<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 26, 1999
REGISTRATION NO. 333-68889
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
<TABLE>
<S> <C> <C> <C>
EXACT NAME OF THE STATE OR OTHER PRIMARY STANDARD I.R.S. EMPLOYER
REGISTRANTS AS JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.
SPECIFIED IN THEIR INCORPORATION OR CLASSIFICATION CODE
CHARTERS ORGANIZATION NUMBER
SUPERIOR TELECOM INC. Delaware 3357 55-2248978
SUPERIOR TRUST I Delaware 9999 51-0386384
</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
------------------------
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. / / _____________________________________________________
------------------------
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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
[LOGO]
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<S> <C> <C>
[LOGO] [LOGO]
</TABLE>
____________, 1999
Dear Stockholder:
The Boards of Directors of Superior TeleCom Inc. and Essex International
Inc. have agreed to merge our 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 an 8 1/2% trust
convertible preferred security 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. After six months, the trust preferred securities will be
convertible into shares of Superior common stock at an initial conversion rate
of .8929 shares of Superior common stock for each trust preferred security. The
conversion rate is subject to adjustment as 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.
You should be aware that:
a. Superior can exchange the trust preferred securities for debt with
similar terms whenever it wants;
b. this debt is subordinate to all of Superior's current and future senior
secured debt; and
c. the payment of distributions on the trust preferred securities can be
deferred by Superior.
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. 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:
[MARCH 16], 1999 AT [10:00] A.M., LOCAL TIME
____________________________
____________________________
FOR SUPERIOR TELECOM INC. STOCKHOLDERS:
[MARCH 16], 1999 AT [12:30] P.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 9. 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 February , 1999 and is
first being mailed to stockholders on or about February , 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 [MARCH 16], 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 [10:00]
a.m., local time, on [March 16], 1999, at , 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, and Essex. The merger
agreement provides for the merger of SUT Acquisition Corp. with and into
Essex with the result that Essex will become a wholly owned subsidiary of
Superior. The merger agreement also provides that Essex stockholders will
receive in the merger 0.64 of an 8 1/2% trust convertible preferred security
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 that they own. 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 [February
16], 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 SUT ACQUISITION CORP. OWNS A MAJORITY OF THE OUTSTANDING SHARES OF
ESSEX COMMON STOCK, IT 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. SUT ACQUISITION CORP. 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
February , 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 [MARCH 16], 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 [12:30] p.m.,
local time, on [March 16], 1999, at , 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 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 provided 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
[February 16], 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.
THEREFORE, THE APPROVAL OF THESE PROPOSALS IS ASSURED.
By Order of the Board of Directors
Stewart H. Wahrsager
Secretary
New York, New York
February , 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> <C>
QUESTIONS AND ANSWERS ABOUT THE MERGER....................................................................... 1
SUMMARY...................................................................................................... 3
RISK FACTORS............................................................................................... 9
Risks Relating to the Combined Company..................................................................... 9
Risks Relating to the Trust Preferred Securities........................................................... 13
SELECTED HISTORICAL FINANCIAL INFORMATION.................................................................... 17
THE MEETINGS................................................................................................. 28
Purpose of the Meetings.................................................................................... 28
Record Date and Voting Rights.............................................................................. 28
Proxies.................................................................................................... 30
Solicitation and Revocation of Proxies..................................................................... 30
THE MERGER................................................................................................... 31
General.................................................................................................... 31
Background of the Merger................................................................................... 31
Recommendation of the Essex Board and the Reasons for the Recommendation................................... 34
Opinions of the Essex Financial Advisors................................................................... 36
Superior's Reasons for the Merger.......................................................................... 45
Merger Consideration....................................................................................... 45
Stock Options and Benefit Plans............................................................................ 45
Appraisal Rights........................................................................................... 45
Financing of The Offer and The Merger...................................................................... 48
Effective Time............................................................................................. 50
Conversion of Shares; Procedures for Exchange of Certificates; Dividends; No Fractional Shares.............
50
NYSE Listing............................................................................................... 51
Expenses................................................................................................... 51
Interests of Certain Persons in The Merger................................................................. 51
Material Federal Income Tax Consequences................................................................... 53
Accounting Treatment....................................................................................... 58
Regulatory Matters......................................................................................... 58
Resale of Trust Preferred Securities and Superior Common Stock Following the Merger........................ 58
THE MERGER AGREEMENT AND RELATED AGREEMENTS.................................................................. 59
General.................................................................................................... 59
Consideration to Be Received in the Merger................................................................. 59
Corporate Matters.......................................................................................... 60
Conditions to the Merger................................................................................... 60
Representations and Warranties............................................................................. 61
Certain Covenants.......................................................................................... 61
Termination................................................................................................ 64
Amendment; Waiver.......................................................................................... 64
Fees and Expenses.......................................................................................... 65
Stockholders' Agreement.................................................................................... 65
Voting Agreement........................................................................................... 66
Confidentiality Agreement.................................................................................. 66
Agreements of Essex Affiliates............................................................................. 66
THE COMPANIES................................................................................................ 67
Essex International Inc.................................................................................... 67
Superior TeleCom Inc....................................................................................... 68
</TABLE>
i
<PAGE>
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DESCRIPTION OF SUPERIOR CAPITAL STOCK........................................................................ 70
Common Stock............................................................................................... 70
Preferred Stock............................................................................................ 70
Possible Anti-Takeover Effect of Certain Certificate of Incorporation and Bylaw Provisions................. 70
DESCRIPTION OF THE TRUST PREFERRED SECURITIES................................................................ 73
General.................................................................................................... 73
Distributions.............................................................................................. 73
Conversion Rights.......................................................................................... 74
Conversion Rate Adjustments................................................................................ 75
Special Event Exchange..................................................................................... 76
Optional Redemption........................................................................................ 76
Mandatory Redemption....................................................................................... 77
Redemption Upon Change of Control.......................................................................... 77
Redemption Procedures...................................................................................... 78
Subordination of Trust Common Securities................................................................... 78
Distribution of Debentures Upon Dissolution................................................................ 79
Declaration Events of Default; Enforcement of Certain Rights By Holders of Trust Preferred Securities......
79
Voting Rights; Amendment of the Declaration................................................................ 80
Additional Voting Rights................................................................................... 81
Payment of Amounts Due on Trust Preferred Securities....................................................... 82
Property Trustee; Transfer Agent, Registrar and Paying, Conversion and Exchange Agent...................... 82
DESCRIPTION OF THE GUARANTEE................................................................................. 83
General.................................................................................................... 83
Status of the Guarantee.................................................................................... 83
Amendments and Assignment.................................................................................. 84
Certain Covenants of Superior.............................................................................. 84
Guarantee Events of Default................................................................................ 84
Information Concerning the Guarantee Trustee............................................................... 84
Termination of the Guarantee............................................................................... 85
DESCRIPTION OF THE DEBENTURES................................................................................ 86
General.................................................................................................... 86
Interest................................................................................................... 86
Option to Defer Interest Payments.......................................................................... 86
Mandatory Redemption....................................................................................... 87
Optional Redemption........................................................................................ 88
Redemption Upon Change of Control.......................................................................... 88
Conversion of the Debentures............................................................................... 88
Modification of Indenture.................................................................................. 89
Debenture Events of Default; Enforcement of Certain Rights by Holders of Trust Preferred Securities........
90
Consolidation, Merger, Sale of Assets and Other Transactions............................................... 91
Satisfaction and Discharge................................................................................. 91
Subordination.............................................................................................. 91
Payment and Paying Agent................................................................................... 92
Information Concerning the Indenture Trustee............................................................... 92
RELATIONSHIP AMONG THE TRUST PREFERRED SECURITIES, THE DEBENTURES AND THE GUARANTEE..........................
93
Irrevocable and Unconditional Guarantee.................................................................... 93
Sufficiency of Payments.................................................................................... 93
</TABLE>
ii
<PAGE>
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PAGE
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<S> <C> <C>
Limited Purpose of Issuer.................................................................................. 93
Rights Upon Dissolution.................................................................................... 94
COMPARISON OF STOCKHOLDERS' RIGHTS........................................................................... 94
General.................................................................................................... 94
Authorized Capital Stock................................................................................... 94
Preemptive Rights.......................................................................................... 95
Quorum..................................................................................................... 95
Stockholder Voting......................................................................................... 95
Special Meetings of Stockholders........................................................................... 96
Directors.................................................................................................. 96
Removal of Directors....................................................................................... 96
Vacancies on the Board of Directors........................................................................ 96
Certain Business Combinations.............................................................................. 97
Amendment to Certificates of Incorporation................................................................. 97
Amendment of Bylaws........................................................................................ 97
Appraisal/Dissenters' Rights............................................................................... 98
Indemnification of Directors and Officers.................................................................. 98
Insurance.................................................................................................. 99
PROPOSAL TO AMEND SUPERIOR'S CERTIFICATE OF INCORPORATION TO INCREASE THE AUTHORIZED STOCK AND TO ISSUE THE
TRUST PREFERRED SECURITIES.................................................................................
100
PROPOSAL TO AMEND THE SUPERIOR 1996 STOCK OPTION PLAN........................................................ 101
Purpose of the Superior 1996 Stock Option Plan............................................................. 102
Available Shares........................................................................................... 102
Eligibility and Types of Awards............................................................................ 103
Administration............................................................................................. 103
Amendment and Termination of Plan.......................................................................... 103
Non-Employee Director Stock Option Grants.................................................................. 104
Miscellaneous.............................................................................................. 104
Material Federal Income Tax Consequences Relating to the Superior 1996 Stock Option Plan................... 105
Future Plan Awards......................................................................................... 106
Vote Required and Board Recommendation..................................................................... 106
OTHER MATTERS................................................................................................ 106
EXPERTS...................................................................................................... 106
LEGAL MATTERS................................................................................................ 107
RELATIONSHIP WITH INDEPENDENT AUDITORS....................................................................... 107
STOCKHOLDER PROPOSALS........................................................................................ 107
WHERE YOU CAN FIND MORE INFORMATION.......................................................................... 108
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.............................................................. 108
FORWARD-LOOKING STATEMENTS................................................................................... 110
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
Appendix D Amended and Restated Superior TeleCom Inc. 1996 Stock Option Plan
</TABLE>
iii
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q. WHY ARE THE TWO COMPANIES PROPOSING TO MERGE?
A. We believe that the merger of Superior and Essex will create a stronger,
unified company and will diversify the product range of the individual
companies.
Q. WHAT WILL I RECEIVE IN THE MERGER?
A. If the merger is completed, Essex stockholders will receive 0.64 of a
preferred security ("Trust Preferred Securities") to be issued by a trust formed
by Superior in exchange for each share of Essex common stock that they own.
These Trust Preferred Securities will be convertible after six months into
shares of common stock of Superior at an initial conversion rate of .8929 shares
of Superior common stock for each Trust Preferred Security, subject to
adjustment. 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 after six months
into 571 shares of common stock of Superior. No fractional shares of Trust
Preferred Securities will be issued. Instead, Essex stockholders will receive an
amount in cash, without interest, equal to the product of the fraction you would
have otherwise received, multiplied by the average closing price of the Trust
Preferred Securities for a specified period. Existing holders of Superior common
stock will continue to own their shares after the merger and will not receive
any Trust Preferred Securities as a result of the Merger.
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 53 to 58 of this Joint Proxy
Statement/Prospectus.
Q. IF ALL OF THE TRUST PREFERRED SECURITIES ISSUED TO ESSEX STOCKHOLDERS IN THE
MERGER WERE CONVERTED INTO COMMON STOCK OF SUPERIOR, WHAT PERCENTAGE OF THE
OUTSTANDING COMMON STOCK OF SUPERIOR WOULD BE HELD BY ESSEX STOCKHOLDERS?
A. Essex stockholders would hold approximately 17% of the outstanding
common stock of Superior.
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 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
1
<PAGE>
shares of preferred stock and common stock, the issuance of the 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.
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. 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.
2
<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 YOU ARE REFERRED. SEE "WHERE YOU CAN FIND MORE INFORMATION" ON PAGE
108. WE HAVE INCLUDED PAGE REFERENCES PARENTHETICALLY TO DIRECT YOU TO A MORE
COMPLETE DESCRIPTION OF THE TOPICS PRESENTED IN THIS SUMMARY.
THE COMPANIES (PAGE 67)
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
continue to 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 local loop is 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.
WHAT ESSEX STOCKHOLDERS WILL RECEIVE (PAGES 31, 73)
Superior will acquire Essex through a two-step process. The first step of
the process was the tender offer for shares of outstanding common stock of Essex
as a result of which, on November 27, 1998, a wholly owned subsidiary of
Superior acquired approximately 81% of the outstanding common stock of Essex.
The second step of the process is the merger of that subsidiary of Superior with
Essex, as a result of which Superior will acquire the remaining outstanding
shares of Essex. The merger is described in this Joint Proxy
Statement/Prospectus.
As a result of the merger, Essex stockholders 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;
- dividends accumulate from the date of issue, whether payment is deferred
or not;
- be convertible at your option into common stock of Superior beginning six
months after the date they are issued at an initial conversion rate of
.8929 shares of Superior common stock for each Trust Preferred Security,
subject to adjustment;
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- be redeemable at Superior's option beginning four years after the date
they are issued, or during the third year of issuance depending on the
price of Superior's common stock;
- be exchangeable at Superior's option at any time for a like amount of
convertible subordinated debentures of Superior having payment terms
substantially identical to those of the Trust Preferred Securities; and
- be subordinate to all current and future senior secured debt of Superior.
THE MEETINGS (PAGE 28)
The special meeting of stockholders of Essex will be held at [10:00] a.m.,
local time, on [March 16], 1999, at . At the
Essex meeting, holders of Essex common stock will consider and vote upon:
- a proposal to adopt the merger agreement and approve the merger; and
- any other matters that may properly come before the Essex meeting.
The special meeting of stockholders of Superior will be held at [12:30]
p.m., local time, on [March 16], 1999, at . At
the Superior meeting, holders of Superior common stock will consider and vote
upon:
- a proposal to approve and adopt:
(1) an amendment to Superior's certificate of incorporation to increase
the authorized number of shares of preferred stock and common stock
of Superior; and
(2) the issuance of:
(a) the Trust Preferred Securities to stockholders of Essex in the
merger; and
(b) 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.
OUR RECOMMENDATIONS TO STOCKHOLDERS (PAGE 34)
The Essex Board of Directors 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
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 if Essex continued with 19% of its shares being publicly held; and
- the Trust Preferred Securities represent a more beneficial continuing
security than an equity interest in an 81% owned subsidiary of Superior.
The Superior Board of Directors 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 (1) approve and adopt the amendment to Superior's
certificate of incorporation to increase the authorized shares of common stock
and preferred stock of Superior and the issuance of Trust Preferred Securities
to Essex stockholders in the merger,
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(2) to approve and adopt the amendment to the Superior 1996 Stock Option Plan,
and (3) to approve any other matters that may properly come before the Superior
meeting.
VOTES REQUIRED (PAGE 28)
Adoption of the merger agreement and approval of the merger require 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 THE
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. SUPERIOR AND ITS SUBSIDIARY HAVE
AGREED 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.
Approval of the amendment to Superior's certificate of incorporation and the
issuance of the Trust Preferred Securities require 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 amendment to the
Superior 1996 Stock Option Plan requires the affirmative vote of holders of a
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. 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.
THE MERGER (PAGE 31)
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.
THE APPOINTMENT OF NEW ESSEX DIRECTORS AFTER THE OFFER AND THE MANAGEMENT OF
ESSEX FOLLOWING THE MERGER (PAGE 31)
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.
INTERESTS OF ESSEX OFFICERS AND DIRECTORS IN THE MERGER THAT ARE DIFFERENT FROM
THE INTERESTS OF ESSEX STOCKHOLDERS (PAGE 51)
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 OBLIGATION OF ESSEX AND SUPERIOR TO COMPLETE THE MERGER (PAGE
60)
The obligations of Essex and Superior to complete the merger depend upon the
satisfaction of various conditions, including the following:
- the adoption by the stockholders of Essex of the merger agreement;
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- the approval by the stockholders of Superior of the amendment to
Superior's certificate of incorporation and the issuance of the 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.
Superior and Essex may not waive any of these conditions to the merger,
except for the approval of the issuance of the Trust Preferred Securities by
Superior's stockholders. It is unlikely that any waiver of this condition will
be necessary because the approval of this matter at the Superior meeting is
assured.
In addition, Essex's obligation to complete the merger depends upon 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. If these securities are not approved for
listing on the New York Stock Exchange, Essex would consider waiving this
condition if the securities will be listed on another national securities
exchange or a national market system, such as the Nasdaq National Market. Any
waiver of this condition would require the approval of a majority of the Essex
directors who were not nominated by Superior and are not executive officers of
Essex. If Essex waives this condition, it will issue a press release to that
effect, but it will not resolicit the approval of its stockholders, unless
required under applicable law.
CIRCUMSTANCES WHERE ESSEX AND/OR SUPERIOR CAN TERMINATE THE MERGER AGREEMENT
(PAGE 64)
Essex and Superior may agree in writing to terminate the merger agreement
before the merger has been completed. Either Essex or Superior may also
terminate the merger:
- if the merger has not happened by October 31, 2000. However, 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 that date; 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 were not nominated by Superior and are not executive officers of Essex is
required for Essex to authorize the termination of the merger agreement.
The fees and expenses expected to be incurred by Superior and Essex in
connection with the tender offer and the merger total approximately $60 million,
of which $33 million is financing fees and $27 million is transaction expenses.
OPINIONS OF THE ESSEX FINANCIAL ADVISORS WITH RESPECT TO THE FAIRNESS OF THE
CONSIDERATION TO BE RECEIVED BY THE ESSEX STOCKHOLDERS (PAGE 36)
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. You should read them carefully.
APPRAISAL RIGHTS AVAILABLE TO ESSEX STOCKHOLDERS WHO DISSENT FROM THE MERGER
(PAGE 45)
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. If you are
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an Essex stockholder and wish to dissent, you must deliver to Essex, prior to
the vote on the merger at the Essex meeting, a written demand for appraisal of
your shares. You also must not vote in favor of the merger agreement. To not
vote in favor of the merger agreement, you can either:
- vote no in person at the Essex meeting or by proxy;
- abstain from voting;
- fail to vote; or
- if you return a duly executed proxy that does not contain voting
instructions, revoke it.
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 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.
SUPERIOR'S ACCOUNTING TREATMENT OF THE ACQUISITION (PAGE 58)
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.
HART-SCOTT-RODINO REGULATORY APPROVAL HAS BEEN OBTAINED (PAGE 58)
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.
LISTING OF TRUST PREFERRED SECURITIES AND SUPERIOR COMMON STOCK ON THE NEW YORK
STOCK EXCHANGE (PAGE 51)
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.
SUPERIOR'S FINANCING OF THE ACQUISITION (PAGE 48)
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. You 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.
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COMPARATIVE PER SHARE MARKET 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 of 0.64 used in the merger, and then by
0.8929, 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.......................................................... $ 46.00 $ 23.1875 $ 26.29
, 1999...........................................................
</TABLE>
RECENT DEVELOPMENTS
On January 11, 1999, Superior declared a five-for-four stock split of its
common stock. The stock split will be effected in the form of a 25% stock
dividend, which will be paid on February 3, 1999 to stockholders of record on
January 20, 1999.
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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. 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. If
we cannot successfully integrate our companies' operations, our business and the
results of operations of the combined businesses could be adversely affected.
Combining our companies 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 our companies' ability to retain
key management, sales and research and development personnel. In addition, our
management will be occupied with integrating our companies' operations following
the merger and this may temporarily distract management from our companies'
day-to-day businesses. We thus cannot assure you that our companies will be
smoothly and successfully integrated.
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.
Superior's substantial indebtedness could have material and adverse consequences
to you, as a future holder of Trust Preferred Securities, and to Superior,
including the following:
- a significant portion of Superior's cash flow from operations must be
dedicated to repaying debt and may not be available for other purposes,
such as ensuring that payments are made on the Trust Preferred Securities;
- 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.
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. Also, the terms of the Trust Preferred Securities do not
limit the amount of additional debt that Superior may issue or incur.
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
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actions could be completed on terms satisfactory to Superior or that they would
be permitted by the terms of any future credit arrangements.
SUPERIOR'S BUSINESS DEPENDS 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. Superior's
results of operations and financial condition could be materially and adversely
affected by adverse conditions affecting any of the industries in which
Superior's customers are engaged or by the loss of any of Superior's significant
customers.
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.
WE MAY NOT BE ABLE TO KEEP PACE WITH RAPID TECHNOLOGICAL CHANGE. We cannot
assure you that we will successfully introduce new products or product
enhancements that will meet with commercial acceptance. Also our technology may
be surpassed by new technological breakthroughs introduced by competitors.
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 that we manufacture.
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 our
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.
OUR MANUFACTURING FACILITIES ARE OPERATING AT HIGH UTILIZATION RATES. We
are currently operating our manufacturing facilities at high utilization rates
and need to invest in additional manufacturing equipment to meet growing
customer demand. Failure to have new equipment operational in a timely
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manner or shut-downs of existing capacity due to breakdowns or other reasons
could adversely affect our results of operations and financial condition. In
addition, Superior's credit facilities limit the amount of capital expenditures
we can make, which may affect our ability to expand capacity in our businesses.
THE COMPANY FACES INTENSE COMPETITION. Competition in our industry may
adversely affect our businesses. The market for wire and cable products is
highly competitive. Each of our businesses competes with at least one major
competitor. Many of our products are made to industry specifications and
therefore may be interchangeable with competitors' products. We are subject to
competition in many markets on the basis of price, delivery time, customer
service and our ability to meet specialty needs.
With respect to building wire, we believe that price is an important
competitive factor and has led to, and may continue to lead to, earnings and
revenue volatility in our building wire business. This volatility could
adversely affect our results of operations and financial condition. Also, we
believe that increased capacity in the building wire segment of the U.S. wire
and cable industry may reduce prices for building wire products.
We believe that over the next two years certain of our 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 this expanded capacity,
this added supply could increase competition and lead to reduced prices for our
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,
we have been subject to competition from foreign manufacturers from time to time
and this competition may continue in the future.
OUR BUSINESSES ARE SENSITIVE TO FLUCTUATIONS IN BUSINESS CYCLES. We 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. Significant fluctuations or downturns in the economy could
adversely affect our businesses.
Demand for copper telecommunications wire and cable depends on several
factors, including:
(1) the rate at which new access lines are installed in homes and
businesses;
(2) the level of infrastructure spending for items such as road-widenings
and bridges, which generally necessitates replacement of existing
utilities, including telephone cable; and
(3) 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 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.
THE COST AND AVAILABILITY OF OUR RAW MATERIALS MAY BE EXTREMELY
VOLATILE. Our profitability and operating results could be adversely affected
by sudden increases in the price of copper or our inability to obtain sufficient
quantities of necessary 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 we use in our
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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 our net sales. 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 we attempt to reflect copper
price changes in the sale price of our products, there is no assurance that we
can do so. In addition, particular plastics have, at times, been difficult to
obtain.
OUR COMBINED COMPANY WILL DEPEND HEAVILY ON OUR SENIOR MANAGEMENT. The
success of our combined company depends to a significant extent on the efforts
of our senior management. The loss of one or more of these individuals could
adversely affect us. Our continued success will depend on our ability to retain
existing, and attract additional, qualified senior management personnel. We may
not be successful in doing this.
OUR OPERATIONS ARE SUBJECT TO EXTENSIVE ENVIRONMENTAL REGULATION. The costs
of complying with environmental, health and safety laws in our current
operations or liabilities arising from past releases of, or exposure to,
hazardous substances could result in future expenditures that could materially
and adversely affect our results of operations, cash flows or financial
condition.
We 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 waste products. These laws and regulations often
impose stringent permitting requirements. Our operations have resulted in
releases of hazardous substances or waste at sites currently or formerly owned
or operated by us and at sites to which we may have sent waste for disposal. We
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, we 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 COMPANY OR ITS CUSTOMERS MAY NOT ACHIEVE YEAR 2000 COMPLIANCE. Our
efforts to be year 2000 compliant may not be successful and our operations could
be adversely affected as we modify our computer systems to be year 2000
compliant. Our businesses could also be materially adversely affected if any of
our significant customers or suppliers do not successfully and timely achieve
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. We do not manufacture or sell products with embedded technology. We
are modifying our 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, we may incur
expenses in connection with modifying that software or handling any disruptions
that may be caused by the software's impaired functioning.
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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 to you distributions
or other amounts due on the Trust Preferred Securities. Superior will guarantee
the trust's obligations to make these payments to you, but only to the extent
Superior makes payments on the debt. The following risks are associated with
this structure.
YOU MAY NOT RECEIVE PAYMENTS ON THE TRUST PREFERRED SECURITIES IF SUPERIOR
DOES NOT RECEIVE DISTRIBUTIONS FROM ITS SUBSIDIARIES. If Superior's
subsidiaries are unable to make cash distributions to Superior, Superior may be
unable to pay to the trust amounts owed on the debt. If Superior cannot make
payments on this debt, the trust will be unable to pay to you amounts due on the
Trust Preferred Securities. As explained above, you would not be able to rely on
Superior's guarantee in this case.
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.
YOUR RIGHT TO RECEIVE PAYMENT ON THE TRUST PREFERRED SECURITIES IS
SUBORDINATE TO SUPERIOR'S SENIOR SECURED DEBT AND TO ALL OBLIGATIONS OF
SUPERIOR'S SUBSIDIARIES. Superior's obligations under the debentures and the
guarantee are:
(a) unsecured;
(b) subordinate and junior in right of payment to all current and future
senior secured indebtedness of Superior; and
(c) structurally subordinated to all obligations of Superior's subsidiaries.
These factors may impair Superior's ability to make payments on the debentures
and, in turn, the trust's ability to make payments to you on the Trust Preferred
Securities.
Because the debentures and the guarantee are obligations of Superior and not
of its subsidiaries, Superior's obligations under these instruments 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 the subsidiary are likely to be paid in full before Superior
receives any distribution. Even if Superior itself is recognized as a creditor
of the subsidiary, Superior's claims would still be subordinate to any security
interest in the assets of the subsidiary and to any indebtedness of the
subsidiary that is 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
indebtedness to which payment on the Trust Preferred Securities is subordinated.
The terms of the Trust Preferred Securities do not limit the amount of senior
indebtedness or other indebtedness that Superior or its subsidiaries may incur.
13
<PAGE>
DEFERRAL OF DISTRIBUTIONS ON AND CONVERSIONS OF THE TRUST PREFERRED
SECURITIES WOULD RESULT IN ADVERSE TAX CONSEQUENCES. Superior may, at its
option and at any time, cause the trust to defer payment of cash distributions
to you on the Trust Preferred Securities. However, you would still be taxed as
though you received the distributions and would face other adverse consequences
upon the sale or conversion of your Trust Preferred Securities.
Unless Superior is then experiencing specified events of bankruptcy,
insolvency or reorganization, 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. Because Superior will not pay interest on the debentures to
the trust during this deferral period, the trust will not pay to you
distributions on the Trust Preferred Securities, although interest will
accumulate on the unpaid distributions at an annual rate of 8 1/2% during this
time. Superior would elect to defer interest payments if it does not for any
reason have the financial resources to make these payments, including as a
result of the risk factors described above.
Even though you would not receive distributions from the trust during a
deferral 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
actually receive the cash distributions from the trust. And, if you were to
convert your Trust Preferred Securities into Superior common stock during a
deferral period, you would never receive from the trust the cash distributions
that you have reported as income. Also, the conversion rate would not take into
account the unpaid distributions.
You would also face adverse consequences if you convert your Trust Preferred
Securities into Superior common stock at any time other than during an interest
deferral period. If you convert between a record date for the payment of
distributions and the corresponding distribution payment date, you will have to
forfeit the amount of distributions payable to you on the distribution payment
date, unless your Trust Preferred Securities have been called for redemption
during that time. If you convert on or after a distribution payment date and on
or before the next record date, you will not receive distributions to the date
of conversion. However, in both cases, you would be taxed as though you received
these distributions and you must include these amounts in gross income.
All accrued but unpaid distributions will increase your basis in the Trust
Preferred Securities. If you sell your Trust Preferred Securities during a
deferral 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. You cannot offset a capital loss against
ordinary income for U.S. federal income tax purposes, except in limited
circumstances and to a limited extent.
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 a deferral 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 53 of this Joint Proxy Statement/Prospectus.
SUPERIOR MAY EXCHANGE YOUR TRUST PREFERRED SECURITIES FOR DEBENTURES AT ANY
TIME. Superior may dissolve the trust at any time and cause the debentures to
be distributed to you. Therefore, you are not only making an investment decision
about the Trust Preferred Securities, but also about the debentures, and you
should carefully review all the information about the debentures in this
document. Also, if it becomes likely that the trust will be required to register
as an "investment company" or that Superior
14
<PAGE>
or the trust will suffer adverse tax consequences relating to the Trust
Preferred Securities, the Trust Preferred Securities will or may be exchanged,
in whole or in part, for the debentures.
SUPERIOR'S GUARANTEE DOES NOT FULLY PROTECT YOUR RIGHT TO RECEIVE PAYMENT ON
THE TRUST PREFERRED SECURITIES. If Superior does not make payments on the
debentures, then you will not receive payments on your Trust Preferred
Securities. This is because the trust will not have the funds with which to make
those payments and Superior's guarantee will not apply.
Superior will guarantee that the following payments will be made to you:
(1) accumulated and unpaid distributions on the Trust Preferred Securities;
(2) the redemption price of Trust Preferred Securities called for
redemption; and
(3) if debentures are not distributed to you, 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. Therefore, if Superior does not
pay amounts owed on the debentures when due, the trust will not have funds with
which to make these payments and the guarantee will not apply.
LIMITATION ON DIRECT ENFORCEMENT OF RIGHTS BY HOLDERS OF TRUST 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.
YOU WILL HAVE 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, but you will have 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 COULD RESULT IN DISTRIBUTION OF THE
DEBENTURES. 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 the legislation was proposed.
We cannot assure you that legislation will not ultimately be enacted, possibly
with retroactive effect, or that there will not be other developments 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. No such
legislation is pending now, however.
ABSENCE OF PUBLIC MARKET FOR THE TRUST PREFERRED SECURITIES; UNCERTAIN
TRADING PRICE OF TRUST PREFERRED SECURITIES. We cannot assure you that any
market for the Trust Preferred Securities will develop or, if one does develop,
that it will be maintained. If an active market for the Trust Preferred
Securities is not developed or sustained, that could adversely affect their
trading price. 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.
15
<PAGE>
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. See "The
Merger--Opinions of the Essex Financial Advisors."
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.
You must also 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."
16
<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 Securities and Exchange 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 108.
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>
17
<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>
18
<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.
19
<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) 21,949
15,922(c)
------------- ------------ ----------- ------------ -------------
Operating income............................ 75,345 177,636 6,109 (14,445) 244,645
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 (94,741) 120,109
Provision for income taxes.................... (26,786) (58,000) (441) 35,616(e) (49,611)
------------- ------------ ----------- ------------ -------------
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 (59,125) 70,498
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 (73,286) 56,337
Minority interest in earnings of subsidiary... (79) (1,012)(f) (1,091)
------------- ------------ ----------- ------------ -------------
Net income.................................. $ 40,675 $ 86,393 $ 2,476 $ (74,298) $ 55,246
------------- ------------ ----------- ------------ -------------
------------- ------------ ----------- ------------ -------------
Net income per share of common stock:
Basic:
Basic net income per share of common
stock................................... $2.52 $3.42
------------- -------------
------------- -------------
Average common shares outstanding......... 16,164,000 16,164,000
------------- -------------
------------- -------------
Diluted:
Diluted net income per share of common
stock................................... $2.46 $3.27
------------- -------------
------------- -------------
Average common shares outstanding......... 16,546,000 19,521,000
------------- -------------
------------- -------------
</TABLE>
See accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements
20
<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 7,961(c) 10,995
------------- ---------- ------------ -------------
Operating income........................................ 50,516 68,820 (7,461) 111,875
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 (51,512) 51,357
Provision for income taxes................................ (18,026) (22,791) 19,262(e) (21,555)
------------- ---------- ------------ -------------
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 (32,250) 29,802
Distributions on Company-obligated Mandatorily Redeemable
Trust Convertible Preferred Securities of Superior Trust
I holding solely Convertible Debentures................. (7,081)(d) (7,081)
------------- ---------- ------------ -------------
Income before minority interest in subsidiary........... 27,529 34,523 (39,331) 22,721
Minority interest in earnings of subsidiary............... (628) (628)
------------- ---------- ------------ -------------
Net income.............................................. $ 26,901 $ 34,523 $ (39,331) $ 22,093
------------- ---------- ------------ -------------
------------- ---------- ------------ -------------
Net income per share of common stock:
Basic:
Income before unusual charges......................... $1.67 $1.59
Unusual charges(1).................................... -- (0.23)
------------- -------------
Net income per basic share of common stock.......... $1.67 $1.37
------------- -------------
------------- -------------
Average common shares outstanding..................... 16,121,000 16,121,000
------------- -------------
------------- -------------
Diluted:
Income before unusal charges.......................... $1.62 $1.53
Unusual charges(1).................................... -- (0.18)
------------- -------------
Net income per diluted share of common stock........ $1.62 $1.35
------------- -------------
------------- -------------
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
21
<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.
22
<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. The effect
on net income, net of tax, of a 1/8% variance in the interest rates related
to the term loans, revolving credit facility and senior subordinated debt
would be approximately $0.9 million for the twelve months ended April 30,
1998 and approximately $0.4 million for the six months ended October 31,
1998.
(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
46.8% and 48.7% 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.
The use of these proceeds from Superior's initial borrowings are as follows,
with no net impact to cash.
Use of proceeds:
<TABLE>
<S> <C>
Purchase 81% of Essex common stock................ $ 722.0
Repay Essex existing long-term debt............... 270.1
Repay Superior existing long-term debt............ 90.0
Redemption of Essex unexercised stock options..... 47.5
Transaction fees and other expenses............... 60.0
---------
Total use of proceeds........................... $ 1,189.6
---------
---------
</TABLE>
In connection with the above facilities, Superior estimates that deferred
financing charges will amount to approximately $32.8 million.
23
<PAGE>
(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 $17.2m in expense)......................... $ 905.8
Less: historical book values of net assets at September 30, 1998................. (299.0)
Add: Redemption of Essex unexercised stock options............................... 47.5
accrual of expenses......................................................... 10.0
write-off of Essex's deferred financing charges............................. 1.4
-----------
Acquisition goodwill (to be amortized over 40 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."
24
<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 Securities and Exchange Commission. See "Where You
Can Find More Information" on page 108. You should also read this information in
connection with the pro forma financial information under the heading "Unaudited
Pro Forma Condensed Combined Financial Information" on page 19. 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 (1):
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 (2):
Superior..................................................................... 2.46 1.62
Essex........................................................................ 2.82 1.15
Superior pro forma........................................................... 3.27 1.35
Essex merger equivalent...................................................... 1.87 0.77
</TABLE>
<TABLE>
<CAPTION>
OCTOBER 31,
1998
---------------
<S> <C>
Balance Sheet Data (3):
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 of 0.64 and then by 0.8929, 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 diluted share before extraordinary items
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 of 0.64. The pro forma equivalent income per diluted share
before extraordinary items of Essex stock represents the pro forma combined
income per diluted share before extraordinary items multiplied by the
exchange ratio of 0.64 and then by 0.8929, 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."
25
<PAGE>
(3) The pro forma combined book values per diluted 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 of 0.64 and then by 0.8929, the
conversion rate of the Trust Preferred Securities into Superior common
stock. The pro forma equivalent book values per diluted 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>
26
<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........................... 1.63x 1.74x
</TABLE>
- ------------------------
(a) During the year ended April 30, 1994, fixed charges and preference dividends
exceeded earnings by $613,000.
27
<PAGE>
THE MEETINGS
This Joint Proxy Statement/Prospectus is being furnished to:
- holders of common stock, par value $0.01 per share, 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
[10:00] a.m., local time, on [March 16], 1999, at ,
or any adjournment or postponement thereof; and
- holders of common stock, par value $0.01 per share, 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
[12:30] p.m., local time, on [March 16], 1999, at
, or any adjournment or postponement thereof.
This Joint Proxy Statement/Prospectus is first being mailed to Essex and
Superior stockholders on or about February , 1999.
PURPOSE OF THE MEETINGS
ESSEX. The Essex meeting has been called to consider and vote upon:
- 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, and Essex, which
provides for the merger (the "Merger") of SUT Acquisition Corp. with and
into Essex as a result of which Essex will become a wholly owned
subsidiary of Superior; and
- 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:
- 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, 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 (b) the issuance of the Trust
Preferred Securities and the Superior common stock issuable upon
conversion of the Trust Preferred Securities (collectively, the "Charter
Amendment Proposal");
- 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
- 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 [February 16], 1999 as the
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 that date will be entitled to notice of, and to vote at, the Essex meeting.
On the record date, [27,768,782] shares of Essex common stock were outstanding
and entitled to vote. Each record holder of Essex common stock on the record
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 and transact business at the
Essex meeting. The adoption of the Merger Agreement will
28
<PAGE>
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 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 to vote certain shares on one or more matters,
those shares will be considered represented at the Essex meeting for purposes of
determining a quorum, but will have the effect of a vote against the matters
being voted upon.
BECAUSE SUT ACQUISITION CORP. HAS ACQUIRED A MAJORITY OF THE OUTSTANDING
SHARES OF ESSEX COMMON STOCK, IT 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. SUT ACQUISITION CORP. 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 record date, Essex's directors, executive officers and affiliates,
including SUT Acquisition Corp., beneficially owned in the aggregate
[24,742,477] shares, or approximately [89]% of the outstanding shares, of Essex
common stock. Except for stockholders identified under "The Companies--Essex
Principal Stockholders," as of the 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 [February 16], 1999
as the 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 that date will be entitled to notice of, and to vote
at, the Superior meeting. On the record date, [16,238,969] shares of Superior
common stock were outstanding and entitled to vote. Each record holder of
Superior common stock on the record 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 and transact business
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 on that matter. Approval of the Plan
Amendment Proposal will require the affirmative vote of holders of a 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 the proposal. If a broker holding shares in
street name returns an executed proxy that indicates that the broker does not
have discretionary authority to vote certain shares on one or more matters,
those shares will be considered represented at the Superior meeting for purposes
of determining a quorum, but will 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 66. 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.
29
<PAGE>
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, the 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
consideration of a motion to adjourn or postpone the Essex meeting to another
time and/or place for the purpose of soliciting additional proxies or otherwise,
the persons named in the enclosed form of proxy will have discretion to vote on
those 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
the proxies. If no instructions are indicated, the proxies will be voted "FOR"
approval of the Superior Proposals. If any other matters are properly presented
for consideration at the Superior meeting, including consideration of a motion
to adjourn or postpone the Superior meeting to another time and/or place for the
purpose of soliciting additional proxies or otherwise, the persons named in the
enclosed form of proxy will have discretion to vote on those 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. 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.
30
<PAGE>
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 SUT Acquisition Corp. 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. On November 27, 1998, SUT
Acquisition Corp. 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, upon consummation
of the Merger, SUT Acquisition Corp. will merge with and into Essex. Essex will
continue as the surviving corporation and become a wholly owned subsidiary of
Superior. At the effective time of the Merger:
- each outstanding share of Essex common stock, other than shares owned by
Superior and SUT Acquisition Corp. and shares owned by holders who are
exercising appraisal rights under Delaware law, will be converted into the
right to receive 0.64 of a Trust Preferred Security;
- each treasury share of Essex and each share of Essex common stock owned by
Superior, SUT Acquisition Corp. or any direct or indirect wholly owned
subsidiary of Superior or Essex will be canceled; and
- each outstanding share of common stock of SUT Acquisition Corp. will be
converted into one share of Essex, the surviving corporation in the
Merger.
No fractional shares of Trust Preferred Securities will be issued in the
Merger. Instead, Essex stockholders will receive an amount in cash, without
interest, equal to the product of the fraction they would have otherwise
received 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., 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
31
<PAGE>
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 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 and $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. These
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 Superior's Board of
Directors, 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.
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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. In the course of these conversations,
Company A's chief executive did not make any new or different proposals from
those contemplated by Company A's October 7 letter. In light of the pending
discussions with Superior for a transaction in the range of $30 to $35 per
share, with a significant portion in cash, neither Mr. Abbott nor Mr. Lindsay
believed that Company A would propose any terms that would be comparable or
superior to those proposed by Superior or that more detailed discussions with
Company A were warranted. Pursuant to the mutual confidentiality agreement,
Essex was not permitted to disclose to Company A the existence of its
negotiations with Superior or the terms of Superior's offer.
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, including the terms of Superior's financing and
the non-cash consideration, and conducted additional due diligence.
On October 19, 1998, Essex held a telephonic meeting of its Board of
Directors. 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. and Chase Securities Inc. (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 SUT Acquisition Corp. commenced the Offer.
On November 27, 1998, SUT Acquisition Corp. 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. SUT
Acquisition Corp. 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.
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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 SUT Acquisition Corp. 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 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 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
above 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.
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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.
Management estimates that cost savings and operating synergies resulting
from the Merger are anticipated to range from approximately $16 million to $42
million over the next four years.
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 these firms had
proposed or 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, which made 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 financing commitment that had been obtained by Superior from
Bankers Trust. 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; BREAK-UP 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, the competing bidder and approve or
recommend a tender offer competing with the Offer. However, in that case, Essex
may be required to pay Superior a termination fee of $25 million, plus expenses.
The Essex Board noted that the presence of the Stockholders' Agreement entered
into among Superior, SUT Acquisition Corp., 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. This is
because, 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 in 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 their 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
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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 to 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. However, on the
whole, only (1) the presence of the financing condition to the Offer, (2) the
effect of the Stockholders' Agreement on the likelihood of a competing proposal
and (3) the possible payment of a break-up fee in the event the Merger Agreement
is terminated weighed against the recommendation.
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.
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;
- the form of Superior's Certificate of Designation of the Series A
Cumulative Convertible Exchangeable Preferred Stock attached as an exhibit
to the Merger Agreement. Subsequent to the rendering of the opinion of
Goldman Sachs, Superior exercised its right pursuant to the Merger
Agreement to substitute for the Series A Preferred Stock securities having
economic and other material terms and conditions equivalent to the Series
A Preferred Stock, as determined by the Superior Board with the
concurrence of a majority of the directors of Essex who were not nominated
by Superior and 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");
- the form of the Stockholders' Agreement attached as an exhibit to the
Merger Agreement;
- the form of Superior's Indenture for the 8 1/2% Subordinated Convertible
Exchange Debentures;
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- 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 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 Series A Preferred Stock and that any estimate
of the future trading value of the Series A 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 Series A Preferred
Stock, which would be dependent upon and fluctuate with dividend rates
generally, the market price of Superior common stock into which the Series A
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.
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Goldman Sachs did not opine on the fairness from a financial point of view
of the Series A 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;
- the form of Superior's Certificate of Designation of the Series A
Cumulative Convertible Exchangeable Preferred Stock attached as an exhibit
to the Merger Agreement. As noted above in "--Opinion of the Essex
Financial Advisors--Goldman, Sachs & Co.," subsequent to the rendering of
the opinion of Chase, Superior exercised its right pursuant to the Merger
Agreement to substitute for the Series A Preferred Stock securities having
economic and other material terms and conditions equivalent to the Series
A Preferred Stock (see "The Merger Agreement and Related
Agreements--Consideration to be Received in the Merger");
- the form of the Stockholders' Agreement attached as an exhibit to the
Merger Agreement;
- the form of Superior's Indenture for the 8 1/2% Subordinated Convertible
Exchange Debentures;
- 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;
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- 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.
Chase noted that under then current market conditions, there may be a
limited trading market for the Series A Preferred Stock and that any estimate of
the future trading value of the Series A 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 Series A Preferred Stock,
which would be dependent upon and fluctuate with dividend rates generally, the
market price of Superior common stock into which the Series A 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.
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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:
(A) 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 Series A Preferred Stock;
(B) 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
(C) 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 $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.
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Using the Consideration Range, the Essex Financial Advisors calculated the
corresponding fully diluted enterprise consideration as multiples of:
(1) the last twelve months ("LTM") net sales;
(2) LTM earnings before interest, taxes, depreciation and amortization
("EBITDA");
(3) estimated 1998 EBITDA; and
(4)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:
(A) 0.73x to 0.85x LTM net sales;
(B) 5.9x to 6.8x LTM EBITDA;
(C) 6.1x to 7.0x estimated 1998 EBITDA; and
(D) 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:
(1) 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
(2) 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 Series A
Preferred Stock, assuming that the Series A 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 Series A 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 had 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 had 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.
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COMPARABLE PUBLIC COMPANIES ANALYSIS. The Essex Financial Advisors reviewed
certain publicly available financial and operating information of six public
companies consisting of (1) AFC Cable Systems, Inc., (2) Belden Inc., (3) Cable
Design Technologies Corporation, (4) Commscope, Inc., (5) Encore Wire
Corporation and (6) 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 Comparable Companies were chosen
because they operate in the wire and cable industry, as does Essex, and are also
publicly traded. The Essex Financial Advisors noted that the Comparable
Companies, as well as Essex and Superior, derived different percentages of their
revenues from different segments of the wire and cable market. The Essex
Financial Advisors noted that while Essex derived a majority of its revenues
from the sale of building/electrical wire and automotive wire, the Comparable
Companies derived their revenues either from different segments of the
wire/cable market or, if from the same segments as that of Essex, in different
proportions.
The review indicated that:
(A) 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;
(B) 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;
(C) 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 the Group,
compared to 0.64x for Essex;
(D) 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;
(E) 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;
(F) projected five-year EPS growth rates ranged from 11.0% to 17.7% for
the Comparable Companies, compared to 12.0% for Essex;
(G) LTM gross profit margins ranged from 20.9% to 29.8% for the
Comparable Companies, compared to 19.8% for Essex;
(H) LTM EBITDA margins ranged from 11.5% to 17.3% for the Comparable
Companies, compared to 12.5% for Essex;
(I) the ratio of LTM debt to capitalization ranged from 5.3% to 62.9% for
the Comparable Companies, compared to 58.4% for Essex;
(J) 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
(K) 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:
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(1) 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;
(2) 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;
(3) 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;
(4) 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
(5) 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 (1)
Essex/Bessemer, (2) Wirekraft Industries Inc./Hicks, Muse, Tate & Furst Inc.,
(3) Superior/The Alpine Group, Inc., (4) General Cable Inc./Wasall Inc., (5)
Omega Wire Inc./ Hicks, Muse, Tate & Furst Inc., (6) Alcatel's NA Cable Systems,
Inc. and Alcatel's Canada Wire, Inc./ The Alpine Group, Inc., (7) Wirekraft
Industries Inc., Omega Wire Inc. and ECM Holding Co./International Wire Group,
Inc., (8) Dekko Wire Technology Group/International Wire Group, Inc. and (9)
Triangle Wire and Cable, Inc./Essex. The Selected Acquisitions were selected
because they involved transactions in the wire and cable industry, although the
Essex Financial Advisors noted that there have been a limited number of sizable
transactions in that industry. The review showed that for the Selected
Acquisitions, to the extent that such information was available or meaningful,
the transaction value as a multiple of (a) LTM net sales ranged from 0.34x to
1.30x, (b) LTM EBITDA ranged from 5.0x to 9.0x and (c) 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:
(A) the refinancing of all existing indebtedness of Essex and Superior;
(B) an 8.23% average interest rate on transaction debt based on the
three-month LIBOR rate of 5.19% as of September 20, 1998;
(C) the amortization of transaction goodwill over 35 years; and
(D) an equity consideration based on the face value of the Series A
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.
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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 (a) has paid Goldman Sachs a fee of $250,000 upon
announcement of the Offer and a fee of $3,187,500 upon successful completion of
the Offer and (b) will pay Goldman Sachs 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.
However, upon the consummation of the Merger, Essex will be liable for
reimbursement of these 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 (a) has paid Chase a fee of $250,000 upon announcement of the Offer
and a fee of $3,187,500 upon the expiration date of the successful Offer and (b)
will pay Chase a fee of $562,000 upon the closing of the Merger.
Essex has agreed to reimburse Chase for its reasonable expenses, including
the fees and disbursements of legal counsel and other professional advisors.
However, (a) 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 (b) 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
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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 SUT Acquisition Corp.
in the Offer.
MERGER CONSIDERATION
Upon consummation of the Merger, each outstanding share of Essex common
stock, other than shares owned by Superior and SUT Acquisition Corp. and shares
owned by holders who are exercising appraisal rights under Delaware law, will be
converted automatically into the right to receive 0.64 of a Trust Preferred
Security. Prior to the effective time of the Merger, there has been no public
market for the Trust Preferred Securities.
STOCK OPTIONS AND BENEFIT PLANS
Under 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. Each holder of an
unexercised option became entitled to receive a cash payment equal to the
product of (A) the number of shares of Essex common stock underlying the
unexercised option and (B) the excess of (1) $32.00 over (2) the per share
exercise price of the unexercised option. All 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 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 in effect on the date of the Merger
Agreement. However, Superior and Essex will have the right, in the good faith
exercise of their managerial discretion, to terminate, make changes or cause
changes to be made in the compensation, benefits and other terms of employment
of any employee. They may also terminate the employment of any employee.
In accordance with EITF 85-45, "Business Combinations: Settlement of Stock
Options and Awards," Essex has recorded a $47.5 million charge to compensation
expense for the costs to settle the unexercised stock options. The cash
settlement was made by Essex, part of which was funded by an intercompany loan
from Superior.
APPRAISAL RIGHTS
If you are an Essex stockholder who does not vote in favor of the Merger
Agreement and who properly demands appraisal of your shares of Essex common
stock, you 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 only applies to Essex stockholders who wish to
dissent from the Merger. Only a holder of record of Essex shares may exercise
appraisal rights.
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,
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SUCH AS A BROKER OR NOMINEE, MUST ACT PROMPTLY TO CAUSE THE RECORD HOLDER TO
FOLLOW THE STEPS SUMMARIZED BELOW IN A PROPER AND TIMELY MANNER TO PERFECT
APPRAISAL RIGHTS.
Under the DGCL, if you follow the procedures set forth in Section 262, you
will be entitled to have your Essex shares appraised by the Delaware Court of
Chancery and to receive payment of the "fair value" of your 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 the 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 appraisal rights are available and include in
the notice a copy of Section 262. This Joint Proxy Statement/Prospectus will
constitute this notice to the holders of shares, and the applicable statutory
provisions are attached as Appendix C to this Joint Proxy Statement/Prospectus.
If you wish to exercise appraisal rights or to preserve your right to do so, you
should review the following discussion and Appendix C carefully. If you fail to
timely and properly comply with the procedures specified, you will lose
appraisal rights.
If you wish to exercise appraisal rights, you must (1) deliver to Essex,
before the vote on the Merger at the Essex meeting, a written demand for
appraisal and (2) not vote in favor of the Merger. To not vote in favor of the
Merger, you can either (a) vote no in person or by proxy, (b) fail to vote or
(c) abstain from voting. However, if you vote in favor of the Merger Agreement,
by proxy or in person, or return a signed proxy that does not contain voting
instructions and do not revoke it, you will waive your right of appraisal and
nullify any previously filed written demand for appraisal. 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, to
exercise appraisal rights, you must hold of record your shares on the date you
make the written demand for appraisal and must continue to hold your shares
until the effective time of the Merger. If you fail to comply with any of these
conditions and the Merger becomes effective, you will lose appraisal rights and
receive instead the Trust Preferred Securities in accordance with the Merger
Agreement.
Only a holder of record of shares may assert appraisal rights for the shares
registered in his name. A demand for appraisal should be executed by or on
behalf of the holder of record, fully and correctly, as the holder of record's
name appears on his stock certificates. It must also state that the stockholder
intends to demand appraisal of his 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.
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 without exercising appraisal rights with
respect to the shares held for other beneficial owners. If you hold your shares
in brokerage accounts or other nominee forms and wish to exercise appraisal
rights, you should consult your broker to determine the appropriate procedures
for making a demand for appraisal.
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 Merger of the date
that the Merger has become effective. At any time within 60 days after the
effective time of the Merger, you have the right to withdraw your demand for
appraisal and to accept the consideration offered in the Merger. Within 120 days
after the effective time of the Merger,
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but not after that time, Essex or any holder of shares who is entitled to
appraisal rights may file a petition in the Delaware Court of Chancery demanding
a determination of the fair value of the dissenting shares. Essex is under no
obligation to and has no present intention to file this petition. Accordingly,
it is the obligation of the holders of shares to initiate all necessary action
to perfect appraisal rights within the time prescribed in Section 262.
Within 120 days after the effective time of the Merger, if you have complied
with the requirements for exercise of appraisal rights, you 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 as to which demands
for appraisal have been received and the aggregate number of holders of those
shares. Essex must mail this statement to you within ten days after Essex
receives a written request from you 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 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 these stockholders as required by the Court, the
Delaware Court of Chancery may conduct a hearing on this petition to determine
those holders of shares who have complied with Section 262 and who have become
entitled to appraisal rights. The Delaware Court of Chancery may require the
holders of shares who demanded appraisal to submit their stock certificates to
the Register in Chancery for notation of the pendency of the appraisal
proceeding. If you fail to comply with this direction, the Court of Chancery may
dismiss the proceedings as to you.
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. You should be aware that the fair value
of your shares as determined by Section 262 could be more than, the same as or
less than the consideration you would receive in the Merger if you did not seek
appraisal of your shares. Also, 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
experts utilized in the appraisal proceeding, be charged pro rata against the
value of all the shares entitled to be appraised.
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If you have duly demanded an appraisal in compliance with Section 262, you
will not, after the effective time of the Merger, be entitled to vote your
shares 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 you demand appraisal of your shares under Section 262 but fail to
perfect, or effectively withdraw or lose, your right to appraisal, your shares
will be converted into the right to receive the Trust Preferred Securities
pursuant to the Merger Agreement, without interest. You will fail to perfect, or
effectively lose or withdraw, your right to appraisal if no petition for
appraisal is filed within 120 days after the effective time of the Merger, or if
you deliver to Essex a written withdrawal of your demand for appraisal and an
acceptance of the Merger. However, any 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.
IF YOU FAIL TO FOLLOW THE STEPS REQUIRED BY SECTION 262 OF THE DGCL FOR
PERFECTING APPRAISAL RIGHTS, YOU MAY LOSE THESE RIGHTS. IN THAT CASE, YOU WILL
RECEIVE THE TRUST PREFERRED SECURITIES IN ACCORDANCE WITH THE MERGER AGREEMENT.
FINANCING OF THE OFFER AND THE MERGER
The total amount of funds required by Superior and SUT Acquisition Corp. 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 entered into
on November 27, 1998 by Superior/Essex Corp., a wholly owned subsidiary of
Superior, 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 entered into on November 27,
1998 by Superior/Essex, 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 under the
Amended and Restated Credit Agreement. The following summary of the material
terms and conditions of the Amended and Restated Credit Agreement and the Senior
Subordinated Credit Agreement does not purport to be complete and is subject to
the detailed provisions of the Amended and Restated Credit Agreement and the
Senior Subordinated Credit Agreement and the various related documents entered
into in connection therewith.
The Amended and Restated Credit Agreement provides for total borrowings of
up to $1.15 billion and the Senior Subordinated Credit Agreement provides for
total borrowings of up to $200 million. Approximately $1.2 billion of the total
proceeds available under these credit agreements were used to finance the Offer,
including the refinancing of certain indebtedness of Superior and Essex Group,
and to pay related fees and expenses.
The Amended and Restated Credit Agreement is comprised of two tranches of
term loans and a revolving credit facility. Interest on amounts outstanding
under the Amended and Restated Credit Agreement is based upon either (1) the
Federal Funds rate, Bankers Trust's prime lending rate or an adjusted
certificate of deposit rate or (2) 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.
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The applicable margin is a variable component that, in certain circumstances, is
subject to adjustment based on the leverage ratio maintained by Superior/Essex
and its subsidiaries. Superior/Essex 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/Essex and Essex Group under the Amended
and Restated 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 Amended
and Restated Credit Agreement is secured by a first priority lien on
substantially all the assets of Superior, Superior/Essex, Essex Group and their
respective subsidiaries.
Superior, Superior/Essex, Essex Group and most of their respective
subsidiaries are subject to certain customary affirmative and negative covenants
under the Amended and Restated Credit Agreement, including, without limitation,
covenants that restrict, subject to specified exceptions, (1) the incurrence of
additional indebtedness and other obligations, (2) mergers and acquisitions, (3)
asset sales, (4) the granting of liens, (5) prepayment or repurchase of other
indebtedness, (6) engaging in transactions with affiliates, (7) capital
expenditures, (8) the making of investments, (9) dividends and other payments
with respect to equity interests and (10) certain changes in the business in
which they are engaged.
The Senior Subordinated Credit Agreement is a general unsecured obligation
of Superior/Essex, 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 Senior 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 Senior
Subordinated Credit Agreement matures in 2006 and is prepayable at the option of
Superior/Essex at any time. Upon a change of control, as defined in the Senior
Subordinated Credit Agreement, Superior/Essex is required to offer to repurchase
the loans under the Senior Subordinated Credit Agreement at a purchase price
equal to 101% of the principal amount, plus accrued interest to the date of
repurchase. Mandatory prepayments are required from the net Proceeds from
issuances of debt to the extent not required to repay senior indebtedness, such
as the Credit Agreement, Mandatory prepayments are also required from the net
proceeds from equity issuances, other than proceeds received from
(a) the sale of margin stock prior to consummation of the Merger,
(b) the consummation of the Offer, the Merger and the related financing,
(c) issuances of options to purchase Superior common stock,
(d) issuances of Superior common stock to management, directors,
consultants and employees of Superior and its subsidiaries,
(e) issuances of Superior common stock as consideration for an
acquisition and
(f) equity contributions to any subsidiary of Superior/Essex.
Interest on the Senior 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,
which is 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
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interest rate will be LIBOR plus 5.50% and, if LIBOR rate loans are not
available, the alternate base rate plus 4.50%.
The Senior Subordinated Credit Agreement provides for the acceleration of
payment thereunder in the event of acceleration of the indebtedness under the
Amended and Restated Credit Agreement. The Senior Subordinated Credit Agreement
contains customary covenants including, without limitation, covenants that
restrict the ability of Superior/Essex and its subsidiaries, including Essex
Group, to (1) pay dividends or make other restricted payments, (2) make
investments, (3) incur additional indebtedness, (4) permit liens, (5) enter into
any consolidation, merger, conveyance or lease transactions, (6) make asset
sales, (7) enter into transactions with affiliates and (8) engage in unrelated
lines of business.
It is anticipated that the indebtedness incurred through borrowings under
the Amended and Restated Credit Agreement and the Senior 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 this indebtedness. These 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. This filing is anticipated to take place as soon as
practicable after receipt of Essex stockholder approval, Superior stockholder
approval and 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 then. 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 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 on how to
surrender Essex common stock certificates for new certificates representing
Trust Preferred Securities. Until you deliver your Essex common stock
certificates to Superior, you will not receive any dividends on the Trust
Preferred Securities. These dividends will be paid, without interest, to you
upon delivery of your 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 they would have otherwise received multiplied by the
average of the closing price for the Trust Preferred Securities for 10
consecutive trading days. This 10-day period will be immediately before the
effective time of the Merger, if the Trust Preferred Securities are traded on a
"when issued" basis, or immediately after the effective time of the Merger, if
the Trust Preferred Securities are not traded on a "when issued" basis.
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 Trust Preferred Securities 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 New York Stock Exchange. It is anticipated that the 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 have been approved for listing on the New York Stock
Exchange, 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 for 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. Essex entered into individual termination
benefits agreements with seven of its executive officers. Under the agreements,
each executive officer will receive 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 if he or she is terminated
by Essex within 24 months of the consummation of the Offer. The executive
officer will not receive this payment if he or she is terminated (a) by reason
of the executive's death, (b) by reason of the executive's disability, (c) as a
result of reaching the retirement age of 65 or (d) for cause.
Each executive is also entitled to termination benefits if the executive
terminates his or her employment for "good reason" within 24 months of the
consummation of the Offer. Good reason includes:
- the assignment of duties that are materially inconsistent with the
executive's duties prior to the consummation of the Offer;
- a reduction in the executive's annual salary from that in effect
immediately prior to the consummation of the Offer;
- failure to maintain incentive compensation programs for such executive;
- failure to maintain benefit programs for such executive;
- the relocation of the executive's place of employment to a place other
than the metropolitan area where the executive was located immediately
prior to the consummation of the Offer, except for required travel on
Essex's business in accordance with past practice;
- 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;
- failure to reappoint the executive to the corporate office(s) held
immediately prior to the consummation of the Offer, excluding any seat
held on the Essex Board;
- a request by Essex, or the person obtaining control of Essex, for the
resignation of the executive;
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- if terminated, failure to terminate the executive's employment in
accordance with the applicable termination benefits agreement; and
- breach by Essex of any provision of the applicable termination benefits
agreement.
The multiples payable under the termination benefits agreements 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 Messrs. Abbott and Owen intend to remain employees of Essex,
each of them has the right to terminate his employment 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, unless any 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. 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 October 21, 1998, the date of execution of the
Merger Agreement, current and former executive officers and directors of Essex
were deemed to be beneficial owners of an aggregate of approximately 14,414,440
shares of Essex common stock, or approximately 50.5% of the shares of Essex
common stock outstanding as of such date.
INDEMNIFICATION. The Merger Agreement provides that the Certificate of
Incorporation of Essex after the Merger will retain the provisions for
indemnification set forth in Essex's Certificate of Incorporation and Bylaws.
These 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 modification is required by law.
The Merger Agreement also provides that the surviving corporation of the
Merger will, to the fullest extent permitted under applicable law or under the
Certificate of Incorporation or Bylaws of the surviving corporation, 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 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, (1) any
counsel retained by the indemnified parties for any period after the effective
time of the
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Merger will be reasonably satisfactory to the surviving corporation of the
Merger and Superior and (2) neither the surviving corporation of the Merger 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 policies of
directors' and officers' liability insurance maintained by Essex with respect to
claims arising from or related to facts or events that occurred at or before the
effective time of the Merger. Superior may, however, 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. Superior
will not be obligated in any event 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. If such
insurance coverage cannot be obtained at all, or can only be obtained at an
annual premium in excess of such maximum premium, Superior will maintain the
most advantageous policies of directors' and officers' insurance obtainable for
an annual premium equal to such 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 such 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 are 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 you in light of your particular circumstances.
This discussion is generally limited to the United States federal income tax
consequences to Essex stockholders who will hold the Trust Preferred Securities
as capital assets within the meaning of Section 1221 of the Internal Revenue
Code of 1986, as amended.
This summary does not deal with the United States federal income tax
consequences to persons subject to special treatment under the Internal Revenue
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 a holder of Trust Preferred
Securities. The material United States federal income tax consequences to
individuals who are not citizens or residents of the United States and to
foreign corporations are discussed separately below. See "--Alien Holders."
This summary is based on the Internal Revenue Code, final and proposed
Treasury regulations thereunder and administrative and judicial interpretations
thereof, as of today, all of which are subject to change, possibly with
retroactive effect.
YOU ARE ADVISED TO CONSULT YOUR TAX ADVISOR 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 YOUR
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 in
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. If you are an Essex
stockholder participating in the Merger, you will recognize gain or loss at the
effective time of the Merger in an amount equal to the difference between (1)
the fair market value at the effective time of the Merger of the Trust Preferred
Securities you receive in the Merger and the sum of the amount of cash for
fractional shares and (2) your tax basis (generally, your cost) in the Essex
common stock surrendered. Your tax basis in the Trust Preferred Securities will
be equal to the fair market value of the Trust Preferred Securities at the
effective time of the Merger.
Your gain or loss will be capital gain or loss if the Essex common stock was
a capital asset in your hands and will be long-term capital gain or loss if, at
the time of the exchange, you held the Essex common stock for more than 12
months. Under present United States federal income tax 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, SUT Acquisition
Corp. 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. By acceptance of Trust Preferred Securities, each
holder agrees to treat the Debentures for such purposes as indebtedness and the
Trust Preferred Securities as evidence of an undivided ownership interest in the
Debentures. We cannot give you any assurance, however, that the classification
of the Debentures as indebtedness will not be challenged by the Internal Revenue
Service 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, if you hold Trust Preferred Securities you
will generally be considered the owner of an undivided interest in the
Debentures. You will therefore be required to include in your gross income your
pro rata share of interest income (including original issue discount or "OID")
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 relating to specified
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, provided that no interest deferral 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 interest deferral is
not "remote" within the meaning of the applicable Treasury regulations, and that
this position is therefore correct, although there is no authority directly on
point and the IRS could take a contrary position. (If the likelihood of this
occurrence were remote, the OID rules would not apply unless the Trust Preferred
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Securities initially trade at a discount to their liquidation amount, as
discussed below, or unless and until an interest deferral occurred.)
Accordingly, all of your taxable interest income with respect to the Debentures
will be accounted for as OID on a constant yield method regardless of your
method of accounting, and actual distributions of interest will not be reported
as taxable income. Your tax basis for the Trust Preferred Securities will be
increased by the amounts of OID accrued into income, and will be decreased by
cash distributions of interest. The amount of OID that will be recognized in any
quarterly interest payment period 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 your gross
income in accordance with your 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 New York Stock Exchange, is less than their liquidation
amount, the Debentures will be deemed to have been issued with additional OID
equal to that difference. Such OID will be includible in your 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 your election, may be amortized over the
term of the Debentures.
If Superior exercises its option to defer a payment of interest, you will be
required to continue to include OID in gross income even though the Trust will
not make any actual cash payments during the interest deferral period.
If you dispose of Trust Preferred Securities before the record date for
payment of a distribution or during an interest deferral period, you will
include interest (i.e., OID) in gross income but will not receive any cash from
the Trust. The same is true if you 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, if you are a
corporate holder of the Trust Preferred Securities you 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 you in
exchange for the Trust Preferred Securities. Under current law, this
distribution will be treated, for United States federal income tax purposes, as
a nontaxable event. You will receive an aggregate tax basis in the Debentures
distributed equal to your aggregate tax basis in your Trust Preferred
Securities. Your holding period in the Debentures received would include the
period during which you held the Trust Preferred Securities. 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 you and the Trust. In this case, you would recognize gain or loss
as if you had exchanged your Trust Preferred Securities for the Debentures. You
will include interest income on a Debenture received from the Trust in the
manner described above under "--Interest Income and Original Issue Discount."
SALES OF TRUST PREFERRED SECURITIES
If you sell Trust Preferred Securities you will be considered to have
disposed of all or part of your pro rata share of the Debentures. You will
recognize gain or loss equal to the difference between the amount realized on
the sale of the Trust Preferred Securities and your adjusted tax basis in the
Trust Preferred Securities. Your tax basis of a Trust Preferred Security will be
increased by the amount of any OID that is included in your income, and will be
decreased by the amount of any payments, including
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stated interest, made by Superior on the Debentures. In general, any gain or
loss will be a capital gain or loss and will be a long-term capital gain or loss
if you have held the Trust Preferred Securities 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 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.
If you dispose of your Trust Preferred Securities between the record dates for
payments of distributions, you 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 that amount to your adjusted tax basis
in your pro rata share of the underlying Debentures deemed disposed of. To the
extent the selling price is less than the your adjusted tax basis, you will
recognize a capital loss. Subject to certain limited exceptions and to a limited
extent, 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
You will not recognize income, gain or loss upon the conversion of the Trust
Preferred Securities into Superior common stock. You 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 your tax basis in such
fractional share. Your tax basis in Superior common stock received upon
conversion should generally be equal to your tax basis in the Trust Preferred
Securities exchanged less the basis allocated to any fractional share for which
cash is received. Your holding period in the Superior common stock received upon
conversion should generally begin on the date you acquire those Trust Preferred
Securities.
ADJUSTMENT OF CONVERSION PRICE
Section 305 of the Internal Revenue 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. As a holder of Trust
Preferred Securities you would be required to include the amount of any such
constructive dividend in gross income but would not receive any cash. In
addition, your 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.
You 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 Preferred Securities or the Debentures, if
they are distributed to and held directly by you, as well as on and from the
sale of any Superior common stock received on conversion, unless you are (a) a
corporation or you come within certain other exempt categories of recipients
and, when required, demonstrate that status, or (b) provide a correct taxpayer
identification number, certify no loss of exemption from backup withholding and
otherwise comply with the applicable requirements of the backup withholding
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rules. You should consult with your own tax advisor as to your qualification for
exemption from backup withholding and the procedure for obtaining such
exemption.
Backup withholding is not an additional tax. Any amount withheld from you as
backup withholding would be refunded or credited against your 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:
1. 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 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
2. 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
(a) 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
(b) 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 (1) (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.
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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. We cannot
assure you, 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 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. See "Description of the Trust
Preferred Securities--Special Event Exchange."
Superior is aware of at least one case, involving Enron Corporation, now
pending before the United States Tax Court where the IRS initially sought 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." In a recently filed stipulation in the Tax Court,
the IRS conceded that Enron was entitled to deduct its interest expense on the
securities.
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 under that Act, the Merger may
not be consummated unless notification has been given and specified information
has been furnished to the Antitrust Division of the United State Department of
Justice and the United States Federal Trade Commission 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 Federal Trade Commission. The required waiting period under the
Hart-Scott-Rodino Act for the Merger expired on November 13, 1998. At any time
before or after the effective time of the Merger, the Federal Trade Commission
or the Antitrust Division could take any action under the United States
antitrust laws that it deems necessary or desirable in the public interest. This
could include 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 in some cases.
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. However, securities retained by any
stockholder who is an "affiliate" of Essex for purposes of Rule 145 under the
Securities Act of 1933 will not be transferable, except pursuant to an effective
registration statement or an exemption from the registration requirements of the
Securities Act of 1933. An affiliate, as defined under the Securities Act of
1933, generally includes, without limitation, directors, certain executive
officers and beneficial owners of 10% or more of a class of capital stock. 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 those
affiliates 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 SUT Acquisition Corp. 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. On November 27, 1998, SUT Acquisition Corp.
accepted for payment and subsequently purchased 22,562,135 shares of the
outstanding 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, after the
consummation of the Offer and on the terms and subject to the conditions of the
Merger Agreement, SUT Acquisition Corp. 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 Trust Preferred
Securities. 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. This filing is 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. We cannot assure you, however, that each
condition to the Merger will be satisfied by then.
CONSIDERATION TO BE RECEIVED IN THE MERGER
The Merger Agreement provides that, upon consummation of the Merger, each
remaining outstanding share of Essex, other than shares owned by Superior or SUT
Acquisition Corp. and shares owned by holders who will exercise appraisal rights
under Delaware law, 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, of Superior. The Merger
Agreement further provides that, at Superior's option and with the consent of
the member or members of the Essex Board who were not nominated by Superior and
are not executive officers of Essex:
(1) Superior may substitute for the Series A Preferred Stock trust
convertible preferred securities representing undivided beneficial
interests in the assets of a Delaware statutory business trust. The trust
preferred securities must have economic and other material terms and
conditions equivalent to the Series A Preferred Stock, as determined by
the Superior Board with the concurrence of a majority of the independent
Essex directors. Also, Superior must own all of the beneficial interests
in the assets of the trust represented by common securities; and
(2) in the event of such substitution, all references in the Merger
Agreement to Series A Preferred Stock will be deemed to refer to such
trust convertible preferred securities.
BY WRITTEN CONSENT DATED DECEMBER 14, 1998, THE SUPERIOR BOARD APPROVED THE
EXERCISE BY SUPERIOR OF THE OPTION TO SUBSTITUTE THE TRUST PREFERRED SECURITIES
FOR THE SERIES A PREFERRED STOCK AS THE CONSIDERATION TO BE RECEIVED BY ESSEX
STOCKHOLDERS IN THE MERGER. THE SOLE INDEPENDENT ESSEX DIRECTOR HAS CONSENTED TO
THIS 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 SERIES A PREFERRED STOCK, AND THE SOLE INDEPENDENT
ESSEX DIRECTOR CONCURRED WITH THAT DETERMINATION. ONCE
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ISSUED, THE TRUST PREFERRED SECURITIES WILL REPRESENT UNDIVIDED BENEFICIAL
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 SHARES OWNED BY
SUPERIOR OR SUT ACQUISITION CORP. AND SHARES OWNED BY HOLDERS WHO WILL EXERCISE
APPRAISAL RIGHTS UNDER DELAWARE LAW, 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 SERIES A PREFERRED STOCK.
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 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 on how to surrender Essex common stock certificates for new
certificates representing Trust Preferred Securities. Until you deliver your
Essex common stock certificates to Superior, you will not receive any dividends
on the Trust Preferred Securities. These dividends will be paid, without
interest, to you upon delivery of your 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 the fraction they
would have otherwise received 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
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 Trust Preferred Securities 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 SUT Acquisition Corp.
immediately prior to the effective time of the Merger will be the initial
directors of Essex, as 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 or, where permissible, waiver
at or prior to the effective time of the Merger of each of the following
conditions:
(1) the registration statement of which this Joint Proxy
Statement/Prospectus is a part has become effective under the Securities
Act, no stop order suspending the effectiveness of the registration
statement has been issued by the Securities and Exchange Commission and
no proceedings for that purpose and no similar proceeding in respect of
the Joint Proxy Statement/ Prospectus have been initiated or threatened
by the Securities and Exchange 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
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(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, that makes the consummation
of the Merger illegal.
Superior and Essex may not waive any of these conditions to the Merger,
except for the approval of the issuance of the Trust Preferred Securities by
Superior's stockholders. It is unlikely that any waiver of this condition will
be necessary because the approval of this matter at the Superior meeting is
assured.
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 of
the Trust Preferred Securities have been approved for listing on the New York
Stock Exchange, subject to official notice of issuance. Essex may waive this
condition with the approval of a majority of its directors who were not
nominated by Superior and are not executive officers of Essex.
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; SEC 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 SUT Acquisition
Corp.: organization and qualification; authority relative to the Merger
Agreement; no conflict, required filings and consents; Certificates of
Incorporation and Bylaws; capitalization; SEC 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 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. This prohibition does not apply to transfers of Essex
common stock between and among entities associated or affiliated with Bessemer
Holdings, L.P. and its affiliates. Any such proposal or offer is referred to
below 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 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. However, nothing contained in the Merger Agreement
prevents Essex or the Essex Board from (1) complying with Rule 14e-2 promulgated
under the Exchange Act with regard to
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an Acquisition Proposal or (2) 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 similar to the one executed by Superior and Essex
Group; (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, 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 for its directors to comply with
their fiduciary duties under applicable law; and 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.
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 inform
promptly all necessary individuals or entities of the above obligations as well
as those contained in the confidentiality agreement between Superior and Essex
Group. 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. Essex will indicate, 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 in 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 Essex after the Merger will retain the
provisions for indemnification set forth in Essex's Certificate of Incorporation
and Bylaws. These 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 modification is required by law.
The Merger Agreement also provides that Essex will, to the fullest extent
permitted under applicable law or under Essex'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
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virtue of his holding the office of director or officer occurring at or prior to
the effective time of the Merger 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, (1) any counsel retained by the indemnified parties for any
period after the effective time of the Merger will be reasonably satisfactory to
Essex and Superior and (2) neither Essex nor Superior will be liable for any
settlement effected without its written consent.
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 with respect to claims arising from or related to facts or events that
occurred at or before the effective time of the Merger. Superior may, however,
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 than the current Essex policies. Superior will also 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. If such insurance coverage cannot be
obtained at all, or can only be obtained at an annual premium in excess of such
maximum premium, Superior will maintain the most advantageous policies of
directors' and officers' insurance obtainable for an annual premium equal to
such 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 such 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 Essex 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 in effect on the date of the Merger
Agreement. However, Superior and Essex will have the right, in the good faith
exercise of their managerial discretion, to terminate, make changes or cause
changes to be made in the compensation, benefits and other terms of employment
of any employee. They also may terminate the employment of any employee.
Superior will also cause Essex to perform Essex's obligations under individual
termination benefits agreements entered into between Essex and each of its
executive officers, unless any 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.
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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 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 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.
Any termination authorized by Essex requires the approval of a majority of
the Essex directors who were not nominated by Superior and are not executive
officers of Essex.
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 on
the part of any party 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 that 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.
AMENDMENT; WAIVER
The Merger Agreement may be amended in writing by the parties at any time
before or after Essex stockholders have approved the Merger. Once Essex
stockholders have approved the Merger, no amendment that by applicable law
requires further approval by the Essex stockholders may be made without such
further approval. In addition, any amendment requiring action of the Essex Board
must also be approved by a majority of the directors of Essex who were not
nominated by Superior and are not executive officers of Essex.
At any time before the effective time of the Merger, a party may in writing:
(1) extend the time for performance of any of the obligations or other acts of
the other parties; (2) waive any inaccuracies in the representations and
warranties of the other parties contained in the Merger Agreement or in any
document delivered pursuant to the Merger Agreement; or (3) waive compliance,
where permissible, with any of the agreements or conditions contained in the
Merger Agreement. However, the approval of a majority of the directors of Essex
who were not nominated by Superior and are not executive officers of Essex is
required for: (a) any consent by Essex to the extension of the time for
performance of the obligations or other acts of Superior or SUT Acquisition
Corp.; (b) any waiver by Essex of compliance with any of the covenants or
conditions contained in the Merger Agreement for the benefit of Essex or any
other rights of Essex under the Merger Agreement, where permissible; and (c) any
amendment or withdrawal by the Essex Board of its recommendation of the Merger.
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FEES AND EXPENSES
Except for certain expenses related to the conversion of the shares of Essex
common stock in the Merger, which shall be paid by Essex, 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, all
fees and expenses incurred in connection with the Merger Agreement and the
transactions contemplated thereby shall be paid by the party incurring such
expenses, whether or not the Merger is consummated.
The fees and expenses expected to be incurred by Superior and Essex in
connection with the Offer and the Merger total approximately $60 million, of
which $33 million is financing fees and $27 million is transaction expenses.
STOCKHOLDERS' AGREEMENT
In connection with the Merger Agreement, Superior and SUT Acquisition Corp.
entered into a Stockholders' Agreement with certain stockholders of Essex,
including Bessemer Holdings, L.P. and certain of its affiliates, 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, Bessemer Holdings, L.P. and certain of its affiliates
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 them.
Those shares were tendered in the Offer and were acquired by SUT Acquisition
Corp. on a pro rata basis.
Bessemer Holdings, L.P. and certain of its affiliates 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, they will vote the
shares of Essex common stock held of record or of which they have beneficial
ownership (A) in favor of the Merger, the execution and delivery by Essex of the
Merger Agreement and the approval of its terms and each of the other actions
contemplated by the Merger Agreement and the Stockholders' Agreement and any
actions required in furtherance thereof and (B) 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 conditions to the Merger not being
fulfilled. In addition, Bessemer Holdings, L.P. and certain of its affiliates
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 transactions contemplated by the Merger Agreement
and against any Acquisition Proposal. They 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 concerning any Acquisition Proposal.
The Stockholders' Agreement terminated in accordance with its terms upon the
payment by SUT Acquisition Corp. for shares of Essex common stock in the Offer.
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VOTING AGREEMENT
In connection with the Merger Agreement, The Alpine Group, Inc. 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 or in connection
with any written consent of 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 the Trust Preferred Securities; 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 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 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 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 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. This 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 who is identified as an affiliate in this letter to deliver to Superior,
prior to the effective time of the Merger, a written affiliate agreement. Under
these 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 the
sale, transfer or other disposition:
(1) has been registered under the Securities Act;
(2) complies 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. 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 108.
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. 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 Holdings,
L.P. That limited liability company is also the sole general partner of
Bessec Holdings, L.P., a limited partnership that holds 40,006 of the shares
listed for Bessemer Holdings, L.P. Bessemer Securities Corporation is a
principal limited partner of Bessemer Holdings, L.P. and Bessec. Bessemer
Securities LLC is a principal limited partner of Bessec. Mr. Woods is the
President and Chief Executive Officer of Bessemer Securities Corporation and
Bessemer Securities LLC. Each of Messrs. Woods, Lindsay, Cohen and Godfrey
disclaims beneficial ownership of the shares of Essex Common Stock owned or
controlled by Bessemer Holdings, L.P. 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. 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 108.
In connection with the Offer and the Merger, the financing of the Offer and
related transactions, The Alpine Group, Inc. 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.
COMPENSATION OF DIRECTORS. Effective January 1, 1999, Superior increased
the annual retainer to $20,000 from $15,000 for directors who are not employees
of Superior or otherwise compensated by Superior and increased to $1,500 from
$1,000 the amount a non-employee director will receive for each meeting of the
Superior Board or of a committee of the Superior Board attended.
In addition to increasing the annual retainer and per committee meeting
fees, effective January 1, 1999, the Superior Board adopted the Superior Stock
Compensation Plan for Non-Employee Directors. Under the Superior Stock
Compensation Plan, non-employee directors of Superior will automatically receive
50% of the annual retainer in either restricted stock or stock options, as
elected by the non-employee director. Each non-employee director may also elect
to receive all or a portion of the remaining amount of the annual retainer, in
excess of 50% of the annual retainer, and meeting fees in the form of restricted
stock or stock options instead of in cash.
Restricted stock and stock options that are attributable to the annual
retainer will be granted as of the first business day of each quarter of
Superior's fiscal year. Restricted stock and stock options that are attributable
to meeting fees will be granted as of the date of the meeting of the Superior
Board and/or the committee of the Superior Board with respect to which such
grants relate. Shares to be issued under the Superior Stock Compensation Plan
will be made available only from issued shares of Superior common stock
reacquired by Superior and held in treasury until such time as the plan may be
approved by the Superior Stockholders.
The number of shares of restricted stock to be granted will be determined by
dividing: (1) the amount of the annual retainer or meeting fees that a
non-employee director elected to receive in restricted stock, by (2) the lesser
of (a) 100% of the fair market value of the Superior common stock on the first
business day of Superior's fiscal year and (b) 100% of fair market value of the
Superior common stock at the time of grant.
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The number of stock options will be determined by dividing: (1) the amount
of the annual retainer or meeting fees that a non-employee director elected to
receive in stock options, by (2) the value of a stock option on the date of
grant as determined by the Superior Board, based on the purchase price per share
of Superior common stock and a Black-Scholes option pricing model and such other
factors as the Superior Board deems appropriate. Stock options granted under the
Superior Stock Compensation Plan will have a purchase price equal to the lesser
of: (1) 100% of the fair market value of the Superior common stock on the first
business day of Superior's fiscal year; and (2) 100% of the fair market value of
the Superior common stock on the date of grant. Each stock option granted under
the Superior Stock Compensation Plan will expire on the tenth anniversary of the
date of grant.
Awards of restricted stock and stock options under the Superior Stock
Compensation Plan will vest upon the earliest of the following to occur: (1) the
third anniversary of the date of grant; (2) a non-employee director's death; or
(3) upon a change in control, as defined in the Superior Stock Compensation
Plan. The Superior Stock Compensation Plan is adminstered and interpreted by the
Superior Board.
Non-employee directors of Superior will contine to receive annual
nondiscretionary grants of nonqualified stock options under Superior's 1996
Stock Option Plan.
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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 New York Stock Exchange under the ticker symbol
"SUT." As of January 20, 1999, there were issued and outstanding 16,238,969
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 Superior Board 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 that 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 the Superior
Board. Superior's Certificate of Incorporation and Bylaws may have the effect of
discouraging a third party from making
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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 the Superior Board, other than those
directors affiliated with or elected by an interested stockholder, 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. Superior's Certificate of Incorporation
defines an interested stockholder to be any person, other than Messrs. Elbaum
and Schut, 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 that were beneficially owned by an
interested stockholder at any time during the prior two years.
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, that 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.
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 Superior Board 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 Delaware law, 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 limitation on liability does not apply to violations of the
federal securities laws. This provision also 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
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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.
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW. Superior is subject to
Section 203 of the Delaware General Corporation Law. Section 203 relates to an
"interested stockholder," defined by the Delaware General Corporation Law 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. In general,
Section 203 prevents an interested stockholder from engaging in a business
combination with a Delaware corporation for three years following the date the
person became an interested stockholder unless:
(1) before the 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. This excludes 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 the 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
stockholder.
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DESCRIPTION OF THE TRUST PREFERRED SECURITIES
Essex stockholders will receive 0.64 of a Trust Preferred Security in
exchange for each share of Essex common stock in the Merger. The following
summary of the material 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, 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 108. Whenever
particular defined terms of the Declaration are referred to herein, such defined
terms are incorporated herein by reference.
GENERAL
The Declaration authorizes the Trust to issue the Trust Preferred Securities
and Trust Common Securities (collectively, the "Trust Securities") in exchange
for the issuance by Superior of the Debentures to the Trust. Holders of Trust
Preferred Securities will receive distributions and payments upon redemption
and, if an event of default under the Declaration has occurred and is
continuing, liquidation before the holder of the Trust Common Securities.
All of the Trust Common Securities are owned by Superior. 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 Trust to issue any
securities other than the Trust Preferred Securities and the Trust Common
Securities, to incur any indebtedness or to mortgage or pledge its assets. 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 a 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 the distributions. The remedy of a holder of
Trust Preferred Securities in that 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, or $4.25 per
annum. Distributions will accumulate, without interest, from [March 16, 1999],
or the most recent date to which distributions have been paid in full.
Distributions are payable quarterly in arrears on [June 15, September 15,
December 15 and March 15] of each year, commencing on [June 15], 1999, to the
holders of record of the Trust Securities on the applicable record date, when,
as and if available for payment, except as described in the immediately
following paragraphs. The amount of distributions payable for any period is
computed on the basis of a 360-day year of twelve 30-day months.
Payment of distributions to you may be deferred. So long as Superior is not
then experiencing specified events of bankruptcy, insolvency or reorganization,
Superior has the right under the Indenture to defer payment of interest on the
Debentures, at any time or from time to time, for a period not exceeding 20
consecutive quarters. Payment of interest may not be deferred, however, beyond
the stated maturity of the Debentures. If interest payments on the Debentures
are deferred, the Trust will defer payment of quarterly distributions on the
Trust Securities. Distributions to which you would otherwise be entitled during
this deferral period will continue to accumulate, and additional interest will
accrue thereon, at the rate of 8 1/2% per annum. See "Description of the
Debentures-Option to
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Defer Interest Payments" and "Material Federal Income Tax Consequences--Interest
Income and Original Issue Discount." If distributions are deferred,
distributions and accrued interest thereon will be paid 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 the deferral period.
Superior has no current intention to exercise its right to defer payments of
interest on the Debentures. Superior would elect to defer payments of interest
if it does not for any reason have the financial resources to make these
payments.
Distributions on the Trust Securities must be paid to you on the dates
payable to the extent the Trust has funds on hand and available for the payment
of distributions. The funds of the Trust available for distribution to holders
of the Trust Securities will be limited to payments actually received by the
Trust under the Debentures. If Superior does not make interest payments on the
Debentures, the Property Trustee will not have funds available to pay to you
distributions on the Trust Securities. The Guarantee will not apply in this
case.
Distributions on the Trust Securities are payable to the holders as they
appear on the register of the Trust on the relevant record dates, which is the
fifteenth day preceding the relevant distribution payment date.
You will not be entitled to receive distributions on the Trust Preferred
Securities made after the effective time of the Merger until you surrender your
certificates representing Essex common stock. Subject to applicable law, at the
time you surrender your certificates, you will receive all distributions
previously paid on the Trust Preferred Securities, without interest.
CONVERSION RIGHTS
You will have the right, at your option, to convert any or all of your Trust
Securities into shares of Superior common stock at any time after [September 16,
1999], but not later than the close of business on the date that is 10 days
preceding any date fixed for redemption, if there is no default in payment of
the redemption price. If there is a default in payment of the redemption price,
then your rights to convert will continue until the redemption price is paid.
Payments deferred during an interest deferral period will not constitute a
default for this purpose. The initial conversion rate is .8929 shares of
Superior common stock for each Trust Security, subject to adjustment as
described under "--Conversion Rate Adjustments" below.
If you are a holder of record of Trust Securities, your rights to receive
any accrued and unpaid distributions when you convert are as follows:
- If you convert on or after a distribution payment date and on or before
the next record date, you will not receive distributions to the date of
conversion. You will only receive distributions to the distribution
payment date.
- If you convert after a record date and before the corresponding
distribution payment date, you will be entitled to receive distributions
on the distribution payment date even if Superior defaults in making that
payment. However, when you surrender your Trust Securities for conversion
during this period, you must pay to the Conversion Agent an amount equal
to the distributions you will receive on the distribution payment date.
The effect of this is that you will be giving up the amount of the
distribution. But if your Trust Securities have been called for redemption
during this period, you will not have to make this payment.
- You will not receive accrued and unpaid distributions if you convert
during an interest deferral period.
Additionally, no adjustment will be made for dividends on the Superior
common stock issued on conversion.
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If you wish to exercise your conversion right, you must surrender your
certificates representing the Trust Securities to be converted, together with an
irrevocable conversion notice, to the Conversion Agent, which will immediately
convert your Trust Securities into Superior common stock at the conversion rate
then in effect. You may obtain copies of the required form of the conversion
notice from the Conversion Agent.
Shares of Superior common stock issued upon conversion of Trust Securities
will be validly issued, fully paid and non-assessable. You will not receive
fractional shares of Superior common stock as a result of conversion, but
instead, you will receive cash for any fractional interest in an amount equal to
the product of (A) the closing price of a share of Superior common stock on the
last trading day before the date of conversion and (B) 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 the following 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 of the above cases, the conversion rate will be adjusted so that, if
you surrender Trust Securities for conversion after the happening of such an
event, you will be entitled to receive, to the extent permitted by law, the
number and kind of shares of Superior capital stock that you would have received
had you converted your Trust Securities immediately prior to the record date for
the event, or if no record date has been set, then the effective date for the
event.
The conversion rate will also be subject to appropriate adjustment if either
of the following events occurs:
1. Superior issues rights or warrants to all holders of Superior common
stock entitling them 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 beginning 45
business days before the record date for the determination of
stockholders entitled to receive such rights or warrants; or
2. 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 (1) above, any ordinary dividend paid in cash out of the
retained earnings of Superior and any dividend or distribution referred
to in clause (A) above.
The Indenture provides that no change in the conversion rate will actually
be made until the cumulative effect of all adjustments 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.
The Indenture also provides that you will be afforded the following
specified rights upon (A) any consolidation or merger of Superior with any other
corporation, (B) any sale or transfer of all or substantially all of Superior's
assets or (C) any share exchange, in each case, in which all of the
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outstanding shares of Superior common stock are converted into other securities,
cash or other property. If any of these events occurs, you will be given the
right to convert your Trust Securities into the kind and amount of securities,
cash and other property receivable by a holder of the number of shares of
Superior common stock into which your Trust Securities could have been converted
immediately prior to the effective date of the applicable event. If, in
connection with any of these events, each holder of shares of Superior common
stock is entitled to elect to receive either securities, cash or other property
upon completion of the transaction, you will be provided with the right to elect
to receive securities, cash or other property on the same terms and subject to
the same conditions as the holders of Superior common stock. Superior will not
effect any of these transactions unless you receive these rights, which
similarly apply to successive consolidations, mergers, sales, transfers or share
exchanges.
SPECIAL EVENT EXCHANGE
At any time after the occurrence and during the continuation of a Special
Event, all outstanding Trust Securities will be exchanged for Debentures having
a principal amount equal to the aggregate liquidation preference of the Trust
Securities to be exchanged and the Trust will be dissolved. However, in the case
of a Tax Event, Superior may direct that less than all, or none, of the Trust
Securities be exchanged if and for so long as Superior elects to pay any
additional sums such that the net amount of distributions received by the
holders of Trust Securities not so exchanged is not reduced as a result of the
Tax Event, and so long as Superior has not revoked this election or failed to
make these payments.
A "Special Event" means a Tax Event or an Investment Company Event.
A "Tax Event" means the receipt by the Property Trustee of an opinion of
counsel to the effect that, as a result of any amendment to, or change in, the
law or as a result of any administrative pronouncement or judicial decision,
there is more than an insubstantial risk that:
- the Trust is, or will be within 90 days, subject to United States federal
income tax on income received or accrued on the Debentures;
- interest paid by Superior on the Debentures is not, or within 90 days will
not be, deductible by Superior when paid, in whole or in part, for United
States federal income tax purposes; or
- the Trust is, or will be within 90 days, 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 of an
opinion of counsel to the effect that, as a result of the occurrence of a change
in law or regulation, 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.
Superior has agreed in the Guarantee that if and so long as (a) the Trust
holds all the Debentures, (b) a Tax Event has occurred and is continuing and (c)
Superior has elected, and has not revoked its election, to pay additional sums
in respect of the Trust Securities, Superior will pay to the Trust the
additional sums.
Distribution paid on the Trust Securities include any additional sums paid
as a result of a Tax Event.
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 [March 16,] 2003. At any time on and after that date,
Superior may redeem Debentures at its option. The proceeds from this redemption,
to the extent actually received by the Property Trustee, will be applied to
redeem Trust
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Securities having an aggregate liquidation preference equal to the aggregate
principal amount of the Debentures redeemed by Superior. If your Trust
Securities are redeemed during the twelve-month period beginning on [March 17]
of the year specified below, you will be entitled to receive the following cash
redemption prices per Trust Security, plus an amount per Trust Security in cash
equal to all accumulated and unpaid distributions, if any, to the date fixed for
redemption:
<TABLE>
<CAPTION>
REDEMPTION PRICE
PER TRUST
YEAR SECURITY
- ---------------------------------------------------------------------------- ----------------
<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>
During the one-year period commencing on [March 16], 2002, 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, at a cash
redemption price of $52.975, plus accrued and unpaid distributions, if any, to
the date fixed for redemption. Superior may do this only if the product of (a)
the average closing price of a share of Superior common stock, for any 10
consecutive trading days preceding the date of the call for redemption,
multiplied by (b) 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 on 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 pro rata, by lot or by any other
method as the Property Trustee deems fair and appropriate.
MANDATORY REDEMPTION
Upon repayment at maturity or as a result of the acceleration of the
Debentures upon the occurrence of an event of default under the Indenture, the
Debentures will be subject to mandatory redemption, in whole, but not in part,
by Superior. The proceeds from this mandatory 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, and thus of the Trust Securities, will be [March 15], 2014.
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, offer to redeem all of your
Trust Preferred Securities at a purchase price in cash equal to $50.50 per Trust
Security, plus accrued and unpaid distributions to the date of redemption. On or
after the date fixed for redemption, you may elect to accept the offer by
surrendering your certificates to the Paying Agent, at which time you will be
entitled to receive payment of the redemption price.
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"Change of Control" means the occurrence of any of the following events:
A. any person or group, 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 ("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 (1) 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 (2) 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;
C. during any consecutive two-year period, individuals who at the beginning
of that 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 that period
or whose election or nomination for election was previously so approved
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.
REDEMPTION PROCEDURES
The Trust will redeem Trust Securities on each date fixed for redemption at
the applicable redemption price with the proceeds it receives from Superior's
contemporaneous redemption of Debentures at the same redemption price.
Redemption of Trust Securities will be made and the redemption price will be
payable on each redemption date only to the extent that the Trust has received
those proceeds and has them on hand and available for payment of the redemption
price. If the Trust does not have sufficient funds, then any funds it does have
will be applied to redeem Trust Securities pro rata, by lot or in any other
manner as the Property Trustee determines.
SUBORDINATION OF TRUST COMMON SECURITIES
On any distribution payment date, you are entitled to receive payment in
full in cash of all accumulated and unpaid distributions then due on your Trust
Preferred Securities before any distribution is made on the Trust Common
Securities. In addition, no redemption, repurchase, exchange or conversion of
the Trust Common Securities may be effected at any time that Trust Preferred
Securities are outstanding.
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DISTRIBUTION OF DEBENTURES UPON DISSOLUTION
Under 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:
A. specified events of bankruptcy, dissolution or liquidation of Superior;
B. 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 of distributions received by holders of Trust Securities
not exchanged for Debentures is not reduced as a result of the Tax Event
and Superior has not revoked this election or failed to make these
payments;
C. the redemption, conversion or exchange of all of the Trust Securities;
D. the entry by a court of competent jurisdiction of an order for the
dissolution of the Trust; and
E. receipt by the Property Trustee of written notice from Superior, which
may be given at any time and in Superior's sole discretion, of Superior's
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 and cause the Debentures to be distributed to you.
Upon the dissolution of the Trust, the Trust will be liquidated and, after
satisfaction of liabilities to creditors of the Trust as provided by applicable
law, you will receive an aggregate principal amount of Debentures equal to the
aggregate liquidation preference of your Trust Securities.
If the Property Trustee determines that a distribution of the Debentures as
provided above is not practicable, then, on the date of dissolution of the
Trust, you will be entitled to receive out of the assets of the Trust available
for distribution, 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 to the liquidation
date. If this liquidation distribution can be paid only in part because the
Trust has insufficient assets legally available to pay it in full, then you will
receive amounts payable on your Trust Securities on a pro rata basis, based on
liquidation preference. If an event of default under the Declaration has
occurred and is continuing, you will receive the liquidation distribution before
Superior, the holder of the Trust Common Securities; otherwise, you will receive
the liquidation distribution on a pro rata basis with Superior.
DECLARATION EVENTS OF DEFAULT; ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF TRUST
PREFERRED SECURITIES
An event of default under the Indenture constitutes an event of default
under the Declaration with respect to the Trust Preferred Securities. Any waiver
of an event of default under the Indenture will thus constitute a waiver of the
corresponding Declaration event of default.
If an 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. In this event, the Property Trustee, when and to
the extent it receives these payments on the Debentures, will make corresponding
payments on the Trust Securities. Accordingly, to receive payment in the case of
an event of default, you would rely on the enforcement against Superior by the
Property Trustee of its rights as holder of the Debentures. You are not entitled
to accelerate the maturity of the Trust Preferred Securities.
Nevertheless, until any 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. Also, if the Property Trustee fails to enforce its
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rights as holder of the Debentures after a request from you or any other holder
of Trust Preferred Securities, you or that holder may proceed to enforce those
rights directly against Superior. But you 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.
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, you will have no voting rights as a holder of
Trust Preferred Securities.
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;
A. to cure any ambiguity or inconsistencies, as long as the amendment does
not materially adversely affect the interests of any holder of Trust
Securities;
B. 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 Investment
Company Act of 1940; or
C. to qualify or maintain the qualification of the Declaration under the
Trust Indenture Act of 1939.
Otherwise, your rights to amend the Declaration are as follows:
- Superior and the Trustees may amend the Declaration with (1) consent of
holders of a majority, based upon liquidation preference, of the
outstanding Trust Preferred Securities and Trust Common Securities, acting
as a single class, and (2) receipt by the Trustees of an opinion of
counsel to the effect that the amendment, or the exercise of any power
granted to the Trustees in accordance with the 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."
- Without the consent of each holder of Trust Securities, the Declaration
may not be amended to (A) 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 on the Trust Securities or (B) restrict
the right of a holder of Trust Preferred Securities to institute suit to
enforce the payment of distributions.
- The holders of a majority in aggregate liquidation preference of the then
outstanding Trust Preferred Securities must approve any proposed amendment
of the Declaration that provides for, or proposal by the Trustees to
effect, the dissolution, winding-up or termination of the Trust other than
under the terms of the Declaration.
As stated above, 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. So long as any Debentures are
held by the Property Trustee, the Trustees may not,
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without, in each case, obtaining the prior approval of the holders of a majority
in aggregate liquidation preference of all outstanding Trust Preferred
Securities:
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 the Debentures;
B. 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;
C. exercise any right to rescind or annul a declaration making the
principal of all the Debentures due and payable; or
D. consent to any amendment, modification or termination of the Indenture or
the Debentures where such consent is required. In this case, if no event
of default has occurred and is continuing, the holders of all outstanding
Trust Securities, voting together as a single class, must consent.
However, if a consent under the Indenture would require the consent of each
holder of Debentures, the Property Trustee must obtain 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.
Holders of Trust Preferred Securities may take or give any required vote,
consent, approval or direction at a meeting convened for that purpose or by
written consent. If you are a holder of record, you will receive 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. 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, and an affirmative vote by the holders of record of a majority of
the outstanding Trust Preferred Securities, based upon liquidation preference,
constitutes the action of the holders. You are entitled to one vote for each $50
of liquidation preference represented by your Trust Preferred Securities. No
annual meeting of holders of Trust Preferred Securities is required to be held.
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:
A. Distributions on the Trust Preferred Securities are in arrears and unpaid
for six or more quarters, whether or not consecutive;
B. Superior fails to pay all amounts due on the Debentures upon their
stated maturity; or
C. Superior fails to redeem all of the Trust Preferred Securities that the
holders elect to tender in the event of a Change of Control,
then the holders of the then outstanding Trust Preferred Securities, voting
separately and as a class, will have the power to designate two additional
members of Superior's Board of Directors, and Superior will cause them to be
elected to its Board of Directors. Each of the events described in clause (A),
(B) or (C) is a "Voting Rights Triggering Event." A Voting Rights Triggering
Event will not be deemed to have occurred if at the time of the event there are
less than 300,000 Trust Preferred Securities then outstanding.
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These voting rights will continue until such time as (1) in the case of the
non-payment of distributions, all distributions in arrears on the Trust
Preferred Securities are paid in full in cash, (2) in all other cases, any
failure, breach or default giving rise to the Voting Rights Triggering Event is
remedied or waived by the holders of a majority of the Trust Preferred
Securities then outstanding or (3) at any time there are fewer than 300,000
Trust Preferred Securities outstanding. At that time, the term of any directors
elected as provided above will terminate.
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 the vacancy. Superior
will cause that director to be elected to its Board of Directors.
At any time after the holders of the Trust Preferred Securities have the
power to designate directors on Superior's Board, or if any vacancies exist in
the offices of directors designated by the holders, any 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 directors.
If this meeting is not called by any Trustee within 20 days after personal
service to the Trustee, 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 the meeting at the expense of the Trust and to give the required
notice of the meeting.
PAYMENT OF AMOUNTS DUE ON TRUST PREFERRED SECURITIES
You will receive payments in respect of your Trust Preferred Securities by
check mailed to your address as it appears on the books of the Trust.
PROPERTY TRUSTEE; 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. [American
Stock Transfer & Trust Company, the transfer agent for the Superior common
stock, will be the Property Trustee, and will also serve as Indenture Trustee
and Guarantee Trustee.]
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 the
Trust Preferred Securities have been called for redemption.
The Property Trustee will be under no obligation to exercise any of the
rights or powers vested in it by the Declaration at your request or direction,
unless you offer 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 your request or
direction, including any reasonable advances that may be requested by the
Property Trustee.
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DESCRIPTION OF THE GUARANTEE
The Guarantee will be executed and delivered by Superior at the same time
that the Trust issues the Trust Preferred Securities. [American Stock Transfer &
Trust Company] is the Guarantee Trustee under the Guarantee. The Guarantee
Trustee holds the Guarantee for your benefit as a holder of Trust Preferred
Securities. The following summary of the material terms of the Guarantee does
not purport to be complete and is qualified in its entirety by reference to the
Guarantee. You can obtain a copy of the Guarantee by making a written request to
Superior. See "Where You Can Find More Information" on page 108.
GENERAL
Under the Guarantee, Superior has irrevocably and unconditionally agreed to
pay to you, on a subordinated basis, the following payments as and when they
become due, to the extent the Trust has not made these payments to you and
without duplicating any amounts previously paid to you by the Trust:
A. accumulated and unpaid distributions on your Trust Preferred Securities,
but only if and to the extent that the Trust has funds on hand and
available to pay those distributions;
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 and available to pay the redemption price; and
C. upon any dissolution, winding up or liquidation of the Trust in which
the Debentures are not distributed to you, the lesser of:
1. the amount of the cash liquidation distribution, but only if and to
the extent that the Trust has funds on hand and available to pay that
amount; and
2. the amount of assets of the Trust remaining available for
distribution to holders of Trust Preferred Securities.
Superior may make these payments directly to you or may cause the Trust to
make these payments to you. Superior will make these payments to you regardless
of any defense, right of set-off or counterclaim that the Trust may have or
assert, other than the defense of payment.
The Guarantee is an irrevocable guarantee, on a subordinated basis, of the
Trust's obligations to pay to you distributions and payments on redemption or
liquidation. However, the Guarantee applies only if and to the extent that the
Trust has funds on hand and available to make these payments. For example, if
Superior does not make interest payments on the Debentures held by the Trust,
the Trust will not have funds available to make distribution payments to you. In
that case, the Guarantee will not apply and you will not receive any payments
under the Guarantee.
STATUS OF THE GUARANTEE
The Guarantee is an unsecured obligation of Superior. The Guarantee (a)
ranks subordinate in right of payment to all current and future senior secured
indebtedness of Superior and (b) ranks pari passu with any guarantee now or
hereafter entered into by Superior in respect of any preferred stock of
Superior's affiliates that is senior to the Superior common stock. The Guarantee
does not limit the amount of additional indebtedness that Superior or any of its
subsidiaries may incur.
The Guarantee is a guarantee of payment and not of collection. In other
words, 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 only be
discharged when the above guarantee payments are paid in full or the Debentures
are distributed to you as provided in the Declaration.
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AMENDMENTS AND ASSIGNMENT
The Guarantee may not be amended without the prior approval of the holders
of a majority in aggregate liquidation preference of the outstanding Trust
Preferred Securities. Changes that do not materially adversely affect your
rights as a holder of Trust Preferred Securities do not require a vote. The
manner of obtaining any required approval is 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 any successors,
assigns, receivers, trustees and representatives of Superior.
CERTAIN COVENANTS OF SUPERIOR
Superior has agreed that, as long as Trust Preferred Securities are
outstanding:
1. Superior will not convert Debentures into Superior common stock unless
you deliver a notice of conversion to the Conversion Agent;
2. Superior will maintain directly or indirectly 100% ownership of the
Trust Common Securities. However, the Indenture permits another entity to
succeed to this ownership upon a merger, consolidation, sale of assets or
other transaction if the successor entity assumes all of Superior's
obligations;
3. Superior will not voluntarily dissolve, wind-up, liquidate or terminate
the Trust, except in accordance with the terms of the Declaration;
4. Superior will ensure that, if all outstanding Trust Preferred Securities
are converted, there will be enough shares of Superior common stock
available for issuance;
5. Superior will use its reasonable best efforts 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
6. Superior will deliver to you shares of Superior common stock as promptly
as practicable after you convert Trust Preferred Securities into Superior
common stock.
GUARANTEE EVENTS OF DEFAULT
If Superior fails to perform any of its payment or other obligations under
the Guarantee, that will be an event of default, unless the payment is
prohibited by the subordination provisions in the Guarantee. If an event of
default occurs, the Guarantee Trustee will seek to enforce you rights under 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
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, then you may institute a legal proceeding directly against Superior
to enforce your rights under the Guarantee, without first instituting a legal
proceeding against the Trust, the Guarantee Trustee or any other person or
entity.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee is under no obligation to exercise any of the rights
or powers vested in it by the Guarantee at your request or direction, unless you
provide to the Guarantee Trustee security and indemnity, reasonably satisfactory
to the Guarantee Trustee, against the costs, expenses and liabilities that might
be incurred by it in complying with your request or direction, including any
reasonable advances that may be requested by the Guarantee Trustee.
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TERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and effect upon:
A. full payment of the redemption price of all Trust Preferred Securities;
B. the distribution of Debentures to the holders of all of the outstanding
Trust Preferred Securities;
C. full payment of any amounts payable upon dissolution or liquidation of
the Trust; or
D. the distribution of Superior common stock to holders upon conversion of
all Trust Preferred Securities then outstanding.
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 to it with respect to its Trust Preferred Securities.
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DESCRIPTION OF THE DEBENTURES
The Debentures will be issued contemporaneously with the Trust Securities
under an Indenture (the "Indenture") between Superior and [American Stock
Transfer & Trust Company], as Indenture Trustee. The terms of the Debentures
include those stated in the Indenture and those made a part of the Indenture by
reference to the Trust Indenture Act of 1939. The following summary of the
material 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, those defined terms are incorporated herein by reference.
The Trust may be dissolved and the Debentures may be distributed to you at
any time. Therefore, Essex stockholders should read this section carefully.
GENERAL
The Debentures are limited in aggregate principal amount to $171,765,650,
which is the sum of the aggregate liquidation preference of the Trust Preferred
Securities and the Trust Common Securities. The Debentures will be issued in
denominations of $50 and in integral multiples of $50. The Debentures will be
held initially by the Property Trustee in trust for the benefit of the holders
of the Trust Securities, until the liquidation or dissolution, if any, of the
Trust.
The Debentures are unsecured debt under the Indenture, and are subordinate
in right of payment to all current and future senior secured indebtedness of
Superior. The Indenture does not limit Superior's ability to incur or issue any
additional secured or unsecured debt.
The entire principal amount of the Debentures matures, and becomes due and
payable, together with any accrued and unpaid interest thereon, on [March 15],
2014.
INTEREST
Interest on the Debentures is payable at the annual rate of 8 1/2%. Interest
on the Debentures accumulates from [March 16], 1999, or the most recent date to
which interest has been paid in full or duly provided for. Interest is payable
quarterly, in arrears, on [June 15, September 15, December 15 and March 15] of
each year, commencing on [June 15], 1999, until the principal of the Debentures
is paid, duly provided for or made available for payment. The amount of interest
payable for any period is computed on the basis of a 360-day year of twelve
30-day months. Payment of interest is subject to deferral as set forth below.
Interest will be paid to the persons in whose names the Debentures are
registered on the relevant record dates, which is the close of business on the
fifteenth day preceding an interest payment date. Interest payable on the
maturity of the Debentures will be paid to the person to whom principal is paid.
If Superior defaults in a payment of interest on the Debentures, it will pay
the defaulted amounts, plus, to the extent permitted by law, default interest on
the defaulted amounts at the rate of 8 1/2% per annum, to the persons in whose
names the Debentures are registered on a subsequent special record date fixed by
Superior. However, this default interest will only accrue with respect to any
interest payment period, or part thereof, occurring after the liquidation of the
Trust. The term "interest" as used herein includes (a) quarterly interest
payments, (b) default interest, (c) any additional interest that accrues during
an interest deferral period and (d) additional sums payable as a result of a Tax
Event, as applicable.
OPTION TO DEFER INTEREST PAYMENTS
So long as Superior is not then experiencing specified events of bankruptcy,
insolvency or reorganization, Superior has the right under the Indenture to
defer payment of interest on the Debentures, at any time or from time to time,
for a period not exceeding 20 consecutive quarters.
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Payment of interest may not be deferred, however, beyond the stated maturity of
the Debentures. During any interest deferral period, no interest will be due and
payable to the holders, but interest will continue to accrue, and additional
interest will accrue thereon, at the rate of 8 1/2% per annum. Holders of
Debentures will be required to accrue interest income, as original issue
discount, for United States federal income tax purposes, even though they do not
receive any interest payments during a deferral period. See "Material Federal
Income Tax Consequences--Interest Income and Original Issue Discount." At the
end of any deferral period, Superior must pay to the holders all amounts then
accrued and unpaid.
During any interest deferral period, Superior may not, and may not permit
any of its subsidiaries to:
A. declare or pay, or set apart for payment, any dividends or other
distributions on any shares of Superior's capital stock;
B. redeem, purchase, acquire or make a liquidation payment with respect to
any shares of Superior's capital stock; or
C. 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.
However, the following actions are permitted during a deferral period:
1. dividend, redemption, liquidation, interest, principal or guarantee
payments by Superior where the payment is made with securities that rank
pari passu with or junior to the securities on which the applicable
payment is being made;
2. payments by Superior under the Guarantee;
3. payments by Superior under the Senior Subordinated Credit Agreement
entered into in connection with the Offer and the Merger and any
refinancings of that agreement;
4. 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;
5. reclassifications of Superior's capital stock or exchanges or
conversions of one series or class of Superior's capital stock for
another series or class of Superior's capital stock; and
6. purchases of fractional interests in shares of Superior's capital stock
pursuant to the conversion or exchange provisions of the capital stock or
the security being converted or exchanged.
Prior to the termination of any interest deferral period, Superior may
further extend the deferral period, as long as the deferral period, as extended,
does not exceed 20 consecutive quarters or extend beyond the stated maturity of
the Debentures. Upon the termination of any deferral period and the payment of
all amounts then accrued and unpaid, Superior may elect to begin a new deferral
period, subject to the above requirements.
Superior has no current intention to exercise its right to defer payments of
interest on the Debentures. Superior would elect to defer payments of interest
if it does not for any reason have the financial resources to make these
payments.
MANDATORY REDEMPTION
Upon repayment at maturity or as a result of acceleration of the Debentures
upon the occurrence of an event of default under the Indenture, Superior will be
required to redeem the Debentures, in whole, but not in part, at a redemption
price equal to 100% of their principal amount, plus any accrued and unpaid
interest thereon. The Debentures are not subject to the operation of any
purchase,
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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 [March 16], 2003. On or after that date, Superior may at it option
redeem at any time all, or from time to time a portion, of the Debentures.
Holders of Debentures redeemed during the twelve-month period beginning on
[March 17] of the year specified below will receive the following cash
redemption prices, plus accrued and unpaid interest to the date fixed for
redemption:
<TABLE>
<CAPTION>
PERCENTAGE OF
PRINCIPAL AMOUNT
OF DEBENTURES
AT STATED
YEAR MATURITY
- ---------------------------------------------------------------------------- ----------------
<S> <C>
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 [March 16], 2002, Superior, at its
option, may redeem at any time all, or from time to time a portion, of the
Debentures at a cash redemption price of 105.95% of principal amount at stated
maturity, plus accrued and unpaid interest to the redemption date, Superior may
do this only if the product of (A) the average closing price of a share of
Superior common stock for any 10 consecutive trading days preceding the date of
the 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 you hold Trust Preferred Securities and the Trust holds the
Debentures, the Trust will use the proceeds of any redemption to redeem Trust
Securities. Superior may not redeem less than all of the Debentures at any time
outstanding until all accrued but unpaid interest on all Debentures then
outstanding has been paid. See "Description of the Trust Preferred
Securities--Optional Redemption."
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 this redemption, are as described in the first
paragraph under "Description of the Trust Preferred Securities--Redemption Upon
Change of Control."
CONVERSION OF THE DEBENTURES
A holder may, at his, her or its option, convert Debentures, in whole or in
part, into shares of Superior common stock at any time after [September 16,
1999], but not later than the close of business on the date that is 10 days
preceding any date fixed for redemption, if there is no default in payment of
the redemption price. The initial conversion rate is 17.858 shares of Superior
common stock for each $1,000 of principal amount at stated maturity of the
Debentures. This conversion rate is subject to the adjustments described under
"Description of the Trust Preferred Securities--Conversion Rate Adjustments."
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If you are a holder of record of Debentures, your rights to receive any
accrued and unpaid interest when you convert are as follows:
- If you convert on or after an interest payment date and on or before the
next record date, you will not receive interest to the date of conversion.
You will only receive interest to the interest payment date.
- If you convert after a record date and before the corresponding interest
payment date, you will be entitled to receive interest on the interest
payment date even if Superior defaults in making the payment. However,
when you surrender your Debentures for conversion during this period, you
must pay to the Conversion Agent an amount equal to the interest you will
receive on the interest payment date. The effect of this is that you will
be giving up the amount of the interest payment. But if your Debentures
have been called for redemption during this period, you will not have to
make this payment.
- You will not receive accrued and unpaid interest if you convert during an
interest deferral period.
Additionally, no adjustment will be made for dividends on the Superior common
stock issued on conversion.
As long as you own Trust Preferred Securities, the Trust has agreed that it
will not convert the Debentures held by it unless you first convert 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, together
with the actual Debentures to be converted. A cash payment will be made in lieu
of fractional shares.
MODIFICATION OF INDENTURE
The Indenture may not be amended, modified, supplemented or any provision
therein waived in a manner that affects the rights of holders of the Debentures
without the written consent of the holders of not less than a majority in
aggregate principal amount of the outstanding Debentures. However, without the
consent of each holder of Debentures affected, an amendment, supplement or
waiver may not:
- except with respect to any interest deferral period, extend the stated
maturity of the principal of, or any installment of interest on, the
Debentures;
- reduce the principal amount of Debentures or the rate of interest thereon
or reduce any premium payable upon the redemption of the Debentures;
- change the place of payment where, or the coin or currency in which, any
Debenture or interest thereon is payable;
- materially and adversely affect any right to convert or exchange any
Debenture, including increasing the conversion price of any Debenture;
- reduce the amount of Debentures whose holders must consent to an
amendment, modification, waiver or supplement of the Indenture or the
Debentures;
- modify the subordination provisions of the Indenture in a manner
materially adverse to the holders of the Debentures; or
- modify the provisions of the Indenture relating to (a) the amendment or
modification of the Indenture, (b) waiver of past events of default or (c)
the right of the holders to receive payments on the Debentures and to
institute suit therefor;
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However, so long as any Trust Preferred Securities remain outstanding, no
amendment, modification or supplement of the Indenture that materially adversely
affects the holders of the Trust 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 the Trust Preferred Securities then
outstanding unless and until the principal of and premium, if any, on the
Debentures and all accrued and unpaid interest thereon have been paid in full.
In addition, where a consent under the Indenture requires the consent of each
holder of Debentures affected, the Property Trustee may not give that consent
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 if any one of the following events has occurred
and is continuing, it is an event of default with respect to the Debentures:
A. failure to pay any interest on the Debentures when it becomes due and
payable and the failure continues for 30 days. However, if the payment of
interest has been deferred or is prohibited under the terms of the
Indenture, no event of default will result;
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 the payment is prohibited under the terms of the
Indenture;
C. 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. To be an event of default, the failure must continue for a
period of 60 days after written notice has been given (1) to Superior by
the Indenture Trustee or (2) 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;
D. the dissolution, winding up or termination of the Trust, except in
connection with the distribution of Debentures or the making of a full
cash liquidation distribution to the holders of Trust Securities, upon a
merger, consolidation or amalgamation of the Trust permitted by the
Declaration or in any other manner permitted under the Declaration;
E. specific 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. If an 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 this declaration, the holders of at least a majority in
aggregate liquidation preference of the Trust Preferred Securities then
outstanding will have this right. Upon the making of this declaration, the
principal amount of, premium, if any, and accrued and unpaid interest on all the
Debentures then outstanding will become immediately due and payable. However,
the payment of principal, premium and interest will remain subordinated to the
payment of any senior secured indebtedness of Superior.
The holders of a majority in principal amount of the outstanding Debentures
may cancel declarations of acceleration or waive events of default. Holders of a
majority in aggregate liquidation preference of the outstanding Trust Preferred
Securities may take this action if the holders of the Debentures fail to do so.
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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:
1. Superior is the survivor of the merger or consolidation; or
2. 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 the transaction, no event of default
has occurred and is continuing; and
C. the transaction is permitted under the Declaration and the Guarantee and
does not result in any breach or violation of the Declaration or the
Guarantee;
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 all Debentures not previously delivered to
the Indenture Trustee for cancellation:
1. have become due and payable;
2. 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 with the
Indenture Trustee sufficient funds, in trust, to pay the principal of,
premium, if any, and interest on all the outstanding Debentures to the
date of the deposit or to their stated maturity, as the case may be; or
3. have been redeemed or tendered for conversion;
then the Indenture will cease to be of further effect, except as to (a)
surviving rights of transfer, substitution and exchange of Debentures, (b)
rights of holders to receive payment of principal of, premium, if any, and
interest on the Debentures and (c) the rights of the Indenture Trustee under the
Indenture. At that time, Superior will be deemed to have satisfied and
discharged the Indenture.
SUBORDINATION
Superior has agreed, and each holder of Debentures, by its acceptance of the
Debentures, likewise agrees, that all obligations represented by the Debentures,
including the payment of the principal of, premium, if any, and interest 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
secured indebtedness of Superior.
In the event of:
A. any insolvency or bankruptcy case or proceeding, or any related
receivership, liquidation, reorganization or other similar case or
proceeding, relating to Superior, its creditors or its assets, whether
voluntary or involuntary: or
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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:
1. the holders of senior secured indebtedness of Superior will be
entitled to receive payment and satisfaction in full in cash of all
amounts due on or in respect of this debt before the holders of the
Debentures are entitled to receive or retain any payment or
distribution on the Debentures;
2. if the Indenture Trustee or the holder of any Debenture has received
any payment or distribution on the Debentures before all of
Superior's senior secured indebtedness is paid and satisfied in full
in cash, then the Indenture Trustee or the holder must hold the
payment or distribution in trust for the benefit of the holders of
the senior secured indebtedness. Any amounts so held must be
immediately paid over or delivered to the liquidating trustee or
agent or other person making payment or distribution of Superior's
assets for application to the payment of all senior secured
indebtedness remaining unpaid.
Unless the above provisions apply, after an event of default under
Superior's senior secured indebtedness has occurred, Superior may not make any
payment or distribution in respect 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 any such payment. This prohibition will continue until
the applicable event of default is cured, waived or ceases to exist and any
related acceleration of the senior secured indebtedness has been rescinded. At
the time, Superior will resume making any required payments on the Debentures,
including any missed payments. If the Indenture Trustee or the holder of any
Debenture has received any prohibited payment, then the payment must be paid
over to the representatives of the holders of the senior secured indebtedness,
in trust, for distribution to the holders of this debt, or, if no amounts are
then due in respect of this debt, promptly returned to Superior, or otherwise as
a court of competent jurisdiction may direct.
The Indenture places no limitation on the amount of additional senior
secured indebtedness that Superior may incur.
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 the Paying Agent designated by Superior. At the
option of Superior, payment of interest may be made (a) by check mailed to the
address of the person as it appears in the securities register or (b) by wire
transfer of immediately available funds, provided that proper transfer
instructions have been received by the relevant record date.
INFORMATION CONCERNING THE INDENTURE TRUSTEE
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 holder of Debentures, unless the holder has offered to the Indenture Trustee
security and/or indemnity reasonably satisfactory to the Indenture Trustee
against the costs, expenses and liabilities that might be incurred by it in
compliance with the request or direction.
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RELATIONSHIP AMONG THE TRUST PREFERRED
SECURITIES, THE DEBENTURES AND THE GUARANTEE
IRREVOCABLE AND UNCONDITIONAL GUARANTEE
Payments of distributions and other amounts due on the Trust Preferred
Securities have been irrevocably and unconditionally guaranteed by Superior, but
only if and to the extent the Trust has funds on hand and available for their
payment. Taken together, Superior's obligations under the Debentures, the
Indenture, the Declaration and the Guarantee provide, in the aggregate, an
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 an 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 to you distributions or other amounts due on
the Trust Preferred Securities. The Guarantee does not cover payment of
distributions to you when the Trust does not have sufficient funds to pay the
distributions. In that case, you would rely on the enforcement against Superior
by the Property Trustee of its rights as holder of the Debentures. You 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, these payments will be sufficient to cover distributions and other
payments to you on the Trust Preferred Securities, primarily because:
(1) the aggregate principal amount of the Debentures is equal to the sum of
the aggregate liquidation preference of the Trust Preferred Securities
and the Trust Common Securities;
(2) 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;
(3) 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
(4) the Trust will not engage in any activity that is not consistent with
the limited purposes of the Trust.
Superior has the right to set-off any payment it is otherwise required to
make under the Indenture with and to the extent Superior has previously made, or
is simultaneously making, a payment under the Guarantee.
LIMITED PURPOSE OF ISSUER
The Trust Preferred Securities represent a beneficial interest in the assets
of the Trust. The Trust exists for the sole purpose of issuing the Trust
Preferred Securities and the Trust Common Securities in exchange for Superior's
issuance of the Debentures to the Trust. 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 the Debentures, 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 the 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, a cash liquidation distribution. 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. The Property Trustee would be subordinated in
right of payment to all senior secured indebtedness of Superior, but would be
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, 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 Amended and Restated Bylaws and Delaware law, 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 your option into Superior common stock.
The rights of holders of Superior common stock are governed by Delaware law,
Superior's Certificate of Incorporation, as amended, and 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
Delaware law. 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, Delaware law, 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 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. This vote will not require the holders of the
preferred stock and common stock to vote separately as a class.
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PREEMPTIVE RIGHTS
Under Delaware law, stockholders have no preemptive rights unless these
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 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 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 that class or series constitutes a quorum for the transaction of the
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 the 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, a majority of the votes cast upon a given question by the holders of
outstanding shares of all classes of Superior stock entitled to vote on that
question will decide that question. Delaware law requires a higher vote for
sales or leases of all or substantially all of a corporation's assets, mergers,
consolidations and other similar transactions between a corporation and an
interested stockholder.
At any meeting held for the election of directors, directors shall be
elected by a plurality of the votes cast by the holders of shares entitled to
elect 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 the action is approved by a
majority of the Essex Board of Directors, then the action may be taken without a
meeting, without prior notice and without a vote. In this case, a consent in
writing, setting forth the action taken, must be signed by the holders of
outstanding shares having not less than the minimum number of votes that would
be necessary to authorize or take the action at a meeting of stockholders at
which all shares entitled to vote were present and voted. If any class of shares
is entitled to vote on the action as a class, then the holders of a majority of
each class of shares entitled to vote must sign a written consent.
At each election for directors, every stockholder entitled to vote will have
the right to vote, in person or by proxy, his, her or its shares for as many
persons as there are directors to be elected and for whose election he, she or
it has a right to vote.
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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. A special meeting may only be
called pursuant to a resolution approved by a majority of the continuing
directors of the Superior Board of Directors or by the Chairman of the Board,
the Vice-Chairman of the Board, the Chief Executive Officer or any Co-Chief
Executive Officer. Stockholders are not permitted to call an annual meeting or a
special meeting or to require that the Superior Board call an 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, as well as certain successors of
that director.
ESSEX. Essex's Bylaws provide that a special meeting of 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 Superior Board is six. Alternatively, the Superior Board may
establish the number of directors by resolution adopted by a 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 successor has been elected
and qualified.
ESSEX. Essex's Bylaws provide that the number of directors that constitutes
the Essex Board is fixed from time to time exclusively pursuant to a resolution
adopted by a majority of the Essex Board. Under Delaware law, 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 or her
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, voting together as a single
class. However, because Superior does not have a classified board, this
requirement of removal only for cause may not be enforceable under Delaware law.
ESSEX. Subject to the rights of the preferred stockholders to elect
directors under specified circumstances, and unless otherwise provided by law,
Essex's Bylaws provide that a director may be removed from office only for
cause.
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. Each director so chosen shall hold office until
such director's successor has been duly elected and qualified. No decrease in
the authorized number of directors shall shorten the term of any incumbent
director.
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ESSEX. Essex's Bylaws provide that, unless preferred stockholders are
granted rights to elect additional directors, 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 a vacancy expires at the expiration of the term of office of the director
he or she replaced and until his or her successor has been elected and
qualified, or until his or her earlier death, resignation or removal. 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 of Section 203 of the DGCL.
AMENDMENT TO CERTIFICATES OF INCORPORATION
SUPERIOR. Delaware law 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.
Nevertheless, the sections of Superior's Certificate of Incorporation
relating to (a) the Board of Directors, (b) stockholder action, (c) certain
business combinations, (d) director liability, (e) indemnification, (f)
arrangements with creditors and (g) amendment of its Bylaws and 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:
(1) at least two-thirds of the outstanding shares entitled to vote on the
matter, voting together as a single class; and
(2) if there is an interested stockholder, as defined in Superior's
Certificate of Incorporation, at least a majority of the outstanding
shares entitled to vote on the matter, voting together as a single class,
that 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 that the Superior
Board has declared advisable by the affirmative vote of a majority of the total
number of directors that 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
provisions relating to its (a) capital stock, (b) Board of Directors, (c)
Bylaws, (d) stockholder meetings, (e) liability of directors, (f) indemnity and
(g) Section 203 of the Delaware General Corporation Law may not be repealed,
rescinded, altered or amended, and no other provision may be adopted that is
inconsistent with those sections or in any way impairs their operation or
effect, except by the affirmative vote of holders of not less than 66 2/3% of
Essex's voting stock.
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 may be amended or repealed by the Superior Board or by the
stockholders.
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Nevertheless, the sections of Superior's Bylaws pertaining to (a) annual
meetings, (b) special meetings, (c) stockholders, (d) nominations, (e) elections
and terms of directors and (f) 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:
(1) at least two-thirds of the outstanding shares entitled to vote on the
matter, voting together as a single class; and
(2) if there is then an interested stockholder, as defined in Superior's
Certificate of Incorporation, at least a majority of the outstanding
shares entitled to vote on the matter, voting together as a single class,
that 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 as is required
by the Bylaws. However, this provision does not apply to any amendment, repeal
or adoption of any inconsistent provision that the Superior Board has declared
advisable by the affirmative vote of a majority of the total number of directors
that 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. This action may also be taken at any
special meeting of the stockholders or of the Essex Board if notice of such
alteration, amendment, repeal or adoption is contained in the notice of the
special meeting. In the case of amendments by stockholders, the affirmative vote
of the holders of at least 66 2/3% of the 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 Delaware law, 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. Delaware law 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 if 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,
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or is 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 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. Any such
person will be indemnified against expenses, including attorneys' fees,
judgments, fines and amounts in connection with such action or proceeding, to
the fullest extent permitted by Delaware law, 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. Such indemnification 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, executors and administrators of such 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 any
individual serving in one of those capacities for another entity at Superior's
request, against any expense, liability or loss, whether or not Superior would
have the power to indemnify such person under Delaware law.
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 Superior 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 Superior Certificate of Incorporation, the
Superior Board is authorized to issue Superior common stock and Superior
preferred stock from time to time. As of January 20, 1999, no shares of Superior
preferred stock were issued and outstanding, 16,238,969 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 900,000 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 these 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 that 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
Superior Board 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.
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If the proposed amendment to Superior's Certificate of Incorporation is
approved, the Superior Board 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 Superior 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 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 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 Superior Board more difficult or time-consuming.
The Superior 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 these 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 Superior Board in
opposing a hostile takeover bid. It is possible that these shares could be sold
with or without an option, on the part of Superior, to repurchase these shares
or, on the part of the purchaser, to put these 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 (a) to deprive stockholders 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 (b) to assist incumbent management in retaining its present
position.
The Superior Board 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 Superior Board 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
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to awards under the Superior 1996 Stock Option Plan be increased from 1,953,125
to 2,853,125. The Superior Board also amended the Superior 1996 Stock Option
Plan, subject to stockholder approval, to:
- 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 the exercise of a stock option or
the number shares of Superior common stock otherwise deliverable has been
reduced for payment of 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;
- 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, 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
- allow the committee responsible for administering the Superior 1996 Stock
Option Plan 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 that do not legally require
stockholder approval (such as permitting the committee to delegate some or all
of its authority under the Superior 1996 Stock Option Plan in certain
circumstances, permitting participants to defer delivery of Superior common
stock acquired pursuant to the exercise of a 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 is annexed hereto as Appendix D.
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 (1) 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 (2) 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 2,853,125 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. 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
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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 1996 Stock Option Plan during any fiscal year may not exceed
390,625.
ELIGIBILITY AND TYPES OF AWARDS
The Superior 1996 Stock Option Plan provides for the grant of incentive
stock options to employees and nonqualified stock options to employees,
consultants and directors who are neither officers nor employees of Superior. In
the case of incentive stock options, 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 nonqualified stock options, 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 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, as amended,
and an "outside director" as defined under Section 162(m) of the Internal
Revenue Code to the extent then required. If no committee exists that has the
authority to administer the Superior 1996 Stock Option Plan, the functions of
the committee will be exercised by the Superior Board. Currently, the members of
the committee are Messrs. Connell and Levenson. Members of the committee are
only eligible to receive nondiscretionary grants of nonqualified stock options
(as described below) under the terms of the Superior 1996 Stock Option Plan.
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.
The committee may delegate some or all of its authority under the Superior 1996
Stock Option Plan as the committee deems appropriate; provided, however, that no
such delegation shall be made: (1) with regard to any employee who is a "covered
employee" (as defined in Section 162(m) of the Internal Revenue Code) at the
time of grant or (2) that would cause options under the Superior 1996 Stock
Option Plan to fail to be exempt under Section 16(b) of the Securities Exchange
Act of 1934, as amended.
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
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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 non-employee 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
Non-employee directors may receive nondiscretionary grants of nonqualified
stock options under the Superior 1996 Stock Option Plan in accordance with the
terms thereof. Each non-employee director will receive an initial grant of an
option to purchase 23,438 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 a
non-employee 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 non-employee director will receive a nonqualified stock option to
purchase 11,719 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. No
discretionary grants of nonqualified stock options may be made to non-employee
directors under the Superior 1996 Stock Option Plan. Non-employee directors are
eligible to receive additional stock option grants in lieu of all or a portion
of their annual retainer and meeting fees under the Superior Stock Compensation
Plan for Non-Employee Directors described under "The Companies--Superior TeleCom
Inc.--Compensation of Directors."
The options granted to non-employee directors to purchase shares of Superior
common stock will vest evenly in three equal annual installments. Options may be
exercised only after the non-employee 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 non-employee directors will expire upon the tenth
anniversary of the date of grant.
If an non-employee 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 that has not expired may be exercised with respect to the number of
shares of Superior common stock that were exercisable on the date the
non-employee 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 non-employee director
terminates his or her 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
non-employee directors) at the time of grant or thereafter. If a nonqualified
stock option is transferable, it is anticipated that such options may be
transferred solely to immediate family members (I.E., spouse, children,
grandchildren) or trusts, partnerships or other family entities.
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 Internal Revenue Code.
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MATERIAL 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
material 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 incentive stock option 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 incentive stock
option within either (1) two years after the date of the grant of the incentive
stock option or (2) 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 incentive stock option within either of the above mentioned time
periods, the recipient will generally realize as ordinary income an amount equal
to the lesser of (1) the fair market value of the Superior common stock on the
date of exercise over the exercise price, or (2) 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.
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.
ALL STOCK OPTIONS.
With regard to both incentive stock options and nonqualified stock options,
the following material federal income tax consequences also apply:
- 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,
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- 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 Internal Revenue Code regarding a $1,000,000 limitation on deductible
compensation), and
- 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
Internal Revenue Code, which excess amounts may be subject to excise
taxes.
In general, Section 162(m) of the Internal Revenue 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 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.
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<PAGE>
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
Certain matters of Delaware law relating to the validity of the Trust
Preferred Securities to be issued in connection with the Merger have been passed
upon for the Trust by Morris, Nichols, Arsht & Tunnell, special Delaware counsel
to the Trust. The validity of the Debentures, the Superior common stock issuable
upon conversion thereof and the Guarantee, and certain legal matters relating
thereto, have been passed upon for Superior 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 the material 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.
STOCKHOLDER 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 March 15, 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. Stockholder proposals
intended to be presented at the annual meeting must have been received by Essex
no later than November 27, 1998 in order to be considered for inclusion in
Essex's proxy statement relating to this meeting. In addition, Essex's Bylaws
require that stockholders give written notice of any proposal or the nomination
of a director to the Secretary of 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. Stockholder proposals
must be mailed to the Secretary of Essex at the Essex principal offices.
Stockholders proposals or nominations for directors that do not meet the notice
requirements of Essex's Bylaws will not be acted upon at the 1999 annual
meeting.
107
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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
under the Securities Exchange Act of 1934. You may read and copy this
information at the following locations of the Securities and Exchange
Commission:
<TABLE>
<S> <C> <C>
Securities and Exchange Commission Securities and Exchange Commission Securities and Exchange Commission
Judiciary Plaza, Room 1024 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 Securities and Exchange Commission, 450 Fifth Street,
N.W., Room 10024, Washington D.C. 20549, at prescribed rates.
The Securities and Exchange 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 Securities
and Exchange 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.
No financial information has been provided for Superior Trust I since it is
a newly formed entity that has not, to date, conducted any activities other than
those incident to its formation.
Superior and Superior Trust I have filed with the Securities and Exchange
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.
That 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 Securities and
Exchange 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 Securities and Exchange 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 Securities and Exchange 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 Securities
and Exchange Commission and that are not
108
<PAGE>
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
October 2, 1996, including any amendment or report filed with
the Securities and Exchange Commission for purposes of updating such
description.
<TABLE>
<S> <C>
Filed December 22, 1998
Current Reports on Form 8-K Filed January 15, 1999
</TABLE>
<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 Securities and Exchange 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 Securities and Exchange 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
document 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>
109
<PAGE>
If you would like to request documents, please do so by March 1, 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.
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 9 to 16 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.
110
<PAGE>
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
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C> <C> <C>
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
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
-----
<S> <C> <C> <C>
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>
ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
-----
<S> <C> <C> <C>
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>
<TABLE>
<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>
iii
<PAGE>
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
<PAGE>
Company Common Stock tendered pursuant to the Offer shall only be subject to (i)
the condition (the "Minimum Condition") that 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
2
<PAGE>
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 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,
3
<PAGE>
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.
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
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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.
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.
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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.
(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.
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(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 "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
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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 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.
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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 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
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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 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.
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(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 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
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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 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.
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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 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
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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 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,
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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 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.
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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.
(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
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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. 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.
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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 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
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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.
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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 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
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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, 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.
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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, 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
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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.
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);
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(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;
(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
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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 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
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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 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
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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 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
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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 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
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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
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
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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
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
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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,
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employees, agents, legal and financial advisors or other representatives)
except(i) as set forth in Sections 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
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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 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
36
<PAGE>
With a copy to:
Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, California 94306
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
37
<PAGE>
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 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);
38
<PAGE>
(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, 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
39
<PAGE>
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).
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.
40
<PAGE>
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>
41
<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
A-1
<PAGE>
financial 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
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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,
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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
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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 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
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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 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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(LANGUAGE WHICH IS CHANGED BY THE AMENDMENT TO THE SUPERIOR 1996 STOCK
OPTION PLAN, OTHER THAN SECTION HEADINGS, TO BE APPROVED BY STOCKHOLDERS IS IN
ITALICS.)
APPENDIX D
SUPERIOR TELECOM INC.
1996 STOCK OPTION PLAN
(AMENDED AND RESTATED AS OF JANUARY 1, 1999)
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
ARTICLE I. PURPOSE............................................................................. 1
ARTICLE II. DEFINITIONS......................................................................... 1
ARTICLE III. ADMINISTRATION...................................................................... 3
ARTICLE IV. SHARE AND OTHER LIMITATIONS......................................................... 5
ARTICLE V. ELIGIBILITY......................................................................... 7
ARTICLE VI. EMPLOYEE STOCK OPTION GRANTS........................................................ 7
ARTICLE VII. NON-EMPLOYEE DIRECTOR STOCK OPTION GRANTS........................................... 10
ARTICLE VIII. NON-TRANSFERABILITY................................................................. 12
ARTICLE IX. CHANGE IN CONTROL PROVISIONS........................................................ 13
ARTICLE X. TERMINATION OR AMENDMENT OF THE PLAN................................................ 14
ARTICLE XI. UNFUNDED PLAN....................................................................... 15
ARTICLE XII. GENERAL PROVISIONS.................................................................. 15
ARTICLE XIII. TERM OF PLAN........................................................................ 17
ARTICLE XIV. NAME OF PLAN........................................................................ 17
</TABLE>
<PAGE>
SUPERIOR TELECOM INC.
1996 STOCK OPTION PLAN
(AMENDED AND RESTATED AS OF JANUARY 1, 1999)
ARTICLE I.
PURPOSE
The purpose of this Superior TeleCom Inc. 1996 Stock Option Plan (the
"Plan") is to enhance the profitability and value of Superior TeleCom Inc. (the
"Company") for the benefit of its stockholders by enabling the Company (i) to
offer employees and Consultants of the Company 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 the Company'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 the Company's stockholders.
ARTICLE II.
DEFINITIONS
For purposes of this Plan, the following terms shall have the following
meanings:
2.1. "AFFILIATE" SHALL MEAN EACH OF THE FOLLOWING: (I) ANY SUBSIDIARY; (II)
ANY PARENT; (III) ANY CORPORATION, TRADE OR BUSINESS (INCLUDING, WITHOUT
LIMITATION, A PARTNERSHIP OR LIMITED LIABILITY COMPANY) WHICH IS DIRECTLY OR
INDIRECTLY CONTROLLED 50% OR MORE (WHETHER BY OWNERSHIP OF STOCK, ASSETS OR AN
EQUIVALENT OWNERSHIP INTEREST OR VOTING INTEREST) BY THE COMPANY OR ONE OF ITS
AFFILIATES; AND (IV) ANY OTHER ENTITY IN WHICH THE COMPANY OR ANY OF ITS
AFFILIATES HAS A MATERIAL EQUITY INTEREST AND WHICH IS DESIGNATED AS AN
"AFFILIATE" BY RESOLUTION OF THE COMMITTEE.
2.2. "Board" shall mean the Board of Directors of the Company.
2.3. "Cause" shall mean, with respect to a Participant's Termination of
Employment or Termination of Consultancy, unless otherwise determined by the
Committee at grant, or, if no rights of the Participant are reduced, thereafter,
termination due to a Participant's dishonesty, fraud, insubordination, willful
misconduct, refusal to perform services (for any reason other than illness or
incapacity) or materially unsatisfactory performance of his or her duties for
the Company as determined by the Committee in its sole discretion. With respect
to a Participant's Termination of Directorship, Cause shall mean an act or
failure to act that constitutes "cause" for removal of a director under
applicable Delaware law.
2.4. "Change in Control" shall have the meaning set forth in Article IX.
2.5. "Code" shall mean the Internal Revenue Code of 1986, as amended. Any
reference to any section of the Code shall also be a reference to any successor
provision.
2.6. "Committee" shall mean a committee of the Board appointed from time to
time by the Board. Solely to the extent required under Rule 16b-3 and Section
162(m) of the Code, such committee shall consist of two or more non-employee
directors, each of whom shall be a non-employee director as defined in Rule
16b-3 and an outside director as defined under Section 162(m) of the Code. To
the extent that no Committee exists which has the authority to administer the
Plan, the functions of the Committee shall be exercised by the Board. If for any
reason the appointed Committee does not meet the requirements of Rule 16b-3 or
Section 162(m) of the Code, such noncompliance with the
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requirements of Rule 16b-3 or Section 162(m) of the Code shall not affect the
validity of the awards, grants, interpretations or other actions of the
Committee.
2.7. "Common Stock" means the COMMON STOCK, $.01 par value per share, of the
Company.
2.8. "Consultant" means any adviser or consultant to the Company and its
AFFILIATES who is eligible pursuant to Section 5.1 to be granted Options under
this Plan.
2.9. "Disability" shall mean total and permanent disability, as defined in
Section 22(e)(3) of the Code.
2.10. "Effective Date" shall mean October 2, 1996. THE AMENDMENTS CONTAINED
HEREIN SHALL BECOME EFFECTIVE ON JANUARY 1, 1999, SUBJECT TO APPROVAL BY THE
COMPANY'S STOCKHOLDERS TO THE EXTENT AND IN THE MANNER PROVIDED BY APPLICABLE
LAW.
2.11. "Eligible Employees" shall mean the employees of the Company and its
AFFILIATES.
2.12. "Exchange Act" shall mean the Securities Exchange Act of 1934.
2.13. "Fair Market Value" for purposes of this Plan, unless otherwise
required by any applicable provision of the Code or any regulations issued
thereunder, shall mean, as of any date, the last sales price reported for the
Common Stock on the applicable date (i) as reported by the principal national
securities exchange in the United States on which it is then traded, or (ii) if
not traded on any such national securities exchange, as quoted on an automated
quotation system sponsored by the National Association of Securities Dealers. If
the Common Stock is not readily tradable on a national securities exchange or
any system sponsored by the National Association of Securities Dealers, its Fair
Market Value shall be set in good faith by the Committee on the advice of a
registered investment adviser (as defined under the Investment Advisers Act of
1940). NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, "FAIR MARKET VALUE"
MEANS THE PRICE FOR COMMON STOCK SET BY THE COMMITTEE IN GOOD FAITH BASED ON
REASONABLE METHODS SET FORTH UNDER SECTION 422 OF THE CODE AND THE REGULATIONS
THEREUNDER INCLUDING, WITHOUT LIMITATION, A METHOD UTILIZING THE AVERAGE OF
PRICES OF THE COMMON STOCK REPORTED ON THE PRINCIPAL NATIONAL SECURITIES
EXCHANGE ON WHICH IT IS THEN TRADED DURING A REASONABLE PERIOD DESIGNATED BY THE
COMMITTEE. For purposes of the grant of any Stock Option, the applicable date
shall be the date for which the last sales price is available at the time of
grant.
2.14. "Good Reason" shall mean, with respect to a Participant's Termination
of Employment or Termination of Consultancy unless otherwise determined by the
Committee at grant, or, if no rights of the Participant are reduced, thereafter,
a voluntary termination due to "good reason," as the Committee, in its sole
discretion, decides to treat as a Good Reason termination.
2.15. "Incentive Stock Option" shall mean any Stock Option awarded under
this Plan intended to be and designated as an "Incentive Stock Option" within
the meaning of Section 422 of the Code.
2.16. "Non-Qualified Stock Option" shall mean any Stock Option awarded under
this Plan that is not an Incentive Stock Option.
2.17. "PARENT" SHALL MEAN ANY PARENT CORPORATION OF THE COMPANY WITHIN THE
MEANING OF SECTION 424(E) OF THE CODE.
2.18. "Participant" shall mean the following persons to whom an Option has
been granted pursuant to this Plan: Eligible Employees and Consultants of the
Company and its AFFILIATES and non-employee directors of the Company; provided,
however, that non-employee directors shall be Participants for purposes of the
Plan solely with respect to awards of Stock Options pursuant to Article VII.
2.19. "Retirement" with respect to a Participant's Termination of Employment
or Termination of Consultancy, shall mean a Termination of Employment or
Termination of Consultancy without Cause by a Participant who has attained (i)
at least age sixty-five (65); or (ii) such earlier date after age fifty-five
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(55) as approved by the Committee with regard to such Participant. With respect
to a Participant's Termination of Directorship, Retirement shall mean the
failure to stand for reelection or the failure to be reelected after a
Participant has attained age sixty-five (65).
2.20. "Rule 16b-3" shall mean Rule 16b-3 under Section 16(b) of the Exchange
Act as then in effect or any successor provisions.
2.21. "Section 162(m) of the Code" shall mean the exception for
performance-based compensation under Section 162(m) of the Code and any Treasury
regulations thereunder.
2.22. "Stock Option" or "Option" shall mean any OPTION to purchase shares of
Common Stock granted to Eligible Employees or Consultants pursuant to Article VI
or non-employee directors pursuant to Article VII.
2.23. "Subsidiary" shall mean any corporation that is defined as a
subsidiary corporation in Section 424(f) of the Code.
2.24. "Ten Percent Stockholder" shall mean a person owning Common Stock of
the Company possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company , ITS SUBSIDIARIES OR ITS PARENT.
2.25. "Termination of Consultancy" shall mean, with respect to an individual
that the individual is no longer acting as a Consultant to the Company or AN
AFFILIATE. In the event an entity shall cease to be AN AFFILIATE, there shall be
deemed a Termination of Consultancy of any individual who is not otherwise a
Consultant of the Company or another AFFILIATE at the time the entity ceases to
be AN AFFILIATE. IN THE EVENT THAT A CONSULTANT BECOMES AN ELIGIBLE EMPLOYEE
UPON THE TERMINATION OF HIS CONSULTANCY, THE COMMITTEE, IN ITS SOLE AND ABSOLUTE
DISCRETION, MAY DETERMINE THAT NO TERMINATION OF CONSULTANCY SHALL BE DEEMED TO
OCCUR UNTIL SUCH TIME AS SUCH CONSULTANT IS NO LONGER A CONSULTANT OR AN
ELIGIBLE EMPLOYEE.
2.26. "Termination of Directorship" shall mean, with respect to a
non-employee director, that the non-employee director has ceased to be a
director of the Company.
2.27. "Termination of Employment" shall mean (i) a termination of service
(for reasons other than a military or personal leave of absence granted by the
Company) of a Participant from the Company and its AFFILIATES; or (ii) when an
entity which is employing a Participant ceases to be AN AFFILIATE, unless the
Participant thereupon becomes employed by the Company or another AFFILIATE. IN
THE EVENT THAT AN ELIGIBLE EMPLOYEE BECOMES A CONSULTANT UPON THE TERMINATION OF
HIS EMPLOYMENT, THE COMMITTEE, IN ITS SOLE AND ABSOLUTE DISCRETION, MAY
DETERMINE THAT NO TERMINATION OF EMPLOYMENT SHALL BE DEEMED TO OCCUR UNTIL SUCH
TIME AS SUCH ELIGIBLE EMPLOYEE IS NO LONGER AN ELIGIBLE EMPLOYEE OR A
CONSULTANT.
2.28. "Transfer" or "Transferred" shall mean anticipate, alienate, attach,
sell, assign, pledge, encumber, charge or otherwise transfer.
ARTICLE III.
ADMINISTRATION
3.1. The Committee. The Plan shall be administered and interpreted by the
Committee. THE COMMITTEE MAY DELEGATE SOME OR ALL OF ITS AUTHORITY UNDER THE
PLAN AS THE COMMITTEE DEEMS APPROPRIATE IN ITS SOLE AND ABSOLUTE DISCRETION;
PROVIDED, HOWEVER, THAT NO SUCH DELEGATION SHALL BE MADE (I) WITH REGARD TO ANY
ELIGIBLE EMPLOYEE WHO IS A "COVERED EMPLOYEE" (AS DEFINED IN SECTION 162(M) OF
THE CODE) AT THE TIME OF GRANT OR (II) THAT WOULD CAUSE STOCK OPTIONS UNDER THE
PLAN TO FAIL TO BE EXEMPT UNDER SECTION 16(B) OF THE EXCHANGE ACT.
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3.2. Stock Option Grants. The Committee shall have full authority to grant
Stock Options, pursuant to the terms of this Plan. Stock Options shall be
granted to non-employee directors of the Company pursuant to Article VII. In
particular, the Committee shall have the authority:
(a) to select the Eligible Employees and Consultants to whom Stock
Options may from time to time be granted hereunder;
(b) to determine whether and to what extent Stock Options are to be
granted hereunder to one or more Eligible Employees or Consultants;
(c) to determine, in accordance with the terms of this Plan, the number
of shares of Common Stock to be covered by each Stock Option granted to an
Eligible Employee or Consultant hereunder;
(d) to determine the terms and conditions, not inconsistent with the
terms of this Plan, of any Option granted hereunder to an Eligible Employee
or Consultant (including, but not limited to, the share price, any
restriction or limitation, any vesting schedule or acceleration thereof, or
any forfeiture restrictions or waiver thereof, regarding any Stock Option
and the shares of Common Stock relating thereto, based on such factors, if
any, as the Committee shall determine, in its sole discretion);
(e) to determine whether and under what circumstances a Stock Option
may be settled in cash and/or Common Stock under Subsection 6.3(d);
(f) to determine whether, to what extent and under what circumstances
to provide loans (which shall be on a recourse basis and shall bear a
reasonable rate of interest) to Eligible Employees and Consultants in order
to exercise Options under the Plan; and
(g) to determine whether to require an Eligible Employee or Consultant,
as a condition of the granting of any Option, to not sell or otherwise
dispose of shares acquired pursuant to the exercise of the Option for a
period of time as determined by the Committee, in its sole discretion,
following the date of the acquisition of such Option.
3.3. Guidelines. Subject to Article X hereof, the Committee shall have the
authority to adopt, alter and repeal such administrative rules, guidelines and
practices governing this Plan and perform all acts, including the delegation of
its administrative responsibilities, as it shall, from time to time, deem
advisable; to construe and interpret the terms and provisions of this Plan and
any Option issued under this Plan (and any agreements relating thereto); and to
otherwise supervise the administration of this Plan. The Committee may correct
any defect, supply any omission or reconcile any inconsistency in this Plan or
in any agreement relating thereto in the manner and to the extent it shall deem
necessary to carry this Plan into effect, but only to the extent any such action
would be permitted under the applicable provisions of Rule 16b-3 (if any) and
the applicable provisions of Section 162(m) of the Code (if any). The Committee
may adopt special guidelines and provisions for persons who are residing in, or
subject to, the taxes of, countries other than the United States to comply with
applicable tax and securities laws. If and to the extent applicable, this Plan
is intended to comply with Section 162(m) of the Code and the applicable
requirements of Rule 16b-3 and shall be limited, construed and interpreted in a
manner so as to comply therewith.
3.4. Decisions Final. Any decision, interpretation or other action made or
taken in good faith by or at the direction of the Company, the Board, or the
Committee (or any of its members) arising out of or in connection with the Plan
shall be within the absolute discretion of the Company, the Board, or the
Committee, as the case may be, and shall be final, binding and conclusive on the
Company and all employees and Participants and their respective heirs,
executors, administrators, successors and assigns.
3.5. Reliance on Counsel. The Company, the Board or the Committee may
consult with legal counsel, who may be counsel for the Company or other counsel,
with respect to its obligations or duties
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hereunder, or with respect to any action or proceeding or any question of law,
and shall not be liable with respect to any action taken or omitted by it in
good faith pursuant to the advice of such counsel.
3.6. Procedures. If the Committee is appointed, the Board shall designate
one of the members of the Committee as chairman and the Committee shall hold
meetings, subject to the By-Laws of the Company, at such times and places as it
shall deem advisable. A majority of the Committee members shall constitute a
quorum. All determinations of the Committee shall be made by a majority of its
members. Any decision or determination reduced to writing and signed by all
Committee members in accordance with the By-Laws of the Company shall be fully
effective as if it had been made by a vote at a meeting duly called and held.
The Committee shall keep minutes of its meetings and shall make such rules and
regulations for the conduct of its business as it shall deem advisable.
3.7. Designation of Consultants--Liability.
(a) The Committee may designate employees of the Company and
professional advisors to assist the Committee in the administration of the
Plan and may grant authority to employees to execute agreements or other
documents on behalf of the Committee.
(b) The Committee may employ such legal counsel, consultants and agents
as it may deem desirable for the administration of the Plan and may rely
upon any opinion received from any such counsel or consultant and any
computation received from any such consultant or agent. Expenses incurred by
the Committee or Board in the engagement of any such counsel, consultant or
agent shall be paid by the Company. The Committee, its members and any
person designated pursuant to paragraph (a) above shall not be liable for
any action or determination made in good faith with respect to the Plan. To
the maximum extent permitted by applicable law, no officer of the Company or
member or former member of the Committee or of the Board shall be liable for
any action or determination made in good faith with respect to the Plan or
any Option granted under it. To the maximum extent permitted by applicable
law and the Certificate of Incorporation and By-Laws of the Company and to
the extent not covered by insurance, each officer and member or former
member of the Committee or of the Board shall be indemnified and held
harmless by the Company against any cost or expense (including reasonable
fees of counsel reasonably acceptable to the Company) or liability
(including any sum paid in settlement of a claim with the approval of the
Company), and advanced amounts necessary to pay the foregoing at the
earliest time and to the fullest extent permitted, arising out of any act or
omission to act in connection with the Plan, except to the extent arising
out of such officer's, member's or former member's own fraud or bad faith.
Such indemnification shall be in addition to any rights of indemnification
the officers, directors or members or former officers, directors or members
may have under applicable law or under the Certificate of Incorporation or
By-Laws of the Company or AFFILIATE. Notwithstanding anything else herein,
this indemnification will not apply to the actions or determinations made by
an individual with regard to Options granted to him or her under this Plan.
ARTICLE IV.
SHARE AND OTHER LIMITATIONS
4.1. Shares.
(a) GENERAL LIMITATION. The aggregate number of shares of Common Stock
which may be issued under this Plan shall not exceed 2,282,500 SHARES (AS
ADJUSTED TO REFLECT ALL ADJUSTMENTS TO THE COMMON STOCK AS OF THE EFFECTIVE
DATE OF THE AMENDMENTS CONTAINED HEREIN, subject to any increase or decrease
pursuant to Section 4.2) which may be either authorized and unissued Common
Stock or Common Stock held in or acquired for the treasury of the Company.
If any Option granted
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under this Plan expires, terminates or is cancelled for any reason without
having been exercised in full or the Company repurchases any Option pursuant
to Section 6.3(f), the number of shares of Common Stock underlying the
repurchased Option and/or the number of shares of Common Stock underlying
any unexercised Option shall again be available for the purposes of awards
under the Plan. IN DETERMINING THE NUMBER OF SHARES OF COMMON STOCK
AVAILABLE FOR AWARDS OTHER THAN AWARDS OF INCENTIVE STOCK OPTIONS, IF COMMON
STOCK HAS BEEN DELIVERED OR EXCHANGED BY A PARTICIPANT AS FULL OR PARTIAL
PAYMENT TO THE COMPANY FOR THE EXERCISE PRICE OR FOR WITHHOLDING TAXES, IN
CONNECTION WITH THE EXERCISE OF A STOCK OPTION OR THE NUMBER SHARES OF
COMMON STOCK OTHERWISE DELIVERABLE HAS BEEN REDUCED FOR FULL OR PARTIAL
PAYMENT FOR THE EXERCISE PRICE OR FOR WITHHOLDING TAXES, THE NUMBER OF
SHARES OF COMMON STOCK DELIVERED, EXCHANGED OR REDUCED SHALL AGAIN BE
AVAILABLE FOR PURPOSES OF AWARDS UNDER THIS PLAN.
(b) INDIVIDUAL PARTICIPANT LIMITATIONS. The maximum number of shares
of Common Stock subject to any Option which may be granted under this Plan
to each Participant shall not exceed 312,500 SHARES (AS ADJUSTED TO REFLECT
ALL ADJUSTMENTS TO THE COMMON STOCK AS OF THE EFFECTIVE DATE OF THE
AMENDMENTS CONTAINED HEREIN, subject to any increase or decrease pursuant to
Section 4.2) during each fiscal year of the Company.
4.2. Changes.
(a) The existence of the Plan and the Options granted hereunder shall
not affect in any way the right or power of the Board or the stockholders of
the Company to make or authorize any adjustment, recapitalization,
reorganization or other change in the Company's capital structure or its
business, any merger or consolidation of the Company or AFFILIATE, any issue
of bonds, debentures, preferred or prior preference stock ahead of or
affecting Common Stock, the dissolution or liquidation of the Company or
AFFILIATE, any sale or transfer of all or part of THE assets or business OF
THE COMPANY OR AFFILIATE or any other corporate act or proceeding.
(b) In the event of any such change in the capital structure or
business of the Company by reason of any stock dividend or distribution,
stock split or reverse stock split, recapitalization, reorganization,
merger, consolidation, split-up, combination or exchange of shares,
distribution with respect to its outstanding Common Stock or capital stock
other than Common Stock, sale or transfer of all or part of its assets or
business, reclassification of its capital stock, or any similar change
affecting the Company's capital structure or business and the Committee
determines an adjustment is appropriate under the Plan, then the aggregate
number and kind of shares which thereafter may be issued under this Plan,
the number and kind of shares to be issued upon exercise of an outstanding
Option granted under this Plan and the exercise price thereof shall be
appropriately adjusted consistent with such change in such manner as the
Committee may deem equitable to prevent substantial dilution or enlargement
of the rights granted to, or available for, Participants under this Plan or
as otherwise necessary to reflect the change, and any such adjustment
determined by the Committee shall be binding and conclusive on the Company
and all Participants and employees and their respective heirs, executors,
administrators, successors and assigns.
(c) Fractional shares of Common Stock resulting from any adjustment in
Options pursuant to Section 4.2(a) or (b) shall be aggregated until, and
eliminated at, the time of exercise by rounding-down for fractions less than
one-half ( 1/2) and rounding-up for fractions equal to or greater than
one-half ( 1/2). No cash settlements shall be made with respect to
fractional shares eliminated by rounding. Notice of any adjustment shall be
given by the Committee to each Participant whose Option has been adjusted
and such adjustment (whether or not such notice is given) shall be effective
and binding for all purposes of the Plan.
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(d) In the event of a merger or consolidation in which the Company is
not the surviving entity or in the event of any transaction that results in
the acquisition of substantially all of the Company's outstanding Common
Stock by a single person or entity or by a group of persons and/or entities
acting in concert, or in the event of the sale or transfer of all of the
Company's assets (all of the foregoing being referred to as "Acquisition
Events"), then the Committee may, in its sole discretion, terminate all
outstanding Options of Eligible Employees and Consultants, effective as of
the date of the Acquisition Event, by delivering notice of termination to
each such Participant at least twenty (20) days prior to the date of
consummation of the Acquisition Event; provided, that during the period from
the date on which such notice of termination is delivered to the
consummation of the Acquisition Event, each such Participant shall have the
right to exercise in full all of his or her Options that are then
outstanding (without regard to any limitations on exercisability otherwise
contained in the Option Agreements) but contingent on occurrence of the
Acquisition Event, and, provided that, if the Acquisition Event does not
take place within a specified period after giving such notice for any reason
whatsoever, the notice and exercise shall be null and void.
If an Acquisition Event occurs, to the extent the Committee does not
terminate the outstanding Options pursuant to this Section 4.2(d), then the
provisions of Section 4.2(b) shall apply.
ARTICLE V.
ELIGIBILITY
5.1. GENERAL ELIGIBILITY. Consultants and all ELIGIBLE EMPLOYEES are
eligible to be granted NON-QUALIFIED STOCK Options under this Plan. Eligibility
under this Plan shall be determined by the Committee in its sole discretion.
5.2. INCENTIVE STOCK OPTIONS. ALL ELIGIBLE EMPLOYEES WHO ARE EMPLOYEES OF
THE COMPANY, ITS SUBSIDIARIES OR ITS PARENT (IF ANY) ARE ELIGIBLE TO BE GRANTED
INCENTIVE STOCK OPTIONS UNDER THIS PLAN.
5.3. NON-EMPLOYEE DIRECTORS. Non-employee directors of the Company are
only eligible to receive an award of Stock Options in accordance with Article
VII of the Plan.
ARTICLE VI.
EMPLOYEE STOCK OPTION GRANTS
6.1. Options. Each Stock Option granted hereunder shall be one of two
types: (i) an Incentive Stock Option intended to satisfy the requirements of
Section 422 of the Code or (ii) a Non-Qualified Stock Option.
6.2. Grants. The Committee shall have the authority to grant to any
Eligible Employee one or more Incentive Stock Options, Non-Qualified Stock
Options, or both types of Stock Options. The Committee shall have the authority
to grant to any Consultant one or more Non-Qualified Stock Options. To the
extent that any Stock Option does not qualify as an Incentive Stock Option
(whether because of its provisions or the time or manner of its exercise or
otherwise), such Stock Option or the portion thereof which does not qualify,
shall constitute a separate Non-Qualified Stock Option. NOTWITHSTANDING ANY
OTHER PROVISION OF THIS PLAN TO THE CONTRARY OR ANY PROVISION IN AN AGREEMENT
EVIDENCING THE GRANT OF A STOCK OPTION TO THE CONTRARY, ANY STOCK OPTION GRANTED
TO AN ELIGIBLE EMPLOYEE OF AN AFFILIATE (OTHER THAN AN AFFILIATE WHICH IS A
PARENT OR A SUBSIDIARY) SHALL BE A NON-QUALIFIED STOCK OPTION.
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6.3. Terms of Options. Options granted under this Plan shall be subject to
the following terms and conditions, and shall be in such form and contain such
additional terms and conditions, not inconsistent with the terms of this Plan,
as the Committee shall deem desirable:
(a) OPTION PRICE. The option price per share of Common Stock
purchasable under an Incentive Stock Option shall be determined by the
Committee at the time of grant but shall not be less than 100% of the Fair
Market Value of the share of Common Stock at the time of grant; provided,
however, if an Incentive Stock Option is granted to a Ten Percent
Stockholder, the purchase price shall be no less than 110% of the Fair
Market Value of the Common Stock. The purchase price of shares of Common
Stock subject to a Non-Qualified Stock Option shall be determined by the
Committee but shall not be less than the 100% of the Fair Market Value of
the Common Stock at the time of grant. Notwithstanding the foregoing, if an
Option is modified, extended or renewed and, thereby, deemed to be the
issuance of a new Option under the Code, the exercise price of an Option may
continue to be the original exercise price even if less than the Fair Market
Value of the Common Stock at the time of such modification, extension or
renewal.
(b) OPTION TERM. The term of each Stock Option shall be fixed by the
Committee, but no Stock Option shall be exercisable more than ten (10) years
after the date the Option is granted, provided, however, the term of an
Incentive Stock Option granted to a Ten Percent Stockholder may not exceed
five (5) years.
(c) EXERCISABILITY. Stock Options shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by the
Committee at grant. If the Committee provides, in its discretion, that any
Stock Option is exercisable subject to certain limitations (including,
without limitation, that it is exercisable only in installments or within
certain time periods), the Committee may waive such limitations on the
exercisability at any time at or after grant in whole or in part (including,
without limitation, that the Committee may waive the installment exercise
provisions or accelerate the time at which Options may be exercised), based
on such factors, if any, as the Committee shall determine, in its sole
discretion.
(d) METHOD OF EXERCISE. Subject to whatever installment exercise and
waiting period provisions apply under subsection (c) above, Stock Options
may be exercised in whole or in part at any time during the Option term, by
giving written notice of exercise to the Company specifying the number of
shares to be purchased. Such notice shall be accompanied by payment in full
of the purchase price in such form, or such other arrangement for the
satisfaction of the purchase price, as the Committee may accept. If and to
the extent determined by the Committee in its sole discretion at or after
grant, payment in full or in part may also be made in the form of Common
Stock withheld from the shares to be received on the exercise of a Stock
Option hereunder or Common Stock owned by the Participant (and for which the
Participant has good title free and clear of any liens and encumbrances)
based, in each case, on the Fair Market Value of the Common Stock on the
payment date as determined by the Committee. No shares of Common Stock shall
be issued until payment, as provided herein, therefor has been made or
provided for.
(e) INCENTIVE STOCK OPTION LIMITATIONS. To the extent that the
aggregate Fair Market Value (determined as of the time of grant) of the
Common Stock with respect to which Incentive Stock Options are exercisable
for the first time by an Eligible Employee during any calendar year under
the Plan and/or any other stock option plan of the Company or any Subsidiary
or ANY PARENT exceeds $100,000, such Options shall be treated as Options
which are not Incentive Stock Options.
Should the foregoing provision not be necessary in order for the Stock
Options to qualify as Incentive Stock Options, or should any additional
provisions be required, the Committee may amend the Plan accordingly,
without the necessity of obtaining the approval of the stockholders of the
Company.
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(f) BUY OUT AND SETTLEMENT PROVISIONS. The Committee may at any time
on behalf of the Company offer to buy out an Option previously granted,
based on such terms and conditions as the Committee shall establish and
communicate to the Participant at the time that such offer is made.
(g) FORM, MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. Subject to
the terms and conditions and within the limitations of the Plan, an Option
shall be evidenced by such form of agreement or grant as is approved by the
Committee, and the Committee may modify, extend or renew outstanding Options
granted under the Plan (provided that the rights of a Participant are not
reduced without his consent), or accept the surrender of outstanding Options
(up to the extent not theretofore exercised) and authorize the granting of
new Options in substitution therefor (to the extent not theretofore
exercised).
(h) DEFERRED DELIVERY OF COMMON SHARES. THE COMMITTEE MAY IN ITS
DISCRETION PERMIT PARTICIPANTS TO DEFER DELIVERY OF COMMON STOCK ACQUIRED
PURSUANT TO A PARTICIPANT'S EXERCISE OF AN OPTION IN ACCORDANCE WITH THE
TERMS AND CONDITIONS ESTABLISHED BY THE COMMITTEE.
(I) OTHER TERMS AND CONDITIONS. Options may contain such other
provisions, which shall not be inconsistent with any of the foregoing terms
of the Plan, as the Committee shall deem appropriate including, without
limitation, permitting "reloads" such that the same number of Options are
granted as the number of Options exercised, shares used to pay for the
exercise price of Options or shares used to pay withholding taxes
("Reloads"). With respect to Reloads, the exercise price of the new Stock
Option shall be the Fair Market Value on the date of the "reload" and the
term of the Stock Option shall be the same as the remaining term of the
Options that are exercised, if applicable, or such other exercise price and
term as determined by the Committee.
6.4. Termination of Employment or Termination of Consultancy. The
following rules apply with regard to Options upon the Termination of Employment
of a Participant:
(a) TERMINATION BY REASON OF DEATH. If a Participant's Termination of
Employment or Termination of Consultancy is by reason of death, any Stock
Option held by such Participant, unless otherwise determined by the
Committee at grant or, if no rights of the Participant's estate are reduced,
thereafter, may be exercised, to the extent exercisable at the Participant's
death, by the legal representative of the estate, at any time within a
period of one (1) year from the date of such death, but in no event beyond
the expiration of the stated term of such Stock Option.
(b) TERMINATION BY REASON OF DISABILITY. If a Participant's
Termination of Employment or Termination of Consultancy is by reason of
Disability, any Stock Option held by such Participant, unless otherwise
determined by the Committee at grant or, if no rights of the Participant are
reduced, thereafter, may be exercised, to the extent exercisable at the
Participant's termination, by the Participant (or the legal representative
of the Participant's estate if the Participant dies after termination) at
any time within a period of one (1) year from the date of such termination,
but in no event beyond the expiration of the stated term of such Stock
Option.
(c) TERMINATION BY REASON OF RETIREMENT. If a Participant's
Termination of Employment or Termination of Consultancy is by reason of
Retirement, any Stock Option held by such Participant, unless otherwise
determined by the Committee at grant, or, if no rights of the Participant
are reduced, thereafter, shall be fully vested and may thereafter be
exercised by the Participant at any time within a period of one (1) year
from the date of such termination, but in no event beyond the expiration of
the stated term of such Stock Option; provided, however, that, if the
Participant dies within such exercise period, any unexercised Stock Option
held by such Participant shall thereafter be exercisable, to the extent to
which it was exercisable at the time of death, for a period of one (1) year
(or such other period as the Committee may specify at grant or, if no rights
of the
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Participant's estate are reduced, thereafter) from the date of such death,
but in no event beyond the expiration of the stated term of such Stock
Option.
(d) INVOLUNTARY TERMINATION WITHOUT CAUSE OR TERMINATION FOR GOOD
REASON. If a Participant's Termination of Employment or Termination of
Consultancy is by involuntary termination without Cause or for Good Reason,
any Stock Option held by such Participant, unless otherwise determined by
the Committee at grant or, if no rights of the Participant are reduced,
thereafter, may be exercised, to the extent exercisable at termination, by
the Participant at any time within a period of ninety (90) days from the
date of such termination, but in no event beyond the expiration of the
stated term of such Stock Option.
(e) TERMINATION WITHOUT GOOD REASON. If a Participant's Termination of
Employment or Termination of Consultancy is voluntary but without Good
Reason and occurs prior to, or more than ninety (90) days after, the
occurrence of an event which would be grounds for Termination of Employment
or Termination of Consultancy by the Company for Cause (without regard to
any notice or cure period requirements), any Stock Option held by such
Participant, unless otherwise determined by the Committee at grant or, if no
rights of the Participant are reduced, thereafter, may be exercised, to the
extent exercisable at termination, by the Participant at any time within a
period of thirty (30) days from the date of such termination, but in no
event beyond the expiration of the stated term of such Stock Option.
(f) OTHER TERMINATION. Unless otherwise determined by the Committee at
grant or, if no rights of the Participant are reduced, thereafter, if a
Participant's Termination of Employment or Termination of Consultancy is for
any reason other than death, Disability, Retirement, Good Reason,
involuntary termination without Cause or voluntary termination as provided
in subsection (e) above, any Stock Option held by such Participant shall
thereupon terminate and expire as of the date of termination, provided that
(unless the Committee determines a different period upon grant or, if, no
rights of the Participant are reduced, thereafter) in the event the
termination is for Cause or is a voluntary termination without Good Reason
within ninety (90) days after occurrence of an event which would be grounds
for Termination of Employment or Termination of Consultancy by the Company
for Cause (without regard to any notice or cure period requirement), any
Stock Option held by the Participant at the time of occurrence of the event
which would be grounds for Termination of Employment or Termination of
Consultancy by the Company for Cause shall be deemed to have terminated and
expired upon occurrence of the event which would be grounds for Termination
of Employment or Termination of Consultancy by the Company for Cause.
ARTICLE VII.
NON-EMPLOYEE DIRECTOR STOCK OPTION GRANTS
7.1. Options. The terms of this Article VII shall apply only to Options
granted to non-employee directors.
7.2. Grants. Without further action by the Board or the stockholders of
the Company, each non-employee director shall:
(a) subject to the terms of the Plan, be granted Options to purchase
18,750 SHARES (AS ADJUSTED TO REFLECT ALL ADJUSTMENTS TO THE COMMON STOCK AS
OF THE EFFECTIVE DATE OF THE AMENDMENTS CONTAINED HEREIN, SUBJECT TO ANY
INCREASE OR DECREASE PURSUANT TO SECTION 4.2) of Common Stock upon (1) the
date on which the offering price in connection with the initial public
offering of the Common Stock (the "Offering") is agreed upon between the
Company and the underwriters (the "Price to the Public"); or if later, (2)
as of the date the non-employee director begins service as a director on the
Board; and
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(b) subject to the terms of the Plan, be granted Options to purchase
9,375 SHARES (AS ADJUSTED TO REFLECT ALL ADJUSTMENTS TO THE COMMON STOCK AS
OF THE EFFECTIVE DATE OF THE AMENDMENTS CONTAINED HEREIN, SUBJECT TO ANY
INCREASE OR DECREASE PURSUANT TO SECTION 4.2) of Common Stock upon each
anniversary of the date on which he began service as a director of the
Board.
7.3. Non-Qualified Stock Options. Stock Options granted under this Article
VII shall be Non-Qualified Stock Options.
7.4. Terms of Options. Options granted under this Article VII shall be
subject to the following terms and conditions and shall be in such form and
contain such additional terms and conditions, not inconsistent with terms of
this Plan, as the Committee shall deem desirable:
(a) OPTION PRICE. The purchase price per share deliverable upon the
exercise of an Option granted pursuant to Section 7.2(a)(1) shall be the
Price to the Public and the purchase price per share deliverable upon the
exercise of an Option granted pursuant to Section 7.2(a)(2) shall be 100% of
the Fair Market Value of such Common Stock at the time of the grant of the
Option, or the par value of the Common Stock, whichever is greater.
(b) EXERCISABILITY. Except as otherwise provided herein, thirty-three
percent (33%) of any Option granted under this Article VII shall be
exercisable on or after each of the three anniversaries following the date
of grant. All Options shall fully vest upon a Change in Control.
(c) METHOD FOR EXERCISE. A non-employee director electing to exercise
one or more Options shall give written notice of exercise to the Company
specifying the number of shares to be purchased. Common Stock purchased
pursuant to the exercise of Options shall be paid for at the time of
exercise in cash or by delivery of unencumbered Common Stock owned by the
non-employee director or a combination thereof or by such other method as
approved by the Board.
(d) OPTION TERM. Except as otherwise provided herein, if not
previously exercised each Option shall expire upon the tenth anniversary of
the date of the grant thereof.
7.5. Termination of Directorship. The following rules apply with regard to
Options upon the Termination of Directorship:
(a) DEATH, DISABILITY OR OTHERWISE CEASING TO BE A DIRECTOR OTHER THAN
FOR CAUSE. Except as otherwise provided herein, upon the Termination of
Directorship, on account of Disability, death, Retirement, resignation,
failure to stand for reelection or failure to be reelected or otherwise
other than as set forth in (b) below, all outstanding Options then
exercisable and not exercised by the Participant prior to such Termination
of Directorship shall remain exercisable, to the extent exercisable at the
Termination of Directorship, by the Participant or, in the case of death, by
the Participant's estate or by the person given authority to exercise such
Options by his or her will or by operation of law, for the remainder of the
stated term of such Options.
(b) CAUSE. Upon removal, failure to stand for reelection or failure to
be renominated for Cause, or if the Company obtains or discovers information
after Termination of Directorship that such Participant had engaged in
conduct that would have justified a removal for Cause during such
directorship, all outstanding Options of such Participant shall immediately
terminate and shall be null and void.
(c) CANCELLATION OF OPTIONS. No Options that were not exercisable
during the period such person serves as a director shall thereafter become
exercisable upon a Termination of Directorship for any reason or no reason
whatsoever, and such Options shall terminate and become null and void upon a
Termination of Directorship.
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7.6. Changes. (a) The Awards to a non-employee director shall be subject
to Sections 4.2(a), (b) and (c) of the Plan and this Section 7.6, but shall not
be subject to Section 4.2(d).
(b) If the Company shall not be the surviving corporation in any merger
or consolidation, or if the Company is to be dissolved or liquidated, then,
unless the surviving corporation assumes the Options or substitutes new
Options which are determined by the Board in its sole discretion to be
substantially similar in nature and equivalent in terms and value for
Options then outstanding, upon the effective date of such merger,
consolidation, liquidation or dissolution, any unexercised Options shall
expire without additional compensation to the holder thereof; provided,
that, the Committee shall deliver notice to each non-employee director at
least twenty (20) days prior to the date of consummation of such merger,
consolidation, dissolution or liquidation which would result in the
expiration of the Options and during the period from the date on which such
notice of termination is delivered to the consummation of the merger,
consolidation, dissolution or liquidation, such Participant shall have the
right to exercise in full effective as of such consummation all Options that
are then outstanding (without regard to limitations on exercise otherwise
contained in the Options) but contingent on occurrence of the merger,
consolidation, dissolution or liquidation, and, provided that, if the
contemplated transaction does not take place within a ninety (90) day period
after giving such notice for any reason whatsoever, the notice, accelerated
vesting and exercise shall be null and void and, if and when appropriate,
new notice shall be given as aforesaid.
ARTICLE VIII.
NON-TRANSFERABILITY
No Stock Option shall be Transferable by the Participant otherwise than by
will or by the laws of descent and distribution. All Stock Options shall be
exercisable, during the Participant's lifetime, only by the Participant. No
Option shall, except as otherwise specifically provided by law or herein, be
Transferable in any manner, and any attempt to Transfer any such Option shall be
void, and no such Option shall in any manner be liable for or subject to the
debts, contracts, liabilities, engagements or torts of any person who shall be
entitled to such Option nor shall it be subject to attachment or legal process
for or against such person. NOTWITHSTANDING THE FOREGOING, THE COMMITTEE MAY
DETERMINE AT THE TIME OF GRANT OR THEREAFTER, THAT A NON-QUALIFIED STOCK OPTION
GRANTED PURSUANT TO ARTICLE VI (OTHER THAN A NON-QUALIFIED STOCK OPTION GRANTED
TO A NON-EMPLOYEE DIRECTOR) THAT IS OTHERWISE NOT TRANSFERABLE PURSUANT TO THIS
ARTICLE VIII IS TRANSFERABLE IN WHOLE OR PART AND IN SUCH CIRCUMSTANCES, AND
UNDER SUCH CONDITIONS, AS SPECIFIED BY THE COMMITTEE.
D-12
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ARTICLE IX.
CHANGE IN CONTROL PROVISIONS
9.1. Benefits. In the event of a Change in Control of the Company (as
defined below), except as otherwise provided by the Committee upon the grant of
an Option, the Participant shall be entitled to the following benefits:
(a) Subject to paragraph (c) below with regard to Options granted to
Eligible Employees and Consultants, all outstanding Options of such
Participant granted prior to the Change in Control shall be fully vested and
immediately exercisable in their entirety. The Committee, in its sole
discretion, may provide for the purchase of any such Stock Options by the
Company for an amount of cash equal to the excess of the Change in Control
price (as defined below) of the shares of Common Stock covered by such Stock
Options, over the aggregate exercise price of such Stock Options. For
purposes of this Section 9.1, Change in Control price shall mean the higher
of (i) the highest price per share of Common Stock paid in any transaction
related to a Change in Control of the Company, or (ii) the highest Fair
Market Value per share of Common Stock at any time during the sixty (60) day
period preceding a Change in Control.
(b) Notwithstanding anything to the contrary herein, unless the
Committee provides otherwise at the time an Option is granted to an Eligible
Employee hereunder or thereafter, no acceleration of exercisability shall
occur with respect to such Option if the Committee reasonably determines in
good faith, prior to the occurrence of the Change in Control, that the
Options shall be honored or assumed, or new rights substituted therefor
(each such honored, assumed or substituted option hereinafter called an
"Alternative Option"), by a Participant's employer (or the parent or a
subsidiary of such employer), or, in the case of a Consultant, by the entity
(or its parent or subsidiary) which retains the Consultant, immediately
following the Change in Control, provided that any such Alternative Option
must meet the following criteria:
(i) the Alternative Option must be based on stock which is traded on
an established securities market, or which will be so traded within
thirty (30) days of the Change in Control;
(ii) the Alternative Option must provide such Participant with
rights and entitlements substantially equivalent to or better than the
rights, terms and conditions applicable under such Option, including, but
not limited to, an identical or better exercise schedule; and
(iii) the Alternative Option must have economic value substantially
equivalent to the value of such Option (determined at the time of the
Change in Control).
For purposes of Incentive Stock Options, any assumed or substituted Option
shall comply with the requirements of Treasury regulation Section 1.425-1 (and
any amendments thereto).
(c) Notwithstanding anything else herein, the Committee may, in its
sole discretion, provide for accelerated vesting of an Option (other than a
grant to a non-employee director pursuant to Article VII hereof), upon a
Termination of Employment or Termination of Consultancy during the
Pre-Change in Control Period. Unless otherwise determined by the Committee,
the Pre-Change in Control Period shall be the one hundred eighty (180) day
period prior to a Change in Control.
9.2. Change in Control. A "Change in Control" shall be deemed to have
occurred:
(a) upon any "person" as such term is used in Sections 13(d) and 14(d)
of the Exchange Act (other than the Company, any trustee or other fiduciary
holding securities under any employee benefit plan of the Company, any
company owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of Common Stock of the
Company, as a group or individually BY Steven S. Elbaum or The Alpine Group,
INC.), becoming the owner (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities
D-13
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of the Company representing twenty-five percent (25%) or more of the
combined voting power of the Company's then outstanding securities
(including, without limitation, securities owned at the time of any increase
in ownership);
(b) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors, and any new
director (other than a director designated by a person who has entered into
an agreement with the Company to effect a transaction described in paragraph
(a), (c), or (d) of this section) or a director whose initial assumption of
office occurs as a result of either an actual or threatened election contest
(as such terms are used in Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act) or other actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the Board of Directors of
the Company whose election by the Board of Directors or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds of the directors then still in office who either were directors
at the beginning of the two-year period or whose election or nomination for
election was previously so approved, cease for any reason to constitute at
least a majority of the Board of Directors;
(c) upon the merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than fifty
percent (50%) of the combined voting power of the voting securities of the
Company or such surviving entity outstanding immediately after such merger
or consolidation; provided, however, that a merger or consolidation effected
to implement a recapitalization of the Company (or similar transaction) in
which no person (other than those covered by the exceptions in (a) above)
acquires more than twenty-five percent (25%) of the combined voting power of
the Company's then outstanding securities shall not constitute a Change in
Control of the Company; or
(d) upon the stockholder's of the Company approval of a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's
assets other than the sale of all or substantially all of the assets of the
Company to a person or persons who beneficially own, directly or indirectly,
at least fifty percent (50%) or more of the combined voting power of the
outstanding voting securities of the Company at the time of the sale.
ARTICLE X.
TERMINATION OR AMENDMENT OF THE PLAN
10.1. Termination or Amendment. Notwithstanding any other provision of
this Plan, the Board may at any time, and from time to time, amend, in whole or
in part, any or all of the provisions of the Plan, or suspend or terminate it
entirely, retroactively or otherwise; provided, however, that, unless otherwise
required by law or specifically provided herein, the rights of a Participant
with respect to Options granted prior to such amendment, suspension or
termination, may not be impaired without the consent of such Participant and,
provided further, without the approval of the stockholders of the Company, if
and to the extent required by the applicable provisions of Rule 16b-3 or, if and
to the extent required, under the applicable provisions of Section 162(m) of the
Code, or with regard to Incentive Stock Options, Section 422 of the Code, no
amendment may be made which would (i) increase the aggregate number of shares of
Common Stock that may be issued under this Plan; (ii) increase the maximum
individual Participant limitations for a fiscal year under Section 4.1(b); (iii)
change the classification of employees, Consultants and non-employee directors
eligible to receive Options under this Plan; (iv) decrease the minimum Option
price of any Stock Option; (v) extend the maximum Option period under Section
6.3; (vi) change any rights under the Plan with regard to
D-14
<PAGE>
non-employee directors; or (vii) require stockholder approval in order for the
Plan to continue to comply with the applicable provisions, if any, of Rule
16b-3, Section 162(m) of the Code or, with regard to Incentive Stock Options,
Section 422 of the Code. In no event may the Plan be amended without the
approval of the stockholders of the Company in accordance with the applicable
laws or other requirements to increase the aggregate number of shares of Common
Stock that may be issued under the Plan, decrease the minimum option price of
any Stock Option, or to make any other amendment that would require stockholder
approval under the rules of any exchange or system on which the Company's
securities are listed or traded at the request of the Company.
Except with respect to the award of Stock Options to non-employee directors
under Article VII, the Committee may amend the terms of any Option theretofore
granted, prospectively or retroactively, but, subject to Article IV above or as
otherwise specifically provided herein, no such amendment or other action by the
Committee shall impair the rights of any Participant without the Participant's
consent.
ARTICLE XI.
UNFUNDED PLAN
11.1. Unfunded Status of Plan. This Plan is intended to constitute an
"unfunded" plan for incentive compensation. With respect to any payments as to
which a Participant has a fixed and vested interest but which are not yet made
to a Participant by the Company, nothing contained herein shall give any such
Participant any rights that are greater than those of a general creditor of the
Company.
ARTICLE XII.
GENERAL PROVISIONS
12.1. Legend. The Committee may require each person receiving shares
pursuant to the exercise of an Option under the Plan to represent to and agree
with the Company in writing that the Participant is acquiring the shares without
a view to distribution thereof. In addition to any legend required by this Plan,
the certificates for such shares may include any legend which the Committee
deems appropriate to reflect any restrictions on Transfer.
All certificates for shares of Common Stock delivered under the Plan shall
be subject to such stock transfer orders and other restrictions as the Committee
may deem advisable under the rules, regulations and other requirements of the
Securities and Exchange Commission, any stock exchange upon which the Common
Stock is then listed or any national securities association system upon whose
system the Common Stock is then quoted, any applicable Federal or state
securities law, and any applicable corporate law, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.
12.2. Other Plans. Nothing contained in this Plan shall prevent the Board
from adopting other or additional compensation arrangements, subject to
stockholder approval if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific cases.
12.3. No Right to Employment/Consultancy/Directorship. Neither this Plan
nor the grant of any Option hereunder shall give any Participant or other
employee any right with respect to continuance of employment or consultancy with
the Company or any AFFILIATE, nor shall they be a limitation in any way on the
right of the Company or any AFFILIATE by which an employee is employed or
consultant retained to terminate his employment or consultancy, as applicable,
at any time. Neither this Plan nor the grant of any Option hereunder shall
impose any obligations on the Company to retain any Participant as a director
nor shall it impose on the part of any Participant any obligation to remain as a
director of the Company.
D-15
<PAGE>
12.4. Withholding of Taxes. The Company shall have the right to deduct
from any payment to be made to a Participant, or to otherwise require, prior to
the issuance or delivery of any shares of Common Stock or the payment of any
cash hereunder, payment by the Participant of, any Federal, state or local taxes
required by law to be withheld.
The Committee may permit any such withholding obligation with regard to any
Participant to be satisfied by reducing the number of shares of Common Stock
otherwise deliverable or by delivering shares of Common Stock already owned. Any
fraction of a share of Common Stock required to satisfy such tax obligations
shall be disregarded and the amount due shall be paid instead in cash by the
Participant.
12.5. Listing and Other Conditions.
(a) AS LONG AS the Common Stock IS listed on a national securities
exchange or system sponsored by a national securities association, the issue
of any shares of Common Stock pursuant to the exercise of an Option shall be
conditioned upon such shares being listed on such exchange or system. The
Company shall have no obligation to issue such shares unless and until such
shares are so listed, and the right to exercise any Option with respect to
such shares shall be suspended until such listing has been effected.
(b) If at any time counsel to the Company shall be of the opinion that
any sale or delivery of shares of Common Stock pursuant to the exercise of
an Option is or may in the circumstances be unlawful or result in the
imposition of excise taxes on the Company under the statutes, rules or
regulations of any applicable jurisdiction, the Company shall have no
obligation to make such sale or delivery, or to make any application or to
effect or to maintain any qualification or registration under the Securities
Act of 1933, as amended, or otherwise with respect to shares of Common Stock
or Options and the right to exercise any Option shall be suspended until, in
the opinion of said counsel, such sale or delivery shall be lawful or will
not result in the imposition of excise taxes on the Company.
(c) Upon termination of any period of suspension under this Section
12.5, any Option affected by such suspension which shall not then have
expired or terminated shall be reinstated as to all shares available before
such suspension and as to shares which would otherwise have become available
during the period of such suspension, but no such suspension shall extend
the term of any Option.
12.6. Governing Law. This Plan shall be governed and construed in
accordance with the laws of the State of Delaware (regardless of the law that
might otherwise govern under applicable Delaware principles of conflict of
laws).
12.7. Construction. Wherever any words are used in this Plan in the
masculine gender they shall be construed as though they were also used in the
feminine gender in all cases where they would so apply, and wherever any words
are used herein in the singular form they shall be construed as though they were
also used in the plural form in all cases where they would so apply.
12.8. Other Benefits. No Option payment under this Plan shall be deemed
compensation for purposes of computing benefits under any retirement plan of the
Company or its subsidiaries nor affect any benefits under any other benefit plan
now or subsequently in effect under which the availability or amount of benefits
is related to the level of compensation.
12.9. Costs. The Company shall bear all expenses included in administering
this Plan, including expenses of issuing Common Stock pursuant to any Options
hereunder.
12.10. No Right to Same Benefits. The provisions of Options need not be
the same with respect to each Participant, and such Options granted to
individual Participants need not be the same in subsequent years.
D-16
<PAGE>
12.11. Death/Disability. The Committee may in its discretion require the
transferee of a Participant to supply it with written notice of the
Participant's death or Disability and to supply it with a copy of the will (in
the case of the Participant's death) or such other evidence as the Committee
deems necessary to establish the validity of the transfer of an Option. The
Committee may also require that the agreement of the transferee to be bound by
all of the terms and conditions of the Plan.
12.12. Section 16(b) of the Exchange Act. All elections and transactions
under the Plan by persons subject to Section 16 of the Exchange Act involving
shares of Common Stock are intended to comply with any applicable condition
under Rule 16b-3. The Committee may establish and adopt written administrative
guidelines, designed to facilitate compliance with Section 16(b) of the Exchange
Act, as it may deem necessary or proper for the administration and operation of
the Plan and the transaction of business thereunder.
12.13. Severability of Provisions. If any provision of the Plan shall be
held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions hereof, and the Plan shall be construed and enforced
as if such provisions had not been included.
12.14. Headings and Captions. The headings and captions herein are
provided for reference and convenience only, shall not be considered part of the
Plan, and shall not be employed in the construction of the Plan.
ARTICLE XIII.
TERM OF PLAN
No Option shall be granted pursuant to the Plan on or after the tenth
anniversary of the earlier of the date the Plan is adopted or the date of
stockholder approval, but Options granted prior to such tenth anniversary may
extend beyond that date.
ARTICLE XIV.
NAME OF PLAN
This Plan shall be known as the Superior TeleCom Inc. 1996 Stock Option
Plan.
D-17
<PAGE>
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
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<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** Form of Opinion of Morris, Nichols, Arsht & Tunnell, 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
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<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).
10.6 Amended and Restated Superior TeleCom Inc. 1996 Stock Option Plan (incorporated by reference to Appendix
D to the Joint Proxy Statement/Prospectus filed as part of this Registration Statement).
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 the 8 1/2% Convertible Subordinated
Debentures, the Superior Common Stock and the Preferred Securities Guarantee Agreement being registered
hereby (contained in Exhibit 5.1).
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 Morris, Nichols, Arsht & Tunnell with respect to the legality of the 8 1/2% Trust Convertible
Preferred Securities being registered hereby (contained in Exhibit 5.2).
24.1* Power of Attorney (included in signature page of previous filing).
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 special meeting of stockholders of Essex International Inc.
</TABLE>
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* Previously filed.
** Filed herewith.
II-2
<PAGE>
(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).
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
II-3
<PAGE>
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
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.
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE 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 25TH DAY OF JANUARY, 1999.
SUPERIOR TELECOM INC.
By /s/ STEVEN S. ELBAUM
------------------------------------------
Steven S. Elbaum
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN
THE CAPACITIES AND ON THE DATES INDICATED.
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SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Chairman of the Board and
/s/ STEVEN S. ELBAUM Chief Executive Officer
- ------------------------------ (Principal Executive January 25, 1999
Steven S. Elbaum Officer)
*
- ------------------------------ Director January 25, 1999
Eugene P. Connell
*
- ------------------------------ Director January 25, 1999
Robert T. Levenson
*
- ------------------------------ Director January 25, 1999
Charles Y.C. Tse
/s/ BRAGI F. SCHUT
- ------------------------------ Director January 25, 1999
Bragi F. Schut
Chief Financial Officer
/s/ DAVID S. ALDRIDGE and Treasurer (Principal
- ------------------------------ Accounting and Financial January 25, 1999
David S. Aldridge Officer)
*By: /s/ STEWART H.
WAHRSAGER
- ------------------------------ January 25, 1999
Stewart H. Wahrsager
ATTORNEY-IN-FACT
</TABLE>
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the 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 25th day of January, 1999.
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** Form of Opinion of Morris, Nichols, Arsht & Tunnell, 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).
10.6 Amended and Restated Superior TeleCom Inc. 1996 Stock Option Plan (incorporated by reference to Appendix
D to the Joint Proxy Statement/Prospectus filed as part of this Registration Statement).
12.1 Statement of ratios of combined fixed charges and preference dividends to earnings (included on page 21
of this Registration Statement).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
23.1 Consent of Proskauer Rose LLP with respect to the legality of the 8 1/2% Convertible Subordinated
Debentures, the Superior Common Stock and the Preferred Securities Guarantee Agreement being registered
hereby (contained in Exhibit 5.1).
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 Morris, Nichols, Arsht & Tunnell with respect to the legality of the 8 1/2% Trust Convertible
Preferred Securities being registered hereby (contained in Exhibit 5.2).
24.1* Power of Attorney (included in signature page of previous filing).
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 special meeting of stockholders of Essex International Inc.
</TABLE>
- ------------------------
* Previously filed.
** Filed herewith.
<PAGE>
EXHIBIT 5.1
PROSKAUER ROSE LLP
1585 Broadway
New York, New York 10036-8299
January 25, 1999
Superior TeleCom Inc.
1790 Broadway
New York, New York 10019
Dear Sirs:
We are acting as counsel to Superior TeleCom Inc., a Delaware corporation (the
"Company"), in connection with the Registration Statement on Form S-4 (the
"Registration Statement") filed by the Company under the Securities Act of 1933,
as amended (the "Act"), relating to the registration of 3,332,254 8 1/2% Trust
Convertible Preferred Securities (the "Trust Preferred Securities") issued by
Superior Trust I, a statutory business trust created under the laws of the State
of Delaware, up to $171,765,650 aggregate principal amount of the Company's
8 1/2% Convertible Subordinated Debentures (the "Debentures"), shares of the
Company's common stock, par value $.01 per share, issuable upon conversion of
the Trust Preferred Securities and the Debentures (the "Shares"), and the
guarantee of the Company relating to the Trust Preferred Securities (the
"Guarantee").
We have examined such records, documents and other instruments as we have deemed
relevant and necessary as a basis for the opinions hereinafter set forth. We
have also assumed, without investigation, the authenticity of any document
submitted to us as an original, the conformity to originals of any document
submitted to us as a copy, the authenticity of the originals of such latter
documents, the genuineness of all signatures and the legal capacity of natural
persons signing such documents.
Based upon, and subject to, the foregoing, we are of the opinion that:
1. the Debentures have been duly authorized by the Company for issuance.
2. the Shares have been duly authorized by the Company and, when issued upon
the due conversion of the Trust Preferred Securities or the Debentures, will be
validly issued, fully paid and non-assessable.
3. the Guarantee has been duly authorized by the Company.
<PAGE>
4. The Debentures and the Guarantee are the legal, valid and binding
obligations of the Company, enforceable against it in accordance with their
terms, except as may be limited by bankruptcy, insolvency, fraudulent
conveyance, fraudulent transfer, reorganization, moratorium and other similar
laws now or hereafter in effect relating to or affecting creditors' rights
generally and by general equitable principles (regardless of whether enforcement
is sought in equity or at law), including, without limitation, principles
regarding good faith and fair dealing.
The foregoing opinion is limited to the laws of the State of New York and the
corporate laws of the State of Delaware, and we express no opinion as to the
effect on the matters covered by this letter of the laws of any other
jurisdiction.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters." In giving the foregoing consent, we do not admit that we are in the
category of persons whose consent is required under Section 7 of the Act or the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder.
Very truly yours,
/s/ PROSKAUER ROSE LLP
<PAGE>
Exhibit 5.2
[Letterhead of Morris, Nichols, Arsht & Tunnell]
JANUARY 22, 1999
DRAFT
January ___, 1999
Superior Trust I
c/o Superior TeleCom Inc.
1790 Broadway
New York, New York 10019
Re: SUPERIOR TRUST I
Ladies and Gentlemen:
We have acted as special Delaware counsel to Superior Trust I, a
Delaware statutory business trust (the "Trust"), in connection with certain
matters relating to the formation of the Trust and the proposed issuance of
Preferred Securities (the "Preferred Securities") of the Trust as described in
Registration Statement No. 333-68889 (and the Prospectus forming a part thereof)
on Form S-4 filed with the Securities and Exchange Commission (the "Commission")
on December 14, 1998, as amended by Pre-Effective Amendment No. 1 thereto (as so
amended, the "Registration Statement"). Capitalized terms used herein and not
otherwise herein defined are used as defined in the form of Amended and Restated
Declaration of Trust of the Trust attached as an exhibit to the Registration
Statement (the "Governing Instrument").
In rendering this opinion, we have examined and relied upon copies of
the following documents in the forms provided to us: the Certificate of Trust of
the Trust as filed in the Office of the Secretary of State of the State of
Delaware (the "State Office") on December 9, 1998 (the "Certificate"); the
Declaration of Trust of the Trust dated as of December 9, 1998 (the "Original
Governing Instrument"); the Governing Instrument; the form of Indenture to be
entered into by Superior TeleCom Inc. (the "Company") relating to the
Debentures; the form of Guarantee Agreement to be entered into by the Company
relating to the Preferred Securities; the Agreement and Plan of Merger dated as
of October 21, 1998 (the "Merger Agreement") among the Company, SUT Acquisition
Corp., a Delaware corporation and a subsidiary of the Company, and Essex
International Inc.; the Registration Statement; and a certification of good
standing of the Trust obtained as of a recent date from the State Office. In
such examinations, we have assumed the genuineness of all signatures, the
conformity to original documents of all documents submitted to
<PAGE>
Superior Trust I
January ___, 1999
Page 2
us as drafts or copies or forms of documents to be executed and the legal
capacity of natural persons to complete the execution of documents. We have
further assumed for purposes of this opinion: (i) the due formation or
organization, valid existence and good standing of each entity that is a party
to any of the documents reviewed by us under the laws of the jurisdiction of its
respective formation or organization; (ii) the due authorization, execution and
delivery by, or on behalf of, each of the parties thereto of the
above-referenced documents (including, without limitation, the due
authorization, execution and delivery of the Governing Instrument prior to the
first issuance of Preferred Securities); (iii) that no event has occurred
subsequent to the filing of the Certificate, or will occur prior to the issuance
of the Preferred Securities, that would cause a dissolution or liquidation of
the Trust under the Original Governing Instrument or the Governing Instrument,
as applicable; (iv) that the activities of the Trust have been and will be
conducted in accordance with the Original Governing Instrument or the Governing
Instrument, as applicable, and the Delaware Business Trust Act, 12 DEL. C.
ss.ss. 3801 ET seq. (the "Delaware Act"); (v) that each Person that will acquire
Preferred Securities in the "Merger" (as defined in the Registration Statement
and as used herein, the "Merger") will validly tender "Essex Common Stock" (as
defined in the Registration Statement and as used herein, "Essex Common Stock")
in exchange therefor, that such Essex Common Stock will be duly accepted, and
that such Person will duly receive Preferred Securities in consideration
thereof, all in accordance with the terms and conditions of the Governing
Instrument, the Registration Statement and the Merger Agreement and that the
Preferred Securities are otherwise issued to the Preferred Securities Holders in
accordance with the terms, conditions, requirements and procedures set forth in
the Governing Instrument, the Registration Statement and the Merger Agreement;
and (vi) that the documents examined by us are in full force and effect, express
the entire understanding of the parties thereto with respect to the subject
matter thereof and have not been amended, supplemented or otherwise modified,
except as herein referenced. No opinion is expressed with respect to the
requirements of, or compliance with, federal or state securities or blue sky
laws. We have not reviewed any documents other than those identified above in
connection with this opinion, and we have assumed that there are no other
documents that are contrary to or inconsistent with the opinions expressed
herein. Further, we have not participated in the preparation of the Registration
Statement or any other offering materials relating to the Preferred Securities
and we assume no responsibility for their contents. As to any fact material to
our opinion, other than those assumed, we have relied without independent
investigation on the above-referenced documents and certificates and on the
accuracy, as of the date hereof, of the matters therein contained.
Based on and subject to the foregoing, and limited in all respects to
matters of Delaware law, it is our opinion that:
1. The Trust is a duly formed and validly existing business trust in
good standing under the laws of the State of Delaware.
<PAGE>
Superior Trust I
January ___, 1999
Page 3
2. The Preferred Securities, when issued pursuant to the Merger and in
accordance with the terms, conditions, requirements and procedures set forth in
the Governing Instrument, the Registration Statement and the Merger Agreement,
will be duly authorized for issuance by the Governing Instrument and will
constitute validly issued and, subject to the qualifications set forth in
paragraph 3 below, fully paid and nonassessable beneficial interests in the
assets of the Trust.
3. Under the Delaware Act and the terms of the Governing Instrument,
each Preferred Security Holder of the Trust, in such capacity, will be entitled
to the same limitation of personal liability as that extended to stockholders of
private corporations for profit organized under the General Corporation Law of
the State of Delaware; provided, however, we express no opinion with respect to
the liability of any Preferred Security Holder who is, was or may become a named
Trustee of the Trust. Notwithstanding the foregoing, we note that pursuant to
the Governing Instrument, Preferred Security Holders may be obligated to make
payments or provide indemnity or security under the circumstances set forth
therein.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name and reference to our opinion
under the heading "LEGAL MATTERS" in the Prospectus forming a part thereof. In
giving this consent, we do not thereby admit that we come within the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended, or the rules and regulations of the Commission thereunder. This
opinion speaks only as of the date hereof and is based on our understandings and
assumptions as to present facts, and on our review of the above-referenced
documents and the application of Delaware law as the same exist as of the date
hereof, and we undertake no obligation to update or supplement this opinion
after the date hereof for the benefit of any person or entity with respect to
any facts or circumstances that may hereafter come to our attention or any
changes in facts or law that may hereafter occur or take effect. This opinion is
intended solely for the benefit of the addressee hereof in connection with the
matters contemplated hereby and may not be relied on by any other person or
entity or for any other purpose without our prior written consent.
Very truly yours,
MORRIS, NICHOLS, ARSHT & TUNNELL
<PAGE>
EXHIBIT 8.1
PROSKAUER ROSE LLP
1585 Broadway
New York, New York 10036-8299
January 25, 1999
Superior TeleCom Inc.
Superior Trust I
1790 Broadway
New York, N.Y. 10019-1412
Ladies and Gentlemen:
We have acted as counsel to Superior TeleCom Inc., a Delaware
corporation (the "Company"), and Superior Trust I, a Delaware statutory business
trust (the "Trust"), in connection with the preparation and filing with the
Securities and Exchange Commission ("SEC") of the Company's Registration
Statement on Form S-4.
Pursuant to the Registration Statement, up to $171,765,650 aggregate
principal amount of the Company's 8 1/2% Convertible Subordinated Debentures due
2014 ("Convertible Subordinated Debt Securities") will be issued to the Trust in
connection with the issuance by the Trust of 8 1/2 Trust Convertible Preferred
Securities (the "Trust Preferred Securities"). The Trust Preferred Securities
will be issued to shareholders of Essex International Inc. ("Essex") in
connection with the merger of Essex into a wholly owned subsidiary of the
Company.
You have requested our opinion as to the material United States federal
income tax consequences of (i) the receipt of Trust Preferred Securities in the
merger and (ii) the ownership, disposition and conversion of the Convertible
Subordinated Debt Securities and Trust Preferred Securities. In preparing our
opinion, we have reviewed and relied upon the Company's Registration Statement
on Form S-4 with respect to the matters discussed therein and such other
documents as we deemed necessary.
In our opinion, the discussion in the Registration Statement under the
caption "Certain U.S. Federal Income Tax Consequences" accurately describes the
material U.S. federal income tax consequences of the receipt of Trust Preferred
Securities in the
<PAGE>
merger and the ownership, disposition and conversion of the Convertible
Subordinated Debt Securities and Trust Preferred Securities.
The foregoing opinion is based upon the Internal Revenue Code of 1986,
as amended, Treasury Regulations (including proposed and temporary regulations)
promulgated thereunder, rulings, official pronouncements and judicial decisions
all as in effect on the date hereof and all of which are subject to change,
possibly with retroactive effect.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and the reference to this firm under the caption "Legal
Matters" and "Certain U.S. Federal Income Tax Consequences" in the Registration
Statement. In giving such consent, we do not hereby admit that we are in the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933, and rules and regulations of the SEC promulgated thereunder.
Sincerely yours,
/s/ PROSKAUER ROSE LLP
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent 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
January 25, 1999
<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 Amendment No. 1 to 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.
/S/ ERNST & YOUNG LLP
---------------------------------------------------------------
Ernst & Young
Indianapolis, Indiana
January 25, 1999
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM T-1
STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
---------------------------
AMERICAN STOCK TRANSFER & TRUST COMPANY
(Exact name of trustee as specified in its charter)
New York 13-3439945
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
40 Wall Street 10005
New York, New York (Zip Code)
(Address of trustee's
principal executive offices)
---------------------------
SUPERIOR TRUST I
(Exact name of obligor as specified in its character)
Delaware 51-0386384
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
1790 Broadway
New York, New York 10019-1412
(Address of principal executive (Zip Code)
offices)
---------------------------
8 1/2% TRUST CONVERTIBLE PREFERRED SECURITIES
(Title of the Indenture Securities)
<PAGE>
-2-
GENERAL
1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
a. Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, Albany, New York
b. Whether it is authorized to exercise corporate trust powers.
The Trustee is authorized to exercise corporate trust powers.
2. AFFILIATIONS WITH OBLIGOR AND UNDERWRITERS.
If the obligor or any underwriter for the obligor is an
affiliate of the trustee, describe each such affiliation.
None.
3. VOTING SECURITIES OF THE TRUSTEE.
Furnish the following information as to each class of voting
securities of the trustee:
As of January 25, 1999
----------------------------------------------------------------------
COL. A COL. B
----------------------------------------------------------------------
Title of Class Amount Outstanding
----------------------------------------------------------------------
Common Shares - par value $600 per share. 1,000 shares
4. TRUSTEESHIPS UNDER OTHER INDENTURES.
None.
<PAGE>
-3-
5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH THE
OBLIGOR OR UNDERWRITERS.
None.
6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR ITS
OFFICIALS.
None.
7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS OR THEIR
OFFICIALS.
None.
8. SECURITIES OF THE OBLIGOR OWNED OR HELD BY THE TRUSTEE.
None.
9. SECURITIES OF UNDERWRITERS OWNED OR HELD BY THE TRUSTEE.
None.
10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF
CERTAIN AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR.
None.
11. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF
A PERSON OWNING 50 PERCENT OR MORE OF THE VOTING SECURITIES
OF THE OBLIGOR.
None.
12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE.
None.
13. DEFAULTS BY THE OBLIGOR.
None.
14. AFFILIATIONS WITH THE UNDERWRITERS.
None.
15. FOREIGN TRUSTEE.
Not applicable.
<PAGE>
-4-
16. List of Exhibits.
T-1.1 - A copy of the Organization Certificate of American Stock Transfer
& Trust Company, as amended to date including authority to
commence business and exercise trust powers was filed in
connection with the Registration Statement of Live Entertainment,
Inc., File No. 33-54654, and is incorporated herein by reference.
T-1.4 - A copy of the By-Laws of American Stock Transfer & Trust Company,
as amended to date was filed in connection with the Registration
Statement of Live Entertainment, Inc., File No. 33-54654, and is
incorporated herein by reference.
T-1.6 - The consent of the Trustee required by Section 312(b) of the
Trust Indenture Act of 1939. Exhibit A.
T-1.7 - A copy of the latest report of condition of the Trustee published
pursuant to law or the requirements of its supervising or
examining authority. - Exhibit B.
-------------------------------
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the Trustee,
American Stock Transfer & Trust Company, a corporation organized and existing
under the laws of the State of New York, has duly caused this statement of
eligibility and qualification to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of New York, and State of New York,
on the 25th day of January, 1999.
AMERICAN STOCK TRANSFER
& TRUST COMPANY
Trustee
By: /s/ Herbert Lemmer
----------------------------
Vice President
<PAGE>
EXHIBIT A
Securities and Exchange Commission
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321 (b) of the Trust Indenture Act of
1939, and subject to the limitations therein contained, American Stock Transfer
& Trust Company hereby consents that reports of examinations of said corporation
by Federal, State, Territorial or District authorities may be furnished by such
authorities to you upon request therefor.
Very truly yours,
AMERICAN STOCK TRANSFER
& TRUST COMPANY
By /s/ Herbert Lemmer
---------------------------
Vice President
<PAGE>
EXHIBIT B
AMERICAN STOCK TRANSFER & TRUST COMPANY
40 WALL ST.
NEW YORK, NY 10005
CONSOLIDATED REPORT OF CONDITION AND INCOME FOR A BANK WITH DOMESTIC
OFFICES ONLY AND TOTAL ASSETS OF LESS THAN $100 MILLION REPORT AT CLOSE OF
BUSINESS ON JUNE 30, 1998
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC - BALANCE SHEET
DOLLAR AMOUTS IN THOUSANDS
- --------------------------------------------------------------------------------
ASSETS
1. Cash and balances due from depository institutions: 345
a. Noninterest-bearing balances and currency and coin
b. Interest-bearing balances
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A)
b. Available-for-sale securities (from Schedule RC-B, column D) 6,478
3. Federal funds sold and securities purchased under agreements
to resell
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule RC-C)
b. LESS: Allowance for loan and lease losses
c. LESS: Allocated transfer risk reserve
d. Loans and leases, net of unearned income, allowance, and
reserve (item 4.a minus 4.b and 4.c
5. Trading assets
6. Premises and fixed assets (including capitalized leases) 4,066
7. Other real estate owned (from Schedule RC-M)
8. Investments in unconsolidated subsidiaries and associated companies
(from Schedule RC-M)
9. Customers' liability to this bank on acceptances outstanding
10. Intangible assets (from Schedule RC-M)
11. Other asssets (from Schedule RC-F) 7,638
12. a. Total assets (sum of items 1 through 11) 18,527
b. Losses deferred pursuant to 12 U.S.C. 1823 (j)
c. Total assets and losses deferred pursuant to 12 U.S.C.
1823 (j) (sum of items 12.a and 12.b) 18,527
<PAGE>
SCHEDULE RC - CONTINUED
DOLLAR AMOUNTS IN THOUSANDS
- --------------------------------------------------------------------------------
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and C
from Schedule RC-E)
(1) Noninterest-bearing
(2) Interest-bearing
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs
(1) Noninterest-bearing
(2) Interest-bearing
14. Federal funds purchased and securities sold under agreements
to repurchase
15. a. Demand notes issued to the U.S. Treasury
b. Trading liabilities
16. Other borrowed money (includes mortgage indebtedness and
obligations under capitalized leases):
a. With a remaining maturity of one year or less
b. With a remaining maturity of more than one year
through three years
c. With a remaining maturity of more than three years
17. Not applicable
18. Bank's liability on acceptances executed and outstanding
19. Subordinated notes and debentures
20. Other liabilities (from Schedule RC-G) 3,076
21. Total liabilities (sum of items 13 through 20) 3,076
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus
24. Common stock 600
25. Surplus (exclude all surplus related to preferred stock) 9,290
26. a. Undivided profits and capital reserves 5,561
b. Net unrealized holding gains (losses) on available-for-sale
securities
27. Cumulative foreign currency translation adjustments
28. a. Total equity capital (sum of items 23 through 27) 15,451
b. Losses deferred pursuant to 12 U.S.C. 1823(j)
c. Total equity capital and losses deferred pursuant to 12
U.S.C. 1823(j) (sum of items 28.a and 28.b) 15,451
29. Total liabilities, equity capital, and losses deferred pursuant
to 12 U.S.C.. 1823 (j) (sum of items 21 and 28.c) 18,527
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM T-1
STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
--------------------
AMERICAN STOCK TRANSFER & TRUST COMPANY
(Exact name of trustee as specified in its charter)
New York 13-3439945
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
40 Wall Street 10005
New York, New York (Zip Code)
(Address of trustee's
principal executive offices)
--------------------
SUPERIOR TELECOM INC.
(Exact name of obligor as specified in its character)
Delaware 55-2248978
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
1790 Broadway
New York, New York 10019-1412
(Address of principal executive (Zip Code)
offices)
---------------------------------------------------------------
8 1/2 % CONVERTIBLE SUBORDINATED DEBENTURES DUE 2014
(Title of the Indenture Securities)
-2-
<PAGE>
GENERAL
1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
a. Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, Albany, New York
b. Whether it is authorized to exercise corporate trust powers.
The Trustee is authorized to exercise corporate trust powers.
2. AFFILIATIONS WITH OBLIGOR AND UNDERWRITERS.
If the obligor or any underwriter for the obligor is an
affiliate of the trustee, describe each such affiliation.
None.
3. VOTING SECURITIES OF THE TRUSTEE.
Furnish the following information as to each class of voting
securities of the
trustee:
As of January 25, 1999
----------------------------------------------------------
COL. A COL. B
----------------------------------------------------------
Title of Class Amount Outstanding
----------------------------------------------------------
Common Shares - 1,000 shares
par value $600 per share.
4. TRUSTEESHIPS UNDER OTHER INDENTURES.
American Stock Transfer & Trust Company will act as Guarantee Trustee
under a Guarantee Agreement in terms of which Obligor will guarantee
payment of certain 8 1/2% Trust Convertible Preferred Securities
issued by Superior Trust I.
<PAGE>
-3-
5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH THE
OBLIGOR OR UNDERWRITERS.
None.
6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR ITS
OFFICIALS.
None.
7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS OR THEIR
OFFICIALS.
None.
8. SECURITIES OF THE OBLIGOR OWNED OR HELD BY THE TRUSTEE.
None.
9. SECURITIES OF UNDERWRITERS OWNED OR HELD BY THE TRUSTEE.
None.
10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF
CERTAIN AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR.
None.
11. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF
A PERSON OWNING 50 PERCENT OR MORE OF THE VOTING SECURITIES
OF THE OBLIGOR.
None.
12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE.
None.
13. DEFAULTS BY THE OBLIGOR.
None.
14. AFFILIATIONS WITH THE UNDERWRITERS.
None.
15. FOREIGN TRUSTEE.
Not applicable.
<PAGE>
-4-
16. LIST OF EXHIBITS.
T-1.1 - A copy of the Organization Certificate of American Stock Transfer
& Trust Company, as amended to dateincluding authority to
commence business and exercise trust powers was filed in
connection with the Registration Statement of Live Entertainment,
Inc., File No. 33-54654, and is incorporated herein by reference.
T-1.4 - A copy of the By-Laws of American Stock Transfer & Trust Company,
as amended to date was filed in connection with the Registration
Statement of Live Entertainment, Inc., File No. 33-54654, and is
incorporated herein by reference.
T-1.6 - The consent of the Trustee required by Section 312(b) of the
Trust Indenture Act of 1939. Exhibit A.
T-1.7 - A copy of the latest report of condition of the Trustee published
pursuant to law or the requirements of its supervising or
examining authority. - Exhibit B.
---------------------------
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the Trustee,
American Stock Transfer & Trust Company, a corporation organized and existing
under the laws of the State of New York, has duly caused this statement of
eligibility and qualification to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of New York, and State of New York,
on the 25th day of January, 1999.
AMERICAN STOCK TRANSFER
& TRUST COMPANY
Trustee
By: /s/ Herbert Lemmer
-----------------------------
Vice President
<PAGE>
EXHIBIT A
Securities and Exchange Commission
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321 (b) of the Trust Indenture Act of
1939, and subject to the limitations therein contained, American Stock Transfer
& Trust Company hereby consents that reports of examinations of said corporation
by Federal, State, Territorial or District authorities may be furnished by such
authorities to you upon request therefor.
Very truly yours,
AMERICAN STOCK TRANSFER
& TRUST COMPANY
By /s/ Herbert Lemmer
---------------------------
Vice President
<PAGE>
EXHIBIT B
AMERICAN STOCK TRANSFER & TRUST COMPANY
40 WALL ST.
NEW YORK, NY 10005
CONSOLIDATED REPORT OF CONDITION AND INCOME FOR A BANK WITH DOMESTIC
OFFICES ONLY AND TOTAL ASSETS OF LESS THAN $100 MILLION REPORT AT CLOSE OF
BUSINESS ON JUNE 30, 1998
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC - BALANCE SHEET
DOLLAR AMOUTS IN THOUSANDS
- --------------------------------------------------------------------------------
ASSETS
1. Cash and balances due from depository institutions: 345
a. Noninterest-bearing balances and currency and coin
b. Interest-bearing balances
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A)
b. Available-for-sale securities (from Schedule RC-B, column D) 6,478
3. Federal funds sold and securities purchased under agreements
to resell
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule RC-C)
b. LESS: Allowance for loan and lease losses
c. LESS: Allocated transfer risk reserve
d. Loans and leases, net of unearned income, allowance, and
reserve (item 4.a minus 4.b and 4.c
5. Trading assets
6. Premises and fixed assets (including capitalized leases) 4,066
7. Other real estate owned (from Schedule RC-M)
8. Investments in unconsolidated subsidiaries and associated companies
(from Schedule RC-M)
9. Customers' liability to this bank on acceptances outstanding
10. Intangible assets (from Schedule RC-M)
11. Other asssets (from Schedule RC-F) 7,638
12. a. Total assets (sum of items 1 through 11) 18,527
b. Losses deferred pursuant to 12 U.S.C. 1823 (j)
c. Total assets and losses deferred pursuant to 12 U.S.C.
1823 (j) (sum of items 12.a and 12.b) 18,527
<PAGE>
SCHEDULE RC - CONTINUED
DOLLAR AMOUNTS IN THOUSANDS
- --------------------------------------------------------------------------------
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and C
from Schedule RC-E)
(1) Noninterest-bearing
(2) Interest-bearing
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs
(1) Noninterest-bearing
(2) Interest-bearing
14. Federal funds purchased and securities sold under agreements
to repurchase
15. a. Demand notes issued to the U.S. Treasury
b. Trading liabilities
16. Other borrowed money (includes mortgage indebtedness and
obligations under capitalized leases):
a. With a remaining maturity of one year or less
b. With a remaining maturity of more than one year
through three years
c. With a remaining maturity of more than three years
17. Not applicable
18. Bank's liability on acceptances executed and outstanding
19. Subordinated notes and debentures
20. Other liabilities (from Schedule RC-G) 3,076
21. Total liabilities (sum of items 13 through 20) 3,076
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus
24. Common stock 600
25. Surplus (exclude all surplus related to preferred stock) 9,290
26. a. Undivided profits and capital reserves 5,561
b. Net unrealized holding gains (losses) on available-for-sale
securities
27. Cumulative foreign currency translation adjustments
28. a. Total equity capital (sum of items 23 through 27) 15,451
b. Losses deferred pursuant to 12 U.S.C. 1823(j)
c. Total equity capital and losses deferred pursuant to 12
U.S.C. 1823(j) (sum of items 28.a and 28.b) 15,451
29. Total liabilities, equity capital, and losses deferred pursuant
to 12 U.S.C.. 1823 (j) (sum of items 21 and 28.c) 18,527
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------
AMERICAN STOCK TRANSFER & TRUST COMPANY
(Exact name of trustee as specified in its charter)
New York 13-3439945
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
40 Wall Street 10005
New York, New York (Zip Code)
(Address of trustee's
principal executive offices)
-------------------------
SUPERIOR TELECOM INC.
(Exact name of obligor as specified in its character)
Delaware 55-2248978
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
1790 Broadway
New York, New York 10019-1412
(Address of principal executive (Zip Code)
offices)
GUARANTEE OF PAYMENT OF 8 1/2% CONVERTIBLE PREFERRED
Securities issued by Superior Trust I
(Title of the Indenture Securities)
<PAGE>
-2-
GENERAL
1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
a. Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, Albany, New York
b. Whether it is authorized to exercise corporate trust powers.
The Trustee is authorized to exercise corporate trust powers.
2. AFFILIATIONS WITH OBLIGOR AND UNDERWRITERS.
If the obligor or any underwriter for the obligor is an
affiliate of the trustee, describe each such affiliation.
None.
3. VOTING SECURITIES OF THE TRUSTEE.
Furnish the following information as to each class of voting
securities of the
trustee:
As of January 25, 1999
----------------------------------------------------------------------
COL. A COL. B
----------------------------------------------------------------------
Title of Class Amount Outstanding
----------------------------------------------------------------------
Common Shares - par value $600 per share. 1,000 shares
4. TRUSTEESHIPS UNDER OTHER INDENTURES.
American Stock Transfer & Trust Company will act as Indenture Trustee
in respect of certain 8 1/2% Convertible Subordinated Debentures due
2014 to be issued by Obligor under an Indenture to be entered into
between Obligor and American Stock Transfer & Trust Company.
<PAGE>
-3-
5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH THE
OBLIGOR OR UNDERWRITERS.
None.
6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR ITS
OFFICIALS.
None.
7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS OR THEIR
OFFICIALS.
None.
8. SECURITIES OF THE OBLIGOR OWNED OR HELD BY THE TRUSTEE.
None.
9. SECURITIES OF UNDERWRITERS OWNED OR HELD BY THE TRUSTEE.
None.
10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF
CERTAIN AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR.
None.
11. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF
A PERSON OWNING 50 PERCENT OR MORE OF THE VOTING SECURITIES
OF THE OBLIGOR.
None.
12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE.
None.
13. DEFAULTS BY THE OBLIGOR.
None.
14. AFFILIATIONS WITH THE UNDERWRITERS.
None.
15. FOREIGN TRUSTEE.
Not applicable.
<PAGE>
-4-
16. List of Exhibits.
T-1.1 - A copy of the Organization Certificate of American Stock Transfer
& Trust Company, as amended to date including authority to
commence business and exercise trust powers was filed in
connection with the Registration Statement of Live Entertainment,
Inc., File No. 33-54654, and is incorporated herein by reference.
T-1.4 - A copy of the By-Laws of American Stock Transfer & Trust Company,
as amended to date was filed in connection with the Registration
Statement of Live Entertainment, Inc., File No. 33-54654, and is
incorporated herein by reference.
T-1.6 - The consent of the Trustee required by Section 312(b) of the
Trust Indenture Act of 1939. Exhibit A.
T-1.7 - A copy of the latest report of condition of the Trustee published
pursuant to law or the requirements of its supervising or
examining authority. - Exhibit B.
--------------------------
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the Trustee,
American Stock Transfer & Trust Company, a corporation organized and existing
under the laws of the State of New York, has duly caused this statement of
eligibility and qualification to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of New York, and State of New York,
on the 25th day of January, 1999.
AMERICAN STOCK TRANSFER
& TRUST COMPANY
Trustee
By: /s/ Herbert Lemmer
------------------------------
Vice President
<PAGE>
EXHIBIT A
Securities and Exchange Commission
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321 (b) of the Trust Indenture Act of
1939, and subject to the limitations therein contained, American Stock Transfer
& Trust Company hereby consents that reports of examinations of said corporation
by Federal, State, Territorial or District authorities may be furnished by such
authorities to you upon request therefor.
Very truly yours,
AMERICAN STOCK TRANSFER
& TRUST COMPANY
By /s/ Herbert Lemmer
----------------------------
Vice President
<PAGE>
EXHIBIT B
AMERICAN STOCK TRANSFER & TRUST COMPANY
40 WALL ST.
NEW YORK, NY 10005
CONSOLIDATED REPORT OF CONDITION AND INCOME FOR A BANK WITH DOMESTIC
OFFICES ONLY AND TOTAL ASSETS OF LESS THAN $100 MILLION REPORT AT CLOSE OF
BUSINESS ON JUNE 30, 1998
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC - BALANCE SHEET
DOLLAR AMOUTS IN THOUSANDS
- --------------------------------------------------------------------------------
ASSETS
1. Cash and balances due from depository institutions: 345
a. Noninterest-bearing balances and currency and coin
b. Interest-bearing balances
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A)
b. Available-for-sale securities (from Schedule RC-B, column D) 6,478
3. Federal funds sold and securities purchased under agreements
to resell
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule RC-C)
b. LESS: Allowance for loan and lease losses
c. LESS: Allocated transfer risk reserve
d. Loans and leases, net of unearned income, allowance, and
reserve (item 4.a minus 4.b and 4.c
5. Trading assets
6. Premises and fixed assets (including capitalized leases) 4,066
7. Other real estate owned (from Schedule RC-M)
8. Investments in unconsolidated subsidiaries and associated companies
(from Schedule RC-M)
9. Customers' liability to this bank on acceptances outstanding
10. Intangible assets (from Schedule RC-M)
11. Other asssets (from Schedule RC-F) 7,638
12. a. Total assets (sum of items 1 through 11) 18,527
b. Losses deferred pursuant to 12 U.S.C. 1823 (j)
c. Total assets and losses deferred pursuant to 12 U.S.C.
1823 (j) (sum of items 12.a and 12.b) 18,527
<PAGE>
SCHEDULE RC - CONTINUED
DOLLAR AMOUNTS IN THOUSANDS
- --------------------------------------------------------------------------------
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and C
from Schedule RC-E)
(1) Noninterest-bearing
(2) Interest-bearing
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs
(1) Noninterest-bearing
(2) Interest-bearing
14. Federal funds purchased and securities sold under agreements
to repurchase
15. a. Demand notes issued to the U.S. Treasury
b. Trading liabilities
16. Other borrowed money (includes mortgage indebtedness and
obligations under capitalized leases):
a. With a remaining maturity of one year or less
b. With a remaining maturity of more than one year
through three years
c. With a remaining maturity of more than three years
17. Not applicable
18. Bank's liability on acceptances executed and outstanding
19. Subordinated notes and debentures
20. Other liabilities (from Schedule RC-G) 3,076
21. Total liabilities (sum of items 13 through 20) 3,076
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus
24. Common stock 600
25. Surplus (exclude all surplus related to preferred stock) 9,290
26. a. Undivided profits and capital reserves 5,561
b. Net unrealized holding gains (losses) on available-for-sale
securities
27. Cumulative foreign currency translation adjustments
28. a. Total equity capital (sum of items 23 through 27) 15,451
b. Losses deferred pursuant to 12 U.S.C. 1823(j)
c. Total equity capital and losses deferred pursuant to 12
U.S.C. 1823(j) (sum of items 28.a and 28.b) 15,451
29. Total liabilities, equity capital, and losses deferred pursuant
to 12 U.S.C.. 1823 (j) (sum of items 21 and 28.c) 18,527
<PAGE>
SUPERIOR TELECOM INC.
PROXY
SPECIAL MEETING OF STOCKHOLDERS
[MARCH 16], 1999
This proxy is solicited on behalf of the Board of Directors of Superior
TeleCom Inc. ("Superior") for the special meeting of stockholders (including any
adjournments or postponements thereof, the "Special Meeting") of Superior to be
held on [March 16], 1999.
Unless otherwise specified below, the undersigned, a holder of record of
shares of common stock, par value $.01 per share ("Common Stock"), of Superior
at the close of business on [February 16],1999 (the "Record Date"), hereby
appoints Steven S. Elbaum, David S. Aldridge or Stewart H. Wahrsager, or any of
them, the proxy or proxies of the undersigned, each with full power of
substitution, to attend the Special Meeting and to vote as specified in this
proxy all the shares of Common Stock which the undersigned would otherwise be
entitled to vote if personally present. At the Special Meeting, holders of
Common Stock will be voting on whether to approve and adopt (1) an amendment to
Superior's certificate of incorporation to (a) increase the authorized number of
shares of preferred stock, par value $.01 per share ("Preferred Stock"), of
Superior from one million to five million and (b) increase the authorized number
of shares of Common Stock from 25 million to 35 million, and in connection
therewith, to authorize the issuance of 8 1/2% trust convertible preferred
securities of Superior Trust I (the "Trust Preferred Securities"), as provided
in the Agreement and Plan of Merger, dated as of October 21, 1998, by and among
Superior, SUT Acquisition Corp., a wholly owned subsidiary of Superior, and
Essex International Inc., and the Common Stock issuable upon conversion of the
Trust Preferred Securities, and (2) an amendment to the Superior 1996 Stock
Option Plan. The undersigned hereby revokes any previous proxies with respect to
the matters covered in this proxy.
THE BOARD OF DIRECTORS OF SUPERIOR RECOMMENDS A VOTE FOR APPROVAL
AND ADOPTION OF PROPOSALS 1 AND 2 ABOVE
IF RETURNED CARDS ARE SIGNED AND DATED BUT NOT MARKED YOU WILL BE DEEMED TO HAVE
VOTED TO APPROVE AND ADOPT PROPOSALS 1 AND 2 ABOVE
<PAGE>
<TABLE>
<S> <C> <C> <C>
1. The approval and adoption of (a) the amendment to Superior's certificate of incorporation to increase the
authorized number of shares of Preferred Stock from one million to five million and to increase the
authorized number of shares of Common Stock from 25 million to 35 million and (b) the issuance of the
Trust Preferred Securities and the Common Stock issuable upon conversion of the Trust Preferred
Securities.
/ / FOR / / AGAINST / / ABSTAIN
2. The approval and adoption of an amendment to the Superior 1996 Stock Option Plan.
/ / FOR / / AGAINST / / ABSTAIN
In their discretion, the proxies are authorized to vote upon such other business as may properly come
before the Special Meeting.
</TABLE>
Proxies can only be given by stockholders of record on the Record Date.
Please sign your name below exactly as it appears hereon. When shares of Common
Stock are held of record by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such. If a corporation, please sign in full corporate name by president or
other authorized officer. If a partnership, please sign in partnership name by
authorized person.
<TABLE>
<S> <C>
Dated:
-------------------------------------------------------,
1999
-----------------------------------------------------------
Signature (Title, if any)
-----------------------------------------------------------
Signature if held jointly
</TABLE>
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
<PAGE>
ESSEX INTERNATIONAL INC.
PROXY
SPECIAL MEETING OF STOCKHOLDERS
[MARCH 16], 1999
This proxy is solicited on behalf of the Board of Directors of Essex
International Inc. ("Essex") for the special meeting of stockholders (including
any adjournments or postponements thereof, the "Special Meeting") of Essex to be
held on [March 16], 1999.
Unless otherwise specified below, the undersigned, a holder of record of
shares of common stock, par value $.01 per share ("Common Stock"), of Essex at
the close of business on [February 16], 1999 (the "Record Date"), hereby
appoints Steven R. Abbott, Robert D. Lindsay or Debra F. Minott, or any of them,
the proxy or proxies of the undersigned, each with full power of substitution,
to attend the Special Meeting and to vote as specified in this proxy all the
shares of Common Stock which the undersigned would otherwise be entitled to vote
if personally present. At the Special Meeting, holders of Common Stock will be
voting on whether to approve and adopt the Agreement and Plan of Merger, dated
as of October 21, 1998 (the "Merger Agreement"), by and among Superior TeleCom
Inc., SUT Acquisition Corp. and Essex, providing for the merger of SUT
Acquisition Corp. with and into Essex as a result of which Essex will become a
wholly owned subsidiary of Superior TeleCom Inc. The undersigned hereby revokes
any previous proxies with respect to the matters covered in this proxy.
THE BOARD OF DIRECTORS OF ESSEX RECOMMENDS A VOTE FOR APPROVAL
AND ADOPTION OF THE MERGER AGREEMENT
IF RETURNED CARDS ARE SIGNED AND DATED BUT NOT MARKED YOU WILL BE DEEMED TO HAVE
VOTED TO APPROVE AND ADOPT THE MERGER AGREEMENT
<PAGE>
<TABLE>
<S> <C> <C> <C>
1. The approval and adoption of the Merger Agreement providing for the merger of SUT Acquisition Corp. with
and into Essex.
/ / FOR / / AGAINST / / ABSTAIN
In their discretion, the proxies are authorized to vote upon such other business as may properly come
before the Special Meeting.
</TABLE>
Proxies can only be given by stockholders of record on the Record Date.
Please sign your name below exactly as it appears hereon. When shares of Common
Stock are held of record by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such. If a corporation, please sign in full corporate name by president or
other authorized officer. If a partnership, please sign in partnership name by
authorized person.
<TABLE>
<S> <C>
Dated: ------------------------------------------------, 1999
-------------------------------------------------------------
Signature (Title, if any)
-------------------------------------------------------------
Signature if held jointly
</TABLE>
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
