<PAGE>
UNITED STATES OMB APPROVAL
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(RULE 13D-101)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
-----
ESSEX INTERNATIONAL INC.
- -------------------------------------------------------------------------------
(Name of Issuer)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
- -------------------------------------------------------------------------------
(Title of Class of Securities)
297025 10 8
- -------------------------------------------------------------------------------
(CUSIP Number)
STEVEN S. ELBAUM
THE ALPINE GROUP, INC.
SUPERIOR TELECOM INC.
SUT ACQUISITION CORP.
1790 BROADWAY
NEW YORK, NEW YORK 10019-1412
(212) 757-3333
- -------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
OCTOBER 21, 1998
- -------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check
the following box / /
<PAGE>
SCHEDULE 13D
CUSIP NO. 297025 10 8 PAGE 2 OF 7 PAGES
- -------------------------------------------------------------------------------
NAMES OF REPORTING PERSONS
SUT Acquisition Corp.
1 I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Applied For
- -------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (A)/x/
2 (B)/ /
- -------------------------------------------------------------------------------
SEC USE ONLY
3
- -------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
BK
- -------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
5 ITEMS 2(D) OR 2(E) / /
- -------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
- -------------------------------------------------------------------------------
SOLE VOTING POWER
7
13,254,187 shares of Common Stock (right to acquire)
-----------------------------------------------------------
NUMBER OF SHARED VOTING POWER
SHARES 8
BENEFICIALLY 0
OWNED BY -----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
REPORTING 9
PERSON WITH 13,254,187 shares of Common Stock (right to acquire)
-----------------------------------------------------------
SHARED DISPOSITIVE POWER
10
0
- -------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
13,254,187 shares of Common Stock (right to acquire)
- -------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
12
- -------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
47.7%
- -------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO
- -------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
CUSIP NO. 297025 10 8 PAGE 3 OF 7 PAGES
- -------------------------------------------------------------------------------
NAMES OF REPORTING PERSONS
1 Superior TeleCom Inc.
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
58-2248978
- -------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (A) /x/
2 (B) / /
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS* BK
- -------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
5 ITEMS 2(D) OR 2(E) / /
- -------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
- -------------------------------------------------------------------------------
SOLE VOTING POWER
7
13,254,187 shares of Common Stock (right to acquire)
-----------------------------------------------------------
NUMBER OF SHARED VOTING POWER
SHARES 8
BENEFICIALLY 0
OWNED BY -----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
REPORTING 9
PERSON WITH 13,254,187 shares of Common Stock (right to acquire)
-----------------------------------------------------------
SHARED DISPOSITIVE POWER
10
0
- -------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
13,254,187 shares of Common Stock (right to acquire)
- -------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
12
- -------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
47.7%
- -------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO, HC
- -------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
CUSIP NO. 297025 10 8 PAGE 4 OF 7 PAGES
NAMES OF REPORTING PERSONS
1 The Alpine Group, Inc.
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
22-1620387
- -------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (A) /x/
2 (B) / /
- -------------------------------------------------------------------------------
SEC USE ONLY
3
- -------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
BK
- -------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
5 ITEMS 2(D) OR 2(E) / /
- -------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
- -------------------------------------------------------------------------------
SOLE VOTING POWER
7
13,254,187 shares of Common Stock (right to acquire)
-----------------------------------------------------------
NUMBER OF SHARED VOTING POWER
SHARES 8
BENEFICIALLY 0
OWNED BY -----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
REPORTING 9
PERSON WITH 13,254,187 shares of Common Stock (right
to acquire)
-----------------------------------------------------------
SHARED DISPOSITIVE POWER
10
0
- -------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
13,254,187 shares of Common Stock (right to acquire)
- -------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
12
- -------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
47.7%
- -------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO, HC
- -------------------------------------------------------------------------------
<PAGE>
PAGE 5 OF 7 PAGES
ITEM 1. SECURITY AND ISSUER
This Statement relates to the common stock, par value $0.01
per share, of Essex International Inc., a Delaware corporation (the
"Company"), whose principal executive offices are located at 1601
Wall Street, Fort Wayne, Indiana 46802.
ITEM 2. IDENTITY AND BACKGROUND
(a)-(c) and (f) This Statement is being filed by The Alpine
Group, Inc., a Delaware corporation ("Alpine"), Superior TeleCom
Inc., a Delaware corporation and Alpine's 50.1% owned subsidiary
("Parent"), and SUT Acquisition Corp., a Delaware corporation and
Parent's wholly owned subsidiary ("Purchaser"). The information
concerning the name, state or other place of organization,
principal business, address of the principal business and address
of the principal office of each of Purchaser, Parent and Alpine and
the information concerning the name, residence or business address,
present principal occupation or employment and the name, principal
business and address of any corporation or other organization in
which such employment is conducted and citizenship of each of the
executive officers and directors of Purchaser, Parent and Alpine is
set forth in the Introduction, Section 8 ("Certain Information
Concerning Purchaser and Parent") and Schedule I of Purchaser's
Offer to Purchase, dated October 28, 1998 (the "Offer to
Purchase"), and is incorporated herein by reference. The Offer to
Purchase is annexed hereto as Exhibit 99.2.
(d) and (e) The information set forth in Item 2(e) and (f)
("Identity and Background") of the Tender Offer Statement on
Schedule 14D-1 filed with the Securities and Exchange Commission by
Purchaser and Parent on October 28, 1998 (the "Schedule 14D-1") is
incorporated herein by reference. The Schedule 14D-1 is annexed
hereto as Exhibit 99.1.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The information set forth in the Introduction, Section 9
("Financing of the Offer and the Merger") and Section 10
("Background of the Offer; Contacts with the Company; the Merger
Agreement; Stockholders Agreement; Voting Agreement") of the Offer
to Purchase is incorporated herein by reference.
ITEM 4. PURPOSE OF TRANSACTION
(a)-(g) and (j) The information set forth in the
Introduction, Section 10 ("Background of the Offer; Contacts with
the Company; the Merger Agreement; Stockholders Agreement; Voting
Agreement") and Section 11 ("Purpose of the Offer; Plans for the
Company After the Offer and the Merger") of the Offer to Purchase
is incorporated herein by reference.
(h) and (i) The information set forth in Section 10
("Background of the Offer; Contacts with the Company; the Merger
Agreement; Stockholders Agreement; Voting Agreement") and Section
13 ("Effect of the Offer on the Market for the Shares, Exchange
Listing and Exchange Act Registration") of the Offer to Purchase is
incorporated herein by reference.
<PAGE>
PAGE 6 OF 7
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a)-(c) The information set forth in the Introduction,
Section 8 ("Certain Information Concerning Purchaser and Parent")
and Section 10 ("Background of the Offer; Contacts with the
Company; the Merger Agreement; Stockholders Agreement; Voting
Agreement") of the Offer to Purchase is incorporated herein by
reference.
(d) None.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO SECURITIES OF THE ISSUER.
The information set forth in the Introduction, Section 8
("Certain Information Concerning Purchaser and Parent") and Section
10 ("Background of the Offer; Contacts with the Company; the Merger
Agreement; Stockholders Agreement; Voting Agreement") of the Offer
to Purchase is incorporated herein by reference.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
99.1 Schedule 14D-1 filed with the Securities and Exchange
Commission on October 28, 1998
99.2 Offer to Purchase dated October 28, 1998
99.3 Commitment Letter, dated October 21, 1998, from Bankers
Trust Company to Parent
99.4 Agreement and Plan of Merger, dated as of October 21,
1998, among Parent, Purchaser and the Company
99.5 Stockholders Agreement, dated as of October 21, 1998,
among Parent, Purchaser and certain stockholders of the
Company named therein
99.6 Agreement as to Joint Filing of Schedule 13D among
Alpine, Parent and Purchaser
<PAGE>
PAGE 7 OF 7 PAGES
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement
is true, complete and correct.
Dated: November 2, 1998
SUT ACQUISITION CORP.
By: /s/Steven S. Elbaum
-------------------------
Name: Steven S. Elbaum
Title: Chairman of the Board, President
and Chief Executive Officer
SUPERIOR TELECOM INC.
By: /s/Steven S. Elbaum
-------------------------
Name: Steven S. Elbaum
Title: Chairman of the Board, President
and Chief Executive Officer
THE ALPINE GROUP, INC.
By: /s/Steven S. Elbaum
-------------------------
Name: Steven S. Elbaum
Title: Chairman of the Board
and Chief Executive Officer
<PAGE>
EXHIBIT INDEX
99.1 Schedule 14D-1 filed with the Securities and Exchange
Commission on October 28, 1998
99.2 Offer to Purchase dated October 28, 1998
99.3 Commitment Letter, dated October 21, 1998, from Bankers
Trust Company to Parent
99.4 Agreement and Plan of Merger, dated as of October 21,
1998, among Parent, Purchaser and the Company
99.5 Stockholders Agreement, dated as of October 21, 1998,
among Parent, Purchaser and certain stockholders of the
Company named therein
99.6 Agreement as to Joint Filing of Schedule 13D among
Alpine, Parent and Purchaser
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION
14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
------------------------
ESSEX INTERNATIONAL INC.
(NAME OF SUBJECT COMPANY)
SUT ACQUISITION CORP.
SUPERIOR TELECOM INC.
(BIDDERS)
------------------------------
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
------------------------------
297025 10 8
(CUSIP NUMBER OF CLASS OF SECURITIES)
------------------------------
STEVEN S. ELBAUM
SUT ACQUISITION CORP.
SUPERIOR TELECOM INC.
1790 BROADWAY
NEW YORK, NEW YORK 10019-1412
(212) 757-3333
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE
NOTICES AND COMMUNICATIONS ON BEHALF OF THE BIDDER)
------------------------------
COPY TO
RONALD R. PAPA, ESQ.
PROSKAUER ROSE LLP
1585 BROADWAY
NEW YORK, NEW YORK 10036
(212) 969-3000
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
TRANSACTION VALUATION AMOUNT OF FILING FEE
<S> <C>
$721,988,320 (1) $144,398
</TABLE>
(1) Calculated by multiplying $32.00, the per share cash tender offer price, by
22,562,135, the number of shares of Common Stock being sought in the tender
offer.
/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
<TABLE>
<S> <C>
Amount Previously Paid: Filing Party:
Form or Registration No.: Date Filed:
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 14D-1
CUSIP NO. 297025 10 8 Page 2 of 3 Pages
- --------------------------------------------------------------------------------
(1) NAME OF REPORTING PERSONS: SUT Acquisition Corp.
S.S. OR I.R.S. IDENTIFICATION NUMBER OF ABOVE PERSON: Applied For
- --------------------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*:
(a) /X/
(b) / /
- --------------------------------------------------------------------------------
(3) SEC USE ONLY
- --------------------------------------------------------------------------------
(4) SOURCE OF FUNDS*:
BK
- --------------------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(e) OR 2(f)
/ /
- --------------------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION:
Delaware
- --------------------------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
- --------------------------------------------------------------------------------
(7) SOLE VOTING POWER:
13,254,187 shares of Common Stock (right to acquire)
- --------------------------------------------------------------------------------
(8) SHARED VOTING POWER:
0
- --------------------------------------------------------------------------------
(9) SOLE DISPOSITIVE POWER:
13,254,187 shares of Common Stock (right to acquire)
- --------------------------------------------------------------------------------
(10) SHARED DISPOSITIVE POWER:
0
- --------------------------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
13,254,187 shares of Common Stock
- --------------------------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*:
- --------------------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):
47.7%
- --------------------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON*:
CO
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 14D-1
CUSIP NO. 297025 10 8 Page 3 of 3 Pages
- --------------------------------------------------------------------------------
(1) NAME OF REPORTING PERSONS: Superior TeleCom Inc.
S.S. OR I.R.S. IDENTIFICATION NUMBER OF ABOVE PERSON: 58-2248978
- --------------------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*:
(a) /X/
(b) / /
- --------------------------------------------------------------------------------
(3) SEC USE ONLY
- --------------------------------------------------------------------------------
(4) SOURCE OF FUNDS*:
BK
- --------------------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(e) OR 2(f)
/ /
- --------------------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION:
Delaware
- --------------------------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
- --------------------------------------------------------------------------------
(7) SOLE VOTING POWER:
13,254,187 shares of Common Stock (right to acquire)
- --------------------------------------------------------------------------------
(8) SHARED VOTING POWER:
0
- --------------------------------------------------------------------------------
(9) SOLE DISPOSITIVE POWER:
13,254,187 shares of Common Stock (right to acquire)
- --------------------------------------------------------------------------------
(10) SHARED DISPOSITIVE POWER:
0
- --------------------------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
13,254,187 shares of Common Stock
- --------------------------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*:
- --------------------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):
47.7%
- --------------------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON*:
CO, HC
- --------------------------------------------------------------------------------
<PAGE>
This Tender Offer Statement on Schedule 14D-1 (the "Statement") relates to
the offer by SUT Acquisition Corp., a corporation organized and existing under
the laws of the State of Delaware ("Purchaser") and a wholly owned subsidiary of
Superior TeleCom Inc., a corporation organized and existing under the laws of
the State of Delaware ("Parent"), to purchase up to 22,562,135 shares of common
stock, par value $0.01 per share (the "Shares"), of Essex International Inc., a
corporation organized and existing under the laws of the State of Delaware (the
"Company"), at a price of $32.00 per Share, net to the seller in cash (subject
to applicable withholding of taxes), without interest, upon the terms and
subject to the conditions set forth in Purchaser's Offer to Purchase, dated
October 28, 1998 (the "Offer to Purchase"), and in the related Letter of
Transmittal (which, together with any amendments or supplements thereto,
collectively constitute the "Offer"), copies of which are filed herewith as
Exhibits (a)(1) and (a)(2), respectively.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Essex International Inc. and its
principal executive offices are located at 1601 Wall Street, Fort Wayne, Indiana
46802.
(b) The class of equity securities and the exact amount of such securities
being sought are 22,562,135 shares of common stock, par value $0.01 per share,
of the Company. As of October 20, 1998, there were 27,768,782 Shares issued and
outstanding, as represented by the Company in the Agreement and Plan of Merger,
dated as of October 21, 1998, among Parent, Purchaser and the Company. The
information set forth in the Introduction and Section 1 ("Terms of the Offer;
Proration; Expiration Date") of the Offer to Purchase is incorporated herein by
reference.
(c) The information concerning the principal market in which the Shares are
traded and certain high and low sales prices for the Shares in such principal
market is set forth in Section 6 ("Price Range of Shares; Dividends") in the
Offer to Purchase and is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g) This Statement is being filed by Purchaser and Parent.
Parent is a 50.1% owned subsidiary of The Alpine Group, Inc., a corporation
organized and existing under the laws of the State of Delaware ("Alpine"). The
information concerning the name, state or other place of organization, principal
business and address of the principal office of each of Purchaser, Parent and
Alpine and the information concerning the name, residence or business address,
present principal occupation or employment and the name, principal business and
address of any corporation or other organization in which such employment or
occupation is conducted, material occupations, positions, offices or employments
during the last five years and citizenship of each of the executive officers and
directors of Purchaser, Parent and Alpine are set forth in the Introduction,
Section 8 ("Certain Information Concerning Purchaser and Parent") and Schedule I
of the Offer to Purchase and is incorporated herein by reference.
(e) and (f) During the last five years, none of Purchaser, Parent or Alpine
and, to the best knowledge of Purchaser, Parent and Alpine, none of the persons
listed in Schedule I of the Offer to Purchase has been (i) convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any violation
of such laws.
ITEM 3. PAST CONTRACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) The information set forth in Section 8 ("Certain Information Concerning
Purchaser and Parent") of the Offer to Purchase is incorporated herein by
reference.
(b) The information set forth in the Introduction, Section 8 ("Certain
Information Concerning Purchaser and Parent") and Section 10 ("Background of the
Offer; Contacts with the Company; the
<PAGE>
Merger Agreement; Stockholders Agreement; Voting Agreement") of the Offer to
Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(c) The information set forth in Section 9 ("Financing of the Offer and
the Merger") of the Offer to Purchase is incorporated herein by reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in the Introduction, Section 10
("Background of the Offer; Contacts with the Company; the Merger Agreement;
Stockholders Agreement; Voting Agreement") and Section 11 ("Purpose of the
Offer; Plans for the Company After the Offer and the Merger") of the Offer to
Purchase is incorporated herein by reference.
(f) and (g) The information set forth in Section 13 ("Effect of the Offer on
the Market for the Shares, Exchange Listing and Exchange Act Registration") of
the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) The information set forth on the cover page and in the Introduction,
Section 8 ("Certain Information Concerning Purchaser and Parent") and Section 10
("Background of the Offer; Contacts with the Company; the Merger Agreement;
Stockholders Agreement; Voting Agreement") of the Offer to Purchase is
incorporated herein by reference.
(b) The information set forth in the Introduction, Section 8 ("Certain
Information Concerning Purchaser and Parent") and Section 10 ("Background of the
Offer; Contacts with the Company; the Merger Agreement; Stockholders Agreement;
Voting Agreement") of the Offer to Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction, Section 8 ("Certain
Information Concerning Purchaser and Parent") and Section 10 ("Background of the
Offer; Contacts with the Company; the Merger Agreement; Stockholders Agreement;
Voting Agreement") of the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction and Section 16 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 8 ("Certain Information Concerning
Purchaser and Parent") of the Offer to Purchase incorporated herein by
reference.
The incorporation by reference herein of the above-referenced financial
information does not constitute an admission that such information is material
to a decision by a security holder of the Company whether to sell, tender or
hold securities being sought in the Offer.
ITEM 10. ADDITIONAL INFORMATION.
(a) Not applicable
<PAGE>
(b)-(c) The information set forth in Section 15 ("Certain Legal Matters and
Regulatory Approvals") of the Offer to Purchase is incorporated herein by
reference.
(d) Not applicable
(e) Not applicable
(f) The information set forth in the Offer to Purchase is incorporated
herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<S> <C>
(a)(1) Form of Offer to Purchase dated October 28, 1998
(a)(2) Form of Letter of Transmittal
(a)(3) Form of Notice of Guaranteed Delivery
(a)(4) Form of Letter to brokers, dealers, commercial banks, trust companies and nominees
(a)(5) Form of Letter to clients for use by brokers, dealers, commercial banks, trust
companies and nominees
(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form
W-9
(a)(7) Summary Advertisement as published in THE WALL STREET JOURNAL on October 28, 1998
(a)(8) Press release issued on October 22, 1998
(b) Commitment Letter, dated October 21, 1998, from Bankers Trust Company to Parent
(c)(1) Agreement and Plan of Merger, dated as of October 21, 1998, among Parent, Purchaser
and the Company
(c)(2) Stockholders Agreement, dated as of October 21, 1998, among Parent, Purchaser and
certain stockholders of the Company named therein
(d) Not applicable
(e) Not applicable
(f) Not applicable
</TABLE>
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
SUT ACQUISITION CORP.
By: /s/ STEVEN S. ELBAUM
-----------------------------------------
Name: Steven S. Elbaum
Title: Chairman of the Board, President
and Chief Executive Officer
SUPERIOR TELECOM INC.
By: /s/ STEVEN S. ELBAUM
-----------------------------------------
Name: Steven S. Elbaum
Title: Chairman of the Board, President
and Chief Executive Officer
October 28, 1998
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO.
- -----------
<S> <C>
(a)(1) Form of Offer to Purchase dated October 28, 1998
(a)(2) Form of Letter of Transmittal
(a)(3) Form of Notice of Guaranteed Delivery
(a)(4) Form of Letter to brokers, dealers, commercial banks, trust companies and nominees
(a)(5) Form of Letter to clients for use by brokers, dealers, commercial banks, trust companies and nominees
(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9
(a)(7) Summary Advertisement as published in THE WALL STREET JOURNAL on October 28, 1998
(a)(8) Press release issued on October 22, 1998
(b) Commitment Letter, dated October 21, 1998, from Bankers Trust Company to Parent
(c)(1) Agreement and Plan of Merger, dated as of October 21, 1998, among Parent, Purchaser and the Company
(c)(2) Stockholders Agreement, dated as of October 21, 1998, among Parent, Purchaser and certain
stockholders of the Company named therein
(d) Not applicable
(e) Not applicable
(f) Not applicable
</TABLE>
<PAGE>
OFFER TO PURCHASE FOR CASH
22,562,135 SHARES OF COMMON STOCK
OF
ESSEX INTERNATIONAL INC.
AT
$32.00 NET PER SHARE
BY
SUT ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
SUPERIOR TELECOM INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON NOVEMBER 25, 1998, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE HAVING BEEN VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST A
MAJORITY OF THE SHARES THEN OUTSTANDING ON A FULLY DILUTED BASIS AND IS ALSO
SUBJECT TO A FINANCING CONTINGENCY AND OTHER CUSTOMARY CLOSING CONDITIONS.
------------------------
THE BOARD OF DIRECTORS OF ESSEX INTERNATIONAL INC. (THE "COMPANY") HAS APPROVED
AND FOUND ADVISABLE THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING THE OFFER AND THE MERGER, AND DETERMINED THAT THE
TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST
INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY AND RECOMMENDS THAT
STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES
PURSUANT TO THE OFFER.
------------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
shares of common stock, par value $0.01 per share (the "Shares"), of the Company
should either (1) complete and sign the Letter of Transmittal (or a facsimile
thereof) in accordance with the instructions in the Letter of Transmittal and
(a) mail or deliver it together with the certificate(s) evidencing tendered
Shares, and any other required documents, to the Depositary or (b) tender such
Shares pursuant to the procedures for book-entry transfer set forth in Section
3, or (2) request such stockholder's broker, dealer, commercial bank, trust
company or other nominee to effect the transaction for such stockholder. Any
stockholder whose Shares are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact such broker,
dealer, commercial bank, trust company or other nominee if such stockholder
desires to tender such Shares.
A stockholder who desires to tender Shares and whose certificates evidencing
such Shares are not immediately available, or who cannot comply with the
procedures for book-entry transfer on a timely basis, may tender such Shares by
following the procedures for guaranteed delivery set forth in Section 3.
Questions or requests for assistance may be directed to the Information
Agent or to the Dealer Manager at their respective addresses and telephone
numbers set forth on the back cover of this Offer to Purchase. Additional copies
of this Offer to Purchase, the Letter of Transmittal and the Notice of
Guaranteed Delivery may also be obtained from the Information Agent, the Dealer
Manager or from brokers, dealers, commercial banks or trust companies.
------------------------
THE DEALER MANAGER FOR THE OFFER IS:
BT Wolfensohn
A DIVISION OF BT ALEX. BROWN
October 28, 1998
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TABLE OF CONTENTS
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<C> <S> <C>
INTRODUCTION.................................................................................................... 1
1. Terms of the Offer; Proration; Expiration Date....................................................... 3
2. Acceptance for Payment and Payment for Shares........................................................ 4
3. Procedures for Accepting the Offer and Tendering Shares.............................................. 5
4. Withdrawal Rights.................................................................................... 8
5. Certain Federal Income Tax Consequences.............................................................. 8
6. Price Range of Shares; Dividends..................................................................... 9
7. Certain Information Concerning the Company........................................................... 10
8. Certain Information Concerning Purchaser and Parent.................................................. 13
9. Financing of the Offer and the Merger................................................................ 15
10. Background of the Offer; Contacts with the Company; The Merger Agreement; Stockholders Agreement;
Voting Agreement..................................................................................... 17
11. Purpose of the Offer; Plans for the Company After the Offer and the Merger........................... 28
12. Dividends and Distributions.......................................................................... 30
13. Effect of the Offer on the Market for the Shares, Exchange Listing and Exchange Act Registration..... 30
14. Certain Conditions of the Offer...................................................................... 31
15. Certain Legal Matters and Regulatory Approvals....................................................... 33
16. Fees and Expenses.................................................................................... 35
17. Miscellaneous........................................................................................ 36
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF ALPINE,
PARENT AND PURCHASER...................................................................................... 37
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To the Holders of Common Stock of
ESSEX INTERNATIONAL INC.:
INTRODUCTION
SUT Acquisition Corp., a corporation organized and existing under the laws
of the State of Delaware ("Purchaser") and a wholly owned subsidiary of Superior
TeleCom Inc., a corporation organized and existing under the laws of the State
of Delaware ("Parent"), hereby offers to purchase up to 22,562,135 (the "Offered
Number") shares of common stock, par value $0.01 per share ("Company Common
Stock" or "Shares"), of Essex International Inc., a corporation organized and
existing under the laws of the State of Delaware (the "Company"), at a price of
$32.00 per Share (such amount, or any greater amount per Share paid pursuant to
the Offer, being hereinafter referred to as the "Per Share Amount"), net to the
seller in cash (subject to applicable withholding of taxes), without interest,
upon the terms and subject to the conditions set forth in this Offer to Purchase
and in the related Letter of Transmittal (which, together with any amendments or
supplements hereto or thereto, collectively constitute the "Offer").
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter of
Transmittal, stock transfer or other similar taxes with respect to the purchase
of Shares by Purchaser pursuant to the Offer. Purchaser will pay all charges and
expenses of BT Wolfensohn (a division of BT Alex. Brown Incorporated), which is
acting as Dealer Manager for the Offer (in such capacity, the "Dealer Manager"),
American Stock Transfer & Trust Company (the "Depositary") and D.F. King & Co.,
Inc. (the "Information Agent") incurred in connection with the Offer. See
Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS APPROVED AND FOUND
ADVISABLE THE MERGER AGREEMENT (AS DEFINED BELOW) AND THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, AND RECOMMENDS THAT
STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE HAVING BEEN VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST A
MAJORITY OF THE SHARES THEN OUTSTANDING ON A FULLY DILUTED BASIS (THE "MINIMUM
CONDITION") AND IS ALSO SUBJECT TO A FINANCING CONTINGENCY AND OTHER CUSTOMARY
CLOSING CONDITIONS. SEE SECTION 14, WHICH SETS FORTH IN FULL THE CONDITIONS TO
THE OFFER.
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of October 21, 1998 (the "Merger Agreement"), among Parent, Purchaser and the
Company. The Merger Agreement provides that, among other things, as soon as
practicable after the purchase of Shares pursuant to the Offer and the
satisfaction of the other conditions set forth in the Merger Agreement and in
accordance with the relevant provisions of the General Corporation Law of the
State of Delaware ("Delaware Law"), Purchaser will be merged with and into the
Company (the "Merger"). Following consummation of the Merger, the Company will
continue as the surviving corporation (the "Surviving Corporation") and will be
a wholly owned subsidiary of Parent.
Following completion of the Offer, the Merger Agreement provides that,
subject to the satisfaction or waiver of certain conditions set forth therein,
including the approval and adoption of the Merger Agreement by the Company's
stockholders, the remaining Shares will be converted in the Merger into shares
of Series A Cumulative Convertible Exchangeable Preferred Stock, par value $0.01
per share ("Parent Preferred Stock"), of Parent. As more completely described
below, if fewer than the Offered Number of Shares is purchased in the Offer, the
remaining Company stockholders will receive in the Merger shares of Parent
Preferred Stock and cash for their Shares so that the aggregate cash and stock
consideration paid in the Offer and the Merger combined is the same as if the
Offer had been fully subscribed. At the effective time of the Merger (the
"Effective Time"), each remaining outstanding Share (other than Shares held in
the treasury of the Company or owned by Purchaser, Parent or any direct or
indirect wholly owned subsidiary of Parent or of the Company (collectively,
"Ineligible Shares") and other
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than Shares held by stockholders who have demanded and perfected appraisal
rights, if any, under Delaware Law ("Dissenting Shares")) will be converted
automatically into the right to receive (i) 0.64 of a fully paid and
non-assessable share of Parent Preferred Stock (the "Exchange Ratio"); provided,
however, that if Purchaser accepts for payment and pays for less than the
Offered Number of Shares in the Offer (the number of Shares so accepted for
payment and paid for being referred to herein as the "Accepted Share Number"),
then the Exchange Ratio will be adjusted (the "Adjusted Exchange Ratio") and the
Adjusted Exchange Ratio will be equal to the product of the Exchange Ratio and a
fraction (A) the numerator of which is equal to (x) the number of outstanding
Shares immediately prior to the Effective Time (excluding Ineligible Shares)
(the "Final Outstanding Number") plus (y) the Accepted Share Number minus (z)
the Offered Number and (B) the denominator of which is the Final Outstanding
Number and (ii) if the Exchange Ratio has been adjusted pursuant to the
immediately preceding proviso, an amount in cash equal to the product of the Per
Share Amount and a fraction (A) the numerator of which is the amount by which
the Offered Number exceeds the Accepted Share Number and (B) the denominator of
which is the Final Outstanding Number. The Merger Agreement is more fully
described in Section 10.
The Merger Agreement provides that, promptly upon the acceptance for payment
by Purchaser of Shares purchased pursuant to the Offer, and from time to time
thereafter as Shares are acquired by Purchaser, Purchaser will be entitled to
designate such number of directors, rounded up to the next greatest whole
number, on the Board as will give Purchaser representation on the Board equal to
the product of the total number of directors on the Board (including Purchaser's
designees) multiplied by the percentage that the aggregate number of Shares then
beneficially owned by Purchaser and its affiliates following such purchase bears
to the number of Shares then outstanding; provided, however, that, until the
Effective Time, the Board will maintain at least one current director who is not
an executive officer of the Company. In the Merger Agreement, the Company has
agreed to take all actions necessary to cause Purchaser's designees to be
elected as directors of the Company, including increasing the size of the Board
or securing the resignations of incumbent directors. See Section 10.
The consummation of the Merger is subject to the satisfaction or waiver of
certain conditions, including the approval and adoption of the Merger Agreement
by the requisite vote of the stockholders of the Company. See Section 10. A
Prospectus/Proxy Statement (as defined in Section 10) (which will constitute a
prospectus for the Parent Preferred Stock issuable in the Merger, the Parent
Common Stock (as defined below) issuable upon conversion thereof and Parent's
8- 1/2% Convertible Subordinated Exchange Debentures due 2013 (the "Exchange
Debentures") issuable upon exchange of the Parent Preferred Stock) containing
detailed information concerning the Merger will be furnished to stockholders of
the Company in connection with a special meeting to be called by the Company to
vote on the Merger. Purchaser will vote all Shares acquired pursuant to the
Offer in favor of the Merger. Under Delaware Law, the affirmative vote of the
holders of a majority of the outstanding Shares is required to approve and adopt
the Merger Agreement and the Merger. Consequently, if Purchaser acquires
(pursuant to the Offer or otherwise) at least a majority of the outstanding
Shares, Purchaser will have sufficient voting power to approve and adopt the
Merger Agreement and the Merger without the vote of any other stockholder.
In connection with the execution of the Merger Agreement, Parent and
Purchaser entered into a Stockholders Agreement, dated as of October 21, 1998
(the "Stockholders Agreement"), with certain stockholders of the Company,
including Bessemer Holdings, L.P. and certain affiliates thereof (the
"Stockholders"). Under the Stockholders Agreement, each of the Stockholders has,
among other things, (i) agreed to tender pursuant to the Offer all Shares owned
by him or it, (ii) granted to Purchaser an irrevocable option, subject to the
terms and conditions of the Stockholders Agreement, to purchase such Shares for
a cash purchase price per Share equal to the Per Share Amount, (iii) agreed to
vote such Shares in favor of the Merger and the Merger Agreement and (iv)
granted to Parent and certain officers of Parent an irrevocable proxy to vote
such Shares in favor of the transactions contemplated by the Merger Agreement.
The Shares owned by the Stockholders and subject to the Stockholders Agreement,
13,254,187 Shares, constituted approximately 47.7% of the Shares represented by
the Company to be outstanding as of October 20, 1998. As a result of the
Stockholders Agreement, Purchaser, Parent and The Alpine Group, Inc., a Delaware
corporation and the 50.1% owner of Parent ("Alpine"), are deemed to be the
beneficial owners of such Shares. See Section 10.
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In addition, the consummation of the Merger is subject to the approval and
adoption of the Parent Preferred Stock Matters (as defined in Section 10) by the
requisite vote of the stockholders of Parent. The Prospectus/Proxy Statement
will also be furnished to stockholders of Parent in connection with a special
meeting to be called by Parent to vote on the Parent Preferred Stock Matters.
See Section 10. Pursuant to a letter agreement, dated October 21, 1998, from
Alpine to the Company (the "Voting Agreement"), Alpine has, among other things,
agreed that it will, at any such meeting (or in connection with any written
consent of such stockholders), vote (or cause to be voted) all shares of common
stock, par value $0.01 per share ("Parent Common Stock"), of Parent then held of
record by Alpine or which Alpine has the right to vote in favor of the Parent
Preferred Stock Matters. See Section 10.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
1. TERMS OF THE OFFER; PRORATION; EXPIRATION DATE.
Upon the terms and subject to the conditions of the Offer (including if the
Offer is extended or amended, the terms and conditions of such extension or
amendment), Purchaser will accept for payment and pay for all Shares (up to the
Offered Number) validly tendered on or prior to the Expiration Date (as defined
below) and not withdrawn as permitted by Section 4. The term "Expiration Date"
means 12:00 midnight, New York City time, on Wednesday, November 25, 1998;
provided, however, that Purchaser may, without the consent of the Company (but
subject to the terms and conditions of the Merger Agreement, as described
below), extend the period during which the Offer is open, in which event the
term "Expiration Date" will mean the latest time and date at which the Offer, as
so extended by Purchaser, will expire.
If more than the Offered Number of Shares is validly tendered on or prior to
the Expiration Date and not withdrawn, Purchaser will, upon the terms and
subject to the conditions of the Offer, accept such Shares for payment on a pro
rata basis, with adjustments to avoid purchases of fractional Shares, based upon
the number of Shares validly tendered on or prior to the Expiration Date and not
withdrawn.
Because of the difficulty of determining precisely the number of Shares
validly tendered and not withdrawn, if proration is required, Purchaser would
not expect to announce the final results of proration until approximately seven
New York Stock Exchange ("NYSE") trading days after the Expiration Date.
Preliminary results of proration will be announced by press release as promptly
as practicable after the Expiration Date. Holders of Shares may obtain such
preliminary information from the Depositary and may also be able to obtain such
preliminary information from their brokers. Purchaser will not pay for any
Shares accepted for payment pursuant to the Offer until the final proration
factor is known.
Purchaser may, without the consent of the Company, (A) extend the Offer in
increments of up to ten business days each if at the Expiration Date the Minimum
Condition has not been satisfied or any of the other conditions set forth in
Section 14 hereof have not been satisfied or waived, until such time as such
conditions are satisfied or waived, and (B) extend the Offer for any period
required by any rule, regulation, interpretation or position of the Securities
and Exchange Commission (the "Commission") applicable to the Offer. Under
certain circumstances, Purchaser will be required to extend the Expiration Date
at the Company's request, as described in Section 10. Purchaser is required to
give oral or written notice of any such extension to the Depositary. During any
such extension, all Shares previously tendered and not withdrawn will remain
tendered pursuant to the Offer, subject to the rights of a tendering stockholder
to withdraw his, her or its Shares. See Section 4.
Subject to the applicable regulations of the Commission, Purchaser also
expressly reserves the right, in its sole discretion (but subject to the terms
and conditions of the Merger Agreement), at any time and from time to time, (i)
to delay acceptance for payment of, or, regardless of whether such Shares were
theretofore accepted for payment, payment for, any Shares, or to terminate the
Offer and not accept for payment, or not pay for, any Shares if, at the
Expiration Date, any of the conditions specified in Section 14
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exists and (ii) to waive any condition or otherwise amend the Offer in any
respect, by giving oral or written notice of such delay, termination, waiver or
amendment to the Depositary and by making a public announcement thereof. The
Merger Agreement provides that, without the consent of the Company, Purchaser
will not (i) decrease the Per Share Amount payable in the Offer, (ii) change the
form of consideration to be paid in the Offer, (iii) reduce the maximum number
of Shares to be purchased in the Offer, (iv) modify the conditions to the Offer
set forth in Section 14 or impose conditions to the Offer in addition to those
set forth in Section 14, (v) modify or waive the Minimum Condition or (vi)
extend the Offer except as provided above and in Section 10. Purchaser
acknowledges that (i) Rule 14e-l(c) under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), requires Purchaser to pay the consideration
offered or return the Shares tendered promptly after the termination or
withdrawal of the Offer and (ii) Purchaser may not delay acceptance for payment
of, or payment for (except as provided in clause (i) of the first sentence of
this paragraph), any Shares upon the occurrence of any of the conditions
specified in Section 14 without extending the period of time during which the
Offer is open.
Any such extension, delay, termination, waiver or amendment will be followed
as promptly as practicable by public announcement thereof, such announcement in
the case of an extension to be made no later than 9:00 a.m., New York City time,
on the next business day after the previously scheduled Expiration Date. Subject
to applicable law (including Rules 14d-4(c) and 14d-6(d) under the Exchange Act,
which require that material changes be promptly disseminated to stockholders in
a manner reasonably designed to inform them of such changes) and without
limiting the manner in which Purchaser may choose to make any public
announcement, Purchaser will have no obligation to publish, advertise or
otherwise communicate any such public announcement other than by issuing a press
release to the Dow Jones News Service.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, Purchaser will extend the Offer to the extent required by Rules 14d-4(c),
14d-6(d) and 14e-1(d) under the Exchange Act.
Subject to the terms of the Merger Agreement, if, prior to the Expiration
Date, Purchaser should decide to increase or decrease the number of Shares being
sought or to increase or decrease the consideration being offered in the Offer,
such increase or decrease in the number of Shares being sought or such increase
or decrease in the consideration being offered will be applicable to all
stockholders whose Shares are accepted for payment pursuant to the Offer. If at
the time notice of any such increase or decrease in the number of Shares being
sought or such increase or decrease in the consideration being offered is first
published, sent or given to holders of such Shares, the Offer is scheduled to
expire at any time earlier than the period ending on the tenth business day from
and including the date that such notice is first so published, sent or given,
the Offer will be extended at least until the expiration of such ten business
day period. For purposes of the Offer, a "business day" means any day other than
a day on which banks in New York City are required or authorized to be closed
and consists of the time period from 12:01 a.m. through 12:00 midnight, New York
City time.
The Company has provided Purchaser with the Company's stockholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares. This Offer to Purchase and the related Letter of Transmittal will be
mailed to record holders of Shares whose names appear on the Company's
stockholder list and will be furnished, for subsequent transmittal to beneficial
owners of Shares, to brokers, dealers, commercial banks, trust companies and
similar persons whose names, or the names of whose nominees, appear on the
stockholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), Purchaser will accept for
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payment, and will pay for, all Shares validly tendered on or prior to the
Expiration Date and not properly withdrawn promptly after the later to occur of
(i) the Expiration Date, (ii) the expiration or termination of any applicable
waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), and (iii) the satisfaction or waiver of the
conditions to the Offer set forth in Section 14. Subject to applicable rules of
the Commission and to the terms of the Merger Agreement, Purchaser expressly
reserves the right to delay acceptance for payment of, or payment for, Shares
pending receipt of any regulatory approvals specified in Section 15 or in order
to comply in whole or in part with any other applicable law.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i) the
certificates evidencing such Shares (the "Share Certificates") or timely
confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such
Shares into the Depositary's account at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in Section
3, (ii) the Letter of Transmittal (or a facsimile thereof), properly completed
and duly executed, with any required signature guarantees, or an Agent's Message
(as defined below) in connection with a book-entry transfer, and (iii) any other
documents required by the Letter of Transmittal.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that Purchaser
may enforce such agreement against such participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn as, if and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance for payment of such Shares pursuant to the
Offer. Upon the terms and subject to the conditions of the Offer, payment for
Shares accepted for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payments from Purchaser and
transmitting such payments to tendering stockholders whose Shares have been
accepted for payment. Payment for Shares accepted for payment pursuant to the
Offer may be delayed in the event of proration due to the difficulty of
determining the number of Shares validly tendered and not withdrawn. See Section
1. Under no circumstances will interest on the purchase price for Shares be
paid, regardless of any extension of the Offer or any delay in making such
payment.
If any tendered Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer (including because of proration), Share
Certificates evidencing unpurchased Shares will be returned, without expense to
the tendering stockholder (or, in the case of Shares tendered by book-entry
transfer into the Depositary's account at the Book-Entry Transfer Facility
pursuant to the procedures set forth in Section 3, such Shares will be credited
to an account maintained at such Book-Entry Transfer Facility), as promptly as
practicable following the expiration or termination of the Offer.
3. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES.
In order for a holder of Shares validly to tender Shares pursuant to the
Offer, the Letter of Transmittal (or a facsimile thereof), properly completed
and duly executed, together with any required signature guarantees, or an
Agent's Message in connection with a book-entry transfer of Shares, and any
other documents required by the Letter of Transmittal, must be received by the
Depositary at its address set forth on the back cover of this Offer to Purchase
and either (i) the Share Certificates evidencing tendered Shares must be
received by the Depositary at such address or such Shares must be tendered
pursuant to the procedures for book-entry transfer described below and a
Book-Entry Confirmation must
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be received by the Depositary, in each case on or prior to the Expiration Date,
or (ii) the tendering stockholder must comply with the guaranteed delivery
procedures described below.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
BOOK-ENTRY TRANSFER. The Depositary will establish an account with respect
to the Shares at the Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in the system of the Book-Entry Transfer
Facility may make a book-entry delivery of Shares by causing such Book-Entry
Transfer Facility to transfer such Shares into the Depositary's account at such
Book-Entry Transfer Facility in accordance with such Book-Entry Transfer
Facility's procedures for such transfer. However, although delivery of Shares
may be effected through book-entry transfer at the Book-Entry Transfer Facility,
the Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, together with any required signature guarantees, or an Agent's Message
in connection with a book-entry transfer, and any other required documents,
must, in any case, be received by the Depositary at its address set forth on the
back cover of this Offer to Purchase on or prior to the Expiration Date, or the
tendering stockholder must comply with the guaranteed delivery procedures
described below. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES
NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
SIGNATURE GUARANTEES. Signatures on all Letters of Transmittal must be
guaranteed by a firm which is a member of the Securities Transfer Agents
Medallion Program, or by any other "eligible guarantor institution," as such
term is defined in Rule 17Ad-15 under the Exchange Act (each of the foregoing
being referred to as an "Eligible Institution"), except in cases where Shares
are tendered (i) by a registered holder of Shares who has not completed either
the box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account of
an Eligible Institution. If a Share Certificate is registered in the name of a
person other than the person who or that signs the Letter of Transmittal, or if
payment is to be made, or a Share Certificate not accepted for payment or not
tendered is to be returned, to a person other than the registered holder(s),
then the Share Certificate must be endorsed or accompanied by appropriate stock
powers, in either case signed exactly as the name(s) of the registered holder(s)
appear on the Share Certificate, with the signature(s) on such Share Certificate
or stock powers guaranteed by an Eligible Institution. See Instructions 1 and 5
of the Letter of Transmittal.
GUARANTEED DELIVERY. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Share Certificates evidencing such Shares are
not immediately available or such stockholder cannot deliver the Share
Certificates and all other required documents to the Depositary prior to the
Expiration Date, or such stockholder cannot complete the procedures for delivery
by book-entry transfer on a timely basis, such Shares may nevertheless be
tendered, provided that all the following conditions are satisfied:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by Purchaser, is received
by the Depositary on or prior to the Expiration Date as provided below; and
(iii) the Share Certificates (or a Book-Entry Confirmation) evidencing
all tendered Shares, in proper form for transfer, in each case together with
the Letter of Transmittal (or a facsimile thereof),
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properly completed and duly executed, with any required signature guarantees
(or, in the case of a book-entry transfer, an Agent's Message), and any
other documents required by the Letter of Transmittal, are received by the
Depositary within three NYSE trading days after the date of execution of
such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or mail or
transmitted by telegram or facsimile transmission to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in the form
of Notice of Guaranteed Delivery made available by Purchaser.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of the
Share Certificates evidencing such Shares, or a Book-Entry Confirmation of the
delivery of such Shares, and the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature guarantees
(or, in the case of a book-entry transfer, an Agent's Message), and any other
documents required by the Letter of Transmittal.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by Purchaser in its sole discretion, which
determination will be final and binding on all parties. Purchaser reserves the
absolute right to reject any and all tenders determined by it not to be in
proper form or the acceptance for payment of which may, in the opinion of its
counsel, be unlawful. Purchaser also reserves the absolute right to waive any
condition of the Offer or any defect or irregularity, in the tender of any
Shares of any particular stockholder, whether or not similar defects or
irregularities are waived in the case of other stockholders. No tender of Shares
will be deemed to have been validly made until all defects and irregularities
have been cured or waived. None of Purchaser, Parent, the Dealer Manager, the
Depositary, the Information Agent or any other person will be under any duty to
give notification of any defects or irregularities in tenders or incur any
liability for failure to give any such notification. Purchaser's interpretation
of the terms and conditions of the Offer (including the Letter of Transmittal
and the instructions thereto) will be final and binding.
APPOINTMENT. By executing the Letter of Transmittal as set forth above, a
tendering stockholder irrevocably appoints designees of Purchaser as such
stockholder's proxies, each with full power of substitution, in the manner set
forth in the Letter of Transmittal, to the full extent of such stockholder's
rights with respect to the Shares tendered by such stockholder and accepted for
payment by Purchaser (and with respect to any and all other Shares or other
securities issued or issuable in respect of such Shares on or after October 28,
1998). All such proxies will be considered coupled with an interest in the
tendered Shares. Such appointment will be effective when, and only to the extent
that, Purchaser accepts such Shares for payment. Upon such acceptance for
payment, all prior proxies given by such stockholder with respect to such Shares
(and such other Shares and securities) will be revoked without further action,
and no subsequent proxies may be given nor any subsequent written consent
executed by such stockholder (and, if given or executed, will not be deemed to
be effective) with respect thereto. The designees of Purchaser will, with
respect to the Shares (and such other Shares and securities) for which the
appointment is effective, be empowered to exercise all voting and other rights
of such stockholder as they in their sole discretion may deem proper at any
annual or special meeting of the Company's stockholders or any adjournment or
postponement thereof, by written consent in lieu of any such meeting or
otherwise. Purchaser reserves the right to require that, in order for Shares to
be deemed validly tendered, immediately upon Purchaser's payment for such
Shares, Purchaser must be able to exercise full voting rights with respect to
such Shares (and such other Shares and securities).
The acceptance for payment by Purchaser of Shares pursuant to any of the
procedures described above will constitute a binding agreement between the
tendering stockholder and Purchaser upon the terms and subject to the conditions
of the Offer.
7
<PAGE>
UNDER THE FEDERAL INCOME TAX LAWS, THE DEPOSITARY WILL BE REQUIRED TO
WITHHOLD 31 PERCENT OF THE AMOUNT OF ANY PAYMENTS MADE TO CERTAIN STOCKHOLDERS
PURSUANT TO THE OFFER ("BACKUP WITHHOLDING") UNLESS SUCH STOCKHOLDER PROVIDES
THE DEPOSITARY WITH APPROPRIATE CERTIFICATION SUCH AS THE STOCKHOLDER'S CORRECT
TAXPAYER IDENTIFICATION NUMBER AND A CERTIFICATION THAT SUCH STOCKHOLDER IS NOT
SUBJECT TO BACKUP WITHHOLDING BY COMPLETING THE SUBSTITUTE FORM W-9 IN THE
LETTER OF TRANSMITTAL. SEE INSTRUCTION 9 OF THE LETTER OF TRANSMITTAL.
4. WITHDRAWAL RIGHTS.
Tenders of Shares made pursuant to the Offer are irrevocable except that
such Shares may be withdrawn at any time prior to the Expiration Date and,
unless theretofore accepted for payment by Purchaser pursuant to the offer, may
also be withdrawn at any time after December 28, 1998. If Purchaser extends the
Offer, is delayed in its acceptance for payment of Shares or is unable to accept
Shares for payment pursuant to the Offer for any reason, then, without prejudice
to Purchaser's rights under the Offer, the Depositary may, nevertheless, on
behalf of Purchaser, retain tendered Shares, and such Shares may not be
withdrawn except to the extent that tendering stockholders are entitled to
withdrawal rights as described in this Section 4. Any such delay will be by an
extension of the Offer to the extent required by law.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
its address set forth on the back cover page of this Offer to Purchase. Any such
notice of withdrawal must specify the name of the person who tendered the Shares
to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder of such Shares, if different from that of the person who
tendered such Shares. If Share Certificates evidencing Shares to be withdrawn
have been delivered or otherwise identified to the Depositary, then, prior to
the physical release of such Share Certificates, the serial numbers shown on
such Share Certificates must be submitted to the Depositary and the signature(s)
on the notice of withdrawal must be guaranteed by an Eligible Institution,
unless such Shares have been tendered for the account of an Eligible
Institution. If Shares have been tendered pursuant to the procedures for
book-entry transfer as set forth in Section 3, any notice of withdrawal must
also specify the name and number of the account at the Book-Entry Transfer
Facility to be credited with the withdrawn Shares, in which case a notice of
withdrawal will be effective if delivered to the Depositary by any method
described in the first sentence of this paragraph.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by Purchaser, in its sole discretion,
whose determination will be final and binding. None of Purchaser, Parent, the
Dealer Manager, the Depositary, the Information Agent or any other person will
be under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification.
Any Shares properly withdrawn will thereafter be deemed not to have been
validly tendered for purposes of the Offer. However, withdrawn Shares may be
re-tendered at any time prior to the Expiration Date by following one of the
procedures described in Section 3.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The receipt of cash for Shares pursuant to the Offer and the receipt of
Parent Preferred Stock or a combination of Parent Preferred Stock and cash
pursuant to the Merger will be a taxable transaction to the stockholders of the
Company for federal income tax purposes and may also be a taxable transaction
under applicable state, local or foreign tax laws. This will be the case whether
a stockholder sells Shares pursuant to the Offer, the Merger or both. The Merger
Agreement provides that, under certain circumstances and
8
<PAGE>
conditions, convertible preferred securities having economic and other material
terms and conditions equivalent to the Parent Preferred Stock may be substituted
for the Parent Preferred Stock to be issued in the Merger. References in this
section to Parent Preferred Stock shall refer to such convertible preferred
securities in the event of such substitution.
A tendering stockholder whose Shares are accepted for sale pursuant to the
Offer generally will recognize gain or loss on the date the Offer is consummated
equal to the difference between such stockholder's tax basis in the Shares
accepted for purchase and the amount of cash received in exchange therefor. A
stockholder who receives Parent Preferred Stock or a combination of Parent
Preferred Stock and cash in exchange for Shares pursuant to the Merger will
recognize gain or loss at the Effective Time in an amount equal to the
difference between (i) the sum of the amount of cash and the fair market value
of the Parent Preferred Stock received by the stockholder at the Effective Time
and (ii) such stockholder's tax basis in the Shares surrendered. A stockholder's
tax basis in Parent Preferred Stock will be equal to the fair market value of
such stock at the Effective Time.
Gain or loss will be capital gain or loss if the Shares were capital assets
in the hands of the stockholder, and will be long-term capital gain or loss if,
at the time of the exchange, the Shares were held by the stockholder for more
than 12 months. Under present U.S. federal law, long-term capital gains are
generally taxable at a maximum rate of 20% for individuals and 35% for
corporations.
The Merger will not be a taxable transaction to Purchaser, Parent or the
Company.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE TO CERTAIN TYPES OF
STOCKHOLDERS, INCLUDING STOCKHOLDERS WHO ACQUIRED SHARES PURSUANT TO THE
EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION, INDIVIDUALS WHO
ARE NOT CITIZENS OR RESIDENTS OF THE UNITED STATES, AND FOREIGN CORPORATIONS.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND IS BASED UPON PRESENT LAW. STOCKHOLDERS ARE URGED TO
CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE
OFFER AND THE MERGER TO THEM, INCLUDING THE APPLICATION AND EFFECT OF THE
ALTERNATIVE MINIMUM TAX AND STATE, LOCAL AND FOREIGN TAX LAWS.
6. PRICE RANGE OF SHARES; DIVIDENDS.
The Shares have been listed and traded principally on the NYSE since April
18, 1997 under the symbol "SXC." The following table sets forth, for the
quarters indicated, the high and low sales prices per Share on the NYSE as
reported by the Dow Jones News Service. The Company has not paid any dividends
on the Shares during the periods set forth below.
<TABLE>
<CAPTION>
HIGH LOW
------- ---------
<S> <C> <C> <C>
1997:
Second Quarter (April 18-June 30)............................................................... $ 28 1/4 $ 17
Third Quarter................................................................................... 40 25
Fourth Quarter.................................................................................. 38 7/8 29
1998:
First Quarter................................................................................... 40 7/8 30
Second Quarter.................................................................................. 41 3/16 19
Third Quarter................................................................................... 28 1/4 16
Fourth Quarter (through October 27)............................................................. 28 1/2 13
<CAPTION>
<S> <C>
1997:
Second Quarter (April 18-June 30)...............................................................
Third Quarter................................................................................... 1/2
Fourth Quarter..................................................................................
1998:
First Quarter...................................................................................
Second Quarter.................................................................................. 1/2
Third Quarter................................................................................... 5/8
Fourth Quarter (through October 27)............................................................. 7/8
</TABLE>
9
<PAGE>
On October 21, 1998, the last full trading day prior to the announcement of
the execution of the Merger Agreement and of Purchaser's intention to commence
the Offer, the closing price per Share as reported on the NYSE was $23 3/16. On
October 27, 1998, the last full trading day prior to the date of this Offer to
Purchase, the closing price per Share as reported on the NYSE was $28 7/16.
Stockholders are urged to obtain a current market quotation for the Shares.
7. CERTAIN INFORMATION CONCERNING THE COMPANY.
Except as otherwise set forth herein, the information concerning the Company
contained in this Offer to Purchase, including financial information, has been
furnished by the Company or has been taken from or based upon publicly available
documents and records on file with the Commission and other public sources. None
of Purchaser, Parent or the Dealer Manager assumes any responsibility for the
accuracy or completeness of the information concerning the Company, furnished by
the Company or contained in such documents and records or for any failure by the
Company to disclose events which may have occurred or may affect the
significance or accuracy of any such information but which are unknown to
Purchaser and Parent.
GENERAL. The Company is a corporation organized and existing under the laws
of the State of Delaware with its principal executive offices located at 1601
Wall Street, Fort Wayne, Indiana 46802. The Company is a holding company that
operates exclusively through Essex Group, Inc., a Michigan corporation and the
Company's wholly owned subsidiary ("Essex"). Essex was founded in 1930 and is
principally engaged in the development, manufacture and distribution of
electrical wire and cable and insulation products to over 11,000 customers
worldwide in a wide range of industrial markets from its 28 manufacturing
facilities and 38 service centers located throughout the United States and
Canada. Among its products are: building wire for commercial and residential
construction applications; magnet wire and insulation materials for
electromechanical devices such as motors, transformers and electrical controls;
copper voice and datacom wire; industrial wire for applications in construction,
appliances, recreational vehicles and industrial facilities; and automotive wire
and specialty wiring assemblies for automobiles and trucks.
FINANCIAL INFORMATION. Set forth below is certain selected consolidated
financial information relating to the Company and its subsidiaries which has
been excerpted or derived from the financial statements contained in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997 (the
"Form 10-K") and the unaudited financial statements contained in the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998 (the "Form
10-Q"). More comprehensive information is included in the Form 10-K, the Form
10-Q and other documents filed by the Company with the Commission. The financial
information that follows is qualified in its entirety by reference to such
reports and other documents, including the financial statements and related
notes contained therein. Such reports and other documents may be examined and
copies may be obtained from the offices of the Commission in the manner set
forth below.
10
<PAGE>
ESSEX INTERNATIONAL INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
------------------------------- --------------------
<S> <C> <C> <C> <C> <C>
1995 1996 1997 1997 1998
--------- --------- --------- --------- ---------
<CAPTION>
(UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Net sales.................................................. $ 1,201.7 $ 1,332.0 $ 1,701.3 $ 864.1 $ 755.0
Income from operations..................................... 76.7 106.5 177.5 92.2 80.0
Income before extraordinary charge......................... 13.3 37.5 84.0 42.7 39.4
Extraordinary charge--debt retirement, net of income tax
benefit.................................................. 3.0 1.2 -- -- 7.5
--------- --------- --------- --------- ---------
Net income................................................. $ 10.3 $ 36.3 $ 84.0 $ 42.7 $ 31.9
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Earnings per common share:
Income before extraordinary charge....................... $ 0.32 $ 1.32 $ 3.03 $ 1.64 $ 1.31
Extraordinary charge..................................... .17 .06 -- -- .25
--------- --------- --------- --------- ---------
Net income............................................... $ 0.15 $ 1.26 $ 3.03 $ 1.64 $ 1.06
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Earnings per common share--assuming dilution:
Income before extraordinary charge....................... $ 0.30 $ 1.22 $ 2.83 $ 1.50 $ 1.27
Extraordinary charge..................................... .16 .05 -- -- .24
--------- --------- --------- --------- ---------
Net income............................................... $ 0.14 $ 1.17 $ 2.83 $ 1.50 $ 1.03
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
-------------------- 1998
1996 1997 (UNAUDITED)
--------- --------- -----------
<S> <C> <C> <C>
(IN MILLIONS)
FINANCIAL POSITION (AT END OF PERIOD):
Total assets................................................................... $ 842.8 $ 863.8 $ 893.5
Total debt (including current portion)......................................... $ 463.8 $ 353.5 $ 364.6
Stockholders' equity........................................................... $ 158.7 $ 294.1 $ 321.6
</TABLE>
On October 27, 1998, the Company announced operating results for its third
quarter and the nine months ended September 30, 1998.
Net sales for the third quarter 1998 were $387.3 million compared to $445.2
million for the third quarter 1997, primarily reflecting a marked decline in
copper costs during 1998.
Net income for the third quarter 1998 was $16.8 million, or $.59 per share,
after unusual charges of $3.6 million ($6.0 million before tax) or $.12 per
share on a diluted basis. This compares to net income of $22.1 million, or $.72
per share, for the third quarter 1997.
Net sales for the nine months ended September 30, 1998 were $1,142.4 million
compared to $1,309.3 million for the same period last year. The decline in net
sales is a direct result of a marked decline in copper prices during 1998.
Net income for the nine months ended September 30, 1998 was $48.7 million,
or $1.60 per share, compared to $64.7 million, or $2.21 per share, for the same
period last year. Included within the year-to-date 1998 results are unusual and
extraordinary charges in the amount of $11.1 million ($18.5 million before tax),
or $.36 per share. The unusual charges were taken with respect to plant closure
costs and an early retirement program offered to certain of the Company's senior
executives. An extraordinary charge of $7.5 million ($12.5 million before tax),
or $0.24 per share, was recorded in the second quarter of 1998 in conjunction
with the redemption and refinancing of the Company's 10% Senior Notes.
CERTAIN COMPANY PROJECTIONS. To the knowledge of Parent and Purchaser, the
Company does not as a matter of course make public forecasts as to its future
financial performance. However, in connection with
11
<PAGE>
the discussions and negotiations described in Section 10, the Company furnished
Parent with certain financial projections which Parent and Purchaser believe are
not publicly available. Neither Parent nor Purchaser verified the accuracy of
such financial projections and neither Parent nor Purchaser relied on them in
evaluating whether or not to proceed with the Offer.
According to the projections, the Company has estimated that it will have
net sales of $1,666.9 million and EBIT (earnings before interest and taxes) of
$162.5 million, including $15.3 million of anticipated unusual charges relating
primarily to plant start-up costs and the Company's upgrade of its existing
business information systems, for the year ending December 31, 1999.
IT IS THE UNDERSTANDING OF PARENT AND PURCHASER THAT THE PROJECTIONS WERE
NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE OR COMPLIANCE WITH PUBLISHED
GUIDELINES OF THE COMMISSION OR THE GUIDELINES ESTABLISHED BY THE AMERICAN
INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS REGARDING PROJECTIONS OR FORECASTS AND
ARE INCLUDED HEREIN ONLY BECAUSE SUCH INFORMATION WAS PROVIDED TO PARENT AND
PURCHASER. THESE FORWARD-LOOKING STATEMENTS (AS THAT TERM IS DEFINED IN THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995) ARE SUBJECT TO CERTAIN RISKS
AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE
PROJECTIONS. THE COMPANY HAS ADVISED PURCHASER AND PARENT THAT ITS INTERNAL
FINANCIAL FORECASTS (UPON WHICH THE PROJECTIONS PROVIDED TO PARENT WERE BASED IN
PART) ARE, IN GENERAL, PREPARED SOLELY FOR INTERNAL USE AND CAPITAL BUDGETING
AND OTHER MANAGEMENT DECISIONS, AND ARE SUBJECTIVE IN MANY RESPECTS AND THUS
SUSCEPTIBLE TO INTERPRETATIONS AND PERIODIC REVISION BASED ON ACTUAL EXPERIENCE
AND BUSINESS DEVELOPMENTS. THE PROJECTIONS ALSO REFLECT NUMEROUS ASSUMPTIONS
(NOT ALL OF WHICH WERE PROVIDED TO PARENT), ALL MADE BY MANAGEMENT OF THE
COMPANY, WITH RESPECT TO INDUSTRY PERFORMANCE, GENERAL BUSINESS, ECONOMIC,
MARKET AND FINANCIAL CONDITIONS AND OTHER MATTERS, INCLUDING EFFECTIVE TAX RATES
CONSISTENT WITH HISTORICAL LEVELS FOR THE COMPANY, ALL OF WHICH ARE DIFFICULT TO
PREDICT, MANY OF WHICH ARE BEYOND THE COMPANY'S CONTROL AND NONE OF WHICH WERE
SUBJECT TO APPROVAL BY PARENT OR PURCHASER. ACCORDINGLY, THERE CAN BE NO
ASSURANCE THAT THE ASSUMPTIONS MADE IN PREPARING THE PROJECTIONS WILL PROVE
ACCURATE, AND ACTUAL RESULTS MAY BE MATERIALLY GREATER OR LESS THAN THOSE
CONTAINED IN THE PROJECTIONS. THE INCLUSION OF THE PROJECTIONS HEREIN SHOULD NOT
BE REGARDED AS AN INDICATION THAT ANY OF PARENT, PURCHASER, THE COMPANY OR THEIR
RESPECTIVE AFFILIATES OR REPRESENTATIVES CONSIDERED OR CONSIDER THE PROJECTIONS
TO BE A RELIABLE PREDICTION OF FUTURE EVENTS, AND THE PROJECTIONS SHOULD NOT BE
RELIED UPON AS SUCH. NONE OF PARENT, PURCHASER, THE COMPANY NOR ANY OF THEIR
RESPECTIVE AFFILIATES ASSUMES ANY RESPONSIBILITY FOR THE VALIDITY,
REASONABLENESS, ACCURACY OR COMPLETENESS OF THE PROJECTIONS. NONE OF PARENT,
PURCHASER, THE COMPANY OR ANY OF THEIR RESPECTIVE AFFILIATES OR REPRESENTATIVES
HAS MADE, OR MAKES, ANY REPRESENTATION TO ANY PERSON REGARDING THE INFORMATION
CONTAINED IN THE PROJECTIONS AND NONE OF THEM INTENDS TO UPDATE OR OTHERWISE
REVISE THE PROJECTIONS TO REFLECT CIRCUMSTANCES EXISTING AFTER THE DATE WHEN
MADE OR TO REFLECT THE OCCURRENCE OF FUTURE EVENTS EVEN IN THE EVENT THAT ANY OR
ALL OF THE ASSUMPTIONS UNDERLYING THE PROJECTIONS ARE SHOWN TO BE IN ERROR.
AVAILABLE INFORMATION. The Shares are registered under the Exchange Act and
the Company is therefore subject to the reporting requirements of the Exchange
Act and, in accordance therewith, is required to file periodic reports, proxy
statements and other information with the Commission relating to its business,
financial condition and other matters. Information as to particular dates
concerning the
12
<PAGE>
Company's directors and officers, their remuneration, stock options granted to
them, the principal holders of the Company's securities and any material
interest of such persons in transactions with the Company is required to be
disclosed in proxy statements distributed to the Company's stockholders and
filed with the Commission. Such reports, proxy statements and other information
should be available for inspection at the public reference facilities maintained
by the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the following regional offices of the Commission: New York Regional
Office, Seven World Trade Center, 3rd Floor, New York, New York 10048; and
Chicago Regional Office, Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such materials may be obtained by mail, upon
payment of the Commission's customary fees, by writing to its principal office
at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission also maintains
a Website (http:// www.sec.gov) that contains reports, proxy and information
statements and other information regarding issuers that file electronically with
the Commission. In addition, reports, proxy statements and other information
concerning the Company can be inspected and copied at the NYSE, 20 Broad Street,
New York, New York 10005, on which the Shares are listed.
8. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT.
Purchaser is a newly incorporated corporation organized and existing under
the laws of the State of Delaware organized in connection with the Offer and the
Merger and has not carried on any activities other than in connection with the
Offer and the Merger. The principal offices of Purchaser are located at 1790
Broadway, New York, New York 10019. Purchaser is a wholly owned subsidiary of
Parent.
Until immediately prior to the time that Purchaser will purchase Shares
pursuant to the Offer, it is not anticipated that Purchaser will have any
significant assets or liabilities or engage in activities other than those
incident to its formation and capitalization and the transactions contemplated
by the Offer and the Merger. Because Purchaser is newly formed and has minimal
assets and capitalization, no meaningful financial information regarding
Purchaser is available.
Parent is a corporation organized and existing under the laws of the State
of Delaware. Its principal offices are located at 1790 Broadway, New York, New
York 10019. Parent is the largest manufacturer of copper telecommunications
cable in North America and serves four of the five regional bell operating
companies, Sprint Corporation and GTE Corporation. Copper telecommunications
cable is the most widely used medium for voice and data transmission in the
local loop, the segment of the telecommunications network that connects the
customer's premises to the nearest telephone switching center or center office,
which comprises approximately 173 million residential and business access lines
in the United States.
Parent is a 50.1% owned subsidiary of Alpine, a corporation organized and
existing under the laws of the State of Delaware. Alpine's principal offices are
located at 1790 Broadway, New York, New York 10019. Alpine is an industrial
holding company which, through Parent, principally manufactures and sells
telecommunications and data wire and cable products and, through Premier
Refractories International Inc., Alpine's 83.4% owned subsidiary, manufactures
and sells refractory products and provides related services to a number of
industries.
The name, citizenship, business address, principal occupation or employment,
and five-year employment history of each of the directors and executive officers
of Alpine, Parent and Purchaser and certain other information are set forth in
Schedule I hereto.
The Parent Common Stock is listed and traded on the NYSE under the symbol
"SUT."
Set forth below are certain selected financial data relating to Parent and
its subsidiaries for Parent's last three fiscal years, which have been excerpted
or derived from the audited financial statements contained in Parent's Annual
Report on Form 10-K for the fiscal year ended April 30, 1998 and from the
unaudited financial statements contained in Parent's Quarterly Report on Form
10-Q for the fiscal quarter ended July 31, 1998, in each case filed by Parent
with the Commission. More comprehensive financial information is included in
such reports and other documents filed by Parent with the Commission, and the
following financial data is qualified in its entirety by reference to such
reports and other documents, including the financial information and related
notes contained therein. Such reports and other documents may be inspected and
copies may be obtained from the offices of the Commission in the same manner as
set forth with respect to information about the Company in Section 7.
13
<PAGE>
SUPERIOR TELECOM INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
FISCAL YEAR ENDED THREE MONTHS ENDED
---------------------------------- ----------------------
<S> <C> <C> <C> <C> <C>
APRIL 28, APRIL 30, APRIL 30, JULY 31, JULY 31,
1996 1997 1998 1997 1998
---------- ---------- ---------- ---------- ----------
<CAPTION>
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Net sales......................................... $ 410,413 $ 463,840 $ 516,599 $ 131,233 $ 156,874
Cost of goods sold................................ 362,854 384,271 417,358 106,891 122,578
---------- ---------- ---------- ---------- ----------
Gross profit.................................... 47,559 79,569 99,241 24,342 34,296
Selling, general and administrative expenses...... 14,223 17,166 22,181 5,371 8,457
Amortization of goodwill.......................... 1,556 1,726 1,715 430 446
---------- ---------- ---------- ---------- ----------
Operating income................................ 31,780 60,677 75,345 18,541 25,393
Interest expense, net............................. (17,006) (12,869) (7,815) (2,440) (2,456)
Preferred stock dividends of subsidiary........... -- (319) (37) -- --
Other income (expense)............................ 55 (24) (32) 63 (316)
---------- ---------- ---------- ---------- ----------
Income from continuing operations before income
taxes........................................... 14,829 47,465 67,461 16,164 22,621
Provision for income taxes........................ (6,722) (18,989) (26,786) (6,436) (9,098)
---------- ---------- ---------- ---------- ----------
Income before extraordinary (loss).............. 8,107 28,476 40,675 9,728 13,523
Extraordinary (loss) on early extinguishment of
debt............................................ (2,645) -- -- -- --
---------- ---------- ---------- ---------- ----------
Income before minority interest................... 5,462 28,476 40,675 9,728 13,523
Minority interest in earnings of subsidiary....... -- -- -- -- (364)
---------- ---------- ---------- ---------- ----------
Net income........................................ $ 5,462 $ 28,476 $ 40,675 $ 9,728 $ 13,159
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Basic net income per share........................ $ 1.13(1) $ 2.52 $ 0.60 $ 0.81
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Diluted net income per share...................... $ 1.12(1) $ 2.46 $ 0.59 $ 0.79
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
APRIL 30, APRIL 30, JULY 31,
1997 1998 1998
------------- ------------- ------------
<S> <C> <C> <C>
(UNAUDITED)
<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital...................................................... $ 47,617 $ 38,532 $ 33,669
Total assets......................................................... 238,108 232,243 312,404
Total debt, including intercompany................................... 122,089 75,380 91,855
Total stockholders' equity........................................... 44,028 82,206 92,169
</TABLE>
- ------------------------
(1) Parent completed an initial public offering in October 1996. Parent thus
determines basic and diluted net income per share for the period from
October 1996 to April 30, 1997 based on net income for the seven months
ended April 30, 1997 of $17,390.
14
<PAGE>
Except as described in this Offer to Purchase and in the Stockholders
Agreement, (i) none of Purchaser, Parent, Alpine nor, to the best knowledge of
Purchaser, Parent and Alpine, any of the persons listed in Schedule I to this
Offer to Purchase or any affiliate or majority-owned subsidiary of Purchaser,
Parent, Alpine or any of the persons so listed beneficially owns or has any
right to acquire, directly or indirectly, any Shares and (ii) none of Purchaser,
Parent, Alpine nor, to the best knowledge of Purchaser, Parent and Alpine, any
of the persons or entities referred to above, nor any director, executive
officer or subsidiary of any of the foregoing, has effected any transaction in
the Shares during the past 60 days.
Except as provided in the Merger Agreement and in the Stockholders Agreement
and as otherwise described in this Offer to Purchase, none of Purchaser, Parent,
Alpine nor, to the best knowledge of Purchaser, Parent and Alpine, any of the
persons listed in Schedule I to this Offer to Purchase has any contract,
arrangement, understanding or relationship with any other person with respect to
any securities of the Company, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or voting of
such securities, joint ventures, loan or option arrangements, puts or calls,
guaranties of loans, guaranties against loss or the giving or withholding of
proxies. Except as set forth in this Offer to Purchase, since January 1, 1995,
neither Purchaser, Parent, Alpine nor, to the best knowledge of Purchaser,
Parent and Alpine, any of the persons listed in Schedule I hereto, has had any
business relationship or transaction with the Company or any of its executive
officers, directors or affiliates that is required to be reported under the
rules and regulations of the Commission applicable to the Offer. Except as set
forth in this Offer to Purchase, since January 1, 1995, there have been no
contacts, negotiations or transactions between any of Purchaser, Parent, Alpine
or any of their respective subsidiaries or, to the best knowledge of Purchaser,
Parent and Alpine, any of the persons listed in Schedule I to this Offer to
Purchase, on the one hand, and the Company or its affiliates, on the other hand,
concerning a merger, consolidation or acquisition, tender offer or other
acquisition of securities, an election of directors or a sale or other transfer
of a material amount of assets.
9. FINANCING OF THE OFFER AND THE MERGER.
The total amount of funds required by Purchaser to consummate the Offer and
the Merger (including the refinancing of certain existing indebtedness of Parent
and the Company) and to pay related fees and expenses is estimated to be
approximately $1.35 billion. Purchaser will obtain all of such funds from
Parent. Parent currently intends to provide such funds from loans available
pursuant to a Senior Secured Credit Facility (the "Credit Facility") to be
entered into by Parent, the Company, certain subsidiaries of Parent and the
Company, various lenders and Bankers Trust Company (an affiliate of BT
Wolfensohn), as administrative agent ("Bankers Trust"). Parent has received a
commitment letter dated October 21, 1998 (the "Commitment Letter") in which
Bankers Trust has agreed, subject to certain customary conditions, to provide
the Credit Facility in an aggregate amount up to $1.45 billion in order to
finance the acquisition of the Company, to refinance certain existing
indebtedness of Parent and the Company, to pay related fees and expenses and to
provide for the working capital requirements of Parent or its subsidiaries
(including the Company). The following is a summary of the anticipated material
terms and conditions of the Credit Facility. This summary does not purport to be
a complete description of the Credit Facility and is subject to the detailed
provisions of the loan agreement and various related documents to be negotiated
and entered into in connection with the Credit Facility.
Proceeds of the Credit Facility will be used to finance the Offer, to
refinance certain existing indebtedness of Parent and the Company and to pay
related fees and expenses, and, with respect to the revolving credit facility
described below, for general corporate purposes of Parent and its subsidiaries
(including the Company and its subsidiaries).
The Credit Facility will be comprised of three tranches of term loans and a
revolving credit facility. Interest on amounts outstanding under the Credit
Facility will be based upon either (i) the Federal Reserve reported certificate
of deposit rate, Bankers Trust's prime lending rate or an adjusted certificate
of deposit rate or (ii) the Eurodollar rate plus, in each case, an applicable
margin, a variable component which, in
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certain circumstances, will be subject to adjustment based on the leverage ratio
maintained by Parent. The borrowers will also pay Bankers Trust underwriting and
administrative fees, reimburse certain expenses and provide certain indemnities,
all of which Parent believes to be customary for commitments of this type. The
three tranches of term loans will have five and one-half, seven and eight year
terms, and the revolving credit facility will have a five and one-half year
term. Each of the term loans will require periodic mandatory amortization
payments.
The obligations of each of Parent and the Company under the Credit Facility
will be unconditionally guaranteed by the other party and their respective
obligations will be guaranteed by certain of their respective subsidiaries,
including Purchaser. The indebtedness incurred under the Credit Facility will
also be secured by a first priority lien on substantially all the assets of
Parent, the Company and their subsidiaries, including Purchaser, other than
"margin stock," including Company Common Stock owned by Purchaser after
consummation of the Offer.
The obligations of the lenders under the Credit Facility to advance funds is
subject to the satisfaction of certain conditions customary in agreements of
this type. In addition, Parent will be subject to certain customary affirmative
and negative covenants in the Credit Facility, including, without limitation,
covenants that restrict, subject to specified exceptions, (i) the incurrence of
additional indebtedness and other obligations, (ii) mergers and acquisitions,
(iii) asset sales, (iv) the granting of liens, (v) prepayment or repurchase of
other indebtedness, (vi) engaging in transactions with affiliates, (vii) capital
expenditures, (viii) the making of investments and (ix) dividends and other
payments with respect to equity interests.
Bankers Trust's commitment to provide the Credit Facility is conditioned on,
among other things: (1) since June 30, 1998 in the case of the Company and since
July 31, 1998 in the case of Parent, nothing having occurred (and the lenders
having become aware of no facts or conditions not previously known) which
Bankers Trust shall reasonably determine could reasonably be expected to have a
material adverse effect on the rights or remedies of Bankers Trust or lenders
under the Credit Facility, or on the ability of Parent and its subsidiaries
(including the Company) to perform their obligations to the lenders under the
Credit Facility, or which could reasonably be expected to have a material
adverse effect on the Offer and related transactions or the business, property,
assets, nature of assets, liabilities or condition (financial or otherwise) of
Parent and its subsidiaries or the Company and its subsidiaries, in each case,
taken as a whole, and both before and after giving effect to the Offer and
related transactions; (2) there having been no material adverse change after the
date hereof to the syndication market for credit facilities similar in nature to
the Credit Facility and there not having occurred and been continuing a material
disruption of or material adverse change in financial, banking or capital
markets that would have a material adverse effect on the syndication, in each
case as determined by Bankers Trust in its reasonable discretion and (3) the
negotiation, execution and delivery on or before April 30, 1999 of definitive
documentation with respect to the Credit Facility.
The Offer is subject to a financing contingency. See Section 14.
It is anticipated that the indebtedness incurred through borrowing under the
Credit Facility will be repaid from funds generated internally by Parent and its
subsidiaries, including the Company and its subsidiaries, and from other sources
that may include the proceeds of the private or public sale of debt or equity
securities. No final decisions have been made concerning the method Parent will
employ to repay such indebtedness. Such decisions when made will be based upon
Parent's review from time to time of the advisability of particular actions, as
well as on prevailing interest rates and financial and other economic
conditions.
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10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY; THE MERGER AGREEMENT;
STOCKHOLDERS AGREEMENT; VOTING AGREEMENT.
BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY
In March 1998, Steven S. Elbaum, Chairman of the Board of Directors,
President and Chief Executive Officer of Parent, and Robert D. Lindsay, a
representative of Bessemer Holdings, L.P., a principal stockholder of the
Company ("Bessemer"), had a meeting during which Mr. Elbaum suggested a possible
transaction between Parent and the Company. Following this meeting,
representatives of Parent and the Company met to begin exploration of such a
possible transaction, and Parent retained BT Wolfensohn to act as its financial
advisor. While no specific terms were discussed, the general terms of a range of
possible transactions were reviewed, all involving the receipt of a mix of
Parent stock and cash by stockholders of the Company in exchange for their
shares of Company Common Stock. On April 24, 1998, Parent and a subsidiary of
the Company entered into a mutual confidentiality agreement (the
"Confidentiality Agreemement"). By mid-May 1998, because of a widening disparity
between the price of the stock of the Company and that of the stock of Parent,
representatives of both Parent and the Company agreed to halt negotiations
regarding a possible transaction.
Parent has been advised by the Company that, in June 1998, a representative
of another company ("Company A") contacted Mr. Lindsay in order to explore
Bessemer's interest in a possible transaction between Company A and the Company.
In light of the then-recent fall in the Company's stock price, and given
Bessemer's belief that the Company's stock would increase in price in the near
future, Bessemer determined that the time was not right for such a transaction
and deferred any further conversation regarding such a transaction.
In early August 1998, Mr. Elbaum called Mr. Lindsay to request a meeting.
Messrs. Elbaum and Lindsay met on August 11, 1998, at which time Mr. Elbaum
suggested that the parties reopen negotiations regarding a possible transaction
between Parent and the Company. Messrs. Elbaum and Lindsay discussed the
increased disparity between the respective prices of the stocks of the two
companies since April. Mr. Lindsay indicated that the transaction structure
under consideration in April remained problematic in current market conditions.
It was agreed that Mr. Elbaum would consider alternative transaction structures
designed to give full value to stockholders of the Company in the then current
market environment.
On September 15, 1998, Mr. Elbaum called Mr. Lindsay to propose a
transaction between Parent and the Company in which the stockholders of the
Company would receive consideration with a value of between $30-$35 per Share,
with a significant portion of such consideration to be paid in cash. Mr. Lindsay
informed the management of the Company of this proposal.
Parent has been advised by the Company that, on September 16, 1998,
representatives of Company A met with representatives of Bessemer to discuss
Bessemer's interest in a possible transaction between Company A and the Company.
On September 25, 1998, representatives from Bessemer met with Mr. Elbaum to
discuss a possible transaction between Parent and the Company. The parties
agreed that a transaction similar to that suggested by Mr. Elbaum on September
15 was worth exploring. Over the course of the next few weeks, representatives
of the Company, Bessemer and their financial advisors met with representatives
of Parent, BT Wolfensohn and Bankers Trust (Parent's lead bank lender) to
discuss the prospective transaction between Parent and the Company and to
exchange information, including a presentation by the Company's management.
Parent has been advised by the Company that, on October 7, 1998, Company A
sent a letter to the Company that reiterated Company A's continued interest in a
transaction with the Company and included various financial analyses prepared by
the financial advisor to Company A. Although no particular structure was
identified in the letter, the financial analyses suggested a stock-for-stock
transaction at the
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then-prevailing market prices. The financial advisor to Company A also contacted
Mr. Lindsay inquiring as to Bessemer's interest in a transaction involving
Company A and the Company.
On October 12, 1998, representatives of the Company, Bessemer, Parent and
their respective legal and financial advisors met to discuss the terms and
conditions and structure of the proposed transaction, including the terms and
conditions of the proposed non-cash consideration and the terms of any agreement
by Bessemer to commit to support the transaction.
Following the October 12, 1998 meeting, representatives of the Company,
Bessemer and the Company's financial advisors met with representatives of Parent
and Alpine, who presented an overview of Parent's business, including a
description of the lines of business, historical financial performance and
recent acquisitions.
On October 14, 1998, at a regularly scheduled meeting of the board of
directors of parent (the "Parent Board"), the directors discussed the proposed
transaction with the Company. The members of the Parent Board discussed the
valuation and structure of the proposed transaction, as well as the strategic
and other benefits and risks presented by it, and examined and discussed a
report on the Company that had been previously prepared by BT Wolfensohn. The
Parent Board determined that it would be advisable for management of Parent to
continue its discussions with representatives of the Company.
Parent has been advised by the Company that, on or around October 15, 1998,
the chief executive officer of Company A called both Steven R. Abbott, Chairman
and Chief Executive Officer of the Company, and Mr. Lindsay regarding the
Company's interest in discussions concerning a transaction between Company A and
the Company.
During the period from October 12 to October 21, 1998, Parent, the Company
and their respective legal and financial advisors conducted further negotiations
of the terms of the transaction and conducted additional due diligence.
On October 19, 1998, the Company held a telephonic meeting of the Board. The
Board, with the assistance of financial advisors and legal counsel, discussed
the principal terms of the proposed transaction. Representatives of Goldman,
Sachs & Co. and Chase Securities Inc. (the Company's financial advisors)
discussed the proposed transaction from a financial point of view.
On October 20, 1998, the Parent Board met again. A representative of BT
Wolfensohn made a presentation and orally expressed to the Board BT Wolfensohn's
opinion (subsequently confirmed in writing) that the consideration to be paid by
Parent pursuant to the Merger Agreement in the Offer and the Merger, taken
together, was fair from a financial point of view to Parent. Following
discussion among the directors of the terms of the proposed transaction, the
Parent Board determined that the transaction was in the best interests of the
stockholders of Parent and approved the Merger Agreement, the Offer and the
Merger.
On October 21, 1998, the Board met again. The Company's legal advisors
discussed the terms of the definitive documentation for the transaction.
Representatives of Goldman, Sachs & Co. and Chase Securities Inc. made a
financial presentation and orally expressed to the Board their respective
fairness opinions. Representatives of management discussed with the Board their
views as to the implications of the proposed transaction on the Company. The
Board thereafter approved, declared advisable and adopted the Merger Agreement
and the Merger and approved the Offer. The Board determined that the Offer and
the Merger, taken together as a unitary transaction, are fair to, and in the
best interests of, the Company's stockholders.
On October 21, 1998, following the special meeting of the Board, the Company
and Parent executed the Merger Agreement and the Offer and the Merger were
publically announced before U.S. financial markets opened on October 22, 1998.
On October 28, 1998, Parent and Purchaser commenced the Offer.
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THE MERGER AGREEMENT
The following is a summary of the Merger Agreement, a copy of which is filed
as an exhibit to the Tender Offer Statement on Schedule 14D-1 (the "Schedule
14D-1") filed by Purchaser and Parent with the Commission in connection with the
Offer. Such summary is qualified in its entirety by reference to the Merger
Agreement.
THE OFFER. The Merger Agreement provides for the commencement of the Offer
as promptly as reasonably practicable, but in no event later than five business
days after the initial public announcement on the date of the Merger Agreement
or the following day of Purchaser's intention to commence the Offer. Purchaser
has commenced the Offer in accordance with the terms of the Merger Agreement.
Subject to the terms and conditions of the Offer (including, without
limitation, the Minimum Condition), Purchaser will, and Parent will cause
Purchaser to, accept for payment and pay for, as promptly as practicable after
the Expiration Date, all Shares validly tendered and not withdrawn. The
obligation of Purchaser to accept for payment and pay for Shares tendered
pursuant to the Offer is subject to the satisfaction of the Minimum Condition
and certain other conditions that are described in Section 14 hereof. Purchaser
and Parent have agreed that no change in the Offer may be made without the prior
written consent of the Company which decreases the Per Share Amount, changes the
form of consideration to be paid in the Offer, reduces the maximum number of
Shares to be purchased in the Offer, modifies the conditions to the Offer set
forth in Section 14 hereof or imposes conditions to the Offer in addition to
those set forth in Section 14 hereof, modifies or waives the Minimum Condition,
or extends the Offer except as set forth in this Section 10.
Nevertheless, Purchaser may, without the consent of the Company, (A) extend
the Offer in increments of up to ten business days each if at the Expiration
Date the Minimum Condition has not been satisfied or any of the other conditions
set forth in Section 14 hereof have not been satisfied or waived, until such
time as such conditions are satisfied or waived, and (B) extend the Offer for
any period required by any rule, regulation, interpretation or position of the
Commission applicable to the Offer. In the event that (i) the Minimum Condition
has not been satisfied or (ii) the condition set forth in paragraph (a) of
Section 14 hereof with respect to any action or proceeding by a governmental or
regulatory authority, the condition set forth in paragraph (j) of Section 14
hereof with respect to the financing of the Offer or the HSR Condition (as
defined in Section 14 hereof) has not been satisfied or waived at the Expiration
Date, at the request of the Company Purchaser will extend the Expiration Date in
increments of five business days each until the earliest to occur of (x) the
satisfaction or waiver of the Minimum Condition or such other condition, (y) the
termination of the Merger Agreement in accordance with its terms and (z) April
30, 1999.
BOARD REPRESENTATION; DIRECTORS. The Merger Agreement provides that upon
the acceptance for payment by Purchaser of Shares purchased pursuant to the
Offer, and from time to time thereafter as Shares are acquired by Purchaser,
Purchaser will be entitled, subject to compliance with Section 14(f) of the
Exchange Act, to designate such number of directors, rounded up to the next
greatest whole number, on the Board as will give Purchaser representation on the
Board equal to that number of directors which equals the product of the total
number of directors on the Board (giving effect to the directors appointed or
elected pursuant to this sentence and including current directors serving as
officers of the Company) multiplied by the percentage that the aggregate number
of Shares beneficially owned by Purchaser or any affiliate of Purchaser
(including such Shares as are accepted for payment pursuant to the Offer, but
excluding shares held by the Company or any of its affiliates) bears to the
number of Shares outstanding; provided, however, that in the event that
Purchaser's designees are appointed or elected to the Board, until the Effective
Time the Board is required to have at least one director who is a director on
the date of the Merger Agreement and who is not an executive officer of the
Company (the "Independent Director"). The Merger Agreement also provides that,
at such times, the Company will cause (i) each committee of the Board, (ii) if
requested by Purchaser, the board of directors of each of the Company's
subsidiaries and
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(iii) if requested by Purchaser, each committee of such subsidiaries' boards to
include persons designated by Purchaser constituting the same percentage of each
such committee or board as Purchaser's designees are of the Board. The Company
will, upon request by Purchaser, promptly increase the size of the Board or
exercise its best efforts to secure the resignations of such number of directors
as is necessary to enable Purchaser's designees to be elected to the Board and
will cause Purchaser's designees to be so elected. The Board has approved the
taking of action by stockholders of the Company, by written consent, to amend
the By-Laws of the Company as may be necessary or desirable to effect the
foregoing.
Following the election or appointment of Purchaser's designees to the Board
as provided above, and prior to the Effective Time, the approval of the
Independent Director (or if there is more than one Independent Director, a
majority of the Independent Directors) will be required to authorize (i) any
termination of the Merger Agreement by the Company, (ii) any amendment of the
Merger Agreement requiring action by the Board (other than an amendment to
eliminate cash from the consideration payable in the Merger in the event
Purchaser accepts for payment and pays for the Offered Number of Shares in the
Offer), (iii) any consent by the Company to any extension of the time for
performance of any of the obligations or other acts of Parent or Purchaser, (iv)
any waiver by the Company of compliance with any of the covenants or conditions
contained in the Merger Agreement for the benefit of the Company or any other
rights of the Company under the Merger Agreement and (v) any amendment or
withdrawal by the Board of its recommendation of the Merger.
THE MERGER. Following completion of the Offer, upon the terms and subject
to the conditions of the Merger Agreement and in accordance with Delaware Law,
Purchaser will be merged with and into the Company at the Effective Time. As a
consequence of the Merger, the separate corporate existence of Purchaser will
cease and the Company will continue as the Surviving Corporation and will be a
wholly owned subsidiary of Parent. Upon consummation of the Merger, each
Ineligible Share will be canceled and retired without payment of any
consideration thereof.
The Merger Agreement provides that the directors of Purchaser immediately
prior to the Effective Time will be the initial directors of the Surviving
Corporation and that the officers of the Company immediately prior to the
Effective Time will be the initial officers of the Surviving Corporation. The
Merger Agreement also provides that, at the Effective Time, the Certificate of
Incorporation of the Surviving Corporation will be amended as has been agreed by
the parties, and further provides that the By-Laws of Purchaser will be the
By-Laws of the Surviving Corporation.
CONVERSION OF SECURITIES. As a result of the Merger, the remaining
outstanding Shares will be converted into shares of Parent Preferred Stock. As
more completely described below, if fewer than the Offered Number of Shares is
purchased in the Offer, the remaining Company stockholders will receive in the
Merger shares of Parent Preferred Stock and cash for their Shares so that the
aggregate cash and stock consideration paid in the Offer and the Merger combined
is the same as if the Offer had been fully subscribed. At the Effective Time,
each remaining outstanding Share (other than Ineligible Shares and Dissenting
Shares) will be converted automatically into the right to receive, subject to
adjustment to remove fractional shares, (i) 0.64 of a fully paid and
non-assessable share of Parent Preferred Stock; provided, however, that if
Purchaser accepts for payment and pays for less than the Offered Number of
Shares in the Offer, then the Exchange Ratio will be adjusted and the Adjusted
Exchange Ratio will be equal to the product of the Exchange Ratio and a fraction
(A) the numerator of which is equal to (x) the Final Outstanding Number plus (y)
the Accepted Share Number minus (z) the Offered Number and (B) the denominator
of which is the Final Outstanding Number and (ii) if the Exchange Ratio has been
adjusted pursuant to the immediately preceding proviso, an amount in cash equal
to the product of the Per Share Amount and a fraction (A) the numerator of which
is the amount by which the Offered Number exceeds the Accepted Share Number and
(B) the denominator of which is the Final Outstanding Number.
Pursuant to the Merger Agreement, each share of common stock, par value
$0.01 per share, of Purchaser issued and outstanding immediately prior to the
Effective Time will be converted into and
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exchanged for one share of common stock, par value $0.01 per share, of the
Surviving Corporation. In addition, as of the date of consummation of the Offer,
all outstanding unexercised options to purchase Company Common Stock granted
under the Company's Amended and Restated Stock Option Plan (the "Employee Plan")
and the Company's 1997 Stock Option Plan for Nonemployee Directors (the
"Directors' Plan" and, together with the Employee Plan, the "Stock Option
Plans") or pursuant to any other arrangement adopted by the Board to provide
options, warrants or other rights to purchase capital stock of the Company to
directors, officers or employees of the Company (in any such case, an "Option")
will be canceled and each holder of an unexercised Option will be entitled to
receive a cash payment equal to the product of (x) the number of shares of
Company Common Stock underlying such unexercised Option and (y) the excess of
(1) the Per Share Amount over (2) the per share exercise price of the
unexercised Option.
The Merger Agreement provides that, at the sole option of Parent and with
the consent of the Independent Director (or if there is more than one
Independent Director, the Independent Directors), which consent may not be
unreasonably withheld, Parent may, prior to the mailing of the Prospectus/Proxy
Statement (as defined below) to the stockholders of the Company, substitute for
the Parent Preferred Stock to be issued in the Merger convertible preferred
securities having economic and other material terms and conditions equivalent to
the Parent Preferred Stock, as determined by the board of directors of Parent
with the concurrence of a majority of the Independent Directors, but
representing undivided beneficial interests in the assets of a statutory
business trust created under Delaware Law, of which all of the beneficial
interests in the assets of such trust represented by common securities are owned
by Parent.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
customary representations and warranties of the parties thereto, including the
following representations by the Company: organization and qualification;
subsidiaries; Certificate of Incorporation and By-Laws; capitalization;
authority relative to the Merger Agreement; material contracts; no conflict,
required filings and consents; compliance with law, permits; Commission filings,
financial statements; absence of certain changes or events; no undisclosed
liabilities; absence of litigation; employee benefit plans; employment
agreements; labor matters; restrictions on business activities; taxes;
environmental matters; brokers; intellectual property; vote required; opinions
of financial advisors; and year 2000 compliance.
CONDUCT OF BUSINESS. Under the Merger Agreement, the Company has covenanted
and agreed that during the period from the date of the Merger Agreement and
continuing until the earlier to occur of the termination of the Merger Agreement
or the election of Purchaser's designees representing at least a majority of the
members of the Board, unless Parent otherwise agrees in writing and unless
otherwise expressly permitted under the Merger Agreement, the Company will
conduct its business and will cause the businesses of its subsidiaries to be
conducted, and the Company and its subsidiaries will not take any action except,
in the ordinary course of business and in a manner consistent with past
practice; and the Company will use reasonable commercial efforts to preserve
substantially intact the business organization of the Company and its
subsidiaries, to keep available the services of the present officers, employees
and consultants of the Company and its subsidiaries, and to preserve the present
relationships of the Company and its subsidiaries with customers, suppliers and
other persons with which the Company or any of its subsidiaries has significant
business relations. The Merger Agreement provides that, except as contemplated
therein, neither the Company nor any of its subsidiaries will, during the period
from the date of the Merger Agreement and continuing until the earlier to occur
of the termination of the Merger Agreement or the election of Purchaser's
designees representing at least a majority of the members of the Board, directly
or indirectly, do or propose to do, any of the following without the prior
written consent of Parent: (a) amend or otherwise change the Company's or any of
its subsidiaries' Certificate of Incorporation or By-Laws; (b) issue, sell,
pledge, dispose of, encumber, or authorize the issuance, sale, pledge,
disposition or encumbrance of, any shares of capital stock of any class, or any
options, warrants, convertible securities or other rights of any kind to acquire
any shares of capital stock, or any other ownership interest (including, without
limitation, any phantom interest) of the Company, any of its subsidiaries or
affiliates (except for the issuance of shares of Company Common Stock issuable
pursuant to the exercise of Options under the
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Stock Option Plans, which Options are outstanding on the date of the Merger
Agreement); (c) sell, pledge, dispose of or encumber any assets of the Company
or any of its subsidiaries (except for (i) sales of assets in the ordinary
course of business and in a manner consistent with past practice and (ii)
dispositions of obsolete or worthless assets); (d) amend or change the period
(or permit any acceleration, amendment or change) of exercisability of Options
granted under the Stock Option Plans or authorize cash payments in exchange for
any such Options; (e) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of any of its capital stock, except that a wholly owned subsidiary of
the Company may declare and pay a dividend to its parent, (ii) split, combine or
reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock or (iii) amend the terms of, repurchase, redeem
or otherwise acquire, or permit any subsidiary to repurchase, redeem or
otherwise acquire, any of its securities or any securities of its subsidiaries,
or propose to do any of the foregoing; (f) sell, transfer, license, sublicense
or otherwise dispose of any material current patents, registered and material
unregistered trademarks and service marks, registered and material unregistered
copyrights, trade names and any applications therefor owned by the Company (the
"Company Intellectual Property") (other than in the ordinary course of business
consistent with past practice) or amend or modify any existing agreements with
respect to any material Company Intellectual Property or any material
third-party patents, trademarks or copyrights which are incorporated in, are or
form a part of any product of the Company; (g) (i) acquire (by merger,
consolidation or acquisition of stock or assets) any corporation, partnership or
other business organization or division thereof; (ii) incur any indebtedness for
borrowed money (other than indebtedness incurred under existing credit
facilities in the ordinary course of business consistent with past practice) or
issue any debt securities or assume, guarantee or endorse or otherwise as an
accommodation become responsible for, the obligations of any person, or make any
loans or advances, except to employees in the ordinary course consistent with
past practice; (iii) enter into or amend any contract or agreement other than in
the ordinary course of business; (iv) authorize or make any capital expenditures
or purchase of fixed assets that are not currently budgeted and that in the
aggregate exceed $500,000; (v) terminate any material contract or amend any of
its material terms (other than amendments to existing credit arrangements
designed to remedy defaults thereunder); or (vi) enter into or amend any
contract, agreement, commitment or arrangement to effect any of the matters
prohibited by (i) through (v); (h) increase the compensation payable or to
become payable to its officers or directors or grant any severance or
termination pay to, or enter into any employment or severance agreement with,
any director or officer of the Company or any of its subsidiaries or establish,
adopt, enter into or, except as required by law, terminate or amend in any
material respect any employee benefit plan; (i) take any action, other than as
required by generally accepted accounting principles, to change accounting
policies or procedures or cash maintenance policies or procedures (including,
without limitation, procedures with respect to revenue recognition,
capitalization of development costs, payments of accounts payable and collection
of accounts receivable); (j) make any material tax election inconsistent with
past practice or settle or compromise any material tax liability, except to the
extent the amount of any such settlement or compromise has been reserved for on
the consolidated financial statements contained in the Company's reports filed
with the Commission or would not have a material adverse effect on the Company;
(k) pay, discharge, settle or satisfy any lawsuits, claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business and consistent with past practice of liabilities reflected or
reserved against in the financial statements of the Company or incurred in the
ordinary course of business and consistent with past practice; (1) except as may
be required by law, take any action to terminate or amend any employee benefit
plan; (m) permit any material increase in the number of employees of the Company
or any of its subsidiaries employed by the Company or any of its subsidiaries,
as the case may be, on the date of the Merger Agreement other than pursuant to
an employee benefit plan to be agreed to by the Company and Parent as promptly
as practicable after the date of the Merger Agreement, acting reasonably and in
good faith; or (n) take or fail to take, or agree in writing or otherwise to
take or fail to take, any of the actions described in (a) through (m) above, or
any action which would make any of the representations or warranties of the
Company
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contained in the Merger Agreement untrue or incorrect or prevent the Company
from performing or cause the Company not to perform its covenants under the
Merger Agreement or result in any of the conditions to the Merger set forth in
the Merger Agreement not being satisfied.
PROSPECTUS/PROXY STATEMENT; REGISTRATION STATEMENT; STOCKHOLDERS
MEETINGS. As promptly as practicable after the execution of the Merger
Agreement, Parent and the Company will prepare and file with the Commission a
proxy statement relating to the meeting of the Company's stockholders (the
"Company Stockholders' Meeting") and the meeting of Parent's stockholders (the
"Parent Stockholders' Meeting") to be held in connection with the Merger (the
"Prospectus/Proxy Statement") and Parent will prepare and file with the
Commission a Registration Statement on Form S-4 in connection with the issuance
of shares of Parent Preferred Stock in the Merger (the "Registration
Statement"). The Merger Agreement provides that Parent and the Company will each
use all reasonable efforts to have the Registration Statement declared effective
under the Securities Act of 1933, as amended (the "Securities Act"), as promptly
as practicable after its filing, and promptly thereafter mail the
Prospectus/Proxy Statement to the Company's and Parent's stockholders.
The Company will, in accordance with Delaware Law and the Company's
Certificate of Incorporation and By-Laws, call and hold the Company
Stockholders' Meeting as promptly as practicable, but in no event more than 45
days after the Registration Statement is declared effective, for the purpose of
considering and voting upon the approval of the Merger. Subject to its fiduciary
duties under applicable law, the Company will take all lawful actions to solicit
the approval of the Merger by the Company's stockholders. Parent and Purchaser
have agreed to cause all Shares purchased pursuant to the Offer and all other
Shares owned by them or any of their subsidiaries or affiliates to be voted in
favor of the Merger Agreement and the Merger. In addition, Parent will, in
accordance with Delaware Law and Parent's Certificate of Incorporation and
By-Laws, take all action necessary to convene a meeting of holders of Parent
Common Stock as promptly as practicable for the purpose of considering and
voting upon the approval of an amendment to Parent's Certificate of
Incorporation to authorize additional shares of preferred stock, par value $0.01
per share, of Parent and the issuance of Parent Preferred Stock in accordance
with the terms of the Merger Agreement (the "Parent Preferred Stock Matters").
Pursuant to the Voting Agreement, Alpine has, among other things, agreed that it
will, at any such meeting (or in connection with any written consent of such
stockholders), vote (or cause to be voted) all shares of Parent Common Stock
then held of record by it or which it has the right to vote in favor of the
Parent Preferred Stock Matters. The Voting Agreement is more fully described
below.
NO SOLICITATION. Pursuant to the Merger Agreement, the Company has agreed
that it will not, and will not permit or cause any of its subsidiaries or any of
the officers and directors of it or its subsidiaries to, and will direct its and
its subsidiaries' employees, agents and representatives (including any
investment banker, attorney or accountant retained by it or any of its
subsidiaries) not to, directly or indirectly, initiate, solicit, encourage or
otherwise facilitate any inquiries or the making of any proposal or offer with
respect to a merger, reorganization, share exchange, consolidation or similar
transaction involving, or any purchase of 15% or more of the consolidated assets
or equity securities of the Company or any of its subsidiaries, other than
transfers of Company Common Stock between and among entities associated or
affiliated with the Stockholders (any such proposal or offer being hereinafter
referred to as an "Acquisition Proposal"). The Company has further agreed that
it will not, and will not permit or cause any of its subsidiaries or any of the
officers and directors of it or its subsidiaries to, and will direct its and its
subsidiaries' employees, agents and representatives (including any investment
banker, attorney or accountant retained by it or any of its subsidiaries) not
to, directly or indirectly, engage in any negotiations concerning, or provide
any confidential information or data to, or have any discussions with, any
person relating to an Acquisition Proposal, whether made before or after the
date of the Merger Agreement, or otherwise facilitate any effort or attempt to
make or implement an Acquisition Proposal; provided, however, that nothing
contained in the Merger Agreement prevents the Company or the Board from (i)
complying with Rule 14e-2 promulgated under the Exchange Act with regard to an
Acquisition Proposal or (ii) at any time
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prior to the earlier to occur of (x) payment for Shares pursuant to the Offer or
(y) the approval of the Merger by the requisite vote of the stockholders of the
Company (A) providing information in response to a request therefor by a person
who has made an unsolicited bona fide written Acquisition Proposal if the Board
receives from the person so requesting such information an executed
confidentiality agreement on terms substantially equivalent to those contained
in the Confidentiality Agreement; (B) engaging in any negotiations or
discussions with any person who has made an unsolicited bona fide written
Acquisition Proposal; or (C) recommending such an Acquisition Proposal to the
stockholders of the Company, if and only to the extent that, (i) in each such
case referred to in clause (A), (B) or (C) above, the Board determines in good
faith after consultation with outside legal counsel that such action is
necessary in order for its directors to comply with their fiduciary duties under
applicable law and (ii) in each case referred to in clause (B) or (C) above, the
Board determines in good faith (after consultation with its financial advisor)
that such Acquisition Proposal is reasonably likely to be consummated, taking
into account all legal, financial and regulatory aspects of the proposal and the
person making the proposal and would, if consummated, result in a more favorable
transaction than the transaction contemplated by the Merger Agreement (any such
more favorable Acquisition Proposal being referred to as a "Superior Proposal").
The Company has agreed to immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties conducted
before the date of the Merger Agreement with respect to any of the foregoing.
The Company has further agreed that it will take the necessary steps to promptly
inform the individuals or entities referred to in the first sentence of this
paragraph of the above obligations as well as those contained in the
Confidentiality Agreement. The Company will notify Parent immediately if any
inquiries, proposals or offers are received by, any information requested from,
or any discussions or negotiations are sought to be initiated or continued with,
any of its representatives indicating, in connection with such notice, the name
of such person and the material terms and conditions of any proposals or offers
and thereafter will keep Parent informed, on a current basis, of the status and
terms of any such proposals or offers and the status of any such negotiations or
discussions. The Company also will promptly request each person that has
previously executed a confidentiality agreement in connection with its
consideration of an Acquisition Proposal to return all confidential information
that has been furnished to such person by or on behalf of it or any of its
subsidiaries.
EMPLOYMENT MATTERS. Under the Merger Agreement, for not less than one year
following the Effective Time, Parent will cause the Surviving Corporation to
maintain compensation and employee benefits plans and arrangements and
perquisites for employees of the Company and its subsidiaries that, in the
aggregate, are substantially comparable to those provided pursuant to their
compensation and employee benefit plans and arrangements and perquisites in
effect on the date of the Merger Agreement. However, Parent and the Surviving
Corporation will have the right, in the good faith exercise of their managerial
discretion, to terminate or make changes or cause changes to be made in the
compensation, benefits and other terms of employment of any employee and to
terminate the employment of any employee. Parent will also cause the Surviving
Corporation to perform the Company's obligations under individual termination
benefits agreements entered into between the Company and each of its executive
officers, unless any such officer agrees otherwise.
INDEMNIFICATION. The Merger Agreement provides that the Certificate of
Incorporation of the Surviving Corporation will contain the provisions with
respect to indemnification set forth in the Certificate of Incorporation and
By-Laws of the Company, which provisions will not be amended, repealed or
otherwise modified for a period of six years from the Effective Time in any
manner that would adversely affect the rights of individuals who between the
date of the Merger Agreement and the Effective Time were directors or officers
of the Company, unless such modification is required by law.
The Merger Agreement also provides that after the election of Purchaser's
designees representing at least a majority of the members of the Board, the
Surviving Corporation will, to the fullest extent permitted under applicable law
or under the Surviving Corporation's Certificate of Incorporation or By-Laws,
indemnify and hold harmless each director and officer of the Company or any of
its subsidiaries
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(collectively, the "Indemnified Parties") against any costs or expenses
(including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to any action or omission by such
director or officer by virtue of his holding the office of director or officer
occurring at or prior to the Effective Time (including, without limitation, the
transactions contemplated by the Merger Agreement) for a period of six years
after the Effective Time. In the event of any such claim, action, suit,
proceeding or investigation (whether arising before or after the Effective
Time), (i) any counsel retained by the Indemnified Parties for any period after
the Effective Time will be reasonably satisfactory to the Surviving Corporation
and Parent and (ii) neither the Surviving Corporation nor Parent will be liable
for any settlement effected without its written consent (which consent will not
be unreasonably withheld).
The Merger Agreement further provides that, for a period of six years after
the Effective Time, Parent will cause to be maintained in effect the current
policies of directors' and officers' liability insurance maintained by the
Company (provided that Parent may substitute policies with reputable and
financially sound carriers of at least the same coverage and amounts containing
terms and conditions which are no less advantageous) with respect to claims
arising from or related to facts or events that occurred at or before the
Effective Time. However, Parent will not be obligated to make annual premium
payments for such insurance to the extent such premiums exceed 150% of the
annual premiums paid by the Company as of the date of the Merger Agreement for
such insurance (such 150% amount (currently represented to be $288,000), the
"Maximum Premium"). If such insurance coverage cannot be obtained at all, or can
only be obtained at an annual premium in excess of the Maximum Premium, Parent
will maintain the most advantageous policies of directors' and officers'
insurance obtainable for an annual premium equal to the Maximum Premium.
Nevertheless, if such insurance coverage cannot be obtained at all, Parent will
purchase all available extended reporting periods with respect to pre-existing
insurance in an amount that, together with all other insurance purchased, does
not exceed the Maximum Premium. Parent has agreed not to take any action that
would have the effect of limiting the aggregate amount of insurance coverage
required to be maintained for the individuals referred to in this paragraph.
LISTING AND DELISTING. Pursuant to the Merger Agreement, Parent will use
its best efforts to cause the shares of Parent Preferred Stock to be issued in
the Merger, the shares of Parent Common Stock issuable upon conversion thereof,
and the Exchange Debentures prior to or upon issuance thereof, to be approved
for listing on the NYSE. In addition, the Surviving Corporation will use its
best efforts to cause the Shares to be delisted from the NYSE and de-registered
under the Exchange Act as soon as practicable following the Effective Time.
CONDITIONS TO THE MERGER. Under the Merger Agreement, the respective
obligations of each party to effect the Merger are subject to the satisfaction
at or prior to the Effective Time of each of the following conditions: (a) the
Registration Statement has become effective under the Securities Act. No stop
order suspending the effectiveness of the Registration Statement has been issued
by the Commission and no proceedings for that purpose and no similar proceeding
in respect of the Prospectus/Proxy Statement has been initiated or threatened by
the Commission; (b) the Merger Agreement and the transactions contemplated by
the Merger Agreement have been approved and adopted by the requisite vote of the
stockholders of the Company and the Parent Preferred Stock Matters have been
approved and adopted by the requisite vote of the stockholders of Parent; (c) no
temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other similar binding legal
restraint or prohibition preventing the consummation of the Merger is in effect,
and there has not been any action taken, or any statute, rule, regulation or
order enacted, entered, enforced or deemed applicable to the Merger, which makes
the consummation of the Merger illegal; and (d) Parent, Purchaser or their
affiliates have purchased, or caused to be purchased, the Shares pursuant to the
Offer or pursuant to the Stockholders Agreement.
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In addition, the obligation of the Company to effect the Merger is subject
to the condition that the shares of Parent Preferred Stock to be issued in the
Merger and the shares of Parent Common Stock issuable upon conversion thereof
have been approved for listing, subject to official notice of issuance, on the
NYSE.
TERMINATION; FEES AND EXPENSES. The Merger Agreement provides that it may
be terminated and the Merger may be abandoned at any time prior to the Effective
Time, notwithstanding approval thereof by the stockholders of the Company: (a)
by mutual written consent duly authorized by the respective boards of directors
of Parent and the Company; or (b) by either Parent or the Company if the Merger
has not been consummated by October 31, 2000 (provided that such right to
terminate the Merger Agreement will not be available to any party whose failure
to fulfill any obligation under the Merger Agreement has been the cause of or
resulted in the failure of the Merger to occur on or before such date); or (c)
by either Parent or the Company if a court of competent jurisdiction or
governmental, regulatory or administrative agency has issued a non-appealable
final order, decree or ruling or taken any other action, in each case having the
effect of permanently restraining, enjoining or otherwise prohibiting the
Merger; or (d) by Parent or the Company if Shares have not been purchased
pursuant to the Offer or the Stockholders Agreement prior to April 30, 1999
(provided that Parent or the Company, as applicable, is not then in material
breach of the Merger Agreement); or (e) as long as Shares have not been
purchased pursuant to the Offer or the Stockholders Agreement, by Parent if (i)
the Board withdraws, modifies or changes its recommendation of the Merger
Agreement, the Offer or the Merger in a manner adverse to Parent or has resolved
to do so or (ii) the Board has recommended, taken a "neutral" position with
respect to, resolved to accept or accepted an Acquisition Proposal; or (f) as
long as Shares have not been purchased pursuant to the Offer or the Stockholders
Agreement, by Parent upon a breach of any representation, warranty, covenant or
agreement on the part of the Company set forth in the Merger Agreement or if any
representation or warranty of the Company has become untrue, in either case,
such that the breach would give rise to the failure of a condition set forth in
Section 14 hereof (a "Terminating Breach"), provided, that, if such Terminating
Breach is curable prior to the expiration of 30 days from its occurrence (but in
no event later than April 30, 1999) by the Company through the exercise of its
reasonable best efforts and for so long as the Company continues to exercise
such reasonable best efforts, Parent may not terminate the Merger Agreement
under this provision until the expiration of such period without such
Terminating Breach having been cured; or (g) by the Company if, as of an
Expiration Date occurring later than 150 days after the commencement by
Purchaser of the Offer, all of the conditions to the Offer set forth in Section
14 hereof have been satisfied or waived except for the condition set forth in
paragraph (j) thereof; provided, that the Company may not terminate the Merger
Agreement if the Company's failure to fulfill any obligation under the Merger
Agreement was the cause of, or resulted in, the failure to satisfy such
condition; or (h) by Parent if the Offer has expired or has been terminated in
accordance with the terms set forth in the Merger Agreement without Shares
having been purchased pursuant to the Offer.
In the event of the termination of the Merger Agreement, the Merger
Agreement provides that it will become void and there will be no liability
thereunder on the part of any party thereto (or any of its affiliates,
directors, officers, employees, agents, legal and financial advisors or other
representatives) except (i) under the provisions of the Merger Agreement related
to fees and expenses described below and under certain other provisions of the
Merger Agreement which survive termination and (ii) nothing contained in the
Merger Agreement will relieve any party from liability or damages resulting from
any breach of the Merger Agreement.
Except as described below, all fees and expenses incurred in connection with
the Merger Agreement and the transactions contemplated thereby will be paid by
the party incurring such expenses, whether or not the Merger is consummated.
The Company has agreed to pay Parent a fee of $25,000,000 (the "Fee"), plus
actual, documented and reasonable out-of-pocket expenses of Parent, not in
excess of $5,000,000, relating to the transactions contemplated by the Merger
Agreement (including, but not limited to, fees and expenses of Parent's
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counsel), upon the earliest to occur of the following events: (i) the
termination of the Merger Agreement by Parent pursuant to clause (e) above and
the Minimum Condition is not satisfied at the Expiration Date following the
occurrence of the event giving rise to Parent's right to terminate the Merger
Agreement pursuant to such clause; or (ii) the termination of the Merger
Agreement by Parent pursuant to clause (h) above if any person or "group"
(within the meaning of Section 13(d)(3) of the Exchange Act) has publicly made
an Acquisition Proposal, the Offer has remained open until at least the
Expiration Date following the date such Acquisition Proposal is made and the
Minimum Condition is not satisfied at the Expiration Date; or (iii) the
termination of the Merger Agreement by Parent pursuant to clause (f) above if
any person or "group" (within the meaning of Section 13(d)(3) of the Exchange
Act) has publicly made an Acquisition Proposal and the Company enters into a
binding written agreement concerning a transaction that constitutes an
Acquisition Proposal within one year after the date of such termination.
Parent has agreed to pay the Company a fee of $10,000,000, plus actual,
documented and reasonable out-of-pocket expenses of the Company, not in excess
of $2,000,000, relating to the transactions contemplated by the Merger Agreement
(including, but not limited to, fees and expenses of the Company's counsel),
upon the termination of the Merger Agreement by the Company pursuant to clause
(g) above if the condition set forth in paragraph (j) of Section 14 has not been
satisfied due solely to the failure of one or more of the Excluded Conditions;
provided, however, that no fee or expense reimbursement will be payable if the
Company is then in willful material breach of its obligations under the Merger
Agreement. For purposes of this paragraph, "Excluded Conditions" means the
conditions precedent identified in the following paragraphs under the heading
"Conditions Precedent to the Initial Loans" in Exhibit B to the Commitment
Letter: (iii) (to the extent it relates to the recommendation of the board of
directors of Parent); (v) (change of control of Parent); (vii) (material adverse
effect to the extent it relates to Parent); (xiii) (indebtedness of Parent) and
(xiv) (material adverse effect on markets).
The fee payable under the preceding two paragraphs will be paid within one
business day after the first to occur of the events described in such
paragraphs.
STOCKHOLDERS AGREEMENT
Pursuant to the Stockholders Agreement and in order to induce Parent and
Purchaser to enter into the Merger Agreement, the Stockholders, who beneficially
own in the aggregate approximately 47.7% of the outstanding shares of Company
Common Stock, have agreed to tender and sell all their Shares pursuant to the
Offer and not to withdraw any Shares tendered in the Offer.
The Stockholders have further agreed to vote all Shares held of record or
beneficially owned by them (i) in favor of the Merger and the Merger Agreement
and (ii) against any Acquisition Proposal or other takeover proposal and against
any action or agreement that would impede, frustrate, prevent or nullify the
Stockholders Agreement or result in any breach or failure of condition under the
Merger Agreement. The Stockholders also have granted Parent and certain officers
of Parent an irrevocable proxy to vote their Shares in favor of the transactions
contemplated by the Merger Agreement and against any Acquisition Proposal.
In addition, each of the Stockholders has granted to Purchaser an
irrevocable option (collectively, the "Stock Options") to purchase such
Stockholder's Shares for a cash purchase price per Share equal to the Per Share
Amount. Purchaser may exercise the Stock Options, in whole or in part, after the
occurrence of certain of the events described above which would entitle Parent
to receive the Fee (regardless of whether Parent exercises its right to
terminate the Merger Agreement). The Stock Options will become exercisable, in
whole or in part, upon any such event and will remain exercisable, in whole or
in part, until 120 days after the date of such event (the "120 Day Period"),
provided that the waiting period under the HSR Act has expired or been waived
and there is not in effect any preliminary injunction or other order issued by
any governmental authority prohibiting the exercise of the Stock Options.
However, if the HSR Act waiting period has not expired or been waived or any
such injunction or order is in effect, in each case on the expiration date of
the 120 Day Period, the 120 Day Period will be extended until five business days
after the later of the date of expiration or waiver of the HSR Act waiting
period and the date of removal or lifting of such injunction or order.
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Each of the Stockholders has also agreed, in his or its capacity as a
stockholder of the Company, that such Stockholder (and, if applicable, its
subsidiaries or affiliates) will not (and, if applicable, such Stockholder will
cause its officers, directors, partners, employees, representatives and agents,
including, but not limited to, investment bankers, attorneys and accountants,
not to), directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than Parent,
any of its affiliates or representatives) concerning any Acquisition Proposal.
Each of the Stockholders has agreed to immediately cease any existing
activities, discussions or negotiations with any parties with respect to any
Acquisition Proposal or other takeover proposal. Finally, each of the
Stockholders will immediately communicate to Parent the terms of any proposal,
discussion, negotiation or inquiry (and will disclose any written materials
received by such Stockholder in connection with such proposal, discussion,
negotiation or inquiry), and the identity of the party making such proposal or
inquiry, which such Stockholder may receive in respect of any such transaction.
VOTING AGREEMENT
Pursuant to the Voting Agreement, Alpine has agreed that it will, at any
meeting of the stockholders of Parent, however called, or in connection with any
written consent of such stockholders, vote (or cause to be voted) all shares of
Parent Common Stock then held of record by it or which it has the right to vote
(A) in favor of (1) an amendment to the Certificate of Incorporation of Parent
to authorize additional shares of preferred stock, par value $0.01 per share, of
Parent; (2) the issuance of Parent Preferred Stock; in the case of clauses (1)
and (2) in accordance with the terms of the Merger Agreement, Delaware Law and
the Certificate of Incorporation and By-Laws of Parent; and (3) any other
matters submitted to the stockholders of Parent to authorize or facilitate the
transactions contemplated by the Merger Agreement; and (B) against any matters
submitted to the stockholders of Parent inconsistent with the transactions
contemplated by the Merger Agreement.
11. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY AFTER THE OFFER AND THE MERGER.
PURPOSE OF THE OFFER. The purpose of the Offer and the Merger is for Parent
to acquire control of, and the entire equity interest in, the Company. The
purpose of the Merger is for Parent to acquire all Shares not purchased pursuant
to the Offer. Upon consummation of the Merger, the Company will be a wholly
owned subsidiary of Parent. The Offer is being made pursuant to the Merger
Agreement.
Under Delaware Law, the approval of the Board and the affirmative vote of
the holders of a majority of the outstanding Shares is required to approve and
adopt the Merger Agreement and the Merger. The Prospectus/Proxy Statement (which
will constitute a prospectus for the Parent Preferred Stock issuable in the
Merger, the Parent Common Stock issuable upon conversion thereof and the
Exchange Debentures issuable upon exchange of the Parent Preferred Stock)
containing detailed information concerning the Merger will be furnished to
stockholders of the Company in connection with a special meeting to be called by
the Company to vote on the Merger. The Board has approved and adopted the Merger
Agreement and the transactions contemplated thereby, and the only remaining
required corporate action of the Company is the approval and adoption of the
Merger Agreement and the Merger by the affirmative vote of the holders of a
majority of the Shares. Accordingly, if the Minimum Condition is satisfied,
Purchaser will have sufficient voting power to cause the approval and adoption
of the Merger Agreement and the transactions contemplated thereby without the
affirmative vote of any other stockholder.
In the Merger Agreement, the Company has agreed to take all action necessary
to convene a meeting of its stockholders as soon as practicable after the
consummation of the Offer for the purpose of considering and voting upon the
Merger Agreement and the transactions contemplated thereby. Parent and Purchaser
have agreed that all Shares owned by them and their subsidiaries will be voted
in favor of the Merger Agreement and the transactions contemplated thereby.
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Promptly upon Purchaser's acceptance for payment of Shares purchased
pursuant to the Offer, the Merger Agreement provides that Purchaser will be
entitled to designate representatives to serve on the Board in proportion to
Purchaser's ownership of Shares (including for this purpose the Shares accepted
for payment). See Section 10. Purchaser expects that such representation would
permit Purchaser to exert substantial influence over the Company's conduct of
its business and operations.
DISSENTERS' RIGHTS. Holders of Shares do not have dissenters' rights as a
result of the Offer. However, if the Merger is consummated, holders of Shares
may have rights pursuant to the provisions of Section 262 of Delaware Law to
dissent and demand appraisal of, and to receive payment in cash of the fair
value of, their Shares. If the statutory procedures were complied with, such
rights could lead to a judicial determination of the fair value required to be
paid in cash to such dissenting holders for their Dissenting Shares. Any such
judicial determination of the fair value of the Dissenting Shares could be based
upon considerations other than, or in addition to, the Per Share Amount, the
market value of the Dissenting Shares, including asset values, and the
investment value of the Dissenting Shares. The value so determined could be
greater or lower than the Per Share Amount.
If any holder of Shares who demands appraisal under Section 262 of Delaware
Law fails to perfect, or effectively withdraws or loses his right to appraisal,
as provided in Delaware Law, the Shares of such stockholder will be converted
into the right to receive the consideration payable in the Merger in accordance
with the Merger Agreement. A stockholder may withdraw his demand for appraisal
by delivery to Parent of a written withdrawal of his demand for appraisal and
acceptance of the terms of the Merger.
A stockholder seeking to exercise dissenters' rights under Section 262 of
Delaware Law may not tender his Shares in the Offer and will be further advised
by the Company as to the steps necessary to exercise such rights. FAILURE TO
FOLLOW THE STEPS REQUIRED BY SECTION 262 OF DELAWARE LAW FOR PERFECTING
APPRAISAL RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS.
Section 262(b) of Delaware Law provides that no dissenters' rights will be
available if stockholders of a constituent corporation are required by the terms
of a merger agreement to accept as consideration in a merger stock which is
listed on a national securities exchange. In the event that the Offer is fully
subscribed, Parent, Purchaser and the Company intend to amend the Merger
Agreement to provide specifically that the remaining holders of Company Common
Stock will receive as consideration in the Merger solely Parent Preferred Stock
which is listed on the NYSE. In such case, holders of Company Common Stock will
not be entitled to dissenters' rights.
GOING PRIVATE TRANSACTIONS. The Commission has adopted Rule 13e-3 under the
Exchange Act which is applicable to certain "going private" transactions and
which may under certain circumstances be applicable to the Merger or another
business combination following the purchase of Shares pursuant to the Offer in
which Purchaser seeks to acquire the remaining Shares not held by it. However,
Rule 13e-3 will not be applicable to the Merger or any such other business
combination if (i) the Shares are deregistered under the Exchange Act prior to
the Merger or other business combination, (ii) the Merger or other business
combination is consummated within one year after the purchase of the Shares
pursuant to the Offer and the value of the consideration paid per Share in the
Merger or other business combination (measured at the time of consummation of
the Merger) is at least equal to the amount paid per Share in the Offer or (iii)
the Offered Number of Shares is purchased in the Offer. If applicable, Rule
13e-3 requires, among other things, that certain financial information
concerning the Company and certain information relating to the fairness of the
proposed transaction and the consideration offered to minority stockholders in
such transaction be filed with the Commission and disclosed to stockholders
prior to consummation of the transaction.
PLANS FOR THE COMPANY. It is expected that, initially following the Merger,
the business and operations of the Company will, except as set forth in this
Offer to Purchase, be continued by the Company
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substantially as they are currently being conducted. Parent will continue to
evaluate the business and operations of the Company during the pendency of the
Offer and after the consummation of the Offer and the Merger, and will take such
actions as it deems appropriate under the circumstances then existing. Parent
intends to seek additional information about the Company during this period.
Thereafter, Parent intends to review such information as part of a comprehensive
review of the Company's business, operations, capitalization and management with
a view to optimizing exploitation of the Company's potential in conjunction with
Parent's business.
Except as indicated in this Offer to Purchase, Parent does not have any
present plans or proposals which relate to or would result in an extraordinary
corporate transaction, such as a merger, reorganization or liquidation,
involving the Company or any of its subsidiaries, a sale or transfer of a
material amount of assets of the Company or any of its subsidiaries, any
material change in the Company's capitalization or dividend policy or any other
material change in the Company's corporate structure or business.
12. DIVIDENDS AND DISTRIBUTIONS.
The Merger Agreement provides that the Company may not, between the date of
the Merger Agreement and the earlier to occur of the termination of the Merger
Agreement or the election of Purchaser's designees representing at least a
majority of the members of the Board, without the prior written consent of
Parent, (a) issue, sell, pledge, dispose of, encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any shares of capital
stock of any class, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of capital stock, or any other
ownership interest (including, without limitation, any phantom interest) of the
Company, any of its subsidiaries or affiliates (except for the issuance of
shares of Company Common Stock issuable pursuant to the exercise of Options
under the Stock Option Plans, which Options are outstanding on the date of the
Merger Agreement); or (b) (i) declare, set aside, make or pay any dividend or
other distribution (whether in cash, stock or property or any combination
thereof) in respect of any of its capital stock, except that a wholly owned
subsidiary of the Company may declare and pay a dividend to its parent, (ii)
split, combine or reclassify any of its capital stock or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or (iii) amend the terms of,
repurchase, redeem or otherwise acquire, or permit any subsidiary to repurchase,
redeem or otherwise acquire, any of its securities or any securities of its
subsidiaries, or propose to do any of the foregoing. See Section 10.
13. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, EXCHANGE LISTING AND
EXCHANGE ACT REGISTRATION.
The purchase of Shares by Purchaser pursuant to the Offer will reduce the
number of Shares that might otherwise trade publicly and will reduce the number
of holders of Shares, which could adversely affect the liquidity and market
value of the remaining Shares held by the public.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of the NYSE for continued listing and
may be delisted from the NYSE. According to the NYSE's published guidelines, the
NYSE would consider delisting the Shares if, among other things, the number of
record holders of at least 100 Shares should fall below 1,200, the number of
publicly held Shares (exclusive of holdings of officers, directors and their
immediate families and other concentrated holdings of ten percent or more ("NYSE
Excluded Holdings")) should fall below 600,000 or the aggregate market value of
publicly held Shares (exclusive of NYSE Excluded Holdings) should fall below
$5,000,000. Since Parent is only offering to purchase 22,562,135 Shares
(approximately 81% of the currently outstanding Shares), it is unlikely that any
of the foregoing provisions would be triggered by consummation of the Offer.
However, if as a result of the purchase of Shares pursuant to the Offer or
otherwise, the Shares no longer meet the requirements of the NYSE for continued
listing and the listing of the Shares is discontinued, the market for the Shares
could be adversely affected.
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If the NYSE were to delist the Shares, it is possible that the Shares would
continue to trade on another securities exchange or in the over-the-counter
market and that price or other quotations would be reported by such exchange or
through the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") or other sources. The extent of the public market therefor and
the availability of such quotations would depend, however, upon such factors as
the number of stockholders and/or the aggregate market value of the Shares
remaining at such time, the interest in maintaining a market in the Shares on
the part of securities firms, the possible termination of registration under the
Exchange Act as described below and other factors. Purchaser cannot predict
whether the reduction in the number of Shares that might otherwise trade
publicly would have an adverse or beneficial effect on the market price for or
marketability of the Shares or whether it would cause future market prices to be
greater or less than the Per Share Amount.
The Shares are currently "margin securities," as such term is defined under
the rules of the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board"), which has the effect, among other things, of allowing brokers
to extend credit on the collateral of the Shares. Depending upon factors similar
to those described above regarding listing and market quotations, following the
Offer it is possible that the Shares might no longer constitute "margin
securities" for purposes of the margin regulations of the Federal Reserve Board,
in which event such Shares could no longer be used as collateral for loans made
by brokers.
The Shares are currently registered under the Exchange Act. Such
registration may be terminated upon application by the Company to the Commission
if the Shares are not listed on a national securities exchange and there are
fewer than 300 record holders. The termination of the registration of the Shares
under the Exchange Act would substantially reduce the information required to be
furnished by the Company to holders of Shares and to the Commission and would
make certain provisions of the Exchange Act, such as the short-swing profit
recovery provisions of Section 16(b), the requirement of furnishing a proxy
statement in connection with stockholders' meetings and the requirements of Rule
13e-3 under the Exchange Act with respect to "going private" transactions, no
longer applicable to the Shares. In addition, "affiliates" of the Company and
persons holding "restricted securities" of the Company may be deprived of the
ability to dispose of their Shares pursuant to Rule 144 promulgated under the
Securities Act. If registration of the Shares under the Exchange Act were
terminated, the Shares would no longer be "margin securities" or be eligible for
NYSE or NASDAQ reporting. Purchaser currently intends to seek to cause the
Company to terminate the registration of the Shares under the Exchange Act as
soon after consummation of the Offer as the requirements for termination of
registration are met.
14. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provisions of the Offer, subject to the terms of
the Merger Agreement, Purchaser will not be required to accept for payment or
pay for any Shares tendered pursuant to the Offer, and may terminate or amend
the Offer and may postpone the acceptance for payment of, or payment for, Shares
tendered, if, at the Expiration Date, (i) the Minimum Condition has not been
satisfied, (ii) any applicable waiting period under the HSR Act has not expired
or been terminated prior to the expiration of the Offer (the "HSR Condition") or
(iii) any of the following conditions exists:
(a) there has been instituted or is pending or threatened any action or
proceeding by any governmental, administrative or regulatory authority or by
any other person (in the case of any suit, action or proceeding by a person
other than a governmental, administrative or regulatory authority, such
suit, action or proceeding having a reasonable likelihood of success in
regard to the relief sought in any of clauses (i) through (v) below): (i)
challenging or seeking to make illegal, materially delay or otherwise
directly or indirectly restrain or prohibit or make materially more costly
the making of the Offer, the acceptance for payment of, or payment for, any
Shares by Parent, Purchaser or any other affiliate of Parent, or the
consummation of any other transactions contemplated by the Merger Agreement
(the "Transactions"), or seeking to obtain material damages in connection
with any
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Transaction; (ii) seeking to prohibit or limit materially the ownership or
operation by the Company, Parent or any of their subsidiaries of all or any
material portion of the business or assets of the Company, Parent or any of
their subsidiaries, or to compel the Company, Parent or any of their
subsidiaries to dispose of or hold separate all or any material portion of
the business or assets of the Company, Parent or any of their subsidiaries,
as a result of the Transactions; (iii) seeking to impose or confirm material
limitations on the ability of Parent, Purchaser or any other affiliate of
Parent to exercise effectively full rights of ownership of any Shares,
including, without limitation, the right to vote any Shares acquired by
Purchaser pursuant to the Offer or otherwise on all matters properly
presented to the Company's stockholders, including, without limitation, the
approval and adoption of the Merger Agreement and the transactions
contemplated thereby; (iv) seeking to require divestiture by Parent,
Purchaser or any other affiliate of Parent of any Shares; or (v) which
otherwise has a material adverse effect on the Company;
(b) there has been any action taken, or any statute, rule, regulation,
legislation, interpretation, judgment, order or injunction enacted, entered,
enforced, promulgated, amended, issued or deemed applicable to (i) Parent,
the Company or any subsidiary or affiliate of Parent or the Company or (ii)
the Offer, the Merger or any Transaction, by any legislative body, court,
government or governmental, administrative or regulatory authority or
agency, domestic or foreign, other than the routine application of the
waiting period provisions of the HSR Act to the Offer or the Merger, which
is reasonably likely in the good faith judgment of Parent to result,
directly or indirectly, in any of the consequences referred to in clauses
(i) through (v) of paragraph (a) above;
(c) after the date of the Merger Agreement, there has occurred any
change, condition, event or development that has a material adverse effect
on the Company;
(d) there has occurred (i) any general suspension of, or limitation on
prices for, trading in securities on the NYSE for a period in excess of 24
hours (excluding suspensions or limitations resulting solely from physical
damage or interference with such exchange not related to market conditions),
(ii) a declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (iii) a commencement of a war or
armed hostilities or other similar national or international crisis directly
or indirectly involving the United States having, or which could reasonably
be expected to have, a substantial continuing general effect on business and
financial conditions in the United States or (iv) in the case of any of the
foregoing existing on the date of the Merger Agreement, in the good faith
judgment of Parent a material acceleration or worsening thereof;
(e) (i) the Board or any committee thereof has withdrawn or modified in
a manner adverse to Parent or Purchaser the approval or recommendation of
the Offer, the Merger or the Merger Agreement, or approved or recommended
any takeover proposal or any other acquisition of the Shares other than the
Offer and the Merger or (ii) the Board or any committee thereof has resolved
to do any of the foregoing;
(f) any representation or warranty of the Company in the Merger
Agreement is not true and correct as if such representation or warranty was
made as of the Expiration Date, except for (i) changes contemplated by the
Merger Agreement, (ii) those representations and warranties which address
matters only as of a particular date (which are determined as of such date)
and (iii) where the failure to be true and correct would not, together with
all other such failures, have a material adverse effect on the Company;
(g) the Company or any other person (other than Parent or Purchaser) has
failed to perform in any material respect any obligation or to comply in any
material respect with any agreement or covenant of the Company to be
performed or complied with by it under the Merger Agreement;
(h) the Merger Agreement has been terminated in accordance with its
terms;
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(i) Purchaser and the Company have agreed that Purchaser will terminate
the Offer or postpone the acceptance for payment of or payment for Shares
thereunder; or
(j) the conditions set forth in the Commitment Letter have not been
satisfied or waived or the financing contemplated thereby has not been
effected;
which, in the sole judgment of Purchaser in any such case, and regardless of the
circumstances (including any action or inaction by Parent or any of its
affiliates) giving rise to any such condition, makes it inadvisable to proceed
with the Offer and/or with such acceptance for payment of or payment for the
Shares.
The foregoing conditions are for the sole benefit of Purchaser and Parent
and may be asserted by Purchaser or Parent regardless of the circumstances
giving rise to any such condition or may, subject to the terms of the Merger
Agreement, be waived by Purchaser or Parent in whole or in part at any time and
from time to time in their sole discretion. The failure by Parent or Purchaser
at any time to exercise any of the foregoing rights will not be deemed a waiver
of any such right; the waiver of any such right with respect to particular facts
and other circumstances will not be deemed a waiver with respect to any other
facts and circumstances; and each such right will be deemed an ongoing right
that may be asserted at any time and from time to time.
15. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS.
GENERAL. Based upon its examination of publicly available information with
respect to the Company, the review of certain information furnished by the
Company to Parent and discussions of representatives of Parent with
representatives of the Company during Parent's investigation of the Company (see
Section 10), neither Purchaser nor Parent is aware of any license or other
regulatory permit that appears to be material to the business of the Company and
its subsidiaries, taken as a whole, which might be adversely affected by the
acquisition of Shares by Purchaser pursuant to the Offer or, except as set forth
below, of any approval or other action by any domestic (federal or state) or
foreign governmental, administrative or regulatory authority or agency which
would be required prior to the acquisition of Shares by Purchaser pursuant to
the Offer. Should any such approval or other action be required, it is
Purchaser's present intention to seek such approval or action. There can be no
assurance that any such approval or other action, if needed, would be obtained
without substantial conditions or that adverse consequences might not result to
the business of the Company, Purchaser or Parent or that certain parts of the
businesses of the Company, Purchaser or Parent might not have to be disposed of
or held separate or other substantial conditions complied with in order to
obtain such approval or other action or in the event that such approval was not
obtained or such other action was not taken. Purchaser's obligation under the
Offer to accept for payment and pay for Shares is subject to certain conditions,
including conditions relating to the legal matters discussed in this Section 15.
See Section 14.
STATE TAKEOVER LAWS. The Company is incorporated under the laws of the
State of Delaware. In general, Section 203 of Delaware Law prevents an
"interested stockholder" (generally a person who owns or has the right to
acquire 15% or more of a corporation's outstanding voting stock or an affiliate
or associate thereof) from engaging in a "business combination" (defined to
include mergers and certain other transactions) with a Delaware corporation for
a period of three years following the date such person became an interested
stockholder unless, among other things, prior to such date the board of
directors of the corporation approved either the business combination or the
transaction in which the interested stockholder became an interested
stockholder. The Company, in its Second Amended and Restated Certificate of
Incorporation, elected not to be governed by Section 203. Accordingly, Section
203 is inapplicable to the Offer and the Merger.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations that are incorporated, or have
substantial assets, stockholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
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economic effects, in such states. In EDGAR V. MITE CORP., the Supreme Court of
the United States invalidated on constitutional grounds the Illinois Business
Takeover Statute, which, as a matter of state securities law, made takeovers of
corporations meeting certain requirements more difficult. However, in 1987 in
CTS CORP. V. DYNAMICS CORP. OF AMERICA, the Supreme Court held that the State of
Indiana may, as a matter of corporate law and, in particular, with respect to
those aspects of corporate law concerning corporate governance, constitutionally
disqualify a potential acquiror from voting on the affairs of a target
corporation without the prior approval of the remaining stockholders, provided
that such laws were applicable only under certain conditions. Subsequently, in
TLX ACQUISITION CORP. V. TELEX CORP., a Federal district court in Oklahoma ruled
that the Oklahoma statutes were unconstitutional insofar as they applied to
corporations incorporated outside Oklahoma in that they would subject such
corporations to inconsistent regulations. Similarly, in TYSON FOODS, INC. V.
MCREYNOLDS, a Federal district court in Tennessee ruled that four Tennessee
takeover statutes were unconstitutional as applied to corporations incorporated
outside Tennessee. This decision was affirmed by the United States Court of
Appeals for the Sixth Circuit. In December 1988, a federal district court in
Florida held in GRAND METROPOLITAN PLC V. BUTTERWORTH that the provisions of the
Florida Affiliated Transactions Act and Florida Control Share Acquisition Act
were unconstitutional as applied to corporations incorporated outside of
Florida.
The Company, directly or through subsidiaries, conducts business in a number
of states throughout the United States, some of which may have enacted takeover
laws. Purchaser does not know whether any of these laws will, by their terms,
apply to the Offer or the Merger and has not attempted to comply with any such
laws. Should any person seek to apply any state takeover law, Purchaser reserves
the right to challenge the validity or applicability of any such statute
allegedly applicable to the Offer in appropriate court proceedings or otherwise,
and nothing contained in this Offer to Purchase nor any action taken in
connection herewith is intended as a waiver of that right. In the event it is
asserted that one or more state takeover laws applies to the Offer or the
Merger, and an appropriate court does not determine that it is inapplicable or
invalid as applied to the Offer or the Merger, Purchaser might be required to
file certain information with, or receive approvals from, the relevant state
authorities. In addition, if enjoined, Purchaser might be unable to accept for
payment any Shares tendered pursuant to the Offer or be delayed in continuing or
consummating the Offer and the Merger. In such case, Purchaser may not be
obligated to accept for payment, or pay for, any Shares tendered. See Section
14.
ANTITRUST. Under the HSR Act and the rules that have been promulgated
thereunder by the Federal Trade Commission (the "FTC"), certain acquisition
transactions may not be consummated unless certain information has been
furnished to the Antitrust Division of the Department of Justice (the "Antitrust
Division") and the FTC and certain waiting period requirements have been
satisfied. The acquisition of Shares by Purchaser pursuant to the Offer is
subject to such requirements. See Section 2.
Pursuant to the HSR Act, Parent intends to file a Premerger Notification and
Report Form (the "HSR Report") with the Antitrust Division and the FTC in
connection with the purchase of Shares pursuant to the Offer. Under the
provisions of the HSR Act applicable to the Offer, the purchase of Shares
pursuant to the Offer may not be consummated until the expiration of a
15-calendar day waiting period following the filing by Parent. Parent intends to
file the HSR Report on October 28, 1998, so as to allow the applicable HSR Act
waiting period for the Offer to expire on or prior to 11:59 p.m., New York City
time, on November 11, 1998. Pursuant to the HSR Act, Parent intends to request
early termination of the waiting period applicable to the Offer. There can be no
assurance, however, that the 15-day HSR Act waiting period will be terminated
early. If either the FTC or the Antitrust Division were to request additional
information or documentary material from Parent with respect to the Offer, the
waiting period with respect to the Offer would expire at 11:59 p.m., New York
City time, on the tenth calendar day after the date of substantial compliance by
Parent with such request. Thereafter, the waiting period could be extended only
by court order. If the acquisition of Shares is delayed pursuant to a request by
the FTC or the Antitrust Division for additional information or documentary
material pursuant to the HSR Act, the Offer may, but need not, be extended and,
in any event, the purchase of and payment for Shares will be
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<PAGE>
deferred until ten days after the request is substantially complied with, unless
the extended period expires on or before the date when the initial 15-day period
would otherwise have expired, or unless the waiting period is sooner terminated
by the FTC and the Antitrust Division. Only one extension of such waiting period
pursuant to a request for additional information is authorized by the HSR Act
and the rules promulgated thereunder, except by court order. Any such extension
of the waiting period will not give rise to any withdrawal rights not otherwise
provided for by applicable law. See Section 4. It is a condition to the Offer
that the waiting period applicable under the HSR Act to the Offer expire or be
terminated. See Section 2 and Section 14.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares by
Purchaser pursuant to the Offer. At any time before or after the purchase of
Shares pursuant to the Offer by Purchaser, the FTC or the Antitrust Division
could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the purchase of
Shares pursuant to the Offer or seeking the divestiture of Shares purchased by
Purchaser or the divestiture of substantial assets of Parent, the Company or
their respective subsidiaries. Private parties and state attorneys general may
also bring legal action under federal or state antitrust laws under certain
circumstances. Based upon an examination of information available to Parent
relating to the businesses in which Parent, the Company and their respective
subsidiaries are engaged, Parent and Purchaser believe that the Offer will not
violate the antitrust laws. Nevertheless, there can be no assurance that a
challenge to the Offer on antitrust grounds will not be made or, if such a
challenge is made, what the result would be. See Section 14 for certain
conditions to the Offer, including conditions with respect to litigation.
16. FEES AND EXPENSES.
Except as set forth below, Purchaser will not pay any fees or commissions to
any broker, dealer or other person for soliciting tenders of Shares pursuant to
the Offer.
BT Wolfensohn (a division of BT Alex. Brown Incorporated), financial advisor
to Parent in connection with the acquisition of the Company, is acting as Dealer
Manager for the Offer. Parent has agreed to pay BT Wolfensohn for all of the
services rendered to Parent in connection with the Offer and the Merger,
including services as Dealer Manager, a fee of $7,000,000, 25% of which was
payable upon the execution of the Merger Agreement and the remainder of which is
payable upon the closing of the Offer. Parent has also agreed to reimburse BT
Wolfensohn for all reasonable out-of-pocket expenses incurred by it, including
the reasonable fees and expenses of legal counsel, and to indemnify BT
Wolfensohn against certain liabilities and expenses in connection with its
engagement, including certain liabilities under the federal securities laws.
Purchaser and Parent have retained D.F. King & Co., Inc., as the Information
Agent, and American Stock Transfer & Trust Company, as the Depositary, in
connection with the Offer. The Information Agent may contact holders of Shares
by mail, telephone, telex, telecopy, telegraph and personal interview and may
request banks, brokers, dealers and other nominee stockholders to forward
materials relating to the Offer to beneficial owners.
The Information Agent and the Depositary will receive reasonable and
customary compensation for their services in connection with the Offer, plus
reimbursement for their reasonable out-of-pocket expenses, and will be
indemnified against certain liabilities in connection with the Offer, including
certain liabilities under the federal securities laws. Brokers, dealers,
commercial banks and trust companies will be reimbursed by Purchaser for
customary handling and mailing expenses incurred by them in forwarding material
to their customers.
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17. MISCELLANEOUS.
Purchaser is not aware of any jurisdiction where the making of the Offer is
prohibited by any administrative or judicial action pursuant to any valid state
statute. If Purchaser becomes aware of any valid state statute prohibiting the
making of the Offer or the acceptance of Shares pursuant thereto, Purchaser will
make a good faith effort to comply with any such state statute. If, after such
good faith effort, Purchaser cannot comply with any such state statute, the
Offer will not be made to (nor will tenders be accepted from or on behalf of)
the holders of Shares in such state. In any jurisdiction where the securities,
blue sky or other laws require the Offer to be made by a licensed broker or
dealer, the Offer shall be deemed to be made on behalf of Purchaser by the
Dealer Manager or by one or more registered brokers or dealers licensed under
the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER OR THE COMPANY NOT CONTAINED IN THIS OFFER
TO PURCHASE OR IN THE LETTER OF TRANSMITTAL, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, Parent and Purchaser have filed with the Commission the Schedule
14D-1, together with exhibits, furnishing certain additional information with
respect to the Offer. The Schedule 14D-1 and any amendments thereto, including
exhibits, may be inspected at, and copies may be obtained from, the same places
and in the same manner as set forth in Section 7 (except that they will not be
available at the regional offices of the Commission).
SUT Acquisition Corp.
October 28, 1998
Facsimiles of the Letter of Transmittal will be accepted. The Letter of
Transmittal and certificates evidencing Shares and any other required documents
should be sent or delivered by each stockholder or his broker, dealer,
commercial bank, trust company or other nominee to the Depository at its address
set forth below.
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
ALPINE, PARENT AND PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF ALPINE. The following table sets
forth the name, current business address, citizenship and present principal
occupation or employment, and material occupations, positions, offices or
employments during the last five years, of each director and executive officer
of Alpine. Unless otherwise indicated, the current business address of each
person is 1790 Broadway, New York, New York 10019. Unless otherwise indicated,
each such person is a citizen of the United States of America and has held his
or her present position as set forth below for the past five years. Unless
otherwise indicated, each occupation set forth opposite an individual's name
refers to employment with Alpine.
<TABLE>
<S> <C>
DIRECTORS
Kenneth G. Byers, Jr......................... President of Byers Engineering Company, a
telecommunications technical services firm
(6285 Barfield Road, Atlanta, Georgia 30328).
Steven S. Elbaum............................. Chairman of the Board of Directors and Chief
Executive Officer since 1984; Chairman of the
Board of Directors of Parent, Cables of Zion
United Works, Ltd., an Israel-based, publicly
traded wire and cable manufacturer and
Parent's 51% owned subsidiary ("COZ"), and
PolyVision Corporation, an information
display company ("PolyVision") (29 Laing
Avenue, Dixonville, Pennsylvania 15734).
Randolph Harrison............................ Private investor and consultant to Poten &
Partners, Inc., an energy and shipping
industry consulting firm (885 Third Avenue,
New York, New York 10022). Current residence
address is 22 Frost Mill Road, Mill Neck, New
York 11765.
John C. Jansing.............................. Private investor; a director of Vestaur
Securities, Inc. and 14 Lord Abbett mutual
funds. Current residence address is 162 South
Beach Road, Hobe Sound, Florida 33455.
Ernest C. Janson, Jr......................... A partner with Coopers & Lybrand LLP,
independent public accountants, until his
retirement in 1985. Current residence address
is 216 Roger Webster, Williamsburg, Virginia
23185.
James R. Kanely.............................. Private investor; President and Chief
Operating Officer from November 1993 to
October 1995; prior thereto, President of
Superior TeleTec Inc. Current residence
address is 4600 Pinot Noir Drive, Braselton,
Georgia 30517.
Bragi F. Schut............................... Executive Vice President since 1986.
</TABLE>
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<TABLE>
<S> <C>
EXECUTIVE OFFICERS
Steven S. Elbaum............................. Chairman of the Board of Directors and Chief
Executive Officer since 1984; Chairman of the
Board, President and Chief Executive Officer
of Parent since 1996.
Bragi F. Schut............................... Executive Vice President since 1986.
Stephen M. Johnson........................... Executive Vice President and Chief Operating
Officer since November 1995. President of
Premier Refractories Inc. (a subsidiary of
Alpine) from April 1994 through October 1995.
From January 1994 to April 1994, he was an
independent consultant. From 1987 through
1993, President of Climax Metals Company, a
minerals mining and chemical subsidiary of
Amax, Inc. (101 Merrick Parkway, Norwalk,
Connecticut).
David S. Aldridge............................ Chief Financial Officer since November 1993
and Treasurer since January 1994. Chief
Financial Officer and Treasurer of Parent
since 1996. Prior to 1994, he was Chief
Financial Officer of Superior TeleTec Inc.
until its merger with and into Alpine in
November 1993.
Stewart H. Wahrsager......................... Senior Vice President, General Counsel and
Secretary since January 1996 and Secretary of
Parent since 1996. Prior thereto, he was a
partner in the New York law firm of Rubin
Baum Levin Constant & Friedman (30
Rockefeller Plaza, New York, New York 10112)
</TABLE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. The following table sets
forth the name, current business address, citizenship and present principal
occupation or employment, and material occupations, positions, offices or
employments during the last five years, of each director and executive officer
of Parent. Unless otherwise indicated, the current business address of each
person is 1790 Broadway, New York, New York 10019. Unless otherwise indicated,
each such person is a citizen of the United States of America and has held his
or her present position as set forth below for the past five years. Unless
otherwise indicated, each occupation set forth opposite an individual's name
refers to employment with Parent.
<TABLE>
<S> <C>
DIRECTORS
Steven S. Elbaum............................. Chairman of the Board of Directors, President
and Chief Executive Officer since 1996;
Chairman of the Board of Directors and Chief
Executive Officer of Alpine since 1984;
Chairman of the Board of Directors of COZ and
PolyVision.
</TABLE>
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<TABLE>
<S> <C>
Eugene P. Connell............................ Retired Chairman of Lynch Interactive
Corporation, an owner and operator of
independent telephone companies throughout
the United States. From January 1996 to June
1996, he served as Vice President--Global
Markets Integration of NYNEX Corporation.
From October 1992 to January 1996, he served
as President, Chief Executive Officer and
Director of NYNEX CableComms Group, a
provider of telecommunications services and
cable television in the United Kingdom.
Current residence address is 38 Sherwood
Road, Tenafly, New Jersey 07670.
Robert J. Levenson........................... Executive Vice President and a director of
First Data Corp., a provider of transaction
processing and information services, since
May 1993 (401 Hackensack Avenue, Hackensack,
New Jersey 07601).
Bragi F. Schut............................... Executive Vice President of Alpine since
1986; a director of Alpine since 1983.
Charles Y.C. Tse............................. Former Vice-Chairman and President of
international operations of Warner Lambert
Company, a major pharmaceutical and consumer
products company (300 Park Avenue, New York,
New York 10022). Current residence address is
955 Park Avenue, New York, New York 10028.
EXECUTIVE OFFICERS
Steven S. Elbaum............................. Chairman of the Board, President and Chief
Executive Officer since 1996; Chairman of the
Board of Directors and Chief Executive
Officer of Alpine since 1984.
Justin F. Deedy, Jr.......................... Senior Vice President since July 1996 and
President of Parent's wholly owned
subsidiary, Superior Telecommunications Inc.,
since July 1993.
David S. Aldridge............................ Chief Financial Officer and Treasurer since
1996; Chief Financial Officer of Alpine since
November 1993 and Treasurer of Alpine since
January 1994. Prior to 1994, he was Chief
Financial Officer of Superior TeleTec Inc.
until its merger with and into Alpine in
November 1993.
</TABLE>
3. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER. The directors of Purchaser
are Steven S. Elbaum, Bragi F. Schut and David S. Aldridge. The executive
officers of Purchaser are Steven S. Elbaum (Chairman of the Board, President and
Chief Executive Officer), David S. Aldridge (Treasurer) and Stewart H. Wahrsager
(Secretary). The biographical information for such directors and executive
officers is listed above.
39
<PAGE>
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
<TABLE>
<CAPTION>
BY FACSIMILE TRANSMISSION:
BY MAIL, HAND OR OVERNIGHT DELIVERY (For Eligible Institutions Only)
<S> <C>
40 Wall Street
46th Floor (718) 234-5001
New York, New York 10005
CONFIRM RECEIPT OF FACSIMILE BY TELEPHONE:
(718) 921-8200
</TABLE>
------------------------
Questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
listed below. Additional copies of this Offer to Purchase, the Letter of
Transmittal and the Notice of the Guaranteed Delivery may be obtained from the
Dealer Manager or the Information Agent. A stockholder may also contact brokers,
dealers, commercial banks or trust companies for assistance concerning the
Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
Banks and Brokers Call Collect: (212) 269-5550
All Others Call Toll Free: (800) 431-9642
THE DEALER MANAGER FOR THE OFFER IS:
BT Wolfensohn
A DIVISION OF BT ALEX. BROWN
One Bankers Trust Plaza
130 Liberty Street
New York, New York 10006
(212) 250-6000 (call collect)
<PAGE>
BANKERS TRUST COMPANY
ONE BANKERS TRUST PLAZA
NEW YORK, NEW YORK 10006
October 21, 1998
Superior TeleCom Inc.
150 Interstate North Parkway
Suite 300
Atlanta, Georgia 30334
Attention: Steven S. Elbaum
Chief Executive Officer
Re: Superior TeleCom Inc.
$1.450 Billion Senior Secured Credit Facilities
Gentlemen:
You have advised Bankers Trust Company ("BTCo") that Superior
TeleCom Inc. ("Superior") and a single-purpose, newly formed, wholly-owned
subsidiary of Superior ("Acquisition Co") are entering into an Agreement and
Plan of Merger, dated as of the date hereof (the "Merger Agreement"), with Essex
International Inc., a Delaware corporation ("Target"), pursuant to which
Superior will acquire 100% of the equity securities of Target (the
"Acquisition") for aggregate consideration consisting of (i) not more than
$781.0 million in cash and (ii) shares of convertible exchangeable preferred
stock (the "Convertible Preferred Stock") of Superior, having a liquidation
preference of not more than $167.0 million and otherwise having the terms set
forth in Exhibit B to the Merger Agreement.
Pursuant to the Merger Agreement, you have structured the
Acquisition in two steps: the first step consisting of a tender offer by
Acquisition Co for no less than a majority of the outstanding shares, and no
more than 22.6 million shares (the "Maximum Number"), of common stock of Target
("Target Common Stock") at a price per share in cash of $32.00 (the "Tender
Offer"); and, the second step consisting of (as promptly as practicable after
the closing (the "Closing" or the "Closing Date") of the Tender Offer) a merger
(the "Merger") of Acquisition Co with and into Target in which Target will be
the sur-
<PAGE>
2
viving corporation and remaining common stockholders of Target (other
than Acquisition Co) will receive Convertible Preferred Stock and (to the extent
less than the Maximum Number of shares of Target Common Stock are accepted in
the Tender Offer) any of the cash not so paid. The Tender Offer and the Merger
are referred to herein collectively as the "Acquisition."
You have advised us that in connection with the Acquisition
and at the Closing Date (i) Superior intends to refinance its existing Revolving
Credit Agreement, dated as of October 2, 1996, as amended (the "Existing
Superior Credit Agreement"), and (ii) up to $436.0 million of debt of Target
will be required to be refinanced. The Acquisition and such refinancings are
hereinafter referred to collectively as the "Transaction." Exhibit A sets forth
the proposed sources and uses of funds for the Transaction.
You have advised BTCo that the cash required to consummate, in
full, the Transaction and to pay the fees and expenses incurred in connection
therewith, and to provide for the ongoing working capital requirements of
Superior and Target, will be no more than $1.450 billion. You have advised BTCo
that such cash shall be provided solely from the incurrence by Superior and
Target of up to $1.450 billion in senior secured credit facilities ("Credit
Facilities") described herein. A summary of the Credit Facilities is attached as
Exhibit B to this letter (the "Summary of Terms").
BTCo is pleased to confirm that, subject to and upon the terms
and conditions set forth herein and in the Summary of Terms, it hereby commits
to provide the entire principal amount of the Credit Facilities and to act as
sole administrative agent, collateral agent, syndication agent and documentation
agent and to act as sole agent to structure, arrange and syndicate the Credit
Facilities (in such capacity, the "Agent"). BTCo's commitments as described in
this paragraph are subject to the matters set forth in this letter and in the
Summary of Terms.
BTCo reserves the right to syndicate all or part of the total
commitment to one or more financial institutions (the "Lenders") that will
become parties to definitive credit documentation for the Credit Facilities
pursuant to a syndication to be solely managed and arranged by BTCo. BTCo shall
commence syndication efforts promptly after the execution of this letter, and
you agree reasonably to assist BTCo in achieving a satisfactory syndication.
Such syndication will be accom-
<PAGE>
3
plished by a variety of means, including direct contact during the syndication
between senior management and advisors of Superior and Target and the proposed
syndicate members. BTCo will, in consultation with you, manage all aspects of
the syndication, including decisions as to the selection of institutions to be
approached and when they will be approached, when their commitments will be
accepted, which institutions will participate, the allocations of the
commitments among the Lenders and the amount and distribution of fees among the
Lenders. Without limiting or otherwise affecting the conditions to BTCo's
commitment set forth herein or your obligations hereunder, it is understood and
agreed that BTCo's commitment hereunder is not subject to the successful
syndication of the Credit Facilities.
To assist BTCo in its syndication efforts, you hereby agree
(a) to prepare promptly and provide us and the other syndicate members upon
request with all information deemed necessary by us with respect to Superior,
Target (to the extent that Superior can obtain such information from Target or
Target otherwise provides such information), the Transaction and the other
transactions contemplated hereby, including projections, pro forma financial
statements, financial models and business plans (the "Projections"), as we may
reasonably request in connection with the arrangement and syndication of the
Credit Facilities and (b) to assist BTCo upon request in the preparation of an
Information Memorandum to be used in connection with the syndication of the
Credit Facilities, including making available officers of Superior and, to the
extent within Superior's control, Target from time to time and to attend and
make presentations regarding the business and prospects of Superior and Target,
as appropriate, at a meeting or meetings of Lenders or prospective Lenders.
Upon any acceptance by BTCo of commitments of other Lenders,
the amount of BTCo's commitment hereunder will be reduced by the amount of any
such commitments so accepted (it being understood and agreed that Superior will
not unreasonably withhold or delay its consent when presented with any proposed
acceptance by BTCo of commitments of other Lenders).
You hereby represent and covenant that (a) all information
other than the Projections (the "Information") concerning Superior and, to the
best of Superior's knowledge, Target that has been or will be made available to
any of us by you or any of your representatives in connection with the
transactions contemplated hereby is or will be, when furnished, complete and
correct in all material respects and does not or will not, when
<PAGE>
4
furnished, contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained therein not
materially misleading in light of the circumstances under which such statements
are made and (b) the Projections that have been or will be made available to us
by you or any of your representatives have been or will be prepared in good
faith based upon reasonable assumptions. You agree to supplement the Information
and the Projections from time to time so that the representations and warranties
in this paragraph remain correct in all material respects until the Closing
Date. In arranging and syndicating the Credit Facilities, we will use and rely
on the Information and Projections without independent verification thereof.
It is understood and agreed that, if BTCo deems such actions
advisable in order to ensure successful syndication of the Credit Facilities,
BTCo shall be entitled to change the structure, terms and conditions of the
Credit Facilities, including without limitation, by (x) increasing the pricing
from that set forth in the Summary of Terms and the Fee Letter (but in each case
by increasing the applicable margins no more than 100 basis points per annum in
excess of levels indicated in the Summary of Terms) and/or (y) allocating (and
following the initial allocation, re-allocating) the aggregate amount of its
commitment with respect to the Revolving Credit Facility, the Term Loan A
Facility, the Term Loan B Facility and the Term Loan C Facility in a manner
different from that set forth herein and in the Summary of Terms or eliminating
any of the facilities comprising the Credit Facilities, provided that the
aggregate commitments under the Credit Facilities remains the same.
To induce BTCo to issue this letter, you hereby agree that all
fees and expenses (including the reasonable fees and expenses of counsel and
consultants) of BTCo and its affiliates (collectively, "BT") arising in
connection with this letter and in connection with the transactions described
herein (but excluding any fees, but not expenses, relating to syndication) shall
be for your account, whether or not the Transaction is consummated, the Credit
Facilities are made available or definitive credit documents are executed.
You further agree to indemnify and hold harmless BTCo and each
director, officer, employee and affiliate thereof (each an "indemnified person")
from and against any and all actions, suits, proceedings (including any
investigations or inquiries), claims, losses, damages, liabilities or expenses
of
<PAGE>
5
any kind or nature whatsoever which may be incurred by or asserted against or
involve BTCo or any such indemnified person as a result of or arising out of or
in any way related to or resulting from this letter and, upon demand, to pay and
reimburse BTCo and each indemnified person for any reasonable legal or other
out-of-pocket expenses incurred in connection with investigating, defending or
preparing to defend any such action, suit, proceeding (including any inquiry or
investigation) or claim (whether or not BTCo or any such indemnified person is a
party to any action, suit, proceeding or claim out of which any such expenses
arise, and whether any such action, suit, proceeding or claim is between
Superior and BTCo or an indemnified person or between BTCo or an indemnified
person and a third party or otherwise); provided, however, that you shall not
have to indemnify any indemnified person against any loss, claim, damage,
expense or liability which has been found to have resulted primarily from the
gross negligence or willful misconduct of such indemnified person. You further
agree that you will not, without our prior written consent, settle or compromise
or consent to the entry of any judgment in any pending or threatened claim,
action, suit or proceeding in respect of which indemnification may be sought
hereunder (whether or not we or any other indemnified person is an actual or
potential party to such claim, action, suit or proceeding) unless such
settlement, compromise or consent includes an unconditional release of us and
each other indemnified person from all liability and obligations arising
therefrom. BTCo and such indemnified persons shall not be responsible or liable
for any consequential damages as a result of this letter or the financing
contemplated hereby. You further agree neither BTCo nor any other indemnified
person shall be liable to you for any loss, claim, damage, expense or liability
resulting from the delivery of this letter or the transactions contemplated
hereby unless such loss, claim, damage, expense or liability shall have been
found to have resulted primarily from such person's gross negligence or willful
misconduct. This letter is issued for your benefit only and no other person or
entity may rely hereon.
Except as otherwise required by law (including, without
limitation, filing requirements under the Securities Exchange Act of 1934, as
amended) or unless BTCo has otherwise consented, you are not authorized to show
or circulate this letter to any other person or entity (other than Target and
your and its legal or financial advisors in connection with your and its
evaluation hereof). If this letter is not accepted by you as provided in the
final paragraph hereof, you
<PAGE>
6
are to immediately return this letter (and copies hereof) to the undersigned.
The provisions of the three immediately preceding paragraphs
shall survive any termination of this letter.
BTCo reserves the right to employ the services of its
affiliates (including BT Alex. Brown Incorporated ("BTAB")) in providing
services contemplated by this letter and to allocate, in whole or in part, to
such affiliates certain fees payable to BTCo in such manner as BTCo and such
affiliates may agree in their sole discretion. You acknowledge that BTCo may
share with any of its affiliates (including BTAB) any information related to the
Transaction or any of the matters contemplated hereby. BTCo agrees to treat, and
cause any such affiliate to treat, all non-public information provided to it by
Superior, Target or any of their affiliates as confidential information in
accordance with customary banking industry practices.
BTCo's commitments to provide the Credit Facilities as set
forth above will terminate on April 30, 1999 if a definitive credit agreement
evidencing the Credit Facilities, satisfactory in form and substance to BTCo
(the "Credit Agreement"), shall not have been entered into prior to such date.
At BTCo's option, and consistent with your request and our discussions related
thereto, the Credit Agreement may be structured as an amendment and restatement
of the Existing Superior Credit Agreement.
This letter and the related fee letter shall be governed by
and construed in accordance with the law of the State of New York, and by your
execution hereof, you consent to the jurisdiction of the courts thereof. Both
parties hereby irrevocably waive all right to trial by jury of actions,
proceedings or counterclaims (whether based on contract, tort or otherwise)
arising out of or relating to this letter, the transactions contemplated hereby
or the negotiation, performance or enforcement hereof or thereof.
<PAGE>
7
If you are in agreement with the foregoing, please sign and
return to BTCo (including by way of facsimile transmission) the enclosed copy of
this letter and the related fee letter no later than 5:00 p.m., New York time,
on the date hereof. This letter may be executed in any number of counterparts,
and by the different parties hereto on separate counterparts, each of which when
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.
Very truly yours,
BANKERS TRUST COMPANY
By: /s/ Victoria T. Page
---------------------
Title:
Agreed to and Accepted as of the
Date First Above Written.
SUPERIOR TELECOM INC.
By: /s/ Stewart H. Wahrsager
-------------------------
Title:
<PAGE>
EXHIBIT A
<TABLE>
<CAPTION>
- -------------------------------- --------------- ------ -------------------------------------------------- --------------
Sources & Uses
Sources Uses
- -------------------------------- -------------------------------------------------- --------------
<S> <C> <C> <C>
Revolver1 $230.3 Target Share Purchase23 $936.1
A/R Securitization 0.0 Repay Existing Target Debt 435.8
Term Loan A 500.0 Repay Existing Superior Debt 90.0
Term Loan B 400.0 Fees & Expenses 60.0
Term Loan C 225.0
Convertible Trust Preferred 166.6
Common Equity 0.0
--------
Total Sources $1,521.9 Total Uses $1,521.9
- -------------------------------- --------------- ------ -------------------------------------------------- --------------
1 Total U.S. Bank Commitment: $1,450.0
</TABLE>
1 $325.0 million facility, of which at least $50.0 million shall remain
available immediately after the Closing.
2 Net of proceeds from the exercise of options.
3 Includes gross-up treatment of 1992 options.
<PAGE>
EXHIBIT B
SUMMARY OF CERTAIN TERMS AND CONDITIONS1
<TABLE>
<CAPTION>
<S> <C>
Lenders: BTCo and/or a syndicate of lenders formed by
BTCo (the "Lenders").
Agent: BTCo.
Borrowers: Superior TeleCom Inc. and/or, at BTCo's
request, one or more of its domestic
subsidiaries ("Superior"). Target or, at
BTCo's request, one or more of its domestic
subsidiaries other than, if the receivables
financing described below is not refinanced,
Target's special purpose receivables
financing subsidiary, ("Target" and,
together with Superior, the "Borrowers").
Facilities Available to Borrowers: A $1.450 billion Senior Credit Facility
(the "Senior Credit Facility" and the
loans thereunder being referred to as
"Loans"), to be made available as follows
(with a portion of each such facility
described below to be made available to
Superior and Target in the ratio of 1.99
to 1, rounded upward to the nearest $5.0
million; provided that the
</TABLE>
1 Defined terms, not otherwise defined herein, are used as defined in the
Commitment Letter to which this Exhibit A is appended.
<PAGE>
2
portion of the Revolving Credit Facility to
be made available to Target shall not be
less than $200 million, plus the face amount
of existing letters of credit for the
benefit of Target):
(i) a revolving credit facility in the
amount of $325 million, $25 million of which
shall be available to support stand-by
letters of credit; provided that, such
commitment shall be reduced dollar for
dollar (but in no event more than $100
million) to the extent of availability and
outstandings under the Existing Receivables
Facility (as defined below) or any other
receivables facility (the "Revolving Credit
Facility");
(ii) a term loan A facility in the amount of
$500 million (the "Term Loan A Facility");
(iii) a term loan B facility in the amount
of $400 million (the "Term Loan B
Facility"); and
(iv) a term loan C facility in the amount of
$225 million (the "Term Loan C Facility").
At the time of the Merger, Superior shall
assume each of the facilities previously
made available to Target.
<PAGE>
3
<TABLE>
<CAPTION>
Final Maturities: Maturity (as an
anniversary of the
Facility Closing Date)
-------- ------------------
<S> <C>
Revolving Credit five and one-
Facility half years
Term Loan A five and one-
Facility half years
Term Loan B seven years
Facility
Term Loan C eight years
Facility
Swing Line Loans: A portion of the Revolving
Credit Facility in an amount to be agreed
upon shall be available for swing line loans
(the "Swing Line Loans") from BTCo (in such
capacity, the "Swing Line Lender") on
same-day notice. Each other Lender under the
Revolving Credit Facility shall agree to
take an irrevocable and unconditional pro
rata participation in each Swing Line Loan.
Amortization of Term Loans: The loans under each of the Term
Loan Facilities (the "Term Loans") shall
amortize as follows (with equal quarterly
payments to be made in each indicated year):
<PAGE>
4
Annual Payment
Year Percentage
---- ----------
Term Term Term
Loan A Loan B Loan C
------ ------ ------
<S> <C> <C> <C>
1. 7.5% 1.0% 1.0%
2. 12.5% 1.0% 1.0%
3. 15.0% 1.0% 1.0%
4. 15.0% 1.0% 1.0%
5. 20.0% 1.0% 1.0%
6. 30.0% 35.0% 10.0%
7. -- 60.0% 35.0%
8. -- -- 50.0%
</TABLE>
Use of Proceeds: The proceeds of all Term Loans and no more
than up to $275 million of the Revolving
Credit Facility shall be used to consummate
the Acquisition and to pay related
fees and expenses, all as set forth on
Exhibit A to the Commitment Letter, and to
refinance the Superior Existing Credit
Agreement and the Target Bank Debt
(including letters of credit). Thereafter,
the Revolving Credit Facility will be
available for the working capital
requirements of Superior and its
subsidiaries, including Target, and, to the
extent local financing is not otherwise
available, to fund the cash consideration to
be paid by Superior to acquire
<PAGE>
5
Cvalim, an Israeli company.
Availability: Revolving Loans may be borrowed, repaid and
reborrowed on (to the extent provided above)
and after the Closing Date. Term Loans may
not be reborrowed.
Guarantees: All obligations of each of Superior and
Target under the Credit Facilities shall be
unconditionally guaranteed by each other and
their respective obligations will be
guaranteed by each of their respective
subsidiaries, including Acquisition Co
(collectively, the "Guarantors"), subject to
customary exceptions (including as to
non-U.S. subsidiaries where appropriate) for
transactions of this type (including as to
non-U.S. subsidiaries where appropriate).
Security: The obligations of each of the Borrowers and
the Guarantors shall be secured by a first
priority perfected security interest in (x)
all common stock of each of their direct and
indirect subsidiaries, including Acquisition
Co (except, prior to the time the Target
Common Stock is no longer a "margin stock"
(as defined under Regulation U of the Board
of Governors of the Federal Reserve System),
there shall be no direct or indirect
security interest in margin stock and
Acquisition Co may sell Target Common Stock
for its fair market value as long as the
proceeds received from such sale are cash or
certain securities) and (y) all other
tangible and intangible assets (including
ac-
<PAGE>
6
counts receivable, inventory, equipment and
real estate) of each Borrower and each of
its direct and indirect subsidiaries,
subject to customary exceptions for
transactions of this type.
Interest Rates: At the option of the applicable
Borrower, Loans may be maintained from time
to time as (x) Base Rate Loans which shall
bear interest at the then Applicable Margin
to such Loans in excess of the Base Rate in
effect from time to time or (y) Reserve
Adjusted Eurodollar Loans which shall bear
interest at the then "Applicable Margin" for
such Loans in excess of the Eurodollar Rate
(adjusted for maximum reserves) as
determined by the Agent for the respective
interest period.
"Base Rate" shall mean the highest of
(x)1/2of 1% in excess of the Federal Reserve
reported certificate of deposit rate, (y)
the rate that BTCo announces from time to
time as its prime lending rate, as in effect
from time to time, and (z)1/2of 1% in excess
of the adjusted certificate of deposit rate.
"Applicable Margin" shall mean (i) 325 and
225 basis points in the case of Reserve
Adjusted Eurodollar B Term Loans and Base
Rate B Loans, respectively; (ii) 375 and 275
basis points in the case of Reserve Adjusted
Eurodollar C Term Loans and Base Rate C
Loans, respectively; and (iii) in the case
of all other Loans a per annum percentage
ad-
<PAGE>
7
justed in accordance with the pricing grid
below, which is a function of Superior's
Total Consolidated Debt to EBITDA ratio
(which shall be measured on a trailing
twelve months basis).
<TABLE>
<CAPTION>
Eurodollar Applicable Margins*
---------------------------------------
Leverage A Term
Level Ratio R/C Loan
----- -------- --- ------
<S> <C> <C> <C>
I x > 4.00 2.75 2.75
-
II 3.50 < x < 2.50 2.50
-
4.00
III 3.00 < x < 2.25 2.25
-
3.50
IV 2.50 < x < 2.00 2.00
-
3.00
V x < 2.50 1.75 1.75
</TABLE>
*Applicable Margins with respect to Base
Rate A Loans and Revolving Loans, for each
Level, shall be 100 basis points less than
such related Eurodollar Applicable Margin.
Notwithstanding the foregoing, there shall
not be any step-downs from the Level One
Margin prior to the six month anniversary of
the Closing Date.
Interest periods of 1, 2, 3 and 6 months
shall be available in the case of Reserve
Adjusted Eurodollar Loans. Prior to the
earlier of (x) the sixtieth day after the
Closing Date or (y) notification by BTCo
that the syndication of the Credit
Facilities has been completed, only Base
Rate Loans and Reserve Adjusted Eurodollar
Loans having interest periods of seven days
shall be available.
<PAGE>
8
The Credit Facilities shall include BTCo's
standard protective provisions for such
matters as defaulting Lenders, capital
adequacy, increased costs, actual reserves,
funding losses, illegality and withholding
taxes.
Interest in respect of Base Rate Loans shall
be payable quarterly in arrears on the last
business day of each fiscal quarter.
Interest in respect of Reserve Adjusted
Eurodollar Loans shall be payable in arrears
at the end of the applicable interest period
and every three months in the case of
interest periods in excess of three months.
Interest will also be payable at the time of
repayment of any Revolving Loans and at
maturity. All interest and commitment fee
and other fee calculations shall be based on
a 360-day year and actual days elapsed,
except with respect to Loans bearing
interest at the Base Rate (based on Prime)
which shall be based on a 365/366 day year.
Overdue principal and interest shall bear
interest at a rate per annum equal to the
greater of (i) the rate which is 2% in
excess of the rate otherwise applicable to
Base Rate Loans from time to time and (ii)
the rate which is 2% in excess of the rate
then borne by such borrowings. Such interest
shall be payable on demand.
Voluntary Prepayments: Voluntary prepayments may be made at any
time without premium or penalty, provided
that voluntary prepayments of Reserve Ad-
<PAGE>
9
justed Eurodollar Loans may only be made on
the last day of an interest period
applicable thereto (subject to breakage
costs).
Mandatory Prepayments: Mandatory repayments of Loans
to be required from (a) the net proceeds
from asset sales (except for proceeds of
sales of "margin stock" and with customary
exceptions to be agreed upon), (b) the net
proceeds from issuances of debt, with
customary exceptions to be agreed upon, (c)
the net proceeds from equity issuances or
capital contributions, with customary
exceptions to be agreed upon, (d) certain
insurance proceeds, provided that the
Borrower may reinvest such proceeds in the
absence of a default or event of default
under the Credit Facilities upon mutually
satisfactory terms and (e) 75% of annual
Excess Cash Flow (to be defined and after
deducting cash dividends on the Convertible
Preferred Stock) which shall be reduced to
62.5% if and so long as the ratio of Total
Debt/EBITDA is less than 3.5x and greater to
or equal to 3.0x and which shall be further
reduced to 50% if and so long as the ratio
of Total Debt/EBITDA is less than 3.0x. Such
repayments shall be applied first against
Term Loans (in a manner to be mutually
agreed) and thereafter against Revolving
Loans (with a concomitant reduction in the
Total Revolving Credit Commitment to a level
to be mutually agreed upon).
<PAGE>
10
All voluntary and mandatory prepayments and
repayments of Term Loans will be applied to
designated Term Loan Facilities (with
priorities among the Term Loan Facilities to
be agreed), and, within such facilities, to
reduce future scheduled amortization
payments in a manner to be mutually agreed
upon.
Commitment Fees: 1/2 of 1% per annum of the unutilized
total commitments under the Credit Facility,
as in effect from time to time, commencing
on the Closing Date and continuing to and
including the termination of the Credit
Facility, payable in arrears quarterly and
upon the termination of the Credit Facility.
Fees with respect to Letters of Credit shall
(i) be computed at a rate per annum equal to
the Applicable Eurodollar Margin then in
effect on the daily stated amount of the
Letters of Credit; (ii) include a facing fee
to the issuing bank equal to 1/4 of 1.00%
per annum on the daily stated amount
thereof; and (iii) include customary
administrative fees.
Documentation: The Lenders' commitments will be subject to
the negotiation, execution and delivery of
definitive financing agreements consistent
with the terms of this letter and, where
appropriate, the terms of the Existing
Superior Credit Agreement in each case
prepared by Cahill Gordon & Reindel, counsel
to the Agent. All documentation shall be
governed by New York law.
<PAGE>
11
Conditions Precedent to the The following are the principal conditions
Initial Loans: precedent to the Initial Loans:
(i) The Merger Agreement shall be in full
force and effect, without any waiver or
amendment of any term or other condition
thereof;
(ii) The Tender Offer shall have been
consummated in accordance with applicable
law and in accordance with the Merger
Agreement, without any waiver or amendment
of any term or other condition thereof;
(iii) The recommendations of each of the
Boards of Directors of Superior and Target
with respect to the Transactions shall not
have been modified in any material respect
or withdrawn;
(iv) The Minimum Condition as defined in the
Merger Agreement shall have been satisfied
and Acquisition Co shall have accepted for
payment the maximum number of shares
available for acceptance under the Tender
Offer and, as a result thereof, Superior can
effect the Merger without the affirmative
vote of any other Person;
(v) No Change of Control (as defined in the
Existing Superior Credit Agreement) shall
have occurred;
(vi) All necessary material governmental and
third party approvals in connection with the
Transaction and otherwise referred to herein
shall have been
<PAGE>
12
obtained and remain in effect, and all
applicable waiting periods shall have
expired (including, without limitation,
Hart-Scott-Rodino), in each case, without
any action being taken by any authority
which restrains, prevents, or imposes
materially adverse conditions upon, the
consummation of the transactions
contemplated by the Credit Facilities (or
which may have any such effect);
(vii) Since June 30, 1998 in the case of
Target and July 31, 1998 in the case of
Superior, nothing shall have occurred (and
the Lenders shall have become aware of no
facts or conditions not previously known)
which the Agent or the Lenders shall
reasonably determine could reasonably be
expected to have a material adverse effect
on the rights or remedies of the Lenders or
the Agent, or on the ability of Superior and
its subsidiaries (including Target) to
perform their obligations to the Lenders or
which could reasonably be expected to have a
materially adverse effect on the Transaction
or the business, property, assets, nature of
assets, liabilities, condition (financial or
otherwise) of Superior and its subsidiaries
or Target and its subsidiaries, in each
case, taken as a whole, and both before and
after giving effect to the Transactions
(collectively, "a Materially Adverse
Effect");
(viii) No litigation by any entity (private
or governmental)
<PAGE>
13
shall be pending or threatened which the
Lenders shall have determined could
reasonably be expected to have a Material
Adverse Effect;
(ix) The Lenders shall have received
customary closing officers' certificates
(including as to solvency) and legal
opinions from counsel, and covering matters,
acceptable to the Lenders;
(x) All Loans shall be in full compliance
with all applicable requirements of the
margin regulations and at least $50 million
of the commitments under the Revolving
Credit Facility shall remain available for
borrowing immediately after the Closing
Date;
(xi) All costs, fees, expenses (including,
without limitation, reasonable legal fees
and expenses) and other compensation
contemplated hereby payable to the Lenders
or the Agent shall have been paid to the
extent due;
(xii) The Lenders shall have a perfected
first priority security interest in the
assets of Borrowers and their subsidiaries
as required above and subject to the
provisions set forth above under "Security"
with respect to margin stock;
(xiii) Borrowers and their subsidiaries
shall have no indebtedness outstanding,
except the Credit Facilities, the Loan and
Security Agreement, dated as of April 29,
1998 between Essex
<PAGE>
14
Funding Inc. and Three Rivers Funding
Corporation (the "Existing Receivables
Facility"), other indebtedness satisfactory
to BTCo and other indebtedness to be
mutually agreed upon; and
(xiv) There shall have been no material
adverse change after the date hereof to the
syndication market for credit facilities
similar in nature to the Credit Facilities
and there shall not have occurred and be
continuing a material disruption of or
material adverse change in financial,
banking or capital markets that would have a
material adverse effect on the syndication,
in each case as determined by BTCo in its
reasonable discretion.
Conditions to All Loans: Absence of Material Adverse
Effect, absence of material litigation,
absence of default or unmatured default
under the Credit Facility, continued
accuracy of representations and warranties
and receipt of such documentation
(including, without limitation, opinions of
counsel) as shall be required by the Agent.
Representations and The Credit Facility and related
Warranties: documentation shall contain representations
and warranties typical for these types of
facilities, as well as any additional ones
appropriate in the context of the proposed
transaction.
Covenants: Those typical for these types of facilities
and any additional
<PAGE>
15
covenants appropriate in the context of the
proposed transaction (with such covenants
having such exceptions or baskets as may be
mutually agreed upon). There may be separate
covenants applicable to Target prior to the
Merger. Although the covenants have not yet
been specifically determined, the covenants
shall include:
(i) Financial covenants customary for a
transaction of this type (including, without
limitation, minimum consolidated EBITDA,
maximum ratio of total debt to EBITDA and
minimum ratio of EBITDA to interest, each
measured quarterly);
(ii) Restrictions on other indebtedness or
guaranties (including a prohibition as to
any new indebtedness or contingent
obligations of Acquisition Co. Prior to the
Merger);
(iii) Restrictions on mergers (other than
the merger of Target with or into Superior
or Superior Telecommunications),
acquisitions, joint ventures, partnerships
and acquisitions and dispositions of assets
(having such exceptions or baskets as may be
mutually agreed upon);
(iv) Restrictions on sale-leaseback
transactions and lease payments;
(v) Restrictions on dividends and
distributions (other than cash dividends on
the Convertible Preferred Stock, in
accordance with its terms) and on the
<PAGE>
16
exchange of the Convertible Preferred Stock
for subordinated debentures, and amendments
of organizational, corporate and other
documents (having such exceptions as may be
mutually agreed upon);
(vi) Restrictions on voluntary prepayments
of other indebtedness and amendments
thereto;
(vii) Restrictions on transactions with
affiliates and formation of subsidiaries
(having such exceptions as may be mutually
agreed upon);
(viii) Restrictions on investments (having
such exceptions as may be mutually agreed
upon);
(ix) Maintenance of existence and
properties;
(x) Restrictions against liens and negative
pledges (other than on margin stock prior to
the merger) in favor of persons other than
Agent and the Lenders;
(xi) Maintenance of adequate insurance
coverage;
(xii) ERISA and environmental covenants;
(xiii) The obtaining of interest rate
protection in amounts and for periods to be
determined;
(xiv) Restrictions on capital expenditures;
(xv) Monthly, quarterly and annual financial
and other infor-
<PAGE>
17
mation;
(xvi) Compliance with laws; and
(xvii) Restrictions on line of business.
Events of Default: Those typical for these types of
facilities and any additional ones
appropriate in the context of the proposed
transaction including, without limitation, a
change of control of Superior.
Assignments and Participa- The Borrower may not assign its
tions: rights or obligations under the
Credit Facility without the prior written
consent of the Lenders. Any Lender may
assign all, or, in an amount of not less
than $5 million, any part of, and may sell
participations in, its rights and
obligations under the Credit Facility,
subject (x) in the case of participations,
to customary restrictions on the voting
rights of the participants and (y) in the
case of assignments, to such limitations as
may be established by the Agent. The Credit
Facility shall provide for a mechanism which
will allow for each assignee to become a
direct signatory to the Credit Facility and
will relieve the assigning Lender of its
obligations with respect to the assigned
portion of its commitment.
Required Lenders: Majority of Term Loan Facility and majority
of Revolving Credit Facility, subject
(if desirable to facilitate the syndication)
to supermajority provisions.
<PAGE>
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SUPERIOR TELECOM INC.
SUT ACQUISITION CORP.
AND
ESSEX INTERNATIONAL INC.
DATED AS OF OCTOBER 21, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I THE OFFER...............................................................................................2
SECTION 1.01. The Offer. ....................................................................2
SECTION 1.02. Company Action. ................................................................4
SECTION 1.03. Directors.......................................................................5
ARTICLE II THE MERGER..................................................................................6
SECTION 2.01. The Merger......................................................................6
SECTION 2.02. Effective Time..................................................................6
SECTION 2.03. Effect of the Merger............................................................7
SECTION 2.04. Certificate of Incorporation; By-Laws...........................................7
SECTION 2.05. Directors and Officers..........................................................7
SECTION 2.06. Effect on Capital Stock.........................................................7
SECTION 2.07. Exchange of Certificates; Exchange Agent........................................9
SECTION 2.08. Stock Transfer Books...........................................................11
SECTION 2.09. Dissenting Shares..............................................................11
SECTION 2.10. No Further Ownership Rights in Company Common Stock............................12
SECTION 2.11. Lost, Stolen or Destroyed Certificates.........................................12
SECTION 2.12. Taking of Necessary Action; Further Action.....................................12
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY..............................................12
SECTION 3.01. Organization and Qualification; Subsidiaries...................................12
SECTION 3.02. Certificate of Incorporation and By-Laws.......................................13
SECTION 3.03. Capitalization.................................................................13
SECTION 3.04. Authority Relative to This Agreement...........................................14
SECTION 3.05. Material Contracts; No Conflict, Required Filings and Consents.................14
SECTION 3.06. Compliance, Permits............................................................15
SECTION 3.07. SEC Filings, Financial Statements..............................................16
SECTION 3.08. Absence of Certain Changes or Events...........................................17
SECTION 3.09. No Undisclosed Liabilities.....................................................17
SECTION 3.10. Absence of Litigation..........................................................17
SECTION 3.11. Employee Benefit Plans; Employment Agreements..................................17
SECTION 3.12. Labor Matters..................................................................20
SECTION 3.13. Restrictions on Business Activities............................................21
SECTION 3.14. Taxes..........................................................................21
SECTION 3.15. Environmental Matters..........................................................22
SECTION 3.16. Brokers........................................................................23
SECTION 3.17. Intellectual Property..........................................................23
SECTION 3.18. Vote Required..................................................................25
SECTION 3.19. Opinions of Financial Advisors.................................................25
SECTION 3.20. Year 2000 Compliance...........................................................25
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND
MERGER SUB.................................................................................25
SECTION 4.01. Organization and Qualification.................................................25
SECTION 4.02. Authority Relative to this Agreement...........................................26
SECTION 4.03. No Conflict, Required Filings and Consents.....................................26
SECTION 4.04. Certificate of Incorporation and By-Laws.......................................27
SECTION 4.05. Capitalization.................................................................27
SECTION 4.06. SEC Filings, Financial Statements..............................................28
SECTION 4.07. Absence of Certain Changes or Events...........................................29
SECTION 4.08. Restrictions on Business Activities............................................29
SECTION 4.09. Compliance, Permits............................................................29
SECTION 4.10. No Undisclosed Liabilities.....................................................30
SECTION 4.11. Absence of Litigation..........................................................30
SECTION 4.12. Environmental Matters..........................................................30
SECTION 4.13. Opinion of Financial Advisor...................................................31
ARTICLE V CONDUCT OF BUSINESS BY THE COMPANY.........................................................31
SECTION 5.01. Conduct of Business by the Company.............................................31
SECTION 5.02. No Solicitation................................................................33
SECTION 5.03. Information Supplied...........................................................34
ARTICLE VI ADDITIONAL AGREEMENTS......................................................................35
SECTION 6.01. Filings, Other Actions; Notification...........................................35
SECTION 6.02. Stockholders' Meetings.........................................................36
SECTION 6.03. Access to Information; Confidentiality.........................................37
SECTION 6.04. Consents, Approvals............................................................37
SECTION 6.05. Stock Options..................................................................38
SECTION 6.06. Employment Matters.............................................................38
SECTION 6.07. Agreements of Affiliates.......................................................38
SECTION 6.08. Indemnification................................................................38
SECTION 6.09. Notification of Certain Matters................................................39
SECTION 6.10. Further Action.................................................................40
SECTION 6.11. Public Announcements...........................................................40
SECTION 6.12. Listing and Delisting..........................................................40
SECTION 6.13. Expenses.......................................................................40
SECTION 6.14. Financing......................................................................40
ARTICLE VII CONDITIONS TO THE MERGER...................................................................41
SECTION 7.01. Conditions to Obligation of Each Party to Effect the Merger....................41
SECTION 7.02. Additional Condition to Obligation of the Company .............................41
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
ARTICLE VIII TERMINATION................................................................................42
SECTION 8.01. Termination....................................................................42
SECTION 8.02. Effect of Termination..........................................................43
SECTION 8.03. Fees and Expenses..............................................................43
ARTICLE IX GENERAL PROVISIONS.........................................................................44
SECTION 9.01. Effectiveness of Representations, Warranties and Agreements....................44
SECTION 9.02. Notices........................................................................45
SECTION 9.03. Certain Definitions............................................................46
SECTION 9.04. Amendment......................................................................49
SECTION 9.05. Waiver.........................................................................49
SECTION 9.06. Headings.......................................................................49
SECTION 9.07. Severability...................................................................49
SECTION 9.08. Entire Agreement...............................................................49
SECTION 9.09. Assignment, Merger Sub.........................................................49
SECTION 9.10. Parties in Interest............................................................50
SECTION 9.11. Failure or Indulgence Not Waiver; Remedies Cumulative..........................50
SECTION 9.12. Governing Law..................................................................50
SECTION 9.13. Counterparts...................................................................50
SECTION 9.14. Waiver of Jury Trial...........................................................50
EXHIBIT A CONDITIONS TO THE OFFER...................................................................A-1
EXHIBIT B CERTIFICATE OF DESIGNATION................................................................B-1
EXHIBIT C STOCKHOLDERS AGREEMENT....................................................................C-1
EXHIBIT D RESTATED CERTIFICATE OF INCORPORATION.....................................................D-1
EXHIBIT E FORM OF AFFILIATE AGREEMENT...............................................................E-1
EXHIBIT F FORM OF INDENTURE.........................................................................F-1
</TABLE>
-iii-
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of October 21, 1998 (this
"Agreement"), among SUPERIOR TELECOM INC., a Delaware corporation ("Parent"),
SUT ACQUISITION CORP., a Delaware corporation and a wholly owned subsidiary of
Parent ("Merger Sub"), and ESSEX INTERNATIONAL INC., a Delaware corporation (the
"Company").
W I T N E S S E T H:
WHEREAS, each of the boards of directors of Parent, Merger Sub and the
Company has determined that it is advisable and in the best interests of their
respective stockholders for Parent to enter into a business combination with the
Company upon the terms and subject to the conditions set forth herein;
WHEREAS, in furtherance of such combination, it is proposed that Merger Sub
shall make a cash tender offer (the "Offer") to acquire up to 22,562,135 of the
issued and outstanding shares of common stock, par value $0.01 per share, of the
Company ("Company Common Stock") for $32.00 per share of Company Common Stock
(such amount, or any greater amount per share of Company Common Stock paid
pursuant to the Offer, being hereinafter referred to as the "Per Share Amount")
net to the seller in cash (subject to applicable withholding of taxes), upon the
terms and subject to the conditions of this Agreement and the Offer;
WHEREAS, the board of directors of the Company (the "Board") has approved
the making of the Offer and resolved and agreed to recommend that holders of
Company Common Stock tender their shares of Company Common Stock pursuant to the
Offer;
WHEREAS, also in furtherance of such combination, each of the boards of
directors of Parent, Merger Sub and the Company has approved the merger (the
"Merger") of Merger Sub with and into the Company in accordance with the
applicable provisions of the Delaware General Corporation Law ("Delaware Law"),
and upon the terms and subject to the conditions set forth herein;
WHEREAS, pursuant to the Merger, each outstanding share of Company Common
Stock other than shares of Company Common Stock owned directly or indirectly by
Parent, Merger Sub or the Company and Dissenting Shares (as defined in Section
2.09(a)) shall be converted into the right to receive the Merger Consideration
(as defined in Section 2.07(b)), consisting of shares of Series A Cumulative
Convertible Exchangeable Preferred Stock, par value $.01 per share, of Parent
("Parent Preferred Stock") having the powers, preferences, rights,
qualifications, limitations and restrictions in the form set forth in Exhibit B
hereto and, if applicable, cash upon the terms and subject to the conditions set
forth herein;
1
<PAGE>
WHEREAS, concurrently with the execution and delivery of this Agreement and
as a condition and inducement to Parent's willingness to enter into this
Agreement, Parent, Merger Sub and certain stockholders of the Company (the
"Stockholders") are entering into a stockholders agreement ("Stockholders
Agreement") in the form attached hereto as Exhibit C pursuant to which such
Stockholders are agreeing to take certain actions to support the transactions
contemplated by this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Parent, Merger Sub and the Company hereby agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01. The Offer. (a) Provided that this Agreement shall not have
been terminated in accordance with Article VIII, Merger Sub shall commence
(within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) the Offer as promptly as reasonably practicable
after the date hereof, but in no event later than five business days after the
initial public announcement on the date hereof or the following day of Merger
Sub's intention to commence the Offer. The obligation of Merger Sub to accept
for payment and pay for shares of Company Common Stock tendered pursuant to the
Offer shall only be subject to (i) the condition (the "Minimum Condition") that
at least the number of shares of Company Common Stock (together with the shares
of the Company Common Stock, if any, then owned by Parent or Merger Sub)
constituting a majority of the then outstanding shares of Company Common Stock
on a fully diluted basis shall have been validly tendered and not withdrawn
prior to the expiration of the Offer and (ii) the satisfaction or waiver of the
other conditions set forth in Exhibit A. As used herein, "fully diluted basis"
means issued and outstanding shares of Company Common Stock and shares of
Company Common Stock subject to issuance under vested Options (as defined in
Section 2.06(c)) and shares of Company Common Stock subject to issuance upon
exercise of outstanding warrants, calls, subscriptions or other rights,
agreements, arrangements or commitments of any character relating to the issued
or unissued capital stock of the Company or securities convertible or
exchangeable for such capital stock, but shall not include unvested Options.
Merger Sub expressly reserves the right, subject to compliance with the Exchange
Act, to waive any such condition, to increase the Per Share Amount and to make
any other changes in the terms and conditions of the Offer; provided, however,
that unless Parent and Merger Sub shall have obtained the prior written approval
of the Company, no change may be made in the Offer which (i) decreases the Per
Share Amount, (ii) changes the form of consideration to be paid in the Offer,
(iii) reduces the maximum number of shares of Company Common Stock to be
purchased in the Offer, (iv) modifies the conditions to the Offer set forth in
Exhibit A or imposes conditions to the Offer in addition to those set forth in
Exhibit A, (v) modifies or waives the Minimum Condition or (vi) except as
provided in Section 1.01(b), extends the Offer. The Per Share Amount shall,
subject to applicable withholding of taxes, be net to the seller in cash, upon
the terms and subject to the conditions of
2
<PAGE>
the Offer. Subject to the terms and conditions of the Offer (including, without
limitation, the Minimum Condition), Merger Sub shall, and Parent shall cause
Merger Sub to, accept for payment and pay for, as promptly as practicable after
expiration of the Offer, all shares of Company Common Stock validly tendered and
not withdrawn.
(b) Notwithstanding the foregoing, Merger Sub may, without the consent of
the Company, (A) extend the Offer in increments of up to 10 business days each
if at the scheduled or any extended expiration date of the Offer the Minimum
Condition has not been satisfied or any of the other conditions set forth in
Exhibit A shall not be satisfied or waived, until such time as such conditions
are satisfied or waived and (B) extend the Offer for any period required by any
rule, regulation, interpretation or position of the SEC (as defined in Section
1.01(c)) or the staff thereof applicable to the Offer. Without limiting the
right of Merger Sub to extend the Offer pursuant to the immediately preceding
sentence, in the event that (i) the Minimum Condition shall not have been
satisfied or (ii) the condition set forth in paragraph (a) of Exhibit A with
respect to any action or proceeding by a Governmental Entity, the condition set
forth in paragraph (j) of Exhibit A or the HSR Condition (as defined in Exhibit
A) shall not have been satisfied or waived at the scheduled or any extended
expiration date of the Offer, at the request of the Company Merger Sub shall,
and Parent shall cause Merger Sub to, extend the expiration date of the Offer in
increments of five business days each until the earliest to occur of (x) the
satisfaction or waiver of the Minimum Condition or such other condition, (y) the
termination of this Agreement in accordance with its terms and (z) April 30,
1999.
(c) As soon as practicable on the date of commencement of the Offer, Parent
and Merger Sub shall file with the Securities and Exchange Commission (the
"SEC") a Tender Offer Statement on Schedule 14D-1 (together with all amendments
and supplements thereto, the "Schedule 14D-1") with respect to the Offer. The
Schedule 14D-1 shall contain or shall incorporate by reference an offer to
purchase (the "Offer to Purchase") and forms of the related letter of
transmittal and any related summary advertisement (the Schedule 14D-1, the Offer
to Purchase and such other documents, together with all supplements and
amendments thereto, being referred to herein collectively as the "Offer
Documents"). Parent and Merger Sub shall mail the Schedule 14D-1 to the
stockholders of the Company as soon as practicable after filing with the SEC.
The Offer Documents shall comply in all material respects with the provisions of
applicable federal securities laws. Each of Parent, Merger Sub and the Company
agrees to correct promptly any information provided by it for use in the Offer
Documents which shall have become false or misleading, and Parent and Merger Sub
further agree to take all steps necessary to cause the Schedule 14D-1, as so
corrected, to be filed with the SEC and the other Offer Documents, as so
corrected, to be disseminated to holders of shares of Company Common Stock, in
each case as and to the extent required by applicable federal securities laws.
Parent and Merger Sub shall give the Company and its counsel reasonable
opportunity to review and comment upon the Offer Documents prior to their being
filed with, or sent to, the SEC. Parent and Merger Sub agree to provide the
Company and its counsel any comments Parent, Merger Sub or their counsel may
receive from the SEC or its staff with respect to the Offer Documents promptly
after the receipt of such comments.
3
<PAGE>
(d) Parent shall provide or cause to be provided to Merger Sub on a timely
basis the funds necessary to purchase any and all shares of Company Common Stock
that Merger Sub becomes obligated to purchase pursuant to the Offer.
SECTION 1.02. Company Action. (a) The Company hereby approves of and
consents to the Offer and represents that the Board, at a meeting duly called
and held on October 21, 1998, by the affirmative vote of all members of the
Board present at such meeting, has (i) determined that each of the Agreement,
the Offer and the Merger are fair to and in the best interests of the
stockholders of the Company, (ii) approved, found advisable and adopted this
Agreement and the transactions contemplated hereby, including the Offer and the
Merger (the "Transactions") and (iii) recommended that the stockholders of the
Company accept the Offer and tender their shares of Company Common Stock to
Merger Sub and approve and adopt this Agreement and the Transactions. The
Company hereby consents to the inclusion in the Offer Documents of the
recommendation of the Board described in the immediately preceding sentence,
subject to the second sentence of Section 5.02.
(b) Concurrently with the commencement of the Offer, the Company shall file
with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 (together
with all amendments and supplements thereto, the "Schedule 14D-9") containing
the recommendation of the Board described in Section 1.02(a) and shall
disseminate the Schedule 14D-9 to the extent required by Rule 14D-9 promulgated
under the Exchange Act and any other applicable federal securities laws. The
Schedule 14D-9 shall comply in all other material respects with the provisions
of applicable federal securities laws. Each of the Company, Parent and Merger
Sub agrees to correct promptly any information provided by it for use in the
Schedule 14D-9 which shall have become false or misleading, and the Company
further agrees to take all steps necessary to cause the Schedule 14D-9, as so
corrected, to be filed with the SEC and disseminated to holders of shares of
Company Common Stock, in each case as and to the extent required by applicable
federal securities laws. Parent and its counsel shall be given reasonable
opportunity to review the Schedule 14D-9 before it is filed with the SEC. The
Company agrees to provide Parent and Merger Sub and their counsel any comments
the Company or its counsel may receive from the SEC or its staff with respect to
the Schedule 14D-9 promptly after the receipt of such comments.
(c) The Company shall cause its transfer agent to promptly furnish Merger
Sub with mailing labels containing the names and addresses of all record holders
of shares of Company Common Stock and with security position listings of shares
of Company Common Stock held in stock depositories, each as of a recent date,
together with all other available listings and computer files containing names,
addresses and security position listings of record holders and beneficial owners
of shares of Company Common Stock. The Company shall furnish Merger Sub with
such additional information, including, without limitation, updated listings and
computer files of stockholders, mailing labels and security position listings,
and such other assistance as Parent, Merger Sub or their agents may reasonably
request. Subject to the requirements of applicable law, and except for such
steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Offer or the Merger,
4
<PAGE>
Parent and Merger Sub shall, and each of Parent and Merger Sub shall cause its
affiliates, associates, agents and advisors to, (i) hold in confidence the
information contained in such labels, listings and files, (ii) use such
information only in connection with the Offer and the Merger and (iii) if this
Agreement is terminated in accordance with Article VIII, promptly deliver to the
Company all copies (whether in human or machine readable form) of such
information then in their possession.
SECTION 1.03. Directors. (a) Promptly upon the acceptance for payment by
Merger Sub for shares of Company Common Stock purchased pursuant to the Offer,
and from time to time thereafter as shares of Company Common Stock are acquired
by Merger Sub, Merger Sub shall be entitled, subject to compliance with Section
14(f) of the Exchange Act, to designate such number of directors, rounded up to
the next greatest whole number, on the Board as will give Merger Sub
representation on the Board equal to that number of directors which equals the
product of the total number of directors on the Board (giving effect to the
directors appointed or elected pursuant to this sentence and including current
directors serving as officers of the Company) multiplied by the percentage that
the aggregate number of shares of Company Common Stock beneficially owned by
Merger Sub or any affiliate of Merger Sub (including for purposes of this
Section 1.03 such shares of Company Common Stock as are accepted for payment
pursuant to the Offer, but excluding shares of Company Common Stock held by the
Company or any of its affiliates) bears to the number of shares of Company
Common Stock outstanding; provided, however, that in the event that Merger Sub's
designees are appointed or elected to the Board, until the Effective Time (as
defined in Section 2.02) the Board shall have at least one director who is a
director on the date of this Agreement and who is not an executive officer of
the Company (the "Independent Director") . At such times, the Company will also
cause (i) each committee of the Board, (ii) if requested by Merger Sub, the
board of directors of each of the Company's subsidiaries and (iii) if requested
by Merger Sub, each committee of such subsidiaries' boards to include persons
designated by Merger Sub constituting the same percentage of each such committee
or board as Merger Sub's designees are of the Board. The Company shall, upon
request by Merger Sub, promptly increase the size of the Board or exercise its
best efforts to secure the resignations of such number of directors as is
necessary to enable Merger Sub's designees to be elected to the Board and shall
cause Merger Sub's designees to be so elected. The Board shall approve, and by
approving the execution and delivery of this Agreement by the Company, hereby
does approve the taking of action by stockholders of the Company, by written
consent, to amend the By-Laws of the Company as may be necessary or desirable to
effect the provisions of this Section 1.03.
(b) Following the election or appointment of Merger Sub's designees
pursuant to this Section 1.03, and prior to the Effective Time, the approval of
a majority of the Independent Directors shall be required to authorize (i) any
termination of this Agreement by the Company, (ii) any amendment of this
Agreement requiring action by the Board (other than an amendment to eliminate
cash from the Merger Consideration (as defined in Section 2.07(b)) in the event
Merger Sub accepts for payment and pays for the Offered Number (as defined in
Section 2.06(b)) of shares of Company Common Stock in the Offer), (iii) any
consent by the Company to any extension of the time for performance of any of
the obligations or other acts of Parent or Merger
5
<PAGE>
Sub, (iv) any waiver by the Company of compliance with any of the covenants or
conditions contained in this Agreement for the benefit of the Company or any
other rights of the Company under this Agreement and (v) any amendment or
withdrawal by the Board of its recommendation of the Merger pursuant to Section
5.02.
(c) Subject to applicable law, the Company shall promptly take all action
necessary pursuant to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder in order to fulfill its obligations under this Section
1.03 and shall include in the Schedule 14D-9 mailed to stockholders promptly
after the commencement of the Offer (or an amendment thereof or an information
statement pursuant to Rule 14f-1 if Merger Sub has not theretofore designated
directors) such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 in order to fulfill
its obligations under this Section 1.03. Parent and Merger Sub shall furnish to
the Company and be solely responsible for any information with respect to itself
and its nominees, officers, directors and affiliates required by Section 14(f)
and Rule 14f-1.
ARTICLE II
THE MERGER
SECTION 2.01. The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with Delaware Law, at the Effective
Time (as defined in Section 2.02) Merger Sub shall be merged with and into the
Company. As a result of the Merger, the separate corporate existence of Merger
Sub shall cease and the Company shall continue as the surviving corporation of
the Merger (the "Surviving Corporation") and shall succeed to and assume all the
rights and obligations of Merger Sub in accordance with Delaware Law. Unless
this Agreement has been terminated and the transactions herein contemplated have
been abandoned pursuant to Article VIII and subject to the satisfaction or
waiver of the conditions set forth in Article VII, the consummation of the
Merger will take place as promptly as practicable (and in any event within two
business days) after satisfaction or waiver of the conditions set forth in
Article VII, at the offices of Proskauer Rose LLP, 1585 Broadway, New York, New
York 10036, unless another date, time or place is agreed to in writing by the
parties hereto.
SECTION 2.02. Effective Time. As promptly as practicable after the
satisfaction or waiver of the conditions set forth in Article VII, the parties
hereto shall file this Agreement or a certificate of merger or certificate of
ownership and merger (in either case, the "Certificate of Merger") with the
Secretary of State of the State of Delaware, in such form as required by, and
executed in accordance with the relevant provisions of, Delaware Law and shall
make all other filings or recordings required under Delaware Law. The Merger
shall become effective at such time as the Certificate of Merger is duly filed
with such Secretary of State, or at such other time as Parent and the Company
shall agree and specify in the Certificate of Merger (the time the Merger
becomes effective being the "Effective Time").
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SECTION 2.03. Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in this Agreement, the Certificate of Merger and
the applicable provisions of Delaware Law. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time all the property,
rights, privileges, powers and franchises of the Company and Merger Sub shall
vest in the Surviving Corporation, and all debts, liabilities and duties of the
Company and Merger Sub shall become the debts, liabilities and duties of the
Surviving Corporation.
SECTION 2.04. Certificate of Incorporation; By-Laws. At the Effective Time,
the Certificate of Incorporation of the Surviving Corporation shall be amended
to read in its entirety as set forth on Exhibit D hereto, until thereafter
amended as provided by Delaware Law and such Certificate of Incorporation.
The By-Laws of Merger Sub, as in effect immediately prior to the Effective
Time, shall be the By-Laws of the Surviving Corporation until thereafter amended
as provided by Delaware Law, the Certificate of Incorporation of the Surviving
Corporation and such By-Laws.
SECTION 2.05. Directors and Officers. The directors of Merger Sub
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-Laws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
SECTION 2.06. Effect on Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of Parent, Merger Sub, the Company
or the holders of any of the following securities:
(a) Cancellation. Each share of Company Common Stock held in the treasury
of the Company and each share of Company Common Stock owned by Parent, Merger
Sub or any direct or indirect wholly owned subsidiary of the Company or Parent
immediately prior to the Effective Time ("Ineligible Shares") shall, by virtue
of the Merger and without any action on the part of the holder thereof, cease to
be outstanding, be canceled and retired without payment of any consideration
therefor and cease to exist.
(b) Conversion of Securities. Subject to Sections 2.06(e) and 2.06(f), each
remaining outstanding share of Company Common Stock, other than Dissenting
Shares (as defined in Section 2.09), shall be converted into the right to
receive (i) 0.64 fully paid and non-assessable share of Parent Preferred Stock
(the "Exchange Ratio"); provided, however, that if Merger Sub accepts for
payment and pays for less than 22,562,135 (the "Offered Number") shares of
Company Common Stock in the Offer (the number of shares of Company Common Stock
so accepted for payment and paid for being referred to herein as the "Accepted
Share Number"), then the Exchange Ratio shall be adjusted (the "Adjusted
Exchange Ratio") and the Adjusted Exchange Ratio shall be equal to the product
of the Exchange Ratio and a fraction where (A) the
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numerator of which is equal to (x) the number of outstanding shares of Company
Common Stock immediately prior to the Effective Time (excluding Ineligible
Shares) (the "Final Outstanding Number") plus (y) the Accepted Share Number
minus (z) the Offered Number and (B) the denominator of which is the Final
Outstanding Number and (ii) if the Exchange Ratio has been adjusted pursuant to
the immediately preceding proviso, an amount in cash equal to the product of the
Per Share Amount and a fraction where (A) the numerator of which is the amount
by which the Offered Number exceeds the Accepted Share Number and (B) the
denominator of which is the Final Outstanding Number.
(c) Stock Options. All options to purchase Company Common Stock granted
under the Company's Amended and Restated Stock Option Plan, as amended to date
(the "Employee Plan") and the Company's 1997 Stock Option Plan for Nonemployee
Directors (the "Directors' Plan" and, with the Employee Plan, the "Stock Option
Plans") or pursuant to any other arrangement adopted by the Board to provide
options, warrants or other rights to purchase capital stock of the Company to
directors, officers or employees of the Company (in any such case, an "Option")
then outstanding shall be subject to the provisions of Section 6.05.
(d) Capital Stock of Merger Sub. Each share of common stock, par value $.01
per share, of Merger Sub issued and outstanding immediately prior to the
Effective Time shall be converted into and exchanged for one validly issued,
fully paid and non-assessable share of common stock, par value $.01 per share,
of the Surviving Corporation. Each stock certificate of Merger Sub evidencing
ownership of any such shares shall continue to evidence ownership of such shares
of capital stock of the Surviving Corporation.
(e) Adjustments to Exchange Ratio. The Exchange Ratio shall be adjusted to
reflect fully the effect of any stock split, reverse split, stock dividend
(including any dividend or distribution of securities convertible into Company
Common Stock), reorganization, recapitalization or other like change with
respect to Company Common Stock, the record date for which shall occur after the
date hereof and prior to the Effective Time. The conversion ratio of Parent
Preferred Stock into Parent Common Stock (as defined in Section 4.05) shall be
adjusted to reflect fully the effect of any stock split, reverse split, stock
dividend (including any dividend or distribution of securities convertible into
Parent Common Stock), reorganization, recapitalization or other like change with
respect to Parent Common Stock, the record date of which shall occur after the
date hereof and prior to the Effective Time.
(f) Fractional Shares. No fraction of a share of Parent Preferred Stock
will be issued, but in lieu thereof each holder of Company Common Stock who
would otherwise be entitled to a fraction of a share of Parent Preferred Stock
(after aggregating all fractional shares of Parent Preferred Stock to be
received by such holder) shall receive from Parent an amount of cash (rounded to
the nearest whole cent), without interest, equal to the product of (i) such
fraction, multiplied by (ii) the average of the closing price for the Parent
Preferred Stock as of each of the 10 consecutive trading days immediately
preceding the Effective Time if the Parent Preferred Stock is traded on a "when
issued" basis, or for the 10 consecutive trading days immediately succeeding the
Effective Time if the Parent Preferred Stock is not traded on a "when issued"
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basis, in either case, as quoted in The Wall Street Journal or other reliable
financial newspaper or publication. For the purposes of the preceding sentence,
a "trading day" means a day on which trading generally takes place on the New
York Stock Exchange (the "NYSE") and on which trading in Parent Preferred Stock
has occurred.
(g) Notwithstanding anything herein to the contrary, at the sole option of
Parent and with the consent of the Independent Directors, which consent shall
not be unreasonably withheld, Parent may, prior to the mailing of the
Prospectus/Proxy Statement (as defined in Section 5.03) to the stockholders of
the Company, substitute for the Parent Preferred Stock convertible preferred
securities having economic and other material terms and conditions equivalent to
the Parent Preferred Stock as determined by the board of directors of Parent
with the concurrence of a majority of the Independent Directors, but
representing undivided beneficial interests in the assets of a statutory
business trust created under the laws of the State of Delaware, of which all of
the beneficial interests in the assets of such trust represented by common
securities are owned by Parent. In the event of such substitution, all
references in this Agreement to Parent Preferred Stock shall be deemed to refer
to such convertible preferred securities.
SECTION 2.07. Exchange of Certificates; Exchange Agent. (a) Prior to the
Effective Time, Parent shall deposit, or shall cause to be deposited, to or for
the account of a bank or trust company designated by Parent (the "Exchange
Agent"), which designation shall require the consent of the Company, which
consent shall not be unreasonably withheld, in trust for the benefit of the
holders of Company Common Stock (other than Dissenting Shares), for exchange in
accordance with this Section 2.07, through the Exchange Agent, certificates
evidencing the Parent Preferred Stock and, if applicable, the cash portion of
the Merger Consideration (as defined in Section 2.07(b)), issuable pursuant to
Section 2.06 in exchange for outstanding shares of Company Common Stock.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, Parent will instruct the Exchange Agent to mail to each holder
of record of a certificate or certificates which immediately prior to the
Effective Time evidenced outstanding shares of Company Common Stock (other than
Dissenting Shares) (the "Certificates") (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to the
Exchange Agent and shall be in such form and have such other provisions as
Parent may reasonably specify) and (ii) instructions to effect the surrender of
the Certificates in exchange for the certificates evidencing shares of Parent
Preferred Stock and, in lieu of any fractional shares thereof, cash, and, if
applicable, the cash portion of the Merger Consideration payable pursuant to
Section 2.06(b). Upon surrender of a Certificate for cancellation to the
Exchange Agent together with such letter of transmittal, duly executed, and such
other customary documents as may be required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in exchange therefor (A)
certificates evidencing that number of whole shares of Parent Preferred Stock
which such holder has the right to receive in accordance with the Exchange Ratio
or, if applicable, the Adjusted Exchange Ratio, in respect of the shares of
Company Common Stock formerly evidenced by such Certificate, (B) the amount of
cash, if any, payable with respect to
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such shares pursuant to Section 2.06(b), (C) any dividends or other
distributions to which such holder is entitled pursuant to Section 2.07(c) and
(D) cash in lieu of fractional shares of Parent Preferred Stock to which such
holder is entitled pursuant to Section 2.06(f) (the Parent Preferred Stock,
cash, dividends and distributions described in clauses (A), (B), (C) and (D)
being, collectively, the "Merger Consideration"), and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of ownership
of shares of Company Common Stock which is not registered in the transfer
records of the Company as of the Effective Time, the Merger Consideration may be
issued and paid in accordance with this Article II to a transferee if the
Certificate evidencing such shares of Company Common Stock is presented to the
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer pursuant to this Section 2.07(b) and by evidence that any
applicable stock transfer taxes have been paid. Until so surrendered, each
outstanding Certificate that, prior to the Effective Time, represented shares of
Company Common Stock will be deemed from and after the Effective Time, for all
corporate purposes, other than the payment of dividends, to evidence the right
to receive the number of full shares of Parent Preferred Stock into which such
shares of Company Common Stock shall have been so converted, the right to
receive the cash portion of the Merger Consideration payable with respect
thereto pursuant to Section 2.06(b) and the right to receive an amount in cash
in lieu of the issuance of any fractional shares in accordance with Section
2.06(f).
(c) Distributions With Respect to Unexchanged Shares. No dividends or other
distributions declared or made after the Effective Time with respect to Parent
Preferred Stock with a record date after the Effective Time shall be paid to the
holder of any unsurrendered Certificate until the holder of such Certificate
shall surrender such Certificate. Subject to applicable law, following surrender
of any such Certificate, there shall be paid to the record holder of the
certificates representing whole shares of Parent Preferred Stock issued in
exchange therefor, without interest, at the time of such surrender, the amount
of dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such whole shares of Parent Preferred Stock.
(d) Transfers of Ownership. If any certificate for shares of Parent
Preferred Stock is to be issued in a name other than that in which the
Certificate surrendered in exchange therefor is registered, it will be a
condition of the issuance thereof that the Certificate so surrendered will be
properly endorsed and otherwise in proper form for transfer and that the person
requesting such exchange will have paid to Parent or any person designated by it
any transfer or other taxes required by reason of the issuance of a certificate
for shares of Parent Preferred Stock in any name other than that of the
registered holder of the Certificate surrendered, or established to the
satisfaction of Parent or any agent designated by it that such tax has been paid
or is not payable.
(e) No Liability. Neither Parent, Merger Sub nor the Company shall be
liable to any holder of Company Common Stock for any Merger Consideration (or
dividends or distributions with respect thereto) delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
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(f) Withholding Rights. Subject to Section 8.03(e) and taking into account
Sections 3.14(f) and 6.01(f), Parent, Merger Sub, the Surviving Corporation and
the Exchange Agent shall be entitled to deduct and withhold from the Merger
Consideration otherwise payable pursuant to this Agreement to any holder of
Company Common Stock such amounts as Parent, Merger Sub, the Surviving
Corporation or the Exchange Agent is required to deduct and withhold with
respect to the making of such payment under the Code, or any provision of state,
local, provincial or foreign tax law; provided, however, that Parent, Merger
Sub, the Surviving Corporation or the Exchange Agent, as applicable, shall
promptly pay any amounts deducted and withheld hereunder to the applicable
Governmental Entity, shall promptly file all Tax Returns (as defined in Section
9.03(o)) required to be filed in respect of such deductions and withholding, and
shall promptly provide to the Company proof of such payment and a copy of all
such Tax Returns. To the extent that amounts are so withheld, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the shares of Company Common Stock in respect of which such
deduction and withholding was made.
SECTION 2.08. Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed, and there shall be no further
registration of transfers of Company Common Stock thereafter on the records of
the Company. If, after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they shall be canceled and exchanged as
provided in this Article II.
SECTION 2.09. Dissenting Shares. (a) Notwithstanding any provision of this
Agreement to the contrary, shares of Company Common Stock that are outstanding
immediately prior to the Effective Time and which are held by stockholders who
shall have not voted in favor of the Merger or consented thereto in writing and
who shall have available to them and who shall have demanded properly in writing
appraisal for such shares of Company Common Stock in accordance with Section 262
of Delaware Law (collectively, the "Dissenting Shares") shall not represent the
right to receive the Merger Consideration. Such stockholders shall be entitled
to receive payment of the appraised value of such shares of Company Common Stock
held by them in accordance with the provisions of such Section 262, except that
all Dissenting Shares held by stockholders who shall have failed to perfect or
who effectively shall have withdrawn or lost their rights to appraisal of such
shares of Company Common Stock under such Section 262 shall thereupon be deemed
to have been converted into and to have become exchangeable for, as of the
Effective Time, the right to receive the Merger Consideration, without any
interest thereon, upon surrender, in the manner provided in Section 2.07, of the
certificate or certificates that formerly evidenced such shares of Company
Common Stock.
(b) The Company shall give Parent (i) prompt notice of any demands for
appraisal received by the Company, withdrawals of such demands, and any other
instruments served pursuant to Delaware Law and received by the Company and (ii)
the opportunity to participate in all negotiations and proceedings with respect
to demands for appraisal under Delaware Law. The Company shall not, except with
the prior written consent of Parent, make any payment with respect to any
demands for appraisal or offer to settle or settle any such demands.
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SECTION 2.10. No Further Ownership Rights in Company Common Stock. The
Merger Consideration delivered upon the surrender for exchange of shares of
Company Common Stock in accordance with the terms hereof shall be deemed to have
been issued in full satisfaction of all rights pertaining to such shares of
Company Common Stock, and there shall be no further registration of transfers on
the records of the Surviving Corporation of shares of Company Common Stock which
were outstanding immediately prior to the Effective Time.
SECTION 2.11. Lost, Stolen or Destroyed Certificates. If any Certificates
shall have been lost, stolen or destroyed, the Exchange Agent shall issue in
exchange for such lost, stolen or destroyed Certificates, upon the making of an
affidavit of that fact by the holder thereof, such Merger Consideration as may
be required pursuant to Section 2.07; provided, however, that Parent may, in its
discretion and as a condition precedent to the issuance and delivery thereof,
require the owner of such lost, stolen or destroyed Certificates to deliver a
bond in such sum as it may reasonably direct as indemnity against any claim that
may be made against Parent or the Exchange Agent with respect to the
Certificates alleged to have been lost, stolen or destroyed.
SECTION 2.12. Taking of Necessary Action; Further Action. Each of Parent,
Merger Sub and the Company in good faith will take all such commercially
reasonable and lawful action as may be necessary or appropriate in order to
effectuate the Merger in accordance with this Agreement as promptly as possible.
If, at any time after the Effective Time, any such further action is necessary
or desirable to carry out the purposes of this Agreement and to vest the
Surviving Corporation with full right, title and possession to all assets,
property, rights, privileges, powers and franchises of the Company and Merger
Sub, the officers and directors of the Company and Merger Sub are fully
authorized in the name of their respective corporations or otherwise to take,
and will take, all such lawful and necessary action.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub that:
SECTION 3.01. Organization and Qualification; Subsidiaries. Each of the
Company and its subsidiaries (as defined in Section 9.03(m)) is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite corporate power and
authority and is in possession of all franchises, grants, authorizations,
licenses, permits, easements, consents, certificates, approvals and orders
("Approvals") necessary to own, lease and operate the properties it purports to
own, operate or lease and to carry on its business as it is now being conducted,
except where the failure to be so organized, existing and in good standing or to
have such power, authority and Approvals would not have a Company Material
Adverse Effect (as defined in Section 9.03(d)). Each of the Company and its
subsidiaries is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
its properties owned, leased or operated by it or the nature of its activities
makes such qualification or
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licensing necessary, except for such failures to be so duly qualified or
licensed and in good standing that would not have a Company Material Adverse
Effect. A true and complete list of all of the Company's subsidiaries, together
with the jurisdiction of incorporation of each subsidiary and the percentage of
each subsidiary's outstanding capital stock owned by the Company or another
subsidiary, is set forth in Section 3.01 of the written disclosure schedule
previously delivered by the Company to Parent (the "Company Disclosure
Schedule"). Except as set forth in Section 3.01 of the Company Disclosure
Schedule, the Company does not directly or indirectly own any equity or similar
interest in, or any interest convertible into or exchangeable or exercisable
for, any equity or similar interest in, any corporation, partnership, joint
venture or other business association or entity.
SECTION 3.02. Certificate of Incorporation and By-Laws. The Company has
heretofore furnished to Parent a complete and correct copy of its Certificate of
Incorporation and By-Laws, as amended to date, and a complete and correct copy
of the equivalent organizational documents of each of its subsidiaries. Such
Certificate of Incorporation, By-Laws and equivalent organizational documents of
each of its subsidiaries are in full force and effect. The Company is not in
violation of any of the provisions of its Certificate of Incorporation or
By-Laws. None of the Company's subsidiaries is in violation of any of the
provisions of its Certificate of Incorporation or By-Laws or equivalent
organizational documents, except for any such violations as would not have a
Company Material Adverse Effect.
SECTION 3.03. Capitalization. The authorized capital stock of the Company
consists of 150,000,000 shares of Company Common Stock and 5,000,000 shares of
preferred stock, par value $0.01 per share. As of October 20, 1998, (i)
27,768,782 shares of Company Common Stock were issued and outstanding, all of
which have been duly authorized and validly issued and are fully paid and
non-assessable, (ii) no shares of preferred stock were issued or outstanding,
(iii) 2,469,900 shares of Company Common Stock were held in the treasury of the
Company, (iv) 2,142,638 shares of Company Common Stock were reserved for future
issuance pursuant to outstanding Options granted under the Employee Plan, (v)
746,844 shares of Company Common Stock were reserved for future issuance
pursuant to future option grants under the Employee Plan, (vi) 4,290 shares of
Company Common Stock were reserved for future issuance pursuant to outstanding
Options granted under the Directors' Plan, (vii) 94,867 shares of Company Common
Stock were reserved for future issuance pursuant to future option grants under
the Directors' Plan, and (viii) no shares of preferred stock were reserved for
issuance. No change in such capitalization has occurred between October 20, 1998
and the date hereof other than any change associated with the exercise of vested
Options. Except as set forth in this Section 3.03 or Section 3.11 hereof or in
Section 3.03 or Section 3.11 of the Company Disclosure Schedule, there are no
options, warrants or other rights, agreements, arrangements or commitments of
any character relating to the issued or unissued capital stock of the Company or
any of its subsidiaries or obligating the Company or any of its subsidiaries to
issue or sell any shares of capital stock of, or other equity interests in, the
Company or any of its subsidiaries. All shares of Company Common Stock subject
to issuance as aforesaid, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and non-assessable. Except as is set forth in Section
3.03 of the Company
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Disclosure Schedule, there are no obligations, contingent or otherwise, of the
Company or any of its subsidiaries to repurchase, redeem or otherwise acquire
any shares of capital stock of the Company or the capital stock of any
subsidiary or to provide funds to or make any investment (in the form of a loan,
capital contribution or otherwise) in any such subsidiary or any other entity
other than guarantees of bank obligations of subsidiaries entered into in the
ordinary course of business. All of the outstanding shares of capital stock of
each of the Company's subsidiaries are duly authorized, validly issued, fully
paid and non-assessable, and, other than as pledged pursuant to the Credit
Agreement, dated as of October 31, 1996, as amended and restated as of March 27,
1998, among the Company, Essex Group, Inc., the lenders named therein and The
Chase Manhattan Bank and other than directors' or similar de minimis statutory
qualifying shares, all such shares are owned by the Company or another
subsidiary, free and clear of all security interests, liens, claims, pledges,
agreements, limitations in the Company's voting rights, charges or other
encumbrances of any nature whatsoever.
SECTION 3.04. Authority Relative to This Agreement. (a) The Company has all
necessary corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the Company
and the consummation by the Company of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action and no other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the transactions so contemplated (other than the
adoption of this Agreement by the holders of at least a majority of the
outstanding shares of the Company Common Stock entitled to vote in accordance
with Delaware Law and the Company's Certificate of Incorporation and By-Laws).
This Agreement has been duly and validly executed and delivered by the Company
and, assuming the due authorization, execution and delivery of this Agreement by
Parent and Merger Sub, constitutes the legal, valid and binding obligation of
the Company.
(b) The Board (i) has declared that this Agreement, the Offer, the Merger
and the other transactions contemplated hereby and thereby are advisable and in
the best interests of the stockholders of the Company, (ii) has authorized,
approved and adopted this Agreement, the Merger and the other transactions
contemplated hereby and thereby and (iii) has approved the Offer.
(c) As of the date hereof and pursuant to Section 203(b)(3) of the Delaware
Law, the restrictions contained in Section 203 of Delaware Law are, and at all
times on or prior to the Effective Time such restrictions shall be, inapplicable
to the Offer, the Merger and the transactions contemplated by this Agreement.
SECTION 3.05. Material Contracts; No Conflict, Required Filings and
Consents. (a) All agreements which, as of the date hereof are required to be
filed with the SEC pursuant to the requirements of the Exchange Act as "material
contracts" (collectively, the "Material Contracts") of the Company and its
subsidiaries are filed as Exhibits to the Company SEC Reports (as defined in
Section 3.07) filed in 1998. All of the Material Contracts are valid, binding
and in full
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force and effect. The Company is not in material default of any of its
obligations under the Material Contracts. No contracting party to any Material
Contract has indicated to the Company its intention to terminate, cancel or
modify such Material Contract or otherwise to reduce or change its activity
thereunder so as to affect adversely the benefits derived, or currently expected
to be derived, by the Company.
(b) Except as set forth in Section 3.05(b) of the Company Disclosure
Schedule, the execution and delivery of this Agreement by the Company do not,
and the performance of this Agreement by the Company will not, (i) conflict with
or violate the Certificate of Incorporation or By-Laws or equivalent
organizational documents of the Company or any of its subsidiaries, (ii)
conflict with or violate any law, rule, regulation, order, judgment or decree
applicable to the Company or any of its subsidiaries or by which its or any of
their respective properties is bound or affected or (iii) result in any breach
of or constitute a default (or an event that with notice or lapse of time or
both would become a default), or impair the Company's or any of its
subsidiaries' rights or alter the rights or obligations of any third party
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any Material Contract, or result in the creation of a lien or
encumbrance on any of the properties or assets of the Company or any of its
subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or its or any of their respective properties
is bound or affected except, in the case of clauses (ii) and (iii), for such
breaches, violations or defaults that would not have a Company Material Adverse
Effect.
(c) The execution and delivery of this Agreement by the Company does not,
and the performance of this Agreement by the Company will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, domestic or foreign, except (i)
for applicable requirements, if any, of the Securities Act of 1933, as amended
(the "Securities Act"), the Exchange Act, state securities laws ("Blue Sky
Laws"), the pre-merger notification requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), any non-United
States competition, antitrust and investment laws and the filing of appropriate
merger or other documents as required by Delaware Law, and (ii) where the
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not prevent or delay consummation of
the Merger, or otherwise prevent or delay the Company from performing its
obligations under this Agreement, or would not otherwise have a Company Material
Adverse Effect.
SECTION 3.06. Compliance, Permits. (a) Except as disclosed in Section
3.06(a) of the Company Disclosure Schedule, except for such conflicts, defaults
and violations as have not had and would not have a Company Material Adverse
Effect, neither the Company nor any of its subsidiaries is in conflict with, or
in default or violation of, (i) any law, rule, regulation, order, judgment or
decree applicable to the Company or any of its subsidiaries or by which its or
any of their respective properties is bound or affected or (ii) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which
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the Company or any of its subsidiaries is a party or by which the Company or any
of its subsidiaries or its or any of their respective properties is bound or
affected.
(b) The Company and its subsidiaries hold all permits, licenses, easements,
variances, exemptions, consents, certificates, orders and approvals from
governmental authorities necessary for the operation of the business of the
Company and its subsidiaries taken as a whole (collectively, the "Company
Permits"), except to the extent that failure to have any such Company Permit
would not have a Company Material Adverse Effect. The Company and its
subsidiaries are in compliance with the terms of the Company Permits, except
where the failure so to comply would not have a Company Material Adverse Effect.
SECTION 3.07. SEC Filings, Financial Statements. (a) The Company has filed
all forms, reports and documents required to be filed by it with the SEC since
May 1, 1997. The Company has delivered to Parent, in the form filed with the
SEC, (i) its Annual Report on Form 10-K for the year ended December 31, 1997,
(ii) its Quarterly Reports on Form 10-Q for the periods ended March 31 and June
30, 1998, (iii) all proxy statements relating to the Company's meetings of
stockholders (whether annual or special) held since May 1, 1997, (iv) all
reports or registration statements filed by the Company with the SEC (other than
Reports on Form 10-Q, Reports on Form 3, 4 or 5 and Schedules 13G filed on
behalf of affiliates of the Company) since May 1, 1997 and (v) all amendments
and supplements to all such reports and registration statements filed by the
Company with the SEC (collectively, the "Company SEC Reports"). The Company SEC
Reports (i) were prepared in accordance with the requirements of the Securities
Act or the Exchange Act, as the case may be, and (ii) did not at the time they
were filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. None of the Company's
subsidiaries is required to file any forms, reports or other documents with the
SEC.
(b) Each of the consolidated financial statements (including, in each case,
any related notes thereto) contained in the Company SEC Reports was prepared in
accordance with United States Generally Accepted Accounting Principles ("GAAP")
applied on a consistent basis throughout the periods involved (except as may be
indicated therein or in the notes thereto) and each fairly presents in all
material respects the consolidated financial position of the Company and its
subsidiaries as at the respective dates thereof and the consolidated results of
its operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments and such statements do not contain notes thereto.
(c) The Company has heretofore furnished to Parent a complete and correct
copy of any amendments or modifications, which have not yet been filed with the
SEC but which are required to be filed, to agreements, documents or other
instruments which previously had been filed by the Company with the SEC pursuant
to the Securities Act or the Exchange Act.
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SECTION 3.08. Absence of Certain Changes or Events. Except as set forth in
Section 3.08 of the Company Disclosure Schedule, between June 30, 1998 and the
date of this Agreement, the Company has conducted its business in the ordinary
course and there has not occurred: (i) any amendments or changes in the
Certificate of Incorporation or By-Laws of the Company; (ii) any material damage
to, destruction or loss of any assets of the Company (whether or not covered by
insurance); (iii) any change by the Company in its accounting methods,
principles or practices; (iv) any revaluation by the Company of any of its
assets, including, without limitation, writing down the value of capitalized
software or inventory or writing off notes or accounts receivable, other than in
the ordinary course of business; or (v) any sale of a material amount of assets
of the Company, except for the sale of inventory in the ordinary course of
business.
SECTION 3.09. No Undisclosed Liabilities. Except as is disclosed in Section
3.09 of the Company Disclosure Schedule or the Company SEC Reports, neither the
Company nor any of its subsidiaries has any liabilities (absolute, accrued,
contingent or otherwise) of the type that are required to be disclosed in
financial statements, including the notes thereto, prepared in accordance with
GAAP which are, in the aggregate, material to the business, operations or
financial condition of the Company and its subsidiaries taken as a whole, except
liabilities (i) adequately provided for or referred to in the Company's balance
sheet and the related notes thereto as of June 30, 1998 included in Section 3.09
of the Company Disclosure Schedule (the "June 30, 1998 Balance Sheet"), (ii)
incurred in the ordinary course of business and not required under GAAP to be
reflected on the the June 30, 1998 Balance Sheet or (iii) incurred since June
30, 1998 in the ordinary course of business and consistent with past practice,
and liabilities incurred in connection with this Agreement.
SECTION 3.10. Absence of Litigation. Except as set forth in Section 3.10 of
the Company Disclosure Schedule or in the Company SEC Reports filed prior to the
date of this Agreement, there are no claims, actions, suits, proceedings or
investigations pending or, to the knowledge of the Company, threatened against
the Company or any of its subsidiaries, or any properties or rights of the
Company or any of its subsidiaries, before any court, arbitrator or Governmental
Entity that is reasonably likely to have a Company Material Adverse Effect.
SECTION 3.11. Employee Benefit Plans; Employment Agreements. (a) Section
3.11(a) of the Company Disclosure Schedule lists all material employee benefit
plans (as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")), all other material plans, including bonus, stock
option, stock purchase, incentive, deferred compensation, supplemental
retirement, severance or termination pay, post-retirement, medical or life
insurance, disability, supplemental unemployment benefits, change-in-control or
parachute plans, profit-sharing, pension or retirement plans or agreements and
other similar material fringe or employee benefit plans, programs or
arrangements (whether written or unwritten, insured or self-insured), and any
employment or executive compensation or severance agreements, regardless of
whether ERISA is applicable thereto, for the benefit of, or relating to, any
employee, director or stockholder of the Company (whether current, former or
retired) or any trade or business (whether or not incorporated) which is a
member of a controlled group
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including the Company or which is under common control with the Company (an
"ERISA Affiliate") within the meaning of Section 414(b), (c), (m) or (o) of the
Code (the "Employee Plans").
(b) Except as set forth in Section 3.11(b) of the Company Disclosure
Schedule, none of the Company (including any subsidiary thereof), any ERISA
Affiliate or any of their respective predecessors has, within the past five
years, contributed to, contributes to, is required to contribute to, or
otherwise participates in or in any way, directly or indirectly, has any
liability with respect to any plan subject to Section 412 of the Code, Section
302 of ERISA or Title IV of ERISA, including, without limitation, any
"multiemployer plan" (within the meaning of Sections (3)(37) or 4001(a)(3) of
ERISA or Section 414(f) of the Code) (a "Multiemployer Plan"), or any single
employer pension plan (within the meaning of Section 4001(a)(15) of ERISA) which
is subject to Sections 4063 and 4064 of ERISA (a "Multiple Employer Plan").
Except as set forth on Schedule 3.11(b) of the Company Disclosure Schedule, if
the Company or any subsidiary thereof or any ERISA Affiliate were to have a
complete or partial withdrawal as of the Effective Time, no obligation to pay
any material withdrawal liability would exist with respect to any Multiemployer
Plan and no material liability, whether direct or contingent, exists with regard
to any Multiemployer Plan or Multiple Employer Plan. All premiums due to the
Pension Benefit Guaranty Corporation (the "PBGC") by the Company or any ERISA
Affiliate have been paid on a timely basis. No "reportable event" within the
meaning of Section 4043(c) of ERISA (with respect to which the 30-day notice
period would not be waived) has occurred or is expected to occur, and the
consummation of the transaction contemplated by this Agreement will not result
in a reportable event.
(c) With respect to each of the Employee Plans: (i) none of the Employee
Plans provides retiree medical, death or other retiree welfare benefits (whether
or not insured) to any current or future retiree or terminee (other than under
Section 4980 of the Code, the Federal Social Security Act or a plan qualified
under Section 401(a) of the Code); (ii) all Employee Plans are in compliance in
all material respects with the terms thereof and the requirements prescribed by
any and all applicable statutes (including, without limitation, the Code and
ERISA), orders or governmental rules and regulations currently in effect with
respect thereto (including, without limitation, the pass-through voting and
tender provisions of any Employee Plan with respect to any Company Common Stock
held thereunder), and the Company, each of its subsidiaries and any ERISA
Affiliate have performed all material obligations required to be performed by
them under, are not in any material respect in default under or in violation of,
and have no knowledge of any default or violation by any other party to, any of
the Employee Plans; (iii) each Employee Plan intended to qualify under Section
401(a) of the Code (or similar provisions for tax- registered or tax-favored
plans of foreign jurisdictions) is the subject of a favorable determination
letter from United States Internal Revenue Service (the "IRS") (or, if
applicable, similar approvals of Governmental Entities (as defined in Section
9.03(i)), and nothing has occurred or could reasonably be expected to occur that
impaired or could reasonably be expected to impair such determination or result
in the imposition of any penalty or tax liability; (iv) all contributions
required to be made to any Employee Plan under the terms of the Employee Plan or
any collective bargaining agreement or as required by law have been timely made
and, to the extent
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required by GAAP, a reasonable amount has been accrued for contributions to each
Employee Plan for the current plan years; (v) no "accumulated funding
deficiency" (within the meaning of Section 412 of the Code and Section 302 of
ERISA) has been or could be expected to be incurred, whether or not waived, and
no excise tax or other taxes have been or could be expected to be incurred or
are due and owing with respect to the Employee Plan because of any failure to
comply with the minimum funding standards of ERISA and the Code; (vi) no
"prohibited transaction," within the meaning of Section 4975 of the Code or
Section 406 of ERISA, has occurred or is expected to occur with respect to any
Employee Plan which would result in material liability; and (vii) to the
knowledge of the Company, the present value of all unfunded "benefit
liabilities" (whether or not vested) (within the meaning of Section 4001(a)(16)
of ERISA) with respect to any Employee Plans subject to Title IV of ERISA has
not materially increased above the amount disclosed in the most recent SEC
Reports.
(d) To the knowledge of the Company, (i) there are no pending audits,
investigations, litigation or other enforcement actions against the Company with
respect to any of the Employee Plans and (ii) no proceeding has been or is
expected to be initiated to terminate any Employee Plan subject to Title IV of
ERISA.
(e) There are no material actions, suits or claims pending or, to the
knowledge of the Company, threatened by former or present employees of the
Company (or their beneficiaries) with respect to Employee Plans, the Company,
any ERISA Affiliate, any director, officer or employee thereof, or the trustee,
assets or fiduciaries of the Employee Plans (other than non-material routine
claims for benefits) and, to the knowledge of the Company, no set of
circumstances or facts exist that could reasonably be expected to give rise to
any such action, suit or claim.
(f) Section 3.11(f) of the Company Disclosure Schedule sets forth a true
and complete list of each current or former employee, officer or director of the
Company or any of its subsidiaries who holds an Option as of the date hereof,
together with the number of shares of Company Common Stock subject to such
Option, the date of grant of such Option, the exercise price of such Option (to
the extent determined as of the date hereof), and the expiration date of such
Option. Section 3.11(f) of the Company Disclosure Schedule also sets forth the
total number of outstanding Options. No Option is intended to qualify as an
"incentive stock option" within the meaning of Section 422(b) of the Code.
(g) To the knowledge of the Company, with respect to each scheme or
arrangement mandated by a government other than the United States and with
respect to each Employee Plan maintained or contributed to by any subsidiary of
the Company that is not subject to United States law (a "Foreign Employee
Plan"), there are no material liabilities.
(h) The Company has made available to Parent: (i) copies of all employment
agreements with officers of the Company; (ii) copies of all agreements with
consultants who are individuals obligating the Company to make annual cash
payments in an amount exceeding $100,000 and which are not terminable on less
than 60 days' notice without penalty; (iii) copies
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of all plans, programs, agreements and other arrangements of the Company with or
relating to its employees which contain change in control provisions; and (iv)
the various forms of employment agreements, if any, of the Company for its
nonexecutive employees.
(i) Except as set forth in Section 3.11(i)(1) of the Company Disclosure
Schedule, the consummation of the transactions contemplated by this Agreement
will not give rise to any liability, including, without limitation, liability
for severance pay, unemployment compensation, termination pay or withdrawal
liability, or accelerate the time of payment or vesting or increase the amount
of compensation or benefits due to any employee, director or stockholder of the
Company (whether current, former or retired) or their beneficiaries solely by
reason of such transactions. Except as set forth in Section 3.11(i)(2) of the
Company Disclosure Schedule, no amounts payable under any Employee Plan will
fail to be deductible for federal income tax purposes by virtue of Sections
162(m) or 280G of the Code. Except as set forth in Section 3.11(i)(3) of the
Company Disclosure Schedule, neither the Company, any ERISA Affiliate, nor any
officer or employee thereof, has made any promises or commitments, whether
legally binding or not, to create any additional plan, agreement or arrangement,
or to modify or change any existing Employee Plan. No event, condition or
circumstance exists that could reasonably be expected to result in a material
increase of the benefits provided under any Employee Plan or the expense of
maintaining any Employee Plan from the level of benefits or expense incurred for
the most recent fiscal year ended before the Effective Time. Except as set forth
in Section 3.11(i)(4) of the Company Disclosure Schedule, neither the Company
nor any ERISA Affiliate has any unfunded liabilities pursuant to any Employee
Plan that is not intended to be qualified under Section 401(a) of the Code, and
that is an employee pension benefit plan within the meaning of Section 3(2) of
ERISA, a nonqualified deferred compensation plan or excess benefit plan. Except
as required by law, no event, condition or circumstance exists that would
prevent the amendment or termination of any Employee Plan.
SECTION 3.12. Labor Matters. There are no labor disputes pending or, to the
knowledge of the Company, threatened, between the Company or any of its
subsidiaries and any of their respective employees, which disputes are
reasonably likely to have a Company Material Adverse Effect. Neither the Company
nor any of its subsidiaries has knowingly engaged in any unfair labor practices
within the meaning of the National Labor Relations Act or similar such
legislation of foreign jurisdictions. Except as set forth in Section 3.12 of the
Company Disclosure Schedule, neither the Company nor any of its subsidiaries is
presently a party to, or bound by, any collective bargaining agreement or union
contract with respect to any persons employed by the Company or its subsidiaries
and no collective bargaining agreement is being negotiated by the Company or any
of its subsidiaries. Except as would not reasonably be expected to have a
Company Material Adverse Effect, neither the Company nor any of its subsidiaries
has any knowledge of any strikes, slowdowns, work stoppages or lockouts, or
threats thereof, by or with respect to any employees of the Company or any of
its subsidiaries, and there have been no such strikes, slowdowns, work stoppages
or lockouts within the past three years. Each of the Company and its
subsidiaries is in compliance in all material respects with all applicable laws,
regulations and orders relating to workers' compensation and the Worker
Adjustment and Retraining Notification Act or similar such legislation of
foreign jurisdictions.
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SECTION 3.13. Restrictions on Business Activities. Other than this
Agreement, there is no material agreement, judgment, injunction, order or decree
binding upon the Company or any of its subsidiaries which has or could
reasonably be expected to have (after giving effect to the consummation of the
Offer and the Merger) the effect of prohibiting or impairing any material
business operations of the Company or any of its subsidiaries, as currently
conducted.
SECTION 3.14. Taxes. Except as set forth in Section 3.14 of the Company
Disclosure Schedule or except as have not had and would not reasonably be
expected to have a Company Material Adverse Effect:
(a) The Company and each of its subsidiaries, and any consolidated,
combined, unitary or aggregate group for Tax (as defined in Section 9.03(n))
purposes of which the Company or any of its subsidiaries is a member, have
timely filed all United States federal income Tax Returns (as defined in Section
9.03(o)) and all other material Tax Returns required to be filed by them or any
of them (taking into account applicable extensions), and have timely paid and
discharged all Taxes shown therein to be due, except with respect to which the
Company is maintaining reserves in accordance with GAAP in its financial
statements that are in all material respects adequate for their payment. All
federal income Tax Returns and all other material Tax Returns filed by the
Company and each of its subsidiaries with respect to Taxes were true and correct
in all material respects as of the date on which they were filed or as
subsequently amended to the date hereof. The Company and each of its
subsidiaries have disclosed to the relevant taxing authority any position taken
where the failure to make such disclosure would enable the taxing authority to
subject such person to any material penalties or additions to Tax. As of the
date hereof, neither the IRS nor any other taxing authority or agency is now
asserting or, to the best of the Company's knowledge, threatening to assert
against the Company or any of its subsidiaries any deficiency or claim for
material additional Taxes. As of the date hereof, except for routine requests
for information in connection with pending audits, there are no requests for
information from the IRS or any other taxing authority or agency currently
outstanding. As of the date hereof, no material federal Tax Return of either the
Company or any of its subsidiaries is currently being audited by any taxing
authority nor are any proceedings (whether administrative or judicial) currently
being conducted with respect to any issues relating to Taxes. No material tax
claim has become a lien on any assets of the Company or any subsidiary thereof.
Neither the Company nor any of its subsidiaries is required to include in income
(i) any material items in respect of any change in accounting principles or any
deferred intercompany transactions or (ii) any installment sale gain, where the
inclusion in income would result in a material tax liability in excess of the
reserves therefor.
(b) (i) Neither the Company nor any of its subsidiaries has been subject to
any accumulated earnings tax or personal holding company tax; (ii) neither the
Company nor any of its subsidiaries is obligated under any agreement with
respect to industrial development bonds or other obligations with respect to
which the excludability from gross income of the holder for United States
federal or state income tax purposes could be affected by the transactions
contemplated hereunder; (iii) as of the date hereof, there are no waivers or
extensions of any applicable statute of limitations for the assessment or
collection of Taxes with respect to any
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material Tax Return that relates to the Company or any of its subsidiaries which
remain in effect; (iv) there are no tax rulings, closing agreements or changes
of accounting method relating to the Company or any of its subsidiaries which
would materially affect their liability for Taxes for any period after the
Effective Time; (v) all federal and all material state and local income Tax
Returns of the Company and each of its subsidiaries with respect to taxable
periods through the year ended December 31, 1994 have been examined and closed
or are Tax Returns with respect to which the applicable statute of limitations
has expired; (vi) neither the Company nor any subsidiary has filed a consent
under Section 341(f) of the Code or any comparable provision of state revenue
statutes; (vii) no material property of the Company or its subsidiaries is
"tax-exempt use property "within the meaning of Section 168(h) of the Code; and
(viii) neither the Company nor its subsidiaries is a party to any material lease
made pursuant to Section 168(f) of the Code.
(c) No power of attorney has been granted by the Company or any of its
subsidiaries with respect to any material matter relating to Taxes which is
currently in force, other than any power given to outside counsel to the Company
or any of its subsidiaries in connection with any tax audit.
(d) Neither the Company nor any of its subsidiaries is a party to any
material agreement (written or oral) providing for the allocation or sharing of
Taxes, with any party other than the Company and/or one or more of its
subsidiaries.
(e) The Company and each of its subsidiaries have withheld from each
payment made to any of their respective past or present employees, officers or
directors, or any other person, the amount of all Taxes and other deductions
required to be withheld therefrom and paid the same to the proper tax or other
receiving officers within the time required by law.
(f) The Company is not, nor was it any time during each of the five-year
periods ending on the dates on which the Offer is consummated and the Effective
Time occurs, a "United States real property holding corporation" within the
meaning of Section 897(c) of the Code.
SECTION 3.15. Environmental Matters. Except as set forth in Section 3.15 of
the Company Disclosure Schedule or except as have not had and would not
reasonably be expected to have a Company Material Adverse Effect:
(a) All of the current operations of the Company and each of its
subsidiaries and their respective assets, businesses and real property,
including any operations at or from any real property presently owned, used,
leased, occupied, managed or operated by the Company or any of its subsidiaries
(collectively, the "Real Property"), comply and have at all times complied with
all applicable Environmental Laws (as defined in Section 9.03(g)).
(b) To the knowledge of the Company, none of the assets of the Company or
any of its subsidiaries, nor any of the Real Property, contains any Hazardous
Substances (as defined in Section 9.03(j)) in, on, over, under or at it, in
concentrations which would violate any applicable
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Environmental Laws (as defined in Section 9.03(g)) or reasonably would be likely
to result in the imposition of liability or obligations on Company or any of its
subsidiaries under any applicable Environmental Laws, including any liability or
obligations for the investigation, corrective action, remediation or monitoring
of Hazardous Substances in, on, over, under or at the Real Property.
(c) None of the Real Property is listed or proposed for listing on the
National Priorities List pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), 42 U.S.C. Section 9601 et seq., or
any similar inventory of sites requiring investigation or remediation maintained
by any state or locality. Neither the Company, nor any of its subsidiaries has
received any notice, whether oral or written, from any Governmental Entity or
third party of any actual or threatened Environmental Liabilities (as defined in
Section 9.03(h)).
(d) To the knowledge of the Company, each of the Company and its
subsidiaries has all the permits, licenses, authorizations and approvals
necessary for the conduct of their businesses and for the operations on, in or
at the Real Property (the "Environmental Permits"), which are required under
applicable Environmental Laws and they are in compliance in all material
respects with the terms and conditions of all such Environmental Permits. To the
best knowledge of the Company and each of its subsidiaries, no reason exists why
the Company and each of its subsidiaries would not be capable of continued
operation of their businesses in compliance in all material respects with the
Environmental Permits and the applicable Environmental Laws.
(e) Neither the Company nor any of its subsidiaries has contractually
assumed or succeeded to, or received any written notice that it has assumed or
succeeded to by operation of law, including the Environmental Laws and common
law, or otherwise, any Environmental Liabilities of any predecessors or any
other person or entity.
SECTION 3.16. Brokers. No broker, finder or investment banker (other than
Goldman, Sachs & Co. ("GS") and Chase Securities Inc. ("Chase")), is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company. The Company has heretofore furnished to Parent a
complete and correct copy of all agreements among the Company, GS and Chase
pursuant to which such firms would be entitled to any payment relating to the
transactions contemplated hereunder.
SECTION 3.17. Intellectual Property. (a) The Company owns, or is licensed
or otherwise possesses legally enforceable rights to use, all patents,
trademarks, trade names, service marks, copyrights and any applications
therefor, technology, know-how, computer software programs or applications and
tangible or intangible proprietary information or material that are used or
proposed to be used in the business of the Company, each of which, where
applicable, is to the Company's knowledge valid and subsisting. Section 3.17 of
the Company Disclosure Schedule lists all current patents, registered and
material unregistered trademarks and service marks, registered and material
unregistered copyrights, trade names and any applications
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therefor owned by the Company (the "Company Intellectual Property Rights"), and
specifies the jurisdictions in which each such Company Intellectual Property
Right has been issued or registered or in which an application for such issuance
and registration has been filed, including the respective registration or
application numbers and the names of all registered owners. Section 3.17 of the
Company Disclosure Schedule includes and specifically identifies all material
third-party patents, trademarks or copyrights (the "Third Party Intellectual
Property Rights") which, to the knowledge of the Company, are incorporated in,
are, or form a part of, any product of the Company. Section 3.17 of the Company
Disclosure Schedule lists (i) all material licenses, sublicenses and other
agreements as to which the Company is a party and pursuant to which any person
is authorized to use any Company Intellectual Property Right, or any trade
secret material to the Company and (ii) all material licenses, sublicenses and
other agreements as to which the Company is a party and pursuant to which the
Company is authorized to use any Third Party Intellectual Property Rights, or
other trade secret of a third party in or as any product, and includes the
identity of all parties thereto, a description of the nature and subject matter
thereof, the applicable royalty and the term thereof.
(b) The Company is not, nor will it be as a result of the execution and
delivery of this Agreement or the performance of its obligations hereunder, in
violation of any Third Party Intellectual Property Rights license, sublicense or
agreement described in Section 3.17 of the Company Disclosure Schedule. No
claims with respect to the Company Intellectual Property Rights, any trade
secret material to the Company or Third Party Intellectual Property Rights to
the extent arising out of any use, reproduction or distribution of such Third
Party Intellectual Property Rights by or through the Company, are currently
pending or, are threatened by any person, nor, to the Company's knowledge, do
any valid grounds for any bona fide claims exist: (i) to the effect that the
manufacture, sale, licensing or use of any product as now used, sold or licensed
or proposed for use, sale or license by the Company infringes on any copyright,
patent, trademark, service mark or trade secret; (ii) against the use by the
Company of any trademarks, trade names, trade secrets, copyrights, patents,
technology, know-how or computer software programs and applications used in the
Company's business as currently conducted or as proposed to be conducted by the
Company; (iii) challenging the ownership, validity or effectiveness of any of
the Company Intellectual Property Rights or other trade secret material to the
Company; or (iv) challenging the Company's license or legally enforceable right
to use of the Third Party Intellectual Rights. To the Company's knowledge, there
is no material unauthorized use, infringement or misappropriation of any of the
Company Intellectual Property by any third party. Neither the Company nor any of
its subsidiaries (i) has been sued or charged in writing as a defendant in any
claim, suit, action or proceeding which involves a claim or infringement of
trade secrets, any patents, trademarks, service marks, maskworks or copyrights
and which has not been finally terminated prior to the date hereof or been
informed or notified by any third party that the Company may be engaged in such
infringement or (ii) has knowledge of any infringement liability with respect
to, or infringement by, the Company or any of its subsidiaries of any trade
secret, patent, trademark, service mark, maskwork or copyright of another party.
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SECTION 3.18. Vote Required. The affirmative vote of the holders of at
least a majority of the outstanding shares of Company Common Stock is the only
vote of the holders of any class or series of the Company's capital stock
necessary to approve the Merger.
SECTION 3.19. Opinions of Financial Advisors. The Company has been advised
by its financial advisors, that in their opinion as of the date hereof, the
consideration to be received, pursuant to this Agreement, by holders of Company
Common Stock in the Offer and the Merger taken as a unitary transaction, are
fair from a financial point of view to such holders, and will deliver a written
copy of such opinions to Parent, it being understood and acknowledged that such
opinions have been rendered for the benefit of the Board of Directors of the
Company and may not be relied upon by Parent, its affiliates or any of their
respective stockholders.
SECTION 3.20. Year 2000 Compliance. The Company has taken affirmative steps
to fully assess, address and correct any and all potential problems and
liabilities relating to year 2000 compliance and its impact on any Employee Plan
and its participants and beneficiaries, and to cause the computer systems of the
Company and its subsidiaries to be Year 2000 Compliant by April 1, 1999, except
as would not reasonably be expected to have a Company Material Adverse Effect.
The term "Year 2000 Compliant" as used herein means that the computer systems
(i) are capable of recognizing, processing, managing, representing, interpreting
and manipulating correctly date related data for dates earlier and later than
January 1, 2000; (ii) have the ability to provide date recognition for any data
element without limitation; (iii) have the ability to function automatically
into and beyond the year 2000 without human intervention and without any change
in operations associated with the advent of the year 2000; (iv) have the ability
to interpret data, dates and time correctly into and beyond the year 2000; (v)
have the ability not to produce noncompliance in existing information, nor
otherwise corrupt such data into and beyond the year 2000; (vi) have the ability
to process correctly after January 1, 2000 data containing dates before that
date; and (vii) have the ability to recognize all "leap years," including
February 29, 2000.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub each hereby represent and warrant to the Company
that:
SECTION 4.01. Organization and Qualification. Each of Parent and Merger Sub
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has the requisite corporate
power and authority and is in possession of all Approvals necessary to own,
lease and operate the properties it purports to own, operate or lease and to
carry on its business as it is now being conducted, except where the failure to
be so organized, existing and in good standing or to have such power, authority
and Approvals would not have a Parent Material Adverse Effect (as defined in
Section 9.03(k)). Each of Parent and Merger Sub is duly qualified or licensed as
a foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties
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owned, leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except for such failures to be so duly
qualified or licensed and in good standing that would not have a Parent Material
Adverse Effect.
SECTION 4.02. Authority Relative to this Agreement. (a) Each of Parent and
Merger Sub has all necessary corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Parent and Merger Sub and the consummation by Parent and
Merger Sub of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of Parent and Merger
Sub, and no other corporate proceedings on the part of Parent or Merger Sub are
necessary to authorize this Agreement or to consummate the transactions so
contemplated (other than the approval ("Parent Stockholder Approval") by the
holders of at least a majority of the outstanding shares of Parent Common Stock
(as hereinafter defined) of an amendment to the Certificate of Incorporation of
Parent to authorize additional shares of Parent Preferred Stock and the issuance
of Parent Preferred Stock in accordance with the terms of this Agreement, all in
accordance with Delaware Law and Parent's Certificate of Incorporation and
By-Laws (the "Parent Preferred Stock Matters")). This Agreement has been duly
and validly executed and delivered by Parent and Merger Sub and, assuming the
due authorization, execution and delivery of this Agreement by the Company,
constitutes a legal, valid and binding obligation of Parent and Merger Sub.
(b) The board of directors of Parent (i) has declared that this Agreement,
the Offer, the Merger, the Parent Preferred Stock Matters and the other
transactions contemplated hereby and thereby are advisable and in the best
interests of the stockholders of Parent, (ii) has authorized, approved and
adopted this Agreement (including the Parent Preferred Stock Matters and
substantially the form of Indenture attached hereto as Exhibit F), the Offer,
the Merger and the other transactions contemplated hereby and thereby, and (iii)
has taken appropriate action, pursuant to Section 203(a)(1) of the Delaware Law,
to cause the restrictions contained in Section 203 of Delaware Law to be
inapplicable to the Offer, the Merger and the transactions contemplated by this
Agreement, and to approve the agreement (the "Alpine Agreement") by The Alpine
Group, Inc. to vote (or cause to be voted) the shares of Parent Common Stock (as
defined in Section 4.05) held of record by it or which it has the right to vote
(A) in favor of (1) an amendment to the Certificate of Incorporation of Parent
to authorize additional shares of preferred stock, par value $.01 per share, of
Parent; (2) the issuance of Parent Preferred Stock, in the case of clauses (1)
and (2) hereof in accordance with the terms of the Merger Agreement, Delaware
Law and the Certificate of Incorporation and By-Laws of Parent; and (3) any
other matters submitted to the stockholders of Parent to authorize or facilitate
the transactions contemplated by the Alpine Agreement; and (B) against any
matters submitted to the stockholders of Parent inconsistent with the
transactions contemplated by this Agreement.
SECTION 4.03. No Conflict, Required Filings and Consents. (a) Except as set
forth in Section 4.03(b) hereof or Section 4.03(a) of the written disclosure
schedule previously delivered by Parent and Merger Sub to the Company (the
"Parent Disclosure Schedule"), the
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execution and delivery of this Agreement by Parent and Merger Sub do not, and
the performance of this Agreement by Parent and Merger Sub will not, (i)
conflict with or violate the Certificate of Incorporation or By-Laws of Parent
or the Certificate of Incorporation or By-Laws of Merger Sub, (ii) conflict with
or violate any law, rule, regulation, order, judgment or decree applicable to
Parent or any of its subsidiaries or by which its or their respective properties
are bound or affected or (iii) result in any breach of or constitute a default
(or an event which with notice or lapse of time or both would become a default)
under, or impair Parent's or Merger Sub's rights or alter the rights or
obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any contracts material
to the business of Parent and Merger Sub taken as a whole (a "Parent Material
Contract") or result in the creation of a lien or encumbrance on any of the
properties or assets of Parent or Merger Sub pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Parent or Merger Sub is a party or by
which Parent or Merger Sub or its or any of their respective properties are
bound or affected, except in any such case for any such breaches, defaults or
other occurrences that would not have a Parent Material Adverse Effect.
(b) The execution and delivery of this Agreement by Parent and Merger Sub
will not require any consent, approval, authorization or permit of, or filing
with or notification to, any Governmental Entity except (i) for applicable
requirements, if any, of the Securities Act, the Exchange Act, the Blue Sky
Laws, the NYSE and the pre-merger notification requirements of the HSR Act and
(ii) where the failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not prevent or delay
consummation of the Merger, or otherwise prevent Parent or Merger Sub from
performing their respective obligations under this Agreement, and would not have
a Parent Material Adverse Effect.
SECTION 4.04. Certificate of Incorporation and By-Laws. Parent has
heretofore furnished to the Company a complete and correct copy of Parent's and
Merger Sub's Certificate of Incorporation and By-Laws, each as amended to date.
Such Certificates of Incorporation and By-Laws are in full force and effect.
Neither Parent nor Merger Sub is in violation of any of the provisions of its
Certificate of Incorporation or By-Laws, except for any such violations as would
not have a Parent Material Adverse Effect.
SECTION 4.05. Capitalization. The authorized capital stock of Parent
consists of 25,000,000 shares of common stock, par value $.01 per share ("Parent
Common Stock"), of which 16,057,295 shares were issued and outstanding, as of
the close of business on October 20, 1998, and 1,000,000 shares of preferred
stock, par value $.01 per share, none of which was outstanding as of the close
of business on October 20, 1998. The authorized capital stock of Merger Sub
consists of 1,000 shares of common stock, par value $.01 per share, 100 shares
of which are issued and outstanding. All of the outstanding shares of Parent's
and Merger Sub's respective capital stock have been duly authorized and validly
issued and are fully paid and non-assessable. Subject to obtaining Parent
Stockholder Approval: (i) the shares of Parent Preferred Stock to be issued in
the Merger have been duly authorized and, when so issued in accordance with the
terms hereof, such shares will be validly issued, fully paid and non-assessable;
(ii) the
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shares of Parent Common Stock issuable upon conversion of the Parent Preferred
Stock issuable in the Merger, in accordance with the terms of the Parent
Preferred Stock, have been duly authorized and such shares of Parent Common
Stock, when so issued upon such conversion will be validly issued, fully paid
and non-assessable; and (iii) the shares of Parent Common Stock issuable upon
exercise of Options assumed pursuant to Section 2.06(c) have been duly
authorized and, when so issued upon such exercise of the Options in accordance
with their respective terms, will be validly issued, fully paid and
non-assessable. Except as set forth in this Section 4.05 and except for those
options granted pursuant to Parent's 1996 Stock Option Plan and Employee Stock
Purchase Plan, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of Parent or Merger Sub or obligating Parent or Merger Sub to
issue or sell any shares of capital stock of, or other equity interests in,
Parent or Merger Sub. Except as is set forth in Section 4.05 of Parent
Disclosure Schedule, there are no obligations, contingent or otherwise, of
Parent or Merger Sub to repurchase, redeem or otherwise acquire any shares of
capital stock of Parent or Merger Sub or to provide funds to or make any
investment (in the form of a loan, capital contribution or otherwise) in Merger
Sub or any other entity other than guarantees of bank obligations of
subsidiaries entered into in the ordinary course of business.
SECTION 4.06. SEC Filings, Financial Statements. (a) Parent has filed all
forms, reports and documents required to be filed by it with the SEC since at
least December 31, 1995. Parent has heretofore delivered to the Company, in the
form filed with the SEC, (i) its Annual Report on Form 10-K for the fiscal year
ended April 30, 1998 and its Quarterly Report on Form 10-Q for the fiscal
quarter ended July 31, 1998, (ii) all proxy statements relating to Parent's
meetings of stockholders (whether annual or special) held since December 31,
1997, (iii) all other reports or registration statements (other than Reports on
Form 10-Q and Reports on Form 3, 4 or 5 filed on behalf of affiliates of the
Parent) filed by Parent with the SEC since December 31, 1997 and (iv) all
amendments and supplements to all such reports and registration statements filed
by Parent with the SEC (collectively, the "Parent SEC Reports"). The Parent SEC
Reports (i) were prepared in accordance with the requirements of the Securities
Act or the Exchange Act, as the case may be and (ii) did not at the time they
were filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(b) Each of the consolidated financial statements (including, in each case,
any related notes thereto) contained in the Parent SEC Reports was prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto) and each fairly
presents in all material respects the consolidated financial position of Parent
and its subsidiaries as at the respective dates thereof and the consolidated
results of its operations and cash flows for the periods indicated, except that
the unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments and such statements do not contain notes thereto.
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(c) Parent has heretofore furnished to the Company a complete and correct
copy of any amendments or modifications, which have not yet been filed with the
SEC but which are required to be filed, to agreements, documents or other
instruments which previously had been filed by Parent with the SEC pursuant to
the Securities Act or the Exchange Act.
SECTION 4.07. Absence of Certain Changes or Events. Except as set forth on
Section 4.07 of the Parent Disclosure Schedule or the Parent SEC Reports,
between July 31, 1998 and the date of this Agreement, Parent has conducted its
business in the ordinary course and there has not occurred: (i) any amendments
or changes in the Certificate of Incorporation or By-Laws of Parent; (ii) any
material damage to, destruction or loss of any assets of the Parent (whether or
not covered by insurance); (iii) any revaluation by Parent of any of its assets,
including, without limitation, writing down the value of capitalized software or
inventory or writing off notes or accounts receivable other than in the ordinary
course of business; or (iv) any sale of a material amount of assets of Parent,
except in the ordinary course of business.
SECTION 4.08. Restrictions on Business Activities. Other than this
Agreement, there is no material agreement, judgment, injunction, order or decree
binding upon Parent or Merger Sub which has or could reasonably be expected to
have the effect of prohibiting or impairing any material business of Parent or
Merger Sub as currently conducted.
SECTION 4.09. Compliance, Permits. (a) Except for such conflicts, defaults
and violations as have not had and would not have a Parent Material Adverse
Effect, neither Parent nor any of its subsidiaries is in conflict with, or in
default or violation of, (i) any law, rule, regulation, order, judgment or
decree applicable to Parent or any of its subsidiaries or by which its or any of
their respective properties is bound or affected or (ii) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Parent or any of its subsidiaries is a
party or by which Parent or any of its subsidiaries or its or any of their
respective properties is bound or affected.
(b) Parent and its subsidiaries hold all permits, licenses, easements,
variances, exemptions, consents, certificates, orders and approvals from
governmental authorities necessary for the operation of the business of Parent
and its subsidiaries taken as a whole (collectively, the "Parent Permits"),
except to the extent that failure to have any such Parent Permit would not have
a Parent Material Adverse Effect. Parent and its subsidiaries are in compliance
with the terms of the Parent Permits, except where the failure so to comply
would not have a Parent Material Adverse Effect.
SECTION 4.10. No Undisclosed Liabilities. Except as disclosed in the Parent
SEC Reports, Parent does not have any liabilities (absolute, accrued, contingent
or otherwise) of the type that are required to be disclosed in financial
statements, including the notes thereto, prepared in accordance with GAAP which
are, in the aggregate, material to the business, operations or financial
condition of Parent and its subsidiaries taken as a whole, except liabilities
(i) adequately provided for or referred to in Parent's balance sheet and the
related notes thereto as of July 31, 1998 included in Section 4.10 of the Parent
Disclosure Schedule (the "July 31
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Balance Sheet"), (ii) incurred in the ordinary course of business and not
required under GAAP to be reflected on the July 31, 1998 Balance Sheet or (iii)
incurred since July 31, 1998 in the ordinary course of business and consistent
with past practice, and liabilities incurred in connection with this Agreement.
SECTION 4.11. Absence of Litigation. Except as disclosed in the Parent SEC
Reports filed prior to the date of this Agreement, as of the date hereof, there
are no claims, actions, suits, proceedings or investigations pending or, to the
knowledge of Parent, threatened against Parent or any of its subsidiaries, or
any properties or rights of the Company or any of its subsidiaries, before any
court, arbitrator or Governmental Entity that is reasonably likely to have a
Parent Material Adverse Effect.
SECTION 4.12. Environmental Matters. Except as have not had and would not
reasonably be expected to have a Parent Material Adverse Effect:
(a) All of the current operations of Parent and each of its subsidiaries
and their respective assets, businesses and real property, including any
operations at or from any real property presently or formerly owned, used,
leased, occupied, managed or operated by Parent or any of its subsidiaries
(collectively, the "Parent Real Property"), comply with all applicable
Environmental Laws.
(b) To the knowledge of Parent, none of the assets of Parent or any of its
subsidiaries, nor any of the Parent Real Property, contains any Hazardous
Substances in, on, over, under or at it, in concentrations which would violate
any applicable Environmental Laws or reasonably would be likely to result in the
imposition of liability or obligations on Parent or any of its subsidiaries
under any applicable Environmental Laws, including any liability or obligations
for the investigation, corrective action, remediation or monitoring of Hazardous
Substances in, on, over, under or at the Parent Real Property.
(c) None of the Parent Real Property is listed or proposed for listing on
the National Priorities List pursuant to the CERCLA, 42 U.S.C. Section 9601 et
seq., or any similar inventory of sites requiring investigation or remediation
maintained by any state or locality. Neither Parent nor any of its subsidiaries
has received any notice, whether oral or written, from any Governmental Entity
or third party of any actual or threatened Environmental Liabilities.
(d) To the knowledge of Parent, each of Parent and its subsidiaries has all
the permits, licenses, authorizations and approvals necessary for the conduct of
their businesses and for the operations on, in or at the Parent Real Property
(the "Parent Environmental Permits"), which are required under applicable
Environmental Laws and they are in compliance in all material respects with the
terms and conditions of all such Parent Environmental Permits. To the best
knowledge of Parent and each of its subsidiaries, no reason exists why Parent
and each of its subsidiaries would not be capable of continued operation of
their businesses in compliance in all material respects with the Parent
Environmental Permits and the applicable Environmental Laws.
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SECTION 4.13. Opinion of Financial Advisor. Parent has been advised by its
financial advisor, BT Wolfensohn, that in its opinion, as of the date thereof,
the consideration to be paid by Parent to the holders of Company Common Stock in
the Offer and the Merger, taken together, is fair from a financial point of view
to Parent, and will deliver a written copy of such opinion to the Company; it
being understood and acknowledged that such opinion has been rendered for the
benefit of the board of directors of Parent and may not be relied upon by the
Company, its affiliates or any of their respective stockholders.
ARTICLE V
CONDUCT OF BUSINESS BY THE COMPANY
SECTION 5.01. Conduct of Business by the Company. During the period from
the date of this Agreement and continuing until the earlier to occur of the
termination of this Agreement or the election of Merger Sub's designees
representing at least a majority of the members of the Board in accordance with
Section 1.03, the Company covenants and agrees that, unless Parent shall
otherwise agree in writing and unless otherwise expressly permitted hereunder,
the Company shall conduct its business and shall cause the businesses of its
subsidiaries to be conducted, and the Company and its subsidiaries shall not
take any action except, in the ordinary course of business and in a manner
consistent with past practice; and the Company shall use reasonable commercial
efforts to preserve substantially intact the business organization of the
Company and its subsidiaries, to keep available the services of the present
officers, employees and consultants of the Company and its subsidiaries, and to
preserve the present relationships of the Company and its subsidiaries with
customers, suppliers and other persons with which the Company or any of its
subsidiaries has significant business relations. By way of amplification and not
limitation, neither the Company nor any of its subsidiaries shall, during the
period from the date of this Agreement and continuing until the earlier to occur
of the termination of this Agreement or the election of Merger Sub's designees
representing at least a majority of the members of the Board in accordance with
Section 1.03, directly or indirectly, do or propose to do, any of the following
without the prior written consent of Parent, unless otherwise expressly
permitted hereunder:
(a) amend or otherwise change the Company's or any of its subsidiaries'
Certificate of Incorporation or By-Laws;
(b) issue, sell, pledge, dispose of or encumber, or authorize the issuance,
sale, pledge, disposition or encumbrance of, any shares of capital stock of any
class, or any options, warrants, convertible securities or other rights of any
kind to acquire any shares of capital stock, or any other ownership interest
(including, without limitation, any phantom interest) of the Company, any of its
subsidiaries or affiliates (except for the issuance of shares of the Company
Common Stock issuable pursuant to the exercise of Options under the Stock Option
Plans, which Options are outstanding on the date hereof);
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(c) sell, pledge, dispose of or encumber any assets of the Company or any
of its subsidiaries (except for (i) sales of assets in the ordinary course of
business and in a manner consistent with past practice and (ii) dispositions of
obsolete or worthless assets);
(d) amend or change the period (or permit any acceleration, amendment or
change) of exercisability of Options granted under the Stock Option Plans or
authorize cash payments in exchange for any such Options;
(e) (i) declare, set aside, make or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
any of its capital stock, except that a wholly owned subsidiary of the Company
may declare and pay a dividend to its parent, (ii) split, combine or reclassify
any of its capital stock or issue or authorize or propose the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock or (iii) amend the terms of, repurchase, redeem or otherwise
acquire, or permit any subsidiary to repurchase, redeem or otherwise acquire,
any of its securities or any securities of its subsidiaries, or propose to do
any of the foregoing;
(f) sell, transfer, license, sublicense or otherwise dispose of any
material Company Intellectual Property (other than in the ordinary course of
business consistent with past practice) or amend or modify any existing
agreements with respect to any material Company Intellectual Property or Third
Party Intellectual Property Rights;
(g) (i) acquire (by merger, consolidation or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof; (ii) incur any indebtedness for borrowed money (other than indebtedness
incurred under existing credit facilities in the ordinary course of business
consistent with past practices) or issue any debt securities or assume,
guarantee or endorse or otherwise as an accommodation become responsible for,
the obligations of any person, or make any loans or advances except to employees
in the ordinary course consistent with past practice; (iii) enter into or amend
any contract or agreement other than in the ordinary course of business; (iv)
authorize or make any capital expenditures or purchase of fixed assets that are
not currently budgeted and that in the aggregate exceed $500,000; (v) terminate
any Material Contract or amend any of its material terms (other than amendments
to existing credit arrangements designed to remedy defaults thereunder); or (vi)
enter into or amend any contract, agreement, commitment or arrangement to effect
any of the matters prohibited by this Section 5.01(g);
(h) except as set forth in Section 3.11(a) of the Company Disclosure
Schedule, increase the compensation payable or to become payable to its officers
or directors or grant any severance or termination pay to, or enter into any
employment or severance agreement with any director or officer of the Company or
any of its subsidiaries or establish, adopt, enter into or, except as required
by law, terminate or amend in any material respect any Employee Plan;
(i) take any action, other than as required by GAAP, to change
accounting policies or procedures or cash maintenance policies or procedures
(including, without limitation, procedures
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with respect to revenue recognition, capitalization of development costs,
payments of accounts payable and collection of accounts receivable);
(j) make any material Tax election inconsistent with past practice or
settle or compromise any material Tax liability, except to the extent the amount
of any such settlement or compromise has been reserved for on the consolidated
financial statements contained in the Company SEC Reports, or would not have a
Company Material Adverse Effect;
(k) pay, discharge, settle, or satisfy any lawsuits, claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business and consistent with past practice of liabilities reflected or
reserved against in the financial statements of the Company or incurred in the
ordinary course of business and consistent with past practice;
(l) except as may be required by law, take any action to terminate or amend
any Employee Plan;
(m) permit any material increase in the number of employees of the Company
or any of its subsidiaries employed by the Company or any of its subsidiaries,
as the case may be, on the date hereof other than pursuant to an employee plan
to be agreed to by the Company and Parent as promptly as practicable after the
date hereof acting reasonably and in good faith; or
(n) take or fail to take, or agree in writing or otherwise to take or fail
to take, any of the actions described in Section 5.01(a) through (m) above, or
any action which would make any of the representations or warranties of the
Company contained in this Agreement untrue or incorrect or prevent the Company
from performing or cause the Company not to perform its covenants hereunder or
result in any of the conditions to the Merger set forth herein not being
satisfied.
SECTION 5.02. No Solicitation. The Company will not, and will not permit or
cause any of its subsidiaries or any of the officers and directors of it or its
subsidiaries to, and shall direct it and its subsidiaries, employees, agents and
representatives (including any investment banker, attorney or accountant
retained by it or any of its subsidiaries) not to, directly or indirectly,
initiate, solicit, encourage or otherwise facilitate any inquiries or the making
of any proposal or offer with respect to a merger, reorganization, share
exchange, consolidation or similar transaction involving, or any purchase of 15%
or more of the consolidated assets or equity securities of the Company or any of
its subsidiaries, other than transfers of Company Common Stock between and among
entities associated or affiliated with the Stockholders (any such proposal or
offer being hereinafter referred to as an "Acquisition Proposal"). The Company
will not, and will not permit or cause any of its subsidiaries or any of the
officers and directors of it or its subsidiaries to, and shall direct its and
its subsidiaries' employees, agents and representatives (including any
investment banker, attorney or accountant retained by it or any of its
subsidiaries) not to, directly or indirectly, engage in any negotiations
concerning, or provide any confidential information or data to, or have any
discussions with, any person relating to an
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Acquisition Proposal, whether made before or after the date of this Agreement,
or otherwise facilitate any effort or attempt to make or implement an
Acquisition Proposal; provided, however, that nothing contained in this
Agreement shall prevent the Company or the Board from (i) complying with Rule
14e-2 promulgated under the Exchange Act with regard to an Acquisition Proposal
or (ii) at any time prior to the earlier to occur of (x) payment for shares of
Company Common Stock pursuant to the Offer or (y) the approval of the Merger by
the requisite vote of the stockholders of the Company (A) providing information
in response to a request therefor by a person who has made an unsolicited bona
fide written Acquisition Proposal if the Board receives from the person so
requesting such information an executed confidentiality agreement on terms
substantially equivalent to those contained in the Confidentiality Agreement (as
defined in Section 6.03); (B) engaging in any negotiations or discussions with
any person who has made an unsolicited bona fide written Acquisition Proposal;
or (C) recommending such an Acquisition Proposal to the stockholders of the
Company, if and only to the extent that, (i) in each such case referred to in
clause (A), (B) or (C) above, the Board determines in good faith after
consultation with outside legal counsel that such action is necessary in order
for its directors to comply with their fiduciary duties under applicable law and
(ii) in each case referred to in clause (B) or (C) above, the Board of Directors
of the Company determines in good faith (after consultation with its financial
advisor) that such Acquisition Proposal is reasonably likely to be consummated,
taking into account all legal, financial and regulatory aspects of the proposal
and the person making the proposal and would, if consummated, result in a more
favorable transaction than the transaction contemplated by this Agreement (any
such more favorable Acquisition Proposal being referred to in this Agreement as
a "Superior Proposal"). The Company will immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing. The Company agrees
that it will take the necessary steps to promptly inform the individuals or
entities referred to in the first sentence hereof of the obligations undertaken
in this Section 5.02 and in the Confidentiality Agreement. The Company will
notify Parent immediately if any such inquiries, proposals or offers are
received by, any such information requested from, or any such discussions or
negotiations are sought to be initiated or continued with, any of its
representatives indicating, in connection with such notice, the name of such
person and the material terms and conditions of any proposals or offers and
thereafter shall keep Parent informed, on a current basis, on the status and
terms of any such proposals or offers and the status of any such negotiations or
discussions. The Company also will promptly request each person that has
heretofore executed a confidentiality agreement in connection with its
consideration of an Acquisition Proposal to return all confidential information
heretofore furnished to such person by or on behalf of it or any of its
subsidiaries.
SECTION 5.03. Information Supplied. Each of the Company and Parent agrees,
as to itself and its subsidiaries, that none of the information supplied or to
be supplied by it or its subsidiaries for inclusion or incorporation by
reference in (i) the Offer Documents, the Schedule 14D-1 and the Schedule 14D-9
will, at the time of filing thereof and at the time of distribution thereof,
contain any untrue statement of material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, (ii) the Registration Statement on
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Form S-4 filed with the SEC by Parent in connection with the issuance of shares
of Parent Preferred Stock in the Merger (including the information statement or
proxy statement (as applicable) and prospectus (the "Prospectus/Proxy
Statement") constituting a part thereof) (the "S-4 Registration Statement")
will, at the time the S-4 Registration Statement becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading and (iii) the Prospectus/Proxy Statement and any amendment or
supplement thereto will, at the date of mailing to stockholders of the Company
and of Parent and at the times of the meetings of stockholders of the Company
and of Parent to be held in connection with the Merger, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Filings, Other Actions; Notification. (a) Parent and the
Company shall as promptly as practicable prepare and file with the SEC the
Prospectus/Proxy Statement, and Parent shall prepare and file with the SEC the
S-4 Registration Statement as promptly as practicable. Parent and the Company
each shall use all reasonable efforts to have the S-4 Registration Statement
declared effective under the Securities Act as promptly as practicable after
such filing, and promptly thereafter mail the Prospectus/Proxy Statement to the
stockholders of the Company and of Parent. Parent shall also use all reasonable
efforts to obtain prior to the effective date of the S-4 Registration Statement
all necessary state securities law or "blue sky" permits and approvals required
in connection with the Merger and to consummate the other transactions
contemplated by this Agreement and will pay all expenses incident thereto.
(b) Parent and the Company shall promptly prepare and file as soon as
practicable after the date hereof all documents required to be filed with the
United States Federal Trade Commission and the Department of Justice in order to
comply with the HSR Act. Parent and the Company shall promptly furnish all
materials thereafter required in connection therewith.
(c) Each of the Company and Parent shall cooperate with each other and use
(and shall cause its subsidiaries to use) all best efforts (i) to cause to be
done all things necessary, proper or advisable on its part under this Agreement
and applicable laws to consummate and make effective the Offer, the Merger and
the other transactions contemplated by this Agreement as soon as practicable,
including preparing and filing as promptly as practicable all documentation to
effect all necessary notices, reports and other filings and (ii) to obtain as
promptly as practicable all consents, registrations, approvals, permits and
authorizations necessary or advisable to be obtained from any third party and/or
any Governmental Entity in connection with, as a result of or in order to
consummate the Offer, the Merger or any of the other transactions contemplated
by this Agreement, including, without limitation, upon request of
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Parent, all material consents required in connection with the consummation of
the Offer and the Merger; provided, however, that nothing in this Section 6.01
shall require, or be construed to require, Parent, in connection with the
receipt of any regulatory approval, to proffer to, or agree to (i) sell or hold
separate and agree to sell or to discontinue to or limit, before or after the
Effective Time, any assets, businesses or interest in any assets or businesses
of Parent, the Company or any of their respective affiliates (or to consent to
any sale, or agreement to sell, or discontinuance or limitation by the Company
of any of its assets or businesses) or (ii) agree to any conditions relating to,
or changes or restriction in, the operations of any such asset or businesses
which, in either case, could, in the judgment of Parent, materially and
adversely impact the economic or business benefits to Parent of the transactions
contemplated by this Agreement. Subject to applicable laws relating to the
exchange of information, Parent and the Company shall have the right to review
in advance, and to the extent practicable each will consult the other on, all
the information relating to Parent or the Company, as the case may be, and any
of their respective subsidiaries, that appear in any filing made with, or
written materials submitted to, any third party or any Governmental Entity in
connection with the Offer, the Merger and the other transactions contemplated by
this Agreement. In exercising the foregoing right, each of the Company and
Parent shall act reasonably and as promptly as practicable.
(d) Each of the Company and Parent shall, upon request by the other,
furnish the other with all information concerning itself, its subsidiaries,
directors, officers and stockholders and such other matters as may be reasonably
necessary or advisable in connection with the Offer Documents, the Schedule
14D-1, the Schedule 14D-9, the Prospectus/Proxy Statement, the S-4 Registration
Statement or any other statement, filing, notice or application made by or on
behalf of Parent, the Company or any of their respective subsidiaries to any
third party or Governmental Entity in connection with the Offer, the Merger and
the other transactions contemplated by this Agreement.
(e) Each of the Company and Parent shall keep the other apprised of the
status of matters relating to completion of the transactions contemplated
hereby, including promptly furnishing the other with copies of notices or other
communications received by Parent or the Company, as the case may be, or any of
its subsidiaries, from any third party or any Governmental Entity with respect
to the Offer, the Merger and the other transactions contemplated by this
Agreement. The Company and Parent each shall give prompt notice to the other of
any change that is reasonably likely to result in a Company Material Adverse
Effect or a Parent Material Adverse Effect, as applicable.
(f) The Company shall provide Parent with a certificate, satisfying the
requirements of Treasury Regulations Sections 1.897-2(h) and 1.1445-3, that the
Company was not a United States real property holding corporation within the
meaning of Section 897(c) of the Code within any time during each of the
five-year periods ending on the dates the Offer is consummated and the Effective
Time occurs.
SECTION 6.02. Stockholders' Meetings. (a) The Company shall, in accordance
with Delaware Law and the Company's Certificate of Incorporation and By-Laws,
take all action
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necessary to convene a meeting of holders of Company Common Stock (the "Company
Stockholders' Meeting") as promptly as practicable but in no event more than 45
days after the S- 4 Registration Statement is declared effective, to consider
and vote upon the approval of the Merger. Subject to fiduciary obligations under
applicable law, the Board shall recommend such approval, shall not withdraw or
modify such recommendation and shall take all lawful action to solicit such
approval. Without limiting the generality of the foregoing, if the Board
withdraws or modifies its recommendation, the Company nonetheless shall cause
the Company Stockholders' Meeting to be convened and a vote taken with respect
to the Merger and the Board shall communicate to the Company's stockholders its
basis for such withdrawal or modification as contemplated by Section 251 of the
Delaware Law. Parent and Merger Sub shall cause all shares of Company Common
Stock purchased pursuant to the Offer and all other shares of Company Common
Stock owned by them or any of their subsidiaries or affiliates to be voted to
adopt and approve this Agreement and the Merger at the Company Stockholders'
Meeting.
(b) Parent shall, in accordance with Delaware Law and Parent's Certificate
of Incorporation and By-Laws, take all action necessary to convene a meeting of
holders of Parent Common Stock as promptly as practicable but in no event more
than 45 days after the S-4 Registration Statement is declared effective, to
consider and vote upon the approval of the Parent Preferred Stock Matters.
Parent's board of directors shall recommend such approval, shall not withdraw or
modify such recommendation and shall take all lawful action to solicit such
approval.
SECTION 6.03. Access to Information; Confidentiality. Upon reasonable
notice and subject to restrictions contained in confidentiality agreements to
which such party is subject, the Company and Parent shall (and they shall cause
each of their respective subsidiaries to) afford to the officers, employees,
accountants, counsel and other representatives of the other party, reasonable
access, during the period prior to the Effective Time, to all its properties,
books, contracts, commitments and records and, during such period, the Company
and Parent shall (and they shall cause each of their respective subsidiaries to)
furnish promptly to the other party all information concerning its business,
properties and personnel as such party may reasonably request, and shall make
available to the other party the appropriate individuals (including attorneys,
accountants and other professionals) for discussion of its business, properties
and personnel as such party may reasonably request. The Company and Parent shall
keep such information confidential in accordance with the terms of the
confidentiality agreement dated April 23, 1998 (the "Confidentiality Agreement")
between Parent and the Company's subsidiary. Notwithstanding the foregoing, no
such review, inquiry or investigation shall affect any representations or
warranties of any parties herein or the conditions to the obligations of any
parties.
SECTION 6.04. Consents, Approvals. Each of the Company and Parent shall use
reasonable efforts to obtain all consents, waivers, approvals, authorizations or
orders (including, without limitation, all approvals of Governmental Entities),
and the Company and Parent shall make all filings (including, without
limitation, all filings with United States and foreign governmental or
regulatory agencies) required in connection with the authorization, execution
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and delivery of this Agreement by the Company and Parent and the consummation by
them of the transactions contemplated hereby.
SECTION 6.05. Stock Options. The Board (or a committee thereof) shall adopt
such resolutions and take such other actions, if any, as may be required to
provide that as soon as practicable after the date of the consummation of the
Offer, and contingent upon the Offer, all outstanding unexercised options
granted under the Employee Plan and the Directors' Plan shall be canceled and
each holder of an unexercised stock option shall be entitled to receive a cash
payment equal to the product of (x) the number of shares of Company Common Stock
underlying such unexercised stock option and (y) the excess of (1) the Per Share
Amount over (2) the per share exercise price of the unexercised stock option.
SECTION 6.06. Employment Matters. (a) Except as contemplated by this
Agreement, for not less than one year following the Effective Time, Parent shall
cause the Surviving Corporation to maintain compensation and employee benefits
plans and arrangements and perquisites for employees of the Company and its
subsidiaries that, in the aggregate, are substantially comparable to those
provided pursuant to their compensation and employee benefit plans and
arrangements and perquisites in effect on the date hereof. Notwithstanding the
above, Parent and Surviving Corporation shall have the right in the good faith
exercise of their managerial discretion, to terminate or make changes or cause
changes to be made in compensation, benefits and other terms of employment of
any employee and to terminate the employment of any employee.
(b) Parent shall cause the Surviving Corporation to perform the Company's
obligations under the Termination Benefits Agreements, dated as of April 11,
1997, between the Company and each of its executive officers unless any such
officer agrees otherwise.
SECTION 6.07. Agreements of Affiliates. The Company shall deliver to
Parent, prior to the date the S-4 Registration Statement becomes effective under
the Securities Act, a letter (an "Affiliate Letter") identifying all persons who
are, or may be deemed to be, at the time of the Company Stockholders' Meeting,
"affiliates" of the Company for purposes of Rule 145 under the Securities Act.
The Company shall use its best efforts to cause each person who is identified as
an "affiliate" in the Affiliate Letter to deliver to Parent, prior to the
Effective Time, a written agreement (an "Affiliate Agreement") in substantially
the form of Exhibit E hereto.
SECTION 6.08. Indemnification. (a) The Certificate of Incorporation of the
Surviving Corporation shall contain the provisions with respect to
indemnification set forth in the Certificate of Incorporation and By-Laws of the
Company, which provisions shall not be amended, repealed or otherwise modified
for a period of six years from the Effective Time in any manner that would
adversely affect the rights thereunder of individuals who between the date
hereof and the Effective Time were directors or officers of the Company, unless
such modification is required by law.
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(b) After the election of Merger Sub's designees representing at least a
majority of the members of the Board in accordance with Section 1.03, the
Surviving Corporation shall, and Parent shall cause the Surviving Corporation,
to the fullest extent permitted under applicable law or under the Surviving
Corporation's Certificate of Incorporation or By-Laws, indemnify and hold
harmless, each director and officer of the Company or any of its subsidiaries
(collectively, the "Indemnified Parties") against any costs or expenses
(including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to any action or omission by such
director or officer by virtue of their holding the office of director or officer
occurring at or prior to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement) for a period of six years after the
Effective Time. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i) any
counsel retained by the Indemnified Parties for any period after the Effective
Time shall be reasonably satisfactory to the Surviving Corporation and Parent
and (ii) neither the Surviving Corporation nor Parent shall be liable for any
settlement effected without its written consent (which consent shall not be
unreasonably withheld).
(c) For a period of six years after the Effective Time, Parent shall cause
to be maintained in effect the current policies of directors' and officers'
liability insurance maintained by the Company (provided that Parent may
substitute therefor policies with reputable and financially sound carriers of at
least the same coverage and amounts containing terms and conditions which are no
less advantageous ) with respect to claims arising from or related to facts or
events that occurred at or before the Effective Time; provided, however, that
Parent shall not be obligated to make annual premium payments for such insurance
to the extent such premiums exceed 150% of the annual premiums paid as of the
date hereof by the Company for such insurance (such 150% amount, the "Maximum
Premium"). If such insurance coverage cannot be obtained at all, or can only be
obtained at an annual premium in excess of the Maximum Premium, Parent shall
maintain the most advantageous policies of directors' and officers' insurance
obtainable for an annual premium equal to the Maximum Premium; provided further,
if such insurance coverage cannot be obtained at all, Parent shall purchase all
available extended reporting periods with respect to pre-existing insurance in
an amount that, together with all other insurance purchased pursuant to this
Section 6.08(c), does not exceed the Maximum Premium. The Company represents to
Parent that the Maximum Premium is $288,000. Parent agrees, and will cause the
Company, not to take any action that would have the effect of limiting the
aggregate amount of insurance coverage required to be maintained for the
individuals referred to in this Section 6.08(c).
SECTION 6.09. Notification of Certain Matters. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
(i) the occurrence, or non-occurrence, of any event the occurrence, or
non-occurrence, of which would be likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate and (ii) any failure of
the Company, Parent or Merger Sub, as the case may be, materially to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it
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hereunder; provided, however, that the delivery of any notice pursuant to this
Section shall not limit or otherwise affect the remedies available hereunder to
the party receiving such notice.
SECTION 6.10. Further Action. Upon the terms and subject to the conditions
hereof, each of the parties hereto in good faith shall use all commercially
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all other things necessary, proper or advisable to consummate
and make effective as promptly as practicable the transactions contemplated by
this Agreement, to obtain in a timely manner all necessary waivers, consents and
approvals and to effect all necessary registrations and filings, and to
otherwise satisfy or cause to be satisfied all conditions precedent to its
obligations under this Agreement.
SECTION 6.11. Public Announcements. The initial press release with respect
to the execution of this Agreement shall be a joint press release acceptable to
Parent and the Company. Thereafter, so long as this Agreement is in effect,
Parent and the Company shall consult with each other before issuing any press
release or otherwise making any public statements with respect to the Merger or
this Agreement and shall not issue any such press release or make any such
public statement without the prior consent of the other party, which shall not
be unreasonably withheld; provided, however, that a party may, without the prior
consent of the other party, issue such press release or make such public
statement as may upon the advice of counsel be required by law or the NYSE if it
has used all reasonable efforts to consult with the other party.
SECTION 6.12. Listing and Delisting. Parent shall use its best efforts to
cause the shares of Parent Preferred Stock to be issued in the Merger, the
shares of Parent Common Stock issuable upon conversion of the Parent Preferred
Stock issuable in the Merger, and the Exchange Debentures (as defined in Exhibit
B) prior to or upon issuance thereof, to be approved for listing on the NYSE.
The Surviving Corporation shall use its best efforts to cause the Common Stock
to be de-listed from the NYSE and de-registered under the Exchange Act as soon
as practicable following the Effective Time.
SECTION 6.13. Expenses. The Surviving Corporation shall pay all charges and
expenses, including those of the Exchange Agent, in connection with the
transactions contemplated in Article II. Except as otherwise provided in Section
8.03, whether or not the Merger is consummated, all other costs and expenses
incurred in connection with this Agreement and the Offer, the Merger and the
other transactions contemplated by this Agreement shall be paid by the party
incurring such expense, except that expenses incurred in connection with the
filing fee for the S-4 Registration Statement and printing and mailing the
Prospectus/Proxy Statement and the S-4 Registration Statement shall be shared
equally by Parent and the Company.
SECTION 6.14. Financing. Parent shall use its best efforts to put in place
the financing described in the letter dated October 21, 1998 (the "Commitment
Letter") from Bankers Trust Company to Parent. Parent shall use its best efforts
to ensure that the conditions described in the Commitment Letter are fulfilled
in a timely manner, including, without
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limitation, the condition that the recommendation of the board of directors of
Parent with respect to the transactions referred to therein shall not have been
modified in any material respect or withdrawn. The Company shall cooperate with
all reasonable requests of Parent, and take all actions as may be reasonably
requested by Parent, in connection with obtaining such financing.
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01. Conditions to Obligation of Each Party to Effect the Merger.
The respective obligations of each party to effect the Merger shall be subject
to the satisfaction at or prior to the Effective Time of each of the following
conditions:
(a) Effectiveness of the Registration Statement. The S-4 Registration
Statement shall have become effective under the Securities Act. No stop order
suspending the effectiveness of the S-4 Registration Statement shall have been
issued by the SEC and no proceedings for that purpose and no similar proceeding
in respect of the Prospectus/Proxy Statement shall have been initiated or
threatened by the SEC;
(b) Stockholder Approvals. This Agreement and the Transactions shall have
been approved and adopted by the requisite vote of the stockholders of the
Company and the Parent Preferred Stock Matters shall have been approved and
adopted by the requisite vote of the stockholders of Parent;
(c) No Injunctions or Restraints; Illegality. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other similar binding legal restraint or prohibition
preventing the consummation of the Merger shall be in effect, and there shall
not be any action taken, or any statute, rule, regulation or order enacted,
entered, enforced or deemed applicable to the Merger, which makes the
consummation of the Merger illegal; and
(d) Offer. Parent, Merger Sub or their affiliates shall have purchased, or
caused to be purchased, shares of Company Common Stock pursuant to the Offer or
pursuant to the Stockholders Agreement.
SECTION 7.02. Additional Condition to Obligation of the Company. The
obligation of the Company to effect the Merger is also subject to the condition
that the shares of Parent Preferred Stock to be issued in the Merger and the
shares of Parent Common Stock issuable upon conversion of Parent Preferred Stock
shall have been approved for listing, subject to official notice of issuance, on
the NYSE.
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ARTICLE VIII
TERMINATION
SECTION 8.01. Termination. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time, notwithstanding
approval thereof by the stockholders of the Company:
(a) by mutual written consent duly authorized by the respective boards of
directors of Parent and the Company; or
(b) by either Parent or the Company if the Merger shall not have been
consummated by October 31, 2000 (provided that the right to terminate this
Agreement under this Section 8.01(b) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the cause of or
resulted in the failure of the Merger to occur on or before such date); or
(c) by either Parent or the Company if a court of competent jurisdiction or
Governmental Entity shall have issued a non-appealable final order, decree or
ruling or taken any other action, in each case having the effect of permanently
restraining, enjoining or otherwise prohibiting the Merger; or
(d) by Parent or the Company, if Company Common Stock has not been
purchased pursuant to the Offer or pursuant to the Stockholders Agreement prior
to April 30, 1999 (provided that Parent or the Company, as applicable, is not
then in material breach hereof); or
(e) as long as Company Common Stock has not been purchased pursuant to the
Offer or pursuant to the Stockholders Agreement, by Parent, if (i) the Board
shall withdraw, modify or change its recommendation of this Agreement, the Offer
or the Merger in a manner adverse to Parent or shall have resolved to do so; or
(ii) the Board shall have recommended, taken a "neutral" position with respect
to, resolved to accept or accepted an Acquisition Proposal; or
(f) as long as Company Common Stock has not been purchased pursuant to the
Offer or pursuant to the Stockholders Agreement, by Parent, upon a breach of any
representation, warranty, covenant or agreement on the part of the Company, set
forth in this Agreement or if any representation or warranty of the Company,
shall have become untrue, in either case, such that the breach would give rise
to the failure of a condition set forth in Exhibit A (a "Terminating Breach"),
provided that, if such Terminating Breach is curable prior to the expiration of
30 days from its occurrence (but in no event later than April 30, 1999) by the
Company through the exercise of its reasonable best efforts and for so long as
the Company continues to exercise such reasonable best efforts, Parent may not
terminate this Agreement under this Section 8.01(f) until the expiration of such
period without such Terminating Breach having been cured; or
(g) by the Company if, as of any scheduled or extended expiration date of
the Offer occurring later than 150 days after the commencement by Merger Sub of
the Offer, all of the
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conditions to the Offer set forth in Exhibit A have been satisfied or waived
except for the condition set forth in paragraph (j) of Exhibit A; provided, that
the Company may not terminate this Agreement pursuant to this Section 8.01(g) if
the Company's failure to fulfill any obligation under this Agreement has been
the cause of, or resulted in, the failure to satisfy the condition set forth in
paragraph (j) of Exhibit A; or
(h) by Parent if the Offer has expired or has been terminated in accordance
with the terms set forth in this Agreement (including Exhibit A) without Company
Common Stock having been purchased pursuant to the Offer.
SECTION 8.02. Effect of Termination. In the event of the termination of
this Agreement and the abandonment of the Merger pursuant to Section 8.01, this
Agreement shall forthwith become void and there shall be no liability on the
part of any party hereto (or any of its affiliates, directors, officers,
employees, agents, legal and financial advisors or other representatives) except
(i) as set forth in Sections 6.13, 8.03 and 9.01 and (ii) nothing herein shall
relieve any party from liability or damages resulting from any breach of this
Agreement.
SECTION 8.03. Fees and Expenses. (a) Except as set forth in Section 6.13
and this Section 8.03, all fees and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses, whether or not the Merger is consummated.
(b) The Company shall pay Parent a fee of $25,000,000, plus actual,
documented and reasonable out-of-pocket expenses of Parent, not in excess of
$5,000,000, relating to the transactions contemplated by this Agreement
(including, but not limited to, fees and expenses of Parent's counsel), upon the
earliest to occur of the following events:
(i) the termination of this Agreement by Parent pursuant to Section
8.01(e) and the Minimum Condition shall not have been satisfied at the
scheduled or any extended expiration date of the Offer following the
occurrence of the event giving rise to Parent's right to terminate this
Agreement pursuant to Section 8.01(e); or
(ii) the termination of this Agreement by Parent pursuant to Section
8.01(h) if any person or "group" (within the meaning of Section 13(d)(3) of
the Exchange Act) shall have publicly made an Acquisition Proposal, the
Offer shall have remained open until at least the scheduled or any extended
expiration date following the date such Acquisition Proposal is made and
the Minimum Condition shall not have been satisfied at the scheduled or any
extended expiration date of the Offer; or
(iii) the termination of this Agreement by Parent pursuant to Section
8.01(f) if any person or "group" (within the meaning of Section 13(d)(3) of
the Exchange Act) shall have publicly made an Acquisition Proposal and the
Company enters into a binding written agreement concerning a transaction
that constitutes an Acquisition Proposal within one year after the date of
such termination;
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provided, however, that no fee or expense reimbursement shall be payable
pursuant to this Section 8.03(b) if Parent or Merger Sub shall then be in
willful material breach of its obligations hereunder.
(c) Parent shall pay the Company a fee of $10,000,000, plus actual,
documented and reasonable out-of-pocket expenses of the Company, not in excess
of $2,000,000, relating to the transactions contemplated by this Agreement
(including, but not limited to, fees and expenses of the Company's counsel),
upon the termination of this Agreement by the Company pursuant to Section
8.01(g) if the condition set forth in paragraph (j) of Exhibit A has not been
satisfied due solely to the failure of one or more of the Excluded Conditions;
provided, however, that no fee or expense reimbursement shall be payable
pursuant to this Section 8.03(c) if the Company shall then be in willful
material breach of its obligations hereunder. For purposes of this Section
8.03(c), "Excluded Conditions" means the conditions precedent identified in the
following paragraphs under the heading "Conditions Precedent to the Initial
Loans" in Exhibit B to the Commitment Letter: (iii) (to the extent it relates to
the recommendation of the board of directors of Parent), (v) (change of control
of Parent), (vii) (material adverse effect to the extent it relates to Parent),
(xiii) (indebtedness of Parent) and (xiv) (material adverse effect on markets).
(d) The fee payable pursuant to Section 8.03(b) or Section 8.03(c) shall be
paid within one business day after the first to occur of the events described in
Section 8.03(b)(i), (ii) or (iii) or Section 8.03(c).
(e) All transfer, documentary, sales, use, stamp, registration and other
such taxes (including, without limitation, any penalties and interest) incurred
in connection with this Agreement by the Company and its stockholders
(including, without limitation, any New York States Real Estate Transfer Tax,
New York City Real Property Transfer Tax and New York State Stock Transfer Tax
and other similar taxes imposed by any other State of the United States or other
taxing jurisdiction) shall be borne and paid by Parent, and Parent will, at its
own expense, file all necessary Tax Returns with respect to all such taxes and,
if required by applicable law, the Company will, and will cause its subsidiaries
to, join in the execution of any such Tax Returns.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Effectiveness of Representations, Warranties and Agreements.
Except as otherwise provided in this Section 9.01, the representations,
warranties and agreements of each party hereto shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
any other party hereto, any person controlling any such party or any of their
officers or directors, whether prior to or after the execution of this
Agreement. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 8.01, as the case may be, except that the agreements set
forth in Article II and in Section 6.05 (Stock Options), 6.08 (Indemnification)
and 6.12 (Listing and Delisting) shall survive the
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consummation of the Merger and those set forth in Section 6.13 (Expenses),
Section 8.02 (Effect of Termination) and Section 8.03 (Fees and Expenses) shall
survive termination of this Agreement. The Confidentiality Agreement shall
survive termination of this Agreement as provided therein.
SECTION 9.02. Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered or mailed if delivered personally or mailed by
registered or certified mail (postage prepaid, return receipt requested) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like changes of address shall be effective upon receipt)
or sent by electronic transmission, with confirmation received, to the telecopy
number specified below:
(a) If to Parent or Merger Sub:
Superior Telecom Inc.
1790 Broadway
New York, New York 10019-1412
Telecopier No.: (212) 757-3423
Attention: General Counsel
With a copy to:
Proskauer Rose LLP
1585 Broadway
New York, New York 10036
Telecopier No.: (212) 969-2900
Attention: Ronald R. Papa, Esq.
(b) If to the Company:
Essex International Inc.
1601 Wall Street
Fort Wayne, Indiana 46802
Telecopier No.: (219) 461-4565
Attention: General Counsel
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With a copy to:
Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, California 94306
Telecopier No.: (650) 857-0663
Attention: Richard Climan, Esq.
and
Bessemer Partners & Co.
630 Fifth Avenue
New York, New York 10111
Telecopier No.: (212) 969-9032
Attention: Robert D. Lindsay
and
Cravath, Swaine & Moore
825 Eighth Avenue
New York, New York 10019
Telecopier No.: (212) 474-3700
Attention: Richard Hall, Esq.
SECTION 9.03. Certain Definitions. For purposes of this Agreement, the
term:
(a) "affiliates" means a person that directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under common control
with, the first mentioned person; including, without limitation, any partnership
or joint venture in which the first mentioned person (either alone, or through
or together with any other subsidiary) has, directly or indirectly, an interest
of 10 percent or more;
(b) "beneficial owner" with respect to any shares of Company Common Stock,
means a person who shall be deemed to be the beneficial owner of such shares (i)
which such person or any of its affiliates or associates beneficially owns,
directly or indirectly, (ii) which such person or any of its affiliates or
associates (as such term is defined in Rule 12b-2 under the Exchange Act) has,
directly or indirectly, (A) the right to acquire (whether such right is
exercisable immediately or subject only to the passage of time), pursuant to any
agreement, arrangement or understanding or upon the exercise of consideration
rights, exchange rights, warrants or options, or otherwise, or (B) the right to
vote pursuant to any agreement, arrangement or understanding or (iii) which are
beneficially owned, directly or indirectly, by any other persons with whom such
person or any of its affiliates or person with whom such person or any of its
affiliates or
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associates has any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any shares;
(c) "business day" means any day other than a day on which banks in New
York City are required or authorized to be closed;
(d) "Company Material Adverse Effect" means any change or effect that,
individually or when taken together with all other such changes or effects that
have occurred prior to the date of determination of the occurrence of the
Company Material Adverse Effect, is materially adverse to the business, results
of operations, or financial condition of the Company and its subsidiaries, taken
as a whole; provided, however, that in determining whether there has been a
Company Material Adverse Effect, any adverse effect attributable to the
following shall be disregarded: (i) general economic or business conditions;
(ii) general industry conditions; (iii) the taking of any action permitted or
required by this Agreement; (iv) the announcement or pendency of the Offer, the
Merger or any of the other transactions contemplated by this Agreement; (v) the
breach by Parent or Merger Sub of this Agreement; and (vi) a decline in the
Company's stock price; in each case, to the extent that such adverse effect is
attributable to such event;
(e) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of stock, as trustee or
executor, by contract or credit arrangement or otherwise;
(f) "Environment" means any surface or subsurface physical medium or
natural resources, including air, land, soil, surface waters, ground waters,
stream and river sediments, biota and any indoor area, surface or physical
medium;
(g) "Environmental Laws" means any applicable federal, foreign, state,
local or common law, rule, regulation, ordinance, code, order or judgment
(including any binding judicial or administrative interpretations, guidances,
directives, policy statements or opinions) relating to the injury to, or the
pollution or protection of, human health and safety or the Environment;
(h) "Environmental Liabilities" means any claims, judgments, damages
(including punitive damages), losses, penalties, fines, liabilities,
encumbrances, liens, violations, costs and expenses (including attorneys' and
consultants' fees) of investigation, remediation, monitoring or defense of any
matter relating to human health, safety or the Environment of whatever kind or
nature by any party, entity or authority, (A) which are incurred as a result of
(i) the existence of Hazardous Substances generated by the Company or any of its
subsidiaries or in, on, under, at or emanating from any Real Property, (ii) the
Company's or any of its subsidiary's offsite transportation, treatment, storage
or disposal of Hazardous Substances or (iii) the violation of any Environmental
Laws or (B) which arise under Environmental Laws;
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(i) "Governmental Entity" means any United States or foreign governmental,
administrative or regulatory authority, commission, body, agency or other
authority;
(j) "Hazardous Substances" means petroleum, petroleum products,
petroleum-derived substances, radioactive materials, hazardous wastes,
polychlorinated biphenyls, lead based paint, radon, urea formaldehyde, asbestos
or any materials containing asbestos, and any materials or substances regulated
or defined as or included in the definition of "hazardous substances,"
"hazardous materials," "hazardous constituents," "toxic substances,"
"pollutants," "contaminants" or regulated under any Environmental Law by reason
of toxicity, carcinogenicity, ignitability, corrosivity or reactivity;
(k) "Parent Material Adverse Effect" means any change or effect that,
individually or when taken together with all other such changes or effects that
have occurred prior to the date of determination of the occurrence of the Parent
Material Adverse Effect, is materially adverse to the business, results of
operations, or financial condition of Parent and its subsidiaries, taken as a
whole; provided, however, that in determining whether there has been a Parent
Material Adverse Effect, any adverse effect attributable to the following shall
be disregarded: (i) general economic or business conditions; (ii) general
industry conditions; (iii) the taking if any action permitted or required by
this Agreement; (iv) the announcement or pendency of the Offer, the Merger or
any of the other transactions contemplated by this Agreement; (v) the breach by
the Company of this Agreement; and (vi) a decline in Parent's stock price; in
each case, to the extent that such adverse effect is attributable to such event;
(l) "person" means an individual, corporation, partnership, association,
trust, unincorporated organization, other entity or group (as defined in Section
13(d)(3) of the Exchange Act);
(m) "subsidiary" or "subsidiaries" of the Company, the Surviving
Corporation, Parent or any other person means any corporation, partnership,
joint venture or other legal entity of which the Company, the Surviving
Corporation, Parent or such other person, as the case may be (either alone or
through or together with any other subsidiary), owns, directly or indirectly,
more than 50% of the stock or other equity interests the holders of which are
generally entitled to vote for the election of the board of directors or other
governing body of such corporation or other legal entity;
(n) "Tax" or "Taxes" shall mean taxes, fees, levies, duties, tariffs,
imposts and governmental impositions or charges of any kind in the nature of (or
similar to) taxes, payable to any federal, state, provincial, local or foreign
taxing authority, including (without limitation) (i) income, franchise, profits,
gross receipts, ad valorem, net worth, value added, sales, use, service, real or
personal property, special assessments, capital stock, license, payroll,
withholding, employment, social security, workers' compensation, unemployment
compensation, utility, severance, production, excise, stamp, occupation,
premiums, windfall profits, transfer and gains taxes and (ii) interest,
penalties, additional taxes and additions to tax imposed with respect thereto;
and
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(o) "Tax Returns" shall mean returns, reports and information statements
with respect to Taxes required to be filed with the IRS or any other taxing
authority, domestic or foreign, including, without limitation, consolidated,
combined and unitary tax returns.
SECTION 9.04. Amendment. Subject to 1.03(b), this Agreement may be amended
by the parties hereto by action taken by or on behalf of their respective boards
of directors at any time prior to the Effective Time; provided, however, that,
after approval of the Merger by the stockholders of the Company, no amendment
may be made which by law requires further approval by such stockholders without
such further approval. This Agreement may not be amended except by an instrument
in writing signed by the parties hereto.
SECTION 9.05. Waiver. Subject to Section 1.03(b), at any time prior to the
Effective Time, any party hereto may with respect to any other party hereto (a)
extend the time for the performance of any of the obligations or other acts, (b)
waive any inaccuracies in the representations and warranties contained herein or
in any document delivered pursuant hereto or (c) waive compliance with any of
the agreements or conditions contained herein. Any such extension or waiver
shall be valid if set forth in an instrument in writing signed by the party or
parties to be bound thereby.
SECTION 9.06. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 9.07. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
SECTION 9.08. Entire Agreement. This Agreement (including any exhibits
hereto), the Company Disclosure Schedule, the Parent Disclosure Schedule and the
Confidentiality Agreement constitute the entire agreement and supersede all
prior agreements and undertakings both written and oral, among the parties, or
any of them, with respect to the subject matter hereof.
SECTION 9.09. Assignment, Merger Sub. This Agreement shall not be assigned
by operation of law or otherwise, except that Merger Sub may assign all of its
rights hereunder to any direct or indirect wholly owned subsidiary of Parent,
provided that no such assignment shall relieve Merger Sub of its obligations
hereunder.
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SECTION 9.10. Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied (including, without limitation, Section 6.06 (Employment
Matters)), is intended to or shall confer upon any other person any right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement,
other than Article II and Sections 6.05 (Stock Options), 6.08 (Indemnification)
and 6.12 (Listing and Delisting).
SECTION 9.11. Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
SECTION 9.12. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF DELAWARE.
SECTION 9.13. Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 9.14. Waiver of Jury Trial. EACH OF PARENT, MERGER SUB AND THE
COMPANY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL
RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED
UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
SUPERIOR TELECOM INC.
By: /s/ Steven S. Elbaum
-------------------------------------------
Name: Steven S. Elbaum
Title: Chairman of the Board,
President and Chief Executive Officer
SUT ACQUISITION CORP.
By: /s/ Steven S. Elbaum
-------------------------------------------
Name: Steven S. Elbaum
Title: Chairman of the Board,
President and Chief Executive Officer
ESSEX INTERNATIONAL INC.
By: /s/ Steven R. Abbott
-------------------------------------------
Name: Steven R. Abbott
Title: President and Chief Executive Officer
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EXHIBIT A
CONDITIONS TO THE OFFER
Notwithstanding any other provisions of the Offer, subject to the terms of
the Agreement, Merger Sub shall not be required to accept for payment or pay for
any shares of Company Common Stock tendered pursuant to the Offer, and may
terminate or amend the Offer and may postpone the acceptance for payment of, or
payment for, shares of Company Common Stock tendered, if, at any scheduled or
extended expiration date of the Offer, (i) the Minimum Condition shall not have
been satisfied, (ii) any applicable waiting period under the HSR Act shall not
have expired or been terminated prior to the expiration of the Offer (the "HSR
Condition") or (iii) any of the following conditions shall exist:
(a) there shall have been instituted or be pending or threatened any action
or proceeding by any Governmental Entity or any other person (in the case of any
suit, action or proceeding by a person other than a Governmental Entity, such
suit, action or proceeding having a reasonable likelihood of success in regard
to the relief sought in any of clauses (i) through (v) below): (i) challenging
or seeking to make illegal, materially delay or otherwise directly or indirectly
restrain or prohibit or make materially more costly the making of the Offer, the
acceptance for payment of, or payment for, any shares of Company Common Stock by
Parent, Merger Sub or any other affiliate of Parent, or the consummation of any
other Transaction, or seeking to obtain material damages in connection with any
Transaction; (ii) seeking to prohibit or limit materially the ownership or
operation by the Company, Parent or any of their subsidiaries of all or any
material portion of the business or assets of the Company, Parent or any of
their subsidiaries, or to compel the Company, Parent or any of their
subsidiaries to dispose of or hold separate all or any material portion of the
business or assets of the Company, Parent or any of their subsidiaries, as a
result of the Transactions; (iii) seeking to impose or confirm material
limitations on the ability of Parent, Merger Sub or any other affiliate of
Parent to exercise effectively full rights of ownership of any shares of Company
Common Stock, including, without limitation, the right to vote any shares of
Company Common Stock acquired by Merger Sub pursuant to the Offer or otherwise
on all matters properly presented to the Company's stockholders, including,
without limitation, the approval and adoption of this Agreement and the
transactions contemplated hereby; (iv) seeking to require divestiture by Parent,
Merger Sub or any other affiliate of Parent of any shares of Company Common
Stock; or (v) which otherwise has a Company Material Adverse Effect;
(b) there shall have been any action taken, or any statute, rule,
regulation, legislation, interpretation, judgment, order or injunction enacted,
entered, enforced, promulgated, amended, issued or deemed applicable to (i)
Parent, the Company or any subsidiary or affiliate of Parent or the Company or
(ii) the Offer, the Merger or any Transaction, by any legislative body, court,
government or Governmental Entity, domestic or foreign, other than the routine
application of the waiting period provisions of the HSR Act to the Offer or the
Merger, which is reasonably likely in the good faith judgment of the Parent to
result, directly or indirectly, in any of the consequences referred to in
clauses (i) through (v) of paragraph (a) above;
A-1
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(c) after the date of the Agreement, there shall have occurred any change,
condition, event or development that has a Company Material Adverse Effect;
(d) there shall have occurred (i) any general suspension of, or limitation
on prices for, trading in securities on the NYSE for a period in excess of 24
hours (excluding suspensions or limitations resulting solely from physical
damage or interference with such exchange not related to market conditions),
(ii) a declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (iii) a commencement of a war or armed
hostilities or other similar national or international crisis directly or
indirectly involving the United States having, or which could reasonably be
expected to have, a substantial continuing general effect on business and
financial conditions in the United States or (iv) in the case of any of the
foregoing existing on the date hereof, in the good faith judgment of the Parent
a material acceleration or worsening thereof;
(e) (i) the Board or any committee thereof shall have withdrawn or modified
in a manner adverse to Parent or Merger Sub the approval or recommendation of
the Offer, the Merger or the Agreement, or approved or recommended any takeover
proposal or any other acquisition of shares of Company Common Stock other than
the Offer and the Merger or (ii) the Board or any committee thereof shall have
resolved to do any of the foregoing;
(f) any representation or warranty of the Company in the Agreement shall
not be true and correct as if such representation and warranty was made as of
the date of the expiration of the Offer, except for (i) changes contemplated by
the Agreement, (ii) those representations and warranties which address matters
only as of a particular date (which shall be determined as of such date) and
(iii) where the failure to be true and correct would not, together with all
other such failures, have a Company Material Adverse Effect;
(g) the Company or any other person (other than Parent and Merger Sub)
shall have failed to perform in any material respect any obligation or to comply
in any material respect with any agreement or covenant of the Company to be
performed or complied with by it under the Agreement;
(h) the Agreement shall have been terminated in accordance with its terms;
(i) Merger Sub and the Company shall have agreed that Merger Sub shall
terminate the Offer or postpone the acceptance for payment of or payment for
shares of Company Common Stock thereunder; or
(j) the conditions set forth in the Commitment Letter shall not have been
satisfied or waived or the financing contemplated thereby shall not have been
effected;
which, in the sole judgment of Merger Sub in any such case, and regardless of
the circumstances (including any action or inaction by Parent or any of its
affiliates) giving rise to any such
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condition, makes it inadvisable to proceed with the Offer and/or with such
acceptance for payment of or payment for the shares of Company Common Stock.
The foregoing conditions are for the sole benefit of Merger Sub and Parent
and may be asserted by Merger Sub or Parent regardless of the circumstances
giving rise to any such condition or may, subject to Section 1.01 of the
Agreement, be waived by Merger Sub or Parent in whole or in part at any time and
from time to time in their sole discretion. The failure by Parent or Merger Sub
at any time to exercise any of the foregoing rights shall not be deemed a waiver
of any such right; the waiver of any such right with respect to particular facts
and other circumstances shall not be deemed a waiver with respect to any other
facts and circumstances; and each such right shall be deemed an ongoing right
that may be asserted at any time and from time to time.
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STOCKHOLDERS AGREEMENT
AGREEMENT, dated as of October 21, 1998, among Superior Telecom Inc.,
a Delaware corporation ("Parent"), SUT Acquisition Corp., a Delaware corporation
and a wholly owned subsidiary of Parent (the "Merger Sub"), and Bessemer
Holdings, L.P., Bessec Holdings, L.P., Steven R. Abbott, The Woods Foundation,
Woods 1994 Family Partnership, L.P., Ward W. Woods, North Hailey Corporation,
Nebris Corporation, Robert D. Lindsay, Lindsay 1994 Family Partnership, L.P.,
Demarest Corporation, Old Hundred Corporation, Craighall Corporation and Rodney
A. Cohen (each, a "Stockholder", and collectively, the "Stockholders").
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this
Agreement, Parent, Merger Sub and Essex International Inc., a Delaware
corporation (the "Company"), have entered into an Agreement and Plan of Merger
(as such agreement may hereafter be amended from time to time, the "Merger
Agreement"), pursuant to which Merger Sub will be merged with and into the
Company (the "Merger");
WHEREAS, in furtherance of the Merger, Parent and the Company desire
that as soon as practicable (and not later than five business days) after the
announcement of the execution of the Merger Agreement, Merger Sub shall commence
a cash tender offer (the "Offer") to purchase at a price of $32.00 per share up
to 22,562,135 outstanding shares of Common Stock (as defined in Section 1
hereof), including a pro rata portion of the Shares (as defined in Section 2
hereof) beneficially owned by each of the Stockholders; and
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that each of the Stockholders agrees, and each of
the Stockholders has agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
1. Definitions. For purposes of this Agreement:
(a) "Beneficially Own" or "Beneficial Ownership" with respect to any
securities (other than outstanding unexercised options granted under the
Stock Option Plans) shall mean having "beneficial ownership" of such
securities (as determined pursuant to Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), including pursuant
to any agreement, arrangement or understanding, whether or not in writing.
Without duplicative counting of the same securities by the same holder,
securities Beneficially Owned by a Person shall include securities
Beneficially Owned by all other Persons with whom such Person would
constitute a "group" within the meaning of Section 13(d)(3) of the Exchange
Act.
<PAGE>
(b) "Common Stock" shall mean at any time the Common Stock, $0.01 par
value, of the Company.
(c) "Person" shall mean an individual, corporation, partnership,
limited liability company, joint venture, association, trust,
unincorporated organization or other entity.
(d) Capitalized terms used and not defined herein, and the term
"Acquisition Proposal," have the respective meanings ascribed to them in
the Merger Agreement.
2. Tender of Shares.
(a) In order to induce Parent and Merger Sub to enter into the Merger
Agreement, each of the Stockholders hereby agrees to validly tender (or cause
the record owner of such shares to validly tender), and not to withdraw,
pursuant to and in accordance with the terms of the Offer, not later than the
tenth business day after commencement of the Offer pursuant to Section 1.01 of
the Merger Agreement and Rule 14d-2 under the Exchange Act, the number of shares
of Common Stock set forth opposite such Stockholder's name on Schedule I hereto
(the "Existing Shares" of such Stockholder, and together with any shares
acquired by such Stockholder in any capacity after the date hereof and prior to
the termination of this Agreement by means of purchase, dividend, distribution
or in any other way, the "Shares" of such Stockholder), all of which are
Beneficially Owned by such Stockholder. Each of the Stockholders hereby
acknowledges and agrees that Parent's and Merger Sub's obligation to accept for
payment and pay for such Stockholder's Shares in the Offer, including the Shares
Beneficially Owned by such Stockholder, is subject to the terms and conditions
of the Offer and the Merger Agreement.
(b) Each of the Stockholders hereby permits Parent and Merger Sub to
publish and disclose in the Offer Documents and, if approval of the Company's
stockholders is required under applicable law, the S-4 Registration Statement
(including the Prospectus/Proxy Statement constituting a part thereof and all
documents and schedules filed with the SEC) his or its identity and ownership of
the Common Stock and the nature of his or its commitments, arrangements and
understandings under this Agreement.
3. Option In order to induce Parent and Merger Sub to enter into the
Merger Agreement, each of the Stockholders hereby grants to Merger Sub an
irrevocable option (individually, the "Stock Option" and collectively, the
"Stock Options") to purchase such Stockholder's Shares (the "Option Shares") for
a cash purchase price (the "Purchase Price") equal to $32.00 per Share. Merger
Sub may exercise the Stock Options, with respect to all or any part of each
Stockholder's Option Shares, after the occurrence of any event as a result of
which Parent would be entitled to receive the Fee pursuant to Section 8.03(b)(i)
or Section 8.03(b)(ii) of the Merger Agreement (regardless of whether Parent
then exercises its right to terminate the Merger Agreement). The Stock Options
shall become exercisable, in whole or in part, upon any such
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event and remain exercisable in whole or in part until the date which is 120
days after the date of such event (the "120 Day Period"), so long as: (i) all
waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), required for the purchase of the Option Shares upon
such exercise shall have expired or been waived and (ii) there shall not be in
effect any preliminary injunction or other order issued by any Governmental
Entity prohibiting the exercise of the Stock Options pursuant to this Agreement;
provided that if (i) all HSR Act waiting periods shall not have expired or been
waived or (ii) there shall be in effect any such injunction or order, in each
case on the expiration of the 120 Day Period, the 120 Day Period shall be
extended until five business days after the later of (A) the date of expiration
or waiver of all HSR Act waiting periods and (B) the date of removal or lifting
of such injunction or order. If Merger Sub wishes to exercise any or all of the
Stock Options, Merger Sub shall send a written notice (the "Notice") to such
Stockholder or Stockholders identifying the place and date (not less than 15
days after the date of the Tag-Along Event (as defined in Section 4(a)) for the
closing of such purchase or purchases.
4. Additional Agreements.
(a) Management Stockholders Agreement. Each of the Stockholders agrees
that he or it shall take, or cause to be taken, all actions necessary to comply
with its obligations pursuant to that certain Management Stockholders and
Registration Rights Agreement, dated as of October 9, 1992, by and among BE
Acquisition Corporation, BCP and certain officers and employees of Essex Group,
Inc., as amended (the "Management Stockholders Agreement"), including the
provision of Tag-Along Notices (as defined in the Management Stockholders
Agreement) to each of the Tag-Along Offerees (as defined in the Management
Stockholders Agreement) as promptly as practicable (and not later than two
business days) after the earliest to occur of the following (the "Tag-Along
Event"): (i) the Board withdraws, modifies or changes its recommendation of the
Merger Agreement, the Offer or the Merger in a manner adverse to Parent or shall
have resolved to do so, (ii) the Board recommends, takes a "neutral" position
with respect to, or resolves to accept or accepts an Acquisition Proposal, and
(iii) any person or "group" (within the meaning of Section 13(d) (3) of the
Exchange Act) shall publicly make an Acquisition Proposal. If a Tag-Along Event
occurs and any Tag-Along Offeree properly exercises his, her or its option to
sell a number of shares of Common Stock owned by such Tag-Along Offeree in
accordance with Section 3.01 of the Management Stockholders Agreement, Parent
hereby agrees to purchase such shares from the Tag-Along Offeree upon the same
terms and conditions applicable to the Stock Options.
(b) Voting Agreement. Each of the Stockholders shall, at any meeting
of the holders of Common Stock, however called, or in connection with any
written consent of the holders of Common Stock, vote (or cause to be voted) such
Stockholder's Shares (if any) then held of record or Beneficially Owned by such
Stockholder, (i) in favor of the Merger, the execution and delivery by the
Company of the Merger Agreement and the approval of the terms thereof and each
of the other actions contemplated by the Merger Agreement and this Agreement and
any actions required in furtherance thereof and hereof and (ii) against any
Acquisition
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Proposal or other takeover proposal and against any action or agreement that
would impede, frustrate, prevent or nullify this Agreement, or result in a
breach in any respect of any covenant, representation or warranty or any other
obligation or agreement of the Company under the Merger Agreement or which would
result in any of the conditions set forth in Exhibit A to the Merger Agreement
or set forth in Article VII of the Merger Agreement not being fulfilled.
(c) Irrevocable Proxy. By its execution hereof and in order to secure
its obligations under this Agreement, each of the Stockholders hereby
irrevocably grants to, and appoints, Parent and Steven S. Elbaum and Stewart H.
Wahrsager, or either of them, in their respective capacities as officers of
Parent, and any individual who shall hereafter succeed to any such office of
Parent, and each of them individually, as his or its true and lawful proxy and
attorney-in-fact (with full power of substitution), for and in the name, place
and stead of him or it, to vote such Stockholder's Shares, or grant a consent or
approval in respect of such Shares in favor of the various transactions
contemplated by the Merger Agreement and against any Acquisition Proposal
("Irrevocable Proxy"). Such Stockholder hereby represents that any proxies
heretofore given in respect of his or its Shares are not irrevocable, and that
any such proxies are hereby revoked.
Each of the Stockholders understands and acknowledges that Parent is
entering into the Merger Agreement in reliance upon his or its execution and
delivery of this Irrevocable Proxy. Each of the Stockholders hereby affirms that
this Irrevocable Proxy is given in connection with the execution of this
Agreement and the Merger Agreement, and further affirms that this Irrevocable
Proxy is coupled with an interest in this Agreement for the term stated herein
and may under no circumstances be revoked. Such Stockholders hereby ratifies and
confirms all that this Irrevocable Proxy may lawfully do or cause to be done by
virtue hereof. This Irrevocable Proxy is executed and intended to be irrevocable
in accordance with the provisions of Section 212(e) of the Delaware General
Corporation Law.
(d) No Solicitation. Each of the Stockholders hereby agrees, in his or
its capacity as a stockholder of the Company, that such Stockholder (and, if
applicable, its subsidiaries or affiliates) shall not (and, if applicable, such
Stockholder shall cause its officers, directors, partners, employees,
representatives and agents, including, but not limited to, investment bankers,
attorneys and accountants, not to) directly or indirectly, encourage, solicit,
participate in or initiate discussions or negotiations with, or provide any
information to, any corporation, partnership, Person or other entity or group
(other than Parent, any of its affiliates or representatives) concerning any
Acquisition Proposal. Each of the Stockholders will immediately cease any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any Acquisition Proposal or other takeover proposal.
Each of the Stockholders will immediately communicate to Parent the terms of any
proposal, discussion, negotiation or inquiry (and will disclose any written
materials received by such Stockholder in connection with such proposal,
discussion, negotiation or inquiry) and the identity of the party making such
proposal or inquiry which such Stockholder may receive in respect of any such
transaction. Any action taken by the Company or any member of the Board of
Directors of the
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Company in his capacity as such in accordance with Section 5.02 of the Merger
Agreement shall be deemed not to violate this Section 4(d).
(e) No Inconsistent Arrangements. Each of the Stockholders hereby
covenants and agrees that, except as contemplated by this Agreement and the
Merger Agreement, such Stockholder shall not (i) transfer (which term shall
include, without limitation, any sale, gift, pledge or other disposition), or
consent to any transfer of, any or all of such Stockholder's Shares or any
interest therein other than to another Stockholder, (ii) enter into any
contract, option or other agreement or understanding with respect to any
transfer of any or all of such Stockholder's Shares or any interest therein
other than to another Stockholder, (iii) grant any proxy, power-of-attorney or
other authorization in or with respect to such Stockholder's Shares, (iv)
deposit such Stockholder's Shares into a voting trust or enter into a voting
agreement or arrangement with respect to such Stockholder's Shares or (v) take
any other action that would in any way restrict, limit or interfere with the
performance of his or its obligations hereunder or the transactions contemplated
hereby or by the Merger Agreement.
(f) Best Efforts. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use its best efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement
and the Merger Agreement. Each party shall promptly consult with the other and
provide any necessary information and material with respect to all filings made
by such party with any Governmental Entity in connection with this Agreement and
the Merger Agreement and the transactions contemplated hereby and thereby.
(g) Waiver of Appraisal Rights. Each of the Stockholders hereby waives
any rights of appraisal or rights to dissent from the Merger that it may have.
(h) In the event the Company fails to comply with its obligations
under Section 1.03 of the Merger Agreement, each Stockholder who is a member of
the Board shall resign, and each Stockholder shall use its best efforts to cause
any affiliate of or person related to such Stockholder to resign, from the Board
effective promptly upon purchase by Merger Sub of shares of Common Stock
pursuant to the Offer.
5. Representations and Warranties of the Stockholder. Each of the
Stockholders hereby represents and warrants to Parent as follows:
(a) Ownership of Shares. Such Stockholder is the record and Beneficial
Owner of the Existing Shares, as set forth on Schedule I. On the date
hereof, the Existing Shares of such Stockholder constitute all of the
Shares owned of record or Beneficially Owned by such Stockholder. Such
Stockholder has sole voting power and sole power to issue instructions with
respect to the matters set forth in Sections 2, 3 and 4 hereof, sole power
of disposition, sole power to demand appraisal rights and sole power to
agree to all of the matters set forth in this Agreement,
C-5
<PAGE>
in each case with respect to all of the Existing Shares of such Stockholder with
no limitations, qualifications or restrictions on such rights, subject to
applicable securities laws and the terms of this Agreement.
(b) Power; Binding Agreement. Such Stockholder has the power and
authority to enter into and perform all of his or its obligations under this
Agreement. The execution, delivery and performance of this Agreement by such
Stockholder will not violate any other agreement to which such Stockholder is a
party including, without limitation, any voting agreement, proxy arrangement,
pledge agreement, shareholders agreement or voting trust. This Agreement has
been duly and validly executed and delivered by such Stockholder and constitutes
a valid and binding agreement of such Stockholder, enforceable against such
Stockholder in accordance with its terms. There is no beneficiary or holder of a
voting trust certificate or other interest of any trust of which such
Stockholder is a trustee whose consent is required for the execution and
delivery of this Agreement or the consummation by such Stockholder of the
transactions contemplated hereby.
(c) No Conflicts. Except for filings under the HSR Act and the
Exchange Act (i) no filing with, and no permit, authorization, consent or
approval of, any Governmental Entity for the execution of this Agreement by such
Stockholder and the consummation by such Stockholder of the transactions
contemplated hereby and (ii) none of the execution and delivery of this
Agreement by such Stockholder, the consummation by such Stockholder of the
transactions contemplated hereby or compliance by such Stockholder with any of
the provisions hereof shall (A) conflict with or result in any breach of any
organizational documents applicable to such Stockholder, (B) result in a
violation or breach of, or constitute (with or without notice or lapse of time
or both) a default (or give rise to any third party right of termination,
cancellation, material modification or acceleration) under any of the terms,
conditions or provisions of any note, loan agreement, bond, mortgage, indenture,
license, contract, commitment, arrangement, understanding, agreement or other
instrument or obligation of any kind to which such Stockholder is a party or by
which such Stockholder or any of his or its properties or assets may be bound,
or (C) violate any order, writ, injunction, decree, judgment, order, statute,
rule or regulation applicable to such Stockholder or any of his or its
properties or assets.
(d) No Liens. Except as permitted by this Agreement or arising under
the Management Stockholders Agreement, the Existing Shares and the certificates
representing such shares are now, and at all times during the term hereof will
be, held by such Stockholder, or by a nominee or custodian for the benefit of
such Stockholder, free and clear of all Liens, proxies, voting trusts or
agreements, understandings or arrangements or any other rights whatsoever,
except for any such Liens or proxies arising hereunder.
(e) No Finder's Fees. No broker, investment banker, financial advisor
or other person is entitled to any broker's, finder's, financial adviser's or
other similar fee or commission in connection with the transactions contemplated
hereby based upon arrangements made by or on behalf of such Stockholder.
C-6
<PAGE>
(f) Reliance by Parent. Such Stockholder understands and acknowledges
that Parent is entering into, and causing Merger Sub to enter into, the Merger
Agreement in reliance upon such Stockholder's execution and delivery of this
Agreement.
6. Representations and Warranties of Parent and Sub. Each of Parent
and Sub hereby represents and warrants to the Stockholders as follows:
(a) Power; Binding Agreement. Each of Parent and Sub has the corporate
power and authority to enter into and perform all of its obligations under
this Agreement. The execution, delivery and performance of this Agreement
by each of Parent and Merger Sub will not violate any other agreement to
which either of them is a party. This Agreement has been duly and validly
executed and delivered by each of Parent and Merger Sub and constitutes a
valid and binding agreement of each of Parent and Merger Sub, enforceable
against each of Parent and Merger Sub in accordance with its terms.
(b) No Conflicts. Except for filings under the HSR Act and the
Exchange Act, (i) no filing with, and no permit, authorization, consent or
approval of, any Governmental Entity is necessary for the execution of this
Agreement by each of Parent and Merger Sub and the consummation by each of
Parent and Merger Sub of the transactions contemplated hereby and (ii) none
of the execution and delivery of this Agreement by each of Parent and
Merger Sub, the consummation by each of Parent and Merger Sub of the
transactions contemplated hereby or compliance by each of Parent and Merger
Sub with any of the provisions hereof shall (A) conflict with or result in
any breach of any organizational documents applicable to either of Parent
or Merger Sub, (B) result in a violation or breach of, or constitute (with
or without notice or lapse of time or both) a default (or give rise to any
third party right of termination, cancellation, material modification or
acceleration) under any of the terms, conditions or provisions of any note,
loan agreement, bond, mortgage, indenture, license, contract, commitment,
arrangement, understanding, agreement or other instrument or obligation of
any kind to which either of Parent or Merger Sub is a party or by which
either of Parent or Merger Sub or any of their properties or assets may be
bound, or (C) violate any order, writ, injunction, decree, judgment, order,
statute, rule or regulation applicable to either of Parent or Merger Sub or
any of their properties or assets.
7. Further Assurances. From time to time, at the other party's
request and without further consideration, each party hereto shall execute and
deliver such additional documents and take all such further lawful action as may
be necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement.
8. Stop Transfer. Each of the Stockholders agrees that he or it
shall not request that the Company register the transfer (book-entry or
otherwise) of any certificate or uncertificated interest representing any of
such Stockholder's Shares, unless such transfer is made in compliance with this
Agreement. In the event of a stock dividend or distribution, or any change in
the Common
C-7
<PAGE>
Stock by reason of any stock dividend, split-up, recapitalization, combination,
exchange of shares or the like, the term "Shares" shall refer to and include
each Stockholder's Shares as well as all such stock dividends and distributions
and any shares into which or for which any or all of each Stockholder's Shares
may be changed or exchanged.
9. Termination. Except as provided in Section 3 hereof, the
covenants, agreements and proxy contained herein with respect to each
Stockholder's Shares shall terminate upon the earlier of (a) the payment by
Merger Sub for shares of Common Stock purchased pursuant to the Offer and (b)
the termination of the Merger Agreement in accordance with its terms.
10. Miscellaneous.
(a) Entire Agreement. This Agreement and the Merger Agreement
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersede all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof.
(b) Binding Agreement. This Agreement and the obligations hereunder
shall attach to each Stockholder's Shares and shall be binding upon any Person
or entity to which legal or beneficial ownership of each Stockholder's Shares
shall pass, whether by operation of law or otherwise, including, without
limitation, such Stockholder's administrators or successors. Notwithstanding any
transfer of Shares, the transferor shall remain liable for the performance of
all obligations of the transferor under this Agreement.
(c) Assignment. This Agreement shall not be assigned by operation of
law or otherwise without the prior written consent of the other party; provided
that Merger Sub may assign all of its rights hereunder to any direct or indirect
wholly owned subsidiary of Parent to which it has assigned all of its rights
under the Merger Agreement and, provided further, however, that the Stock
Options shall be freely transferable once they become exercisable under Section
3. Notwithstanding anything herein to the contrary, no assignment shall not
relieve an assigning party of its obligations hereunder.
(d) Amendments, Waivers, Etc. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, except upon
the execution and delivery of a written agreement executed by the parties
hereto.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if given) by hand delivery or telecopy (with a
confirmation copy sent for next day delivery via courier service, such as
Federal Express), or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
C-8
<PAGE>
If to the
Stockholders: Bessemer Partners & Co.
630 Fifth Avenue
New York, New York 10111
Attention: Robert D. Lindsay
Telecopier No.: (212) 969-9032
Copy to: Cravath, Swaine & Moore
825 Eighth Avenue
New York, New York 10019
Attention: Richard Hall, Esq.
Telecopier No.: (212) 474-3700
If to Parent
or Merger Sub: Superior Telecom Inc.
1790 Broadway
New York, New York 10010
Attention: General Counsel
Telecopier No.: (212) 757-3423
Copy to: Proskauer Rose LLP
1585 Broadway
New York, New York 10036
Attention: Ronald R. Papa, Esq.
Telecopier No.: (212) 969-2900
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
(g) Specific Performance. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore in the event
of any such breach the aggrieved party shall be entitled
C-9
<PAGE>
to the remedy of specific performance of such covenants and agreements and
injunctive and other equitable relief in addition to any other remedy to which
it may be entitled, at law or in equity.
(h) Remedies Cumulative. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any thereof
by any party shall not preclude the simultaneous or later exercise of any other
such right, power or remedy by such party.
(i) No Waiver. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
(j) No Third Party Beneficiaries. This Agreement is not intended to be
for the benefit of, and shall not be enforceable by, any person or entity who or
which is not a party hereto.
(k) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without giving effect to the
principles of conflicts of law thereof.
(l) Waiver of Jury Trial. Each party hereto hereby waives any right to
a trial by jury in connection with any action, suit or proceeding brought in
connection with this Agreement.
(m) Descriptive Headings. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
(n) Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which, taken together,
shall constitute one and the same Agreement.
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<PAGE>
IN WITNESS WHEREOF, Parent, Merger Sub and each Stockholder have
caused this Agreement to be duly executed as of the day and year first above
written.
SUPERIOR TELECOM INC.
By:
-----------------------------------
Name: Steven S. Elbaum
Title: Chairman of the Board,
President and Chief Executive
Officer
SUT ACQUISITION CORP.
By:
-----------------------------------
Name: Steven S. Elbaum
Title: Chairman of the Board,
President and Chief Executive
Officer
BESSEMER HOLDINGS, L.P.
By: KYLIX HOLDINGS, L.L.C., General
Partner
By: DEMAREST CORPORATION, a principal
manager
By: /s/ROBERT D. LINDSAY
-----------------------------------
Name: Robert D. Lindsay
Title: President
BESSEC HOLDINGS, L.P.
By: KYLIX HOLDINGS, L.L.C., General
Partner
By: DEMAREST CORPORATION, a principal
manager
By: /s/ROBERT D. LINDSAY
-----------------------------------
Name: Robert D. Lindsay
Title: President
<PAGE>
IN WITNESS WHEREOF, Parent, Merger Sub and each Stockholder have
caused this Agreement to be duly executed as of the day and year first above
written.
SUPERIOR TELECOM INC.
By: /s/STEVEN S. ELBAUM
-----------------------------------
Name: Steven S. Elbaum
Title: Chairman of the Board,
President and Chief Executive
Officer
SUT ACQUISITION CORP.
By: /s/STEVEN S. ELBAUM
-----------------------------------
Name: Steven S. Elbaum
Title: Chairman of the Board,
President and Chief Executive
Officer
BESSEMER HOLDINGS, L.P.
By: KYLIX HOLDINGS, L.L.C., General
Partner
By: DEMAREST CORPORATION, a principal
manager
By:
-----------------------------------
Name: Robert D. Lindsay
Title: President
BESSEC HOLDINGS, L.P.
By: KYLIX HOLDINGS, L.L.C., General
Partner
By: DEMAREST CORPORATION, a principal
manager
By:
-----------------------------------
Name: Robert D. Lindsay
Title: President
<PAGE>
By: /s/WARD W. WOODS
-----------------------------------
Ward W. Woods
THE WOODS FOUNDATION
By: /s/WARD W. WOODS
-----------------------------------
Name: Ward W. Woods
Title: President
WOODS 1994 FAMILY PARTNERSHIP, L.P.
By: NORTH HAILEY CORPORATION,
General Partner
By: /s/WARD W. WOODS
-----------------------------------
Name: Ward W. Woods
Title: President
NORTH HAILEY CORPORATION
By: /s/WARD W. WOODS
-----------------------------------
Name: Ward W. Woods
Title: President
NEBRIS CORPORATION
By: /s/WARD W. WOODS
-----------------------------------
Name: Ward W. Woods
Title: President
<PAGE>
/s/ROBERT D. LINDSAY
----------------------------------------
Robert D. Lindsay
LINDSAY 1994 FAMILY PARTNERSHIP, L.P.
By: DEMAREST CORPORATION, General
Partner
By: /s/ROBERT D. LINDSAY
-----------------------------------
Name: Robert D. Lindsay
Title: President
DEMAREST CORPORATION
By: /s/ROBERT D. LINDSAY
-----------------------------------
Name: Robert D. Lindsay
Title: President
OLD HUNDRED CORPORATION
By: /s/ROBERT D. LINDSAY
-----------------------------------
Name: Robert D. Lindsay
Title: President
CRAIGHALL CORPORATION
By: /s/RODNEY A. COHEN
-----------------------------------
Name: Rodney A. Cohen
Title: President
/s/RODNEY A. COHEN
----------------------------------------
Rodney A. Cohen
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Number of Options Held
Name of Stockholder Shares Held @$15/sh
------------------- ----------- -------
- --------------------------------------------------------------------------------
<S> <C> <C>
Woods 1994 Family Partnership, L.P. 162,272
- --------------------------------------------------------------------------------
North Hailey Corporation 13,714
- --------------------------------------------------------------------------------
Nebris Corporation 607,346
- --------------------------------------------------------------------------------
Ward W. Woods 215,571 843
- --------------------------------------------------------------------------------
The Woods Foundation 22,500
- --------------------------------------------------------------------------------
Lindsay 1994 Family Partnership, L.P. 158,460
- --------------------------------------------------------------------------------
Demarest Corporation 7,395
- --------------------------------------------------------------------------------
Old Hundred Corporation 340,186
- --------------------------------------------------------------------------------
Robert D. Lindsay 115,442 843
- --------------------------------------------------------------------------------
Craighall Corporation 64,070 0
- --------------------------------------------------------------------------------
Rodney A. Cohen 0 843
- --------------------------------------------------------------------------------
Bessemer Holdings, L.P. 11,316,903
- --------------------------------------------------------------------------------
Bessec Holdings, L.P. 230,328
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 99.6
AGREEMENT AS TO JOINT FILING OF SCHEDULE 13D
Each of the undersigned hereby affirms that it is individually eligible to use
Schedule 13D and agrees that this Schedule 13D is filed on its behalf.
Dated: November 2, 1998
SUT ACQUISITION CORP.
By: /s/Steven S. Elbaum
------------------------------
Name: Steven S. Elbaum
Title: Chairman of the Board, President
and Chief Executive Officer
SUPERIOR TELECOM INC.
By: /s/Steven S. Elbaum
------------------------------
Name: Steven S. Elbaum
Title: Chairman of the Board, President
and Chief Executive Officer
THE ALPINE GROUP, INC.
By: /s/Steven S. Elbaum
------------------------------
Name: Steven S. Elbaum
Title: Chairman of the Board
and Chief Executive Officer
