<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
---------------------
SHOWPOWER, INC.
(Name of Subject Company)
---------------------
GE POWER ACQUISITION CORP.
A Wholly Owned Subsidiary Of
GE ENERGY SERVICES, INC.
And An Indirect Wholly Owned Subsidiary Of
GENERAL ELECTRIC COMPANY
(Bidders)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title Of Class of Securities)
825396 10 4
(Cusip Number of Class of Securities)
BRIGGS L. TOBIN, ESQ.
GENERAL ELECTRIC COMPANY
4200 WILDWOOD PARKWAY
ATLANTA, GEORGIA 30339
(770) 859-6000
(Name, Address and Telephone Number of Persons Authorized to
Receive Notices and Communications on Behalf of Bidders)
---------------------
Copy To
C. WILLIAM BAXLEY, ESQ.
KING & SPALDING
191 PEACHTREE STREET
ATLANTA, GEORGIA 30303-1763
TELEPHONE: (404) 572-4600
---------------------
DECEMBER 20, 1999
(DATE OF EVENT WHICH REQUIRES FILING
STATEMENT ON SCHEDULE 13D)
---------------------
CALCULATION OF FILING FEE
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TRANSACTION VALUATION* AMOUNT OF FILING FEE*
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$27,382,894 $5,477
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</TABLE>
* For the purpose of calculating the fee only, this amount assumes the purchase
of 3,911,842 shares of Common Stock, par value $.01 per share, of Showpower,
Inc. at $7.00 per share. Such number includes all outstanding shares as of
December 17, 1999, and assumes the exercise of all in-the-money stock options
to purchase shares of Common Stock which are outstanding as of such date.
[ ] 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.
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Amount Previously Paid: Filing Party:
Form or Registration No.: Date Filed:
</TABLE>
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Page 2 of 8
SCHEDULES 14D-1 AND 13D
CUSIP NO. 825396104
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1. NAME OF REPORTING PERSON: GE POWER ACQUISITION CORP.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: 582510381
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(A) [X]
(B) [ ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS:
AF
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(E) OR 2(F):
N/A [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION:
DELAWARE
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7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
1,490,374 SHARES*
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8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES:
N/A [ ]
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9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7):
43.6% OF THE SHARES ISSUED AND OUTSTANDING AS OF DECEMBER 17, 1999*
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10. TYPE OF REPORTING PERSON:
CO
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* See second paragraph on page 5.
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Page 3 of 8
SCHEDULES 14D-1 AND 13D
CUSIP NO. 825396104
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1. NAME OF REPORTING PERSON: GE ENERGY SERVICES, INC.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: 58-2389698
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(A) [X]
(B) [ ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS:
AF
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(E) OR 2(F):
N/A [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION:
DELAWARE
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7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
1,490,374 SHARES*
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8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES:
N/A [ ]
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9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7):
43.6% OF THE SHARES ISSUED AND OUTSTANDING AS OF DECEMBER 17, 1999*
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10. TYPE OF REPORTING PERSON:
CO
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* See second and third paragraphs on page 5.
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Page 4 of 8
SCHEDULES 14D-1 AND 13D
CUSIP NO. 825396104
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1. NAME OF REPORTING PERSON: GENERAL ELECTRIC COMPANY
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: 14-0689340
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(A) [X]
(B) [ ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS:
WC
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(E) OR 2(F): [X]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION:
NEW YORK
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7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
1,490,374 SHARES*
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8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES:
[ ]
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9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7):
43.6% OF THE SHARES ISSUED AND OUTSTANDING AS OF DECEMBER 17, 1999*
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10. TYPE OF REPORTING PERSON:
CO
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* See second and third paragraphs on page 5.
<PAGE> 5
Page 5 of 8
This Statement relates to a tender offer by GE Power Acquisition Corp.
(formerly known as Emmy Acquisition Corp.), a Delaware corporation (the
"Offeror") and a wholly owned subsidiary of GE Energy Services, Inc., a Delaware
corporation (the "Parent"), which is a wholly owned subsidiary of General
Electric Company, a New York corporation ("General Electric"), to purchase all
outstanding shares of common stock, par value $.01 per share (the "Shares"), of
Showpower, Inc., a Delaware corporation (the "Company"), at a purchase price of
$7.00 per Share, net to the seller in cash, without interest, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated December 27,
1999 (the "Offer to Purchase"), and in the related Letter of Transmittal (which
together constitute the "Offer"), copies of which are filed as Exhibits (a)(1)
and (a)(2) hereof, respectively, and which are incorporated herein by reference.
This Tender Offer Statement on Schedule 14D-1 also constitutes a Statement on
Schedule 13D with respect to the acquisition by the Offeror and Parent of
beneficial ownership of Shares subject to the Tender Agreements (as hereinafter
defined). The cover page above and item numbers and responses thereto below are
in accordance with the requirements of Schedule 14D-1.
The Offeror and Parent have entered into Tender Agreements dated as of
December 17, 1999 (the "Tender Agreements"), with certain stockholders of the
Company (the "Tendering Stockholders"), pursuant to which the Tendering
Stockholders have agreed to tender an aggregate of 1,490,374 Shares owned by
them (the "Committed Shares") pursuant to the Offer and certain Tendering
Stockholders have agreed to vote their portion of such Committed Shares in favor
of the Merger (as defined herein) and otherwise in the manner directed by the
Offeror. In addition, the Offeror, Parent and each of the Tendering Stockholders
have entered into an Indemnification Agreement dated as of December 17, 1999
(the "Indemnification Agreements") pursuant to which the Tendering Stockholders
have agreed, among other things, to indemnify the Offeror and Parent with
respect to third party claims arising out of or relating to breaches of the
representations and warranties contained in the Merger Agreement dated as of
December 17, 1999 among Parent, Offeror and the Company (the "Merger
Agreement"), subject to limitations set forth in such Indemnification
Agreements. The Offeror and Parent disclaim ownership of the Committed Shares.
Additional information about the Tender Agreements and the Indemnification
Agreements is contained in Section 13 ("The Merger Agreement; the Tender
Agreements; the Indemnification Agreements and Certain Other Agreements") of the
Offer to Purchase.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Showpower, Inc. The address of the
principal executive offices of the Company is set forth in Section 8 ("Certain
Information Concerning the Company") of the Offer to Purchase and is
incorporated herein by reference.
(b) The exact title of the class of equity securities being sought in the
Offer is the common stock, par value $.01 per share, of the Company. The
information set forth in the Introduction to the Offer to Purchase is
incorporated herein by reference.
(c) The information set forth in Section 6 ("Price Range of Shares;
Dividends") of the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a) through (d), (g): The information set forth in the Introduction and
Section 9 ("Certain Information Concerning the Offeror, Parent and General
Electric") of the Offer to Purchase, and in Annex I thereto, is incorporated
herein by reference.
(e) and (f): Except as set forth in Section 9 ("Certain Information
Concerning the Offeror, Parent and General Electric") of the Offer to Purchase,
which is incorporated herein by reference, none of the Offeror, Parent, General
Electric nor, to the best of their knowledge, any of the persons listed in Annex
I of the Offer to Purchase, has during the last five years (i) been convicted in
a criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) been a party to a civil proceeding of a judicial or administrative
<PAGE> 6
Page 6 of 8
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 CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) and (b): The information set forth in the Introduction and Section 11
("Background of the Offer; Past Contacts, Transactions or Negotiations with the
Company") of the Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) and (b): The information set forth in Section 10 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a) through (e): The information set forth in the Introduction, Section 11
("Background of the Offer; Past Contacts, Transactions or Negotiations with the
Company"), Section 12 ("Purpose of the Offer and the Merger; Plans for the
Company") and Section 13 ("The Merger Agreement; the Tender Agreements; the
Indemnification Agreements and Certain Other Agreements") of the Offer to
Purchase is incorporated herein by reference.
(f) and (g): The information set forth in Section 7 ("Certain Effects of
the Transaction on the Market for the Shares, Stock 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) and (b): The information set forth in the Introduction, Section 9
("Certain Information Concerning the Offeror, Parent and General Electric") and
Section 13 ("The Merger Agreement; the Tender Agreements; the Indemnification
Agreements and Certain Other Agreements") 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 11 ("Background of
the Offer; Past Contacts, Transactions or Negotiations with the Company") and
Section 13 ("The Merger Agreement; the Tender Agreements; the Indemnification
Agreements and Certain Other Agreements") 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 in Section 17 ("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 9 ("Certain Information Concerning the
Offeror, Parent and General Electric") of the Offer to Purchase is incorporated
herein by reference.
The incorporation by reference herein of the above-mentioned financial
information does not constitute an admission that such information is material
to a decision by a stockholder of the Company as to whether to sell, tender or
hold Shares being sought in the Offer.
<PAGE> 7
Page 7 of 8
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in Section 11 ("Background of the Offer; Past
Contacts, Transactions or Negotiations with the Company") and Section 13 ("The
Merger Agreement; the Tender Agreements; the Indemnification Agreements and
Certain Other Agreements") of the Offer to Purchase is incorporated by
reference.
(b) and (c) The information set forth in Section 16 ("Certain Legal
Matters") of the Offer to Purchase is incorporated herein by reference.
(d) The information set forth in Section 7 ("Certain Effects of the
Transaction on the Market for the Shares, Stock Exchange Listing and Exchange
Act Registration") of the Offer to Purchase is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and in the Letter of
Transmittal is incorporated herein by reference in its entirety.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase, dated December 27, 1999.
(a)(2) Letter of Transmittal.
(a)(3) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(4) Letter from Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees to Clients.
(a)(5) Notice of Guaranteed Delivery.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Summary Announcement, dated December 27, 1999.
(a)(8) Press Release issued by the Parent and the Company on December 20,
1999.
(a)(9) Press Release issued by the Parent and the Company on December 27,
1999.
(c)(1) Agreement and Plan of Merger, dated as of December 17, 1999, among
Parent, the Offeror and the Company.
(c)(2) Form of Tender Agreement, dated as of December 17, 1999, among each
of the Tendering Stockholders, the Offeror and Parent.
(c)(3) Form of Indemnification Agreement, dated as of December 17, 1999,
among each of the Tendering Stockholders, the Offeror and Parent.
(c)(4) Employment Letter Agreement, dated as of December 17, 1999, between
GE Energy Systems Rentals and John Campion.
(c)(5) Employment Letter Agreement, dated as of December 17, 1999, between
GE Energy Systems Rentals and Laurence Anderson.
(c)(6) Power of Attorney, dated as of February 8, 1999.
(d) None.
(e) Not applicable.
(f) None.
<PAGE> 8
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.
Dated: December 27, 1999
General Electric Company
By: /s/ JANET BEDOL
------------------------------------
Name: Janet Bedol
Title: Attorney-in-Fact and
Associate
Securities Counsel
GE Energy Services, Inc.
By: /s/ C.F. CARSON
------------------------------------
Name: C.F. Carson
Title: Chief Financial Officer
GE Power Acquisition Corp.
By: /s/ C.F. CARSON
------------------------------------
Name: C.F. Carson
Title: Chief Financial Officer
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
SHOWPOWER, INC.
at
$7.00 NET PER SHARE
by
GE POWER ACQUISITION CORP.
a wholly owned subsidiary of
GE ENERGY SERVICES, INC.
and an indirect wholly owned subsidiary of
GENERAL ELECTRIC COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, JANUARY 25, 2000,
UNLESS THE OFFER IS EXTENDED.
THIS OFFER (THE "OFFER") IS BEING MADE IN CONNECTION WITH THE AGREEMENT AND
PLAN OF MERGER, DATED AS OF DECEMBER 17, 1999 (THE "MERGER AGREEMENT"), AMONG GE
ENERGY SERVICES, INC. ("PARENT"), GE POWER ACQUISITION CORP. (THE "OFFEROR") AND
SHOWPOWER, INC. (THE "COMPANY"). THE BOARD OF DIRECTORS OF THE COMPANY HAS
UNANIMOUSLY APPROVED AND ADOPTED THE MERGER AGREEMENT, APPROVED THE OFFER AND
THE MERGER (AS DEFINED HEREIN), HAS DETERMINED THAT THE TERMS OF THE OFFER AND
THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS
AND RECOMMENDS THAT HOLDERS OF THE SHARES (AS DEFINED HEREIN) ACCEPT THE OFFER
AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
IN CONNECTION WITH THE MERGER AGREEMENT, PARENT AND THE OFFEROR ENTERED INTO
TENDER AGREEMENTS DATED DECEMBER 17, 1999 (THE "TENDER AGREEMENTS") WITH CERTAIN
STOCKHOLDERS OF THE COMPANY WHO OWN APPROXIMATELY 43.6% OF THE SHARES THAT ARE
OUTSTANDING AND 38.1% ON A FULLY DILUTED BASIS (ASSUMING THE EXERCISE OF ALL
"IN-THE-MONEY" STOCK OPTIONS). PURSUANT TO THE TENDER AGREEMENTS, SUCH
STOCKHOLDERS HAVE AGREED TO TENDER SUCH SHARES PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER SUCH NUMBER OF
SHARES THAT WOULD CONSTITUTE MORE THAN FIFTY PERCENT (50%) OF THE SHARES THAT
ARE OUTSTANDING DETERMINED ON A FULLY DILUTED BASIS, (II) ANY WAITING PERIOD
UNDER THE HSR ACT (AS DEFINED HEREIN) APPLICABLE TO THE PURCHASE OF SHARES
PURSUANT TO THE OFFER HAVING EXPIRED OR HAVING BEEN TERMINATED PRIOR TO THE
EXPIRATION OF THE OFFER AND (III) THE SATISFACTION OF CERTAIN OTHER TERMS AND
CONDITIONS. SEE SECTION 15.
---------------------
IMPORTANT
Any stockholder desiring to tender Shares should either (i) complete and
sign the Letter of Transmittal or a facsimile thereof in accordance with the
instructions in the Letter of Transmittal and deliver the Letter of Transmittal
with the Shares and all other required documents to the Depositary (as defined
herein) or follow the procedure for book-entry transfer set forth in Section 3
of this Offer to Purchase or (ii) request such stockholder's broker, dealer,
commercial bank, trust company or other nominee to effect the transaction for
the stockholder. Stockholders having Shares registered in the name of a broker,
dealer, commercial bank, trust company or other nominee must contact such person
if they desire to tender their Shares.
Any stockholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available or who cannot comply with
the procedures for book-entry transfer on a timely basis or who cannot deliver
all required documents to the Depositary, in each case prior to the expiration
of the Offer, must tender such Shares pursuant to the guaranteed delivery
procedure set forth in Section 3 of this Offer to Purchase.
Questions and requests for assistance or additional copies of this Offer to
Purchase or the Letter of Transmittal may be directed to the Information Agent
at its address and telephone number set forth on the back cover of this Offer to
Purchase.
---------------------
The Information Agent for the Offer is:
[MORROW INC. LOGO]
December 27, 1999
<PAGE> 2
TABLE OF CONTENTS
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PAGE
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Introduction................................................ 1
1. Terms of the Offer; Expiration Date.................. 3
2. Acceptance for Payment and Payment for Shares........ 4
3. Procedure for Tendering Shares....................... 5
4. Withdrawal Rights.................................... 9
5. Certain United States Federal Income Tax
Consequences....................................... 9
6. Price Range of Shares; Dividends..................... 11
7. Certain Effects of the Transaction on the Market for
the Shares, Stock Exchange Listing and Exchange Act
Registration....................................... 11
8. Certain Information Concerning the Company........... 12
9. Certain Information Concerning the Offeror, Parent
and General Electric............................... 17
10. Source and Amount of Funds........................... 20
11. Background of the Offer; Past Contacts, Transactions
or Negotiations with the Company................... 20
12. Purpose of the Offer and the Merger; Plans for the
Company............................................ 22
13. The Merger Agreement; the Tender Agreements; the
Indemnification Agreements and Certain Other
Agreements......................................... 24
14. Dividends And Distributions.......................... 34
15. Certain Conditions to the Offeror's Obligations...... 34
16. Certain Legal Matters................................ 36
17. Fees and Expenses.................................... 37
18. Miscellaneous........................................ 37
Annex I
Certain Information Concerning the Directors and Executive
Officers of General Electric, Parent and the Offeror... 39
Appendix A.
Agreement and Plan of Merger dated as of December 17, 1999
among Parent, the Offeror and the Company.............. A-1
Appendix B.
Form of Tender Agreement dated as of December 17, 1999.... B-1
Appendix C.
Form of Indemnification Agreement dated as of December 17,
1999................................................... C-1
</TABLE>
i
<PAGE> 3
TO THE HOLDERS OF COMMON STOCK OF SHOWPOWER, INC.:
INTRODUCTION
GE Power Acquisition Corp. (formerly known as Emmy Acquisition Corp.), a
Delaware corporation (the "Offeror"), a wholly owned subsidiary of GE Energy
Services, Inc., a Delaware corporation ("Parent"), a wholly owned subsidiary of
General Electric Company, a New York corporation ("General Electric"), hereby
offers to purchase all outstanding shares of Common Stock, par value $.01 per
share (the "Shares"), of Showpower, Inc., a Delaware corporation (the
"Company"), at a purchase price of $7.00 per Share, net to the seller in cash,
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 holders of Shares will not be obligated to pay brokerage
fees or commissions or, except as set forth in the Letter of Transmittal, stock
transfer taxes on the purchase of Shares by the Offeror pursuant to the Offer.
The Offeror will pay all charges and expenses of Continental Stock Transfer &
Trust Company (the "Depositary") and Morrow & Co., Inc. (the "Information
Agent") in connection with the Offer.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED AND ADOPTED
THE MERGER AGREEMENT (AS DEFINED HEREIN), APPROVED THE OFFER AND THE MERGER (AS
DEFINED HEREIN), HAS DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE
FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS AND RECOMMENDS
THAT THE HOLDERS OF THE SHARES ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT
TO THE OFFER.
Prime Charter Ltd. ("Prime Charter"), the Company's financial advisor, has
delivered to the Company's Board of Directors its written opinion dated December
16, 1999 that, as of such date and based upon and subject to certain matters set
forth in such opinion, the consideration to be received by the holders of Shares
pursuant to the Offer and the Merger is fair to such holders from a financial
point of view. A copy of such opinion is contained in the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 which is being
distributed to the Company's stockholders.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE HAVING BEEN
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER SUCH
NUMBER OF SHARES THAT WOULD CONSTITUTE MORE THAN FIFTY PERCENT (50%) OF THE
SHARES THAT ARE OUTSTANDING DETERMINED ON A FULLY DILUTED BASIS (THE "MINIMUM
CONDITION"), (II) ANY WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST
IMPROVEMENTS ACT OF 1976, AS AMENDED (THE "HSR ACT"), APPLICABLE TO THE PURCHASE
OF SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR HAVING BEEN TERMINATED PRIOR
TO THE EXPIRATION OF THE OFFER AND (III) THE SATISFACTION OF CERTAIN OTHER TERMS
AND CONDITIONS. SEE SECTION 15.
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of December 17, 1999 (the "Merger Agreement"), among Parent, the Offeror and
the Company. The Merger Agreement provides that, among other things, 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 Delaware General Corporation Law, as amended (the "DGCL"), the
Offeror 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 and an indirect wholly owned subsidiary of General Electric. At the
effective time of the Merger (the "Effective Time"), each Share that is issued
and outstanding (other than Shares owned by the Company, any subsidiary of the
Company, Parent, the Offeror, any other subsidiary of Parent or by stockholders,
if any, who are entitled to and who properly exercise dissenter's rights under
the DGCL ("Dissenting Shares")) will be converted into the right to receive from
the Surviving Corporation $7.00 (or any higher price that may be paid for each
Share
<PAGE> 4
pursuant to the Offer) in cash, without interest thereon (the "Offer Price").
See Section 5 for a description of certain United States federal income tax
consequences of the Offer and the Merger.
In connection with the Merger Agreement, the Offeror and Parent entered
into Tender Agreements dated as of December 17, 1999 (the "Tender Agreements"),
with each of the following stockholders of the Company: John J. Campion and
Esther Ash, G. Laurence and Thressa Anderson, Stephen R. Bernstein, Jeffrey B.
Stone, Joseph A. Ades, Robert E. Masterson, David C. and Annika Bernstein,
Vincent A. Carrino and Eric C. Jackson (the "Tendering Stockholders"). Pursuant
to the Tender Agreements, the Tendering Stockholders have agreed to tender an
aggregate of 1,490,374 Shares owned by the Tendering Stockholders (the
"Committed Shares") and John J. Campion and Esther Ash, G. Laurence and Thressa
Anderson, Stephen R. Bernstein, Jeffrey B. Stone, Joseph A. Ades, Robert E.
Masterson and David C. and Annika Bernstein have agreed to vote their portion of
the Committed Shares in favor of the Merger and otherwise in the manner directed
by the Offeror. The Offeror, Parent and each of the Tendering Stockholders have
also entered into Indemnification Agreements dated as of December 17, 1999 (the
"Indemnification Agreements") pursuant to which, among other things, the
Tendering Stockholders have agreed to indemnify Offeror and Parent with respect
to third party claims arising out of or relating to breaches of the
representations and warranties contained in the Merger Agreement. The Tendering
Stockholders have also agreed that, among other things, unless the Merger
Agreement is terminated in accordance with its terms, such Tendering
Stockholders will not transfer the Committed Shares. The Committed Shares
represent approximately 38.1% of the Shares that, as of December 17, 1999, were
issued and outstanding on a fully diluted basis (assuming the exercise of all
"in-the-money" stock options). The Merger Agreement, the Tender Agreements and
the Indemnification Agreements are more fully described in Section 13.
The Merger Agreement provides that, promptly after the Offeror acquires
Shares which represent at least the Minimum Condition, the Offeror will be
entitled to designate such number of directors on the Board of Directors of the
Company, subject to compliance with Section 14(f) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), as will make the percentage of the
Company's directors designated by the Offeror equal to the percentage of the
aggregate voting power of the Shares held by Parent or any of its subsidiaries
and the Company shall, at such time, cause the Offeror's designees to be so
elected by its existing Board of Directors. The Company has agreed, at the
option of the Offeror, either to increase the size of the Board of Directors of
the Company and/or obtain the resignation of such number of directors as is
necessary to enable the Offeror's designees to be elected or appointed to the
Board. In addition, the Company shall cause to be delivered to Parent
resignations of all of the directors of the Company's subsidiaries to be
effective upon the purchase of Shares that represent the Minimum Condition
pursuant to the Offer and shall appoint new directors nominated by the Offeror
to fill such vacancies. Following the election or appointment of the Offeror's
designees to the Board of Directors of the Company and prior to the Effective
Time, the affirmative vote of the directors of the Company who are not designees
of the Offeror shall be required by the Company to (i) amend or terminate the
Merger Agreement by the Company, (ii) exercise or waive any of the Company's
rights or remedies under the Merger Agreement, or (iii) extend the time for
performance of Parent's and the Offeror's respective obligations under the
Merger Agreement.
If the Minimum Condition and the other conditions to the Offer are
satisfied and the Offer is consummated, the Offeror will own a sufficient number
of Shares to ensure that the Merger will be approved. Under Section 253 of the
DGCL, if, after consummation of the Offer, the Offeror owns at least 90% of the
Shares then outstanding, the Offeror will be able to cause the Merger to occur
without a vote of the Company's stockholders. If, however, after consummation of
the Offer, the Offeror owns less than 90% of the then outstanding Shares, a vote
of the Company's stockholders will be required under the DGCL to approve the
Merger, and a significantly longer period of time will be required to effect the
Merger.
The Company has advised the Offeror that as of December 17, 1999, there
were (a) 3,421,842 Shares issued and outstanding, (b) 1,000,000 Shares reserved
for issuance upon the exercise of outstanding employee and director stock
options, under the 1998 Stock Option and Incentive Plan (the "1998 Stock Option
Plan"), of which 969,563 are outstanding and 490,000 are "in-the-money" and (c)
120,000 Shares reserved for issuance upon the exercise of the warrant issued to
Prime Charter at $16.50 per Share (the "Charter Warrant"). Prime Charter has
agreed to surrender the Charter Warrant upon the consummation of the Offer
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for no additional consideration. Based on the foregoing, the Minimum Condition
will be satisfied if at least 1,955,922 Shares, or approximately 57.2% of the
outstanding Shares as of December 17, 1999 (approximately 50.01% of the Shares
on a fully diluted basis (assuming the exercise of all "in-the-money" stock
options)), are validly tendered and not withdrawn prior to the Expiration Date
(as defined below).
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; 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 any extension or
amendment), the Offeror will accept for payment and thereby purchase all Shares
validly tendered prior to the Expiration Date and not withdrawn in accordance
with Section 4. The term "Expiration Date" means 12:00 Midnight, New York City
time, on Tuesday, January 25, 2000, unless the Offeror has extended the period
of time for 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 the
Offeror, will expire.
If the Offeror decides, in its sole discretion, to increase the
consideration offered in the Offer to holders of Shares and if, at the time that
notice of such increase is first published, sent or given to holders of Shares
in the manner specified below, the Offer is scheduled to expire at any time
earlier than the expiration of a period ending on the tenth business day from,
and including, the date that such notice is first so published, sent or given,
then the Offer will be extended until the expiration of such period of ten
business days. For purposes of the Offer, a "business day" means any day other
than a Saturday, Sunday or a federal holiday and consists of the time period
from 12:01 a.m. through 12:00 Midnight, New York City time.
THE OFFER IS CONDITIONED UPON SATISFACTION OF THE MINIMUM CONDITION, THE
EXPIRATION OR TERMINATION OF ANY WAITING PERIOD UNDER THE HSR ACT APPLICABLE TO
THE PURCHASE OF SHARES PURSUANT TO THE OFFER AND CERTAIN OTHER TERMS AND
CONDITIONS. SEE SECTION 15. THE MERGER AGREEMENT AND THE OFFER MAY BE TERMINATED
BY THE OFFEROR AND PARENT IF CERTAIN EVENTS OCCUR. The Offeror reserves the
right (but is not obligated), in accordance with applicable rules and
regulations of the United States Securities and Exchange Commission (the
"Commission"), subject to the limitations set forth in the Merger Agreement and
described below, to waive any condition to the Offer, except with respect to the
Minimum Condition. If any condition set forth in Section 15, other than with
respect to the Minimum Condition, has not been satisfied by 12:00 Midnight, New
York City time, on January 25, 2000 (or any other time then set as the
Expiration Date), the Offeror may, subject to the terms of the Merger Agreement
as described below, elect to (i) extend the Offer and, subject to applicable
withdrawal rights, retain all tendered Shares until the expiration of the Offer,
as extended, (ii) subject to complying with applicable rules and regulations of
the Commission, accept for payment all Shares so tendered and not extend the
Offer or (iii) terminate the Offer and not accept for payment any Shares and
return all tendered Shares to tendering stockholders. During any extension, all
Shares previously tendered and not withdrawn will remain subject to the Offer
and subject to the right of a tendering stockholder to withdraw such
stockholder's Shares. See Section 4. Under no circumstances will the Offeror pay
interest on the purchase price for tendered Shares whether or not it extends the
Offer.
Under the terms of the Merger Agreement, the Offeror may not, without the
consent of the Company, reduce the Minimum Condition, reduce the number of
Shares subject to the Offer, reduce the Offer Price, extend the Offer (except as
described in the next sentence), change the form of consideration payable in the
Offer or amend any other term of the Offer in any manner adverse to the holders
of Shares in any material respect. Notwithstanding the foregoing, the Offeror
may, without the consent of the Company, (i) extend the Offer, if at the
scheduled or extended expiration date of the Offer any of the conditions shall
not be satisfied or waived, until such time as such conditions are satisfied or
waived, (ii) extend the Offer for any period required by any rule, regulation,
interpretation or position of the Commission or the Commission staff applicable
to the
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<PAGE> 6
Offer and (iii) if all Offer conditions are satisfied or waived but the number
of Shares tendered is less than 90% of the then outstanding number of Shares on
a fully diluted basis, extend the Offer from time to time without the consent of
the Company in order to permit the Offeror to solicit additional Shares to be
tendered in the Offer. Any change in the terms or conditions of the Offer that
is adverse to the holders of the Shares in any material respect (including a
decrease in the Offer Price or Minimum Condition or the imposition of a new
material condition to the Offer) by the Offeror shall require the prior written
consent of the Company.
Any extension of the period during which the Offer is open, delay in
acceptance for payment or payment, termination or amendment of the Offer will be
followed, as promptly as practicable, by public announcement thereof, such
announcement in the case of an extension to be issued not later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date in accordance with the public announcement requirements of Rules
14d-4(c), 14d-6(d) and 14e-1(d) under the Exchange Act. Without limiting the
obligation of the Offeror under such rule or the manner in which the Offeror may
choose to make any public announcement, the Offeror currently intends to make
announcements by issuing a press release to the Dow Jones News Service and
making any appropriate filing with the Commission.
If, subject to the terms of the Merger Agreement, the Offeror 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 (including, with the
consent of the Company, a waiver of the Minimum Condition), the Offeror will
disseminate additional tender offer materials and extend the Offer if and to the
extent required by Rules 14d-4(c), 14d-6(d) and 14e-1(d) under the Exchange Act
or otherwise. The minimum period during which a tender offer must remain open
following material changes in the terms of the Offer or the information
concerning the Offer, other than a change in price or a change in percentage of
securities sought, will depend upon the facts and circumstances, including the
materiality of the changes. In the Commission's view, an offer should remain
open for a minimum of five business days from the date the material change is
first published, sent or given to stockholders, and, if material changes are
made with respect to information that is significant, such as the Offer Price
and the percentage of securities sought, a minimum ten business day period may
be required to allow for adequate dissemination to stockholders and investor
response. With respect to a change in price or a change in percentage of
securities sought, a minimum ten business day period is generally required to
allow for adequate dissemination to stockholders and investor response.
In addition, the Offeror may, at its sole option, after the date the Shares
are purchased pursuant to the Offer commence a subsequent offer pursuant to Rule
14d-11 of the Exchange Act (which becomes effective as of January 24, 2000) to
purchase additional Shares prior to the consummation of the Merger. If the
Offeror commences a subsequent offer, all Shares tendered in the subsequent
offer would be immediately accepted and paid for as they are tendered at the
Offer Price. Any subsequent offer must remain open for a minimum of three and a
maximum of twenty business days.
The Company has provided the Offeror with the Company's list of
stockholders and security position listings for the purpose of disseminating the
Offer to holders of Shares. This Offer to Purchase, the related Letter of
Transmittal and other relevant materials will be mailed to record holders of
Shares and will be furnished by the Offeror 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 for subsequent
transmittal to beneficial owners of Shares.
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), the Offeror will purchase, by accepting for payment, and will pay
for, all Shares validly tendered and not withdrawn in accordance with Section 4
prior to the Expiration Date promptly after the later to occur of (a) the
Expiration Date and (b) the satisfaction or waiver of the conditions set forth
in Section 15, including, without limitation, the expiration or termination of
the waiting period applicable to the acquisition of the Shares pursuant to the
Offer under the HSR Act. Subject to compliance with Rule 14e-1(c) under the
Exchange Act, the Offeror expressly reserves the right,
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<PAGE> 7
in its sole discretion, to delay acceptance of, or payment for, Shares in order
to comply in whole or in part with any applicable law. See Sections 1 and 16. In
all cases, payment for Shares purchased pursuant to the Offer will be made only
after timely receipt by the Depositary of (i) certificates representing such
Shares 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 appropriate Letter of Transmittal, properly
completed and duly executed (or a facsimile thereof) with all required signature
guarantees or, in the case of a book-entry transfer, an Agent's Message (as
defined below) 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 the
Offeror may enforce such agreement against the participant.
For purposes of the Offer, the Offeror will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not withdrawn as, if
and when the Offeror gives oral or written notice to the Depositary of the
Offeror's acceptance of such Shares for payment pursuant to the Offer. In all
cases, payment for Shares purchased pursuant to the Offer will be made by
deposit of the purchase price with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from the Offeror and
transmitting such payment to tendering stockholders. If, for any reason
whatsoever, acceptance for payment of any Shares tendered pursuant to the Offer
is delayed, or the Offeror is unable to accept for payment Shares tendered
pursuant to the Offer, then, without prejudice to the Offeror's rights under
Section 1, the Depositary may, nevertheless, on behalf of the Offeror, retain
tendered Shares, and such Shares may not be withdrawn, except to the extent that
the tendering stockholders are entitled to withdrawal rights as described in
Section 4 below and as otherwise required by Rule 14e-1(c) under the Exchange
Act. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE
PAID BY THE OFFEROR.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if certificates are submitted representing more Shares than are
tendered, certificates representing unpurchased or untendered Shares will be
returned, without expense to the tendering stockholder (or, in the case of
Shares delivered by book-entry transfer to the Book-Entry Transfer Facility,
such Shares will be credited to an account maintained within such Book-Entry
Transfer Facility), as promptly as practicable after the expiration, termination
or withdrawal of the Offer.
IF, PRIOR TO THE EXPIRATION DATE, THE OFFEROR INCREASES THE PRICE BEING
PAID FOR SHARES ACCEPTED FOR PAYMENT PURSUANT TO THE OFFER, SUCH INCREASED
CONSIDERATION WILL BE PAID TO ALL STOCKHOLDERS WHOSE SHARES ARE PURCHASED
PURSUANT TO THE OFFER, WHETHER OR NOT SUCH SHARES WERE TENDERED PRIOR TO SUCH
INCREASE IN CONSIDERATION.
The Offeror reserves the right, subject to the provisions of the Merger
Agreement, to transfer or assign, in whole or from time to time in part, to one
or more of its affiliates, the right to purchase all or any portion of the
Shares tendered pursuant to the Offer, but no such transfer or assignment will
relieve the Offeror of its obligations under the Offer or prejudice the rights
of tendering stockholders to receive payment for Shares validly tendered and
accepted for payment.
3. PROCEDURE FOR TENDERING SHARES.
Valid Tenders. Except as set forth below, for Shares to be validly
tendered pursuant to the Offer, a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof), together 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, must be received by
the Depositary at one of its addresses set forth on the back cover of this Offer
to Purchase prior to the Expiration Date or the tendering stockholder must
comply with the guaranteed delivery procedure set forth below. In addition,
either (i) certificates
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<PAGE> 8
representing tendered Shares must be received by the Depositary along with the
Letter of Transmittal or such Shares must be tendered pursuant to the procedure
for book-entry transfer set forth below, and a Book-Entry Confirmation must be
received by the Depositary, in each case prior to the Expiration Date, or (ii)
the guaranteed delivery procedures set forth below must be complied with. No
alternative, conditional or contingent tenders will be accepted.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING
STOCKHOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
DEPOSITARY (INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY
CONFIRMATION). 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. Any
financial institution that is a participant in the Book-Entry Transfer
Facility's system may make 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 transfer. However, although delivery of
Shares may be effected through book-entry transfer into the Depositary's account
at the Book-Entry Transfer Facility, the Letter of Transmittal (or a facsimile
thereof), properly completed and duly executed, 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 transmitted to and received
by the Depositary at one of its addresses set forth on the back cover of this
Offer to Purchase prior to the Expiration Date or the guaranteed delivery
procedures described below must be complied with.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
Signature Guarantee. Signatures on the Letter of Transmittal must be
guaranteed by a bank, broker, dealer, credit union, savings association or other
entity which is a member in good standing of the Securities Transfer Agents
Medallion Program or by any other bank, broker, dealer, credit union, savings
association or other entity which is an "eligible guarantor institution," as
such term is defined in Rule 17Ad-15 under the Exchange Act (each of the
foregoing constituting an "Eligible Institution"), unless the Shares tendered
thereby are tendered (i) by a registered holder of Shares who has not completed
either the box labeled "Special Delivery Instructions" or the box labeled
"Special Payment Instructions" on the Letter of Transmittal or (ii) for the
account of any Eligible Institution. If the certificates are registered in the
name of a person or persons other than the signer of the Letter of Transmittal,
or if payment is to be made, or delivered to, or certificates for unpurchased
Shares are to be issued or returned to, a person other than the registered
holder, then the tendered certificates must be endorsed or accompanied by duly
executed stock powers, in either case signed exactly as the name or names of the
registered holder or holders appear on the certificates, with the signatures on
the certificates or stock powers guaranteed by an Eligible Institution as
provided in the Letter of Transmittal. See Instructions 1 and 5 to the Letter of
Transmittal.
If the certificates are forwarded separately to the Depositary, a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof) must
accompany each such delivery.
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Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates are not immediately available or
time will not permit all required documents to reach the Depositary prior to the
Expiration Date or the procedure for book-entry transfer cannot be completed on
a timely basis, such Shares may nevertheless be tendered if all of the following
guaranteed delivery procedures are duly complied with:
(i) the 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 the Offeror, is
received by the Depositary, as provided below, prior to the Expiration
Date; and
(iii) the certificates (or a Book-Entry Confirmation) representing all
tendered Shares, in proper form for transfer together with a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof),
and 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 trading
days after the date of execution of such Notice of Guaranteed Delivery. The
term "trading day" is any day on which the American Stock Exchange ("AMEX")
is open for business.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by facsimile transmission or mail to the Depositary and must include a guarantee
by an Eligible Institution in the form set forth in the Notice of Guaranteed
Delivery and a representation that the stockholder on whose behalf the tender is
being made is deemed to own the Shares being tendered within the meaning of Rule
14e-4 under the Exchange Act.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (i) certificates for, or a Book-Entry Confirmation
with respect to, such Shares, (ii) a properly completed and duly executed Letter
of Transmittal (or a facsimile thereof), with all required signature guarantees
or, in the case of a book-entry transfer, an Agent's Message, and (iii) any
other documents required by the Letter of Transmittal. Accordingly, tendering
stockholders may be paid at different times depending upon when certificates are
received by the Depository or Book-Entry Confirmations with respect to Shares
which are received into the Depositary's account at the Book-Entry Transfer
Facility. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE OF
THE SHARES TO BE PAID BY THE OFFEROR, REGARDLESS OF ANY EXTENSION OF THE OFFER
OR ANY DELAY IN MAKING ANY PAYMENT.
Backup Federal Income Tax Withholding and Substitute Form W-9. Under the
"backup withholding" provisions of Federal income tax law, the Depositary may be
required to withhold 31% of the amount of any payments of cash pursuant to the
Offer or the Merger. In order to avoid backup withholding, each stockholder
surrendering Shares in the Offer must, unless an exemption applies, provide the
payor of such cash with such stockholder's correct taxpayer identification
number ("TIN") on a substitute Form W-9 and certify, under penalties of perjury,
that such TIN is correct and that such stockholder is not subject to backup
withholding. If a stockholder does not provide its correct TIN or fails to
provide the certifications described above, the Internal Revenue Service ("IRS")
may impose a penalty on such stockholder and payment of cash to such stockholder
pursuant to the Offer may be subject to backup withholding of 31%.
All stockholders surrendering Shares pursuant to the Offer should complete
and sign the Substitute Form W-9 included in the Letter of Transmittal to
provide the information and certification necessary to avoid backup withholding
(unless an applicable exemption exists and is proved in a manner satisfactory to
the Depositary). Certain stockholders (including among others all corporations
and certain foreign individuals and entities) are not subject to backup
withholding. Noncorporate foreign stockholders should complete and sign a Form
W-8, Certificate of Foreign Status, a copy of which may be obtained from the
Depositary, in order to avoid backup withholding. See Instruction 9 of the
Letter of Transmittal.
Determination of Validity. All questions as to the form of documents and
the validity, eligibility (including time of receipt) and acceptance for payment
of any tender of Shares will be determined by the
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Offeror, in its sole discretion, and its determination will be final and binding
on all parties. The Offeror reserves the absolute right to reject any or all
tenders of any Shares that are determined by it not to be in proper form or the
acceptance of or payment for which may, in the opinion of the Offeror, be
unlawful. The Offeror also reserves the absolute right to waive any of the
conditions of the Offer (other than the Minimum Condition), subject to
applicable law and the limitations set forth in the Merger Agreement, or any
defect or irregularity in the tender of any Shares whether or not similar
defects or irregularities are waived in the case of other stockholders. The
Offeror's interpretation of the terms and conditions of the Offer (including the
Letter of Transmittal and the Instructions to the Letter of Transmittal) will be
final and binding on all parties. No tender of Shares will be deemed to have
been validly made until all defects and irregularities have been cured or
waived. None of the Offeror, Parent, General Electric, 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.
Other Requirements. By executing the Letter of Transmittal as set forth
above (including through delivery of an Agent's Message), a tendering
stockholder irrevocably appoints designees of the Offeror as such stockholder's
agent, attorneys-in-fact and proxies, each with full power of substitution, in
the manner set forth in the Letter of Transmittal, to exercise all voting and
other rights of the stockholder as each such attorney and proxy or his
substitute shall in his sole judgment deem proper, with respect to all of the
Shares tendered by such stockholder and accepted for payment by the Offeror (and
any and all other Shares or other securities issued or issuable in respect of
such Shares on or after the date of this Offer to Purchase). All such powers of
attorney and proxies will be considered irrevocable and coupled with an interest
in the tendered Shares. This appointment is effective when, and only to the
extent that, the Offeror accepts for payment the Shares in accordance with the
terms of the Offer. Upon acceptance for payment, all prior powers of attorney,
proxies and written consents granted by the stockholder at any time with respect
to such Shares or other securities or rights will, without further action, be
revoked and no subsequent powers of attorney or proxies may be given or written
consent executed by such stockholder (and, if given or executed, will not be
deemed effective). The designees of the Offeror will, with respect to the Shares
and other securities or rights, be empowered to exercise all voting and other
rights of such stockholder as they in their sole judgment deem proper in respect
of any annual or special meeting of the Company's stockholders, or any
adjournment or postponement thereof, any actions by written consent in lieu of
any such meeting or otherwise. In order for Shares to be deemed validly
tendered, immediately upon the Offeror's payment for such Shares, the Offeror
must be able to exercise full voting and other rights with respect to such
Shares and the other securities or rights issued or issuable in respect of such
Shares, including voting at any meeting of stockholders (whether annual or
special or whether or not adjourned) in respect of such Shares.
A tender of Shares pursuant to any one of the procedures described above
will constitute the tendering stockholder's acceptance of the terms and
conditions of the Offer, as well as the tendering stockholder's representation
and warranty that (i) such stockholder has the full power and authority to
tender, sell, assign and transfer the tendered Shares (and any and all other
Shares or other securities issued or issuable in respect of such Shares), and
(ii) when the same are accepted for payment by the Offeror, the Offeror will
acquire good and unencumbered title thereto, free and clear of all liens,
restrictions, charges and encumbrances and not subject to any adverse claims. A
tender of Shares pursuant to any of the procedures described above will
constitute the tendering stockholder's acceptance of the terms and conditions of
the Offer, as well as the tendering stockholder's representation and warranty to
the Offeror that (a) such stockholder has a net long position in such Shares
being tendered within the meaning of Rule 14e-4 under the Exchange Act and (b)
the tender of such Shares complies with Rule 14e-4 under the Exchange Act. It is
a violation of Rule 14e-4 under the Exchange Act for a person, directly or
indirectly, to tender Shares for such person's own account unless, at the time
of tender, the person so tendering (i) has a net long position equal to or
greater than the amount of (x) Shares tendered or (y) other securities
immediately convertible into or exchangeable or exercisable for the Shares
tendered and such person will acquire such Shares for tender by conversion,
exchange or exercise and (ii) will cause such Shares to be delivered in
accordance with the terms of the Offer. Rule 14e-4 provides a similar
restriction applicable to the tender or guarantee of a tender on behalf of
another person. The Offeror's acceptance for payment of Shares tendered pursuant
to the Offer will constitute a binding agreement between the tendering
stockholder and the Offeror upon the terms and subject to the conditions of the
Offer.
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4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4, tenders of Shares made
pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer may
be withdrawn at any time prior to the Expiration Date and, unless theretofore
accepted for payment pursuant to the Offer, may also be withdrawn at any time
after February 25, 2000. If acceptance of any Shares tendered is delayed for any
reason or if the Offeror is unable to accept for payment or pay for Shares
tendered pursuant to the Offer, then, without prejudice to the Offeror's rights
under the Offer, the Depositary may, on behalf of the Offeror, retain tendered
Shares, and such Shares may not be withdrawn except to the extent that tendering
stockholders are entitled to and duly exercise withdrawal rights as set forth in
this Section 4. Any such delay in acceptance for payment will be accomplished by
extension of the Offer to the extent required by law.
For a withdrawal of Shares tendered pursuant to the Offer to be effective,
a written telegraphic or facsimile transmission notice of withdrawal must be
timely received by the Depositary at one of its addresses set forth on the back
cover of this Offer to Purchase. Any 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 (if certificates have been tendered) the name in which the
certificates are registered, if different from that of the person who tendered
the Shares. If certificates have been delivered or otherwise identified to the
Depositary, then, prior to the physical release of such certificates, the
stockholder must submit the serial numbers shown on the certificates evidencing
the Shares to be withdrawn to the Depositary and, unless such Shares have been
tendered for the account of an Eligible Institution, the signatures on the
notice of withdrawal must be guaranteed by an Eligible Institution. If Shares
have been tendered pursuant to the procedures for book-entry transfer 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 and must otherwise comply with such Book-Entry Transfer
Facility's procedures.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Offeror, in its sole discretion,
and its determination will be final and binding on all parties. None of the
Offeror, Parent, General Electric, 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 be deemed not validly tendered for
purposes of the Offer, but may be tendered at any subsequent time prior to the
Expiration Date by following any of the procedures described in Section 3.
5. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.
The following is a summary of certain United States federal income tax
consequences of the Offer and the Merger to beneficial owners of Shares whose
Shares are purchased pursuant to the Offer or whose Shares are converted to cash
in the Merger. The discussion is for general information only and does not
purport to consider all aspects of United States federal income taxation that
might be relevant to beneficial owners of Shares. The discussion is based on
current provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), proposed, temporary and final regulations promulgated thereunder and
administrative and judicial interpretations thereof, all of which are subject to
change possibly on a retroactive basis. The discussion applies only to
beneficial owners of Shares in whose hands Shares are capital assets within the
meaning of Section 1221 of the Code, and may not apply to Shares received
pursuant to the exercise of employee stock options or otherwise as compensation,
or to certain types of beneficial owners of Shares (such as insurance companies,
tax-exempt organizations, mutual funds and broker-dealers) who might be subject
to special rules. This discussion does not discuss the United States federal
income tax consequences to a beneficial owner of Shares who, for United States
federal income tax purposes, is a non-resident alien individual, a foreign
corporation, a foreign partnership or a foreign estate or trust, nor does it
consider the effect of any foreign, state or local tax laws.
BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH BENEFICIAL OWNER OF
SHARES SHOULD CONSULT SUCH BENEFICIAL OWNER'S OWN TAX ADVISOR TO
9
<PAGE> 12
DETERMINE THE APPLICABILITY OF THE RULES DISCUSSED BELOW TO SUCH BENEFICIAL
OWNER AND THE PARTICULAR TAX EFFECTS TO SUCH BENEFICIAL OWNER OF THE OFFER AND
THE MERGER, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND OTHER TAX
LAWS.
The receipt of cash for Shares pursuant to the Offer or the Merger will be
a taxable transaction for United States federal income tax purposes. In general,
for United States federal income tax purposes, a beneficial owner of Shares will
recognize gain or loss equal to the difference (if any) between the beneficial
owner's adjusted tax basis in the Shares sold pursuant to the Offer or converted
to cash in the Merger and the amount of cash received therefor. In general, such
gain or loss will be capital gain or loss and will be long-term capital gain or
loss if the beneficial owner held the Shares for more than one year as of the
date of sale (in the case of the Offer) or the Effective Time (in the case of
the Merger). The excess of net long-term capital gains over net short-term
capital losses is currently taxed at a maximum rate of 20% for noncorporate
taxpayers.
Payments in connection with the Offer or the Merger might be subject to
"backup withholding" at a rate of 31%, unless a beneficial owner of Shares (a)
is a corporation or comes within certain exempt categories and, when required,
demonstrates this fact or (b) provides a correct TIN to the payor, certifies as
to no loss of exemption from backup withholding and otherwise complies with
applicable requirements of the backup withholding rules. A beneficial owner who
does not provide a correct TIN may be subject to penalties imposed by the
Internal Revenue Service. Any amount paid as backup withholding does not
constitute an additional tax and will be creditable against the beneficial
owner's United States federal income tax liability. Each beneficial owner of
Shares should consult with his or her own tax advisor as to his or her
qualification for exemption from backup withholding and the procedure for
obtaining such exemption. Those tendering their Shares in the Offer may prevent
backup withholding by completing the Substitute Form W-9 included in the Letter
of Transmittal. See Section 3. Similarly, those who convert their Shares into
cash in the Merger may prevent backup withholding by completing a Substitute
Form W-9 and submitting it to the paying agent for the Merger.
In general, cash received in respect of Dissenting Shares will result in
the recognition of capital gain or loss to the beneficial owner of such Shares.
Any such beneficial owner should consult such owner's tax advisor in that
regard.
Parent and the Offeror will be entitled to deduct and withhold from the
consideration otherwise payable pursuant to the Merger Agreement to any holder
of Shares such amounts as Parent or the Offeror is required to deduct and
withhold with respect to the making of such payment. To the extent that amounts
are so withheld by Parent or the Offeror, such withheld amounts shall be treated
for all purposes of the Merger Agreement as having been paid to the holder of
the Shares in respect of which such deduction and withholding was made by Parent
or the Offeror.
10
<PAGE> 13
6. PRICE RANGE OF SHARES; DIVIDENDS.
According to the Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1998 (the "Form 10-K"), the Shares are traded on the AMEX
under the symbol "SHO". Prior to June 1998, the Shares were not listed on an
exchange. The following table sets forth for the periods indicated the reported
high and low sales prices for the Shares on the AMEX.
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
1998:
Second Quarter............................................ $15 1/8 $13 1/2
Third Quarter............................................. $17 $ 7 7/8
Fourth Quarter............................................ $12 1/4 $ 7
1999:
First Quarter............................................. $10 7/8 $ 4 9/16
Second Quarter............................................ 5 3/4 3 1/2
Third Quarter............................................. 6 3/16 3 7/8
Fourth Quarter (through December 23, 1999)................ 7 4 3/8
</TABLE>
On December 17, 1999, the last full day of trading prior to the public
announcement of the execution of the Merger Agreement, according to publicly
available sources, the reported closing price per Share on the AMEX was $5 1/2.
On December 23, 1999, the last full day of trading prior to the commencement of
the Offer, according to publicly available sources, the reported closing price
per Share on the AMEX was $6 13/16. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT
MARKET QUOTATIONS FOR THE SHARES.
The Company has not declared or paid any dividends on the Shares since its
initial public offering in June 1998.
7. CERTAIN EFFECTS OF THE TRANSACTION ON THE MARKET FOR THE SHARES, STOCK
EXCHANGE LISTING AND EXCHANGE ACT REGISTRATION.
The purchase of the Shares by the Offeror pursuant to the Offer will reduce
the number of Shares that might otherwise trade publicly and will reduce the
number of holders of Shares, and could adversely affect the liquidity and market
value of the remaining Shares held by the public. The Company has advised the
Offeror that, as of December 17, 1999, there were approximately 46 holders of
record and approximately 2,000 beneficial owners of the Shares. The Offeror
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 Offer price therefor.
AMEX Quotation. Depending upon the number of Shares purchased pursuant to
the Offer, the Shares may no longer meet the standards for continued inclusion
in AMEX. According to published guidelines, AMEX will normally consider
suspending dealings in, or removing from the list, a security that fails to
substantially meet, among other things, the following standards: (i) at least
200,000 publicly held shares (exclusive of holdings of officers, directors,
controlling stockholders or other family or concentrated holdings), (ii)
aggregate market value of publicly held shares of at least $1 million, or (iii)
total number of public stockholders of at least 300.
If the Shares are no longer eligible for AMEX quotation, it is possible
that the Shares would continue to trade in the over the counter market and that
price quotations might still be available from other sources. The extent of the
public market for the Shares and the availability of such quotations would,
however, depend upon the number of holders of such Shares remaining at such
time, the interest in maintaining a market in such Shares on the part of
securities firms, the possible termination of registration of such Shares under
the Exchange Act as described below and other factors.
11
<PAGE> 14
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Such registration may be terminated upon application by the
Company to the Commission if there are fewer than 300 record holders of the
Shares. It is the intention of the Offeror to seek to cause an application for
such termination to be made as soon after consummation of the Offer as the
requirements for termination of registration of the Shares are met. If such
registration were terminated, the Company would no longer legally be required to
disclose publicly in proxy materials distributed to stockholders the information
which it now must provide under the Exchange Act or to make public disclosure of
financial and other information in annual, quarterly and other reports required
to be filed with the Commission under the Exchange Act; the Company would no
longer be subject to Rule 13e-3 under the Exchange Act relating to "going
private" transactions; and the officers, directors and 10% stockholders of the
Company would no longer be subject to the "short-swing" insider trading
reporting and profit recovery provisions of the Exchange Act. Furthermore, if
such registration were terminated, the ability of "affiliates" of the Company
and persons holding "restricted securities" of the Company to dispose of such
securities under Rule 144 or Rule 144A promulgated under the Securities Act of
1933, as amended (the "Securities Act"), may be impaired, or, with respect to
certain persons, eliminated.
If registration of the Shares is not terminated prior to the Merger, then
the Shares will be delisted from the AMEX and the registration of the Shares
under the Exchange Act will be terminated following the consummation of the
Merger.
Margin Regulations. The Shares are currently "margin securities" under the
regulations 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 such Shares for the purpose of
buying, carrying or trading in securities ("Purpose Loans"). Depending upon
factors similar to those described above regarding listing and market
quotations, it is possible that, following the Offer, the Shares would no longer
constitute "margin securities" for the purposes of the margin regulations of the
Federal Reserve Board and therefore could no longer be used as collateral for
Purpose Loans made by brokers. If registration of Shares under the Exchange Act
were terminated, such Shares would no longer be "margin securities."
8. 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. Although none of the Offeror, Parent or General Electric has any
knowledge that would indicate that statements contained herein based upon such
documents are untrue, none of the Offeror, Parent or General Electric assume any
responsibility for the accuracy or completeness of the information concerning
the Company 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 the Offeror, Parent or General Electric.
The summary information concerning the Company in this Section 8 and
elsewhere in this Offer to Purchase is derived from the Form 10-K, the Company's
Quarterly Report on Form 10-QSB for the period ended September 30, 1999 (the
"Form 10-Q") and other publicly available information. The summary information
set forth below is qualified in its entirety by reference to such reports (which
may be obtained and inspected as described below) and should be considered in
conjunction with the more comprehensive financial and other information in such
reports and other publicly available reports and documents filed by the Company
with the Commission and other publicly available information.
The Company's predecessor, Showpower, Inc., a California corporation, was
incorporated under the laws of the State of California in 1991. The Company
provides temporary power generation and temperature control rental equipment and
support services on a worldwide basis for entertainment, corporate and special
events. The Company's customers include corporations, event producers,
television networks, motion picture studios, facility operators and performers
that need electric power and/or temperature control services to support events
at locations where these services are inadequate or unavailable. In addition to
rental equipment,
12
<PAGE> 15
the Company provides fully integrated, value-added services, including planning,
technical advice, customized installation, on-site operation and support
personnel. The Company's power equipment consists of transportable,
diesel-powered electricity generators contained in acoustic enclosures, and
related power distribution equipment. Temperature control equipment consists
primarily of transportable, electrically-driven heating, ventilation and air
conditioning units. The Company has expanded geographically by making
acquisitions and opening new branch offices. In March 1997, the Company acquired
Templine, Ltd., a generator and distribution rental company based in Bristol,
England, in order to expand its presence and scope of operations in Europe.
Since September 1996, the Company has opened branch offices in Richardson,
Texas, Fort Lauderdale, Florida and Rio de Janeiro, Brazil. The Company's common
stock is listed on the AMEX. According to the Form 10-K, the Company employed
approximately 118 full-time employees. The Company's principal executive offices
are located at 18420 S. Santa Fe Avenue, Rancho Dominguez, California 90221. The
telephone number of the Company at such offices is (310) 604-9676.
Financial Information. Set forth below are certain selected consolidated
financial data for the Company's last two years and the nine months ended
September 30, 1999, which were derived from the Form 10-K and the Form 10-Q.
Results for the nine months ended September 30, 1999, are not necessarily
indicative of the results to be expected for the full fiscal year. More
comprehensive financial information (including management's discussion and
analysis of financial condition and results of operations) is included in the
reports and other documents filed by the Company with the Commission, and the
following financial data are qualified in their 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 examined and
copies thereof may be obtained from the offices of the Commission in the manner
set forth below under "Available Information."
13
<PAGE> 16
SHOWPOWER, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
----------------------- NINE MONTHS ENDED
1997 1998 SEPTEMBER 30, 1999
---------- ---------- ------------------
(UNAUDITED)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.............................................. $ 17,294 $ 20,175 $ 15,055
Cost of sales......................................... 9,790 12,720 9,943
---------- ---------- ----------
Gross profit.......................................... 7,504 7,455 5,112
---------- ---------- ----------
Operating expenses:
General and administrative.......................... 5,957 7,708 4,728
Depreciation and amortization....................... 222 274 255
Stock compensation expense.......................... 107 142 144
---------- ---------- ----------
Total operating expenses.................... 6,286 8,124 5,127
---------- ---------- ----------
Income (loss) from operations......................... 1,218 (669) (15)
---------- ---------- ----------
Other income and (expense), net....................... (171) (216) 152
---------- ---------- ----------
Income (loss) before income taxes and minority
interest............................................ 1,047 (885) 137
Income tax provision............................. 116 683 52
Minority interest................................ -- 7 --
---------- ---------- ----------
Net (loss) income..................................... 931 (1,575) 85
Other comprehensive income (loss):
Foreign currency translation adjustment.......... 17 (8) (192)
Comprehensive income (loss)........................... $ 948 $ (1,583) $ (107)
========== ========== ==========
Net income (loss) per share:
Basic............................................... $ 0.54 $ (0.59) $ 0.03
========== ========== ==========
Diluted............................................. $ 0.52 $ (0.59) $ 0.02
========== ========== ==========
Weighted average shares outstanding:
Basic............................................... 1,724,580 2,653,787 3,293,075
Diluted............................................. 1,801,143 2,653,787 3,426,247
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1998 SEPTEMBER 30, 1999
----------------- ------------------
(UNAUDITED)
<S> <C> <C>
BALANCE SHEET DATA:
Total current assets........................................ $ 5,024 $ 7,635
Property and equipment, net................................. 16,002 15,280
Other assets................................................ 1,514 1,508
------- -------
Total assets........................................... $22,540 $24,423
======= =======
Total current liabilities................................... $ 3,531 $ 4,705
Total long-term liabilities................................. 2,673 3,386
Minority interest........................................... 46 28
Total stockholders' equity.................................. 16,290 16,304
------- -------
Total liabilities...................................... $22,540 $24,423
======= =======
</TABLE>
14
<PAGE> 17
Certain Financial Projections for the Company. Prior to entering into the
Merger Agreement, Parent conducted a due diligence review of the Company and in
connection with such review received certain non-public information provided by
the Company, including certain projected financial information (the
"Projections") for the fiscal year ending December 31, 1999. The Company does
not in the ordinary course publicly disclose projections and the Projections
were not prepared with a view to public disclosure. The Company advised Parent
and the Offeror that the Projections represent what the Company believes to be a
reasonable estimate of the Company's future financial performance and reflect
significant assumptions and subjective judgments by the Company's management
regarding industry performance and general business and economic conditions. The
Projections do not give effect to the Offer or the potential combined operations
of Parent and the Company. The Projections are set forth below in this Offer to
Purchase for the limited purpose of giving the holders of the Shares access to
financial projections prepared by the Company's management that were made
available to Parent and the Offeror in connection with the Merger Agreement and
the Offer.
15
<PAGE> 18
PROJECTED FINANCIAL PERFORMANCE*
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PROJECTED FOR FISCAL YEAR 1999
--------------------------------
OCTOBER NOVEMBER DECEMBER
-------- --------- ---------
<S> <C> <C> <C>
STATEMENTS OF OPERATIONS (IN THOUSANDS):
Total sales............................................... $ 2,750 $ 2,296 $ 3,750
Cost of sales............................................. 1,666 1,533 2,039
Depreciation -- rental assets............................. 186 191 193
------- ------- -------
Gross profit.............................................. 898 572 1,518
General and administrative expenses....................... 494 507 532
Stock compensation........................................ 12 12 12
Depreciation and amortization............................. 30 30 30
------- ------- -------
Total sales, general and administrative................... 536 549 574
Operating income.......................................... 362 23 944
Interest expense.......................................... 27 36 38
Interest income and other................................. 3 3 3
------- ------- -------
Income before tax......................................... 338 (10) 909
Tax provision (benefit)................................... 135 (4) 364
Contingency to meet 9/8/99 forecast....................... 50 50 59
Less: Minority interest................................... -- -- (5)
------- ------- -------
Net income................................................ $ 153 $ (56) $ 481
======= ======= =======
EBITDA.................................................... $ 581 $ 247 $ 1,170
======= ======= =======
CURRENT ASSETS:
Cash and cash equivalents................................. 2,341 3,384 4,579
Trade accounts receivable................................. 2,930 2,903 2,616
Other receivables......................................... 916 516 516
Deferred Income taxes..................................... 224 224 224
Prepaids and other current assets......................... 600 475 450
------- ------- -------
7,011 7,502 8,385
Property and equipment.................................... 22,483 23,033 23,233
Less: Accumulated depreciation............................ (7,096) (7,309) (7,524)
------- ------- -------
15,387 15,724 15,709
Intangibles............................................... 1,485 1,485 1,485
Less: Accumulated amortization............................ (368) (376) (384)
------- ------- -------
1,117 1,109 1,101
Other..................................................... 384 384 384
------- ------- -------
Total............................................... $23,899 $24,719 $25,579
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY:
Trade accounts payable and accrued........................ $ 2,081 $ 2,308 $ 2,482
Accrued compensation...................................... 300 400 500
Customer deposits......................................... 570 250 150
Current portion of notes payable.......................... 853 1,001 1,006
Current portion of capital lease.......................... 204 201 120
Bank line................................................. -- -- --
Income taxes.............................................. 27 27 27
------- ------- -------
4,035 4,187 4,285
Long term portion of notes payable........................ 1,860 2,589 2,501
Long term portion of capital lease........................ 283 273 264
Deferred rent and other................................... 55 55 55
Deferred income taxes..................................... 1,187 1,183 1,547
------- ------- -------
3,385 4,100 4,367
Minority interest......................................... 28 28 33
Common stock.............................................. 19,798 19,810 19,822
Foreign currency translation.............................. (183) (183) (183)
Notes receivable from stockholders........................ (540) (543) (546)
Retained earnings (deficit)............................... (2,624) (2,680) (2,199)
------- ------- -------
16,451 16,404 16,894
------- ------- -------
Total............................................... $23,899 $24,719 $25,579
======= ======= =======
</TABLE>
* See Cautionary Statements Concerning Forward-Looking Statements
16
<PAGE> 19
CAUTIONARY STATEMENTS CONCERNING FORWARD-LOOKING STATEMENTS
Certain matters discussed and statements made herein may constitute
forward-looking statements within the meaning of the Securities Act and the
Exchange Act, as amended by the Private Securities Litigation Reform Act of
1995, 15 U.S.C.A. Section 77z-2 and 78u-5 (Supp. 1996). Such forward-looking
statements are not guarantees of future performance and involve risks and
uncertainties and actual results may differ materially from those contemplated
by such forward-looking statements. Forward-looking statements include the
information set forth above in "Certain Financial Projections for the Company."
Forward-looking statements also include those preceded by, followed by or that
include the words "believes", "expects", "anticipates" or similar expressions.
Such statements should be viewed with caution.
While presented with numerical specificity, the Projections are based upon
a variety of estimates and hypothetical assumptions which may not be accurate,
may not be realized, and are also inherently subject to significant business,
economic and competitive uncertainties and contingencies, all of which are
difficult to predict, and most of which are beyond the control of the Company,
Parent, the Offeror and General Electric. Accordingly, there can be no assurance
that any of the Projections will be realized and the actual results may vary
materially from those shown above.
In addition, the Projections were not prepared in accordance with generally
accepted accounting principles, and neither the Company's nor Parent's
independent accountants have examined or compiled any of the Projections or
expressed any conclusion or provided any other form of assurance with respect to
the Projections and accordingly assume no responsibility for the Projections.
The Projections were prepared with a limited degree of precision, and were not
prepared with a view to public disclosure or compliance with the published
guidelines of the Commission or the guidelines established by the American
Institute of Certified Public Accountants regarding projections, which could
require a more complete presentation of data than as shown above. The inclusion
of the Projections herein should not be regarded as a representation by Parent,
the Offeror or General Electric or any other person that the projected results
will be achieved. The Projections should be read in conjunction with the
historical financial information of the Company included above and in the
reports and other documents of the Company that may be obtained from the offices
of the Commission in the manner set forth below under "Available Information."
None of Parent, the Offeror or General Electric or any other person assumes any
responsibility for the accuracy, completeness or validity of the foregoing
Projections. None of the Company, Parent, the Offeror or General Electric
intends to update or supplement the Projections to reflect changing
circumstances existing after their preparation.
Available Information. The Company is subject to the informational
requirements of the Exchange Act and in accordance therewith files periodic
reports, proxy statements and other information with the Commission relating to
its business, financial condition and other matters. The Company is required to
disclose in such proxy statements certain information, as of particular dates,
concerning the Company's directors and officers, their remuneration, stock
options granted to them, the principal holders of the Company's securities and
any material interests of such persons in transactions with the Company. Such
reports, proxy statements and other information may be inspected at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the regional offices of the
Commission located at Seven World Trade Center, 13th Floor, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material may also be obtained at prescribed rates
from the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission also maintains a World Wide Web site on
the Internet at http://www.sec.gov that contains reports and other information
regarding registrants that file electronically with the Commission. Such
material may also be inspected at the offices of the AMEX, 86 Trinity Place, New
York, New York 10006.
9. CERTAIN INFORMATION CONCERNING THE OFFEROR, PARENT AND GENERAL ELECTRIC.
The Offeror is a newly incorporated Delaware corporation. To date, the
Offeror has not conducted any business other than that incident to its
formation, the execution and delivery of the Merger Agreement, the Tender
Agreements, the Indemnification Agreements and certain other agreements and the
commencement
17
<PAGE> 20
of the Offer. Accordingly, no meaningful financial information with respect to
the Offeror is available. The Offeror is a wholly owned subsidiary of Parent.
The principal executive office of the Offeror is located at 4200 Wildwood
Parkway, Atlanta, Georgia 30303.
Parent, a Delaware corporation, has its principal executive office at 4200
Wildwood Parkway, Atlanta, Georgia 30303. Parent is a wholly owned subsidiary of
General Electric which offers comprehensive high technology services and parts
covering the entire range of customers' needs throughout the entire energy cycle
from oil and gas exploration and power generation, to transmission and
distribution and energy consumption services. Services include equipment
uprates, repowering, power plant life extensions, rental power, fuel cells and
micro-turbine services, long-term service agreements, and operation and
maintenance contracts. Parent also includes Energy Management Systems which is
comprised of GE Harris Energy Control Systems, Power Systems Energy Consulting,
and Reuter Stokes -- which designs, manufactures and markets computer control
centers and other electronic systems to help utilities and industrial users
automate and integrate power systems for optimal efficiency.
General Electric, a New York corporation, has its principal executive
offices at 3135 Easton Turnpike, Fairfield, Connecticut 06431. General Electric
is one of the largest and most diversified industrial corporations in the world.
General Electric has engaged in developing, manufacturing and marketing a wide
variety of products for the generation, transmission, distribution, control and
utilization of electricity since its incorporation in 1892. Over the years,
General Electric has developed or acquired new technologies and services that
have broadened considerably the scope of its activities.
General Electric products include major appliances; lighting products;
industrial automation products; medical diagnostic imaging equipment; motors;
electrical distribution and control equipment; locomotives; power generation and
delivery products; nuclear power support services and fuel assemblies;
commercial and military aircraft jet engines; and engineered materials, such as
plastics, silicones and superabrasive industrial diamonds.
General Electric's services include product services; electrical product
supply houses; electrical apparatus installation, engineering, repair and
rebuilding services; and computer-related information services. Through its
affiliate, the National Broadcasting Company, Inc. ("NBC"), General Electric
delivers network television services, operates television stations, and provides
cable programming and distribution services. Through another affiliate, General
Electric Capital Services, Inc., General Electric offers a broad array of
financial and other services including consumer financing, commercial and
industrial financing, real estate financing, asset management and leasing,
mortgage services, consumer savings and insurance services, specialty insurance
and reinsurance, and satellite communications.
General Electric operates in more than 100 countries around the world,
including 280 manufacturing plants in 26 different nations.
Set forth below are certain summary consolidated financial data with
respect to General Electric excerpted or derived from financial information
contained in General Electric's Annual Report on Form 10-K for the year ended
December 31, 1998 and General Electric's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1999. The consolidated financial statements do not
reflect a three-for-one stock split which was announced by General Electric on
December 17, 1999, but which will not take effect unless and until it is
approved by the General Electric stockholders on April 26, 2000. A dividend
announced by General Electric on December 17, 1999 of 41 cents per share is also
not reflected in these financial statements. The dividend will be paid to
holders of record on December 27, 1999. Also on December 17, 1999, General
Electric announced that it will increase its stock buy-back program by $5
million, to $22 million. More comprehensive financial information is included in
such reports and other documents filed by General Electric with the Commission,
and the following summary is qualified in its entirety by reference to such
reports and such other documents and all the financial information (including
any related notes) contained therein.
18
<PAGE> 21
GENERAL ELECTRIC COMPANY
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
FISCAL YEARS ENDED DECEMBER 31, SEPTEMBER 30,
----------------------------------------------- ------------------
1994 1995 1996 1997 1998 1998 1999
------- ------- ------- ------- ------- ------- -------
(AUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
GENERAL ELECTRIC COMPANY AND
CONSOLIDATED AFFILIATES
Revenues.............................. $60,109 $70,028 $79,179 $90,840 $100,469 $71,832 $78,775
Earnings from continuing operations... 5,915 6,573 7,280 8,203 9,296 6,625 7,628
Earnings (loss) from discontinued
operations.......................... (1,189) -- -- -- -- -- --
Effect of accounting change........... -- -- -- -- -- -- --
Net earnings.......................... 4,726 6,573 7,280 8,203 9,296 6,625 7,628
Dividends declared.................... 2,546 2,838 3,138 3,535 4,081 2,933 3,440
Earned on average share owners'
equity.............................. 18.1% 23.5% 24.0% 25.0% 25.7% -- --
PER SHARE
Earnings from continuing operations --
basic............................... $ 1.73 $ 1.95 $ 2.20 $ 2.50 $ 2.84 $ 2.03 $ 2.33
Earnings (loss) from discontinued
operations.......................... (0.35) -- -- -- -- -- --
Effect of accounting change........... -- -- -- -- -- -- --
Net earnings -- basic................. 1.38 1.95 2.20 2.50 2.84 2.03 2.33
Net earnings -- diluted............... 1.37 1.93 2.16 2.46 2.80 1.99 2.29
Dividends declared.................... 0.745 0.845 0.95 1.08 1.25 0.90 1.05
Total assets of continuing
operations.......................... 185,871 228,035 272,402 304,012 355,935 334,575 380,224
Long-term borrowings.................. 36,979 51,027 49,246 46,603 59,663 57,436 66,338
Shares outstanding-- average (in
millions)........................... 3,417 3,368 3,307 3,275 3,269 3,268 3,276
</TABLE>
General Electric is subject to the informational requirements of the
Exchange Act and in accordance therewith files periodic reports and other
information with the Commission relating to its business, financial condition
and other matters. Such reports and other information are available for
inspection and copying at the offices of the Commission in the same manner as
set forth with respect to the Company in Section 8. Such material may also be
inspected at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.
Except as described below, during the past five years, General Electric has
not been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors), nor has it been 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 or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws. In
April, 1994, a U.K. subsidiary of General Electric, IGE Medical Systems Limited
("IGEMS") discovered the loss of a radioactive barium source at the Radlett,
England facility. The lost source, used to calibrate nuclear camera detectors,
emits a very low level of radiation. IGEMS immediately reported the loss as
required by the U.K. Radioactive Substances Act. An ensuing investigation,
conducted in cooperation with government authorities, failed to locate the
source. On July 21, 1994, Her Majesty's Inspectorate of Pollution ("HMIP")
charged IGEMS with violating the Radioactive Substances Act by failing to comply
with a condition of registration. Such Act provides that a registrant like
IGEMS, which "does not comply with a limitation or condition subject to which
[it] is so registered ... shall be guilty of [a criminal] offense." Condition 7
of IGEMS' registration states that it "shall so far as is reasonably practicable
prevent ... loss of any registered source."
At the beginning of the trial on February 24, 1995, IGEMS entered a guilty
plea and agreed to pay of fine of L5,000 and assessed costs of L5,754. The
prosecutor's presentation focused primarily on the 1991 change in
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<PAGE> 22
internal IGEMS procedures and, in particular, the source logging procedure. The
prosecutor complimented IGEMS' investigation and efforts to locate the source
and advised the court that IGEMS had no previous violations of the Radioactive
Substances Act. He also told the court that the Radlett plant had been
highlighted as an exemplary facility to HMIP inspectors as part of their
training. In mitigation, IGEMS emphasized the significant infrastructure and
expense undertaken by IGEMS to provide security for radiation sources and the
significant effort and expense incurred in attempting to locate the missing
source.
The name, citizenship, business address, present principal occupation and
material positions held during the past five years of each of the directors and
executive officers of General Electric, Parent and the Offeror are set forth in
Annex I to this Offer to Purchase. Except as expressly noted in Annex I to this
Offer to Purchase, each such executive officer and director is a citizen of the
United States of America. During the past five years, none of the executive
officers or directors has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors), or been 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 or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
Except as described in this Offer to Purchase, none of the Offeror, Parent,
General Electric, or to the best knowledge of the Offeror, Parent or General
Electric, any of the persons listed in Annex I hereto, owns or has any right to
acquire any Shares and none of them has effected any transaction in the Shares
during the past 60 days. See Section 13.
Except as set forth in this Offer to Purchase, none of the Offeror, Parent,
General Electric or, to the best knowledge of the Offeror, Parent or General
Electric, any of the persons listed in Annex I hereto, 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 the voting
of any 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, there have been no
contacts, negotiations or transactions between the Offeror, Parent or General
Electric, or, to the best of their knowledge, any of the persons listed in Annex
I hereto, on the one hand, and the Company or its affiliates, on the other hand,
concerning a merger, consolidation or acquisition, a tender offer or other
acquisition of securities, an election of directors or a sale or other transfer
of a material amount of assets. Except as described in this Offer to Purchase,
none of the Offeror, Parent, General Electric or, to the best knowledge of
Parent, the Offeror or General Electric, any of the persons listed in Annex I
hereto, has had any transaction with the Company or any of its executive
officers, directors or affiliates that would require disclosure under the rules
and regulations of the Commission applicable to the Offer.
10. SOURCE AND AMOUNT OF FUNDS.
The Offeror estimates that the total amount of funds required to purchase
the outstanding Shares pursuant to the Offer and to pay fees and expenses
related to the Offer and the Merger will be approximately $29 million. The
Offeror currently anticipates obtaining such funds from Parent, which will
obtain such funds from General Electric. General Electric currently intends to
provide such funds from cash on hand.
While the foregoing represents the current intention of Parent and the
Offeror with respect to the financial arrangements for such funds, such
financial arrangements may change depending upon such factors as Parent and the
Offeror may deem appropriate.
11. BACKGROUND OF THE OFFER; PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH
THE COMPANY.
Prior Contracts with the Company
NBC, a wholly owned subsidiary of General Electric, has contracts with the
Company representing revenues in the aggregate of $500,000 per year. NBC has
also been in discussions with the Company to provide equipment for the 2000
Sydney Olympics; however, no transaction has been consummated. In addition, the
Company was paid $10,000 for providing technicians and equipment for a General
Electric
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<PAGE> 23
family day event in Schenectady, New York, in August 1999. No other contract
with a General Electric business represents more than 1% of the Company's
revenues.
Background of the Offer
In mid-July 1998, Martin Moore, General Manager of Parent, contacted John
Campion, Chief Executive Officer of the Company concerning a possible strategic
combination with or acquisition of the Company by Parent. The Company and Parent
executed a confidentiality agreement in late July for the purpose of furthering
discussions and continued to discuss potential strategic alternatives. During
these discussions in July, Mr. Moore indicated to Mr. Campion that Parent may
have an interest in acquiring the Company.
In early August 1998, representatives of Parent met with certain directors
and officers of the Company and performed initial due diligence with respect to
the Company. During the due diligence process, Mr. Moore and other
representatives of Parent met with Mr. Campion, Laurence Anderson (President of
the Company), Stephen Bernstein (Executive Vice President -- General Counsel and
Secretary of the Company), Jeffrey Stone (Chairman of the Board of the Company)
and Vincent Carrino (a director of the Company) concerning a possible
acquisition by Parent of the Company. These discussions continued through
September and early October 1998, but the parties were unable to agree on
material terms of a transaction. During October 1998, Parent determined to
develop the temporary power rental business internally, rather than through an
acquisition, and did not pursue any further discussions with the Company.
In April 1999, the Company's Board of Directors discussed the need for
additional working capital to purchase equipment and to compete effectively for
large projects and instructed the Company's management to pursue alternatives to
raise additional capital, including reviving discussions with Parent. After this
meeting, Mr. Stone contacted Mr. Moore to discuss a possible minority interest
investment by Parent in the Company. At the request of Mr. Moore, Mr. Stone
prepared a preliminary term sheet for Parent with respect to a proposed minority
investment in the Company. On April 14, 1999, Mr. Moore and other
representatives of Parent met with Messrs. Stone, Bernstein and Carrino
concerning a potential minority investment in the Company by Parent.
In May 1999, representatives of Parent and the Company met and discussed
various means by which a minority investment in the Company might be made.
On June 14, 1999, Parent proposed a term sheet that outlined a $5 million
investment in the Company by Parent whereby Parent would purchase shares of a
newly authorized class of convertible preferred stock. Representatives of the
Company and Parent continued to have discussions concerning the proposed
minority investment throughout June, July and August, but were unable to reach a
definitive agreement on the terms of the proposed investment.
On August 12, 1999, representatives of Parent met with Mr. Stone to discuss
financial projections of the Company and again proposed a potential acquisition
of the Company by Parent. At this meeting, Mr. Moore indicated that, based on
the diligence conducted by Parent to date and publicly available information,
Parent would propose a preliminary valuation with respect to a potential offer
to acquire the Company at $7 per share.
Parent signed a new confidentiality agreement with the Company on September
28, 1999 for the purpose of pursuing discussions with respect to a transaction
on the terms discussed during the August 12 meeting. On October 14, 1999, Parent
submitted the proposed terms pursuant to which Parent would pursue negotiations
with the Company to the Chairman of General Electric, and obtained his
authorization to negotiate the acquisition of the Company.
On October 28, 1999, Mr. Moore delivered to Mr. Stone a non-binding
proposal outlining the terms upon which Parent would acquire the Company at a
purchase price of $7 per share, subject to certain downward adjustments based on
the financial condition of the Company at the time of the closing of the
acquisition. On October 29, 1999, Mr. Stone and Mr. Moore discussed Mr. Stone's
comments on Parent's proposal.
On November 2 through 5, 1999, representatives of Parent, including
Parent's outside legal advisor, King & Spalding, and outside financial auditor,
KPMG Peat Marwick LLP, and certain other outside consultants,
21
<PAGE> 24
met with representatives of the Company to review legal, financial,
environmental, human resource, operational and other information concerning the
Company.
King & Spalding, on behalf of Parent, submitted an initial draft Merger
Agreement to the Company on November 5, 1999.
Additional site visits by representatives of Parent to the Company's
facilities in Los Angeles and Brazil occurred on November 9, 1999 and November
15, 1999. In addition, representatives of Parent continued their due diligence
and discussed with the Company possible responsibilities and compensation
arrangements with Messrs. Campion and Anderson following the Merger. On November
15, 1999 representatives of Parent and the Company, including their legal
advisors, met in New York to discuss the terms of the Merger Agreement, Tender
Agreements and Indemnification Agreements. At this meeting, Parent continued to
propose an acquisition valuation of $7 per share, but no longer insisted on a
post-closing purchase price adjustment.
On November 23, 1999, the Board of Directors of the Company met and
discussed the status of the negotiations and the terms of the proposed
agreements. The Board of Directors of the Company authorized Mr. Stone to (i)
continue proposed negotiations with representatives of Parent and (ii) engage a
qualified investment banking firm to advise the Company with respect to the
fairness, from a financial point of view, of the terms of any proposed
transaction to the stockholders of the Company.
On December 15, 1999, after the negotiations between the parties had been
substantially completed, the Board of Directors of the Company met and reviewed
the terms of the proposed Merger Agreement, Tender Agreements and
Indemnification Agreements. The Board of Directors agreed to meet again on the
following day.
On December 16, 1999, the Board of Directors of the Company met and (i)
unanimously determined that the Merger Agreement, the Tender Agreements and
Indemnification Agreements and the transactions contemplated thereby, including
each of the Offer and the Merger, are advisable and are fair to and in the best
interests of the stockholders of the Company, (ii) approved the Offer and the
Merger and (iii) recommended that the stockholders of the Company accept the
Offer and tender their Shares to the Offeror. Following such Board actions, on
December 17, 1999, the Merger Agreement, the Tender Agreements and
Indemnification Agreements were executed and delivered by the parties thereto.
On December 20, 1999, prior to the opening of trading on the AMEX, Parent and
the Company jointly announced that the Merger Agreement had been signed and that
the Offeror intended to commence the Offer. On December 27, 1999, the Offeror
commenced the Offer.
12. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY.
The purpose of the Offer, the Merger, the Merger Agreement and the other
transactions contemplated thereby, is to enable Parent to acquire control of,
and the entire equity interest in, the Company.
Pursuant to the DGCL and the Certificate of Incorporation of the Company,
adoption by the Board of Directors of the Company and the affirmative vote of
the holders of a majority of all votes entitled to be cast by all shares
entitled to vote is required to approve the Merger Agreement. The Board of
Directors of the Company has unanimously approved and adopted the Merger
Agreement, the Tender Agreements and Indemnification Agreements and approved the
terms of the Offer and the Merger, and, unless the Merger is consummated
pursuant to the short form merger provisions under the DGCL as described below,
the only remaining required corporate action of the Company is the approval of
the Merger Agreement by the affirmative vote of the holders of a majority of the
outstanding Shares. If the Offeror acquires, through the Offer or otherwise a
majority of the combined voting power of the outstanding Shares, it would have
sufficient voting power to effect the Merger without the vote of any other
stockholder of the Company.
Pursuant to the Merger Agreement, the Company has agreed that, as soon as
practicable following the expiration of the Offer, it will duly call, give
notice of, convene and hold a meeting of stockholders for the purpose of
obtaining the stockholders' approval of the Merger Agreement. Parent has agreed
that all Shares owned by the Offeror or any other subsidiary of Parent will be
voted in favor of approval of the Merger Agreement. The stockholders' meeting
shall be held as soon as practicable following the purchase of Shares
22
<PAGE> 25
pursuant to the Offer. If the Offeror acquires a majority of the Shares through
the Offer or otherwise, approval of the Merger Agreement can be obtained without
the affirmative vote of any other stockholder of the Company.
Appraisal Rights in Connection with the Offer. Stockholders do not have
appraisal rights as a result of the Offer. However, if the Merger is
consummated, stockholders of the Company at the time of the Merger who do not
vote in favor of the Merger will have the right under the DGCL to dissent and
demand appraisal of, and receive payment in cash of the fair value of, their
Shares outstanding immediately prior to the Effective Time in accordance with
Section 262 of the DGCL.
Under the DGCL, dissenting stockholders who comply with the applicable
statutory procedures will be entitled to receive a judicial determination of the
fair value of their Shares (exclusive of any element of value arising from the
accomplishment or expectation of such merger or similar business combination)
and to receive payment of such fair value in cash. Any such judicial
determination of the fair value of such Shares could be based upon
considerations other than or in addition to the price paid in the Offer and the
Merger and the market value of the Shares. In Weinberger v. UOP, Inc., the
Delaware Supreme Court stated, among other things, that "proof of value by any
techniques or methods which are generally considered acceptable in the financial
community and otherwise admissible in court" should be considered in an
appraisal proceeding. Stockholders should recognize that the value so determined
could be higher or lower than the price per Share paid pursuant to the Offer or
the Merger.
In addition, several decisions by Delaware courts have held that in certain
circumstances a controlling stockholder of a corporation involved in a merger
has a fiduciary duty to other stockholders that requires that the merger be fair
to other stockholders. In determining whether a merger is fair to minority
stockholders, Delaware courts have considered, among other things, the type and
amount of the consideration to be received by the other stockholders and whether
there was fair dealing among the parties. The Delaware Supreme Court stated in
Weinberger and Rabkin v. Philip A. Hunt Chemical Corp. that the remedy
ordinarily available to minority stockholders in a cash-out merger is the right
to appraisal described above.
However, a damages remedy or injunctive relief may be available if a merger
is found to be the product of procedural unfairness, including fraud,
misrepresentation or other misconduct.
THE FOREGOING SUMMARY OF THE RIGHTS OF OBJECTING STOCKHOLDERS DOES NOT
PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY
STOCKHOLDERS DESIRING TO EXERCISE ANY AVAILABLE APPRAISAL RIGHTS. THE
PRESERVATION AND EXERCISE OF APPRAISAL RIGHTS REQUIRE STRICT ADHERENCE TO THE
APPLICABLE PROVISIONS OF THE DGCL.
Rule 13e-3. 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 following the purchase of
Shares pursuant to the Offer in which the Offeror seeks to acquire any remaining
Shares. Rule 13e-3 should not be applicable to the Merger if the Merger is
consummated within one year after the expiration or termination of the Offer and
the price paid in the Merger is not less than the per Share price paid pursuant
to the Offer. However, if the Offeror is deemed to have acquired control of the
Company pursuant to the Offer and if the Merger is consummated more than one
year after completion of the Offer or an alternative acquisition transaction is
effected whereby stockholders of the Company receive consideration less than
that paid pursuant to the Offer, in either case at a time when the Shares are
still registered under the Exchange Act, the Offeror may be required to comply
with Rule 13e-3 under the Exchange Act. If applicable, Rule 13e-3 would require,
among other things, that certain financial information concerning the Company
and certain information relating to the fairness of the Merger or such
alternative transaction and the consideration offered to minority stockholders
in the Merger or such alternative transaction, be filed with the Commission and
disclosed to stockholders prior to consummation of the Merger or such
alternative transaction. The purchase of a substantial number of Shares pursuant
to the Offer may result in the Company being able to terminate its Exchange Act
registration. See Section 7. If such registration were terminated, Rule 13e-3
would be inapplicable to any such future Merger or such alternative transaction.
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<PAGE> 26
Plans for the Company. 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. 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
the Company's potential contribution to Parent's business.
Except as indicated in this Offer to Purchase, Parent does not have any
current plans or proposals which relate to or would result in any of the
following: 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 change in the present Board of Directors or management of the
Company; any material change in the Company's present capitalization or dividend
policy; or any other material change in the Company's corporate structure or
business. Notwithstanding the foregoing, promptly after the Offeror acquires a
majority of the Shares, the Offeror will be entitled to designate such number of
directors on the Board of Directors of the Company as will make the percentage
of the Company's directors designated by the Offeror equal to the percentage of
the aggregate voting power of the Shares held by Parent or any of its
subsidiaries. In addition, assuming the Offeror's nominees are appointed as
directors of the Company and so long as there are holders of Shares other than
Parent or any of its subsidiaries, Parent expects that the Board of Directors of
the Company would not declare dividends on the Shares.
13. THE MERGER AGREEMENT; THE TENDER AGREEMENTS; THE INDEMNIFICATION AGREEMENTS;
AND CERTAIN OTHER AGREEMENTS.
The following is a summary of the material terms of the Merger Agreement,
which summary is qualified in its entirety by reference to the Merger Agreement
which is filed as an exhibit to the Tender Offer Statement on Schedule 14D-1.
The Offer. The Merger Agreement provides for the commencement of the Offer
as promptly as practicable, but in no event later than five (5) business days
following the date of public announcement of the execution thereof. The
obligation of Offeror to accept for payment the Shares tendered pursuant to the
Offer is subject to (i) the Minimum Condition and (ii) the satisfaction or
waiver of certain other conditions of the Offer. See Section 15. The Minimum
Condition of the Offer is that the Shares tendered pursuant to the Offer by the
expiration of the Offer and not withdrawn, together with the Shares owned by the
Offeror, represent, on a fully diluted basis, a majority of the outstanding
voting power of the Shares.
The Offeror expressly reserves the right to modify the terms of the Offer,
except that, without the consent of the Company, the Offeror shall not, (i) make
any change in the terms or conditions of the offer that is adverse to the
holders of the shares in any material respect, (ii) decrease the Minimum
Condition or the Offer Price per Share payable in the Offer, or (iii) impose
material conditions on the Offer other than those set forth in Annex I attached
to the Merger Agreement. Notwithstanding the foregoing, the Offeror may, without
the consent of the Company, (i) extend the Offer on one or more occasions, if at
the scheduled Expiration Date any of the conditions to the Offeror's obligation
to purchase the Shares are not satisfied, until such time as such conditions are
satisfied or waived, (ii) extend the Offer for any period required by any rule,
regulation, interpretation or position of the Commission or the staff thereof
applicable to the Offer and (iii) extend the Offer on one or more occasions, if
at the scheduled Expiration Date all conditions to the Offer shall have been
satisfied but less than a number of Shares that, together with the number of
Shares owned by the Parent and Offeror, represents ninety percent (90%) of the
outstanding Shares, on a fully-diluted basis, shall have been tendered into the
Offer. The rights reserved by the Offeror in this paragraph are in addition to
the Offeror's rights to terminate the Offer pursuant to Section 15.
In addition, the Offeror may, at its sole option, after the date the Shares
are purchased pursuant to the Offer commence a subsequent offer pursuant to Rule
14d-11 of the Exchange Act (which becomes effective as of January 24, 2000) to
purchase additional Shares prior to the consummation of the Merger. If the
Offeror commences a subsequent offer, all Shares tendered in the subsequent
offer would be immediately accepted and paid for as they are tendered at the
Offer Price. Any subsequent offer must remain open for a minimum of three and a
maximum of twenty business days.
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<PAGE> 27
The Merger. The Merger Agreement provides that subject to the terms and
conditions thereof (and including those described in Section 15) and in
accordance with the DGCL, the Offeror shall be merged with and into the Company
at the Effective Time. Following the Merger, the separate corporate existence of
the Offeror shall cease and the Company shall continue as the surviving
corporation and shall succeed to and assume all the rights and obligations of
the Offeror in accordance with the DGCL.
Pursuant to the Merger Agreement, as of the Effective Time, each Share
issued and outstanding immediately prior to the Effective Time (unless otherwise
provided for) shall be converted automatically into the right to receive an
amount in cash equal to $7 payable, without interest less any required
withholding taxes (the "Merger Consideration") upon surrender of the certificate
formerly representing such Share in the manner described in the Merger
Agreement.
At the Effective Time, each outstanding option to purchase Shares granted
under the Company's 1998 Stock Option and Incentive Plan (each a "Company
Option"), whether or not then exercisable, shall be cancelled and each holder of
a cancelled Company Option shall be entitled to receive at the Effective Time or
as soon as practicable thereafter from the Company upon execution and delivery
of an option termination agreement, in form and substance reasonably acceptable
to Parent in consideration for the cancellation of such Company Option, an
amount in cash (the "Option Consideration") equal to (i) the number of Shares
previously subject to such Company Option that but for the cancellation thereof
would have been exercisable (after giving effect to any acceleration of vesting
pursuant to the terms of such Company Option as a result of the consummation of
the Offer or the Merger), multiplied by (ii) the excess, if any, of the Offer
Price over the exercise price per Share of the Company Option.
The Merger Agreement provides that, unless otherwise stipulated, Shares
that are issued and outstanding immediately prior to the Effective Time and that
are held by stockholders who are entitled to demand and properly demand
appraisal rights for such Shares pursuant to, and in compliance with all aspects
of, Section 262 of the DGCL, shall not be converted into the Merger
Consideration, but rather such stockholders shall be entitled to only such
rights as are granted in accordance with Section 262 of the DGCL; provided that
if such holder shall have failed to perfect or otherwise waived, withdrawn or
lost his, her or its right to appraisal under Section 262 of the DGCL, such
holder's Shares shall be treated as if they had been converted as of the
Effective Time into a right to receive the Merger Consideration.
The Merger Agreement also provides that, at the Effective Time, the
Certificate of Incorporation of the Company, as in effect immediately prior to
the Effective Time, shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law or such Certificate of Incorporation. At the Effective Time, the
Bylaws of the Company, as in effect immediately prior to the Effective Time,
shall be the Bylaws of the Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law, the Certificate of
Incorporation of the Surviving Corporation or such Bylaws.
The Merger Agreement provides that (i) the directors of the Offeror at the
Effective Time shall be the directors of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected or appointed and qualified, as the case may be, and (ii) the
officers of the Offeror at the Effective Time shall be the officers of the
Surviving Corporation, until the earlier of their resignation or removal or
until their respective successors are duly elected and qualified, as the case
may be.
Stockholders' Meeting; Proxy Statement. The Merger Agreement provides, if
the approval and adoption of the Merger Agreement by the Company's stockholders
is required by law, the Company will, as soon as practicable following the
consummation of Offer (or the subsequent offer, if applicable), duly call, give
notice of, convene and hold a stockholder meeting for the purpose of considering
the approval of the Merger Agreement and the transactions contemplated thereby.
The Board of Directors of the Company will recommend to the stockholders the
adoption or approval of the Merger Agreement and the Merger, shall solicit
proxies in favor of the Merger Agreement and the Merger and shall take all other
actions necessary or, in the reasonable judgment of Parent, helpful to secure
the vote or consent of such holders required by the DGCL or the Merger
Agreement, to effect the Merger and shall not withdraw such recommendation. In
connection with such meeting, the Company will promptly prepare and file with
the Commission and will
25
<PAGE> 28
thereafter mail to its stockholders as promptly as practicable a proxy statement
of the Company (the "Proxy Statement") and all other proxy materials for such
meeting. Notwithstanding the foregoing, if the Offeror acquires at least 90% of
the outstanding Shares, the parties shall, at the request of Parent, take all
necessary and appropriate action to cause the Merger to become effective as soon
as practicable after the expiration of the Offer (or the subsequent offer, if
applicable) without a meeting of the Company's stockholders in accordance with
Section 253 of the DGCL.
Except as expressly permitted by the Merger Agreement, neither the Board of
Directors of the Company nor any committee thereof may (i) withdraw, qualify or
modify, or propose publicly to withdraw, qualify or modify, in a manner adverse
to Parent, the approval or recommendation by such Board of Directors or any such
committee of the Offer, the Merger, or the Merger Agreement, (ii) approve or
recommend, or propose publicly to approve or recommend any Acquisition Proposal
(as hereinafter defined) from a third party (an "Alternative Transaction"), or
(iii) cause the Company to enter into any letter of intent, agreement in
principle or acquisition agreement or other similar agreement (an "Acquisition
Agreement") relating to any Alternative Transaction. Notwithstanding the
foregoing, if prior to the approval of the Merger Agreement by the Company's
stockholders, and in any event no later than the original termination date of
the Offer, the Board of Directors of the Company determines in good faith that
it has received a Superior Proposal (as hereinafter defined) in compliance with
the solicitation provisions contained in the Merger Agreement and after taking
into consideration advice from outside counsel with respect to its fiduciary
duties to the Company's stockholders under applicable Delaware law, the Board of
Directors of the Company may (subject to this and the following sentences)
inform its stockholders that it no longer believes that the Merger is advisable
and no longer recommends approval (a "Subsequent Determination") and enter into
an Acquisition Agreement with respect to a Superior Proposal, but only at a time
that is more than five (5) business days (or two (2) business days in the case
of a material amendment to a Superior Proposal) following Parent's receipt of
written notice advising Parent that the Company's Board of Directors is prepared
to accept such Superior Proposal. Such notice shall specify the material terms
and conditions of such Superior Proposal (and include a copy of such proposal
with all accompanying documentation), identify the person making such Superior
Proposal and state that the Board of Directors intends to make a subsequent
determination. During this five business day period (or two (2) business day
period in the case of a material amendment), the Company shall provide an
opportunity for Parent to propose adjustments to the terms of the Merger
Agreement to enable the Company to proceed with its recommendation to its
stockholders without a Subsequent Determination. An "Acquisition Proposal" means
any bona fide proposal with respect to a merger, consolidation, share exchange,
tender offer or similar transaction involving the Company, or any purchase or
other acquisition of all or substantially all or any significant portion of the
assets of the Company or 25% or more of any class of the Company's capital
stock. A "Superior Proposal" means any proposal (on its most recently amended or
modified terms, if amended or modified) made by a third party to enter into an
Alternative Transaction which the Board of Directors of the Company determines
in its good faith judgment (based on, among other things, the advice of an
independent financial advisor) to be more favorable to the stockholders than the
Merger and the Offer, from a financial point of view (taking into account
whether, in the good faith judgment of the Board of Directors of the Company,
after obtaining the advice of such independent financial advisor, the third
party is reasonably able to finance the transaction, and any proposed changes to
the Merger Agreement that may be proposed by Parent in response to such
Alternative Transaction), except that for purposes of the definition of
"Superior Proposal," an "Alternative Transaction" shall mean an Acquisition
Proposal by a third party, provided that the reference to 25% in the definition
of "Acquisition Proposal" shall be deemed to be "51%".
Nothing contained in the Merger Agreement shall prohibit the Company from
taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any disclosure to the
Company's stockholders if, in the good faith judgment of the Board of Directors
of the Company, after consultation with outside counsel, failure so to disclose
would be inconsistent with its obligations under applicable law; provided,
however, that, except as expressly provided in the Merger Agreement, neither the
Company nor its Board of Directors nor any committee thereof shall withdraw,
qualify or modify, or propose to withdraw, qualify or modify, its position with
respect to the Merger Agreement or in connection with the Offer or the Merger,
or approve or recommend, or propose to approve or recommend, an Acquisition
Proposal.
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Designation of Directors. The Merger Agreement provides that, promptly
upon the acceptance for payment of, and payment by the Offeror for, any Shares
pursuant to the Offer, the Offeror shall be entitled to designate such number of
directors on the Board of Directors as will give the Offeror representation on
the Board of Directors equal to at least that number of directors, rounded up to
the next whole number, which is the percentage that (i) such number of Shares so
accepted for payment and paid for by the Offeror plus the number of Shares
otherwise owned by the Offeror or any other subsidiary of Parent bears to (ii)
the number of such Shares outstanding, and the Company shall, at such time,
cause the Offeror's designees to be so appointed or elected. Subject to
applicable law, the Company shall take all action requested by Parent necessary
to effect any such appointment or election. In connection with the foregoing,
the Company will promptly, at the option of the Offeror, use its best efforts to
either increase the size of the Board of Directors of the Company or obtain the
resignation of such number of its current directors as is necessary to enable
Offeror's designee to be elected or appointed to the Board of Directors of the
Company as provided above.
Access to Information; Confidentiality. The Company shall, and shall cause
each of its subsidiaries to, afford to the accountants, counsel, financial
advisors and other representatives of Parent and the Offeror reasonable access
at all reasonable times to officers, employees, agents, properties, offices or
other facilities, books, and records of the Company and its subsidiaries
(including, but not limited to, reasonable access to the Company's and its
subsidiaries' leased properties to enable Parent to conduct environmental
testing on such leased property), and shall furnish Parent and the Offeror with
all financial, operating and other data and information as Parent or Offeror may
reasonably request. During such period, the Company shall furnish to Parent and
the Offeror monthly financial and operating data within 20 days following the
end of each calendar month.
All information obtained by Parent concerning the Company and its
subsidiaries in connection with the transactions contemplated by the Merger
Agreement shall be kept confidential in accordance with the Confidentiality
Agreement, dated September 28, 1999 between Parent and the Company.
Other Offers. The Merger Agreement provides that the Company will not, nor
shall the Company authorize or permit any of its subsidiaries, officers,
directors or employees or any financial advisors, auditors, attorneys, lenders
or other advisors or representatives to directly or indirectly, (i) solicit,
initiate or encourage the submission of, any Acquisition Proposal, or (ii)
participate in or encourage any discussions or negotiations regarding, or
furnish to any person any non-public information with respect to, or take any
other action to facilitate any inquiries or the making of, any proposal that
constitutes, or may reasonably be expected to lead to, any Acquisition Proposal;
provided however, that, the Board of Directors of the Company shall not be
prohibited from furnishing information, or entering into discussions or
negotiations with, any person or entity that makes an unsolicited Acquisition
Proposal prior to the initial termination date of the Offer if and to the extent
that (i) the Board of Directors of the Company, after taking into consideration
the advice of independent outside legal counsel, determines in good faith that
such action is required for the Board to comply with its fiduciary obligations
to the Company's stockholders under Delaware law, (ii) prior to taking such
action, the Company receives from such entity an executed customary
confidentiality agreement and (iii) the Board of Directors of the Company
concludes in good faith based upon advice from its independent financial
advisor, that the Acquisition Proposal is a Superior Proposal. The Company shall
provide immediate oral and written notice to Parent of (i) any Acquisition
Proposal or any inquiry which could reasonably be expected to lead to any
Acquisition Proposal, (ii) the material terms and conditions of such Acquisition
Proposal or inquiry, (iii) the identity of the person or entity making any such
Acquisition Proposal or inquiry and (iv) the Company's intention to furnish
information to or enter into discussions or negotiations with, such person or
entity. The Company will keep Parent informed of the status and details of any
such Acquisition Proposal or inquiry.
Directors' and Officers' Indemnification and Insurance. The Merger
Agreement provides that, for six (6) years from and after the Effective Time,
Parent will cause the Surviving Corporation to indemnify and hold harmless all
past and present officers and directors of the Company and its subsidiaries for
acts or omissions occurring at or prior to the Effective Time to the same extent
such persons are indemnified by the Company pursuant to its Certificate of
Incorporation, Bylaws or agreements in effect on the date of the Merger
Agreement.
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Parent has agreed to cause the Surviving Corporation to maintain, for six
(6) years from the Effective Time, if available, the Company's current directors
and officers liability insurance policies (provided that the Surviving
Corporation may substitute for such policies, policies of at least the same
coverage containing terms and conditions which are not materially less
favorable) that provide coverage for events occurring prior to the Effective
Time; provided, however, that the Surviving Corporation shall not be required to
expend more than an amount per year equal to one hundred fifty percent (150%) of
current annual premiums paid by the Company for such insurance. If but for the
preceding sentence the Surviving Corporation shall be required to spend more
than 150% of current annual premiums, the Surviving Corporation shall obtain the
maximum amount of such insurance obtainable by payment of annual premiums equal
to 150% of current annual premiums.
Conduct of Business Pending the Merger. Pursuant to the Merger Agreement,
from the date thereof until such time as Parent's designees constitute a
majority of the members of the Board of Directors of the Company:
- The Company has agreed that unless Parent shall otherwise agree in
writing, (i) the business of the Company and its subsidiaries shall be
conducted only in, and the Company and its subsidiaries shall not take
any action except in, the ordinary course of business and in a manner
consistent with prior practice, (ii) the Company and its subsidiaries
shall use their reasonable best efforts to preserve intact their business
organizations, to keep available the services of their current officers
and employees and to preserve the current relationships of the Company
and its subsidiaries with customers, suppliers and other persons with
which the Company or its subsidiaries has business relations, (iii) the
Company and its subsidiaries will comply with all applicable laws and
regulations wherever its business is conducted, including, without
limitation, the timely filing of all reports, forms or other documents
with the Commission required pursuant to the Securities Act or the
Exchange Act, (iv) the Company shall make the capital expenditures
identified on the Company's 1999 budget, however, the Company shall not
make any expenditures to develop a wide area network and (v) the Company
shall make certain additional capital expenditures to purchase equipment
as set forth in the Company's disclosure letter delivered in connection
with the Merger Agreement (the "Company Disclosure Letter");
- The Company has agreed that the Company shall not, nor shall the Company
permit any of its subsidiaries to, (i) declare or pay any dividends on or
make other distributions (whether in cash, stock or property) in respect
of any of its Shares, except for dividends by a wholly owned subsidiary
of the Company to the Company or another wholly owned subsidiary of the
Company, (ii) split, combine or reclassify any of its Shares or issue or
authorize or propose the issuance of any other securities in respect of,
in lieu of or in substitution for Shares; (iii) repurchase or otherwise
acquire any Shares; (iv) issue, deliver or sell, or authorize or propose
the issuance, delivery or sale of, any shares of its capital stock or any
securities convertible into any such shares of its capital stock, or any
rights, warrants or options to acquire any such shares of its capital
stock or convertible securities or any stock appreciation rights, phantom
stock plans or stock equivalents, other than the issuance of Shares upon
(x) the exercise of Company options outstanding as of the date of the
Merger Agreement, and (y) the exercise of warrants outstanding as of the
date of the Merger Agreement or (v) take any action that would, or could
reasonably be expected to, result in any of the conditions to the Offer
or the Merger Agreement not being satisfied; and
- The Company has agreed that the Company shall not, nor shall the Company
permit any of its subsidiaries to, (i) amend its certificate of
incorporation (including any certificate of designations attached
thereto) or bylaws or other equivalent organizational documents; (ii)
create, assume or incur any indebtedness for borrowed money or guaranty
any such indebtedness of another person, other than (A) borrowings under
existing lines of credit (or under any refinancing of such existing
lines) or (B) indebtedness owing to, or guaranties of indebtedness owing
to, the Company; (iii) make any loans or advances to any other person
other than loans or advances between any subsidiaries of the Company or
between the Company and any of its subsidiaries (other than loans or
advances less than $25,000 made in the ordinary course of business
consistent with past practice and loans or advances to its subsidiary in
Australia in connection with the Sydney 2000 Olympic Games which shall in
no event
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exceed $100,000 in the aggregate); (iv) mortgage or pledge any of its
assets or properties; (v) merge or consolidate with any other entity in
any transaction, or sell any business or assets in a single transaction
or series of transactions in which the aggregate consideration is
$100,000 or greater; (vi) change its accounting policies except as
required by generally accepted accounting principles; (vii) make any
change in employment terms for any of its directors or officers; (viii)
alter, amend or create any obligations with respect to compensation,
severance, benefits, change of control payments or any other payments to
employees, directors or affiliates of the Company or its subsidiaries or
enter into any new, or amend any existing, employment agreements; (ix)
make any change to the Company benefit plans; (x) amend or cancel or
agree to the amendment or cancellation of any material contract; (xi)
pay, loan or advance (other than the payment of compensation, directors'
fees or reimbursement of expenses in the ordinary course of business) any
amount to, or sell, transfer or lease any properties or assets (real,
personal or mixed, tangible or intangible) to, or enter into any
agreement with, any of its officers or directors or any "affiliate" or
"associate" of any of its officers or directors; (xii) form or commence
the operations of any business or any corporation, partnership, joint
venture, business association or other business organization or division
thereof; (xiii) make any tax election (other than in the ordinary course
of business consistent with past practice) or settle or compensate any
tax liability involving amounts in excess of $50,000 in the aggregate;
(xiv) pay, discharge, settle or satisfy any claims litigation,
liabilities or obligations (whether absolute, accrued, asserted or
unasserted, contingent or otherwise) involving amounts in excess of
$100,000 in the aggregate; or (xv) make any capital expenditures
inconsistent with or, not provided for by, the Company's 1999 budget or
as otherwise expressly provided in the Company Disclosure Letter.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of the parties thereto including, but
not limited to, representations and warranties by the Company concerning: the
Company's organization, standing and power; capitalization; the Board of
Directors' approval of the Merger Agreement, the Tender Agreements, the
Indemnification Agreements and the transactions contemplated by the Merger
Agreement (including approvals so as to render Section 203 of the DGCL
inapplicable to Parent and the Offeror by reason of their entering into the
Merger Agreement and the Tender Agreements or consummating the transactions
contemplated by the Merger Agreement); no conflicts with organizational
documents, laws or contracts; required filings and consents; compliance with
law; Commission filings and financial statements; absence of certain changes or
events; tax matters; ownership and condition of assets; change of control
agreements; absence of litigation; contracts and commitments; information
supplied for purposes of filing with the Commission; employee benefit plans;
labor and employment matters; environmental compliance; intellectual property;
Year 2000 compliance; brokers; insurance policies; notes and accounts
receivable; affiliate transactions; other acquisition discussions; warrants;
stockholders' rights agreement; and major suppliers and customers. Some of the
representations are qualified by a material adverse effect clause. For purposes
of the Merger Agreement, "Company Material Adverse Effect" means any change,
event or effect which shall have occurred or been threatened that, when taken
together with all other adverse changes, events or effects that have occurred or
been threatened, is or is reasonably likely to, (i) be materially adverse to the
business, operations, prospects, properties, condition (financial or otherwise),
assets, liabilities (including, without limitation, contingent liabilities), of
the Company and its subsidiaries taken as a whole, or (ii) prevent or materially
delay the performance by the Company of any of its obligations under the Merger
Agreement or the consummation of the Offer, the Merger or other transactions
contemplated by the Merger Agreement.
Conditions of the Merger. Under the Merger Agreement, the respective
obligations of each party to effect the Merger shall be subject to the following
conditions:
- The respective obligations of Parent, Offeror and the Company to effect
the Merger are subject to the satisfaction of the following conditions,
unless waived in writing by all parties:
(i) each of the conditions set forth in Section 15 shall have been
satisfied or waived by the Offeror, and the Offeror or its permitted
assignee shall have purchased the Shares validly tendered and not
withdrawn pursuant to the terms of the Offer; provided, however, that
this condition shall not be applicable to the obligations of Parent or
the Offeror if, in breach of the Merger Agreement or the
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terms of the Offer, the Offeror or its permitted assignee fails to
purchase any Shares validly tendered and not withdrawn pursuant to the
Offer;
(ii) the Merger Agreement and the Merger shall have been approved and
adopted by the requisite vote of the stockholders of the Company, if and
to the extent required by the DGCL, the Company Certificate of
Incorporation and the Company Bylaws;
(iii) no temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction
or other legal restraint or prohibition preventing the consummation of
the Merger shall be in effect; provided, however, that the parties
invoking this condition shall use all commercially reasonable efforts to
have any such order or injunction vacated; and
(iv) all actions by or in respect of or filings with any governmental
entity required to permit the consummation of the Merger shall have been
obtained or made (including the expiration or termination of any
applicable waiting period under the HSR Act).
- The obligations of Parent and the Offeror to effect the Merger are
further subject to satisfaction or waiver at or prior to the Effective
Time of the following conditions:
(i) (A) The representations and warranties of the Company in the Merger
Agreement that are qualified by materiality shall be true and correct in
all respects as of the date of the Merger Agreement and as of the
Effective Time; (B) the representations and warranties of the Company in
the Merger Agreement that are not qualified by materiality shall be true
and correct in all material respects as of the date of the Merger
Agreement and as of the Effective Time; (C) the Company shall have
performed in all material respects all obligations required to be
performed by it under the Merger Agreement; and (D) the Company shall
have delivered to Parent and the Offeror a certificate to the effect
that each of the conditions specified in (A), (B) and (C) above is
satisfied in all respects;
(ii) the Company and its subsidiaries shall have procured all necessary
third party consents in connection with the consummation of the Merger;
and
(iii) there shall not be overtly threatened, instituted or pending any
action, proceeding, application or counterclaim by any governmental
entity before any court or governmental regulatory or administrative
agency, authority or tribunal which challenges or seeks to challenge,
restrain or prohibit the consummation of the Offer or the Merger.
- The obligations of the Company to effect the Merger are further subject
to satisfaction or waiver at or prior to the Effective Time of the
following conditions:
(i) the representations and warranties of Parent and the Offeror in the
Merger Agreement that are qualified by materiality shall be true and
correct in all respects as of the date of the Merger Agreement and as of
the Effective Time;
(ii) the representations and warranties of Parent and the Offeror in the
Merger Agreement that are not qualified by materiality shall be true and
correct in all material respects as of the date of the Merger Agreement
and as of the Effective Time;
(iii) Parent and Offeror shall have performed in all material respects
all obligations required to be performed by them under the Merger
Agreement; and
(iv) Parent and Offeror shall have delivered to the Company a
certificate to the effect that each of the conditions specified in (i),
(ii) and (iii) is satisfied in all respects.
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Termination Events. The Merger Agreement may be terminated at any time
prior to the Effective Time, whether before or after any approval of the matters
presented in connection with the Merger by the stockholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by any of Parent, the Offeror or the Company if any court of
competent jurisdiction or other governmental entity shall have issued an
order, decree, ruling or taken any other action permanently restraining,
enjoining or otherwise prohibiting the Offer or the Merger and such order,
decree, ruling or other action shall have become final and nonappealable;
provided however, that the party terminating the Merger Agreement shall use
all commercially reasonable efforts to have such order, decree, ruling or
action vacated;
(c) by any of Parent, the Offeror or the Company if the Offer shall
have expired or been terminated and the Offeror shall not have purchased
any Shares pursuant thereto on or before March 31, 2000; provided, however,
that the right to terminate the Merger Agreement shall not be available to
any party whose failure to fulfill any obligation under the Merger
Agreement has been the primary cause of, or resulted in, the expiration or
termination of the Offer on or before such date;
(d) by Parent or the Offeror if the Board of Directors of the Company
(i) shall have withdrawn or shall have modified in a manner adverse to
Parent or the Offeror its approval or recommendation of the Offer, the
Merger or the Merger Agreement, (ii) shall have caused the Company to enter
into an agreement with respect to an Acquisition Proposal, (iii) shall have
endorsed, approved or recommended any Acquisition Proposal or (iv) shall
have resolved to do any of the foregoing;
(e) by Parent or the Offeror, if as a result of the failure of any of
the conditions set forth in Section 15, the Offer shall have been
terminated by Parent or the Offeror or expired in accordance with its terms
without Offeror (or any permitted assignee) having purchased any Shares
pursuant to the Offer; provided however, that neither Parent nor the
Offeror shall have the right to terminate the Merger Agreement if such
party is in material breach of the Merger Agreement;
(f) by Parent or the Offeror, if (i) any of the conditions to
obligations of Parent and the Offeror to effect the Merger shall have
become incapable of fulfillment and shall not have been waived by Parent
and the Offeror or (ii) the Company shall breach in any material respect
any of its representations, warranties, covenants or other obligations in
the Merger Agreement and, within ten (10) days after written notice of such
breach to the Company from Parent, such breach shall not have been cured in
all material respects or waived by Parent or the Offeror and the Company
shall not have provided reasonable assurance to Parent and the Offeror that
such breach will be cured in all material respects on or before the
Effective Time;
(g) by the Company, if (i) any of the conditions to the obligations of
the Company to effect the Merger shall have become incapable of fulfillment
and shall not have been waived by the Company or (ii) Parent or the Offeror
shall breach in any material respect any of their respective
representations, warranties or obligations hereunder and, within ten (10)
days after written notice of such breach to Parent from the Company, such
breach shall not have been cured in all material respects or waived by the
Company and Parent or the Offeror, as the case may be, shall not have
provided reasonable assurance to the Company that such breach will be cured
in all material respects on or before the Effective Time;
(h) by any of Parent, the Offeror or the Company if the Offeror shall
have terminated the Offer without Parent or the Offeror purchasing any
Shares pursuant thereto;
(i) by Parent prior to the date the Shares are purchased pursuant to
the Offer if Parent determines in its sole discretion that the matters
disclosed in the phase I or phase II environmental tests with respect to
any property leased by the Company or any subsidiary would be likely to be
material to the Company or any of its subsidiaries;
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(j) by Parent if on or prior to the twenty-fifth (25th) business day
following the execution of the Merger Agreement, in the good faith judgment
of Parent's auditor, the Company does not meet each of the Financial
Statement Tests (as defined below).
The "Financial Statement Tests" are (i) that the Company's financial
statements included in the Company's Form 10-Q were prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the period involved (except as permitted by Form 10-QSB or as may be
indicated in the notes thereto) and fairly present, subject to normal, recurring
audit adjustments, the consolidated financial position of the Company and its
subsidiaries at the respective date thereof and the consolidated results of its
operations and changes in cash flows for the period indicated, (ii) the
Stockholders' Equity (as determined consistent with the methodology used in the
Form 10-Q) as of November 30, 1999 is at least equal to $16,500,000 and
(iii) the Current Liabilities and Long Term Liabilities (each as determined
consistent with the methodology used in the Form 10-Q) as of November 30, 1999
are in the aggregate no greater than $8,660,000; provided, for purposes of (ii)
and (iii), the 1999 annual bonuses to be paid to John J. Campion and G. Laurence
Anderson by the Company shall not be taken into account when determining
Stockholders' Equity, Current Liabilities and Long Term Liabilities.
The Company shall pay to Parent a termination fee of $1.5 million (the
"Termination Fee"), payable in same day funds, as liquidated damages and not as
a penalty to reimburse Parent for its time, expense and lost opportunity costs
of pursuing the merger and offer if: (i) either the Parent or the Offeror
terminates the Merger Agreement in accordance with paragraph (d) above or (ii)
(A) after the date of the Merger Agreement and prior to the termination of the
Merger Agreement, any person makes a Acquisition Proposal, (B) the Offer shall
have remained open until the scheduled Expiration Date immediately following the
date such Acquisition Proposal is announced, (C) the Minimum Condition is not
satisfied at the Expiration Date, and (D) the Merger Agreement is thereafter
terminated. In addition, if within one year after the termination of the Merger
Agreement, the Company shall enter into any agreement relating to, or
consummate, an Acquisition Proposal with a person other than Parent or the
Offeror, then immediately prior to, and as a condition of, consummation of such
transaction the Company shall pay to Parent upon demand the Termination Fee;
provided no such amount shall be payable if the Termination Fee shall already
have become payable or been paid or if the Merger Agreement shall have been
terminated in accordance with paragraph (a) or (b) above or by the Company in
accordance with clause (ii) of paragraph (g) above.
Fees and Expenses. Except as specifically provided, all fees and expenses
incurred in connection with the transactions contemplated by the Merger
Agreement shall be paid by the party incurring such fees or expenses.
Tender Agreements. Concurrently with the execution and delivery of the
Merger Agreement, Parent, the Offeror and each of the Tendering Stockholders
entered into the Tender Agreements. Pursuant to the Tender Agreements, the
Tendering Stockholders agreed to tender into the Offer an aggregate of 1,490,374
Shares currently owned by the Tendering Stockholders (the "Committed Shares").
The Tender Agreements also provide that John J. Campion and Esther Ash, G.
Laurence and Thressa Anderson, Stephen R. Bernstein, Jeffrey B. Stone, Joseph A.
Ades, Robert E. Masterson and David C. and Annika Bernstein irrevocably appoint
the Offeror as their proxy to vote their portion of such Committed Shares (i) in
favor of the Merger and the transaction and (ii) otherwise in the manner
directed by Offeror.
Indemnification Agreements. Concurrently with the execution or delivery of
the Merger Agreement, Parent, the Offeror and each of the Tendering Stockholders
entered into the Indemnification Agreements. Pursuant to the Indemnification
Agreements, the Offeror shall withhold and put into an escrow account in the
aggregate 10% of the amount that each Tendering Stockholder is entitled to
receive pursuant to the Offer with respect to the Committed Shares, which is
equal in the aggregate to $1,043,261.80. The Tendering Stockholders have agreed
to indemnify the Offeror, Parent and the Company for twelve (12) months
following the closing of the Merger for up to the amount withheld by the Offeror
for third party claims arising out of, based upon or relating to any inaccuracy
in or breach of any representation, warranty, covenant or agreement by or on
behalf of the Company contained in the Merger Agreement or by the Tendering
Stockholders contained in the Indemnification Agreements. Also, the Tendering
Stockholders have agreed to
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indemnify the Offeror, Parent and the Company up to the amount in the escrow
account for any third party claims arising out of, based upon or relating to
matters disclosed by the Company in the Company Disclosure Letter with respect
to the representations and warranties relating to taxes, employment benefit
plans, labor and employment matters, environmental matters and intellectual
property.
In addition, each of the Tendering Stockholders has agreed that until
December 17, 2002 such Tendering Stockholder will not, directly or indirectly,
engage or have any equity or profit interest in (except for an equity interest
in a publicly held corporation which does not exceed 1% of such corporation's
outstanding capital stock) or render services of any executive, administrative,
supervisory, marketing, production or consulting nature to any corporation or
other entity that conducts Company Activities in the Territory. "Company
Activities" are defined as all activities that the Company has conducted within
the previous year, including the provision of temporary power generation and
temperature control rental equipment and support services on a worldwide basis
for entertainment, corporate and special events. The "Territory" means the areas
where the Company and its subsidiaries conduct business and actively seek
customers, including the geographic area within a 150 mile radius of the
Company's current offices. The Tendering Stockholders have also agreed to
maintain the confidentiality of the Company's trade secrets and confidential
information and for three years not to solicit for employment employees of the
Company.
Employment Agreements
Concurrently with execution of the Merger Agreement, GE Energy Systems
Rentals entered into an Employment Agreement with G. Laurence Anderson, the
President of the Company, and John J. Campion, the Chief Executive Officer of
the Company (the "Employment Agreements"). Such Employment Agreements shall be
effective upon the purchase of the Shares pursuant to the Offer and create an
at-will employment for each of the employees.
Pursuant to Mr. Anderson's Employment Agreement, Mr. Anderson's initial
annual salary will be $150,000 with a minimum guaranteed bonus of $60,000 in the
first year of his employment. Mr. Anderson's duties and responsibilities
following the Merger shall be substantially the same as prior to the Merger. In
addition, GE Energy Systems Rentals agreed that the Company shall be entitled to
pay Mr. Anderson a bonus for fiscal year 1999 in the amount of $106,832.90. Mr.
Anderson will also be entitled to receive options to purchase 1,000 shares of
General Electric upon completion of the Merger and another 1,000 shares on the
first anniversary of his employment. GE Energy Systems Rentals also agreed to
cause the Company to forgive the note payable by Mr. Anderson to the Company in
the amount of $133,338 upon the closing of the Offer. If Mr. Anderson's
employment is terminated without cause, Mr. Anderson shall be entitled to
receive (i) all sums due to him under the Employment Agreement up to and
including the date of termination of his employment, (ii) a severance payment of
$75,000 and (iii) all benefits to which he is entitled up to and including the
date of termination and any benefits to which he is entitled following such
termination pursuant to applicable law or the terms of the benefit plans
themselves. In addition, Mr. Anderson's non-compete agreement with the Company
shall immediately cease and be of no further force and effect.
Pursuant to Mr. Campion's Employment Agreement, Mr. Campion's initial
annual salary will be $200,000 with a minimum guaranteed bonus of $100,000 in
the first year of his employment, with an additional bonus if certain sales are
targets are satisfied. Mr. Campion's duties and responsibilities following the
Merger shall be substantially the same as prior to the Merger. In addition, GE
Energy Systems Rentals agreed that the Company shall be entitled to pay Mr.
Campion a bonus for fiscal year 1999 in the amount of $213,665.80. Mr. Campion
will also be entitled to receive options to purchase 2,000 shares of General
Electric upon completion of the Merger and another 2,000 shares on the first
anniversary of his employment. GE Energy Systems Rentals also agreed to cause
the Company to forgive the note payable by Mr. Campion to the Company in the
amount of $289,263 upon the closing of the Offer. If Mr. Campion's employment is
terminated without cause, Mr. Campion shall be entitled to receive (i) all sums
due to him under the Employment Agreement up to and including the date of
termination of his employment, (ii) a severance payment of $100,000 and (iii)
all benefits to which he is entitled up to and including the date of termination
and any benefits to which he is entitled following such termination pursuant to
applicable law or the terms of
33
<PAGE> 36
the benefit plans themselves. In addition, Mr. Campion's non-compete agreement
with the Company shall immediately cease and be of no further force and effect.
Proposed Agreement with John J. Campion
Parent may enter into an agreement with John J. Campion whereby if Parent
proposes to sell the Company at any time while Mr. Campion is an employee of the
Company and before December 17, 2002, Parent, subject to certain conditions,
would inform Mr. Campion of its intent to sell the Company and negotiate
exclusively and in good faith for 30 days with Mr. Campion with respect to the
sale of the Company should Mr. Campion inform Parent that he wishes to purchase
the Company.
14. DIVIDENDS AND DISTRIBUTIONS.
The Merger Agreement provides that neither the Company nor any of its
subsidiaries will, among other things, from the date of the Merger Agreement
through the time Parent's designees constitute a majority of the members of the
Board of Directors of the Company, (i) declare or pay any dividends on or make
other distributions (whether in cash, stock or property) in respect of any of
its Shares, except for dividends by a wholly owned subsidiary of the Company to
the Company or another wholly owned subsidiary of the Company, (ii) split,
combine or reclassify any of its Shares or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for Shares; (iii) repurchase or otherwise acquire any Shares; (iv) issue,
deliver or sell, or authorize or propose the issuance, delivery or sale of, any
Shares or any securities convertible into any such Shares, or any rights,
warrants or options to acquire any such Shares or convertible securities or any
stock appreciation rights, phantom stock plans or stock equivalents, other than
the issuance of shares of Company Common Stock upon (x) the exercise of Company
options outstanding as of the date of the Merger Agreement, and (y) exercise of
warrants outstanding as of the date of the Merger Agreement or (v) take any
action that would, or could reasonably be expected to, result in any of the
conditions to the Offer set forth in Section 15 or any of the conditions set
forth in the "Conditions of the Merger" not being satisfied.
15. CERTAIN CONDITIONS TO THE OFFEROR'S OBLIGATIONS.
Notwithstanding any other provision of the Offer or the Merger Agreement,
and in addition to and not in limitation of the Offeror's rights to extend or
amend the Offer at any time, in its sole discretion (subject to the terms of the
Merger Agreement), the Offeror shall not be required to accept for payment or,
subject to any applicable rules or regulations of the Commission, pay for any
Shares, and (subject to such rules and regulations) may delay the acceptance of
payment of or, subject to any restriction referred to above, the payment for,
and may (except as provided in the Merger Agreement) terminate the Offer, if (a)
the Shares tendered pursuant to the Offer by the expiration of the Offer and not
withdrawn, together with the Shares owned by Offeror represent, on a fully
diluted basis, less than Minimum Condition, (b) the waiting periods under the
HSR Act applicable to the transactions contemplated by the Merger Agreement
shall not have expired or been terminated, if applicable, or any other
regulatory approvals required under applicable law have not been obtained, which
if not obtained would prevent the consummation of the Offer, (c) Baker &
Daniels, legal counsel for the Company, does not deliver an opinion
substantially in the form of Exhibit A to the Merger Agreement, or (d) at any
time after the date of the Merger Agreement and prior to the acceptance for
payment of the Shares, any of the following conditions exist:
(i) there shall be instituted, pending or threatened any action,
investigation or proceeding by any governmental entity, or there shall be
instituted, pending or threatened any action or proceeding by any other
person, domestic or foreign, before any governmental entity, which is
reasonably likely to be determined adversely to Offeror, (A) challenging or
seeking to make illegal, to delay materially or otherwise, directly or
indirectly, to restrain or prohibit the making of the Offer, the acceptance
for payment of or payment for some of or all the Shares by Offeror or the
consummation of the Merger, seeking to obtain material damages or imposing
any material adverse conditions in connection therewith or otherwise,
directly or indirectly, relating to the transactions contemplated by the
Offer or the Merger, (B) seeking to restrain, prohibit or delay the
exercise of full rights of ownership or operation by Offeror or
34
<PAGE> 37
its affiliates of all or any portion of the business or assets of the
Company and its subsidiaries, taken as a whole, or of Offeror or any of its
affiliates, or to compel Offeror or any of its affiliates to dispose of or
hold separate all or any material portion of the business or assets of the
Company and its subsidiaries, taken as a whole, or of Offeror or any of its
affiliates, (C) seeking to impose or confirm limitations on the ability of
Offeror or any of its affiliates effectively to exercise full rights of
ownership of the Shares, including, without limitation, the right to vote
the Shares acquired or owned by Offeror or any of its affiliates on all
matters properly presented to the stockholders, (D) seeking to require
divestiture by Offeror or any of its affiliates of the Shares, or (E) that
otherwise would reasonably be expected to have a Company Material Adverse
Effect;
(ii) there shall be any action taken, or any statute, rule,
regulation, injunction, order or decree proposed, enacted, enforced,
promulgated, issued or deemed applicable to, or any consent or approval
withheld with respect to, the Offer, the acceptance for payment of or
payment for any Shares or the Merger, by any governmental entity that, in
the reasonable judgment of Offeror, may, directly or indirectly, result in
any of the consequences referred to in clauses (A) through (E) of paragraph
(i) above;
(iii) there shall have occurred any change, condition, event or
development that has resulted in, or would reasonably be expected to result
in, a Company Material Adverse Effect;
(iv) there shall have occurred (A) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market, (B) any decline in either the
Dow Jones Industrial Average or the Standard and Poor's Index of 500
Industrial Companies by an amount in excess of twenty-five percent (25%),
measured from the date of the Merger Agreement, (C) the declaration of any
banking moratorium or any suspension of payments in respect of banks or any
material limitation (whether or not mandatory) on the extension of credit
by lending institutions in the United States, (D) the commencement of a
war, material armed hostilities or other material international or national
calamity directly or indirectly involving the United States that has a
significant adverse effect on the functioning of the financial markets in
the United States, or (E) in the case of any of the foregoing existing at
the time of execution of the Merger Agreement, a material acceleration or
worsening thereof;
(v) (A) the representations and warranties of the Company in the
Merger Agreement that are qualified by materiality shall not be true and
correct in all respects as of the date of the Merger Agreement and as of
the Effective Time; (B) the representations and warranties of the Company
in the Merger Agreement that are not qualified by materiality shall not be
true and correct in all material respects as of the date of the Merger
Agreement and as of the Effective Time; (C) the Company shall not have
performed in all material respects all obligations required to be performed
by it under the Merger Agreement; (D) the directors of the Company's
subsidiaries shall not have resigned and appointed nominees to fill their
vacancies as provided in the Merger Agreement; and (E) an officer of the
Company shall not have delivered to Parent and Offeror a certificate to the
effect that each of the foregoing conditions is satisfied in all respects;
(vi) the Company and its subsidiaries shall not have procured all
necessary third party consents (other than from governmental entities) with
respect to matters material to the conduct of business by the Company
required in connection with the execution and delivery of the Merger
Agreement and the consummation of the Merger and the other transactions
contemplated hereby;
(vii) the Merger Agreement shall have been terminated in accordance
with its terms; or
(viii) the Company and its subsidiaries shall not have provided the
Offeror and Parent with reasonable access for at least twenty (20) business
days to its leased properties to enable the Offeror and Parent to conduct
phase I and phase II environmental testing,
which, in the reasonable judgment of the Offeror in any such case, and
regardless of the circumstances giving rise to any such condition, makes it
inadvisable to proceed with such acceptance for payment or payment.
35
<PAGE> 38
The foregoing conditions are for the sole benefit of the Offeror and may be
asserted by the Offeror regardless of the circumstances giving rise to any such
condition (including any action or omission by the Offeror) or may be waived by
the Offeror in whole or in part at any time and from time to time, in its sole
discretion. The failure by the Offeror 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. Should the Offer be terminated pursuant to the
foregoing provisions, all tendered Shares not theretofore accepted for payment
shall be returned forthwith.
16. CERTAIN LEGAL MATTERS.
Except as set forth in this Section, the Offeror is not aware of any
approval or other action by any governmental or administrative agency which
would be required for the acquisition or ownership of Shares by the Offeror as
contemplated herein. Should any such approval or other action be required, it
will be sought, but the Offeror has no current intention to delay the purchase
of Shares tendered pursuant to the Offer pending the outcome of any such matter,
subject, however, to the Offeror's right to decline to purchase Shares if any of
the conditions specified in Section 15 shall have occurred. There can be no
assurance that any such approval or other action, if needed, would be obtained
or would be obtained without substantial conditions, or that adverse
consequences might not result to the Company's business or that certain parts of
the Company's business might not have to be disposed of if any such approvals
were not obtained or other action taken.
Antitrust. Under the provisions of the HSR Act applicable to the Offer,
the acquisition of Shares under the Offer may be consummated following the
expiration of a 15-day waiting period following the filing by Parent of a
Premerger Notification and Report Form with respect to the Offer, unless Parent
receives a request for additional information or documentary material from the
Department of Justice, Antitrust Division (the "Antitrust Division") or the
Federal Trade Commission ("FTC") or unless early termination of the waiting
period is granted. Parent expects to make such a filing in early January. If,
within the initial 15-day waiting period, either the Antitrust Division or the
FTC requests additional information or documentary material concerning the
Offer, the waiting period will be extended through the tenth day after the date
of substantial compliance by all parties receiving such requests. Complying with
a request for additional information or documentary material can take a
significant amount of time.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the Offeror's proposed acquisition of
the Company. At any time before or after the Offeror's acquisition of Shares
pursuant to the Offer, the Antitrust Division or the FTC could take such action
under the antitrust laws as either deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares pursuant to the
Offer or the consummation of the Merger, or seeking the divestiture of Shares
acquired by the Offeror or the divestiture of substantial assets of the Company
or its subsidiaries or Parent or its subsidiaries. Private parties may also
bring legal action under the antitrust laws under certain circumstances. There
can be no assurance that a challenge to the Offer, the consummation of the
Merger, the tender of the Shares pursuant to the Tender Agreements or the
agreements set forth in the Indemnification Agreements on antitrust grounds will
not be made, or, if such a challenge is made, of the result thereof.
If any applicable waiting period under the HSR Act applicable to the Offer
has not expired or been terminated prior to the Expiration Date, the Offeror
will not be obligated to proceed with the Offer or the purchase of any Shares
not theretofore purchased pursuant to the Offer. See Section 15.
In addition, the Merger is notifiable to the Brazilian antitrust
authorities. The Brazilian antitrust authorities will review the transaction to
determine whether it is compatible with Brazilian antitrust law. If the
Brazilian authorities conclude that the transaction is incompatible with
applicable law, they could withhold their approval or condition approval on
undertakings by the parties, including a divestiture of certain operations in
Brazil; however, the consent of the Brazilian antitrust authorities is not
required by law prior to the closing of the transaction. Notification to the
antitrust authorities will be made within 15 business days
36
<PAGE> 39
from the date of the Merger Agreement. A final decision by the antitrust
authorities is anticipated within approximately five months.
State Takeover Laws. A number of states have adopted takeover laws and
regulations which purport to varying degrees to be applicable to attempts to
acquire securities of corporations which are incorporated in such states or
which have or whose business operations have substantial economic effects in
such states, or which have substantial assets, security holders, principal
executive offices or principal places of business therein. In 1982, the Supreme
Court of the United States, in Edgar v. Mite Corp., invalidated on
constitutional grounds the Illinois Business Takeovers Act, which as a matter of
state securities law made takeovers of corporations meeting certain requirements
more difficult, and the reasoning in such decision is likely to apply to certain
other state takeover statutes. However, in 1987, in CTS Corp. v. Dynamics Corp.
of America, the Supreme Court of the United States held that the State of
Indiana could, as a matter of corporate law and in particular 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.
The Company, directly or through subsidiaries, conducts business in a
number of states throughout the United States, some of which have enacted
takeover laws. The Offeror does not know whether any of these laws will, by
their terms, apply to the Offer or the Merger and, except as described herein
with respect to the State of Delaware, has not complied with any such laws.
Should any person seek to apply any state takeover law, the Offeror will take
such action as then appears desirable, which may include challenging the
validity or applicability of any such statute in appropriate court proceedings.
If it is asserted that one or more state takeover laws is applicable to the
Offer or the Merger, and an appropriate court does not determine that it is
inapplicable or invalid as applied to the Offer, the Offeror might be required
to file certain information with, or receive approvals from, the relevant state
authorities. In addition, if enjoined, the Offeror 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 event, the Offeror may not be
obligated to accept for payment any Shares tendered. See Section 15.
17. FEES AND EXPENSES.
Neither the Offeror nor Parent, nor any officer, director, stockholder,
agent or other representative of the Offeror or Parent will pay any fees or
commissions to any broker, dealer or other person for soliciting tenders of
Shares pursuant to the Offer. Brokers, dealers, commercial banks and trust
companies and other nominees will, upon request, be reimbursed by the Offeror
for customary mailing and handling expenses incurred by them in forwarding
materials to their customers.
The Offeror has retained Morrow & Co., Inc. as Information Agent and
Continental Stock Transfer & Trust Company as Depositary in connection with the
Offer. The Information Agent and the Depositary will receive reasonable and
customary compensation for their services hereunder and reimbursement for their
reasonable out-of-pocket expenses. The Depositary will also be indemnified by
the Offeror against certain liabilities in connection with the Offer. The
Information Agent may contact holders of Shares by mail, telex, telegraph or
personal interviews and may request brokers, dealers and other nominee
stockholders to forward materials relating to the Offer to beneficial owners of
Shares.
18. MISCELLANEOUS.
The Offer is not being made to, nor will tenders be accepted from or on
behalf of, holders of Shares residing in any jurisdiction in which the making or
acceptance thereof would not be in compliance with the
37
<PAGE> 40
securities, blue sky or other laws of such jurisdiction. 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 the
Offeror 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 the Offeror other than as contained in this Offer to
Purchase or in the Letter of Transmittal and, if any such information or
representation is given or made, it should not be relied upon as having been
authorized by the Offeror or Parent.
The Offeror, Parent and General Electric have filed with the Commission the
Schedule 14D-1, pursuant to Section 14(d)(1) of the Exchange Act and Rule 14d-3
promulgated thereunder, furnishing certain information with respect to the
Offer. The Schedule 14D-1 and any amendments thereto, including exhibits, may be
examined and copies may be obtained at the same places and in the same manner as
set forth with respect to the Company in Section 8 (except that they will not be
available at the regional offices of the Commission).
38
<PAGE> 41
ANNEX I
CERTAIN INFORMATION CONCERNING THE DIRECTORS
AND EXECUTIVE OFFICERS OF GENERAL ELECTRIC, PARENT AND THE OFFEROR
DIRECTORS AND EXECUTIVE OFFICERS OF GENERAL ELECTRIC. Set forth below are
the name, current business address, citizenship, present principal occupation or
employment history (covering a period of not less than five years) of each
executive officer and Director of General Electric. Unless otherwise indicated,
each such person's business address is 3135 Easton Turnpike, Fairfield,
Connecticut 06431-0001. Each person is a citizen of the United States, except
for Mr. Gonzalez, Mr. Fresco and Ms. Jung, who are citizens of Mexico, Italy and
Canada, respectively.
DIRECTORS
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND MATERIAL POSITIONS
NAME BUSINESS ADDRESS HELD DURING PAST FIVE YEARS
- ---- ---------------- ---------------------------------
<S> <C> <C>
J. I. Cash, Jr................ Harvard Business School Professor of Business
Morgan Hall Administration -- Graduate
Soldiers Field Road School of Business
Boston, MA 02163 Administration,
Harvard University
S. S. Cathcart................ 222 Wisconsin Avenue Retired Chairman,
Suite 103 Illinois Tool Works, Inc.
Lake Forest, IL 60045
D. D. Dammerman............... In 1998, Mr. Dammerman was
elected Vice Chairman of the
Board and Executive Officer and
Chairman and CEO of GE Capital
Services, Inc., prior to 1998,
Mr. Dammerman served as Senior
Vice President -- Finance,
General Electric Company
P. Fresco..................... Fiat SpA Chairman of the Board, Fiat SpA
Via Nizza 250 since 1998; Vice Chairman of the
10126 Torino, Italy Board and Executive Officer,
General Electric Company
A. M. Fudge................... Kraft Foods, Inc. Executive Vice President, Kraft
555 South Broadway Foods
Tarrytown, NY 10591
C. X. Gonzalez................ Kimberly-Clark de Mexico, Chairman of the Board and Chief
S.A. de C.V. Executive Officer, Kimberly-
Jose Luis Lagrange 103, Clark de Mexico, S.A. de C.V.
Tercero Piso
Colonia Los Morales
Mexico, D.F. 11510, Mexico
Andrea Jung................... Avon Products, Inc. President and Chief Executive
1345 Avenue of the Americas Officer, Avon Products, Inc.
New York, NY 10105 ("Avon")
</TABLE>
39
<PAGE> 42
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND MATERIAL POSITIONS
NAME BUSINESS ADDRESS HELD DURING PAST FIVE YEARS
- ---- ---------------- ---------------------------------
<S> <C> <C>
Ms. Jung joined Avon in 1994 as
President, Product Marketing for
Avon U.S. She was elected
President, Global Marketing in
1996, an Executive Vice President
in 1997, and President and a
Director of the Company in 1998.
K. G. Langone................. Invemed Associates, Inc. Chairman, President and Chief
375 Park Avenue Executive Officer, Invemed
New York, NY 10152 Associates, Inc.
S. G. McNealy................. Sun Microsystems, Inc. Chairman, President and Chief
901 San Antonio Road Executive Officer, Sun
Palo Alto, CA 94303-4900 Microsystems, Inc.
G. G. Michelson............... Federated Department Stores Former Senior Vice
151 West 34th Street President -- External Affairs and
New York, NY 10001 Former Member of the Board of
Directors, Federated Department
Stores
S. Nunn....................... King & Spalding Partner, King & Spalding since
191 Peachtree Street, N.E. January 1997; prior to that time
Atlanta, Georgia 30303 Mr. Nunn was a United States
Senator
J. D. Opie.................... Vice Chairman of the Board and
Executive Officer
R. S. Penske.................. Penske Corporation Chairman of the Board and
13400 Outer Drive, West President, Penske Corporation
Detroit, MI 48239-4001
F. H. T. Rhodes............... Cornell University President Emeritus, Cornell
3104 Snee Building University
Ithaca, NY 14853
A. C. Sigler.................. Champion International Retired Chairman of the Board and
Corporation CEO and former Director, Champion
1 Champion Plaza International Corporation
Stamford, CT 06921
D. A. Warner III.............. J. P. Morgan & Co., Inc. & Chairman of the Board, President,
Morgan Guaranty Trust Co. and Chief Executive Officer, J.P.
60 Wall Street Morgan & Co. Incorporated and
New York, NY 10260 Morgan Guaranty Trust Company
J. F. Welch, Jr............... Chairman of the Board and Chief
Executive Officer, General
Electric Company
</TABLE>
40
<PAGE> 43
EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND MATERIAL POSITIONS HELD
NAME BUSINESS ADDRESS DURING PAST FIVE YEARS
- ---- ---------------- --------------------------------------
<S> <C> <C>
J.F. Welch, Jr................... Chairman of the Board and Chief
Executive Officer
P.D. Ameen....................... Vice President and Comptroller
J.R. Bunt........................ Vice President and Treasurer
W.J. Conaty...................... Senior Vice President -- Human
Resources
D.D. Dammerman................... Vice Chairman of the Board and
Executive Officer
L.S. Edelheit.................... General Electric Company Senior Vice President -- Corporate
P.O. Box 8 Research and Development
Schenectady, NY 12301
B.W. Heineman, Jr................ Senior Vice President -- General
Counsel and Secretary
J.R. Immelt...................... General Electric Company Senior Vice President -- GE Medical
P.O. Box 414 Systems
Milwaukee, WI 53201
L.R. Johnston.................... General Electric Company Senior Vice President -- GE Appliances
Appliance Park
Louisville, KY 40225
W.J. McNerney, Jr................ General Electric Company Senior Vice President -- GE Aircraft
1 Neumann Way Engines
Cincinnati, OH 05215
R.L. Nardelli.................... General Electric Company Senior Vice President -- GE Power
1 River Road Systems
Schenectady, NY 12345
R.W. Nelson...................... Vice President -- Corporate Financial
Planning and Analysis
J.D. Opie........................ Vice Chairman of the Board and
Executive Officer
G.M. Reiner...................... Senior Vice President -- Chief
Information Officer
J.G. Rice........................ General Electric Company Vice President--GE Transportation
2901 East Lake Road Systems
Erie, PA 16531
G.L. Rogers...................... General Electric Company Senior Vice President -- GE Plastics
1 Plastics Avenue
Pittsfield, MA 01201
K. S. Sherin..................... Senior Vice President, Finance and
Chief Financial Officer
</TABLE>
41
<PAGE> 44
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND MATERIAL POSITIONS HELD
NAME BUSINESS ADDRESS DURING PAST FIVE YEARS
- ---- ---------------- --------------------------------------
<S> <C> <C>
L.G. Trotter..................... General Electric Company Senior Vice President -- GE Industrial
41 Woodford Avenue Systems
Plainville, CT 06062
M. S. Zafirovski................. General Electric Company Senior Vice President -- GE Lighting
Nela Park
Cleveland, OH 44112
</TABLE>
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. Set forth below are the name,
current business address, citizenship, present principal occupation or
employment history (covering a period of not less than five years) of each
executive officer and director of Parent. Each such person's business address is
4200 Wildwood Parkway, Atlanta, Georgia 30339. All persons listed below are
citizens of the United States of America.
DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND MATERIAL
POSITIONS HELD DURING PAST
NAME FIVE YEARS
- ---- ----------------------------
<S> <C>
Ricardo Artigas.................................. Director, President and Chief Executive Officer
Molly Burke...................................... General Counsel; prior to June 1999, Ms. Burke
was associate counsel for Litigation and Legal
Policy for General Electric Company.
Candace Carson................................... Chief Financial Officer ("CFO"); prior to 1997,
Ms. Carson was CFO of GE Information Systems,
Inc.
</TABLE>
DIRECTORS AND EXECUTIVE OFFICERS OF THE OFFEROR. Set forth below are the
name, current business address, citizenship, present principal occupation or
employment history (covering a period of not less than five years) of each
executive officer and director of the Offeror. Each such person's business
address is 4200 Wildwood Parkway, Atlanta, Georgia 30339. All persons listed
below are citizens of the United States of America.
DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND MATERIAL POSITIONS
NAME HELD DURING PAST FIVE YEARS
- ---- ------------------------------------
<S> <C>
Ricardo Artigas.................................. Director, President and Chief Executive Officer
Molly Burke...................................... Director, Secretary and Vice President
Candace Carson................................... Director, Treasurer and Vice President
</TABLE>
42
<PAGE> 45
Facsimile copies of the Letter of Transmittal will be accepted. The Letter
of Transmittal and certificates for Shares and any other required documents
should be sent or delivered by each stockholder of the Company or his broker,
dealer, commercial bank, trust company or other nominee to the Depositary at one
of the addresses set forth below:
The Depositary for the Offer is:
Continental Stock Transfer & Trust Company
<TABLE>
<S> <C>
By Hand or Overnight Delivery: By Mail:
Continental Stock Transfer & Trust Company Continental Stock Transfer & Trust Company
2 Broadway 2 Broadway
19th Floor New York, New York 10004
New York, New York 10004
Attn: Reorganization Department
Facsimile for Eligible Institutions only:
(212) 616-7610
To confirm receipt of Notice of Guaranteed Delivery:
(212) 509-4000 (ext. 535)
</TABLE>
If you require additional information, please call Continental Stock
Transfer & Trust Company at
(212) 509-4000 (ext. 535)
Any questions or requests for assistance or additional copies of the Offer
to Purchase and the Letter of Transmittal and Notice of Guaranteed Delivery may
be directed to the Information Agent at its telephone number and location listed
below. Stockholders may also contact their broker, dealer, commercial bank,
trust company or other nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
[MORROW INC. LOGO]
445 Park Avenue, 5th Floor
New York, NY 10022
Call Collect (212) 754-8000
Banks and Brokerage Firms, Please Call:
(800) 662-5200
SHAREHOLDERS PLEASE CALL: (800) 566-9061
<PAGE> 46
APPENDIX A
AGREEMENT AND PLAN OF MERGER
AMONG
GE ENERGY SERVICES, INC.,
EMMY ACQUISITION CORP.
AND
SHOWPOWER, INC.
DATED AS OF DECEMBER 17, 1999
<PAGE> 47
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I THE OFFER AND MERGER............................................. A-2
Section 1.1. The Offer................................................... A-2
Section 1.2. Consent to Offer; Schedule 14D-9............................ A-3
Section 1.3. The Merger.................................................. A-3
Section 1.4. Effective Time; Closing..................................... A-3
Section 1.5. Effect of the Merger........................................ A-4
Section 1.6. Conversion of Company Common Stock.......................... A-4
Section 1.7. Dissenting Shares........................................... A-4
Section 1.8. Stock Option Plans.......................................... A-5
Section 1.9. Surrender of Shares of Company Common Stock; Stock Transfer A-5
Books.....................................................
ARTICLE II THE SURVIVING CORPORATION
Section 2.1. Certificate of Incorporation................................ A-7
Section 2.2. Bylaws...................................................... A-7
Section 2.3. Directors and Officers...................................... A-7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1. Organization and Standing................................... A-7
Section 3.2. Capitalization.............................................. A-7
Section 3.3. Authority for Agreement..................................... A-8
Section 3.4. No Conflict................................................. A-9
Section 3.5. Required Filings and Consents............................... A-9
Section 3.6. Compliance.................................................. A-9
Section 3.7. SEC Filings, Financial Statements........................... A-9
Section 3.8. Absence of Certain Changes or Events........................ A-10
Section 3.9. Taxes....................................................... A-11
Section 3.10. Assets...................................................... A-11
Section 3.11. Change of Control Agreements................................ A-12
Section 3.12. Litigation.................................................. A-12
Section 3.13. Contracts and Commitments................................... A-12
Section 3.14. Information Supplied........................................ A-13
Section 3.15. Employee Benefit Plans...................................... A-13
Section 3.16. Labor and Employment Matters................................ A-14
Section 3.17. Environmental Compliance and Disclosure..................... A-16
Section 3.18. Intellectual Property....................................... A-17
Section 3.19. Year 2000 Compliance........................................ A-18
Section 3.20. Brokers..................................................... A-19
Section 3.21. Insurance Policies.......................................... A-19
Section 3.22. Notes and Accounts Receivable............................... A-19
Section 3.23. Transactions with Affiliates................................ A-19
Section 3.24. No Existing Discussions..................................... A-20
Section 3.25. Company Warrants............................................ A-20
Section 3.26. Stockholders' Rights Agreement.............................. A-20
Section 3.27. Major Suppliers and Customers............................... A-20
Section 3.28. Disclosure.................................................. A-21
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER
Section 4.1. Organization and Standing................................... A-21
Section 4.2. Authority for Agreement..................................... A-21
Section 4.3. No Conflict................................................. A-21
Section 4.4. Required Filings and Consents............................... A-21
</TABLE>
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<PAGE> 48
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Section 4.5. Information Supplied........................................ A-22
Section 4.6. Brokers..................................................... A-22
Section 4.7. Financing................................................... A-22
Section 4.8. Disclosure.................................................. A-22
ARTICLE V COVENANTS
Section 5.1. Conduct of the Business Pending Assumption of Control....... A-22
Section 5.2. Access to Information; Confidentiality...................... A-24
Section 5.3. Notification of Certain Matters............................. A-24
Section 5.4. Further Assurances.......................................... A-24
Section 5.5. Board Recommendations....................................... A-25
Section 5.6. Stockholder Litigation...................................... A-26
Section 5.7. Indemnification............................................. A-26
Section 5.8. Public Announcements........................................ A-27
Section 5.9. Acquisition Proposals....................................... A-27
Section 5.10. Company Stockholders' Meeting............................... A-27
Section 5.11. Proxy Statement............................................. A-27
Section 5.12. Stockholder Lists........................................... A-28
Section 5.13. Shares Held by Company Subsidiaries......................... A-28
Section 5.14. Directors................................................... A-28
Section 5.15. Undertakings of Parent...................................... A-29
Section 5.16. Director Resignations....................................... A-29
Section 5.17. Company Options............................................. A-29
Section 5.18. Financial Statement Tests................................... A-29
Section 5.19. Environmental Compliance.................................... A-29
ARTICLE VI CONDITIONS
Section 6.1. Conditions to the Obligation of Each Party.................. A-30
Section 6.2. Conditions to Obligations of Parent and Buyer to Effect the A-30
Merger....................................................
Section 6.3. Conditions to Obligations of the Company to Effect the A-30
Merger....................................................
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER
Section 7.1. Termination................................................. A-31
Section 7.2. Effect of Termination....................................... A-32
Section 7.3. Amendments.................................................. A-32
Section 7.4. Waiver...................................................... A-33
ARTICLE VIII GENERAL PROVISIONS
Section 8.1. No Third Party Beneficiaries................................ A-33
Section 8.2. Entire Agreement............................................ A-33
Section 8.3. Succession and Assignment................................... A-33
Section 8.4. Counterparts................................................ A-33
Section 8.5. Headings.................................................... A-33
Section 8.6. Governing Law............................................... A-33
Section 8.7. Severability................................................ A-33
Section 8.8. Specific Performance........................................ A-33
Section 8.9. Construction................................................ A-34
Section 8.10. Non-Survival of Representations and Warranties and A-34
Agreements................................................
Section 8.11. Certain Definitions......................................... A-34
Section 8.12. Fees and Expenses........................................... A-34
Section 8.13. Notices..................................................... A-34
ANNEX I CONDITIONS OF THE INITIAL OFFER
</TABLE>
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<PAGE> 49
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of December
17, 1999, by and among GE Energy Services, Inc., a Delaware corporation
("Parent"), Emmy Acquisition Corp., a Delaware corporation ("Buyer") and wholly
owned subsidiary of Parent, and Showpower, Inc., a Delaware corporation (the
"Company").
WITNESSETH:
WHEREAS, the parties to this Agreement desire to effect the acquisition of
the Company by Buyer;
WHEREAS, in furtherance of the foregoing, upon the terms and subject to the
conditions of this Agreement and in accordance with the Delaware General
Corporation Law of the State of Delaware (the "DGCL"), Buyer will make the cash
tender offer described in Section 1.1 and thereafter Buyer will merge with and
into the Company (the "Merger") in accordance with the provisions of the DGCL,
with the Company as the surviving corporation;
WHEREAS, concurrently with the execution and delivery of this Agreement,
Parent and each of John J. Campion and Esther Ash, G. Laurence and Thressa
Anderson, Stephen R. Bernstein, Jeffrey B. Stone, Joseph A. Ades, Robert E.
Masterson, David C. and Annika Bernstein, Vincent Carrino and Eric G. Jackson
(the "Tendering Stockholders") have entered into a stockholder's agreement,
dated as of the date hereof (the "Tender Agreements"), pursuant to which, among
other things, such stockholders have agreed to tender their shares of the common
stock, par value $.01 per share, of the Company ("Company Common Stock") in the
Initial Offer (as hereinafter defined);
WHEREAS, concurrently with the execution and delivery of this Agreement,
Parent and each of the Tendering Stockholders have entered into an agreement,
dated as of the date hereof (the "Indemnification Agreements"), pursuant to
which, among other things, such stockholders have agreed to indemnify Parent for
breaches of representations, warranties and covenants of this Agreement, subject
to the terms and conditions contained therein;
WHEREAS, the Board of Directors of the Company has unanimously determined
that the Initial Offer, the Subsequent Offer (as hereinafter defined), the
Merger and this Agreement are fair to, and in the best interests of, the Company
and the holders of Company Common Stock (the "Company Stockholders");
WHEREAS, the Board of Directors of Parent and Buyer have each approved this
Agreement, the Merger, the Initial Offer and the Subsequent Offer, upon the
terms and subject to the conditions set forth herein;
WHEREAS, the Board of Directors of the Company has unanimously approved
this Agreement, the Initial Offer, the Subsequent Offer and the Merger, and the
transactions contemplated hereby, which approval was based in part on the
opinion of Prime Charter Ltd. (the "Independent Advisor"), independent financial
advisor to the Board of Directors of the Company, that, as of the date of such
opinion and based on the assumptions, qualifications and limitations contained
therein, the consideration to be received by the Company Stockholders for their
shares of Company Common Stock in the Initial Offer, the Subsequent Offer and
the Merger is fair to these stockholders from a financial point of view;
WHEREAS, the Board of Directors of the Company has unanimously resolved to
recommend acceptance of the Initial Offer, the Subsequent Offer and the Merger
to the Company Stockholders and has determined that the consideration to be paid
for each share of Company Common Stock in the Initial Offer, the Subsequent
Offer and the Merger is fair to the holders of the Company Common Stock and to
recommend that the Company Stockholders accept the Initial Offer and Subsequent
Offer, as applicable, and approve the Merger, this Agreement and the
transactions contemplated hereby.
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<PAGE> 50
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements contained in this
Agreement and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
THE OFFER AND MERGER
Section 1.1. The Offer.
(a) Provided that this Agreement shall not have been terminated in
accordance with Section 7.1 hereof and nothing shall have occurred that
would result in a failure to satisfy any of the conditions set forth in
Annex I hereto, as promptly as practicable after the date hereof, but in no
event later than five (5) business days following the public announcement
of the terms of this Agreement, Parent shall cause Buyer to commence and
Buyer shall commence (within the meaning of Rule 14d-2 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) an offer to purchase
all of the issued and outstanding shares of the Company Common Stock at a
price of $7.00 per share (the "Offer Price") net to the seller in cash, but
subject to any withholding required by law (the "Initial Offer").
(b) The Initial Offer shall be subject to the conditions set forth in
Annex I hereto. Buyer shall not except as expressly contemplated hereby,
without the prior written consent of the Company, make any change in the
terms or conditions of the Initial Offer that is adverse to the holders of
the Company Common Stock in any material respect, decrease the Offer Price
or the Minimum Condition or impose material conditions to the Initial Offer
other than those set forth in Annex I hereto (it being agreed that a waiver
by Buyer of any condition, in its sole discretion, shall not be deemed to
be adverse to the holders of the Company Common Stock); provided that:
(i) if on any scheduled expiration date of the Initial Offer all
conditions to the Initial Offer shall not have been satisfied or waived,
the Initial Offer may, but need not, be extended from time to time
without the consent of the Company for such period of time as is
reasonably expected by Buyer to be necessary to satisfy the unsatisfied
conditions;
(ii) the Initial Offer may be extended by Buyer without the consent
of the Company for any period required by any rule, regulation,
interpretation or position of the United States Securities and Exchange
Commission (the "SEC") or the staff thereof applicable to the Initial
Offer; and
(iii) if at any scheduled expiration date of the Initial Offer all
conditions to the Initial Offer shall have been satisfied but less than
a number of shares of Company Common Stock that, together with the
number of shares of Company Common Stock owned by Parent and Buyer,
represents ninety percent (90%) of the outstanding shares of Company
Common Stock, on a fully-diluted basis, shall have been tendered into
the Initial Offer, Buyer shall be entitled to (but not required to)
extend the Initial Offer from time to time without the consent of the
Company in order to permit Buyer to solicit additional shares to be
tendered into the Initial Offer.
Buyer shall, unless Buyer shall have in its sole discretion
exercised its right to extend the termination date of the Initial Offer
pursuant to this Section 1.1(b), on the terms and subject to the prior
satisfaction or waiver of the conditions of the Initial Offer, accept
for payment and purchase, as soon as permitted under the terms of the
Initial Offer, all shares of the Company Common Stock validly tendered
and not withdrawn prior to the expiration date of the Initial Offer. It
is agreed that the conditions to the Initial Offer are solely for the
benefit of Buyer and may be asserted by Buyer regardless of the
circumstances giving rise to any such condition (including any action or
inaction by Buyer) or may, but need not, be waived by Buyer, in whole or
in part at any time and from time to time, in its sole discretion,
except with respect to the Minimum Condition.
(c) The Initial Offer shall be made by means of an offer to purchase
(the "Offer to Purchase") that is subject to the conditions set forth in
Annex I hereto. As soon as practicable on the date of commencement of the
Initial Offer, Buyer (and, to the extent required by law, Parent) shall
file with the
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<PAGE> 51
SEC a Tender Offer Statement on Schedule 14D-1 (together with all
supplements and amendments thereto, the "Schedule 14D-1" or the "Offer
Documents"). The Offer to Purchase shall provide for an initial expiration
date of twenty (20) business days (as defined in Rule 14d-1 under the
Exchange Act) from the date of commencement, subject to Buyer's right to
extend the expiration date of the Offer pursuant to Section 1.1(b).
(d) Notwithstanding anything herein to the contrary, Buyer may, at its
sole option, after the date the Shares of Company Common Stock are
purchased by Buyer pursuant to the Initial Offer (the "Purchase Date"),
commence a subsequent offer for shares of Company Common Stock pursuant to
Rule 14d-11 (which becomes effective as of January 24, 2000) under the
Exchange Act for such period as Buyer may determine (the "Subsequent
Offer") which Subsequent Offer shall comply in all material respects with
the provisions of all applicable United States securities laws.
(e) The Offer Documents (and any documents filed with the SEC pursuant
to a Subsequent Offer) shall comply in all material respects with the
provisions of all applicable United States federal securities laws. Each
party hereto shall promptly supplement, update and correct any information
provided by it for use in the Offer Documents (and any documents filed with
the SEC pursuant to a Subsequent Offer) if, and to the extent that, it is
or shall have become incomplete, false or misleading. In any such event,
Buyer shall take all steps necessary to cause the Offer Documents (and any
documents filed with the SEC pursuant to a Subsequent Offer) as so
supplemented, updated or corrected to be filed with the SEC and to be
disseminated to the Company Stockholders as and to the extent required by
applicable United States federal securities laws. The Company and its
counsel, with respect to the Schedule 14D-1 (or any documents to be filed
with the SEC pursuant to a Subsequent Offer), shall be given an opportunity
to review and comment on such filing and each supplement, amendment or
response to comments with respect thereto prior to being filed with or
delivered to the SEC.
Section 1.2. Consent to Offer; Schedule 14D-9. The Company hereby approves
of and consents to the Initial Offer and Subsequent Offer and to the inclusion
in the Initial Offer and Subsequent Offer and the related documents thereto the
recommendations of the Board of Directors of the Company set forth in Section
3.3(b) hereof. Simultaneously with or as soon as practicable on the day of
filing of the Schedule 14D-1 by Buyer, the Company shall file with the SEC a
Tender Offer Solicitation/Recommendation Statement on Schedule 14D-9 (together
with all supplements and amendments thereto, the "Schedule 14D-9") that will
comply in all material respects with the provisions of all applicable United
States federal securities laws which shall reflect the recommendations of the
Board of Directors of the Company set forth in Section 3.3(b) hereof. Each party
shall promptly supplement, update and correct any information provided by it for
use in the Schedule 14D-9 if, and to the extent that, it is or shall have become
incomplete, false or misleading. In any such event, the Company shall take all
steps necessary to cause the Schedule 14D-9 as so supplemented, updated or
corrected to be filed with the SEC and to be disseminated to the Company
Stockholders, in each case, as and to the extent required by applicable United
States federal securities laws. Each other party hereto and its respective
counsel shall be given an opportunity to review and comment on the Schedule
14D-9 and each supplement, amendment or response to comments with respect
thereto prior to being filed with or delivered to the SEC. The Company shall
cooperate with Buyer with respect to the Subsequent Offer, if applicable, and
shall provide to Buyer all documentation that Buyer may reasonably request in
connection with respect to such Subsequent Offer.
Section 1.3. The Merger. Upon the terms and subject to the conditions of
this Agreement, and in accordance with the DGCL, at the Effective Time (as
hereinafter defined), Buyer shall be merged with and into the Company. As a
result of the Merger, the separate corporate existence of Buyer shall cease and
the Company shall continue as the surviving corporation following the Merger
(the "Surviving Corporation"). The corporate existence of the Company, with all
its purposes, rights, privileges, franchises, powers and objects, shall continue
unaffected and unimpaired by the Merger and, as the Surviving Corporation, it
shall be governed by the laws of the State of Delaware.
Section 1.4. Effective Time; Closing. As promptly as practicable (and in
any event within five (5) business days) after the satisfaction or waiver of the
conditions set forth in Article VI hereof, the parties
A-3
<PAGE> 52
hereto shall cause the Merger to be consummated by filing a certificate of
merger or certificate of ownership and merger, if applicable (the "Certificate
of Merger"), with the Secretary of State of the State of Delaware and by making
all other filings or recordings required under the DGCL in connection with the
Merger, in such form as is required by, and executed in accordance with the
relevant provisions of, the DGCL. The Merger shall become effective at such time
as the Certificate of Merger is duly filed with the Secretary of State of the
State of Delaware, or at such other time as the parties hereto agree shall be
specified in the Certificate of Merger (the date and time the Merger becomes
effective, the "Effective Time"). On the date of such filing, a closing (the
"Closing") shall be held at 10:00 a.m., Eastern Standard Time, at the offices of
the King & Spalding, 191 Peachtree Street, Atlanta, Georgia 30303, or at such
other time and location as the parties hereto shall otherwise agree.
Section 1.5. Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of the DGCL.
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 Buyer shall vest in the Surviving Corporation, and all debts,
liabilities, obligations, restrictions, disabilities and duties of the Company
and Buyer shall become the debts, liabilities, obligations, restrictions,
disabilities and duties of the Surviving Corporation.
Section 1.6. Conversion of Company Common Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of Buyer, the Company or
the holders of any of the following securities:
(a) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares canceled
pursuant to Section 1.6(c) and Dissenting Shares (as defined in Section
1.7), if any) shall be canceled and, subject to Section 1.7, shall by
virtue of the Merger and without any action on the part of the holder
thereof be converted automatically into the right to receive an amount in
cash equal to $7.00 payable, without interest, to the holder of such share
of Company Common Stock, upon surrender of the certificate that formerly
evidenced such share of Company Common Stock in the manner provided in
Section 1.9 (the "Merger Consideration");
(b) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time that is owned by Parent or Buyer
and each share of Company Common Stock that is owned by the Company as
treasury stock shall be canceled and retired and cease to exist and no
payment or distribution shall be made with respect thereto;
(c) At the Effective Time, all shares of the Company Common Stock
converted pursuant to Section 1.6(a) shall no longer be outstanding and
shall automatically be canceled and retired and cease to exist, and each
holder of a certificate ("Certificate") representing any such shares of
Company Common Stock shall cease to have any rights with respect thereto,
except the right to receive the Merger Consideration in accordance with
Section 1.6(a); and
(d) Each share of common stock, par value $.01 per share, of Buyer
issued and outstanding immediately prior to the Effective Time shall be
converted into and become one validly issued, fully paid and nonassessable
share of common stock, par value $.01 per share, of the Surviving
Corporation and shall constitute the only outstanding shares of capital
stock of the Surviving Corporation.
Section 1.7. Dissenting Shares.
(a) Notwithstanding anything in this Agreement to the contrary, shares
of Company Common Stock that are issued and outstanding immediately prior
to the Effective Time and which are held by Company Stockholders who have
demanded and perfected their demands for appraisal of such shares of
Company Common Stock in the time and manner provided in Section 262 of the
DGCL and, as of the Effective Time, have neither effectively withdrawn nor
lost their rights to such appraisal and payment under the DGCL (the
"Dissenting Shares") shall not be converted as described in Section 1.6(a),
but shall, by virtue of the Merger, be entitled to only such rights as are
granted by Section 262 of the DGCL; provided, however, that if such holder
shall have failed to perfect or shall have effectively withdrawn or lost
his, her or its right to appraisal and payment under the DGCL, such
holder's shares of Company Common Stock shall thereupon be deemed to have
been converted, at the Effective Time, as described in
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<PAGE> 53
Section 1.6(a), into the right to receive the Merger Consideration set
forth in such provisions, without any interest thereon.
(b) The Company shall give Parent (i) prompt notice of any demands for
appraisal pursuant to Section 262 of the DGCL received by the Company,
withdrawals of such demands, and any other instruments served pursuant to
the DGCL and received by the Company and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under
the DGCL. The Company shall not, except with the prior written consent of
Parent or as otherwise required by applicable law, make any payment with
respect to any such demands for appraisal or offer to settle or settle any
such demands.
Section 1.8. Stock Option Plans. The Company shall take all commercially
reasonable efforts necessary to ensure that, pursuant to the Company's 1998
Stock Option and Incentive Plan (the "Company Stock Option Plan"), all
outstanding options to acquire Company Common Stock (the "Company Options")
granted under the Company Stock Option Plans shall be exercised in full
immediately prior to the consummation of the Initial Offer and all Company
Options that are not exercised prior to the consummation of the Initial Offer
will terminate and expire as of the consummation date of the Initial Offer. In
addition, the Company shall, by written notice to each holder of Company
Options, offer to pay such holder upon the consummation of the Initial Offer, in
exchange for the cancellation of such holder's Company Options (regardless of
exercise price) upon the consummation of the Initial Offer, an amount in cash
determined by multiplying (A) the excess, if any, of the Offer Price over the
applicable exercise price per share of the Company Option by (B) the number of
shares of Company Common Stock such holder could have purchased had such holder
exercised such Company Option in full immediately prior to the consummation of
the Initial Offer (such amount, the "Option Consideration"), and each such
Company Option shall thereafter be canceled.
Section 1.9. Surrender of Shares of Company Common Stock; Stock Transfer
Books.
(a) Prior to the Effective Time, Parent shall designate a bank or
trust company to act as agent (the "Paying Agent") for the holders of
shares of Company Common Stock reasonably acceptable to the Company to
receive the funds necessary to make the payments to such holders pursuant
to Section 1.6 upon surrender of their Certificates. Parent will, on or
prior to the Effective Time, deposit with the Paying Agent the Merger
Consideration to be paid in respect of the shares of Company Common Stock
(the "Fund"). The Fund shall be invested by the Paying Agent as directed by
Parent. Any net profit resulting from, or interest or income produced by,
such investments, shall be payable to the Surviving Corporation. Parent
shall replace any monies lost through any investment made pursuant to this
Section 1.9(a). The Paying Agent shall make the payments provided in
Section 1.6.
(b) Promptly after the Effective Time, the Surviving Corporation shall
cause to be mailed to each person who was, at the Effective Time, a holder
of record of shares of Company Common Stock entitled to receive the Merger
Consideration pursuant to Section 1.6 a form of 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 Paying Agent) and instructions for use in effecting the
surrender of the Certificates pursuant to such letter of transmittal. Upon
surrender to the Paying Agent of a Certificate, together with such letter
of transmittal, duly completed and validly executed in accordance with the
instructions thereto, and such other documents as may be required pursuant
to such instructions, the holder of such Certificate shall be entitled to
receive in exchange therefor the Merger Consideration for each share of
Company Common Stock formerly evidenced by such Certificate, and such
Certificate shall then be canceled. Until so surrendered, each such
Certificate shall, at and after the Effective Time, represent for all
purposes, only the right to receive such Merger Consideration. No interest
shall accrue or be paid to any beneficial owner of shares of Company Common
Stock or any holder of any Certificate with respect to the Merger
Consideration payable upon the surrender of any Certificate. If payment of
the Merger Consideration is to be made to a person other than the person in
whose name the surrendered Certificate is registered on the stock transfer
books of the Company, it shall be a condition of payment that the
Certificate so surrendered shall be endorsed in blank or to the Paying
Agent or otherwise be in
A-5
<PAGE> 54
proper form for transfer and that the person requesting such payment shall
have paid all transfer and other taxes required by reason of the payment of
the Merger Consideration to a person other than the registered holder of
the Certificate surrendered or shall have established to the satisfaction
of the Surviving Corporation that such taxes either have been paid or are
not applicable. If any Certificate shall have been lost, stolen or
destroyed, upon making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation or Parent, the posting by such person of a bond, in
such reasonable amount as the Surviving Corporation or Parent may direct,
as indemnity against any claim that may be made against it with respect to
such Certificate, the Paying Agent will issue in exchange for such lost,
stolen or destroyed Certificate the applicable Merger Consideration such
holder is entitled to receive pursuant to Section 1.6.
(c) At any time following the sixth (6th) month after the Effective
Time, the Surviving Corporation shall be entitled to require the Paying
Agent to deliver to it any portion of the Fund which had been made
available to the Paying Agent and not disbursed to holders of shares of
Company Common Stock (including, without limitation, all interest and other
income received by the Paying Agent in respect of all amounts held in the
Fund or other funds made available to it), and thereafter each such holder
shall be entitled to look only to the Surviving Corporation (subject to
abandoned property, escheat and other similar laws), and only as general
creditors thereof, with respect to any Merger Consideration that may be
payable upon due surrender of the Certificates held by such holder. If any
Certificates representing shares of Company Common Stock shall not have
been surrendered immediately prior to such date on which the Merger
Consideration in respect of such Certificate would otherwise escheat to or
become the property of any Governmental Entity (as hereinafter defined),
any such cash, shares, dividends or distributions payable in respect of
such Certificate shall, to the extent permitted by applicable law, become
the property of the Surviving Corporation, free and clear of all claims or
interest of any person previously entitled thereto. Notwithstanding the
foregoing, none of the Surviving Corporation, Parent, Buyer or the Paying
Agent shall be liable to any holder of a share of Company Common Stock for
any Merger Consideration delivered in respect of such share of Company
Common Stock to a public official pursuant to any abandoned property,
escheat or other similar law.
(d) At the Effective Time, the stock transfer books of the Company
shall be closed and thereafter there shall be no further registration of
transfers of shares of Company Common Stock on the records of the Company.
From and after the Effective Time, except for Parent and Buyer, the holders
of shares of Company Common Stock outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such shares
of Company Common Stock except as otherwise provided herein or by
applicable law, and all cash paid pursuant to this Article I upon the
surrender or exchange of Certificates shall be deemed to have been paid in
full satisfaction of all rights pertaining to the shares of Company Common
Stock theretofore represented by such Certificate.
(e) Parent, Buyer, the Surviving Corporation and the Paying Agent, as
the case may be, shall be entitled to deduct and withhold from the Merger
Consideration otherwise payable pursuant to this Agreement to any holder of
shares of Company Common Stock and Company Options such amounts that
Parent, Buyer, the Surviving Corporation or the Paying Agent is required to
deduct and withhold with respect to the making of such payment under the
Internal Revenue Code of 1986, as amended (the "Code"), the rules and
regulations promulgated thereunder or any provision of state, local or
foreign tax law. To the extent that amounts are so withheld by Parent,
Buyer, the Surviving Corporation or the Paying Agent, such amounts shall be
treated for all purposes of this Agreement as having been paid to the
holder of the shares of Company Common Stock and Company Options in respect
of which such deduction and withholding was made by Parent, Buyer, the
Surviving Corporation or the Paying Agent.
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<PAGE> 55
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1. Certificate of Incorporation. The Certificate of
Incorporation of the Company as in effect immediately prior to the Effective
Time shall be the Certificate of Incorporation of the Surviving Corporation,
until the same shall thereafter be altered, amended or repealed in accordance
with applicable law or such Certificate of Incorporation.
Section 2.2. Bylaws. The Bylaws of the Company as in effect immediately
prior to the Effective Time shall be the Bylaws of the Surviving Corporation,
until the same shall thereafter be altered, amended or repealed in accordance
with applicable law, the Certificate of Incorporation of the Surviving
Corporation or such Bylaws.
Section 2.3. Directors and Officers. From and after the Effective Time,
until the earlier of their resignation or removal or until their respective
successors are duly elected or appointed and qualified in accordance with
applicable law, (i) the directors of Buyer at the Effective Time shall be the
directors of the Surviving Corporation, and (ii) the officers of Buyer at the
Effective Time shall be the officers of the Surviving Corporation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each of the other parties hereto as
follows:
Section 3.1. Organization and Standing. Each of the Company and each
Subsidiary (as defined below) (i) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, (ii) has full corporate power and authority and all necessary
government approvals to own, lease and operate its properties and assets and to
conduct its business as presently conducted and (iii) is duly qualified or
licensed to do business as a foreign corporation and is in good standing in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification or licensing
necessary, except where the failure to be so qualified or licensed, individually
or in the aggregate, has not had, or would not reasonably be expected to have, a
Company Material Adverse Effect (as hereinafter defined). The Company has
furnished or made available to Parent true and complete copies of its
certificate of incorporation (including any certificates of designations
attached thereto, the "Company Certificate of Incorporation") and bylaws (the
"Company Bylaws") and the certificate of incorporation and bylaws (or equivalent
organizational documents) of each Subsidiary, each as amended to date. Such
certificate of incorporation, bylaws or equivalent organizational documents are
in full force and effect, and neither the Company nor any Subsidiary is in
violation of any provision of its certificate of incorporation, bylaws or
equivalent organizational documents.
Section 3.2. Capitalization. The authorized capital stock of the Company
consists of 6,500,000 shares of Company Common Stock and 1,000,000 shares of
preferred stock, $.0l par value per share (the "Preferred Stock"). As of the
date hereof, (i) 3,421,842 shares of Company Common Stock are issued and
outstanding, all of which are validly issued, fully paid and nonassessable and
free of preemptive rights, (ii) no shares of Company Common Stock are held in
the treasury of the Company, (iii) 969,563 Company Options are outstanding
pursuant to the Company Stock Option Plan, each such option entitling the holder
thereof to purchase one share of Company Common Stock, and 1,000,000 shares of
Company Common Stock are authorized and reserved for future issuance pursuant to
the Company Stock Option Plan, (iv) no shares of Preferred Stock are issued or
outstanding, and (v) 120,000 shares of Company Common Stock are reserved for
future issuance pursuant to the Company Warrants. The Company Disclosure Letter
delivered by the Company to the other parties hereto concurrently with the
execution of this Agreement (the "Company Disclosure Letter") sets forth a true
and complete list of the outstanding Company Options with the exercise price.
Except as set forth above or in the Company Disclosure Letter, there are no
options, warrants, convertible securities, subscriptions, stock appreciation
rights, phantom stock plans or stock equivalents or
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other rights, agreements, arrangements or commitments (contingent or otherwise)
of any character issued or authorized by the Company relating to the issued or
unissued capital stock of the Company or any Subsidiary or obligating the
Company or any Subsidiary to issue or sell any shares of capital stock of, or
options, warrants, convertible securities, subscriptions or other equity
interests in, the Company or any Subsidiary. All shares of Company 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 nonassessable. Except as set forth in the Company
Disclosure Letter, there are no outstanding contractual obligations of the
Company or any Subsidiary to repurchase, redeem or otherwise acquire any shares
of Company Stock or any capital stock of any Subsidiary or to pay any dividend
or make any other distribution in respect thereof or to provide funds to, or
make any investment (in the form of a loan, capital contribution or otherwise)
in, any person. The Company Disclosure Letter sets forth a correct and complete
list of each corporation, association, subsidiary, partnership, limited
liability company or other entity of which the Company controls, directly or
indirectly, 30% or more of the outstanding equity interests (each a "Subsidiary"
and collectively, the "Subsidiaries"). Except as set forth in the Company
Disclosure Letter, the Company owns beneficially and of record all of the issued
and outstanding capital stock of each Subsidiary and does not own an equity
interest in any other corporation, association, partnership, limited liability
company or other entity, other than in the Subsidiaries. Each outstanding share
of capital stock of each Subsidiary is duly authorized, validly issued, fully
paid and nonassessable and each such share owned by the Company or another
Subsidiary is free and clear of all security interests, liens, claims, pledges,
options, rights of first refusal, agreements, limitations on the Company's or
such other Subsidiary's voting rights, charges and other encumbrances of any
nature whatsoever.
Section 3.3. Authority for Agreement.
(a) The Company has all necessary power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and, subject
to obtaining necessary stockholder approval, to consummate the Initial
Offer, the Subsequent Offer, the Merger and the other transactions
contemplated by this Agreement. The execution, delivery and performance by
the Company of this Agreement, and the consummation by the Company of the
Initial Offer, the Subsequent Offer, the Merger and the other transactions
contemplated by this Agreement, have been duly authorized by all necessary
corporate action (including, without limitation, the unanimous approval of
the Board of Directors of the Company) and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or to
consummate the Initial Offer, the Subsequent Offer, the Merger or the other
transactions contemplated by this Agreement (other than, with respect to
the Merger, the approval and adoption of this Agreement by the affirmative
vote of a majority of the voting power of the then outstanding shares of
Company Common Stock and the filing and recordation of appropriate merger
documents as required by the DGCL). This Agreement has been duly executed
and delivered by the Company and, assuming the due authorization, execution
and delivery by Parent and Buyer, constitutes a legal, valid and binding
obligation of the Company enforceable against the Company in accordance
with its terms. The affirmative vote of holders of the outstanding shares
of Company Common Stock entitled to vote at a duly called and held meeting
of stockholders is the only vote of the Company's Stockholders necessary to
approve this Agreement, the Merger and the other transactions contemplated
by this Agreement.
(b) At a meeting duly called and held on December 16, 1999, the Board
of Directors of the Company unanimously (i) determined that this Agreement
and the Tender Agreements and the Indemnification Agreements and the other
transactions contemplated hereby and thereby, including the Initial Offer,
the Subsequent Offer and the Merger, are fair to and in the best interests
of the Company and the Company Stockholders, (ii) approved, authorized and
adopted this Agreement, the Initial Offer, the Subsequent Offer, the Merger
and the other transactions contemplated hereby, and (iii) resolved to
recommend acceptance of the Initial Offer, the Subsequent Offer, and, if
applicable, approval and adoption of this Agreement and the Merger by the
Company Stockholders. The actions taken by the Board of Directors of the
Company constitute approval of the Initial Offer, the Subsequent Offer, the
Merger, this Agreement and the Tender Agreements and the Indemnification
Agreements and the other
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transactions contemplated hereby and thereby by the Board of Directors of
the Company under the provisions of Section 203 of the DGCL such that
Section 203 of the DGCL does not apply to this Agreement, the Tender
Agreements, the Indemnification Agreements or the transactions contemplated
hereby or thereby. Other than Section 203 of the DGCL, no state
antitakeover or similar statute is applicable to Parent or Buyer in
connection with the Merger, the Initial Offer, the Subsequent Offer, this
Agreement, the Tender Agreements or the Indemnification Agreements or any
of the transactions contemplated hereby or thereby.
(c) The Independent Advisor has delivered to the Board of Directors of
the Company its written opinion, dated as of the date of this Agreement,
that, as of such date and based on the assumptions, qualifications and
limitations contained therein, the consideration to be received by the
Company Stockholders in the Initial Offer, the Subsequent Offer and the
Merger is fair to such holders from a financial point of view. A copy of
such opinion is included in the Company Disclosure Letter.
Section 3.4. No Conflict. The execution and delivery of this Agreement by
the Company do not, and the performance of this Agreement by the Company and the
consummation of the Initial Offer, the Subsequent Offer and the Merger and the
other transactions contemplated by this Agreement will not, (i) conflict with or
violate the Company Certificate of Incorporation or Company Bylaws or equivalent
organizational documents of any of its Subsidiaries, (ii) subject to Section
3.5, conflict with or violate any United States federal, state or local or any
foreign statute, law, rule, regulation, ordinance, code, order, judgment, decree
or any other requirement or rule of law (a "Law") applicable to the Company or
any of its Subsidiaries or by which any property or asset of the Company or any
of its Subsidiaries is bound or affected, or (iii) except as set forth in the
Company Disclosure Letter, result in a breach of or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
give to others any right of termination, amendment, acceleration or cancellation
of, result in triggering any payment or other obligations, or result in the
creation of a lien or other encumbrance on any property or asset of the Company
or any of its Subsidiaries in any case that would be material to the Company or
any Subsidiary pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
or Material Contract (as hereinafter defined) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries or
any property or asset of any of them is bound or affected.
Section 3.5. Required Filings and Consents. The execution and delivery of
this Agreement by the Company do 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 United States federal, state or local or
any foreign government or any court, administrative or regulatory agency or
commission or other governmental authority or agency, domestic or foreign (a
"Governmental Entity"), except (i) for applicable requirements, if any, of the
Exchange Act, state securities or "blue sky" laws ("Blue Sky Laws") and filing
and recordation of appropriate merger documents as required by the DGCL, (ii)
for those required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), (iii) for applicable requirements, if any, required
by the Brazilian anti-trust authorities and (iv) for filings contemplated by
Sections 1.1, 1.2 and 3.14 hereof.
Section 3.6. Compliance. Each of the Company and its Subsidiaries (i) has
been operated at all times in compliance in all material respects with all Laws
applicable to the Company or any of its Subsidiaries or by which any property,
business or asset of the Company or any of its Subsidiaries is bound or affected
and (ii) is not in default or violation of any notes, bonds, mortgages,
indentures, contracts, agreements, leases, licenses, permits, franchises, or
other instruments or obligations or Material Contract to which the Company or
any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries or any property or asset of the Company or any of its Subsidiaries
is bound or affected.
Section 3.7. SEC Filings, Financial Statements.
(a) The Company and each Subsidiary, as necessary, has filed all
forms, reports, statements and documents required to be filed with any
regulatory authority established by law in a foreign jurisdiction or with
the SEC since April 21, 1998 (the "SEC Reports," and together with the
foreign jurisdiction reports and UK Accounts (as hereinafter defined), the
"Government Reports"), each of which has complied in
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all material respects with the applicable requirements of the Securities
Act of 1933, as amended (the "Securities Act"), and the rules and
regulations promulgated thereunder, or the Exchange Act, and the rules and
regulations promulgated thereunder, or, in the case of a foreign
jurisdiction, the relevant laws of that jurisdiction, each as in effect on
the date so filed. None of the Government Reports (including, but not
limited to, any financial statements or schedules included or incorporated
by reference therein) contained when filed any untrue statement of a
material fact or omitted or omits to state a material fact required to be
stated or incorporated by reference therein or necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading. Except to the extent that information contained
in any Government Report has been revised or superseded by a later filed
Government Report, none of the Government Reports contains any untrue
statement of a material fact or omits 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.
For purposes of this Agreement, the term "UK Accounts" means the Company's
or its Subsidiaries' individual accounts (as that term is used in section
226 of the UK Companies Act of 1985) and cash flow statement for the
financial year ended December 31, 1998, the auditor's report on those
accounts, the directors' report for that year and the notes to those
accounts.
(b) All of the financial statements included in the Government
Reports, in each case, including any related notes thereto, as filed with
the SEC (those filed with the SEC are collectively referred to as the
"Company Financial Statements") or with relevant authorities in foreign
jurisdictions, have been prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto or, in
the case of the unaudited statements, as may be permitted by Form 10-QSB of
the SEC and subject, in the case of the unaudited statements, to normal,
recurring audit adjustments) and fairly present the consolidated financial
position of the Company and its Subsidiaries at the respective date thereof
and the consolidated results of its operations and changes in cash flows
for the periods indicated. The value shown in the Government Reports or any
financial statement of any real property owned by any foreign Subsidiary of
the Company is not greater than the value that would be ascribed to it by
customary valuation principles in that jurisdiction.
(c) Other than as disclosed in the Company Disclosure Letter, there
are no liabilities of the Company or any of its Subsidiaries of any kind
whatsoever, whether or not accrued and whether or not contingent or
absolute, that are material to the Company and its Subsidiaries, taken as a
whole, other than (i) liabilities disclosed or provided for in the
consolidated balance sheet of the Company and its Subsidiaries at December
31, 1998, including the notes thereto, (ii) liabilities disclosed in the
SEC Reports, (iii) liabilities incurred on behalf of the Company in
connection with this Agreement and the contemplated Merger, and (iv)
liabilities incurred in the ordinary course of business consistent with
past practice since December 31, 1998, none of which are, individually or
in the aggregate, reasonably likely to be material to the Company.
(d) The Company has heretofore furnished or made available to Parent a
complete and correct copy of any amendments or modifications which have not
yet been filed with the SEC to agreements, documents or other instruments
which previously had been filed by the Company with the SEC as exhibits to
the SEC Reports pursuant to the Securities Act and the rules and
regulations promulgated thereunder or the Exchange Act and the rules and
regulations promulgated thereunder.
Section 3.8. Absence of Certain Changes or Events. Except as contemplated
by this Agreement, as disclosed in the SEC Reports filed prior to the date
hereof or as disclosed in Section 3.8 of the Company Disclosure Letter since
December 31, 1998, the Company and its Subsidiaries have conducted their
respective businesses only in the ordinary course and consistent with prior
practice and there has not been (i) any event or occurrence of any condition
that has had or would reasonably be expected to have a Company Material Adverse
Effect, (ii) any declaration, setting aside or payment of any dividend or any
other distribution with respect to any of the capital stock of the Company or
any Subsidiary, (iii) any material change in accounting methods, principles or
practices employed by the Company, or (iv) any action of the type described in
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Sections 5.1(b) or 5.1(c) which had such action been taken after the date of
this Agreement would be in violation of any such Section.
Section 3.9. Taxes. The Company and each of its Subsidiaries have timely
filed all Tax Returns required to be filed by any of them. All such Tax Returns
are true, correct and complete in all material respects. All Taxes of the
Company and its Subsidiaries which are (i) shown as due on such Tax Returns,
(ii) otherwise due and payable or (iii) claimed or asserted by any taxing
authority to be due, have been paid, except for those Taxes being contested in
good faith and for which adequate reserves have been established in the
financial statements included in the SEC Reports in accordance with GAAP. There
are no liens for any Taxes upon the assets of the Company or any of its
Subsidiaries, other than statutory liens for Taxes not yet due and payable and
liens for real estate Taxes contested in good faith. The Company does not know
of any proposed or threatened Tax claims or assessments which, if upheld, could
individually or in the aggregate have a Company Material Adverse Effect. Neither
the Company nor any of its Subsidiaries has made an election under Section
341(f) of the Code. Neither the Company nor any of its Subsidiaries has waived
any statute of limitations in respect of Taxes or agreed to any extension of
time with respect to a Tax assessment or deficiency. The Company and each
Subsidiary has withheld and paid over to the relevant taxing authority all Taxes
required to have been withheld and paid in connection with payments to
employees, independent contractors, creditors, Stockholders or other third
parties. The unpaid Taxes of the Company and its Subsidiaries for the current
taxable period (A) did not, as of the most recent Company Financial Statements,
exceed the reserve for Tax liability set forth on the face of the balance sheet
in the most recent Company Financial Statements and (B) do not exceed that
reserve as adjusted for the passage of time through the Closing in accordance
with the past custom and practice of the Company and its Subsidiaries in filing
their Tax Returns. For purposes of this Agreement, (a) "Tax" (and, with
correlative meaning, "Taxes") means any federal, state, local or foreign income,
gross receipts, property, sales, use, license, excise, franchise, employment,
payroll, premium, withholding, alternative or added minimum, ad valorem,
transfer or excise tax, or any other tax, custom, duty, governmental fee or
other like assessment or charge of any kind whatsoever, together with any
interest or penalty or addition thereto, whether disputed or not, imposed by any
Governmental Entity, and (b) "Tax Return" means any return, report or similar
statement required to be filed with respect to any Tax (including any attached
schedules), including, without limitation, any information return, claim for
refund, amended return or declaration of estimated Tax.
The Company or any Subsidiary is not and has not been a party to or
otherwise involved in any transaction, agreement or arrangement or otherwise
other than by way of a bargain at arm's length, or any transaction, agreement or
arrangement (whether or not by way of a bargain at arm's length) under which it
has been or is or may be required to make any payment for goods services or
facilities provided to it which is in excess of the market value of such goods,
services or facilities or under which it has been, or is or may be required to
provide such goods, services or facilities for a consideration which is less
than the market value of such goods, services or facilities and in consequence
of which it is or will be liable to Tax in respect of an amount deemed for Tax
purposes to be income or gains of the Company or any Subsidiary but not actually
income or gains of the Company or any Subsidiary.
The Company Disclosure Letter sets forth with reasonable specificity: (i)
all jurisdictions in which the Company or any Subsidiary currently has a
presence requiring it to pay Taxes (a "Taxable Presence") and all jurisdictions
in which the Company or any Subsidiary has had a Taxable Presence since January
1, 1996, (ii) all Tax Returns filed or due to be filed applicable to the three
year period ending on the date hereof and (iii) all correspondence with any Tax
authorities (including, without limitation, all audits, notices and requests for
information from or to taxing authorities) since January 1, 1996.
Section 3.10. Assets.
(a) Except as set forth in the Company's Annual Report on Form 10-KSB
for the fiscal year ended December 31, 1998 (the "10-K") or in the Company
Disclosure Letter, the Company and each of its Subsidiaries have good and
marketable title to, or a valid leasehold interest in, all of their real
and personal properties and assets reflected in the 10-K or acquired after
December 31, 1998 (other than assets disposed of since December 31, 1998 in
the ordinary course of business consistent with past
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practice), in each case free and clear of all title defects, liens,
encumbrances and restrictions, except for (i) liens, encumbrances or
restrictions which secure indebtedness which are properly reflected in the
10-K; (ii) liens for Taxes accrued but not yet payable; (iii) liens arising
as a matter of law in the ordinary course of business with respect to
obligations incurred after December 31, 1998, provided that the obligations
secured by such liens are not delinquent; and (iv) liens that do not
individually or in the aggregate, materially detract from the value of the
assets subject thereto or materially impact the operation of the Company or
any Subsidiary. The Company Disclosure Letter sets forth a true, correct
and complete list of all real property (i) owned or leased by the Company
or a Subsidiary, (ii) as to which the Company or a Subsidiary has a
license, easement or right of way to use, (iii) as to which the Company or
a Subsidiary has the option to purchase, lease, license or acquire an
easement or right of way or (iv) in which the Company or a Subsidiary has
any other interest. Except as set forth in the Company Disclosure Letter,
the Company and each of its Subsidiaries either own, or have valid
leasehold interests in, all properties and assets used by them in the
conduct of their business.
(b) Except as set forth in the Company Disclosure Letter, neither the
Company nor any of its Subsidiaries has any legal obligation, absolute or
contingent, to any other person to sell or otherwise dispose of any of its
assets with an individual value of $50,000 or an aggregate value in excess
of $100,000.
(c) The equipment of the Company and its Subsidiaries is in good
operating condition and repair (ordinary wear and tear excepted) and is
adequate for the uses to which it is being put, and none of such equipment
is in need of maintenance or repairs, except for ordinary routine
maintenance or repairs that are not in the aggregate material in nature or
cost. The equipment of the Company and its Subsidiaries is adequate for the
continued conduct of the business of the Company and its Subsidiaries after
the Effective Time in substantially the same manner as conducted prior to
the Effective Time.
Section 3.11. Change of Control Agreements. Except as set forth in the
Company Disclosure Letter, neither the execution and delivery of this Agreement
nor the consummation of the Initial Offer, the Subsequent Offer, the Merger or
the other transactions contemplated by this Agreement, will (either alone or in
conjunction with any other event) result in, cause the accelerated vesting or
delivery of, or increase the amount or value of, any payment or benefit to any
director, officer or employee of the Company. Except as set forth in the Company
Disclosure Letter, without limiting the generality of the foregoing, no amount
paid or payable by the Company in connection with the Initial Offer, the
Subsequent Offer, the Merger or the other transactions contemplated by this
Agreement, including accelerated vesting of options, (either solely as a result
thereof or as a result of such transactions in conjunction with any other event)
will be an "excess parachute payment" within the meaning of Section 280G of the
Code.
Section 3.12. Litigation. Except for such matters disclosed in the Company
Disclosure Letter which, if adversely determined individually or in the
aggregate, are not, and would not reasonably be expected to be, material to the
Company, there are no claims, suits, actions, investigations, indictments or
information, or administrative, arbitration or other proceedings ("Litigation")
pending or, to the knowledge of the Company, threatened against the Company or
any of its Subsidiaries. There are no judgments, orders, injunctions, decrees,
stipulations or awards (whether rendered by a court, administrative agency, or
by arbitration, pursuant to a grievance or other procedure) against or relating
to the Company or any of its Subsidiaries.
Section 3.13. Contracts and Commitments.
(a) The Company Disclosure Letter sets forth a true, correct and
complete list of the following contracts to which the Company or a
Subsidiary is a party (including every amendment, modification or
supplement to the foregoing): (i) any contracts of employment and contracts
or agreements which limit or restrict the Company, any Subsidiary or any
employee from engaging in any business in any jurisdiction, (ii) agreements
or arrangements for the purchase or sale of any assets (otherwise than in
the ordinary course of business), (iii) all bonds, debentures, notes,
loans, credit or loan agreements or commitments, mortgages, indentures or
guarantees or other agreements or contracts relating to the borrowing of
money involving amounts in excess of $100,000, (iv) agreements with unions,
material independent contractor agreements and material leased or temporary
employee agreements, (v) leases of any real or personal property involving
annual rent of $25,000 or more, and (vi) all other contracts,
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agreements or commitments involving payments made by or to the Company or a
Subsidiary of $50,000 (individually, a "Material Contract" and
collectively, "Material Contracts"). Prior to the date hereof, the Company
has provided to Buyer and Parent true, correct and complete copies of the
following contracts to which the Company or a Subsidiary is a party
(including every amendment, modification or supplement to the foregoing):
(i) all bonds, debentures, notes, loans, credit or loan agreements or
commitments, mortgages, indentures or guarantees or other agreements or
contracts relating to the borrowing of money involving amounts in excess of
$10,000 and (ii) leases of any real or personal property involving annual
rent of $5,000 or more. Except for agreements, arrangements or commitments
disclosed in the Company Disclosure Letter, neither the Company nor any of
its Subsidiaries is a party to any agreement, arrangement or commitment
which is material to the business of the Company or any of its
Subsidiaries. The Company has delivered or made available true, correct and
complete copies of all such agreements, arrangements and commitments to
Parent. Neither the Company nor any of its Subsidiaries is in default under
any such agreement, arrangement or commitment which defaults individually
or in the aggregate would reasonably be expected to be material to the
Company or any Subsidiary.
(b) Except as set forth in the Company Disclosure Letter, each of the
Company's and its Subsidiaries' current and existing contracts with respect
to the provision of equipment or services (a) disclaims all warranties of
merchantability and fitness for a particular use, (b) limits the Company's
and its Subsidiaries' liability to only amounts paid under such contract
and (c) permits the other party to such contract only to recover actual
damages and not any special, consequential or punitive damages or lost
profits.
Section 3.14. Information Supplied. None of the information supplied or to
be supplied by the Company in writing to Parent specifically for inclusion or
incorporation by reference in the Schedule 14D-1 will, at the date such
documents are first published, sent or delivered to Company Stockholders or,
unless promptly corrected, at any time during the pendency of the Initial Offer
of Subsequent Offer 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 made therein, in light of the circumstances under which they
were made, not misleading. Neither the Schedule 14D-9 at the date such document
is first published, sent or delivered to the Company Stockholders or, unless
promptly corrected, at any time during the pendency of the Initial Offer or
Subsequent Offer, nor the proxy statement to be mailed to the Company
Stockholders in connection with the meeting (the "Stockholder's Meeting") to be
called to consider the Merger (the "Proxy Statement") (if applicable) at the
date such document is first published, sent or delivered to Company Stockholders
or, unless promptly corrected, at any time during the pendency of the
Stockholder's Meeting, will 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 made therein, in light of the circumstances under
which they were made, not misleading. The Schedule 14D-9 and the Proxy Statement
(if applicable) will comply as to form and substance in all material respects
with the requirements of the Exchange Act and the applicable rules and
regulations of the SEC thereunder. Notwithstanding the foregoing, no
representation or warranty is made by the Company with respect to statements
made or incorporated by reference therein based on information supplied by
Parent or Buyer for inclusion or incorporation by reference in any of the
foregoing documents.
Section 3.15. Employee Benefit Plans. All employee benefit plans,
compensation arrangements and other benefit arrangements covering employees of
the Company or any of its Subsidiaries (the "Company Benefit Plans") and all
employee agreements providing for compensation, severance or other benefits to
any employee or former employee of the Company or any of its Subsidiaries are
listed in the Company Disclosure Letter. True, correct and complete copies of
the following documents with respect to each of the Company Benefit Plans have
been provided by the Company to Parent: (i) any plans and related trust
documents and amendments thereto, (ii) summary plan descriptions and material
modifications thereto, (iii) written communications made since January 1, 1998
to employees relating to the Company Benefit Plans and (iv) written descriptions
of all non-written agreements relating to the Company Benefit Plans. To the
extent applicable, the Company Benefit Plans comply with the requirements of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and the
Code, and any Company Benefit Plan intended to be
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qualified under Section 401(a) of the Code has received a determination letter
or is a model prototype plan and continues to satisfy the requirements for such
qualification. Neither the Company nor any of its Subsidiaries nor any ERISA
Affiliate of the Company maintains, contributes to or has maintained or
contributed in the past six (6) years to any benefit plan which is covered by
Title IV of ERISA or Section 412 of the Code. Neither any Company Benefit Plan,
nor the Company nor any Subsidiary has incurred any liability or penalty under
Section 4975 of the Code or Section 502(i) of ERISA or engaged in any
transaction that is reasonably likely to result in any such liability or
penalty. Each of the Company and its Subsidiaries and any ERISA Affiliate which
maintains a "group health plan" within the meaning of Section 5000(b)(1) of the
Code has complied with the notice and continuation requirements of Section 4980B
of the Code, Part 6 of Subtitle B of Title I of ERISA and the regulations
thereunder (COBRA), and the creditable coverage certification requirements and
limitations on pre-existing condition exclusion requirements of Section 9801 of
the Code, Part 7 of Subtitle B of Title I of ERISA and the regulations
thereunder (HIPAA). Except as set forth in the Company Disclosure Letter, each
Company Benefit Plan has been maintained and administered in compliance with its
terms and with ERISA and the Code to the extent applicable thereto. There is no
pending or, to the knowledge of the Company, threatened or anticipated
Litigation against or otherwise involving any of the Company Benefit Plans and
no Litigation (excluding claims for benefits incurred in the ordinary course of
Company Benefit Plan activities) has been brought against or with respect to any
such Company Benefit Plan. All contributions required to be made as of the date
hereof to the Company Benefit Plans have been made or provided for. Except as
described in the SEC Reports or as required by Law, neither the Company nor any
of its Subsidiaries maintains or contributes to any plan or arrangement which
provides or has any liability to provide life insurance or medical or other
employee welfare benefits to any employee or former employee upon his retirement
or termination of employment, and neither the Company nor any of its
Subsidiaries has ever represented, promised or contracted (whether in oral or
written form) to any employee or former employee that such benefits would be
provided.
Any individual who performs services for the Company or any of its
Subsidiaries (other than through a contract with an organization other than such
individual) and who is not treated as an employee for federal income tax
purposes by the Company or its Subsidiaries is not an employee for such
purposes. Except as set forth in the Company Disclosure Letter, there are no
agreements in effect between the Company or any Subsidiary and any individual
retained by the Company or any Subsidiary to provide services as a consultant or
independent contractor.
For purposes of this Agreement "ERISA Affiliate" means any business or
entity which is a member of the same "controlled group of corporations," an
"affiliated service group" or is under "common control" with an entity within
the meanings of Sections 414(b), (c) or (m) of the Code, is required to be
aggregated with the entity under Section 414(o) of the Code, or is under "common
control" with the entity, within the meaning of Section 4001(a)(14) of ERISA, or
any regulations promulgated or proposed under any of the foregoing Sections.
Section 3.16. Labor and Employment Matters. Except as set forth in the
Company Disclosure Letter:
(a) There are no agreements or arrangements on behalf of any officer,
director or employee providing for payment or other benefits to such person
contingent upon the execution of this Agreement, the Closing or a
transaction involving a change of control of the Company other than the
Company Stock Option Plan.
(b) Neither the Company nor any of its Subsidiaries is a party to, or
bound by, any collective bargaining agreement or other contracts,
arrangements, agreements or understandings with a labor union or labor
organization that was certified by the National Labor Relations Board
("NLRB"). There is no existing, pending or, to the knowledge of the
Company, threatened (i) unfair labor practice charge or complaint, labor
dispute, labor arbitration proceeding or any other matter before the NLRB
or any other comparable state agency against or involving the Company or
any of its Subsidiaries, (ii) activity or proceeding by a labor union or
representative thereof to organize any employees of the Company or any of
its Subsidiaries, (iii) certification or decertification question relating
to collective bargaining units at the
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premises of the Company or any of its Subsidiaries or (iv) lockout, strike,
organized slowdown, work stoppage or work interruption with respect to such
employees.
(c) Neither the Company nor any of its Subsidiaries has taken any
action that would constitute a "Mass Layoff" or "Plant Closing" within the
meaning of the Worker Adjustment and Retraining Notification ("WARN") Act
or would otherwise trigger notice requirements or liability under any state
or local plant closing notice law. No agreement, arbitration or court
decision or governmental order in any way limits or restricts any of the
Company, any of its Subsidiaries or Parent from relocating or closing any
of the operations of the Company or any of its Subsidiaries.
(d) Except as set forth in the Company Disclosure Letter, neither the
Company nor any of its Subsidiaries has failed to pay when due any wages
(including overtime wages), bonuses, commissions, benefits, taxes,
penalties or assessments or other monies, owed to, or arising out of the
employment of or any relationship or arrangement with, any officer,
director, employee, sales representative, contractor, consultant or other
agent. Except as set forth in the Company Disclosure Letter, the Company
and its Subsidiaries are in compliance with all applicable Laws relating to
employment and the payment of wages and benefits. There are no, and the
Company has no reason to believe there would be any, citations,
investigations, administrative proceedings or formal complaints of
violations of any federal or state wage and hour laws pending or, to the
knowledge of the Company, threatened before the Department of Labor or any
federal, state or administrative agency or court against or involving the
Company or any of its Subsidiaries.
(e) The Company and each of its Subsidiaries are in compliance with
all United States immigration laws relating to employment and have properly
completed and maintained all applicable forms (including but not limited to
I-9 forms) and, to the knowledge of the Company, there are no citations,
investigations, administrative proceedings or formal complaints of
violations of the immigration laws pending or threatened before the
Immigration and Naturalization Service or any federal, state or
administrative agency or court against or involving the Company or any of
its Subsidiaries.
(f) There are no investigations, administrative proceedings, charges
or formal complaints of discrimination (including discrimination based upon
sex, age, marital status, race, national origin, sexual preference,
disability, handicap or veteran status) pending or threatened before the
Equal Employment Opportunity Commission or any federal, state or local
agency or court against or involving the Company or any of its
Subsidiaries. No discrimination, sexual harassment, retaliation and/or
wrongful or tortious conduct claim is pending or, to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries under
the 1866, 1877, 1964 or 1991 Civil Rights Acts, the Equal Pay Act, the Age
Discrimination in Employment Act, as amended, the Americans with
Disabilities Act, the Family and Medical Leave Act, the Fair Labor
Standards Act, ERISA, or any other federal law relating to employment or
any comparable state or local fair employment practices act regulating
discrimination in the workplace, and no wrongful discharge, libel, slander,
invasion of privacy or other claim (including but not limited to violations
of the Fair Credit Reporting Act, as amended, and any applicable
whistleblower statutes) under any state or federal law is pending or, to
the knowledge of the Company, threatened against the Company or any of its
Subsidiaries.
(g) If the Company or any of its Subsidiaries is a Federal, State or
local contractor obligated to develop and maintain an affirmative action
plan, no discrimination claim, show-cause notice, conciliation proceeding,
sanctions or debarment proceedings is pending or, to the knowledge of the
Company, has been threatened against the Company or any of its Subsidiaries
with the Office of Federal Contract Compliance Programs or any other
Federal agency or any comparable state or local agency or court and no desk
audit or on-site review is in progress.
(h) There are no citations, investigations, administrative proceedings
or formal complaints of violations of local, state or federal occupational
safety and health laws pending or, to the knowledge of the Company,
threatened before the Occupational Safety and Health Review Commission or
any federal, state or local agency or court against or involving the
Company or any of its Subsidiaries.
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(i) No workers' compensation or retaliation claim is pending against
the Company or any of its Subsidiaries in excess of $100,000 in the
aggregate and the Company maintains adequate insurance with respect to
workers' compensation claims pursuant to insurance policies that are
currently in force, or has accrued an adequate liability for such
obligations, including, without limitation, adequate accruals with respect
to accrued but unreported claims and retroactive insurance premiums.
Section 3.17. Environmental Compliance and Disclosure. Except as set forth
in the Company Disclosure Letter:
(a) Each of the Company and its Subsidiaries possesses, and is in
compliance in all material respect with, all permits, licenses and
governmental authorizations and has filed all notices that are required
under, all Environmental Laws (as hereinafter defined) applicable to the
Company or any Subsidiary, as applicable, and the Company and each of its
Subsidiaries is in compliance in all material respects with all applicable
limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in those laws
or contained in any Law, regulation, code, plan, order, decree, judgment,
notice, permit or demand letter issued, entered, promulgated or approved
thereunder, including, but not limited to, with respect to the use,
storage, treatment, manufacture, generation, disposal and handling of
Hazardous Materials;
(b) Neither the Company nor any Subsidiary has received notice of
actual or threatened liability under the Federal Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA") or any
similar state or local statute or ordinance from any governmental agency or
any third party and, to the knowledge of the Company, there are no facts or
circumstances which could form the basis for the assertion of any claim
against the Company or any Subsidiary under any Environmental Laws
including, without limitation, CERCLA or any similar local, state or
foreign Law with respect to any on-site or off-site location;
(c) No Hazardous Materials have ever been, are being, or are
threatened to be spilled, released, discharged, disposed, placed or
otherwise caused to become located in buildings or the soil, sub-surface
strata, air, water or ground water under, or upon any plant, facility,
site, area or property currently or previously owned or leased by the
Company or any Subsidiary or on which the Company or any Subsidiary is
conducting or has conducted its business or operations.
(d) Neither the Company nor any Subsidiary has entered into or agreed
to, nor does it contemplate entering into, any consent decree or order, and
neither the Company nor any Subsidiary is subject to any judgment, decree
or judicial or administrative order relating to compliance with, or the
cleanup of Hazardous Materials under, any applicable Environmental Laws;
(e) Neither the Company nor any Subsidiary has been subject to any
administrative or judicial proceeding pursuant to and, to the knowledge of
the Company, has not been alleged to be in violation of, applicable
Environmental Laws or regulations either now or any time during the past
five years;
(f) Neither the Company nor any Subsidiary has received notice that it
is subject to any claim, obligation, liability, loss, damage or expense of
whatever kind or nature, contingent or otherwise, incurred or imposed or
based upon any provision of any Environmental Law and arising out of any
act or omission of the Company or any Subsidiary, its employees, agents or
representatives or, to the knowledge of the Company, arising out of the
ownership, use, control or operation by the Company or any Subsidiary of
any plant, facility, site, area or property (including, without limitation,
any plant, facility, site, area or property currently or previously owned
or leased by the Company or any Subsidiary) or any other area on which the
Company or any Subsidiary is conducting or has conducted its business or
operations from which any Hazardous Materials were released into the
environment (the term "release" meaning any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
dumping or disposing into the environment, and the term "environment"
meaning any surface or ground water, drinking water supply, soil, surface
or subsurface strata or medium, or the ambient air) and there is no basis
for any such notice and, to the knowledge of the Company, none are
threatened or foreseen;
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(g) The Company has heretofore provided Parent with true, correct and
complete copies of all files of the Company and each Subsidiary relating to
environmental matters (or an opportunity to review such files). Neither the
Company nor any Subsidiary has paid any fines, penalties or assessments
within the last five years with respect to environmental matters; and
(h) To the Company's knowledge, none of the assets owned by the
Company or any Subsidiary or any real property leased by the Company or any
Subsidiary contain any friable asbestos, regulated PCBs or underground
storage tanks.
As used in this Section 3.17, the term "Environmental Laws" means any and
all past, present and future laws (including without limitation statutes,
regulations, and common law) of the United States, the United Kingdom, Brazil,
Canada, any State, any Province or political subdivision of any of them, or any
other nation or political subdivision, for the protection of the environment or
human health and safety, including without limitation, judgments, awards,
decrees, regulations, rules, standards, requirements, orders and permits issued
by any court, administrative agency or commission or other Governmental Entity
under such laws, and shall include without limitation the Comprehensive
Environmental Response Compensation and Liability Act (42 USC 9601 et seq.), the
Clean Air Act (42 USC sec.sec. 7401 et seq.), the Resource Conservation and
Recovery Act (42 USC sec.sec. 6901 et seq.), the Clean Water Act (33 USC
sec.sec. 1251 et seq.), the Occupational Safety and Health Act (29 U.S.C.
sec.sec. 651 et seq.), the Toxic Substance Control Act (15 USC sec.sec. 2601 et
seq.), and the Safe Drinking Water Act (42 USC sec.sec. 300f et seq.), as well
as any and all state or local laws that relate to pollution, contamination of
the environment, human health, or safety, and all future amendments to such
laws, and all past, present and future regulations, rules, standards,
requirements, orders and permits issued thereunder.
As used in this Section 3.17, the term "Hazardous Materials" means any
waste, pollutant, hazardous substance, toxic, radioactive, ignitable, reactive
or corrosive substance, hazardous waste, special waste, controlled waste,
industrial substance, by-product, process intermediate product or waste,
petroleum or petroleum-derived substance or waste, chemical liquids or solids,
liquid or gaseous products, or any constituent of any such substance or waste or
any other material which may be harmful to human health or the environment.
Section 3.18. Intellectual Property.
(a) The Company Disclosure Letter sets forth a true and complete list
of all of the following items which the Company and/or its Subsidiaries own
in whole or in part and/or have a valid claim of ownership in whole or in
part (such as a contract right of assignment from an employee or
independent contractor) (hereinafter referred to as the "Intellectual
Property Rights"): (i) all United States and foreign patents and
applications therefor, (ii) all United States and foreign trademark, trade
name, service mark, collective mark, and certification mark registrations
and applications therefor at the federal, state or local level, (iii) all
material trademarks, trade names, service marks, collective marks, and
certification marks which have been used by the Company or its Subsidiaries
in commerce at any time in the last five years (and for each, the date of
first use in commerce and a description of the goods and services in
connection with which it has been used), and (iv) all United States and
foreign and copyright registrations and applications therefor. The Company
Disclosure Letter also sets forth a true and complete list of all items
described in subsections (i) through (iv) of the previous sentence in which
the Company or any of its Subsidiaries own a license (the "Licensed
Rights"). Neither the Company nor any Subsidiary has (i) any unpatented
inventions which have been the subject of a patent application, (ii) any
material copyrightable works of authorship which have not been the subject
of a copyright registration or application therefor, including but not
limited to software code, manuals and other text works, photographs, video
recordings, and audio recordings, or (iii) any mask works. Prior to the
date hereof, the Company has provided Parent with reasonable access to all
of the Company's and its Subsidiaries' material trade secrets, proprietary
information, databases and data. The Company represents and warrants that,
except as expressly stated in the Company Disclosure Letter, (i) the
Intellectual Property Rights are free and clear of any liens, claims or
encumbrances, are not subject to any license (royalty bearing or royalty
free) and are not subject to any other arrangement requiring any payment to
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any person or the obligation to grant rights to any person in exchange;
(ii) the Licensed Rights are free and clear of any liens, claims,
encumbrances, royalties or other obligations; and (iii) the Intellectual
Property Rights and the Licensed Rights are all those material rights
necessary to the conduct of the business of each of the Company, its
Subsidiaries and the Company's affiliates as presently conducted. The
validity of the Intellectual Property Rights and title thereto and validity
of the Licensed Rights, (i) have not been questioned in any prior
Litigation; (ii) are not being questioned in any pending Litigation; and
(iii) are not the subject(s) of any threatened or proposed Litigation. The
business of each of the Company and its Subsidiaries, as presently
conducted, does not conflict with and, to the knowledge of the Company, has
not been alleged to conflict with any patents, trademarks, trade names,
service marks, copyrights or other intellectual property rights of others.
The consummation of the transactions contemplated hereby will not result in
the loss or impairment of any of the Intellectual Property Rights or the
Company's or its Subsidiaries' right to use any of the Licensed Rights.
There are no third parties using any of the Intellectual Property Rights
material to the business of the Company or its Subsidiaries as presently
conducted.
(b) Each of the Company and its Subsidiaries owns, or possesses
sufficiently broad and valid rights to, all computer software programs that
are material to the conduct of the business of the Company and its
Subsidiaries. There are no infringement suits, actions or proceedings
pending or, to the knowledge of the Company, threatened against the Company
or any Subsidiary with respect to any software owned or licensed by the
Company or any Subsidiary.
Section 3.19. Year 2000 Compliance.
(a) Except as set forth in the Company Disclosure Letter, the Company
has reviewed its operations and the operations of each Subsidiary with a
view to assessing whether its business would be adversely effected by not
being Year 2000 Compliant (as hereinafter defined) and has taken such
actions as it deems necessary or advisable to address Year 2000 Compliance.
Except as set forth in the Company Disclosure Letter, all of the product(s)
and/or service(s) offered and/or used by the Company or its Subsidiaries,
including each item of hardware, software, and firmware; any system,
equipment, or products consisting of or containing one or more thereof; and
any and all enhancements, upgrades, customizations, modifications,
maintenance and the like, currently or at any time in the past are, as of
the date of this Agreement, Year 2000 Compliant.
(b) Neither the Company nor any of its Subsidiaries is subject to any
pending or threatened regulatory action, proceeding or investigation
concerning the Year 2000 Compliance of the Company's or any of its
Subsidiaries' products, services or operations, and there is no basis for
any such regulatory action, investigation or proceeding. The Company and
its Subsidiaries are in compliance with all applicable regulatory rules,
regulations and requirements in regards to the Year 2000 Compliance of
their products, services and operations. No claim that any of the Company's
or any of its Subsidiaries' products or services are not Year 2000
Compliant, including but not limited to product liability claims, has been
asserted or threatened, and there is no basis for any such claim or action.
The Company and its Subsidiaries have furnished Parent with true, correct
and complete copies of any customer agreements or other materials in which
the Company or any Subsidiary has furnished (or could be deemed to have
furnished) assurances as to the Year 2000 Compliance of the Company's or
such Subsidiary's products or services, including any responses to surveys
or requests for certification of Year 2000 Compliance and letters of
assurance to customers.
(c) To the knowledge of the Company, all vendors of products or
services to the Company and its Subsidiaries, and their respective
products, services and operations, are Year 2000 Compliant, and, to the
knowledge of the Company, each such vendor will continue to furnish its
products or services to the Company and such Subsidiary, without
interruption or material delay, on and after January 1, 2000.
(d) "Year 2000 Compliant" means that (a) the products, services, or
other item(s) at issue accurately process, provide and/or receive date/time
data (including but not limited to calculating, comparing, and sequencing),
within, from, into, and between centuries (including the twentieth and
twenty-first centuries and the years 1999 and 2000), including but not
limited to leap year calculations,
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and (b) neither the performance nor the functionality nor the supply of the
products, services, and other item(s) at issue will be affected by
dates/times prior to, on, after, or spanning January 1, 2000. The design of
the products, services, and other item(s) at issue to ensure compliance
with the foregoing warranties and representations includes proper date/time
data century recognition and recognition of 1999 and 2000, calculations
that accommodate same century and multi-century formulae and date/time
values before, on, after, and spanning January 1, 2000, and date/time data
interface values that reflect the century, 1999, and 2000. In particular,
but without limitation, (i) no value for current date/time will cause any
error, interruption, or decreased performance in or for such product(s),
service(s), and other item(s), (ii) all manipulations of date and time
related data (including but not limited to calculating, comparing,
sequencing, processing, and outputting) will produce correct results for
all valid dates and times, including when used in combination with Year
2000 Compliant other products, services, or items, (iii) all date/time
elements in interfaces and data storage will specify the century to
eliminate date ambiguity without human intervention, including leap year
calculations, (iv) where any date/time element is represented without a
century, the correct century will be unambiguous for all manipulations
involving that element, (v) authorization codes, passwords, and zaps (purge
functions) will function normally and in the same manner during prior to,
on, and after January 1, 2000, including the manner in which they function
with respect to expiration dates and CPU serial numbers, and (vi) the
Company's and its Subsidiaries' supply of the product(s), service(s), and
other item(s) will not be interrupted, delayed, decreased, or otherwise
affected by the advent of the year 2000.
Section 3.20. Brokers. Except pursuant to the Independent Advisor
Engagement Letter (as hereinafter defined), no broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or commission in
connection with this Agreement, the Initial Offer, the Subsequent Offer, the
Merger or the other transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company. The Company Disclosure Letter
includes a complete and correct copy of all agreements between the Company and
the Independent Advisor pursuant to which such firms would be entitled to any
payment relating to this Agreement, the Initial Offer, the Subsequent Offer, the
Merger or the other transactions contemplated by this Agreement.
Section 3.21. Insurance Policies. The Company has delivered to Parent
prior to the date hereof a complete and accurate list of all insurance policies
in force naming the Company, any of its Subsidiaries or employees thereof as an
insured or beneficiary or as a loss payable payee or for which the Company or
any Subsidiary has paid or is obligated to pay all or part of the premiums.
Neither the Company nor any Subsidiary has received notice of any pending or
threatened cancellation or premium increase (retroactive or otherwise) with
respect thereto, and each of the Company and the Subsidiaries is in compliance
in all material respects with all conditions contained therein. Except as set
forth in the Company Disclosure Letter, there are no material pending claims
against such insurance policies by the Company or any Subsidiary as to which
insurers are defending under reservation of rights or have denied liability, and
there exists no material claim under such insurance policies that has not been
properly filed by the Company or any Subsidiary. Except for the self-insurance
retentions or deductibles set forth in the policies contained in the
aforementioned list, the policies are adequate in scope and amount to cover all
prudent and reasonably foreseeable risks which may arise in the conduct of the
business of the Company and the Subsidiaries.
Section 3.22. Notes and Accounts Receivable
(a) Except as disclosed in the Company Disclosure Letter, there are no
notes receivable of the Company or any Subsidiary owing by any director,
officer, stockholder or employee of the Company or any Subsidiary
("Affiliate Debt").
(b) Except as disclosed in the Company Disclosure Letter, all accounts
receivable of the Company and any Subsidiary are current or covered by
adequate reserves for uncollectability, and there are no material disputes
regarding the collectibility of any such accounts receivable.
Section 3.23. Transactions with Affiliates. Except as set forth in the
Company Disclosure Letter (other than compensation and benefits received in the
ordinary course of business as an employee or director of the Company or its
Subsidiaries) (collectively, the "Affiliate Transactions"), no director, officer
or other
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"affiliate" or "associate" (as hereinafter defined) of the Company or any
Subsidiary or any entity in which, to the knowledge of the Company, any such
director, officer or other affiliate or associate, owns any beneficial interest
(other than a publicly held corporation whose stock is traded on a national
securities exchange or in the over-the-counter market and less than 1% of the
stock of which is beneficially owned by any such persons) has any interest with
a value in excess, individually or in the aggregate, of $60,000 in: (i) any
contract, arrangement or understanding with, or relating to the business or
operations of Company or any Subsidiary; (ii) any loan, arrangement,
understanding, agreement or contract for or relating to indebtedness of the
Company or any Subsidiary; or (iii) any property (real, personal or mixed),
tangible, or intangible, used or currently intended to be used in, the business
or operations of the Company or any Subsidiary.
Section 3.24. No Existing Discussions. As of the date hereof, the Company
is not engaged, directly or indirectly, in any negotiations or discussions with
any other party with respect to an Acquisition Proposal (as hereinafter
defined).
Section 3.25. Company Warrants. Prior to the Purchase Date, all of the
Company's outstanding warrants to acquire shares of Company Common Stock shall
be cancelled.
Section 3.26. Stockholders' Rights Agreement. Neither the Company nor any
Subsidiary has adopted, or intends to adopt, a Stockholders' Rights Agreement or
any similar plan or agreement which limits or impairs the ability to purchase,
or become the direct or indirect beneficial owner of, shares of Company Common
Stock or any other equity or debt securities of the Company or any of its
Subsidiaries.
Section 3.27. Major Suppliers and Customers.
(a) The Company Disclosure Letter sets forth a list of each supplier
of goods or services to Company and the Subsidiaries to whom the Company
and the Subsidiaries paid in the aggregate more than $500,000 during the
nine month period ended September 30, 1999 and the 12-month period ended
December 31, 1998 (each a "Major Supplier" and, collectively, "Major
Suppliers"), together with in each case the amount paid during such period.
Neither the Company nor any Subsidiary is engaged in any material dispute
with any Major Supplier and, to the knowledge of the Company, no Major
Supplier intends to terminate, limit or reduce its business relations with
the Company or any Subsidiary. Except as set forth in the Company
Disclosure Letter, the Company has no reason to believe that the
consummation of the transactions contemplated hereunder will have any
adverse effect on the business relationship of the Company or any
Subsidiary with any Major Supplier. Except as set forth in the Company
Disclosure Letter, none of the officers or directors of the Company or any
Subsidiary, or any "affiliate" or "associate" of any officer or director of
the Company or any Subsidiary, or any company or other organization in
which any officer or director of the Company or any Subsidiary or any
"affiliate" or "associate" of any officer or director of the Company or any
Subsidiary has a direct or indirect or indirect financial interest, has any
financial interest in any supplier of the Company or any Subsidiary (other
than a publicly held corporation whose stock is traded on a national
securities exchange or in the over-the-counter market and less than 1% of
the stock of which is beneficially owned by any such persons).
(b) The Company Disclosure Letter sets forth a list of each customer
which accounted for net revenue to the Company and the Subsidiaries in the
aggregate of more than $500,000 during the nine month period ended
September 30, 1999 and the 12-month period ended December 31, 1998 (each a
"Major Customer" and, collectively, "Major Customers") together with the
amount of net revenue produced during such period. Neither the Company nor
any Subsidiary is engaged in any material dispute with any Major Customer
and, to the knowledge of the Company, no Major Customer intends to
terminate, limit or reduce its business relations with the Company or any
Subsidiary. Except as set forth in the Company Disclosure Letter, the
Company has no reason to believe that the consummation of the transactions
contemplated hereunder will adversely affect the business relationship of
the Company or any Subsidiary with any Major Customer. Except as set forth
in the Company Disclosure Letter, none of the officers or directors of the
Company or any Subsidiary, or any "affiliate" or "associate" of any officer
or director of the Company or any Subsidiary, or any company or other
organization in which any officer or director of the Company or any
Subsidiary or any "affiliate" or "associate" of any officer or director of
the Company or any Subsidiary has a direct or indirect financial interest,
has any financial interest in any
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customer of the Company or any Subsidiary (other than a publicly held
corporation whose stock is traded on a national securities exchange or in
the over-the-counter market and less than 1% of the stock of which is
beneficially owned by any such persons).
Section 3.28. Disclosure. No representation or warranty made by the
Company in this Agreement or in the Company Disclosure Letter contains an untrue
statement of a material fact or omits to state a material fact required to be
stated herein or therein or necessary to make the statements contained herein or
therein not misleading. The representations and warranties of the Company
contained herein, disregarding all qualifications and exemptions contained
therein relating to materiality or a Company Material Adverse Effect, are true
and correct with only such exemptions as would not in the aggregate reasonably
be expected to have a Company Material Adverse Effect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER
Each of Parent and Buyer represents and warrants to the Company as follows:
Section 4.1. Organization and Standing. Such person (a) is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, (b) has full corporate power and authority to
own, lease and operate it properties and assets and to conduct its business as
presently conducted and (c) is duly qualified or licensed to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of its
business makes such qualification or licensing necessary, except where the
failure to be so qualified or licensed would not, individually or in the
aggregate, have a material adverse effect on Parent or Buyer.
Section 4.2. Authority for Agreement. Such person has all necessary
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the Initial Offer, the Subsequent
Offer, the Merger and the other transactions contemplated by this Agreement. The
execution, delivery and performance by such person of this Agreement, and the
consummation by each such person of the Initial Offer, the Subsequent Offer, the
Merger and the other transactions contemplated by this Agreement, have been duly
authorized by all necessary corporate action and no other corporate proceedings
on the part of such person are necessary to authorize this Agreement or to
consummate the Initial Offer, the Subsequent Offer, the Merger or the other
transactions contemplated by this Agreement (other than, with respect to the
Merger, the filing and recordation of appropriate merger documents as required
by the DGCL). This Agreement has been duly executed and delivered by such person
and, assuming due authorization, execution and delivery by the Company,
constitutes a legal, valid and binding obligation of each of such person
enforceable against such person in accordance with its terms.
Section 4.3. No Conflict. The execution and delivery of this Agreement by
such person do not, and the performance of this Agreement by such person and the
consummation of the Initial Offer, the Subsequent Offer, the Merger and the
other transactions contemplated by this Agreement will not, (i) conflict with or
violate the certificate of incorporation or bylaws of such person, (ii) conflict
with or violate any Law applicable to such person or by which any property or
asset of such person is 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, give to others any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or other encumbrance on any property or asset of such person pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which such person is a party or
by which such person or any property or asset of either of them is bound or
affected, except in the case of clauses (ii) and (iii) for any such conflicts,
violations, breaches, defaults or other occurrences which would not,
individually or in the aggregate, prevent or materially delay the performance by
such person of its respective obligations under this Agreement or the
consummation of the Initial Offer, the Subsequent Offer, the Merger or the other
transactions contemplated by this Agreement.
Section 4.4. Required Filings and Consents. The execution and delivery of
this Agreement by such person do not, and the performance of this Agreement by
such person will not, require any consent, approval,
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authorization or permit of, or filing with or notification to, any Governmental
Entity, except (i) for applicable requirements, if any, of the Exchange Act,
Blue Sky Laws and filing and recordation of appropriate merger documents as
required by the DGCL, (ii) for those required by the HSR Act, (iii) for
applicable requirements, if any, required by the Brazilian anti-trust
authorities, (iv) for filings contemplated by Sections 1.1, 1.2 and 3.14 and
(iv) where failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not, individually or in
the aggregate, prevent or materially delay the performance by such person of any
of its respective obligations under this Agreement or the consummation of the
Initial Offer, the Subsequent Offer, the Merger or the other transactions
contemplated by this Agreement.
Section 4.5. Information Supplied. None of the information supplied or to
be supplied by such person for inclusion or incorporation by reference in the
Schedule 14D-9 or the Proxy Statement (if applicable) will, at the date such
documents are first published, sent or delivered to Company Stockholders or,
unless promptly corrected, at any time during the pendency of the Initial Offer
or the Subsequent Offer 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 made therein, in light of the circumstances under which
they were made, not misleading. Neither the Schedule 14D-1, at the date such
document is first published, sent or delivered to the Company Stockholders or,
unless promptly corrected, at any time during the pendency of the Initial Offer
or the Subsequent Offer, nor the Proxy Statement (if applicable) at the date
such document is first published, sent or delivered to Company Stockholders or,
unless promptly corrected, at any time during the pendency of the Stockholder's
Meeting, will 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 made therein, in light of the circumstances under which they were
made, not misleading. The Schedule 14D-1 will comply as to form and substance in
all material respects with the requirements of the Exchange Act and the
applicable rules and regulations of the SEC thereunder. Notwithstanding the
foregoing, no representation or warranty is made by such person with respect to
statements made or incorporated by reference therein based on information
supplied by the Company for inclusion or incorporation by reference in any of
the foregoing documents.
Section 4.6. Brokers. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission payable by such person in
connection with this Agreement, the Initial Offer, the Subsequent Offer, the
Merger or the other transactions contemplated by this Agreement based upon
arrangements made by or on behalf of such person.
Section 4.7. Financing. Parent has sufficient funds available to purchase,
or to cause Buyer to purchase, the shares of the Company Common Stock pursuant
to the Initial Offer and the Subsequent Offer and the Merger and to pay all of
its and Buyer's fees and expenses related to the transactions contemplated by
this Agreement.
Section 4.8. Disclosure. No representation or warranty made by Parent or
Buyer in this Agreement or pursuant to the Initial Offer or Subsequent Offer
contains an untrue statement of a material fact or omits to state a material
fact required to be stated herein or therein or necessary to make the statements
contained herein or therein not misleading.
ARTICLE V
COVENANTS
Section 5.1. Conduct of the Business Pending Assumption of Control. From
the date hereof until such time as Parent's designees shall constitute a
majority of the members of the Board of Directors of the Company, the following
provisions shall apply:
(a) The Company covenants and agrees that unless Parent shall
otherwise agree in writing, (i) the business of the Company and its
Subsidiaries shall be conducted only in, and the Company and its
Subsidiaries shall not take any action except in, the ordinary course of
business and in a manner consistent with prior practice, (ii) the Company
and its Subsidiaries shall use reasonable best efforts to preserve intact
their business organizations, to keep available the services of their
current officers and
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employees and to preserve the current relationships of the Company and its
Subsidiaries with customers, suppliers and other persons with which the
Company or its Subsidiaries has business relations, (iii) the Company and
its Subsidiaries will comply with all applicable Laws and regulations
wherever its business is conducted, including, without limitation, the
timely filing of all reports, forms or other documents with the SEC
required pursuant to the Securities Act or the Exchange Act, (iv) the
Company shall make the capital expenditures identified on the Company's
1999 budget included in the Company Disclosure Letter, however, the Company
shall not make any expenditures to develop a wide area network and (v) the
Company shall make the additional capital expenditures to purchase
equipment as set forth in the Company Disclosure Letter.
(b) The Company covenants and agrees that the Company shall not, nor
shall the Company permit any of its Subsidiaries to, (i) declare or pay any
dividends on or make other distributions (whether in cash, stock or
property) in respect of any of its capital stock, except for dividends by a
wholly owned Subsidiary of the Company to the Company or another wholly
owned Subsidiary of the Company, (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; (iii) repurchase or otherwise acquire any shares of its
capital stock; (iv) issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock or any
securities convertible into any such shares of its capital stock, or any
rights, warrants or options to acquire any such shares or convertible
securities or any stock appreciation rights, phantom stock plans or stock
equivalents, other than the issuance of shares of Company Common Stock upon
(x) the exercise of Company Options outstanding as of the date of this
Agreement, and (y) exercise of warrants outstanding as of the date of this
Agreement or (v) take any action that would, or could reasonably be
expected to, result in any of the conditions to the Initial Offer set forth
in Annex I or any of the conditions set forth in Article VI not being
satisfied.
(c) The Company covenants and agrees that the Company shall not, nor
shall the Company permit any of its Subsidiaries to, (i) amend its
certificate of incorporation (including any certificate of designations
attached thereto) or bylaws or other equivalent organizational documents;
(ii) create, assume or incur any indebtedness for borrowed money or
guaranty any such indebtedness of another person, other than (A) borrowings
under existing lines of credit (or under any refinancing of such existing
lines) or (B) indebtedness owing to, or guaranties of indebtedness owing
to, the Company; (iii) make any loans or advances to any other person other
than loans or advances between any Subsidiaries of the Company or between
the Company and any of its Subsidiaries (other than loans or advances less
than $25,000 made in the ordinary course of business consistent with past
practice and loans or advances to its Subsidiary in Australia in connection
with the Sydney 2000 Olympic Games which shall in no event exceed $100,000
in the aggregate); (iv) mortgage or pledge any of its assets or properties;
(v) merge or consolidate with any other entity in any transaction, or sell
any business or assets in a single transaction or series of transactions in
which the aggregate consideration is $100,000 or greater; (vi) change its
accounting policies except as required by GAAP; (vii) make any change in
employment terms for any of its directors or officers; (viii) alter, amend
or create any obligations with respect to compensation, severance,
benefits, change of control payments or any other payments to employees,
directors or affiliates of the Company or its Subsidiaries or enter into
any new, or amend any existing, employment agreements; (ix) make any change
to the Company Benefit Plans; (x) amend or cancel or agree to the amendment
or cancellation of any Material Contract; (xi) pay, loan or advance (other
than the payment of compensation, directors' fees or reimbursement of
expenses in the ordinary course of business) any amount to, or sell,
transfer or lease any properties or assets (real, personal or mixed,
tangible or intangible) to, or enter into any agreement with, any of its
officers or directors or any "affiliate" or "associate" of any of its
officers or directors; (xii) form or commence the operations of any
business or any corporation, partnership, joint venture, business
association or other business organization or division thereof; (xiii) make
any tax election (other than in the ordinary course of business consistent
with past practice) or settle or compensate any tax liability involving
amounts in excess of $50,000 in the aggregate; (xiv) pay, discharge, settle
or satisfy any claims litigation, liabilities or obligations (whether
absolute, accrued, asserted or unasserted, contingent or otherwise)
involving amounts in excess of $100,000 in the
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aggregate; or (xv) make any capital expenditures inconsistent with or, not
provided for by, the Company's 1999 budget contained in the Company
Disclosure Letter or as otherwise expressly provided for in the Company
Disclosure Letter.
Section 5.2. Access to Information; Confidentiality.
(a) From the date hereof to the Effective Time, the Company shall, and
shall cause the officers, directors, employees, auditors, attorneys,
financial advisors, lenders and other agents (collectively, the
"Representatives") of the Company to, afford the Representatives of Parent
and Buyer reasonable access at all reasonable times to the officers,
employees, agents, properties, offices and other facilities, books and
records of the Company and its Subsidiaries (including, but not limited to,
reasonable access to the Company's and its Subsidiaries' leased properties
to enable Parent to conduct phase I and II environmental testing on such
leased properties), and shall furnish Parent and Buyer with all financial,
operating and other data and information as Parent or Buyer, through its
Representatives, may reasonably request. The Company shall furnish to
Parent and Buyer monthly financial and operating data and information
within 20 days following the end of each calendar month. Parent will remain
subject to the terms of a confidentiality agreement with the Company dated
September 28, 1999 (the "Confidentiality Agreement").
(b) No investigation pursuant to this Section 5.2 shall affect any
representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto.
Section 5.3. 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 nonoccurrence, of any event which would be likely to
cause any representation or warranty contained in this Agreement to be untrue or
inaccurate and (ii) any failure by such party (or Buyer, in the case of Parent)
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder; provided, however, that the delivery of any
notice pursuant to this Section 5.3 shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice. If any event or
matter arises after the date of this Agreement which, if existing or occurring
at the date of this Agreement, would have been required to be set forth or
described in the Company Disclosure Letter or which is necessary to correct any
information in the Company Disclosure Letter which has been rendered inaccurate
thereby, then the Company shall promptly supplement, or amend, and deliver to
Parent the Company Disclosure Letter which it has delivered pursuant to this
Agreement.
Section 5.4. Further Assurances.
(a) Upon the terms and subject to the conditions hereof, each of the
parties hereto shall use all commercially reasonable efforts to take, or
cause to be taken, all appropriate action, and to do, or cause to be done,
all things necessary, proper or advisable under Law to consummate the
Initial Offer and the Subsequent Offer and to consummate and make effective
the Merger and the other transactions contemplated by this Agreement,
including, without limitation, using all commercially reasonable efforts to
obtain all licenses, permits, consents, approvals, authorizations,
qualifications and orders of each Governmental Entity and parties to
contracts with the Company and its Subsidiaries as are necessary for the
consummation of the Initial Offer and the Subsequent Offer and the Merger
and the other transactions contemplated by this Agreement and to fulfill
the conditions set forth in Article VI. If at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes
of this Agreement, the proper officers of each party to this Agreement and
the Surviving Corporation shall use all commercially reasonable efforts to
take all such action.
(b) In connection with, and without limiting the foregoing, the
Company shall (i) take all actions necessary to ensure that no state
antitakeover statute or similar statute or regulation is or becomes
operative with respect to this Agreement, the Initial Offer, the Subsequent
Offer, the Merger or any other transactions contemplated by this Agreement
or the Tender Agreements or the Indemnification Agreements and (ii) if any
state antitakeover statute or similar statute or regulation is or becomes
operative with respect to this Agreement, the Tender Agreements, the
Indemnification Agreements, the Initial Offer, the Subsequent Offer, the
Merger or any other transaction contemplated by this Agreement
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or the Tender Agreements or the Indemnification Agreements, take all
actions necessary to ensure that this Agreement, the Tender Agreements, the
Indemnification Agreements, the Initial Offer, the Subsequent Offer, the
Merger and any other transactions contemplated by this Agreement or the
Tender Agreements or the Indemnification Agreements may be consummated as
promptly as practicable on the terms contemplated by this Agreement and the
Tender Agreements and the Indemnification Agreements and otherwise to
minimize the effect of such statute or regulation on the Merger, the
Initial Offer, the Subsequent Offer and the other transactions contemplated
by this Agreement and the Tender Agreements and the Indemnification
Agreements.
Section 5.5. Board Recommendations.
(a) In connection with the Initial Offer, the Subsequent Offer, the
Merger and Stockholders' Meeting, the Board of Directors of the Company
shall (i) subject to Section 5.5(b), recommend to the holders of the
Company Common Stock to tender their shares of Company Common Stock in the
Initial Offer and Subsequent Offer and vote in favor of the Merger and use
its reasonable best efforts to obtain the necessary approvals by the
Company Stockholders of this Agreement and (ii) otherwise comply with all
legal requirements applicable to such meeting.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall, except as expressly permitted by this Section 5.5(b) (i)
withdraw, qualify or modify, or propose publicly to withdraw, qualify or
modify, in a manner adverse to Parent, the approval or recommendation of
such Board of Directors or such committee of the Initial Offer, the
Subsequent Offer, the Merger or this Agreement, (ii) approve or recommend,
or propose publicly to approve or recommend, any transaction involving an
Acquisition Proposal (as hereinafter defined) from a third party (an
"Alternative Transaction"), or (iii) cause the Company to enter into any
letter of intent, agreement in principle, acquisition agreement or other
similar agreement (each, an "Acquisition Agreement") related to any
Alternative Transaction. Notwithstanding the foregoing, if prior to the
approval of this Agreement by the Company Stockholders, and in any event no
later than the original termination date of the Initial Offer, the Board of
Directors of the Company determines in good faith, after it has received a
Superior Proposal (as hereinafter defined) in compliance with Section 5.9
and after taking into consideration advice from outside counsel with
respect to its fiduciary duties to Company Stockholders under applicable
Delaware law, the Board of Directors of the Company may (subject to this
and the following sentences) inform Company Stockholders that it no longer
believes that the Merger is advisable and no longer recommends approval (a
"Subsequent Determination") and enter into an Acquisition Agreement with
respect to a Superior Proposal, but only at a time that is after the fifth
business day (or the second business day, in the case of a material
amendment to a Superior Proposal) following Parent's receipt of written
notice advising Parent that the Board of Directors of the Company is
prepared to accept a Superior Proposal. Such written notice shall specify
the material terms and conditions of such Superior Proposal (and include a
copy thereof with all accompanying documentation, if in writing), identify
the person making such Superior Proposal and state that the Board of
Directors of the Company intends to make a Subsequent Determination. During
such five business day period (or two business day period in the case of a
material amendment), the Company shall provide an opportunity for Parent to
propose such adjustments to the terms and conditions of this Agreement as
would enable the Company to proceed with its recommendation to its
stockholders without a Subsequent Determination. For purposes of this
Agreement, a "Superior Proposal" means any proposal (on its most recently
amended or modified terms, if amended or modified) made by a third party to
enter into an Alternative Transaction which the Board of Directors of the
Company determines in its good faith judgment (based on, among other
things, the advice of an independent financial advisor) to be more
favorable to the Company Stockholders than the Merger and the Initial Offer
and Subsequent Offer, from a financial point of view (taking into account
whether, in the good faith judgment of the Board of Directors of the
Company, after obtaining the advice of such independent financial advisor,
the third party is reasonably able to finance the transaction, and any
proposed changes to this Agreement that may be proposed by Parent in
response to such Alternative Transaction), except that for purposes of the
definition of "Superior Proposal," an "Alternative Transaction" shall mean
an Acquisition Proposal by a third party, provided that the reference to
"25%" in
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the definition of "Acquisition Proposal" shall be deemed to be "51%."
Notwithstanding any other provision of this Agreement, the Company shall in
no way limit or prevent (i) Company Stockholders from tendering shares of
Company Common Stock in the Initial Offer or Subsequent Offer or (ii) Buyer
from purchasing such shares of Company Common Stock whet her or not the
Board of Directors of the Company makes a Subsequent Determination.
(c) Nothing contained in this Section 5.5 shall prohibit the Company
from taking and disclosing to its stockholders a position contemplated by
Rule 14(e)-2(a) promulgated under the Exchange Act or from making any
disclosure to the Company Stockholders if, in the good faith judgment of
the Board of Directors of the Company, after consultation with outside
counsel, failure so to disclose would be inconsistent with applicable Law;
provided, however, neither the Company nor its Board of Directors nor any
committee thereof shall, except as specifically permitted by Section
5.5(b), withdraw, qualify, or modify, or propose to withdraw, qualify or
modify, its position with respect to the Initial Offer, the Subsequent
Offer, the Merger or this Agreement or approve or recommend, or propose to
approve or recommend an Alternative Transaction.
Section 5.6. Stockholder Litigation. The Company shall give Parent the
opportunity to participate in the defense or settlement of any stockholder
Litigation against the Company and its directors relating to the transactions
contemplated by this Agreement, the Initial Offer, the Subsequent Offer or the
Merger; provided, however, that no such settlement shall be agreed to without
Parent's consent which consent will not be unreasonably withheld.
Section 5.7. Indemnification.
(a) It is understood and agreed that all rights to indemnification by
the Company now existing in favor of each present and former director and
officer of the Company or its Subsidiaries (the "Indemnified Parties") as
provided in the Company Certificate of Incorporation or the Company Bylaws,
in each case as in effect on the date of this Agreement, or pursuant to any
other agreements in effect on the date hereof, copies of which have been
provided to Parent, shall survive the Merger and Parent shall (i) cause the
Surviving Corporation to continue in full force and effect for a period of
at least six (6) years from the Effective Time and (ii) perform, or cause
the Surviving Corporation to perform, in a timely manner, the Surviving
Corporation's obligation with respect thereto. Parent and Buyer agree that
any claims for indemnification hereunder as to which they have received
written notice prior to the sixth anniversary of the Effective Time shall
survive, whether or not such claims shall have been finally adjudicated or
settled.
(b) Parent shall cause the Surviving Corporation to, and the Surviving
Corporation shall, maintain in effect for six (6) years from the Effective
Time, if available, the current directors' and officers' liability
insurance policies ("D&O Insurance") covered by such policies (provided
that the Surviving Corporation may substitute therefor policies of at least
the same coverage containing terms and conditions which are not materially
less favorable) with respect to matters occurring prior to the Effective
Time; provided, however, that in no event shall the Surviving Corporation
be required to expend pursuant to this Section 5.7(b) more than an amount
per year equal to one hundred fifty percent (150%) of current annual
premiums paid by the Company for such insurance. In the event that, but for
the proviso to the immediately preceding sentence, the Surviving
Corporation would be required to expend more than one hundred fifty percent
(150%) of current annual premiums, the Surviving Corporation shall obtain
the maximum amount of such insurance obtainable by payment of annual
premiums equal to one hundred fifty percent (150%) of current annual
premiums.
(c) If the Surviving Corporation or any of its successors or assigns
(i) consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and
assets to any person, then, and in each such case, proper provision shall
be made so that the successors and assigns of the Surviving Corporation
shall assume the obligations set forth in this Section 5.7.
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Section 5.8. Public Announcements. Parent and the Company shall consult
with each other before issuing any press release or otherwise making any public
statements with respect to this Agreement, the Initial Offer, the Subsequent
Offer or the Merger and shall not issue any such press release or make any such
public statement prior to such consultation, except as may be required by Law or
any listing agreement with a national securities exchange or trading system to
which Parent or the Company is a party.
Section 5.9. Acquisition Proposals. The Company shall not, nor shall it
authorize or permit any of its Subsidiaries or Representatives to, directly or
indirectly, (a) solicit, initiate or encourage the submission of any Acquisition
Proposal or (b) participate in or encourage any discussion or negotiations
regarding, or furnish to any person any non-public information with respect to,
or take any other action to facilitate any inquiries or the making of, any
proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal; provided, however, that the foregoing shall not prohibit
the Board of Directors of the Company from furnishing information to, or
entering into discussions or negotiations with, any person or entity that makes
an unsolicited Acquisition Proposal prior to the initial termination date of the
Initial Offer if, and to the extent that, (A) the Board of Directors of the
Company, after taking into consideration advice of independent outside legal
counsel, determines in good faith that such action is required for the Board of
Directors of the Company to comply with its fiduciary obligations to the Company
Stockholders under applicable Delaware law, (B) prior to taking such action, the
Company receives from such person or entity an executed agreement in reasonably
customary form relating to the confidentiality of information to be provided to
such person or entity and (C) the Board of Directors of the Company concludes in
good faith, based upon advice from its independent financial advisor, that the
Acquisition Proposal is a Superior Proposal. The Company shall provide immediate
oral and written notice to Parent of (a) the receipt of any such Acquisition
Proposal or any inquiry which could reasonably be expected to lead to any
Acquisition Proposal, (b) the material terms and conditions of such Acquisition
Proposal or inquiry, (c) the identity of such person or entity making any such
Acquisition Proposal or inquiry and (d) the Company's intention to furnish
information to, or enter into discussions or negotiations with, such person or
entity. The Company shall continue to keep Parent informed of the status and
details of any such Acquisition Proposal or inquiry. For purposes of this
Agreement, "Acquisition Proposal" means any bona fide proposal with respect to a
merger, consolidation, share exchange, tender offer or similar transaction
involving the Company, or any purchase or other acquisition of all or any
significant portion of the assets of the Company or 25% or more of any class of
Company capital stock.
Section 5.10. Company Stockholders' Meeting.
(a) The Company shall cause the Stockholders' Meeting to be duly
called and held as soon as practicable following the consummation of the
Initial Offer (or, at Buyer's option, the Subsequent Offer, if applicable)
for the purpose of voting on the approval and adoption of this Agreement
and the Merger, if such meeting is required. The Company shall take all
action necessary in accordance with applicable Law and the Company
Certificate of Incorporation and Company Bylaws to duly call, give notice
of, and convene the Stockholders' Meeting, if such meeting is required.
(b) The Company shall, at the direction of Parent, solicit from
holders of shares of Company Stock entitled to vote at the Stockholders'
Meeting proxies in favor of such approval and shall take all other action
necessary or, in the reasonable judgment of Parent, helpful to secure the
vote or consent of such holders required by the DGCL or this Agreement to
effect the Merger.
Section 5.11. Proxy Statement.
(a) If required by applicable Law in connection with the Merger,
Parent and the Company will as promptly as practicable following the
consummation of the Initial Offer (or, at Buyer's option, the Subsequent
Offer, if applicable) jointly prepare, and the Company shall file, the
Proxy Statement with the SEC and will use all commercially reasonable
efforts to respond to the comments of the SEC and to cause the Proxy
Statement to be mailed to the Company Stockholders at the earliest
practical time. The Company shall furnish all information concerning it and
the holders of its capital stock as Parent may reasonably request in
connection with such actions. Each party to this Agreement will notify the
other parties and the Board of Directors of the Company promptly of the
receipt of the comments of the SEC, if any, and of any request by the SEC
for amendments or supplements to the Proxy Statement or for
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additional information with respect thereto, and will supply the other
parties with copies of all correspondence between such party or its
Representatives, on the one hand, and the SEC or members of its staff, on
the other hand, with respect to the Proxy Statement, the Initial Offer, the
Subsequent Offer or the Merger. If (A) at any time prior to the
Stockholders' Meeting, any event should occur relating to the Company or
any of its Subsidiaries which should be set forth in an amendment of, or a
supplement to, the Proxy Statement, the Company will promptly inform Parent
and (B) if at any time prior to the Stockholders' Meeting, any event should
occur relating to Parent or Buyer or any of their respective associates or
affiliates, or relating to the plans of any such persons for the Company
after the Effective Time that should be set forth in an amendment of, or a
supplement to, the Proxy Statement, Parent will promptly inform the
Company, and in the case of (A) or (B) the Company and Parent, will, upon
learning of such event, promptly prepare, and the Company shall file and,
if required, mail such amendment or supplement to the Company Stockholders;
provided, prior to such filing or mailing, the Company and Parent shall
consult with each other with respect to such amendment or supplement and
shall incorporate the other's comments thereon.
(b) The Company shall include in the Proxy Statement the
recommendation of the Board of Directors of the Company described in
Section 3.3, subject to any modification, amendment or withdrawal thereof,
and represents that the Independent Advisor has, subject to the terms of
its engagement letter with the Company and the Board of Directors of the
Company (the "Independent Advisor Engagement Letter"), consented to the
inclusion of references to its opinion in the Proxy Statement. The Company
and its counsel shall permit Parent and its counsel to participate in all
communications with the SEC and its staff, including any meetings and
telephone conferences, relating to the Proxy Statement, the Initial Offer,
the Subsequent Offer, the Merger or this Agreement.
(c) Notwithstanding the foregoing, if at any time Buyer and/or any
direct or indirect subsidiary of Parent shall acquire at least 90% of the
outstanding shares of Company Common Stock, Buyer and the Company shall
take all necessary and appropriate action to cause the Merger to become
effective as promptly as practicable after the expiration of the Initial
Offer or Subsequent Offer, if applicable, and the satisfaction or waiver of
the conditions set forth in Article VI without the Stockholders' Meeting in
accordance with Section 253 of the DGCL.
Section 5.12. Stockholder Lists. The Company shall promptly (but in no
event later than three (3) business days after the date of this Agreement), or
shall cause its transfer agent to promptly, furnish Parent and Buyer with
mailing labels containing the names and addresses of all record holders of
shares of Company Stock and with security position listings of shares of Company
Stock held in stock depositories, each as of the most recent practicable 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 Stock. The Company shall furnish Parent and Buyer with such
additional information, including, without limitation, updated listings and
computer files of the Company Stockholders, mailing labels and security position
listings, and such other assistance as Parent, Buyer or their agents may
reasonably request.
Section 5.13. Shares Held by Company Subsidiaries. The Company agrees to
cause each of the Subsidiaries of the Company that owns any shares of Company
Stock not to tender any such shares pursuant to the Initial Offer or Subsequent
Offer.
Section 5.14. Directors. Promptly upon the acceptance for payment of, and
payment by Buyer for, shares of Company Common Stock pursuant to the Initial
Offer, Buyer shall be entitled to designate such number of directors on the
Board of Directors of the Company as will give Buyer, subject to compliance with
Section 14(f) of the Exchange Act, representation on such Board of Directors
equal to at least that number of directors, rounded up to the next whole number,
which is the percentage that (i) such number of shares of Company Common Stock
so accepted for payment and paid for by Buyer in the Initial Offer plus the
number of shares of Company Stock otherwise owned by Parent, Buyer or any other
subsidiary of Parent bears to (ii) the total number of shares of Company Common
Stock outstanding, and the Company shall, at such time, cause Buyer's designees
to be appointed or elected. Subject to applicable Law, the Company shall take
all action requested by Parent necessary to effect any such appointment or
election, including mailing to its
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stockholders an information statement containing the information required by
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder (either
separately or combined with the Schedule 14D-9), and the Company agrees to make
such mailing with the mailing of the Schedule 14D-9 (provided that Buyer shall
have provided to the Company on a timely basis all information required to be
included in such information statement with respect to Buyer's designees). In
connection with the foregoing, the Company will promptly, at the option of
Buyer, use its best efforts to either increase the size of the Board of
Directors of the Company or obtain the resignation of such number of its current
directors as is necessary to enable Buyer's designee to be elected or appointed
to the Board of Directors of the Company as provided above.
Section 5.15. Undertakings of Parent. Parent shall perform, or cause to be
performed, when due all obligations of Buyer under this Agreement.
Section 5.16. Director Resignations. The Company shall cause to be
delivered to Parent resignations of all the directors of the Company's
Subsidiaries to be effective upon the purchase of at least a majority of the
outstanding shares of Company Common Stock by Buyer pursuant to the Initial
Offer. The Company shall cause such directors, prior to resignation, to appoint
new directors nominated by Parent to fill such vacancies.
Section 5.17. Company Options. As promptly as practicable following the
date hereof, the Company shall use all commercially reasonable efforts to cause
all of the holders of Company Options to agree to the termination and expiration
of their Company Options upon consummation of the Initial Offer in exchange for
the Option Consideration described in Section 1.8.
Section 5.18. Financial Statement Tests. The Company shall provide to KPMG
Peat Marwick LLP ("Parent's Auditor"), Parent's regular outside accounting firm,
reasonable access at all reasonable times to the officers, employees, agents,
properties, offices and other facilities, books and records of the Company and
its Subsidiaries, and shall furnish Parent's Auditor with all financial,
operating and other data and information as Parent's Auditor may reasonably
request for the purpose of determining whether the Company is in compliance with
the Financial Statement Tests. For purposes of this Agreement, the "Financial
Statement Tests" mean (i) that the Company's financial statements included in
the Company's quarterly report on form 10-QSB for the quarter ended September
30, 1999 (the "September 10-Q") were prepared in accordance with GAAP applied on
a consistent basis throughout the period involved (except as permitted by Form
10-QSB or as may be indicated in the notes thereto) and fairly present, subject
to normal, recurring audit adjustments, the consolidated financial position of
the Company and its Subsidiaries at the respective date thereof and the
consolidated results of its operations and changes in cash flows for the period
indicated, (ii) the Stockholders' Equity (as determined consistent with the
methodology used in the September 10-Q) as of November 30, 1999 is at least
equal to $16,500,000 and (iii) the Current Liabilities and Long Term Liabilities
(each as determined consistent with the methodology used in the September 10-Q)
as of November 30, 1999 are in the aggregate no greater than $8,660,000;
provided, for purposes of (ii) and (iii), the 1999 annual bonuses to be paid to
John J. Campion and G. Laurence Anderson by the Company shall not be taken into
account when determining Stockholders' Equity, Current Liabilities and Long Term
Liabilities.
Section 5.19. Environmental Compliance. The Company shall use commercially
reasonable efforts to develop and implement as promptly as practicable a plan to
bring the fuel tanks identified in Section 3.17(a), paragraph 2 of the Company
Disclosure Letter into compliance with applicable Environmental Laws. As soon as
practicable beginning 15 days after the date hereof, and in any event prior to
the Purchase Date, the Company shall take all such action as is necessary to
cause the operation of the Company's generator sets in California to be in
compliance with applicable Environmental Laws and permits.
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ARTICLE VI
CONDITIONS
Section 6.1. Conditions to the Obligation of Each Party. The respective
obligations of Parent, Buyer and the Company to effect the Merger are subject to
the satisfaction of the following conditions, unless waived in writing by all
parties:
(a) Each of the conditions set forth in Annex I shall have been
satisfied or waived by Buyer, and Buyer or its permitted assignee shall
have purchased the shares of Company Common Stock validly tendered and not
withdrawn pursuant to the terms of the Initial Offer; provided, however,
that this condition shall not be applicable to the obligations of Parent or
Buyer if, in breach of this Agreement or the terms of the Initial Offer,
Buyer or its permitted assignee fails to purchase any shares of Company
Common Stock validly tendered and not withdrawn pursuant to the Initial
Offer;
(b) This Agreement and the Merger shall have been approved and adopted
by the requisite vote of the Company Stockholders, if and to the extent
required by the DGCL, the Company Certificate of Incorporation and the
Company Bylaws;
(c) No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or
other legal restraint or prohibition preventing the consummation of the
Merger shall be in effect; provided, however, that the parties invoking
this condition shall use all commercially reasonable efforts to have any
such order or injunction vacated;
(d) All actions by or in respect of or filings with any Governmental
Entity required to permit the consummation of the Merger shall have been
obtained or made (including the expiration or termination of any applicable
waiting period under the HSR Act); and
(e) The offering period with respect to the Subsequent Offer, if
applicable, shall have expired.
Section 6.2. Conditions to Obligations of Parent and Buyer to Effect the
Merger. The obligations of Parent and Buyer to effect the Merger are further
subject to satisfaction or waiver at or prior to the Effective Time of the
following conditions:
(a)(i) The representations and warranties of the Company in this
Agreement that are qualified by materiality shall be true and correct in
all respects as of the date of this Agreement and as of the Effective Time;
(ii) the representations and warranties of the Company in this Agreement
that are not qualified by materiality shall be true and correct in all
material respects as of the date of this Agreement and as of the Effective
Time; (iii) the Company shall have performed in all material respects all
obligations required to be performed by it under this Agreement; and (iv)
the Company shall have delivered to Parent and Buyer a certificate to the
effect that each of the conditions specified in (i), (ii) and (iii) above
is satisfied in all respects;
(b) The Company and its Subsidiaries shall have procured all necessary
third party consents in connection with the consummation of the Merger; and
(c) There shall not be overtly threatened, instituted or pending any
action, proceeding, application or counterclaim by any Governmental Entity
before any court or governmental regulatory or administrative agency,
authority or tribunal which challenges or seeks to challenge, restrain or
prohibit the consummation of the Initial Offer, Subsequent Offer or the
Merger.
Section 6.3. Conditions to Obligations of the Company to Effect the
Merger. The obligations of the Company to effect the Merger are further subject
to satisfaction or waiver at or prior to the Effective Time of the following
conditions:
(a) The representations and warranties of Parent and Buyer in this
Agreement that are qualified by materiality shall be true and correct in
all respects as of the date of this Agreement and as of the Effective Time;
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(b) The representations and warranties of Parent and Buyer in this
Agreement that are not qualified by materiality shall be true and correct
in all material respects as of the date of this Agreement and as of the
Effective Time;
(c) Parent and Buyer shall have performed in all material respects all
obligations required to be performed by them under this Agreement; and
(d) Parent and Buyer shall have delivered to the Company a certificate
to the effect that each of the conditions specified in Sections 6.3(a), (b)
and (c) is satisfied in all respects.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1. Termination. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time, whether before or
after approval of matters presented in connection with the Merger by the Company
Stockholders:
(a) By mutual written consent of duly authorized representatives of
Parent and the Company;
(b) By any of Parent, Buyer or the Company if any court of competent
jurisdiction or other Governmental Entity shall have issued an order,
decree, ruling or taken any other action permanently restraining, enjoining
or otherwise prohibiting the Initial Offer, the Subsequent Offer or the
Merger and such order, decree, ruling or other action shall have become
final and nonappealable; provided however, that the party terminating this
Agreement pursuant to this Section 7.1(b) shall use all commercially
reasonable efforts to have such order, decree, ruling or action vacated;
(c) By any of Parent, Buyer or the Company if the Initial Offer shall
have expired or been terminated and Buyer shall not have purchased any
shares of Company Common Stock pursuant thereto on or before March 31,
2000; provided, however, that the right to terminate this Agreement under
this Section 7.1(c) shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the primary cause of,
or resulted in, the expiration or termination of the Initial Offer on or
before such date;
(d) By Parent or Buyer if the Board of Directors of the Company (i)
shall have withdrawn or shall have modified in a manner adverse to Parent
or Buyer its approval or recommendation of the Initial Offer, the
Subsequent Offer, the Merger or this Agreement, (ii) causes the Company to
enter into an agreement with respect to an Acquisition Proposal, (iii)
shall have endorsed, approved or recommended any Acquisition Proposal or
(iv) shall have resolved to do any of the foregoing;
(e) By Parent or Buyer, if as a result of the failure of any of the
conditions set forth in Annex I to this Agreement, the Initial Offer shall
have been terminated by Parent or Buyer or expired in accordance with its
terms without Buyer (or any permitted assignee) having purchased any shares
of Company Common Stock pursuant to the Initial Offer; provided however,
that neither Parent nor Buyer shall have the right to terminate this
Agreement under this Section 7.1(e) if such party is in material breach of
this Agreement;
(f) By Parent or Buyer, if (i) any of the conditions set forth in
Section 6.2 shall have become incapable of fulfillment and shall not have
been waived by Parent and Buyer or (ii) the Company shall breach in any
material respect any of its representations, warranties, covenants or other
obligations hereunder and, within ten (10) days after written notice of
such breach to the Company from Parent, such breach shall not have been
cured in all material respects or waived by Parent or Buyer and the Company
shall not have provided reasonable assurance to Parent and Buyer that such
breach will be cured in all material respects on or before the Effective
Time;
(g) By the Company, if (i) any of the conditions set forth in Section
6.3 shall have become incapable of fulfillment and shall not have been
waived by the Company or (ii) Parent or Buyer shall breach in any material
respect any of their respective representations, warranties or obligations
hereunder
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and, within ten (10) days after written notice of such breach to Parent
from the Company, such breach shall not have been cured in all material
respects or waived by the Company and Parent or Buyer, as the case may be,
shall not have provided reasonable assurance to the Company that such
breach will be cured in all material respects on or before the Effective
Time;
(h) By any of Parent, Buyer or the Company if Buyer shall have
terminated the Initial Offer without Parent or Buyer (or the voting trust,
if applicable) purchasing any shares of Company Common Stock pursuant
thereto;
(i) By Parent prior to the Purchase Date if Parent determines in its
sole discretion that the matters disclosed in the phase I or phase II
environmental tests with respect to any property leased by the Company or
any Subsidiary would be likely to be material to the Company or any
Subsidiary; or
(j) By Parent if on or prior to the twenty-fifth (25th) business day
following the date hereof, in the good faith judgment of Parent's Auditor,
the Company does not meet each of the Financial Statement Tests.
Section 7.2. Effect of Termination.
(a) In the event of the termination of this Agreement pursuant to
Section 7.1 hereof, this Agreement shall forthwith be terminated and have
no further effect except as specifically provided herein and, except as
provided in this Section 7.2 and in Section 8.12, there shall be no
liability on the part of any party hereto, provided that nothing herein
shall relieve any party from liability for any willful breach hereof.
(b) If (i) Parent or Buyer exercises its right to terminate this
Agreement under Section 7.1(d) or (ii) (A) after the date of this Agreement
any Acquisition Proposal involving the Company shall have been announced,
(B) the Initial Offer shall have remained open until at least the scheduled
expiration date immediately following the date such Acquisition Proposal is
announced, (C) the Minimum Condition shall not have been satisfied at the
expiration of the Initial Offer and (D) this Agreement or the Offer shall
thereafter be terminated, the Company shall pay to Parent upon demand $1.5
million (the "Termination Fee"), payable in same-day funds, as liquidated
damages and not as a penalty to reimburse Parent for its time, expense and
lost opportunity costs of pursuing the Merger and Initial Offer.
(c) If within one year after termination of this Agreement, the
Company shall enter into any agreement relating to, or consummate, an
Acquisition Proposal with a person other than Parent or Buyer, then
immediately prior to, and as a condition of, consummation of such
transaction the Company shall pay to Parent upon demand the Termination
Fee, payable in same-day funds, as liquidated damages and not as a penalty,
to reimburse Parent for its time, expense and lost opportunity costs of
pursuing the Merger; provided that no such amount shall be payable if the
Termination Fee shall have become payable or have been paid in accordance
with Section 7.2(b) of this Agreement or if this Agreement shall have been
terminated in accordance with Section 7.1(a) or 7.1(b) or by the Company in
accordance with clause (ii) of Section 7.1(g).
(d) Notwithstanding anything to the contrary set forth in this
Agreement, if the Company fails promptly to pay to Parent any amounts due
under this Section 7.2, the Company shall pay the costs and expenses
(including reasonable legal fees and expenses) in connection with any
action, including the filing of any lawsuit or other legal action, taken to
collect payment, together with interest on the amount of any unpaid fee or
obligation at the publicly announced prime rate of Citibank, N.A. in effect
from time to time from the date such fee or obligation was required to be
paid.
Section 7.3. Amendments. This Agreement may not be amended except by
action of the board of directors of each of the parties hereto set forth in an
instrument in writing signed on behalf of each of the parties hereto; provided,
however, that after approval of the Merger by the Company Stockholders (if
required), no amendment may be made without the further approval of the Company
Stockholders if the effect of such amendment would be to reduce the Merger
Consideration or change the form thereof. Following the election or appointment
of Buyer's designees pursuant to Section 5.14 and prior to the Effective Time,
the
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affirmative vote of the directors of the Company who are not designees of Buyer
shall be required by the Company to (i) amend or terminate this Agreement by the
Company, (ii) exercise or waive any of the Company's rights or remedies under
this Agreement, or (iii) extend the time for performance of Parent's and Buyer's
respective obligations under this Agreement.
Section 7.4. Waiver. At any time prior to the Effective Time, whether
before or after the Stockholders' Meeting, any party hereto, by action taken by
its board of directors, may subject to Section 7.3 (i) extend the time for the
performance of any of the covenants, obligations or other acts of any other
party hereto or (ii) waive any inaccuracy of any representations or warranties
or compliance with any of the agreements, covenants or conditions of any other
party or with any conditions to its own obligations. Any agreement on the part
of a party hereto to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party by its duly
authorized officer. The failure of any party to this Agreement to assert any of
its rights under this Agreement or otherwise shall not constitute a waiver of
such rights. 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.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1. No Third Party Beneficiaries. Other than the provisions of
Sections 5.6 and 5.7 hereof, nothing in this Agreement shall confer any rights
or remedies upon any person other than the parties hereto.
Section 8.2. Entire Agreement. This Agreement constitutes the entire
Agreement among the parties with respect to the subject matter hereof and
supersedes any prior understandings, agreements, or representations by or among
the parties, written or oral, with respect to the subject matter hereof.
Section 8.3. Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties named herein and their respective
successors. No party may assign either this Agreement or any of its rights,
interests, or obligations hereunder without the prior written approval of the
other parties; provided, however, that Buyer may freely assign its rights to
another wholly owned subsidiary of Parent without such prior written approval
but no such assignment shall relieve Buyer of any of its obligations hereunder.
Section 8.4. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
Section 8.5. Headings. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 8.6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to principles of conflicts of law thereof.
Section 8.7. Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
Section 8.8. Specific Performance. Each of the parties acknowledges and
agrees that the other party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in
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accordance with their specific terms or otherwise are breached. Accordingly,
each of the parties agrees that the other party shall be entitled to seek an
injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any action instituted in any court of the United States or
any state thereof having jurisdiction over the parties and the matter, in
addition to any other remedy to which it may be entitled, at law or in equity.
Section 8.9. Construction. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any party.
Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation."
Section 8.10. Non-Survival of Representations and Warranties and
Agreements. Except as expressly set forth in the Indemnification Agreements,
the representations, warranties and agreements in this Agreement shall terminate
at the Effective Time or upon the termination of this Agreement pursuant to
Section 7.1, as the case may be, except that (i) the agreements set forth in
Articles I and VIII and Sections 5.4, 5.6 and 5.7 shall survive the Effective
Time indefinitely and (ii) the agreements set forth in Sections 5.2, 5.6, 5.7
and 7.2 and in Article VIII shall survive the termination of this Agreement
indefinitely.
Section 8.11. Certain Definitions.
(a) For purposes of this Agreement, the terms "associate" and
"affiliate" shall have the same meaning as set forth in Rule l2b-2
promulgated under the Exchange Act, and the term "person" shall mean any
individual, corporation, partnership (general or limited), limited
liability company, limited liability partnership, trust, joint venture,
joint-stock company, syndicate, association, entity, unincorporated
organization or government or any political subdivision, agency or
instrumentality thereof.
(b) For purposes of this Agreement, the phrase "Company Material
Adverse Effect" shall mean, with respect to the Company, any change, event
or effect shall have occurred or been threatened that, when taken together
with all other adverse changes, events or effects that have occurred or
been threatened, is or is reasonably likely to (i) be materially adverse to
the business, operations, prospects, properties, condition (financial or
otherwise), assets, liabilities (including, without limitation, contingent
liabilities) of the Company and its Subsidiaries taken as a whole or (ii)
prevent or materially delay the performance by the Company of any of its
obligations under this Agreement or the consummation of the Initial Offer,
the Subsequent Offer, the Merger or the other transactions contemplated by
this Agreement.
(c) For purposes of this Agreement, the phrases "to the knowledge of
the Company," "known to the Company," and similar formulations shall mean
matters within the actual knowledge, after reasonable inquiry, of John J.
Campion, G. Laurence Anderson, Stephen R. Bernstein, Jeffrey B. Stone, Pete
Wills and Nicholas Storr.
Section 8.12. Fees and Expenses. Except as provided in Section 7.2, all
costs and expenses incurred by the parties hereto in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses.
Section 8.13. 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 given upon receipt) by delivery in person, by telecopy
or by registered or certified mail (postage prepaid, return receipt requested)
to the respective parties at the following addresses, or at such other address
for a party as shall be specified in a notice given in accordance with this
Section 8.13:
If to Parent or Buyer: General Electric Company
4200 Wildwood Parkway
Atlanta, Georgia 30339
Telecopier: (770) 859-7012
Attention: Briggs L. Tobin, Esq.
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with a copy to: King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303
Telecopier: (404) 572-5100
Attention: C. William Baxley, Esq.
Mark E. Thompson, Esq.
If to the Company: Showpower, Inc.
18420 South Santa Fe Avenue
Rancho Dominguez, California 90221
Telecopier: (310) 604-1671
Attention: John J. Campion
with a copy to: Baker & Daniels
300 North Meridian Street
Indianapolis, Indiana 46204
Telecopier: (317) 237-1000
Attention: David C. Worrell, Esq.
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IN WITNESS WHEREOF, the Company, Parent and Buyer and have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
SHOWPOWER, INC.
By: /s/ JOHN J. CAMPION
------------------------------------
Name: John J. Campion
Title: CEO
GE ENERGY SERVICES, INC.
By: /s/ MARTIN A. MOORE
------------------------------------
Name: Martin A. Moore
Title: President -- GE Energy Rental
EMMY ACQUISITION CORP.
By: /s/ MARTIN A. MOORE
------------------------------------
Name: Martin A. Moore
Title: President -- GE Energy Rental
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ANNEX I
CONDITIONS OF THE INITIAL OFFER
Notwithstanding any other provision of the Initial Offer or the Agreement,
and in addition to and not in limitation of Buyer's rights to extend or amend
the Initial Offer at any time, in its sole discretion (subject to the
Agreement), Buyer shall not be required to accept for payment or, subject to any
applicable rules or regulations of the SEC, pay for any shares of Company Common
Stock, and (subject to such rules and regulations) may delay the acceptance of
payment of or, subject to any restriction referred to above, the payment for,
and may (except as provided in the Agreement) terminate the Initial Offer, if
(a) the shares of Company Common Stock tendered pursuant to the Initial Offer by
the expiration of the Initial Offer and not withdrawn, together with the shares
of Company Stock owned by Buyer represent, on a fully diluted basis, less than a
majority of the outstanding voting power of the Company Stock (the "Minimum
Condition"), (b) the waiting periods under the HSR Act applicable to the
transactions contemplated by the Agreement shall not have expired or been
terminated, if applicable, or any other regulatory approvals required under
applicable Law have not been obtained, which if not obtained would prevent the
consummation of the Initial Offer, (c) Baker & Daniels, legal counsel for the
Company, does not deliver an opinion substantially in the form of Exhibit A
hereto, or (d) at any time after the date of this Agreement and prior to the
acceptance for payment of the shares of Company Common Stock, any of the
following conditions exist:
(i) there shall be instituted, pending or threatened any action,
investigation or proceeding by any Governmental Entity, or there shall be
instituted, pending or threatened any action or proceeding by any other
person, domestic or foreign, before any Governmental Entity, which is
reasonably likely to be determined adversely to Buyer, (A) challenging or
seeking to make illegal, to delay materially or otherwise, directly or
indirectly, to restrain or prohibit the making of the Initial Offer, the
acceptance for payment of or payment for some of or all the shares of
Company Common Stock by Buyer or the consummation of the Merger, seeking to
obtain material damages or imposing any material adverse conditions in
connection therewith or otherwise, directly or indirectly, relating to the
transactions contemplated by the Initial Offer or the Merger, (B) seeking
to restrain, prohibit or delay the exercise of full rights of ownership or
operation by Buyer or its affiliates of all or any portion of the business
or assets of the Company and its Subsidiaries, taken as a whole, or of
Buyer or any of its affiliates, or to compel Buyer or any of its affiliates
to dispose of or hold separate all or any material portion of the business
or assets of the Company and its Subsidiaries, taken as a whole, or of
Buyer or any of its affiliates, (C) seeking to impose or confirm
limitations on the ability of Buyer or any of its affiliates effectively to
exercise full rights of ownership of the shares of Company Common Stock,
including, without limitation, the right to vote the shares of Company
Common Stock acquired or owned by Buyer or any of its affiliates on all
matters properly presented to the Company Stockholders, (D) seeking to
require divestiture by Buyer or any of its affiliates of the shares of
Company Common Stock, or (E) that otherwise would reasonably be expected to
have a Company Material Adverse Effect;
(ii) there shall be any action taken, or any statute, rule,
regulation, injunction, order or decree proposed, enacted, enforced,
promulgated, issued or deemed applicable to, or any consent or approval
withheld with respect to, the Initial Offer, the acceptance for payment of
or payment for any shares of Company Common Stock or the Merger, by any
Governmental Entity that, in the reasonable judgment of Buyer, may,
directly or indirectly, result in any of the consequences referred to in
clauses (A) through (E) of paragraph (i) above;
(iii) there shall have occurred any change, condition, event or
development that has resulted in, or would reasonably be expected to result
in, a Company Material Adverse Effect;
(iv) there shall have occurred (A) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market, (B) any decline in either the
Dow Jones Industrial Average or the Standard and Poor's Index of 500
Industrial Companies by an amount in excess of twenty-five percent (25%),
measured from the date of the Agreement, (C) the declaration of any banking
moratorium or any suspension of payments in respect of banks or any
material limitation (whether or not mandatory) on the extension of credit
by lending institutions in the United
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States, (D) the commencement of a war, material armed hostilities or other
material international or national calamity directly or indirectly
involving the United States that has a significant adverse effect on the
functioning of the financial markets in the United States, or (E) in the
case of any of the foregoing existing at the time of execution of the
Agreement, a material acceleration or worsening thereof;
(v) (A) the representations and warranties of the Company in the
Agreement that are qualified by materiality shall not be true and correct
in all respects as of the date of the Agreement and as of the Effective
Time; (B) the representations and warranties of the Company in the
Agreement that are not qualified by materiality shall not be true and
correct in all material respects as of the date of the Agreement and as of
the Effective Time; (C) the Company shall not have performed in all
material respects all obligations required to be performed by it under the
Agreement; (D) the directors of the Company's Subsidiaries shall have
resigned and appointed nominees to fill their vacancies as provided in
Section 5.16; and (E) an officer of the Company shall not have delivered to
Parent and Buyer a certificate to the effect that each of the foregoing
conditions is satisfied in all respects;
(vi) the Company and its Subsidiaries shall not have procured all
necessary third party consents (other than from Governmental Entities) with
respect to matters material to the conduct of business by the Company
required in connection with the execution and delivery of the Agreement and
the consummation of the Merger and the other transactions contemplated
hereby;
(vii) the Agreement shall have been terminated in accordance with its
terms; or
(viii) the Company and its Subsidiaries shall not have provided Buyer
and Parent with reasonable access for at least twenty (20) business days to
its leased properties to enable Buyer and Parent to conduct phase I and
phase II environmental testing,
which, in the reasonable judgment of Buyer in any such case, and regardless of
the circumstances giving rise to any such condition, makes it inadvisable to
proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Buyer and may be
asserted by Buyer regardless of the circumstances giving rise to any such
condition (including any action or omission by Buyer) or may be waived by Buyer
in whole or in part at any time and from time to time, in its sole discretion.
The failure by Buyer 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.
Should the Initial Offer be terminated pursuant to the foregoing provisions, all
tendered shares of Company Common Stock not theretofore accepted for payment
shall be returned forthwith.
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EXHIBIT A
The opinions to be delivered on behalf of the Company will be to the following
effect, with only such assumptions and qualifications as are reasonably
satisfactory to Buyer and Parent:
1. Each of the Company and each Subsidiary organized in the United
States (a "U.S. Subsidiary") (i) is a corporation or limited liability
company duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, (ii) has full power and
authority as a corporation or limited liability company, as applicable, and
all necessary government approvals to own, lease and operate its properties
and assets and to conduct its business as presently conducted and (iii) is
duly qualified or licensed to do business as a foreign corporation or
limited liability company, as applicable, and is in good standing in each
jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its business makes such qualification or
licensing necessary, except where the failure to be so qualified or
licensed, individually or in the aggregate, has not had, or would not
reasonably be expected to have, a Company Material Adverse Effect.
2. The Company has all necessary power and authority to execute and
deliver the Agreement, to perform its obligations thereunder and to
consummate the Offer, the Merger and the other transactions contemplated by
the Agreement.
3. The execution, delivery and performance by the Company of the
Agreement, and the consummation by the Company of the Offer, the Merger and
the other transactions contemplated by the Agreement, have been duly
authorized by all necessary corporate action, (including, without
limitation, the unanimous approval of the Board of Directors of the
Company) and no other corporate proceedings on the part of the Company are
necessary to authorize the Agreement or to consummate the Offer, the Merger
or the other transactions contemplated by the Agreement. The Company has
duly and validly executed and delivered the Agreement.
4. The Agreement and the transactions contemplated thereby constitute
the legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with its terms, except as limited by
bankruptcy, insolvency, reorganization and moratorium laws, and general
principles of equity.
5. The execution and delivery of the Agreement by the Company do not,
and the performance of the Agreement by the Company and the consummation of
the Offer and the Merger and the other transactions contemplated by the
Agreement will not (i) conflict with or violate the Company Certificate of
Incorporation or Company Bylaws equivalent organizational documents of any
of its U.S. Subsidiaries, (ii) conflict with or violate any Law applicable
to the Company or any of its U.S. Subsidiaries by which any property or
asset of the Company or any of its U.S. Subsidiaries is bound or affected
or (iii) to the knowledge of such counsel, except as set forth in the
Company Disclosure Letter, result in a breach of or constitute a default
(or an event which with notice or lapse of time or both would become a
default) under, give to others any right of termination, amendment,
acceleration or cancellation of, result in triggering any payment or other
obligations, or result in the creation of any lien or other encumbrance on
any property or asset of the Company or any of its U.S. Subsidiaries in any
case that would be material to the Company or any U.S. Subsidiary pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation or Material
Contract to which the Company or any of its U.S. Subsidiaries is a party or
by which the Company or any of its U.S. Subsidiaries or any property or
asset of any of them is bound or affected.
6. The Company's authorized capitalization consists of 6,500,000
shares of common stock and 1,000,000 shares of preferred stock. To the
knowledge of such counsel, except as disclosed in the Company Disclosure
Letter, there are no rights of first refusal, preemptive rights or other
rights, options, calls, warrants or other securities with rights
outstanding which are convertible into, exercisable for, or convertible
into, exercisable for, or related to any shares of capital stock of the
Company or any U.S. Subsidiary or other agreement either directly or
indirectly for the purchase or acquisition from the Company or any U.S.
Subsidiary of any shares of its capital stock.
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APPENDIX B
FORM OF
TENDER AGREEMENT
THIS TENDER AGREEMENT (this "Agreement") dated as of December 17, 1999 is
entered into by and among GE Energy Services, Inc., a Delaware corporation
("Parent"), Emmy Acquisition Corp., a Delaware corporation and wholly owned
subsidiary of Parent ("Buyer"), and , in his capacity as a stockholder
of the Company and a resident of the State of ("Securityholder"), with
respect to certain equity securities owned by Securityholder of Showpower, Inc.,
a Delaware corporation (the "Company"), and, for purposes of Section 1.7 hereof,
the Company.
WITNESSETH:
WHEREAS, Parent, Buyer and the Company have entered into an Agreement and
Plan of Merger (the "Merger Agreement") dated as of the date hereof pursuant to
which Buyer has agreed to make a cash tender offer described therein and
thereafter merge with and into the Company (the "Merger") in accordance with the
provisions of the Delaware General Corporation Law of the State of Delaware;
WHEREAS, as of the date hereof, Securityholder beneficially owns and has
the power to vote certain shares of the common stock, par value $.01 per share,
of the Company (the "Company Common Stock"); and
WHEREAS, in consideration of Buyer's and Parent's agreements herein and in
the Merger Agreement, Securityholder has agreed to cooperate with Buyer and
Parent with respect to the acquisition of the Company by Parent and Buyer upon
the terms and subject to the conditions set forth in the Merger Agreement.
NOW, THEREFORE, in contemplation of the foregoing and in consideration of
the mutual agreements, covenants, representations and warranties contained
herein and for other good and valuable consideration, the receipt of which is
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto agree as follows:
1. Certain Covenants.
1.1 Lock-Up. Securityholder hereby covenants and agrees during the
term of this Agreement that (a) except as consented to in writing by
Parent in its sole discretion, Securityholder will not, directly or
indirectly, sell, transfer, assign, pledge, hypothecate or otherwise
dispose of or limit its right to vote in any manner any of the
Securities (as hereinafter defined), or agree to do any of the
foregoing, and (b) Securityholder will not take any action which would
have the effect of preventing or disabling Securityholder from
performing its obligations under this Agreement.
1.2 No Solicitation. During the term of this Agreement, neither
Securityholder nor any person acting as an agent of Securityholder or
otherwise on Securityholder's behalf shall, directly or indirectly,
solicit, encourage or initiate negotiations with, or provide any
information to, any corporation, partnership, person or other entity or
group (other than Parent or an affiliate or an associate of Parent)
concerning any sale, transfer, pledge or other disposition or conversion
of the Securities. Securityholder 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.
Securityholder will notify Buyer immediately if any party contacts
Securityholder following the date hereof (other than Buyer or an
affiliate or associate of Buyer) concerning any sale, transfer, pledge
or other disposition or conversion of the Securities.
1.3 Voting Agreement.
(a) Securityholder has revoked or terminated any proxies, voting
agreements or similar arrangements previously given or entered into
with respect to the Securities and hereby irrevocably appoints Buyer,
during the term of this Agreement, as proxy for Securityholder to
vote (or refrain from voting) in any manner as Buyer, in its sole
discretion, may see fit, all of the Securities of Securityholder for
Securityholder and in Securityholder's name, place and stead,
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at any annual, special or other meeting or action of the
securityholders of the Company, as applicable, or at any adjournment
thereof or pursuant to any consent of securityholders of the Company,
in lieu of a meeting or otherwise, with respect to (i) the adoption
and approval of the Merger Agreement, (ii) any extraordinary
corporate transaction (other than the Merger), such as a merger,
consolidation, business combination, tender or exchange offer,
reorganization, recapitalization, liquidation or other change of
control involving the Company or any of its subsidiaries, including,
but not limited to, any Acquisition Proposal (as defined in the
Merger Agreement), and (iii) any sale or transfer of a material
amount of the assets or securities of the Company or any of its
subsidiaries (other than pursuant to the Merger). The parties
acknowledge and agree that neither Buyer, nor Buyer's successors,
assigns, subsidiaries, divisions, employees, officers, directors,
shareholders, agents and affiliates shall owe any duty to, whether in
law or otherwise, or incur any liability of any kind whatsoever,
including without limitation, with respect to any and all claims,
losses, demands, causes of action, costs, expenses (including
reasonable attorney's fees) and compensation of any kind or nature
whatsoever to Securityholder in connection with, as a result of or
otherwise relating to any vote (or refrain from voting) by Buyer of
the Securities subject to the irrevocable proxy hereby granted to
Buyer at any annual, special or other meeting or action or the
execution of any consent of the securityholders of the Company.
(b) Notwithstanding the foregoing grant to Buyer of the
irrevocable proxy, in the event Buyer elects not to exercise its
rights to vote the Securities pursuant to the irrevocable proxy,
Securityholder agrees to vote all of the Securities during the term
of this Agreement (i) if the issue on which Securityholder is
requested to vote is a proposal to approve the Merger, Securityholder
agrees to vote in favor of or give its consent to, as applicable,
such transaction or (ii) otherwise in the manner directed by Buyer at
any annual, special or other meeting or action of securityholders of
the Company, in lieu of a meeting or otherwise with respect to any
issue brought before the securityholders of the Company.
1.4 Tender of Securities.
(a) Securityholder agrees to tender, and not withdraw, the
Securities owned by Securityholder to Buyer in the Initial Offer (as
defined in the Merger Agreement), and in any event no later than 10
business days following the commencement of the Initial Offer.
(b) Buyer shall withhold 10% of Securityholder's gross aggregate
Offer Price (as defined in the Merger Agreement) received in the
Initial Offer for the Securities (which amount is equal to
$ at a $7 per share Offer Price) and place such amount into
an escrow account (the "Indemnification Escrow") pursuant to the
terms of an escrow agreement in substantially the form of Exhibit A
hereto (the "Escrow Agreement"). The funds in the Indemnification
Escrow shall secure the indemnification obligations of Securityholder
and shall be distributed to Securityholder on the first anniversary
of the Closing, subject to claims made in accordance with the
Indemnification Agreement (as defined in the Merger Agreement).
1.5 Public Announcement. Securityholder shall consult with Parent
before issuing any press releases or otherwise making any public
statements with respect to the transactions contemplated herein and
shall not issue any such press release or make any such public statement
without the approval of Buyer, except as may be required by law.
1.6 Stop Transfer Instruction. Promptly following the date hereof,
Securityholder and Buyer shall deliver joint written instructions to the
Company and to the Company's transfer agent stating that the Securities
may not be sold, transferred, pledged, assigned, hypothecated or
otherwise disposed of in any manner without the prior written consent of
Buyer or except in accordance with the terms and conditions of this
Agreement.
1.7 Debt to the Company. Pursuant to the terms of Securityholder's
note payable to the Company and related pledge agreement (collectively,
the "Loan Agreement"), the Company hereby
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consents to Securityholder entering into this Agreement and agreeing to
tender the Securities in the Initial Offer.
2. Representation and Warranties.
2.1 Representations and Warranties of Buyer and Parent. Buyer and
Parent, hereby jointly and severally, represent and warrant to
Securityholder, as of the date hereof and as of the date Buyer purchases
shares of Company Common Stock pursuant to the Initial Offer, as
follows:
(a) Authorization. Each of Buyer and Parent is a corporation
duly organized, validly existing and in good standing under the laws
of its state of incorporation. Each of Buyer and Parent has all
requisite power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. Each of Buyer
and Parent has duly authorized, executed and delivered this Agreement
and this Agreement is a legal, valid and binding agreement of Buyer,
enforceable against Buyer in accordance with its terms.
2.2 Representations and Warranties of
Securityholder. Securityholder hereby represents and warrants to Buyer
and Parent, as of the date hereof and as of the date Buyer purchases
shares of Company Common Stock pursuant to the Initial Offer, as
follows:
(a) Ownership. Securityholder is the sole record and beneficial
owner of, and has good and marketable title to, shares
of Company Common Stock (collectively, the "Securities"), in each
case free and clear of all liabilities, claims, liens, options,
proxies, charges, participations and encumbrances of any kind or
character whatsoever, except for any security interest securing the
obligations under the Loan Agreement.
(b) Authorization. Securityholder has all requisite power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby and has sole voting power and sole
power of disposition, with respect to all of the Securities owned by
Securityholder with no restrictions on its voting rights or rights of
disposition pertaining thereto. Securityholder has duly authorized,
executed and delivered this Agreement and this Agreement is a legal,
valid and binding agreement of Securityholder, enforceable against
Securityholder in accordance with its terms.
(c) No Violation. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated
hereby will (a) require Securityholder to file or register with, or
obtain any material permit, authorization, consent or approval of,
any governmental agency, authority, administrative or regulatory
body, court or other tribunal, foreign or domestic, or any other
entity, or (b) violate, or cause a breach of or default under, any
contract, agreement or understanding, any statute or law, or any
judgment, decree, order, regulation or rule of any governmental
agency, authority, administrative or regulatory body, court or other
tribunal, foreign or domestic, or any other entity or any arbitration
award binding upon Securityholder. No proceedings are pending which,
if adversely determined, will have a material adverse effect on any
of the Securities. Securityholder has not previously assigned or sold
any of the Securities to any third party.
(d) Securityholder Has Adequate Information. Securityholder is
a sophisticated seller with respect to the Securities and has
adequate information concerning the business and financial condition
of the Company to make an informed decision regarding the sale of the
Securities and has independently and without reliance upon Buyer or
Parent and based on such information as Securityholder has deemed
appropriate, made its own analysis and decision to enter into this
Agreement. Securityholder acknowledges that neither Buyer nor Parent
has made and neither make any representation or warranty, whether
express or implied, of any kind or character except as expressly set
forth in this Agreement. Securityholder acknowledges that the
agreements contained herein with respect to the Securities by
Securityholder are irrevocable, and that Securityholder shall have no
recourse to the Securities or Buyer or Parent, except
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with respect to breaches of representations, warranties, covenants
and agreements expressly set forth in this Agreement, and pursuant to
indemnities contained herein.
(e) Buyer's Excluded Information. Securityholder acknowledges
and confirms that (a) Buyer or Parent may possess or hereafter come
into possession of certain non-public information concerning the
Securities and the Company which is not known to Securityholder and
which may be material to Securityholder's decision to sell the
Securities ("Buyer's Excluded Information"), (b) Securityholder has
requested not to receive Buyer's Excluded Information and has
determined to sell the Securities notwithstanding its lack of
knowledge of Buyer's Excluded Information, and (c) Buyer and Parent
shall have no liability or obligation to Securityholder, in
connection with, and Securityholder hereby waives and releases Buyer
and Parent from, any claims which Securityholder or its successors
and assigns may have against Buyer or Parent (whether pursuant to
applicable securities laws or otherwise) with respect to, the
non-disclosure of Buyer's Excluded Information; provided, however,
nothing contained in this Section 2.2(e) shall limit Securityholder's
right to rely upon the express representations and warranties made by
Buyer and Parent in this Agreement, or Securityholder's remedies in
respect of breaches of any such representations and warranties.
(f) No Setoff. Securityholder has no liability or obligation
related to or in connection with the Securities other than the
obligations to Buyer and Parent as set forth in this Agreement. There
are no legal or equitable defenses or counterclaims that have been or
may be asserted by or on behalf of the Company, as applicable, to
reduce the amount of the Securities or affect the validity or
enforceability of the Securities.
3. Survival of Representations and Warranties. The respective
representations and warranties of Securityholder, Parent and Buyer
contained herein or in any certificates or other documents delivered in
connection herewith shall not be deemed waived or otherwise affected by any
investigation made by the other party hereto, and each representation and
warranty contained herein shall survive the closing of the transactions
contemplated hereby until the expiration of the applicable statute of
limitations, including extensions thereof.
4. Specific Performance. Securityholder acknowledges that Buyer and
Parent will be irreparably harmed and that there will be no adequate remedy
at law for a violation of any of the covenants or agreements of
Securityholder which are contained in this Agreement. It is accordingly
agreed that, in addition to any other remedies which may be available to
Buyer and Parent upon the breach by Securityholder of such covenants and
agreements, Buyer and Parent shall have the right to obtain injunctive
relief to restrain any breach or threatened breach of such covenants or
agreements or otherwise to obtain specific performance of any of such
covenants or agreements.
5. Miscellaneous.
5.1 Term. This agreement shall terminate upon the termination of
the Merger Agreement.
5.2 Expenses. Each of the parties hereto shall pay its own
expenses incurred in connection with this Agreement. Each of the parties
hereto warrants and covenants to the others that it will bear all claims
for brokerage fees attributable to action taken by it.
5.3 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of and be enforceable by the parties hereto and their
respective representatives and permitted successors and assigns.
5.4 Entire Agreement. This Agreement contains the entire
understanding of the parties and supersedes all prior agreements and
understandings between the parties with respect to its subject matter.
This Agreement may be amended only by a written instrument duly executed
by the parties hereto.
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5.5 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. Time is of the essence with respect to
all provisions of this Agreement.
5.6 Assignment. This Agreement may not be transferred or assigned
by Securityholder but may be assigned by Buyer to any of its affiliates
or to any successor to its business and will be binding upon and inure
to the benefit of any such affiliate or successor.
5.7 Counterparts. This Agreement may be executed in two
counterparts, each of which shall be an original, but both of which
together shall constitute one and the same Agreement.
5.8 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 given if so given) by delivery,
telegram or telecopy, or by mail (registered or certified mail, postage
prepaid, return receipt requested) or by any national courier service,
provided that any notice delivered as herein provided shall also be
delivered by telecopy at the time of such delivery. All communications
hereunder shall be delivered to the respective parties at the following
addresses (or at such other address for a party as shall be specified by
like notice, provided that notices of a change of address shall be
effective only upon receipt thereof):
If to Parent or Buyer: General Electric Company
4200 Wildwood Parkway
Atlanta, Georgia 30339
Attention: Briggs L. Tobin, Esq.
Telecopy: (770) 859-7012
with a copy to: King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
Attention: C. William Baxley, Esq.
Mark E. Thompson, Esq.
Telecopy: (404) 572-5100
If to Securityholder:
Telecopy:
5.9 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of
Delaware, without regard to its principles of conflicts of laws.
5.10 Enforceability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity
or enforceability of any other provision of this Agreement, which shall
remain in full force and effect.
5.11 Further Assurances. From time to time at or after the date
Buyer purchases shares of Company Common Stock pursuant to the Initial
Offer, at Buyer's request and without further consideration,
Securityholder shall execute and deliver to Buyer such documents and
take such action as Buyer may reasonably request in order to consummate
more effectively the transactions contemplated hereby and to vest in
Buyer good, valid and marketable title to the Securities, including, but
not limited to, using its best efforts to cause the appropriate transfer
agent or registrar to transfer of record the Securities.
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IN WITNESS WHEREOF, Buyer, Parent, Securityholder and the Company have
caused this Agreement to be duly executed as of the day and year first above
written.
EMMY ACQUISITION CORP.
By:
--------------------------------------
Name:
Title:
GE ENERGY SERVICES, INC.
By:
--------------------------------------
Name:
Title:
--------------------------------------
Securityholder
SHOWPOWER, INC.,
for purposes of Section 1.7 only
By:
--------------------------------------
Name:
Title:
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EXHIBIT A
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement"), dated as of ,
2000, is entered into by and among GE Energy Services, Inc., a Delaware
corporation ("Parent"), Emmy Acquisition Corp., a Delaware corporation and
wholly owned subsidiary of Parent ("Buyer"), and G. Lawrence Anderson and John
J. Campion, in their capacity as the stockholder representatives (the
"Stockholder Representatives") of the stockholders identified on Schedule I
hereto (the "Securityholders") of Showpower, Inc., a Delaware corporation (the
"Company"), and , a banking corporation, as escrow
agent (the "Escrow Agent"). Capitalized terms used but not otherwise defined in
this Agreement shall have the meanings ascribed to such terms in the
Indemnification Agreements (as hereinafter defined).
WITNESSETH:
WHEREAS, Parent, Buyer and the Company have entered into an Agreement and
Plan of Merger (the "Merger Agreement") dated as of December , 1999 pursuant
to which Buyer has agreed to make a cash tender offer described therein and
thereafter merge with and into the Company (the "Merger") in accordance with the
provisions of the Delaware General Corporation Law of the State of Delaware;
WHEREAS, as of the date hereof, Stockholder Representatives are the
representatives of the Securityholders who beneficially own and have the power
to vote in the aggregate shares of the common stock, par value
$.01 per share, of the Company (the "Company Common Stock") as set forth on
Schedule I hereto;
WHEREAS, concurrently with the execution and delivery of the Merger
Agreement, Parent, Buyer, the Stockholder Representatives and each of the
Securityholders have entered into agreements, dated as of the date hereof (the
"Indemnification Agreements"), pursuant to which, among other things, each
Securityholder has irrevocably appointed the Stockholder Representatives as
their agent and attorney-in-fact and has agreed to indemnify Parent and Buyer
for breaches of representations, warranties and covenants contained in the
Merger Agreement, subject to the terms and conditions contained in the
Indemnification Agreement;
WHEREAS, concurrently with the execution and delivery of the Merger
Agreement, Parent, Buyer, the Company and each of the Securityholders have
entered into agreements, dated as of the date hereof (the "Tender Agreements"),
pursuant to which, among other things, each Securityholder has agreed to tender
his shares of Company Common Stock in the Initial Offer (as defined in the Merge
Agreement);
WHEREAS, Section 1.4(b) of the Tender Agreements provides for Buyer to
withhold from the Offer Price (as defined in Section 1.1(a) of the Merger
Agreement) payable to the Securityholders and deliver to the Escrow Agent
in the aggregate (the "Indemnification Escrow Fund") (each
Securityholder's portion of such Indemnification Escrow Fund is identified on
Schedule I hereto) on the date the shares of Company Common Stock are purchased
by Buyer pursuant to the Initial Offer (the "Purchase Date"); and
WHEREAS, Parent, Buyer and each Securityholder intend for the
Indemnification Escrow Fund to secure the indemnification obligations of such
Securityholder under Section 3 of the Indemnification Agreements and to be held
by the Escrow Agent in accordance with the provisions of this Agreement;
NOW, THEREFORE, in contemplation of the foregoing and in consideration of
the mutual agreements, covenants, representations and warranties contained
herein and for other good and valuable consideration, the receipt of which is
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto agree as follows:
1. Appointment of the Escrow Agent. Parent, Buyer and each
Securityholder hereby appoint and designate the Escrow Agent as escrow
agent to receive, hold and disburse the Indemnification Escrow Fund in
accordance with the terms of this Agreement. The Escrow Agent hereby
accepts its appointment
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as the escrow agent and agrees to receive, hold and disburse the
Indemnification Escrow Fund and any income, interest or other amounts
received thereon in accordance with the terms of this Agreement.
2. The Indemnification Escrow Fund.
2.1 Receipt of the Indemnification Escrow Fund. The Escrow Agent
hereby acknowledges receipt of the Indemnification Escrow Fund.
2.2 Investment of the Indemnification Escrow Fund. The Escrow
Agent shall invest the Indemnification Escrow Fund as instructed by the
Stockholder Representatives in (i) savings accounts with, repurchase
agreements, or certificates of deposit issued by, federally chartered
banks or trust companies, the assets of which are at least $100,000,000
in excess of their liabilities, (ii) United States Treasury Bills (or an
investment portfolio or fund investing only in United States Treasury
Bills), (iii) commercial paper rated in the highest grade by a
nationally recognized credit rating agency or (iv) the [TREASURY
OBLIGATIONS MONEY MARKET FUND] (as long as such money market fund is
rated AAA by a nationally recognized credit rating agency), with the
income from such invested cash being held by the Escrow Agent as part of
the Indemnification Escrow Fund. The parties hereto agree that the
income from such invested cash shall be recognized as income by each
Securityholder for federal, state and local tax purposes.
2.3 Disbursement of the Indemnification Escrow Fund. The
Indemnification Escrow Fund shall secure each Securityholder's
obligations with respect to a claim by a Buyer Indemnitee (as defined in
Section 3.1 of the Indemnification Agreements) for indemnification from
each Securityholder (an "Indemnity Claim") pursuant to the
indemnification obligations set forth in Section 3 of the
Indemnification Agreements.
(i) The Escrow Agent shall disburse to any Buyer Indemnitee an
amount equal to that Buyer Indemnitee's Indemnity Claim promptly
following receipt of (A) the written consent or agreement of Parent
and the Stockholder Representatives to the payment of such Indemnity
Claim, specifying the amount thereof, or (B) a final decision, order,
judgment or decree of an arbitrator or court having jurisdiction
which is either not subject to appeal or as to which notice of appeal
has not been timely filed or served (a "Final Decision") with respect
to such Indemnity Claim, specifying the amount thereof.
(ii) On the first anniversary of the Closing (as defined in
Section 1.4 of the Merger Agreement), the Escrow Agent shall, subject
to the disbursement of the Indemnification Escrow Fund pursuant to
Section 2.3(i) of this Agreement, disburse to the Stockholder
Representatives, or in the manner directed by the Stockholder
Representatives, the remaining balance of the Indemnification Escrow
Fund, less the amount of any unresolved Indemnity Claims of which the
Escrow Agent has received notice.
All disbursements from the Indemnification Escrow Fund shall be made
by wire transfer of cash in immediately available funds to the person
entitled thereto.
2.4 Stockholder Representatives. Escrow Agent shall be able to
rely conclusively, without inquiry or liability, on the instructions,
agreements and decisions of the Stockholder Representatives, acting
jointly, with respect to all actions or matters permitted to be taken by
the Stockholder Representatives hereunder or under the Indemnification
Agreements, and no party shall have any cause of action against Escrow
Agent for any action taken by Escrow Agent in reliance upon the
agreements, instructions or decisions of the Stockholder Representatives
acting jointly. All actions, agreements, decisions and instructions of
the Stockholder Representatives shall be conclusive and binding upon
each Securityholder.
3. Termination of the Indemnification Escrow Fund. The escrow
provided for hereunder shall terminate upon the disbursement of the
Indemnification Escrow Fund pursuant to Section 2.3(ii) of this Agreement.
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4. Covenants of the Escrow Agent. The Escrow Agent hereby agrees and
covenants to Parent, Buyer, the Stockholder Representatives and each
Securityholder as follows:
(a) The Escrow Agent agrees to perform all of its obligations
under this Agreement and not to deliver custody or possession of any
of the Indemnification Escrow Fund to anyone except pursuant to the
express terms of this Agreement.
(b) The Escrow Agent agrees to send, within three (3) business
days after receipt of a written notice from any party hereto, one
copy of such written notice to all other parties hereto.
5. Resignation and Removal of the Escrow Agent. The Escrow Agent may
resign from the performance of its duties hereunder at any time by giving
thirty (30) days' prior written notice to Parent and the Stockholder
Representatives or may be removed, with or without cause, by Parent at any
time by the giving of thirty (30) days' prior written notice to the Escrow
Agent.
Such resignation or removal shall take effect upon the appointment of
a successor escrow agent as provided herein. Upon any such notice of
resignation or removal, Parent and the Stockholder Representatives shall
appoint a successor escrow agent hereunder, which shall be a commercial
bank, trust company or other financial institution with a combined capital
and surplus in excess of $100,000,000. Upon the acceptance in writing of
any appointment as Escrow Agent hereunder by a successor escrow agent, such
successor escrow agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Escrow Agent,
and the retiring Escrow Agent shall be discharged from its duties and
obligations under this Agreement, but shall not be discharged from any
liability for actions taken as Escrow Agent hereunder prior to such
succession. After any retiring Escrow Agent's resignation or removal, the
provisions of this Agreement shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Escrow Agent under this
Agreement.
6. Liability of the Escrow Agent. The Escrow Agent shall have no
liability or obligation with respect to the Indemnification Escrow Fund
except for the Escrow Agent's willful misconduct or gross negligence. The
Escrow Agent may rely upon any instrument, not only as to its due
execution, validity and effectiveness, but also as to the truth and
accuracy of any information contained therein, which the Escrow Agent shall
in good faith believe to be genuine, to have been signed or presented by
the person or parties purporting to sign the same and to conform to the
provisions of this Agreement. The Escrow Agent may consult legal counsel
selected by it in the event of any dispute or question of the construction
of this Agreement, the Merger Agreement or the Indemnification Agreements
or seek the assistance of a court of competent jurisdiction, and shall
incur no liability and shall be fully protected in acting in accordance
with the opinion or instruction of such counsel or such court. Provided
that the Escrow Agent shall be in compliance with its duties hereunder,
Parent and each Securityholder hereby jointly agree to indemnify and hold
harmless the Escrow Agent against any and all losses, claims, damages,
liabilities and expenses, including reasonable costs of investigation and
counsel fees and disbursement, which may be imposed upon the Escrow Agent
or incurred by the Escrow Agent in connection with its acceptance of
appointment as escrow agent hereunder, or the performance of its duties
hereunder, including any litigation arising from this Agreement or
involving the subject matter hereof of the cash deposited hereunder.
7. Compensation of the Escrow Agent. Parent shall compensate the
Escrow Agent for performing its duties hereunder in accordance with
Schedule II attached hereto.
8. Miscellaneous.
8.1 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of and be enforceable by the parties hereto and their
respective representatives and permitted successors and assigns.
8.2 Entire Agreement. This Agreement contains the entire
understanding of the parties and supersedes all prior agreements and
understandings between the parties with respect to its subject
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matter. This Agreement may be amended only by a written instrument duly
executed by the parties hereto.
8.3 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.
8.4 Waiver. Any party hereto may, at its option, waive in writing
any or all of the conditions herein contained to which its obligations
hereunder are subject. No waiver of any provision of this Agreement,
however, shall constitute a waiver of any other provision (whether
similar or not similar), nor shall such waiver constitute a continuing
waiver unless otherwise expressly provided.
8.5 Time of the Essence. Time is of the essence with respect to
all provisions of this Agreement.
8.6 Assignment. This Agreement may not be transferred or assigned
by any Securityholder but may be assigned by Parent or Buyer to any of
its affiliates or to any successor to its business and will be binding
upon and inure to the benefit of any such affiliate or successor.
8.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which
together shall constitute one and the same Agreement.
8.8 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 given if so given) by delivery,
telegram or telecopy, or by mail (registered or certified mail, postage
prepaid, return receipt requested) or by any national courier service,
provided that any notice delivered as herein provided shall also be
delivered by telecopy at the time of such delivery. All communications
hereunder shall be delivered to the respective parties at the following
addresses (or at such other address for a party as shall be specified by
like notice, provided that notices of a change of address shall be
effective only upon receipt thereof):
If to Parent or Buyer: General Electric Company
4200 Wildwood Parkway
Atlanta, Georgia 30339
Attention: Briggs L. Tobin, Esq.
Telecopy: (770) 859-7012
with a copy to: King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
Attention: C. William Baxley, Esq.
Mark E. Thompson, Esq.
Telecopy: (404) 572-5146
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If to Stockholder Representatives: Showpower, Inc.
18420 South Sante Fe Avenue
Rancho Dominguez, California 90221
Attention: G. Lawrence Anderson
John J. Campion
Telecopy: (310) 604-1671
with a copy to: Baker & Daniels
300 North Meridian Street
Indianapolis, Indiana 46204
Attention: David C. Worrell, Esq.
Telecopy: (317) 237-1000
If to the Escrow Agent:
Attention:
Telecopy:
8.9 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of
Delaware, without regard to its principles of conflicts of laws.
8.10 Enforceability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity
or enforceability of any other provision of this Agreement, which shall
remain in full force and effect.
8.11 Further Assurances. From time to time at or after the
Purchase Date, at Parent's or Buyer's request and without further
consideration, the Stockholder Representatives shall execute and deliver
to Parent or Buyer such documents and take such action as Parent or
Buyer may reasonably request in order to consummate more effectively the
transactions contemplated by this Agreement.
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IN WITNESS WHEREOF, Buyer, Parent, the Stockholder Representatives and the
Escrow Agent have caused this Agreement to be duly executed as of the day and
year first above written.
EMMY ACQUISITION CORP.
By:
------------------------------------
Name:
Title:
GE ENERGY SERVICES, INC.
By:
------------------------------------
Name:
Title:
STOCKHOLDER REPRESENTATIVE,
on behalf of the Securityholders
identified on Schedule I hereto
--------------------------------------
G. Lawrence Anderson
STOCKHOLDER REPRESENTATIVE,
on behalf of the Securityholders
identified on Schedule I hereto
--------------------------------------
John J. Campion
[ESCROW AGENT]
By:
------------------------------------
Name:
Title:
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SCHEDULE I
SECURITYHOLDERS
<TABLE>
<CAPTION>
SECURITYHOLDER NUMBER OF SHARES PORTION OF ESCROW
-------------- ---------------- -----------------
<S> <C> <C>
John J. Campion and Esther Ash.............................. 209,184 $146,428.80
G. Laurence and Thressa Anderson............................ 104,012 $ 72,808.40
Stephen R. Bernstein........................................ 113,670 $ 79,569.00
Jeffrey B. Stone............................................ 359,828 $251,879.60
Joseph A. Ades.............................................. 148,633 $104,043.10
Robert E. Masterson......................................... 244,329 $171,030.30
David C. and Annika Bernstein............................... 180,093 $126,065.10
Vincent A. Carrino.......................................... 55,132 $ 38,592.40
Eric C. Jackson............................................. 75,493 $ 52,845.10
</TABLE>
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SCHEDULE II
COMPENSATION OF THE ESCROW AGENT
Escrow Agent's Fee:[$ ]
The Escrow Agent's fee for the term of this Escrow Agreement is due at
signing.
Out of pocket expenses such as, but not limited to, postage, courier,
insurance, overnight mail, long distance telephone, stationery, travel, legal or
accounting, etc., will be billed at cost.
These fees do not include extraordinary services which will be priced
according to time and scope of duties.
It is acknowledged that the schedule of fees shown above is acceptable for
the services mutually agreed upon and the undersigned authorizes
to perform these services.
All escrow agent fees and expense reimbursements shall be paid by
.
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APPENDIX C
FORM OF INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement") dated as of December 17,
1999 is entered into by and among GE Energy Services, Inc., a Delaware
corporation ("Parent"), Emmy Acquisition Corp., a Delaware corporation and
wholly owned subsidiary of Parent ("Buyer"), and , in his
capacity as a stockholder of the Company and a resident of the State of
("Securityholder"), with respect to certain equity securities
owned by Securityholder of Showpower, Inc., a Delaware corporation (the
"Company"), and for purposes of Section 3.5 hereof, G. Laurence Anderson and
John J. Campion (the "Stockholders' Agents").
WITNESSETH:
WHEREAS, Parent, Buyer and the Company have entered into an Agreement and
Plan of Merger (the "Merger Agreement") dated as of the date hereof pursuant to
which Buyer has agreed to make a cash tender offer described therein and
thereafter merge with and into the Company (the "Merger") in accordance with the
provisions of the Delaware General Corporation Law of the State of Delaware;
WHEREAS, as of the date hereof, Securityholder beneficially owns and has
the power to vote certain shares of the common stock, par value $.01 per share,
of the Company (the "Company Common Stock");
WHEREAS, each of Securityholder and certain other stockholders of the
Company entered into tender agreements (the "Tender Agreements") with Parent,
Buyer and the Company dated as of the date hereof pursuant to which such
stockholders agreed to tender their shares of common stock of the Company to
Buyer in the Initial Offer (as defined in the Merger Agreement) and place a
portion of the proceeds received by such stockholders from the Initial Offer
into an escrow account to secure their indemnification obligations pursuant to
this Agreement; and
WHEREAS, in consideration of Buyer's and Parent's agreements herein and in
the Merger Agreement, Securityholder has agreed to cooperate with Buyer and
Parent with respect to the acquisition of the Company by Parent and Buyer upon
the terms and subject to the conditions set forth in the Merger Agreement.
NOW, THEREFORE, in contemplation of the foregoing and in consideration of
the mutual agreements, covenants, representations and warranties contained
herein and for other good and valuable consideration, the receipt of which is
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto agree as follows:
1. Representation and Warranties.
1.1 Representations and Warranties of Buyer and Parent. Buyer and
Parent, hereby jointly and severally, represent and warrant to
Securityholder, as of the date hereof and as of the date Buyer purchases
shares of Company Common Stock pursuant to the Initial Offer, as
follows:
(a) Authorization. Each of Buyer and Parent is a corporation
duly organized, validly existing and in good standing under the laws
of its state of incorporation. Each of Buyer and Parent has all
requisite power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. Each of Buyer
and Parent has duly authorized, executed and delivered this Agreement
and this Agreement is a legal, valid and binding agreement of Buyer,
enforceable against Buyer in accordance with its terms.
1.2 Representations and Warranties of
Securityholder. Securityholder hereby represents and warrants to Buyer
and Parent, as of the date hereof and as of the date Buyer purchases
shares of Company Common Stock pursuant to the Initial Offer, as
follows:
(a) Ownership. Securityholder is the sole record and beneficial
owner of, and has good and marketable title to, shares of
Company Common Stock (collectively, the "Securities"), in each case
free and clear of all liabilities, claims, liens, options, proxies,
charges,
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participations and encumbrances of any kind or character whatsoever,
except for the security interest securing the obligations under
Securityholder's note payable to the Company.
(b) Authorization. Securityholder has all requisite power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby and has sole voting power and sole
power of disposition, with respect to all of the Securities owned by
Securityholder with no restrictions on its voting rights or rights of
disposition pertaining thereto. Securityholder has duly authorized,
executed and delivered this Agreement and this Agreement is a legal,
valid and binding agreement of Securityholder, enforceable against
Securityholder in accordance with its terms.
(c) No Violation. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated
hereby will (a) require Securityholder to file or register with, or
obtain any material permit, authorization, consent or approval of,
any governmental agency, authority, administrative or regulatory
body, court or other tribunal, foreign or domestic, or any other
entity, or (b) violate, or cause a breach of or default under, any
contract, agreement or understanding, any statute or law, or any
judgment, decree, order, regulation or rule of any governmental
agency, authority, administrative or regulatory body, court or other
tribunal, foreign or domestic, or any other entity or any arbitration
award binding upon Securityholder. No proceedings are pending which,
if adversely determined, will have a material adverse effect on any
of the Securities. Securityholder has not previously assigned or sold
any of the Securities to any third party. (d) No
Setoff. Securityholder has no liability or obligation related to or
in connection with the Securities other than the obligations to Buyer
and Parent as set forth in this Agreement. There are no legal or
equitable defenses or counterclaims that have been or may be asserted
by or on behalf of the Company, as applicable, to reduce the amount
of the Securities or affect the validity or enforceability of the
Securities.
(g) Company Representations and Warranties. The representations
and warranties of the Company contained in Article III of the Merger
Agreement are hereby incorporated into this Agreement in their
entirety as representations and warranties of Securityholder and,
notwithstanding anything contained in the Merger Agreement to the
contrary, such representations and warranties shall survive for
purposes of this Agreement for the periods described in Article 3 of
this Agreement.
2. Survival of Representations and Warranties. The respective
representations and warranties of Securityholder, Parent and Buyer
contained herein or incorporated herein by reference or in any certificates
or other documents delivered in connection herewith shall not be deemed
waived or otherwise affected by any investigation made by the other party
hereto, and each representation and warranty contained herein or
incorporated herein by reference shall survive the closing of the
transactions contemplated hereby until the expiration of the applicable
statute of limitations, including extensions thereof. Notwithstanding the
foregoing, the representations and warranties of the Company contained in
Article III of the Merger Agreement or incorporated herein by reference
shall survive for a period of twelve months following the Closing (as
defined in the Merger Agreement).
3. Indemnification.
3.1 Indemnification by Securityholder.
(a) Indemnity. Securityholder shall defend and indemnify Buyer,
Parent and the Company and their agents, affiliates, subsidiaries,
controlling persons, officers, directors, and employees
(collectively, the "Buyer Indemnitees"), and hold the Buyer
Indemnitees wholly harmless from and against, any and all losses,
liabilities, damages, costs (including, without limitation, court
costs) and expenses (including, without limitation, reasonable
attorneys' fees) which the Company or any Buyer Indemnitee incurs as
a result of, or with respect to, any third party claims made against
the Company or any Buyer Indemnitee and arising out of or based upon
or relating to (i) any inaccuracy in or breach of any representation,
warranty, covenant or
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agreement by or on behalf of Securityholder or the Company contained
in this Agreement (including the representations and warranties
incorporated herein by reference pursuant to Section 2.2(g)), the
Merger Agreement or contained in any certificate, instrument,
agreement or document of Securityholder or the Company delivered to
Buyer or Parent in connection with the consummation of the
transactions contemplated hereunder or thereunder and (ii) any of the
matters contained in the Company Disclosure Letter with respect to
the representations and warranties contained in Sections 3.9, 3.15,
3.16, 3.17 and 3.18 of the Merger Agreement which are incorporated by
reference herein (collectively "Losses"). For purposes of this
Agreement, third party claims shall exclude any claim brought by or
on behalf of any wholly-owned subsidiary of Parent, unless such third
party claim arises out of or is related to actions or events
affecting such subsidiary which occurred on or prior to the date
hereof.
(b) Claims. In the event that any Buyer Indemnitee shall
receive written notice of any claim or proceeding against such Buyer
Indemnitee that, if successful, might result in a claim under this
Section 3.1, such Buyer Indemnitee shall give Securityholder prompt
written notice of such claim or proceeding and shall permit
Securityholder to participate in the defense of such claim or
proceeding by counsel of Securityholder's own choosing and at the
expense of Securityholder. In addition, upon written request of such
Buyer Indemnitee, Securityholder shall assume the carriage of the
defense of any such claim or proceeding.
(c) Right to Indemnification. In no event shall
Securityholder's right to receive indemnification pursuant to Section
5.7 of the Merger Agreement affect or in any way limit
Securityholder's obligation to indemnify the Buyer Indemnitees
hereunder.
3.2 Specific Performance. Securityholder acknowledges that Buyer
and Parent will be irreparably harmed and that there will be no adequate
remedy at law for a violation of any of the covenants or agreements of
Securityholder which are contained in this Agreement. It is accordingly
agreed that, in addition to any other remedies which may be available to
Buyer and Parent upon the breach by Securityholder of such covenants and
agreements, Buyer and Parent shall have the right to obtain injunctive
relief to restrain any breach or threatened breach of such covenants or
agreements or otherwise to obtain specific performance of any of such
covenants or agreements.
3.3 Exclusive Remedy. From and after the Effective Date (as
defined in Merger Agreement), recourse of any Buyer Indemnitee to the
aggregate amount of the property held in the Indemnification Escrow (as
defined in the Tender Agreements) pursuant to each of the Tender
Agreements shall be the sole and exclusive remedy of the Buyer
Indemnitees for monetary damages for any claim for indemnification under
this Article 3, other than with respect to claims made by a Buyer
Indemnitee against Securityholder for fraud, bad faith or willful
misconduct.
3.4 Defense of Third Party Claims. Securityholder may participate
in (but not control) the defense and Buyer Indemnitee will have the sole
right to control the defense of third party claims made pursuant to
Article 3 by using counsel selected by Buyer Indemnitee. Buyer
Indemnitee shall have the sole right to make any significant decisions
with respect to the defense of such claim, except as to the settlement
or compromise of such claim which Buyer Indemnitee shall have the right
to settle, adjust or compromise with the consent of Securityholder;
provided, however, that such consent may not be unreasonably withheld.
Securityholder shall make available to Buyer Indemnitee any documents
and materials in his or its possession or control that may be necessary
to the defense of, and shall otherwise cooperate with Buyer Indemnitee
in the defense of, such claim or legal proceeding.
3.5 Stockholders' Agents.
(a) Appointment. In order to efficiently administer, among
other matters, the defense and/or settlement of any claims for which
Securityholder may be required to indemnify the Buyer Indemnitees
pursuant to Section 3.1, Securityholder hereby irrevocably designates
and appoints G. Laurence Anderson and John J. Campion, as the lawful
agent and attorney-in-fact
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(the "Stockholders' Agents") with full powers of substitution to act
in the name, place and stead of Securityholder with respect to the
authority provided in paragraph (b) below. Securityholder hereby
ratifies and confirms all that the Stockholders' Agents shall do or
cause to be done by virtue of his appointment as a Stockholders'
Representative and Jeffrey B. Stone and John J. Campion hereby accept
such designation and appointment.
(b) Authority. The Stockholders' Agents, acting jointly, are
empowered and authorized, acting specifically and not generally on
behalf of Securityholder (i) to take all action necessary in
connection with the defense and/or settlement of any claims for which
the Securityholder may be required to indemnify the Buyer Indemnitees
pursuant to Section 3.1; (ii) to execute and deliver the Escrow
Agreement (as defined in the Tender Agreements); (iii) to give and
receive all notices required to be given under the Escrow Agreement;
(iv) to receive, hold and distribute to the Securityholder hereto any
moneys received as a distribution pursuant to the Escrow Agreement or
any other sums received by the Stockholders' Agents in such capacity,
and to retain same or a portion thereof as a reserve for expenses
(inclusive without limitation of the expenses referred to in
paragraph (f) below) or for other possible payments or liabilities,
all as determined in the sole discretion of the Stockholders' Agents
with such retained or reserved amounts to be distributed upon or
after the payment of such expenses, making such payments or discharge
of such liabilities; (vi) to employ such legal counsel and other
representatives as the Stockholders' Agents shall select from time to
time; and (vii) to take any and all additional action as is
contemplated or permitted to be taken by or on behalf of the
Securityholder as the Stockholders' Agents deem necessary or
appropriate by the terms of this Agreement and the Escrow Agreement.
(c) Successor. In the event that one of the Stockholders'
Agents dies, becomes unable to perform his responsibilities hereunder
or resigns, Stephen R. Bernstein is hereby appointed and constituted
as one of the Stockholders' Agents, and he shall become and be deemed
one of the Stockholders' Agents.
(d) Decisions Binding. All decisions and actions, taken
jointly, by the Stockholders' Agents, whatsoever shall be binding
upon Securityholder, and Securityholder shall not have the right to
object, dissent, protest or otherwise contest the same.
(e) Further Agreements. By execution of this Agreement,
Securityholder agrees that:
(i) The appointment of the Stockholders' Agents shall be
deemed coupled with an interest and shall be irrevocable and the
Buyer Indemnitees and the escrow agent under the Escrow Agreement
shall be able to rely conclusively, without inquiry or liability,
on the instructions, agreements and decisions of the
Stockholders' Agents, acting jointly, as to the settlement of any
claims for indemnification pursuant to Section 3.1 or any other
actions required or permitted to be taken by the Stockholders'
Agents hereunder or under the Escrow Agreement, and no party
hereunder shall have any cause of action against the Buyer
Indemnitees for any action taken by the Buyer Indemnitees in
reliance upon the agreements, instructions or decisions of the
Stockholders' Agents, acting jointly;
(ii) all actions, agreements, decisions and instructions of
the Securityholders' Agents shall be conclusive and binding upon
Securityholder and Securityholder shall not have any cause of
action against the Stockholders' Agents for any action taken,
decision made or instruction given by the Stockholders' Agents,
acting jointly, under this Agreement, except for fraud or bad
faith;
(iii) the provisions of this Section 3.5 are independent and
severable, are irrevocable and coupled with an interest and shall
be enforceable notwithstanding any rights or remedies that
Securityholder may have in connection with the transactions
contemplated by the Merger Agreement;
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(iv) the provisions of this Section 3.5 shall be binding
upon the executors, heirs, legal representatives and successors
of each Securityholder, and any references in this Agreement to
Securityholder shall mean and include the successors to the
Securityholder's rights hereunder, whether pursuant to
testamentary disposition, the laws of descent and distribution or
otherwise; and
(v) the Buyer Indemnitees and the escrow agent under the
Escrow Agreement shall, upon receipt of any writing which
reasonably appears to have been signed by the Stockholders'
Agents, act upon such writing without any further duty of inquiry
as to the genuineness of the writing.
(f) Expenses. All reasonable fees and expenses incurred by the
Stockholders' Agents or otherwise required to be paid by
Securityholder, may be withheld by the Stockholders' Agents and paid
from sums paid to the Stockholders' Agents as a distribution pursuant
to the Escrow Agreement or any other sums received by the
Stockholders' Agents in such capacity.
4. Trade Secrets, Confidential Information and Noncompetition
Covenants.
4.1 Definitions. For the purposes of this Section 4, the following
definitions shall apply:
(a) "Company Activities" shall mean all activities of the type
conducted or provided by the Company within one year prior to the
date of this Agreement. For purposes of reference, such activities at
the date of this Agreement include the provision of temporary power
generation and temperature control rental equipment and support
services on a worldwide basis for entertainment, corporate and
special events.
(b) "Confidential Information" shall mean any data or
information, other than Trade Secrets, which is valuable to the
Company and not generally known to competitors of the Company.
(c) "Confidentiality Period" shall mean the period beginning the
date hereof and ending on the third anniversary of the date hereof.
(d) "Noncompete Period" shall mean the period beginning on the
date hereof and ending on the third anniversary of the date hereof.
(e) "Territory" shall mean the areas where the Company
Activities are conducted as of the date hereof and any area where
customers or actively sought prospective customers of the Company are
present. For purposes of reference, such areas include the geographic
area contained within a 150-mile radius of the current office
locations of the Company.
(f) "Trade Secret" shall mean information, including, but not
limited to, technical or nontechnical data, a formula, pattern,
compilation, program, device, method, technique, drawing, process,
financial data, financial plan, product plan, list of actual or
potential customers or suppliers, or other information similar to any
of the foregoing, which (i) derives independent economic value,
actual or potential, from not being generally known to, and not being
readily ascertainable by proper means by, the public or to other
persons who can derive economic value from its disclosure or use, and
(ii) is the subject of reasonable efforts under the circumstances by
the Company to maintain its secrecy. For purposes of this Agreement,
the term "Trade Secrets" shall not include information that (i) was
generally known to the public at the time the Company disclosed the
information to Securityholder; (ii) became generally known to the
public after disclosure by the Company through no act or omission of
Securityholder; or (iii) was disclosed to Securityholder by a third
party having a bona fide right both to possess the information and to
disclose the information to Securityholder.
4.2 Trade Secrets. Securityholder shall hold in confidence at all
times on and after the date hereof all Trade Secrets, and shall not
disclose, publish or make use at any time on and after the date hereof
of Trade Secrets without the prior written consent of the Company.
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4.3 Confidential Information. During the Confidentiality Period,
Securityholder shall hold in confidence all Confidential Information and
shall not disclose, publish or make use of Confidential Information
without the prior written consent of the Company.
4.4 Noncompetition.
(a) Coverage. Securityholder acknowledges that to protect
adequately the interest of the Company it is essential that any
noncompete covenant with respect thereto cover all Company Activities
and the entire Territory.
(b) Noncompete Covenant. Securityholder hereby agrees that
Securityholder shall not, during the Noncompete Period, in any manner
(other than as an employee of the Company), directly or by assisting
others, engage in, have any equity or profit interest in (except for
an equity interest in a publicly held corporation which does not
exceed one percent (1%) of such corporation's outstanding capital
stock), or render services of any executive, administrative,
supervisory, marketing, production or consulting nature to any
corporation or other entity that conducts the Company Activities in
the Territory.
(c) Customer Nonsolicitation. Securityholder hereby agrees that
Securityholder shall not, during the Noncompete Period, in any manner
(other than as an employee of the Company), directly or by assisting
others, solicit or accept, or attempt to solicit or accept, any
business from any customer of the Company, including actively sought
prospective customers, for purposes of providing products or services
that are competitive with those provided by the Company.
4.5 No-hire Covenant. Securityholder hereby agrees that
Securityholder shall not, during the Noncompete Period, in any manner
(other than as an employee of the Company), directly or by assisting
others, recruit or hire, or attempt to recruit or hire, on the
Securityholder's behalf or on behalf of any other person, firm or
corporation, any employee of the Company.
4.6 Severability, Damages and Tolling. If a judicial or arbitral
determination is made that any of the provisions of this Section 4
constitutes an unreasonable or otherwise unenforceable restriction
against Securityholder, the provisions of this Section 4 shall be
rendered void only to the extent that such judicial or arbitral
determination finds such provisions to be unreasonable or otherwise
unenforceable. In this regard, Securityholder and the Company hereby
agree that any judicial or arbitral authority construing this Agreement
shall be empowered to sever any prohibited business activity, time
period or geographical area from the coverage of this Section 4 and to
apply the provisions of this Section 4 to the remaining business
activities and the remaining time period not so severed by such judicial
or arbitral authority. Moreover, notwithstanding the fact that any
provision of this Section 4 is determined not to be specifically
enforceable, the Company shall nevertheless be entitled to recover
monetary damages as a result of the breach of such provision by
Securityholder. The time period during which the prohibitions set forth
in this Section 4 shall apply shall be tolled and suspended for a period
equal to the aggregate quantity of time during which Securityholder
violates such prohibitions in any respect.
4.7 Injunctive Relief. Securityholder hereby agrees that any
remedy at law for any breach of the provisions contained in Sections
4.2, 4.3, 4.4 or 4.5 hereof shall be inadequate and that the Company
shall be entitled to injunctive relief in addition to any other remedy
the Company might have under this Agreement.
5. Miscellaneous.
5.1 Expenses. Each of the parties hereto shall pay its own
expenses incurred in connection with this Agreement. Each of the parties
hereto warrants and covenants to the others that it will bear all claims
for brokerage fees attributable to action taken by it.
C-6
<PAGE> 108
5.2 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of and be enforceable by the parties hereto and their
respective representatives and permitted successors and assigns.
5.3 Entire Agreement. This Agreement contains the entire
understanding of the parties and supersedes all prior agreements and
understandings between the parties with respect to its subject matter.
This Agreement may be amended only by a written instrument duly executed
by the parties hereto.
5.4 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. Time is of the essence with respect to
all provisions of this Agreement.
5.5 Assignment. This Agreement may not be transferred or assigned
by Securityholder but may be assigned by Buyer to any of its affiliates
or to any successor to its business and will be binding upon and inure
to the benefit of any such affiliate or successor.
5.6 Counterparts. This Agreement may be executed in two
counterparts, each of which shall be an original, but both of which
together shall constitute one and the same Agreement.
5.7 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 given if so given) by delivery,
telegram or telecopy, or by mail (registered or certified mail, postage
prepaid, return receipt requested) or by any national courier service,
provided that any notice delivered as herein provided shall also be
delivered by telecopy at the time of such delivery. All communications
hereunder shall be delivered to the respective parties at the following
addresses (or at such other address for a party as shall be specified by
like notice, provided that notices of a change of address shall be
effective only upon receipt thereof):
If to Parent or Buyer: General Electric Company
4200 Wildwood Parkway
Atlanta, Georgia 30339
Attention: Briggs L. Tobin, Esq.
Telecopy: (770) 859-7012
with a copy to: King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
Attention: C. William Baxley, Esq.
Mark E. Thompson, Esq.
Telecopy: (404) 572-5100
If to Securityholder:
with a copy to: Baker & Daniels
300 North Meridian Street
Indianapolis, Indiana 46204
Attention: David C. Worrell, Esq.
Telecopy: (317) 237-1000
5.8 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of
Delaware, without regard to its principles of conflicts of laws.
C-7
<PAGE> 109
5.9 Enforceability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity
or enforceability of any other provision of this Agreement, which shall
remain in full force and effect.
5.10 Further Assurances. From time to time at or after the date
Buyer purchases shares of Company Common Stock pursuant to the Initial
Offer, at Buyer's request and without further consideration,
Securityholder shall execute and deliver to Buyer such documents and
take such action as Buyer may reasonably request in order to consummate
more effectively the transactions contemplated hereby and to vest in
Buyer good, valid and marketable title to the Securities, including, but
not limited to, using its best efforts to cause the appropriate transfer
agent or registrar to transfer of record the Securities.
C-8
<PAGE> 110
IN WITNESS WHEREOF, Buyer, Parent, Securityholder and the Stockholders'
Agents have caused this Agreement to be duly executed as of the day and year
first above written.
EMMY ACQUISITION CORP.
By:
------------------------------------
Name:
Title:
GE ENERGY SERVICES, INC.
By:
------------------------------------
Name:
Title:
------------------------------------
Securityholder
STOCKHOLDERS' AGENT, for
purposes of Section 3.5 only
------------------------------------
G. Laurence Anderson
STOCKHOLDERS' AGENT, for
purposes of Section 3.5 only
------------------------------------
John J. Campion
C-9
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
SHOWPOWER, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED DECEMBER 27, 1999
BY
GE POWER ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
GE ENERGY SERVICES, INC.
AND
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
GENERAL ELECTRIC COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, JANUARY 25, 2000,
UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
Continental Stock Transfer & Trust Company
<TABLE>
<S> <C>
By Hand or Overnight Courier: By Mail:
Continental Stock Transfer & Trust Company Continental Stock Transfer & Trust Company
2 Broadway 2 Broadway
19th Floor New York, New York 10004
New York, New York 10004
</TABLE>
Attn: Reorganization Department
Facsimile for Eligible Institutions only: (212) 616-7610
To confirm receipt of notice of Guaranteed
Delivery: (212) 509-4000 (ext. 535)
If you require additional information,
please call: (212) 509-4000 (ext. 535)
---------------------------
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS VIA A FACSIMILE, TO A NUMBER OTHER THAN AS SET FORTH ABOVE, DOES
NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY. YOU MUST SIGN THIS LETTER OF
TRANSMITTAL IN THE APPROPRIATE SPACE THEREFOR PROVIDED BELOW AND COMPLETE THE
SUBSTITUTE FORM W-9 SET FORTH BELOW.
<PAGE> 2
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ----------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) SHARES TENDERED
(PLEASE FILL IN, IF BLANK) (ATTACH ADDITIONAL LIST IF NECESSARY)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NUMBER OF
SHARE SHARES NUMBER OF
CERTIFICATE REPRESENTED BY SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
TOTAL SHARES
- ----------------------------------------------------------------------------------------------------------------------
* Need not be completed by stockholders tendering by book entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares represented by any certificates delivered to the
Depositary are being tendered. See Instruction 4.
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by stockholders of Showpower,
Inc., a Delaware corporation (the "Company"), if certificates for Shares (as
defined below) are to be forwarded herewith or, unless an Agent's Message (as
defined in the Offer to Purchase dated December 27, 1999 (the "Offer to
Purchase")) is utilized, if delivery of Shares is to be made by book-entry
transfer to an account maintained by Continental Stock Transfer & Trust Company
(the "Depositary") at The Depositary Trust Company ("DTC") (the "Book-Entry
Transfer Facilities") pursuant to the procedures set forth in Section 3 of the
Offer to Purchase (as defined below). DELIVERY OF DOCUMENTS TO A BOOK-ENTRY
TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver their Shares and all other documents required hereby to the
Depositary prior to the Expiration Date (as defined in the Offer to Purchase),
or who cannot comply with the book-entry transfer procedures on a timely basis,
must tender their Shares pursuant to the guaranteed delivery procedures set
forth in Section 3 of the Offer to Purchase. See Instruction 2.
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
[ ]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution
--------------------------------------------------------------------------
Name of Book-Entry Transfer Facility
--------------------------------------------------------------------------
Account No.
--------------------------------------------------------------------------
Transaction Code No.
--------------------------------------------------------------------------
[ ]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Tendering Stockholder(s)
--------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
--------------------------------------------------------------------------
Window Ticket Number (if any)
--------------------------------------------------------------------------
Name of Institution which Guaranteed Delivery
--------------------------------------------------------------------------
If delivery is by book-entry transfer:
Name of Tendering Institution
--------------------------------------------------------------------------
Name of Book-Entry Transfer Facility
--------------------------------------------------------------------------
Account No.
--------------------------------------------------------------------------
Transaction Code No.
--------------------------------------------------------------------------
<PAGE> 4
Ladies and Gentlemen:
The undersigned hereby tenders to GE Power Acquisition Corp. (formerly
known as Emmy Acquisition Corp., the "Offeror"), a Delaware corporation, a
wholly owned subsidiary of GE Energy Services, Inc., a Delaware corporation (the
"Parent"), a wholly owned subsidiary of General Electric Company, a New York
corporation ("General Electric"), the above-described shares of common stock,
par value $.01 per share (the "Shares"), of Showpower, Inc., a Delaware
corporation (the "Company"), pursuant to the Offeror's offer to purchase all of
the outstanding Shares at a purchase price of $7.00 per Share, net to the seller
in cash, without interest, upon the terms and subject to the conditions set
forth in the Offer to Purchase, receipt of which is hereby acknowledged, and in
this Letter of Transmittal (which, together with the Offer to Purchase, and any
amendments or supplements hereto or thereto, collectively constitute the
"Offer"). The Offer is being made in connection with the Agreement and Plan of
Merger, dated as of December 17, 1999 (the "Merger Agreement"), among the
Parent, the Offeror, and the Company.
Subject to and effective upon acceptance for payment of and payment for the
Shares tendered herewith, the undersigned hereby sells, assigns and transfers to
or upon the order of the Offeror all right, title and interest in and to all the
Shares that are being tendered hereby (and any and all other Shares or other
securities issued or issuable in respect thereof) and appoints the Depositary
the true and lawful agent and attorney-in-fact of the undersigned with respect
to such Shares (and all such other Shares or securities), with full power of
substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to (a) deliver certificates for such Shares (and all
such other Shares or securities), or transfer ownership of such Shares (and all
such other Shares or securities) on the account books maintained by any of the
Book-Entry Transfer Facilities, together, in any such case, with all
accompanying evidences of transfer and authenticity, to or upon the order of the
Offeror, (b) present such Shares (and all such other Shares or securities) for
transfer on the books of the Company and (c) receive all benefits and otherwise
exercise all rights of beneficial ownership of such Shares (and all such other
Shares or securities), all in accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints each designee of the Offeror as
the agent, attorney-in-fact and proxy of the undersigned, each with full power
of substitution, to exercise all voting and other rights of the undersigned in
such manner as each such attorney and proxy or his substitute shall in his sole
judgment deem proper, with respect to all of the Shares tendered hereby which
have been accepted for payment by the Offeror prior to the time of any vote or
other action (and any and all other Shares or other securities or rights issued
or issuable in respect of such Shares) at any meeting of stockholders of the
Company (whether annual or special and whether or not an adjourned meeting), any
actions by written consent in lieu of any such meeting or otherwise. This proxy
is irrevocable, is coupled with an interest in the Shares and is granted in
consideration of, and is effective upon, the acceptance for payment of such
Shares by the Offeror in accordance with the terms of the Offer. Such acceptance
for payment shall revoke any other power of attorney, proxy or written consent
granted by the undersigned at any time with respect to such Shares (and all such
other Shares or other securities or rights), and no subsequent powers of
attorney or proxies will be given or written consents will be executed by the
undersigned (and if given or executed, will not be deemed effective). The
undersigned understands that in order for Shares to be deemed validly tendered,
immediately upon the acceptance for payment of such Shares, the Offeror or its
designee must be able to exercise full voting rights with respect to such Shares
and other securities, including voting at any meeting of stockholders.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby (and any and all other Shares or other securities or rights
issued or issuable in respect of such Shares) and that when the same are
accepted for payment by the Offeror, the Offeror will acquire good and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances and not subject to any adverse claims. The undersigned, upon
request, will execute and deliver any additional documents deemed by the
Depositary or the Offeror to be necessary or desirable to complete the sale,
assignment and transfer of the Shares tendered hereby (and all such other Shares
or other securities or rights).
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned. Except as stated in the Offer, this tender is
irrevocable.
<PAGE> 5
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute an agreement between the undersigned and the
Offeror upon the terms and subject to the conditions of the Offer.
Unless otherwise indicated under "Special Payment Instructions," please
issue the check for the purchase price of any Shares accepted for payment, and
return any Shares not tendered or not accepted for payment, in the name(s) of
the undersigned. Similarly, unless otherwise indicated under "Special Delivery
Instructions," please mail the check for the purchase price of any Shares
accepted for payment and return any certificates for Shares not tendered or not
accepted for payment (and accompanying documents, as appropriate) to the
undersigned at the address shown below the undersigned's signature(s). If both
"Special Payment Instructions" and "Special Delivery Instructions" are
completed, please issue the check for the purchase price of any Shares purchased
and return any Shares not tendered or not purchased in the name(s) of, and
deliver said check and any certificates to, the person(s) so indicated.
Stockholders tendering Shares by book-entry transfer may request that any Shares
not accepted for payment be returned by crediting such account maintained at
such Book-Entry Transfer Facility as such stockholder may designate by making an
appropriate entry under "Special Payment Instructions." The undersigned
recognizes that the Offeror has no obligation, pursuant to the "Special Payment
Instructions," to transfer any Shares from the name of the registered holder(s)
thereof if the Offeror does not accept for payment any of the Shares so
tendered.
<PAGE> 6
------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares
purchased or certificates for Shares not tendered or not purchased are to
be issued in the name of someone other than the undersigned or if Shares
tendered hereby and delivered by book-entry transfer which are not
accepted for payment are to be returned by credit to an account at one of
the Book-Entry Transfer Facilities other than designated above.
Issue [ ] check [ ] certificate to:
Name
-----------------------------------------------------------------------------
(PLEASE PRINT)
Address
-----------------------------------------------------------------------------
----------------------------------------------------------------------
(ZIP CODE)
----------------------------------------------------------------------
(TAXPAYER IDENTIFICATION OR
SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9)
[ ] Credit Shares delivered by book-entry transfer and not purchased to
the account set forth below
Name of Book-Entry Transfer Facility
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5 AND 7)
To be completed ONLY if the check for the purchase price of Shares
purchased or certificates for Shares not tendered or not purchased are to
be mailed to someone other than the undersigned or to the undersigned at
an address other than that shown below the undersigned's signature(s).
Mail check and/or certificates to:
Name
-----------------------------------------------------------------------------
(PLEASE PRINT)
Address
-----------------------------------------------------------------------------
----------------------------------------------------------------------
(ZIP CODE)
------------------------------------------------------------
(TAXPAYER IDENTIFICATION OR
SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9)
------------------------------------------------------------
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, signatures
on all Letters of Transmittal must be guaranteed by a firm that is a bank,
broker, dealer, credit union, savings association or other entity which is a
member in good standing of the Securities Transfer Agents Medallion Program or
by any other bank, broker, dealer, credit union, savings association or other
entity which is an "eligible guarantor institution," as such term is defined in
Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended (each of the
foregoing constituting an "Eligible Institution"), unless the Shares tendered
thereby are tendered (i) by a registered holder of Shares who has not completed
either the box labeled "Special Payment Instructions" or the box labeled
"Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of an Eligible Institution. See Instruction 5. If the certificates are
registered in the name of a person or persons other than the signer of this
Letter of Transmittal, or if payment is to be made or delivered to, or
certificates evidencing unpurchased Shares are to be issued or returned to, a
person other than the registered owner or owners, then the tendered certificates
must be endorsed or accompanied by duly executed stock powers, in either case
signed exactly as the name or names of the registered owner or owners appear on
the certificates or stock powers, with the signatures on the certificates or
stock powers guaranteed by an Eligible Institution as provided herein. See
Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARES. This Letter of
Transmittal is to be used either if certificates are to be forwarded herewith
or, unless an Agent's Message (as defined in the Offer to Purchase) is utilized,
if the delivery of Shares is to be made by book-entry transfer pursuant to the
procedures set forth in Section 3 of the Offer to Purchase. Certificates for all
physically delivered Shares, or a confirmation of a book-entry transfer into the
Depositary's account at one of the Book-Entry Transfer Facilities of all Shares
delivered electronically, as well as a properly completed and duly executed
Letter of Transmittal (or a facsimile thereof) and any other documents required
by this Letter of Transmittal, or an Agent's Message in the case of a book-entry
delivery, must be received by the Depositary at one of its addresses set forth
on the front page of this Letter of Transmittal prior to the Expiration Date.
Stockholders who cannot deliver their Shares and all other required documents to
the Depositary prior to the Expiration Date must tender their Shares pursuant to
the guaranteed delivery procedures set forth in Section 3 of the Offer to
Purchase. Pursuant to such procedures: (a) such tender must be made by or
through an Eligible Institution; (b) a properly completed and duly executed
Notice of Guaranteed Delivery, substantially in the form provided by the
Offeror, must be received by the Depositary prior to the Expiration Date; and
(c) the certificates for all tendered Shares, in proper form for tender, or a
confirmation of a book-entry transfer into the Depositary's account at one of
the Book-Entry Transfer Facilities of all Shares delivered electronically, as
well as a properly completed and duly executed Letter of Transmittal (or a
facsimile thereof), and any other documents required by this Letter of
Transmittal, must be received by the Depositary within three trading days after
the date of execution of such Notice of Guaranteed Delivery, all as provided in
Section 3 of the Offer to Purchase. The term "trading day" is any day on which
the American Stock Exchange ("AMEX") is open for business.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH A BOOK-ENTRY TRANSFER FACILITY,
IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE
OF A BOOK-ENTRY TRANSFER, BY A CONFIRMATION OF A BOOK-ENTRY TRANSFER). 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.
No alternative, conditional or contingent tenders will be accepted, and no
fractional Shares will be purchased. By executing this Letter of Transmittal (or
a facsimile thereof), the tendering stockholder waives any right to receive any
notice of the acceptance for payment of the Shares.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares and any other required
information should be listed on a separate schedule attached hereto and
separately signed on each page thereof in the same manner as this Letter of
Transmittal is signed.
4. PARTIAL TENDERS (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares represented by any certificate
delivered to the Depositary are to be tendered, fill in the number of Shares
which are
<PAGE> 8
to be tendered in the box entitled "Number of Shares Tendered." In such case, a
new certificate for the remainder of the Shares represented by the old
certificate will be sent to the person(s) signing this Letter of Transmittal
unless otherwise provided in the appropriate box marked "Special Payment
Instructions" and/or "Special Delivery Instructions" on this Letter of
Transmittal, as promptly as practicable following the Expiration Date. All
Shares represented by certificates delivered to the Depositary will be deemed to
have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the certificates without alteration, enlargement or any change
whatsoever.
If any of the Shares tendered hereby are held of record by two or more
persons, all such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in different names on
different certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of certificates or separate stock powers
are required unless payment of the purchase price is to be made, or Shares not
tendered or not purchased are to be returned, in the name of any person other
than the registered holder(s), in which case the certificate(s) for such Shares
tendered hereby must be endorsed, or accompanied by, appropriate stock powers,
in either case signed exactly as the name(s) of the registered holder(s)
appear(s) on the certificate for such Shares. Signatures on any such
certificates or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the 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(s) on the certificates
for such Shares. Signature(s) on any such certificates or stock powers must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal or any certificate or stock power is signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory to
the Offeror of the authority of such person so to act must be submitted.
6. STOCK TRANSFER TAXES. The Offeror will pay or cause to be paid any
stock transfer taxes with respect to the sale and transfer of any Shares to it
or its order pursuant to the Offer. If, however, payment of the purchase price
is to be made to, or Shares not tendered or not purchased are to be returned in
the name of, any person other than the registered holder(s), then the amount of
any stock transfer taxes (whether imposed on the registered holder(s), such
other person or otherwise) payable on account of the transfer to such person
will be deducted from the purchase price unless satisfactory evidence of the
payment of such taxes, or exemption therefrom, is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTION. If the check for the purchase
price of any Shares purchased is to be issued, or any Shares not tendered or not
purchased are to be returned, in the name of a person other than the person(s)
signing this Letter of Transmittal or if the check or any certificates for
Shares not tendered or not purchased are to be mailed to someone other than the
person(s) signing this Letter of Transmittal or to the person(s) signing this
Letter of Transmittal at an address other than that shown above, the appropriate
boxes on this Letter of Transmittal should be completed. Stockholders tendering
Shares by book-entry transfer may request that Shares not purchased be credited
to such account at any of the Book-Entry Transfer Facilities as such stockholder
may designate under "Special Payment Instructions." If no such instructions are
given, any such Shares not purchased will be returned by crediting the account
at the Book-Entry Transfer Facilities designated above.
8. SUBSTITUTE FORM W-9. Under U.S. Federal income tax law, a tendering
stockholder whose Shares are accepted for payment is required to provide the
Depositary with such stockholder's correct taxpayer identification number
("TIN") on Substitute Form W-9, which is provided below, unless an exemption
applies. Failure to provide the information on the Substitute Form W-9 may
subject the tendering stockholder to a $50 penalty and to 31% federal income tax
backup withholding on the payment of the purchase price for the Shares.
<PAGE> 9
9. FOREIGN HOLDERS. Foreign holders must submit a completed IRS Form W-8
to avoid 31% backup withholding. IRS Form W-8 may be obtained by contacting the
Depositary at one of the addresses on the face of this Letter of Transmittal.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance
or additional copies of the Offer to Purchase and this Letter of Transmittal may
be obtained from the Information Agent at its address or telephone number set
forth below.
11. WAIVER OF CONDITIONS. The conditions of the Offer may be waived by the
Offeror (subject to certain limitations in the Merger Agreement), in whole or in
part, at any time or from time to time, in the Offeror's sole discretion.
12. LOST, DESTROYED, MUTILATED, OR STOLEN CERTIFICATES. If any
certificate(s) representing Shares has been lost, destroyed, mutilated, or
stolen, the stockholder should promptly notify the Depositary. The stockholder
will then be instructed as to the steps to be taken in order to replace the
certificate(s). This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost, destroyed, mutilated or
stolen certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE COPY HEREOF (TOGETHER
WITH CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED
DOCUMENTS) OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY
PRIOR TO THE EXPIRATION DATE (AS DEFINED IN THE OFFER TO PURCHASE).
IMPORTANT TAX INFORMATION
Under federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary with such
stockholder's correct TIN on the Substitute Form W-9. If such stockholder is an
individual, the TIN is such stockholder's Social Security Number. If the
Depositary is not provided with the correct TIN, the stockholder may be subject
to a $50 penalty imposed by the Internal Revenue Service. In addition, payments
that are made to such stockholder with respect to Shares purchased pursuant to
the Offer may be subject to backup withholding.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that stockholder must submit a statement, signed under penalties of
perjury, attesting to that individual's exempt status. Such statements may be
obtained from the Depositary. All exempt recipients (including foreign persons
wishing to qualify as exempt recipients) should see the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If backup withholding results in an
overpayment of taxes, a refund may be obtained.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup federal income tax withholding on payments that are made
to a stockholder with respect to Shares purchased pursuant to the Offer, the
stockholder is required to notify the Depositary of such stockholder's correct
TIN by completing the form certifying that the TIN provided on the Substitute
Form W-9 is correct.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the Social Security
Number or Employer Identification Number of the record owner of the Shares. If
the Shares are in more than one name or are not in the name of the actual owner,
consult the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional guidelines on which number to
report.
<PAGE> 10
SIGN HERE
(COMPLETE SUBSTITUTE FORM W-9 BELOW)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGNATURE(S) OF OWNER(S)
Name(s)
- --------------------------------------------------------------------------------
Capacity (full title)
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number
- --------------------------------------------------------------------------------
Tax Identification or Social Security Number
----------------------------------------------------------------------
(See Substitute Form W-9)
Dated:
- --------------------------------------------------------------------------------
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
stock certificate(s) or on a security position listing or by the person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorneys-in-fact, officer of a corporation or other person acting in
a fiduciary or representative capacity, please set forth full title and see
Instruction 5.)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
FOR USE BY FINANCIAL INSTITUTIONS ONLY. PLACE MEDALLION GUARANTEE IN SPACE
BELOW.
Authorized signature(s)
- --------------------------------------------------------------------------------
Name
- --------------------------------------------------------------------------------
Name of Firm
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number
- --------------------------------------------------------------------------------
Dated:
- --------------------------------------------------------------------------------
<PAGE> 11
PAYER'S NAME: CONTINENTAL STOCK TRANSFER & TRUST COMPANY
<TABLE>
<S> <C> <C>
PART 1--PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT TIN:
SUBSTITUTE AND CERTIFY BY SIGNING AND DATING BELOW. ---------------------------
FORMW-9 SOCIAL SECURITY NUMBER
DEPARTMENT OF THE TREASURY, PART II--FOR PAYEES EXEMPT FROM BACKUP WITHHOLDING,
SEE THE ENCLOSED GUIDELINES FOR CERTIFICATION OF OR
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 EMPLOYER IDENTIFICATION NUMBER
AND COMPLETE AS INSTRUCTED THEREIN.
----------------------------------------------------------------------------------------
CERTIFICATION -- UNDER PENALTIES OF PERJURY, I CERTIFY THAT:
(1) THE NUMBER SHOWN ON THIS FORM IS MY CORRECT TIN (OR I AM WAITING FOR A NUMBER
TO BE ISSUED TO ME); AND
(2) I AM NOT SUBJECT TO BACKUP WITHHOLDING BECAUSE (A) I AM EXEMPT FROM BACKUP
WITHHOLDING OR (B) I HAVE NOT BEEN NOTIFIED BY THE INTERNAL REVENUE SERVICE ("IRS")
THAT I AM SUBJECT TO BACKUP WITHHOLDING AS A RESULT OF FAILURE TO REPORT ALL
INTEREST OR DIVIDEND, OR (C) THE IRS HAS NOTIFIED ME THAT I AM NO LONGER SUBJECT
TO BACKUP WITHHOLDING.
----------------------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS -- YOU MUST CROSS OUT ITEM (2) ABOVE IF YOU HAVE BEEN
NOTIFIED BY THE IRS THAT YOU ARE SUBJECT TO BACKUP WITHHOLDING BECAUSE OF UNDER
INTERNAL REVENUE SERVICE REPORTING INTEREST OR DIVIDENDS ON YOUR TAX RETURN. HOWEVER, IF AFTER BEING NOTIFIED
SERVICE PAYER'S REQUEST BY THE IRS THAT YOU WERE SUBJECT TO BACKUP WITHHOLDING, YOU RECEIVED ANOTHER
FOR TAXPAYER IDENTIFICATION NOTIFICATION FROM THE IRS THAT YOU WERE NO LONGER SUBJECT TO BACKUP WITHHOLDING, DO
NUMBER ("TIN") AND NOT CROSS OUT ITEM (2). (ALSO SEE THE INSTRUCTIONS IN THE ENCLOSED GUIDELINES.)
CERTIFICATION SIGNATURE __________ DATE __________ ,
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING YOUR TIN.
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I CERTIFY UNDER PENALTIES OF PERJURY THAT A TIN HAS NOT BEEN ISSUED TO ME, AND EITHER (1) I HAVE MAILED OR
DELIVERED AN APPLICATION TO RECEIVE A TIN TO THE APPROPRIATE IRS CENTER OR SOCIAL SECURITY ADMINISTRATION
OFFICE OR (2) I INTEND TO MAIL OR DELIVER AN APPLICATION IN THE NEAR FUTURE. I UNDERSTAND THAT IF I DO NOT
PROVIDE A TIN BY THE TIME OF PAYMENT, 31% OF ALL PAYMENTS PURSUANT TO THE OFFER MADE TO ME THEREAFTER WILL BE
WITHHELD UNTIL I PROVIDE A NUMBER.
</TABLE>
<TABLE>
<S> <C> <C> <C>
------------------------------------------------------------------- ------------------------------ ,
Signature Date
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 12
The Information Agent for the Offer is:
[MORROW INC. LOGO]
445 Park Avenue, 5th Floor
New York, NY 10022
Call Collect (212) 754-8000
Banks and Brokerage Firms, Please Call:
(800) 662-5200
SHAREHOLDERS PLEASE CALL: (800) 566-9061
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
SHOWPOWER, INC.
AT
$7.00 NET PER SHARE
BY
GE POWER ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
GE ENERGY SERVICES, INC.
AND
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
GENERAL ELECTRIC COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, JANUARY 25, 2000, UNLESS THE OFFER IS EXTENDED.
DECEMBER 27, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by GE Power Acquisition Corp. (formerly known as
Emmy Acquisition Corp.), a Delaware corporation (the "Offeror"), a wholly owned
subsidiary of GE Energy Services, Inc., a Delaware corporation ("Parent"), and
an indirect wholly owned subsidiary of General Electric Company, a New York
corporation ("General Electric"), to act as Information Agent in connection with
the Offeror's offer to purchase all outstanding shares of common stock, par
value $.01 per share (the "Shares"), of Showpower, Inc., a Delaware corporation
(the "Company"), at a purchase price of $7.00 per Share, net to the seller in
cash, without interest, upon the terms and subject to the conditions set forth
in the Offer to Purchase, dated December 27, 1999 (the "Offer to Purchase"), and
in the related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer") enclosed herewith. The
Offer is being made in connection with the Agreement and Plan of Merger, dated
as of December 17, 1999, among Parent, the Offeror and the Company (the "Merger
Agreement"). Holders of Shares whose certificates for such Shares (the
"Certificates") are not immediately available or who cannot deliver their
Certificates and all other required documents to Continental Stock Transfer &
Trust Company (the "Depositary") or complete the procedures for book-entry
transfer prior to the Expiration Date (as defined in Section 1 of the Offer to
Purchase) must tender their Shares according to the guaranteed delivery
procedures set forth in Section 3 of the Offer to Purchase.
Please furnish copies of the enclosed materials to those of your clients
for whose accounts you hold Shares in your name or in the name of your nominee.
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. The Offer to Purchase, dated December 27, 1999.
2. The Letter of Transmittal to tender Shares for your use and for the
information of your clients. Facsimile copies of the Letter of Transmittal may
be used to tender Shares.
3. A letter to stockholders of the Company from John J. Campion, the Chief
Executive Officer of the Company, together with a Solicitation/Recommendation
Statement on Schedule 14D-9 filed with the Securities and Exchange Commission by
the Company and mailed to the stockholders of the Company.
<PAGE> 2
4. The Notice of Guaranteed Delivery for Shares to be used to accept the
Offer if Certificates and all other required documents are not immediately
available or cannot be delivered to the Depositary prior to the Expiration Date
(as defined in the Offer to Purchase) or if the procedure for book-entry
transfer cannot be completed prior to the Expiration Date.
5. A printed form of letter which may be sent to your clients for whose
accounts you hold Shares registered in your name, with space provided for
obtaining such clients' instructions with regard to the Offer.
6. Guidelines of the Internal Revenue Service for Certification of Taxpayer
Identification Number on Substitute Form W-9.
7. A return envelope addressed to the Depositary.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, JANUARY 25, 2000,
UNLESS THE OFFER IS EXTENDED.
Please note the following:
1. The tender price is $7.00 per Share, net to the seller in cash without
interest.
2. The Offer is being made for all of the outstanding Shares.
3. The Offer and withdrawal rights will expire at 12:00 Midnight, New York
City time, on Tuesday, January 25, 2000, unless the Offer is extended.
4. The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer such number of
Shares that would constitute at least a majority of the Shares that are
outstanding determined on a fully diluted basis.
5. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the transfer of Shares pursuant to the
Offer.
In order to accept the Offer, (i) a duly executed and properly completed
Letter of Transmittal (or facsimile thereof) and any required signature
guarantees or, in the case of a book-entry transfer, an Agent's Message (as
defined in the Offer to Purchase) or other required documents should be sent to
the Depositary and (ii) Certificates representing the tendered Shares on a
timely Book-Entry Confirmation (as defined in the Offer to Purchase) should be
delivered to the Depositary in accordance with the instructions set forth in the
Offer.
If holders of Shares wish to tender, but it is impracticable for them to
forward their Certificates or other required documents or complete the
procedures for book-entry transfer prior to the Expiration Date, a tender must
be effected by following the guaranteed delivery procedures specified in Section
3 of the Offer to Purchase.
Neither the Offeror, Parent nor any officer, director, stockholder, agent
or other representative of the Offeror will pay any fees or commissions to any
broker, dealer or other person for soliciting tenders of Shares pursuant to the
Offer. The Offeror will, however, upon request, reimburse you for customary
mailing and handling expenses incurred by you in forwarding any of the enclosed
materials to your clients. The Offeror will pay or cause to be paid any transfer
taxes payable on the transfer of Shares to it, except as otherwise provided in
Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
Morrow & Co. Inc., the Information Agent for the Offer, 445 Park Avenue, 5th
Floor, New York, New York 10022 ((212) 754-8000).
<PAGE> 3
Requests for copies of the enclosed materials may be directed to the
Information Agent at the above address and telephone number.
Very truly yours,
MORROW & CO., INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF PARENT, THE OFFEROR, THE DEPOSITARY, THE
INFORMATION AGENT OR ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER
PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT ON BEHALF OF ANY OF THEM IN
CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS
CONTAINED THEREIN.
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
SHOWPOWER, INC.
AT
$7.00 NET PER SHARE
BY
GE POWER ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
GE ENERGY SERVICES, INC.
AND
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
GENERAL ELECTRIC COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, JANUARY 25, 2000, UNLESS THE OFFER IS EXTENDED.
DECEMBER 27, 1999
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated December
27, 1999 (the "Offer to Purchase"), and the related Letter of Transmittal
(which, together with any amendments or supplements thereto, collectively
constitute the "Offer") relating to an offer by GE Power Acquisition Corp.
(formerly known as Emmy Acquisition Corp.), a Delaware corporation (the
"Offeror"), a wholly owned subsidiary of GE Energy Services, Inc., a Delaware
corporation (the "Parent"), and an indirect wholly owned subsidiary of General
Electric Company, a New York corporation ("General Electric"), to purchase all
outstanding shares of common stock, par value $.01 per share (the "Shares"), of
Showpower, Inc., a Delaware corporation (the "Company"), at a purchase price of
$7.00 per Share, net to the seller in cash, without interest, upon the terms and
subject to the conditions set forth in the Offer. The Offer is being made in
connection with the Agreement and Plan of Merger, dated as of December 17, 1999,
among Parent, the Offeror and the Company (the "Merger Agreement"). This
material is being forwarded to you as the beneficial owner of Shares carried by
us in your account but not registered in your name.
WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER
OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO
YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR
ACCOUNT.
Accordingly, we request instructions as to whether you wish to tender any
or all of the Shares held by us for your account, upon the terms and conditions
set forth in the Offer.
Please note the following:
1. The tender price is $7.00 per Share, net to you in cash without
interest.
2. The Board of Directors of the Company unanimously has determined that
the Offer and the Merger (as defined in the Offer to Purchase), are fair to and
in the best interests of the Company's stockholders, has approved the Offer and
adopted the Merger Agreement and recommends acceptance of the Offer by the
Company's stockholders.
3. The Offer is being made for all of the outstanding Shares.
<PAGE> 2
4. The Offer and withdrawal rights will expire at 12:00 Midnight, New York
City time, on Tuesday, January 25, 2000, unless the Offer is extended.
5. The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer such number of
Shares that would constitute a majority of the Shares that are outstanding
determined on a fully diluted basis.
6. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the transfer of Shares pursuant to the
Offer.
If you wish to have us tender any or all of the Shares, please so instruct
us by completing, executing, detaching and returning to us the instruction form
contained in this letter. An envelope to return your instructions to us is
enclosed. If you authorize tender of your Shares, all such Shares will be
tendered unless otherwise indicated in such instruction form. PLEASE FORWARD
YOUR INSTRUCTIONS TO US AS SOON AS POSSIBLE TO ALLOW US AMPLE TIME TO TENDER
YOUR SHARES ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and any supplements or amendments thereto. The Offer is not being
made to, nor will tenders be accepted from or on behalf of, holders of Shares
residing in any jurisdiction in which the making of the Offer or acceptance
thereof would not be in compliance with the securities laws of such
jurisdiction. 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 will be
deemed to be made on behalf of the Offeror by one or more registered brokers or
dealers licensed under the laws of such jurisdiction.
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
SHOWPOWER, INC.
This form, or one substantially equivalent hereto, must be used to accept
the Offer (as defined below) if certificates for shares of common stock, par
value $.01 per share (the "Shares"), of Showpower, Inc., a Delaware corporation
(the "Company"), are not immediately available or if the procedure for
book-entry transfer cannot be completed on a timely basis or time will not
permit all required documents to reach the Depositary prior to the Expiration
Date (as defined in the Offer to Purchase). Such form may be delivered by hand,
facsimile transmission or mail to the Depositary. See Section 3 of the Offer to
Purchase, dated December 27, 1999 (the "Offer to Purchase").
The Depositary for the Offer is:
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
<TABLE>
<S> <C>
By Hand or Overnight Courier: By Mail:
Continental Stock Transfer & Trust Company Continental Stock Transfer & Trust Company
2 Broadway 2 Broadway
19th Floor New York, New York 10004
New York, New York 10004
Facsimile for Eligible Institutions only: To confirm receipt of Notice of Guaranteed
Delivery:
(212) 616-7610 (212) 509-4000 (ext. 535)
</TABLE>
If you require additional information, please call
Continental Stock Transfer & Trust Company at (212) 509-4000 (ext. 535)
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS, OR
TRANSMISSION OF INSTRUMENTS VIA A FACSIMILE, OTHER THAN AS SET FORTH ABOVE, DOES
NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" (as defined in the Offer to Purchase)
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal or an
Agent's Message and certificates for Shares to the Depositary within the time
period shown herein. Failure to do so could result in a financial loss to such
Eligible Institution.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED.
<PAGE> 2
LADIES AND GENTLEMEN:
The undersigned hereby tender(s) to GE Power Acquisition Corp., a Delaware
corporation, upon the terms and subject to the conditions set forth in the Offer
to Purchase, and the related Letter of Transmittal, receipt of which is hereby
acknowledged, the number of Shares of the Company indicated below, pursuant to
the guaranteed delivery procedure set forth in Section 3 of the Offer to
Purchase.
<TABLE>
<S> <C>
Number of Shares: -------------------------------------- SIGN HERE
Certificate No(s) (if available): Name(s) of Record Holder(s):
- -------------------------------------------------------- --------------------------------------------------------
- -------------------------------------------------------- --------------------------------------------------------
(Please Print)
If Securities will be tendered by
book-entry transfer: Address(es):
------------
Name of Tendering Institution: --------------------------------------------------------
- ------------------------------------------------ --------------------------------------------------------
(Zip Code)
Name of Book Entry Transfer Facility:
Area Code and Telephone No(s):
- --------------------------------------------------------
--------------------------------------------------------
Account No.: at
---------------------------------------- --------------------------------------------------------
Dated: ------------------------------------------------- Signature(s):
--------------------------------------------------------
</TABLE>
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a bank, broker, dealer, credit union, savings association
or other entity which is a member in good standing of the Securities Transfer
Agents Medallion Program or a bank, broker, dealer, credit union, savings
association or other entity which is an "eligible guarantor institution," as
such term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934,
as amended, guarantees the delivery to the Depositary of the Shares tendered
hereby, together with a properly completed and duly executed Letter of
Transmittal (or manually signed facsimile(s) thereof) and any other required
documents, or an Agent's Message (as defined in the Offer to Purchase) in the
case of a book-entry delivery of Shares, all within three trading days of the
date hereof. A "trading day" is any day on which the American Stock Exchange is
open for business.
<TABLE>
<S> <C>
Name of Firm: Title:
------------------------------------------------------ ---------------------------------------------
------------------------------------------------------ Name:
(Authorized Signature)
---------------------------------------------
Address: (Please Print or Type)
------------------------------------------------------ Area Code and Telephone No.:
------------------------------------------------------ ---------------------------------------------
------------------------------------------------------ Dated: --------------------------------------
(Zip Code)
</TABLE>
DO NOT SEND CERTIFICATES FOR SHARES WITH THIS FORM--
CERTIFICATES SHOULD BE SENT WITH THE LETTER OF TRANSMITTAL.
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- ------------------------------------------------------------
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- ------------------------------------------------------------
<C> <S> <C>
1. An individual's account. The individual
2. Two or more individuals (joint The actual owner of
account) the account or, if
combined funds, the
first individual on
the account(1)
3. Husband and wife (joint The actual owner of
account) the account or, if
joint funds, the first
individual on the
account(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint The adult, or if the
account) minor is the only
contributor, the
minor(1)
6. Account in the name of The ward, minor or
guardian or committee for a incompetent person(3)
designated ward, minor or
incompetent person
7. a. A revocable savings trust The grantor-
account (in which grantor is trustee(1)
also trustee)
b. Any "trust" account that is The actual owner(1)
not a legal or valid trust
under State law
8. Sole proprietorship account The owner(4)
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------
GIVE THE EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- ------------------------------------------------------------
<C> <S> <C>
9. A valid trust, estate or The legal entity (Do
pension trust not furnish the
identifying number of
the personal
representative or
trustee unless the
legal entity itself is
not designated in the
account title.)(5)
10. Corporate account The corporation
11. Religious, charitable or The organization
educational organization
account
12. Partnership account held in The partnership
the name of the business
13. Association, club, or other The organization
tax-exempt organization
14. A broker or registered nominee The broker or nominee
15. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State
or local governmental school
district or prison) that
receives agricultural program
payments
- -----------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Card, or Form SS-4,
Application for Employer Identification Number (for businesses and all other
entities), or Form W-7 for Individual Taxpayer Identification Number (for alien
individuals required to file U.S. tax returns), at an office of the Social
Security Administration or the Internal Revenue Service.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on all payments
include the following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan, or a custodial account under section 403(b)(7).
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or
any political subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- An international organization or any agency or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S.
or a possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a)
- An entity registered at all times during the tax year under the
Investment Company Act of 1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident alien partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
- Payments of interest not generally subject to backup withholding include
the following:
- Payments of interest on obligations issued by individuals. NOTE: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends
under section 852).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
<PAGE> 3
- Payments made to a nominee.
Exempt payees described above should file a Substitute Form W-9 to avoid
possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND
RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE
DIVIDENDS, ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends and patronage dividends
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE -- Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes and to help verify the accuracy of your tax return.
Payers must be given the numbers whether or not recipients are required to file
tax returns. Payers must generally withhold 31% of taxable interest, dividend
and certain other payments to a payee who does not furnish a taxpayer
identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If
you fail to furnish your taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If
you make a false statement with no reasonable basis which results in no
imposition of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE.
<PAGE> 1
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell these securities. The Offer is made only by the Offer to Purchase
dated December 27, 1999 and the related Letter of Transmittal and is not being
made to (nor will tenders be accepted from) holders of Shares in any
jurisdiction in which the Offer or the acceptance thereof would not be in
compliance with the securities laws of such jurisdiction. In those jurisdictions
where securities laws require the Offer to be made by a licensed broker or
dealer, the Offer shall be deemed to be made on behalf of the Offeror by one or
more registered brokers or dealers licensed under the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
SHOWPOWER, INC.
AT $7.00 NET PER SHARE
BY
GE POWER ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
GE ENERGY SERVICES, INC.
AND
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
GENERAL ELECTRIC COMPANY
GE Power Acquisition Corp. (formerly known as Emmy Acquisition Corp.), a
Delaware corporation (the "Offeror"), a wholly owned subsidiary of GE Energy
Services, Inc., a Delaware corporation (the "Parent"), and an indirect wholly
owned subsidiary of General Electric Company, a New York corporation, is
offering to purchase all of the shares of common stock, par value $.01 per share
(the "Shares"), of Showpower, Inc., a Delaware corporation (the "Company"), for
$7.00 per Share, net to the seller in cash without interest, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated December 27,
1999 (the "Offer to Purchase"), and in the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer").
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, JANUARY 25, 2000, UNLESS THE OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, (i) there being validly
tendered and not withdrawn prior to the expiration of the Offer such number of
Shares that would constitute at least a majority of the Shares that are
outstanding determined on a fully diluted basis, (ii) any waiting period under
the HSR Act (as defined in the Offer to Purchase) applicable to the purchase of
Shares pursuant to the Offer having expired or having been terminated prior to
the expiration of the Offer, and (iii) the satisfaction of certain other terms
and conditions.
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of December 17, 1999 (the "Merger Agreement"), among Parent, the Offeror and
the Company. The Merger Agreement provides that, among other things, 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 Delaware General Corporation Law, as amended (the "DGCL"), the
Offeror 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 and an indirect wholly owned subsidiary of General Electric. At the
effective time of the Merger (the "Effective Time"), each Share that is issued
and outstanding (other than Shares owned by the Company, any subsidiary of the
Company, Parent, the Offeror, any other subsidiary of Parent or by stockholders,
if any, who are entitled to and who properly exercise dissenter's rights under
the DGCL ("Dissenting Shares")) will be converted into the right to receive from
the Surviving Corporation $7.00 (or any higher price that may be paid for each
Share pursuant to the Offer) in cash, without interest thereon (the "Offer
Price").
<PAGE> 2
In connection with the Merger Agreement, the Offeror and Parent entered
into Tender Agreements dated as of December 17, 1999 (the "Tender Agreements"),
with each of the following stockholders of the Company: John J. Campion and
Esther Ash, G. Laurence and Thressa Anderson, Stephen R. Bernstein, Jeffrey B.
Stone, Joseph A. Ades, Robert E. Masterson, David C. and Annika Bernstein,
Vincent A. Carrino and Eric C. Jackson (the "Tendering Stockholders"). Pursuant
to the Tender Agreements, the Tendering Stockholders have agreed to tender the
1,490,374 Shares owned by them (the "Committed Shares") pursuant to the Offer.
The Committed Shares represent approximately 38.1% of the Shares that, as of
December 17, 1999, were issued and outstanding on a fully diluted basis
(assuming the exercise of all "in-the-money" stock options).
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY ADOPTED THE MERGER
AGREEMENT AND APPROVED THE OFFER AND THE MERGER, HAS DETERMINED THAT THE TERMS
OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
COMPANY'S STOCKHOLDERS, AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT
THE OFFER AND TENDER ALL THEIR SHARES PURSUANT TO THE OFFER.
For purposes of the Offer, the Offeror will be deemed to have accepted for
payment, and thereby purchased Shares validly tendered and not withdrawn, if and
when the Offeror gives oral or written notice to Continental Stock Transfer &
Trust Company (the "Depositary") of the Offeror's acceptance of such Shares for
payment. In all cases, payment for Shares purchased pursuant to the Offer will
be made by deposit of the purchase price with the Depositary, which shall act as
agent for tendering stockholders for the purpose of receiving payment from the
Offeror and transmitting payment to the tendering stockholders. Payment for
Shares accepted for payment pursuant to the Offer will be made only after timely
receipt by the Depositary of (i) certificates for such Shares or timely
confirmation of a book-entry transfer of such Shares into the Depositary's
account at the Book-Entry Transfer Facility (as defined in the Offer to
Purchase) pursuant to the procedures set forth in the Offer to Purchase, (ii) a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees, or, in the case of a
book-entry transfer, an Agent's Message (as defined in the Offer to Purchase)
and (iii) any other documents required by the Letter of Transmittal.
If any of the conditions set forth in the Offer to Purchase that relate to
the Offeror's obligations to purchase the Shares are not satisfied by 12:00
Midnight, New York City time, on Tuesday, January 25, 2000 (or any other time
then set as the Expiration Date), the Offeror may, subject to the terms of the
Merger Agreement, (i) extend the Offer and, subject to applicable withdrawal
rights, retain all tendered Shares until the expiration of the Offer as so
extended, (ii) subject to complying with applicable rules and regulations of the
Securities and Exchange Commission, accept for payment all Shares so tendered
and not extend the Offer, or (iii) terminate the Offer and not accept for
payment any Shares and return all tendered Shares to tendering stockholders. The
term "Expiration Date" shall mean 12:00 Midnight, New York City time, on
Tuesday, January 25, 2000, unless the Offeror shall have extended the period of
time for which the Offer is open, in which event the term "Expiration Date"
shall mean the latest time and date at which the Offer, as so extended by the
Offeror, shall expire.
Subject to the limitations set forth in the Offer and the Merger Agreement,
the Offeror reserves the right (but will not be obligated), at any time or from
time to time in its sole discretion, to extend the period during which the Offer
is open by giving oral or written notice of such extension to the Depositary and
by making a public announcement of such extension. There can be no assurance
that the Offeror will exercise its right to extend the Offer. Any extension of
the period during which the Offer is open will be followed, as promptly as
practicable, by public announcement thereof, such announcement to be issued not
later than 9:00 a.m., New York City Time, on the next business day after the
previously scheduled Expiration Date. During any such extension, all Shares
previously tendered and not withdrawn will remain subject to the Offer, subject
to the rights of a tendering stockholder to withdraw such stockholder's Shares.
Except as otherwise provided in Section 4 of the Offer to Purchase, tenders
of Shares made pursuant to the Offer are irrevocable, except that Shares
tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date, and, unless theretofore accepted for payment, may also be
withdrawn at any time after February 25, 2000. For a withdrawal to be effective,
a written or facsimile transmission notice of withdrawal must be timely received
by the Depositary at one of its addresses set forth on the back cover of the
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 if different from the name of
the person who tendered the Shares. If certificates for Shares to be withdrawn
have been delivered or otherwise identified to the Depositary, then prior to the
physical release of such certificates, the serial numbers shown on such
certificates must be submitted to the Depositary and, unless such Shares have
been tendered for the account of an Eligible Institution (as defined in the
Offer to Purchase), the signature
<PAGE> 3
on the notice of withdrawal must be guaranteed by an Eligible Institution. If
Shares have been tendered pursuant to the procedures for book-entry transfer set
forth in Section 3 of the Offer to Purchase, the notice of withdrawal must
specify the name and number of the account at the Book-Entry Transfer Facility
to be credited with withdrawn Shares, in which case a notice of withdrawal will
be effective if delivered to the Depositary by any method of delivery described
in this paragraph. All questions as to the form and validity (including time of
receipt) of a notice of withdrawal will be determined by the Offeror, in its
sole discretion, and its determination shall be final and binding on all
parties.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
The Company has provided to the Offeror its lists of stockholders and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase, the related Letter of Transmittal and other
related materials are being mailed to record holders of Shares and will be
mailed to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the stockholder
lists or, if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
Any questions or requests for assistance or for copies of the Offer to
Purchase and the related Letter of Transmittal and other tender offer materials
may be directed to the Information Agent as set forth below, and copies will be
furnished promptly at the Offeror's expense. No fees or commissions will be
payable to brokers, dealers or other persons for soliciting tenders of Shares
pursuant to the Offer.
The Information Agent for the Offer is:
[MORROW INC. LOGO]
445 Park Avenue, 5th Floor
New York, NY 10022
Call Collect (212) 754-8000
Banks and Brokerage Firms, Please Call:
(800) 662-5200
SHAREHOLDERS PLEASE CALL: (800) 566-9061
<PAGE> 1
GE POWER SYSTEMS AGREES TO ACQUIRE SHOWPOWER, INC.
ACCELERATES GLOBAL EXPANSION OF GE ENERGY RENTALS UNIT
INTO ENTERTAINMENT AND SPECIAL EVENTS SEGMENT
Schenectady, NY December 20, 1999... In a move to accelerate the growth of
its GE Energy Rentals unit, GE Power Systems today announced it has signed
definitive agreements to acquire 100% of Showpower, Inc.'s shares at $7 per
share for an aggregate purchase price of $28 million.
The transaction will take the form of a tender offer by a subsidiary of GE
Energy Services, Inc. for all of the outstanding shares of Showpower at $7 in
cash net per share, followed by a cash merger for the remaining shares at $7.
The tender offer is subject to customary terms and conditions, including at
least a majority of the outstanding shares on a fully diluted basis being
tendered. The tender offer is expected to commence no later than December 27,
1999. In connection with the transaction, holders of approximately 40% of the
outstanding shares of Showpower have agreed to tender their shares pursuant to
the offer.
Showpower's board has unanimously approved the transaction and has received
a fairness opinion from Prime Charter Ltd.
Showpower is a Rancho Dominiguez, California based company, publicly traded
on the American Stock Exchange under the symbol SHO, with locations in
California, Texas, New Jersey, Nevada, Florida, Brazil, and the United Kingdom.
Showpower provides temporary power generation and temperature control rental
equipment and support on a worldwide basis for entertainment, corporate and
special events.
GE Energy Rentals was launched earlier this year in response to a growing
demand for temporary distributed power and climate control in the commercial,
industrial, utility, oil and gas, and special event markets. GE has already
expanded the power generation rental industry with its recent introduction of
the TM 2500, the largest mobile gas turbine-generator set available on a rental
basis, producing up to 22.8 megawatts in a single package. Prior to the TM2500,
large power block customers needed multiple diesel sets to achieve that level of
output.
"Showpower is an ideal strategic fit for us," said GE Energy Rentals
President Martin Moore. "Showpower operates on a global basis and its employees
possess the expertise we view as essential to success in mission critical
equipment rental markets worldwide. We are committed to serving the growing
markets in which Showpower currently participates and we anticipate drawing upon
the technical and operational skills that exist at Showpower as we implement our
plans for aggressive growth in the commercial and industrial segments of the
industry."
Showpower CEO, John Campion, described the deal as "a unique opportunity,
both to enhance the level of service provided to Showpower's traditional
customers and to reshape the broader rental industry by leveraging GE Power
Systems sales and services network as well as GE's brand recognition in
virtually all markets." Upon completion of the acquisition, Campion will join
the management team of GE Energy Rentals.
ABOUT GE POWER SYSTEMS AND GE ENERGY RENTALS
GE Power Systems is one of the world's leading suppliers of power
generation technology, energy services and energy management systems. The $9.9
billion business has the largest installed base of power generation equipment in
the industry. GE Energy Rentals, a single source for power and climate control
needs, is among the latest of several GE Power Systems' ventures, acquisitions
and alliances executed during the past two years to deliver total, global energy
solutions.
ABOUT SHOWPOWER
Showpower provides temporary power generation and temperature control
rental equipment and support services on a worldwide basis for entertainment,
corporate and special events. Showpower's customers include corporations, event
producers, television networks, motion picture studios, facility operators and
performers that need electric power and/or temperature control services to
support events at locations where these services are inadequate or unavailable.
Showpower
<PAGE> 2
also provides fully integrated, value-added services, including planning,
technical advice, customized installations, on-site operations and support
personnel.
CONTACTS:
<TABLE>
<S> <C>
Jeff Ignaszak Laurence Anderson
GE Power Systems Showpower
518-385-9713 310-604-9676
</TABLE>
<PAGE> 1
GE ENERGY SERVICES COMMENCES TENDER OFFER FOR SHOWPOWER, INC.
MONDAY, DECEMBER 27, 1999 -- GE Energy Services, Inc., today announced that
a wholly owned subsidiary has commenced its previously announced tender offer
for all of the shares of common stock, par value $.01 per share, Showpower, Inc.
("SHO") at $7 per share, net to the seller, in cash. Showpower is headquartered
in Rancho Dominguez, California with additional operations in Texas, New Jersey,
Nevada, Florida, Brazil, and the United Kingdom. Showpower provides temporary
power generation and temperature control rental equipment and support on a
worldwide basis for entertainment, corporate and special events.
The tender offer is being made pursuant to an Agreement and Plan of Merger
dated as of December 17, 1999. The tender offer will expire at 12:00 midnight,
New York City time, on Tuesday, January 25, 2000, unless extended. The offer is
conditioned upon, among other things, there being validly tendered and not
withdrawn a number of shares which equals at least a majority of the outstanding
shares on a fully diluted basis.
Continental Stock Transfer & Trust Company is the depositary for the tender
offer. Morrow & Co., Inc. is the information agent.
GE Energy Services, Inc. is a division of GE Power Systems, one of the
world's leading suppliers of power generation technology, energy services and
energy management systems.
CONTACT:
Jeff Ignaszak
GE Power Systems
518-385-9713
<PAGE> 1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
AMONG
GE ENERGY SERVICES, INC.,
EMMY ACQUISITION CORP.
AND
SHOWPOWER, INC.
DATED AS OF DECEMBER 17, 1999
<PAGE> 2
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I THE OFFER AND MERGER
Section 1.1. The Offer................................................... 2
Section 1.2. Consent to Offer; Schedule 14D-9............................ 3
Section 1.3. The Merger.................................................. 3
Section 1.4. Effective Time; Closing..................................... 3
Section 1.5. Effect of the Merger........................................ 4
Section 1.6. Conversion of Company Common Stock.......................... 4
Section 1.7. Dissenting Shares........................................... 4
Section 1.8. Stock Option Plans.......................................... 5
Section 1.9. Surrender of Shares of Company Common Stock; Stock Transfer
Books..................................................... 5
ARTICLE II THE SURVIVING CORPORATION
Section 2.1. Certificate of Incorporation................................ 6
Section 2.2. Bylaws...................................................... 7
Section 2.3. Directors and Officers...................................... 7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1. Organization and Standing................................... 7
Section 3.2. Capitalization.............................................. 7
Section 3.3. Authority for Agreement..................................... 8
Section 3.4. No Conflict................................................. 9
Section 3.5. Required Filings and Consents............................... 9
Section 3.6. Compliance.................................................. 9
Section 3.7. SEC Filings, Financial Statements........................... 9
Section 3.8. Absence of Certain Changes or Events........................ 10
Section 3.9. Taxes....................................................... 10
Section 3.10. Assets...................................................... 11
Section 3.11. Change of Control Agreements................................ 12
Section 3.12. Litigation.................................................. 12
Section 3.13. Contracts and Commitments................................... 12
Section 3.14. Information Supplied........................................ 13
Section 3.15. Employee Benefit Plans...................................... 13
Section 3.16. Labor and Employment Matters................................ 14
Section 3.17. Environmental Compliance and Disclosure..................... 16
Section 3.18. Intellectual Property....................................... 17
Section 3.19. Year 2000 Compliance........................................ 18
Section 3.20. Brokers..................................................... 19
Section 3.21. Insurance Policies.......................................... 19
Section 3.22. Notes and Accounts Receivable............................... 19
Section 3.23. Transactions with Affiliates................................ 19
Section 3.24. No Existing Discussions..................................... 20
Section 3.25. Company Warrants............................................ 20
Section 3.26. Stockholders' Rights Agreement.............................. 20
Section 3.27. Major Suppliers and Customers............................... 20
Section 3.28. Disclosure.................................................. 20
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER
Section 4.1. Organization and Standing................................... 21
Section 4.2. Authority for Agreement..................................... 21
Section 4.3. No Conflict................................................. 21
Section 4.4. Required Filings and Consents............................... 21
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Section 4.5. Information Supplied........................................ 22
Section 4.6. Brokers..................................................... 22
Section 4.7. Financing................................................... 22
Section 4.8. Disclosure.................................................. 22
ARTICLE V COVENANTS
Section 5.1. Conduct of the Business Pending Assumption of Control....... 22
Section 5.2. Access to Information; Confidentiality...................... 23
Section 5.3. Notification of Certain Matters............................. 24
Section 5.4. Further Assurances.......................................... 24
Section 5.5. Board Recommendations....................................... 25
Section 5.6. Stockholder Litigation...................................... 26
Section 5.7. Indemnification............................................. 26
Section 5.8. Public Announcements........................................ 26
Section 5.9. Acquisition Proposals....................................... 26
Section 5.10. Company Stockholders' Meeting............................... 27
Section 5.11. Proxy Statement............................................. 27
Section 5.12. Stockholder Lists........................................... 28
Section 5.13. Shares Held by Company Subsidiaries......................... 28
Section 5.14. Directors................................................... 28
Section 5.15. Undertakings of Parent...................................... 29
Section 5.16. Director Resignations....................................... 29
Section 5.17. Company Options............................................. 29
Section 5.18. Financial Statement Tests................................... 29
Section 5.19. Environmental Compliance.................................... 29
ARTICLE VI CONDITIONS
Section 6.1. Conditions to the Obligation of Each Party.................. 29
Section 6.2. Conditions to Obligations of Parent and Buyer to Effect the
Merger.................................................... 30
Section 6.3. Conditions to Obligations of the Company to Effect the
Merger.................................................... 30
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER
Section 7.1. Termination................................................. 30
Section 7.2. Effect of Termination....................................... 32
Section 7.3. Amendments.................................................. 32
Section 7.4. Waiver...................................................... 32
ARTICLE VIII GENERAL PROVISIONS
Section 8.1. No Third Party Beneficiaries................................ 33
Section 8.2. Entire Agreement............................................ 33
Section 8.3. Succession and Assignment................................... 33
Section 8.4. Counterparts................................................ 33
Section 8.5. Headings.................................................... 33
Section 8.6. Governing Law............................................... 33
Section 8.7. Severability................................................ 33
Section 8.8. Specific Performance........................................ 33
Section 8.9. Construction................................................ 33
Section 8.10. Non-Survival of Representations and Warranties and
Agreements................................................ 33
Section 8.11. Certain Definitions......................................... 34
Section 8.12. Fees and Expenses........................................... 34
Section 8.13. Notices..................................................... 34
ANNEX 1 CONDITIONS OF THE INITIAL OFFER
</TABLE>
ii
<PAGE> 4
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of December
17, 1999, by and among GE Energy Services, Inc., a Delaware corporation
("Parent"), Emmy Acquisition Corp., a Delaware corporation ("Buyer") and wholly
owned subsidiary of Parent, and Showpower, Inc., a Delaware corporation (the
"Company").
WITNESSETH:
WHEREAS, the parties to this Agreement desire to effect the acquisition of
the Company by Buyer;
WHEREAS, in furtherance of the foregoing, upon the terms and subject to the
conditions of this Agreement and in accordance with the Delaware General
Corporation Law of the State of Delaware (the "DGCL"), Buyer will make the cash
tender offer described in Section 1.1 and thereafter Buyer will merge with and
into the Company (the "Merger") in accordance with the provisions of the DGCL,
with the Company as the surviving corporation;
WHEREAS, concurrently with the execution and delivery of this Agreement,
Parent and each of John J. Campion and Esther Ash, G. Laurence and Thressa
Anderson, Stephen R. Bernstein, Jeffrey B. Stone, Joseph A. Ades, Robert E.
Masterson, David C. and Annika Bernstein, Vincent Carrino and Eric G. Jackson
(the "Tendering Stockholders") have entered into a stockholder's agreement,
dated as of the date hereof (the "Tender Agreements"), pursuant to which, among
other things, such stockholders have agreed to tender their shares of the common
stock, par value $.01 per share, of the Company ("Company Common Stock") in the
Initial Offer (as hereinafter defined);
WHEREAS, concurrently with the execution and delivery of this Agreement,
Parent and each of the Tendering Stockholders have entered into an agreement,
dated as of the date hereof (the "Indemnification Agreements"), pursuant to
which, among other things, such stockholders have agreed to indemnify Parent for
breaches of representations, warranties and covenants of this Agreement, subject
to the terms and conditions contained therein;
WHEREAS, the Board of Directors of the Company has unanimously determined
that the Initial Offer, the Subsequent Offer (as hereinafter defined), the
Merger and this Agreement are fair to, and in the best interests of, the Company
and the holders of Company Common Stock (the "Company Stockholders");
WHEREAS, the Board of Directors of Parent and Buyer have each approved this
Agreement, the Merger, the Initial Offer and the Subsequent Offer, upon the
terms and subject to the conditions set forth herein;
WHEREAS, the Board of Directors of the Company has unanimously approved
this Agreement, the Initial Offer, the Subsequent Offer and the Merger, and the
transactions contemplated hereby, which approval was based in part on the
opinion of Prime Charter Ltd. (the "Independent Advisor"), independent financial
advisor to the Board of Directors of the Company, that, as of the date of such
opinion and based on the assumptions, qualifications and limitations contained
therein, the consideration to be received by the Company Stockholders for their
shares of Company Common Stock in the Initial Offer, the Subsequent Offer and
the Merger is fair to these stockholders from a financial point of view;
WHEREAS, the Board of Directors of the Company has unanimously resolved to
recommend acceptance of the Initial Offer, the Subsequent Offer and the Merger
to the Company Stockholders and has determined that the consideration to be paid
for each share of Company Common Stock in the Initial Offer, the Subsequent
Offer and the Merger is fair to the holders of the Company Common Stock and to
recommend that the Company Stockholders accept the Initial Offer and Subsequent
Offer, as applicable, and approve the Merger, this Agreement and the
transactions contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements contained in this
Agreement and intending to be legally bound hereby, the parties hereto agree as
follows:
1
<PAGE> 5
ARTICLE I
THE OFFER AND MERGER
Section 1.1. The Offer.
(a) Provided that this Agreement shall not have been terminated in
accordance with Section 7.1 hereof and nothing shall have occurred that
would result in a failure to satisfy any of the conditions set forth in
Annex I hereto, as promptly as practicable after the date hereof, but in no
event later than five (5) business days following the public announcement
of the terms of this Agreement, Parent shall cause Buyer to commence and
Buyer shall commence (within the meaning of Rule 14d-2 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) an offer to purchase
all of the issued and outstanding shares of the Company Common Stock at a
price of $7.00 per share (the "Offer Price") net to the seller in cash, but
subject to any withholding required by law (the "Initial Offer").
(b) The Initial Offer shall be subject to the conditions set forth in
Annex I hereto. Buyer shall not except as expressly contemplated hereby,
without the prior written consent of the Company, make any change in the
terms or conditions of the Initial Offer that is adverse to the holders of
the Company Common Stock in any material respect, decrease the Offer Price
or the Minimum Condition or impose material conditions to the Initial Offer
other than those set forth in Annex I hereto (it being agreed that a waiver
by Buyer of any condition, in its sole discretion, shall not be deemed to
be adverse to the holders of the Company Common Stock); provided that:
(i) if on any scheduled expiration date of the Initial Offer all
conditions to the Initial Offer shall not have been satisfied or waived,
the Initial Offer may, but need not, be extended from time to time
without the consent of the Company for such period of time as is
reasonably expected by Buyer to be necessary to satisfy the unsatisfied
conditions;
(ii) the Initial Offer may be extended by Buyer without the consent
of the Company for any period required by any rule, regulation,
interpretation or position of the United States Securities and Exchange
Commission (the "SEC") or the staff thereof applicable to the Initial
Offer; and
(iii) if at any scheduled expiration date of the Initial Offer all
conditions to the Initial Offer shall have been satisfied but less than
a number of shares of Company Common Stock that, together with the
number of shares of Company Common Stock owned by Parent and Buyer,
represents ninety percent (90%) of the outstanding shares of Company
Common Stock, on a fully-diluted basis, shall have been tendered into
the Initial Offer, Buyer shall be entitled to (but not required to)
extend the Initial Offer from time to time without the consent of the
Company in order to permit Buyer to solicit additional shares to be
tendered into the Initial Offer.
Buyer shall, unless Buyer shall have in its sole discretion
exercised its right to extend the termination date of the Initial Offer
pursuant to this Section 1.1(b), on the terms and subject to the prior
satisfaction or waiver of the conditions of the Initial Offer, accept
for payment and purchase, as soon as permitted under the terms of the
Initial Offer, all shares of the Company Common Stock validly tendered
and not withdrawn prior to the expiration date of the Initial Offer. It
is agreed that the conditions to the Initial Offer are solely for the
benefit of Buyer and may be asserted by Buyer regardless of the
circumstances giving rise to any such condition (including any action or
inaction by Buyer) or may, but need not, be waived by Buyer, in whole or
in part at any time and from time to time, in its sole discretion,
except with respect to the Minimum Condition.
(c) The Initial Offer shall be made by means of an offer to purchase
(the "Offer to Purchase") that is subject to the conditions set forth in
Annex I hereto. As soon as practicable on the date of commencement of the
Initial Offer, Buyer (and, to the extent required by law, Parent) shall
file with the SEC a Tender Offer Statement on Schedule 14D-1 (together with
all supplements and amendments thereto, the "Schedule 14D-1" or the "Offer
Documents"). The Offer to Purchase shall provide for an initial expiration
date of twenty (20) business days (as defined in Rule 14d-1 under the
Exchange Act)
2
<PAGE> 6
from the date of commencement, subject to Buyer's right to extend the
expiration date of the Offer pursuant to Section 1.1(b).
(d) Notwithstanding anything herein to the contrary, Buyer may, at its
sole option, after the date the Shares of Company Common Stock are
purchased by Buyer pursuant to the Initial Offer (the "Purchase Date"),
commence a subsequent offer for shares of Company Common Stock pursuant to
Rule 14d-11 (which becomes effective as of January 24, 2000) under the
Exchange Act for such period as Buyer may determine (the "Subsequent
Offer") which Subsequent Offer shall comply in all material respects with
the provisions of all applicable United States securities laws.
(e) The Offer Documents (and any documents filed with the SEC pursuant
to a Subsequent Offer) shall comply in all material respects with the
provisions of all applicable United States federal securities laws. Each
party hereto shall promptly supplement, update and correct any information
provided by it for use in the Offer Documents (and any documents filed with
the SEC pursuant to a Subsequent Offer) if, and to the extent that, it is
or shall have become incomplete, false or misleading. In any such event,
Buyer shall take all steps necessary to cause the Offer Documents (and any
documents filed with the SEC pursuant to a Subsequent Offer) as so
supplemented, updated or corrected to be filed with the SEC and to be
disseminated to the Company Stockholders as and to the extent required by
applicable United States federal securities laws. The Company and its
counsel, with respect to the Schedule 14D-1 (or any documents to be filed
with the SEC pursuant to a Subsequent Offer), shall be given an opportunity
to review and comment on such filing and each supplement, amendment or
response to comments with respect thereto prior to being filed with or
delivered to the SEC.
Section 1.2. Consent to Offer; Schedule 14D-9. The Company hereby approves
of and consents to the Initial Offer and Subsequent Offer and to the inclusion
in the Initial Offer and Subsequent Offer and the related documents thereto the
recommendations of the Board of Directors of the Company set forth in Section
3.3(b) hereof. Simultaneously with or as soon as practicable on the day of
filing of the Schedule 14D-1 by Buyer, the Company shall file with the SEC a
Tender Offer Solicitation/Recommendation Statement on Schedule 14D-9 (together
with all supplements and amendments thereto, the "Schedule 14D-9") that will
comply in all material respects with the provisions of all applicable United
States federal securities laws which shall reflect the recommendations of the
Board of Directors of the Company set forth in Section 3.3(b) hereof. Each party
shall promptly supplement, update and correct any information provided by it for
use in the Schedule 14D-9 if, and to the extent that, it is or shall have become
incomplete, false or misleading. In any such event, the Company shall take all
steps necessary to cause the Schedule 14D-9 as so supplemented, updated or
corrected to be filed with the SEC and to be disseminated to the Company
Stockholders, in each case, as and to the extent required by applicable United
States federal securities laws. Each other party hereto and its respective
counsel shall be given an opportunity to review and comment on the Schedule
14D-9 and each supplement, amendment or response to comments with respect
thereto prior to being filed with or delivered to the SEC. The Company shall
cooperate with Buyer with respect to the Subsequent Offer, if applicable, and
shall provide to Buyer all documentation that Buyer may reasonably request in
connection with respect to such Subsequent Offer.
Section 1.3. The Merger. Upon the terms and subject to the conditions of
this Agreement, and in accordance with the DGCL, at the Effective Time (as
hereinafter defined), Buyer shall be merged with and into the Company. As a
result of the Merger, the separate corporate existence of Buyer shall cease and
the Company shall continue as the surviving corporation following the Merger
(the "Surviving Corporation"). The corporate existence of the Company, with all
its purposes, rights, privileges, franchises, powers and objects, shall continue
unaffected and unimpaired by the Merger and, as the Surviving Corporation, it
shall be governed by the laws of the State of Delaware.
Section 1.4. Effective Time; Closing. As promptly as practicable (and in
any event within five (5) business days) after the satisfaction or waiver of the
conditions set forth in Article VI hereof, the parties hereto shall cause the
Merger to be consummated by filing a certificate of merger or certificate of
ownership and merger, if applicable (the "Certificate of Merger"), with the
Secretary of State of the State of Delaware and by making all other filings or
recordings required under the DGCL in connection with the Merger, in such
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form as is required by, and executed in accordance with the relevant provisions
of, the DGCL. The Merger shall become effective at such time as the Certificate
of Merger is duly filed with the Secretary of State of the State of Delaware, or
at such other time as the parties hereto agree shall be specified in the
Certificate of Merger (the date and time the Merger becomes effective, the
"Effective Time"). On the date of such filing, a closing (the "Closing") shall
be held at 10:00 a.m., Eastern Standard Time, at the offices of the King &
Spalding, 191 Peachtree Street, Atlanta, Georgia 30303, or at such other time
and location as the parties hereto shall otherwise agree.
Section 1.5. Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of the DGCL.
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 Buyer shall vest in the Surviving Corporation, and all debts,
liabilities, obligations, restrictions, disabilities and duties of the Company
and Buyer shall become the debts, liabilities, obligations, restrictions,
disabilities and duties of the Surviving Corporation.
Section 1.6. Conversion of Company Common Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of Buyer, the Company or
the holders of any of the following securities:
(a) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares canceled
pursuant to Section 1.6(c) and Dissenting Shares (as defined in Section
1.7), if any) shall be canceled and, subject to Section 1.7, shall by
virtue of the Merger and without any action on the part of the holder
thereof be converted automatically into the right to receive an amount in
cash equal to $7.00 payable, without interest, to the holder of such share
of Company Common Stock, upon surrender of the certificate that formerly
evidenced such share of Company Common Stock in the manner provided in
Section 1.9 (the "Merger Consideration");
(b) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time that is owned by Parent or Buyer
and each share of Company Common Stock that is owned by the Company as
treasury stock shall be canceled and retired and cease to exist and no
payment or distribution shall be made with respect thereto;
(c) At the Effective Time, all shares of the Company Common Stock
converted pursuant to Section 1.6(a) shall no longer be outstanding and
shall automatically be canceled and retired and cease to exist, and each
holder of a certificate ("Certificate") representing any such shares of
Company Common Stock shall cease to have any rights with respect thereto,
except the right to receive the Merger Consideration in accordance with
Section 1.6(a); and
(d) Each share of common stock, par value $.01 per share, of Buyer
issued and outstanding immediately prior to the Effective Time shall be
converted into and become one validly issued, fully paid and nonassessable
share of common stock, par value $.01 per share, of the Surviving
Corporation and shall constitute the only outstanding shares of capital
stock of the Surviving Corporation.
Section 1.7. Dissenting Shares.
(a) Notwithstanding anything in this Agreement to the contrary, shares
of Company Common Stock that are issued and outstanding immediately prior
to the Effective Time and which are held by Company Stockholders who have
demanded and perfected their demands for appraisal of such shares of
Company Common Stock in the time and manner provided in Section 262 of the
DGCL and, as of the Effective Time, have neither effectively withdrawn nor
lost their rights to such appraisal and payment under the DGCL (the
"Dissenting Shares") shall not be converted as described in Section 1.6(a),
but shall, by virtue of the Merger, be entitled to only such rights as are
granted by Section 262 of the DGCL; provided, however, that if such holder
shall have failed to perfect or shall have effectively withdrawn or lost
his, her or its right to appraisal and payment under the DGCL, such
holder's shares of Company Common Stock shall thereupon be deemed to have
been converted, at the Effective Time, as described in Section 1.6(a), into
the right to receive the Merger Consideration set forth in such provisions,
without any interest thereon.
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(b) The Company shall give Parent (i) prompt notice of any demands for
appraisal pursuant to Section 262 of the DGCL received by the Company,
withdrawals of such demands, and any other instruments served pursuant to
the DGCL and received by the Company and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under
the DGCL. The Company shall not, except with the prior written consent of
Parent or as otherwise required by applicable law, make any payment with
respect to any such demands for appraisal or offer to settle or settle any
such demands.
Section 1.8. Stock Option Plans. The Company shall take all commercially
reasonable efforts necessary to ensure that, pursuant to the Company's 1998
Stock Option and Incentive Plan (the "Company Stock Option Plan"), all
outstanding options to acquire Company Common Stock (the "Company Options")
granted under the Company Stock Option Plans shall be exercised in full
immediately prior to the consummation of the Initial Offer and all Company
Options that are not exercised prior to the consummation of the Initial Offer
will terminate and expire as of the consummation date of the Initial Offer. In
addition, the Company shall, by written notice to each holder of Company
Options, offer to pay such holder upon the consummation of the Initial Offer, in
exchange for the cancellation of such holder's Company Options (regardless of
exercise price) upon the consummation of the Initial Offer, an amount in cash
determined by multiplying (A) the excess, if any, of the Offer Price over the
applicable exercise price per share of the Company Option by (B) the number of
shares of Company Common Stock such holder could have purchased had such holder
exercised such Company Option in full immediately prior to the consummation of
the Initial Offer (such amount, the "Option Consideration"), and each such
Company Option shall thereafter be canceled.
Section 1.9. Surrender of Shares of Company Common Stock; Stock Transfer
Books.
(a) Prior to the Effective Time, Parent shall designate a bank or
trust company to act as agent (the "Paying Agent") for the holders of
shares of Company Common Stock reasonably acceptable to the Company to
receive the funds necessary to make the payments to such holders pursuant
to Section 1.6 upon surrender of their Certificates. Parent will, on or
prior to the Effective Time, deposit with the Paying Agent the Merger
Consideration to be paid in respect of the shares of Company Common Stock
(the "Fund"). The Fund shall be invested by the Paying Agent as directed by
Parent. Any net profit resulting from, or interest or income produced by,
such investments, shall be payable to the Surviving Corporation. Parent
shall replace any monies lost through any investment made pursuant to this
Section 1.9(a). The Paying Agent shall make the payments provided in
Section 1.6.
(b) Promptly after the Effective Time, the Surviving Corporation shall
cause to be mailed to each person who was, at the Effective Time, a holder
of record of shares of Company Common Stock entitled to receive the Merger
Consideration pursuant to Section 1.6 a form of 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 Paying Agent) and instructions for use in effecting the
surrender of the Certificates pursuant to such letter of transmittal. Upon
surrender to the Paying Agent of a Certificate, together with such letter
of transmittal, duly completed and validly executed in accordance with the
instructions thereto, and such other documents as may be required pursuant
to such instructions, the holder of such Certificate shall be entitled to
receive in exchange therefor the Merger Consideration for each share of
Company Common Stock formerly evidenced by such Certificate, and such
Certificate shall then be canceled. Until so surrendered, each such
Certificate shall, at and after the Effective Time, represent for all
purposes, only the right to receive such Merger Consideration. No interest
shall accrue or be paid to any beneficial owner of shares of Company Common
Stock or any holder of any Certificate with respect to the Merger
Consideration payable upon the surrender of any Certificate. If payment of
the Merger Consideration is to be made to a person other than the person in
whose name the surrendered Certificate is registered on the stock transfer
books of the Company, it shall be a condition of payment that the
Certificate so surrendered shall be endorsed in blank or to the Paying
Agent or otherwise be in proper form for transfer and that the person
requesting such payment shall have paid all transfer and other taxes
required by reason of the payment of the Merger Consideration to a person
other than the registered holder of the Certificate surrendered or shall
have established to the satisfaction of the
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Surviving Corporation that such taxes either have been paid or are not
applicable. If any Certificate shall have been lost, stolen or destroyed,
upon making of an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation or Parent, the posting by such person of a bond, in
such reasonable amount as the Surviving Corporation or Parent may direct,
as indemnity against any claim that may be made against it with respect to
such Certificate, the Paying Agent will issue in exchange for such lost,
stolen or destroyed Certificate the applicable Merger Consideration such
holder is entitled to receive pursuant to Section 1.6.
(c) At any time following the sixth (6th) month after the Effective
Time, the Surviving Corporation shall be entitled to require the Paying
Agent to deliver to it any portion of the Fund which had been made
available to the Paying Agent and not disbursed to holders of shares of
Company Common Stock (including, without limitation, all interest and other
income received by the Paying Agent in respect of all amounts held in the
Fund or other funds made available to it), and thereafter each such holder
shall be entitled to look only to the Surviving Corporation (subject to
abandoned property, escheat and other similar laws), and only as general
creditors thereof, with respect to any Merger Consideration that may be
payable upon due surrender of the Certificates held by such holder. If any
Certificates representing shares of Company Common Stock shall not have
been surrendered immediately prior to such date on which the Merger
Consideration in respect of such Certificate would otherwise escheat to or
become the property of any Governmental Entity (as hereinafter defined),
any such cash, shares, dividends or distributions payable in respect of
such Certificate shall, to the extent permitted by applicable law, become
the property of the Surviving Corporation, free and clear of all claims or
interest of any person previously entitled thereto. Notwithstanding the
foregoing, none of the Surviving Corporation, Parent, Buyer or the Paying
Agent shall be liable to any holder of a share of Company Common Stock for
any Merger Consideration delivered in respect of such share of Company
Common Stock to a public official pursuant to any abandoned property,
escheat or other similar law.
(d) At the Effective Time, the stock transfer books of the Company
shall be closed and thereafter there shall be no further registration of
transfers of shares of Company Common Stock on the records of the Company.
From and after the Effective Time, except for Parent and Buyer, the holders
of shares of Company Common Stock outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such shares
of Company Common Stock except as otherwise provided herein or by
applicable law, and all cash paid pursuant to this Article I upon the
surrender or exchange of Certificates shall be deemed to have been paid in
full satisfaction of all rights pertaining to the shares of Company Common
Stock theretofore represented by such Certificate.
(e) Parent, Buyer, the Surviving Corporation and the Paying Agent, as
the case may be, shall be entitled to deduct and withhold from the Merger
Consideration otherwise payable pursuant to this Agreement to any holder of
shares of Company Common Stock and Company Options such amounts that
Parent, Buyer, the Surviving Corporation or the Paying Agent is required to
deduct and withhold with respect to the making of such payment under the
Internal Revenue Code of 1986, as amended (the "Code"), the rules and
regulations promulgated thereunder or any provision of state, local or
foreign tax law. To the extent that amounts are so withheld by Parent,
Buyer, the Surviving Corporation or the Paying Agent, such amounts shall be
treated for all purposes of this Agreement as having been paid to the
holder of the shares of Company Common Stock and Company Options in respect
of which such deduction and withholding was made by Parent, Buyer, the
Surviving Corporation or the Paying Agent.
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1. Certificate of Incorporation. The Certificate of
Incorporation of the Company as in effect immediately prior to the Effective
Time shall be the Certificate of Incorporation of the Surviving Corporation,
until the same shall thereafter be altered, amended or repealed in accordance
with applicable law or such Certificate of Incorporation.
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Section 2.2. Bylaws. The Bylaws of the Company as in effect immediately
prior to the Effective Time shall be the Bylaws of the Surviving Corporation,
until the same shall thereafter be altered, amended or repealed in accordance
with applicable law, the Certificate of Incorporation of the Surviving
Corporation or such Bylaws.
Section 2.3. Directors and Officers. From and after the Effective Time,
until the earlier of their resignation or removal or until their respective
successors are duly elected or appointed and qualified in accordance with
applicable law, (i) the directors of Buyer at the Effective Time shall be the
directors of the Surviving Corporation, and (ii) the officers of Buyer at the
Effective Time shall be the officers of the Surviving Corporation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each of the other parties hereto as
follows:
Section 3.1. Organization and Standing. Each of the Company and each
Subsidiary (as defined below) (i) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, (ii) has full corporate power and authority and all necessary
government approvals to own, lease and operate its properties and assets and to
conduct its business as presently conducted and (iii) is duly qualified or
licensed to do business as a foreign corporation and is in good standing in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification or licensing
necessary, except where the failure to be so qualified or licensed, individually
or in the aggregate, has not had, or would not reasonably be expected to have, a
Company Material Adverse Effect (as hereinafter defined). The Company has
furnished or made available to Parent true and complete copies of its
certificate of incorporation (including any certificates of designations
attached thereto, the "Company Certificate of Incorporation") and bylaws (the
"Company Bylaws") and the certificate of incorporation and bylaws (or equivalent
organizational documents) of each Subsidiary, each as amended to date. Such
certificate of incorporation, bylaws or equivalent organizational documents are
in full force and effect, and neither the Company nor any Subsidiary is in
violation of any provision of its certificate of incorporation, bylaws or
equivalent organizational documents.
Section 3.2. Capitalization. The authorized capital stock of the Company
consists of 6,500,000 shares of Company Common Stock and 1,000,000 shares of
preferred stock, $.0l par value per share (the "Preferred Stock"). As of the
date hereof, (i) 3,421,842 shares of Company Common Stock are issued and
outstanding, all of which are validly issued, fully paid and nonassessable and
free of preemptive rights, (ii) no shares of Company Common Stock are held in
the treasury of the Company, (iii) 969,563 Company Options are outstanding
pursuant to the Company Stock Option Plan, each such option entitling the holder
thereof to purchase one share of Company Common Stock, and 1,000,000 shares of
Company Common Stock are authorized and reserved for future issuance pursuant to
the Company Stock Option Plan, (iv) no shares of Preferred Stock are issued or
outstanding, and (v) 120,000 shares of Company Common Stock are reserved for
future issuance pursuant to the Company Warrants. The Company Disclosure Letter
delivered by the Company to the other parties hereto concurrently with the
execution of this Agreement (the "Company Disclosure Letter") sets forth a true
and complete list of the outstanding Company Options with the exercise price.
Except as set forth above or in the Company Disclosure Letter, there are no
options, warrants, convertible securities, subscriptions, stock appreciation
rights, phantom stock plans or stock equivalents or other rights, agreements,
arrangements or commitments (contingent or otherwise) of any character issued or
authorized by the Company relating to the issued or unissued capital stock of
the Company or any Subsidiary or obligating the Company or any Subsidiary to
issue or sell any shares of capital stock of, or options, warrants, convertible
securities, subscriptions or other equity interests in, the Company or any
Subsidiary. All shares of Company 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
nonassessable. Except as set forth in the Company Disclosure Letter, there are
no outstanding contractual obligations of the Company or any Subsidiary to
repurchase, redeem or otherwise acquire any shares of
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Company Stock or any capital stock of any Subsidiary or to pay any dividend or
make any other distribution in respect thereof or to provide funds to, or make
any investment (in the form of a loan, capital contribution or otherwise) in,
any person. The Company Disclosure Letter sets forth a correct and complete list
of each corporation, association, subsidiary, partnership, limited liability
company or other entity of which the Company controls, directly or indirectly,
30% or more of the outstanding equity interests (each a "Subsidiary" and
collectively, the "Subsidiaries"). Except as set forth in the Company Disclosure
Letter, the Company owns beneficially and of record all of the issued and
outstanding capital stock of each Subsidiary and does not own an equity interest
in any other corporation, association, partnership, limited liability company or
other entity, other than in the Subsidiaries. Each outstanding share of capital
stock of each Subsidiary is duly authorized, validly issued, fully paid and
nonassessable and each such share owned by the Company or another Subsidiary is
free and clear of all security interests, liens, claims, pledges, options,
rights of first refusal, agreements, limitations on the Company's or such other
Subsidiary's voting rights, charges and other encumbrances of any nature
whatsoever.
Section 3.3. Authority for Agreement.
(a) The Company has all necessary power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and, subject
to obtaining necessary stockholder approval, to consummate the Initial
Offer, the Subsequent Offer, the Merger and the other transactions
contemplated by this Agreement. The execution, delivery and performance by
the Company of this Agreement, and the consummation by the Company of the
Initial Offer, the Subsequent Offer, the Merger and the other transactions
contemplated by this Agreement, have been duly authorized by all necessary
corporate action (including, without limitation, the unanimous approval of
the Board of Directors of the Company) and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or to
consummate the Initial Offer, the Subsequent Offer, the Merger or the other
transactions contemplated by this Agreement (other than, with respect to
the Merger, the approval and adoption of this Agreement by the affirmative
vote of a majority of the voting power of the then outstanding shares of
Company Common Stock and the filing and recordation of appropriate merger
documents as required by the DGCL). This Agreement has been duly executed
and delivered by the Company and, assuming the due authorization, execution
and delivery by Parent and Buyer, constitutes a legal, valid and binding
obligation of the Company enforceable against the Company in accordance
with its terms. The affirmative vote of holders of the outstanding shares
of Company Common Stock entitled to vote at a duly called and held meeting
of stockholders is the only vote of the Company's Stockholders necessary to
approve this Agreement, the Merger and the other transactions contemplated
by this Agreement.
(b) At a meeting duly called and held on December 16, 1999, the Board
of Directors of the Company unanimously (i) determined that this Agreement
and the Tender Agreements and the Indemnification Agreements and the other
transactions contemplated hereby and thereby, including the Initial Offer,
the Subsequent Offer and the Merger, are fair to and in the best interests
of the Company and the Company Stockholders, (ii) approved, authorized and
adopted this Agreement, the Initial Offer, the Subsequent Offer, the Merger
and the other transactions contemplated hereby, and (iii) resolved to
recommend acceptance of the Initial Offer, the Subsequent Offer, and, if
applicable, approval and adoption of this Agreement and the Merger by the
Company Stockholders. The actions taken by the Board of Directors of the
Company constitute approval of the Initial Offer, the Subsequent Offer, the
Merger, this Agreement and the Tender Agreements and the Indemnification
Agreements and the other transactions contemplated hereby and thereby by
the Board of Directors of the Company under the provisions of Section 203
of the DGCL such that Section 203 of the DGCL does not apply to this
Agreement, the Tender Agreements, the Indemnification Agreements or the
transactions contemplated hereby or thereby. Other than Section 203 of the
DGCL, no state antitakeover or similar statute is applicable to Parent or
Buyer in connection with the Merger, the Initial Offer, the Subsequent
Offer, this Agreement, the Tender Agreements or the Indemnification
Agreements or any of the transactions contemplated hereby or thereby.
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(c) The Independent Advisor has delivered to the Board of Directors of
the Company its written opinion, dated as of the date of this Agreement,
that, as of such date and based on the assumptions, qualifications and
limitations contained therein, the consideration to be received by the
Company Stockholders in the Initial Offer, the Subsequent Offer and the
Merger is fair to such holders from a financial point of view. A copy of
such opinion is included in the Company Disclosure Letter.
Section 3.4. No Conflict. The execution and delivery of this Agreement by
the Company do not, and the performance of this Agreement by the Company and the
consummation of the Initial Offer, the Subsequent Offer and the Merger and the
other transactions contemplated by this Agreement will not, (i) conflict with or
violate the Company Certificate of Incorporation or Company Bylaws or equivalent
organizational documents of any of its Subsidiaries, (ii) subject to Section
3.5, conflict with or violate any United States federal, state or local or any
foreign statute, law, rule, regulation, ordinance, code, order, judgment, decree
or any other requirement or rule of law (a "Law") applicable to the Company or
any of its Subsidiaries or by which any property or asset of the Company or any
of its Subsidiaries is bound or affected, or (iii) except as set forth in the
Company Disclosure Letter, result in a breach of or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
give to others any right of termination, amendment, acceleration or cancellation
of, result in triggering any payment or other obligations, or result in the
creation of a lien or other encumbrance on any property or asset of the Company
or any of its Subsidiaries in any case that would be material to the Company or
any Subsidiary pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
or Material Contract (as hereinafter defined) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries or
any property or asset of any of them is bound or affected.
Section 3.5. Required Filings and Consents. The execution and delivery of
this Agreement by the Company do 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 United States federal, state or local or
any foreign government or any court, administrative or regulatory agency or
commission or other governmental authority or agency, domestic or foreign (a
"Governmental Entity"), except (i) for applicable requirements, if any, of the
Exchange Act, state securities or "blue sky" laws ("Blue Sky Laws") and filing
and recordation of appropriate merger documents as required by the DGCL, (ii)
for those required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), (iii) for applicable requirements, if any, required
by the Brazilian anti-trust authorities and (iv) for filings contemplated by
Sections 1.1, 1.2 and 3.14 hereof.
Section 3.6. Compliance. Each of the Company and its Subsidiaries (i) has
been operated at all times in compliance in all material respects with all Laws
applicable to the Company or any of its Subsidiaries or by which any property,
business or asset of the Company or any of its Subsidiaries is bound or affected
and (ii) is not in default or violation of any notes, bonds, mortgages,
indentures, contracts, agreements, leases, licenses, permits, franchises, or
other instruments or obligations or Material Contract to which the Company or
any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries or any property or asset of the Company or any of its Subsidiaries
is bound or affected.
Section 3.7. SEC Filings, Financial Statements.
(a) The Company and each Subsidiary, as necessary, has filed all
forms, reports, statements and documents required to be filed with any
regulatory authority established by law in a foreign jurisdiction or with
the SEC since April 21, 1998 (the "SEC Reports," and together with the
foreign jurisdiction reports and UK Accounts (as hereinafter defined), the
"Government Reports"), each of which has complied in all material respects
with the applicable requirements of the Securities Act of 1933, as amended
(the "Securities Act"), and the rules and regulations promulgated
thereunder, or the Exchange Act, and the rules and regulations promulgated
thereunder, or, in the case of a foreign jurisdiction, the relevant laws of
that jurisdiction, each as in effect on the date so filed. None of the
Government Reports (including, but not limited to, any financial statements
or schedules included or incorporated by reference therein) contained when
filed any untrue statement of a material fact or omitted or omits to state
a material fact required to be stated or incorporated by reference therein
or necessary in order to make the statements
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therein, in the light of the circumstances under which they were made, not
misleading. Except to the extent that information contained in any
Government Report has been revised or superseded by a later filed
Government Report, none of the Government Reports contains any untrue
statement of a material fact or omits 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.
For purposes of this Agreement, the term "UK Accounts" means the Company's
or its Subsidiaries' individual accounts (as that term is used in section
226 of the UK Companies Act of 1985) and cash flow statement for the
financial year ended December 31, 1998, the auditor's report on those
accounts, the directors' report for that year and the notes to those
accounts.
(b) All of the financial statements included in the Government
Reports, in each case, including any related notes thereto, as filed with
the SEC (those filed with the SEC are collectively referred to as the
"Company Financial Statements") or with relevant authorities in foreign
jurisdictions, have been prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto or, in
the case of the unaudited statements, as may be permitted by Form 10-QSB of
the SEC and subject, in the case of the unaudited statements, to normal,
recurring audit adjustments) and fairly present the consolidated financial
position of the Company and its Subsidiaries at the respective date thereof
and the consolidated results of its operations and changes in cash flows
for the periods indicated. The value shown in the Government Reports or any
financial statement of any real property owned by any foreign Subsidiary of
the Company is not greater than the value that would be ascribed to it by
customary valuation principles in that jurisdiction.
(c) Other than as disclosed in the Company Disclosure Letter, there
are no liabilities of the Company or any of its Subsidiaries of any kind
whatsoever, whether or not accrued and whether or not contingent or
absolute, that are material to the Company and its Subsidiaries, taken as a
whole, other than (i) liabilities disclosed or provided for in the
consolidated balance sheet of the Company and its Subsidiaries at December
31, 1998, including the notes thereto, (ii) liabilities disclosed in the
SEC Reports, (iii) liabilities incurred on behalf of the Company in
connection with this Agreement and the contemplated Merger, and (iv)
liabilities incurred in the ordinary course of business consistent with
past practice since December 31, 1998, none of which are, individually or
in the aggregate, reasonably likely to be material to the Company.
(d) The Company has heretofore furnished or made available to Parent a
complete and correct copy of any amendments or modifications which have not
yet been filed with the SEC to agreements, documents or other instruments
which previously had been filed by the Company with the SEC as exhibits to
the SEC Reports pursuant to the Securities Act and the rules and
regulations promulgated thereunder or the Exchange Act and the rules and
regulations promulgated thereunder.
Section 3.8. Absence of Certain Changes or Events. Except as contemplated
by this Agreement, as disclosed in the SEC Reports filed prior to the date
hereof or as disclosed in Section 3.8 of the Company Disclosure Letter since
December 31, 1998, the Company and its Subsidiaries have conducted their
respective businesses only in the ordinary course and consistent with prior
practice and there has not been (i) any event or occurrence of any condition
that has had or would reasonably be expected to have a Company Material Adverse
Effect, (ii) any declaration, setting aside or payment of any dividend or any
other distribution with respect to any of the capital stock of the Company or
any Subsidiary, (iii) any material change in accounting methods, principles or
practices employed by the Company, or (iv) any action of the type described in
Sections 5.1(b) or 5.1(c) which had such action been taken after the date of
this Agreement would be in violation of any such Section.
Section 3.9. Taxes. The Company and each of its Subsidiaries have timely
filed all Tax Returns required to be filed by any of them. All such Tax Returns
are true, correct and complete in all material respects. All Taxes of the
Company and its Subsidiaries which are (i) shown as due on such Tax Returns,
(ii) otherwise due and payable or (iii) claimed or asserted by any taxing
authority to be due, have been paid, except for those Taxes being contested in
good faith and for which adequate reserves have been established in
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the financial statements included in the SEC Reports in accordance with GAAP.
There are no liens for any Taxes upon the assets of the Company or any of its
Subsidiaries, other than statutory liens for Taxes not yet due and payable and
liens for real estate Taxes contested in good faith. The Company does not know
of any proposed or threatened Tax claims or assessments which, if upheld, could
individually or in the aggregate have a Company Material Adverse Effect. Neither
the Company nor any of its Subsidiaries has made an election under Section
341(f) of the Code. Neither the Company nor any of its Subsidiaries has waived
any statute of limitations in respect of Taxes or agreed to any extension of
time with respect to a Tax assessment or deficiency. The Company and each
Subsidiary has withheld and paid over to the relevant taxing authority all Taxes
required to have been withheld and paid in connection with payments to
employees, independent contractors, creditors, Stockholders or other third
parties. The unpaid Taxes of the Company and its Subsidiaries for the current
taxable period (A) did not, as of the most recent Company Financial Statements,
exceed the reserve for Tax liability set forth on the face of the balance sheet
in the most recent Company Financial Statements and (B) do not exceed that
reserve as adjusted for the passage of time through the Closing in accordance
with the past custom and practice of the Company and its Subsidiaries in filing
their Tax Returns. For purposes of this Agreement, (a) "Tax" (and, with
correlative meaning, "Taxes") means any federal, state, local or foreign income,
gross receipts, property, sales, use, license, excise, franchise, employment,
payroll, premium, withholding, alternative or added minimum, ad valorem,
transfer or excise tax, or any other tax, custom, duty, governmental fee or
other like assessment or charge of any kind whatsoever, together with any
interest or penalty or addition thereto, whether disputed or not, imposed by any
Governmental Entity, and (b) "Tax Return" means any return, report or similar
statement required to be filed with respect to any Tax (including any attached
schedules), including, without limitation, any information return, claim for
refund, amended return or declaration of estimated Tax.
The Company or any Subsidiary is not and has not been a party to or
otherwise involved in any transaction, agreement or arrangement or otherwise
other than by way of a bargain at arm's length, or any transaction, agreement or
arrangement (whether or not by way of a bargain at arm's length) under which it
has been or is or may be required to make any payment for goods services or
facilities provided to it which is in excess of the market value of such goods,
services or facilities or under which it has been, or is or may be required to
provide such goods, services or facilities for a consideration which is less
than the market value of such goods, services or facilities and in consequence
of which it is or will be liable to Tax in respect of an amount deemed for Tax
purposes to be income or gains of the Company or any Subsidiary but not actually
income or gains of the Company or any Subsidiary.
The Company Disclosure Letter sets forth with reasonable specificity: (i)
all jurisdictions in which the Company or any Subsidiary currently has a
presence requiring it to pay Taxes (a "Taxable Presence") and all jurisdictions
in which the Company or any Subsidiary has had a Taxable Presence since January
1, 1996, (ii) all Tax Returns filed or due to be filed applicable to the three
year period ending on the date hereof and (iii) all correspondence with any Tax
authorities (including, without limitation, all audits, notices and requests for
information from or to taxing authorities) since January 1, 1996.
Section 3.10. Assets.
(a) Except as set forth in the Company's Annual Report on Form 10-KSB
for the fiscal year ended December 31, 1998 (the "10-K") or in the Company
Disclosure Letter, the Company and each of its Subsidiaries have good and
marketable title to, or a valid leasehold interest in, all of their real
and personal properties and assets reflected in the 10-K or acquired after
December 31, 1998 (other than assets disposed of since December 31, 1998 in
the ordinary course of business consistent with past practice), in each
case free and clear of all title defects, liens, encumbrances and
restrictions, except for (i) liens, encumbrances or restrictions which
secure indebtedness which are properly reflected in the 10-K; (ii) liens
for Taxes accrued but not yet payable; (iii) liens arising as a matter of
law in the ordinary course of business with respect to obligations incurred
after December 31, 1998, provided that the obligations secured by such
liens are not delinquent; and (iv) liens that do not individually or in the
aggregate, materially detract from the value of the assets subject thereto
or materially impact the operation of the Company or any Subsidiary. The
Company Disclosure Letter sets forth a true, correct and complete list of
all real property (i) owned or leased by the Company or a Subsidiary, (ii)
as to
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which the Company or a Subsidiary has a license, easement or right of way
to use, (iii) as to which the Company or a Subsidiary has the option to
purchase, lease, license or acquire an easement or right of way or (iv) in
which the Company or a Subsidiary has any other interest. Except as set
forth in the Company Disclosure Letter, the Company and each of its
Subsidiaries either own, or have valid leasehold interests in, all
properties and assets used by them in the conduct of their business.
(b) Except as set forth in the Company Disclosure Letter, neither the
Company nor any of its Subsidiaries has any legal obligation, absolute or
contingent, to any other person to sell or otherwise dispose of any of its
assets with an individual value of $50,000 or an aggregate value in excess
of $100,000.
(c) The equipment of the Company and its Subsidiaries is in good
operating condition and repair (ordinary wear and tear excepted) and is
adequate for the uses to which it is being put, and none of such equipment
is in need of maintenance or repairs, except for ordinary routine
maintenance or repairs that are not in the aggregate material in nature or
cost. The equipment of the Company and its Subsidiaries is adequate for the
continued conduct of the business of the Company and its Subsidiaries after
the Effective Time in substantially the same manner as conducted prior to
the Effective Time.
Section 3.11. Change of Control Agreements. Except as set forth in the
Company Disclosure Letter, neither the execution and delivery of this Agreement
nor the consummation of the Initial Offer, the Subsequent Offer, the Merger or
the other transactions contemplated by this Agreement, will (either alone or in
conjunction with any other event) result in, cause the accelerated vesting or
delivery of, or increase the amount or value of, any payment or benefit to any
director, officer or employee of the Company. Except as set forth in the Company
Disclosure Letter, without limiting the generality of the foregoing, no amount
paid or payable by the Company in connection with the Initial Offer, the
Subsequent Offer, the Merger or the other transactions contemplated by this
Agreement, including accelerated vesting of options, (either solely as a result
thereof or as a result of such transactions in conjunction with any other event)
will be an "excess parachute payment" within the meaning of Section 280G of the
Code.
Section 3.12. Litigation. Except for such matters disclosed in the Company
Disclosure Letter which, if adversely determined individually or in the
aggregate, are not, and would not reasonably be expected to be, material to the
Company, there are no claims, suits, actions, investigations, indictments or
information, or administrative, arbitration or other proceedings ("Litigation")
pending or, to the knowledge of the Company, threatened against the Company or
any of its Subsidiaries. There are no judgments, orders, injunctions, decrees,
stipulations or awards (whether rendered by a court, administrative agency, or
by arbitration, pursuant to a grievance or other procedure) against or relating
to the Company or any of its Subsidiaries.
Section 3.13. Contracts and Commitments.
(a) The Company Disclosure Letter sets forth a true, correct and
complete list of the following contracts to which the Company or a
Subsidiary is a party (including every amendment, modification or
supplement to the foregoing): (i) any contracts of employment and contracts
or agreements which limit or restrict the Company, any Subsidiary or any
employee from engaging in any business in any jurisdiction, (ii) agreements
or arrangements for the purchase or sale of any assets (otherwise than in
the ordinary course of business), (iii) all bonds, debentures, notes,
loans, credit or loan agreements or commitments, mortgages, indentures or
guarantees or other agreements or contracts relating to the borrowing of
money involving amounts in excess of $100,000, (iv) agreements with unions,
material independent contractor agreements and material leased or temporary
employee agreements, (v) leases of any real or personal property involving
annual rent of $25,000 or more, and (vi) all other contracts, agreements or
commitments involving payments made by or to the Company or a Subsidiary of
$50,000 (individually, a "Material Contract" and collectively, "Material
Contracts"). Prior to the date hereof, the Company has provided to Buyer
and Parent true, correct and complete copies of the following contracts to
which the Company or a Subsidiary is a party (including every amendment,
modification or supplement to the foregoing): (i) all bonds, debentures,
notes, loans, credit or loan agreements or commitments, mortgages,
indentures or guarantees or other agreements or contracts relating to the
borrowing of money involving amounts in excess of $10,000 and (ii) leases
of any real or personal property involving annual rent of $5,000 or more.
Except for agreements, arrangements or commitments
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disclosed in the Company Disclosure Letter, neither the Company nor any of
its Subsidiaries is a party to any agreement, arrangement or commitment
which is material to the business of the Company or any of its
Subsidiaries. The Company has delivered or made available true, correct and
complete copies of all such agreements, arrangements and commitments to
Parent. Neither the Company nor any of its Subsidiaries is in default under
any such agreement, arrangement or commitment which defaults individually
or in the aggregate would reasonably be expected to be material to the
Company or any Subsidiary.
(b) Except as set forth in the Company Disclosure Letter, each of the
Company's and its Subsidiaries' current and existing contracts with respect
to the provision of equipment or services (a) disclaims all warranties of
merchantability and fitness for a particular use, (b) limits the Company's
and its Subsidiaries' liability to only amounts paid under such contract
and (c) permits the other party to such contract only to recover actual
damages and not any special, consequential or punitive damages or lost
profits.
Section 3.14. Information Supplied. None of the information supplied or to
be supplied by the Company in writing to Parent specifically for inclusion or
incorporation by reference in the Schedule 14D-1 will, at the date such
documents are first published, sent or delivered to Company Stockholders or,
unless promptly corrected, at any time during the pendency of the Initial Offer
of Subsequent Offer 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 made therein, in light of the circumstances under which they
were made, not misleading. Neither the Schedule 14D-9 at the date such document
is first published, sent or delivered to the Company Stockholders or, unless
promptly corrected, at any time during the pendency of the Initial Offer or
Subsequent Offer, nor the proxy statement to be mailed to the Company
Stockholders in connection with the meeting (the "Stockholder's Meeting") to be
called to consider the Merger (the "Proxy Statement") (if applicable) at the
date such document is first published, sent or delivered to Company Stockholders
or, unless promptly corrected, at any time during the pendency of the
Stockholder's Meeting, will 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 made therein, in light of the circumstances under
which they were made, not misleading. The Schedule 14D-9 and the Proxy Statement
(if applicable) will comply as to form and substance in all material respects
with the requirements of the Exchange Act and the applicable rules and
regulations of the SEC thereunder. Notwithstanding the foregoing, no
representation or warranty is made by the Company with respect to statements
made or incorporated by reference therein based on information supplied by
Parent or Buyer for inclusion or incorporation by reference in any of the
foregoing documents.
Section 3.15. Employee Benefit Plans. All employee benefit plans,
compensation arrangements and other benefit arrangements covering employees of
the Company or any of its Subsidiaries (the "Company Benefit Plans") and all
employee agreements providing for compensation, severance or other benefits to
any employee or former employee of the Company or any of its Subsidiaries are
listed in the Company Disclosure Letter. True, correct and complete copies of
the following documents with respect to each of the Company Benefit Plans have
been provided by the Company to Parent: (i) any plans and related trust
documents and amendments thereto, (ii) summary plan descriptions and material
modifications thereto, (iii) written communications made since January 1, 1998
to employees relating to the Company Benefit Plans and (iv) written descriptions
of all non-written agreements relating to the Company Benefit Plans. To the
extent applicable, the Company Benefit Plans comply with the requirements of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and the
Code, and any Company Benefit Plan intended to be qualified under Section 401(a)
of the Code has received a determination letter or is a model prototype plan and
continues to satisfy the requirements for such qualification. Neither the
Company nor any of its Subsidiaries nor any ERISA Affiliate of the Company
maintains, contributes to or has maintained or contributed in the past six (6)
years to any benefit plan which is covered by Title IV of ERISA or Section 412
of the Code. Neither any Company Benefit Plan, nor the Company nor any
Subsidiary has incurred any liability or penalty under Section 4975 of the Code
or Section 502(i) of ERISA or engaged in any transaction that is reasonably
likely to result in any such liability or penalty. Each of the Company and its
Subsidiaries and any ERISA Affiliate which maintains a "group health plan"
within the meaning of Section 5000(b)(1) of the
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Code has complied with the notice and continuation requirements of Section 4980B
of the Code, Part 6 of Subtitle B of Title I of ERISA and the regulations
thereunder (COBRA), and the creditable coverage certification requirements and
limitations on pre-existing condition exclusion requirements of Section 9801 of
the Code, Part 7 of Subtitle B of Title I of ERISA and the regulations
thereunder (HIPAA). Except as set forth in the Company Disclosure Letter, each
Company Benefit Plan has been maintained and administered in compliance with its
terms and with ERISA and the Code to the extent applicable thereto. There is no
pending or, to the knowledge of the Company, threatened or anticipated
Litigation against or otherwise involving any of the Company Benefit Plans and
no Litigation (excluding claims for benefits incurred in the ordinary course of
Company Benefit Plan activities) has been brought against or with respect to any
such Company Benefit Plan. All contributions required to be made as of the date
hereof to the Company Benefit Plans have been made or provided for. Except as
described in the SEC Reports or as required by Law, neither the Company nor any
of its Subsidiaries maintains or contributes to any plan or arrangement which
provides or has any liability to provide life insurance or medical or other
employee welfare benefits to any employee or former employee upon his retirement
or termination of employment, and neither the Company nor any of its
Subsidiaries has ever represented, promised or contracted (whether in oral or
written form) to any employee or former employee that such benefits would be
provided.
Any individual who performs services for the Company or any of its
Subsidiaries (other than through a contract with an organization other than such
individual) and who is not treated as an employee for federal income tax
purposes by the Company or its Subsidiaries is not an employee for such
purposes. Except as set forth in the Company Disclosure Letter, there are no
agreements in effect between the Company or any Subsidiary and any individual
retained by the Company or any Subsidiary to provide services as a consultant or
independent contractor.
For purposes of this Agreement "ERISA Affiliate" means any business or
entity which is a member of the same "controlled group of corporations," an
"affiliated service group" or is under "common control" with an entity within
the meanings of Sections 414(b), (c) or (m) of the Code, is required to be
aggregated with the entity under Section 414(o) of the Code, or is under "common
control" with the entity, within the meaning of Section 4001(a)(14) of ERISA, or
any regulations promulgated or proposed under any of the foregoing Sections.
Section 3.16. Labor and Employment Matters. Except as set forth in the
Company Disclosure Letter:
(a) There are no agreements or arrangements on behalf of any officer,
director or employee providing for payment or other benefits to such person
contingent upon the execution of this Agreement, the Closing or a
transaction involving a change of control of the Company other than the
Company Stock Option Plan.
(b) Neither the Company nor any of its Subsidiaries is a party to, or
bound by, any collective bargaining agreement or other contracts,
arrangements, agreements or understandings with a labor union or labor
organization that was certified by the National Labor Relations Board
("NLRB"). There is no existing, pending or, to the knowledge of the
Company, threatened (i) unfair labor practice charge or complaint, labor
dispute, labor arbitration proceeding or any other matter before the NLRB
or any other comparable state agency against or involving the Company or
any of its Subsidiaries, (ii) activity or proceeding by a labor union or
representative thereof to organize any employees of the Company or any of
its Subsidiaries, (iii) certification or decertification question relating
to collective bargaining units at the premises of the Company or any of its
Subsidiaries or (iv) lockout, strike, organized slowdown, work stoppage or
work interruption with respect to such employees.
(c) Neither the Company nor any of its Subsidiaries has taken any
action that would constitute a "Mass Layoff" or "Plant Closing" within the
meaning of the Worker Adjustment and Retraining Notification ("WARN") Act
or would otherwise trigger notice requirements or liability under any state
or local plant closing notice law. No agreement, arbitration or court
decision or governmental order in any way limits or restricts any of the
Company, any of its Subsidiaries or Parent from relocating or closing any
of the operations of the Company or any of its Subsidiaries.
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(d) Except as set forth in the Company Disclosure Letter, neither the
Company nor any of its Subsidiaries has failed to pay when due any wages
(including overtime wages), bonuses, commissions, benefits, taxes,
penalties or assessments or other monies, owed to, or arising out of the
employment of or any relationship or arrangement with, any officer,
director, employee, sales representative, contractor, consultant or other
agent. Except as set forth in the Company Disclosure Letter, the Company
and its Subsidiaries are in compliance with all applicable Laws relating to
employment and the payment of wages and benefits. There are no, and the
Company has no reason to believe there would be any, citations,
investigations, administrative proceedings or formal complaints of
violations of any federal or state wage and hour laws pending or, to the
knowledge of the Company, threatened before the Department of Labor or any
federal, state or administrative agency or court against or involving the
Company or any of its Subsidiaries.
(e) The Company and each of its Subsidiaries are in compliance with
all United States immigration laws relating to employment and have properly
completed and maintained all applicable forms (including but not limited to
I-9 forms) and, to the knowledge of the Company, there are no citations,
investigations, administrative proceedings or formal complaints of
violations of the immigration laws pending or threatened before the
Immigration and Naturalization Service or any federal, state or
administrative agency or court against or involving the Company or any of
its Subsidiaries.
(f) There are no investigations, administrative proceedings, charges
or formal complaints of discrimination (including discrimination based upon
sex, age, marital status, race, national origin, sexual preference,
disability, handicap or veteran status) pending or threatened before the
Equal Employment Opportunity Commission or any federal, state or local
agency or court against or involving the Company or any of its
Subsidiaries. No discrimination, sexual harassment, retaliation and/or
wrongful or tortious conduct claim is pending or, to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries under
the 1866, 1877, 1964 or 1991 Civil Rights Acts, the Equal Pay Act, the Age
Discrimination in Employment Act, as amended, the Americans with
Disabilities Act, the Family and Medical Leave Act, the Fair Labor
Standards Act, ERISA, or any other federal law relating to employment or
any comparable state or local fair employment practices act regulating
discrimination in the workplace, and no wrongful discharge, libel, slander,
invasion of privacy or other claim (including but not limited to violations
of the Fair Credit Reporting Act, as amended, and any applicable
whistleblower statutes) under any state or federal law is pending or, to
the knowledge of the Company, threatened against the Company or any of its
Subsidiaries.
(g) If the Company or any of its Subsidiaries is a Federal, State or
local contractor obligated to develop and maintain an affirmative action
plan, no discrimination claim, show-cause notice, conciliation proceeding,
sanctions or debarment proceedings is pending or, to the knowledge of the
Company, has been threatened against the Company or any of its Subsidiaries
with the Office of Federal Contract Compliance Programs or any other
Federal agency or any comparable state or local agency or court and no desk
audit or on-site review is in progress.
(h) There are no citations, investigations, administrative proceedings
or formal complaints of violations of local, state or federal occupational
safety and health laws pending or, to the knowledge of the Company,
threatened before the Occupational Safety and Health Review Commission or
any federal, state or local agency or court against or involving the
Company or any of its Subsidiaries.
(i) No workers' compensation or retaliation claim is pending against
the Company or any of its Subsidiaries in excess of $100,000 in the
aggregate and the Company maintains adequate insurance with respect to
workers' compensation claims pursuant to insurance policies that are
currently in force, or has accrued an adequate liability for such
obligations, including, without limitation, adequate accruals with respect
to accrued but unreported claims and retroactive insurance premiums.
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Section 3.17. Environmental Compliance and Disclosure. Except as set forth
in the Company Disclosure Letter:
(a) Each of the Company and its Subsidiaries possesses, and is in
compliance in all material respect with, all permits, licenses and
governmental authorizations and has filed all notices that are required
under, all Environmental Laws (as hereinafter defined) applicable to the
Company or any Subsidiary, as applicable, and the Company and each of its
Subsidiaries is in compliance in all material respects with all applicable
limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in those laws
or contained in any Law, regulation, code, plan, order, decree, judgment,
notice, permit or demand letter issued, entered, promulgated or approved
thereunder, including, but not limited to, with respect to the use,
storage, treatment, manufacture, generation, disposal and handling of
Hazardous Materials;
(b) Neither the Company nor any Subsidiary has received notice
of actual or threatened liability under the Federal Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA") or any
similar state or local statute or ordinance from any governmental agency or
any third party and, to the knowledge of the Company, there are no facts or
circumstances which could form the basis for the assertion of any claim
against the Company or any Subsidiary under any Environmental Laws
including, without limitation, CERCLA or any similar local, state or
foreign Law with respect to any on-site or off-site location;
(c) No Hazardous Materials have ever been, are being, or are
threatened to be spilled, released, discharged, disposed, placed or
otherwise caused to become located in buildings or the soil, sub-surface
strata, air, water or ground water under, or upon any plant, facility,
site, area or property currently or previously owned or leased by the
Company or any Subsidiary or on which the Company or any Subsidiary is
conducting or has conducted its business or operations.
(d) Neither the Company nor any Subsidiary has entered into or agreed
to, nor does it contemplate entering into, any consent decree or order, and
neither the Company nor any Subsidiary is subject to any judgment, decree
or judicial or administrative order relating to compliance with, or the
cleanup of Hazardous Materials under, any applicable Environmental Laws;
(e) Neither the Company nor any Subsidiary has been subject to any
administrative or judicial proceeding pursuant to and, to the knowledge of
the Company, has not been alleged to be in violation of, applicable
Environmental Laws or regulations either now or any time during the past
five years;
(f) Neither the Company nor any Subsidiary has received notice that it
is subject to any claim, obligation, liability, loss, damage or expense of
whatever kind or nature, contingent or otherwise, incurred or imposed or
based upon any provision of any Environmental Law and arising out of any
act or omission of the Company or any Subsidiary, its employees, agents or
representatives or, to the knowledge of the Company, arising out of the
ownership, use, control or operation by the Company or any Subsidiary of
any plant, facility, site, area or property (including, without limitation,
any plant, facility, site, area or property currently or previously owned
or leased by the Company or any Subsidiary) or any other area on which the
Company or any Subsidiary is conducting or has conducted its business or
operations from which any Hazardous Materials were released into the
environment (the term "release" meaning any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
dumping or disposing into the environment, and the term "environment"
meaning any surface or ground water, drinking water supply, soil, surface
or subsurface strata or medium, or the ambient air) and there is no basis
for any such notice and, to the knowledge of the Company, none are
threatened or foreseen;
(g) The Company has heretofore provided Parent with true, correct and
complete copies of all files of the Company and each Subsidiary relating to
environmental matters (or an opportunity to review such files). Neither the
Company nor any Subsidiary has paid any fines, penalties or assessments
within the last five years with respect to environmental matters; and
(h) To the Company's knowledge, none of the assets owned by the
Company or any Subsidiary or any real property leased by the Company or any
Subsidiary contain any friable asbestos, regulated PCBs or underground
storage tanks.
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As used in this Section 3.17, the term "Environmental Laws" means any and
all past, present and future laws (including without limitation statutes,
regulations, and common law) of the United States, the United Kingdom, Brazil,
Canada, any State, any Province or political subdivision of any of them, or any
other nation or political subdivision, for the protection of the environment or
human health and safety, including without limitation, judgments, awards,
decrees, regulations, rules, standards, requirements, orders and permits issued
by any court, administrative agency or commission or other Governmental Entity
under such laws, and shall include without limitation the Comprehensive
Environmental Response Compensation and Liability Act (42 USC 9601 et seq.), the
Clean Air Act (42 USC sec.sec. 7401 et seq.), the Resource Conservation and
Recovery Act (42 USC sec.sec. 6901 et seq.), the Clean Water Act (33 USC
sec.sec. 1251 et seq.), the Occupational Safety and Health Act (29 U.S.C.
sec.sec. 651 et seq.), the Toxic Substance Control Act (15 USC sec.sec. 2601 et
seq.), and the Safe Drinking Water Act (42 USC sec.sec. 300f et seq.), as well
as any and all state or local laws that relate to pollution, contamination of
the environment, human health, or safety, and all future amendments to such
laws, and all past, present and future regulations, rules, standards,
requirements, orders and permits issued thereunder.
As used in this Section 3.17, the term "Hazardous Materials" means any
waste, pollutant, hazardous substance, toxic, radioactive, ignitable, reactive
or corrosive substance, hazardous waste, special waste, controlled waste,
industrial substance, by-product, process intermediate product or waste,
petroleum or petroleum-derived substance or waste, chemical liquids or solids,
liquid or gaseous products, or any constituent of any such substance or waste or
any other material which may be harmful to human health or the environment.
Section 3.18. Intellectual Property.
(a) The Company Disclosure Letter sets forth a true and complete list of
all of the following items which the Company and/or its Subsidiaries own in
whole or in part and/or have a valid claim of ownership in whole or in part
(such as a contract right of assignment from an employee or independent
contractor) (hereinafter referred to as the "Intellectual Property Rights"): (i)
all United States and foreign patents and applications therefor, (ii) all United
States and foreign trademark, trade name, service mark, collective mark, and
certification mark registrations and applications therefor at the federal, state
or local level, (iii) all material trademarks, trade names, service marks,
collective marks, and certification marks which have been used by the Company or
its Subsidiaries in commerce at any time in the last five years (and for each,
the date of first use in commerce and a description of the goods and services in
connection with which it has been used), and (iv) all United States and foreign
and copyright registrations and applications therefor. The Company Disclosure
Letter also sets forth a true and complete list of all items described in
subsections (i) through (iv) of the previous sentence in which the Company or
any of its Subsidiaries own a license (the "Licensed Rights"). Neither the
Company nor any Subsidiary has (i) any unpatented inventions which have been the
subject of a patent application, (ii) any material copyrightable works of
authorship which have not been the subject of a copyright registration or
application therefor, including but not limited to software code, manuals and
other text works, photographs, video recordings, and audio recordings, or (iii)
any mask works. Prior to the date hereof, the Company has provided Parent with
reasonable access to all of the Company's and its Subsidiaries' material trade
secrets, proprietary information, databases and data. The Company represents and
warrants that, except as expressly stated in the Company Disclosure Letter, (i)
the Intellectual Property Rights are free and clear of any liens, claims or
encumbrances, are not subject to any license (royalty bearing or royalty free)
and are not subject to any other arrangement requiring any payment to any person
or the obligation to grant rights to any person in exchange; (ii) the Licensed
Rights are free and clear of any liens, claims, encumbrances, royalties or other
obligations; and (iii) the Intellectual Property Rights and the Licensed Rights
are all those material rights necessary to the conduct of the business of each
of the Company, its Subsidiaries and the Company's affiliates as presently
conducted. The validity of the Intellectual Property Rights and title thereto
and validity of the Licensed Rights, (i) have not been questioned in any prior
Litigation; (ii) are not being questioned in any pending Litigation; and (iii)
are not the subject(s) of any threatened or proposed Litigation. The business of
each of the Company and its Subsidiaries, as presently conducted, does not
conflict with and, to the knowledge of the Company, has not been alleged to
conflict with any patents, trademarks, trade names, service marks, copyrights or
other intellectual property rights of others.
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The consummation of the transactions contemplated hereby will not result in the
loss or impairment of any of the Intellectual Property Rights or the Company's
or its Subsidiaries' right to use any of the Licensed Rights. There are no third
parties using any of the Intellectual Property Rights material to the business
of the Company or its Subsidiaries as presently conducted.
(b) Each of the Company and its Subsidiaries owns, or possesses
sufficiently broad and valid rights to, all computer software programs that are
material to the conduct of the business of the Company and its Subsidiaries.
There are no infringement suits, actions or proceedings pending or, to the
knowledge of the Company, threatened against the Company or any Subsidiary with
respect to any software owned or licensed by the Company or any Subsidiary.
Section 3.19. Year 2000 Compliance.
(a) Except as set forth in the Company Disclosure Letter, the Company
has reviewed its operations and the operations of each Subsidiary with a
view to assessing whether its business would be adversely effected by not
being Year 2000 Compliant (as hereinafter defined) and has taken such
actions as it deems necessary or advisable to address Year 2000 Compliance.
Except as set forth in the Company Disclosure Letter, all of the product(s)
and/or service(s) offered and/or used by the Company or its Subsidiaries,
including each item of hardware, software, and firmware; any system,
equipment, or products consisting of or containing one or more thereof; and
any and all enhancements, upgrades, customizations, modifications,
maintenance and the like, currently or at any time in the past are, as of
the date of this Agreement, Year 2000 Compliant.
(b) Neither the Company nor any of its Subsidiaries is subject to any
pending or threatened regulatory action, proceeding or investigation
concerning the Year 2000 Compliance of the Company's or any of its
Subsidiaries' products, services or operations, and there is no basis for
any such regulatory action, investigation or proceeding. The Company and
its Subsidiaries are in compliance with all applicable regulatory rules,
regulations and requirements in regards to the Year 2000 Compliance of
their products, services and operations. No claim that any of the Company's
or any of its Subsidiaries' products or services are not Year 2000
Compliant, including but not limited to product liability claims, has been
asserted or threatened, and there is no basis for any such claim or action.
The Company and its Subsidiaries have furnished Parent with true, correct
and complete copies of any customer agreements or other materials in which
the Company or any Subsidiary has furnished (or could be deemed to have
furnished) assurances as to the Year 2000 Compliance of the Company's or
such Subsidiary's products or services, including any responses to surveys
or requests for certification of Year 2000 Compliance and letters of
assurance to customers.
(c) To the knowledge of the Company, all vendors of products or
services to the Company and its Subsidiaries, and their respective
products, services and operations, are Year 2000 Compliant, and, to the
knowledge of the Company, each such vendor will continue to furnish its
products or services to the Company and such Subsidiary, without
interruption or material delay, on and after January 1, 2000.
(d) "Year 2000 Compliant" means that (a) the products, services, or
other item(s) at issue accurately process, provide and/or receive date/time
data (including but not limited to calculating, comparing, and sequencing),
within, from, into, and between centuries (including the twentieth and
twenty-first centuries and the years 1999 and 2000), including but not
limited to leap year calculations, and (b) neither the performance nor the
functionality nor the supply of the products, services, and other item(s)
at issue will be affected by dates/times prior to, on, after, or spanning
January 1, 2000. The design of the products, services, and other item(s) at
issue to ensure compliance with the foregoing warranties and
representations includes proper date/time data century recognition and
recognition of 1999 and 2000, calculations that accommodate same century
and multi-century formulae and date/time values before, on, after, and
spanning January 1, 2000, and date/time data interface values that reflect
the century, 1999, and 2000. In particular, but without limitation, (i) no
value for current date/time will cause any error, interruption, or
decreased performance in or for such product(s), service(s), and other
item(s), (ii) all manipulations of date and time related data (including
but not limited to calculating, comparing, sequencing, processing, and
outputting) will produce correct results for all valid dates and
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times, including when used in combination with Year 2000 Compliant other
products, services, or items, (iii) all date/time elements in interfaces
and data storage will specify the century to eliminate date ambiguity
without human intervention, including leap year calculations, (iv) where
any date/time element is represented without a century, the correct century
will be unambiguous for all manipulations involving that element, (v)
authorization codes, passwords, and zaps (purge functions) will function
normally and in the same manner during prior to, on, and after January 1,
2000, including the manner in which they function with respect to
expiration dates and CPU serial numbers, and (vi) the Company's and its
Subsidiaries' supply of the product(s), service(s), and other item(s) will
not be interrupted, delayed, decreased, or otherwise affected by the advent
of the year 2000.
Section 3.20. Brokers. Except pursuant to the Independent Advisor
Engagement Letter (as hereinafter defined), no broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or commission in
connection with this Agreement, the Initial Offer, the Subsequent Offer, the
Merger or the other transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company. The Company Disclosure Letter
includes a complete and correct copy of all agreements between the Company and
the Independent Advisor pursuant to which such firms would be entitled to any
payment relating to this Agreement, the Initial Offer, the Subsequent Offer, the
Merger or the other transactions contemplated by this Agreement.
Section 3.21. Insurance Policies. The Company has delivered to Parent
prior to the date hereof a complete and accurate list of all insurance policies
in force naming the Company, any of its Subsidiaries or employees thereof as an
insured or beneficiary or as a loss payable payee or for which the Company or
any Subsidiary has paid or is obligated to pay all or part of the premiums.
Neither the Company nor any Subsidiary has received notice of any pending or
threatened cancellation or premium increase (retroactive or otherwise) with
respect thereto, and each of the Company and the Subsidiaries is in compliance
in all material respects with all conditions contained therein. Except as set
forth in the Company Disclosure Letter, there are no material pending claims
against such insurance policies by the Company or any Subsidiary as to which
insurers are defending under reservation of rights or have denied liability, and
there exists no material claim under such insurance policies that has not been
properly filed by the Company or any Subsidiary. Except for the self-insurance
retentions or deductibles set forth in the policies contained in the
aforementioned list, the policies are adequate in scope and amount to cover all
prudent and reasonably foreseeable risks which may arise in the conduct of the
business of the Company and the Subsidiaries.
Section 3.22. Notes and Accounts Receivable
(a) Except as disclosed in the Company Disclosure Letter, there are no
notes receivable of the Company or any Subsidiary owing by any director,
officer, stockholder or employee of the Company or any Subsidiary
("Affiliate Debt").
(b) Except as disclosed in the Company Disclosure Letter, all accounts
receivable of the Company and any Subsidiary are current or covered by
adequate reserves for uncollectability, and there are no material disputes
regarding the collectibility of any such accounts receivable.
Section 3.23. Transactions with Affiliates. Except as set forth in the
Company Disclosure Letter (other than compensation and benefits received in the
ordinary course of business as an employee or director of the Company or its
Subsidiaries) (collectively, the "Affiliate Transactions"), no director, officer
or other "affiliate" or "associate" (as hereinafter defined) of the Company or
any Subsidiary or any entity in which, to the knowledge of the Company, any such
director, officer or other affiliate or associate, owns any beneficial interest
(other than a publicly held corporation whose stock is traded on a national
securities exchange or in the over-the-counter market and less than 1% of the
stock of which is beneficially owned by any such persons) has any interest with
a value in excess, individually or in the aggregate, of $60,000 in: (i) any
contract, arrangement or understanding with, or relating to the business or
operations of Company or any Subsidiary; (ii) any loan, arrangement,
understanding, agreement or contract for or relating to indebtedness of the
Company or any Subsidiary; or (iii) any property (real, personal or mixed),
tangible, or intangible, used or currently intended to be used in, the business
or operations of the Company or any Subsidiary.
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Section 3.24. No Existing Discussions. As of the date hereof, the Company
is not engaged, directly or indirectly, in any negotiations or discussions with
any other party with respect to an Acquisition Proposal (as hereinafter
defined).
Section 3.25. Company Warrants. Prior to the Purchase Date, all of the
Company's outstanding warrants to acquire shares of Company Common Stock shall
be cancelled.
Section 3.26. Stockholders' Rights Agreement. Neither the Company nor any
Subsidiary has adopted, or intends to adopt, a Stockholders' Rights Agreement or
any similar plan or agreement which limits or impairs the ability to purchase,
or become the direct or indirect beneficial owner of, shares of Company Common
Stock or any other equity or debt securities of the Company or any of its
Subsidiaries.
Section 3.27. Major Suppliers and Customers.
(a) The Company Disclosure Letter sets forth a list of each supplier
of goods or services to Company and the Subsidiaries to whom the Company
and the Subsidiaries paid in the aggregate more than $500,000 during the
nine month period ended September 30, 1999 and the 12-month period ended
December 31, 1998 (each a "Major Supplier" and, collectively, "Major
Suppliers"), together with in each case the amount paid during such period.
Neither the Company nor any Subsidiary is engaged in any material dispute
with any Major Supplier and, to the knowledge of the Company, no Major
Supplier intends to terminate, limit or reduce its business relations with
the Company or any Subsidiary. Except as set forth in the Company
Disclosure Letter, the Company has no reason to believe that the
consummation of the transactions contemplated hereunder will have any
adverse effect on the business relationship of the Company or any
Subsidiary with any Major Supplier. Except as set forth in the Company
Disclosure Letter, none of the officers or directors of the Company or any
Subsidiary, or any "affiliate" or "associate" of any officer or director of
the Company or any Subsidiary, or any company or other organization in
which any officer or director of the Company or any Subsidiary or any
"affiliate" or "associate" of any officer or director of the Company or any
Subsidiary has a direct or indirect or indirect financial interest, has any
financial interest in any supplier of the Company or any Subsidiary (other
than a publicly held corporation whose stock is traded on a national
securities exchange or in the over-the-counter market and less than 1% of
the stock of which is beneficially owned by any such persons).
(b) The Company Disclosure Letter sets forth a list of each customer
which accounted for net revenue to the Company and the Subsidiaries in the
aggregate of more than $500,000 during the nine month period ended
September 30, 1999 and the 12-month period ended December 31, 1998 (each a
"Major Customer" and, collectively, "Major Customers") together with the
amount of net revenue produced during such period. Neither the Company nor
any Subsidiary is engaged in any material dispute with any Major Customer
and, to the knowledge of the Company, no Major Customer intends to
terminate, limit or reduce its business relations with the Company or any
Subsidiary. Except as set forth in the Company Disclosure Letter, the
Company has no reason to believe that the consummation of the transactions
contemplated hereunder will adversely affect the business relationship of
the Company or any Subsidiary with any Major Customer. Except as set forth
in the Company Disclosure Letter, none of the officers or directors of the
Company or any Subsidiary, or any "affiliate" or "associate" of any officer
or director of the Company or any Subsidiary, or any company or other
organization in which any officer or director of the Company or any
Subsidiary or any "affiliate" or "associate" of any officer or director of
the Company or any Subsidiary has a direct or indirect financial interest,
has any financial interest in any customer of the Company or any Subsidiary
(other than a publicly held corporation whose stock is traded on a national
securities exchange or in the over-the-counter market and less than 1% of
the stock of which is beneficially owned by any such persons).
Section 3.28. Disclosure. No representation or warranty made by the
Company in this Agreement or in the Company Disclosure Letter contains an untrue
statement of a material fact or omits to state a material fact required to be
stated herein or therein or necessary to make the statements contained herein or
therein not misleading. The representations and warranties of the Company
contained herein, disregarding all qualifications and exemptions contained
therein relating to materiality or a Company Material Adverse Effect, are true
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and correct with only such exemptions as would not in the aggregate reasonably
be expected to have a Company Material Adverse Effect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER
Each of Parent and Buyer represents and warrants to the Company as follows:
Section 4.1. Organization and Standing. Such person (a) is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, (b) has full corporate power and authority to
own, lease and operate it properties and assets and to conduct its business as
presently conducted and (c) is duly qualified or licensed to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of its
business makes such qualification or licensing necessary, except where the
failure to be so qualified or licensed would not, individually or in the
aggregate, have a material adverse effect on Parent or Buyer.
Section 4.2. Authority for Agreement. Such person has all necessary
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the Initial Offer, the Subsequent
Offer, the Merger and the other transactions contemplated by this Agreement. The
execution, delivery and performance by such person of this Agreement, and the
consummation by each such person of the Initial Offer, the Subsequent Offer, the
Merger and the other transactions contemplated by this Agreement, have been duly
authorized by all necessary corporate action and no other corporate proceedings
on the part of such person are necessary to authorize this Agreement or to
consummate the Initial Offer, the Subsequent Offer, the Merger or the other
transactions contemplated by this Agreement (other than, with respect to the
Merger, the filing and recordation of appropriate merger documents as required
by the DGCL). This Agreement has been duly executed and delivered by such person
and, assuming due authorization, execution and delivery by the Company,
constitutes a legal, valid and binding obligation of each of such person
enforceable against such person in accordance with its terms.
Section 4.3. No Conflict. The execution and delivery of this Agreement by
such person do not, and the performance of this Agreement by such person and the
consummation of the Initial Offer, the Subsequent Offer, the Merger and the
other transactions contemplated by this Agreement will not, (i) conflict with or
violate the certificate of incorporation or bylaws of such person, (ii) conflict
with or violate any Law applicable to such person or by which any property or
asset of such person is 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, give to others any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or other encumbrance on any property or asset of such person pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which such person is a party or
by which such person or any property or asset of either of them is bound or
affected, except in the case of clauses (ii) and (iii) for any such conflicts,
violations, breaches, defaults or other occurrences which would not,
individually or in the aggregate, prevent or materially delay the performance by
such person of its respective obligations under this Agreement or the
consummation of the Initial Offer, the Subsequent Offer, the Merger or the other
transactions contemplated by this Agreement.
Section 4.4. Required Filings and Consents. The execution and delivery of
this Agreement by such person do not, and the performance of this Agreement by
such person 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 Exchange Act, Blue Sky Laws and filing
and recordation of appropriate merger documents as required by the DGCL, (ii)
for those required by the HSR Act, (iii) for applicable requirements, if any,
required by the Brazilian anti-trust authorities, (iv) for filings contemplated
by Sections 1.1, 1.2 and 3.14 and (iv) where failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
would not, individually or in the aggregate, prevent or materially delay the
performance by such person of any of its respective obligations under this
Agreement or the consummation of the Initial Offer, the Subsequent Offer, the
Merger or the other transactions contemplated by this Agreement.
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Section 4.5. Information Supplied. None of the information supplied or to
be supplied by such person for inclusion or incorporation by reference in the
Schedule 14D-9 or the Proxy Statement (if applicable) will, at the date such
documents are first published, sent or delivered to Company Stockholders or,
unless promptly corrected, at any time during the pendency of the Initial Offer
or the Subsequent Offer 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 made therein, in light of the circumstances under which
they were made, not misleading. Neither the Schedule 14D-1, at the date such
document is first published, sent or delivered to the Company Stockholders or,
unless promptly corrected, at any time during the pendency of the Initial Offer
or the Subsequent Offer, nor the Proxy Statement (if applicable) at the date
such document is first published, sent or delivered to Company Stockholders or,
unless promptly corrected, at any time during the pendency of the Stockholder's
Meeting, will 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 made therein, in light of the circumstances under which they were
made, not misleading. The Schedule 14D-1 will comply as to form and substance in
all material respects with the requirements of the Exchange Act and the
applicable rules and regulations of the SEC thereunder. Notwithstanding the
foregoing, no representation or warranty is made by such person with respect to
statements made or incorporated by reference therein based on information
supplied by the Company for inclusion or incorporation by reference in any of
the foregoing documents.
Section 4.6. Brokers. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission payable by such person in
connection with this Agreement, the Initial Offer, the Subsequent Offer, the
Merger or the other transactions contemplated by this Agreement based upon
arrangements made by or on behalf of such person.
Section 4.7. Financing. Parent has sufficient funds available to purchase,
or to cause Buyer to purchase, the shares of the Company Common Stock pursuant
to the Initial Offer and the Subsequent Offer and the Merger and to pay all of
its and Buyer's fees and expenses related to the transactions contemplated by
this Agreement.
Section 4.8. Disclosure. No representation or warranty made by Parent or
Buyer in this Agreement or pursuant to the Initial Offer or Subsequent Offer
contains an untrue statement of a material fact or omits to state a material
fact required to be stated herein or therein or necessary to make the statements
contained herein or therein not misleading.
ARTICLE V
COVENANTS
Section 5.1. Conduct of the Business Pending Assumption of Control. From
the date hereof until such time as Parent's designees shall constitute a
majority of the members of the Board of Directors of the Company, the following
provisions shall apply:
(a) The Company covenants and agrees that unless Parent shall
otherwise agree in writing, (i) the business of the Company and its
Subsidiaries shall be conducted only in, and the Company and its
Subsidiaries shall not take any action except in, the ordinary course of
business and in a manner consistent with prior practice, (ii) the Company
and its Subsidiaries shall use reasonable best efforts to preserve intact
their business organizations, to keep available the services of their
current officers and employees and to preserve the current relationships of
the Company and its Subsidiaries with customers, suppliers and other
persons with which the Company or its Subsidiaries has business relations,
(iii) the Company and its Subsidiaries will comply with all applicable Laws
and regulations wherever its business is conducted, including, without
limitation, the timely filing of all reports, forms or other documents with
the SEC required pursuant to the Securities Act or the Exchange Act, (iv)
the Company shall make the capital expenditures identified on the Company's
1999 budget included in the Company Disclosure Letter, however, the Company
shall not make any expenditures to develop a wide area network and (v) the
Company shall make the additional capital expenditures to purchase
equipment as set forth in the Company Disclosure Letter.
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(b) The Company covenants and agrees that the Company shall not, nor
shall the Company permit any of its Subsidiaries to, (i) declare or pay any
dividends on or make other distributions (whether in cash, stock or
property) in respect of any of its capital stock, except for dividends by a
wholly owned Subsidiary of the Company to the Company or another wholly
owned Subsidiary of the Company, (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; (iii) repurchase or otherwise acquire any shares of its
capital stock; (iv) issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock or any
securities convertible into any such shares of its capital stock, or any
rights, warrants or options to acquire any such shares or convertible
securities or any stock appreciation rights, phantom stock plans or stock
equivalents, other than the issuance of shares of Company Common Stock upon
(x) the exercise of Company Options outstanding as of the date of this
Agreement, and (y) exercise of warrants outstanding as of the date of this
Agreement or (v) take any action that would, or could reasonably be
expected to, result in any of the conditions to the Initial Offer set forth
in Annex I or any of the conditions set forth in Article VI not being
satisfied.
(c) The Company covenants and agrees that the Company shall not, nor
shall the Company permit any of its Subsidiaries to, (i) amend its
certificate of incorporation (including any certificate of designations
attached thereto) or bylaws or other equivalent organizational documents;
(ii) create, assume or incur any indebtedness for borrowed money or
guaranty any such indebtedness of another person, other than (A) borrowings
under existing lines of credit (or under any refinancing of such existing
lines) or (B) indebtedness owing to, or guaranties of indebtedness owing
to, the Company; (iii) make any loans or advances to any other person other
than loans or advances between any Subsidiaries of the Company or between
the Company and any of its Subsidiaries (other than loans or advances less
than $25,000 made in the ordinary course of business consistent with past
practice and loans or advances to its Subsidiary in Australia in connection
with the Sydney 2000 Olympic Games which shall in no event exceed $100,000
in the aggregate); (iv) mortgage or pledge any of its assets or properties;
(v) merge or consolidate with any other entity in any transaction, or sell
any business or assets in a single transaction or series of transactions in
which the aggregate consideration is $100,000 or greater; (vi) change its
accounting policies except as required by GAAP; (vii) make any change in
employment terms for any of its directors or officers; (viii) alter, amend
or create any obligations with respect to compensation, severance,
benefits, change of control payments or any other payments to employees,
directors or affiliates of the Company or its Subsidiaries or enter into
any new, or amend any existing, employment agreements; (ix) make any change
to the Company Benefit Plans; (x) amend or cancel or agree to the amendment
or cancellation of any Material Contract; (xi) pay, loan or advance (other
than the payment of compensation, directors' fees or reimbursement of
expenses in the ordinary course of business) any amount to, or sell,
transfer or lease any properties or assets (real, personal or mixed,
tangible or intangible) to, or enter into any agreement with, any of its
officers or directors or any "affiliate" or "associate" of any of its
officers or directors; (xii) form or commence the operations of any
business or any corporation, partnership, joint venture, business
association or other business organization or division thereof; (xiii) make
any tax election (other than in the ordinary course of business consistent
with past practice) or settle or compensate any tax liability involving
amounts in excess of $50,000 in the aggregate; (xiv) pay, discharge, settle
or satisfy any claims litigation, liabilities or obligations (whether
absolute, accrued, asserted or unasserted, contingent or otherwise)
involving amounts in excess of $100,000 in the aggregate; or (xv) make any
capital expenditures inconsistent with or, not provided for by, the
Company's 1999 budget contained in the Company Disclosure Letter or as
otherwise expressly provided for in the Company Disclosure Letter.
Section 5.2. Access to Information; Confidentiality.
(a) From the date hereof to the Effective Time, the Company shall, and
shall cause the officers, directors, employees, auditors, attorneys,
financial advisors, lenders and other agents (collectively, the
"Representatives") of the Company to, afford the Representatives of Parent
and Buyer reasonable access at all reasonable times to the officers,
employees, agents, properties, offices and other facilities, books and
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records of the Company and its Subsidiaries (including, but not limited to,
reasonable access to the Company's and its Subsidiaries' leased properties
to enable Parent to conduct phase I and II environmental testing on such
leased properties), and shall furnish Parent and Buyer with all financial,
operating and other data and information as Parent or Buyer, through its
Representatives, may reasonably request. The Company shall furnish to
Parent and Buyer monthly financial and operating data and information
within 20 days following the end of each calendar month. Parent will remain
subject to the terms of a confidentiality agreement with the Company dated
September 28, 1999 (the "Confidentiality Agreement").
(b) No investigation pursuant to this Section 5.2 shall affect any
representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto.
Section 5.3. 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 nonoccurrence, of any event which would be likely to
cause any representation or warranty contained in this Agreement to be untrue or
inaccurate and (ii) any failure by such party (or Buyer, in the case of Parent)
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder; provided, however, that the delivery of any
notice pursuant to this Section 5.3 shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice. If any event or
matter arises after the date of this Agreement which, if existing or occurring
at the date of this Agreement, would have been required to be set forth or
described in the Company Disclosure Letter or which is necessary to correct any
information in the Company Disclosure Letter which has been rendered inaccurate
thereby, then the Company shall promptly supplement, or amend, and deliver to
Parent the Company Disclosure Letter which it has delivered pursuant to this
Agreement.
Section 5.4. Further Assurances.
(a) Upon the terms and subject to the conditions hereof, each of the
parties hereto shall use all commercially reasonable efforts to take, or
cause to be taken, all appropriate action, and to do, or cause to be done,
all things necessary, proper or advisable under Law to consummate the
Initial Offer and the Subsequent Offer and to consummate and make effective
the Merger and the other transactions contemplated by this Agreement,
including, without limitation, using all commercially reasonable efforts to
obtain all licenses, permits, consents, approvals, authorizations,
qualifications and orders of each Governmental Entity and parties to
contracts with the Company and its Subsidiaries as are necessary for the
consummation of the Initial Offer and the Subsequent Offer and the Merger
and the other transactions contemplated by this Agreement and to fulfill
the conditions set forth in Article VI. If at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes
of this Agreement, the proper officers of each party to this Agreement and
the Surviving Corporation shall use all commercially reasonable efforts to
take all such action.
(b) In connection with, and without limiting the foregoing, the
Company shall (i) take all actions necessary to ensure that no state
antitakeover statute or similar statute or regulation is or becomes
operative with respect to this Agreement, the Initial Offer, the Subsequent
Offer, the Merger or any other transactions contemplated by this Agreement
or the Tender Agreements or the Indemnification Agreements and (ii) if any
state antitakeover statute or similar statute or regulation is or becomes
operative with respect to this Agreement, the Tender Agreements, the
Indemnification Agreements, the Initial Offer, the Subsequent Offer, the
Merger or any other transaction contemplated by this Agreement or the
Tender Agreements or the Indemnification Agreements, take all actions
necessary to ensure that this Agreement, the Tender Agreements, the
Indemnification Agreements, the Initial Offer, the Subsequent Offer, the
Merger and any other transactions contemplated by this Agreement or the
Tender Agreements or the Indemnification Agreements may be consummated as
promptly as practicable on the terms contemplated by this Agreement and the
Tender Agreements and the Indemnification Agreements and otherwise to
minimize the effect of such statute or regulation on the Merger, the
Initial Offer, the Subsequent Offer and the other transactions contemplated
by this Agreement and the Tender Agreements and the Indemnification
Agreements.
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Section 5.5. Board Recommendations.
(a) In connection with the Initial Offer, the Subsequent Offer, the
Merger and Stockholders' Meeting, the Board of Directors of the Company
shall (i) subject to Section 5.5(b), recommend to the holders of the
Company Common Stock to tender their shares of Company Common Stock in the
Initial Offer and Subsequent Offer and vote in favor of the Merger and use
its reasonable best efforts to obtain the necessary approvals by the
Company Stockholders of this Agreement and (ii) otherwise comply with all
legal requirements applicable to such meeting.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall, except as expressly permitted by this Section 5.5(b) (i)
withdraw, qualify or modify, or propose publicly to withdraw, qualify or
modify, in a manner adverse to Parent, the approval or recommendation of
such Board of Directors or such committee of the Initial Offer, the
Subsequent Offer, the Merger or this Agreement, (ii) approve or recommend,
or propose publicly to approve or recommend, any transaction involving an
Acquisition Proposal (as hereinafter defined) from a third party (an
"Alternative Transaction"), or (iii) cause the Company to enter into any
letter of intent, agreement in principle, acquisition agreement or other
similar agreement (each, an "Acquisition Agreement") related to any
Alternative Transaction. Notwithstanding the foregoing, if prior to the
approval of this Agreement by the Company Stockholders, and in any event no
later than the original termination date of the Initial Offer, the Board of
Directors of the Company determines in good faith, after it has received a
Superior Proposal (as hereinafter defined) in compliance with Section 5.9
and after taking into consideration advice from outside counsel with
respect to its fiduciary duties to Company Stockholders under applicable
Delaware law, the Board of Directors of the Company may (subject to this
and the following sentences) inform Company Stockholders that it no longer
believes that the Merger is advisable and no longer recommends approval (a
"Subsequent Determination") and enter into an Acquisition Agreement with
respect to a Superior Proposal, but only at a time that is after the fifth
business day (or the second business day, in the case of a material
amendment to a Superior Proposal) following Parent's receipt of written
notice advising Parent that the Board of Directors of the Company is
prepared to accept a Superior Proposal. Such written notice shall specify
the material terms and conditions of such Superior Proposal (and include a
copy thereof with all accompanying documentation, if in writing), identify
the person making such Superior Proposal and state that the Board of
Directors of the Company intends to make a Subsequent Determination. During
such five business day period (or two business day period in the case of a
material amendment), the Company shall provide an opportunity for Parent to
propose such adjustments to the terms and conditions of this Agreement as
would enable the Company to proceed with its recommendation to its
stockholders without a Subsequent Determination. For purposes of this
Agreement, a "Superior Proposal" means any proposal (on its most recently
amended or modified terms, if amended or modified) made by a third party to
enter into an Alternative Transaction which the Board of Directors of the
Company determines in its good faith judgment (based on, among other
things, the advice of an independent financial advisor) to be more
favorable to the Company Stockholders than the Merger and the Initial Offer
and Subsequent Offer, from a financial point of view (taking into account
whether, in the good faith judgment of the Board of Directors of the
Company, after obtaining the advice of such independent financial advisor,
the third party is reasonably able to finance the transaction, and any
proposed changes to this Agreement that may be proposed by Parent in
response to such Alternative Transaction), except that for purposes of the
definition of "Superior Proposal," an "Alternative Transaction" shall mean
an Acquisition Proposal by a third party, provided that the reference to
"25%" in the definition of "Acquisition Proposal" shall be deemed to be
"51%." Notwithstanding any other provision of this Agreement, the Company
shall in no way limit or prevent (i) Company Stockholders from tendering
shares of Company Common Stock in the Initial Offer or Subsequent Offer or
(ii) Buyer from purchasing such shares of Company Common Stock whether or
not the Board of Directors of the Company makes a Subsequent Determination.
(c) Nothing contained in this Section 5.5 shall prohibit the Company
from taking and disclosing to its stockholders a position contemplated by
Rule 14(e)-2(a) promulgated under the Exchange Act or from making any
disclosure to the Company Stockholders if, in the good faith judgment of
the Board of
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Directors of the Company, after consultation with outside counsel, failure
so to disclose would be inconsistent with applicable Law; provided,
however, neither the Company nor its Board of Directors nor any committee
thereof shall, except as specifically permitted by Section 5.5(b),
withdraw, qualify, or modify, or propose to withdraw, qualify or modify,
its position with respect to the Initial Offer, the Subsequent Offer, the
Merger or this Agreement or approve or recommend, or propose to approve or
recommend an Alternative Transaction.
Section 5.6. Stockholder Litigation. The Company shall give Parent the
opportunity to participate in the defense or settlement of any stockholder
Litigation against the Company and its directors relating to the transactions
contemplated by this Agreement, the Initial Offer, the Subsequent Offer or the
Merger; provided, however, that no such settlement shall be agreed to without
Parent's consent which consent will not be unreasonably withheld.
Section 5.7. Indemnification.
(a) It is understood and agreed that all rights to indemnification by
the Company now existing in favor of each present and former director and
officer of the Company or its Subsidiaries (the "Indemnified Parties") as
provided in the Company Certificate of Incorporation or the Company Bylaws,
in each case as in effect on the date of this Agreement, or pursuant to any
other agreements in effect on the date hereof, copies of which have been
provided to Parent, shall survive the Merger and Parent shall (i) cause the
Surviving Corporation to continue in full force and effect for a period of
at least six (6) years from the Effective Time and (ii) perform, or cause
the Surviving Corporation to perform, in a timely manner, the Surviving
Corporation's obligation with respect thereto. Parent and Buyer agree that
any claims for indemnification hereunder as to which they have received
written notice prior to the sixth anniversary of the Effective Time shall
survive, whether or not such claims shall have been finally adjudicated or
settled.
(b) Parent shall cause the Surviving Corporation to, and the Surviving
Corporation shall, maintain in effect for six (6) years from the Effective
Time, if available, the current directors' and officers' liability
insurance policies ("D&O Insurance") covered by such policies (provided
that the Surviving Corporation may substitute therefor policies of at least
the same coverage containing terms and conditions which are not materially
less favorable) with respect to matters occurring prior to the Effective
Time; provided, however, that in no event shall the Surviving Corporation
be required to expend pursuant to this Section 5.7(b) more than an amount
per year equal to one hundred fifty percent (150%) of current annual
premiums paid by the Company for such insurance. In the event that, but for
the proviso to the immediately preceding sentence, the Surviving
Corporation would be required to expend more than one hundred fifty percent
(150%) of current annual premiums, the Surviving Corporation shall obtain
the maximum amount of such insurance obtainable by payment of annual
premiums equal to one hundred fifty percent (150%) of current annual
premiums.
(c) If the Surviving Corporation or any of its successors or assigns
(i) consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and
assets to any person, then, and in each such case, proper provision shall
be made so that the successors and assigns of the Surviving Corporation
shall assume the obligations set forth in this Section 5.7.
Section 5.8. Public Announcements. Parent and the Company shall consult
with each other before issuing any press release or otherwise making any public
statements with respect to this Agreement, the Initial Offer, the Subsequent
Offer or the Merger and shall not issue any such press release or make any such
public statement prior to such consultation, except as may be required by Law or
any listing agreement with a national securities exchange or trading system to
which Parent or the Company is a party.
Section 5.9. Acquisition Proposals. The Company shall not, nor shall it
authorize or permit any of its Subsidiaries or Representatives to, directly or
indirectly, (a) solicit, initiate or encourage the submission of any Acquisition
Proposal or (b) participate in or encourage any discussion or negotiations
regarding, or furnish to any person any non-public information with respect to,
or take any other action to facilitate any inquiries or
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the making of, any proposal that constitutes, or may reasonably be expected to
lead to, any Acquisition Proposal; provided, however, that the foregoing shall
not prohibit the Board of Directors of the Company from furnishing information
to, or entering into discussions or negotiations with, any person or entity that
makes an unsolicited Acquisition Proposal prior to the initial termination date
of the Initial Offer if, and to the extent that, (A) the Board of Directors of
the Company, after taking into consideration advice of independent outside legal
counsel, determines in good faith that such action is required for the Board of
Directors of the Company to comply with its fiduciary obligations to the Company
Stockholders under applicable Delaware law, (B) prior to taking such action, the
Company receives from such person or entity an executed agreement in reasonably
customary form relating to the confidentiality of information to be provided to
such person or entity and (C) the Board of Directors of the Company concludes in
good faith, based upon advice from its independent financial advisor, that the
Acquisition Proposal is a Superior Proposal. The Company shall provide immediate
oral and written notice to Parent of (a) the receipt of any such Acquisition
Proposal or any inquiry which could reasonably be expected to lead to any
Acquisition Proposal, (b) the material terms and conditions of such Acquisition
Proposal or inquiry, (c) the identity of such person or entity making any such
Acquisition Proposal or inquiry and (d) the Company's intention to furnish
information to, or enter into discussions or negotiations with, such person or
entity. The Company shall continue to keep Parent informed of the status and
details of any such Acquisition Proposal or inquiry. For purposes of this
Agreement, "Acquisition Proposal" means any bona fide proposal with respect to a
merger, consolidation, share exchange, tender offer or similar transaction
involving the Company, or any purchase or other acquisition of all or any
significant portion of the assets of the Company or 25% or more of any class of
Company capital stock.
Section 5.10. Company Stockholders' Meeting.
(a) The Company shall cause the Stockholders' Meeting to be duly
called and held as soon as practicable following the consummation of the
Initial Offer (or, at Buyer's option, the Subsequent Offer, if applicable)
for the purpose of voting on the approval and adoption of this Agreement
and the Merger, if such meeting is required. The Company shall take all
action necessary in accordance with applicable Law and the Company
Certificate of Incorporation and Company Bylaws to duly call, give notice
of, and convene the Stockholders' Meeting, if such meeting is required.
(b) The Company shall, at the direction of Parent, solicit from
holders of shares of Company Stock entitled to vote at the Stockholders'
Meeting proxies in favor of such approval and shall take all other action
necessary or, in the reasonable judgment of Parent, helpful to secure the
vote or consent of such holders required by the DGCL or this Agreement to
effect the Merger.
Section 5.11. Proxy Statement.
(a) If required by applicable Law in connection with the Merger,
Parent and the Company will as promptly as practicable following the
consummation of the Initial Offer (or, at Buyer's option, the Subsequent
Offer, if applicable) jointly prepare, and the Company shall file, the
Proxy Statement with the SEC and will use all commercially reasonable
efforts to respond to the comments of the SEC and to cause the Proxy
Statement to be mailed to the Company Stockholders at the earliest
practical time. The Company shall furnish all information concerning it and
the holders of its capital stock as Parent may reasonably request in
connection with such actions. Each party to this Agreement will notify the
other parties and the Board of Directors of the Company promptly of the
receipt of the comments of the SEC, if any, and of any request by the SEC
for amendments or supplements to the Proxy Statement or for additional
information with respect thereto, and will supply the other parties with
copies of all correspondence between such party or its Representatives, on
the one hand, and the SEC or members of its staff, on the other hand, with
respect to the Proxy Statement, the Initial Offer, the Subsequent Offer or
the Merger. If (A) at any time prior to the Stockholders' Meeting, any
event should occur relating to the Company or any of its Subsidiaries which
should be set forth in an amendment of, or a supplement to, the Proxy
Statement, the Company will promptly inform Parent and (B) if at any time
prior to the Stockholders' Meeting, any event should occur relating to
Parent or Buyer or any of their respective associates or affiliates, or
relating to the plans of any such persons for the Company after the
Effective Time that should be set forth in an amendment of, or a supplement
to, the Proxy Statement, Parent will
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promptly inform the Company, and in the case of (A) or (B) the Company and
Parent, will, upon learning of such event, promptly prepare, and the
Company shall file and, if required, mail such amendment or supplement to
the Company Stockholders; provided, prior to such filing or mailing, the
Company and Parent shall consult with each other with respect to such
amendment or supplement and shall incorporate the other's comments thereon.
(b) The Company shall include in the Proxy Statement the
recommendation of the Board of Directors of the Company described in
Section 3.3, subject to any modification, amendment or withdrawal thereof,
and represents that the Independent Advisor has, subject to the terms of
its engagement letter with the Company and the Board of Directors of the
Company (the "Independent Advisor Engagement Letter"), consented to the
inclusion of references to its opinion in the Proxy Statement. The Company
and its counsel shall permit Parent and its counsel to participate in all
communications with the SEC and its staff, including any meetings and
telephone conferences, relating to the Proxy Statement, the Initial Offer,
the Subsequent Offer, the Merger or this Agreement.
(c) Notwithstanding the foregoing, if at any time Buyer and/or any
direct or indirect subsidiary of Parent shall acquire at least 90% of the
outstanding shares of Company Common Stock, Buyer and the Company shall
take all necessary and appropriate action to cause the Merger to become
effective as promptly as practicable after the expiration of the Initial
Offer or Subsequent Offer, if applicable, and the satisfaction or waiver of
the conditions set forth in Article VI without the Stockholders' Meeting in
accordance with Section 253 of the DGCL.
Section 5.12. Stockholder Lists. The Company shall promptly (but in no
event later than three (3) business days after the date of this Agreement), or
shall cause its transfer agent to promptly, furnish Parent and Buyer with
mailing labels containing the names and addresses of all record holders of
shares of Company Stock and with security position listings of shares of Company
Stock held in stock depositories, each as of the most recent practicable 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 Stock. The Company shall furnish Parent and Buyer with such
additional information, including, without limitation, updated listings and
computer files of the Company Stockholders, mailing labels and security position
listings, and such other assistance as Parent, Buyer or their agents may
reasonably request.
Section 5.13. Shares Held by Company Subsidiaries. The Company agrees to
cause each of the Subsidiaries of the Company that owns any shares of Company
Stock not to tender any such shares pursuant to the Initial Offer or Subsequent
Offer.
Section 5.14. Directors. Promptly upon the acceptance for payment of, and
payment by Buyer for, shares of Company Common Stock pursuant to the Initial
Offer, Buyer shall be entitled to designate such number of directors on the
Board of Directors of the Company as will give Buyer, subject to compliance with
Section 14(f) of the Exchange Act, representation on such Board of Directors
equal to at least that number of directors, rounded up to the next whole number,
which is the percentage that (i) such number of shares of Company Common Stock
so accepted for payment and paid for by Buyer in the Initial Offer plus the
number of shares of Company Stock otherwise owned by Parent, Buyer or any other
subsidiary of Parent bears to (ii) the total number of shares of Company Common
Stock outstanding, and the Company shall, at such time, cause Buyer's designees
to be appointed or elected. Subject to applicable Law, the Company shall take
all action requested by Parent necessary to effect any such appointment or
election, including mailing to its stockholders an information statement
containing the information required by Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder (either separately or combined with the
Schedule 14D-9), and the Company agrees to make such mailing with the mailing of
the Schedule 14D-9 (provided that Buyer shall have provided to the Company on a
timely basis all information required to be included in such information
statement with respect to Buyer's designees). In connection with the foregoing,
the Company will promptly, at the option of Buyer, use its best efforts to
either increase the size of the Board of Directors of the Company or obtain the
resignation of such number of its current directors as is necessary to enable
Buyer's designee to be elected or appointed to the Board of Directors of the
Company as provided above.
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Section 5.15. Undertakings of Parent. Parent shall perform, or cause to be
performed, when due all obligations of Buyer under this Agreement.
Section 5.16. Director Resignations. The Company shall cause to be
delivered to Parent resignations of all the directors of the Company's
Subsidiaries to be effective upon the purchase of at least a majority of the
outstanding shares of Company Common Stock by Buyer pursuant to the Initial
Offer. The Company shall cause such directors, prior to resignation, to appoint
new directors nominated by Parent to fill such vacancies.
Section 5.17. Company Options. As promptly as practicable following the
date hereof, the Company shall use all commercially reasonable efforts to cause
all of the holders of Company Options to agree to the termination and expiration
of their Company Options upon consummation of the Initial Offer in exchange for
the Option Consideration described in Section 1.8.
Section 5.18. Financial Statement Tests. The Company shall provide to KPMG
Peat Marwick LLP ("Parent's Auditor"), Parent's regular outside accounting firm,
reasonable access at all reasonable times to the officers, employees, agents,
properties, offices and other facilities, books and records of the Company and
its Subsidiaries, and shall furnish Parent's Auditor with all financial,
operating and other data and information as Parent's Auditor may reasonably
request for the purpose of determining whether the Company is in compliance with
the Financial Statement Tests. For purposes of this Agreement, the "Financial
Statement Tests" mean (i) that the Company's financial statements included in
the Company's quarterly report on form 10-QSB for the quarter ended September
30, 1999 (the "September 10-Q") were prepared in accordance with GAAP applied on
a consistent basis throughout the period involved (except as permitted by Form
10-QSB or as may be indicated in the notes thereto) and fairly present, subject
to normal, recurring audit adjustments, the consolidated financial position of
the Company and its Subsidiaries at the respective date thereof and the
consolidated results of its operations and changes in cash flows for the period
indicated, (ii) the Stockholders' Equity (as determined consistent with the
methodology used in the September 10-Q) as of November 30, 1999 is at least
equal to $16,500,000 and (iii) the Current Liabilities and Long Term Liabilities
(each as determined consistent with the methodology used in the September 10-Q)
as of November 30, 1999 are in the aggregate no greater than $8,660,000;
provided, for purposes of (ii) and (iii), the 1999 annual bonuses to be paid to
John J. Campion and G. Laurence Anderson by the Company shall not be taken into
account when determining Stockholders' Equity, Current Liabilities and Long Term
Liabilities.
Section 5.19. Environmental Compliance. The Company shall use commercially
reasonable efforts to develop and implement as promptly as practicable a plan to
bring the fuel tanks identified in Section 3.17(a), paragraph 2 of the Company
Disclosure Letter into compliance with applicable Environmental Laws. As soon as
practicable beginning 15 days after the date hereof, and in any event prior to
the Purchase Date, the Company shall take all such action as is necessary to
cause the operation of the Company's generator sets in California to be in
compliance with applicable Environmental Laws and permits.
ARTICLE VI
CONDITIONS
Section 6.1. Conditions to the Obligation of Each Party. The respective
obligations of Parent, Buyer and the Company to effect the Merger are subject to
the satisfaction of the following conditions, unless waived in writing by all
parties:
(a) Each of the conditions set forth in Annex I shall have been
satisfied or waived by Buyer, and Buyer or its permitted assignee shall
have purchased the shares of Company Common Stock validly tendered and not
withdrawn pursuant to the terms of the Initial Offer; provided, however,
that this condition shall not be applicable to the obligations of Parent or
Buyer if, in breach of this Agreement or the terms of the Initial Offer,
Buyer or its permitted assignee fails to purchase any shares of Company
Common Stock validly tendered and not withdrawn pursuant to the Initial
Offer;
(b) This Agreement and the Merger shall have been approved and adopted
by the requisite vote of the Company Stockholders, if and to the extent
required by the DGCL, the Company Certificate of Incorporation and the
Company Bylaws;
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(c) No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or
other legal restraint or prohibition preventing the consummation of the
Merger shall be in effect; provided, however, that the parties invoking
this condition shall use all commercially reasonable efforts to have any
such order or injunction vacated;
(d) All actions by or in respect of or filings with any Governmental
Entity required to permit the consummation of the Merger shall have been
obtained or made (including the expiration or termination of any applicable
waiting period under the HSR Act); and
(e) The offering period with respect to the Subsequent Offer, if
applicable, shall have expired.
Section 6.2. Conditions to Obligations of Parent and Buyer to Effect the
Merger. The obligations of Parent and Buyer to effect the Merger are further
subject to satisfaction or waiver at or prior to the Effective Time of the
following conditions:
(a)(i) The representations and warranties of the Company in this
Agreement that are qualified by materiality shall be true and correct in
all respects as of the date of this Agreement and as of the Effective Time;
(ii) the representations and warranties of the Company in this Agreement
that are not qualified by materiality shall be true and correct in all
material respects as of the date of this Agreement and as of the Effective
Time; (iii) the Company shall have performed in all material respects all
obligations required to be performed by it under this Agreement; and (iv)
the Company shall have delivered to Parent and Buyer a certificate to the
effect that each of the conditions specified in (i), (ii) and (iii) above
is satisfied in all respects;
(b) The Company and its Subsidiaries shall have procured all necessary
third party consents in connection with the consummation of the Merger; and
(c) There shall not be overtly threatened, instituted or pending any
action, proceeding, application or counterclaim by any Governmental Entity
before any court or governmental regulatory or administrative agency,
authority or tribunal which challenges or seeks to challenge, restrain or
prohibit the consummation of the Initial Offer, Subsequent Offer or the
Merger.
Section 6.3. Conditions to Obligations of the Company to Effect the
Merger. The obligations of the Company to effect the Merger are further subject
to satisfaction or waiver at or prior to the Effective Time of the following
conditions:
(a) The representations and warranties of Parent and Buyer in this
Agreement that are qualified by materiality shall be true and correct in
all respects as of the date of this Agreement and as of the Effective Time;
(b) The representations and warranties of Parent and Buyer in this
Agreement that are not qualified by materiality shall be true and correct
in all material respects as of the date of this Agreement and as of the
Effective Time;
(c) Parent and Buyer shall have performed in all material respects all
obligations required to be performed by them under this Agreement; and
(d) Parent and Buyer shall have delivered to the Company a certificate
to the effect that each of the conditions specified in Sections 6.3(a), (b)
and (c) is satisfied in all respects.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1. Termination. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time, whether before or
after approval of matters presented in connection with the Merger by the Company
Stockholders:
(a) By mutual written consent of duly authorized representatives of
Parent and the Company;
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(b) By any of Parent, Buyer or the Company if any court of competent
jurisdiction or other Governmental Entity shall have issued an order,
decree, ruling or taken any other action permanently restraining, enjoining
or otherwise prohibiting the Initial Offer, the Subsequent Offer or the
Merger and such order, decree, ruling or other action shall have become
final and nonappealable; provided however, that the party terminating this
Agreement pursuant to this Section 7.1(b) shall use all commercially
reasonable efforts to have such order, decree, ruling or action vacated;
(c) By any of Parent, Buyer or the Company if the Initial Offer shall
have expired or been terminated and Buyer shall not have purchased any
shares of Company Common Stock pursuant thereto on or before March 31,
2000; provided, however, that the right to terminate this Agreement under
this Section 7.1(c) shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the primary cause of,
or resulted in, the expiration or termination of the Initial Offer on or
before such date;
(d) By Parent or Buyer if the Board of Directors of the Company (i)
shall have withdrawn or shall have modified in a manner adverse to Parent
or Buyer its approval or recommendation of the Initial Offer, the
Subsequent Offer, the Merger or this Agreement, (ii) causes the Company to
enter into an agreement with respect to an Acquisition Proposal, (iii)
shall have endorsed, approved or recommended any Acquisition Proposal or
(iv) shall have resolved to do any of the foregoing;
(e) By Parent or Buyer, if as a result of the failure of any of the
conditions set forth in Annex I to this Agreement, the Initial Offer shall
have been terminated by Parent or Buyer or expired in accordance with its
terms without Buyer (or any permitted assignee) having purchased any shares
of Company Common Stock pursuant to the Initial Offer; provided however,
that neither Parent nor Buyer shall have the right to terminate this
Agreement under this Section 7.1(e) if such party is in material breach of
this Agreement;
(f) By Parent or Buyer, if (i) any of the conditions set forth in
Section 6.2 shall have become incapable of fulfillment and shall not have
been waived by Parent and Buyer or (ii) the Company shall breach in any
material respect any of its representations, warranties, covenants or other
obligations hereunder and, within ten (10) days after written notice of
such breach to the Company from Parent, such breach shall not have been
cured in all material respects or waived by Parent or Buyer and the Company
shall not have provided reasonable assurance to Parent and Buyer that such
breach will be cured in all material respects on or before the Effective
Time;
(g) By the Company, if (i) any of the conditions set forth in Section
6.3 shall have become incapable of fulfillment and shall not have been
waived by the Company or (ii) Parent or Buyer shall breach in any material
respect any of their respective representations, warranties or obligations
hereunder and, within ten (10) days after written notice of such breach to
Parent from the Company, such breach shall not have been cured in all
material respects or waived by the Company and Parent or Buyer, as the case
may be, shall not have provided reasonable assurance to the Company that
such breach will be cured in all material respects on or before the
Effective Time;
(h) By any of Parent, Buyer or the Company if Buyer shall have
terminated the Initial Offer without Parent or Buyer (or the voting trust,
if applicable) purchasing any shares of Company Common Stock pursuant
thereto;
(i) By Parent prior to the Purchase Date if Parent determines in its
sole discretion that the matters disclosed in the phase I or phase II
environmental tests with respect to any property leased by the Company or
any Subsidiary would be likely to be material to the Company or any
Subsidiary; or
(j) By Parent if on or prior to the twenty-fifth (25th) business day
following the date hereof, in the good faith judgment of Parent's Auditor,
the Company does not meet each of the Financial Statement Tests.
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Section 7.2. Effect of Termination.
(a) In the event of the termination of this Agreement pursuant to
Section 7.1 hereof, this Agreement shall forthwith be terminated and have
no further effect except as specifically provided herein and, except as
provided in this Section 7.2 and in Section 8.12, there shall be no
liability on the part of any party hereto, provided that nothing herein
shall relieve any party from liability for any willful breach hereof.
(b) If (i) Parent or Buyer exercises its right to terminate this
Agreement under Section 7.1(d) or (ii) (A) after the date of this Agreement
any Acquisition Proposal involving the Company shall have been announced,
(B) the Initial Offer shall have remained open until at least the scheduled
expiration date immediately following the date such Acquisition Proposal is
announced, (C) the Minimum Condition shall not have been satisfied at the
expiration of the Initial Offer and (D) this Agreement or the Offer shall
thereafter be terminated, the Company shall pay to Parent upon demand $1.5
million (the "Termination Fee"), payable in same-day funds, as liquidated
damages and not as a penalty to reimburse Parent for its time, expense and
lost opportunity costs of pursuing the Merger and Initial Offer.
(c) If within one year after termination of this Agreement, the
Company shall enter into any agreement relating to, or consummate, an
Acquisition Proposal with a person other than Parent or Buyer, then
immediately prior to, and as a condition of, consummation of such
transaction the Company shall pay to Parent upon demand the Termination
Fee, payable in same-day funds, as liquidated damages and not as a penalty,
to reimburse Parent for its time, expense and lost opportunity costs of
pursuing the Merger; provided that no such amount shall be payable if the
Termination Fee shall have become payable or have been paid in accordance
with Section 7.2(b) of this Agreement or if this Agreement shall have been
terminated in accordance with Section 7.1(a) or 7.1(b) or by the Company in
accordance with clause (ii) of Section 7.1(g).
(d) Notwithstanding anything to the contrary set forth in this
Agreement, if the Company fails promptly to pay to Parent any amounts due
under this Section 7.2, the Company shall pay the costs and expenses
(including reasonable legal fees and expenses) in connection with any
action, including the filing of any lawsuit or other legal action, taken to
collect payment, together with interest on the amount of any unpaid fee or
obligation at the publicly announced prime rate of Citibank, N.A. in effect
from time to time from the date such fee or obligation was required to be
paid.
Section 7.3. Amendments. This Agreement may not be amended except by
action of the board of directors of each of the parties hereto set forth in an
instrument in writing signed on behalf of each of the parties hereto; provided,
however, that after approval of the Merger by the Company Stockholders (if
required), no amendment may be made without the further approval of the Company
Stockholders if the effect of such amendment would be to reduce the Merger
Consideration or change the form thereof. Following the election or appointment
of Buyer's designees pursuant to Section 5.14 and prior to the Effective Time,
the affirmative vote of the directors of the Company who are not designees of
Buyer shall be required by the Company to (i) amend or terminate this Agreement
by the Company, (ii) exercise or waive any of the Company's rights or remedies
under this Agreement, or (iii) extend the time for performance of Parent's and
Buyer's respective obligations under this Agreement.
Section 7.4. Waiver. At any time prior to the Effective Time, whether
before or after the Stockholders' Meeting, any party hereto, by action taken by
its board of directors, may subject to Section 7.3 (i) extend the time for the
performance of any of the covenants, obligations or other acts of any other
party hereto or (ii) waive any inaccuracy of any representations or warranties
or compliance with any of the agreements, covenants or conditions of any other
party or with any conditions to its own obligations. Any agreement on the part
of a party hereto to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party by its duly
authorized officer. The failure of any party to this Agreement to assert any of
its rights under this Agreement or otherwise shall not constitute a waiver of
such rights. 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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ARTICLE VIII
GENERAL PROVISIONS
Section 8.1. No Third Party Beneficiaries. Other than the provisions of
Sections 5.6 and 5.7 hereof, nothing in this Agreement shall confer any rights
or remedies upon any person other than the parties hereto.
Section 8.2. Entire Agreement. This Agreement constitutes the entire
Agreement among the parties with respect to the subject matter hereof and
supersedes any prior understandings, agreements, or representations by or among
the parties, written or oral, with respect to the subject matter hereof.
Section 8.3. Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties named herein and their respective
successors. No party may assign either this Agreement or any of its rights,
interests, or obligations hereunder without the prior written approval of the
other parties; provided, however, that Buyer may freely assign its rights to
another wholly owned subsidiary of Parent without such prior written approval
but no such assignment shall relieve Buyer of any of its obligations hereunder.
Section 8.4. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
Section 8.5. Headings. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 8.6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to principles of conflicts of law thereof.
Section 8.7. Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
Section 8.8. Specific Performance. Each of the parties acknowledges and
agrees that the other party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the parties agrees that
the other party shall be entitled to seek an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to enforce specifically
this Agreement and the terms and provisions hereof in any action instituted in
any court of the United States or any state thereof having jurisdiction over the
parties and the matter, in addition to any other remedy to which it may be
entitled, at law or in equity.
Section 8.9. Construction. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any party.
Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation."
Section 8.10. Non-Survival of Representations and Warranties and
Agreements. Except as expressly set forth in the Indemnification Agreements,
the representations, warranties and agreements in this Agreement shall terminate
at the Effective Time or upon the termination of this Agreement pursuant to
Section 7.1, as the case may be, except that (i) the agreements set forth in
Articles I and VIII and Sections 5.4, 5.6 and 5.7 shall survive the Effective
Time indefinitely and (ii) the agreements set forth in Sections 5.2, 5.6, 5.7
and 7.2 and in Article VIII shall survive the termination of this Agreement
indefinitely.
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Section 8.11. Certain Definitions.
(a) For purposes of this Agreement, the terms "associate" and
"affiliate" shall have the same meaning as set forth in Rule l2b-2
promulgated under the Exchange Act, and the term "person" shall mean any
individual, corporation, partnership (general or limited), limited
liability company, limited liability partnership, trust, joint venture,
joint-stock company, syndicate, association, entity, unincorporated
organization or government or any political subdivision, agency or
instrumentality thereof.
(b) For purposes of this Agreement, the phrase "Company Material
Adverse Effect" shall mean, with respect to the Company, any change, event
or effect shall have occurred or been threatened that, when taken together
with all other adverse changes, events or effects that have occurred or
been threatened, is or is reasonably likely to (i) be materially adverse to
the business, operations, prospects, properties, condition (financial or
otherwise), assets, liabilities (including, without limitation, contingent
liabilities) of the Company and its Subsidiaries taken as a whole or (ii)
prevent or materially delay the performance by the Company of any of its
obligations under this Agreement or the consummation of the Initial Offer,
the Subsequent Offer, the Merger or the other transactions contemplated by
this Agreement.
(c) For purposes of this Agreement, the phrases "to the knowledge of
the Company," "known to the Company," and similar formulations shall mean
matters within the actual knowledge, after reasonable inquiry, of John J.
Campion, G. Laurence Anderson, Stephen R. Bernstein, Jeffrey B. Stone, Pete
Wills and Nicholas Storr.
Section 8.12. Fees and Expenses. Except as provided in Section 7.2, all
costs and expenses incurred by the parties hereto in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses.
Section 8.13. 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 given upon receipt) by delivery in person, by telecopy
or by registered or certified mail (postage prepaid, return receipt requested)
to the respective parties at the following addresses, or at such other address
for a party as shall be specified in a notice given in accordance with this
Section 8.13:
If to Parent or Buyer:
General Electric Company
4200 Wildwood Parkway
Atlanta, Georgia 30339
Telecopier: (770) 859-7012
Attention: Briggs L. Tobin, Esq.
with a copy to:
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303
Telecopier: (404) 572-5100
Attention: C. William Baxley, Esq.
Mark E. Thompson, Esq.
If to the Company:
Showpower, Inc.
18420 South Santa Fe Avenue
Rancho Dominguez, California 90221
Telecopier: (310) 604-1671
Attention: John J. Campion
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with a copy to:
Baker & Daniels
300 North Meridian Street
Indianapolis, Indiana 46204
Telecopier: (317) 237-1000
Attention: David C. Worrell, Esq.
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IN WITNESS WHEREOF, the Company, Parent and Buyer and have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
SHOWPOWER, INC.
By: /s/ JOHN J. CAMPION
------------------------------------
Name: John J. Campion
Title: CEO
GE ENERGY SERVICES, INC.
By: /s/ MARTIN A. MOORE
------------------------------------
Name: Martin A. Moore
Title: President -- GE Energy Rental
EMMY ACQUISITION CORP.
By: /s/ MARTIN A. MOORE
------------------------------------
Name: Martin A. Moore
Title: President -- GE Energy Rental
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ANNEX I
CONDITIONS OF THE INITIAL OFFER
Notwithstanding any other provision of the Initial Offer or the Agreement,
and in addition to and not in limitation of Buyer's rights to extend or amend
the Initial Offer at any time, in its sole discretion (subject to the
Agreement), Buyer shall not be required to accept for payment or, subject to any
applicable rules or regulations of the SEC, pay for any shares of Company Common
Stock, and (subject to such rules and regulations) may delay the acceptance of
payment of or, subject to any restriction referred to above, the payment for,
and may (except as provided in the Agreement) terminate the Initial Offer, if
(a) the shares of Company Common Stock tendered pursuant to the Initial Offer by
the expiration of the Initial Offer and not withdrawn, together with the shares
of Company Stock owned by Buyer represent, on a fully diluted basis, less than a
majority of the outstanding voting power of the Company Stock (the "Minimum
Condition"), (b) the waiting periods under the HSR Act applicable to the
transactions contemplated by the Agreement shall not have expired or been
terminated, if applicable, or any other regulatory approvals required under
applicable Law have not been obtained, which if not obtained would prevent the
consummation of the Initial Offer, (c) Baker & Daniels, legal counsel for the
Company, does not deliver an opinion substantially in the form of Exhibit A
hereto, or (d) at any time after the date of this Agreement and prior to the
acceptance for payment of the shares of Company Common Stock, any of the
following conditions exist:
(i) there shall be instituted, pending or threatened any action,
investigation or proceeding by any Governmental Entity, or there shall be
instituted, pending or threatened any action or proceeding by any other
person, domestic or foreign, before any Governmental Entity, which is
reasonably likely to be determined adversely to Buyer, (A) challenging or
seeking to make illegal, to delay materially or otherwise, directly or
indirectly, to restrain or prohibit the making of the Initial Offer, the
acceptance for payment of or payment for some of or all the shares of
Company Common Stock by Buyer or the consummation of the Merger, seeking to
obtain material damages or imposing any material adverse conditions in
connection therewith or otherwise, directly or indirectly, relating to the
transactions contemplated by the Initial Offer or the Merger, (B) seeking
to restrain, prohibit or delay the exercise of full rights of ownership or
operation by Buyer or its affiliates of all or any portion of the business
or assets of the Company and its Subsidiaries, taken as a whole, or of
Buyer or any of its affiliates, or to compel Buyer or any of its affiliates
to dispose of or hold separate all or any material portion of the business
or assets of the Company and its Subsidiaries, taken as a whole, or of
Buyer or any of its affiliates, (C) seeking to impose or confirm
limitations on the ability of Buyer or any of its affiliates effectively to
exercise full rights of ownership of the shares of Company Common Stock,
including, without limitation, the right to vote the shares of Company
Common Stock acquired or owned by Buyer or any of its affiliates on all
matters properly presented to the Company Stockholders, (D) seeking to
require divestiture by Buyer or any of its affiliates of the shares of
Company Common Stock, or (E) that otherwise would reasonably be expected to
have a Company Material Adverse Effect;
(ii) there shall be any action taken, or any statute, rule,
regulation, injunction, order or decree proposed, enacted, enforced,
promulgated, issued or deemed applicable to, or any consent or approval
withheld with respect to, the Initial Offer, the acceptance for payment of
or payment for any shares of Company Common Stock or the Merger, by any
Governmental Entity that, in the reasonable judgment of Buyer, may,
directly or indirectly, result in any of the consequences referred to in
clauses (A) through (E) of paragraph (i) above;
(iii) there shall have occurred any change, condition, event or
development that has resulted in, or would reasonably be expected to result
in, a Company Material Adverse Effect;
(iv) there shall have occurred (A) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market, (B) any decline in either the
Dow Jones Industrial Average or the Standard and Poor's Index of 500
Industrial Companies by an amount in excess of twenty-five percent (25%),
measured from the date of the Agreement, (C) the declaration of any banking
moratorium or any suspension of payments in respect of banks or any
material limitation (whether or not mandatory) on the extension of credit
by lending institutions in the United
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<PAGE> 41
States, (D) the commencement of a war, material armed hostilities or other
material international or national calamity directly or indirectly
involving the United States that has a significant adverse effect on the
functioning of the financial markets in the United States, or (E) in the
case of any of the foregoing existing at the time of execution of the
Agreement, a material acceleration or worsening thereof;
(v) (A) the representations and warranties of the Company in the
Agreement that are qualified by materiality shall not be true and correct
in all respects as of the date of the Agreement and as of the Effective
Time; (B) the representations and warranties of the Company in the
Agreement that are not qualified by materiality shall not be true and
correct in all material respects as of the date of the Agreement and as of
the Effective Time; (C) the Company shall not have performed in all
material respects all obligations required to be performed by it under the
Agreement; (D) the directors of the Company's Subsidiaries shall have
resigned and appointed nominees to fill their vacancies as provided in
Section 5.16; and (E) an officer of the Company shall not have delivered to
Parent and Buyer a certificate to the effect that each of the foregoing
conditions is satisfied in all respects;
(vi) the Company and its Subsidiaries shall not have procured all
necessary third party consents (other than from Governmental Entities) with
respect to matters material to the conduct of business by the Company
required in connection with the execution and delivery of the Agreement and
the consummation of the Merger and the other transactions contemplated
hereby;
(vii) the Agreement shall have been terminated in accordance with its
terms; or
(viii) the Company and its Subsidiaries shall not have provided Buyer
and Parent with reasonable access for at least twenty (20) business days to
its leased properties to enable Buyer and Parent to conduct phase I and
phase II environmental testing,
which, in the reasonable judgment of Buyer in any such case, and regardless of
the circumstances giving rise to any such condition, makes it inadvisable to
proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Buyer and may be
asserted by Buyer regardless of the circumstances giving rise to any such
condition (including any action or omission by Buyer) or may be waived by Buyer
in whole or in part at any time and from time to time, in its sole discretion.
The failure by Buyer 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.
Should the Initial Offer be terminated pursuant to the foregoing provisions, all
tendered shares of Company Common Stock not theretofore accepted for payment
shall be returned forthwith.
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EXHIBIT A
The opinions to be delivered on behalf of the Company will be to the
following effect, with only such assumptions and qualifications as are
reasonably satisfactory to Buyer and Parent:
1. Each of the Company and each Subsidiary organized in the United
States (a "U.S. Subsidiary") (i) is a corporation or limited liability
company duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, (ii) has full power and
authority as a corporation or limited liability company, as applicable, and
all necessary government approvals to own, lease and operate its properties
and assets and to conduct its business as presently conducted and (iii) is
duly qualified or licensed to do business as a foreign corporation or
limited liability company, as applicable, and is in good standing in each
jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its business makes such qualification or
licensing necessary, except where the failure to be so qualified or
licensed, individually or in the aggregate, has not had, or would not
reasonably be expected to have, a Company Material Adverse Effect.
2. The Company has all necessary power and authority to execute and
deliver the Agreement, to perform its obligations thereunder and to
consummate the Offer, the Merger and the other transactions contemplated by
the Agreement.
3. The execution, delivery and performance by the Company of the
Agreement, and the consummation by the Company of the Offer, the Merger and
the other transactions contemplated by the Agreement, have been duly
authorized by all necessary corporate action, (including, without
limitation, the unanimous approval of the Board of Directors of the
Company) and no other corporate proceedings on the part of the Company are
necessary to authorize the Agreement or to consummate the Offer, the Merger
or the other transactions contemplated by the Agreement. The Company has
duly and validly executed and delivered the Agreement.
4. The Agreement and the transactions contemplated thereby constitute
the legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with its terms, except as limited by
bankruptcy, insolvency, reorganization and moratorium laws, and general
principles of equity.
5. The execution and delivery of the Agreement by the Company do not,
and the performance of the Agreement by the Company and the consummation of
the Offer and the Merger and the other transactions contemplated by the
Agreement will not (i) conflict with or violate the Company Certificate of
Incorporation or Company Bylaws equivalent organizational documents of any
of its U.S. Subsidiaries, (ii) conflict with or violate any Law applicable
to the Company or any of its U.S. Subsidiaries by which any property or
asset of the Company or any of its U.S. Subsidiaries is bound or affected
or (iii) to the knowledge of such counsel, except as set forth in the
Company Disclosure Letter, result in a breach of or constitute a default
(or an event which with notice or lapse of time or both would become a
default) under, give to others any right of termination, amendment,
acceleration or cancellation of, result in triggering any payment or other
obligations, or result in the creation of any lien or other encumbrance on
any property or asset of the Company or any of its U.S. Subsidiaries in any
case that would be material to the Company or any U.S. Subsidiary pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation or Material
Contract to which the Company or any of its U.S. Subsidiaries is a party or
by which the Company or any of its U.S. Subsidiaries or any property or
asset of any of them is bound or affected.
6. The Company's authorized capitalization consists of 6,500,000
shares of common stock and 1,000,000 shares of preferred stock. To the
knowledge of such counsel, except as disclosed in the Company Disclosure
Letter, there are no rights of first refusal, preemptive rights or other
rights, options, calls, warrants or other securities with rights
outstanding which are convertible into, exercisable for, or convertible
into, exercisable for, or related to any shares of capital stock of the
Company or any U.S. Subsidiary or other agreement either directly or
indirectly for the purchase or acquisition from the Company or any U.S.
Subsidiary of any shares of its capital stock.
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<PAGE> 1
FORM OF
TENDER AGREEMENT
THIS TENDER AGREEMENT (this "Agreement") dated as of December 17, 1999 is
entered into by and among GE Energy Services, Inc., a Delaware corporation
("Parent"), Emmy Acquisition Corp., a Delaware corporation and wholly owned
subsidiary of Parent ("Buyer"), and , in his capacity as a stockholder
of the Company and a resident of the State of ("Securityholder"), with
respect to certain equity securities owned by Securityholder of Showpower, Inc.,
a Delaware corporation (the "Company"), and, for purposes of Section 1.7 hereof,
the Company.
WITNESSETH:
WHEREAS, Parent, Buyer and the Company have entered into an Agreement and
Plan of Merger (the "Merger Agreement") dated as of the date hereof pursuant to
which Buyer has agreed to make a cash tender offer described therein and
thereafter merge with and into the Company (the "Merger") in accordance with the
provisions of the Delaware General Corporation Law of the State of Delaware;
WHEREAS, as of the date hereof, Securityholder beneficially owns and has
the power to vote certain shares of the common stock, par value $.01 per share,
of the Company (the "Company Common Stock"); and
WHEREAS, in consideration of Buyer's and Parent's agreements herein and in
the Merger Agreement, Securityholder has agreed to cooperate with Buyer and
Parent with respect to the acquisition of the Company by Parent and Buyer upon
the terms and subject to the conditions set forth in the Merger Agreement.
NOW, THEREFORE, in contemplation of the foregoing and in consideration of
the mutual agreements, covenants, representations and warranties contained
herein and for other good and valuable consideration, the receipt of which is
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto agree as follows:
1. Certain Covenants.
1.1 Lock-Up. Securityholder hereby covenants and agrees during the
term of this Agreement that (a) except as consented to in writing by
Parent in its sole discretion, Securityholder will not, directly or
indirectly, sell, transfer, assign, pledge, hypothecate or otherwise
dispose of or limit its right to vote in any manner any of the
Securities (as hereinafter defined), or agree to do any of the
foregoing, and (b) Securityholder will not take any action which would
have the effect of preventing or disabling Securityholder from
performing its obligations under this Agreement.
1.2 No Solicitation. During the term of this Agreement, neither
Securityholder nor any person acting as an agent of Securityholder or
otherwise on Securityholder's behalf shall, directly or indirectly,
solicit, encourage or initiate negotiations with, or provide any
information to, any corporation, partnership, person or other entity or
group (other than Parent or an affiliate or an associate of Parent)
concerning any sale, transfer, pledge or other disposition or conversion
of the Securities. Securityholder 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.
Securityholder will notify Buyer immediately if any party contacts
Securityholder following the date hereof (other than Buyer or an
affiliate or associate of Buyer) concerning any sale, transfer, pledge
or other disposition or conversion of the Securities.
1.3 Voting Agreement.
(a) Securityholder has revoked or terminated any proxies, voting
agreements or similar arrangements previously given or entered into
with respect to the Securities and hereby irrevocably appoints Buyer,
during the term of this Agreement, as proxy for Securityholder to
vote (or refrain from voting) in any manner as Buyer, in its sole
discretion, may see fit, all of the Securities of Securityholder for
Securityholder and in Securityholder's name, place and stead, at any
annual, special or other meeting or action of the securityholders of
the Company, as applicable, or at any adjournment thereof or pursuant
to any consent of securityholders of the
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Company, in lieu of a meeting or otherwise, with respect to (i) the
adoption and approval of the Merger Agreement, (ii) any extraordinary
corporate transaction (other than the Merger), such as a merger,
consolidation, business combination, tender or exchange offer,
reorganization, recapitalization, liquidation or other change of
control involving the Company or any of its subsidiaries, including,
but not limited to, any Acquisition Proposal (as defined in the
Merger Agreement), and (iii) any sale or transfer of a material
amount of the assets or securities of the Company or any of its
subsidiaries (other than pursuant to the Merger). The parties
acknowledge and agree that neither Buyer, nor Buyer's successors,
assigns, subsidiaries, divisions, employees, officers, directors,
shareholders, agents and affiliates shall owe any duty to, whether in
law or otherwise, or incur any liability of any kind whatsoever,
including without limitation, with respect to any and all claims,
losses, demands, causes of action, costs, expenses (including
reasonable attorney's fees) and compensation of any kind or nature
whatsoever to Securityholder in connection with, as a result of or
otherwise relating to any vote (or refrain from voting) by Buyer of
the Securities subject to the irrevocable proxy hereby granted to
Buyer at any annual, special or other meeting or action or the
execution of any consent of the securityholders of the Company.
(b) Notwithstanding the foregoing grant to Buyer of the
irrevocable proxy, in the event Buyer elects not to exercise its
rights to vote the Securities pursuant to the irrevocable proxy,
Securityholder agrees to vote all of the Securities during the term
of this Agreement (i) if the issue on which Securityholder is
requested to vote is a proposal to approve the Merger, Securityholder
agrees to vote in favor of or give its consent to, as applicable,
such transaction or (ii) otherwise in the manner directed by Buyer at
any annual, special or other meeting or action of securityholders of
the Company, in lieu of a meeting or otherwise with respect to any
issue brought before the securityholders of the Company.
1.4 Tender of Securities.
(a) Securityholder agrees to tender, and not withdraw, the
Securities owned by Securityholder to Buyer in the Initial Offer (as
defined in the Merger Agreement), and in any event no later than 10
business days following the commencement of the Initial Offer.
(b) Buyer shall withhold 10% of Securityholder's gross aggregate
Offer Price (as defined in the Merger Agreement) received in the
Initial Offer for the Securities (which amount is equal to
$ at a $7 per share Offer Price) and place such amount into
an escrow account (the "Indemnification Escrow") pursuant to the
terms of an escrow agreement in substantially the form of Exhibit A
hereto (the "Escrow Agreement"). The funds in the Indemnification
Escrow shall secure the indemnification obligations of Securityholder
and shall be distributed to Securityholder on the first anniversary
of the Closing, subject to claims made in accordance with the
Indemnification Agreement (as defined in the Merger Agreement).
1.5 Public Announcement. Securityholder shall consult with Parent
before issuing any press releases or otherwise making any public
statements with respect to the transactions contemplated herein and
shall not issue any such press release or make any such public statement
without the approval of Buyer, except as may be required by law.
1.6 Stop Transfer Instruction. Promptly following the date hereof,
Securityholder and Buyer shall deliver joint written instructions to the
Company and to the Company's transfer agent stating that the Securities
may not be sold, transferred, pledged, assigned, hypothecated or
otherwise disposed of in any manner without the prior written consent of
Buyer or except in accordance with the terms and conditions of this
Agreement.
1.7 Debt to the Company. Pursuant to the terms of Securityholder's
note payable to the Company and related pledge agreement (collectively,
the "Loan Agreement"), the Company hereby consents to Securityholder
entering into this Agreement and agreeing to tender the Securities in
the Initial Offer.
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2. Representation and Warranties.
2.1 Representations and Warranties of Buyer and Parent. Buyer and
Parent, hereby jointly and severally, represent and warrant to
Securityholder, as of the date hereof and as of the date Buyer purchases
shares of Company Common Stock pursuant to the Initial Offer, as
follows:
(a) Authorization. Each of Buyer and Parent is a corporation
duly organized, validly existing and in good standing under the laws
of its state of incorporation. Each of Buyer and Parent has all
requisite power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. Each of Buyer
and Parent has duly authorized, executed and delivered this Agreement
and this Agreement is a legal, valid and binding agreement of Buyer,
enforceable against Buyer in accordance with its terms.
2.2 Representations and Warranties of
Securityholder. Securityholder hereby represents and warrants to Buyer
and Parent, as of the date hereof and as of the date Buyer purchases
shares of Company Common Stock pursuant to the Initial Offer, as
follows:
(a) Ownership. Securityholder is the sole record and beneficial
owner of, and has good and marketable title to, shares
of Company Common Stock (collectively, the "Securities"), in each
case free and clear of all liabilities, claims, liens, options,
proxies, charges, participations and encumbrances of any kind or
character whatsoever, except for any security interest securing the
obligations under the Loan Agreement.
(b) Authorization. Securityholder has all requisite power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby and has sole voting power and sole
power of disposition, with respect to all of the Securities owned by
Securityholder with no restrictions on its voting rights or rights of
disposition pertaining thereto. Securityholder has duly authorized,
executed and delivered this Agreement and this Agreement is a legal,
valid and binding agreement of Securityholder, enforceable against
Securityholder in accordance with its terms.
(c) No Violation. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated
hereby will (a) require Securityholder to file or register with, or
obtain any material permit, authorization, consent or approval of,
any governmental agency, authority, administrative or regulatory
body, court or other tribunal, foreign or domestic, or any other
entity, or (b) violate, or cause a breach of or default under, any
contract, agreement or understanding, any statute or law, or any
judgment, decree, order, regulation or rule of any governmental
agency, authority, administrative or regulatory body, court or other
tribunal, foreign or domestic, or any other entity or any arbitration
award binding upon Securityholder. No proceedings are pending which,
if adversely determined, will have a material adverse effect on any
of the Securities. Securityholder has not previously assigned or sold
any of the Securities to any third party.
(d) Securityholder Has Adequate Information. Securityholder is
a sophisticated seller with respect to the Securities and has
adequate information concerning the business and financial condition
of the Company to make an informed decision regarding the sale of the
Securities and has independently and without reliance upon Buyer or
Parent and based on such information as Securityholder has deemed
appropriate, made its own analysis and decision to enter into this
Agreement. Securityholder acknowledges that neither Buyer nor Parent
has made and neither make any representation or warranty, whether
express or implied, of any kind or character except as expressly set
forth in this Agreement. Securityholder acknowledges that the
agreements contained herein with respect to the Securities by
Securityholder are irrevocable, and that Securityholder shall have no
recourse to the Securities or Buyer or Parent, except with respect to
breaches of representations, warranties, covenants and agreements
expressly set forth in this Agreement, and pursuant to indemnities
contained herein.
3
<PAGE> 4
(e) Buyer's Excluded Information. Securityholder acknowledges
and confirms that (a) Buyer or Parent may possess or hereafter come
into possession of certain non-public information concerning the
Securities and the Company which is not known to Securityholder and
which may be material to Securityholder's decision to sell the
Securities ("Buyer's Excluded Information"), (b) Securityholder has
requested not to receive Buyer's Excluded Information and has
determined to sell the Securities notwithstanding its lack of
knowledge of Buyer's Excluded Information, and (c) Buyer and Parent
shall have no liability or obligation to Securityholder, in
connection with, and Securityholder hereby waives and releases Buyer
and Parent from, any claims which Securityholder or its successors
and assigns may have against Buyer or Parent (whether pursuant to
applicable securities laws or otherwise) with respect to, the
non-disclosure of Buyer's Excluded Information; provided, however,
nothing contained in this Section 2.2(e) shall limit Securityholder's
right to rely upon the express representations and warranties made by
Buyer and Parent in this Agreement, or Securityholder's remedies in
respect of breaches of any such representations and warranties.
(f) No Setoff. Securityholder has no liability or obligation
related to or in connection with the Securities other than the
obligations to Buyer and Parent as set forth in this Agreement. There
are no legal or equitable defenses or counterclaims that have been or
may be asserted by or on behalf of the Company, as applicable, to
reduce the amount of the Securities or affect the validity or
enforceability of the Securities.
3. Survival of Representations and Warranties. The respective
representations and warranties of Securityholder, Parent and Buyer
contained herein or in any certificates or other documents delivered in
connection herewith shall not be deemed waived or otherwise affected by any
investigation made by the other party hereto, and each representation and
warranty contained herein shall survive the closing of the transactions
contemplated hereby until the expiration of the applicable statute of
limitations, including extensions thereof.
4. Specific Performance. Securityholder acknowledges that Buyer and
Parent will be irreparably harmed and that there will be no adequate remedy
at law for a violation of any of the covenants or agreements of
Securityholder which are contained in this Agreement. It is accordingly
agreed that, in addition to any other remedies which may be available to
Buyer and Parent upon the breach by Securityholder of such covenants and
agreements, Buyer and Parent shall have the right to obtain injunctive
relief to restrain any breach or threatened breach of such covenants or
agreements or otherwise to obtain specific performance of any of such
covenants or agreements.
5. Miscellaneous.
5.1 Term. This agreement shall terminate upon the termination of
the Merger Agreement.
5.2 Expenses. Each of the parties hereto shall pay its own
expenses incurred in connection with this Agreement. Each of the parties
hereto warrants and covenants to the others that it will bear all claims
for brokerage fees attributable to action taken by it.
5.3 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of and be enforceable by the parties hereto and their
respective representatives and permitted successors and assigns.
5.4 Entire Agreement. This Agreement contains the entire
understanding of the parties and supersedes all prior agreements and
understandings between the parties with respect to its subject matter.
This Agreement may be amended only by a written instrument duly executed
by the parties hereto.
5.5 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. Time is of the essence with respect to
all provisions of this Agreement.
4
<PAGE> 5
5.6 Assignment. This Agreement may not be transferred or assigned
by Securityholder but may be assigned by Buyer to any of its affiliates
or to any successor to its business and will be binding upon and inure
to the benefit of any such affiliate or successor.
5.7 Counterparts. This Agreement may be executed in two
counterparts, each of which shall be an original, but both of which
together shall constitute one and the same Agreement.
5.8 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 given if so given) by delivery,
telegram or telecopy, or by mail (registered or certified mail, postage
prepaid, return receipt requested) or by any national courier service,
provided that any notice delivered as herein provided shall also be
delivered by telecopy at the time of such delivery. All communications
hereunder shall be delivered to the respective parties at the following
addresses (or at such other address for a party as shall be specified by
like notice, provided that notices of a change of address shall be
effective only upon receipt thereof):
If to Parent or Buyer:
General Electric Company
4200 Wildwood Parkway
Atlanta, Georgia 30339
Attention: Briggs L. Tobin, Esq.
Telecopy: (770) 859-7012
with a copy to:
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
Attention: C. William Baxley, Esq.
Mark E. Thompson, Esq.
Telecopy: (404) 572-5100
If to Securityholder:
Telecopy:
5.9 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of
Delaware, without regard to its principles of conflicts of laws.
5.10 Enforceability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity
or enforceability of any other provision of this Agreement, which shall
remain in full force and effect.
5.11 Further Assurances. From time to time at or after the date
Buyer purchases shares of Company Common Stock pursuant to the Initial
Offer, at Buyer's request and without further consideration,
Securityholder shall execute and deliver to Buyer such documents and
take such action as Buyer may reasonably request in order to consummate
more effectively the transactions contemplated hereby and to vest in
Buyer good, valid and marketable title to the Securities, including, but
not limited to, using its best efforts to cause the appropriate transfer
agent or registrar to transfer of record the Securities.
5
<PAGE> 6
IN WITNESS WHEREOF, Buyer, Parent, Securityholder and the Company have
caused this Agreement to be duly executed as of the day and year first above
written.
EMMY ACQUISITION CORP.
By:
--------------------------------------
Name
Title
GE ENERGY SERVICES, INC.
By:
--------------------------------------
Name
Title
--------------------------------------
Securityholder
SHOWPOWER, INC.,
for purposes of Section 1.7 only
By:
--------------------------------------
Name
Title
6
<PAGE> 7
EXHIBIT A
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement"), dated as of ,
2000, is entered into by and among GE Energy Services, Inc., a Delaware
corporation ("Parent"), Emmy Acquisition Corp., a Delaware corporation and
wholly owned subsidiary of Parent ("Buyer"), and G. Lawrence Anderson and John
J. Campion, in their capacity as the stockholder representatives (the
"Stockholder Representatives") of the stockholders identified on Schedule I
hereto (the "Securityholders") of Showpower, Inc., a Delaware corporation (the
"Company"), and , a banking corporation, as escrow
agent (the "Escrow Agent"). Capitalized terms used but not otherwise defined in
this Agreement shall have the meanings ascribed to such terms in the
Indemnification Agreements (as hereinafter defined).
WITNESSETH:
WHEREAS, Parent, Buyer and the Company have entered into an Agreement and
Plan of Merger (the "Merger Agreement") dated as of December , 1999 pursuant
to which Buyer has agreed to make a cash tender offer described therein and
thereafter merge with and into the Company (the "Merger") in accordance with the
provisions of the Delaware General Corporation Law of the State of Delaware;
WHEREAS, as of the date hereof, Stockholder Representatives are the
representatives of the Securityholders who beneficially own and have the power
to vote in the aggregate [ ] shares of the common stock, par value
$.01 per share, of the Company (the "Company Common Stock") as set forth on
Schedule I hereto;
WHEREAS, concurrently with the execution and delivery of the Merger
Agreement, Parent, Buyer, the Stockholder Representatives and each of the
Securityholders have entered into agreements, dated as of the date hereof (the
"Indemnification Agreements"), pursuant to which, among other things, each
Securityholder has irrevocably appointed the Stockholder Representatives as
their agent and attorney-in-fact and has agreed to indemnify Parent and Buyer
for breaches of representations, warranties and covenants contained in the
Merger Agreement, subject to the terms and conditions contained in the
Indemnification Agreement;
WHEREAS, concurrently with the execution and delivery of the Merger
Agreement, Parent, Buyer, the Company and each of the Securityholders have
entered into agreements, dated as of the date hereof (the "Tender Agreements"),
pursuant to which, among other things, each Securityholder has agreed to tender
his shares of Company Common Stock in the Initial Offer (as defined in the Merge
Agreement);
WHEREAS, Section 1.4(b) of the Tender Agreements provides for Buyer to
withhold from the Offer Price (as defined in Section 1.1(a) of the Merger
Agreement) payable to the Securityholders and deliver to the Escrow Agent
[ ] in the aggregate (the "Indemnification Escrow Fund") (each
Securityholder's portion of such Indemnification Escrow Fund is identified on
Schedule I hereto) on the date the shares of Company Common Stock are purchased
by Buyer pursuant to the Initial Offer (the "Purchase Date"); and
WHEREAS, Parent, Buyer and each Securityholder intend for the
Indemnification Escrow Fund to secure the indemnification obligations of such
Securityholder under Section 3 of the Indemnification Agreements and to be held
by the Escrow Agent in accordance with the provisions of this Agreement;
NOW, THEREFORE, in contemplation of the foregoing and in consideration of
the mutual agreements, covenants, representations and warranties contained
herein and for other good and valuable consideration, the receipt of which is
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto agree as follows:
1. Appointment of the Escrow Agent. Parent, Buyer and each
Securityholder hereby appoint and designate the Escrow Agent as escrow
agent to receive, hold and disburse the Indemnification Escrow Fund in
accordance with the terms of this Agreement. The Escrow Agent hereby
accepts its appointment
7
<PAGE> 8
as the escrow agent and agrees to receive, hold and disburse the
Indemnification Escrow Fund and any income, interest or other amounts
received thereon in accordance with the terms of this Agreement.
2. The Indemnification Escrow Fund.
2.1 Receipt of the Indemnification Escrow Fund. The Escrow Agent
hereby acknowledges receipt of the Indemnification Escrow Fund.
2.2 Investment of the Indemnification Escrow Fund. The Escrow
Agent shall invest the Indemnification Escrow Fund as instructed by the
Stockholder Representatives in (i) savings accounts with, repurchase
agreements, or certificates of deposit issued by, federally chartered
banks or trust companies, the assets of which are at least $100,000,000
in excess of their liabilities, (ii) United States Treasury Bills (or an
investment portfolio or fund investing only in United States Treasury
Bills), (iii) commercial paper rated in the highest grade by a
nationally recognized credit rating agency or (iv) the [TREASURY
OBLIGATIONS MONEY MARKET FUND] (as long as such money market fund is
rated AAA by a nationally recognized credit rating agency), with the
income from such invested cash being held by the Escrow Agent as part of
the Indemnification Escrow Fund. The parties hereto agree that the
income from such invested cash shall be recognized as income by each
Securityholder for federal, state and local tax purposes.
2.3 Disbursement of the Indemnification Escrow Fund. The
Indemnification Escrow Fund shall secure each Securityholder's
obligations with respect to a claim by a Buyer Indemnitee (as defined in
Section 3.1 of the Indemnification Agreements) for indemnification from
each Securityholder (an "Indemnity Claim") pursuant to the
indemnification obligations set forth in Section 3 of the
Indemnification Agreements.
(i) The Escrow Agent shall disburse to any Buyer Indemnitee an
amount equal to that Buyer Indemnitee's Indemnity Claim promptly
following receipt of (A) the written consent or agreement of Parent
and the Stockholder Representatives to the payment of such Indemnity
Claim, specifying the amount thereof, or (B) a final decision, order,
judgment or decree of an arbitrator or court having jurisdiction
which is either not subject to appeal or as to which notice of appeal
has not been timely filed or served (a "Final Decision") with respect
to such Indemnity Claim, specifying the amount thereof.
(ii) On the first anniversary of the Closing (as defined in
Section 1.4 of the Merger Agreement), the Escrow Agent shall, subject
to the disbursement of the Indemnification Escrow Fund pursuant to
Section 2.3(i) of this Agreement, disburse to the Stockholder
Representatives, or in the manner directed by the Stockholder
Representatives, the remaining balance of the Indemnification Escrow
Fund, less the amount of any unresolved Indemnity Claims of which the
Escrow Agent has received notice.
All disbursements from the Indemnification Escrow Fund shall be made
by wire transfer of cash in immediately available funds to the person
entitled thereto.
2.4 Stockholder Representatives. Escrow Agent shall be able to
rely conclusively, without inquiry or liability, on the instructions,
agreements and decisions of the Stockholder Representatives, acting
jointly, with respect to all actions or matters permitted to be taken by
the Stockholder Representatives hereunder or under the Indemnification
Agreements, and no party shall have any cause of action against Escrow
Agent for any action taken by Escrow Agent in reliance upon the
agreements, instructions or decisions of the Stockholder Representatives
acting jointly. All actions, agreements, decisions and instructions of
the Stockholder Representatives shall be conclusive and binding upon
each Securityholder.
3. Termination of the Indemnification Escrow Fund. The escrow
provided for hereunder shall terminate upon the disbursement of the
Indemnification Escrow Fund pursuant to Section 2.3(ii) of this Agreement.
8
<PAGE> 9
4. Covenants of the Escrow Agent. The Escrow Agent hereby agrees and
covenants to Parent, Buyer, the Stockholder Representatives and each
Securityholder as follows:
(a) The Escrow Agent agrees to perform all of its obligations
under this Agreement and not to deliver custody or possession of any
of the Indemnification Escrow Fund to anyone except pursuant to the
express terms of this Agreement.
(b) The Escrow Agent agrees to send, within three (3) business
days after receipt of a written notice from any party hereto, one
copy of such written notice to all other parties hereto.
5. Resignation and Removal of the Escrow Agent. The Escrow Agent may
resign from the performance of its duties hereunder at any time by giving
thirty (30) days' prior written notice to Parent and the Stockholder
Representatives or may be removed, with or without cause, by Parent at any
time by the giving of thirty (30) days' prior written notice to the Escrow
Agent.
Such resignation or removal shall take effect upon the appointment of
a successor escrow agent as provided herein. Upon any such notice of
resignation or removal, Parent and the Stockholder Representatives shall
appoint a successor escrow agent hereunder, which shall be a commercial
bank, trust company or other financial institution with a combined capital
and surplus in excess of $100,000,000. Upon the acceptance in writing of
any appointment as Escrow Agent hereunder by a successor escrow agent, such
successor escrow agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Escrow Agent,
and the retiring Escrow Agent shall be discharged from its duties and
obligations under this Agreement, but shall not be discharged from any
liability for actions taken as Escrow Agent hereunder prior to such
succession. After any retiring Escrow Agent's resignation or removal, the
provisions of this Agreement shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Escrow Agent under this
Agreement.
6. Liability of the Escrow Agent. The Escrow Agent shall have no
liability or obligation with respect to the Indemnification Escrow Fund
except for the Escrow Agent's willful misconduct or gross negligence. The
Escrow Agent may rely upon any instrument, not only as to its due
execution, validity and effectiveness, but also as to the truth and
accuracy of any information contained therein, which the Escrow Agent shall
in good faith believe to be genuine, to have been signed or presented by
the person or parties purporting to sign the same and to conform to the
provisions of this Agreement. The Escrow Agent may consult legal counsel
selected by it in the event of any dispute or question of the construction
of this Agreement, the Merger Agreement or the Indemnification Agreements
or seek the assistance of a court of competent jurisdiction, and shall
incur no liability and shall be fully protected in acting in accordance
with the opinion or instruction of such counsel or such court. Provided
that the Escrow Agent shall be in compliance with its duties hereunder,
Parent and each Securityholder hereby jointly agree to indemnify and hold
harmless the Escrow Agent against any and all losses, claims, damages,
liabilities and expenses, including reasonable costs of investigation and
counsel fees and disbursement, which may be imposed upon the Escrow Agent
or incurred by the Escrow Agent in connection with its acceptance of
appointment as escrow agent hereunder, or the performance of its duties
hereunder, including any litigation arising from this Agreement or
involving the subject matter hereof of the cash deposited hereunder.
7. Compensation of the Escrow Agent. Parent shall compensate the
Escrow Agent for performing its duties hereunder in accordance with
Schedule II attached hereto.
8. Miscellaneous.
8.1 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of and be enforceable by the parties hereto and their
respective representatives and permitted successors and assigns.
8.2 Entire Agreement. This Agreement contains the entire
understanding of the parties and supersedes all prior agreements and
understandings between the parties with respect to its subject
9
<PAGE> 10
matter. This Agreement may be amended only by a written instrument duly
executed by the parties hereto.
8.3 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.
8.4 Waiver. Any party hereto may, at its option, waive in writing
any or all of the conditions herein contained to which its obligations
hereunder are subject. No waiver of any provision of this Agreement,
however, shall constitute a waiver of any other provision (whether
similar or not similar), nor shall such waiver constitute a continuing
waiver unless otherwise expressly provided.
8.5 Time of the Essence. Time is of the essence with respect to
all provisions of this Agreement.
8.6 Assignment. This Agreement may not be transferred or assigned
by any Securityholder but may be assigned by Parent or Buyer to any of
its affiliates or to any successor to its business and will be binding
upon and inure to the benefit of any such affiliate or successor.
8.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which
together shall constitute one and the same Agreement.
8.8 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 given if so given) by delivery,
telegram or telecopy, or by mail (registered or certified mail, postage
prepaid, return receipt requested) or by any national courier service,
provided that any notice delivered as herein provided shall also be
delivered by telecopy at the time of such delivery. All communications
hereunder shall be delivered to the respective parties at the following
addresses (or at such other address for a party as shall be specified by
like notice, provided that notices of a change of address shall be
effective only upon receipt thereof):
If to Parent or Buyer:
General Electric Company
4200 Wildwood Parkway
Atlanta, Georgia 30339
Attention: Briggs L. Tobin, Esq.
Telecopy: (770) 859-7012
with a copy to:
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
Attention: C. William Baxley, Esq.
Mark E. Thompson, Esq.
Telecopy: (404) 572-5146
10
<PAGE> 11
If to Stockholder Representatives:
Showpower, Inc.
18420 South Sante Fe Avenue
Rancho Dominguez, California 90221
Attention: G. Lawrence Anderson
John J. Campion
Telecopy: (310) 604-1671
with a copy to:
Baker & Daniels
300 North Meridian Street
Indianapolis, Indiana 46204
Attention: David C. Worrell, Esq.
Telecopy: (317) 237-1000
If to the Escrow Agent:
Attention:
Telecopy:
8.9 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of
Delaware, without regard to its principles of conflicts of laws.
8.10 Enforceability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity
or enforceability of any other provision of this Agreement, which shall
remain in full force and effect.
8.11 Further Assurances. From time to time at or after the
Purchase Date, at Parent's or Buyer's request and without further
consideration, the Stockholder Representatives shall execute and deliver
to Parent or Buyer such documents and take such action as Parent or
Buyer may reasonably request in order to consummate more effectively the
transactions contemplated by this Agreement.
11
<PAGE> 12
IN WITNESS WHEREOF, Buyer, Parent, the Stockholder Representatives and the
Escrow Agent have caused this Agreement to be duly executed as of the day and
year first above written.
EMMY ACQUISITION CORP.
By:
------------------------------------
Name
Title
GE ENERGY SERVICES, INC.
By:
------------------------------------
Name
Title
STOCKHOLDER REPRESENTATIVE,
on behalf of the Securityholders
identified on Schedule I hereto
--------------------------------------
G. Lawrence Anderson
STOCKHOLDER REPRESENTATIVE,
on behalf of the Securityholders
identified on Schedule I hereto
--------------------------------------
John J. Campion
[ESCROW AGENT]
By:
------------------------------------
Name
Title
12
<PAGE> 13
SCHEDULE I
SECURITYHOLDERS
<TABLE>
<CAPTION>
SECURITYHOLDER NUMBER OF SHARES PORTION OF ESCROW
-------------- ---------------- -----------------
<S> <C> <C>
John J. Campion and Esther Ash.............................. 209,184 $146,428.80
G. Laurence and Thressa Anderson............................ 104,012 72,808.40
Stephen R. Bernstein........................................ 113,670 79,569.00
Jeffrey B. Stone............................................ 359,828 251,879.60
Joseph A. Ades.............................................. 148,633 104,043.10
Robert E. Masterson......................................... 244,329 171,030.30
David C. and Annika Bernstein............................... 180,093 126,065.10
Vincent A. Carrino.......................................... 55,132 38,592.40
Eric C. Jackson............................................. 75,493 52,845.10
</TABLE>
13
<PAGE> 14
SCHEDULE II
COMPENSATION OF THE ESCROW AGENT
Escrow Agent's Fee: [$ ]
The Escrow Agent's fee for the term of this Escrow Agreement is due at
signing.
Out of pocket expenses such as, but not limited to, postage, courier,
insurance, overnight mail, long distance telephone, stationery, travel, legal or
accounting, etc., will be billed at cost.
These fees do not include extraordinary services which will be priced
according to time and scope of duties.
It is acknowledged that the schedule of fees shown above is acceptable for
the services mutually agreed upon and the undersigned authorizes
to perform these services.
All escrow agent fees and expense reimbursements shall be paid by
.
14
<PAGE> 1
FORM OF INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement") dated as of December 17,
1999 is entered into by and among GE Energy Services, Inc., a Delaware
corporation ("Parent"), Emmy Acquisition Corp., a Delaware corporation and
wholly owned subsidiary of Parent ("Buyer"), and , in his
capacity as a stockholder of the Company and a resident of the State of
("Securityholder"), with respect to certain equity securities
owned by Securityholder of Showpower, Inc., a Delaware corporation (the
"Company"), and for purposes of Section 3.5 hereof, G. Laurence Anderson and
John J. Campion (the "Stockholders' Agents").
WITNESSETH:
WHEREAS, Parent, Buyer and the Company have entered into an Agreement and
Plan of Merger (the "Merger Agreement") dated as of the date hereof pursuant to
which Buyer has agreed to make a cash tender offer described therein and
thereafter merge with and into the Company (the "Merger") in accordance with the
provisions of the Delaware General Corporation Law of the State of Delaware;
WHEREAS, as of the date hereof, Securityholder beneficially owns and has
the power to vote certain shares of the common stock, par value $.01 per share,
of the Company (the "Company Common Stock");
WHEREAS, each of Securityholder and certain other stockholders of the
Company entered into tender agreements (the "Tender Agreements") with Parent,
Buyer and the Company dated as of the date hereof pursuant to which such
stockholders agreed to tender their shares of common stock of the Company to
Buyer in the Initial Offer (as defined in the Merger Agreement) and place a
portion of the proceeds received by such stockholders from the Initial Offer
into an escrow account to secure their indemnification obligations pursuant to
this Agreement; and
WHEREAS, in consideration of Buyer's and Parent's agreements herein and in
the Merger Agreement, Securityholder has agreed to cooperate with Buyer and
Parent with respect to the acquisition of the Company by Parent and Buyer upon
the terms and subject to the conditions set forth in the Merger Agreement.
NOW, THEREFORE, in contemplation of the foregoing and in consideration of
the mutual agreements, covenants, representations and warranties contained
herein and for other good and valuable consideration, the receipt of which is
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto agree as follows:
1. Representation and Warranties.
1.1 Representations and Warranties of Buyer and Parent. Buyer and
Parent, hereby jointly and severally, represent and warrant to
Securityholder, as of the date hereof and as of the date Buyer purchases
shares of Company Common Stock pursuant to the Initial Offer, as
follows:
(a) Authorization. Each of Buyer and Parent is a corporation
duly organized, validly existing and in good standing under the laws
of its state of incorporation. Each of Buyer and Parent has all
requisite power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. Each of Buyer
and Parent has duly authorized, executed and delivered this Agreement
and this Agreement is a legal, valid and binding agreement of Buyer,
enforceable against Buyer in accordance with its terms.
1.2 Representations and Warranties of
Securityholder. Securityholder hereby represents and warrants to Buyer
and Parent, as of the date hereof and as of the date Buyer purchases
shares of Company Common Stock pursuant to the Initial Offer, as
follows:
(a) Ownership. Securityholder is the sole record and beneficial
owner of, and has good and marketable title to, shares of
Company Common Stock (collectively, the "Securities"), in each case
free and clear of all liabilities, claims, liens, options, proxies,
charges, participations and encumbrances of any kind or character
whatsoever, except for the security interest securing the obligations
under Securityholder's note payable to the Company.
1
<PAGE> 2
(b) Authorization. Securityholder has all requisite power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby and has sole voting power and sole
power of disposition, with respect to all of the Securities owned by
Securityholder with no restrictions on its voting rights or rights of
disposition pertaining thereto. Securityholder has duly authorized,
executed and delivered this Agreement and this Agreement is a legal,
valid and binding agreement of Securityholder, enforceable against
Securityholder in accordance with its terms.
(c) No Violation. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated
hereby will (a) require Securityholder to file or register with, or
obtain any material permit, authorization, consent or approval of,
any governmental agency, authority, administrative or regulatory
body, court or other tribunal, foreign or domestic, or any other
entity, or (b) violate, or cause a breach of or default under, any
contract, agreement or understanding, any statute or law, or any
judgment, decree, order, regulation or rule of any governmental
agency, authority, administrative or regulatory body, court or other
tribunal, foreign or domestic, or any other entity or any arbitration
award binding upon Securityholder. No proceedings are pending which,
if adversely determined, will have a material adverse effect on any
of the Securities. Securityholder has not previously assigned or sold
any of the Securities to any third party.
(d) No Setoff. Securityholder has no liability or obligation
related to or in connection with the Securities other than the
obligations to Buyer and Parent as set forth in this Agreement. There
are no legal or equitable defenses or counterclaims that have been or
may be asserted by or on behalf of the Company, as applicable, to
reduce the amount of the Securities or affect the validity or
enforceability of the Securities.
(g) Company Representations and Warranties. The representations
and warranties of the Company contained in Article III of the Merger
Agreement are hereby incorporated into this Agreement in their
entirety as representations and warranties of Securityholder and,
notwithstanding anything contained in the Merger Agreement to the
contrary, such representations and warranties shall survive for
purposes of this Agreement for the periods described in Article 3 of
this Agreement.
2. Survival of Representations and Warranties. The respective
representations and warranties of Securityholder, Parent and Buyer
contained herein or incorporated herein by reference or in any certificates
or other documents delivered in connection herewith shall not be deemed
waived or otherwise affected by any investigation made by the other party
hereto, and each representation and warranty contained herein or
incorporated herein by reference shall survive the closing of the
transactions contemplated hereby until the expiration of the applicable
statute of limitations, including extensions thereof. Notwithstanding the
foregoing, the representations and warranties of the Company contained in
Article III of the Merger Agreement or incorporated herein by reference
shall survive for a period of twelve months following the Closing (as
defined in the Merger Agreement).
3. Indemnification.
3.1 Indemnification by Securityholder.
(a) Indemnity. Securityholder shall defend and indemnify Buyer,
Parent and the Company and their agents, affiliates, subsidiaries,
controlling persons, officers, directors, and employees
(collectively, the "Buyer Indemnitees"), and hold the Buyer
Indemnitees wholly harmless from and against, any and all losses,
liabilities, damages, costs (including, without limitation, court
costs) and expenses (including, without limitation, reasonable
attorneys' fees) which the Company or any Buyer Indemnitee incurs as
a result of, or with respect to, any third party claims made against
the Company or any Buyer Indemnitee and arising out of or based upon
or relating to (i) any inaccuracy in or breach of any representation,
warranty, covenant or agreement by or on behalf of Securityholder or
the Company contained in this Agreement
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<PAGE> 3
(including the representations and warranties incorporated herein by
reference pursuant to Section 2.2(g)), the Merger Agreement or
contained in any certificate, instrument, agreement or document of
Securityholder or the Company delivered to Buyer or Parent in
connection with the consummation of the transactions contemplated
hereunder or thereunder and (ii) any of the matters contained in the
Company Disclosure Letter with respect to the representations and
warranties contained in Sections 3.9, 3.15, 3.16, 3.17 and 3.18 of
the Merger Agreement which are incorporated by reference herein
(collectively "Losses"). For purposes of this Agreement, third party
claims shall exclude any claim brought by or on behalf of any
wholly-owned subsidiary of Parent, unless such third party claim
arises out of or is related to actions or events affecting such
subsidiary which occurred on or prior to the date hereof.
(b) Claims. In the event that any Buyer Indemnitee shall
receive written notice of any claim or proceeding against such Buyer
Indemnitee that, if successful, might result in a claim under this
Section 3.1, such Buyer Indemnitee shall give Securityholder prompt
written notice of such claim or proceeding and shall permit
Securityholder to participate in the defense of such claim or
proceeding by counsel of Securityholder's own choosing and at the
expense of Securityholder. In addition, upon written request of such
Buyer Indemnitee, Securityholder shall assume the carriage of the
defense of any such claim or proceeding.
(c) Right to Indemnification. In no event shall
Securityholder's right to receive indemnification pursuant to Section
5.7 of the Merger Agreement affect or in any way limit
Securityholder's obligation to indemnify the Buyer Indemnitees
hereunder.
3.2 Specific Performance. Securityholder acknowledges that Buyer
and Parent will be irreparably harmed and that there will be no adequate
remedy at law for a violation of any of the covenants or agreements of
Securityholder which are contained in this Agreement. It is accordingly
agreed that, in addition to any other remedies which may be available to
Buyer and Parent upon the breach by Securityholder of such covenants and
agreements, Buyer and Parent shall have the right to obtain injunctive
relief to restrain any breach or threatened breach of such covenants or
agreements or otherwise to obtain specific performance of any of such
covenants or agreements.
3.3 Exclusive Remedy. From and after the Effective Date (as
defined in Merger Agreement), recourse of any Buyer Indemnitee to the
aggregate amount of the property held in the Indemnification Escrow (as
defined in the Tender Agreements) pursuant to each of the Tender
Agreements shall be the sole and exclusive remedy of the Buyer
Indemnitees for monetary damages for any claim for indemnification under
this Article 3, other than with respect to claims made by a Buyer
Indemnitee against Securityholder for fraud, bad faith or willful
misconduct.
3.4 Defense of Third Party Claims. Securityholder may participate
in (but not control) the defense and Buyer Indemnitee will have the sole
right to control the defense of third party claims made pursuant to
Article 3 by using counsel selected by Buyer Indemnitee. Buyer
Indemnitee shall have the sole right to make any significant decisions
with respect to the defense of such claim, except as to the settlement
or compromise of such claim which Buyer Indemnitee shall have the right
to settle, adjust or compromise with the consent of Securityholder;
provided, however, that such consent may not be unreasonably withheld.
Securityholder shall make available to Buyer Indemnitee any documents
and materials in his or its possession or control that may be necessary
to the defense of, and shall otherwise cooperate with Buyer Indemnitee
in the defense of, such claim or legal proceeding.
3.5 Stockholders' Agents.
(a) Appointment. In order to efficiently administer, among
other matters, the defense and/or settlement of any claims for which
Securityholder may be required to indemnify the Buyer Indemnitees
pursuant to Section 3.1, Securityholder hereby irrevocably designates
and appoints G. Laurence Anderson and John J. Campion, as the lawful
agent and attorney-in-fact (the "Stockholders' Agents") with full
powers of substitution to act in the name, place and
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<PAGE> 4
stead of Securityholder with respect to the authority provided in
paragraph (b) below. Securityholder hereby ratifies and confirms all
that the Stockholders' Agents shall do or cause to be done by virtue
of his appointment as a Stockholders' Representative and Jeffrey B.
Stone and John J. Campion hereby accept such designation and
appointment.
(b) Authority. The Stockholders' Agents, acting jointly, are
empowered and authorized, acting specifically and not generally on
behalf of Securityholder (i) to take all action necessary in
connection with the defense and/or settlement of any claims for which
the Securityholder may be required to indemnify the Buyer Indemnitees
pursuant to Section 3.1; (ii) to execute and deliver the Escrow
Agreement (as defined in the Tender Agreements); (iii) to give and
receive all notices required to be given under the Escrow Agreement;
(iv) to receive, hold and distribute to the Securityholder hereto any
moneys received as a distribution pursuant to the Escrow Agreement or
any other sums received by the Stockholders' Agents in such capacity,
and to retain same or a portion thereof as a reserve for expenses
(inclusive without limitation of the expenses referred to in
paragraph (f) below) or for other possible payments or liabilities,
all as determined in the sole discretion of the Stockholders' Agents
with such retained or reserved amounts to be distributed upon or
after the payment of such expenses, making such payments or discharge
of such liabilities; (vi) to employ such legal counsel and other
representatives as the Stockholders' Agents shall select from time to
time; and (vii) to take any and all additional action as is
contemplated or permitted to be taken by or on behalf of the
Securityholder as the Stockholders' Agents deem necessary or
appropriate by the terms of this Agreement and the Escrow Agreement.
(c) Successor. In the event that one of the Stockholders'
Agents dies, becomes unable to perform his responsibilities hereunder
or resigns, Stephen R. Bernstein is hereby appointed and constituted
as one of the Stockholders' Agents, and he shall become and be deemed
one of the Stockholders' Agents.
(d) Decisions Binding. All decisions and actions, taken
jointly, by the Stockholders' Agents, whatsoever shall be binding
upon Securityholder, and Securityholder shall not have the right to
object, dissent, protest or otherwise contest the same.
(e) Further Agreements. By execution of this Agreement,
Securityholder agrees that:
(i) The appointment of the Stockholders' Agents shall be
deemed coupled with an interest and shall be irrevocable and the
Buyer Indemnitees and the escrow agent under the Escrow Agreement
shall be able to rely conclusively, without inquiry or liability,
on the instructions, agreements and decisions of the
Stockholders' Agents, acting jointly, as to the settlement of any
claims for indemnification pursuant to Section 3.1 or any other
actions required or permitted to be taken by the Stockholders'
Agents hereunder or under the Escrow Agreement, and no party
hereunder shall have any cause of action against the Buyer
Indemnitees for any action taken by the Buyer Indemnitees in
reliance upon the agreements, instructions or decisions of the
Stockholders' Agents, acting jointly;
(ii) all actions, agreements, decisions and instructions of
the Securityholders' Agents shall be conclusive and binding upon
Securityholder and Securityholder shall not have any cause of
action against the Stockholders' Agents for any action taken,
decision made or instruction given by the Stockholders' Agents,
acting jointly, under this Agreement, except for fraud or bad
faith;
(iii) the provisions of this Section 3.5 are independent and
severable, are irrevocable and coupled with an interest and shall
be enforceable notwithstanding any rights or remedies that
Securityholder may have in connection with the transactions
contemplated by the Merger Agreement;
(iv) the provisions of this Section 3.5 shall be binding
upon the executors, heirs, legal representatives and successors
of each Securityholder, and any references in this Agree-
4
<PAGE> 5
ment to Securityholder shall mean and include the successors to
the Securityholder's rights hereunder, whether pursuant to
testamentary disposition, the laws of descent and distribution or
otherwise; and
(v) the Buyer Indemnitees and the escrow agent under the
Escrow Agreement shall, upon receipt of any writing which
reasonably appears to have been signed by the Stockholders'
Agents, act upon such writing without any further duty of inquiry
as to the genuineness of the writing.
(f) Expenses. All reasonable fees and expenses incurred by the
Stockholders' Agents or otherwise required to be paid by
Securityholder, may be withheld by the Stockholders' Agents and paid
from sums paid to the Stockholders' Agents as a distribution pursuant
to the Escrow Agreement or any other sums received by the
Stockholders' Agents in such capacity.
4. Trade Secrets, Confidential Information and Noncompetition
Covenants.
4.1 Definitions. For the purposes of this Section 4, the following
definitions shall apply:
(a) "Company Activities" shall mean all activities of the type
conducted or provided by the Company within one year prior to the
date of this Agreement. For purposes of reference, such activities at
the date of this Agreement include the provision of temporary power
generation and temperature control rental equipment and support
services on a worldwide basis for entertainment, corporate and
special events.
(b) "Confidential Information" shall mean any data or
information, other than Trade Secrets, which is valuable to the
Company and not generally known to competitors of the Company.
(c) "Confidentiality Period" shall mean the period beginning the
date hereof and ending on the third anniversary of the date hereof.
(d) "Noncompete Period" shall mean the period beginning on the
date hereof and ending on the third anniversary of the date hereof.
(e) "Territory" shall mean the areas where the Company
Activities are conducted as of the date hereof and any area where
customers or actively sought prospective customers of the Company are
present. For purposes of reference, such areas include the geographic
area contained within a 150-mile radius of the current office
locations of the Company.
(f) "Trade Secret" shall mean information, including, but not
limited to, technical or nontechnical data, a formula, pattern,
compilation, program, device, method, technique, drawing, process,
financial data, financial plan, product plan, list of actual or
potential customers or suppliers, or other information similar to any
of the foregoing, which (i) derives independent economic value,
actual or potential, from not being generally known to, and not being
readily ascertainable by proper means by, the public or to other
persons who can derive economic value from its disclosure or use, and
(ii) is the subject of reasonable efforts under the circumstances by
the Company to maintain its secrecy. For purposes of this Agreement,
the term "Trade Secrets" shall not include information that (i) was
generally known to the public at the time the Company disclosed the
information to Securityholder; (ii) became generally known to the
public after disclosure by the Company through no act or omission of
Securityholder; or (iii) was disclosed to Securityholder by a third
party having a bona fide right both to possess the information and to
disclose the information to Securityholder.
4.2 Trade Secrets. Securityholder shall hold in confidence at all
times on and after the date hereof all Trade Secrets, and shall not
disclose, publish or make use at any time on and after the date hereof
of Trade Secrets without the prior written consent of the Company.
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<PAGE> 6
4.3 Confidential Information. During the Confidentiality Period,
Securityholder shall hold in confidence all Confidential Information and
shall not disclose, publish or make use of Confidential Information
without the prior written consent of the Company.
4.4 Noncompetition.
(a) Coverage. Securityholder acknowledges that to protect
adequately the interest of the Company it is essential that any
noncompete covenant with respect thereto cover all Company Activities
and the entire Territory.
(b) Noncompete Covenant. Securityholder hereby agrees that
Securityholder shall not, during the Noncompete Period, in any manner
(other than as an employee of the Company), directly or by assisting
others, engage in, have any equity or profit interest in (except for
an equity interest in a publicly held corporation which does not
exceed one percent (1%) of such corporation's outstanding capital
stock), or render services of any executive, administrative,
supervisory, marketing, production or consulting nature to any
corporation or other entity that conducts the Company Activities in
the Territory.
(c) Customer Nonsolicitation. Securityholder hereby agrees that
Securityholder shall not, during the Noncompete Period, in any manner
(other than as an employee of the Company), directly or by assisting
others, solicit or accept, or attempt to solicit or accept, any
business from any customer of the Company, including actively sought
prospective customers, for purposes of providing products or services
that are competitive with those provided by the Company.
4.5 No-hire Covenant. Securityholder hereby agrees that
Securityholder shall not, during the Noncompete Period, in any manner
(other than as an employee of the Company), directly or by assisting
others, recruit or hire, or attempt to recruit or hire, on the
Securityholder's behalf or on behalf of any other person, firm or
corporation, any employee of the Company.
4.6 Severability, Damages and Tolling. If a judicial or arbitral
determination is made that any of the provisions of this Section 4
constitutes an unreasonable or otherwise unenforceable restriction
against Securityholder, the provisions of this Section 4 shall be
rendered void only to the extent that such judicial or arbitral
determination finds such provisions to be unreasonable or otherwise
unenforceable. In this regard, Securityholder and the Company hereby
agree that any judicial or arbitral authority construing this Agreement
shall be empowered to sever any prohibited business activity, time
period or geographical area from the coverage of this Section 4 and to
apply the provisions of this Section 4 to the remaining business
activities and the remaining time period not so severed by such judicial
or arbitral authority. Moreover, notwithstanding the fact that any
provision of this Section 4 is determined not to be specifically
enforceable, the Company shall nevertheless be entitled to recover
monetary damages as a result of the breach of such provision by
Securityholder. The time period during which the prohibitions set forth
in this Section 4 shall apply shall be tolled and suspended for a period
equal to the aggregate quantity of time during which Securityholder
violates such prohibitions in any respect.
4.7 Injunctive Relief. Securityholder hereby agrees that any
remedy at law for any breach of the provisions contained in Sections
4.2, 4.3, 4.4 or 4.5 hereof shall be inadequate and that the Company
shall be entitled to injunctive relief in addition to any other remedy
the Company might have under this Agreement.
5. Miscellaneous.
5.1 Expenses. Each of the parties hereto shall pay its own
expenses incurred in connection with this Agreement. Each of the parties
hereto warrants and covenants to the others that it will bear all claims
for brokerage fees attributable to action taken by it.
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<PAGE> 7
5.2 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of and be enforceable by the parties hereto and their
respective representatives and permitted successors and assigns.
5.3 Entire Agreement. This Agreement contains the entire
understanding of the parties and supersedes all prior agreements and
understandings between the parties with respect to its subject matter.
This Agreement may be amended only by a written instrument duly executed
by the parties hereto.
5.4 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. Time is of the essence with respect to
all provisions of this Agreement.
5.5 Assignment. This Agreement may not be transferred or assigned
by Securityholder but may be assigned by Buyer to any of its affiliates
or to any successor to its business and will be binding upon and inure
to the benefit of any such affiliate or successor.
5.6 Counterparts. This Agreement may be executed in two
counterparts, each of which shall be an original, but both of which
together shall constitute one and the same Agreement.
5.7 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 given if so given) by delivery,
telegram or telecopy, or by mail (registered or certified mail, postage
prepaid, return receipt requested) or by any national courier service,
provided that any notice delivered as herein provided shall also be
delivered by telecopy at the time of such delivery. All communications
hereunder shall be delivered to the respective parties at the following
addresses (or at such other address for a party as shall be specified by
like notice, provided that notices of a change of address shall be
effective only upon receipt thereof):
If to Parent or Buyer:
General Electric Company
4200 Wildwood Parkway
Atlanta, Georgia 30339
Attention: Briggs L. Tobin, Esq.
Telecopy: (770) 859-7012
with a copy to:
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
Attention: C. William Baxley, Esq.
Mark E. Thompson, Esq.
Telecopy: (404) 572-5100
If to Securityholder:
Telecopy:
with a copy to:
Baker & Daniels
300 North Meridian Street
Indianapolis, Indiana 46204
Attention: David C. Worrell, Esq.
Telecopy: (317) 237-1000
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<PAGE> 8
5.8 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of
Delaware, without regard to its principles of conflicts of laws.
5.9 Enforceability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity
or enforceability of any other provision of this Agreement, which shall
remain in full force and effect.
5.10 Further Assurances. From time to time at or after the date
Buyer purchases shares of Company Common Stock pursuant to the Initial
Offer, at Buyer's request and without further consideration,
Securityholder shall execute and deliver to Buyer such documents and
take such action as Buyer may reasonably request in order to consummate
more effectively the transactions contemplated hereby and to vest in
Buyer good, valid and marketable title to the Securities, including, but
not limited to, using its best efforts to cause the appropriate transfer
agent or registrar to transfer of record the Securities.
IN WITNESS WHEREOF, Buyer, Parent, Securityholder and the Stockholders'
Agents have caused this Agreement to be duly executed as of the day and year
first above written.
EMMY ACQUISITION CORP.
By:
------------------------------------
Name
Title
GE ENERGY SERVICES, INC.
By:
------------------------------------
Name
Title
------------------------------------
Securityholder
STOCKHOLDERS' AGENT, for
purposes of Section 3.5 only
------------------------------------
G. Laurence Anderson
STOCKHOLDERS' AGENT, for
purposes of Section 3.5 only
------------------------------------
John J. Campion
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<PAGE> 1
December 17, 1999
Mr. John Campion
Chief Executive Officer
Showpower, Inc.
Dear John:
Upon closing of the tender offer for the shares of Showpower, Inc., GE
Energy Systems Rentals is pleased to offer you the position of Senior Vice
President -- Global Sales and Marketing reporting to me. This position is in the
Executive Band at GE and will provide for the following:
1. You will receive an annual salary of Two Hundred Thousand Dollars
($200,000). You shall be entitled to a guaranteed bonus of $100,000 for
year 1 of your employment with additional bonus if the sales target of
$70,000,000 is satisfied according to the formula attached hereto as
Attachment A. In the event of any termination, you shall be entitled to the
bonus pro-rated through the date of termination. GE agrees that Showpower,
Inc., prior to December 27, 1999, shall be entitled to pay you a bonus for
fiscal 1999 in the amount $213,665.80 based on free cash flow of
$3,204,987. The payment of this amount shall not be taken into account when
determining whether Showpower has satisfied any financial benchmarks for
purposes of the subject acquisition.
2. You will also be eligible for GE Energy Rentals' comprehensive
benefits plans. You will receive options for 2,000 shares of GE stock upon
the completion of the acquisition and another 2,000 on the first
anniversary of your employment with GE. These options are consistent with
those offered to other GE employees from time to time. In addition, you
will be allowed to participate in the compensation deferral programs.
3. Effective upon the closing of the tender offer for the shares of
Showpower, Inc., the amount of $289,263 owed by you to Showpower, Inc. will
be forgiven and you will assume your automobile lease.
4. Effective upon the closing of the tender offer for the shares of
Showpower, Inc., this agreement replaces and supercedes any previous
employment agreements between Showpower and yourself.
5. You will agree to be bound by the terms of the Indemnification
Agreement, including the Noncompetition clause and No-Hire Covenants
(Attachment C).
6. During your employment, GE agrees that these offered duties and
responsibilities will not be substantially diminished in any way except for
Cause.
7. GE may terminate your employment without cause at any time and for
any or no reason provided, however, that in the event that GE terminates
your employment without Cause (as defined on Attachment B hereto), (a) GE
will pay or provide you (i) all sums to which you are entitled under this
agreement up to and including the date of termination of your employment,
(ii) immediately upon such termination a severance payment in the amount of
One Hundred Thousand Dollars ($100,000), and (iii) all benefits to which
you are entitled up to and including the date of termination of your
employment and any benefits to which you are entitled following such
termination pursuant to applicable law or the terms of the benefit plans
themselves, and (b) the Noncompete shall immediately cease and be of no
further force and effect. In the event of your voluntary resignation or if
the Company terminates you for Cause, (a) GE Will pay or provide you (i)
all sums to which you are entitled under this agreement up to and including
the date of termination of your employment, and (ii) all benefits to which
you are entitled up to and including the date of termination of your
employment and any benefits to which you are entitled following such
termination pursuant to applicable law or the terms of the benefit plans
themselves, and (c) the Noncompete shall remain in full force and effect in
accordance with its terms and there shall be no severance payment.
8. You will be reimbursed for your expenses incurred in the conduct of
GE business in accordance with GE's written policies.
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<PAGE> 2
9. You shall be entitled to one month's vacation per year.
10. This agreement shall be governed by the internal laws of the State
of Delaware. The prevailing party in any dispute under this agreement shall
be entitled to reasonable attorney's fees and expenses.
This offer is contingent upon certain conditions described in the enclosed
"Acknowledgment -- Conditions of Employment," which you need to sign and return
using the instructions on the form. As one of the requirements is a drug screen
test, we ask you to make arrangements for your drug screen with within 24 hours
of acceptance of this offer per the attached Candidate Drug Screen Instruction.
The drug screen process must be completed prior to your first day of work.
Upon your acceptance, we would appreciate you signing and returning a fax
copy to my attention at 404-572-5174. Also, please read through the additional
material enclosed and complete/sign off on:
- Acknowledgment Conditions of Employment
- Integrity Forms ("Spirit & Letter document")
- Employee Innovation and Propriety Information Agreement (FN348-C)
- Employment Application
John, this is a great opportunity to join the world's leaders in the power
industry and to enhance your career growth in a key leadership position. We look
forward to the contribution you can make in helping us execute an aggressive
growth strategy for this business.
Sincerely,
/s/ MARTIN A. MOORE
Martin A. Moore
Attachments
2
<PAGE> 3
CONFIRMATION OF ACCEPTANCE
I hereby accept the offer of employment with GE Energy Services based on
the conditions outlined in this letter.
<TABLE>
<S> <C>
/s/ JOHN CAMPION
- ------------------------------------------ ------------------------------------------
Signature Date
JOHN CAMPION
- ------------------------------------------ ------------------------------------------
Print Name SSN#
</TABLE>
3
<PAGE> 4
ATTACHMENT B
DEFINITION OF CAUSE
Termination for Cause. The term "Cause" means: (i) Executive is convicted
of, pleads guilty to (including a plea of nolo contendere), or confesses to any
felony or any act of fraud, misappropriation, or embezzlement; (ii) Executive
engages in any other conduct involving dishonesty, illegality, or moral
turpitude that is materially detrimental or injurious to the business interests,
reputation or goodwill of the GE or its affiliates; (iii) Executive's willful
failure or gross negligence in the performance of his duties and
responsibilities for the Company; (iv) any failure by Executive to comply in any
material respect with the terms of this Agreement or any policies or directives
of GE; or (v) Executive's disregard of a direct, reasonable order of any other
officer or employee of GE in a senior position relative to Executives, the
substance of which is permitted by law. With regard to subsections (iii) and
(v), GE shall give Executive written notice of a violation of each of
Subsections (iii) and (iv); provided that no notice need be sent if Executive
has previously committed a similar violation. GE may terminate Executive's
employment for Cause if he fails to correct such violation within thirty (30)
days after receiving notice. GE may terminate this Agreement and Executive's
employment for Cause immediately upon the occurrence of a violation by Executive
similar to a previous violation of subsections (iii) or (iv) committed by
Executive. Cause shall in all cases be determined solely by GE in good faith.
4
<PAGE> 1
December 17, 1999
Mr. Laurence Anderson
President -- Showpower, Inc.
Dear Laurence:
Upon closing of the tender offer for the shares of Showpower, Inc., GE
Energy Systems Rentals is pleased to offer you the position of Vice
President -- Fleet Operations reporting to me. This position is in the Executive
Band at GE and will provide for the following:
1. You will receive an annual salary of One Hundred Fifty Thousand
Dollars ($150,000). You shall be entitled to a guaranteed bonus of $60,000
for year 1 of your employment. In the event of any termination, you shall
be entitled to the bonus pro-rated through the date of termination. GE
agrees that Showpower, Inc., prior to December 27, 1999, shall be entitled
to pay you a bonus for fiscal 1999 in the amount $106,832.90 based on free
cash flow of $3,204,987. The payment of this amount shall not be taken into
account when determining whether Showpower has satisfied any financial
benchmarks for purposes of the subject acquisition.
2. You will also be eligible for GE Energy Rentals' comprehensive
benefits plans. You will receive options for 1,000 shares of GE stock upon
completion of the acquisition and another 1,000 shares on the first
anniversary of your employment with GE. These options are consistent with
those offered to other GE employees from time to time. In addition, you
will be allowed to participate in the compensation deferral programs.
3. Effective upon the closing of the tender offer for the shares of
Showpower, Inc., the amount of $133,338 (and any applicable interest or
fees associated with this amount) owed by you to Showpower, Inc. will be
forgiven.
4. Effective upon the closing of the tender offer for the shares of
Showpower, Inc., this agreement replaces and supercedes any previous
employment agreements between Showpower and yourself.
5. You will agree to be bound by the terms of the Indemnification
Agreement, including the Noncompetition clause and No-Hire Covenants
(Attachment B).
6. During your employment, GE agrees that these offered duties and
responsibilities will not be substantially diminished in any way except for
Cause.
7. GE may terminate your employment without cause at any time and for
any or no reason provided, however, that in the event that GE terminated
your employment without Cause (as defined on Attachment A hereto), (a) GE
will pay or provide you (i) all sums to which you are entitled under this
agreement up to and including the date of termination of your employment,
(ii) immediately upon such termination a severance payment in the amount of
Seventy Five Thousand Dollars ($75,000), and (iii) all benefits to which
you are entitled up to and including the date of termination of your
employment and any benefits to which you are entitled following such
termination pursuant to applicable law or the terms of the benefit plans
themselves, and (b) the Noncompete shall immediately cease and be of no
further force and effect. In the event of your voluntary resignation or if
the Company terminates you for Cause, (a) GE Will pay or provide you (i)
all sums to which you are entitled under this agreement up to and including
the date of termination of your employment, and (ii) all benefits to which
you are entitled up to and including the date of termination of your
employment and any benefits to which you are entitled following such
termination pursuant to applicable law or the terms of the benefit plans
themselves, and (c) the Noncompete shall remain in full force and effect in
accordance with its terms and there shall be no severance payment.
8. You will be reimbursed for your expenses incurred in the conduct of
GE business in accordance with GE's written policies.
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9. You shall be entitled to one month's vacation per year.
10. This agreement shall be governed by the internal laws of the State
of Georgia. The prevailing party in any dispute under this agreement shall
be entitled to reasonable attorney's fees and expenses.
11. As agreed, you will transfer to GE Energy Rentals' Headquarters in
Schenectady, New York and receive a full relocation package.
This offer is contingent upon certain conditions described in the enclosed
"Acknowledgment -- Conditions of Employment," which you need to sign and return
using the instructions on the form. As one of the requirements is a drug screen
test, we ask you to make arrangements for your drug screen with within 24 hours
of acceptance of this offer per the attached Candidate Drug Screen Instruction.
The drug screen process must be completed prior to your first day of work.
Upon your acceptance, we would appreciate you signing and returning a fax
copy to my attention at 404-572-5174. Also, please read through the additional
material enclosed and complete/sign off on:
- Acknowledgment Conditions of Employment
- Integrity Forms ("Spirit & Letter document)
- Employee Innovation and Propriety Information Agreement (FN348-C)
- Employment Application
Laurence, this is a great opportunity to join the world's leaders in the
power industry and to enhance your career growth in a key leadership position.
We look forward to the contribution you can make in helping us execute an
aggressive growth strategy for this business.
Sincerely,
/s/ MARTIN A. MOORE
Martin A. Moore
Attachments
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CONFIRMATION OF ACCEPTANCE
I hereby accept the offer of employment with GE Energy Services based on
the conditions outlined in this letter.
<TABLE>
<S> <C>
/s/ LAURENCE ANDERSON
- ------------------------------------------ ------------------------------------------
Signature Date
LAURENCE ANDERSON
- ------------------------------------------ ------------------------------------------
Print Name SSN#
</TABLE>
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ATTACHMENT A
DEFINITION OF "CAUSE"
Termination for Cause. The term "Cause" means: (i) Executive is convicted
of, pleads guilty to (including a plea of nolo contendere), or confesses to any
felony or any act of fraud, misappropriation, or embezzlement; (ii) Executive
engages in any other conduct involving dishonesty, illegality, or moral
turpitude that is materially detrimental or injurious to the business interests,
reputation or goodwill of the GE or its affiliates; (iii) Executive's willful
failure or gross negligence in the performance of his duties and
responsibilities for the Company; (iv) any failure by Executive to comply in any
material respect with the terms of this Agreement or any policies or directives
of GE; or (v) Executive's disregard of a direct, reasonable order of any other
officer or employee of GE in a senior position relative to Executives, the
substance of which is permitted by law. With regard to subsections (iii), (iv)
and (v), GE shall give Executive written notice of a violation of each of
subsections (iii), (iv) and (v); provided that no notice need be sent if
Executive has previously committed a similar violation. GE may terminate
Executive's employment for Cause if he fails to correct such violation within
thirty (30) days after receiving notice. GE may terminate this Agreement and
Executive's employment for Cause immediately upon the occurrence of a violation
by Executive similar to a previous violation of subsections (iii), (iv) or (v)
committed by Executive. Cause shall in all cases be determined solely by GE in
good faith.
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POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that General Electric Company ("GE")
constitutes and appoints each of the Corporate Counsel, Associate Corporate
Counsel, and Associate Securities Counsel as its true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution,
for and on behalf of GE and in GE's respective name, place and stead, in any and
all capacities, to sign any Statements on Schedule 13D, Schedule 13G, Schedule
14D, Form 3, Form 4 or Form 5 under the Securities Exchange Act of 1934, and any
and all amendments to any thereof, and other documents in connection therewith
(including, without limitation, any joint filing agreement with respect to any
Statement on Schedule 13D, Schedule 13G or 14D or amendment thereto) and to file
the same, with all exhibits thereto, with the Securities and Exchange
Commission, granting unto each said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully and to all intents and purposes
as GE might or could do in person, hereby ratifying and confirming all that each
said attorney-in-fact and agent, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
GENERAL ELECTRIC COMPANY
By: /s/ B.W. HEINEMAN, JR.
------------------------------------
Name: B.W. Heineman, Jr.
Title: Senior Vice President,
General Counsel and Secretary
Dated: February 8, 1999
