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:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] 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 [25], 1998
Dear Stockholder:
You are cordially invited to attend a special meeting (the "Special Meeting") of
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,
Francis E. Baker
Chairman of the Board
<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
Restrictive Covenants................................................11
Debenture Indenture..................................................11
Other Restrictive Covenants..........................................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.....................................................19
INDEPENDENT AUDITORS.........................................................20
INCORPORATION BY REFERENCE...................................................20
ADDITIONAL INFORMATION.......................................................20
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 stockholders (including any
adjournment or postponement thereof, the "Special Meeting") of Andersen Group,
Inc., a Connecticut corporation (the "Company"), 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,
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 (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
Francis E. Baker, Secretary
Bloomfield, Connecticut
PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY PROMPTLY, WHETHER OR NOT YOU INTEND
TO BE PRESENT AT THE SPECIAL MEETING.
<PAGE>
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 (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 [25], 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 purchase all of the Company's 10 1/2% Convertible
Subordinated Debentures due 2002 (the "Old Debentures") 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").
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 Debenture. 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.
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 on the Preferred Stock; and (4) file the Amended
Certificate.
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. These tellers
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
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>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF CLASS
BENEFICIAL OWNER BENEFICIAL OWNERSHIP
PREFERRED COMMON PREFERRED COMMON
<S> <C> <C> <C> <C> <C>
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 113,721 558,423 44.3 24.6
as a 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 above
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
above, 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, without par value, 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
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
above 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
above 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 above 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 such
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 Amended Certificate is filed, the restrictions on the
payment of dividends on the Preferred Stock and the Common Stock will be
removed. 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".
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 Amended Certificate is filed, then, subject to the Company's having
legally available funds, the Company will buy back the remaining Old Debentures,
if any, extinguish the IRB Indenture, pay the Dividend Arrearages and implement
the Proposal. 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 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 for every year that the Preferred Stock remains outstanding, the Company
shall call for redemption 160,000 shares of the Preferred Stock, to the extent
the Company has funds legally available therefor and subject to the Restrictive
Covenants, by paying $18.75 in cash per share plus accrued and unpaid dividends
to the date of payment. If the Amended Certificate is filed, the mandatory
redemption 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 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, the Company 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 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
Stocks 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 self tender offer, 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 its self tender offer 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 299,561 shares of Preferred Stock pursuant to the
self tender offer as well as other open market purchases to date (approximately
215,000 shares), 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 $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 the 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.
RESTRICTIVE COVENANTS
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 [18+1 if mailing after 1/14/98] 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 approval of the filing of the Amended Certificate
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 indenture
pursuant to which the Old Debentures were issued (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.
OTHER RESTRICTIVE COVENANTS
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. 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.
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>
<CAPTION>
NINE MONTHS ENDED YEARS ENDED
NOVEMBER 30 FEBRUARY 28/29,
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
1997 1996 1997 1996
REVENUES:
<S> <C> <C> <C> <C>
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 .... 3,659 (1,071) (605) (3,436)
before income taxes and extraordinary item
Income tax (expense) benefit ................ (1,464) 375 904 1,166
Income (loss) from continuing operations .... 2,195 696 299 (2,270)
before extraordinary item
Income from discontinued operations, ........ -- -- -- 413
net of income taxes of $170
Gain on sale of discontinued segment, ....... -- -- -- 3,790
net of income taxes of ................... $ 2,041
Net income .................................. 2,195 (696) 299 1,933
Preferred dividend requirement .............. (356) (328) (411) (559)
Reversal of preferred dividends ............. 37 -- 134 1,015
Income 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>
<TABLE>
<CAPTION>
BALANCE SHEET INFORMATION
NOVEMBER 30, 1997 FEBRUARY 28, 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C>
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 issued 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 Arrearage 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 its available cash is not sufficient to cover this
requirement, 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 the
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 December 23, 1997 7 1/4 5 1/2
On December 23, 1997, the last reported sales price for the Common Stock on the
NASDAQ National Market System was $5.50 per share.
On December 23, 1997, 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."
DESCRIPTION OF CAPITAL STOCK
GENERAL
The authorized capital stock of the Company consists of 6,000,000 shares of
Common Stock, no par value (the "Common Stock") of which 1,935,478 shares were
issued and outstanding at November 30, 1997, 800,000 shares of redeemable
cumulative convertible preferred stock of which 256,448 shares of Preferred
Stock were issued and outstanding at November 30, 1997, and 200,000 shares of
preferred stock, no par value, no shares of which 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 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
[18+1 if mailing after 1/14/98] 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 dosed) 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.
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 $18.25 per share
in the case of any such redemption during the period through February 28, 1996,
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. 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 restrictive covenants contained in the Debenture Indenture. 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.
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. No
adjustment will be made, however, upon the consummation of the Offer.
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 Deloitte & Touche LLP serves as the Company's independent certified
public accountants. A representative from Deloitte & Touche LLP is not expected
to be present at the Special Meeting but will have the opportunity to make a
statement if they desire to do so and will be available to respond to
appropriate 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.
[D. The Offering Circular distributed for the Exchange Offer.]
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 [25], 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 series thereof, may 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.
EIGHTH: 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
subparagraph, 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 hold 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
hereinafter 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 e 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 shares of Common Stock on the business day
preceding the day of conversation. 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 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 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 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 of 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 of 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 exchanged,
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 their 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 in effect at the time; provided, however,
that any consideration which was actually received by the Company in connection
with the issuance of 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 hereof.
(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 competition, 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 of 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, 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.
(xiii) 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).
(xiiii) 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 or with other adjustments no previously made, would require a
change of at least 1% 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 of any 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 actions 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 by 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>
Preliminary Copy, dated January 25, 1997
ANDERSEN GROUP, INC.
This Proxy is Solicited on Behalf of the Board of Directors of Andersen Group,
Inc. (the "Company")
The undersigned hereby appoints [ ] and [ ] 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 [ ] 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>
Preliminary Copy, dated January 25, 1998
ANDERSEN GROUP, INC.
This Proxy is Solicited on Behalf of the Board of Directors of Andersen Group,
Inc. (the "Company")
The undersigned hereby appoints [ ] and [ ] 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 [ ] 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).
