SCHEDULE 14A (Rule 14a-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant / / Filed by a Party other than the Registrant /X/ Check the appropriate box: /X/ Preliminary Proxy Statement / / Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) / / Definitive Proxy Statement / / Definitive Additional Materials / / Soliciting Material Under Rule 14a-12 UNITED INDUSTRIAL CORPORATION - -------------------------------------------------------------------------------- (Name of Registrant as Specified in Its Charter) STEEL PARTNERS II, L.P. WARREN G. LICHTENSTEIN JAMES R. HENDERSON GLEN M. KASSAN - -------------------------------------------------------------------------------- (Name of Persons(s) Filing Proxy Statement, if Other Than the Registrant) Payment of Filing Fee (Check the appropriate box): /X/ No fee required. / / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. (1) Title of each class of securities to which transaction applies: - -------------------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: - --------------------------------------------------------------------------------(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): - -------------------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: - -------------------------------------------------------------------------------- (5) Total fee paid: - -------------------------------------------------------------------------------- / / Fee paid previously with preliminary materials: - -------------------------------------------------------------------------------- / / Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. (1) Amount previously paid: - -------------------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: - -------------------------------------------------------------------------------- (3) Filing Party: - -------------------------------------------------------------------------------- (4) Date Filed: - -------------------------------------------------------------------------------- -2- STEEL PARTNERS II, L.P. August 20, 2002 Dear Fellow Stockholder: Steel Partners II, L.P. ("Steel") is the beneficial owner of 1,310,250 shares of Common Stock of United Industrial Corporation representing approximately ___% of the outstanding Common Stock. We do not believe that the current Board of Directors is acting in your best interests, and we are therefore seeking your support for the election of our two nominees to the Board of Directors of United Industrial at the annual meeting of stockholders scheduled to be held on October 4, 2002. We urge you to carefully consider the information contained in the attached Proxy Statement and then support the efforts of Steel to maximize value for all stockholders by signing, dating and returning the enclosed GOLD proxy today. If you have already voted for the incumbent management slate you have every right to change your vote by signing and returning a later dated proxy. If you have any questions or require any assistance with your vote please contact MacKenzie Partners, Inc., which is assisting us, at their address and toll-free numbers below. Thank you for your support, Warren G. Lichtenstein On behalf of Steel Partners II, L.P. [MACKENZIE LOGO] PRELIMINARY COPY SUBJECT TO COMPLETION DATED AUGUST 20, 2002 ANNUAL MEETING OF STOCKHOLDERS OF UNITED INDUSTRIAL CORPORATION ------------------------- PROXY STATEMENT OF STEEL PARTNERS II, L.P. ------------------------- PLEASE MAIL THE ENCLOSED GOLD PROXY CARD Steel Partners II, L.P. ("Steel") is the second largest stockholder of United Industrial Corporation, a Delaware corporation ("UIC" or the "Company"). Steel is writing to you in connection with the election of two directors to UIC's Board of Directors at the annual meeting of stockholders scheduled to be held on October 4, 2002, including any adjournments or postponements thereof and any meeting which may be called in lieu thereof (the "Annual Meeting"). Steel has nominated its slate of directors in opposition to UIC's incumbent director nominees, Richard Erkeneff and E. Donald Shapiro, whose terms expire at the Annual Meeting. Steel believes that recent actions of the Board of Directors of UIC (the "UIC Board") have not been in the best interests of UIC's stockholders. As further described herein, Steel believes that a more thorough investigation of strategic alternatives, a greater dedication to maximizing stockholder value and improving corporate governance policies, will be best achieved through the election of Steel's slate. This proxy statement (the "Proxy Statement") and the enclosed GOLD proxy card are being furnished to stockholders of UIC by Steel in connection with the solicitation of proxies from UIC's stockholders to be used at the Annual Meeting to elect Steel's nominees, James R. Henderson and Glen M. Kassan (the "Nominees"), to the UIC Board. As Nominees for director, Messrs. Henderson and Kassan are deemed to be participants in this proxy solicitation. As members of the soliciting group, Steel and Warren Lichtenstein, the managing member of the general partner of Steel, are also deemed to be participants in this proxy solicitation. Mr. Lichtenstein has been a director of UIC since May 2001. This Proxy Statement and the GOLD proxy card are first being furnished to UIC's stockholders on or about August __, 2002. UIC has set the record date for determining stockholders entitled to notice of and to vote at the Annual Meeting as of August 26, 2002 (the "Record Date"). The principal executive offices of UIC are located at 570 Lexington Avenue, New York, New York 10022. Stockholders of record at the close of business on the Record Date will be entitled to vote at the Annual Meeting. According to UIC, as of the Record Date, there were _________ shares of common stock, $1.00 par value per share (the "Shares"), outstanding and entitled to vote at the Annual Meeting. Steel, along with all of the participants in this solicitation, are the beneficial owners of an aggregate of 1,320,250 Shares which represents approximately ____% of the Shares outstanding (based on information publicly disclosed by UIC). The participants in this solicitation intend to vote such Shares for the election of the Nominees. THIS SOLICITATION IS BEING MADE BY STEEL AND NOT ON BEHALF OF THE BOARD OF DIRECTORS OR MANAGEMENT OF UIC. STEEL IS NOT AWARE OF ANY OTHER MATTERS TO BE BROUGHT BEFORE THE ANNUAL MEETING [OTHER THAN THE RATIFICATION OF THE APPOINTMENT OF THE COMPANY'S AUDITORS]. SHOULD OTHER MATTERS, WHICH STEEL IS NOT AWARE OF A REASONABLE TIME BEFORE THIS SOLICITATION, BE BROUGHT BEFORE THE ANNUAL MEETING, THE PERSONS NAMED AS PROXIES IN THE ENCLOSED GOLD PROXY CARD WILL VOTE ON SUCH MATTERS IN THEIR DISCRETION. WE URGE YOU TO SIGN, DATE AND RETURN THE GOLD PROXY CARD IN FAVOR OF THE ELECTION OF OUR NOMINEES DESCRIBED IN THIS PROXY STATEMENT. IF YOU HAVE ALREADY SENT A __________ PROXY CARD TO THE UIC BOARD, YOU MAY REVOKE THAT PROXY AND VOTE AGAINST THE ELECTION OF UIC'S NOMINEES BY SIGNING, DATING AND RETURNING THE ENCLOSED GOLD PROXY CARD. THE LATEST DATED PROXY IS THE ONLY ONE THAT COUNTS. ANY PROXY MAY BE REVOKED AT ANY TIME PRIOR TO THE ANNUAL MEETING BY DELIVERING A WRITTEN NOTICE OF REVOCATION OR A LATER DATED PROXY FOR THE ANNUAL MEETING TO STEEL, C/O MACKENZIE PARTNERS, INC. WHO IS ASSISTING IN THIS SOLICITATION, OR TO THE SECRETARY OF UIC, OR BY VOTING IN PERSON AT THE ANNUAL MEETING. -2- IMPORTANT Your vote is important, no matter how many or how few Shares you own. Steel urges you to sign, date, and return the enclosed GOLD proxy card today to vote FOR the election of the Nominees. The Nominees are committed, subject to their fiduciary duty to UIC's stockholders, to giving all UIC's stockholders the opportunity to receive the maximum value for their Shares. A vote FOR the Nominees will enable you - as the owners of UIC - to send a message to the UIC Board that you are committed to maximizing the value of your Shares. o If your Shares are registered in your own name, please sign and date the enclosed GOLD proxy card and return it to Steel, c/o MacKenzie Partners, Inc., in the enclosed envelope today. o If any of your Shares are held in the name of a brokerage firm, bank, bank nominee or other institution on the Record Date, only it can vote such Shares and only upon receipt of your specific instructions. Accordingly, please contact the person responsible for your account and instruct that person to execute on your behalf the GOLD proxy card. Steel urges you to confirm your instructions in writing to the person responsible for your account and to provide a copy of such instructions to Steel, c/o MacKenzie Partners, Inc., who is assisting in this solicitation, at the address and telephone numbers set forth below, and on the back cover of this proxy statement, so that we may be aware of all instructions and can attempt to ensure that such instructions are followed. IF YOU HAVE ANY QUESTIONS REGARDING YOUR PROXY, OR NEED ASSISTANCE IN VOTING YOUR SHARES, PLEASE CALL: [MACKENZIE LOGO] -3- PROPOSAL I - ELECTION OF DIRECTORS REASONS FOR THE SOLICITATION We are asking you to elect our Nominees in order to: o remove two incumbent directors; o elect nominees that support actions that we believe would give stockholders the greatest opportunity to maximize the value of their Shares; and o elect two clearly independent directors. As further described below, Steel believes that the election of the Nominees represents the best means for UIC's stockholders to maximize the value of their Shares. Steel, as the second largest stockholder of UIC, has a vested interest in the maximization of the value of the Shares. Additionally, Steel believes that the Nominees have extensive experience in private and public investment, corporate governance and business management. If elected to the Board, the Nominees will use their collective experience to explore alternatives to maximize stockholder value including, but not limited to, the sale of all or substantially all of UIC on a tax efficient basis. WE BELIEVE THAT ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF UIC MUST BE SOLD ON A TAX EFFICIENT BASIS AS SOON AS POSSIBLE In Steel's opinion, maximum stockholder value will only be achieved through a prompt sale of all or substantially all of UIC. The Nominees are committed to working with the other members of the UIC Board to encourage the sale of all or substantially all of UIC. UIC announced on April 8, 2002 that it had been working with Wachovia Securities for a year to explore alternatives to enhance stockholder value, including a possible sale of UIC. Steel questions the timing of this announcement and believes that its one-year delay may indicate UIC's lack of intent to commit to a sale of the Company. While UIC has taken steps to divest certain of its businesses and assets during the past two years, Steel believes that these divestitures have been insignificant in amount and that the UIC Board is not truly committed to a sale of all or substantially all of the Company. We do not believe that the UIC Board is moving quickly enough to maximize stockholder value. While stockholders have waited patiently for the UIC Board to further enhance stockholder value, UIC's financial performance this year has taken a turn for the worse, as evidenced by UIC's Form 10-Q for the six months ended June 30, 2002 (the "June 30 10-Q"). We believe, UIC's financial performance will languish as long as UIC continues to operate as it has historically. o According to the June 30 10-Q, UIC realized net losses of approximately $10.7 million for the three month period ended June 30, 2002 compared to net income of approximately $1.9 million for the comparable period in 2001. -4- o According to the June 30 10-Q, UIC realized net losses of approximately $22.0 million for the six month period ended June 30, 2002 compared to net income of approximately $4.5 million for the comparable period in 2001. o This represents a stunning decrease in net income of approximately 463% and 389% during the three and six month periods, respectively. WE BELIEVE THAT UIC SHOULD ADOPT CRITICAL CORPORATE GOVERNANCE POLICIES INCLUDING CAUSING A MAJORITY OF THE BOARD TO BE COMPOSED OF INDEPENDENT DIRECTORS AND DECLASSIFYING THE UIC BOARD We believe that UIC should respond to the sweeping legislation enacted by Congress and rules being adopted by the New York Stock Exchange ("NYSE") which are promoting greater accountability to stockholders. Specifically, we believe that UIC must cause its Board of Directors to be composed of a majority of clearly independent directors which we believe will shortly be a listing requirement for all NYSE companies. Under proposed Section 303A of the NYSE listing standards, listed companies will be required to have a majority of independent directors. According to UIC's Form 10-K for the fiscal year ended December 31, 2001 (the "2001 Form 10-K"), the UIC Board is currently composed of six directors, two of whom are also executive officers of UIC, as follows: NAME POSITION ---- -------- Harold Gelb Chairman of the Board Richard Erkeneff President and Director Susan Fein Zawel Vice President Corporate Communications, Associate General Counsel and Secretary Joseph Schneider Director E. Donald Shapiro Director Warren Lichtenstein Director We do not believe that a majority of the UIC Board is independent under either the existing or proposed NYSE standards. o According to the 2001 Form 10-K, Richard Erkeneff and Susan Zawel are UIC employees and collected salaries, bonuses and other compensation in the aggregate of $608,171 and $229,436, respectively, during 2001. o According to the 2001 Form 10-K, Mr. Gelb has a special compensation arrangement with UIC under which he received compensation of $137,500 during 2001 and will receive $150,000 during 2002 for his services as Chairman of the Board. The -5- other UIC directors receive only $20,000 per year and other fees for attending Board and committee meetings. UIC also maintains a New York office, a primary purpose of which is to provide Mr. Gelb with his sole business office. o As three of the current six UIC Board members are employees of UIC and/or collect six-figure salaries and other compensation for their services and receive other benefits, we question the collective Board's ability to exercise independent judgment in carrying out its responsibilities. The election of our Nominees to the Board of Directors will cause a majority of the Board to be clearly independent in compliance with Section 303A of the NYSE listing standards. We believe that a majority of independent directors will increase the quality of oversight over the UIC Board, lessen the possibility of conflicts of interest and allow the UIC Board to most effectively exercise its fiduciary duties to the stockholders. If elected, the Nominees would also attempt to work with the UIC Board to take other measures to improve UIC's corporate governance, including declassifying the Board and removing the "staggered board" provision. A classified board of directors limits the ability of stockholders to elect all directors on an annual basis. We believe that the annual election of directors is the primary means for stockholders to influence corporate governance policies and to hold management accountable for its implementation of those policies. Steel and the Nominees view classified boards as having the effect of insulating directors from being accountable to the corporation's stockholders. WE BELIEVE THAT THE UIC BOARD MUST PROMPTLY EXPLORE OTHER ALTERNATIVES TO MAXIMIZE STOCKHOLDER VALUE INCLUDING A SALE OF THE ENTIRE COMPANY We believe that the election of the Nominees represents an opportunity for stockholders to maximize the present value of their Shares. James Henderson and Glen Kassan have extensive experience providing management and advisory services to public and private companies and currently serve as executive officers and directors of various public companies. See "The Nominees." If elected, the Nominees will, subject to their fiduciary duties of the highest standards, explore all available alternatives to maximize stockholder value including, but not limited to: o working with the UIC Board to sell the entire company by means of a merger, tender offer or otherwise, or to divest assets of the Company on a tax efficient basis; o working with the UIC Board to respond to new corporate governance legislation and NYSE listing standards, and take other measures to improve corporate governance, including declassifying the organization of the UIC Board; and o working with the UIC Board to reduce unnecessary expenses by, among other things, closing UIC's New York office. -6- Subject to their fiduciary duties, the Nominees' priority would be to maximize stockholder value by pursuing a sale of UIC. Although the Nominees would seek to sell UIC to the highest bidder, the Nominees' priority would be to negotiate and consummate a transaction on the most favorable terms available to the UIC stockholders. The Nominees would work to solicit bids from potential acquirors, including competitors of UIC. In accordance with the Nominees' fiduciary duties to enter into a sale transaction that would have the greatest benefit to UIC stockholders, bids would be carefully evaluated based on, among other things, the value of the consideration offered, the ability of the bidder to finance the bid, the quality of any non-cash consideration offered (including the financial condition of any bidder offering non-cash consideration), and the timing and likelihood of consummation of the proposed transaction in light of any required financing or regulatory approvals. This process could result in the Nominees' decision to accept a proposal to acquire UIC for a purchase price that is not necessarily the highest price offered. We wish to provide the stockholders, the true owners of UIC, with the opportunity to elect directors that are unaffiliated with the existing Board. Your vote to elect the Nominees does not constitute a vote in favor of our value enhancing plans including pursuing a sale of UIC. Your vote to elect the Nominees will have the legal effect of replacing two incumbent directors with our Nominees. If the Nominees are elected to the Board and a transaction involving the sale of UIC is proposed by the Board, stockholders will have an opportunity to vote on such transaction to the extent required by law. Neither we (nor to our knowledge, any other person on our behalf) has made or undertaken any analysis or reports as to whether stockholder value will be maximized as a result of this solicitation or obtained reports from consultants or other outside parties as to whether the proposals presented herein would have an effect on stockholder value. There can be no assurance that stockholder value will be maximized as a result of this solicitation or the election of the Nominees. THE NOMINEES The following information sets forth the name, business address, present principal occupation, and employment and material occupations, positions, offices, or employments for the past five years of the Nominees. This information has been furnished to Steel by the Nominees. Where no date is given for the commencement of the indicated office or position, such office or position was assumed prior to August 1, 1997. Each person listed below is a citizen of the United States. JAMES R. HENDERSON (44) has been a Vice President of Steel Partners, Ltd., a management and advisory company, since March 2002. Steel Partners, Ltd. has provided management services to Steel and other affiliates of Steel since March 2002. Mr. Henderson served as a Vice President of Steel Partners Services, Ltd., a management and advisory company, from August 1999 through March 2002. Steel Partners Services, Ltd. provided management services to Steel and other affiliates of Steel until March 2002, when Steel Partners, Ltd. acquired the rights to provide certain management services from Steel Partners Services Ltd. He has also served as Vice President of Operations of WebFinancial Corporation, a commercial and consumer lender, since September 2001. Mr. Henderson has served -7- as President of Gateway Industries, Inc., a provider of database development and Web site design and development services, since December 2001. Mr. Henderson is a director of SL Industries, Inc., a manufacturer and marketer of Power and Data Quality systems and equipment for industrial, medical, aerospace and consumer applications. From 1996 to July 1999, Mr. Henderson was employed in various positions with Aydin Corporation, a defense-electronics manufacturer, which included a tenure as president and Chief Operating Officer from October 1998 to June 1999. Prior to his employment with Aydin Corporation, Mr. Henderson was employed as an executive with UNISYS Corporation, an e-business solutions provider. Mr. Henderson is a director of ECC International Corp., a manufacturer and marketer of computer-controlled simulators for training personnel to perform maintenance and operator procedures on military weapons. As of the date hereof, Mr. Henderson did not beneficially own any Shares. Mr. Henderson has not purchased or sold any Shares during the past two years. The business address of Mr. Henderson is c/o Steel Partners, Ltd., 150 East 52nd Street, 21st Floor, New York, New York 10022. GLEN M. KASSAN (59) has been an Executive Vice President of Steel Partners, Ltd., a management and advisory company, since March 2002. Steel Partners, Ltd. has provided management services to Steel and other affiliates of Steel since March 2002. Mr. Kassan served as Executive Vice President of Steel Partners Services, Ltd., a management and advisory company, from June 2001 through March 2002 and Vice President from October 1999 through May 2001. Steel Partners Services, Ltd. provided management services to Steel and other affiliates of Steel until March 2002, when Steel Partners, Ltd. acquired the rights to provide certain management services from Steel Partners Services, Ltd. He has also served as Vice President, Chief Financial Officer and Secretary of WebFinancial Corporation, a commercial and consumer lender, since June 2000. Mr. Kassan has served as Vice Chairman of the Board of Directors of Caribbean Fertilizer Group Ltd., a private company engaged in the production of agricultural products in Puerto Rico and Jamaica, since June 2000. Mr. Kassan is a director and has served as President of SL Industries, Inc., a manufacturer and marketer of Power and Data Quality systems and equipment for industrial, medical, aerospace and consumer applications, since January 2002 and February 2002, respectively. From June 2000 to April 2002, Mr. Kassan served as Vice President, Chief Financial Officer and Secretary of Gateway Industries, Inc., a provider of database development and Web site design and development services. From 1997 to 1998, Mr. Kassan served as Chairman and Chief Executive Officer of Long Term Care Services, Inc., a privately owned healthcare services company which Mr. Kassan co-founded in 1994 and initially served as Vice Chairman and Chief Financial Officer. Mr. Kassan is currently a director of Tandycrafts, Inc., a manufacturer of picture frames and framed art, Puroflow Incorporated, a designer and manufacturer of precision filtration devices, and the Chairman of the Board of US Diagnostic Inc., an operator of outpatient diagnostic imaging. As of the date hereof, Mr. Kassan did not beneficially own any Shares. Mr. Kassan has not purchased or sold any Shares during the past two years. The business address of Mr. Kassan is c/o Steel Partners, Ltd., 150 East 52nd Street, 21st Floor, New York, New York 10022. The Nominees will not receive any compensation from Steel for their services as directors of UIC. On March 7, 2001, James Henderson entered into an Agreement (the "Agreement") with UIC, Steel and Warren Lichtenstein, pursuant to which, among other things, Mr. Henderson has been allowed to attend all meetings -8- of the UIC Board in a non-voting observer capacity. The Agreement is attached to Amendment No. 5 to the Schedule 13D filed by Steel and Warren Lichtenstein with respect to UIC and is incorporated herein by reference. On March 20, 2002, James Henderson and Steel entered into a Reimbursement Agreement (the "Henderson Reimbursement Agreement") in which Steel agreed to bear all expenses incurred by Mr. Henderson in connection with his nomination to the UIC Board, including approved expenses incurred by Mr. Henderson in the solicitation of proxies or written consents from UIC stockholders. The Henderson Reimbursement Agreement is attached to Amendment No. 6 to the Schedule 13D filed by Steel, Warren Lichtenstein and the Nominees with respect to UIC and is incorporated herein by reference. On March 20, 2002, Glen Kassan and Steel entered into a Reimbursement Agreement (the "Kassan Reimbursement Agreement") in which Steel agreed to bear all expenses incurred by Mr. Kassan in connection with his nomination to the UIC Board, including approved expenses incurred by Mr. Kassan in the solicitation of proxies or written consents from UIC stockholders. The Kassan Reimbursement Agreement is attached to Amendment No. 6 to the Schedule 13D filed by Steel, Warren Lichtenstein and the Nominees with respect to UIC and is incorporated herein by reference. Other than as stated above, there are no arrangements or understandings between Steel and each Nominee or any other person or persons pursuant to which the nominations described herein are to be made, other than the consent by each of the Nominees to serve as a director of UIC if elected as such at the Annual Meeting. The Nominees have not been convicted in any criminal proceedings (excluding traffic violations or similar misdemeanors) over the past ten years. None of the Nominees is a party adverse to UIC or any of its subsidiaries or has a material interest adverse to UIC or any of its subsidiaries in any material pending legal proceedings. Steel does not expect that the Nominees will be unable to stand for election, but, in the event that such persons are unable to serve or for good cause will not serve, the Shares represented by the enclosed GOLD proxy card will be voted for substitute nominees. In addition, Steel reserves the right to nominate substitute persons if UIC makes or announces any changes to its Bylaws or takes or announces any other action that has, or if consummated would have, the effect of disqualifying the Nominees. In any such case, Shares represented by the enclosed GOLD proxy card will be voted for such substitute nominees. The UIC Board is divided into three classes serving staggered three-year terms. Two directors are to be elected at the Annual Meeting to hold office until 2005 and until their successors are duly elected and qualify. Steel has no reason to believe any of the Nominees will be disqualified or unable or unwilling to serve if elected. YOU ARE URGED TO VOTE FOR THE ELECTION OF THE NOMINEES ON THE ENCLOSED GOLD PROXY CARD. -9- [PROPOSAL 2 - APPOINTMENT OF INDEPENDENT AUDITORS Steel has no objection to the ratification of the appointment of Ernst & Young LLP as independent accountants for UIC for the fiscal year ending December 31, 2002. Please see UIC's Proxy Statement for the Annual Meeting for a description of this proposal.] VOTING AND PROXY PROCEDURES Only stockholders of record on the Record Date will be entitled to notice of and to vote at the Annual Meeting. Each Share is entitled to one vote. Stockholders who sell Shares before the Record Date (or acquire them without voting rights after the Record Date) may not vote such Shares. Stockholders of record on the Record Date will retain their voting rights in connection with the Annual Meeting even if they sell such Shares after the Record Date. Based on publicly available information, Steel believes that the only outstanding class of securities of UIC entitled to vote at the Annual Meeting are the Shares. Shares represented by properly executed GOLD proxy cards will be voted at the Annual Meeting as marked and, in the absence of specific instructions, will be voted FOR the election of the Nominees to the Board, FOR the proposal to ratify the appointment of Ernst & Young LLP as independent accountants of UIC for the fiscal year ending December 31, 2002, and in the discretion of the persons named as proxies on all other matters as may properly come before the Annual Meeting. Directors are elected by a plurality of the votes cast and the nominees who receive the most votes will be elected (assuming a quorum is present). [To be approved, the proposal to ratify the appointment of auditors must receive a majority of the votes cast (assuming a quorum is present).] Stockholders have cumulative voting rights with respect to the election of directors. Under cumulative voting, each stockholder is entitled to the same number of votes per share as the number of directors to be elected (or, for purposes of this election, two votes per share). A stockholder may cast all of such votes for a single Nominee or distribute them between the Nominees, as he or she wishes, either by so marking the ballot at the meeting or by specific voting instructions sent with a signed proxy to either Steel in care of MacKenzie Partners, Inc. at the address set forth on the back cover of this Proxy Statement or to UIC at 570 Lexington Avenue, New York, New York 10022 or any other address provided by UIC. Broker non-votes, described below, and abstentions will be counted only for the purpose of determining whether a quorum is present at the Annual Meeting. An abstention from voting will be tabulated as a vote withheld on the election, but will not be considered in determining whether each of the nominees has received a plurality of the votes cast at the Annual Meeting [and will not be counted either "for" or "against" the ratification of auditors]. Proxies relating to "street name" Shares that are voted by brokers only on some of the proposals will not be entitled to vote on any proposal which the broker does not have discretionary voting power and has not received instructions from the beneficial owner ("broker non-votes"). Stockholders of UIC may revoke their proxies at any time prior to exercise by attending the Annual Meeting and voting in person (although attendance at the Annual Meeting will not in and of itself constitute revocation of a proxy) or by delivering a written notice of revocation. The delivery of a subsequently dated proxy which is properly completed will constitute a revocation of any earlier proxy. The revocation may be delivered either to Steel -10- in care of MacKenzie Partners, Inc. at the address set forth on the back cover of this Proxy Statement or to UIC at 570 Lexington Avenue, New York, New York 10022 or any other address provided by UIC. Although a revocation is effective if delivered to UIC, Steel requests that either the original or photostatic copies of all revocations be mailed to Steel in care of MacKenzie Partners, Inc. at the address set forth on the back cover of this Proxy Statement so that Steel will be aware of all revocations and can more accurately determine if and when proxies have been received from the holders of record on the Record Date of a majority of the outstanding Shares. IF YOU WISH TO VOTE FOR THE ELECTION OF THE NOMINEES TO THE UIC BOARD, PLEASE SIGN, DATE AND RETURN PROMPTLY THE ENCLOSED GOLD PROXY CARD IN THE POSTAGE-PAID ENVELOPE PROVIDED. SOLICITATION OF PROXIES The solicitation of proxies pursuant to this Proxy Statement is being made by Steel. Proxies may be solicited by mail, facsimile, telephone, telegraph, in person and by advertisements. Steel will not solicit proxies via the Internet. Steel has entered into an agreement with MacKenzie Partners, Inc. for solicitation and advisory services in connection with this solicitation, for which MacKenzie Partners, Inc. will receive a fee not to exceed $__________, together with reimbursement for its reasonable out-of-pocket expenses, and will be indemnified against certain liabilities and expenses, including certain liabilities under the federal securities laws. MacKenzie Partners, Inc. will solicit proxies from individuals, brokers, banks, bank nominees and other institutional holders. Steel has requested banks, brokerage houses and other custodians, nominees and fiduciaries to forward all solicitation materials to the beneficial owners of the Shares they hold of record. Steel will reimburse these record holders for their reasonable out-of-pocket expenses in so doing. It is anticipated that MacKenzie Partners, Inc. will employ approximately [__] persons to solicit UIC's stockholders for the Annual Meeting. The entire expense of soliciting proxies is being borne by Steel. If the Nominees are elected to the UIC Board, Steel intends to seek reimbursement of the costs of this solicitation from UIC. Unless otherwise required by law, Steel does not currently intend to submit the question of reimbursement of the costs of this solicitation to a stockholder vote. Costs of this solicitation of proxies are currently estimated to be approximately $_________. Steel estimates that through the date hereof, its expenses in connection with this solicitation are approximately $__________. PARTICIPANT INFORMATION Along with the Nominees, Warren Lichtenstein and Steel are participants in this solicitation. Warren Lichtenstein is Chairman of the Board, Secretary and the Managing Member of Steel Partners, L.L.C. ("Steel LLC"), a Delaware limited liability company. Steel LLC is the general partner of Steel. The principal business of Mr. Lichtenstein, Steel LLC and Steel is investing in the securities of small-cap companies. The principal business address of Mr. Lichtenstein, Steel LLC and Steel is 150 East 52nd Street, 21st Floor, New York, New York 10022. Mr. Lichtenstein has been a director of UIC since May 2001. -11- James Henderson and Glen Kassan are Vice Presidents of Steel Partners, Ltd., an affiliate of Steel. As of the date hereof, Steel is the beneficial owner of 1,310,250 Shares. Steel LLC does not beneficially own any Shares on the date hereof, except by virtue of its role in Steel. Mr. Lichtenstein beneficially owns 10,000 Shares underlying options exercisable within 60 days of the date of this Proxy Statement and may be deemed to beneficially own the 1,310,250 Shares of UIC owned by Steel by virtue of his positions with Steel. For information regarding purchases and sales of Shares during the past two years by Steel, see Schedule I. CERTAIN TRANSACTIONS BETWEEN STEEL AND UIC Except as set forth in this Proxy Statement (including the Schedules hereto), neither Steel nor any of the other participants in this solicitation, or any of their respective associates: (i) directly or indirectly beneficially owns any Shares or any securities of UIC; (ii) has had any relationship with UIC in any capacity other than as a stockholder, or is or has been a party to any transactions, or series of similar transactions, or was indebted to UIC during the past year with respect to any Shares of UIC; or (iii) knows of any transactions during the past year, currently proposed transactions, or series of similar transactions, to which UIC or any of its subsidiaries was or is to be a party, in which the amount involved exceeds $60,000 and in which any of them or their respective affiliates had, or will have, a direct or indirect material interest. In addition, other than as set forth herein, there are no contracts, arrangements or understandings entered into by Steel or any other participant in this solicitation or any of their respective associates within the past year with any person with respect to any of UIC's securities, including, but not limited to, joint ventures, loan or option arrangements, puts or calls, guarantees against loss or guarantees of profit, division of losses or profits, or the giving or withholding of proxies. Except as set forth in this Proxy Statement (including the Schedules hereto), neither Steel nor any of the other participants in this solicitation, or any of their respective associates, has entered into any agreement or understanding with any person with respect to (i) any future employment by UIC or its affiliates or (ii) any future transactions to which UIC or any of its affiliates will or may be a party. However, Steel has reviewed, and will continue to review, on the basis of publicly available information, various possible business strategies that it might consider in the event that the Nominees are elected to the Board. OTHER MATTERS AND ADDITIONAL INFORMATION Steel is unaware of any other matters to be considered at the Annual Meeting [other than the ratification of the appointment of the Company's auditors]. However, should other matters, which Steel is not aware of a reasonable time before this solicitation, be brought before the Annual Meeting, the persons named as proxies on the enclosed GOLD proxy card will vote on such matters in their discretion. See Schedule II for information regarding persons who beneficially own more than 5% of the Shares and the ownership of the Shares by the management of UIC. The information concerning UIC contained in this Proxy Statement and the Schedules attached hereto has been taken from, or is based upon, publicly available information. -12- STEEL PARTNERS II, L.P. _______, 2002 -13- SCHEDULE I ---------- TRANSACTIONS IN THE SHARES DURING THE PAST TWO YEARS ---------------------------------------------------- Shares of Common Stock Price Per Date of Purchased Share ($) Purchase --------- --------- -------- STEEL PARTNERS II, L.P. ----------------------- 20,000 9.84410 8/28/00 5,000 9.95500 8/29/00 20,300 10.02380 8/30/00 7,000 10.82000 9/06/00 500 11.29000 9/13/00 6,000 11.27960 9/19/00 600 11.05000 9/20/00 3,400 11.10250 9/21/00 5,000 10.91500 9/22/00 10,200 10.21820 10/18/00 9,000 10.17500 10/19/00 4,200 10.41610 10/20/00 11,000 10.56140 10/23/00 5,000 10.48750 10/24/00 6,000 10.50830 10/25/00 1,700 10.67500 10/27/00 5,000 10.67000 10/30/00 1,000 10.81000 10/31/00 3,000 10.42500 11/02/00 900 10.42500 11/03/00 2,500 10.67500 11/06/00 3,600 10.67500 11/22/00 10,800 10.79650 11/27/00 8,720 10.80000 11/28/00 11,000 10.67500 11/29/00 -14- Shares of Common Stock Price Per Date of Purchased Share ($) Purchase --------- --------- -------- STEEL PARTNERS II, L.P. ----------------------- 300 10.72500 12/04/00 500 10.67500 12/06/00 5,500 11.05000 12/27/00 14,400 11.09340 12/28/00 9,000 11.10500 12/29/00 2,000 11.17500 1/03/01 6,600 11.12570 1/04/01 17,600 13.50920 3/12/01 4,700 13.47000 3/13/01 5,000 13.30000 3/14/01 3,400 13.53000 3/15/01 10,000 13.30000 3/16/01 11,300 13.20260 3/19/01 -15- WARREN G. LICHTENSTEIN ---------------------- NONE(1) JAMES R. HENDERSON ------------------ NONE GLEN M. KASSAN -------------- NONE - -------- (1) By virtue of his position with Steel Partners II, L.P., Mr. Lichtenstein has the power to vote and dispose of UIC Shares owned by Steel Partners II, L.P. Accordingly, Mr. Lichtenstein may be deemed the beneficial owner of the UIC Shares owned by Steel Partners II, L.P. -16- SCHEDULE II SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT The following is based solely on information provided in the Form 10-K: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS On March 22, 2002, there were outstanding and entitled to vote 12,976,718 shares of Common Stock. At March 22, 2002, more than 5% of the Company's outstanding voting securities was beneficially owned by each of the persons named in the following table, except that the information as to Kennedy Capital Management, Inc., Dimensional Fund Advisors Inc., Elaine Fein and J.P. Morgan Chase & Co. is as of December 31, 2001 and is based upon information furnished to the Company by such persons in Schedules 13G, and the information as to Steel Partners II, L.P. is based upon information furnished by such entity in a Schedule 13D and a Form 4. Name and Address of Amount and Nature of Title of Class Beneficial Owner Beneficial Ownership Percent of Class - -------------- ---------------- -------------------- ---------------- Common Stock Kennedy Capital Management, Inc. 1,509,450(1) 11.63% 10829 Olive Boulevard St. Louis, Missouri 63141 Common Stock Steel Partners II, L.P. 1,310,250 10.10% 150 East 52 Street New York, New York 10022 Common Stock Dimensional Fund Advisors Inc. 1,059,440(2) 8.16% 1299 Ocean Avenue, 11th Floor Santa Monica, California 90401 Common Stock Elaine Fein 983,747(3) 7.58% P.O. Box 99 Scarsdale, New York 10583 Common Stock J.P. Morgan Chase & Co. 914,551(4) 7.05% 270 Park Avenue New York, New York 10017 (1) Kennedy Capital Management, Inc., a registered investment advisor, has sole voting power as to 1,496,400 shares of Common Stock and sole dispositive power as to 1,509,450 shares. (2) Dimensional Fund Advisors Inc. ("Dimensional"), an investment advisor registered under Section 203 of the Investment Advisors Act of 1940, is deemed to have beneficial ownership of 1,059,440 shares of Common Stock. Dimensional furnishes investment advice to four investment companies registered under the Investment Company Act of 1940, and serves as investment manager to certain other commingled group trusts and separate accounts (collectively, the "Funds"). In its role as investment advisor or manager, Dimensional possesses voting and/or investment power over the securities of the Company that are owned by the Funds. Dimensional disclaims beneficial ownership of such securities. -17- (3) Includes 912,551 shares of Common Stock owned by The Estate of Bernard Fein, of which Ms. Fein is an executor, and 71,196 shares owned by The Fein Foundation, of which Ms. Fein is a trustee. (4) Includes 912,551 shares of Common Stock owned by The Estate of Bernard Fein, of which J.P. Morgan Chase & Co. is an executor. SECURITY OWNERSHIP OF MANAGEMENT The following table sets forth, as of March 1, 2002, the number of shares of Common Stock of the Company beneficially owned by each director of the Company, each executive officer named in the Summary Compensation Table above, and by all directors and executive officers of the Company as a group. Except as otherwise indicated all shares are owned directly. Amount and Nature of Beneficial Percent Name or Group Ownership(1)(2) of Class - ------------- --------------- -------- Richard R. Erkeneff 596,000 4.44% Harold S. Gelb 35,000 (3) Warren G. Lichtenstein 1,315,250(4) 10.14% James H. Perry 82,843 (3) Joseph S. Schneider 25,000 (3) E. Donald Shapiro 45,000 (3) Robert W. Worthing 80,419(5) (3) Susan Fein Zawel 386,954(6) 2.97% All directors and executive officers as a group, consisting of 8 persons 2,566,466 18.72% (1) The information as to securities owned by directors and executive officers was furnished to the Company by such directors and executive officers. Includes units in the Company's 401(k) plan, which consist of shares of Common Stock and cash. (2) Includes shares which the following persons have the right to acquire within 60 days through the exercise of stock options: Mr. Erkeneff, 460,000 shares; Mr. Gelb, 30,000 shares; Mr. Lichtenstein, 5,000 shares; Mr. Perry, 77,000 shares; Mr. Schneider, 20,000 shares; Mr. Shapiro, 30,000 shares; Mr. Worthing, 71,000 shares; Ms. Fein Zawel, 55,000 shares; and all directors and executive officers as a group, 748,000 shares. (3) Less than 1%. (4) All of such shares are owned by Steel Partners II, L.P. ("Steel") (other than Mr. Lichtenstein's stock options). Mr. Lichtenstein is the Chairman of the Board, Secretary and Managing Member of the general partner of Steel. Mr. Lichtenstein disclaims beneficial ownership of the shares owned by Steel, except to the extent of his pecuniary interest therein. (5) Does not include 500 shares of Common Stock owned by Mr. Worthing's spouse, as to which he disclaims beneficial ownership. (6) Includes 11,440 shares of Common Stock owned by Ms. Fein Zawel's spouse, 4,772 shares of Common Stock owned by Ms. Fein Zawel jointly with her spouse, and 32,634 shares of Common Stock held in trust for her minor children. -18- IMPORTANT Tell your Board what you think! Your vote is important. No matter how many Shares you own, please give Steel your proxy FOR the election of the Nominees by taking three steps: o SIGNING the enclosed GOLD proxy card, o DATING the enclosed GOLD proxy card, and o MAILING the enclosed GOLD proxy card TODAY in the envelope provided (no postage is required if mailed in the United States). If any of your Shares are held in the name of a brokerage firm, bank, bank nominee or other institution, only it can vote such Shares and only upon receipt of your specific instructions. Accordingly, please contact the person responsible for your account and instruct that person to execute the GOLD proxy card representing your Shares. Steel urges you to confirm in writing your instructions to Steel in care of MacKenzie Partners, Inc. at the address provided below so that Steel will be aware of all instructions given and can attempt to ensure that such instructions are followed. If you have any questions or require any additional information concerning this Proxy Statement, please contact MacKenzie Partners, Inc. at the address set forth below. [MACKENZIE LOGO] -19- PRELIMINARY COPY SUBJECT TO COMPLETION DATED AUGUST 20, 2002 UNITED INDUSTRIAL CORPORATION ANNUAL MEETING OF STOCKHOLDERS THIS PROXY IS SOLICITED ON BEHALF OF STEEL PARTNERS II, L.P. The undersigned appoints Warren G. Lichtenstein and Glen M. Kassan, and each of them, attorneys and agents with full power of substitution to vote all shares of common stock of United Industrial Corporation (the "Company") which the undersigned would be entitled to vote if personally present at the Annual Meeting of Stockholders of the Company, and including at any adjournments or postponements thereof and at any meeting called in lieu thereof, as follows: 1. ELECTION OF DIRECTORS: FOR ALL WITHHOLD ALL FOR ALL except nominee Nominees: James R. Henderson and written below Glen M. Kassan [ ] [ ] [ ] --------- [2. RATIFICATION OF APPOINTMENT FOR AGAINST ABSTAIN OF INDEPENDENT AUDITORS: [ ] [ ] [ ]] 3. In their discretion with respect to any other matters as may properly come before the Annual Meeting. -20- The undersigned hereby revokes any other proxy or proxies heretofore given to vote or act with respect to the shares of Common Stock of the Company held by the undersigned, and hereby ratifies and confirms all action the herein named attorneys and proxies, their substitutes, or any of them may lawfully take by virtue hereof. If properly executed, this proxy will be voted as directed above. IF NO DIRECTION IS INDICATED WITH RESPECT TO THE ABOVE PROPOSALS, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES, OR ANY SUBSTITUTIONS THERETO, [AND FOR THE RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS]. This proxy will be valid until the sooner of one year from the date indicated below and the completion of the Annual Meeting. DATED: ____________________________ PLEASE SIGN EXACTLY AS NAME APPEARS ON THIS PROXY. - ------------------------------------ (Signature) - ------------------------------------ (Signature, if held jointly) - ------------------------------------ (Title) WHEN SHARES ARE HELD JOINTLY, JOINT OWNERS SHOULD EACH SIGN. EXECUTORS, ADMINISTRATORS, TRUSTEES, ETC., SHOULD INDICATE THE CAPACITY IN WHICH SIGNING. IMPORTANT: PLEASE SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY! -21-
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PREC14A Filing
Steel Partners Ii Inactive PREC14APreliminary proxy with contested solicitation
Filed: 20 Aug 02, 12:00am