SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by Registrant [X]
Filed by a Party other than Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials [ ]
Soliciting Material Pursuant to Rule 14a-11(c) or Rule
14a-12
ANDERSEN GROUP, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i) and 0-11.
(1) Tile of each class of securities to which transaction applied:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
ANDERSEN GROUP, INC.
1280 Blue Hills Avenue
Bloomfield, Connecticut 06002-1374
(860) 242-0761
January 27, 1998
Dear Stockholder:
You are cordially invited to attend a special meeting (the "Special Meeting") of
the stockholders of Andersen Group, Inc. (the "Company"), which will be held at
the corporate headquarters of the principal subsidiary of the Company, The J.M.
Ney Company, located at Ney Industrial Park, 2 Douglas Street, Bloomfield,
Connecticut, on February 25, 1998 starting at 10:00 a.m., local time. A notice
of the Special Meeting, a proxy card and a Proxy Statement containing important
information about the matters to be acted upon at the Special Meeting are
enclosed.
At the Special Meeting, you will be asked to consider and vote upon a proposal
(the "Proposal") to amend and restate the Company's Certificate of Incorporation
to modify the terms of the Company's Series A Cumulative Convertible Preferred
Stock.
THE BOARD OF DIRECTORS HAS APPROVED THE PROPOSAL, BELIEVES THE ADOPTION OF THE
PROPOSAL IS IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS, AND
RECOMMENDS THAT THE STOCKHOLDERS VOTE IN FAVOR OF THE PROPOSAL.
Whether or not you are personally able to attend the Special Meeting, please
complete, sign and date the enclosed proxy card and return it in the enclosed
prepaid envelope as soon as possible. This action will not limit your right to
vote in person if you wish to attend the Special Meeting and vote personally.
Sincerely yours,
/s/ Francis E. Baker
Francis E. Baker
Chairman and Secretary
<PAGE>
ANDERSEN GROUP
-------------------------------------------------------------
Notice of
Special Meeting
and
Proxy Statement
A special meeting of the stockholders
of Andersen Group, Inc. will be
held on Wednesday, February 25, 1998
at 10:00 a.m., at the corporate
headquarters of the principal
subsidiary of the Company,
The J. M. Ney Company,
Ney Industrial Park,
2 Douglas Street,
Bloomfield, Connecticut
----------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS TO BE
HELD ON FEBRUARY 25, 1998......................................................i
PROXY STATEMENT
FOR SPECIAL MEETING OF STOCKHOLDERS............................................1
THE SPECIAL MEETING............................................................1
TIME AND PLACE; PURPOSES....................................................1
VOTING RIGHTS; VOTES REQUIRED FOR APPROVAL..................................1
CERTAIN CONDITIONS TO THE PROPOSAL..........................................2
PROXIES.....................................................................2
DISCUSSION OF APPRAISAL/DISSENTERS' RIGHTS..................................3
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.................3
SECURITY OWNERSHIP OF MANAGEMENT............................................3
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS.............................3
THE PROPOSAL...................................................................6
AMENDMENT AND RESTATEMENT OF THE CERTIFICATE OF INCORPORATION TO CHANGE THE
TERMS OF THE PREFERRED STOCK..............................................6
Elimination of Dividend Restrictions on the
Common Stock and the Preferred Stock...................................6
Elimination of the Dividend Arrearages...................................7
Provision for Fixed Rate of Return.......................................7
Elimination of Mandatory Redemption......................................7
RECOMMENDATION OF THE BOARD OF DIRECTORS.......................................7
THE COMPANY....................................................................8
General..................................................................8
Electronics Segment......................................................8
Ultrasonics Segment......................................................9
Other Investments........................................................9
RECENT DEVELOPMENTS CONCERNING THE PREFERRED STOCK............................10
RESTRICTIVE COVENANTS.........................................................11
Debenture Indenture.....................................................11
IRB Indenture...........................................................12
SUMMARY FINANCIAL DATA........................................................13
PRO FORMA DATA................................................................14
PRICE RANGES OF THE COMMON STOCK..............................................15
DIVIDENDS.....................................................................15
DESCRIPTION OF CAPITAL STOCK..................................................16
General.................................................................16
Common Stock............................................................16
Preferred Stock.........................................................17
Redemption..............................................................18
Voting..................................................................19
Liquidation, Dissolution and Winding-Up.................................19
Preemptive Rights.......................................................19
Conversion Rights.......................................................19
EXPENSES OF SOLICITATION......................................................20
INDEPENDENT AUDITORS..........................................................20
INCORPORATION BY REFERENCE....................................................20
ADDITIONAL INFORMATION........................................................21
OTHER MATTERS.................................................................21
EXHIBIT 1-
SECOND AMENDED AND RESTATED
CERTIFICATE OF
INCORPORATION
OF ANDERSEN GROUP, INC.
....................................................................E-1
<PAGE>
ANDERSEN GROUP, INC.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS TO BE
HELD ON FEBRUARY 25, 1998
NOTICE IS HEREBY GIVEN that a special meeting of the stockholders (including any
adjournment or postponement thereof, the "Special Meeting") of Andersen Group,
Inc., a Connecticut corporation (the "Company"), will be held at the corporate
headquarters of the principal subsidiary of the Company, The J.M. Ney Company,
located at Ney Industrial Park, 2 Douglas Street, Bloomfield, Connecticut,
starting at 10:00 a.m., local time, on February 25, 1998, for the following
purposes:
1. To amend and restate the Company's Amended and Restated Certificate
of Incorporation (the "Certificate of Incorporation") so as to
eliminate certain restrictions on the payment of dividends on the
Company's Common Stock, no par value (the "Common Stock") and the
Company's Series A Cumulative Convertible Preferred Stock, no par
value (the "Preferred Stock"), change the dividend payment rate on
the Preferred Stock and eliminate the requirement that the Company
redeem the Preferred Stock; and
2. To transact such other business as may properly come before the
Special Meeting.
Holders of record of the Common Stock and the Preferred Stock at the close of
business on January 21, 1998, the record date for the Special Meeting, will be
entitled to notice of and to vote at the Special Meeting.
Under Connecticut law, the holders of the Preferred Stock may assert dissenters'
rights with regards to the proposed amendment and restatement of the Certificate
of Incorporation.
To assure that your interests will be represented at the Special Meeting,
regardless of whether you plan to attend in person, please complete, date and
sign the enclosed proxy card and return it promptly in the enclosed return
envelope, which requires no postage if mailed in the United States. This action
will not limit your right to vote in person if you wish to attend the Special
Meeting and vote personally.
By Order of the Board of Directors
/s/ Francis E. Baker
Francis E. Baker, Chairman and Secretary
Bloomfield, Connecticut
PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY PROMPTLY, WHETHER OR NOT YOU INTEND
TO BE PRESENT AT THE SPECIAL MEETING.
<PAGE>
-11-
ANDERSEN GROUP, INC.
1280 BLUE HILLS AVENUE
BLOOMFIELD, CONNECTICUT 06002-1374
PROXY
STATEMENT
FOR SPECIAL MEETING OF STOCKHOLDERS
This Proxy Statement is being furnished in connection with the solicitation by
the Board of Directors of Andersen Group, Inc., a Connecticut corporation (the
"Company"), of proxies for use at a special meeting of the stockholders of the
Company, or at any adjournment or postponement thereof (the "Special Meeting"),
for the purposes set forth in the accompanying Notice of Special Meeting of
Stockholders. Proxies are being solicited from the holders of the following
securities of the Company: (i) Andersen Group, Inc. Common Stock, no par value
(the "Common Stock") and (ii) Andersen Group, Inc. Series A Cumulative
Convertible Preferred Stock, no par value (the "Preferred Stock").
THE SPECIAL MEETING
TIME AND PLACE; PURPOSES
The Special Meeting will be held at the headquarters of the principal subsidiary
of the Company, The J.M. Ney Company, located at Ney Industrial Park, 2 Douglas
Street, Bloomfield, Connecticut on Wednesday, February 25, 1998, starting at
10:00 a.m. local time. At the Special Meeting, the stockholders of the Company
will be asked to consider and vote upon (a) a proposal (the "Proposal") to amend
and restate the Company's Amended and Restated Certificate of Incorporation (the
"Certificate of Incorporation"), so as to eliminate certain restrictions on the
payment of dividends on the Common Stock and the Preferred Stock, to change the
dividend payment rate on the Preferred Stock and to eliminate the requirement
that the Company redeem the Preferred Stock and (b) such other business as may
properly come before the Special Meeting. See "THE PROPOSAL". For purposes of
this Proxy Statement and the Special Meeting, the proposed Second Amended and
Restated Certificate of Incorporation of the Company, which appears as "EXHIBIT
1", shall be referred to as the "Amended Certificate".
This Proxy Statement and the accompanying form of proxy are first being mailed
to the holders of shares of the Common Stock and the Preferred Stock on or about
January 27, 1998.
VOTING RIGHTS; VOTES REQUIRED FOR APPROVAL
The Board of Directors has fixed the close of business January 21, 1998 (the
"Record Date") as the date for the determination of holders of shares of the
Common Stock and the Preferred Stock entitled to notice of and to vote at the
Special Meeting. Only holders of record of such shares at the close of business
on the Record Date are entitled to notice of and to vote at the Special Meeting.
Holders of record of the Common Stock and the Preferred Stock will vote as
separate classes at the Special Meeting. At the close of business on the Record
Date, there were 1,935,478 shares of Common Stock and 256,448 shares of
Preferred Stock outstanding and entitled to vote at the Special Meeting. Each
holder of Common Stock will be entitled to one vote for each share held. Each
holder of Preferred Stock will be entitled to one vote for each share held.
The presence, in person or by proxy, of the holders of a majority of the voting
power of the outstanding shares of the Common Stock entitled to vote is
necessary to constitute a quorum at the Special Meeting. Approval of the
Proposal by the class of Common Stock holders will require that more votes of
the Common Stock must be cast in favor of the Proposal than against the
Proposal.
The presence, in person or by proxy, of the holders of a majority of the voting
power of the outstanding shares of the Preferred Stock entitled to vote is
necessary to constitute a quorum at the Special Meeting. Approval of the
Proposal by the class of Preferred Stock holders will require, in accordance
with the minimum statutory requirements applicable under Connecticut law, that
not less than a majority of the outstanding shares of Preferred Stock be voted
in favor of the Proposal. However, even if a majority of outstanding shares of
Preferred Stock is voted in favor of the Proposal, the Company has reserved the
right not to implement the Proposal. See "CERTAIN CONDITIONS TO THE PROPOSAL",
immediately below.
CERTAIN CONDITIONS TO THE PROPOSAL
Regardless of whether the Proposal is approved at the Special Meeting by the
requisite percentage of the class of holders of shares of the Preferred Stock
and the class of holders of shares of the Common Stock as provided above, the
Company will not implement the Proposal unless the Company has legally available
funds: (a) to remove the indenture pursuant to which the Company's 10 1/2%
Convertible Subordinated Debentures due 2002 (the "Old Debentures") were issued
(the "Debenture Indenture") by purchasing all of the Old Debentures, if any, not
tendered pursuant to the Company's exchange offer for the Old Debentures (the
"Exchange Offer"); (b) to extinguish the indenture of trust dated December 20,
1983 from the Company to the Trustee named therein, as amended (the "IRB
Indenture"); and (c) to pay the dividend arrearages on the Preferred Stock (the
"Dividend Arrearages").
If 85% or more of the outstanding shares of Preferred Stock are voted in favor
of the Proposal, at least a majority of the shares of Common Stock are voted in
favor of the Proposal, and at least 66 2/3% of the Company's outstanding Old
Debentures are tendered in the Exchange Offer, then, subject to the legal
availability of funds, the Company will: (1) purchase any Old Debentures not
tendered in the Exchange Offer; (2) extinguish the IRB Indenture; (3) pay the
Dividend Arrearages; and (4) file the Amended Certificate.
In addition, if more than a majority but less than 85% of the outstanding shares
of Preferred Stock are voted in favor of the Proposal, and at least a majority
of the outstanding shares of Common Stock are voted in favor of the Proposal,
the Company may, but shall not be obligated to, remove the restrictive covenants
in the Old Debentures and the IRB Indenture (the "Restrictive Covenants") by
purchasing any Old Debentures not tendered in the Exchange Offer and
extinguishing the IRB Indenture. If the Restrictive Covenants are not removed,
the Company will be unable to pay the Dividend Arrearages for at least the
foreseeable future. Unless the Dividend Arrearages are paid, the Amended
Certificate will not be filed.
SEE "RESTRICTIVE COVENANTS" and "DIVIDENDS".
PROXIES
All shares of the Common Stock and the Preferred Stock represented by properly
executed proxies received prior to or at the Special Meeting, and not revoked,
will be voted in accordance with the instructions indicated in such proxies. If
no instructions are indicated, such proxies will be voted FOR the Proposal. So
far as the Company's Board of Directors is aware, the Proposal is the only
matter to be acted upon at the Special Meeting. As to any other matter which may
properly come before the Special Meeting, the persons named in the accompanying
proxy card will vote thereon in accordance with their best judgment. A properly
executed proxy marked "ABSTAIN", although counted for purposes of determining
whether there is a quorum and for purposes of determining the aggregate voting
power and number of shares represented and entitled to vote at the Special
Meeting, will not be voted for or against the Proposal.
Broker nonvotes are counted for purposes of determining the number of shares
represented at the Special Meeting but broker nonvotes are deemed not to have
voted on the Proposal. Broker nonvotes occur when a broker nominee does not vote
on the Proposal because it has not received instructions to so vote from the
beneficial owner and does not have discretionary authority to vote.
Votes are counted by tellers of the Company's transfer agent. Representatives of
the Company or of the Company's transfer agent will canvas the shareholders
present at the Special Meeting, count their votes and count the votes
represented by proxies presented.
A stockholder may revoke his or her proxy at any time prior to its use by
delivering to the Secretary of the Company a signed notice of revocation or a
later dated signed proxy or by attending the Special Meeting and voting in
person. Attendance at the Special Meeting will not in itself constitute the
revocation of a proxy.
The cost of solicitation of proxies will be paid by the Company. In addition to
solicitation by mail, officers, directors and employees of the Company may
solicit proxies by telephone, telegram, in person or by other means. Such
persons will receive no additional compensation for such services. Brokerage
houses, nominees, fiduciaries and other custodians will be requested to forward
soliciting material to the beneficial owners of shares held of record by them
and will be reimbursed for their reasonable out-of-pocket expenses in connection
therewith.
DISCUSSION OF APPRAISAL/DISSENTERS' RIGHTS
Under Connecticut law, the holders of the shares of the Preferred Stock may
assert dissenters' rights with regard to the Proposal and begin a process that
may result in an appraisal of such holders' shares of the Preferred Stock. To
assert dissenters' rights, a holder of shares of the Preferred Stock must not
vote affirmatively for the Proposal and must submit written notice to the
Company before the vote is taken that such holder of shares of the Preferred
Stock is asserting dissenters' rights.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF MANAGEMENT
Mr. Oliver R. Grace, Jr., the President, Chief Executive Officer and a Director
of the Company, Mr. John S. Grace, a Director of the Company, Mr. Peter N.
Bennett, a Director of the Company and Mr. Francis E. Baker, Chairman of the
Company's Board of Directors have indicated their intention to vote all shares
of the Common Stock and the Preferred Stock that they beneficially own in favor
of the Proposal. As of December 31, 1997, these stockholders beneficially owned
in the aggregate approximately 196,000 and 114,000 shares of the Common Stock
and the Preferred Stock, respectively, representing approximately 10% and 44% of
the Common Stock and the Preferred Stock, respectively.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information regarding the beneficial ownership of
the Common Stock and the Preferred Stock, as of December 31, 1997, by each
director, by each named executive officer of the Company, by persons who
beneficially own 5% or more of the outstanding shares of Common and/or Preferred
Stock, and by all directors and executive officers of the Company as a group.
The beneficial ownership information described and set forth below is based on
information furnished by the specified persons and is determined in accordance
with Rule 13d-3 under the Securities Exchange Act of 1934, as amended. It does
not constitute an admission of beneficial ownership for any other purpose.
Except as otherwise indicated, the persons shown exercise sole voting and
investment power over the shares. Where indicated in footnotes to the table,
share ownership includes shares subject to options or warrants that are
currently exercisable or will become exercisable within 60 days of the date of
this Proxy Statement.
<TABLE>
<S> <C> <C> <C> <C> <C>
------------------------------------------------ ------------------------------- ------------------------------
Name and Address of Amount and Nature of Percent of Class
Beneficial Owner Beneficial Ownership
------------------------------------------------ ------------------------------- ------------------------------
------------------------------------------------ --------------- --------------- ---------------- -------------
Preferred Common Preferred Common
------------------------------------------------ --------------- --------------- ---------------- -------------
------------------------------------------------ --------------- --------------- ---------------- -------------
Francis E. Baker(1) 0 135,039 0 7.0
8356 Sego Lane
Vero Beach, Florida
------------------------------------------------ --------------- --------------- ---------------- -------------
------------------------------------------------ --------------- --------------- ---------------- -------------
Estate of Oliver R. Grace, Sr.(2) 0 101,596 0 5.3
c/o Lorraine G. Grace, Executrix
49 Cove Neck Road
Oyster Bay, New York
------------------------------------------------ --------------- --------------- ---------------- -------------
------------------------------------------------ --------------- --------------- ---------------- -------------
Lorraine G. Grace(3) 0 131,317 0 6.7
49 Cove Neck Road
Oyster Bay, New York
------------------------------------------------ --------------- --------------- ---------------- -------------
------------------------------------------------ --------------- --------------- ---------------- -------------
Oliver R. Grace, Jr. (4) 6,000 177,347 2.3 8.6
55 Brookville Road
Glen Head, New York
------------------------------------------------ --------------- --------------- ---------------- -------------
------------------------------------------------ --------------- --------------- ---------------- -------------
John S. Grace(5) 22,571 136,436 8.8 6.7
55 Brookville Road
Glen Head, New York
------------------------------------------------ --------------- --------------- ---------------- -------------
------------------------------------------------ --------------- --------------- ---------------- -------------
Peter N. Bennett(6) 85,150 168,065 33.2 8.0
6 Batersea High St.
London SW11 3RA, England
------------------------------------------------ --------------- --------------- ---------------- -------------
------------------------------------------------ --------------- --------------- ---------------- -------------
The Bank of Butterfield(7) 16,863 296,675 6.6 15.1
Rose Bank Centre
14 Bermudiana Road
Hamilton, Bermuda
------------------------------------------------ --------------- --------------- ---------------- -------------
------------------------------------------------ --------------- --------------- ---------------- -------------
First United Securities Limited(8) 0 135,844 0 7.0
Exchange House
P.O. Box 16, 54-58 Athol Street
Douglas, Isle of Man
------------------------------------------------ --------------- --------------- ---------------- -------------
------------------------------------------------ --------------- --------------- ---------------- -------------
Steven T. Newby(9) 0 123,417 0 6.4
6116 Executive Boulevard
Suite 701
Rockville, Maryland
------------------------------------------------ --------------- --------------- ---------------- -------------
------------------------------------------------ --------------- --------------- ---------------- -------------
Louis A. Lubrano(10) 0 8,618 0 (11)
------------------------------------------------ --------------- --------------- ---------------- -------------
------------------------------------------------ --------------- --------------- ---------------- -------------
James J. Pinto(12) 0 16,000 0 (11)
------------------------------------------------ --------------- --------------- ---------------- -------------
------------------------------------------------ --------------- --------------- ---------------- -------------
Ronald N. Cerny(13) 0 7,500 0 (11)
------------------------------------------------ --------------- --------------- ---------------- -------------
------------------------------------------------ --------------- --------------- ---------------- -------------
Andrew M. O'Shea(14) 0 10,000 0 (11)
------------------------------------------------ --------------- --------------- ---------------- -------------
------------------------------------------------ --------------- --------------- ---------------- -------------
All directors and executive officers as a 113,721 557,185 44.3 24.5
group (3 (Preferred) and 8 (Common) persons
including certain of the above-named
individuals)
------------------------------------------------ --------------- --------------- ---------------- -------------
</TABLE>
(1) Francis E. Baker has beneficial ownership of an aggregate of 135,039
shares of Common Stock and no shares of Preferred Stock. Of the Common
Stock amount 120,001 shares are owned directly. The figure set forth in
the table includes 10,400 shares of Common Stock with respect to which
Mr. Baker has shared voting power as co-trustee under the Oliver R.
Grace Grandchildren Trust U/R dated December 27, 1976 and 4,638 shares
which such Trust owns by virtue of its ability to convert $75,000
principal amount of the Company's 10.5% Convertible Subordinated
Debentures (the "Debentures") to Common Stock within a 60-day period.
Mr. Baker disclaims beneficial ownership of such shares held in trust.
In addition to the shares reported in the table, Mr. Baker is the
settlor of four irrevocable trusts dated March 31, 1970 created for the
benefit of certain of his children. Fleet National Bank acts as trustee
under each of these trusts, which hold an aggregate of 68,306 shares of
Common Stock. Mr. Baker does not exercise any control over these four
trusts and disclaims beneficial ownership.
(2) The Estate of Oliver R. Grace, Sr., c/o Lorraine G. Grace, Executrix,
has direct beneficial ownership of an aggregate of 101,596 shares of
Common Stock and no shares of Preferred Stock.
(3) Lorraine G. Grace has beneficial ownership of 131,317 shares of Common
Stock and no shares of Preferred Stock. Of the Common Stock amount,
13,638 shares are held by Mrs. Grace directly; 2,475 shares are held by
Mrs. Grace, as trustee of a trust for the benefit of her children;
13,608 shares are held by virtue of the ability of Mrs. Grace to convert
$220,000 principal amount of the Debentures to Common Stock within a
60-day period; and 101,596 shares are held by virtue of Mrs. Grace's
appointment as executrix of the Estate of Oliver R. Grace, Sr. Lorraine
G. Grace is the mother of Directors Oliver R. Grace, Jr. and John S.
Grace.
(4) Oliver R. Grace, Jr. has beneficial ownership of an aggregate of 177,347
shares of Common Stock and 6,000 shares of Preferred Stock. Of the
Common Stock amount, 44,444 shares are held by Oliver R. Grace, Jr.
directly, including 40,144 shares by virtue of Mr. Grace's ability to
convert $649,000 principal amount of the Debentures to Common Stock
within a 60-day period; 11,610 shares are held by virtue of Mr. Grace's
ability, as custodian for the benefit of his children, to convert 6,000
shares of the Company's Preferred Stock, to Common Stock within a 60-day
period; 7,593 shares are held by Carolyn Grace, the spouse of Oliver R.
Grace, Jr., of which 7,113 shares are held by Mrs. Grace by virtue of
her ability to convert $115,000 principal amount of the Debentures to
Common Stock within a 60-day period; 58,144 shares are held by virtue of
the ability of The Anglo American Security Fund L.P. (of which Oliver R.
Grace, Jr. is a general partner) to convert $940,000 principal amount of
the Debentures to Common Stock within a 60-day period; 37,000 shares are
held by a corporation owned by members of Mr. Grace's family and 9,056
shares are held in an individual retirement account for the benefit of
Mr. Grace. Mr. Grace, Jr. also holds stock options to acquire an
additional 9,500 shares of Common Stock which may be issued to him
within a 60-day period. Oliver R. Grace, Jr. disclaims beneficial
ownership of all shares owned by his spouse, by him as trustee for the
benefit of family members, by his children, and by The Anglo American
Security Fund, L.P. described herein.
(5) John S. Grace has beneficial ownership of 136,436 shares of Common Stock
and 22,571 shares of Preferred Stock. Of the Common Stock amount, 17,706
shares are owned by John S. Grace directly, including 1,856 shares held
by virtue of Mr. Grace's ability to convert $30,000 principal amount of
the Debentures to Common Stock within a 60-day period; 58,144 shares are
held by virtue of the ability of The Anglo American Security Fund L.P.
(of which John S. Grace is a general partner) to convert $940,000
principal amount of the Debentures to Common Stock within a 60-day
period; 1,856 shares are held by virtue of the ability of Florida & Asia
Consulting, Inc. (Lola Grace, the spouse of John S. Grace, is the sole
shareholder of Florida & Asia Consulting, Inc.) to convert $30,000
principal amount of the Debentures to Common Stock within a 60-day
period; 43,675 shares are held by virtue of the ability of Sterling
Grace Capital Management, L.P. (John S. Grace is Chairman of Sterling
Grace Corporation, the general partner of Sterling Grace Capital
Management, L.P.) to convert 22,571 shares of the Preferred Stock to
Common Stock within a 60-day period and 9,055 shares are held in an
individual retirement account for Mr. Grace's benefit. Mr. Grace also
holds stock options to acquire an additional 6,000 shares of Common
Stock. John S. Grace disclaims beneficial ownership of all shares held
by Trustees for the benefit of members of his family and The Anglo
American Security Fund L.P.
(6) Peter N. Bennett has beneficial ownership of 168,065 shares of Common
Stock and 85,150 shares of Preferred Stock. Of the Common Stock amount,
300 shares of Common Stock are owned directly. The figure set forth in
the table includes shares held by virtue of the ability of Mr. Bennett
to convert 85,150 shares of the Preferred Stock to 164,765 shares of
Common Stock within a 60-day period. Also included in the figure set
forth in the table are 3,000 shares of Common Stock which may be issued
to Mr. Bennett within 60 days hereof upon the exercise of his existing
exercisable stock option.
(7) The Bank of Butterfield (the "Bank") has beneficial ownership of an
aggregate 296,675 shares of Common Stock and 16,863 shares of Preferred
Stock as trustee of various trusts. Of the Common Stock amount 32,630
shares are held by virtue of the Bank's ability, as trustee, to convert
16,863 shares of the Preferred Stock to Common Stock within a 60-day
period.
(8) First United Securities Limited ("FUSL") has beneficial ownership of an
aggregate of 135,844 shares of Common Stock, as trustee of various
trusts, and no shares of Preferred Stock. Of the Common Stock amount
11,134 shares are held by virtue of the ability of FUSL to convert
$180,000 principal amount of the Debentures to Common Stock within a
60-day period.
(9) Steven T. Newby, a broker/dealer at Newby & Company, owns 123,417 shares
of Common Stock directly and no shares of Preferred Stock.
(10) Louis A. Lubrano has beneficial ownership of 8,618 shares of Common
Stock and no shares of Preferred Stock. Of the Common Stock amount 618
shares are held by virtue of Mr. Lubrano's ability to convert $10,000
principal amount of the Debentures to Common Stock within a 60-day
period. Mr. Lubrano also has stock options to acquire 8,000 shares of
Common Stock within a 60-day period.
(11) Represents less than one percent (1%) of the Common Stock.
(12) James J. Pinto has beneficial ownership of 16,000 shares of Common Stock
and no shares of Preferred Stock. Of the Common Stock amount 8,000
shares are held directly. Also included in the figure set forth in the
table are stock options to acquire 8,000 shares of Common Stock within a
60-day period.
(13) Ronald N. Cerny does not own any shares of Common or Preferred Stock
directly. The figure set forth in the table represents a stock option to
acquire 7,500 shares of Common Stock within a 60-day period.
(14) Andrew M. O'Shea does not own any shares of Common or Preferred Stock
directly. The figure set forth in the table represents a stock option to
acquire 10,000 shares of Common Stock within a 60-day period.
THE PROPOSAL
AMENDMENT AND RESTATEMENT OF THE CERTIFICATE OF INCORPORATION TO CHANGE THE
TERMS OF THE PREFERRED STOCK
The purpose of the Proposal is to provide the holders of the Preferred Stock
with a fixed rate dividend, remove the Restrictive Covenants to paying dividends
on the Common Stock and the Preferred Stock, eliminate the mandatory redemption
feature of the Preferred Stock and provide liquidity by causing the Dividend
Arrearages to be paid. The Statement Fixing and Determining the Terms of Shares
of Series A Cumulative Convertible Preferred Stock of Andersen Group, Inc. (the
"Statement Fixing and Determining the Terms of the Preferred Stock"), which
appears as an exhibit to the Certificate of Incorporation, provides for (a) a
variable rate dividend on the Preferred Stock, (b) certain restrictions on the
payment of dividends on the Common Stock and the Preferred Stock, and (c) the
mandatory redemption of the Preferred Stock. Subject to the Company's having
legally available funds, if the Proposal is approved, and if certain other
conditions set forth herein are satisfied (see "CERTAIN CONDITIONS TO THE
PROPOSAL"), the Certificate of Incorporation will be amended and restated by
filing the Amended Certificate so that the Statement Fixing and Determining the
Terms of the Preferred Stock (a) provides a fixed rate of dividends on the
Preferred Stock, (b) does not contain any restrictions on the payments of
dividends based on the IRB Indenture, and (c) does not provide for a mandatory
redemption of the Preferred Stock. The full text of the proposed Amended
Certificate is set forth as "EXHIBIT 1".
The purposes of the changes in the terms of the Preferred Stock, in conjunction
with the Exchange Offer related to the Old Debentures and the possible
retirement of the IRB Indenture, are, among other things, (a) to eliminate the
restrictions on the Company's ability to pay dividends on the Common Stock, (b)
to allow the Company to eliminate the Dividend Arrearages, and (c) to simplify
the Company's equity structure by providing for a fixed rate of dividends on the
Preferred Stock and eliminating the Company's mandatory redemption requirement.
See "THE PROPOSAL", "PRO FORMA DATA", "DIVIDENDS" and "RESTRICTIVE COVENANTS".
Elimination of Dividend Restrictions on the Common Stock and the Preferred Stock
The Company's ability to pay dividends on the Common Stock and the Preferred
Stock is subject to the Restrictive Covenants. Until there are no Old Debentures
outstanding and the IRB Indenture has been fully discharged, the Company must
satisfy certain covenants before it can pay any dividends to the holders of the
Preferred Stock or the Common Stock. Subject to the Company's having legally
available funds, if the restrictions on the payment of dividends on the
Preferred Stock and the Common Stock are removed, the Amended Certificate will
be filed. Even if the restrictions on the payment of dividends on the Preferred
Stock and the Common Stock are removed, the Company does not intend to pay a
dividend on its Common Stock in the foreseeable future. See "RESTRICTIVE
COVENANTS", "CAPITAL STOCK" and "DIVIDENDS".
<PAGE>
Elimination of the Dividend Arrearages
Under the Restrictive Covenants as now in effect, the Company must have
sufficient consolidated net income determined on a cumulative basis, net of
losses, dividends and prior redemptions or repurchases of stock, plus cash
proceeds received by the Company from sales of its stock and indebtedness
convertible into stock, before redeeming or repurchasing Common Stock or
Preferred Stock or paying dividends on the Preferred Stock or the Common Stock.
Under this test, at November 30, 1997, the Company would have needed to earn
approximately $2.25 million before it could redeem or repurchase shares of or
pay dividends on the Preferred Stock or the Common Stock.
The aggregate amount of Dividend Arrearages as of November 30, 1997 was
approximately $1.2 million. The Company's ability to pay the Dividend Arrearages
is subject to the Restrictive Covenants. Until there are no Old Debentures
outstanding and the IRB Indenture has been fully discharged, the Company must
satisfy certain covenants before it can pay the Dividend Arrearages to the
holders of the Preferred Stock.
If the Proposal is approved and the Debenture Indenture and the IRB Indenture is
removed, then, subject to the Company's having legally available funds, the
Company will pay the Dividend Arrearages. See "RESTRICTIVE COVENANTS", "CERTAIN
CONDITIONS TO THE PROPOSAL" and "RECENT DEVELOPMENTS CONCERNING THE PREFERRED
STOCK".
Provision for Fixed Rate of Return
Dividends on the Preferred Stock are currently payable at a variable rate,
depending on the operating income of The J.M. Ney Company ("J.M. Ney"), ranging
between $0.75 per share, per year, to $1.75 per share, per year. See
"DESCRIPTION OF CAPITAL STOCK-Preferred Stock". If the Amended Certificate is
filed, then, subject to the Company's having legally available funds, the
dividend rate on the Preferred Stock will be changed to a fixed rate of $1.50
per share, per year.
Elimination of Mandatory Redemption
The Statement Fixing and Determining the Terms of the Preferred Stock provides
that beginning March 1, 1996, and on each succeeding anniversary thereof, the
Company is required to redeem 160,000 shares of its Preferred Stock (to the
extent that the Company has funds legally available therefor and subject to the
Restrictive Covenants) at a price of $18.75 per share plus accrued and unpaid
dividends up to the date of payment. As discussed below under "RECENT
DEVELOPMENTS CONCERNING THE PREFERRED STOCK", as a result of the Company's
purchase of shares of Preferred Stock pursuant to the Offer to Purchase (defined
below), as well as other open market purchases to date, the Company was entitled
to a share-for-share credit against the Company's mandatory redemption
obligations of 160,000 shares of Preferred Stock scheduled for each of March 1,
1996, March 1, 1997 and March 1, 1998 and has a credit of approximately 35,000
shares towards its March 1, 1999 obligation. If the Amended Certificate is
filed, the mandatory redemption requirement of the Preferred Stock will be
eliminated. See "RESTRICTIVE COVENANTS" and "DESCRIPTION OF CAPITAL
STOCK--Redemption".
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS HAS APPROVED THE PROPOSAL AND BELIEVES THAT ITS ADOPTION
IS IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS. ACCORDINGLY, THE
BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF THE PROPOSAL.
THE COMPANY
General
The Company was incorporated under the laws of the State of Connecticut in 1951.
The Company's principal executive offices are located at 1280 Blue Hills Avenue,
Bloomfield, Connecticut.
The Company has historically made investments in companies that operated in
several highly diverse segments, and which required extensive management
participation in operation and restructure. Since 1991, the Company's primary
investment has been J.M. Ney which has operated in three industry segments:
electronics manufacturing and supply, ultrasonic cleaning equipment, and dental
supplies. In November 1995, J.M. Ney sold the assets and certain liabilities of
the dental segment.
In addition to the investment in J.M. Ney, since April 1993, the Company has
held an investment in Digital GraphiX, Incorporated ("DGI"), a video graphics
company. DGI sold substantially all of its assets in April 1997 and is currently
in the process of winding up its affairs. The Company also holds a portfolio of
marketable securities primarily comprised of the common stock of certain
financial institutions and certain Russian and Eastern European equity
securities. The Company also owns an investment in a joint venture, which has
investments in a company that holds agreements to develop data transmission
networks throughout the Commonwealth of Independent States. The Company owns a
108,000 square foot building in Bloomfield, Connecticut which it leases to its
subsidiary, Ney Ultrasonics, and to former subsidiaries and third parties.
On June 1, 1997, as part of a strategic reorganization of the Company, Oliver R.
Grace, Jr., the Company's Chairman of the Board, became President and Chief
Executive Officer, and Francis E. Baker, the Company's President, became
Secretary and Chairman of the Board. As part of this strategic reorganization,
the Company plans to relocate its principal executive offices from Bloomfield,
Connecticut to New York, New York during 1998.
Electronics Segment
The electronics segment is a full-service, precious metal and parts supplier to
automotive, medical, industrial electronics, military and semi-conductor
manufacturers. The fully integrated approach of J.M. Ney includes fabrication
and manufacture of its precious metal alloys, as well as design, engineering and
metallurgical support. The fabrication capabilities include stamping, wire
drawing, rolling from ingot to foil, precision turning, injection and insert
molding and refining.
J.M. Ney specializes in the engineering and manufacturing of precious metal
alloy contacts and contact assemblies aimed at low amperage applications.
Electrical contacts made of precious metals, including gold, platinum, palladium
and silver, are considered extremely dependable as the materials are inert and
highly resistant to corrosion and wear. In developing a finished contact or
assembly, J.M. Ney's technical staff works closely with customers, typically on
an engineer-to-engineer level, in order to design a product that meets all of
the metallurgical, electronic, dynamic and other performance specifications
required for the customer's applications. J.M. Ney designs and builds the
necessary molds and tools as well as designs and manufactures the end product.
By controlling the total process, J.M. Ney has a competitive advantage over
other companies in technology, cost and response time. J.M. Ney is certified in
all applicable quality standards, including certification for the manufacture of
its products, certification for production and supply of precious metal alloys,
dental alloys and products, as well as approval by the Japanese Industrial
Standards and the United States Food and Drug Administration.
J.M. Ney's business has limited direct competition with regard to the
manufacture of low amperage precious metal contacts and assemblies due to the
inherent risks which accompany the engineering and manufacture of precious
metals (i.e., high start-up and inventory costs, theft, etc.). While some
competitors offer similar products, J.M. Ney believes that these operations lack
the vertical integration to compete across the entire spectrum of products. J.M.
Ney faces indirect competition from companies such as Engelhard Corporation and
Johnson Matthey, Inc., which have significantly greater resources and which are
involved in higher volume production of more standard precious metal alloys.
J.M. Ney sells to more than 800 customers, with approximately 85% of its sales
being made to customers in the United States. J.M. Ney's sales are made
domestically through both field sales and manufacturers' representatives located
in key geographic markets. Internationally, J.M. Ney sells through
manufacturers' representatives, independent distributors and original equipment
manufacturers. No customer in the Electronics segment accounted for more than
10% of the Company's consolidated sales in fiscal 1997.
In connection with the sale of the assets and liabilities of J.M. Ney's Dental
segment in November, 1995, J.M. Ney entered into a three year manufacturing
agreement to alloy and fabricate precious metals for the purchaser of J.M. Ney's
dental business. As part of this agreement, J.M. Ney and the Company agreed, for
a ten-year period, not to sell alloys, equipment or merchandise into the dental
market served by the purchaser. The Company is, however, permitted to continue
producing, selling and marketing precious metal copings and other machined and
molded parts and material for use in the dental implant industry.
Ultrasonics Segment
The Ultrasonics segment, which consists of J.M. Ney's majority-owned subsidiary,
Ney Ultrasonics Inc. ("Ney Ultrasonics"), has focused on working with high-end
electronic, semi-conductor, disk-drive, medical and aerospace customers to
provide the advanced capabilities of patented ultrasonic cleaning technology.
Ney Ultrasonics' products have become the preferred choice in ultrasonics
cleaning for numerous OEM system integrators and fabricators.
J.M. Ney's EnviroSONIK(TM) and Torrent(TM) cleaning systems continue to replace
equipment and processes that use ozone-depleting chemicals which are being
phased out under mandates of provisions in the Clean Air Act of 1990. Ney
Ultrasonics is the exclusive licensee of the patented ultrasonic technology used
in its products. These products are capable of cavitating some of the newer
replacement chemistries and also incorporate technologies that eliminate damage
to microminiature components typically caused by ultrasonic equipment produced
by other manufacturers.
Ney Ultrasonics competes with a number of national and regional companies on the
basis of cleaning performance, price and delivery. Ney Ultrasonics' generators
carry a three-year general warranty which is not generally offered by its
competitors.
No customer in the Ultrasonics segment accounted for more than 10% of the
Company's consolidated sales in fiscal 1997.
Other Investments
The Company also holds a portfolio of marketable securities primarily comprised
of the common stock of certain financial institutions and certain Russian and
Eastern European equity securities. Other marketable securities include stock in
Centennial Cellular Corporation and non-investment grade high-yield bonds.
DGI, a video graphics company, comprised the Company's Video Products segment.
In April 1997 DGI sold substantially all of its assets and received the approval
of its shareholders to liquidate. The Company has received partial liquidating
dividends in August and October 1997 totaling $1.10 per share, or an aggregate
of $258,867. The liquidation is expected to be completed by February 1998. At
November 30, 1997 the carrying value of this investment was zero.
The Company also holds an investment in Treglos Investments, LTD, a joint
venture which is investing in a Russian telecommunications company that has
agreements to develop a data transmission network throughout the Commonwealth of
Independent States. The joint venture owns approximately 6% of the Institute for
Automated Systems. Among the joint venture partners are the Company's Chief
Executive Officer and another Director. The carrying value of this investment at
November 30, 1997 is approximately $900,000.
RECENT DEVELOPMENTS CONCERNING THE PREFERRED STOCK
As discussed below under "RESTRICTIVE COVENANTS", the Company is subject to
certain covenants under existing indentures which restrict payment of dividends
on or repurchases of the capital stock of the Company, including the Preferred
Stock. Since April 1993, these restrictive covenants have prohibited the Company
from declaring and paying a dividend on the Preferred Stock. At November 30,
1997, the aggregate amount of the Dividend Arrearages was approximately $1.2
million.
The terms of the Preferred Stock provide that once the Company is in arrears on
the payment of the dividends on the Preferred Stock for six consecutive
quarters, the holders of the Preferred Stock, voting together as a class, are
entitled to elect one additional director to the Company's Board of Directors at
any annual meeting of shareholders or a special meeting held in place thereof,
or at a special meeting of the holders of shares of the Preferred Stock. As of
October 16, 1994, the Company was in arrears for six consecutive quarters in the
payment of the dividends on the Preferred Stock. If and when the dividends which
are in arrears on the Preferred Stock shall have been paid or declared and set
apart for payment, the rights of the holders of the shares of the Preferred
Stock to elect an additional director shall cease (but always subject to the
same provisions for the vesting of voting rights in the case of any similar
future arrearages in dividends), and the term of office of any person elected
director by the holders of the shares of the Preferred Stock shall terminate. As
of the date hereof, no special meeting of the holders of the shares of the
Preferred Stock has been held or scheduled to elect such director.
In response to the effect the Restrictive Covenants have had on the Company's
ability to declare and pay dividends on the Preferred Stock, the Company has
undertaken a series of efforts to retire the Preferred Stock.
In January 1996, the Company consummated a self tender offer and purchased for
cash (the "Offer to Purchase") 299,561 shares of Preferred Stock for a purchase
price of $12.25 per share, or approximately $3.67 million in the aggregate. Of
that purchase price, approximately $1.50 per share of the consideration for the
Preferred Stock represented an amount that was approximately equivalent to the
eight quarterly dividends that the Company had not been able to declare and pay
on the Preferred Stock since April 15, 1993, the last date on which the Company
was able to declare and pay dividends on the Preferred Stock. At May 8, 1995,
prior to commencement of the Offer to Purchase, 589,036 shares of Preferred
Stock had been outstanding. The Company paid for the shares of Preferred Stock
purchased with a portion of the net cash proceeds received from the sale of the
J.M. Ney dental segment.
The Company was able to consummate the Offer to Purchase because the holders of
a majority in principal amount of the Old Debentures at the time outstanding
waived compliance with certain of the restrictive covenants of the IRB
Indenture.
In October 1996 the Company sought and received a second waiver of compliance
with certain of the restrictive covenants of the IRB Indenture to permit the
Company to use up to $6,000,000 to repurchase shares of the Company's capital
stock, including the Preferred Stock. To date the Company has purchased an
additional 33,027 shares of Preferred Stock through this repurchase program at
an aggregate price of approximately $552,000. Beginning March 1, 1996, and on
each succeeding anniversary thereof, the Company is required to redeem 160,000
shares of its Preferred Stock (to the extent that the Company has funds legally
available therefor and subject to the Restrictive Covenants) at a price of
$18.75 per share plus accrued and unpaid dividends up to the date of payment.
Under that formula, at March 1, 1996, the Company would have been required to
redeem 160,000 shares of Preferred Stock at a price of approximately $21.03 per
share including the accrued and unpaid dividends, assuming that aggregate
dividends of $0.75, $0.75 and $0.78 per share of Preferred Stock had been
accrued for the fiscal years ended February 28, 1994 and 1995 and February 29,
1996, respectively.
As a result of its purchase of shares of Preferred Stock pursuant to the Offer
to Purchase as well as other open market purchases to date, the Company was
entitled to a share-for-share credit against the Company's mandatory redemption
obligations of 160,000 shares of Preferred Stock scheduled for each of March 1,
1996, March 1, 1997 and March 1, 1998 and has a credit of approximately 35,000
shares towards its March 1, 1999 obligation.
Pursuant to the Exchange Offer, the Company is currently offering to exchange
$1,000.00 principal amount of New Debentures and $10.00 cash for each $1,000.00
principal amount of Old Debentures. See "RESTRICTIVE COVENANTS" and "PURPOSES
AND EFFECTS OF THE PROPOSAL".
RESTRICTIVE COVENANTS
The Company is subject to Restrictive Covenants which restrict payment of
dividends on or repurchases of the Company's capital stock. However, as
discussed above under "RECENT DEVELOPMENTS CONCERNING THE PREFERRED STOCK", the
Company was able to obtain a waiver of certain of these restrictions for the
limited purposes discussed thereunder.
Debenture Indenture
Under the Debenture Indenture, the relevant covenant provides, in pertinent
part, that
So long as any of the [Old Debentures] shall be Outstanding [as
defined], the Company will not declare any dividends ... on any stock
of the Company or make, or permit any Subsidiary [as defined]; to make,
any payment on account of the purchase, redemption or other retirement
of any shares of such stock, ... either directly or indirectly, unless
... after giving effect to such proposed dividend or other payment or
distribution and to any other dividend declared but not paid, at the
date (herein called the "Computation Date") of such declaration (in the
case of a dividend) or of such other payment or distribution, ... the
sum of the aggregate amount of all dividends declared and all such
other payments and distributions made during the period commencing
October 15, 1982 to and including the Computation Date shall not exceed
the sum of:
(i) the aggregate Consolidated Net Income [as defined]
computed for the period commencing September 30, 1982, to and including
the end of the last fiscal quarter of the Company next preceding the
date 45 days prior to the Computation Date;
(ii) the aggregate net cash proceeds received by the Company
from sales subsequent to October 21, 1982, of shares of its stock for
cash; and
(iii) the aggregate net cash proceeds received by the Company
from sales subsequent to October 21, 1982, of indebtedness of the
Company convertible into stock of the Company to the extent such
indebtedness has been converted into such stock.
As the result of the losses incurred in fiscal years 1993, 1994 and 1995 and
because of redemptions or repurchases of Preferred Stock in fiscal years 1992,
1993, 1994, 1996, 1997 and 1998 at prices ranging from $12.25 to $18.00 per
share (see "RECENT DEVELOPMENTS CONCERNING THE PREFERRED STOCK"), the Company is
prohibited by this covenant from paying any dividends on the Preferred Stock, or
the Common Stock, and the Company has omitted the scheduled quarterly dividend
on the Preferred Stock for the past 19 quarters. However, as discussed above
under "Recent Developments Concerning the Preferred Stock", the Company was able
to obtain a waiver of certain of these restrictions for the limited purposes of
repurchasing and retiring shares of the Preferred Stock.
Contemporaneously with the solicitation of shareholders for the approval of the
Proposal contemplated hereby, the Company is offering to exchange $1,000.00
principal amount of its New Debentures and $10.00 cash for each $1,000.00
principal amount of its Old Debentures. The indenture pursuant to which the New
Debentures are to be issued does not contain the restrictive covenants contained
in the Debenture Indenture. To the extent all of the outstanding Old Debentures
are tendered to the Company, and/or alternative arrangements are made for the
retirement of all Old Debentures not so tendered, these restrictive covenants
would be terminated. No assurance can be given that the Company will ultimately
determine to purchase any of the Old Debentures, or that the Company will have
sufficient legally available funds to make any purchases.
IRB Indenture
The IRB Indenture also restricts the Company's ability to pay dividends on the
Preferred Stock and the Common Stock. However, the IRB Indenture is less
limiting on the Company's ability to pay dividends than the Debenture Indenture.
Under the IRB Indenture, the relevant covenant provides, in pertinent part, that
The Company will not declare or make or incur any liability to make any
Distribution [as defined] in respect of its capital stock unless,
immediately after giving effect to the proposed Distribution,
Distributions in respect of its capital stock . . . would not exceed
$750,000 plus 60% of Consolidated Net Income [as defined] (or minus
100% in the case of losses).
At November 30, 1997, distributions exceeded Consolidated Net Income by
approximately $825,000 thereby restricting the Company from making any future
distributions until such deficit is eliminated. There is approximately $456,000
principal amount of bonds issued pursuant to the IRB Indenture outstanding at
November 30, 1997. The bonds mature in 2003 but the Company has the right to
repurchase and retire the bonds at any time. Subject to the conditions discussed
above in "CERTAIN CONDITIONS TO THE PROPOSAL", if the Company is required to
redeem or elects to redeem all the Old Debentures which have not been tendered
into the Exchange Offer, it will repurchase and retire the principal amount of
bonds issued pursuant to the IRB Indenture before redeeming the Old Debentures.
<PAGE>
SUMMARY FINANCIAL DATA
The following table sets forth, in summary form, certain financial data of the
Company for each of the periods indicated. This summary is qualified in its
entirety by the detailed information and financial statements included in the
documents incorporated herein by reference. See "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE".
<TABLE>
<S> <C> <C> <C> <C>
Nine Months Ended Years Ended
November 30, February 28/29,
(In thousands, except per share amounts)
Consolidated Statements of Operations 1997 1996 1997 1996
- -------------------------------------
Revenues:
Net sales $22,724 $19,253 $24,517 $23,235
Investment and other income (loss) 3,560 (860) (142) 813
- ------------------------------------------------------ --------------- --------------- -------------- ---------------
Total Revenues 26,284 18,393 24,375 24,048
- ------------------------------------------------------ --------------- --------------- -------------- ---------------
Costs and Expenses:
Cost of sales 14,645 12,452 15,469 15,398
Selling, general and administrative expenses 5,949 5,310 7,249 9,166
Research and development expenses 1,259 1,103 1,472 1,683
Interest expense 772 599 790 1,237
- ------------------------------------------------------ --------------- --------------- -------------- ---------------
Total Costs and Expenses 22,625 19,464 24,980 27,484
- ------------------------------------------------------ --------------- --------------- -------------- ---------------
Income (loss) from continuing operations before
income taxes and extraordinary item 3,659 (1,071) (605) (3,436)
Income tax (expense) benefit (1,464) 375 904 1,166
- ------------------------------------------------------ --------------- --------------- -------------- ---------------
Income (loss) from continuing operations before
extraordinary item 2,195 (696) 299 (2,270)
Income from discontinued operations, net of income
taxes of $170 --- --- --- 413
Gain on sale of discontinued segment, net of income
taxes of $2,041 --- --- --- 3,790
- ------------------------------------------------------ --------------- --------------- -------------- ---------------
Net income 2,195 (696) 299 1,933
Preferred dividend requirement (356) (328) (411) (559)
Reversal of preferred dividends 37 --- 134 1,015
- ------------------------------------------------------
--------------- --------------- -------------- ---------------
Income (loss) applicable to common shares $1,876 $(1,024) $22 $2,389
====== ======== === ======
Earnings (loss) per common share:
Continuing operations -- primary $0.96 $(0.53) $0.01 $(0.94)
Continuing operations -- fully diluted $0.88 [1] [1] [1]
Discontinued operations --- --- --- $0.21
Gain on sale of discontinued segment --- --- --- $1.96
- ------------------------------------------------------ --------------- --------------- -------------- ---------------
Income per common share -- primary $1.12 $0.00 $0.01 $1.23
Income per common share -- fully diluted $0.91 $0.00 [1] [1]
Weighted average number of shares 1,953,445 1,946,051 1,946,051 1,934,478
Ratio of earnings to fixed charges 4.16 (0.12) .51 (.87)
Coverage deficiency N/A 2,028 636 5,272
[1] Anti-dilutive
</TABLE>
<PAGE>
Balance Sheet Information
<TABLE>
<S> <C> <C>
November 30, 1997 February 28, 1997
(In thousands, except per share amounts)
Total assets $42,567 $37,677
Total liabilities 22,284 19,139
Working capital 13,552 12,183
Long-term debt and other long-term obligations 7,617 8,162
Common stock 2,103 2,103
Redeemable cumulative convertible preferred stock 4,760 4,891
Additional paid-in capital 3,248 3,248
Treasury stock (90) (90)
Retained earnings 10,262 8,386
Total Common and Other Stockholders' equity 15,523 13,647
Book value per common share $8.03 $7.05
</TABLE>
PRO FORMA DATA
Approval of the Proposal, in and of itself, will not have a material effect on
the Company's Consolidated Statements of Operations. However, consummation of
the Exchange Offer could have a material effect on the Company's cash if the
Company is required to redeem, or elects to redeem, the Old Debentures which
have not been tendered. Assuming that the Company has to purchase and redeem up
to 33 1/3% in aggregate principal amount of the outstanding Old Debentures, the
Company's cash will be decreased by approximately $3.7 million, as detailed
below:
(i) the Company will have to pay approximately $456,000 to retire the bonds
outstanding pursuant to the IRB Indenture;
(ii) the Company will have to pay up to approximately $1.9 million to
purchase and redeem up to 33 1/3% of the Old Debentures;
(iii) the Company will have to pay the Cash Payment and the expenses to be
incurred in the Exchange Offer of approximately $115,000; and
(iv) if the Restrictive Covenants are eliminated, the Company will have to
pay the Dividend Arrearages of approximately $1.2 million.
The Company's current liabilities will be reduced by the amount it has to pay to
satisfy the Dividend Arrearages, by the current portion outstanding on the
principal amount of the bonds issued pursuant to the IRB Indenture and by the
current portion of the principal amount of Old Debentures outstanding. The
Company's total liabilities will be reduced by a corresponding amount.
In the event that the Company's available cash is not sufficient to fund these
payments, the Company intends to sell some of its marketable securities to
satisfy any shortage. The amount of the cash requirement will be decreased to
the extent that more than 66 2/3% in aggregate principal amount of Old
Debentures outstanding are tendered for exchange pursuant to the Exchange Offer.
PRICE RANGES OF THE COMMON STOCK
The Company's Common Stock is traded on the over-the-counter market
under the symbol (ANDR) with quotes supplied by the National Market System of
NASDAQ. The following table sets forth the high and low bid prices for the
Common Stock, as reported on the NASDAQ National Market System, for each
quarterly period since March 1, 1995. The stock prices shown represent prices
between dealers and do not include retail markups, markdowns or commissions and
may not necessarily represent actual transactions.
High Low
Fiscal Year Ended February 29, 1996
First Quarter $6 1/2 $3 3/4
Second Quarter 7 5 1/4
Third Quarter 7 3 1/4
Fourth Quarter 6 1/2 5
Fiscal Year Ended February 28, 1997
First Quarter 6 1/2 3 3/4
Second Quarter 7 5 1/4
Third Quarter 7 3 1/4
Fourth Quarter 6 1/2 5
Fiscal Year Ended February 28, 1998
First Quarter 5 1/2 4 1/2
Second Quarter 6 1/4 6
Third Quarter 8 7 1/2
Fourth Quarter through January 20, 1998 6 1/2 5 1/2
On January 20, 1998, the last reported sales price for the Common Stock on the
NASDAQ National Market System was $5.50 per share.
On January 20, 1998, there were approximately 700 holders of record of the
Common Stock and the number of outstanding shares of the Common Stock was
1,935,478.
DIVIDENDS
The amount of accrued but unpaid dividends on the Preferred Stock at November
30, 1997 was approximately $1.2 million in the aggregate, or approximately $4.77
per share. The Company has not paid a dividend on shares of its Common Stock
since 1993. The Company does not intend to pay a dividend on its shares of
Common Stock for the foreseeable future. The Company's ability to pay dividends
on its Common Stock is subject to the same Restrictive Covenants as its ability
to pay dividends on the Preferred Stock. See "RECENT DEVELOPMENTS CONCERNING THE
PREFERRED STOCK", "RESTRICTIVE COVENANTS" and "DESCRIPTION OF CAPITAL
STOCK--Preferred Stock".
Dividends on the Preferred Stock are payable as and when declared by the Board
of Directors out of funds legally available therefor. Dividends accrue quarterly
on February 28, May 31, August 31 and November 30 of each year. The dividend
rate on the Preferred Stock is an adjustable rate that is based on the operating
income of J.M. Ney as described herein under "DESCRIPTION OF CAPITAL STOCK--
Preferred Stock," but which rate will in no event be less than $0.1875 per share
per quarter and no more than $0.4375 per share per quarter. As a result of
losses incurred in fiscal years 1993, 1994 and 1995 and redemptions or
repurchases of the Preferred Stock in fiscal years 1992, 1993, 1994, 1996, 1997
and 1998 at prices ranging from $12.25 to $18.00 per share, the Restrictive
Covenants have prevented the Company from declaring or paying dividends on its
Preferred Stock since April 15, 1993. See "RESTRICTIVE COVENANTS". Nevertheless,
dividends have been accrued at the minimum annual rate of $0.75 per share for
the fiscal year 1994 and 1995; at $0.78 per share for fiscal year 1996; at $1.24
per share for fiscal year 1997; and at $1.25 per share for the nine months ended
November 30, 1997. For additional information concerning the manner in which the
dividend rate on the Preferred Stock is determined. See "DESCRIPTION OF CAPITAL
STOCK--Preferred Stock--Dividends."
Subject to the Company's having legally available funds, if the Proposal is
approved, the Debenture Indenture and the IRB Indenture are removed and the
Dividend Arrearages are paid, the Certificate of Incorporation will be amended
to change the dividend rate on the Preferred Stock to a fixed rate of $1.50 per
share, per year. See "THE PROPOSAL--Provision for a Fixed Rate of Return" and
"CERTAIN CONDITIONS TO THE PROPOSAL".
DESCRIPTION OF CAPITAL STOCK
General
The authorized capital stock of the Company consists of 6,000,000 shares of
Common Stock of which 1,935,478 shares were issued and outstanding at November
30, 1997 and 800,000 shares of Preferred Stock of which 256,448 shares were
issued and outstanding at November 30, 1997. The following is a brief summary of
certain rights and provisions of the Company's capital stock.
Common Stock
Each share of the Company's Common Stock is entitled to participate pro rata in
distributions upon liquidation, subject to the rights of the holders of the
Preferred Stock, and to one vote on all matters submitted to a vote of the
shareholders. Dividends may be paid to the holders of the Company's Common Stock
when and if declared by the Board of Directors out of funds legally available
therefor. The Company has not paid a dividend on shares of its Common Stock
since 1993. The Company does not intend to pay a dividend on its shares of
Common Stock for the foreseeable future. The Company's ability to pay dividends
on its Common Stock is subject to the same Restrictive Covenants as its ability
to pay dividends on the Preferred Stock. See "RECENT DEVELOPMENTS CONCERNING THE
PREFERRED STOCK", "RESTRICTIVE COVENANTS", "PURPOSES AND EFFECTS OF THE
PROPOSAL" and "DESCRIPTION OF CAPITAL STOCK--Preferred Stock". Holders of the
Company's Common Stock have no preemptive or similar rights.
The shares of Common Stock have noncumulative voting rights, which means that
the holders of more than 50% of the shares voting can elect all the Directors if
they so choose, and in such event, the holders of the remaining shares cannot
elect any Directors.
Holders of Common Stock do not have any right to subscribe to any additional
securities which may be issued by the Company. Outstanding shares of Common
Stock are validly issued, fully paid and non-assessable.
The transfer agent and the registrar for the Common Stock is Registrar and
Transfer Company.
Preferred Stock
Dividends. The holders of the Company's Preferred Stock are entitled to receive,
when and as declared by the Company's Board of Directors, cumulative cash
dividends, out of funds legally available therefor, in an amount equal to (i)
$0.1875 per share plus (ii) any positive amount per share (the "Participating
Dividend") equal to the quotient obtained by dividing (a) an amount equal to (1)
50% of the Ney Operating Income (as defined below) minus (2) $150,000, by (b)
800,000; provided, however, that such total quarterly rate per share shall not
exceed $0.4375. The dividends are payable not later than 45 days after the end
of each fiscal quarter of the Company. So long as any share of Preferred Stock
remains outstanding, no dividend or other distribution shall be paid or declared
on any shares of the Common Stock, other than dividends payable in shares of
Common Stock, unless all cumulative dividends on the Preferred Stock have been
paid or declared and set apart for payment. If dividends (cash, stock or
otherwise) are paid or declared on the Common Stock, as permitted above, the
Preferred Stock is not entitled to participate in any such dividends or
distributions. Due to the Restrictive Covenants, the Company has been prohibited
from paying the regularly scheduled dividend on the Preferred Stock for the past
19 fiscal quarters. See "RECENT DEVELOPMENTS CONCERNING THE PREFERRED STOCK" and
"RESTRICTIVE COVENANTS".
"Ney Operating Income" means, for each quarterly accounting period ending
immediately prior to a dividend payment date, the amount of Income from
Continuing Operations (as defined below) of J.M. Ney for such quarterly
accounting period before any allocation of overhead expense incurred by the
Company but after deduction for appropriate and reasonable direct charges for
necessary services rendered or paid for by the Company or any subsidiary to J.M.
Ney, all as determined in accordance with generally accepted accounting
principles applied on a consistent basis by the Company in the preparation of
the Company's audited annual financial statements, including the effect of any
adjustments to the carrying value of the assets and liabilities of J.M. Ney and
its subsidiaries on the consolidated balance sheet of J.M. Ney in accordance
with APB No. 16. - "Business Combinations" and the rules and regulations of the
Commission with respect thereto. "Income from Continuing Operations" means J.M.
Ney's consolidated revenue from continuing operations (excluding nonoperating
income and results of capital transactions and before provision for Federal and
state income taxes) minus cost of sales, selling, administrative, research and
general expenses, profit sharing, all other operational expenses, and interest
expense and imputed interest expense calculated at the Company's cost of funds,
in each case attributable to Excess Ney Financings. "Excess Ney Financings"
means the amount of any borrowings or capital leases undertaken to finance (i)
working capital needs of J.M. Ney or its subsidiaries in excess of $750,000 or
(ii) the acquisition of assets, including acquisition of assets by way of
acquisition of securities or merger or consolidation, used or included in the
continuing operations of J.M. Ney or its subsidiaries, to the extent such amount
exceeds J.M Ney's consolidated depreciation and amortization expense (such
amount to be calculated at the end of each monthly accounting period based on
the amount of such financings then outstanding and the cumulative amount of such
depreciation and amortization expense from February 28, 1991 to such month-end).
The Company's independent public accountants review the Company's calculation of
Ney Operating Income within 120 days after the end of each fiscal year of the
Company.
In the event of any merger, consolidation or sale of any substantial part of the
assets of J.M. Ney which would have a material adverse effect on Ney Operating
Income, the Participating Dividend rate for the quarter in which such
transaction occurs and for subsequent quarters shall be adjusted to be an amount
equal to the amount determined under clause (ii) above plus the quotient
obtained by dividing (i) the amount equal to one quarter of (a) the net proceeds
received by the Company or any Company subsidiary from any such transaction,
multiplied by (b) the yield to maturity of a seven year U.S. Treasury Note (or
the closest available maturity) (as quoted in the Wall Street Journal on the
date on which such transaction is closed) plus 60 basis points, by (ii) 800,000;
provided, however, that the total Participating Dividend per share per quarter
shall not exceed $0.25.
Payment of the Participating Dividend depends on future operations of J.M. Ney
and future transactions involving the J.M. Ney divisions. The terms of the
Preferred Stock do not require the Company to consolidate the operations of
businesses acquired with J.M. Ney, even if such businesses are related, but the
Company may consolidate such businesses as it determines.
Payment of dividends on, and voluntary and mandatory redemptions and repurchases
of, the capital stock of the Company are subject to certain restrictions
contained in the Debenture Indenture. Pursuant to such restrictions, the Company
may not pay any dividends or make any distribution with respect to the purchase,
redemption or other retirement of any of its capital stock (other than
distributions of capital stock or rights or warrants to subscribe to such stock)
if the Company is in default under the Debenture Indenture. Additionally,
pursuant to such restrictions, the Company is only permitted to pay any such
dividend or make any such distribution to the extent by which cumulative
Consolidated Net Income (as defined in the Debenture Indenture) earned after
November 30, 1997, including cash proceeds received by the Company from sales of
its stock and indebtedness convertible into stock, exceeds approximately $2.25
million.
Subject to the Company's having legally available funds, if the Proposal is
approved, the Debenture Indenture and the IRB Indenture are removed and the
Dividend Arrearages are paid, the Certificate of Incorporation will be amended
to change the dividend rate on the Preferred Stock to a fixed rate of $1.50 per
share, per year. See "THE PROPOSAL--Provision for a Fixed Rate of Return" and
"CERTAIN CONDITIONS TO THE PROPOSAL".
The IRB Indenture also restricts the Company's ability to pay dividends on the
Preferred Stock. However, the IRB Indenture is less limiting on the Company's
ability to pay dividends than the Debenture Indenture.
The Company is offering to exchange $1,000.00 principal amount of its New
Debentures plus $10.00 cash for each $1,000.00 principal amount of its Old
Debentures. The indenture pursuant to which the New Debentures are to be issued
does not contain the restrictive covenants contained in the Debenture Indenture.
To the extent all of the outstanding Old Debentures are tendered to the Company
for exchange, and/or alternative arrangements are made for the retirement of all
Old Debentures not so tendered, these restrictive covenants would be terminated.
No assurance can be given that the Company will ultimately determine to purchase
any of the Old Debentures, or that the Company will have sufficient legally
available funds to make any such purchases. To the extent less than all of the
outstanding Old Debentures are tendered for exchange or otherwise repurchased by
the Company, the restrictive covenants contained in the Debenture Indenture
would remain in full force and effect with respect to the payment of dividends
on and repurchases of the Company's capital stock, including the Preferred
Stock.
See "RECENT DEVELOPMENTS CONCERNING THE PREFERRED STOCK" and "RESTRICTIVE
COVENANTS".
Redemption
The Preferred Stock is redeemable, in whole or in part, at the option of the
Company, by paying therefor in cash a redemption price equal to $18.75 per
share, plus accrued and unpaid dividends to the date fixed for redemption. The
holders of record of the Preferred Stock to be redeemed will be given notice
twenty days prior to the date fixed for redemption. If less than all of the
outstanding shares of Preferred Stock are to be redeemed, such shares will be
redeemed on a pro rata basis (rounded to the nearest whole share to avoid
redemption of fractional shares).
On March 1, 1996 and on the first business day following each anniversary
thereafter, the Company is required to call for redemption on such date 160,000
shares of Preferred Stock, to the extent that the Company has funds legally
available therefor and subject to the Restrictive Covenants, by paying therefor
in cash $18.75 per share plus accrued and unpaid dividends up to the date of
payment. Each holder of Preferred Stock will be given twenty days' notice prior
to the date fixed for redemption. In connection with any mandatory redemption,
the shares of Preferred Stock will be redeemed pro rata from all record holders
in proportion to the number of such shares of Preferred Stock held by them
(rounded to the nearest whole share to avoid redemption of fractional shares).
As discussed above, under "DIVIDENDS", the redemption of the Preferred Stock is
subject to the Restrictive Covenants which restrict payment of dividends on or
repurchases of the Company's capital stock. See "RECENT DEVELOPMENTS CONCERNING
THE PREFERRED STOCK" for a discussion of various recent efforts the Company has
undertaken in order to repurchase and retire the Preferred Stock and for a
description of impediments to redemption of the Preferred Stock.
Subject to the Company's having legally available funds, if the Proposal is
approved, the Debenture Indenture and the IRB Indenture are removed and the
Dividend Arrearages are paid, the Certificate of Incorporation will be amended
to remove the requirement that the Company call for redemption any shares of the
Preferred Stock. See "THE PROPOSAL--Elimination of Mandatory Redemption" and
"CERTAIN CONDITIONS TO THE PROPOSAL".
Voting
Holders of Preferred Stock do not, except as required by law or as set forth
below, have any right or power to vote on any question or in any proceeding or
to be represented at, or to receive notice of, any meeting of the Company's
stockholders. On any matters on which the holders of Preferred Stock are
entitled to vote, they will be entitled to one vote for each share held.
Liquidation, Dissolution and Winding-Up
In the event of any liquidation, dissolution or winding-up of the affairs of the
Company, whether voluntary or involuntary, the holders of the Preferred Stock
will be entitled, before any assets of the Company are distributed among or paid
over to the holders of Common Stock, to be paid $18.75 per share, together with
any accrued but unpaid dividends thereon, and no more. If, upon such
liquidation, dissolution or winding-up, the assets of the Company distributed as
aforesaid among the holders of the Preferred Stock are insufficient to permit
payment to them of said amount, the entire assets of the Company will be
distributed ratably among the holders of the Preferred Stock issued and
outstanding and having such priority.
Preemptive Rights
The holders of Preferred Stock have no preemptive rights.
Conversion Rights
The holders of the Preferred Stock have the right, at their option, to convert
one or more of such shares into fully paid and nonassessable shares of Common
Stock at any time and from time to time after the date of issuance, at the rate
of 1.935 shares of Common Stock for each share of Preferred Stock
The conversion rate is subject to adjustment in the event of certain issuances
of Common Stock and certain changes in the number of issued and outstanding
shares of Common Stock by reason of a stock dividend or distribution, split-up,
merger, reorganization, recapitalization or combination of the Company.
EXPENSES OF SOLICITATION
The cost of soliciting proxies will be borne by the Company. The Company will
reimburse brokers, banks and other persons holding stock in their names, or in
the names of nominees, for their expenses in sending these proxy materials to
beneficial owners. Proxies may be solicited by present or former directors,
officers and other employees of the Company, who will receive no additional
compensation therefor, through the mail and through telephone, fax, e-mail or
telegraphic communications to, or by meetings with, stockholders or their
representatives.
INDEPENDENT AUDITORS
The firm of KPMG Peat Marwick LLP served as the Company's independent certified
public accountants until December 23, 1997. The firm of Deloitte & Touche LLP
began serving as the Company's independent certified public accountants on
December 23, 1997. No representative from either firm is expected to be present
at the Special Meeting, nor is it expected that either firm will make a
statement or be available to respond to questions posed at the Special Meeting.
INCORPORATION BY REFERENCE
The following documents previously filed by the Company with the Securities and
Exchange Commission (the "SEC") under the Securities Exchange Act of 1934 (the
"Act") are hereby incorporated by reference in this Proxy Statement (Commission
File No. 0-1460):
A. The Company's Annual Report on Form 10-K for the year ended
February 28, 1997;
B. The Company's Quarterly Reports on Form 10-Q for the fiscal
quarters ended May 31, August 31 and November 30, 1997;
C. The Company's Current Report on Form 8-K, dated December 23, 1997
and Amendment No.1 to such report filed on January 12, 1998; and
D. The Company's Schedule 13E-4 filed January 12, 1998.
All financial statements included in any document filed by the Company with the
SEC pursuant to Sections 13(a), 13(c), or 15(d) of the Exchange Act subsequent
to the date of this Proxy Statement and prior to the date on which the Special
Meeting is held which amend or supplement the financial statements or pro forma
financial statements incorporated by reference herein shall be deemed to be
incorporated by reference into this Proxy Statement as of the date of filing
such documents.
Any statement contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purposes
hereof to the extent that a statement contained herein (or in any other
subsequently filed document that is or is deemed to be incorporated by reference
herein) modifies or supersedes such previous statement. Any statement so
modified or superseded shall not be deemed to constitute a part hereof except as
so modified or superseded.
All information appearing in this Proxy Statement is qualified in its entirety
by the information and financial statements (including notes thereto)
incorporated herein by reference.
ADDITIONAL INFORMATION
The Company is subject to the informational requirements of the Exchange Act
and, in accordance therewith, files reports, proxy and information statements
and other information with the SEC. Such reports, proxy and information
statements and other information filed by the Company with the SEC can be
inspected and copied at the public reference facilities maintained by the SEC at
Room 1024, Judiciary Plaza, 450 Fifth Street, NW, Washington, D.C. 20549, and at
the regional offices of the SEC located at Seven World Trade Center, 13th Floor,
New York, New York 10048 and 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material can also be obtained from the SEC at
prescribed rates by writing to the Public Reference Section of the SEC, Room
1024, Judiciary Plaza, 450 Fifth Street, NW, Washington, D.C. 20549. The SEC
maintains a Web site on the Internet that contains reports, proxy and
information statements and other information regarding registrants (including
the Company) that file electronically with the SEC. The address of the SEC's Web
site is http://www.sec.gov. In addition, materials filed by the Company should
be available for inspection at the offices of the National Association of
Securities Dealers, Inc., Reports Section, 1735 K Street, NW, Washington, D.C.
20006.
OTHER MATTERS
THIS PROXY STATEMENT INCORPORATES DOCUMENTS BY REFERENCE THAT ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (OTHER THAN CERTAIN EXHIBITS) ARE
AVAILABLE WITHOUT CHARGE, UPON WRITTEN OR ORAL REQUEST BY ANY PERSON TO WHOM
THIS PROXY STATEMENT HAS BEEN DELIVERED, FROM BERNARD F. TRAVERS, III, ESQ.,
ASSISTANT SECRETARY, ANDERSEN GROUP, INC., 1280 BLUE HILLS AVENUE, BLOOMFIELD,
CONNECTICUT 06002-1374, (860) 242-0761. DOCUMENTS SO REQUESTED WILL BE PROVIDED
BY FIRST CLASS MAIL OR EQUALLY PROMPT MEANS WITHIN ONE BUSINESS DAY OF RECEIPT
OF SUCH REQUEST.
STOCKHOLDERS ARE URGED TO SPECIFY THEIR CHOICES, DATE, SIGN AND RETURN THE
ENCLOSED FORM OF PROXY IN THE ENCLOSED ENVELOPE, POSTAGE FOR WHICH HAS BEEN
PROVIDED. YOUR PROMPT RESPONSE WILL BE APPRECIATED.
Bloomfield, Connecticut
January 27, 1998
<PAGE>
EXHIBIT 1
SECOND AMENDED AND RESTATED
CERTIFICATE OF
INCORPORATION
OF
ANDERSEN GROUP, INC.
We, the subscribers, certify that we do hereby associate ourselves as a
body politic and corporate under the statute laws of the State of Connecticut;
and we further certify that:
FIRST: The name of the corporation is Andersen Group, Inc.
SECOND: The nature of the business to be transacted and the purposes to be
promoted and carried out by the corporation are as follows:
To engage in any lawful act or activity for which a
corporation may be organized under the provisions of the
Connecticut Business Corporation Act.
THIRD: The amount of the capital stock of said corporation hereby
authorized is six million(6,000,000) shares of common stock,
without par value, and eight hundred thousand (800,000) shares of
preferred stock, without par value, the terms of which are set
forth on Exhibit A attached hereto. The Board of Directors is
authorized to issue, from time to time, all such shares, to fix
and determine the terms, limitations and relative rights and
preferences of the preferred stock into series, to fix and
determine the variations among series to the extent permitted by
law and to provide that shares of the preferred stock, or any
thereof, may series be convertible into the same or a different
number of shares of common stock.
FOURTH: The amount of paid-in capital with which this corporation shall
commence business is $2,000.
FIFTH: The duration of the corporation is unlimited.
SIXTH: No stockholder of said corporation shall have any preemptive or
other right of subscription to any shares of any class of stock
of said corporation, issued or to be issued or sold, whether
now or hereafter authorized, or to any securities convertible into
stock of said corporation of any class, or to receive any such
shares or securities by way of dividend, other than right or
rights, if any, as the Board of Directors may determine; but any
shares of stock or convertible securities which the Board of
Directors may determine to offer for subscription to stockholders
may, at the discretion of the Board of Directors, be offered in
such proportions and to the holders of any one or more or all
classes of stock of the corporation then outstanding, and at such
price or prices as the Board of Directors may determine.
SEVENTH: A director of the corporation shall not be liable to the
corporation or its shareholders for breach of duty as a director
for monetary damages in an amount in excess of the compensation
received by such director for serving the corporation during the
year of such breach (or such lesser amount as may hereafter be
permitted by the Connecticut Business Corporation Act), except to
the extent such exemption from liability or limitation thereof is
not permitted under the Connecticut Business Corporation Act as
currently in effect or as the same may hereafter be amended. No
amendment, modification or repeal of this provision shall
adversely affect any right or protection of a director that exists
at the time of such amendment, modification or repeal.
<PAGE>
EXHIBIT A
STATEMENT FIXING AND DETERMINING THE
TERMS OF SHARES OF SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK
OF ANDERSEN GROUP, INC.
The Series A Cumulative Convertible Preferred Stock of Andersen Group, Inc.
shall be subject to the following terms, limitations, relative rights and
preferences.
1. Designation. There shall be a series of Preferred Stock, the
designation of which shall be the "Series A Cumulative Convertible Preferred
Stock, without par value," hereinafter referred to as the Series A Stock and the
number of authorized shares constituting the Series A Stock shall be 800,000.
2. Dividends. (a) The holders of the Series A Stock shall be entitled
to receive, when and as declared by the Board of Directors but only out of funds
legally available therefor, cumulative cash dividends at the rate specified in
subparagraph (b) below, and no more, payable not later than 45 days after the
end of each fiscal quarter of the Company, commencing with the end of the fiscal
quarter during which the Series A Stock is initially issued. Such dividends
shall be subject to proportional adjustment if dividends are payable for any
part of a fiscal quarter. So long as any share of Series A Stock remains
outstanding no dividend or other distribution shall be paid or declared on any
shares of Common Stock, without par value (the "Common Stock"), of the Company,
other than dividends payable in shares of Common Stock of the Company, unless
all cumulative dividends on the Series A Stock shall have been paid or declared
and set apart for payment. Subject to the foregoing and not otherwise, such
dividends (payable in cash, stock or otherwise) as may be determined by the
Board of Directors may be declared and paid on the Common Stock from time to
time out of any funds legally available therefor, and the Series A Stock shall
not be entitled to participate in any such dividends or distributions whether
payable in cash, stock or otherwise.
(b) Cumulative dividends shall be payable at a quarterly rate
per share upon the Series A Stock in an amount equal to $0.375.
3. Optional Redemption. All or any part of the Series A Stock may be
called for redemption by the Company at its option at any time or from time to
time on or after the day after the second anniversary of February 28, 1991 (the
"Effective Time"), by paying therefor in cash a redemption price equal to $17.75
per share in the case of any such redemption during the period commencing on the
day after such second anniversary and ending on the third anniversary of the
Effective Time, $18.00 per share in the case of any such redemption during the
period commencing on the day after such third anniversary and ending on the
fourth anniversary of the Effective Time, $18.25 per share in the case of any
such redemption during the period commencing on the day after such fourth
anniversary and ending on the fifth anniversary of the Effective Time, and
$18.75 per share in the case of any such redemption thereafter, in each case
plus accrued and unpaid dividends to the date fixed for redemption. At least
twenty (20) days' notice prior to the redemption date, by prepaid certified
mail, shall be given to the holders of record of the Series A Stock to be
redeemed, addressed to the last post office address shown on the records of the
Company. On the date fixed for redemption, and stated in such notice, such
holder of such Series A Stock shall surrender such holder's certificate or
certificates at the place designated in such notice and thereupon be entitled to
receive payment of the redemption price. If notice of redemption is duly given
and if funds for the redemption have been set aside prior to the redemption
date, notwithstanding the fact that a shareholder may have failed to surrender
the same, no dividend shall be payable on such shares after the date fixed for
redemption, and all rights with respect to shares so called for redemption shall
forthwith, after such date, terminate, except only the right of the holders to
receive the redemption price thereof, without interest. If fewer than all the
outstanding shares of Series A Stock are to be redeemed pursuant to this
paragraph, the number of shares to be redeemed shall be determined by the Board
of Directors of the Company, and such shares shall be redeemed pro rata from all
record holders of the Series A Stock in proportion to the number of such shares
held by such holders (rounding to the nearest whole share to avoid redemption of
fractional shares).
4. Voting Rights.
(a) General. The shares of Series A Stock shall not be
entitled to vote upon any matters upon which shareholders are entitled to vote,
except to the extent required by law, including the right to a class vote in the
event of any amendment to the Company's certificate of incorporation which
creates a new class of shares equal or senior to the Series A Stock or changes
an existing class of shares into a class equal or senior to the Series A Stock,
and except to the extent set forth in subparagraph (b) of this paragraph 4.
(b) Certain Voting Rights. If and whenever six quarterly
dividends or the equivalent (whether or not consecutive) payable on the Series A
Stock shall be in arrears whether or not earned or declared, the number of
Directors then constituting the Board of Directors of the Company shall be
increased by one and the holders of the Series A Stock, voting together as a
class, shall be entitled to elect the one additional Director at any annual
meeting of shareholders or a special meeting held in place thereof, or at a
special meeting of the holders of the Series A Stock called as hereinafter
provided. Whenever all arrears in dividends on the Series A Stock then
outstanding shall have been paid and dividends thereon for the current dividend
period shall have been paid or declared and set apart for payment, then the
right of the holders of the Series A Stock to elect such additional one Director
shall cease (but subject always to the same provisions for the vesting of such
voting rights in the case of any similar future arrearages in dividends), and
the term of office of any person elected as Director by the holders of the
Series A Stock shall forthwith terminate and the number of the Board of
Directors shall be reduced accordingly. At any time after such voting power
shall have been so vested in the Series A Stock, the Secretary of the Company
may, and upon the written request of any holder of shares of the Series A Stock
(addressed to the Secretary at the principal office of the Company) shall, call
a special meeting of the holders of the Series A Stock for the election of the
one Director to be elected by them as herein provided, such call to be made by
notice similar to that provided in the by-laws for a special meeting of the
shareholders or as required by law. If any such special meeting required to be
called as above provided shall not be called by the Secretary within twenty (20)
days after receipt of any such request, then any holder of shares of the Series
A Stock may call such meeting, upon the notice above provided, and for that
purpose shall have access to the stock books of the Company. The Director
elected at any such special meeting shall hold office until the next annual
meeting of the shareholders or special meeting held in place thereof if such
office shall not have previously terminated as above provided. In case any
vacancy shall occur with respect to the Director elected by the holders of the
Series A Stock, a successor shall be elected by the Board of Directors to serve
until the next annual meeting of the shareholders or special meeting held in
place thereof upon the nomination by the holders of the Series A Stock.
5. Liquidation, Dissolution and Winding Up. In the event of any
liquidation, dissolution or winding up of the affairs of the Company, whether
voluntary or involuntary, the holders of the Series A Stock shall be entitled,
before any assets of the Company shall be distributed among or paid over to the
holders of the Common Stock, to be paid $18.75 per share together with any
accrued and unpaid dividends thereon, and to no more. If, upon such liquidation,
dissolution or winding up, the assets of the Company distributable as aforesaid
among the holders of the Series A Stock shall be insufficient to permit payment
to them of said amount, the entire assets shall be distributed ratably among the
holders of the Series A Stock issued and outstanding and having such priority.
6. Conversion. (a) The holder of shares of Series A Stock shall have
the right, at its option, to convert one or more of such shares into fully paid
and nonassessable shares of Common Stock of the Company at any time and from
time to time after the date of issuance, at the rate of 1.875 shares of Common
Stock for each one share of Series A Stock or at the rate which results from the
making of any adjustment specified in subparagraph (e) hereof (the number of
shares of Common Stock issuable at any time, giving effect to the latest prior
adjustment pursuant to subparagraph (e) hereof, if any, in exchange for one
share of Series A Stock being hereinafter called the "Conversion Rate").
(b) The Series A Stock shall be convertible at the office of
any transfer agent of the Company, and at such other office or offices, if any,
that the Board of Directors may designate, into fully paid and nonassessable
shares of Common Stock at the Conversion Rate. In case of the redemption for any
shares of Series A Stock, such right of conversation shall cease and terminate,
as to the shares to be redeemed, at the close of business on the date fixed for
such redemption, unless default shall be made in the payment of the redemption
price for the shares to be so redeemed.
(c) In order to convert shares of Series A Stock into shares
of Common Stock pursuant to the right of conversion set forth in subparagraph
(a), the holder thereof shall surrender the certificate or certificates
representing Series A Stock, duly endorsed to the Company or in blank, at any
office herein above mentioned and shall give written notice to the Company at
said office that such holder elects to convert the same, stating in such notice
the name or names in which such holder wishes the certificate or certificates
representing shares of Common Stock to be issued. The Company shall, within five
business days, deliver at said office to such holder of Series A Stock, or to
such holder's nominee or nominees, a certificate or certificates for the number
of shares of Common Stock to which such holder shall be entitled as aforesaid,
together with cash to which such holder shall be entitled in lieu of fractional
shares in an amount equal to the same fraction of the Market Price (as
hereinafter defined) of a whole share of Common Stock on the business day
preceding the day of conversion. The Company shall make no payment or adjustment
on account of any dividends accrued on the shares of the Series A Stock
surrendered for conversion or any dividends upon shares of Common Stock issued
upon conversion, except that the registered holder of shares of Series A Stock
being converted shall be entitled to receive payment of any unpaid dividends
which have accrued on such shares for dividend periods up to the dividend
payment date immediately preceding such surrender for conversion at the time the
Company makes payment to other holders of the Series A Stock of accrued unpaid
dividends for such dividend periods; provided, that if the Company acquires at
any time all outstanding shares of Series A Stock, the Company shall on the date
of the acquisition of the last outstanding share, declare and pay such accrued
and unpaid dividends out of funds legally available therefor. Shares of Series A
Stock shall be deemed to have been converted as of the date of the surrender of
such shares for conversion as provided above, and the person or persons entitled
to receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock on such date. Upon conversion of only a portion of the number of
shares covered by a certificate representing shares of Series A Stock
surrendered for conversion, the Company shall issue and deliver to, or upon the
written order of, the holder of the certificate so surrendered for conversion,
at the expense of the Company, a new certificate covering the number of shares
of Series A Stock representing the unconverted portion of the certificate so
surrendered, which new certificate shall entitle the holder thereof to the
rights of the shares of Series A Stock represented thereby to the same extent as
if the certificate theretofore covering such unconverted shares had not been
surrendered for conversion.
(d) The issuance of certificates for shares of Common Stock
upon the conversion of shares of Series A Stock shall be made without charge to
the converting stockholder for any original issue or transfer tax in respect of
the issuance of such certificates and any such tax shall be paid by the Company.
The Company shall not, however, be required to pay any tax which may be payable
in respect of any transfer involved in the issue and delivery of shares of
Common stock in a name other than that in which the shares of Series A Stock so
converted were registered, and no such issue or delivery shall be made unless
and until the person requesting such issue has paid to the Company the amount of
any such tax or has established to the satisfaction of the Company that such tax
has been paid.
(e) The Conversion Rate shall be subject to the following
adjustments:
(i) If the Company shall declare and pay to the holders
of Common Stock a dividend or other distribution payable in shares of
Common Stock or Convertible Securities (as hereinafter defined), the Conversion
Rate in effect immediately prior thereto shall be adjusted so that the holders
of Series A Stock hereafter surrendered for conversion shall be entitled to
receive the number of shares of Common Stock which such holder would have owned
or been entitled to receive after the declaration and payment of such dividend
or other distribution if such shares of Series A Stock had been converted
immediately prior to the record date for the determination of stockholders
entitled to receive such dividend or other distribution.
(ii) If the Company shall subdivide the outstanding
shares of Common Stock into a greater number of shares of Common Stock, or
combine the outstanding shares of Common Stock into a lesser number of shares,
or issue by reclassification of its shares of Common Stock any shares of the
Company, the Conversion Rate in effect immediately prior thereto shall be
adjusted so that the holders of Series Stock thereafter surrendered for
conversion shall be entitled to receive the number of shares of Common Stock
which such holder would have owned or been entitled to receive after the
happening of any of the events described above if such shares of Series A Stock
had been converted immediately prior to the happening of such event on the day
upon which such subdivision, combination or reclassification, as the case may
be, becomes effective.
(iii) If the Company shall issue or sell any
Additional Shares of Common Stock for a consideration per share less than
the Conversion Amount, then the Conversion Rate shall be adjusted to the number
determined by multiplying the Conversion Rate in effect immediately prior to
such issuance or sale by a fraction, the numerator of which shall be the number
of shares of Common Stock outstanding immediately prior to the issuance or sale
of such Additional Shares of Common Stock plus the number of such Additional
Shares of Common Stock so issued or sold, and the denominator of which shall be
the number of shares of Common Stock outstanding immediately prior to the
issuance or sale of such Additional Shares of Common Stock plus the number of
shares of Common Stock which the aggregate consideration for such Additional
Shares of Common Stock so issued or sold would purchase at a consideration per
share equal to the Conversion Amount. For the purposes of this subparagraph
(iii), the date as of which the Conversation Amount shall be computed shall be
the earlier of (x) the date on which the Company shall enter into a firm
contract for the issuance or sale of such Additional Shares of Common Stock or
(y) the date of the actual issuance or sale of such shares.
(iv) If the Company shall issue or sell any warrants or
options or other rights entitling the holders thereof to subscribe for or
purchase either any Additional Shares of Common Stock or evidences of
indebtedness, shares of stock or other securities which are convertible into or
exchangeable, with or without payment of additional consideration in cash or
property, for Additional Shares of Common Stock (such convertible or
exchangeable evidences of indebtedness, shares of stock or other securities
hereinafter being called "Convertible Securities"), and the consideration per
share for which Additional Shares of Common Stock may at any time thereafter be
issuable pursuant to such warrants or other rights or pursuant to the terms of
such Convertible Securities (when added to the consideration per share of Common
Stock, if any, received for such Convertible Securities, warrants or other
rights), shall be less than the Conversion Amount, then the Conversion Rate
shall be adjusted as provided in subparagraph (iii) on the basis that (x) the
maximum number of Additional Shares of Common Stock issuable pursuant to all
such warrants or other rights or necessary to effect the conversion or exchange
of all such Convertible Securities shall be deemed to have been issued and (y)
the aggregate consideration (plus the consideration, if any, received for such
Convertible Securities, warrants or other rights) for such maximum number of
Additional Shares of Common Stock shall be deemed to be the consideration
received and receivable by the Company for the issuance of such Additional
Shares of Common Stock pursuant to such warrants or other rights or pursuant to
the terms of such Convertible Securities.
(v) If the Company shall issue or sell Convertible
Securities and the consideration per share for which Additional Shares of
Common Stock may at any time thereafter be issuable pursuant to the terms of
such Convertible Securities shall be less than the Conversion Amount, then the
Conversion Rate shall be adjusted as provided in subparagraph (iii) on the basis
that (x) the maximum number of Additional Shares of Common Stock necessary to
effect the conversion or exchange of all such Convertible Securities shall be
deemed to have been issued and (y) the aggregate consideration for such maximum
number of Additional Shares of Common Stock shall be deemed to be the
consideration received and receivable by the Company for the issuance of such
Additional Shares of Common Stock pursuant to the terms of such Convertible
Securities. No adjustment of the Conversion Rate shall be made under this
subparagraph (v) upon the issuance of any Convertible Securities which are
issued pursuant to the exercise of any warrants or other rights, if such
adjustment shall previously have been made upon the issuance of such warrants or
other rights pursuant to subparagraph (iv).
(vi) For the purposes of subparagraphs (iv) and (v),
the date as of which the Conversion Amount shall be computed shall be the
earliest of (x) the date of which the Company shall take a record of the holders
of its Common Stock for the purpose of entitling them to receive any warrants or
other rights referred to in subparagraph (iv) or to receive any Convertible
Securities, (y) the date on which the Company shall enter into a firm contract
for the issuance of such warrants or other rights or Convertible Securities or
(z) the date of the actual issuance of such warrants or other rights or
Convertible Securities.
(vii) No adjustment of the Conversion Rate shall be
made under subparagraph (iii) upon the issuance of any Additional Shares of
Common Stock which are issued pursuant to the exercise of any warrants or
other rights or pursuant to the exercise of any conversion or exchange rights in
any Convertible Securities, if such adjustment shall previously have been made
upon the issuance of such warrants or other rights or upon the issuance of such
Convertible Securities (or upon the issuance of any warrants or other rights
therefor), pursuant to subparagraphs (iv) or (v).
(viii) If any warrants or other rights (or any
portions thereof) which shall have given rise to any adjustment pursuant to
subparagraph (iv) or conversion rights pursuant to Convertible Securities which
shall have given rise to any adjustment pursuant to subparagraph (v) shall have
expired or terminated without the exercise thereof and/or if by reason of the
terms of such warrants or other rights or Convertible Securities there shall
have been an increase or increases, with the passage of time or otherwise, in
the price payable upon the exercise or conversion thereof, then the Conversion
Rate hereunder shall be readjusted (but to no greater extent than originally
adjusted) on the basis of (x) eliminating from the computation of any Additional
Shares of Common Stock corresponding to such warrants or other rights or
conversion rights as shall have expired or terminated, (y) treating the
Additional Shares of Common Stock, if any, actually issued or issuable pursuant
to the previous exercise of such warrants or other rights or of conversion
rights pursuant to any Convertible Securities as having been issued for the
consideration actually received and receivable therefor, and (z) treating any of
such warrants or other rights or of conversion rights pursuant to any
Convertible Securities which remain outstanding as being subject to exercise or
conversion on the basis of such exercise or conversion price as shall be in
effect at the time; provided, however, that any consideration which was actually
received by the Company in connection with the issuance or sale of such warrants
or other rights shall form part of the readjustment computation even though such
warrants or other rights shall have expired without the exercise thereof.
(ix) To the extent that any Additional Shares of
Common Stock, any warrants or other rights to subscribe for or purchase any
Additional Shares of Common Stock, or any Convertible Securities shall be issued
for a cash consideration, the consideration received by the Company therefor
shall be deemed to be the amount of the cash received by the Company therefor,
or, if such Additional Shares of Common Stock, warrants or other rights or
Convertible Securities are offered by the Company for subscription, the
subscription price or, if such Additional Shares of Common Stock, warrants or
other rights or Convertible Securities are sold to underwriters or dealers for
public offering without a subscription offering, the initial public offering
price, in any such case excluding any amounts paid or receivable for accrued
interest or accrued dividends and without deduction of any compensation,
discounts or expenses paid or incurred by the Company for and in the
underwriting of, or otherwise in connection with, the issuance thereof. If and
to the extent that such issuance shall be for a consideration other than cash,
then, except as herein otherwise expressly provided, the amount of such
consideration shall be deemed to be the fair value of such consideration at the
time of such issuance as determined by the Board of Directors of the Company. If
Additional Shares of Common Stock shall be issued as part of a unit with
warrants or other rights, then the amount of consideration for the warrant or
other right shall be deemed to be the amount determined at the time of issuance
by the Board of Directors of the Company. If the Board of Directors of the
Company shall not make any such determination, the consideration for the warrant
or other right shall be deemed to be zero.
(x) In case the Company shall effect a reorganization,
shall merge with or consolidate into another corporation, or shall sell,
transfer or otherwise dispose of all or substantially all of its property,
assets or business and, pursuant to the terms of such reorganization, merger,
consolidation or disposition of assets, shares of stock or other securities,
property or assets of the Company, successor or transferee or an affiliate
thereof or cash are to be received by or distributed to the holders of Common
Stock, then each holder of Series A Stock shall be given a written notice from
the Company informing each holder of the terms of such reorganization, merger,
consolidation, or disposition of assets and of the record date, thereof for any
distribution pursuant thereto, at least ten days in advance of such record date,
and each holder of Series A Stock shall have the right thereafter to receive,
upon conversion of such Series A Stock, the number of shares of stock or other
securities, property or assets of the Company, successor or transferee or
affiliate thereof or cash receivable upon or as a result of such reorganization,
merger, consolidation or disposition of assets by a holder of the number of
shares of Common Stock equal to the Conversion Rate immediately prior to such
event, multiplied by the number of shares of Series A Stock as may be converted.
The provisions of this subparagraph (x) shall similarly apply to successive
reorganizations, mergers, consolidation or dispositions of assets.
(xi) The Company may make such increases in the
conversion rate, so as to increase the number of shares of Common Stock
into which the Series A Stock may be converted, in addition to those required by
subparagraphs (i) - (v) and (x) above, as it considers to be advisable in order
that any event treated for Federal income tax purposes as a dividend of stock or
stock rights shall not be taxable to the recipients.
(xii) The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or
for the account of the Company, and the disposition of such shares shall be
considered an issue or sale of Common Stock for the purposes of this paragraph
(e).
(xiii) If a state of facts shall occur which, without
being specifically controlled by the provisions of this paragraph (e),
would not in the reasonable opinion of the Board of Directors fairly protect the
conversion rights of the Series A Stock in accordance with the essential intent
and principles of such provision, then the Board of Directors of the Company
shall make an adjustment in the application of such provisions, in accordance
with such essential intent and principles, so as to protect such conversion
rights.
(xiv) Anything herein to the contrary notwithstanding,
no adjustment in the Conversion Rate shall be required unless such adjustment,
either by itself orwith other adjustments not previously made, would require a
change of at least1% in such rate; provided, however, that any adjustment which
by reason of this subparagraph (xiv) is not required to be made shall be carried
forward and taken into account in any subsequent adjustment.
(xv) All calculations under this paragraph (e) shall
be made to the nearest one-thousandth of a share.
(xvi) Whenever the Conversion Rate shall be adjusted
pursuant to this paragraph (e), the Company shall forthwith cause to be
delivered to each holder of Series A Stock, a notice setting forth in reasonable
detail the event requiring the adjustment and the method by which such
adjustment was calculated (including a description of the basis on which the
Board of Directors of the Company determined the fair value of any consideration
other than cash pursuant to subparagraph (ix)) and specifying the new Conversion
Rate, accompanied by a letter of a firm of independent certified public
accountants (which may be the regular auditors of the Company) of recognized
national standing selected by the Board of Directors of the Company, stating
that such firm has reviewed the relevant provisions of this paragraph 6 and the
Company's calculation of the new Conversion Rate. In the case referred to in
subparagraph (x), such notice shall be issued describing the amount and kind of
stock, securities, property or assets or cash which shall be receivable upon
conversion of the Series A Stock after giving effect to the provision of such
subparagraph (x).
(xvii) The Company shall provide the holders of the
Series A Stock prompt notice ofany tender or exchange offer made to holders
of the Common Stock to the extent such offer is subject to the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder.
(f) The Company shall at all times reserve and keep available,
free from preemptive rights, out of its authorized but unissued shares of Common
Stock, solely for the purposes of effecting the conversion of Series A Stock,
the full number of shares of Common Stock then deliverable upon the conversion
of all shares of Series A Stock at the time outstanding. The Company shall take
at all times such corporate action as shall be necessary in order that the
Company may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the conversion of Series A Stock in accordance with the
provision hereof, free from all taxes, liens, charges and security interests
with respect to the issue thereof. The Company will, at its expense, use its
best efforts to cause such shares of Common Stock to be listed (subject to
issuance or notice of issuance on all stock exchanges, if any, on which the
Company's Common Stock may become listed.
(g) No fractional shares of Common Stock or scrip representing
fractional shares of Common Stock shall be issued upon any conversion of Series
A Stock, but, in lieu thereof, there shall be paid an amount in cash equal to
the same fraction of the Market Price of a whole share of Common Stock on the
business day preceding the day of conversion.
7. Definitions
(a) "Additional Shares of Common Stock" shall mean all shares
of Common Stock of the Company issued by the Company after the Effective Time,
except (i) shares which may be issued pursuant to conversion of the Series A
Stock, and (ii) shares issued upon conversion of convertible securities
outstanding on the date of issuance of the Series A Stock, or upon the exercise
of options granted or to be granted with respect to up to 100,000 shares
pursuant to any stock option plan approved by the shareholders of the Company.
(b) "Conversion Amount" shall mean at any applicable date, the
amount equal to the quotient resulting from dividing $15.45 by the Conversion
Rate in effect on such date for the Series A Stock.
(c) "Market Price" of a share of Common Stock on any day shall
mean the average closing price of a share of Common Stock for the 15 consecutive
trading days preceding such day on the principal national securities exchange on
which the shares of Common Stock are listed or admitted to trading or, if not
listed or admitted to trading on any national securities exchange, the average
closing price of a share of Common Stock for the 15 consecutive trading days
preceding such day on the NASDAQ/National Market Systems, or if the shares of
Common Stock are not publicly traded, the Market Price for such day shall be the
Conversion Amount or the book value of a share of Common Stock of the Company as
disclosed in the last balance sheet of the Company regularly prepared by the
Company, whichever is higher.
8. Stated Value. The entire consideration received by the Company upon
issuance of the Series A Stock shall be allocated to capital surplus.
9. Shares Surrendered. Any shares of Series A Stock redeemed, purchased
or otherwise reacquired, or surrendered for conversion shall be canceled and
restored to the status of authorized but unissued shares of Preferred Stock of
the Company, but shall not thereafter be issued as shares of Series A Stock.
10. Reports to Holders. The Company shall transmit to the holders of
the Series A Stock copies of the annual reports and of the information,
documents and other reports (or copies of such portions of any of the foregoing
as the Securities and Exchange Commission may from time to time by rules and
regulations prescribe) which the Company may be required to file with the
Securities and Exchange Commission pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934, as amended, including, without limitation,
its Annual Reports to Shareholders, its Annual Reports on Form 10-K, its
Quarterly Reports on Form 10-Q and its Current Reports on Form 8-K. If the
Company is not required to file such information the Company shall transmit to
the holders of the Series A Stock, within 15 days after it would have been
required to file such information with the Securities and Exchange Commission,
financial statements, including any notes thereto, prepared in accordance with
generally accepted accounting principles, reasonably comparable to that which
the Company would have been required to include in such annual reports,
information, documents or other reports if the Company were subject to the
reporting requirements of the Securities Exchange Act of 1934, as amended.
<PAGE>
ANDERSEN GROUP, INC.
This Proxy is Solicited on Behalf of the Board of Directors of Andersen
Group, Inc. (the "Company")
The undersigned hereby appoints Francis E. Baker and Bernard F. Travers, III as
Proxies, with full power to act without the other and each with the power to
appoint his substitute, and hereby authorizes them to represent and to vote, as
designated on the reverse side hereof, all shares of the Company's Common Stock,
no par value (the "Common Stock"), held of record by the undersigned on January
21, 1998 at the Special Meeting of stockholders to be held on February 25, 1998
or any adjournment thereof.
This Proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 1.
(Continued, and to be signed and dated on reverse side)
1. PROPOSAL TO APPROVE the amendment and restatement of the Company's
Certificate of Incorporation in order to eliminate certain restrictions on the
payment of dividends on the Common Stock and the Company's Series A Cumulative
Convertible Preferred Stock (the "Preferred Stock"), change the dividend payment
rate on the Preferred Stock and eliminate the requirement that the Company
redeem the Preferred Stock.
FOR[ ] AGAINST[ ] ABSTAIN [ ]
2. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the Special Meeting.
Address Change and/or
---------------------------------- Comments Mark Here [ ]
Andersen Group, Inc. Common Stock no par value
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Dated: , 1998
Signature
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD Votes MUST be Indicated
PROMPTLY USING THE ENCLOSED ENVELOPE (X) In Black or Blue ink (X).
<PAGE>
ANDERSEN GROUP, INC.
This Proxy is Solicited on Behalf of the Board of Directors of Andersen
Group, Inc. (the "Company")
The undersigned hereby appoints Francis E. Baker and Bernard F. Travers, III as
Proxies, with full power to act without the other and each with the power to
appoint his substitute, and hereby authorizes them to represent and to vote, as
designated on the reverse side hereof, all shares of the Company's Series A
Cumulative Convertible Preferred Stock, (the "Preferred Stock") held of record
by the undersigned on January 21, 1998 at the Special Meeting of stockholders to
be held on February 25, 1998 or any adjournment thereof.
This Proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 1.
(Continued, and to be signed and dated on reverse side)
1. PROPOSAL TO APPROVE the amendment and restatement of the Company's
Certificate of Incorporation in order to eliminate certain restrictions on the
payment of dividends on the Company's Common Stock, no par value and the
Preferred Stock, change the dividend payment rate on the Preferred Stock, and
eliminate the requirement that the Company redeem the Preferred Stock.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the Special Meeting.
Address Change and/or
---------------------------------- Comments Mark Here [ ]
Andersen Group, Inc. Series A Cumulative Convertible Preferred Stock
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Dated: , 1998
Signature
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD Votes MUST be Indicated
PROMPTLY USING THE ENCLOSED ENVELOPE (X) In Black or Blue ink (X).
