures are listed on a national securities exchange, in
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accordance with the rules of such exchange or, if the Debentures are not so
listed, on a pro rata basis, by lot or by such other method as the Indenture
Trustee shall deem fair and appropriate and which may provide for the selection
for redemption of a portion of the principal amount of the Debentures
Outstanding, provided that the unredeemed portion of the principal amount of the
Debentures be in an authorized denomination (which shall not be less than the
minimum authorized denomination) for the Debentures.
The Indenture Trustee shall promptly notify the Company in writing of the
Debentures selected for partial redemption and the principal amount thereof to
be redeemed. For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Debentures shall relate,
in the case of any Debenture redeemed or to be redeemed only in part, to the
portion of the principal amount of such Debenture which has been or is to be
redeemed. If the Company shall so direct, Debentures registered in the name of
the Company, any Affiliate or any Subsidiary thereof shall not be included in
the Debentures selected for redemption.
SECTION 11.3 NOTICE OF REDEMPTION. Notice of redemption shall be given by
first-class mail, postage prepaid, mailed not less than 30 days, and not more
than 60 days, prior to the date fixed for redemption, to each Holder of
Debentures to be redeemed, at the address of such Holder as it appears in the
Securities Register. With respect to Debentures to be redeemed, each notice of
redemption shall state:
(a) the date fixed for such redemption (the "Redemption Date");
(b) the Redemption Price;
(c) if less than all Outstanding Debentures are to be redeemed, the
identification (and, in the case of partial redemption, the respective
principle amounts) of the particular Debentures to be redeemed (including,
if relevant, the CUSIP or ISIN number);
(d) that on the Redemption Date, the Redemption Price will become
due and payable upon each such Debenture or portion thereof, and that upon
deposit of the Redemption Price and any unaccrued and unpaid interest with
the Paying Agent, interest (including Additional Interest and Additional
Sums, if any) thereon, if any, shall cease to accrue on and after the
Redemption Date;
(e) the place or places where the Debentures are to be surrendered
for payment of the Redemption Price at which the Debentures are to be
redeemed;
(f) that a Holder of Debentures who desires to convert Debentures
called for redemption must satisfy the requirements for conversion
contained in the Debentures, the then existing Conversion Rate, and the
date and time when the option to convert shall expire; and
(g) the aggregate principal amount of Debentures that are being
redeemed.
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Notice of redemption of Debentures to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Indenture Trustee in the name and at the expense of the Company. The notice if
mailed in the manner herein provided shall be conclusively presumed to have been
duly given, whether or not the Holder receives such notice. In any case, a
failure to give such notice by mail, or any defect in the notice, to the Holder
of any Debenture designated for redemption in whole or in part shall not affect
the validity of the proceedings for the redemption of any other Debenture.
SECTION 11.4 DEPOSIT OF REDEMPTION PRICE. On or prior to 10:00 a.m., New
York City time, on the Redemption Date specified in the notice of redemption
given as provided in Section 11.3, the Company will deposit with the Indenture
Trustee or with one or more Paying Agents (or, if the Company is acting as its
own Paying Agent, segregate and hold in trust as provided in Section 10.3) an
amount of money, in immediately available funds, sufficient to pay the
Redemption Price of and accrued interest on all the Debentures so called for
redemption on the Redemption Date.
If any Debenture called for redemption has been converted, any money
deposited with the Indenture Trustee or with any Paying Agent or so segregated
and held in trust for the redemption of such Debenture shall (subject to any
right of the Holder of such Debenture or any Predecessor Debenture to receive
interest as provided in the last paragraph of Section 3.7) be paid to the
Company upon Company Request or, if then held by the Company, shall be
discharged from such trust.
SECTION 11.5 DEBENTURES PAYABLE ON REDEMPTION DATE. Once the notice of
redemption described in Section 11.3 is mailed, Debentures called for redemption
become due and payable on the Redemption Date and at the Redemption Price,
including any premium, plus interest accrued to the Redemption Date (and
Additional Interest and Additional Sums, if any). Upon surrender to the Paying
Agent, such Debentures shall be paid at the Redemption Price, including any
premium, plus interest accrued to the Redemption Date (and Additional Interest
and Additional Sums, if any); provided that if a Redemption Date is not a
Business Day, payment shall be made on the next succeeding Business Day (and no
interest shall accrue for the period from such Redemption Date to such
succeeding Business Day), except that, if such Business Day falls in the next
calendar year, such payment shall be made on the immediately preceding Business
Day, in each case, with the same force and effect as if made on the Redemption
Date.
On and after any Redemption Date, if money sufficient to pay the Redemption
Price of and accrued interest on Debentures called for redemption shall have
been made available in accordance with Section 11.4 and payment thereof is not
prohibited pursuant to the terms of this Indenture, the Debentures to be
redeemed will cease to accrue interest and the only right of the Holders of such
Debentures will be to receive payment of the Redemption Price of and accrued and
unpaid interest (and Additional Interest and Additional Sums, if any) on such
Debentures to the Redemption Date. Any monies deposited with the Paying Agent
pursuant to Section 11.4 and unclaimed at the end of one year from the
Redemption Date shall, to the extent permitted by
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law, be returned to the Company, after which the Holders of Debentures called
for redemption shall look only to the Company for the payment thereof.
SECTION 11.6 DEBENTURES REDEEMED IN PART. Any Debenture which is to be
redeemed only in part shall be surrendered at the place of payment therefor
(with, if the Company or the Indenture Trustee so requires, due endorsement by,
or a written instrument of transfer in form satisfactory to the Company and the
Indenture Trustee duly executed by, the Holder thereof or his attorney duly
authorized in writing), and the Company shall execute, and the Indenture Trustee
shall authenticate and make available for delivery to the Holder of such
Debenture without service charge, a new Debenture in principal amount at Stated
Maturity equal to and in exchange for the unredeemed portion of the principal
amount of the Debenture so surrendered. Each Debenture shall be subject to
partial redemption only in the amount of $50 or integral multiples thereof.
SECTION 11.7 OPTIONAL REDEMPTION.
(a) Subject to Section 11.7(b), the Company may not redeem the Debentures
prior to ____________, 2003 [the fourth anniversary of issuance of the trust
preferred stock]. The Company, at its option, may, on or after __________, 2003,
redeem at any time all, or from time to time a portion, of the Debentures on any
date set by the Board of Directors, if redeemed during the twelve-month period
beginning ________, 2003 [the first day after the fourth anniversary of issuance
of the trust preferred stock] of the year specified below, at the following
Redemption Prices (expressed as a percentage of principal amount at Stated
Maturity), together, in each case, with accrued and unpaid interest (including
Additional Interest and Additional Sums, if any) to the Redemption Date:
<TABLE>
<CAPTION>
Year Percentage
- ---- ----------
<S> <C>
[Assuming issuance of the trust preferred stock
occurs in 1999]
2003............................................ 105.100%
2004............................................ 104.250%
2005............................................ 103.400%
2006............................................ 102.550%
2007............................................ 101.700%
2008............................................ 100.850%
and thereafter.................................. 100.000%
</TABLE>
Notwithstanding the foregoing, the Company shall not redeem less than all of the
Debentures at any time Outstanding until all accrued but unpaid interest
(including Additional Interest and Additional Sums, if any) upon all Debentures
then Outstanding shall have been paid.
(b) During the one-year period commencing on ____________ [the third
anniversary of the issuance of the trust preferred stock], the Company, at its
option, may redeem at any time all, or from time to time a portion, of the
Debentures on any date set by the Board of Directors at a cash Redemption Price
of 105.95% (expressed as a percentage of principal amount at Stated
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Maturity), plus accrued and unpaid interest (including Additional Interest and
Additional Sums, if any) to the Redemption Date, provided that the product of
(i) the average Closing Price of a share of Common Stock, for any 10 consecutive
trading days preceding the date of such call for redemption, multiplied by (ii)
the Conversion Rate, shall have equaled or exceeded $65.00 per share.
Notwithstanding the foregoing, the Company shall not redeem less than all of the
Debentures at any time Outstanding until all accrued but unpaid interest
(including Additional Interest and Additional Sums, if any) upon all Debentures
then Outstanding shall have been paid.
SECTION 11.8 EXCHANGE OF TRUST SECURITIES FOR DEBENTURES.
(a) At any time, the Company shall have the right to terminate or
dissolve the Trust and cause the Debentures to be distributed to the
holders of the Preferred Securities and the Common Securities in
liquidation of the Trust after satisfaction of the Trust's liabilities to
its creditors as provided by applicable law.
(b) If a Special Event in respect of the Trust shall occur, the
Company shall give the Property Trustee notice of the same. If a Special
Event in respect of the Trust shall occur and be continuing, the
Declaration requires the Administrative Trustees thereunder to direct the
Conversion Agent (as such terms are defined in the Declaration) to
exchange all outstanding Trust Securities for the Debentures having a
principal amount at Stated Maturity equal to the aggregate liquidation
amount of the Trust Securities to be exchanged, with accrued interest in
an amount equal to any unpaid distributions (including any Additional
Sums) on the Trust Securities; provided, however, that, in the case of a
Tax Event, the Company shall have the right to direct the Property Trustee
that less than all, or none, of the Trust Securities be so exchanged if
and for so long as the Company shall have elected to pay any Additional
Sums such that the net amount received by holders of the Trust Securities
not so exchanged in respect of distributions thereon is not reduced as a
result of such Tax Event, and shall not have revoked any such election or
failed to make such payments.
SECTION 11.9 NO SINKING FUND; REDEMPTION UPON CHANGE OF CONTROL.
(a) Subject to Section 11.9(b), the Debentures shall not be subject
to the operation of a purchase, retirement or sinking fund.
(b) If the Trust is no longer the record Holder of the Debentures,
then, in the event of a Change of Control (as hereinafter defined), the
Company will, to the extent of funds legally available therefore and
subject to the prior payment in full of all other obligations (including,
without limitation, Senior Debt) that are then due or become due as a
result of such Change of Control (or similar event), make an offer to
redeem (the "CHANGE OF CONTROL OFFER") all of the then Outstanding
Debentures at a purchase price in cash equal to 101% of the principal
amount thereof, plus accrued and unpaid interest (including Additional
Interest and Additional Sums, if any) thereon, to the date of redemption.
Within 30 days following the occurrence of any Change of Control,
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notice by first-class mail, postage prepaid, shall be given to each Holder
of Debentures to be redeemed at his or her last address as the same
appears on the Securities Register. Such notice shall state: (i) that a
Change of Control has occurred and that the Holders of Debentures have the
right to require the Company to redeem all or a portion of their
Debentures at a purchase price in cash equal to 101% of the principal
amount thereof, plus accrued and unpaid interest (including Additional
Interest and Additional Sums, if any) thereon (the "CHANGE OF CONTROL
REDEMPTION PRICE") to the date of purchase (the "CHANGE OF CONTROL
PURCHASE DATE"), which shall be a Business Day, specified in such notice,
that is not earlier than 30 days or later than 60 days from the date such
notice is mailed; (ii) the then effective Conversion Rate; (iii) that
payment will be made upon presentation and surrender of the Debentures;
(iv) that accrued but unpaid interest (including Additional Interest and
Additional Sums, if any) thereon to the Change of Control Purchase Date
will be paid; (v) that on and after the Change of Control Purchase Date,
interest will cease to accrue on such Debentures so redeemed and (vi) such
other information as is specified in Section 11.3.
(c) Any notice of a Change of Control Offer which is mailed as
herein provided shall be conclusively presumed to have been duly given,
whether or not the Holder of the Debentures receives such notice. On or
after the date fixed for redemption as stated in such notice of a Change
of Control Offer, each Holder of Debentures electing to accept such Change
of Control Offer shall surrender the Debentures to the Company at the
place designated in such notice and shall thereupon be entitled to receive
payment of the Change of Control Redemption Price. If the Holder elects to
have redeemed less than the entire principal amount represented by any
such Debentures, a new Debenture shall be issued representing the portion
of the principal amount not so redeemed.
(d) In the event a Change of Control Offer is made to holders of
Preferred Securities under the Declaration, then, on or after the
applicable Change of Control Purchase Date with respect to the Preferred
Securities, upon the election of holders of Preferred Securities to accept
such Change of Control Offer by surrendering their certificate (or
certificates) therefor, the Company shall, subject to the provisions of
Article 12, redeem Debentures in an aggregate principal amount at Stated
Maturity equal to the aggregate liquidation amount of such Preferred
Securities so redeemed, at the Change of Control Redemption Price, plus
accrued and unpaid interest thereon, in accordance with the applicable
procedures set forth in, and the terms of, Sections 11.5 and 11.6 hereof.
For the purpose of this Section, the terms "Redemption Price" and
"Redemption Date," as used in Sections 11.5 and 11.6 hereof, shall be
deemed to refer to the "Change of Control Redemption Price" and the
"Change of Control Purchase Date," respectively.
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ARTICLE 12.
SUBORDINATION OF DEBENTURES
SECTION 12.1 DEBENTURES SUBORDINATE TO SENIOR DEBT. The Company covenants
and agrees, and each Holder of Debentures, by its acceptance thereof, likewise
covenants and agrees, that, to the extent and in the manner hereinafter set
forth in this Article 12, all obligations represented by the Debentures
(including the payment of the principal of, premium, if any, and interest
(including Additional Interest and Additional Sums, if any) on the Debentures)
are hereby expressly made subordinate and subject in right of payment as
provided in this Article 12 to the prior indefeasible payment and satisfaction
in full in cash of all existing and future Senior Debt.
This Article 12 shall constitute a continuing offer to all Persons who, in
reliance upon such provisions, become holders of or continue to hold Senior
Debt; and such provisions are made for the benefit of the holders of Senior
Debt; and such holders are made obligees hereunder and they or each of them may
enforce such provisions.
SECTION 12.2 PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC. In the event
of (a) any insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding in connection
therewith, relative to the Company or to its creditors, as such, or to its
assets, whether voluntary or involuntary, or (b) any total or partial
liquidation, dissolution or other winding-up of the Company, whether voluntary
or involuntary and whether or not involving insolvency or bankruptcy, or (c) any
general assignment for the benefit of creditors or any other marshalling of
assets or liabilities of the Company, then and in any such event:
(1) the holders of Senior Debt shall be entitled to receive payment
and satisfaction in full in cash of all amounts due on or in respect of
all Senior Debt before the Holders of the Debentures are entitled to
receive or retain any payment or distribution of any kind or character on
account of the Debentures (including, without limitation, with respect to
principal of, premium, if any, or interest (including Additional Interest
and Additional Sums, if any)); and
(2) any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, by set-off or
otherwise, to which the Holders or the Indenture Trustee would be entitled
but for the provisions of this Article 12, shall be paid by the
liquidating trustee or agent or other Person making such payment or
distribution, whether a trustee in bankruptcy, a receiver or liquidating
trustee or otherwise, directly to the holders of Senior Debt or their
Representative or Representatives or to the trustee or trustees under any
indenture under which any instruments evidencing any of such Senior Debt
may have been issued, ratably according to the aggregate amounts remaining
unpaid on account of the Senior Debt held or represented by each, to the
extent necessary to make payment in full in cash of all Senior Debt
remaining unpaid, after giving effect to any concurrent payment or
distribution to the holders of such Senior Debt; and
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(3) in the event that, notwithstanding the foregoing provisions of
this Section 12.2, the Indenture Trustee or the Holder of any Debenture
shall have received any payment or distribution of assets of the Company
of any kind or character, whether in cash, property or securities,
including, without limitation, by way of set-off or otherwise, in respect
of the Debentures before all Senior Debt is paid and satisfied in full in
cash, then and in such event such payment or distribution shall be held by
the Indenture Trustee or the Holder of such Debenture, as the case may be,
in trust for the benefit of the holders of such Senior Debt and shall be
immediately paid over or delivered forthwith to the liquidating trustee or
agent or other Person making payment or distribution of assets of the
Company for application to the payment of all Senior Debt remaining
unpaid, to the extent necessary to pay all Senior Debt in full in cash
after giving effect to any concurrent payment or distribution to or for
the holders of Senior Debt.
The consolidation of the Company with, or the merger of the Company with or
into, another Person or the liquidation or dissolution of the Company following
the transfer of all its assets (as an entirety or substantially as an entirety)
to another Person upon the terms and conditions set forth in Article 8 hereof
shall not be deemed a dissolution, winding-up, liquidation, reorganization,
assignment for the benefit of creditors or marshaling of assets and liabilities
of the Company for the purposes of this Article 12 if the Person formed by such
consolidation or the surviving entity of such merger or the Person which
acquires by transfer such assets (as an entirety or substantially as an
entirety) shall, as a part of such consolidation, merger or transfer, comply
with the conditions set forth in such Article 8 hereof.
SECTION 12.3 SUSPENSION OF PAYMENT WHEN SENIOR DEBT IN DEFAULT.
(a) Unless Section 12.2 hereof shall be applicable, after the
occurrence of a Payment Default or Non-Payment Event of Default, no
payment or distribution of any assets or securities of the Company of any
kind or character (including, without limitation, cash, property and any
payment or distribution which may be payable or deliverable by reason of
the payment of any other indebtedness of the Company being subordinated to
the payment of the Debentures by the Company) may be made by or on behalf
of the Company, including, without limitation, by way of set-off or
otherwise, for or on account of the Debentures (including, without
limitation, principal, premium or interest (including Additional Interest
and Additional Sums, if any) thereon), or for or on account of the
purchase, redemption, defeasance or other acquisition of the Debentures,
and neither the Indenture Trustee nor any holder or owner of any Debenture
shall take or receive from the Company or any Subsidiary of the Company,
directly or indirectly in any manner, payment in respect of all or any
portion of Debentures (including, without limitation, principal, premium
or interest (including Additional Interest and Additional Sums, if any)
thereon) following the occurrence of a Payment Default on Senior Debt or
the occurrence of a Non-Payment Event of Default on Senior Debt and in any
such event, such prohibition shall continue until such Payment Default or
Non-Payment Event of Default is cured, waived in writing or ceases to
exist and any related acceleration has been rescinded or otherwise cured;
provided that nothing in this sentence shall be deemed
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to affect the right of the Holders to receive payments that are made from
funds on deposit pursuant to Section 4.1(a)(ii)(B). At such time as the
prohibition set forth in the preceding sentence shall no longer be in
effect, the Company shall resume making any and all required payments in
respect of the Debentures, including any missed payments.
(b) In the event that, notwithstanding the foregoing, the Indenture
Trustee or the Holder of any Debenture shall have received any payment
prohibited by the foregoing provisions of this Section 12.3, then and in
such event such payment shall be paid over and delivered forthwith to the
Representative, in trust for distribution to the holders of Senior Debt
or, if no amounts are then due in respect of Senior Debt, promptly
returned to the Company, or otherwise as a court of competent jurisdiction
shall direct.
SECTION 12.4 INDENTURE TRUSTEE'S RELATION TO SENIOR DEBT. With respect to
the holders of Senior Debt, the Indenture Trustee undertakes to perform or to
observe only such of its covenants and obligations as are specifically set forth
in this Article 12, and no implied covenants or obligations with respect to the
holders of Senior Debt shall be read into this Indenture against the Indenture
Trustee. The Indenture Trustee shall not be deemed to owe any fiduciary duty to
the holders of Senior Debt and the Indenture Trustee shall not be liable to any
holder of Senior Debt if it shall mistakenly pay over or deliver to Holders, the
Company or any other Person moneys or assets to which any holder of Senior Debt
shall be entitled by virtue of this Article 12 or otherwise.
SECTION 12.5 SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR DEBT. Subject to
the payment in full in cash of all Senior Debt, the Holders of the Debentures
shall be subrogated to the rights of the holders of such Senior Debt to receive
payments and distributions of cash, property and securities applicable to the
Senior Debt until the principal of, premium, if any, and interest (including
Additional Interest and Additional Sums, if any) on the Debentures shall be paid
in full. For purposes of such subrogation, no payments or distributions to the
holders of Senior Debt of any cash, property or securities to which the Holders
of the Debentures or the Indenture Trustee would be entitled except for the
provisions of this Article 12, and no payments pursuant to the provisions of
this Article 12 to the holders of Senior Debt by Holders of the Debentures or
the Indenture Trustee, shall, as among the Company, its creditors other than
holders of Senior Debt and the Holders of the Debentures, be deemed to be a
payment or distribution by the Company to or on account of the Senior Debt.
If any payment or distribution to which the Holders would otherwise have
been entitled but for the provisions of this Article 12 shall have been applied,
pursuant to the provisions of this Article 12, to the payment of all amounts
payable under the Senior Debt of the Company, then and in such case the Holders
shall be entitled to receive from the holders of such Senior Debt at the time
outstanding any payments or distributions received by such holders of such
Senior Debt in excess of the amount sufficient to indefeasibly pay all amounts
payable under or in respect of such Senior Debt in full in cash.
SECTION 12.6 PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS. The provisions of
this Article 12 are and are intended solely for the purpose of defining the
relative
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rights of the Holders of the Debentures on the one hand and the holders of
Senior Debt on the other hand. Nothing contained in this Article or elsewhere in
this Indenture or in the Debentures is intended to or shall (a) impair, as among
the Company, its creditors other than holders of Senior Debt and the Holders of
the Debentures, the obligation of the Company, which is absolute and
unconditional, to pay to the Holders of the Debentures the principal of,
premium, if any, and interest (including Additional Interest and Additional
Sums, if any) on the Debentures as and when the same shall become due and
payable in accordance with their terms or (b) affect the relative rights against
the Company of the Holders of the Debentures and creditors of the Company other
than the holders of Senior Debt in any insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, arrangement, reorganization or
other similar case or proceeding in connection therewith, or any liquidation,
dissolution or other winding-up, or any assignment for the benefit of creditors
or other marshaling of assets and liabilities referred to in Section 12.2
hereof, to receive, pursuant to and in accordance with such Section, cash,
property and securities otherwise payable or deliverable to the Indenture
Trustee or such Holder.
SECTION 12.7 INDENTURE TRUSTEE TO EFFECTUATE SUBORDINATION. Each Holder of
a Debenture by his acceptance thereof authorizes and directs the Indenture
Trustee on his behalf to take such action as may be necessary or appropriate to
effectuate the subordination provided in this Article and appoints the Indenture
Trustee his attorney-in-fact for any and all such purposes, including, in the
event of any dissolution, winding-up, liquidation or reorganization of the
Company whether in bankruptcy, insolvency, receivership proceedings or
otherwise, the timely filing of a claim for the unpaid balance of the
indebtedness of the Company owing to such Holder in the form required in such
proceedings and the causing of such claim to be approved. If the Indenture
Trustee does not file such a claim prior to 30 days before the expiration of the
time to file such a claim, the holders of Senior Debt, or any Representative,
may file such a claim on behalf of Holders of the Debentures.
SECTION 12.8 NO WAIVER OF SUBORDINATION PROVISIONS.
(a) No right of any present or future holder of any Senior Debt to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the
Company or by any act or failure to act by any such holder, or by any
non-compliance by the Company with the terms, provisions and covenants of
this Indenture, regardless of any knowledge thereof the Company or any
such holder may have or be otherwise charged with.
(b) Without limiting the generality of subsection (a) of this
Section 12.8, the holders of Senior Debt may, at any time and from time to
time, without the consent of or notice to the Indenture Trustee or the
Holders of the Debentures, without incurring responsibility to the Holders
of the Debentures and without impairing or releasing the subordination
provided in this Article 12 or the obligations hereunder of the Holders of
the Debentures to the holders of Senior Debt, do any one or more of the
following: (1) change the manner, place or terms of payment or extend the
time of payment of, or renew or alter, Senior Debt or any instrument
evidencing the same or any agreement under which Senior Debt is
outstanding; (2) sell, exchange, release or otherwise deal with any
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property pledged, mortgaged or otherwise securing Senior Debt; (3) release
any Person liable in any manner for the collection or payment of Senior
Debt; and (4) exercise or refrain from exercising any rights against the
Company or any other Person.
SECTION 12.9 NOTICE TO INDENTURE TRUSTEE.
(a) The Company shall give prompt written notice to the Indenture
Trustee of any fact known to the Company which would prohibit the making
of any payment to or by the Indenture Trustee in respect of the
Debentures. Notwithstanding the provisions of this Article 12 or any other
provision of this Indenture, the Indenture Trustee shall not be charged
with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Indenture Trustee in respect of the
Debentures, unless and until the Indenture Trustee shall have received
written notice thereof from the Company or a holder of Senior Debt or from
any trustee, fiduciary or agent therefor; and, prior to the receipt of any
such written notice, the Indenture Trustee, subject to the provisions of
this Section 12.9, shall be entitled in all respects to assume that no
such facts exist.
(b) Subject to the provisions of Section 6.1 hereof, the Indenture
Trustee shall be entitled to rely on the delivery to it of a written
notice to the Indenture Trustee and the Company by a Person representing
itself to be a holder of Senior Debt (or a trustee, fiduciary or agent
therefor) to establish that such notice has been given by a holder of
Senior Debt (or a trustee, fiduciary or agent therefor); provided,
however, that failure to give such notice to the Company shall not affect
in any way the ability of the Indenture Trustee to rely on such notice. In
the event that the Indenture Trustee determines in good faith that further
evidence is required with respect to the right of any Person as a holder
of Senior Debt to participate in any payment or distribution pursuant to
this Article 12, the Indenture Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Indenture Trustee as to the
amount of Senior Debt held by such Person, the extent to which such Person
is entitled to participate in such payment or distribution and any other
facts pertinent to the rights of such Person under this Article 12, and if
such evidence is not furnished, the Indenture Trustee may defer any
payment to such Person pending judicial determination as to the right of
such Person to receive such payment.
SECTION 12.10 RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING
AGENT. Upon any payment or distribution of assets of the Company referred to in
this Article 12, the Indenture Trustee, subject to the provisions of Section 6.1
hereof, and the Holders shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which any insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding-up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other Person making such payment or distribution,
delivered to the Indenture Trustee or to the Holders, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of Senior Debt and other Debt of the Company, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article.
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SECTION 12.11 RIGHTS OF INDENTURE TRUSTEE AS A HOLDER OF SENIOR DEBT;
PRESERVATION OF INDENTURE TRUSTEE'S RIGHTS. The Indenture Trustee in its
individual capacity shall be entitled to all the rights set forth in this
Article 12 with respect to any Senior Debt which may at any time be held by it,
to the same extent as any other holder of Senior Debt, and nothing in this
Indenture shall deprive the Indenture Trustee of any of its rights as such
holder. Nothing in this Article 12 shall apply to claims of, or payments to, the
Indenture Trustee under or pursuant to Section 6.7 hereof.
SECTION 12.12 ARTICLE APPLICABLE TO PAYING AGENTS. In case at any time any
Paying Agent other than the Indenture Trustee shall have been appointed by the
Company and be then acting hereunder, the term "Indenture Trustee" as used in
this Article 12 shall in such case (unless the context otherwise requires) be
construed as extending to and including such Paying Agent within its meaning as
fully for all intents and purposes as if such Paying Agent were named in this
Article 12 in addition to or in place of the Indenture Trustee.
ARTICLE 13.
CONVERSION OF DEBENTURES
SECTION 13.1 CONVERSION RIGHTS. Subject to and upon compliance with the
provisions of this Article, the Debentures are convertible, in whole or in part,
at the option of any Holder (or, if Trust Securities are outstanding, then only
at the option of any holder of Trust Securities to convert his Trust Securities
by delivery of a Notice of Conversion), at any time after six months following
the first date of original issuance of the Debentures, but not later than the
close of business on the date which is 10 days preceding the date fixed for
redemption thereof in any notice of redemption given pursuant to the provisions
of Section 11.3 hereof if there is no default in payment of the Redemption
Price, into that number of fully paid and nonassessable shares of Common Stock
(calculated as to each conversion to the nearest 1/100th of a share) as shall be
equal to the Conversion Rate in effect at the time of conversion. Debentures may
initially be converted into full shares of Common Stock at the rate of 17.858
shares of Common Stock for each $1,000 of principal amount at Stated Maturity of
the Debentures, subject to adjustment as hereinafter provided (the "CONVERSION
RATE"). Notwithstanding anything in this Article 13 to the contrary, no change
in the Conversion Rate shall actually be made until the cumulative effect of the
adjustments called for by this Article 13 since the date of the last change in
the Conversion Rate would change the Conversion Rate by more than 1%. However,
once the cumulative effect would result in such a change, the Conversion Rate
shall actually be changed to reflect all adjustments called for by this Article
13 and not previously made.
SECTION 13.2 CONVERSION PROCEDURES.
(a) In order to convert all or a portion of the Debentures into
Common Stock, the Holder thereof shall deliver to the Indenture Trustee,
as conversion agent, or to such other agent appointed for such purposes
(the "CONVERSION AGENT"), an irrevocable Notice of Conversion to convert
Debentures on behalf of such Holder, together with the actual Debentures
to be converted, duly endorsed in blank or accompanied by proper
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instruments of transfer. The Notice of Conversion shall set forth the
principal amount at Stated Maturity of Debentures to be converted,
together with the name or names, if other than the Holder, in which the
shares of Common Stock should be issued upon conversion of the Debentures.
In addition, a holder of Trust Securities may exercise its right under the
Declaration to convert such Trust Securities into Common Stock by
delivering to the Conversion Agent an irrevocable Notice of Conversion,
which shall (i) set forth the number of Trust Securities to be converted
and the name or names, if other than the holder, in which the shares of
Common Stock should be issued and (ii) direct the Conversion Agent (a) to
exchange such Trust Security for a portion of the Debentures equal in
principal amount at Stated Maturity to the aggregate liquidation amount of
the Trust Securities to be converted and (b) to immediately convert such
Debentures, on behalf of such holder, into Common Stock (and, if
applicable, other securities, cash or property), and by surrendering
certificates for such Trust Securities to the Conversion Agent, duly
endorsed in blank or accompanies by proper instruments of transfer. So
long as the Trust Securities are outstanding, the Trust shall not convert
any Debentures except pursuant to a Notice of Conversion delivered to the
Conversion Agent by a holder of Trust Securities.
(b) Except as described below, no payment or adjustment is to be
made on conversion for accrued and unpaid interest on the Debentures,
including as a result of the Company's exercise of its right to defer
payment of amounts due under the Debentures pursuant to Section 3.7 hereof
or otherwise, or for dividends on the Common Stock issued on conversion.
The Holder of record of Debentures on a Regular Record Date with respect
to the payment of interest on such Debentures will be entitled to receive
interest in respect of such Debentures on the corresponding Interest
Payment Date notwithstanding the conversion of any such Debentures after
the Regular Record Date or any default by the Company in the payment of
interest on that Interest Payment Date. Notwithstanding the foregoing,
Debentures surrendered for conversion during the period from the close of
business on any Regular Record Date for the payment of interest in respect
of such Debentures to the opening of business on the corresponding
Interest Payment Date (except any such Debentures called for redemption on
a Redemption Date during such period) must be accompanied by payment by
the Holder of record on the Regular Record Date of an amount equal to the
interest payable on such Interest Payment Date. The interest with respect
to Debentures called for redemption on a Redemption Date during the period
from the close of business on a Regular Record Date with respect to the
payment of interest in respect of such Debentures to the opening of
business on the corresponding Interest Payment Date will be payable on
that Interest Payment Date to the Holder of record of such Debentures on
such Regular Record Date notwithstanding the conversion of the Debentures
after the Regular Record Date and prior to the Interest Payment Date, and
the Holder of record of such Debentures on such Regular Record Date need
not include a payment of such interest amount upon surrender of such
Debentures for conversion. Holders of record of Debentures on a Regular
Record Date with respect to the payment of interest in respect of such
Debentures whose Debentures are converted on or after the corresponding
Interest Payment Date will receive the interest payable by
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the Company on that date and need not include payment in the amount of
such interest upon surrender of such Debentures for conversion.
(c) Debentures shall be deemed to have been converted upon the
surrender of the Debentures to the Conversion Agent (the "CONVERSION
DATE"). On the Conversion Date, the Person or Persons converting shall be
deemed to be the holder or holders of record of the Common Stock issuable
upon conversion of the Debentures, and all rights with respect to the
Debentures surrendered shall forthwith terminate except the right to
receive the Common Stock or other securities, cash or other assets as
herein provided (including the provisions of Section 13.2(b)). As promptly
as practicable on or after the Conversion Date, the Company shall issue
and deliver at the office of the Conversion Agent a certificate or
certificates for the number of full shares of Common Stock issuable upon
such conversion, together with the cash payment, if any, in lieu of any
fraction of any share to the Person or Persons entitled to receive the
same in accordance with Section 13.2(e), and the Conversion Agent shall
distribute such certificate or certificates to such Person or Persons.
(d) The Company's delivery to the Holder or Holders of the
Debentures (through the Conversion Agent) upon conversion of the fixed
number of shares of Common Stock into which the Debentures are convertible
(together with the cash payment, if any, in lieu of fractional shares)
shall be deemed to satisfy the Company's obligation to pay the principal
amount at Maturity of the portion of Debentures so converted and any
unpaid interest (including Additional Interest and Additional Sums, if
any) accrued on such Debentures at the time of such conversion.
(e) No fractional shares of Common Stock will be issued as a result
of conversion, but in lieu thereof, such fractional interest will be paid
in cash by the Company to the Conversion Agent in an amount equal to the
product of (i) the Closing Price of a share of Common stock on the last
trading day before the Conversion Date and (ii) such fraction of a share,
and the Conversion Agent will in turn make such payment, if any, to the
Holder or Holders of the Debentures (or the holder or holders of the Trust
Securities, as the case may be) so converted.
(f) In the event of the conversion of any Debenture in part only, a
new Debenture or Debentures for the unconverted portion thereof will be
issued in the name of the Holder thereof upon the cancellation of the
Debenture converted in part, in accordance with Section 3.5.
(g) In effecting the conversion transactions described in this
Article 13, the Conversion Agent is acting as agent of the holders of
Trust Securities (in exchange of Trust Securities for Debentures) and as
agent of the holders of Debentures (in conversion of Debentures into
Common Stock), as the case may be, directing it to effect such conversion
transactions. The Conversion Agent is hereby authorized (i) to exchange
Debentures held by the Trust from time to time for Trust Securities in
connection with the conversion of such Trust Securities and (ii) to
convert all or a portion of the Debentures
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into Common Stock and thereupon to deliver such shares of Common Stock in
accordance with the provisions of this Article 13 and to deliver to the
Trust a new Debenture or Debentures for any resulting unconverted
principal amount.
(h) The Company (and any successor corporation) shall take all
action necessary so that a number of shares of the authorized but unissued
Common Stock (or common stock in the case of any successor corporation)
sufficient to provide for the conversion of the Outstanding Debentures
upon the basis hereinbefore provided are at all times reserved by the
Company (or any successor corporation), free from preemptive rights, for
such conversion, subject to the provisions of Section 13.4. If the Company
shall issue any securities or make any change in its capital structure
which would change the number of shares of Common Stock into which each
share of the Debentures shall be convertible as herein provided, the
Company shall at the same time also make proper provision so that
thereafter there shall be a sufficient number of shares of Common Stock
authorized and reserved, free from preemptive rights, for conversion of
the Outstanding Debentures on the new basis.
(i) The Company shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issue and delivery upon
conversion of shares of Common Stock or other securities or property in a
name other than that of the Holder of the Debentures being converted, and
the Company shall not be required to issue or deliver any such shares or
other securities or property unless and until the Person or Persons
requesting the issuance thereof shall have paid to the Conversion Agent
the amount of any such tax or shall have established to the satisfaction
of the Conversion Agent that such tax has been paid.
SECTION 13.3 CONVERSION PRICE ADJUSTMENTS.
(a) The Conversion Rate shall be adjusted from time to time under
certain circumstances, subject to the provisions of the last three
sentences of Section 13.1, as follows:
(i) In case the Company shall (A) pay a dividend or make a
distribution on its Common Stock in shares of its Capital Stock, (B)
subdivide its outstanding Common Stock into a greater number of
shares, (C) combine the shares of its outstanding Common Stock into
a smaller number of shares or (D) issue by reclassification of its
Common Stock any shares of its Capital Stock, then in each such case
the Conversion Rate in effect immediately prior thereto shall be
proportionately adjusted so that the Holder of any Debentures
thereafter surrendered for conversion shall be entitled to receive,
to the extent permitted by applicable law, the number and kind of
shares of Capital Stock of the Company which it would have owned or
have been entitled to receive after the happening of such event had
such Debentures been converted immediately prior to the record date
for such event (or if no record date has been established in
connection with such event, the effective date for such action). An
adjustment pursuant to this Section 13.3(a)(i) shall become
effective immediately after the record date in the case of a stock
dividend or
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distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or
reclassification.
(ii) In case the Company shall issue rights or warrants to all
holders of the Common Stock entitling such holders to subscribe for
or purchase Common Stock on the record date referred to below at a
price per share less than the average daily Closing Prices of the
Common Stock on the 30 consecutive business days commencing 45
business days before the record date (the "Current Market Price"),
then in each such case the Conversion Rate in effect on such record
date shall be adjusted in accordance with the formula
O + N
c(1) = c x _________
O + N x P
-----
M
where
c(1) = the adjusted Conversion Rate
c = the current Conversion Rate (immediately
preceding the issuance of such rights or warrants)
O = the number of shares of Common Stock outstanding
on the record date
N = the number of additional shares of Common Stock
issuable pursuant to the exercise of such rights
or warrants
P = the exercise price per share of such rights or
warrants
M = the Current Market Price per share of Common
Stock on such record date
Such adjustment shall become effective immediately after the record date for the
determination of stockholders entitled to receive such rights or warrants.
(iii) In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock evidences of its
indebtedness or assets (including securities, but excluding any
warrants or subscription rights referred to in Section 13.3(a)(ii)
above, any ordinary dividend paid in cash out of the retained
earnings of the Company and any dividend or distribution referred to
in Section 13.3(a)(i) above), then in each such case the Conversion
Rate then in effect shall be adjusted in accordance with the formula
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M
c(1) = c x
------
M - F
where
c(1) = the adjusted Conversion Rate
c = the current Conversion Rate (immediately
preceding such distribution)
M = the Current Market Price per share of Common
Stock with respect to the record date mentioned
below
F = the aggregate amount of such cash dividend
and/or the fair market value on such record date
of the assets or securities to be distributed
divided by the number of shares of Common Stock
outstanding on the record date. In the case of
securities, the fair market value shall be the
average of the daily Closing Price for the 30
trading days preceding such record date (or such
fewer number of days for which there shall be a
recognized trading market); provided, however,
that if there shall not be any recognized trading
market for such securities until after such record
date, the fair market value shall be the average
of the daily Closing Price for the 10 trading days
following such record date. In all other cases,
the Board of Directors shall determine such fair
market value, which determination shall be
conclusive.
Such adjustment shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution.
(iv) All calculations hereunder shall be made to the nearest
cent or to the nearest 1/100 of a share, as the case may be.
(v) If at any time as a result of an adjustment made pursuant
to Section 13.3(a)(i), the Holder of any Debentures thereafter
surrendered for conversion shall become entitled to receive
securities, cash or assets other than Common Stock, the number or
amount of such securities or property so receivable upon conversion
shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with
respect to the Common Stock contained in Section 13.3(a)(i) to (iv),
inclusive, above.
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(b) Except as otherwise provided above in this Section 13.3, no
adjustment in the Conversion Rate shall be made in respect of any
conversion for share distributions or dividends theretofore declared and
paid or payable on the Common Stock.
SECTION 13.4 FUNDAMENTAL CHANGE. In case of any consolidation or merger of
the Company with any other corporation or in case of any sale or transfer of all
or substantially all of the assets of the Company, or in the case of any share
exchange, in each case, pursuant to which all of the outstanding shares of
Common Stock are converted into other securities, cash or other property, the
Company shall make appropriate provision or cause appropriate provision to be
made so that each Holder of Debentures then Outstanding shall have the right
thereafter to convert such Debentures into the kind and amount of securities,
cash and other property receivable upon such consolidation, merger, sale,
transfer or share exchange by a holder of the number of shares of Common Stock
into which such Debentures could have been converted immediately prior to the
effective date of such consolidation, merger, sale, transfer or share exchange.
If, in connection with any such consolidation, merger, sale, transfer or share
exchange, each holder of shares of Common Stock is entitled to elect to receive
either securities, cash or other property upon completion of such transaction,
the Company shall provide or cause to be provided to each Holder of Debentures
the right to elect the securities, cash or other property into which the
Debentures held by such Holder shall be convertible after completion of any such
transaction on the same terms and subject to the same conditions applicable to
holders of the Common Stock (including, without limitation, notice of the right
to elect, limitations on the period in which such election shall be made and the
effect of failing to exercise the election). The Company shall not effect any
such transaction unless the provisions of this Section 13.4 have been complied
with. The above provisions shall similarly apply to successive consolidations,
mergers, sales, transfers or share exchanges.
SECTION 13.5 NOTICE OF ADJUSTMENTS OF CONVERSION PRICE. Whenever the
Conversion Rate is adjusted as herein provided, the Company shall send to the
Indenture Trustee, the Conversion Agent and the transfer agent for the Preferred
Securities, the Debentures and the Common Stock, and to the principal securities
exchange, if any, on which the Preferred Securities, the Debentures and the
Common Stock are traded, or the Nasdaq National Market if the Preferred
Securities, the Debentures or the Common Stock is admitted for quotation
thereon, a statement signed by the Chairman of the Board, the President or any
Vice President of the Company and by its Treasurer or its Secretary or Assistant
Secretary stating the adjusted Conversion Rate determined as provided in Section
13.3, and any adjustment so evidenced, given in good faith, shall be binding
upon all holders of Preferred Securities and Debentures and upon the Company.
Whenever the Conversion Rate is adjusted, the Company will give notice by mail
to the holders of record of Preferred Securities and Debentures, which notice
shall be made within 45 days after the effective date of such adjustment and
shall state the adjustment and the Conversion Rate. Notwithstanding the
foregoing notice provisions, failure by the Company to give such notice or a
defect in such notice shall not affect the binding nature of such corporate
action of the Company.
SECTION 13.6 PRIOR NOTICE OF CERTAIN EVENTS. Whenever the Company shall
propose to take any of the actions specified in Section 13.3(a)(i), (ii) or
(iii) or in
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Section 13.4 which would result in any adjustment in the Conversion Rate
hereunder, the Company shall use its best efforts to cause a notice to be mailed
at least 20 days prior to the date on which the books of the Company will close
or on which a record will be taken for such action to the holders of record of
the outstanding Preferred Securities and Debentures on the date of such notice.
Such notice shall specify the action proposed to be taken by the Company and the
date as of which holders of record of the Common Stock shall participate in any
such actions or be entitled to exchange their Common Stock for securities or
other property, as the case may be. Failure by the Company to mail the notice or
any defect in such notice shall not affect the validity of the transaction.
SECTION 13.7 CIRCUMSTANCES NOT REQUIRING CONVERSION RATE ADJUSTMENT.
Notwithstanding any other provision of this Article, no adjustment in the
Conversion Rate need be made (i) for a transaction referred to in Section
13.3(a)(i), (ii) or (iii) if Holders of Preferred Securities and Debentures are
to participate in the transaction or distribution on a basis and with notice
that the Board of Directors reasonably determines to be fair to the Holders of
the Preferred Securities and Debentures and appropriate in light of the basis on
which holders of Common Stock participate in the transaction; (b) for sales of
Common Stock pursuant to a plan for reinvestment of dividends and interest,
provided that the purchase price in any such sale is at least equal to 90% of
the fair market value of the Common Stock at the time of such purchase, or
pursuant to any plan adopted by the Company for the benefit of its employees,
directors or consultants; (c) for a change in par value of the Common Stock not
involving a subdivision or combination described in Section 13.3(a)(i)(B) or
13.3(a)(i)(C); or (d) after the Debentures become convertible solely into cash
by reason of an adjustment pursuant to Section 13.4 hereof.
SECTION 13.8 INDENTURE TRUSTEE'S DISCLAIMER. The Indenture Trustee has no
duty to determine when an adjustment under this Article or under the terms of
the Debentures should be made, how it should be made or what it should be. The
Indenture Trustee has no duty to determine whether any provisions of a
supplemental indenture under Article 9 are correct. The Indenture Trustee makes
no representation as to the validity or value of any securities or assets issued
upon conversion of Debentures. The Indenture Trustee shall not be responsible
for the Company's failure to comply with this Article. Each Conversion Agent
other than the Company shall have the same protection under this Section as the
Indenture Trustee.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the day and year first above written
SUPERIOR TELECOM INC.
By:
-------------------
Name:
Title:
[INDENTURE TRUSTEE],
not in its individual capacity but solely as
Indenture Trustee
By:
-------------------
Name:
Title:
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Exhibit 4.4
GUARANTEE AGREEMENT
SUPERIOR TELECOM INC.
and
[ ]
Dated as of __________, 1999
with respect to
8 1/2% TRUST CONVERTIBLE PREFERRED SECURITIES
(Liquidation Amount $50 per Preferred Security)
<PAGE>
GUARANTEE
This GUARANTEE AGREEMENT, dated as of __________, 1999, is executed
and delivered by Superior TeleCom Inc., a Delaware corporation (the
"Guarantor"), and __________, a __________ banking corporation, as trustee
(the "Guarantee Trustee"), for the benefit of the Holders (as defined herein)
from time to time of the Preferred Securities (as defined herein) of Superior
Trust I, a Delaware statutory business trust (the "Trust").
WHEREAS, pursuant to a Declaration of Trust (the "Declaration of
Trust"), dated as of __________, 1999, among the Trustees named therein, the
Guarantor, as Depositor, and the Holders from time to time of undivided
beneficial interests in the assets of the Trust, the Trust is issuing
__________ of its 8 1/2% Trust Convertible Preferred Securities (liquidation
preference $50 per preferred security) (the "Preferred Securities")
representing preferred undivided beneficial interests in the assets of the
Trust and having the terms set forth in the Declaration of Trust;
WHEREAS, the Preferred Securities and Common Securities (as defined
herein) will be issued by the Trust in consideration for the Debentures (as
defined in the Declaration of Trust) of the Guarantor, which will be
deposited with __________, as Property Trustee under the Declaration of
Trust, as Trust assets; and
WHEREAS, as incentive for the Holders to purchase Preferred
Securities, the Guarantor desires irrevocably and unconditionally to agree,
to the extent set forth herein, to pay to the Holders of the Preferred
Securities the Guarantee Payments (as defined herein) and to make certain
other payments on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall
benefit the Guarantor, the Guarantor executes and delivers this Guarantee
Agreement for the benefit of the Holders from time to time of the Preferred
Securities.
ARTICLE 1
DEFINITIONS
SECTION 1.1 Definitions. As used in this Guarantee Agreement, the
terms set forth below shall, unless the context otherwise requires, have the
following meanings. Capitalized or otherwise defined terms used but not
otherwise defined herein shall have the meanings assigned to such terms in the
Declaration of Trust as in effect on the date hereof.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person; provided, however, that an Affiliate of the
Guarantor shall not be deemed to include the Trust. For the purposes of this
definition, "control" when used with respect to any specified Person means the
possession, directly or indirectly, of the power to direct or cause the
direction
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of the management or policies of such Person, whether through the ownership of
voting securities, by contract or otherwise; provided, however, that beneficial
ownership of 10% or more of the Voting Stock of an entity will be deemed to be
control. The terms "controlling" and "controlled" have meanings correlative to
"control."
"Common Securities" means the securities representing common
beneficial interests in the assets of the Trust.
"Common Stock" means common stock, par value $0.01 per share, of the
Guarantor or shares of any class or classes resulting from any reclassification
or reclassifications thereof and which have no preference in respect of
dividends or of amounts payable in the event of any voluntary or involuntary
liquidation, dissolution or winding-up of the Guarantor and which are not
subject to redemption by the Guarantor.
"Corporate Trust Office" shall mean the office of the Guarantee
Trustee at which the corporate trust business of the Guarantee Trustee shall, at
any particular time, be principally administered, which office at the date of
execution of this Guarantee Agreement is located at _________________________.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Guarantee Agreement, unless such payment
is prohibited by the subordination provisions of Article 6; provided, however,
that, except with respect to a default in payment of any Guarantee Payments, the
Guarantor shall have received written notice of default and shall not have cured
such default within 60 days after receipt of such notice.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent not
paid or made by or on behalf of the Trust: (a) any accumulated and unpaid
Distributions required to be paid on the Preferred Securities, but only if and
to the extent that the Trust has funds on hand available therefor at such time;
(b) the Redemption Price or Optional Redemption Price, as the case may be, of
any Preferred Securities called for redemption, but only if and to the extent
that the Trust has funds on hand available therefor at such time; and (c) upon a
voluntary or involuntary dissolution, winding up or liquidation of the Trust
(unless the Debentures are distributed to Holders of the Preferred Securities),
the lesser of (i) the Liquidation Distribution, but only if and to the extent
that the Trust has funds on hand available therefor at such time and (ii) the
amount of assets of the Trust remaining available for distribution to Holders of
Preferred Securities.
"Guarantee Trustee" means ___________________, until a Successor
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Guarantee Agreement, and thereafter means each such
Successor Guarantee Trustee.
"Holder" means any holder, as registered on the books and records of
the Trust, of any Preferred Securities; provided, however, that in determining
whether the holders of the requisite percentage of Preferred Securities have
given any request, notice, consent or waiver hereunder,
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"Holder" shall not include the Guarantor, the Guarantee Trustee or any Affiliate
of the Guarantor or the Guarantee Trustee.
"Indemnified Person" shall mean the Guarantee Trustee (including in
its individual capacity), any Affiliate of the Guarantee Trustee, or any
officers, directors, shareholders, members, partners, employees,
representatives, nominees, custodians or agents of the Guarantee Trustee (but in
no event shall "Indemnified Person" include the Trust, the Guarantor or any
Holder in their capacities as such).
"Indenture" means the Indenture, dated as of ________________, 1999,
between the Guarantor and _______________, as Indenture Trustee, as amended and
supplemented.
"List of Holders" has the meaning specified in Section 2.2(a).
"Majority in Liquidation Preference of the Securities" means, except
as provided by the Trust Indenture Act, a vote by the Holders, voting separately
as a class, of more than 50% of the aggregate Liquidation Amount of all the
Outstanding Preferred Securities issued by the Trust.
"Officer's Certificate" means a certificate signed by the Chairman of
the Board of Directors, the President, the Chief Executive Officer, any Vice
President, the Chief Financial Officer or the Secretary of the Guarantor, and
delivered to the Guarantee Trustee. Any Officer's Certificate delivered with
respect to compliance with a condition or covenant provided for in this
Guarantee Agreement shall include:
(a) a statement that each officer signing the Officer's Certificate
has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officer's Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Person" means any individual, corporation, partnership, joint
venture, limited liability company, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof or other entity.
"Responsible Officer" shall mean, with respect to the Guarantee
Trustee, any officer within the Corporate Trust Office of the Guarantee Trustee
with direct responsibility for the administration of this Guarantee Agreement
and also means, with respect to a particular
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corporate trust matter, any other officer of the Guarantee Trustee to whom such
matter is referred because of that officer's knowledge of and familiarity with
the particular subject.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbb), as amended and as in force at the date as of which this
instrument was executed; provided, however, that in the event the Trust
Indenture Act of 1939 is amended after such date, "Trust Indenture Act" means,
to the extent required by any such amendment, the Trust Indenture Act of 1939 as
so amended.
ARTICLE 2
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Guarantee Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Guarantee Agreement and
shall, to the extent applicable, be governed by such provisions.
(b) If and to the extent that any provision of this Guarantee
Agreement limits, qualifies or conflicts with the duties imposed by Sections 310
to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.
SECTION 2.2 List of Holders.
(a) The Guarantor shall furnish or cause to be furnished to the
Guarantee Trustee (unless the Guarantee Trustee is acting as Securities
Registrar) (i) semi-annually, on or before January 15 and July 15 of each year,
a list, in such form as the Guarantee Trustee may reasonably require, of the
names and addresses of the Holders ("List of Holders") as of a date not more
than 15 days prior to the delivery thereof and (ii) at such other times as the
Guarantee Trustee may request in writing, within 30 days after the receipt by
the Guarantor of any such written request, a List of Holders as of a date not
more than 15 days prior to the time such list is furnished, in each case to the
extent such information is in the possession or control of the Guarantor and is
not identical to a previously supplied List of Holders or has not otherwise been
received by the Guarantee Trustee. The Guarantee Trustee may destroy any List of
Holders previously given to it on receipt of a new List of Holders.
(b) The Guarantee Trustee shall comply with its obligations under
Section 311(a), Section 311(b) and Section 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Guarantee Trustee. Within 60 days after
December 31 in each calendar year, commencing December 31, 1999, the Guarantee
Trustee shall provide to the Holders such reports as are required by Section 313
of the Trust Indenture Act, if any, in the form
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and in the manner provided by Section 313 of the Trust Indenture Act. The
Guarantee Trustee shall also comply with the requirements of Section 313(d) of
the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Guarantee Trustee. The Guarantor shall
provide to the Guarantee Trustee, the Securities and Exchange Commission and the
Holders such documents, reports and information, if any, as required by Section
314 of the Trust Indenture Act and the compliance certificate required by
Section 314 of the Trust Indenture Act in the form, in the manner and at the
times required by Section 314 of the Trust Indenture Act; and such compliance
certificate of the Guarantor shall be delivered on or before 120 days after the
end of each calendar year. Delivery of such reports, information and documents
to the Guarantee Trustee is for informational purposes only and the Guarantee
Trustee's receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information contained
therein, including the Guarantor's compliance with any of its covenants
hereunder (as to which the Guarantee Trustee is entitled to rely exclusively on
Officer's Certificates).
SECTION 2.5 Evidence of Compliance with Conditions Precedent. The
Guarantor shall provide to the Guarantee Trustee such evidence of compliance
with such conditions precedent, if any, provided for in this Guarantee Agreement
that relate to any of the matters set forth in Section 314(c) of the Trust
Indenture Act. Any certificate or opinion required to be given by an officer
pursuant to Section 314(c)(1) may be given in the form of an Officer's
Certificate.
SECTION 2.6 Events of Default; Waiver. The Holders of a Majority in
Liquidation Preference of the Securities may, by vote, on behalf of the Holders
of all Preferred Securities, waive any past Event of Default and its
consequences. Upon such waiver, any such Event of Default shall cease to exist,
and any Event of Default arising therefrom shall be deemed to have been cured,
for every purpose of this Guarantee Agreement, but no such waiver shall extend
to any subsequent or other default or Event of Default or impair any right
consequent therefrom.
SECTION 2.7 Event of Default; Notice.
(a) The Guarantee Trustee shall, within 30 days after a Responsible
Officer of the Guarantee Trustee obtains actual knowledge of the occurrence of
an Event of Default, transmit by mail, first-class postage prepaid, to the
Holders, notice of such Event of Default actually known to a Responsible Officer
of the Guarantee Trustee, unless such defaults have been cured before the giving
of such notice, provided, that, except in the case of a default in the payment
of a Guarantee Payment, the Guarantee Trustee shall be fully protected in
withholding such notice if and so long as a Responsible Officer of the Guarantee
Trustee in good faith determines that the withholding of such notice is in the
interests of the Holders.
(b) The Guarantee Trustee shall not be deemed to have actual knowledge
of any Event of Default unless the Guarantee Trustee shall have received written
notice, or a Responsible Officer charged with the administration of the
Declaration of Trust shall have obtained actual knowledge, of such Event of
Default.
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SECTION 2.8 Conflicting Interests. The Declaration of Trust and the
Indenture shall be deemed to be specifically described in this Guarantee
Agreement for the purposes of clause (i) of the first proviso contained in
Section 310(b) of the Trust Indenture Act.
ARTICLE 3
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Guarantee Trustee.
(a) This Guarantee Agreement shall be held by the Guarantee Trustee
for the benefit of the Holders, and the Guarantee Trustee shall not transfer
this Guarantee Agreement to any Person except a Holder exercising his or her
rights pursuant to Section 5.4(iv) or to a Successor Guarantee Trustee on
acceptance by such Successor Guarantee Trustee of its appointment to act as
Successor Guarantee Trustee. The right, title and interest of the Guarantee
Trustee shall automatically vest in any Successor Guarantee Trustee, upon
acceptance by such Successor Guarantee Trustee of its appointment hereunder, and
such vesting and cessation of title shall be effective whether or not
conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer of
the Guarantee Trustee has occurred and is continuing, the Guarantee Trustee
shall enforce this Guarantee Agreement for the benefit of the Holders.
(c) The Guarantee Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Guarantee Agreement, and no implied covenants shall be read into this
Guarantee Agreement against the Guarantee Trustee. In case an Event of Default
has occurred (that has not been cured or waived pursuant to Section 2.6) and is
actually known to the Responsible Officer of the Guarantee Trustee, the
Guarantee Trustee shall exercise such of the rights and powers vested in it by
this Guarantee Agreement, and use the same degree of care and skill in its
exercise thereof, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(d) No provision of this Guarantee Agreement shall be construed to
relieve the Guarantee Trustee from liability for its own negligent action, its
own negligent failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Guarantee Trustee shall be
determined solely by the express provisions of this Guarantee Agreement, and the
Guarantee Trustee shall not be liable except for the performance of such duties
and obligations as are specifically set forth in this Guarantee Agreement, and
no implied covenants or obligations shall be read into this Guarantee Agreement
against the Guarantee Trustee; and
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(B) in the absence of bad faith on the part of the Guarantee
Trustee, the Guarantee Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Guarantee Trustee and conforming to
the requirements of this Guarantee Agreement; but in the case of any such
certificates or opinions that by any provision hereof or of the Trust Indenture
Act are specifically required to be furnished to the Guarantee Trustee, the
Guarantee Trustee shall be under a duty to examine the same to determine whether
or not on their face they conform to the requirements of this Guarantee
Agreement;
(ii) the Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Guarantee Trustee,
unless it shall be proved that the Guarantee Trustee was negligent in
ascertaining the pertinent facts upon which such judgment was made;
(iii) the Guarantee Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of not less than a Majority in Liquidation
Preference of the Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee, or
exercising any trust or power conferred upon the Guarantee Trustee under this
Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement shall require the
Guarantee Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if the Guarantee Trustee shall have reasonable
grounds for believing that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Guarantee Agreement or
indemnity satisfactory to it against such risk or liability is not reasonably
assured to it.
SECTION 3.2 Certain Rights of Guarantee Trustee.
(a) Subject to the provisions of Section 3.1:
(i) The Guarantee Trustee may conclusively rely and shall be
fully protected in acting or refraining from acting upon any resolution,
certificate, statement, proxy, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document believed by it to be genuine and to have been signed,
sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by this
Guarantee Agreement shall be sufficiently evidenced by an Officer's Certificate
unless otherwise prescribed herein.
(iii) Whenever, in the administration of this Guarantee
Agreement, the Guarantee Trustee shall deem it desirable that a matter be proved
or established before taking, suffering or omitting to take any action
hereunder, the Guarantee Trustee (unless other evidence
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is herein specifically prescribed) may, in the absence of bad faith on its part,
request and conclusively rely upon an Officer's Certificate which, upon receipt
of such request from the Guarantee Trustee, shall be promptly delivered by the
Guarantor.
(iv) The Guarantee Trustee may consult with legal counsel of its
selection, and the advice or opinion of such legal counsel with respect to legal
matters shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted to be taken by it hereunder in good faith
and in accordance with such advice or opinion. Such legal counsel may be legal
counsel to the Guarantor or any of its Affiliates, and may include any of its
employees. The Guarantee Trustee shall have the right at any time to seek
instructions concerning the administration of this Guarantee Agreement from any
court of competent jurisdiction.
(v) The Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Guarantee Agreement at
the request or direction of any Holder, unless such Holder shall have provided
to the Guarantee Trustee and its officers, directors and agents such security
and indemnity, reasonably satisfactory to the Guarantee Trustee, against the
costs, expenses (including attorneys' fees and expenses and the expenses of the
Guarantee Trustee's agents, nominees and custodians) and liabilities that might
be incurred by it in complying with such request or direction, including such
reasonable advances as may be requested by the Guarantee Trustee; provided that,
nothing contained in this Section 3.2(a)(v) shall be taken to relieve the
Guarantee Trustee, upon the occurrence of an Event of Default, of its obligation
to exercise the rights and powers vested in it by this Guarantee Agreement.
(vi) The Guarantee Trustee shall have no obligation to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Guarantee Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit.
(vii) The Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through its agents, custodians, nominees or attorneys or any Affiliate, and the
Guarantee Trustee shall not be responsible for any misconduct or negligence on
the part of any such person appointed with due care by it hereunder.
(viii) Whenever in the administration of this Guarantee Agreement
the Guarantee Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action hereunder,
the Guarantee Trustee (A) may request written instructions from the Holders of a
Majority in Liquidation Preference of the Securities, (B) may refrain from
enforcing such remedy or right or taking such other action until such
instructions are received and (C) shall be fully protected in relying on and
acting in accordance with such instructions.
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(ix) the Guarantee Trustee shall have no duty to see to any
recording, filing or registration of any instrument or other document (or any
rerecording, refiling or re-registration thereof).
(x) any action taken by the Guarantee Trustee or its agents
hereunder shall bind the Holders of the Preferred Securities, and the signature
of the Guarantee Trustee or its agents alone shall be sufficient and effective
to perform any such action; and no third party shall be required to inquire as
to the authority of the Guarantee Trustee to so act or as to its compliance with
any of the terms and provisions of this Guarantee Agreement, both of which shall
be conclusively evidenced by the Guarantee Trustee's or its agent's taking such
action.
(xi) the Guarantee Trustee shall not be liable for any action
taken, suffered or omitted to be taken by it in good faith, without negligence,
and reasonably believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Guarantee Agreement.
(b) No provision of this Guarantee Agreement shall be deemed to impose
any duty or obligation on the Guarantee Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it in any
jurisdiction in which it shall be illegal, or in which the Guarantee Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Guarantee Trustee
shall be construed to be a duty.
SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee
Agreement. The recitals contained in this Guarantee Agreement shall be taken as
the statements of the Guarantor, and the Guarantee Trustee does not assume any
responsibility for their correctness. The Guarantee Trustee makes no
representation as to the validity or sufficiency of this Guarantee Agreement.
ARTICLE 4
GUARANTEE TRUSTEE
SECTION 4.1 Guarantee Trustee; Eligibility.
(a) There shall at all times be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation or other Person organized and doing
business under the laws of the United States of America or any state or
territory thereof or of the District of Columbia, or a corporation or other
Person permitted by the Securities and Exchange Commission to act as an
indenture trustee under the Trust Indenture Act, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of at
least $50,000,000, and subject to supervision or examination by federal, state,
territorial or District of Columbia authority; it being understood that if such
corporation or other Person publishes reports
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of condition at least annually, pursuant to law or to the requirements of the
supervising or examining authority referred to above, then, for the purposes of
this Section 4.1(a)(ii), the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published.
(b) If at any time the Guarantee Trustee shall cease to be eligible to
so act under Section 4.1(a), the Guarantee Trustee shall immediately resign in
the manner and with the effect set out in Section 4.2(c).
(c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Guarantee Trustee and the Guarantor shall in all respects comply with the
provisions of Section 310(b) of the Trust Indenture Act.
SECTION 4.2 Appointment, Removal and Resignation of the Guarantee
Trustee.
(a) Subject to Section 4.2(b), the Guarantee Trustee may be appointed
or removed without cause at any time by the Guarantor.
(b) The Guarantee Trustee shall not be removed until a Successor
Guarantee Trustee has been appointed and has accepted such appointment by
written instrument executed by such Successor Guarantee Trustee and delivered to
the Guarantor.
(c) The Guarantee Trustee appointed hereunder shall hold office until
a Successor Guarantee Trustee shall have been appointed or until its removal or
resignation. The Guarantee Trustee may resign from office (without need for
prior or subsequent accounting) by an instrument in writing executed by the
Guarantee Trustee and delivered to the Guarantor, which resignation shall not
take effect until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by an instrument in writing executed by such Successor
Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee
Trustee.
(d) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 4.2 within 60 days after
delivery to the Guarantor of an instrument of resignation, the resigning
Guarantee Trustee may petition, at the expense of the Guarantor, any court of
competent jurisdiction for appointment of a Successor Guarantee Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Guarantee Trustee.
(e) No Guarantee Trustee shall be liable for the acts or omissions of
any Successor Guarantor Trustee.
(f) Upon termination of this Guarantee Agreement or the removal or
resignation of the Guarantee Trustee, the Guarantor shall pay all amounts due
and owing to such Guarantee Trustee.
ARTICLE 5
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GUARANTEE
SECTION 5.1 Guarantee. The Guarantor irrevocably and unconditionally
agrees to pay in full, subject to the subordination provisions set forth in
Article 6, to the extent set forth herein, the Guarantee Payments to the Holders
(without duplication of amounts theretofore paid by or on behalf of the Trust),
as and when due, regardless of any defense, right of set-off or counterclaim
which the Trust may have or assert, other than the defense of payment. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Trust to pay such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand. The Guarantor hereby waives
notice of acceptance of the Guarantee Agreement and of any liability to which it
applies or may apply, presentment, demand for payment, any right to require a
proceeding first against the Guarantee Trustee, Trust or any other Person before
proceeding against the Guarantor, protest, notice of nonpayment, notice of
dishonor, notice of redemption and all other notices and demands.
SECTION 5.3 Obligations Not Affected. The obligations, covenants,
agreements and duties of the Guarantor under this Guarantee Agreement shall in
no way be affected or impaired by reason of the happening from time to time of
any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Trust of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be performed
or observed by the Trust;
(b) the extension of time for the payment by the Trust of all or any
portion of the Distributions (other than an extension of time for payment of
Distributions that results from the extension of any interest payment period on
the Debentures as so provided in the Indenture), Redemption Price, Optional
Redemption Price, Liquidation Distribution or any other sums payable under the
terms of the Preferred Securities or the extension of time for the performance
of any other obligation under, arising out of, or in connection with, the
Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Preferred Securities, or
any action on the part of the Trust granting indulgence or extension of any
kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Trust or any of the assets of the
Trust;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
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(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute
a legal or equitable discharge or defense of a guarantor, it being the intent of
this Section 5.3 that the obligations of the Guarantor hereunder shall be
absolute and unconditional under any and all circumstances. There shall be no
obligation of the Holders or the Guarantee Trustee to give notice to, or obtain
the consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 Rights of Holders. The Guarantor expressly acknowledges
that: (i) an executed copy of this Guarantee Agreement will be deposited with
the Guarantee Trustee to be held for the benefit of the Holders; (ii) the
Guarantee Trustee has the right to enforce this Guarantee Agreement on behalf of
the Holders; (iii) the Holders of a Majority in Liquidation Preference of the
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of this
Guarantee Agreement or to direct the exercise of any trust or power conferred
upon the Guarantee Trustee under this Guarantee Agreement; and (iv) if the
Guarantee Trustee fails to enforce the Guarantee, any Holder may institute a
legal proceeding directly against the Guarantor to enforce its rights under this
Guarantee Agreement, without first instituting a legal proceeding against the
Guarantee Trustee, the Trust or any other Person.
SECTION 5.5 Guarantee of Payment. This Guarantee Agreement creates a
guarantee of payment and not of collection. This Guarantee Agreement will not be
discharged except by payment of the Guarantee Payments in full (without
duplication of amounts theretofore paid by the Trust) or upon distribution of
Debentures to Holders as provided in the Declaration of Trust.
SECTION 5.6 Subrogation. The Guarantor acknowledges that its
obligations hereunder are independent of the obligations of the Trust with
respect to the Preferred Securities and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guarantee Payments pursuant to the
terms of this Guarantee Agreement notwithstanding the occurrence of any event
referred to in subsections (a) through (g), inclusive, of Section 5.3 hereof.
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ARTICLE 6
COVENANTS AND SUBORDINATION
SECTION 6.1 Subordination.
(a) If an Event of Default (as defined in the Indenture) has occurred
and is continuing, the rights of holders of Common Securities to receive
payments on liquidation, redemption and otherwise are subordinate to the rights
of Preferred Securities to receive Guarantee Payments under this Guarantee.
(b) In the event and during the continuation of any default by the
Guarantor in the payment of principal, premium, interest or any other payment
due on any Senior Debt (as defined in the Indenture) (whether or not dependent
upon the giving of notice, the lapse of time or both, or any other condition to
such default becoming an event of default), unless and until such default shall
have been cured or waived or shall have ceased to exist, and in the event that
the maturity of any Senior Debt has been accelerated because of a default, then
no Guarantee Payments shall be made hereunder by the Guarantor and neither the
Guarantee Trustee nor any Holder shall have any rights or remedies hereunder to
receive such Guarantee Payments.
(c) In the event of any default (other than a default described in the
immediately preceding paragraph) by the Guarantor under the terms of any
instrument evidencing any Senior Debt (whether or not dependent upon the giving
of notice, the lapse of time or both or any other condition), unless and until
such default shall have been cured or waived or shall have ceased to exist, no
Guarantee Payments shall be made hereunder by the Guarantor and neither the
Guarantee Trustee nor any Holder shall have any rights or remedies hereunder to
receive such Guarantee Payments.
(d) In the event of (i) any insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or other similar
case or proceeding in connection therewith, relative to the Guarantor or to its
creditors, as such, or to its assets, whether voluntary or involuntary, or (b)
any total or partial liquidation, dissolution or other winding-up of the
Guarantor, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, or (c) any general assignment for the benefit of
creditors or any other marshaling of assets or liabilities of the Guarantor,
then and in any such event:
(1) the holders of Senior Debt shall be entitled to receive
payment and satisfaction in full in cash of all amounts due on or in
respect of all Senior Debt before any Guarantee Payment is made; and
(2) any payment or distribution of assets of the Guarantor of any
kind or character, whether in cash, property or securities, by set-off
or otherwise, to which the Holders or the Guarantee Trustee would be
entitled but for the provisions of this Section 6.1, shall be paid by
the liquidating trustee or agent or other Person making such payment
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or distribution, whether a trustee in bankruptcy, a receiver or
liquidating trustee or otherwise, directly to the holders of Senior
Debt or their representative or representatives, or to the trustee or
trustees under any indenture under which any instruments evidencing
any of such Senior Debt may have been issued, ratably according to the
aggregate amounts remaining unpaid on account of the Senior Debt held
or represented by each, to the extent necessary to make payment in
full in cash of all Senior Debt remaining unpaid, after giving effect
to any concurrent payment or distribution to the holders of such
Senior Debt, before any such payment or distribution is made to the
Holders or to the Guarantee Trustee.
(e) In the event that, notwithstanding the foregoing, the Guarantee
Trustee or any Holder shall have received any payment or distribution of assets
of the Guarantor of any kind or character, whether in cash, property or
securities, including, without limitation, by way of set-off or otherwise,
before all Senior Debt is paid and satisfied in full in cash, then and in such
event such payment or distribution shall be held by the Guarantee Trustee or
such Holder, as the case may be, in trust for the benefit of the holders of such
Senior Debt and shall be immediately paid over or delivered forthwith to the
liquidating trustee or agent or other Person making payment or distribution of
assets of the Guarantor for application to the payment of all Senior Debt
remaining unpaid, to the extent necessary to pay all Senior Debt in full in cash
after giving effect to any concurrent payment or distribution to or for the
holders of Senior Debt.
(f) The consolidation of the Guarantor with, or the merger of the
Guarantor with or into, another Person or the liquidation or dissolution of the
Guarantor following the transfer of all its assets (as an entirety or
substantially as an entirety) to another Person upon the terms and conditions
set forth in Article 8 of the Indenture shall not be deemed a dissolution,
winding-up, liquidation, reorganization, assignment for the benefit of creditors
or marshaling of assets and liabilities of the Guarantor for the purposes of
this Section 6.1 if the Person formed by such consolidation or the surviving
entity of such merger or the Person which acquires by transfer such assets (as
an entirety or substantially as an entirety) shall, as a part of such
consolidation, merger or transfer, comply with the conditions set forth in
Article 8 of the Indenture.
(g) Amounts paid or payable by the Guarantor under Article 9 hereof
shall not be subject to the provisions and operation of this Article 6.
(h) This Guarantee Agreement shall rank pari passu with any guarantee
now or hereafter entered into by the Guarantor in respect of any preferred or
preference stock of any Affiliate of the Guarantor that is senior to the Common
Stock.
SECTION 6.2 Certain Covenants of the Guarantor.
(a) Guarantor covenants and agrees that if and so long as (i) the
Trust is the holder of all the Debentures, (ii) a Tax Event in respect of the
Trust has occurred and is continuing and
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(iii) the Guarantor has elected, and has not revoked such election, to pay
Additional Sums in respect of the Preferred Securities and Common Securities,
the Guarantor will pay to the Trust such Additional Sums.
(b) The Guarantor covenants and agrees for so long as Preferred
Securities are Outstanding (i) not to convert Debentures except pursuant to a
Notice of Conversion delivered to the Conversion Agent by a Holder of Trust
Securities, (ii) to maintain directly or indirectly 100% ownership of the Common
Securities, provided that certain successors which are permitted pursuant to the
Indenture may succeed to the Guarantor's ownership of the Common Securities,
(iii) not to voluntarily dissolve, wind-up, liquidate or terminate the Trust,
except in accordance with the terms of the Declaration of Trust, (iv) to
maintain the reservation for issuance of the number of shares of Common Stock
that would be required from time to time upon the conversion of all the
Debentures then outstanding, (v) to use its reasonable best efforts, consistent
with the terms and provisions of the Declaration of Trust, to cause the Trust to
remain classified as a grantor trust and not as an association taxable as a
corporation for United States federal income tax purposes and (vi) to deliver
shares of Common Stock as promptly as practicable on or after any Conversion
Date.
ARTICLE 7
TERMINATION
SECTION 7.1 Termination. This Guarantee Agreement shall terminate and
be of no further force and effect upon (i) full payment of the Redemption Price
or Optional Redemption Price, as the case may be, of all Preferred Securities,
(ii) the distribution of Debentures to the Holders in exchange for all of the
Preferred Securities, (iii) full payment of the amounts payable in accordance
with the Declaration of Trust upon dissolution or liquidation of the Trust or
(iv) the distribution, if any, of Common Stock to the Holders of the Preferred
Securities in respect of the conversion of all such Holders' Preferred
Securities into Common Stock. Notwithstanding the foregoing, this Guarantee
Agreement will continue to be effective or will be reinstated, as the case may
be, if at any time any Holder must restore payment of any sums paid with respect
to Preferred Securities or this Guarantee Agreement.
ARTICLE 8
MISCELLANEOUS
SECTION 8.1 Successors and Assigns. All guarantees and agreements
contained in this Guarantee Agreement shall bind the successors, assigns,
receivers, trustees and representatives of the Guarantor and shall inure to the
benefit of the Holders of the Preferred Securities then Outstanding. Except in
connection with a consolidation, merger or sale involving the Guarantor that is
permitted under Article 8 of the Indenture and pursuant to which the assignee
agrees in writing to perform the Guarantor's obligations hereunder, the
Guarantor shall not assign its obligations hereunder.
SECTION 8.2 Amendments. Except with respect to any changes that do not
materially adversely affect the rights of the Holders (in which case no vote
will be required), this Guarantee
16
<PAGE>
Agreement may not be amended without the prior approval of the Holders of not
less than a Majority in Liquidation Preference of the Securities. The provisions
of Article 6 of the Declaration of Trust concerning meetings of the Holders
shall apply to the giving of such approval. No provisions in Article 3, Article
4 or Article 9, Section 6.1(g) or this sentence may be amended without the prior
written consent of the Guarantee Trustee, which consent may be granted or
withheld in the sole discretion of the Guarantee Trustee. The Guarantor shall
furnish the Guarantee Trustee with an Officer's Certificate and an Opinion of
Counsel to the effect that any amendment of this Guarantee Agreement is
authorized and permitted.
SECTION 8.3 Notices. Any notice, request or other communication
required or permitted to be given hereunder shall be in writing, duly signed by
the party giving such notice, and delivered, telecopied or mailed by first-class
mail as follows:
(a) if given to the Guarantor, to the address set forth below or such
other address as the Guarantor may give notice of to the Holders:
Superior TeleCom Inc.
1790 Broadway
New York, New York 10019
Phone: (212) 757-3333
Facsimile: (212) 757-3423
Attention: Stewart H. Wahrsager, Esq.
(b) if given to the Trust, in care of the Guarantee Trustee, at the
Trust's (and the Guarantee Trustee's) address set forth below or such other
address as the Guarantee Trustee on behalf of the Trust may give notice of to
the Holders:
Superior TeleCom Inc.
1790 Broadway
New York, New York 10019
Phone: (212) 757-3333
Facsimile: (212) 757-3423
Attention: Stewart H. Wahrsager, Esq.
with a copy to:
(c) if given to any Holder, at the address set forth on the books and
records of the Trust.
17
<PAGE>
All notices hereunder shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first-class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
SECTION 8.4 Benefit. This Guarantee Agreement is solely for the
benefit of the Holders, the Guarantee Trustee and other Indemnified Persons and
is not separately transferable from the Preferred Securities.
SECTION 8.5 Interpretation. In this Guarantee Agreement, unless the
context otherwise requires:
(a) Capitalized terms used in this Guarantee Agreement but not defined
in the preamble hereto have the respective meanings assigned to them in Section
1.1;
(b) a term defined anywhere in this Guarantee Agreement has the same
meaning throughout;
(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented or amended
from time to time;
(d) all references in this Guarantee Agreement to Articles and
Sections are to Articles and Sections of this Guarantee Agreement unless
otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Guarantee Agreement unless otherwise defined in this Guarantee
Agreement or unless the context otherwise requires;
(f) a reference to the singular includes the plural and vice versa;
and
(g) the masculine, feminine or neuter genders used herein shall
include the masculine, feminine and neuter genders.
SECTION 8.6 Governing Law. THIS GUARANTEE AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
ARTICLE 9
INDEMNIFICATION
SECTION 9.1 Exculpation.
18
<PAGE>
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Guarantor or any Holder for any loss, damage or
claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith in accordance with this Guarantee Agreement and
in a manner that such Indemnified Person reasonably believed to be within the
scope of the authority conferred on such Indemnified Person by this Guarantee
Agreement or by law, except that an Indemnified Person shall be liable for any
such loss, damage or claim incurred by reason of such Indemnified Person's
negligence or willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Guarantor, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Preferred Securities might properly be paid.
SECTION 9.2 Compensation and Indemnification.
The Guarantor agrees to pay to the Guarantee Trustee such compensation
for its services as shall be mutually agreed upon by the Guarantor and the
Guarantee Trustee (which compensation shall not be limited by any provision of
law in regard to the compensation of a trustee of an express trust). The
Guarantor shall reimburse the Guarantee Trustee upon request for all reasonable
out-of-pocket expenses incurred by it, including the reasonable compensation and
expenses of the Guarantee Trustee's agents and counsel, except any expense as
may be attributable to the negligence or bad faith of the Guarantee Trustee.
The Guarantor agrees to indemnify each Indemnified Person for, and to
hold each Indemnified Person harmless against, any and all loss, liability,
damage, claim or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The provisions of this
Section 9.2 shall survive the termination of this Guarantee Agreement and shall
survive the resignation or removal of the Guarantee Trustee.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all of which together
shall constitute one and the same instrument.
THIS GUARANTEE AGREEMENT is executed as of the day and year first
above written.
SUPERIOR TELECOM INC.,
19
<PAGE>
as Guarantor
By:
--------------------------
Name:
Title:
[Guarantee Trustee],
not in its individual capacity but solely as
Guarantee Trustee
By:
--------------------------
Name:
Title:
20
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
ARTICLE 1
DEFINITIONS..............................................................................................2
SECTION 1.1 Definitions..................................................................................2
ARTICLE 2
TRUST INDENTURE ACT......................................................................................5
SECTION 2.1 Trust Indenture Act; Application............................................................5
SECTION 2.2 List of Holders.............................................................................5
SECTION 2.3 Reports by the Guarantee Trustee............................................................6
SECTION 2.4 Periodic Reports to Guarantee Trustee. .....................................................6
SECTION 2.5 Evidence of Compliance with Conditions Precedent............................................6
SECTION 2.6 Events of Default; Waiver...................................................................6
SECTION 2.7 Event of Default; Notice....................................................................6
SECTION 2.8 Conflicting Interests.......................................................................7
ARTICLE 3
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE.......................................................7
SECTION 3.1 Powers and Duties of the Guarantee Trustee..................................................7
SECTION 3.2 Certain Rights of Guarantee Trustee.........................................................8
SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee Agreement............................10
ARTICLE 4
GUARANTEE TRUSTEE.......................................................................................10
SECTION 4.1 Guarantee Trustee; Eligibility.............................................................10
SECTION 4.2 Appointment, Removal and Resignation of the Guarantee Trustee..............................11
ARTICLE 5
GUARANTEE...............................................................................................12
SECTION 5.1 Guarantee..................................................................................12
SECTION 5.2 Waiver of Notice and Demand................................................................12
SECTION 5.3 Obligations Not Affected...................................................................12
SECTION 5.4 Rights of Holders..........................................................................13
SECTION 5.5 Guarantee of Payment.......................................................................13
SECTION 5.6 Subrogation................................................................................13
ARTICLE 6
COVENANTS AND SUBORDINATION.............................................................................14
SECTION 6.1 Subordination..............................................................................14
SECTION 6.2 Certain Covenants of the Guarantor.........................................................15
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
ARTICLE 7
TERMINATION
........................................................................................................16
SECTION 7.1 Termination................................................................................16
ARTICLE 8
MISCELLANEOUS...........................................................................................16
SECTION 8.1 Successors and Assigns.....................................................................16
SECTION 8.2 Amendments.................................................................................17
SECTION 8.3 Notices....................................................................................17
SECTION 8.4 Benefit....................................................................................18
SECTION 8.5 Interpretation.............................................................................18
SECTION 8.6 Governing Law..............................................................................18
ARTICLE 9
INDEMNIFICATION.........................................................................................19
SECTION 9.1 Exculpation................................................................................19
SECTION 9.2 Compensation and Indemnification...........................................................19
</TABLE>
ii
<PAGE>
CROSS REFERENCE TABLE*
<TABLE>
<CAPTION>
SECTION OF TRUST SECTION OF
INDENTURE ACT OF GUARANTEE
1939, AS AMENDED AGREEMENT
<S> <C>
310(a) .................................................................. 4.1(a)
310(b) .................................................................. 4.1(c), 2.8
310(c)................................................................... Inapplicable
311(a)................................................................... 2.2(b)
311(b) .................................................................. 2.2(b)
311(c)................................................................... Inapplicable
312(a) .................................................................. 2.2(a)
312(b)................................................................... 2.2(b)
313...................................................................... 2.3
314(a)................................................................... 2.4
314(b) .................................................................. Inapplicable
314(c) .................................................................. 2.5
314(d) .................................................................. Inapplicable
314(e) ................................................................. 1.1, 2.5, 3.2
314(f) ................................................................. 3.2
315(a) ................................................................. 3.1(d)
315(b) ................................................................. 2.7
315(c) ................................................................. 3.1
315(d) ................................................................. 3.1(d)
316(a) ................................................................. 1.1, 2.6, 5.4
316(b) ................................................................. 5.3
317(a) ................................................................. Inapplicable
317(b) ................................................................. Inapplicable
318(a) ................................................................. 2.1(b)
318(b) ................................................................. 2.1
318(c) ................................................................. 2.1(a)
</TABLE>
- ------------------------------------------------------------------
*This Cross-Reference Table does not constitute part of the Guarantee Agreement
and shall not affect the interpretation of any of its terms or provisions.
i
<PAGE>
Exhibit 10.2
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT dated as of October 21, 1998,
among the individuals and entities named in Schedule I hereto
(the "Investors"), STEVEN R. ABBOTT and SUPERIOR TELECOM INC., a
Delaware corporation (the "Company").
WHEREAS the Company, SUT Acquisition Corp. ("Merger Sub") and Essex
International Inc., a Delaware corporation ("Essex"), have entered into an
Agreement and Plan of Merger dated as of October 21, 1998 (the "Merger
Agreement"), pursuant to which Merger Sub will be merged with and into Essex
(the "Merger");
WHEREAS in connection with the Merger the Company will issue Series A
Convertible Exchangeable Preferred Stock, par value $.01 per share (the
"Preferred Stock"), to the Investors and Abbott and has agreed to provide
certain registration rights;
WHEREAS in accordance with the Certificate of Designation governing
the Preferred Stock, the Preferred Stock shall be exchangeable into 8-1/2%
Subordinated Convertible Exchange Debentures due 2013 (the "Exchange
Debentures");
WHEREAS the parties hereto desire to set forth the terms and
conditions relating to the sale by means of public offerings of Preferred Stock
owned by the Investors, Abbott and their respective affiliates and transferees.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:
SECTION 1. Definitions. As used in this Agreement, the following terms
shall have the following meanings:
"Business Development Determination" has the meaning set forth in
Section 6 hereof.
"Demand Registration" has the meaning set forth in Section 4 hereof.
"Demand Registration Period" has the meaning set forth in Section 4
hereof.
<PAGE>
"Effective Time" shall have the meaning ascribed to such term in the
Merger Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Form S-3" means a registration statement on Form S-3 under the
Securities Act or any successor form or any similar form that permits
incorporation by reference of reports filed by the Company under the Exchange
Act.
"Losses" has the meaning set forth in Section 8(d) hereof.
"Managing Underwriters" means the Underwriter or Underwriters that
manage or lead an underwritten offering.
"Prospectus" means the prospectus included in any Registration
Statement (including a prospectus that discloses information previously omitted
from a prospectus filed as part of an effective registration statement in
reliance upon Rule 430A under the Securities Act), as amended or supplemented by
any prospectus supplement with respect to the terms of the offering of any
portion of the Registrable Securities covered by such Registration Statement,
and all amendments and supplements to the prospectus, including post-effective
amendments.
"Registrable Securities" means all Securities held by the Investors or
Abbott and their respective affiliates and transferees. As to any particular
Registrable Securities, such Securities will cease to be Registrable Securities
when they have been effectively registered under the Securities Act and disposed
of in accordance with any Registration Statement covering them.
"Registration Statement" means any registration statement filed by the
Company with the SEC under the Securities Act that covers some or all
Registrable Securities, and any amendments or supplements thereto, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all documents and other materials incorporated
by reference therein, including a Shelf Registration Statement.
"SEC" means the Securities and Exchange Commission.
"Securities" means the shares of Preferred Stock received by the
Investors and Abbott in connection with the Merger or any other shares of
capital stock issuable upon conversion of such Preferred Stock as well any other
shares
2
<PAGE>
of capital stock or other securities, including, without limitation,
Exchange Debentures, into which any such securities are reclassified or changed,
including by reason of a merger, consolidation, reorganization or
recapitalization.
"Securities Act" means the Securities Act of 1933.
"Selling Party" has the meaning set forth in Section 8(b) hereof.
"Shelf Registration" means a registration effected pursuant to Section
2 hereof.
"Shelf Registration Period" has the meaning set forth in Section 2(b)
hereof.
"Shelf Registration Statement" means a "shelf" registration statement
filed by the Company pursuant to the provisions of Section 2 hereof with the SEC
covering offers and sales in accordance with Rule 415 under the Securities Act,
or any similar rule that may be adopted by the SEC (whether or not the Company
is then eligible to use Form S-3), that covers some or all of the Registrable
Securities, and any amendments and supplements to such registration statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"Underwriter" means any underwriter of Registrable Securities in
connection with an offering thereof pursuant to a Registration Statement.
SECTION 2. Shelf Registration. (a) The Company shall prepare and, not
later than 10 days after the Effective Time, shall file with the SEC, and
thereafter shall use its best efforts to cause to be declared effective under
the Securities Act as soon as practicable, a Shelf Registration Statement
relating to the offer and sale by the Investors or Abbott of all Registrable
Securities in a manner elected by the Investors or Abbott and set forth in such
Shelf Registration Statement. No securities other than Registrable Securities
shall be included in any such initial Shelf Registration Statement or any
additional Shelf Registration Statement with respect thereto without the consent
of the Investors and Abbott.
(b) The Company shall use its best efforts to keep the Shelf
Registration Statement continuously effective during the period (the "Shelf
Registration Period") from the date a Registration Statement is declared
effective by the
3
<PAGE>
SEC until 30 days following the first anniversary of the Effective Time.
(c) Without limiting the foregoing, the Company shall be deemed not to
have used its best efforts to keep the Shelf Registration Statement effective
during the Shelf Registration Period if the Company voluntarily takes any action
or fails to take any action that would result in (i) the Investors or Abbott not
being able to offer and sell Registrable Securities thereunder, (ii) such Shelf
Registration Statement failing to comply as to form with the applicable
requirements of the Securities Act or (iii) any Prospectus forming a part of any
Shelf Registration Statement containing an untrue statement of a material fact
or omitting to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading unless,
in each case, (x) such action or failure to take action is required by
applicable law, rule, regulation, or legal proceeding or (y) such action or
failure to take action is permitted by Section 6 hereof.
(d) Subject to Section 6 hereof, if the Shelf Registration Statement
ceases to be effective for any reason at any time during the Shelf Registration
Period, the Company shall use its best efforts to obtain the prompt withdrawal
of any order suspending the effectiveness thereof, and shall (i) within five
days after such cessation of effectiveness, amend the Shelf Registration
Statement in a manner reasonably expected to obtain the withdrawal of the order
suspending the effectiveness thereof, or (ii) file an additional Shelf
Registration Statement subsequent to the expired or ineffective Shelf
Registration Statement covering the Registrable Securities. If any additional
Shelf Registration Statement is filed, the Company shall use its best efforts to
cause such Shelf Registration Statement to be declared effective as soon as
practicable after such filing and to keep such Shelf Registration Statement
continuously effective for the remainder of the Shelf Registration Period. As
used herein, the term "Shelf Registration Statement" means any initial Shelf
Registration Statement and any additional Shelf Registration Statement filed as
contemplated by this Section 2.
(e) Subject to Section 6 hereof, the Company shall supplement and
amend as promptly as practicable any Shelf Registration Statement if (i)
required by the SEC or the rules, regulations or instructions applicable to such
Shelf Registration Statement (including to cause all information in such Shelf
Registration Statement to conform in all respects to all information contained
in reports filed by the Company with the SEC pursuant to the Exchange
4
<PAGE>
Act), (ii) otherwise required by or advisable under the Securities Act or (iii)
requested by the Investors, Abbott or the Managing Underwriters with respect to
an underwritten offering of such Registrable Securities.
(f) If during the Shelf Registration Period any Registrable Securities
have not been included in a Shelf Registration Statement, the Company shall upon
the request of any Investor or Abbott file a subsequent Shelf Registration
Statement covering all such unregistered Registrable Securities that includes a
combined Prospectus permitting the inclusion in such Prospectus of all
Registrable Securities, including Registrable Securities included in a
previously filed Registration Statement.
(g) If at any time or from time to time the Investors or Abbott desire
to sell Registrable Securities in an underwritten offering pursuant to the Shelf
Registration Statement, the Underwriters, including the Managing Underwriter,
shall be selected by the Investors or Abbott, as the case may be, subject to the
consent of the Company which may not be unreasonably withheld.
SECTION 3. Piggyback Registrations. If the Company at any time after
the Shelf Registration Period and prior to the expiration of the second
anniversary of the Effective Time proposes to register securities under the
Securities Act (other than pursuant to a registration statement on Form S-4 or
S-8 or the equivalent thereof or pursuant to Section 2 hereof) involving any of
its equity securities (or any security with respect to which equity securities
may be issuable upon exercise, conversion or exchange of any options, rights
thereto or thereunder) to be offered for cash or cash equivalents in an
underwritten public offering, the Company shall each such time give prompt
written notice to the Investors and Abbott of the Company's intention to do so,
describing such securities and specifying the form and manner and the other
relevant facts involved in such proposed registration (including, without
limitation, the identity of the Managing Underwriter and whether such offering
will be pursuant to a "best efforts" or "firm commitment" underwriting). Upon
the written request of the Investors or Abbott delivered to the Company within
15 days after such notice shall have been given to the Investors and Abbott
(which request shall specify the Registrable Securities intended to be disposed
of by the Investors or Abbott and the intended method of disposition thereof),
the Company shall effect the registration (a "Piggyback Registration") under the
Securities Act, as expeditiously as is reasonable, of the sale of all
Registrable Securities that the Company has been so requested to register by the
Investors or Abbott and include
5
<PAGE>
all such Registrable Securities in such offering (by means of a combined
Prospectus if the offering of such Registrable Securities is covered by another
Registration Statement declared effective in accordance with Section 2 hereof)
(in accordance with the intended methods of distribution thereof as aforesaid);
provided, however, that:
(i) if, at any time after giving such written notice of its intention
to register any offering of such securities and prior to the effective date
of the Registration Statement filed in connection with such Piggyback
Registration, the Company shall determine for any reason not to register or
to delay the registration of such offering of securities, the Company may,
at its election, give written notice of such determination to the Investors
or Abbott in connection with such Piggyback Registration thereby relieving
the Company of its obligation to register such securities in such offering
(but the Company shall not thereby be relieved from its obligation to pay
the registration expenses in connection therewith to the extent provided in
Section 7 hereof);
(ii) if the Managing Underwriter of such proposed Piggyback
Registration offering shall advise the Company in writing that, in the
judgment of such Managing Underwriter, the inclusion in any Registration
Statement pursuant to this Section 3 of some or all of the Registrable
Securities creates a substantial risk that the proceeds or price per unit
the Company or persons other than the Company will derive from such
registration will be materially reduced and/or that the number of
securities included in the offering to be registered (including those
sought to be included at the insistence of the Company and any other party
entitled to participate in such offering) is too large a number to be
reasonably sold, or the Managing Underwriter of such underwritten offering
shall inform the Company in writing of its opinion that the securities
requested to be included in such offering would materially adversely affect
its ability to effect such offering, the Company shall register an offering
of, and shall subsequently offer, that number of securities that the
Company is so advised can be sold in such offering, which shall be
allocated in the following priority: (A) first, the securities the Company
proposes to sell, (B) second, the securities proposed to be sold by any
person exercising demand registration rights and (C) third, the Registrable
Securities requested to be included in such offering and the securities
proposed to be sold by any other
6
<PAGE>
holder allocated ratably among such holders on the basis of the securities
proposed to be sold; and
(iii) if the Managing Underwriter of such proposed Piggyback
Registration offering shall advise the Company in writing that, in the
judgment of such Managing Underwriter, the inclusion of any Registrable
Securities in such offering of a type, class or series, as the case may be,
different from that of the securities originally intended to be included in
such offering would materially adversely affect the success of the offering
of such securities originally intended to be so included, then the Company
shall promptly advise the Investors or Abbott thereof and may require, by
written notice to the Investors or Abbott accompanying such advice, that
such different Registrable Securities be excluded from such offering to the
extent the inclusion thereof could adversely affect such offering.
SECTION 4. Demand Registration Right. If the Company is not permitted
under applicable law from time to time in effect to maintain an effective Shelf
Registration Statement during the Shelf Registration Period or if, during the
one-year period terminating on the second anniversary of the Effective Time, the
Company does not meet the requirements of Rule 144(c) under the Securities Act,
each of the Investors or Abbott may make a written request to the Company for
registration with the SEC under and in accordance with the provisions of the
Securities Act of all or part of their Registrable Securities and the Company
shall use its best efforts to effect such registration (a "Demand
Registration"); provided, however, that (i) the Company need effect, and the
Investors and Abbott each are entitled to, only one such Demand Registration
during the period (the "Demand Registration Period") between the first and
second anniversary of the Effective Time, and (ii) no Demand Registration may be
requested after the end of the Demand Registration Period. No securities other
than Registrable Securities shall be included in any such Demand Registration
offering without the consent of the Investors and Abbott.
SECTION 5. Registration Procedures. In connection with any
Registration Statement, the following provisions shall apply:
(a) The Company shall furnish to Abbott and the Investors (if they are
then holding Registrable Securities) and their respective counsel prior to the
filing thereof with the SEC, a copy of any such Registration Statement
(including any preliminary prospectus contained therein),
7
<PAGE>
and each amendment thereto and each amendment or supplement, if any, to the
Prospectus included therein and shall reflect in each such document, when so
filed with the SEC, such comments as the Investors reasonably may propose.
(b) The Company shall ensure that (i) any such Registration Statement
and any amendment thereto and any Prospectus forming part thereof and any
amendment or supplement thereto complies as to form in all material respects
with the Securities Act, (ii) any such Registration Statement and any amendment
thereto does not, when it becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (iii) subject to
Section 6 hereof, any Prospectus forming part of any such Registration
Statement, and any amendment or supplement to such Prospectus, does not include
an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading other than, in clauses
(ii) and (iii), any such untrue statement or omission made therein in reliance
upon and conformity with written information furnished to the Company by or on
behalf of the Investors or Abbott specifically for inclusion therein.
(c) The Company shall promptly advise Abbott and the Investors (if
they are then holding Registrable Securities) and, if requested by the Investors
or Abbott, promptly confirm such advice in writing:
(i) when any such Registration Statement and any amendment or
supplement thereto has been filed with the SEC and when any such
Registration Statement or any post-effective amendment thereto has become
effective;
(ii) of any request by the SEC for amendments or supplements to any
such Registration Statement or the Prospectus included therein or for
additional information;
(iii) of the issuance by the SEC of any stop order suspending the
effectiveness of any such Registration Statement or the initiation of any
actions or proceedings for that purpose;
(iv) of the receipt by the Company of any notification with respect to
the suspension of the qualification of the Registrable Securities included
therein for sale in any jurisdiction or the initiation
8
<PAGE>
or threatening of any action or proceeding for such purpose; and
(v) of the happening of any event that requires the making of any
changes in any such Registration Statement or Prospectus so that, as of
such date, the statements therein are not misleading and do not omit to
state a material fact required to be stated therein or necessary to make
the statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading.
(d) The Company shall use its best efforts to obtain the withdrawal of
any order suspending the effectiveness of any such Registration Statement at the
earliest possible time.
(e) The Company shall furnish to Abbott and the Investors (if they are
then owning Registrable Securities) and their respective counsel, without
charge, a copy of each Registration Statement and any and all post-effective
amendments thereto, including financial statements and schedules, and all
exhibits thereto (including those incorporated therein by reference).
(f) The Company shall furnish Abbott and the Investors (if they are
then owning Registrable Securities) and their respective counsel, without
charge, copies of any and all transmittal letters or other correspondence with
the SEC or any other governmental entity relating to a Registration Statement or
the public offering of the Company's securities.
(g) The Company shall, during the Shelf Registration Period or the
Demand Registration Period, as the case may be, deliver to Abbott and the
Investors (if they are then owning Registrable Securities), without charge, as
many copies of the Prospectus (including each preliminary Prospectus) included
in such Registration Statement and any amendment or supplement thereto as such
Person may reasonably request; and subject to Section 6 below, the Company
consents to the use of the Prospectus or any amendment or supplement thereto by
each such Person in connection with the offering and sale of the Registrable
Securities covered by the Prospectus or any amendment or supplement thereto.
(h) Prior to any offering of Registrable Securities pursuant to any
Registration Statement, the Company shall use its best efforts to register or
qualify or cooperate with the Investors or Abbott and their respective counsel
in connection with the registration or qualification
9
<PAGE>
of such Registrable Securities for offer and sale under the securities, Blue Sky
or similar laws of such U.S. jurisdictions as the Investors or Abbott request,
and the Company shall use its best efforts to do any and all other acts or
things necessary or advisable to enable the offer and sale in such U.S.
jurisdictions of the Registrable Securities covered by such Registration
Statement; provided, however, that the Company shall not be required to qualify
generally to do business in any jurisdiction where it is not then so qualified
or to take any action which would subject it to general service of process or to
taxation in any such jurisdiction where it is not then so subject.
(i) The Company shall cooperate with the Investors or Abbott to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold pursuant to any Registration Statement, free
of any restrictive legends and in such denominations and registered in such
names as requested prior to such sales.
(j) Subject to Section 6 hereof, at any time and from time to time
upon the occurrence of any event contemplated by Section 5(c)(v) hereof, the
Company shall promptly prepare and file with the SEC a post-effective amendment
to any Registration Statement or an amendment or supplement to the related
Prospectus or file any other required document so that, as thereafter delivered
to purchasers of the Registrable Securities offered thereby, the Prospectus will
not include an untrue statement of a material fact or omit to state any material
fact necessary to make the statement therein (in the case of the Prospectus, in
the light of the circumstances under which they were made) not misleading.
(k) The Company shall comply with all applicable rules and regulations
of the SEC and shall make generally available to the Investors and Abbott as
soon as practicable after the effective date of the applicable Registration
Statement an earnings statement satisfying the provisions of Section 11(a) of
the Securities Act and Rule 158 under the Securities Act.
(l) Each holder of Registrable Securities that plans to participate in
a distribution pursuant to a Registration Statement shall furnish to the Company
such information regarding such Person and its affiliates and the distribution
of such Registrable Securities as the Company may from time to time reasonably
require for inclusion in such Registration Statement. Such information at the
time any Registration Statement and any amendment thereto becomes effective, and
at the time any Prospectus or supplement thereto previously reviewed by the
Investors and Abbott
10
<PAGE>
forming a part of any Registration Statement is delivered in any offering of
Registrable Securities, shall not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
(in the case of the Prospectus, in light of the circumstances which the were
made) to make the statements therein not misleading. The Investors or Abbott
shall advise the Company and, if requested by the Company, confirm such advice
in writing in the event that the Investors or Abbott become aware of the
happening of any event that requires the making of any changes in a Registration
Statement or Prospectus so that as of such dates the statements therein provided
by the Investors or Abbott specifically for inclusion therein are not misleading
and do not omit to state a material fact required to be stated therein or
necessary to make the statements therein (in the case of the Prospectus, in
light of the circumstances under which they were made) not misleading.
(m) Subject to Section 6 hereof, the Company shall, upon request,
promptly incorporate in a Prospectus or Prospectus supplement or post-effective
amendment to a Registration Statement, such information, if any, as the Managing
Underwriters, the Investors, Abbott and the Company reasonably agree should be
included therein and shall make all required filings of such Prospectus or
Prospectus supplement or post-effective amendment as soon as practicable
following notification of the matters to be incorporated in such Prospectus or
Prospectus supplement or post-effective amendment, and the Company shall print
and deliver copies of such amended Prospectus or Prospectus supplement to all
purchasers of such Registrable Securities.
(n) If requested by the Investors or Abbott in connection with the
offering and sale of Registrable Securities pursuant to a Registration
Statement, the Company shall enter into one or more underwriting agreements with
the Managing Underwriters selected in accordance with Section 2(g) hereof. Any
such underwriting agreement shall contain such indemnities and other agreements
as are then customarily included in underwriting agreements relating to
secondary public offerings.
(o) The Company shall: (i) make reasonably available for inspection
during normal business hours by the Investors, Abbott, any Underwriter
participating in any disposition pursuant to a Registration Statement, and any
attorney, accountant or other agent or representative retained by the Investors,
Abbott or any such Underwriter all relevant financial and other records,
pertinent corporate documents and properties of the Company and its
subsidiaries; (ii) cause the Company's officers, directors
11
<PAGE>
and employees to supply all relevant information reasonably requested by the
Investors, Abbott or any such Underwriter, attorney, accountant, agent or
representative in connection with any such Registration Statement as is
customary for similar due diligence examinations; provided, however, that any
information that is designated in writing by the Company, as confidential at the
time of delivery of such information shall be kept confidential by the
Investors, Abbott or any such Underwriter, attorney, accountant, agent or
representative, unless (x) disclosure is, in the opinion of counsel to the
disclosing party, required to be made in connection with a court proceeding or
required by law or (y) such information becomes available to the public
generally or through a third party without an accompanying obligation of
confidentiality; (iii) make such representations and warranties to the holders
of Registrable Securities registered thereunder and the Underwriters, if any, in
form, substance and scope as are customarily made by issuers to underwriters in
secondary public underwritten offerings; (iv) obtain opinions of counsel to the
Company and updates thereof (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the Managing Underwriters, if
any) addressed to each selling holder of Registrable Securities and the
Underwriters, if any, covering such matters as are customarily covered in
opinions requested in underwritten secondary public offerings by an affiliate
and such other matters as may be reasonably requested by such holders of
Registrable Securities and Underwriters; (v) obtain "cold comfort" letters and
updates thereof from the independent certified public accountants of the Company
(and, if necessary, any other independent certified public accountants of any
subsidiary of the Company or of any business acquired by the Company for which
financial statements and financial data are, or are required to be, included in
a Registration Statement), addressed to each holder of Registrable
Securities and the Underwriters, if any, in customary form and covering matters
of the type customarily covered in "cold comfort" letters in connection with
underwritten secondary public offerings by an affiliate; (vi) deliver such
documents and certificates as may be reasonably requested by the Investors,
Abbott and the Managing Underwriters, if any, including those to evidence
compliance with Section 5(i) hereof and with any customary condition contained
in the underwriting agreement or other agreement entered into by the Company;
and (vii) use its best efforts to make its senior management reasonably
available for customary "roadshow" or similar presentations to and meetings with
potential investors. The foregoing action set forth in clauses (iii), (iv), (v)
and (vi) of this Section 5(o) shall be performed at (A) the effectiveness of
such Registration Statement and each post-effective
12
<PAGE>
amendment thereto and (B) each closing under any underwriting or similar
agreement as and to the extent required thereunder.
(p) The Company shall cause all Registrable Securities to be listed on
each securities exchange or quoted through each automated interdealer quotation
system on which similar securities of the Company are then listed or quoted.
SECTION 6. Suspension of Offerings in Certain Circumstances. The
Company shall be entitled for the period referred to below to postpone the
filing of any Registration Statement or the taking of any other action otherwise
required to be prepared, filed or taken by it pursuant to Sections 2, 3, 4 and 5
hereof and/or to direct the suspension of any public offering, sale or
distribution of Registrable Securities if the Board of Directors of the Company
determines in good faith that any disclosure that would be required in
connection therewith would have a material adverse effect on the Company or any
financing, acquisition, disposition, merger, business combination, corporate
reorganization, or other transaction or development involving the Company or any
subsidiary of the Company (a "Business Development Determination"). Such
postponement or direction shall continue until such time as the Board of
Directors of the Company determines that the preparation and/or filing of such
Registration Statement or the taking of any such action and/or such public
offering, sale or distribution would no longer have a material adverse effect on
the Company or any such transaction but shall not, in any event, exceed 30 days
for any particular Business Development Determination or 60 days for all
Business Development Determinations during any twelve month period. No Business
Development Determination shall occur within 180 days of the expiration of a
postponement or suspension caused by another Business Development Determination.
The Board shall, as promptly as practicable, give the Investors and Abbott
written notice of any Business Development Determination.
SECTION 7. Registration Expenses. The Company shall bear all costs and
expenses incurred in connection with Sections 2, 3, 4 and 5 hereof, including
fees and disbursements of counsel and accountants for it and the holders of
Registrable Securities, printing, messenger and delivery expenses and all SEC,
National Association of Securities Dealers, Inc. and Blue Sky filing fees
(including those payable by any Underwriters); provided, however, that such
expenses shall exclude any brokerage fees or underwriting discounts and fees.
13
<PAGE>
SECTION 8. Indemnification and Contribution. (a) Indemnification of
Holders of Registrable Securities. In the case of any offering or sale of
Registrable Securities covered by this Agreement, the Company shall indemnify
and hold harmless each of the holders of Registrable Securities and each person
affiliated with or retained by the holders of Registrable Securities and who may
be subject to liability under any applicable securities laws, against any and
all losses, claims, damages or liabilities to which they or any of them may
become subject under the Securities Act or any other statute or common law of
the United States of America or political subdivision thereof, or any other
country or political subdivision thereof or otherwise, including, subject to
Section 8(c) hereof, any amount paid in settlement of any litigation commenced
or threatened (including any amounts paid pursuant to or in settlement of claims
made under customary indemnification or contribution provisions of any
underwriting or similar agreement entered into by the respective holders of
Registrable Securities in connection with any offering or sale of Registrable
Securities), and shall, subject to Section 8(c) hereof, promptly reimburse them,
as and when incurred, for any legal fees or disbursements or other expenses
incurred by them in connection with investigating any claims and defending any
actions, insofar as any such losses, claims, damages, liabilities or actions
shall arise out of or shall be based upon any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement (or in any
preliminary or final Prospectus included therein) or other offering document
relating to the offering and sale of such Registrable Securities, or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading;
provided, however, that the Company shall be liable in any case only to the
extent that any such loss, claim, damage, liability or action arises out of or
is based upon any such untrue statement or alleged untrue statement or omission
or alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any such holders of
Registrable Securities specifically for inclusion therein, including any such
information furnished pursuant to Section 5(l) hereof.
(b) Indemnification of the Company. In the case of each offering or
sale of Securities covered by this Agreement, each holder of Registrable
Securities that sells such Registrable Securities pursuant to a Registration
Statement ("Selling Party") shall indemnify and hold harmless the Company and
each person, if any, who controls the Company within the meaning of Section 15
of the
14
<PAGE>
Securities Act, each person affiliated with or retained by the Company
and who may be subject to liability under any applicable securities laws, and
each of the Company's directors and those officers of the Company who shall have
signed any Registration Statement, offering memorandum or other offering
document, against any and all losses, claims, damages or liabilities to which
they or any of them may become subject under the Securities Act or any other
statute or common law of the United States of America or political subdivision
thereof, or any other country or political subdivision thereof or otherwise,
including, subject to Section 8(c) hereof, any amount paid in settlement of any
litigation commenced or threatened (including any amounts paid pursuant to or in
settlement of claims made under customary indemnification or contribution
provisions of any underwriting or similar agreement entered into by the
respective holders of Registrable Securities in connection with any offering or
sale of Registrable Securities), and shall, subject to Section 8(c) hereof,
promptly reimburse them, as and when incurred, for any legal fees or
disbursements or other expenses incurred by them in connection with
investigating any claims and defending any actions, insofar as any such losses,
claims, damages, liabilities or actions shall arise out of or shall be based
upon any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement (or in any preliminary or final
Prospectus included therein) or other offering document relating to the offering
and sale of such Registrable Securities, or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however, that such holders of
Registrable Securities shall be liable in any case only to the extent that such
loss, claim, damage, liability or action arises out of or is based upon written
information solely relating to such holders of Registrable Securities and their
affiliates furnished to the Company by or on behalf of such holders of
Registrable Securities specifically for inclusion in any Registration Statement,
any preliminary Prospectus or Prospectus contained in such Registration
Statement, any offering memorandum or other offering document, or any amendment
thereof or supplement thereto, including any such information furnished pursuant
to Section 5(l) hereof.
(c) Procedure for Indemnification. Each party indemnified under
Section 8(a) or 8(b) hereof shall, promptly after receipt of notice of the
commencement of any action against such indemnified party in respect of which
indemnity may be sought, notify the indemnifying party in writing of the
commencement thereof. The omission of any indemnified party so to notify an
indemnifying party of such
15
<PAGE>
action shall not relieve the indemnifying party from any liability in respect of
such action which it may have to such indemnified party on account of the
indemnity agreement contained in Section 8(a) or 8(b) hereof, except to the
extent that the indemnifying party was or is actually prejudiced thereby, and in
no event shall relieve the indemnifying party from any other liability that it
may have to such indemnified party to the extent the indemnifying party has not
actually been prejudiced thereby. In case any such action shall be brought
against any indemnified party and such indemnified party shall notify an
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party. If the
indemnifying party so assumes the defense thereof, it may not agree to any
settlement of any such action as the result of which any remedy or relief, other
than monetary damages for which the indemnifying party shall be responsible
hereunder, shall be applied to or against the indemnified party, without the
prior written consent of the indemnified party. An indemnifying party may not
assume or jointly assume the defense of an action if in the reasonable judgment
of the indemnified party a conflict of interest may exist between the
indemnifying party and such indemnified party with respect to such action. An
indemnifying party who is not entitled to, who elects not to, or who has not
appointed counsel reasonably satisfactory to the indemnified party within a
reasonable time to, assume the defense of an action shall be obligated to pay
the fees and expenses of counsel for the indemnified party; provided, however,
that the indemnifying party shall not be obligated to pay the fees and the
expenses of more than one counsel (plus local counsel) for all parties who may
be indemnified by such indemnifying party with respect to such action, unless in
the opinion of counsel a conflict of interest exists between such indemnified
party and any other indemnified party with respect to such action. If the
indemnifying party does not assume the defense of an action, it shall be bound
by any settlement to which the indemnified party agrees, irrespective of whether
the indemnifying party consents thereto; provided, however, that if the
indemnifying party does not assume the defense of action because of a conflict
of interest that prevented it from doing so, then the indemnifying party shall
be bound by any settlement to which the indemnified party agrees and to which
the indemnifying party consents (which consent shall not be unreasonably
withheld). If any settlement of any claim is effected by the indemnified party
prior to commencement of any action relating thereto, the indemnifying party
shall be bound thereby only if it has consented in writing thereto. In any
16
<PAGE>
action with respect to which the indemnifying party has assumed the defense
thereof, the indemnified party shall continue to be entitled to participate in
the defense thereof, with counsel of its own choice; provided, however, that the
indemnifying party shall be relieved of the obligation hereunder to reimburse
the indemnified party for the costs thereof.
(d) Contribution. In the event that the indemnity provided in Section
8(a) or 8(b) is unavailable to or insufficient to hold harmless an indemnified
party for any reason, the Company and the Selling Parties agree to contribute to
the aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating or defending same)
(collectively "Losses") to which the Company and one or more of the Selling
Parties may be subject in such proportion as is appropriate to reflect the
relative fault of the Company and the Selling Parties in connection with the
statements or omissions which resulted in such Losses and any other relevant
equitable considerations; provided, however, that in no case shall any Selling
Party be responsible for any amount in excess of the gain to such Selling Party
over the price paid for such Registrable Securities sold by such Selling Party.
Relative fault shall be determined by reference to whether any alleged untrue
statement or omission related to information provided by the Company or the
Selling Parties. The Company and the Selling Parties agree that it would not be
just and equitable if contribution were determined by pro rata allocation or any
other method of allocation that does not take account of the equitable
considerations referred above. Notwithstanding the provisions of this Section
8(d), no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 8, each person who controls a Selling Party within the meaning of
either the Securities Act or the Exchange Act and each director, officer,
employee and agent of a Selling Party, and each person who controls the Company
within the meaning of either the Securities Act or the Exchange Act, each
officer of the Company who shall have signed the Registration Statement and each
director of the Company shall have the same rights to contribution as the
Company, subject in each case to the applicable terms and conditions of this
Section 8(d).
SECTION 9. Miscellaneous. (a) No Inconsistent Agreements. The Company
has not as of the date hereof taken any actions in accordance with or entered
into and except as expressly permitted by Section 5 hereof the Company shall
17
<PAGE>
not from the date hereof until the expiration of the Registration Period take
any actions in accordance with or enter into, any agreement or arrangement with
respect to any class of its securities that limits or interferes with or is
inconsistent with the rights granted to the holders of Registrable Securities
herein or otherwise conflicts with the provisions hereof.
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may be amended, qualified, modified
or supplemented only by means of a written instrument executed by the affected
party or parties.
(c) Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned or transferred,
in whole or in part, by the Company, the Investors or Abbott. Notwithstanding
the previous sentence, any Investor may assign, in whole or in part, any of or
all its rights, interests, and obligations under this Agreement to any affiliate
of such Investor, or any stockholder of, partner in, or member of such Investor,
and such transferee shall be deemed an "Investor" hereunder for all purposes.
Subject to the preceding sentence, this Agreement shall be binding upon, inure
to the benefit of, and be enforceable by, the parties and their respective
successors and assigns. Any attempted assignment or transfer in violation of
this Section 9(c) shall be void.
(d) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which taken
together shall be considered one and the same agreement, it being understood
that the parties need not sign the same counterpart.
(e) Interpretation. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
Whenever the words "included", "includes" or "including" are used in this
Agreement they shall be deemed to be followed by the words "without limitation".
(f) Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York applicable to
agreements made and to be performed in said State, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law.
(g) Consent to Jurisdiction. Each of the Company, the Investors and
Abbott irrevocably submits to the exclusive jurisdiction of the United States
District Court
18
<PAGE>
for the Southern District of New York located in the Borough of Manhattan in the
City of New York, or if such court does not have jurisdiction, the Supreme Court
of the State of New York, New York County, for the purposes of any suit, action
or other proceeding arising out of this Agreement or any transaction
contemplated hereby. Each of the Company, the Investors and Abbott further
agrees that service of any process, summons, notice or document by U.S.
registered mail to such party's respective address set forth in Section 9(h) (as
it may be changed from time to time) shall be effective service of process for
any action, suit or proceeding in New York with respect to any matters to which
it has submitted to jurisdiction as set forth above in the immediately preceding
sentence. Each of the Company, the Investors and Abbott irrevocably and
unconditionally waives any objective to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby in (a) the United States District Court for the Southern District of New
York or (b) the Supreme Court of the State of New York, New York County, and
hereby further irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any such action, suit or proceeding brought in any
such court has been brought in an inconvenient forum.
(h) Notices. All notices, requests and other communications hereunder
shall be in writing (including fax) and shall be sent, delivered or mailed,
addressed, or faxed to the following addresses (or to any other address as any
party or assignee of a party may specify as its own by giving notice in
accordance herewith):
(a) if to the Company, to:
Superior TeleCom Inc.
1790 Broadway, 15th Floor
New York, NY 10019
Tel.: (212) 757-3333
Fax: (212) 757-3423
Attention: Mr. Steven Elbaum
19
<PAGE>
with a copy to:
Proskauer Rose LLP
1585 Broadway
New York, NY 10036
Tel.: (212) 969-3000
Fax: (212) 969-2900
Attention: Ronald R. Papa, Esq.
(b) if to the Investors, to:
Bessemer Partners & Co.
630 Fifth Avenue
New York, NY 10111
Tel.: (212) 708-9176
Fax: (212) 969-9032
Attention: Mr. Rodney A. Cohen
with a copy to:
Cravath, Swaine & Moore
825 Eighth Avenue
New York, NY 10019
Tel: (212) 474-1000
Fax: (212) 474-3700
Attention: Richard Hall, Esq.
Each such notice, request or other communication shall be given (i) by hand
delivery, (ii) by nationally recognized courier service or (iii) by fax, receipt
confirmed. Each such notice, request or communication shall be effective (A) if
delivered by hand or by nationally recognized courier service, when delivered at
the address specified in this Section 9(h) (or in accordance with the latest
unrevoked written direction from such party) and (B) if given by fax, when such
fax is transmitted to the fax number specified in this Section 9(h) (or in
accordance with the latest unrevoked written direction from such party), and the
appropriate confirmation is received.
(i) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall
20
<PAGE>
not be in any way impaired or affected thereby, it being intended that all of
the rights and privileges of the parties shall be enforceable to the fullest
extent permitted by law.
(j) Effectiveness. This Agreement shall become effective at the
Effective Time.
SECTION 10. Trust Preferred Securities. If the Company causes the
Preferred Stock to be substituted with trust preferred securities pursuant to
Section 2.06(g) of the Merger Agreement, the Company will cause the issuer of
such trust preferred securities to enter in a registration rights agreement with
the Investors and Abbott having terms substantially equivalent to this
Agreement.
21
<PAGE>
IN WITNESS WHEREOF, the Investors and the Company by their duly
authorized representatives and Abbott have caused this Agreement to be executed
as of the day and year first above written.
SUPERIOR TELECOM INC.,
by
/s/ S. Elbaum
---------------------------
Name: S. Elbaum
Title: Chmn. + CEO
BESSEMER HOLDINGS, L.P.,
by KYLIX HOLDINGS, L.L.C.,
General Partner,
by DEMAREST CORPORATION,
a principal manager,
by
-------------------------
Name: Robert D. Lindsay
Title: President
BESSEC HOLDINGS, L.P.,
By KYLIX HOLDINGS, L.L.C.,
General Partner,
by DEMAREST CORPORATION,
a principal manager,
by
-----------------------
Name: Robert D. Lindsay
Title: President
-----------------------------------
Steven R. Abbott
-----------------------------------
Ward W. Woods
<PAGE>
IN WITNESS WHEREOF, the Investors and the Company by their duly
authorized representatives and Abbott have caused this Agreement to be executed
as of the day and year first above written.
SUPERIOR TELECOM INC.,
by
---------------------------
Name:
Title:
BESSEMER HOLDINGS, L.P.,
by KYLIX HOLDINGS, L.L.C.,
General Partner,
by DEMAREST CORPORATION,
a principal manager,
by
/s/ Robert D. Lindsay
-------------------------
Name: Robert D. Lindsay
Title: President
BESSEC HOLDINGS, L.P.,
By KYLIX HOLDINGS, L.L.C.,
General Partner,
by DEMAREST CORPORATION,
a principal manager,
by /s/ Robert D. Lindsay
-----------------------
Name: Robert D. Lindsay
Title: President
/s/ Steven R. Abbott
-----------------------------------
Steven R. Abbott
/s/ Ward W. Woods
-----------------------------------
Ward W. Woods
<PAGE>
THE WOODS FOUNDATION,
by
/s/ Ward W. Woods
-------------------------------
Name: Ward W. Woods
Title: President
WOODS 1994 FAMILY PARTNERSHIP,
L.P.,
by NORTH HAILEY
CORPORATION,
General Partner,
by
/s/ Ward W. Woods
----------------------------
Name: Ward W. Woods
Title: President
NORTH HAILEY CORPORATION,
by
/s/ Ward W. Woods
----------------------------
Name: Ward W. Woods
Title: President
NEBRIS CORPORATION,
by
/s/ Ward W. Woods
----------------------------
Name: Ward W. Woods
Title: President
/s/ Robert D. Lindsay
-----------------------------------
Robert D. Lindsay
LINDSAY 1994 FAMILY PARTNERSHIP,
L.P.,
by DEMAREST CORPORATION,
General Partner,
by
/s/ Robert D. Lindsay
----------------------------
Name: Robert D. Lindsay
Title: President
<PAGE>
DEMAREST CORPORATION,
by
/s/ Robert D. Lindsay
-------------------------------
Name: Robert D. Lindsay
Title: President
OLD HUNDRED CORPORATION,
by
/s/ Robert D. Lindsay
-------------------------------
Name: Robert D. Lindsay
Title: President
CRAIGHALL CORPORATION,
by
/s/ Rodney A. Cohen
-------------------------------
Name: Rodney A. Cohen
Title: President
<PAGE>
SCHEDULE I
Bessemer Holdings, L.P.
Bessec Holdings, L.P.
Ward W. Woods
The Woods Foundation
Woods 1994 Family Partnership, L.P.
North Hailey Corporation
Nebris Corporation
Robert D. Lindsay
Lindsay 1994 Family Partnership, L.P.
Demarest Corporation
Old Hundred Corporation
Craighall Corporation
<PAGE>
Exhibit 10.3
VOTING AGREEMENT
October 21, 1998
Essex International Inc.
1601 Wall Street
Fort Wayne, Indiana 46802
Dear Sirs:
The undersigned, The Alpine Group, Inc., is the beneficial owner of
8,092,560 shares (the "Shares") of common stock, par value $.01 per share, of
Superior TeleCom Inc. (the "Company"). All terms used but not defined herein
shall have the meanings assigned to such terms in that certain Agreement and
Plan of Merger (the "Merger Agreement"), dated of even date hereof by and among
Essex International Inc., SUT Acquisition Corp. ("Merger Sub") and the Company.
The undersigned agrees that it will, at any meeting of the
stockholders of the Company, however called, or in connection with any written
consent of such stockholders, vote (or cause to be voted) the Shares then held
of record by the undersigned or which the undersigned has the right to vote (A)
in favor of (1) an amendment to the Certificate of Incorporation of the Company
to authorize additional shares of Preferred Stock, par value $.01 per share, of
the Company; (2) the issuance of Series A Convertible Preferred Stock, par value
$.01 per share, of the Company, in the case of clauses (1) and (2) hereof in
accordance with the terms of the Merger Agreement, Delaware Law and the
Certificate of Incorporation and By-Laws of the Company; and (3) any other
matters submitted to the stockholders of the Company to authorize or facilitate
the transactions contemplated by the Merger Agreement; and (B) against any
matters submitted to the stockholders of the Company inconsistent with the
transactions contemplated by the Merger Agreement.
The undersigned hereby permits the Company and Merger Sub to publish
and disclose in the Offer Documents and, if approval of the Company's
stockholders is required under applicable law, the S-4 Registration Statement
(including the Prospectus/Proxy Statement constituting a part thereof and all
documents and schedules filed with the SEC) its identity and ownership of the
Shares and the nature of its commitments, arrangements and understandings under
this letter agreement.
The undersigned agrees to use its best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, all things necessary, proper
to advisable under applicable laws and regulations to consummate and to make
effective the agreements contemplated by this letter agreement.
<PAGE>
This letter agreement and the covenants hereunder shall attach to the
Shares and shall be binding upon any person or entity to which legal or
beneficial ownership of such Shares shall pass, whether by operation of law or
otherwise. This letter agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to the
principles of conflicts of law thereof.
Sincerely,
THE ALPINE GROUP, INC.
By:
---------------------------------
Name: Bragi F. Schut
Title: Executive Vice President
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As idependent public accountants, we hereby consent to the use of our report
(and to all reference to our firm) included in or made part of this registration
statement.
Arthur Andersen LLP
Atlanta, Georgia
December 11, 1998
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Joint Proxy Statement of Essex International Inc. and Superior TeleCom Inc.
that is made a part of the Registration Statement (Form S-4) and Prospectus of
Superior TeleCom Inc. and Superior Trust I for the registration of 8 1/2% Trust
Convertible Preferred Securities of Superior Trust I and 8 1/2% Convertible
Subordinated Debentures and Common Stock of Superior TeleCom Inc. and to the
incorporation by reference therein of our report dated January 27, 1998, with
respect to the consolidated financial statements and schedules of Essex
International Inc. included in its Annual Report (Form 10-K) for the year ended
December 31, 1997, filed with the Securities and Exchange Commission.
Indianapolis, Indiana Ernst & Young LLP
December 9, 1998
