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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
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BEST POWER TECHNOLOGY, INCORPORATED
(Name of Subject Company)
BEST POWER TECHNOLOGY, INCORPORATED
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
086548104
(CUSIP Number of Class of Securities)
DENNIS E. BURKE
EXECUTIVE VICE PRESIDENT--ADMINISTRATION
AND CORPORATE SECRETARY
P.O. BOX 280
ROUTE 80
NECEDAH, WISCONSIN 54646-9899
(800) 365-6145
(Name, address and telephone number of person
authorized to receive notice and communication
on behalf of the person(s) filing statement).
WITH A COPY TO:
THOMAS C. JUDGE, ESQ.
MICHAEL BEST & FRIEDRICH
135 SOUTH LASALLE STREET
SUITE 1610
CHICAGO, ILLINOIS 60603-4391
(312) 845-5800
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Best Power Technology, Incorporated, a
Delaware corporation (the "Company"), and the address of the principal executive
offices of the Company is P.O. Box 280, Route 80, Necedah, Wisconsin 54646-9899.
The title of the class of equity securities to which this statement relates is
the common stock, par value $.01 per share, of the Company (the "Common Stock").
ITEM 2. TENDER OFFER OF THE PURCHASER.
This statement relates to a tender offer by G.S. Newco, Inc., a Delaware
corporation (the "Purchaser"), and a direct wholly-owned subsidiary of General
Signal Corporation, a New York corporation ("Parent"), disclosed in a Tender
Offer Statement on Schedule 14D-1, dated May 16, 1995 (the "Schedule 14D-1"), to
purchase all outstanding shares of Common Stock (the "Shares"), at a price of
$21.00 per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated May 16, 1995 (the "Offer to
Purchase"), and the related Letter of Transmittal (which, as amended from time
to time, together constitute the "Offer").
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of May 10, 1995 (the "Merger Agreement"), among Parent, the Purchaser and the
Company. The Merger Agreement provides, among other things, that following
satisfaction or waiver of all conditions to the Merger, the Purchaser will be
merged with and into the Company (the "Merger"), and the Company will continue
as the surviving corporation (the "Surviving Corporation"). A copy of the Merger
Agreement has been filed as Exhibit 1 hereto and is incorporated herein by
reference.
Based on the information in the Schedule 14D-1, the principal executive
offices of the Purchaser and Parent are located at One High Ridge Park, P.O. Box
10010, Stamford, Connecticut 06904.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and address of the Company, which is the person filing this
statement, are set forth in Item 1 above.
(b) Each material contract, agreement, arrangement and understanding and
actual or potential conflict of interest between the Company or its affiliates
and: (i) its executive officers, directors or affiliates or (ii) the Purchaser,
its executive officers, directors or affiliates, is described in the attached
Schedule I or described below.
STOCK OPTIONS. As of the date of filing of this Schedule 14D-9, the current
directors and executive officers of the Company as a group hold stock options
granted under the director stock option plan and the 1993 stock option plan of
the Company to purchase an aggregate of 111,259 shares of Common Stock at
exercise prices ranging from $13.48 to $19.25 per Share. In accordance with the
terms of the Merger Agreement, promptly after the Effective Time, each holder of
options, whether or not such options are then exercisable, will be entitled to
receive an amount in cash equal to the difference between (x) the product of the
number of shares of Common Stock covered by such options multiplied by $21.00
per share, and (y) the aggregate option exercise price payable upon exercise of
such option.
SEVERANCE AGREEMENTS. The Company entered into a severance agreement with
Steve J. Paul, a director of the Company, dated March 31, 1995, in connection
with Mr. Paul's termination as Chief Executive Officer of the Company in January
1995. Under the severance agreement, the Company paid to Mr. Paul $433,000 in
severance and in settlement of Mr. Paul's claims alleged against the Company
arising under his employment agreement with the Company and otherwise as a
result of the termination of such employment. The Company also granted to Mr.
Paul an option to purchase 21,533 shares of Common Stock for $13.48 per share.
The severance agreement provides that such option would terminate, however, if
the Board of Directors approved specified change of control transactions,
including a transaction such as the Offer and the Merger. Accordingly, if the
Offer is completed for at
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least 80% of the outstanding Common Stock or the Merger is completed, Mr. Paul
will instead be entitled to receive from the Company an amount in cash equal to
the product of (A) 21,533 and (B) the average value received (as defined in the
severance agreement) for each share of Common Stock in the Merger minus $13.48,
or $161,928 based on the Offer price of $21.00 per share. All options previously
granted to Mr. Paul under the 1993 employee stock option plan have been
terminated.
The Company has agreed to use its best efforts to maintain through May 17,
1996 health, dental and life insurance coverage for Mr. Paul and his dependents
on the same basis as provided for executive officers of the Company. The Company
also has agreed to indemnify Mr. Paul to the same extent as currently provided
in Article 8 of the Company's Restated Certificate of Incorporation (the
"Certificate of Incorporation") if such Article is amended to reduce or
eliminate indemnification of officers and directors.
The severance agreement imposes on Mr. Paul a confidentiality restriction
and a covenant not to compete, and releases the Company and its officers,
directors, employees and agents from liability for acts or omissions before the
effective date of the severance agreement relating to Mr. Paul's employment,
Company policies or plans, and various laws relating to employment matters.
The Company also entered into a severance agreement with Marguerite M. Paul,
a director of the Company, dated May 12, 1995, in connection with Mrs. Paul's
termination as Executive Vice President--Administration and Secretary of the
Company in January 1995. The severance agreement with Mrs. Paul contains terms
substantially the same as those in the severance agreement with Mr. Paul
described above, except that Mrs. Paul received a cash payment of $330,000 and,
in lieu of stock options, stock appreciation rights that entitle her to receive
$161,928 upon consummation of the Merger.
OTHER SEVERANCE ARRANGEMENTS. John R. Hickey, Executive Vice
President-Operations, Dennis E. Burke, Executive Vice President-Administration
and Corporate Secretary, Gary W. Jungwirth, Senior Vice President--Manufacturing
and Frederick A. Stich--Senior Vice President--Research and Development are
parties to employment agreements with the Company, which terminate in May 1996,
except Mr. Hickey's agreement, which terminates on December 31, 1996. See
Schedule I for information regarding the employment agreements with Messrs.
Hickey and Burke, the terms of which are substantially similar to the employment
agreements with Messrs. Jungwirth and Stich. The Board of Directors has
authorized amendments to such agreements providing that if any such employee is
actually or constructively terminated, other than for cause (as defined in the
applicable agreement), he will receive a severance payment equal to at least one
year's salary. In the event of termination, such individuals would be entitled
to severance payments as follows: John R. Hickey--$200,000; Dennis E.
Burke--$165,000; Gary W. Jungwirth--$125,000; and Frederick A. Stich--$120,000.
BONUS ARRANGEMENTS. The Board of Directors has authorized the payment of
bonuses aggregating $1,000,000 to 17 persons who are employees or directors of
the Company. Such bonuses are expected to be paid prior to consummation of the
Merger. Bonuses to directors and executive officers will be made as follows:
John R. Hickey--$200,000; Dennis E. Burke--$165,000; Paul F. Koeppe--$100,000;
Frederick A. Stich--$50,000; and Gary W. Jungwirth--$50,000.
AGREEMENTS REGARDING SHARES. Purchaser and Parent entered into agreements
with each of the directors of the Company (other than S/oren H. N. Rathman, who
does not own any Shares) under which each such person agreed not to (i) assign,
sell, transfer or otherwise dispose of any of the Shares, or agree to do so,
except pursuant to such agreements, on or before December 31, 1995 or, if
earlier, the termination of the Merger Agreement or the termination of the Offer
in accordance with their respective terms or (ii) prior to the earlier of the
Effective Time (as defined in the Merger Agreement), the termination of the
Merger Agreement in accordance with its terms and December 31, 1995, directly or
indirectly solicit, initiate or encourage (including by way of furnishing
information) inquiries or proposals concerning any Acquisition Transaction (as
defined in the Merger Agreement) or negotiate,
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explore or otherwise communicate with any third party (other than Parent or its
affiliates) regarding any Acquisition Transaction. In addition, each such person
(other than Messrs. Koeppe, Hickey and Burke) agreed to tender all of their
Shares in the Offer promptly after (but in no event later than May 26, 1995)
receiving the Offer to Purchase and not to withdraw such Shares unless the Offer
is extended beyond December 31, 1995 or the Merger Agreement is terminated.
Parent has agreed that if Parent, Purchaser or any subsidiary of Parent
purchases the Shares pursuant to the Offer and does not acquire a majority of
the outstanding shares of Common Stock pursuant to the Offer, Parent will pay
promptly to each such person, in the event that Parent, directly or indirectly,
disposes of the Shares within 12 months of the date of the agreement, any amount
realized on such disposition of the Shares in excess of the amount previously
paid to such person pursuant to the Offer.
TAX INDEMNIFICATION AGREEMENT. The Company entered into a Tax Agreement with
its stockholders in 1993 relating to the Company's status as an S corporation
for federal income tax purposes. Under the Tax Agreement, the Company is
obligated to indemnify such stockholders, which include Steve J. Paul and
Marguerite M. Paul, against additional taxes (including interest and penalties)
arising from an audit of the Company's tax returns for any period during which
it was an S corporation. In anticipation of the Company's initial public
offering in August 1993, its status as an S corporation was terminated as of
June 30, 1993.
THE MERGER AGREEMENT. The summary of the Merger Agreement contained in the
Offer to Purchase, which has been filed with the Securities and Exchange
Commission (the "Commission") as an exhibit to the Schedule 14D-1, a copy of
which is enclosed with this Schedule 14D-9, is incorporated herein by reference.
Such summary should be read in its entirety for a more complete description of
the terms and provisions of the Merger Agreement. The following is a summary of
certain portions of the Merger Agreement that relate to arrangements among the
Company, Parent and the Company's executive officers and directors.
BOARD REPRESENTATION. The Merger Agreement provides that promptly upon the
purchase of such number of shares as represents at least a majority of the
outstanding Shares, Parent shall be entitled to designate such number of
directors, rounded up to the next whole number but in no event more than one
less than the total number of directors, on the Board of Directors of the
Company as will give Parent, subject to compliance with Section 14(f) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), representation
on the Board of Directors equal to the product of the number of directors on the
Board of Directors and the percentage that such number of shares of Common Stock
so purchased bears to the number of shares of Common Stock outstanding, and the
Company shall, upon request by Parent, promptly increase the size of the Board
of Directors to the extent permitted by its Certificate of Incorporation or
exercise its best efforts to secure the resignations of such number of directors
as is necessary to enable Parent's designees to be elected to the Board of
Directors and shall cause Parent's designees to be so elected. The Merger
Agreement further provides that at the request of Parent, the Company shall
take, at its expense, all action necessary to effect any such election,
including mailing to its stockholders the information required by Section 14(f)
of the Exchange Act and Rule 14f-1 promulgated thereunder. Such information is
included in the Information Statement attached as Schedule I hereto.
INDEMNIFICATION. The Merger Agreement provides that Parent shall cause the
Surviving Corporation to indemnify, defend and hold harmless the present and
former officers, directors, employees and agents of the Company and its
subsidiaries against all losses, claims, damages, expenses or liabilities
arising out of actions or omissions or alleged actions or omissions occurring at
or prior to the Effective Time (as defined in the Merger Agreement) to the same
extent and on the same terms and conditions provided for in the Company's
Certificate of Incorporation and By-laws in effect on the date of the Merger
Agreement. Pursuant to the terms of the Merger Agreement, for a period of six
years from the
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Effective Time, the Parent shall cause to be maintained in effect the current
policies of directors' and officers' liability insurance, provided that Parent
may substitute therefor policies of at least the same average coverage and
amounts and containing terms and conditions that are no less advantageous.
The obligations set forth above are binding on all successors and assigns of
Parent and the Surviving Corporation.
CONFIDENTIALITY AGREEMENT. Parent entered into a Confidentiality Agreement,
dated April 13, 1995, with The Chicago Corporation, the Company's financial
advisor, acting on behalf of the Company, pursuant to which Parent agreed, among
other things, to keep confidential certain non-public confidential and
proprietary information of the Company furnished to Parent by or on behalf of
the Company. The Confidentiality Agreement provides that, for a period of two
years from the date of the agreement, unless specifically requested in writing
by the Board of Directors of the Company, neither Parent nor any of its
directors, employees, agents, representatives or commercial or investment banks
participating in the financing of any transaction will (a) effect or seek, offer
or propose to effect, or cause or participate in (i) any acquisition of any
securities (or beneficial ownership thereof) or assets of the Company or any of
its subsidiaries; (ii) any tender or exchange offer or merger or other business
combination involving the Company or any of its subsidiaries; (iii) any
recapitalization, restructuring, liquidation, dissolution or other extraordinary
transaction with respect to the Company or any of its subsidiaries; or (iv) any
solicitation of proxies (as such terms are used in the proxy rules of the
Commission) or written consents to vote any voting securities of the Company,
(b) form, join or in any way participate in a "group" (as defined under the
Exchange Act), (c) otherwise act, alone or in concert with others, to seek to
control or influence the management, Board of Directors or policies of the
Company, (d) take any action that might force the Company to make a public
announcement regarding any of the types of matters set forth in (a) above, or
(e) enter into any discussions or arrangements with any third party with respect
to any of the foregoing. The Confidentiality Agreement does not, however,
restrict Parent from taking any action in the event the Company publicly
announces that it is considering a specific transaction with respect to, or has
entered into any arrangement or understanding with respect to, the sale of all
or any substantial portion of the Company (other than any such arrangement or
understanding with Parent), or from making a tender offer for all of the
outstanding capital stock of the Company after such time as a third party has
commenced, within the meaning of Rule 14d-2 of the Exchange Act, a tender offer
for the Company at a lower value.
INDEMNIFICATION OF OFFICERS AND DIRECTORS. The Company's Certificate of
Incorporation provides that no director of the Company shall be personally
liable to the Company or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of such
director's duty of loyalty to the Company or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the General Corporation Law of the
State of Delaware, or (iv) for any transaction from which such director derived
an improper personal benefit.
The Certificate of Incorporation also provides that the Company must
indemnify each director, officer, employee and agent against liabilities
incurred in such capacity if such person acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the Company
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe his conduct was unlawful.
Expenses incurred by a director or officer in defending any action, suit or
proceeding may be paid by the Company in advance of the final disposition if the
director or officer agrees to repay such amount if it is ultimately determined
that he is not entitled to be indemnified by the Company.
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ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) RECOMMENDATION OF THE BOARD OF DIRECTORS.
The Board of Directors has unanimously approved the Merger Agreement and the
transactions contemplated thereby and unanimously recommends that all holders of
Shares tender such Shares pursuant to the Offer.
(b) BACKGROUND; REASONS FOR THE RECOMMENDATION.
From time to time during the past several years, the Board of Directors of
the Company has considered various strategic alternatives with a view toward
increasing shareholder values. During this time, the Company has periodically
had conversations with a number of potential strategic acquirors of the Company,
including Parent.
In 1992, the Company engaged Kemper Securities Group, Inc. to assist in a
possible sale of the Company. Parent participated in this process, visiting the
Company's facilities, meeting with its principal owners and officers and
receiving certain information about the Company. In June 1993, Parent made a
conditional offer to acquire the Company at a price of approximately $14.00 per
share. The Company's Board of Directors rejected this offer. On August 4, 1993,
the Company made an initial public offering of its common stock, which began
trading on the NASDAQ National Market System on August 4, 1993.
From August 1993 to January 1995, Parent periodically contacted certain
members of the Company's Board of Directors to express continued interest in
forming a strategic alliance. The Company consistently responded that it was
uninterested in pursuing such matters with Parent.
In February 1995, Philip A. Goodrich, Vice President, Corporate Development,
of Parent called Paul F. Koeppe, Chairman of the Executive Committee of the
Company, to indicate that Parent would have an interest in discussing a possible
business combination with the Company. Mr. Koeppe told Mr. Goodrich that he
would inform the Executive Committee of Mr. Goodrich's call. Subsequently, Mr.
Goodrich sent Mr. Koeppe public information regarding Parent, which in turn was
distributed to members of the Executive Committee. Following discussions among
members of the Executive Committee, it was determined that the Company did not
wish to pursue Parent's inquiry. Mr. Koeppe did not return a subsequent February
1995 telephone call from Mr. Goodrich.
Later in February 1995, Edmund M. Carpenter, Chairman and Chief Executive
Officer of Parent, placed a telephone call to Mr. Koeppe but did not reach him.
Mr. Koeppe referred the call to Dennis E. Burke, Executive Vice
President--Administration and Corporate Secretary of the Company. Mr. Burke
returned the telephone call to Mr. Carpenter, who advised Mr. Burke that he
thought the combination of the Company and Parent would be a very good fit and
that he would like to explore the opportunity of combining the two companies.
Mr. Burke advised Mr. Carpenter that he would refer the inquiry to the Executive
Committee. Based on the prior discussions with members of the Executive
Committee and additional discussions among such members, Mr. Burke called Mr.
Carpenter and Mr. Goodrich to advise them that the Executive Committee had
instructed him to advise Parent that the Company was not for sale and was not
going to be offered for sale. Mr. Carpenter responded by emphasizing the
strength of Parent's interest and stated that Parent would not engage in an
unfriendly bid for the Company.
On March 8, 1995, Mr. Koeppe, Mr. Burke and other members of the Company's
Board of Directors received a letter from Mr. Carpenter expressing interest in
pursuing a business combination of the Company and Parent. The letter indicated
that, while Parent was not making a formal proposal, based on public
information, Parent believed that a value of $18.50 to $20.00 per share for the
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Company's stock would be an extremely attractive transaction for the Company's
stockholders. The letter requested an ability to pursue such a transaction and
validate the indicated valuation on a confidential and exclusive basis. Mr.
Burke distributed the letter to the Company's Board of Directors.
The Company's Board of Directors and its legal counsel held a meeting by
teleconference on March 13, 1995. The Board determined that an investment
banking firm should be retained to assist in its review of the Parent's proposal
and any similar proposals that might be received, and the Board adopted
resolutions to set forth certain standards against which all proposals regarding
extraordinary transactions with the Company would be assessed. Mr. Koeppe called
Mr. Carpenter that day and left a message to the effect that the Company would
be retaining an investment banking firm and that the Company's Board of
Directors would meet again soon to review Parent's proposal in greater detail.
Mr. Burke also responded to Mr. Carpenter by letter on March 13, 1995,
indicating that Mr. Carpenter's March 13, 1995 letter had been provided to the
Company's Board of Directors and that Parent's inquiry would receive careful
consideration by the Board with the assistance of its financial and legal
advisors.
On March 14, 1995, the Company engaged The Chicago Corporation as financial
advisor to assist the Company in a review of strategic alternatives. The
Company's Board of Directors met on March 20, 1995 with The Chicago Corporation
and the Company's legal counsel to discuss the Parent letter and to review, on a
preliminary basis, possible strategic and financial alternatives for the
Company, including remaining as an independent company. The Board of Directors
instructed The Chicago Corporation to advise Parent that the Board had reviewed
the Parent letter, that it had made no decisions relative to the possible sale
of the Company, that it had chosen to review with its financial advisor a number
of strategic and financial alternatives, that it would take no action pending a
review of such alternatives, and that it would attempt to respond to Parent
within three to four weeks. The Chicago Corporation was further instructed to
review the Company's Five Year Strategic Business Plan and to give a detailed
report to the Board of Directors on April 9, 1995 concerning the alternatives
available to the Company and the results of The Chicago Corporation's review.
Mr. Koeppe spoke with Mr. Carpenter by telephone on March 21, 1995 to inform
him that the Company's Board of Directors had met to review Parent's proposal
and related matters. Mr. Koeppe stated that the proposal would receive the
careful consideration it deserved from the Company, that the Company had engaged
The Chicago Corporation to assist the Board in its deliberations, that the
review process would require three to four weeks to complete, that as Chairman
of the Executive Committee, Mr. Koeppe would be the Company's designated
spokesman in all discussions between the Company and Parent, and that Parent
should not contact other directors of the Company. Mr. Carpenter expressed
concern about the length of the Company's review process but stated that he
looked forward to a favorable response.
At a meeting of the Company's Board of Directors on April 9, 1995, The
Chicago Corporation presented an extensive analysis of the Company's financial
and strategic alternatives and a preliminary framework for analyzing the value
of the Company. The Chicago Corporation also presented a preliminary list of
potential strategic partners for the Company in addition to Parent. Following
the presentation by The Chicago Corporation, the Board of Directors decided to
continue to explore a number of strategic alternatives, including the possible
sale of the Company. The Board of Directors made no determination to sell the
Company at this meeting. However, the Board of Directors authorized The Chicago
Corporation to contact a limited number of qualified partners to inquire as to
their possible interest in a transaction with the Company. The Board of
Directors instructed The Chicago Corporation to inform Parent that, while the
Board had not decided to sell the Company, it would be interested in continuing
discussions with Parent to determine both the feasibility of a transaction and
the value at which Parent would complete a transaction, provided that Parent
would execute a confidentiality agreement and agree to proceed on a
non-exclusive basis.
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Following the April 9, 1995 meeting of the Company's Board of Directors, The
Chicago Corporation contacted Mr. Carpenter as instructed by the Board of
Directors. Mr. Carpenter indicated a willingness to proceed on a confidential
and non-exclusive basis, and on April 13, 1995, Parent signed a confidentiality
agreement and began a due diligence review of certain non-public information
provided by the Company. The Chicago Corporation also began to contact the
potential strategic partners identified at the April 9, 1995 meeting of the
Board of Directors to determine their interest in pursuing a potential
transaction. One of these parties had made a general inquiry prior to the April
9 meeting.
On April 24, 1995, Parent provided a letter to The Chicago Corporation
indicating that while it was not then prepared to present a formal proposal for
the Company, based on Parent's analysis of the confidential information provided
by the Company, Parent was prepared to begin contract negotiations with an
interest of acquiring all the Company's outstanding common stock at a cash price
of $20.00 per share. Parent again requested that it be allowed to proceed on an
exclusive basis and indicated that its interest must remain confidential. On
April 24, 1995, Parent and its financial advisor, Lazard Freres & Co. LLC,
discussed the letter with The Chicago Corporation. The Chicago Corporation
indicated that it would provide a copy of the April 24, 1995 letter to the
Company's Board of Directors.
After consulting with the Board of Directors, The Chicago Corporation
advised Parent on April 25, 1995 that at the preliminary valuation level
indicated in the April 24, 1995 letter, the Company could not agree to an
exclusivity provision, but that the Company would continue to work with Parent
on due diligence to confirm the valuation for the Company's stock and would
commence the preparation of a definitive Merger Agreement to develop a firm
proposal for the Company. The Chicago Corporation further indicated that the
Board of Directors would like to make a decision on a potential transaction with
Parent prior to the Company's Annual Meeting of Shareholders on May 10, 1995.
The Chicago Corporation again reiterated to Parent that there had been no
decision by the Company's Board of Directors to sell the Company. Following this
conversation, Parent called The Chicago Corporation and indicated its
willingness to continue working on a non-exclusive basis on the timetable
proposed with the understanding that the Board of Directors had not committed
itself to a decision to sell the Company. Parent immediately began intensive due
diligence efforts and had numerous meetings with the management of the Company
during the following two weeks.
During the last week of April and the first week of May, the Company had
several meetings with another potential strategic acquiror to discuss a
potential transaction and executed a confidentiality agreement and provided
non-public information regarding the Company to such potential acquiror. During
this same period of time, the other potential strategic acquirors contacted by
The Chicago Corporation on behalf of the Company indicated that they were not
interested in pursuing a possible transaction.
On May 4, 1995, Mr. Carpenter met with Mr. Koeppe and Steve J. Paul,
directors of the Company, and The Chicago Corporation to indicate that Parent
was proceeding with its due diligence and its review of a proposed Merger
Agreement on the timetable discussed and would be prepared to make a firm
proposal for the Company prior to its Annual Meeting.
On May 8, 1995, the other potential strategic acquiror that was reviewing
non-public information regarding the Company indicated that it was not in a
position to respond definitively. Also on May 8, 1995, after numerous meetings
and discussions with the Company and The Chicago Corporation, Parent provided a
letter to The Chicago Corporation indicating that it was prepared to make a
proposal to acquire all the outstanding Company stock at a price of $21.00 per
share in a cash tender offer followed by a cash-out merger, and proposed certain
additional terms for the Company's consideration, including a break-up fee and
an expense reimbursement provision. Parent indicated that such communication was
not a binding proposal and that it would withdraw its indication of interest if
the proposal were disclosed publicly or to any third party.
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On the morning of May 9, 1995, the Company's Board of Directors met to
consider the Parent's letter and the status of any other potential strategic
acquirors. The Chicago Corporation presented the Parent letter and reported that
one other potential party had expressed interest in a possible transaction with
the Company, but that party was not in a position to respond definitively. After
extended discussion, including an update by The Chicago Corporation of its
valuation analysis and a review by counsel of the Board's fiduciary duties and
the principal terms of the draft Merger Agreement, the Board of Directors
directed The Chicago Corporation to communicate with Lazard Freres & Co. LLC to
determine if the terms of the transaction proposed could be improved. As a
result, the amount of the breakup fee was reduced from the previous indication,
although Parent refused to increase the price any further. At a meeting of the
Company's Board of Directors held in the afternoon of May 9, 1995, The Chicago
Corporation reviewed the revised terms proposed by Parent and orally advised the
Board that it could provide a fairness opinion on the consideration if the Board
of Directors should decide to accept the $21.00 per share price that Parent had
indicated it was prepared to make. The Board of Directors also reviewed with
counsel the status of the negotiations of the Merger Agreement. The Board of
Directors instructed The Chicago Corporation to advise Parent that it was
prepared to proceed with a transaction at $21.00 per share if the parties were
able to execute a mutually satisfactory definitive Merger Agreement prior to the
Annual Meeting. The Chicago Corporation communicated the Board's response to
Parent and both parties agreed to complete negotiation of the Merger Agreement.
Negotiation of the definitive Merger Agreement proceeded into the early hours of
May 10, 1995.
On May 10, 1995, prior to the Annual Meeting of Shareholders, the Board of
Directors met to approve and execute the definitive Merger Agreement and related
documents. After a discussion of valuation issues, The Chicago Corporation
presented its written opinion that the consideration of $21.00 per share in cash
to be offered to the Company's stockholders in the Offer and the Merger would be
fair to the Company's stockholders from a financial point of view. The Board of
Directors unanimously determined that, in light of the valuation discussions
concerning the Company, The Chicago Corporation's fairness opinion and the other
factors described below, the Offer and the Merger would be fair to and in the
best interests of the Company's stockholders and that it would recommend to the
Company's stockholders that they accept the Offer and tender their Shares
pursuant to the Offer. Immediately following the May 10, 1995 Board of Directors
meeting, the parties delivered the definitive Merger Agreement and the Company
issued a press release announcing the transaction and the principal terms and
conditions thereof.
In approving the Merger Agreement and the transactions contemplated thereby
and recommending that all holders of Shares tender their Shares pursuant to the
Offer, the Board of Directors considered a number of factors, including:
(i) the familiarity of the Board of Directors with the Company's business,
financial condition, results of operations, properties and prospects as an
independent entity, and the nature of the industry in which it operates, based
in part upon presentations by the Company's management and financial advisors;
(ii) the terms of the Merger Agreement, including the proposed structure of
the Offer and the Merger involving an immediate cash tender offer for all
outstanding Shares to be followed by a merger for the same consideration,
thereby enabling stockholders to obtain cash for their Shares at the earliest
possible time;
(iii) the results of the process undertaken by the Company to identify and
solicit proposals from third parties to enter into a strategic transaction with
the Company, the small number of unsolicited inquiries from potential bidders
despite public rumors regarding a possible sale of the Company and, based on
these factors, the low likelihood that any third party would propose to acquire
the Company at a price higher than $21.00 per share;
8
<PAGE>
(iv) that the other interested strategic partner was unable to respond
definitively regarding a possible transaction involving the Company and the
advice from the Company's financial and legal advisors that the terms of the
Merger Agreement, including the termination fee and expense reimbursement
provisions, should not unduly discourage third parties from making bona fide
proposals subsequent to signing the Merger Agreement;
(v) that the $21.00 per Share price in the Offer represented a premium of
approximately 61.5% over the closing price for the Shares on May 9, 1995, the
last trading day prior to the public announcement of the execution of the Merger
Agreement;
(vi) the opinion of The Chicago Corporation, dated May 10, 1995, to the
effect that, as of such date and based upon and subject to the matters reviewed
with the Board of Directors, the $21.00 per Share cash consideration to be
received by the holders of the Shares pursuant to the Offer and the Merger was
fair to such holders from a financial point of view. A copy of the written
opinion of The Chicago Corporation is attached hereto as Exhibit 11 and
incorporated herein by reference. STOCKHOLDERS ARE URGED TO READ THE OPINION OF
THE CHICAGO CORPORATION CAREFULLY IN ITS ENTIRETY;
(vii) that the Merger Agreement permits the Company, in the exercise of the
fiduciary duties of the Board of Directors, to furnish nonpublic information and
access thereto to third parties, in response to proposals for an Acquisition
Transaction (as defined in the Merger Agreement) that were not solicited by the
Company, and to participate in discussions and negotiations with such parties
with respect thereto; and
(viii) the ability of Parent and Purchaser to consummate the Offer and the
Merger without conditioning the Offer on the arrangement of financing.
The Board of Directors did not assign relative weights to the foregoing
factors or determine that any factor was of particular importance. Rather, the
Board of Directors viewed its position and recommendations as being based on the
totality of the information presented to and considered by it.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The Company retained The Chicago Corporation to act as exclusive financial
advisor to the Company with respect to a financial evaluation of the Company and
a review of strategic alternatives to maximize value for stockholders. Pursuant
to a letter agreement dated March 14, 1995 (the "Letter Agreement"), the Company
agreed to pay The Chicago Corporation (i) a nonrefundable retainer of $50,000
per quarter during the term of the Letter Agreement, against which certain other
fees payable by the Company to The Chicago Corporation will be credited; (ii) a
fee of $200,000 upon delivery of a written opinion regarding the terms of any
proposed transaction from a financial point of view, which fee will be credited
against any fee payable pursuant to clause (iii); (iii) a fee of 1% of the
transaction value received (or paid) by the Company or its stockholders in
certain extraordinary transactions, including a sale of any subsidiary or
division of the Company, an acquisition by the Company of any other entity (with
a limited exception), a recapitalization of the Company, or an acquisition of
control of more than 50% of the voting securities of the Company by an acquiror;
(iv) a financial advisory fee of at least $500,000, in the event of an
unsuccessful solicitation for control of the Company, which fee will be credited
against any fee payable pursuant to clause (iii); and (v) a mutually agreed upon
fee at the time of any other extraordinary transaction. The Company also agreed
to reimburse The Chicago Corporation for its reasonable fees and expenses in
connection with services provided under the Letter Agreement in an amount not to
exceed $50,000 without the prior written consent of the Company, and to
indemnify The Chicago Corporation and its directors, officers, employees, agents
and controlling persons against certain liabilities, including liabilities
arising under the federal securities laws.
9
<PAGE>
Except as disclosed herein, neither the Company nor any person acting on its
behalf currently intends to employ, retain or compensate any other person to
make solicitations or recommendations to security holders on its behalf
concerning the Offer or the Merger.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) Except for awards under the Company's stock plans described under
"Executive Compensation" in Schedule I hereto, no transactions in the Shares
have been effected during the past 60 days by the Company or, to the best of the
Company's knowledge, by any executive officer, director, affiliate or subsidiary
of the Company.
(b) To the best of the Company's knowledge, to the extent permitted by
applicable securities laws, rules or regulations, except for Shares the sale of
which may result in liability for the holder(s) under Section 16(b) of the
Exchange Act, each executive officer, director and affiliate of the Company
currently intends to tender to the Purchaser all Shares over which he or she has
sole dispositive power.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY SUBJECT COMPANY.
(a) Except as set forth herein, the Company is not engaged in any
negotiation in response to the Offer that relates to or would result in (i) an
extraordinary transaction, such as a merger or reorganization, involving the
Company or any subsidiary of the Company; (ii) a purchase, sale or transfer of a
material amount of assets by the Company or any subsidiary of the Company; (iii)
a tender offer for or other acquisition of securities by or of the Company; or
(iv) any material change in the present capitalization or dividend policy of the
Company.
(b) Except as set forth herein, there are no transactions, board
resolutions, agreements in principle or signed contracts in response to the
Offer that relate to or would result in one or more of the events referred to in
Item 7(a) above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
The Information Statement attached as Schedule I hereto is being furnished
in connection with the possible designation by Parent, pursuant to the Merger
Agreement, of certain persons to be appointed to the Board of Directors of the
Company other than at a meeting of the Company's stockholders.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
<S> <C>
Exhibit 1 Agreement and Plan of Merger, dated as of May 10, 1995, among the Company,
Parent and the Purchaser.
Exhibit 2 Severance Agreement, dated as of March 31, 1995, between Steve J. Paul and the
Company.
Exhibit 3 Severance Agreement, dated as of May 12, 1995, between Marguerite M. Paul and
the Company.
Exhibit 4 Stock Tender Agreement, dated as of May 10, 1995, between Parent and
Steve J. Paul.
Exhibit 5 Stock Tender Agreement, dated as of May 10, 1995, between Parent and Marguerite
M. Paul.
Exhibit 6 Share Restriction Agreement, dated as of May 10, 1995, between Parent and
Dennis E. Burke.
</TABLE>
10
<PAGE>
<TABLE>
<S> <C>
Exhibit 7 Stock Tender Agreement, dated as of May 10, 1995, between Parent and
Roland D. Pampel.
Exhibit 8 Share Restriction Agreement, dated as of May 10, 1995, between Parent and
John R. Hickey.
Exhibit 9 Share Restriction Agreement, dated as of May 10, 1995, between Parent and
Paul F. Koeppe.
Exhibit 10 Confidentiality Agreement, dated April 13, 1995, between Parent and The Chicago
Corporation, acting on behalf of the Company.
Exhibit 11 Opinion of The Chicago Corporation, dated May 10, 1995.*
Exhibit 12 Press Release of the Company, dated May 10, 1995.
Exhibit 13 Letter to Stockholders of the Company, dated May 16, 1995.*
</TABLE>
- ------------
* Included in copies mailed to stockholders.
11
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
BEST POWER TECHNOLOGY, INCORPORATED
By /s/ DENNIS E. BURKE
...................................
Dennis E. Burke, Executive Vice
President--Administration
and Corporate Secretary
Dated: May 16, 1995
12
<PAGE>
SCHEDULE I
BEST POWER TECHNOLOGY, INCORPORATED
P.O. BOX 280
ROUTE 80
NECEDAH, WISCONSIN 54646-9899
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
This Information Statement is being mailed on or about May 16, 1995 as a
part of the Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") of Best Power Technology, Incorporated (the "Company") to the
holders of record of shares of Common Stock, par value $.01 per share, of the
Company (the "Shares") at the close of business on or about May 12, 1995. You
are receiving this Information Statement in connection with the possible
election of persons designated by Parent (as defined below) to a majority of the
seats on the Board of Directors of the Company.
On May 10, 1995, the Company, G.S. Newco, Inc., a Delaware corporation (the
"Purchaser"), and General Signal Corporation ("Parent") entered into an
Agreement and Plan of Merger (the "Merger Agreement"), which provides that,
subject to certain conditions, (i) the Purchaser will commence a tender offer
(the "Offer") for all outstanding Shares at a price of $21.00 per Share, net to
the seller in cash, and (ii) following consummation of the Offer, the Purchaser
will be merged with and into the Company (the "Merger"). As a result of the
Offer and the Merger, the Company will become a wholly-owned subsidiary of
Parent.
The Merger Agreement requires the Company to take such action as Parent may
reasonably request to cause the Parent's Designees (as defined below) to be
elected to the Board of Directors under the circumstances described therein. See
"Board of Directors and Executive Officers--Parent Designees."
This Information Statement is required by Section 14(f) of the Exchange Act
and Rule 14f-1 promulgated thereunder. You are urged to read this Information
Statement carefully. You are not, however, required to take any action.
Capitalized terms used herein and not otherwise defined herein have the meaning
set forth in the Schedule 14D-9.
Pursuant to the Merger Agreement, the Purchaser commenced the Offer on May
16, 1995. The Offer is scheduled to expire at 12:00 Midnight, New York City
time, on June 13, 1995 unless the Offer is extended.
The information contained in this Information Statement concerning the
Purchaser, Parent and the Parent Designees has been furnished to the Company by
Parent, and the Company assumes no responsibility for the accuracy or
completeness of such information.
I-1
<PAGE>
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
GENERAL
The Shares are the only class of voting securities of the Company
outstanding. Each Share has one vote. As of May 10, 1995, there were 9,527,303
Shares outstanding. The Board of Directors is divided into three classes and
currently consists of seven members. There is currently one vacancy on the Board
of Directors. At each annual meeting of stockholders, directors whose terms
expire in that year are elected for three-year terms.
PARENT DESIGNEES
The Merger Agreement provides that promptly upon the purchase by Parent or
the Purchaser of such number of Shares as represents at least a majority of the
outstanding Shares, and from time to time thereafter, Parent shall be entitled
to designate such number of directors, rounded up to the next whole number but
in no event more than one less than the total number of directors, on the Board
of Directors of the Company as will give Parent, subject to compliance with
Section 14(f) of the Exchange Act, representation on the Board of Directors of
the Company proportionate to the number of Shares owned by Parent or the
Purchaser. The Merger Agreement requires the Company, upon request by Parent, to
increase the size of the Board of Directors or attempt to secure the
resignations of current directors to enable the Parent Designees to be elected
to the Board of Directors and to cause the Parent Designees to be so elected.
Parent has informed the Company that it will choose its designees (the
"Parent Designees") from the directors and executive officers listed below. The
Purchaser has informed the Company that each of the directors and executive
officers listed below has consented to act as a director, if so designated. No
determination has yet been made as to which of the current directors of the
Company who are not officers of the Company will continue as directors following
the purchase of Shares pursuant to the Offer.
None of the Parent Designees (i) is currently a director of, or holds any
position with, the Company, (ii) has a familial relationship with any directors
or executive officers of the Company or (iii) to the best knowledge of the
Company, beneficially owns any securities (or rights to acquire such securities)
of the Company. The Company has been advised by Parent that, to the best of
Parent's knowledge, none of the Parent Designees has been involved in any
transactions with the Company or any of its directors, executive officers or
affiliates that are required to be disclosed pursuant to the rules and
regulations of the Commission, except as may be disclosed herein or in the
Schedule 14D-9.
It is expected that the Parent Designees may assume their directorships at
any time following the acceptance for payment of, and payment for, any Shares
pursuant to the Offer, and that, upon assuming office, the Parent Designees will
thereafter constitute at least a majority of the Board of Directors.
Set forth below are the name, material occupations, positions, offices or
employments for the past five years of each Parent Designee. Each such person is
a United States citizen. The business address of each such person is General
Signal Corporation, One High Ridge Park, Stamford, CT 06904. In
I-2
<PAGE>
addition, except as otherwise noted, each Parent Designee has been employed in
his present principal occupation listed below during the last five years.
PRINCIPAL OCCUPATION AND MATERIAL
OCCUPATIONS, POSITIONS,
OFFICES OR EMPLOYMENT FOR THE PAST FIVE
NAME AGE YEARS
- ---------------------- --- --------------------------------------------
Edmund M. Carpenter 53 Chairman and Chief Executive Officer of
Parent since May 1988. Also a director of
Campbell Soup Company, Dana Corporation
and Texaco Inc.
Philip A. Goodrich 38 Vice President of Parent since December
1991. Previously, Director of Corporate
Development since May 1989.
Michael D. Lockhart 45 President and Chief Operating Officer of
Parent since October 1994. Previously,
Vice President and General Manager from
1992 to 1994 of General Electric's
Commercial Engines and Services division,
and Vice President and General Manager of
Transportation Systems from 1989 to 1992.
Terence D. Martin 51 Executive Vice President and Chief Financial
Officer of Parent since February 1995.
Previously, Chief Financial Officer of
American Cyanamid Company since 1991 and
Treasurer since 1988.
Edgar J. Smith, Jr. 60 Vice President and Secretary of Parent since
April 1984, and Vice President and General
Counsel since January 1980.
Julian B. Twombly 48 Vice President and Treasurer of Parent since
December 1991. Prior to joining Parent,
associated with United Dominion
Industries, Ltd. since 1974, most recently
as Senior Vice President and Treasurer.
CURRENT DIRECTORS
The names of the current directors, their ages, principal occupations during
the last five years and certain other information are set forth below.
<TABLE>
<CAPTION>
POSITION WITH THE COMPANY OR
YEAR TERM YEAR FIRST PRINCIPAL OCCUPATION DURING THE LAST
NAME OF DIRECTOR EXPIRES ELECTED A DIRECTOR FIVE YEARS
- ------------------- --------- ------------------ ----------------------------------------
<S> <C> <C> <C>
Paul F. Koeppe..... 1995 1993 Paul F. Koeppe, age 45, has served as
President, Chief Executive Officer, and
a director of Superconductivity, Inc., a
designer and manufacturer of power
systems using superconducting
technology, located in Madison,
Wisconsin, since founding the company in
1988. Mr. Koeppe previously served as
the Director of Electric Power Marketing
and Customer Service of Wisconsin Power
and Light Company, a large
investor-owned utility.
Steve J. Paul...... 1995 1993 Steve J. Paul, age 45, served as
President and Chief Executive Officer
from May 1994 to January 1995 and
previously as Executive Vice
President--Engineering of the Company
since 1993. From 1977 to 1993, Mr. Paul
served as Vice President of Engineering,
Manufacturing and Research and
Development. Mr. Paul is one of the
founders of the Company and provided
most of the early entrepreneurial
</TABLE>
I-3
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH THE COMPANY OR
YEAR TERM YEAR FIRST PRINCIPAL OCCUPATION DURING THE LAST
NAME OF DIRECTOR EXPIRES ELECTED A DIRECTOR FIVE YEARS
- ------------------- --------- ------------------ ----------------------------------------
<S> <C> <C> <C>
support and direction which developed
the ferroresonant technology utilized by
the Company. Mr. Paul was a director of
Best Power Technology Sales Corporation
("Sales") from 1989 until its merger
into the Company in 1993. Mr. Paul is
the son of Marguerite M. Paul and
brother of William L. Paul.
S/oren H.N. Rathmann... 1995 1994 S/oren H.N. Rathmann, age 49, has served
as Director, Marketing and Technology,
and as a member of the Board of
Directors of Silcon A/S, a manufacturer
and distributor of three-phase
uninterruptible power systems, located
in Kolding, Denmark, since 1991. Mr.
Rathmann also served various companies
affiliated with Silcon A/S. He was
Technical Director of Silcon Elektronik
A/S, Denmark, from 1984 to 1991,
Director, Marketing and Technology, of
Silcon Power Electronics A/S, Denmark,
since 1991, and Technical Director of
Gutor Electronic AG, Switzerland, since
1987. Mr. Rathmann also serves as a
director of Danlab A/S, manufacturer of
CATV equipment, Denmark.
Roland D. Pampel....... 1997 1993 Roland D. Pampel, age 60, has served as
President, Chief Executive Officer and a
director of Microcom, Inc., a
telemetering equipment manufacturer,
located in Norwood, Massachusetts, since
1994. Mr. Pampel was President, Chief
Executive Officer and a director of
Nicolet Instrument Corporation, a
biomedical and analytical instruments
manufacturer, Madison, Wisconsin, from
1991 through 1993; President and Chief
Executive Officer of Bull HN Information
Systems, Inc., Billerica, Massachusetts,
from 1989 to 1991, and President and a
director of Apollo Computer, Inc. a
manufacturer of engineering
workstations, Chelmsford, Massachusetts
from 1986 to 1989.
John R. Hickey......... 1997 1994 John R. Hickey, age 39, has been the
Executive Vice President--Operations of
the Company since January 1995, and
previously served as the Senior Vice
President--Sales and Marketing from
October 1993 to January 1995, the Senior
Vice President--International from May
to October 1993, and the Director--
International Division of Sales from
1989 until its merger into the Company
in 1993.
Dennis E. Burke........ 1996 1994 Dennis E. Burke, age 52, has been the
Executive Vice President--Administration
and Secretary of the Company since
January 1995, and previously served as
Senior Vice President--External Affairs
</TABLE>
I-4
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH THE COMPANY OR
YEAR TERM YEAR FIRST PRINCIPAL OCCUPATION DURING THE LAST
NAME OF DIRECTOR EXPIRES ELECTED A DIRECTOR FIVE YEARS
- ------------------- --------- ------------------ ----------------------------------------
<S> <C> <C> <C>
from 1993. From 1988 to 1993, Mr. Burke
was the Assistant Corporate Secretary of
the Company and the Corporate Secretary
of Sales and was the officer primarily
responsible for the administration of
matters relating to regulatory
compliance and procedure for both the
Company and Sales. Mr. Burke has served
the Company in other capacities since
1987. Prior to joining the Company, Mr.
Burke was Vice President of Finance for
the Automotive Components Group of
Borg-Warner Corporation.
Marguerite M. Paul..... 1996 1977 Marguerite M. Paul, age 74, served as
Executive Vice President--Administration
of the Company from 1993 to January
1995, and Secretary from 1977 to January
1995. Mrs. Paul is one of the founders
of the Company and was the President of
the Company from 1992 to 1993; Treasurer
from 1977 to 1992; Vice
President--Administration from 1980 to
1992; President from 1979 to 1980, and
General Manager from 1977 to 1979. In
addition, Mrs. Paul was a director and
the Treasurer of Sales from 1989 until
its merger into the Company in 1993.
Mrs. Paul is the mother of Steve J. Paul
and William L. Paul.
</TABLE>
DIRECTORS' ATTENDANCE AND REMUNERATION
During the year ended December 31, 1994, the Board of Directors held 11
formal meetings and each director attended at least 75% of the total number of
meetings of the Board of Directors and committees thereof of which he or she was
a member.
Directors who are not employees of the Company each receive annual
compensation of $15,000, plus $1,000 for each committee meeting attended, plus
reimbursement of reasonable travel expenses. A stock option plan for outside
directors, the Director Stock Option Plan, has terms closely paralleling the
1993 Stock Option Plan. See "Executive Compensation". The Company has reserved
100,000 shares for issuance under the Director Stock Option Plan. In February
1995, Mr. Rathmann received an option to purchase 5,000 shares of Common Stock
at $13.50 per share, with the option exercise period beginning February 28, 1998
and ending February 27, 2005. Directors who are also employees receive no
additional compensation for their services as directors.
COMMITTEES OF THE BOARD
The Board has Audit, Compensation and Nominating Committees. The functions
of these standing committees are described briefly below.
The members of the Audit Committee are currently Paul F. Koeppe, Roland D.
Pampel and Dennis E. Burke. A majority of the Audit Committee is composed of
independent directors. The functions of the Audit Committee are to recommend to
the Board the engagement of the Company's independent certified public
accountants, to review with such independent public accountants the plans for
and the results and scope of their engagement, to review all related-party
transactions and situations with potential conflicts of interest, to monitor
compliance of all Company personnel with policies and procedures adopted by the
Board, and to report to the Board on the activities and findings of the Audit
I-5
<PAGE>
Committee and make recommendations to the Board based on such findings. The
Company's independent public accountants have direct access to the Audit
Committee to discuss the audit and any other accounting matters. The Audit
Committee held two formal meetings during 1994.
The members of the Compensation Committee are Paul F. Koeppe and Roland D.
Pampel. The Compensation Committee is responsible for reviewing on behalf of,
and making recommendations to, the Board with respect to compensation of
directors, the Chief Executive Officer, and executive vice presidents of the
Company; administering the Company's stock option plans, annual incentive plans,
and any other stock-based or deferred compensation plans; and performing such
other responsibilities as are delegated to it by the Board. The Compensation
Committee is composed entirely of independent directors. Pursuant to Company
policy, only independent directors administer any compensation plan pursuant to
which Company executive officers are eligible participants and only management
directors administer any plan pursuant to which independent directors are
eligible participants. The Compensation Committee also has direct access to
independent compensation consultants for researching and reviewing compensation
plans and executive compensation. The Compensation Committee held two meetings
during 1994.
The members of the Nominating Committee are Paul F. Koeppe, Roland D. Pampel
and Soren H.N. Rathmann. The Nominating Committee is responsible for nominating
candidates to the Board for election as members of the Board or as executive
officers of the Company. The Nominating Committee met four times in 1994. The
Nominating Committee would also consider stockholder submissions of candidates
for nomination as directors. Stockholders wishing to propose candidates for
consideration by the Nominating Committee as nominees for director may do so by
submitting to the Secretary of the Company a written statement including the
candidate's name, biographical data and qualifications. Stockholders also must
comply with certain procedural requirements contained in the Company's By-Laws
and the federal securities laws in submitting such candidates to the Nominating
Committee.
EXECUTIVE OFFICERS
The following individuals currently serve as executive officers of the
Company:
<TABLE>
<CAPTION>
NAME AGE POSITION(S) HELD
- ------------------------------------------ --- ------------------------------------------
<S> <C> <C>
Dennis E. Burke........................... 52 Executive Vice President--Administration
and Corporate Secretary
John R. Hickey............................ 39 Executive Vice President--Operations
Gary W. Jungwirth......................... 45 Senior Vice President--Manufacturing
Frederick A. Stich........................ 56 Senior Vice President--Research and
Development
</TABLE>
Dennis E. Burke has been Executive Vice President--Administration and
Corporate Secretary since January 26, 1995, and has served as a director since
May 11, 1994. From 1993 to January 26, 1995, Mr. Burke served as Senior Vice
President--External Affairs and Assistant Corporate Secretary of the Company.
From 1988 to 1993, Mr. Burke was the Assistant Corporate Secretary of the
Company and the Corporate Secretary of Sales and was the officer primarily
responsible for the administration of matters relating to regulatory compliance
and procedures for both the Company and Sales. Mr. Burke served as an Assistant
to the President of the Company from 1988 to 1989 and in other capacities since
1987.
John R. Hickey has been Executive Vice President--Operations since January
26, 1995, and a director since October 1994. Mr. Hickey served as the Senior
Vice President--Sales and Marketing from 1993 to 1995, the Senior Vice
President--International from May to October 1993, and was the
Director--International Division of Sales from 1989 to 1993.
Gary W. Jungwirth has been Senior Vice President--Manufacturing since 1993.
Prior to such time, Mr. Jungwirth held the following positions with the Company:
Director, Manufacturing/Purchasing from 1992 to 1993; Director, Purchasing from
February 1992 to November 1992; Purchasing Manager from 1987 to 1992; and other
positions from 1985 to 1987.
I-6
<PAGE>
Frederick A. Stich has been Senior Vice President--Research and Development
since 1993. Prior to such time, Mr. Stich held the following positions with the
Company: Director, Research and Development from 1990 to 1993; Manager, Product
Development from 1989 to 1990; and Senior Design Engineer from 1987 to 1989.
All officers are generally elected annually for terms which expire on the
date of the meeting of the Board of Directors following the Annual Meeting of
Stockholders or until their successors are elected and qualified, or until his
or her earlier death, resignation or removal, as provided in the By-Laws of the
Company or Delaware law.
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth certain information known to the Company with
respect to beneficial ownership of the Common Stock as of May 10, 1995, except
as otherwise noted, by (i) each stockholder known by the Company to be the
beneficial owner of more than 5% of the Common Stock, (ii) each director or
nominee for director of the Company, (iii) each named officer, and (iv) all
executive officers and directors as a group. Except as otherwise noted, the
persons named in this table have sole voting and investment power with respect
to all shares of Common Stock.
OWNERSHIP OF MANAGEMENT
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL
NAME OF BENEFICIAL OWNER OWNERSHIP(1) PERCENT OF CLASS
- ------------------------------------------------------------ ----------------- ----------------
<S> <C> <C>
Dennis E. Burke............................................. 950 *
James K. Doan............................................... 1,577 *
John R. Hickey.............................................. 11,694 *
Paul F. Koeppe.............................................. 10,133 *
Roland D. Pampel............................................ 1,500 *
Marguerite M. Paul(1)(2)(3)................................. 881,272 9.3%
Steve J. Paul(1)(2)(3)...................................... 1,187,068 12.5%
William L. & Carole M. Paul(2)(4)........................... 105,241 1.1%
S/oren H.N. Rathmann........................................ 0 0
All executive officers and directors as a group (11
persons).................................................... 2,199,435 23.1%
</TABLE>
OWNERSHIP OF OTHER FIVE PERCENT STOCKHOLDERS
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP(1) PERCENT OF CLASS
- ---------------------------------------------------------- ----------------------- ----------------
<S> <C> <C>
Marguerite M. Paul(1)(2)(3)............................... 881,272 9.3%
Box 819, Route 2
Necedah, WI 54646
Steve J. Paul(1)(2)(3).................................... 1,187,068 12.5%
1522 Lakeview Drive
Tomah, WI 54660
Heartland Advisors, Inc.(5)............................... 1,087,878 11.4%
720 North Milwaukee Street
Milwaukee, WI 53202
</TABLE>
- ------------
* Less than one percent
(1) Except as noted, information concerning persons known to the Company to be
the beneficial owners of more than five percent of its Common Stock is based
upon the most recent information furnished by such persons pursuant to
Section 13(d) or 13(g) of the Securities Exchange Act of 1934.
(2) Steve J. Paul and William L. Paul are the sons of Marguerite M. Paul.
(Footnotes continued on following page)
I-7
<PAGE>
(Footnotes continued from preceding page)
(3) Of the indicated shares, Marguerite M. Paul and Steve J. Paul each disclaim
beneficial ownership of 27,012 shares, which are owned by a Section
501(c)(3) charitable organization of which they are directors. The
information is based upon Amended Schedule 13G's for 1994 and Form 4's for
February 1995.
(4) Information on share ownership is based on information provided by the
Company's transfer agent on May 15, 1995.
(5) Heartland Advisors, Inc. reported that it held no voting power and sole
dispositive power with respect to the indicated shares as of December 31,
1994.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
GENERAL
The Compensation Committee was appointed by the Board and consists of Roland
D. Pampel and Paul F. Koeppe. No present or former executive officer or employee
of the Company serves as a member of the Compensation Committee. Furthermore,
there are no interlocking relationships between any executive officer of the
Company and any entity whose directors or executive officers serve on the
Company's Compensation Committee.
CERTAIN RELATED PARTY TRANSACTIONS
The following discussion describes certain transactions occurring since
January 1, 1994 and all currently proposed transactions between the Company and
each of its directors, director nominees, executive officers and stockholders
known by the Company to own more than 5% of the Common Stock and any member of
the immediate family of any of these persons. See also "Employment Contracts"
below.
The Company entered into an Aircraft Lease Agreement ("Lease") with Jetway
Flight Corporation ("Jetway") and an Aviation Services Agreement ("Services
Agreement") with Necedah Air, Inc. ("Necedah Air") as of May 11, 1994. Each
agreement was for a term of one year. During 1994 Jetway was owned by Steve J.
Paul, and Necedah Air was owned by Steve J. Paul or M. Terese Paul, the sister
of Steve J. Paul and daughter of Marguerite M. Paul. Both agreements were
approved by the Board with Steve J. Paul abstaining. On March 10, 1995, the
Company exercised its rights under each of the Lease and Services Agreements to
give thirty days written notice to terminate the agreements effective April 10,
1995.
Under the Lease the Company paid Jetway monthly base rent of $12,000 for two
aircraft, a monthly hangar fee of $2,000 plus a usage fee of $.75 per statute
mile. The total of all payments to Jetway was $368,828 for 1994.
Under the Services Agreement Necedah Air agreed to provide two pilots
qualified to operate the leased aircraft, to perform routine maintenance repair
and overhaul of the aircraft, and to provide various services related to the
aircraft. The Company paid Necedah Air a monthly service fee of $12,000 for
providing such services, a fee of $100 per hour for each hour in excess of forty
hours per pilot per week, plus payment for aircraft repair and maintenance
expenses and various pilot travel expenses. Under the Services Agreement and a
prior informal agreement, the Company paid approximately $179,139 to Necedah Air
in 1994. The Company believes that the terms of these agreements were no less
favorable to the Company than those which could have been obtained from
independent third-parties for comparable services and equipment.
I-8
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
Set forth below is certain information concerning the compensation of all
individuals serving as the Company's Chief Executive Officer in 1994 and the
Company's four other most highly compensated executive officers serving in the
stated office at December 31, 1994 (the "Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
--------------------- UNDERLYING ALL OTHER
FISCAL SALARY BONUS OPTIONS/SARS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) (#)(6) ($)(7)
- ----------------------------------------- ------ --------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Steve J. Paul,(1)........................ 1994 224,712 127,500 20,000 8,400
President and Chief Executive Officer and 1993 253,462 90,150 21,533 7,782
former Executive Vice President 1992 268,753 150,000 7,263
Engineering
William L. Paul,(1)...................... 1994 305,770 0 -- 4,654
Former President & Chief Executive 1993 278,846 150,150 37,500 216,179
Officer 1992 253,753 150,000 4,033
Marguerite M. Paul,(2)................... 1994 190,385 86,063 10,000 64,728
Executive Vice President 1993 288,669 90,150 21,533 66,059
Administration and Secretary 1992 326,353 150,000 68,332
James K. Doan,(3)........................ 1994 148,000 51,000 7,000 2,772
Senior Vice President 1993 137,115 56,150 8,477 85,936
Finance and Treasurer 1992 138,136 0 1,979
John R. Hickey,(4)....................... 1994 160,000 21,760 6,000 2,772
Senior Vice President 1993 97,542 113,610 5,436 34,190
Sales and Marketing 1992 63,239 88,565 2,618
Dennis E. Burke,(5)...................... 1994 119,173 42,500 10,000 2,567
Senior Vice President 1993 99,174 40,150 4,941 118,195
External Affairs 1992 84,435 0 2,387
</TABLE>
- ------------
(1) Steve J. Paul served as President and Chief Executive Officer from May 11,
1994 to January 26, 1995, and previously served as Executive Vice
President--Engineering. William L. Paul served as President and Chief
Executive Officer from May 17, 1993 to May 11, 1994.
(2) Marguerite M. Paul served as Executive Vice President--Administration and
Secretary until January 26, 1995.
(3) James K. Doan served as Senior Vice President--Finance and Treasurer until
February 28, 1995.
(4) John R. Hickey was elected Executive Vice President-- Operations on January
26, 1995. Mr. Hickey's bonus for 1993 includes commissions of $64,740 based
on certain international sales from January 1 to June 30, 1993. His bonus
for 1992 consists entirely of such commissions.
(5) Dennis E. Burke was elected Executive Vice President-- Administration and
Corporate Secretary on January 26, 1995.
(6) No SARs were awarded in 1994, and no SARs were outstanding as of December
31, 1994.
(7) For 1994 the amounts shown for All Other Compensation consist of the
following:
I-9
<PAGE>
<TABLE>
<CAPTION>
LIFE INSURANCE
PREMIUMS PAID BY
THE COMPANY FOR THE
BENEFIT OF THE COMPANY'S CONTRIBUTION
NAMED OFFICERS NAMED OFFICERS TO THE 401(K) PLAN
- ----------------------------------------------------- ------------------- ----------------------
<S> <C> <C>
Steve J. Paul........................................ $ 8,400 0
William L. Paul...................................... $ 1,882 $2,772
Marguerite M. Paul................................... $64,728 0
James K. Doan........................................ 0 $2,772
John R. Hickey....................................... 0 $2,772
Dennis E. Burke...................................... 0 $2,567
</TABLE>
STOCK OPTION/STOCK APPRECIATION RIGHT GRANTS
The Company has in effect an employee stock option plan pursuant to which
options to purchase Common Stock are granted to officers and other key employees
of the Company and its subsidiaries. The following table shows Option grants in
1994 to the Named Officers.
OPTION/SAR GRANTS IN LAST FISCAL YEAR(1)
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
INDIVIDUAL GRANTS AT ASSUMED ANNUAL
----------------------------------------------------------------- RATES OF STOCK
NUMBER OF % OF TOTAL PRICE APPRECIATION
SECURITIES OPTIONS/SARS(2) FOR FULL OPTION
UNDERLYING GRANTED TO ($/SHARE) TERM
OPTIONS/SARS(2) EMPLOYEES IN EXERCISE OR EXPIRATION ------------------
NAME GRANTED(#) FISCAL YEAR BASE PRICE DATE 5%($) 10%($)
- ------------------- ---------------- ---------------- ----------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Steve J. Paul...... 20,000 27.29% $ 14.75 5-10-2004 185,526 470,142
William L. Paul.... 0 0% N/A N/A 0 0
Marguerite M. Paul. 10,000 13.64% $ 14.75 5-10-2004 92,763 235,071
James K. Doan...... 7,000 9.55% $ 14.75 5-10-2004 64,934 164,550
John R. Hickey..... 6,000 8.19% $ 14.75 5-10-2004 55,658 141,042
Dennis E. Burke.... 10,000 13.64% $ 14.75 5-10-2004 92,763 235,071
</TABLE>
- ------------
(1) The Stock Option Plan is administered by the Compensation Committee of the
Board, which has authority to determine the individuals to whom, and the
terms at which, option grants shall be made, certain terms of the options,
and the number of shares to be subject to each option. The per share option
prices indicated in the table are not less than the fair market value of the
Common Stock on the date of their grant. The options were granted as of May
11, 1994 and the term of each of the options is 10 years. Each award is
exercisable in whole or in part, from time to time, during the period
beginning May 11, 1997 and ending May 10, 2004, except that generally the
option is exercisable within the one year period immediately following the
optionee's death or disability (whether or not otherwise exercisable) or
within ninety days immediately following an involuntary termination of the
optionee's employment, other than for cause, provided the option is
otherwise exercisable. Under the terms of the Merger Agreement, however, the
holders of the options will be entitled to receive the economic value of
their options upon consummation of the Merger. See "Item 3. Identity and
Background--Stock Options" in the Schedule 14D-9.
(2) No SARs were granted in 1994.
AGGREGATED OPTION/SAR EXERCISES IN 1994 AND 1994 YEAR-END OPTION VALUE
Set forth below is certain information concerning the exercise of stock
options or stock warrants during 1994 by each of the Named Officers and the
value of unexercised stock options at the end of 1994.
I-10
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
IN-THE- MONEY
NUMBER OF SHARES NUMBER OF UNEXERCISED OPTIONS/SARS(1) AT FY-END
ACQUIRED ON VALUE REALIZED OPTIONS/SARS(1) AT FY-END (#) ($)
NAME EXERCISE (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ------------------ ---------------- ----------------- ----------------------------- ---------------------------
<S> <C> <C> <C> <C>
Steve J. Paul..... 0 0 0/41,533 0/0
William L. Paul... 0 0 0/0 0/0
Marguerite M. Paul. 0 0 0/31,533 0/0
James K. Doan..... 0 0 0/15,477 0/0
John R. Hickey.... 0 0 0/11,436 0/0
Dennis E. Burke... 0 0 0/14,941 0/0
</TABLE>
- ------------
(1) No SARs were outstanding at the end of fiscal 1994.
EMPLOYMENT CONTRACTS
As of the end of 1994, the Company had employment agreements with each of
the Named Officers other than William L. Paul. Each such agreement expires in
May 1996, except for the agreement with John R. Hickey, which expires December
31, 1996, and each agreement may be renewed for successive three-year periods
with the consent of the Company and the officer. Pursuant to the agreements, the
Company generally may terminate the employment of any such officer only for
cause. The agreement with respect to each officer, except James K. Doan and
Dennis E. Burke, includes an agreement on behalf of the officer not to compete
with the Company for a period of two years after termination of employment. As
of the end of 1994, the employment agreements provided for annual compensation
(subject to annual review) to Steve J. Paul of $300,000, Marguerite M. Paul of
$225,000, James K. Doan of $150,000, John R. Hickey of $160,000, and Dennis E.
Burke of $125,000, plus target bonuses ranging from 35%-50% of annual
compensation. In addition, the Company agreed to pay the premiums on certain
life insurance policies owned by Steve J. Paul and Marguerite M. Paul in the
face amount of $2.3 million and $2.5 million, respectively. The employment
agreements provide that each officer will be a participant in the 1993 Stock
Option Plan. Mr. Doan's employment agreement specifies that if he is terminated
without cause by the Company after the occurrence of certain change of control
events, the Company is obligated to continue wage and benefits and provide
outplacement services to Mr. Doan for a period of up to one year. In February
1995, the Executive Committee of the Board increased the annual salary of John
R. Hickey to $200,000 and of Dennis Burke to $165,000. Target bonuses were also
set at 60% of annual salary for each such executive officer. In addition, the
Executive Committee increased the target bonus for Gary W. Jungwirth and
Frederick W. Stich from 35% to 55% of annual salary.
The Company entered into a severance agreement with William L. Paul, who
served as President and Chief Executive Officer until May 11, 1994. Under the
terms of that agreement, the Company continued to pay to Mr. William L. Paul
annual salary compensation of $300,000 only for 1994 and provided health
insurance benefits for 1994. On March 1, 1995, the Company entered into a
separation agreement with Mr. Doan that terminated his employment agreement in
consideration of a payment of $75,000.
For information concerning other severance arrangements between the Company
and its directors, see "Item 3. Identity and Background--Severance Agreements"
and "--Other Severance Arrangements" in the Schedule 14D-9.
ANNUAL BONUS
The Company's executive officers and other key employees are eligible for an
annual cash bonus pursuant to the Annual Incentive Plan. Individual and/or
organizational performance goals are
I-11
<PAGE>
established for each year. Eligible executives are assigned threshold, target
and maximum bonus levels. The corporate performance measure for bonus payments
is generally based on earnings per share. If a minimum level of earnings is not
met, then no bonuses are paid. As in the case of base salary, individual
non-financial performance measures and unit performance measures, such as sales,
may also be considered in determining bonuses, where appropriate. Under the
terms of the Annual Incentive Plan and compensation policy, adjustments may be
made by the Compensation Committee at any time if conditions so warrant. The
1994 performance goals were established by the Compensation Committee and
approved by the Board.
For information regarding bonuses paid to certain executive officers and
directors, see "Item 3. Identity and Background--Bonus Arrangements" in the
Schedule 14D-9.
STOCK OPTIONS
Under the Company's 1993 Stock Option Plan, stock options may be granted to
the Company's executive officers. Options may be granted to participants, which
constitute incentive stock options within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended, or nonstatutory stock options. The
option price per share will be not less than 100% of the fair market value as of
the date of the grant of the option (110% in the case of incentive stock
options). Options granted under the 1993 Option Plan generally become
exercisable within the fourth through tenth years following the grant. Under the
terms of the Merger Agreement, however, the holders of the options will be
entitled to receive the economic value of their options upon consummation of the
Merger. See "Item 3. Identity and Background--Stock Options" in the Schedule
14D-9. Stock options are granted with an option price per share not less than
100% of the fair market value per share of the Common Stock on the date of grant
and vest over a defined period of not less than three nor more than ten years.
Under the Director Stock Option Plan, which has terms closely paralleling
the 1993 Stock Option Plan, options may be granted to non-employee directors of
the Company. See "Board of Directors and Executive Officers--Directors'
Attendence and Remuneration."
Under the 1993 Employee Stock Purchase Plan, eligible employees may also
purchase Common Stock at 85% of fair market value through payroll deductions or
a semi-annual lump sum cash purchase. In February 1995, Mr. Burke elected to
make a lump sum purchase of 950 Shares and Mr. Hickey elected to continue an
automatic payroll deduction program for purchases of Shares and purchased an
aggregate of 2,000 Shares in 1995 pursuant to such payroll deduction program.
OTHER INFORMATION
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who beneficially own more than ten percent
of the Company's Common Stock ("Ten Percent Holders"), to file initial reports
of ownership and reports of changes in ownership with the Securities and
Exchange Commission and the National Association of Securities Dealers.
Officers, directors and Ten Percent Holders are required by the Securities and
Exchange Commission regulation to furnish the Company with copies of all Section
16(a) forms they file.
To the best of the Company's knowledge, based solely on its review of the
copies of such forms received by it or written representations that no other
reports were required, all Section 16(a) filing requirements applicable to its
officers, directors, and Ten Percent Holders were complied with during the
fiscal year ended December 31, 1994, except that one Form 4 report for July
1994, covering an aggregate of two transactions was filed late by Willard S.
Paul, who then served as a director, and no Form 5 was received by the Company
for William L. Paul. Furthermore, as of May 15, 1995, the Company had not
received from either William L. Paul or James K. Doan a statement on Form 4
acknowledging that such persons are no longer subject to Section 16(a) of the
Exchange Act.
I-12
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. PAGE NO.
- ---------------------------------------------------------------------------------- ---------
<S> <C> <C>
Exhibit 1 Agreement and Plan of Merger, dated as of May 10, 1995, among the
Company, Parent and the Purchaser....................................
Exhibit 2 Severance Agreement, dated as of March 31, 1995, between Steve J.
Paul and the Company...............................................
Exhibit 3 Severance Agreement, dated as of May 12, 1995, between Marguerite M.
Paul and the Company.................................................
Exhibit 4 Stock Tender Agreement, dated as of May 10, 1995, between Parent and
Steve J. Paul........................................................
Exhibit 5 Stock Tender Agreement, dated as of May 10, 1995, between Parent and
Marguerite M. Paul...................................................
Exhibit 6 Share Restriction Agreement, dated as of May 10, 1995, between Parent
and Dennis E. Burke..................................................
Exhibit 7 Stock Tender Agreement, dated as of May 10, 1995, between Parent and
Roland D. Pampel.....................................................
Exhibit 8 Share Restriction Agreement, dated as of May 10, 1995, between Parent
and John R. Hickey...................................................
Exhibit 9 Share Restriction Agreement, dated as of May 10, 1995, between Parent
and Paul F. Koeppe...................................................
Exhibit 10 Confidentiality Agreement, dated April 13, 1995, between Parent and
The Chicago Corporation, acting on behalf of the Company...........
Exhibit 11 Opinion of The Chicago Corporation, dated May 10, 1995...............
Exhibit 12 Press Release of the Company, dated May 10, 1995.....................
Exhibit 13 Letter to Stockholders of the Company, dated May 16, 1995............
</TABLE>
EXHIBIT 1
CONFORMED
---------
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 10 , 1995 (the "Agreement"),
by and among BEST POWER TECHNOLOGY, INCORPORATED, a Delaware corporation
("Company"), GENERAL SIGNAL CORPORATION, a Delaware corporation ("Parent"), and
G.S. NEWCO INC., a Delaware corporation and a direct wholly owned subsidiary of
Parent ("Merger Sub"). Company and Merger Sub are hereinafter sometimes
collectively referred to as the "Constituent Corporations," and Company, Parent
and Merger Sub are hereinafter sometimes collectively referred to as the
"Parties."
WHEREAS, the Boards of Directors of Parent, Merger Sub and Company have
determined that it is in the best interests of their respective stockholders
for Parent to acquire Company upon the terms and subject to the conditions
hereinafter set forth; and
WHEREAS, in furtherance of such acquisition, it is proposed that Parent
shall cause Merger Sub to make a cash tender offer (the "Offer") to acquire all
the issued and outstanding shares of Common Stock, par value $.01 per share, of
Company ("Company Common Stock") (shares of Company Common Stock being
hereinafter collectively referred to as "Shares") for $21.00 per Share (such
amount, or any higher amount as may be paid for any Shares pursuant to the
Offer, being hereinafter referred to as the "Per Share Amount") net to the
seller in cash, upon the terms and subject to the conditions of this Agreement
and the Offer; and
WHEREAS, the Board of Directors of Parent, Merger Sub and Company have
approved the merger of Merger Sub with and into Company (the "Merger")
following consummation of the Offer, upon the terms and subject to the
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements herein contained, the
Parties agree as follows:
ARTICLE I
---------
THE OFFER
SECTION 1.01 The Offer (a) As promptly as practicable (but in no event
---------
later than five business days after the date of the initial public announcement
of the execution and delivery of this Agreement), Parent shall cause Merger
Sub to commence (within the meaning of Rule 14d-2 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act")), the Offer and, subject to the
<PAGE>
conditions of the Offer, shall use all commercially reasonable efforts to
consummate the Offer as promptly as permitted by law. The obligation of Parent
and Merger Sub to consummate the Offer, to accept for payment and to pay for
any shares of Company Common Stock tendered pursuant to the Offer (i) shall be
subject to the condition that such number of shares of Company Common Stock
shall have been validly tendered and not withdrawn prior to the expiration date
of the Offer which, together with the shares of Company Common Stock
beneficially owned by Parent or any affiliate thereof on such date, constitute
a majority of the shares of Company Common Stock then outstanding on a fully
diluted basis (the "Minimum Condition") and (ii) shall be subject to the other
conditions set forth in Annex A hereto.
(b) Neither Parent nor Merger Sub will, without the prior written consent
of Company, decrease the consideration payable in the Offer or decrease the
number of shares of Company Common Stock sought pursuant to the Offer or impose
any additional conditions to the Offer. Company agrees that no shares of
Company Common Stock held by Company or any subsidiary thereof will be tendered
pursuant to the Offer. Notwithstanding any other provision of this Agreement,
the conditions of the Offer are for the sole benefit of Merger Sub and Parent
and may be asserted by Merger Sub and Parent regardless of the circumstances
giving rise to any such conditions or may be waived by Merger Sub and Parent in
whole or in part.
(c) As soon as practicable on the date of commencement of the Offer,
Parent shall cause Merger Sub to file with the Securities and Exchange
Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 with respect
to the Offer which will contain the offer to purchase and form of the related
letter of transmittal (together with any supplements or amendments thereto,
collectively referred to herein as the "Offer Documents"). The Offer Documents
will comply in all material respects with the provisions of applicable federal
securities laws and, on the date filed with the SEC and on the date first
published, sent or given to Company's stockholders, shall not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
that no representation is made by Parent or Merger Sub with respect to
information supplied by Company in writing for inclusion in the Offer
Documents. Parent, Merger Sub and Company each agrees promptly to correct any
information provided by it for use in the Offer Documents if and to the extent
that it shall have become false or misleading in any material respect, and
Parent and Merger Sub further agree to take all steps necessary to cause the
Offer Documents as so corrected to be filed with the SEC and to be disseminated
to holders of shares of Company
-2-
<PAGE>
Common Stock, in each case as and to the extent required by applicable federal
securities laws.
SECTION 1.02 Company Actions. Company hereby consents to the Offer and
---------------
represents that (a) its Board of Directors (at a meeting duly called and held)
has unanimously (i) determined that as of the date of such meeting the Offer
and the Merger are fair to, and in the best interests of, Company's
stockholders, (ii) approved this Agreement and the transactions contemplated
hereby, including the Offer, the Merger and the execution and delivery of the
letter agreements in substantially the form of Exhibit A to this Agreement by
the stockholders of Company listed in Schedule 1.02 of the Disclosure Statement
being delivered confidentially by Company to Parent and Merger Sub concurrently
herewith (the "Disclosure Statement"), and (iii) resolved, subject to the terms
of this Agreement, to recommend acceptance of the Offer and approval and
adoption of this Agreement and the Merger by the stockholders of Company, and
(b) The Chicago Corporation has advised, and delivered its written opinion to,
Company's Board of Directors that as of the date hereof, the cash consideration
to be received by the Company's stockholders in the Offer and Merger is fair
from a financial point of view to such stockholders. Company hereby agrees to
file with the SEC contemporaneously with the commencement of the Offer a
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
containing such recommendation in favor of the Offer and the Merger. The
Schedule 14D-9 will comply in all material respects with the provisions of
applicable federal securities law. The Schedule 14D-9, on the date filed with
the SEC and on the date first published, sent or given to Company's
stockholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, and Company (and Merger Sub and the Parent, with
respect to written information supplied by either of them specifically for use
in the Schedule 14D-9) agree promptly to correct the Schedule 14D-9 if and to
the extent that it shall have become false or misleading in any material
respect and Company shall take all steps necessary to cause the Schedule 14D-9
as so corrected to be filed with the SEC and mailed to the Company's
stockholders to the extent required by applicable federal securities laws.
Company hereby consents to the inclusion in the Offer of the recommendation
referred to in clause (iii) above. In connection with the Offer, Company will
promptly furnish Merger Sub with mailing labels, security position listings and
any available listing or computer file containing the names and addresses of
the record holders of Company Common Stock as of a recent date, and shall
furnish Merger Sub with such information and assistance as Merger Sub or its
agents may reasonably request in communicating the Offer to the stockholders of
Company. Subject to the
-3-
<PAGE>
requirements of law, and except for such steps as are necessary to disseminate
the documents constituting the Offer and any other documents necessary to
consummate the Merger, Parent and Merger Sub and each of their affiliates and
associates shall hold in confidence the information contained in any of such
labels and lists, will use such information only in connection with the Offer
and the Merger, and, if this Agreement is terminated, will deliver to Company
all copies of such information then in their possession.
SECTION 1.03 Directors; Section 14(f). Promptly upon the purchase by
------------------------
Parent or Merger Sub of such number of shares as represents at least a majority
of the outstanding shares of Company Common Stock and from time to time
thereafter, Parent shall be entitled to designate such number of directors,
rounded up to the next whole number but in no event more than one less than the
total number of directors, on the Board of Directors of Company as will give
Parent, subject to compliance with Section 14(f) of the Exchange Act,
representation on the Board of Directors of Company equal to the product of the
number of directors on the Board of Directors of Company and the percentage
that such number of shares of Company Common Stock so purchased bears to the
number of shares of Company Common Stock outstanding, and Company shall, upon
request by Parent, promptly increase the size of the Board of Directors of
Company to the extent permitted by its Certificate of Incorporation or exercise
its best efforts to secure the resignations of such number of directors as is
necessary to enable Parent's designees to be elected to the Board of Directors
of Company and shall cause Parent's designees to be so elected. At the request
of Parent, Company shall take, at its expense, all action necessary to effect
any such election, including mailing to its stockholders the information
required by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder.
ARTICLE II
THE MERGER; DISPOSITION OF SHARES
SECTION 2.01 The Merger. (a) In accordance with the provisions of this
----------
Agreement and the General Corporation Law of the State of Delaware (the
"DGCL"), at the Effective Time (as defined in Section 2.02 hereof), Merger Sub
shall be merged with and into Company, and Company shall be the surviving
corporation (hereinafter sometimes called the "Surviving Corporation") and
shall continue its corporate existence under the laws of the State of Delaware.
At the Effective Time the separate existence of Merger Sub shall cease.
-4-
<PAGE>
(b) The Merger shall have the effects on Company and Merger Sub as the
constituent corporations of the Merger as provided under the DGCL.
SECTION 2.02 Effective Time. The Merger shall become effective at the
--------------
time of filing of, or at such later time as may be specified in, a certificate
of merger, in the form required by and executed in accordance with the DGCL,
with the Secretary of State of the State of Delaware in accordance with the
provisions of Section 251 of the DGCL (the "Certificate of Merger"). The date
and time when the Merger shall become effective is herein referred to as the
"Effective Time."
SECTION 2.03 Certificate of Incorporation and By-Laws of Surviving
-----------------------------------------------------
Corporation. The Certificate of Incorporation and By-Laws of Company shall be
- -----------
the Certificate of Incorporation and By-Laws of the Surviving Corporation until
thereafter amended as provided by law.
SECTION 2.04 Directors and Officers of Surviving Corporation. (a) The
-----------------------------------------------
number of directors of the Surviving Corporation shall be as determined
pursuant to the By-Laws of the Surviving Corporation. The directors of Merger
Sub shall be the directors of the Surviving Corporation and will hold office
from and after the Effective Time until their respective successors are duly
elected or appointed and qualify in the manner provided in the Certificate of
Incorporation and By-Laws of the Surviving Corporation or as otherwise provided
by law or their earlier resignation or removal.
(b) The officers of the Surviving Corporation shall be determined by the
Board of Directors of the Surviving Corporation immediately after the Effective
Time, and will hold office from and after the Effective Time until their
respective successors are duly appointed and qualify in the manner provided in
the By-Laws of the Surviving Corporation or as otherwise provided by law or
their earlier resignation or removal.
SECTION 2.05 Further Assurances. If, at any time after the Effective
------------------
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances, or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in
the Surviving Corporation its right, title or interest in, to or under any of
the rights, properties or assets of either of the Constituent Corporations
acquired or to be acquired by the Surviving Corporation as a result of, or in
connection with, the Merger or otherwise to carry out this Agreement, the
officers and directors of the Surviving Corporation shall be authorized to
execute and deliver, in the name and on behalf of each of the Constituent
Corporations or otherwise, all such deeds, bills of sale,
-5-
<PAGE>
assignments and assurances and to take and do, in the name and on behalf of
each of the Constituent Corporations or otherwise, all such other actions and
things as may be necessary or desirable to vest, perfect or confirm any and all
right, title and interest in, to and under such rights, properties or assets in
the Surviving Corporation or otherwise to carry out this Agreement and the
transactions contemplated hereby.
SECTION 2.06 Effect on Shares of Merger Sub and Company. As of the
------------------------------------------
Effective Time, by virtue of the Merger and without any action on the part of
the holders thereof:
(a) Each share of Company Common Stock issued and outstanding immediately
prior to the Effective Time (except for shares owned by Company or any of its
subsidiaries) shall be converted into the right to receive in cash the Per
Share Amount (the "Merger Consideration").
(b) All shares of common stock, par value $.01 per share, of Merger Sub
issued and outstanding immediately prior to the Effective Time shall, by virtue
of the Merger and without any action on the part of the holder thereof, be
converted at the Effective Time into such number of newly issued shares of
common stock of the Surviving Corporation as shall equal the sum of (x) the
number of shares of Company Common Stock outstanding immediately prior to the
Effective Time and (y) the number of shares of Company Common Stock underlying
options to purchase Company Common Stock cashed out by Parent pursuant to
Section 2.07.
(c) Each share of Company Common Stock owned by Company as treasury stock
or owned by any subsidiary of Company shall be canceled.
(d) All shares of Company Common Stock shall be canceled and retired, and
each certificate representing any such shares of Company Common Stock shall
thereafter represent only the right to receive the Merger Consideration payable
in exchange for such shares of Company Common Stock upon the surrender of such
certificate for payment in accordance with Section 2.08. The shares of Merger
Sub shall become the shares of Company.
(e) Notwithstanding anything in this Agreement to the contrary, shares of
Company Common Stock which are outstanding immediately prior to the Effective
Time and which are held by stockholders who (a) shall not have voted such
shares in favor of the Merger and (b) shall have delivered to Company a written
demand for appraisal of such shares in the manner provided in Section 262 of
the DGCL (the "Dissenting Shares") shall not be converted as described in this
Section 2.06, but instead the holders thereof shall be entitled to payment of
the appraised value of such shares
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in accordance with the provisions of such Section 262; provided, however, that
(i) if any holder of Dissenting Shares shall subsequently deliver a written
withdrawal of its demand for appraisal of such shares (with the written
approval of the Surviving Corporation, if such withdrawal is not tendered
within 60 days after the Closing Date), or (ii) if any holder fails to
establish such holder's entitlement to appraisal rights as provided in such
Section 262, or (iii) if neither any holder of Dissenting Shares nor the
Surviving Corporation has filed a petition demanding a determination of the
value of all Dissenting Shares within the time provided in such Section 262,
such holder or holders (as the case may be) shall forfeit the right to
appraisal of such shares and such shares shall thereupon be deemed to have been
converted into the right to receive, and to have become exchangeable for, as of
the Effective Time, the Merger Consideration applicable thereto. Each holder
of Dissenting Shares shall have only such rights and remedies as are granted to
such holder under Section 262 of the DGCL. Holders of Dissenting Shares shall
not, after the Effective Time, be entitled to vote for any purpose or be
entitled to the payment of dividends or other distributions (except dividends
or other distributions payable to stockholders of record prior to the Effective
Time).
SECTION 2.07 Effect on Company Options. Promptly after the Effective
-------------------------
Time, each holder of options to acquire shares of Company Common Stock granted
under any stock option plan of the Company, whether or not such options are
then exercisable, will be entitled to receive an amount in cash equal to the
difference between (x) the product of the number of shares of Company Common
Stock covered by such option multiplied by the Merger Consideration, and (y)
the aggregate option exercise price payable upon exercise of such option.
SECTION 2.08 Payment for Shares. (a) Prior to the Effective Time, Parent
------------------
shall designate a bank or trust company to act as Paying Agent in the Merger
(the "Paying Agent"). At or prior to the Effective Time, Parent will take all
steps necessary to enable and cause the Surviving Corporation to provide the
Paying Agent funds necessary to make the payments contemplated by Sections 2.06
and 2.07. Any funds remaining with the Paying Agent three months after the
Effective Time shall be released and repaid by the Paying Agent to the
Surviving Corporation, after which time persons entitled thereto may look,
subject to applicable escheat and other similar laws, only to the Surviving
Corporation for payment thereof.
(b) As soon as practicable after the Effective Time, Parent shall cause
the Paying Agent to mail to each record holder, as of the Effective Time, of an
outstanding certificate or certificates which immediately prior to the
Effective Time represented shares of
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Company Common Stock (the "Certificates") a form 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 for payment therefor. Upon surrender to the Paying Agent of a
Certificate, together with such letter of transmittal duly executed, the holder
of such Certificate shall be entitled to receive in exchange therefor an amount
equal to the product of the number of shares of Company Common Stock
represented by such Certificate and the Merger Consideration, and such
Certificate shall forthwith be cancelled. No interest will be paid or accrued
on the cash payable upon the surrender of the Certificates. If payment is to
be made to a person other than the person in whose name the Certificate
surrendered is registered, it shall be a condition of payment that the
Certificate so surrendered shall be properly endorsed or otherwise in proper
form for transfer and that the person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to a person other
than the registered holder of the Certificate surrendered or establish to the
satisfaction of the Surviving Corporation that such tax has been paid or is not
applicable. Until surrendered in accordance with the provisions of this
Section 2.08, each Certificate (other than Certificates representing shares of
Company Common Stock held by Company or any subsidiary of Company and
Dissenting Shares) shall represent for all purposes the right to receive the
Merger Consideration in cash multiplied by the number of shares of Company
Common Stock evidenced by such Certificate, without any interest thereon.
SECTION 2.09 Transfers. From and after the Effective Time, there shall
---------
be no transfers on the stock transfer books of Company or the Surviving
Corporation of shares of Company Common Stock. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be canceled
and exchanged as provided in this Article II.
SECTION 2.10 Special Meeting. (a) If required by applicable law in
---------------
order to consummate the Merger, Company, acting through its Board of Directors,
shall, in accordance with applicable law and subject to the applicable
provisions of this Agreement:
(i) duly call, give notice of, convene and hold a special meeting
(the "Special Meeting") of its shareholders as soon as practicable
following the expiration or termination of the Offer for the purpose of
considering and taking action upon the Merger and this Agreement;
(ii) file with the SEC under the Exchange Act, a Proxy Statement (as
hereinafter defined) and use its best efforts to
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obtain and furnish the information required to be included by it in the
Proxy Statement and, after consultation with Parent, to respond promptly
to any comments made by the SEC with respect to the Proxy Statement and
any preliminary version thereof and cause the Proxy Statement to be mailed
to its shareholders at the earliest practicable time following the
expiration or termination of the Offer or at such other time as Parent
shall direct following consultation with Company;
(iii) include in the Proxy Statement the recommendation of its Board
of Directors that shareholders of Company vote in favor of the approval of
this Agreement and the Merger and use its best efforts to obtain the
necessary approval of this Agreement and the Merger by its shareholders.
(b) Parent agrees that, at the Special Meeting, all of the shares of
Company Common Stock then owned by Parent and Merger Sub will be voted in favor
of the Merger.
(c) As used in this Agreement, the term "Proxy Statement" means the
letter to shareholders, notice of meeting, proxy statement and form of proxy,
or the information statement, as the case may be, to be distributed to
shareholders in connection with the Merger, including any schedules required to
be filed with the SEC in connection therewith.
SECTION 2.11 Merger Without Meeting of Shareholders. Notwithstanding the
--------------------------------------
foregoing Section 2.10, in the event that Parent, Merger Sub and any other
subsidiary of Parent shall acquire an aggregate of at least 90 percent of the
outstanding shares of Company Common Stock, the Parties agree, at the request
of Parent or Merger Sub, to take all necessary and appropriate action to cause
the merger of Merger Sub with and into Company to become effective as soon as
practicable after the expiration of the Offer or at such other time as Parent
shall direct following consultation with Company, without a meeting of
shareholders of Company, in accordance with Section 253 of the DGCL.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF COMPANY
Company represents and warrants to Parent and Merger Sub as follows:
SECTION 3.01 Organization. It and each of its Significant Subsidiaries
------------
is a corporation duly organized, validly existing and in good standing under
the laws of their respective jurisdictions of incorporation and it has all
requisite corporate power and authority to own, lease and operate its
properties and to carry on
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its business as now being conducted. It and each of its subsidiaries is duly
qualified or licensed and in good standing to do business in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and in good
standing would not, individually or in the aggregate, have a material adverse
effect on the business, operations, assets, financial condition or results of
operations of Company and its subsidiaries taken as a whole (a "Material
Adverse Effect"). It owns directly all of the outstanding capital stock of
each of its Significant Subsidiaries except as listed on Schedule 3.01 of the
Disclosure Statement. As used in this Agreement a "Significant Subsidiary"
means a corporation or other entity which is a "significant subsidiary" of
Company within the meaning of Rule 1-02(v) of Regulation S-X of the Securities
and Exchange Commission ("SEC").
SECTION 3.02 Capitalization. Its authorized capital stock consists of
--------------
25,000,000 shares of Company Common Stock and 10,000,000 shares of Preferred
Stock, par value $.01 per share ("Company Preferred Stock" and, together with
Company Common Stock "Company Shares"). As of the date hereof, there are
9,527,303 shares of Company Common Stock issued and outstanding, no shares of
Company Preferred Stock issued and outstanding and no Company Shares held in
its treasury. As of the date hereof, there were reserved under the stock
option plans of Company, all of which are listed on Schedule 3.02 of the
Disclosure Statement (the "Company Plans"), 129,559 shares of Company Common
Stock for issuance upon exercise of outstanding options. Except for the
options to receive Company Common Stock under the Company Plans, there are not
now, and at the Effective Time there will not be, any existing options,
warrants, calls, subscriptions, or other rights, agreements or commitments
obligating Company or any of its subsidiaries to issue, transfer or sell any
shares of capital stock of Company or any of its subsidiaries or any other
securities convertible into or evidencing the right to subscribe for any such
shares. All issued and outstanding shares of Company Common Stock are duly
authorized and validly issued, fully paid, non-assessable and free of
preemptive rights with respect thereto.
SECTION 3.03 Authority. (a) Company has full corporate power and
---------
authority to execute and deliver this Agreement and, subject to the requisite
approval of its stockholders, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized and
approved by its Board of Directors, and no corporate proceedings other than the
requisite approval by its stockholders are necessary to authorize this
Agreement or the consummation of the transactions
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contemplated hereby. This Agreement has been duly and validly executed and
delivered by Company and, assuming this Agreement constitutes a legal, valid
and binding agreement of the other Parties hereto, it constitutes a legal,
valid and binding agreement of Company, enforceable against Company in
accordance with its terms.
(b) Company's Board of Directors has taken all appropriate and necessary
action such that the provision of Section 203 of the DGCL will not apply to the
transactions contemplated by this Agreement.
SECTION 3.04 No Violations; Consents and Approvals. (a) Neither the
-------------------------------------
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby nor compliance by Company with any of the
provisions hereof will (i) subject to obtaining the requisite approval of its
stockholders, violate any provision of its certificate of incorporation or by-
laws, (ii) result in a violation or breach of, or constitute (with or without
due notice or lapse of time or both) a default, or give rise to any right of
termination, cancellation or acceleration or any right which becomes effective
upon the occurrence of a merger, consolidation or change in control, under, any
of the terms, conditions or provisions of any note, bond, mortgage, indenture
or other instrument of indebtedness for money borrowed to which it or any of
its subsidiaries is a party, or by which it or any of its subsidiaries or any
of their respective properties is bound, or (iii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both)
a default, or except as set forth in Schedule 3.04 of the Disclosure Statement
give rise to any right of termination, cancellation or acceleration or any
right which becomes effective upon the occurrence of a merger, consolidation or
change in control, under, any of the terms, conditions or provisions of any
license, franchise, permit or agreement to which it or any of its subsidiaries
is a party, or by which it or any of its subsidiaries or any of their
respective properties is bound, or (iv) violate any statute, rule, regulation,
order or decree of any public body or authority by which it or any of its
subsidiaries or any of its respective properties is bound, excluding from the
foregoing clauses (iii) and (iv) violations, breaches, defaults or rights
which, either individually or in the aggregate, would not have a Material
Adverse Effect or materially impair its ability to consummate the transactions
contemplated hereby or for which it has received or, prior to the Merger, shall
have received appropriate consents or waivers.
(b) No filing or registration with, notification to, or authorization,
consent or approval of, any governmental entity is required by Company in
connection with the execution and delivery of this Agreement or the
consummation by it of the transactions contemplated hereby, except (i) in
connection with the applicable
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<PAGE>
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), (ii) in connection, or in compliance, with the
provisions of the Exchange Act, (iii) the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware, (iv) such filings and
consents as may be required under any environmental law pertaining to any
notification, disclosure or required approval triggered by the Merger or the
transactions contemplated by this Agreement, (v) filings with, and approval of,
the NASDAQ and the SEC with respect to the deregistration of Company Common
Stock, (vi) such consents, approvals, orders, authorizations, notifications,
approvals, registrations, declarations and filings as may be required under the
corporation, takeover or blue sky laws of various states and (vii) such other
consents, orders, authorizations, registrations, declarations and filings not
obtained prior to the Effective Time the failure of which to be obtained or
made would not, individually or in the aggregate, have a Material Adverse
Effect, or materially impair Company's ability to perform its obligations
hereunder or prevent the consummation of any of the transactions contemplated
hereby.
SECTION 3.05 SEC Documents; Financial Statements. (a) Company has made
-----------------------------------
available to Parent and Merger Sub copies of each registration statement,
report, proxy statement or information statement heretofore filed by it with
the SEC (the "SEC Documents"). As of their respective dates, Company's SEC
Documents complied in all material respects with the applicable requirements of
the Securities Act of 1933, as amended (the "Securities Act") and the Exchange
Act, as the case may be, none of such SEC Documents contained any untrue
statement of material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and Company's Board
of Directors consists of the Directors identified in its 1995 proxy statement.
(b) Neither Company nor any of its subsidiaries, nor any of their
respective assets, businesses or operations, is as of the date of this
Agreement a party to, or is bound or affected by, or receives benefits under
any contract or agreement or amendment thereto, that in each case would be
required to be filed as an exhibit to a Form 10-K as of the date of this
Agreement that has not been filed as an exhibit to an SEC Document filed prior
to the date of this Agreement.
(c) As of their respective dates, the consolidated financial statements
included in Company's SEC Documents complied as to form in all material
respects with then applicable accounting requirements and the published rules
and regulations of the SEC with respect thereto, were prepared in accordance
with generally
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<PAGE>
accepted accounting principles applied on a consistent basis during the periods
involved (except as may be indicated therein or in the notes thereto) and
fairly presented its consolidated financial position and that of its
consolidated subsidiaries as at the dates thereof and the consolidated results
of their operations and statements of cash flows for the periods then ended
(subject, in the case of unaudited statements, to the lack of footnotes
thereto, to normal year-end audit adjustments and to any other adjustments
described therein).
(d) The SEC Documents include or there has otherwise been delivered to
Parent (i) consolidated balance sheets as of December 31, 1994 and March 31,
1995; and (ii) consolidated statements of income for the year ended December
31, 1994 and the three months ended March 31, 1995. The foregoing consolidated
audited balance sheet as at December 31, 1994 is sometimes herein referred to
as the "Balance Sheet." The foregoing consolidated unaudited balance sheet as
of March 31, 1995 is sometimes herein referred to as the "Interim Balance
Sheet."
(e) There are no liabilities or obligations of Company and its
consolidated subsidiaries accrued, absolute, or contingent and whether due or
to become due, other than liabilities and obligations (i) reflected, or
adequately reserved against, in the Interim Balance Sheet, (ii) arising in the
ordinary course of business subsequent to the date of the Interim Balance
Sheet, or (iii) which, individually or in the aggregate, would not have a
Material Adverse Effect.
SECTION 3.06 Absence of Certain Changes. Since March 31, 1995, Company
--------------------------
has not (a) suffered any event or occurrence which would have a Material
Adverse Effect or (b) implemented any change in accounting methods, principles
or practices except as required or permitted by generally accepted accounting
principles.
SECTION 3.07 Legal Proceedings. Except as disclosed in Company's SEC
-----------------
Documents filed prior to the date hereof, or reflected or adequately reserved
against in its Interim Balance Sheet, there is no (i) claim, action, suit or
proceeding pending or, to its best knowledge, threatened, against or relating
to it or any of its subsidiaries or any of their respective assets before any
court or governmental or regulatory authority or body or arbitration tribunal
or (ii) outstanding judgment, order, writ, injunction or decree, or
application, request or motion therefor, of any court, governmental agency or
arbitration tribunal in a proceeding to which Company or any of its
subsidiaries is a party, except any such claim, action, suit or proceeding or
judgment, order, writ, injunction, decree, application, request or motion
which, either individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect.
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<PAGE>
SECTION 3.08 Compliance with Laws and Agreements. Neither Company nor
-----------------------------------
any of its subsidiaries is (i) in violation of or noncompliance with any
statute, law, ordinance, regulation, rule or order of any foreign, federal,
state or local government or any other governmental department or agency, or
any judgment, decree or order of any court, applicable to its business or
operations or (ii) in violation, breach or default (with or without due notice
or lapse of time or both) under any of the terms, conditions or provisions of
any agreement to which it is a party, or by which its properties are bound,
except where any such violations or failures to comply or breaches or defaults
would not, individually or in the aggregate, have a Material Adverse Effect.
Company and its subsidiaries have all permits, licenses and franchises from
governmental agencies required to conduct their businesses as now being
conducted, except for such permits, licenses and franchises the absence of
which would not, individually or in the aggregate, have a Material Adverse
Effect.
SECTION 3.09 Proxy Statement. If a Proxy Statement is required for the
---------------
consummation of the Merger under applicable law, the Proxy Statement shall
comply in all material respects with the Exchange Act; and any such Proxy
Statement will not, at the time it is filed with the SEC or is mailed to
shareholders, or at the time of the Special Meeting or the Effective Time,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of circumstances under which they were made, not misleading; provided,
however, that no representation or warranty is made by Company concerning any
information with respect to Parent or its affiliates supplied in writing by
Parent or any such affiliate to Company specifically for inclusion in the Proxy
Statement.
SECTION 3.10 State Antitakeover Statutes. No "business combination,"
---------------------------
"moratorium," "control share" or other state antitakeover statute or regulation
(x) prohibits or restricts Company's ability to perform its obligations under
this Agreement or its ability to consummate the transactions contemplated
hereby, (y) would have the effect of invalidating or voiding this Agreement, or
any material provision hereof, or (z) would subject Parent or Merger Sub to any
material impediment or condition in connection with the exercise of any of
their respective rights under this Agreement or with respect to Company or the
Surviving Corporation.
SECTION 3.11 Broker's Fees. Except for the engagement of The Chicago
-------------
Corporation by Company or as set forth in Schedule 3.11 of the Disclosure
Statement, neither Company nor any of its subsidiaries or any of their
respective directors or officers has employed any broker, finder or financial
advisor or incurred any
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liability for any broker's fees, commissions, or financial advisory or finder's
fees in connection with any of the transactions contemplated by this Agreement.
SECTION 3.12 Environmental Matters. Company and its subsidiaries are
---------------------
each in compliance with all environmental laws, regulations and practices
applicable to their respective businesses and properties ("Applicable
Environmental Standards"), except where the failure to so be in compliance
would not have a Material Adverse Effect. Schedule 3.12 of the Disclosure
Statement lists any notices, requests or directives received by Company or any
subsidiary from any regulatory agency or authority or any other third party
since January 1, 1989 concerning any alleged non-compliance by Company or any
subsidiary with Applicable Environmental Standards or any suggestions, requests
or demands for remedial or prophylactic measures concerning their respective
businesses and properties. Except as listed in Schedule 3.12 of the Disclosure
Statement, there have been no releases, or any claims that there have been any
releases, of any hazardous or toxic substances, materials, wastes, pollutants,
contaminants, petroleum products, asbestos or pcbs into the environment or
within the buildings or structures owned or leased by Company or its
subsidiaries. No hazardous substances (including, without limitation, asbestos
or pcbs) are used or employed within products manufactured at any time by
Company or its subsidiaries or contained within the buildings or structures
owned or leased by Company or its subsidiaries. The Company has no knowledge
of any basis for a claim that it is subject to any material liability under
Applicable Environmental Standards.
SECTION 3.13 Intellectual Property Rights. The Company or its subsidiaries
----------------------------
own or believe they have the right to use all Intellectual Property Rights (as
defined below in this Section 3.13) necessary to the conduct of their
respective businesses. Schedule 3.13 of the Disclosure Statement contains a
worldwide list of all patents, registered trademarks, registered copyrights and
mask works and any application for the foregoing owned by the Company or its
subsidiaries. The Company and/or its subsidiaries have clear and unencumbered
title to the Intellectual Property Rights set forth in Schedule 3.13 of the
Disclosure Statement and such title has not been challenged (pending or
threatened) by others except for the encumbrances listed in Schedule 3.13 of
the Disclosure Statement. Schedule 3.13 of the Disclosure Statement also
contains a list of invention disclosures for which applications for patent are
in progress. No material rights or licenses to use the Intellectual Property
Rights for the manufacture or assembly of products have been granted or
acquired by the Company or its subsidiaries except those listed in Schedule
3.13 of the Disclosure Statement. Except as listed in Schedule 3.13 of the
Disclosure Statement, there have been no claims or
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assertions made or threatened by others that the Company does not own or have
the right to use all Intellectual Property Rights or that the Company has
infringed or will infringe any Intellectual Property Rights of others by the
sale of products or any other activity in the preceding six year period and, to
the knowledge of the Company, there has been no such infringement by the
Company during this period. Except as listed in Schedule 3.13 of the
Disclosure Statement, the Company has no knowledge of any infringement of
Intellectual Property Rights of the Company by others. All such patents,
registered trademarks, service marks, and copyrights owned by the Company or
its subsidiaries are in good standing, and are recorded in the name of Company
or its subsidiaries. True and complete copies of all material listed in
Schedule 3.13 of the Disclosure Statement (except material for foreign patents,
trademarks and copyrights) will promptly be delivered to Parent.
"Intellectual Property Rights" shall mean and include rights relating to
patents, trademarks, service marks, trade names, copyrights, mask works,
inventions, processes, trade secrets, know-how, confidentiality agreements,
consulting agreements, software and documentation relating to the manufacture,
marketing and maintenance of products.
SECTION 3.14 Taxes. Except as disclosed on Schedule 3.14 of the
-----
Disclosure Statement: (i) the Company and its subsidiaries have prepared and
timely filed or will timely file with the appropriate governmental agencies all
material franchise, income and all other material Tax (as hereinafter defined)
returns and reports (Tax returns and reports are hereinafter collectively
referred to as "Tax Returns") required to be filed for any period on or before
the Effective Time, taking into account any extension of time to file granted
to or obtained on behalf of the Company and/or its subsidiaries (Schedules for
which the past three fiscal years have been delivered to Parent to be followed
by delivery of returns to Parent as requested); (ii) all material Taxes of the
Company and its subsidiaries due (whether or not reported) in respect of the
pre-Merger period have been paid in full to the proper authorities or fully
accrued for with respect to fiscal periods for which there are publicly
available financial statements in such statements and otherwise on the books at
the Company, other than such Taxes as are being contested in good faith by
appropriate proceedings and are adequately reserved for in accordance with
generally accepted accounting principles; (iii) all deficiencies resulting from
Tax examinations of federal, state and foreign income, sales and franchise and
all other material Tax Returns filed by the Company and its subsidiaries have
either been paid or adequately reserved for in accordance with generally
accepted accounting principles; (iv) to the best knowledge of the Company, no
deficiency has been asserted or assessed against the Company or
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any of its subsidiaries and is pending, and no examination of the Company or
any of its subsidiaries is pending or threatened for any material amount of Tax
by any taxing authority (with respect to any such action, Schedule 3.14 of the
Disclosure Statement sets forth the periods at issue and the category of Tax,
and the examining authority's and any corresponding revenue agents' reports
relating to the issue have been delivered to Parent); (v) no extension of the
period for assessment or collection of any material Tax is currently in effect
and no extension of time within which to file any material Tax Return has been
requested, which Tax Return has not since been filed; (vi) no material Tax
liens have been filed with respect to any Taxes; (vii) the Company and each of
its subsidiaries have not agreed to make any Section 481 adjustment or similar
adjustment in any jurisdiction by reason of a change in their accounting
methods that would affect the taxable income or deductions of the Company or
any of its subsidiaries for any period ending after the Effective Time; (viii)
the Company and its subsidiaries have made timely payments of the Taxes
required to be deducted and withheld from the wages paid to their employees;
(ix) there are no Tax sharing agreements or arrangements under which the
Company or any subsidiary will have any obligation or liability on or after the
Effective Time; (x) the Company and its subsidiaries have the net operating
loss carryforwards set forth on Schedule 3.14 of the Disclosure Statement; (xi)
the Company and its subsidiaries have no foreign losses as defined in Section
904(f)(2) of the Code; (xii) neither the Company nor any of its subsidiaries
has unused foreign tax credits; (xiii) to the best knowledge of the Company,
all payments, other than payments of dividends (including any payments deemed
to be the equivalent of a dividend) or Taxes, made or incurred by the Company
or any of its subsidiaries since December 31, 1993 will be deductible or
capitalizable for Tax purposes including any payments made by the Company or
any of its subsidiaries pursuant to any transaction contemplated by this
Agreement, except for any payments the failure of which to be deductible or
capitalizable would not, individually or in the aggregate, have a Material
Adverse Effect; (xiv) to the best knowledge of the Company, no income under any
arrangement or understanding to which the Company or any of its subsidiaries is
a party will be attributed to the Company or any of its subsidiaries which is
not represented by income actually attributable to the same entity; (xv) to the
best knowledge of the Company, there are no transfer pricing agreements made
with any taxation authority; (xvi) no assets of the Company or any of its
subsidiaries is held in an arrangement for which partnership Tax Returns are
being filed and neither the Company nor any of its subsidiaries is a partner in
any partnership; (xvii) neither the Company nor any of its subsidiaries owns
any interest in any "controlled foreign corporation" (within the meaning of
Section 957 of the Code), "passive foreign investment company" (within the
meaning of Section 1296 of the Code) or other entity the income of which is
required
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to be included in the income of the Company or such subsidiary; (xviii) neither
the Company nor any of its subsidiaries has made an election under Section
341(f) of the Code; and (xix) the Company is not obligated to make any payments
that would constitute excess parachute payments within the meaning of Section
280G of the Code.
"Tax" or "Taxes" shall mean all federal, state, local and foreign taxes,
duties, levies, charges and assessments of any nature, including social
security payments and deductibles relating to wages, salaries and benefits and
payments to sub-contractors (to the extent required under applicable Tax law),
and also including all interest, penalties and additions imposed with respect
to such amounts.
SECTION 3.15 Employee Benefit Plans; ERISA. (a) Except as set forth in
-----------------------------
Schedule 3.15 of the Disclosure Statement, there are no "employee pension
benefit plans" as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), covering employees (or former
employees) employed in the United States and maintained or contributed to by
the Company or any of its subsidiaries or any of their ERISA Affiliates (as
hereinafter defined), or to which the Company or any of its subsidiaries or any
of their ERISA Affiliates contributes or is obligated to make payments
thereunder or otherwise may have any liability ("Pension Benefits Plans"). For
purposes of this Agreement, the term "ERISA Affiliate" shall mean any person
(as defined in Section 3(9) of ERISA) that is a member of any group of persons
described in Section 414(b), (c), (m) or (o) of the Code of which the Company
or a subsidiary is a member.
(b) Company has delivered to Parent true and complete copies of all
"welfare benefit plans" (as defined in Section 3(1) of ERISA) covering
employees (or former employees) employed in the United States, maintained or
contributed to by the Company or any of its subsidiaries ("Welfare Plans"),
and, to the extent covering employees (or former employees) employed in the
United States, all stock bonus, stock option, restricted stock, stock
appreciation right, stock purchase, bonus, incentive, deferred compensation,
severance and vacation plans maintained or contributed to by the Company or a
subsidiary of the Company. The Company and its subsidiaries do not have and
have not had any multiemployer plans (as defined in Section 3(37) of ERISA)
covering employees (or former employees) employed in the United States to which
the Company or any of its subsidiaries or any of their ERISA Affiliates is
required to make contributions or otherwise may have any liability.
(c) The Company and each of its subsidiaries, and each of the Pension
Benefit Plans and Welfare Plans, are in compliance with the applicable
provisions of ERISA except where the failure to comply
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would not, individually or in the aggregate, have a Material Adverse Effect.
(d) All contributions to, and payments from, and reports in respect of,
the Pension Benefit Plans and the Welfare Plans which are required to have been
made in accordance therewith and, when applicable, ERISA or the Code have
been timely made except where the failure to make such contributions or
payments on a timely basis would not, individually or in the aggregate, either
impair the Company's ability to consummate the Offer, the Merger and the other
transactions contemplated hereby or have a Material Adverse Effect.
SECTION 3.16 Disclosure. No representation or warranty by the Company
----------
and no statement or information relating to the Company or any of its
subsidiaries contained herein, or in any certificate furnished by or on behalf
of the Company to Parent or Merger Sub in connection herewith, contains or will
contain any untrue statement of a material fact or omits or will omit to state
a material fact necessary in order to make the statements herein or therein, in
light of the circumstances under which they were made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby jointly and severally represent and warrant
to Company as follows:
SECTION 4.01 Organization. Each is a corporation duly organized, validly
------------
existing and in good standing under the laws of their respective jurisdictions
of incorporation and each has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as now being
conducted.
SECTION 4.02 Authority. Each has full corporate power and authority to
---------
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized and approved by their respective Boards of Directors and by Parent
as the sole shareholder of Merger Sub, and no other corporate proceedings are
necessary to authorize this Agreement or the consummation of the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Parent and Merger Sub and, assuming this Agreement constitutes a
legal, valid and binding agreement of Company, it constitutes a
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legal, valid and binding agreement of Parent and Merger Sub, enforceable
against each of them in accordance with its terms.
SECTION 4.03 No Violations; Consents and Approvals. (a) Neither the
-------------------------------------
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby nor compliance by Parent and Merger Sub with
any of the provisions hereof will violate any provision of their respective
charters or by-laws.
(b) No filing or registration with, notification to, or authorization,
consent or approval of, any governmental entity is required by Parent or Merger
Sub in connection with the execution and delivery of this Agreement or the
consummation by either of the transactions contemplated hereby, except (i) in
connection with the applicable requirements of the HSR Act, (ii) in connection,
or in compliance, with the provisions of the Exchange Act, (iii) the filing of
the Certificate of Merger with the Secretary of State of the State of Delaware,
(iv) such filings and consents as may be required under any environmental law
pertaining to any notification, disclosure or required approval triggered by
the Merger or the transactions contemplated by this Agreement, (v) such
consents, approvals, orders, authorizations, notifications, approvals,
registrations, declarations and filings as may be required under the
corporation, takeover or blue sky laws of various states and (vi) such other
consents, orders, authorizations, registrations, declarations and filings not
obtained prior to the Effective Time the failure of which to be obtained or
made would not, individually or in the aggregate, materially impair the ability
of Parent or Merger Sub to perform their respective obligations hereunder or
prevent the consummation of any of the transactions contemplated hereby.
SECTION 4.04 Legal Proceedings. There is no (i) claim, action, suit or
-----------------
proceeding pending or, to Parent's best knowledge, threatened, against or
relating to it or any of its subsidiaries or any of their respective assets
before any court or governmental or regulatory authority or body or arbitration
tribunal or (ii) outstanding judgment, order, writ, injunction or decree, or
application, request or motion therefor, of any court, governmental agency or
arbitration tribunal in a proceeding to which Parent or any of its subsidiaries
is a party, except any such claim, action, suit or proceeding or judgment,
order, writ, injunction, decree, application, request or motion which would
not, individually or in the aggregate, materially impair the ability of Parent
or Merger Sub to perform their respective obligations hereunder or prevent the
consummation of any of the transactions contemplated hereby.
SECTION 4.05 Proxy Statement. If a Proxy Statement is required for
---------------
consummation of the Merger under applicable law, none of the information to be
supplied by Parent or Merger Sub for
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inclusion or incorporation by reference in such Proxy Statement at the time of
its mailing to stockholders of Company and at the time of its stockholders
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 therein not misleading.
SECTION 4.06 State Antitakeover Statutes. No "business combination,"
---------------------------
"moratorium," "control share" or other state antitakeover statute or regulation
(x) prohibits or restricts the ability of Parent or Merger Sub to perform their
respective obligations under this Agreement or their ability to consummate the
transactions contemplated hereby, (y) would have the effect of invalidating or
voiding this Agreement, or any material provision hereof, or (z) would subject
Company to any material impediment or condition in connection with the exercise
of any of its rights under this Agreement.
SECTION 4.07 Broker's Fees. Except for the engagement of Lazard Freres &
-------------
Co. by Parent, neither Parent nor any of its subsidiaries or any of their
respective directors or officers has employed any broker, finder or financial
advisor or incurred any liability for any broker's fees, commissions, or
financial advisory or finder's fees in connection with any of the transactions
contemplated by this Agreement.
SECTION 4.08 Fairness Opinion. Parent has received the opinion of Lazard
----------------
Freres & Co. LLC to the effect that, as of May 5, 1995, the consideration
payable to Company's stockholders pursuant to the Offer and the Merger is fair
to Parent's stockholders from a financial point of view.
SECTION 4.09 Capitalization of Merger Sub. The authorized capital stock
----------------------------
of Merger Sub consists of 1,000 shares of its common stock, $.01 par value per
share. 1,000 such shares are outstanding and owned beneficially and of record
by Parent. All such outstanding shares were duly authorized and validly issued
and are fully paid and nonassessable. There are no outstanding options,
warrants or other rights to acquire any capital stock of Merger Sub.
ARTICLE V
COVENANTS
SECTION 5.01 Conduct of Business of Company. Except as contemplated by
------------------------------
this Agreement or as expressly agreed to in writing by Parent, during the
period from the date of this Agreement to the Effective Time, each of Company
and its subsidiaries will conduct its operations according to its ordinary
course of business
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consistent with past practice, and will use all commercially reasonable
efforts to preserve intact its business organization, to keep available the
services of its officers and employees and to maintain satisfactory
relationships with suppliers, distributors, customers and others having
business relationships with it and will take no action which would materially
adversely affect the ability of the Parties to consummate the transactions
contemplated by this Agreement. Without limiting the generality of the
foregoing, and except as otherwise expressly provided in this Agreement, prior
to the Effective Time, Company will not nor will it permit any of its
subsidiaries to, without the prior written consent of Parent:
(a) amend its certificate of incorporation or by-laws;
(b) authorize for issuance, issue, sell, deliver, grant any options for,
or otherwise agree or commit to issue, sell or deliver any shares of any class
of its capital stock or any securities convertible into shares of any class of
its capital stock, except pursuant to and in accordance with the terms of
currently outstanding options;
(c) split, combine or reclassify any shares of its capital stock, declare,
set aside or pay any dividend or other distribution (whether in cash, stock or
property or any combination thereof) in respect of its capital stock or
purchase, redeem or otherwise acquire any shares of its own capital stock or
that of any of its subsidiaries;
(d) except in the ordinary course of business, consistent with past
practices (i) create, incur, assume, maintain or permit to exist any long-term
debt or any short-term debt for borrowed money other than under existing lines
of credit or replacements thereof, (ii) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise) for
the obligations of any person other than its subsidiaries, or (iii) make any
loans, advances or capital contributions to, or investments in, any person
other than its subsidiaries, except pursuant to existing commitments;
(e) except as otherwise expressly contemplated by this Agreement or as set
forth in Schedule 5.01 of the Disclosure Statement, (i) increase in any manner
the compensation of any of its directors, officers or other employees; (ii) pay
or agree to pay any pension, retirement allowance or other employee benefit not
required, or enter into or agree to enter into any agreement or arrangement
with such director, officer or employee, whether past or present, relating to
any such pension, retirement allowance or other employee benefit except as
required under currently existing agreements, plans or arrangements; (iii)
grant any severance or termination pay to, or enter into any employment or
severance
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agreement with, any of its directors, officers or other employees; or (iv)
except as may be required to comply with applicable law, become obligated
(other than pursuant to any new or renewed collective bargaining agreement)
under any new pension plan, welfare plan, multi-employer plan, employee benefit
plan, benefit arrangement, or similar plan or arrangement, which was not in
existence on the date hereof, including any bonus, incentive, deferred
compensation, stock purchase, stock option, stock appreciation right, group
insurance, severance pay, retirement or other benefit plan, agreement or
arrangement, or employment or consulting agreement with or for the benefit of
any person, or amend any of such plans or any of such agreements in existence
on the date hereof;
(f) except as otherwise expressly contemplated by this Agreement, enter
into any other material agreements, commitments or contracts, except
agreements, commitments or contracts for the purchase, sale or lease of goods
or services in the ordinary course of business, consistent with past practices;
(g) except in the ordinary course of business, consistent with past
practices, or as contemplated by this Agreement, authorize, recommend, propose
or announce an intention to authorize, recommend or propose, or enter into, any
agreement in principle or any agreement with respect to any plan of liquidation
or dissolution, any acquisition of a material amount of assets or securities,
any sale, transfer, lease, license, pledge, mortgage, or other disposition or
encumbrance of a material amount of assets or securities or any material change
in its capitalization, or any entry into a material contract or any amendment
or modification of any material contract or any release or relinquishment of
any material contract rights;
(h) knowingly undertake any act, or suffer to exist any condition,
causing any insurance policy naming it as a beneficiary or a loss payee to be
canceled or terminated, except in the ordinary course of business and
consistent with past practice and following written notice to Parent;
(i) enter into any hedging, option, derivative or other similar
transaction, except in the ordinary course of business and consistent with past
practices and following written notice to Parent; or
(j) agree to do any of the foregoing.
SECTION 5.02 Acquisitions. Prior to the Effective Time, Company shall
------------
keep Parent advised of the status of all discussions and negotiations
concerning possible acquisitions and divestitures of any corporations or
businesses by Company and Company agrees
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that without the prior written consent of Parent it shall not make, or agree to
make, any acquisition which requires the issuance of shares of capital stock of
Company or any security convertible into, exchangeable for or exercisable for
shares of such capital stock.
SECTION 5.03 Acquisition Proposals. Parent and Merger Sub acknowledge
---------------------
that Company has had discussions with potential acquirors of Company and has
provided such potential acquirors with information (including non-public
information) concerning Company. Company represents and warrants, to, and
covenants and agrees with, Parent and Merger Sub that neither Company nor any
of its subsidiaries has any agreement, arrangement or understanding with any
such potential acquiror that would be violated by reason of the execution,
delivery and consummation of this Agreement. Company also agrees that from and
after the date hereof and until the earlier of the consummation of the Merger
or the termination of this Agreement, it shall, and shall cause its
subsidiaries and shall use its best efforts to cause the officers, directors,
investment bankers and attorneys of Company and its subsidiaries to, (a)
discontinue the solicitation of potential acquirors of Company and not solicit
(or authorize any person to solicit), directly or indirectly, any further
inquiries, proposals or offers from any person relating to any acquisition or
purchase of all or substantially all the assets of, or any equity interest in,
or any merger, consolidation or business combination with, Company or any of
its subsidiaries (the foregoing being referred to as an "Acquisition
Transaction"), (b) not enter into any agreement with respect to any Acquisition
Transaction, and (c) except in the event that there is an unsolicited written
proposal for an Acquisition Transaction from a bona fide third party, and then
---- ----
only if (i) three business days' written notice shall have been given to
Parent; and (ii) (A) such proposal is not expressed as subject to the
arrangement of financing, (B) Company's Board of Directors shall have been
advised in writing by its investment banker that such third party appears to be
financially capable of consummating an Acquisition Transaction that would yield
a higher value to the Company's stockholders than will the Offer and the
Merger, (C) Company's Board of Directors shall have been advised, by the
written opinion of outside counsel to Company, that any failure to so act would
constitute a breach of the fiduciary responsibilities of the Board of Directors
to the stockholders of Company and (D) the Board of Directors, after weighing
such advice, determines that taking such action is more likely than not to lead
to an Acquisition Transaction with such third party that would yield a higher
value to Company's stockholders than will the Offer and the Merger and that
failing to so act would constitute a breach of the Board's fiduciary duties,
not elicit any discussions of, participate in any negotiations regarding,
cooperate with, facilitate or encourage an Acquisition Transaction or furnish
to
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any other person any non-public information concerning Company in connection
therewith. Company shall immediately notify Parent if any proposal or offer
with respect to an Acquisition Transaction is received by Company and
communicate to Parent the terms of any such proposal or offer.
SECTION 5.04 Access to Information. (a) From the date of this Agreement
---------------------
until the Effective Time, Company will give Parent and its authorized
representatives (including counsel, environmental and other consultants,
financial advisors, accountants and auditors) reasonable access during normal
business hours to all facilities, personnel and operations and to all books and
records of it and its subsidiaries, will permit Parent to make such inspections
as it may reasonably require and will cause its officers and those of its
subsidiaries to furnish Parent with such financial and operating data and other
information with respect to its business and properties as Parent may from time
to time reasonably request; provided, however, that access to intellectual
property and other proprietary information of third parties (including, without
limitation, Silcon A/S) and information access to which is otherwise restricted
by agreements with joint venture partners or other third parties shall be
withheld from Parent and such representatives except to the extent disclosure
thereof is specifically authorized in writing by any such third party.
(b) Each of the Parties will hold and will cause all of the employees and
representatives of such Party and its subsidiaries to hold in strict confidence
pursuant to the Confidentiality Agreement dated April 13, 1995 between Parent
and The Chicago Corporation on behalf of Company (the "Confidentiality
Agreement") all documents and information furnished to the other in connection
with the transactions contemplated by this Agreement as if each such employee
or representative were a party thereto.
SECTION 5.05 Proxy Statement and Stockholders Meeting. (a) If required
----------------------------------------
by applicable law, Company shall file the Proxy Statement with the SEC promptly
following Merger Sub's purchase of Shares in the Offer satisfying the Minimum
Condition. Parent shall promptly furnish to Company all information, and take
such other actions, as may reasonably be requested in connection with the Proxy
Statement. The Proxy Statement shall state that the Board of Directors of the
Company has, subject to the applicable provisions of this Agreement, (i)
approved the Offer and the Merger and (ii) determined that the Offer and the
Merger taken together are fair and in the best interest of the stockholders of
Company.
(b) Company agrees that the Proxy Statement and each amendment or
supplement thereto, at the time of mailing thereof and at the time of the
meeting of stockholders of Company, will not include any untrue statement of a
material fact or omit to state a material
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<PAGE>
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
provided, however, that the foregoing shall not apply to the extent that any
such untrue statement of a material fact or omission to state a material fact
was made by Company in reliance upon and in conformity with written information
concerning Parent to be furnished by it specifically for use in the Proxy
Statement. Parent agrees that none of the information to be furnished in
writing to Company specifically for use in the Proxy Statement and each
amendment or supplement thereto, at the time of mailing thereof and at the time
of the meeting of stockholders of Company, will include any untrue statement of
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. If at any time prior to the Effective
Time any event shall occur which is required to be described in the Proxy
Statement, such event shall be so described, and an amendment or supplement
shall be promptly filed with the SEC and, as required by law, disseminated to
the stockholders of Company. Company will advise Parent and Merger Sub
promptly after it receives notice thereof, of any comments by the SEC on the
Proxy Statement and the responses thereto and of any requests by the SEC for
additional information.
(c) If required by applicable law, Company shall call the Special
Meeting, to be held as promptly as practicable in accordance with applicable
law for the purpose of voting upon the adoption of this Agreement and the
approval of the Merger.
SECTION 5.06 Board Recommendation. Company shall, through its Board of
--------------------
Directors, recommend to its stockholders approval of the Offer, the Merger and
the other transactions contemplated by this Agreement; provided, however, that
such Board of Directors may withdraw, modify or change its recommendations to
Company's stockholders in the event that there is an unsolicited written
proposal for an Acquisition Transaction from a bona fide third party, and then
---- ----
only if (i) three business days' written notice shall have been given to
Parent; and (ii) (A) such proposal is not expressed as subject to the
arrangement of financing, (B) Company's Board of Directors shall have been
advised in writing by its investment banker that such third party appears to be
financially capable of consummating an Acquisition Transaction that would yield
a higher value to Company's stockholders than will the Offer and the Merger,
(C) the Company's Board of Directors shall have been advised, by the written
opinion of outside counsel to Company, that any failure to so act would
constitute a breach of the fiduciary responsibilities of the Board of Directors
to the stockholders of Company and (D) the Board of Directors, after weighing
such advice, determines that taking such action is more likely than not to lead
to an Acquisition Transaction with such third party that would
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yield a higher value to Company's stockholders than will the Offer and the
Merger and that failing to so act would constitute a breach of the Board's
fiduciary duties. Subject to the foregoing, Company shall use all commercially
reasonable efforts to solicit from its stockholders proxies in favor of such
matters.
SECTION 5.07 Reasonable Efforts; Other Actions. Subject to the terms and
---------------------------------
conditions herein provided and applicable law, the Parties shall use all
commercially reasonable efforts promptly to take, or cause to be taken, all
other actions and do, or cause to be done, all other things necessary, proper
or appropriate under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, including, without
limitation, (i) the filing of Notification and Report Forms under the HSR Act
with the Federal Trade Commission (the "FTC") and the Antitrust Division of the
Department of Justice (the "Antitrust Division") and using their reasonable
best efforts to respond as promptly as practicable to all inquiries received
from the FTC or the Antitrust Division for additional information or
documentation, (ii) the obtaining of all necessary consents, approvals or
waivers under its material contracts, and (iii) the lifting of any legal bar to
the Merger.
SECTION 5.08 Public Announcements. Before issuing any press release or
--------------------
otherwise making any public statements with respect to transactions
contemplated by this Agreement, Parent and Company will consult with each other
as to its form and substance 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.
SECTION 5.09 Notification of Certain Matters. Each of Company and Parent
-------------------------------
shall give prompt notice to the other of (i) any notice of, or other
communication relating to, a default or event which, with notice or lapse of
time or both, would become a default, received by it or any of its subsidiaries
subsequent to the date of this Agreement and prior to the Effective Time, under
any contract material to the financial condition, properties, businesses or
results of operations of Company and its subsidiaries taken as a whole to which
it or any of its subsidiaries is a party or is subject, and (ii) any notice or
other communication from any third party alleging that the consent of such
third party is or may be required in connection with the transactions
contemplated by this Agreement.
SECTION 5.10 Indemnification. (a) Parent shall, and shall cause the
---------------
Surviving Corporation to, indemnify, defend and hold harmless the present and
former officers, directors, employees and agents of Company and its
subsidiaries against all losses, claims, damages, expenses or liabilities
arising out of actions or omissions or alleged actions or omissions occurring
at or prior to
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the Effective Time to the same extent and on the same terms and conditions
(including with respect to advancement of expenses) provided for in Company's
Certificate of Incorporation and By-Laws and agreements in effect at the date
hereof.
(b) For a period of six years after the Effective Time, Parent shall cause
to be maintained in effect the current policies of directors' and officers'
liability insurance maintained by the Company (provided that Parent may
substitute therefor policies of at least the same coverage and amounts
containing terms and conditions which are no less advantageous) with respect to
claims arising from facts or events which occurred before the Effective Time.
(c) The provisions of this Section 5.10 are intended to be for the benefit
of, and shall be enforceable by, each indemnified party hereunder, his or her
heirs and his or her representatives.
SECTION 5.11 Expenses. Except as set forth in Section 10.05, the Parties
--------
shall bear their respective expenses incurred in connection with the
transactions contemplated by this Agreement, including, without limitation, the
preparation, execution and performance of this Agreement and the transactions
contemplated hereby, and all fees and expenses of their respective investment
bankers, finders, brokers, agents, representatives, counsel and accountants.
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF THE PARTIES
The respective obligations of each Party to effect the transactions
contemplated by this Agreement shall be subject to the fulfillment at or prior
to the Closing of each of the following conditions:
SECTION 6.01 Stockholder Approval. If required by applicable law, the
--------------------
requisite vote of the stockholders of Company necessary to consummate the
Merger shall have been obtained.
SECTION 6.02 Consents and Approvals. All necessary consents and
----------------------
approvals of any United States or any other governmental authority or any other
third party required for the consummation of the transactions contemplated by
this Agreement shall have been obtained, except for such consents and approvals
the failure to obtain which individually or in the aggregate would not have a
Material Adverse Effect; and any waiting period applicable to the consummation
of the Offer and the Merger under the HSR Act shall have expired or been
terminated.
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ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGER SUB
The obligations of Parent and Merger Sub to effect the transactions
contemplated by this Agreement and to perform their other obligations to be
performed at or subsequent to the Closing shall be subject to the fulfillment
at or prior to the Closing of the following additional conditions, any one or
more of which may be waived by Parent:
SECTION 7.01 Representations and Warranties True. The representations
-----------------------------------
and warranties of Company contained herein (without regard to any materiality
exceptions contained therein) shall be true and correct on the date of this
Agreement and at and on the Closing Date as though such representations and
warranties were made at and on such date, except for such untruths or
inaccuracies which would not, individually or in the aggregate, have a Material
Adverse Effect.
SECTION 7.02 Performance. Company shall have performed and complied in
-----------
all material respects with all agreements, obligations and conditions required
by this Agreement to be performed or complied with by it on or prior to the
Closing Date.
SECTION 7.03 Certificates. Company shall furnish such certificates of
------------
appropriate officers and directors to evidence compliance with the conditions
set forth in Sections 7.01 and 7.02 as may be reasonably requested by Parent.
SECTION 7.04 Certain Proceedings. No writ, order, decree or injunction
-------------------
of a court of competent jurisdiction or governmental entity shall be in effect
against any of the Parties, and no proceedings therefor shall have been
threatened or commenced by any governmental entity, which prohibits or
restricts the consummation of the Offer or the Merger or would otherwise
restrict the Surviving Corporation's exercise of full rights to own and operate
its business in a manner which would have a Material Adverse Effect.
SECTION 7.05 Material Adverse Change. There shall not have occurred
-----------------------
since the date of this Agreement any material adverse change in the business,
operations, assets, financial condition or results of operations of Company and
its subsidiaries taken as a whole.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF COMPANY
The obligation of Company under this Agreement to effect the transactions
contemplated by this Agreement shall be subject to the fulfillment on or before
the Closing Date of each of the following
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additional conditions, any one or more or which may be waived by Company:
SECTION 8.01 Representations and Warranties True. The representations
-----------------------------------
and warranties of Parent and Merger Sub contained herein (without regard to any
materiality exceptions contained therein) shall be true and correct on the date
of this Agreement and at and on the Closing Date as though such representations
and warranties were made at and on such date, except for such untruths or
inaccuracies which would not, individually or in the aggregate, impair their
ability to consummate the transactions contemplated by this Agreement.
SECTION 8.02 Performance. Parent and Merger Sub shall have each
-----------
performed and complied in all material respects with all agreements,
obligations and conditions required by this Agreement to be performed or
complied with by either of them on or prior to the Closing Date.
SECTION 8.03 Certificates. Parent and Merger Sub shall furnish such
------------
certificates of their respective officers to evidence compliance with the
conditions set forth in Sections 8.01 and 8.02 as may be reasonably requested
by Company.
SECTION 8.04 Certain Proceedings. No writ, order, decree or injunction
-------------------
of a court of competent jurisdiction or governmental entity shall be in effect
against any of the Parties, and no proceedings therefor shall have been
threatened or commenced by any governmental entity, which prohibits or
restricts the consummation of the Merger.
ARTICLE IX
CLOSING
SECTION 9.01 Time and Place. Subject to the provisions of Articles VI,
--------------
VII, VIII and X, the closing of the Merger (the "Closing") shall take place at
the offices of Cahill Gordon & Reindel, as soon as practicable but in no event
later than 9:30 A.M., local time, on the later of (x) the day of the Special
Meeting provided for in Section 2.10, if required by law, or (y) the day on
which the last of the conditions set forth in Articles VI, VII and VIII shall
have been satisfied or waived by the Party or Parties entitled to the benefit
of such conditions, or at such other place, at such other time or on such other
date as Parent and Company may mutually agree. The date on which the Closing
actually occurs is herein referred to as the "Closing Date."
SECTION 9.02 Filings at the Closing. Subject to the provisions of
----------------------
Articles VI, VII, VIII and X, the Parties shall cause to be executed and filed
at the Closing the Certificate of Merger and shall cause the Certificate of
Merger to be recorded in accordance with the applicable provisions of the DGCL
and shall
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take any and all other lawful actions and do any and all other lawful things
necessary to cause the Merger to become effective.
ARTICLE X
TERMINATION AND ABANDONMENT
SECTION 10.01 Termination. This Agreement may be terminated at any time
-----------
prior to the Effective Time, whether before or after approval by the
stockholders of Company:
(a) by mutual consent of the Boards of Directors of Parent and Company;
(b) by either Parent or Company if, without a breach of this Agreement by
such terminating party, the Merger shall not have been consummated on or before
December 31, 1995, which date may be extended by mutual written consent of the
Parties;
(c) by either Parent or Company, if any court of competent jurisdiction in
the United States or other governmental body in the United States shall have
issued an order (other than a temporary restraining order), decree or ruling or
taken any other action 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 that the Party seeking to terminate
this Agreement shall have used all commercially reasonable efforts to remove or
lift such order, decree or ruling; or
(d) by either Parent and Merger Sub or Company, if no Shares shall have
been purchased pursuant to the Offer on or before September 30, 1995.
(e) by either Parent and Merger Sub or Company, if the Offer is
terminated in accordance with its terms without the purchase of any Shares.
SECTION 10.02 Termination by Parent. This Agreement may be terminated
---------------------
and the transactions contemplated hereby abandoned by action of the Board of
Directors of Parent, at any time prior to the Effective Time, before or after
the approval by the stockholders of Company, if (a) Company shall have failed
to comply in any material respect with any of the covenants or agreements
contained in Articles I, II and V of this Agreement to be complied with or
performed by Company at or prior to such date of termination, (b) there exists
a breach or breaches of any representation or warranty of Company contained in
this Agreement such that the closing condition set forth in Section 7.01 would
not be satisfied as of the Closing Date; provided, however, that if
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such breach or breaches are capable of being cured prior to the Effective Time,
such breaches shall not have been cured by the earlier of December 31, 1995 or
20 days following delivery to Company of written notice of such breach or
breaches, (c) the Board of Directors of Company shall have exercised their
rights under Section 5.03(c) hereof, or (d) the Board of Directors of Company
shall, at the time of a bona fide offer concerning an Acquisition Transaction
made after the date of this Agreement, have exercised their rights under
Section 5.06 hereof to withdraw, modify or change their recommendation to
stockholders with respect to the Offer, the Merger and the other transactions
contemplated by this Agreement.
SECTION 10.03 Termination by Company. This Agreement may be terminated
----------------------
and the transactions contemplated hereby abandoned at any time prior to the
Effective Time, before or after the approval by the stockholders of Company, by
action of the Board of the Directors of Company, if (a) Parent or Merger Sub
shall have failed to comply in any material respect with any of their
respective covenants or agreements contained in Articles I, II and V of this
Agreement to be complied with or performed by Parent or Merger Sub at or prior
to such date of termination, (b) there exists a breach or breaches of any
representation or warranty of Parent or Merger Sub contained in this Agreement
such that the closing condition set forth in Section 8.01 would not be
satisfied as of the Closing Date; provided, however, that if such breach or
breaches are capable of being cured prior to the Effective Time, such breaches
shall not have been cured by the earlier of December 31, 1995 or 20 days
following delivery to Parent of written notice of such breach or breaches, or
(c) the Board of Directors of Company shall, at the time of a bona fide offer
concerning an Acquisition Transaction made after the date of this Agreement,
have exercised their rights under Section 5.06 hereof to withdraw, modify or
change their recommendation to stockholders with respect to the Offer, the
Merger and the other transactions contemplated by this Agreement.
SECTION 10.04 Procedure for Termination. In the event of termination of
-------------------------
this Agreement and abandonment of the transactions contemplated hereby by
Parent or Company pursuant to this Article X, written notice thereof shall
forthwith be given to the other.
SECTION 10.05 Effect of Termination and Abandonment. (a) In the event of
-------------------------------------
termination of this Agreement and abandonment of the transactions contemplated
hereby pursuant to this Article X, no Party (or any of its respective directors
or officers) shall have any liability or further obligation to any other Party
to this Agreement, except as provided in this Section 10.05 and Section 5.04(b)
hereof and provided that nothing herein shall relieve any party from liability
for any breach of this Agreement.
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(b) If this Agreement is terminated pursuant to this Article X (other
than pursuant to Section 10.03(a) or (b)) and after the date hereof and prior
to such termination a third party shall have made a bona fide offer concerning
an Acquisition Transaction that would yield a higher value to Company's
stockholders than the Offer and Merger, Company shall within two business days
pay Parent by wire transfer of immediately available funds to an account
specified by Parent up to $4 million to reimburse Parent for its documented
fees and expenses directly related to this Agreement and the transactions
contemplated hereby. If this Agreement is terminated by Parent pursuant to
Section 10.02(d) or by Company pursuant to 10.03(c), Company shall within two
business days pay to Parent by wire transfer of immediately available funds to
an account specified by Parent an additional fee of $6 million. If such
additional fee has not already become payable and within twelve months after
the date hereof Company enters into a definitive agreement for an Acquisition
Transaction or an Acquisition Transaction is effected, and if after the date of
this Agreement and prior to its termination pursuant to this Article X, a third
party shall have proposed an Acquisition Transaction to the Company or its
stockholders that would yield a higher value to Company's stockholders than the
Offer and the Merger, then Company, concurrently with and as a condition to
entering into any definitive agreement for an Acquisition Transaction or any
Acquisition Transaction being effected within twelve months after the date
hereof, shall pay Parent by wire transfer of immediately available funds to an
account specified by Parent, an additional fee of $6 million; provided that no
such additional fee shall be payable in the event this Agreement shall have
been terminated pursuant to Section 10.03(a) or 10.03(b).
(c) So long as Company is not in breach or default under any covenant,
condition, representation or warranty herein, in the event of a termination of
this Agreement by Company pursuant to Section 10.03 (a) or (b), then Parent
shall promptly pay Company by wire transfer of immediately available funds to
an account specified by Company up to $4 million to reimburse Company for all
documented fees and expenses incurred by Company (including the fees and
expenses of counsel, accountants, consultants and advisors) directly related to
this Agreement and the transactions contemplated hereby.
ARTICLE XI
DEFINITIONS
SECTION 11.01 Terms Defined in the Agreement. The following capitalized
------------------------------
terms used herein shall have the meanings ascribed in the indicated sections.
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<PAGE>
Acquisition Transaction 5.03
Agreement Preamble
Antitrust Division 5.07
Applicable Environmental Standards 3.12
Balance Sheet 3.05
Certificate of Merger 2.02
Certificates 2.08
Closing 9.01
Closing Date 9.01
Company Preamble
Company Common Stock Recitals
Company Plans 3.02
Company Preferred Stock 3.02
Company Shares 3.02
Confidentiality Agreement 5.04
Constituent Corporations Preamble
DGCL 2.01
Disclosure Statement 1.02
Dissenting Shares 2.06
Effective Time 2.02
Employee Pension Benefit Plans 3.15
ERISA 3.15
ERISA Affiliates 3.15
Exchange Act 1.01
FTC 5.07
HSR Act 3.04
Interim Balance Sheet 3.05
Material Adverse Effect 3.01
Merger Recitals
Merger Consideration 2.06
Merger Sub Preamble
Minimum Condition 1.01
Offer Recitals
Offer Documents 1.01
person 12.10
Parent Preamble
Parties Preamble
Paying Agent 2.08
Pension Benefit Plans 3.15
Per Share Amount Recitals
Person 12.10
Proxy Statement 2.10
Schedule 14D-9 1.02
SEC 1.01
Securities Act 3.05
Shares Recitals
Significant Subsidiary 3.01
Special Meeting 2.10
subsidiary 12.10
Surviving Corporation 2.01
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Welfare Plans 3.15
ARTICLE XII
MISCELLANEOUS
SECTION 12.01 Amendment and Modification. Subject to applicable law,
--------------------------
this Agreement may be amended, modified or supplemented only by written
agreement of the Parties at any time prior to the Effective Time with respect
to any of the terms contained herein; provided, however, that, after this
Agreement is adopted by the stockholders of Company, no such amendment or
modification shall reduce the amount or change the form of the Merger
Consideration or in any way adversely affect the rights of the holders of
Company Common Stock without the further approval of such holders; and,
provided, further, that from and after the date that Parent's designees to the
Board of Directors of Company constitute a majority of the Board of Directors
of Company and prior to consummation of the Merger, any amendment or
modification of this Agreement and any material deviation in the performance of
this Agreement shall require the approval of a majority of the members of the
Board of Directors, if any, who are not designees or affiliates of Parent.
SECTION 12.02 Waiver of Compliance; Consents. Any failure of Parent and
------------------------------
Merger Sub or Company to comply with any obligation, covenant, agreement or
condition herein may be waived only by a written instrument signed by the Party
granting such waiver, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. Whenever this Agreement requires or permits consent by or on behalf
of any party hereto, such consent shall be given in writing in a manner
consistent with the requirements for a waiver of compliance as set forth in
this Section 12.02.
SECTION 12.03 Survivability; Investigations. The respective
-----------------------------
representations and warranties of the Parties contained herein or in any
certificates or other documents delivered prior to or at the Closing shall not
be deemed waived or otherwise affected by any investigation made by any party
hereto and shall not survive the Closing. This Section 12.03 shall have no
effect upon any other obligation of any of the Parties hereto, whether to be
performed before or after the Closing Date.
SECTION 12.04 Reasonable Efforts. Subject to the terms and conditions
------------------
herein provided, and applicable law, the Parties each agree to use all
commercially reasonable efforts to take, or cause to be taken, all action, and
to do, or cause to be done, all things necessary, proper and advisable under
applicable laws and
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regulations to consummate and make effective the transactions contemplated by
this Agreement.
SECTION 12.05 Notices. All notices and other communications hereunder
-------
shall be in writing and shall be delivered personally, by next-day courier or
mailed by registered or certified mail (return receipt requested), first class
postage prepaid, or telecopied with confirmation of receipt, to the Parties at
the addresses specified below (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). Any such notice shall be effective upon
receipt, if personally delivered or telecopied, one day after delivery to a
courier for next-day delivery, or three days after mailing, if deposited in the
U.S mail, first class postage prepaid.
(a) if to Company, to
Best Power Technology, Incorporated
P.O. Box 280
Route 80
Necedah, Wisconsin 54646-9899
Telecopy: (608) 565-3483
Attention: Dennis E. Burke,
Executive Vice President
with a copy to:
Michael Best & Friedrich
135 South LaSalle Street
Suite 1610
Chicago, Illinois 60603
Telecopy: (312) 845-5828
Attention: Thomas C. Judge, Esq.
(b) if to Parent or Merger Sub, to
General Signal Corporation
One High Ridge Park
P.O. Box 10010
Stamford, Connecticut 06904
Telecopy: (203) 329-4314
Attention: Edgar J. Smith, Jr., Esq.,
General Counsel
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<PAGE>
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Telecopy: (212) 269-5420
Attention: W. Leslie Duffy, Esq.
SECTION 12.06 Assignment. This Agreement and all of the provisions
----------
hereof shall be binding upon and inure to the benefit of the Parties and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the Parties without the prior written consent of the other Parties, nor is this
Agreement intended to confer any rights or remedies hereunder upon any other
person except the parties hereto and, with respect to Section 5.10, the
officers, directors and employees of Company.
SECTION 12.07 Governing Law. Except as the laws of the State of Delaware
-------------
are by their terms applicable, this Agreement shall be governed by the laws of
the State of New York (regardless of the laws that might otherwise govern under
applicable New York principles of conflicts of law) as to all matters,
including but not limited to matters of validity, construction, effect,
performance and remedies.
SECTION 12.08 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 12.09 Severability. In case any one or more of the provisions
------------
contained in this Agreement should be invalid, illegal or unenforceable in any
respect against a Party, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby and such invalidity, illegality or unenforceability shall only
apply as to such Party in the specific jurisdiction where such judgment shall
be made.
SECTION 12.10 Interpretation. The article and section headings contained
--------------
in this Agreement are solely for the purpose of reference, are not part of the
agreement of the Parties and shall not in any way affect the meaning or
interpretation of this Agreement. This Agreement has been negotiated by the
Parties and is their mutual product; accordingly, no rule of strict
construction against Company shall be applied in the interpretation of this
Agreement. As used in this Agreement, (i) the term "person" shall mean and
include an individual, a partnership, a joint venture, a corporation, a
limited liability company, a trust,
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an unincorporated organization and a government or any department or agency
thereof; and (ii) the term "subsidiary" of any specified corporation shall mean
any corporation of which a majority of the outstanding securities having
ordinary voting power to elect a majority of the board of directors are,
directly or indirectly, owned by such specified corporation or any other person
of which a majority of the equity interests therein are directly or indirectly,
owned by such specified corporation.
SECTION 12.11 Guarantee. Parent hereby guarantees the due and punctual
---------
performance by Merger Sub of all of Merger Sub's obligations in connection with
the Merger and the other matters contemplated by this Agreement.
SECTION 12.12 Entire Agreement. This Agreement, including the schedules
----------------
and exhibits hereto and the documents and instruments referred to herein and
therein, embodies the entire agreement and understanding of the parties hereto
in respect of the subject matter contained herein and supersedes all prior
agreements and the understandings between the parties with respect to such
subject matter, except for the Confidentiality Agreement, which shall remain in
full force and effect. There are no representations, promises, warranties,
covenants, or undertakings, other than those expressly set forth or referred to
herein and therein.
IN WITNESS WHEREOF, PARENT, MERGER SUB and COMPANY have caused this
Agreement to be signed by their respective duly authorized officers as of the
date first above written.
GENERAL SIGNAL CORPORATION
By: /s/ Philip A. Goodrich
--------------------------
Philip A. Goodrich
Vice President-Corporate Development
G.S. NEWCO, INC.
By: /s/ Edgar J. Smith, Jr.
----------------------------
Edgar J. Smith, Jr.
Vice President
BEST POWER TECHNOLOGY, INCORPORATED
By: /s/ Paul F. Koeppe
--------------------------
Paul F. Koeppe
Chairman, Executive Committee
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<PAGE>
ANNEX A
to Agreement
and Plan of
Merger
CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer and in addition to (and
not in limitation of) Merger Sub's rights to extend and amend the Offer at any
time in its sole discretion, and in addition to the Minimum Condition, Merger
Sub shall not be required to accept for payment or pay for any tendered shares
of Company Common Stock, and may postpone the acceptance for payment of or
payment for tendered shares of Company Common Stock and may terminate or amend
the Offer if, at or before the acceptance of such shares of Company Common
Stock for payment or the payment therefor pursuant to the Offer, any material
litigation with respect to the Offer or the Merger shall not have been finally
settled, dismissed or withdrawn, or any of the following shall occur and be
continuing:
(a) there shall be any pending action or proceeding, or any statute,
rule, regulation, legislation, interpretation, judgment, order or
injunction shall be proposed, sought, enacted, promulgated, entered,
enforced, amended or made applicable to Merger Sub or any of its
affiliates or to the Offer or the Merger by or before any domestic or
foreign government or governmental, regulatory or administrative authority
or agency or by or before any court or tribunal, domestic or foreign (i)
challenging the acquisition by Merger Sub or any affiliate of Merger Sub,
in whole or in part, of the shares of Company Common Stock, seeking,
directly or indirectly, to restrain, delay, prohibit or make more costly
the making or consummation of the Offer or the Merger or seeking to obtain
any damages or otherwise, directly or indirectly, relating to the
transactions contemplated by the Offer or the Merger, (ii) seeking to
prohibit, restrict or limit the ownership or operation by Merger Sub or
any of its affiliates of all or any portion of its or Company's business
or assets, or to compel Merger Sub or any of its affiliates to dispose of
or hold separate all or any portion of its or Company's business or assets
as a result of the Offer or the Merger, (iii) making the purchase of, or
payment for, some or all of the shares of Company Common Stock illegal,
(iv) resulting in a material delay in the ability of Merger Sub to accept
for payment or pay for some or all of the shares of Company Common Stock,
(v) seeking to impose limitations on the ability of Merger Sub or any of
its affiliates effectively to acquire, hold or exercise rights of
ownership of any shares of Company Common Stock now owned or hereafter
purchased or to be purchased, including, without limitation, the right to
vote, or act by consent with respect to, such shares of Company Common
Stock on any matter properly presented to the shareholders of Company,
(vi) imposing any limitations on the
A-1
<PAGE>
ability of Merger Sub or any of its affiliates effectively to control in
any material respect the business and operations of Company, (vii) seeking
or causing any material diminution in the benefits expected to be derived
by Merger Sub or any of its affiliates as a result of the Offer or the
Merger, or (viii) which otherwise would materially and adversely affect
Company and its subsidiaries taken as a whole;
(b) any change (or any development involving a prospective change)
shall have occurred or be threatened in connection with the business,
assets, liabilities, capitalization, shareholders' equity, financial
condition, licenses, franchises, results of operations or prospects of
Company or any of its subsidiaries which would be materially adverse to
Company and its subsidiaries taken as a whole, or Merger Sub shall have
become aware of any fact that would have material adverse significance
with respect to Company and its subsidiaries taken as a whole;
(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange, or on NASDAQ or otherwise in the over-the-counter market, (ii)
the declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (iii) the commencement of a war,
armed hostilities or other international or national calamity directly or
indirectly involving the United States, (iv) any material limitation
(whether or not mandatory) by any governmental authority or agency, or any
other event which would significantly affect the extension of credit by
banks or other lending institutions in the United States, (v) an aggregate
decline since May 9, 1995 of 15% or more in the Standard & Poor's 500
Index, (vi) any imposition of currency controls in the United States or a
material change in exchange rates or a suspension of, or material
limitation on, the markets therefor, or (vii) in the case of any of the
foregoing existing at the time of commencement of the Offer, any material
worsening or acceleration thereof;
(d) Merger Sub or any of its affiliates shall have reached an
agreement or understanding with Company providing for amendment or
termination of the Offer;
(e) it shall have been publicly disclosed after the date of the
Agreement or Merger Sub shall have learned that (i) any person (including
Company or any of its subsidiaries or affiliates), entity or "group" (as
defined in Section 13(d)(3) of the Exchange Act) shall have acquired or
proposed to acquire more than 15% of any class or series of capital stock
of Company (including the Shares) or its subsidiaries or shall have been
granted any option or right to acquire more than 15% of any class or
series of capital stock of Company (including the Shares) or its
subsidiaries, other than acquisitions of Shares for bona fide arbitrage
positions, or (ii) any such person, entity or group which has publicly
disclosed any such ownership of or right to acquire more than 15% of any
class or
A-2
<PAGE>
series of capital stock of Company (including the Shares) or its
subsidiaries prior to May 1, 1995 shall after the date of the Agreement
have acquired or proposed to acquire additional shares of any class or
series of capital stock of Company (including the Shares) or its
subsidiaries constituting more than 1% of such class or series or shall
have been granted any option or right to acquire more than 1% of such
class or series of capital stock of Company (including the Shares) or its
subsidiaries or (iii) any group shall have been formed which beneficially
owns more than 15% of any class or series of capital stock of Company
(including the Shares) or its subsidiaries;
(f) Company shall have failed to comply in any material respect with
its obligations and covenants contained in the Agreement, or the
representations and warranties (without regard to any references to
materiality or Material Adverse Effect contained in any such
representations or warranties) made by Company in the Agreement shall have
failed to be true and correct on the date of the Merger Agreement and of
the expiration of the Offer as though such representations and warranties
had been made at and on such dates, except for such failures which,
individually or in the aggregate, would not have a Material Adverse Effect
and which, individually or in the aggregate, would not materially
adversely affect the rights of Parent and Merger Sub to consummate the
transactions contemplated by the Merger Agreement; or
(g) The Merger Agreement shall be terminated in accordance with its
terms.
The foregoing conditions are for the sole benefit of Merger Sub and may be
asserted by Merger Sub or any of its affiliates or may be waived in whole or in
part at any time or from time to time in its sole discretion. The failure to
exercise any of the foregoing rights shall not be deemed a waiver of any right,
and each right shall be deemed a continuing right which may be asserted at any
time and from time to time for so long as such right exists.
A-3
EXHIBIT 2
SEVERANCE AGREEMENT
AGREEMENT, dated the 31st day of March, 1995, between BEST POWER
TECHNOLOGY, INCORPORATED, a Delaware corporation (the "Company"), and STEVE J.
PAUL ("Paul").
RECITALS
WHEREAS, Paul's employment as Chief Executive Officer of the Company,
pursuant to the Employment Agreement dated May 17, 1993, as amended by the
Amendment to Employment Agreement dated as of June 23, 1994, each between the
Company and Paul (collectively, the "Employment Agreement"), was terminated as
of January 26, 1995; and
WHEREAS, the Company and Paul desire to fully and finally compromise and
settle all differences between them relating to the employment of Paul with the
Company and the termination of that employment.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
herein made, it is agreed as follows:
1. Severance and Settlement Payments.
---------------------------------
(a) On the date of the Company's receipt of a counterpart hereof
executed by Paul, the Company shall make wire transfers of the following
amounts into the Reinhart, Boerner, Van Deuren, Norris & Rieselbach, s.c.
Client Trust Fund for the benefit of Paul:
(i) In severance and in payment of Paul's alleged contractual and other
claims not covered in clause (ii) below, an amount equal to $338,000,
less appropriate employment and income tax withholding; and
(ii) In settlement of Paul's alleged personal injury claims, an amount
equal to $95,000. The Company will not issue a Form 1099 or a Form
W-2 in connection with the amount specified in this clause (ii);
provided, that such amounts shall not be released to Paul until following the
- --------
close of business on the Effective Date (as defined in Section 11 hereof) and
unless the conditions specified in Section 16 shall have been satisfied.
(b) The Company makes no representation or warranty to Paul concerning
the employment or income tax character or consequences (including any related
penalties and interest) to Paul of any of the above payments; and it is further
understood and agreed that any future employment or income tax consequences
(including any related penalties and interest) that may be imposed on or
asserted against Paul will not provide a basis to set aside or in any way alter
this Agreement or the payments to be made hereunder, and that Paul shall be
solely responsible for paying any such taxes that may be imposed or asserted by
any such taxing authority.
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<PAGE>
(c) This Agreement shall not be construed to render Paul a "prevailing
party" within the meaning of Sec. 706(k) of Title VII of the Civil Rights Act of
1964, 42 U.S.C. Sec. 2000e-5(k); the Wisconsin Fair Employment Act, Wis. Stat.
Sec. 111.31 et seq.; or any other federal, state, county or municipal statute,
ordinance or other law, precedent or practice providing for or allowing
attorneys' fees and/or costs; nor shall this Agreement be deemed to constitute
a factor supporting the award of attorneys' fees and/or costs under any
thereof. Paul shall be solely responsible for the payment of all his legal
fees and expenses with respect to this Agreement and all other matters
concerning the Company.
(d) Through May 17, 1996, the Company shall use its best efforts to
obtain and keep in full force and effect group health, dental and life
insurance coverage for the benefit of Paul and his dependents, on the same
basis and with the same payments and co-payments as such coverage is now
provided for executive employees of the Company; provided that (i) the period
from May 18, 1996 through November 17, 1997 shall constitute the eighteen (18)
month continuation coverage period for Paul and his qualifying beneficiaries
under Section 4980B of the Internal Revenue Code of 1986, as amended (the
"Code"), and (ii) the Company's performance of this covenant shall be deemed to
satisfy any health insurance continuation coverage obligations of the Company
through November 17, 1997 under Code Section 4980B with respect to Paul and
his qualifying beneficiaries.
(e) Paul hereby acknowledges that he has received all payments due to him
from the Company in respect of the Employment Agreement or otherwise through
the date of this Agreement, and Paul further acknowledges that this
consideration and the payments to be remitted to him on the Effective Date or
thereafter to the extent specified in this Agreement are being provided in
return for his accepting the terms and conditions hereof, including a release,
covenants not to sue, disclose or compete and not revoking under Section 11 so
that this Agreement becomes effective. Paul hereby acknowledges that such
consideration is in part in lieu of that to which he may be entitled to under
any Company plan or policy.
(f) Paul also acknowledges that all of the options to purchase shares of
the Company's common stock heretofore granted to Paul under the Best Power
Technology, Incorporated 1993 Stock Option Plan have terminated and are void
and that the Company shall no longer be obligated to pay any salary, bonus or
premiums on Paul's whole life insurance policy with a face amount of $2,300,000
or make any other payment to or for the benefit of Paul as set forth in the
Employment Agreement.
(g) The Company agrees that through May 17, 1996 Paul shall be accorded
the published discount on products of the Company granted to its executive
employees generally.
(h) The Company agrees that, in the event the Company proposes to amend
Article Eight of its Certificate of Incorporation in a manner that would reduce
or eliminate the indemnification provided by the Company to its officers and
directors, the Company
2
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will prior to or concurrently with the effectiveness of any such amendment
provide to Paul a written indemnity agreement obligating the Company to
indemnify Paul to the same extent he is now indemnified under Article Eight of
the Certificate of Incorporation.
(i) The Company hereby grants to Paul an option to purchase 21,533 shares
of the Company's common stock pursuant to the Company's Director Stock Option
Plan at a price per share equal to $13.48, exercisable during the ninety day
period commencing on May 17, 1996 by notice to the Company and payment of the
indicated exercise price against delivery of the shares bearing appropriate
legends unless such shares are then the subject of an effective registration
statement. Notwithstanding the foregoing, such option shall terminate and be
null and void with no compensation to Paul therefor in the event that (x) the
Company's Board of Directors approves a Transaction (as defined in Section
1(j)), (y) such Transaction is completed on or before October 15, 1995 and (z)
the cash amount described in such Section is paid to Paul.
(j) Subject to satisfaction of the conditions specified below, the
Company hereby grants to Paul the right to receive in cash the positive amount,
if any, equal to the product of (A) 21,533 and (B) the positive difference, if
any, determined by subtracting (w) $13.48 from (x) the Average Value Received
for each share of the Company's common stock in a Transaction. As used herein,
the term "Transaction" means a sale of all or substantially all of the
Company's assets, the completion of a tender offer for at least 80% of the
Company's issued and outstanding capital stock in a manner approved by its
Board of Directors, a merger to which the Company is a party and pursuant to
which its stockholders immediately prior to such merger own less than half of
the issued and outstanding capital stock of the entity resulting from such
transaction, or any similar transaction involving in substance a sale of the
Company; and the term "Average Value Received" means (y) the aggregate fair
market value of all cash and securities received in a Transaction, valued as of
the time of such receipt and through the use of valuation techniques approved
by the Company's Board of Directors, divided by (z) the number of shares of the
Company's common stock with respect to which such consideration is payable,
whether in one or more steps. The foregoing grant to Paul is subject to the
conditions that (1) the final announced step of a Transaction must be completed
on or prior to October 15, 1995, and (2) in the event that the other party to
the Transaction and the Company's Board of Directors both determine to account
for such Transaction as a pooling of interests, such payment must not adversely
affect such characterization (and if it would adversely affect such
characterization, the foregoing grant to Paul shall be null and void and Paul
shall receive no compensation therefor). If such cash amount is payable, it
shall be paid to Paul upon completion of the final step of the related
Transaction (or, at the election of the other party to such Transaction, at
such earlier time as it may choose to make such payment).
(k) The Company shall use its reasonable best efforts to hold regular
meetings of its Board of Directors at least once each calendar quarter. Prior
to each such meeting, a full agenda and other discussion materials will be
circulated to all Directors; and drafts of the minutes
3
<PAGE>
of each such meeting will be circulated to all Directors promptly thereafter.
2. Confidentiality of Information; Covenant Not to Compete.
-------------------------------------------------------
(a) Notwithstanding the termination of the Employment Agreement and his
employment thereunder, Paul shall be subject to the confidentiality and
noncompetition obligations set forth in the Company's Employee Confidentiality,
Invention, and Copyright Agreement and the Employment Agreement, respectively,
except that all of Paul's obligations not to compete with the Company shall
expire on May 17, 1998. In addition, Paul shall not disclose the terms of
this Agreement to anyone other than his wife, attorney or tax advisor except as
required by law, and he shall advise such persons that they may not disclose
the terms of this Agreement to anyone except as required by law. The parties
agree that, promptly following the Effective Date, the Company shall be
entitled to issue a press release in substantially the form of Annex I hereto.
The Company agrees that it will not issue any other press release or make any
other public disclosure concerning this Agreement without Paul's prior written
consent except as set forth in such press release or, to the extent
additionally required by law, a factual description of the existence and terms
of this Agreement and/or the inclusion of this Agreement as an exhibit to the
Company's filings with the Securities and Exchange Commission.
(b) Paul shall refrain from publishing or communicating, whether orally
or in writing, any remarks disparaging or derogatory of the Company or any of
its employees, officers, directors or shareholders, including, without
limitation, any remarks concerning the business affairs of the Company or the
character or qualifications of any such individuals. The Company shall refrain
from publishing or communicating (and the Company shall advise the members of
its Board of Directors that they may not publish or communicate), whether
orally or in writing, any remarks disparaging or derogatory of Paul, including,
without limitation, any remarks concerning his character or qualifications.
Each party to this Agreement shall refrain from directly or indirectly causing,
encouraging, soliciting or otherwise participating with any other person,
entity or group to take any action which such party is prohibited from taking
under this Agreement.
3. Release.
-------
(a) Except as provided in Sections 1(g) and 5, Paul hereby releases, and
hereby waives any claims or rights that he may have against, the Company or any
of its employees, officers, directors or agents for any act or omission that
occurs before the Effective Date of this Agreement, including, without
limitation, any liability or obligation for any expense, damage or loss that he
might otherwise claim based on the following:
(1) his employment with the Company or the termination of that
employment;
(2) any Company policy, plan, practice, contract or
4
<PAGE>
agreement, including, without limitation, the Employment Agreement,
the Best Power Technology, Incorporated 1993 Stock Option Plan and
the Best Power Technology, Incorporated Annual Incentive Plan;
(3) any tort alleged by, or personal injury sustained by, him;
(4) any policies, practices, laws or agreements governing the
payment of wages, commissions or other compensation;
(5) any laws governing employment discrimination including, but not
limited to, Title VII of the Civil Rights Act, the Age Discrimination in
Employment Act, the Employee Retirement Income Security Act, the Americans
with Disabilities Act and the Wisconsin Fair Employment Act;
(6) any laws or agreements that provide for punitive, exemplary or
statutory damages; and
(7) any laws or agreements that provide for payment of attorney
fees, costs or expenses.
Paul understands that his release of the Company and its employees,
officers, directors and agents and his waiver of these claims applies to his
heirs, estate, executors, administrators and representatives, and he hereby
represents that he has not assigned any such claims or authorized any other
person or entity to assert such claims on his or their behalf.
This Agreement does not prevent Paul from asserting any legal rights he
may have as a shareholder of the Company or from discharging any duties he may
have as a Director of the Company.
(b) The Company hereby releases, and hereby waives any claims or rights
that it may have against, Paul for any act or omission that occurred before the
Effective Date of this Agreement. The Company understands that its release of
Paul and its waiver of such claims applies to its successors and assigns, and
the Company hereby represents that it has not assigned any such claims or
authorized any other person or entity to assert such claims on its behalf.
4. No Entitlement. Paul hereby resigns as an officer and director of
--------------
each subsidiary of the Company. Paul shall not now or hereafter be entitled to
employment or reemployment with the Company or any subsidiary or to a
directorship with any subsidiary. Notwithstanding any other provision of this
Agreement, the Company may reemploy Paul if mutually agreed.
5. Claims Not Waived. This Agreement does not waive any claims that
----------------- ---
Paul may have arising under (a) any worker's compensation law, or any plan
currently maintained by the Company that provides for retirement benefits; (b)
this Agreement; or (c)
5
<PAGE>
the Certificate of Incorporation or By-laws of the Company.
6. Nonadmission. Nothing in this Agreement is meant to suggest that the
------------
Company or Paul has violated any law or contract, that Paul has any valid claim
against the Company or that the Company has any valid claim against Paul.
7. Voluntary Agreement. Paul hereby acknowledges and states that he has
-------------------
entered into this Agreement knowingly and voluntarily.
8. Consulted An Attorney. Paul hereby represents that he has consulted
---------------------
with an attorney of his choice about this Agreement and any matter that it
covers before signing this Agreement.
9. Covenant Not to Sue.
-------------------
(a) Paul understands that this Agreement prohibits him from initiating a
lawsuit against the Company or any of its employees, officers, directors or
agents for any claim waived or released in Section 3, and prohibits him from
recovering any amounts or obtaining any remedy for himself for any claim waived
or released in Section 3 through an action or proceeding brought by others.
(b) The Company understands that this Agreement prohibits the Company
from initiating a lawsuit against Paul for any claim waived or released in
Section 3, and prohibits the Company from recovering any amount or obtaining
any remedy for the Company for any claim waived or released in Section 3
through an action or proceeding brought by others.
10. Complete Agreement. This document contains the entire agreement
------------------
between Paul and the Company relating to the subject matter hereof. This
Agreement supersedes and displaces any prior agreements and discussions between
Paul and the Company relating to such matters, and neither Paul nor the Company
may rely on any such prior agreements or discussions. No waiver or amendment
to this Agreement shall be effective unless in writing, signed by the party or
parties to be bound.
11. Effective Date and Revocation. This Agreement shall not be effective
-----------------------------
until seven (7) days after it has been signed and dated by Paul and sent to the
Company or its representative (such seventh day after Paul's signing, dating
and sending of this Agreement being the "Effective Date" hereof), provided that
the Company's offer represented by this Agreement shall be revoked unless this
Agreement is so signed, dated and sent prior to 5:00 p.m. (Milwaukee time) on
March 31, 1995. Until the Effective Date, Paul may revoke his acceptance of
this Agreement by delivering to the Secretary of the Company and to Reinhart,
Boerner, Van Deuren, Norris & Rieselbach, s.c., a written statement stating
that he wishes to revoke this Agreement or not be bound by it. In such event,
or in the event that the conditions specified in Section 16 are not timely
satisfied, neither party shall be bound hereby, all agreements of the parties
herein shall be deemed void ab initio, and Paul shall cause the funds deposited
-- ------
into escrow pursuant to Section 1(a) to be forthwith returned to the Company
with interest.
6
<PAGE>
12. Final and Binding Effect. Paul understands that if this Agreement
------------------------
becomes effective it will have a final and binding effect and that by signing
and not timely revoking this Agreement he may be giving up legal rights.
13. Representations. By signing this Agreement, Paul represents that he
---------------
has read this Agreement and understands all of its terms. By signing this
Agreement, the Company represents that this Agreement has been authorized by
the Executive Committee of the Company's Board of Directors.
14. Construction of Agreement. Each provision of this Agreement shall be
-------------------------
considered separate and independent from the other provisions of this
Agreement, and no invalidity of a provision shall affect any other provision of
this Agreement. This Agreement has been the subject of extensive negotiations
between the parties and is their mutual product; accordingly, no rule of strict
construction shall be applied against the Company. Except as set forth above
in this Section, customary principles of contract construction shall apply to
this Agreement and are incorporated herein.
15. Notices. All notices and other communications hereunder or in
-------
connection herewith shall be deemed to have been duly given if in writing and
(i) in the case of Section 11, delivered personally or by facsimile, confirmed
by overnight delivery, or (ii) in any other case, delivered personally or sent
by registered or certified mail, return receipt requested, and first-class
postage prepaid:
(a) If to the Company:
Best Power Technology, Incorporated
P.O. Box 280
Route 1 Box 106 Highway 80
Necedah, Wisconsin 54646
Attention: Corporate Secretary
With a copy to:
Thomas C. Judge
Michael, Best & Friedrich
135 South LaSalle Street
Suite 1610
Chicago, Illinois 60603-4391
(or at such other address or with a copy to such other person or
addresses as may have been designated from time to time by notice in
writing); or
7
<PAGE>
(b) If to Paul:
Steve J. Paul
1522 Lakeview Drive
Tomah, Wisconsin 54660
With a copy to:
Robert F. Henkle, Jr.
Reinhart, Boerner, Van Deuren,
Norris & Rieselbach, s.c.
1000 North Water Street
Suite 2100
Milwaukee, Wisconsin 53202
(or at such other address or with a copy to such other person or
addresses as may have been designated from time to time by notice in
writing).
16. Release of Funds.Concurrently with its execution and delivery of this
----------------
Agreement, the Company is being furnished with a letter from Paul's counsel,
Reinhart, Boerner, Van Deuren, Norris & Rieselbach, s.c., setting forth certain
acknowledgements and agreements with respect to this Agreement, the funds
described in Section 1(a) and related matters. The Company and Paul hereby
authorize such counsel to release to Paul the funds described in Section 1(a)
following the close of business on the Effective Date, but only upon the
receipt by such counsel of (a) a certification by Paul to the effect that Paul
affirms and does not revoke his acceptance of this Agreement, that he has fully
performed his obligations hereunder since the date of his signing, dating and
sending hereof, and that he has no knowledge of a breach hereof by the Company
and (b) a certification by the Company to the effect that it has not received
notice of revocation of this Agreement from Paul, that it has fully performed
its obligations under this Agreement since the date hereof, and that it has no
knowledge of a breach hereof by Paul. In the event that (i) Paul revokes his
acceptance of this Agreement pursuant to Section 11 or (ii) any of the
certifications described above in this Section are not provided in the
respective forms required by the close of business on the Effective Date
(unless, in the case of clause (ii), waived by both parties hereto), the
Company's deposit pursuant to Section 1(a) and any interest accrued thereon
shall forthwith be remitted by such firm by wire transfer to the Company.
17. Receipt. Paul hereby acknowledges receipt of this Agreement
-------
on March 31, 1995.
8
<PAGE>
BEST POWER TECHNOLOGY, INCORPORATED
By: /s/ Dennis E. Burke
--------------------------------
Executive Vice President - Administration
/s/ Steve J. Paul
----------------------------------
Steve J. Paul
9
EXHIBIT 3
SEVERANCE AGREEMENT
AGREEMENT, dated the 12th day of May, 1995, between BEST POWER TECHNOLOGY,
INCORPORATED, a Delaware corporation (the "Company"), and MARGUERITE M. PAUL
("Paul").
RECITALS
WHEREAS, Paul's employment as Senior Executive Vice President -
Administration and Secretary of the Company, pursuant to the Employment
Agreement dated May 17, 1993, as amended by the Amendment to Employment
Agreement dated as of June 23, 1994, each between the Company and Paul
(collectively, the "Employment Agreement"), was terminated as of January 26,
1995; and
WHEREAS, the Company and Paul desire to fully and finally compromise and
settle all differences between them relating to the employment of Paul with the
Company and the termination of that employment.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
herein made, it is agreed as follows:
1. Severance and Settlement Payments.
---------------------------------
(a) On the date of the Company's receipt of a counterpart hereof executed
by Paul, the Company shall make wire transfers of the following amounts into
the Reinhart, Boerner, Van Deuren, Norris & Rieselbach, s.c. Client Trust Fund
for the benefit of Paul:
(i) In severance and in payment of Paul's alleged contractual and other
claims not covered in clause (ii) below, an amount equal to
$235,000 less appropriate employment and income tax withholding; and
(ii) In settlement of Paul's alleged personal injury claims, an amount
equal to $95,000. The Company will not issue a Form 1099 or a Form
W-2 in connection with the amount specified in this clause (ii);
provided, that such amounts shall not be released to Paul until following the
- --------
close of business on the Effective Date (as defined in Section 11 hereof) and
unless the conditions specified in Section 16 shall have been satisfied.
(b) The Company makes no representation or warranty to Paul concerning
the employment or income tax character or consequences (including any related
penalties and interest) to Paul of any of the above payments; and it is further
understood and agreed that any future employment or income tax consequences
(including any related penalties and interest) that may be imposed on or
asserted against Paul will not provide a basis to set aside or in any way
1
<PAGE>
alter this Agreement or the payments to be made hereunder, and that Paul shall
be solely responsible for paying any such taxes that may be imposed or asserted
by any such taxing authority.
(c) This Agreement shall not be construed to render Paul a "prevailing
party" within the meaning of Sec. 706(k) of Title VII of the Civil Rights Act of
1964, 42 U.S.C. Sec. 2000e-5(k); the Wisconsin Fair Employment Act, Wis. Stat.
Sec. 111.31 et seq.; or any other federal, state, county or municipal statute,
ordinance or other law, precedent or practice providing for or allowing
attorneys' fees and/or costs; nor shall this Agreement be deemed to constitute
a factor supporting the award of attorneys' fees and/or costs under any
thereof. Paul shall be solely responsible for the payment of all her legal
fees and expenses with respect to this Agreement and all other matters
concerning the Company.
(d) Through May 17, 1996, the Company shall use its best efforts to
obtain and keep in full force and effect group health, dental and life
insurance coverage for the benefit of Paul and her dependents, on the same
basis and with the same payments and co-payments as such coverage is now
provided for executive employees of the Company; provided that (i) the period
from May 18, 1996 through November 17, 1997 shall constitute the eighteen (18)
month continuation coverage period for Paul and her qualifying beneficiaries
under Section 4980B of the Internal Revenue Code of 1986, as amended (the
"Code"), and (ii) the Company's performance of this covenant shall be deemed to
satisfy any health insurance continuation coverage obligations of the Company
through November 17, 1997 under Code Section 4980B with respect to Paul and her
qualifying beneficiaries.
(e) Paul hereby acknowledges that she has received all payments due to
her from the Company in respect of the Employment Agreement or otherwise
through the date of this Agreement, and Paul further acknowledges that this
consideration and the payments to be remitted to her on the Effective Date or
thereafter to the extent specified in this Agreement are being provided in
return for her accepting the terms and conditions hereof, including a release,
covenants not to sue, disclose or compete and not revoking under Section 11 so
that this Agreement becomes effective. Paul hereby acknowledges that such
consideration is in part in lieu of that to which she may be entitled to under
any Company plan or policy.
(f) Paul also acknowledges that all of the options to purchase shares of
the Company's common stock heretofore granted to Paul under the Best Power
Technology, Incorporated 1993 Stock Option Plan have terminated and are void
and that the Company shall no longer be obligated to pay any salary, bonus or
premiums on Paul's whole life insurance policy with a face amount of $2,500,000
or make any other payment to or for the benefit of Paul as set forth in the
Employment Agreement.
(g) The Company agrees that through May 17, 1996 Paul shall be accorded
the published discount on products of the Company granted to its executive
employees generally.
(h) The Company agrees that, in the event the Company proposes to amend
Article Eight of its Certificate of Incorporation
2
<PAGE>
in a manner that would reduce or eliminate the indemnification provided by the
Company to its officers and directors, the Company will prior to or
concurrently with the effectiveness of any such amendment provide to Paul a
written indemnity agreement obligating the Company to indemnify Paul to the
same extent she is now indemnified under Article Eight of the Certificate of
Incorporation.
(i) The Company hereby grants to Paul the right to receive in cash the
positive amount, if any, equal to the product of (A) 21,533 and (B) the
positive difference, if any, determined by subtracting (w) $13.48 from (x) the
Average Value Received for each share of the Company's common stock in a
Transaction. As used herein, the term "Transaction" means a sale of all or
substantially all of the Company's assets, the completion of a tender offer
for at least 80% of the Company's issued and outstanding capital stock in a
manner approved by its Board of Directors, a merger to which the Company is a
party and pursuant to which its stockholders immediately prior to such merger
own less than half of the issued and outstanding capital stock of the entity
resulting from such transaction, or any similar transaction involving in
substance a sale of the Company; and the term "Average Value Received" means
(y) the aggregate fair market value of all cash and securities received in a
Transaction, valued as of the time of such receipt and through the use of
valuation techniques approved by the Company's Board of Directors, divided
by (z) the number of shares of the Company's common stock with respect to
which such consideration is payable, whether in one or more steps. The
foregoing grant to Paul is subject to the condition that in the event that the
other party to the Transaction and the Company's Board of Directors both
determine to account for such Transaction as a pooling of interests, such
payment must not adversely affect such characterization (and if it would
adversely affect such characterization, the foregoing grant to Paul shall be
null and void and Paul shall receive no compensation therefor). If such cash
amount is payable, it shall be paid to Paul upon completion of the final step
of the related Transaction (or, at the election of the other party to such
Transaction, at such earlier time as it may choose to make such payment).
(j) The Company shall use its reasonable best efforts to hold regular
meetings of its Board of Directors at least once each calendar quarter. Prior
to each such meeting, a full agenda and other discussion materials will be
circulated to all Directors; and drafts of the minutes
3
<PAGE>
of each such meeting will be circulated to all Directors promptly thereafter.
2. Confidentiality of Information; Covenant Not to Compete.
-------------------------------------------------------
(a) Notwithstanding the termination of the Employment Agreement and her
employment thereunder, Paul shall be subject to the confidentiality and
noncompetition obligations set forth in the Company's Employee Confidentiality,
Invention, and Copyright Agreement and the Employment Agreement, respectively,
except that all of Paul's obligations not to compete with the Company shall
expire on May 17, 1998. In addition, Paul shall not disclose the terms of this
Agreement to anyone other than her attorney or tax advisor except as required
by law, and she shall advise such persons that they may not disclose the terms
of this Agreement to anyone except as required by law. The Company agrees that
it will not issue any press release or make any other public disclosure
concerning this Agreement without Paul's prior written consent except, to the
extent required by law, a factual description of the existence and terms of
this Agreement and/or the inclusion of this Agreement as an exhibit to the
Company's filings with the Securities and Exchange Commission.
(b) Paul shall refrain from publishing or communicating, whether orally
or in writing, any remarks disparaging or derogatory of the Company or any of
its employees, officers, directors or shareholders, including, without
limitation, any remarks concerning the business affairs of the Company or the
character or qualifications of any such individuals. The Company shall refrain
from publishing or communicating (and the Company shall advise the members of
its Board of Directors that they may not publish or communicate), whether
orally or in writing, any remarks disparaging or derogatory of Paul, including,
without limitation, any remarks concerning her character or qualifications.
Each party to this Agreement shall refrain from directly or indirectly causing,
encouraging, soliciting or otherwise participating with any other person,
entity or group to take any action which such party is prohibited from taking
under this Agreement.
3. Release.
-------
(a) Except as provided in Sections 1(g) and 5, Paul hereby releases, and
hereby waives any claims or rights that she may have against, the Company or
any of its employees, officers, directors or agents for any act or omission
that occurs before the Effective Date of this Agreement, including, without
limitation, any liability or obligation for any expense, damage or loss that
she might otherwise claim based on the following:
(1) her employment with the Company or the termination of that
employment;
(2) any Company policy, plan, practice, contract or agreement,
including, without limitation, the Employment Agreement, the Best Power
Technology, Incorporated 1993 Stock Option Plan and the Best Power
Technology, Incorporated Annual
4
<PAGE>
Incentive Plan;
(3) any tort alleged by, or personal injury sustained by, her;
(4) any policies, practices, laws or agreements governing the
payment of wages, commissions or other compensation;
(5) any laws governing employment discrimination including, but not
limited to, Title VII of the Civil Rights Act, the Age Discrimination in
Employment Act, the Employee Retirement Income Security Act, the Americans
with Disabilities Act and the Wisconsin Fair Employment Act;
(6) any laws or agreements that provide for punitive, exemplary or
statutory damages; and
(7) any laws or agreements that provide for payment of attorney
fees, costs or expenses.
Paul understands that her release of the Company and its employees,
officers, directors and agents and her waiver of these claims applies to her
heirs, estate, executors, administrators and representatives, and she hereby
represents that she has not assigned any such claims or authorized any other
person or entity to assert such claims on her or their behalf.
This Agreement does not prevent Paul from asserting any legal rights she
may have as a shareholder of the Company or from discharging any duties she may
have as a Director of the Company.
(b) The Company hereby releases, and hereby waives any claims or rights
that it may have against, Paul for any act or omission that occurred before the
Effective Date of this Agreement. The Company understands that its release of
Paul and its waiver of such claims applies to its successors and assigns, and
the Company hereby represents that it has not assigned any such claims or
authorized any other person or entity to assert such claims on its behalf.
4. No Entitlement. Paul hereby resigns as an officer and director of
--------------
each subsidiary of the Company. Paul shall not now or hereafter be entitled to
employment or reemployment with the Company or any subsidiary or to a
directorship with any subsidiary. Notwithstanding any other provision of this
Agreement, the Company may reemploy Paul if mutually agreed.
5. Claims Not Waived. This Agreement does not waive any claims that
----------------- ---
Paul may have arising under (a) any worker's compensation law, or any plan
currently maintained by the Company that provides for retirement benefits; (b)
this Agreement; or (c) the Certificate of Incorporation or By-laws of the
Company.
6. Nonadmission. Nothing in this Agreement is meant to suggest that the
------------
Company or Paul has violated any law or contract,
5
<PAGE>
that Paul has any valid claim against the Company or that the Company has any
valid claim against Paul.
7. Voluntary Agreement. Paul hereby acknowledges and states that she
-------------------
has entered into this Agreement knowingly and voluntarily.
8. Consulted An Attorney. Paul hereby represents that she has
---------------------
consulted with an attorney of her choice about this Agreement and any matter
that it covers before signing this Agreement.
9. Covenant Not to Sue.
-------------------
(a) Paul understands that this Agreement prohibits her from initiating a
lawsuit against the Company or any of its employees, officers, directors or
agents for any claim waived or released in Section 3, and prohibits her from
recovering any amounts or obtaining any remedy for herself for any claim waived
or released in Section 3 through an action or proceeding brought by others.
(b) The Company understands that this Agreement prohibits the Company
from initiating a lawsuit against Paul for any claim waived or released in
Section 3, and prohibits the Company from recovering any amount or obtaining
any remedy for the Company for any claim waived or released in Section 3
through an action or proceeding brought by others.
10. Complete Agreement. This document contains the entire agreement
------------------
between Paul and the Company relating to the subject matter hereof. This
Agreement supersedes and displaces any prior agreements and discussions between
Paul and the Company relating to such matters, and neither Paul nor the Company
may rely on any such prior agreements or discussions. No waiver or amendment
to this Agreement shall be effective unless in writing, signed by the party or
parties to be bound.
11. Effective Date and Revocation. This Agreement shall not be effective
-----------------------------
until seven (7) days after it has been signed and dated by Paul and sent to the
Company or its representative (such seventh day after Paul's signing, dating
and sending of this Agreement being the "Effective Date" hereof). Until the
Effective Date, Paul may revoke her acceptance of this Agreement by delivering
to the Secretary of the Company and to Reinhart, Boerner, Van Deuren, Norris &
Rieselbach, s.c., a written statement stating that she wishes to revoke this
Agreement or not be bound by it. In such event, or in the event that the
conditions specified in Section 16 are not timely satisfied, neither party
shall be bound hereby, all agreements of the parties herein shall be deemed
void ab initio, and Paul shall cause the funds deposited into escrow pursuant
-- ------
to Section 1(a) to be forthwith returned to the Company with interest.
12. Final and Binding Effect. Paul understands that if this Agreement
------------------------
becomes effective it will have a final and binding effect and that by signing
and not timely revoking this Agreement she may be giving up legal rights.
6
<PAGE>
13. Representations. By signing this Agreement, Paul represents that she
---------------
has read this Agreement and understands all of its terms. By signing this
Agreement, the Company represents that this Agreement has been authorized by
the Executive Committee of the Company's Board of Directors.
14. Construction of Agreement. Each provision of this Agreement shall be
-------------------------
considered separate and independent from the other provisions of this
Agreement, and no invalidity of a provision shall affect any other provision of
this Agreement. This Agreement has been the subject of extensive negotiations
between the parties and is their mutual product; accordingly, no rule of strict
construction shall be applied against the Company. Except as set forth above
in this Section, customary principles of contract construction shall apply to
this Agreement and are incorporated herein.
15. Notices. All notices and other communications hereunder or in
-------
connection herewith shall be deemed to have been duly given if in writing and
(i) in the case of Section 11, delivered personally or by facsimile, confirmed
by overnight delivery or (ii) in any other case, delivered personally or sent
by registered or certified mail, return receipt requested, and first-class
postage prepaid:
(a) If to the Company:
Best Power Technology, Incorporated
P.O. Box 280
Route 1 Box 106 Highway 80
Necedah, Wisconsin 54646
Attention: Corporate Secretary
With a copy to:
Thomas C. Judge
Michael, Best & Friedrich
135 South LaSalle Street
Suite 1610
Chicago, Illinois 60603-4391
(or at such other address or with a copy to such other person or
addresses as may have been designated from time to time by notice in
writing); or
(b) If to Paul:
Marguerite M. Paul
W 4973 Countytrunk G
Necedah, Wisconsin 54646
7
<PAGE>
With a copy to:
Robert F. Henkle, Jr.
Reinhart, Boerner, Van Deuren,
Norris & Rieselbach, s.c.
1000 North Water Street
Suite 2100
Milwaukee, Wisconsin 53202
(or at such other address or with a copy to such other person or
addresses as may have been designated from time to time by notice in
writing).
16. Release of Funds. Concurrently with its execution and delivery of
----------------
this Agreement, the Company is being furnished with a letter from Paul's
counsel, Reinhart, Boerner, Van Deuren, Norris & Rieselbach, s.c., setting
forth certain acknowledgements and agreements with respect to this Agreement,
the funds described in Section 1(a) and related matters. The Company and Paul
hereby authorize such counsel to release to Paul the funds described in Section
1(a) following the close of business on the Effective Date, but only upon the
receipt by such counsel of (a) a certification by Paul to the effect that Paul
affirms and does not revoke her acceptance of this Agreement, that she has
fully performed her obligations hereunder since the date of her signing, dating
and sending hereof, and that she has no knowledge of a breach hereof by the
Company and (b) a certification by the Company to the effect that it has not
received notice of revocation of this Agreement from Paul, that it has fully
performed its obligations under this Agreement since the date hereof, and that
it has no knowledge of a breach hereof by Paul. In the event that (i) Paul
revokes her acceptance of this Agreement pursuant to Section 11 or (ii) any of
the certifications described above in this Section are not provided in the
respective forms required by the close of business on the Effective Date
(unless, in the case of clause (ii), waived by both parties hereto), the
Company's deposit pursuant to Section 1(a) and any interest accrued thereon
shall forthwith be remitted by such firm by wire transfer to the Company.
17. Receipt. Paul hereby acknowledges receipt of this Agreement
-------
on May 12, 1995.
BEST POWER TECHNOLOGY, INCORPORATED
By: /s/ Dennis E. Burke
--------------------------------
Executive Vice President -
Administration
8
<PAGE>
/s/ Marguerite M. Paul
----------------------------------
Marguerite M. Paul
9
EXHIBIT 4
May 10, 1995
General Signal Corporation
G.S. Newco Inc.
Stamford, CT
Gentlemen:
This letter is being delivered to you in connection with, and to induce
you to enter into, the Agreement and Plan of Merger by and among General Signal
Corporation ("Parent"), G.S. Newco Inc. ("Merger Sub") and Best Power
Technology, Incorporated dated as of May 10, 1995 (the "Merger Agreement"), a
copy of which is attached hereto as Annex 1.
You and the undersigned prior to the delivery hereof had no agreement,
arrangement or understanding to acquire the Shares (as defined hereinafter) or
for the purpose of acquiring, holding, voting or disposing of the Shares.
Prior to the delivery hereof, the Board of Directors of Best Power Technology,
Incorporated, a Delaware corporation ("the Company"), has approved you and the
undersigned entering into this letter agreement and the transactions
contemplated by this letter agreement, as well as the execution and delivery by
the Company of the Merger Agreement providing for the merger of the Company
with a direct wholly-owned subsidiary of yours (the "Merger") and the offer to
purchase all outstanding shares of common stock, par value $.01 per share (the
"Company Common Stock"), of the Company (the "Offer").
The undersigned hereby represents and warrants to, and covenants and
agrees with, Parent as follows:
a. Your and the undersigned's obligations hereunder shall be subject to
the condition that the Merger, the Offer and this letter agreement shall have
been approved by the Board of Directors of the Company with the effect that
Parent will not be subject to the restrictions of Section 203 of the Delaware
General Corporation Law.
b. The undersigned is the beneficial and/or record holder of 1,160,056
shares of Company Common Stock (the "Shares") and/or has the right to acquire
no shares of Company Common Stock, free and clear of all liens and security
interests whatsoever.
c. The undersigned will tender all of the Shares to Merger Sub pursuant
to the Offer, as the Offer may be amended by its terms or in accordance with
the Merger Agreement. Such tender shall be made promptly after (but in no
event later than May 26, 1995) the
1
<PAGE>
undersigned has received the Offer in the form of an Offer to Purchase. The
undersigned further agrees not to withdraw such tendered Shares, unless the
Offer is extended beyond December 31, 1995 or unless the Merger Agreement is
terminated.
d. The undersigned will not, except pursuant to the Offer, assign, sell,
transfer or otherwise dispose of, including by way of pledge, hypothecation or
grant of any security interest, any of the Shares, or enter into any direct or
indirect agreement or arrangement to effect any of the foregoing, on or before
December 31, 1995 or, if earlier, the termination of the Merger Agreement or
the termination of the Offer in accordance with their respective terms,
provided, however, the undersigned may transfer Shares to a trust created by
the undersigned provided the trustee of the trust agrees to be bound by this
letter agreement to the same extent as the undersigned.
e. Subject to paragraph (f) below, the undersigned agrees that, prior to
the earlier of the Effective Time (as defined in the Merger Agreement), the
termination of the Merger Agreement in accordance with its terms and December
31, 1995, the undersigned shall not, directly or indirectly, solicit, initiate
or encourage (including by way of furnishing information) inquiries or
proposals concerning any Acquisition Transaction (as defined in the Merger
Agreement) or negotiate, explore or otherwise communicate with any third party
(other than Parent or its affiliates) regarding any Acquisition Transaction.
f. Parent and Merger Sub each acknowledge that the undersigned has
entered into this letter agreement solely in his/her capacity as a stockholder
of the Company and that by entering into this letter agreement the undersigned
has not limited in any way his/her ability to discharge or perform his/her
fiduciary duty, to the extent applicable, as a director of the Company and
subject to the terms and conditions of the Merger Agreement.
g. If Parent, Merger Sub or any subsidiary of Parent purchases the
Shares pursuant to the Offer and does not acquire a majority of the outstanding
shares of Company Common Stock pursuant to the Offer, Parent will pay promptly
to the undersigned in immediately available funds, in the event that it,
directly or indirectly, disposes of the Shares within 12 months of the date of
this letter agreement, any amount realized on such disposition of the Shares in
excess of the amount previously paid to the undersigned pursuant to the Offer.
This letter agreement shall be governed by the laws of the State of
Delaware applicable to contracts made and performed wholly in such state.
Very truly yours,
/s/ Steve J. Paul
2
<PAGE>
Agreed to:
GENERAL SIGNAL CORPORATION
By: /s/ Philip A. Goodrich
-------------------------
Name: Philip A. Goodrich
Title: Vice President -
Corporate Development
G. S. NEWCO INC.
By: /s/ Edgar J. Smith, Jr.
-------------------------
Name: Edgar J. Smith, Jr.
Title: Vice President
Approved:
BEST POWER TECHNOLOGY, INCORPORATED
By: /s/ Dennis E. Burke
-------------------------
Name: Dennis E. Burke
Title: Executive Vice President -
Administration
3
EXHIBIT 5
May 10, 1995
General Signal Corporation
G.S. Newco Inc.
Stamford, CT
Gentlemen:
This letter is being delivered to you in connection with, and to induce
you to enter into, the Agreement and Plan of Merger by and among General Signal
Corporation ("Parent"), G.S. Newco Inc. ("Merger Sub") and Best Power
Technology, Incorporated dated as of May 10, 1995 (the "Merger Agreement"), a
copy of which is attached hereto as Annex 1.
You and the undersigned prior to the delivery hereof had no agreement,
arrangement or understanding to acquire the Shares (as defined hereinafter) or
for the purpose of acquiring, holding, voting or disposing of the Shares.
Prior to the delivery hereof, the Board of Directors of Best Power Technology,
Incorporated, a Delaware corporation ("the Company"), has approved you and the
undersigned entering into this letter agreement and the transactions
contemplated by this letter agreement, as well as the execution and delivery by
the Company of the Merger Agreement providing for the merger of the Company
with a direct wholly-owned subsidiary of yours (the "Merger") and the offer to
purchase all outstanding shares of common stock, par value $.01 per share (the
"Company Common Stock"), of the Company (the "Offer").
The undersigned hereby represents and warrants to, and covenants and
agrees with, Parent as follows:
a. Your and the undersigned's obligations hereunder shall be subject to
the condition that the Merger, the Offer and this letter agreement shall have
been approved by the Board of Directors of the Company with the effect that
Parent will not be subject to the restrictions of Section 203 of the Delaware
General Corporation Law.
b. The undersigned is the beneficial and/or record holder of 854,260
shares of Company Common Stock (the "Shares") and/or has the right to acquire
no shares of Company Common Stock, free and clear of all liens and security
interests whatsoever.
c. The undersigned will tender all of the Shares to Merger Sub pursuant
to the Offer, as the Offer may be amended by its terms or in accordance with
the Merger Agreement. Such tender shall be made promptly after (but in no
event later than May 26, 1995) the
1
<PAGE>
undersigned has received the Offer in the form of an Offer to Purchase. The
undersigned further agrees not to withdraw such tendered Shares, unless the
Offer is extended beyond December 31, 1995 or unless the Merger Agreement is
terminated.
d. The undersigned will not, except pursuant to the Offer, assign, sell,
transfer or otherwise dispose of, including by way of pledge, hypothecation or
grant of any security interest, any of the Shares, or enter into any direct or
indirect agreement or arrangement to effect any of the foregoing, on or before
December 31, 1995 or, if earlier, the termination of the Merger Agreement or
the termination of the Offer in accordance with their respective terms,
provided, however, the undersigned may transfer Shares to a trust created by
the undersigned provided the trustee of the trust agrees to be bound by this
letter agreement to the same extent as the undersigned.
e. Subject to paragraph (f) below, the undersigned agrees that, prior to
the earlier of the Effective Time (as defined in the Merger Agreement), the
termination of the Merger Agreement in accordance with its terms and December
31, 1995, the undersigned shall not, directly or indirectly, solicit, initiate
or encourage (including by way of furnishing information) inquiries or
proposals concerning any Acquisition Transaction (as defined in the Merger
Agreement) or negotiate, explore or otherwise communicate with any third party
(other than Parent or its affiliates) regarding any Acquisition Transaction.
f. Parent and Merger Sub each acknowledge that the undersigned has
entered into this letter agreement solely in his/her capacity as a stockholder
of the Company and that by entering into this letter agreement the undersigned
has not limited in any way his/her ability to discharge or perform his/her
fiduciary duty, to the extent applicable, as a director of the Company and
subject to the terms and conditions of the Merger Agreement.
g. If Parent, Merger Sub or any subsidiary of Parent purchases the
Shares pursuant to the Offer and does not acquire a majority of the outstanding
shares of Company Common Stock pursuant to the Offer, Parent will pay promptly
to the undersigned in immediately available funds, in the event that it,
directly or indirectly, disposes of the Shares within 12 months of the date of
this letter agreement, any amount realized on such disposition of the Shares in
excess of the amount previously paid to the undersigned pursuant to the Offer.
This letter agreement shall be governed by the laws of the State of
Delaware applicable to contracts made and performed wholly in such state.
Very truly yours,
/s/ Marguerite M. Paul
2
<PAGE>
Agreed to:
GENERAL SIGNAL CORPORATION
By: /s/ Philip A. Goodrich
-------------------------
Name: Philip A. Goodrich
Title: Vice President -
Corporate Development
G. S. NEWCO INC.
By: /s/ Edgar J. Smith, Jr.
-------------------------
Name: Edgar J. Smith, Jr.
Title: Vice President
Approved:
BEST POWER TECHNOLOGY, INCORPORATED
By: /s/ Dennis E. Burke
-------------------------
Name: Dennis E. Burke
Title: Executive Vice President -
Administration
3
EXHIBIT 6
May 10, 1995
General Signal Corporation
G.S. Newco Inc.
Stamford, CT
Gentlemen:
This letter is being delivered to you in connection with, and to induce
you to enter into, the Agreement and Plan of Merger by and among General Signal
Corporation ("Parent"), G.S. Newco Inc. ("Merger Sub") and Best Power
Technology, Incorporated dated as of May 10, 1995 (the "Merger Agreement"), a
copy of which is attached hereto as Annex 1.
You and the undersigned prior to the delivery hereof had no agreement,
arrangement or understanding to acquire the Shares (as defined hereinafter) or
for the purpose of acquiring, holding, voting or disposing of the Shares.
Prior to the delivery hereof, the Board of Directors of Best Power Technology,
Incorporated, a Delaware corporation ("the Company"), has approved you and the
undersigned entering into this letter agreement and the transactions
contemplated by this letter agreement, as well as the execution and delivery by
the Company of the Merger Agreement providing for the merger of the Company
with a direct wholly-owned subsidiary of yours (the "Merger") and the offer to
purchase all outstanding shares of common stock, par value $.01 per share (the
"Company Common Stock"), of the Company (the "Offer").
The undersigned hereby represents and warrants to, and covenants and
agrees with, Parent as follows:
a. Your and the undersigned's obligations hereunder shall be subject to
the condition that the Merger, the Offer and this letter agreement shall have
been approved by the Board of Directors of the Company with the effect that
Parent will not be subject to the restrictions of Section 203 of the Delaware
General Corporation Law.
b. The undersigned is the beneficial and/or record holder of 950 shares
of Company Common Stock (the "Shares") and/or has the right to acquire 14,941
shares of Company Common Stock, free and clear of all liens and security
interests whatsoever.
c. The undersigned will not, except pursuant to the Offer, Merger or
the exercise of dissenters' rights with respect to the Merger, assign, sell,
transfer or otherwise dispose of, including by way of pledge, hypothecation or
grant of any security interest, any of the Shares, or enter into any direct or
indirect agreement or arrangement to effect any of the foregoing, on or before
December 31, 1995 or, if earlier, the termination of the Merger Agreement or
the termination of the Offer in accordance with their respective terms,
provided, however, the undersigned may transfer Shares to a trust created by
the undersigned provided the trustee of the trust agrees to be bound by this
letter agreement to the same extent as the undersigned.
1
<PAGE>
d. Subject to paragraph (e) below, the undersigned agrees that, prior to
the earlier of the Effective Time (as defined in the Merger Agreement), the
termination of the Merger Agreement in accordance with its terms and December
31, 1995, the undersigned shall not, directly or indirectly, solicit, initiate
or encourage (including by way of furnishing information) inquiries or
proposals concerning any Acquisition Transaction (as defined in the Merger
Agreement) or negotiate, explore or otherwise communicate with any third party
(other than Parent or its affiliates) regarding any Acquisition Transaction.
e. Parent and Merger Sub each acknowledge that the undersigned has
entered into this letter agreement solely in his/her capacity as a stockholder
of the Company and that by entering into this letter agreement the undersigned
has not limited in any way his/her ability to discharge or perform his/her
fiduciary duty, to the extent applicable, as a director of the Company and
subject to the terms and conditions of the Merger Agreement.
f. If Parent, Merger Sub or any subsidiary of Parent purchases the
Shares pursuant to the Offer and does not acquire a majority of the outstanding
shares of Company Common Stock pursuant to the Offer, Parent will pay promptly
to the undersigned in immediately available funds, in the event that it,
directly or indirectly, disposes of the Shares within 12 months of the date of
this letter agreement, any amount realized on such disposition of the Shares in
excess of the amount previously paid to the undersigned pursuant to the Offer.
This letter agreement shall be governed by the laws of the State of
Delaware applicable to contracts made and performed wholly in such state.
Very truly yours,
/s/ Dennis E. Burke
2
<PAGE>
Agreed to:
GENERAL SIGNAL CORPORATION
By: /s/ Philip A. Goodrich
-------------------------
Name: Philip A. Goodrich
Title: Vice President -
Corporate Development
G. S. NEWCO INC.
By: /s/ Edgar J. Smith, Jr.
-------------------------
Name: Edgar J. Smith, Jr.
Title: Vice President
Approved:
BEST POWER TECHNOLOGY, INCORPORATED
By: /s/ Dennis E. Burke
-------------------------
Name: Dennis E. Burke
Title: Executive Vice President -
Administration
3
EXHIBIT 7
May 10, 1995
General Signal Corporation
G.S. Newco Inc.
Stamford, CT
Gentlemen:
This letter is being delivered to you in connection with, and to induce
you to enter into, the Agreement and Plan of Merger by and among General Signal
Corporation ("Parent"), G.S. Newco Inc. ("Merger Sub") and Best Power
Technology, Incorporated dated as of May 10, 1995 (the "Merger Agreement"), a
copy of which is attached hereto as Annex 1.
You and the undersigned prior to the delivery hereof had no agreement,
arrangement or understanding to acquire the Shares (as defined hereinafter) or
for the purpose of acquiring, holding, voting or disposing of the Shares.
Prior to the delivery hereof, the Board of Directors of Best Power Technology,
Incorporated, a Delaware corporation ("the Company"), has approved you and the
undersigned entering into this letter agreement and the transactions
contemplated by this letter agreement, as well as the execution and delivery by
the Company of the Merger Agreement providing for the merger of the Company
with a direct wholly-owned subsidiary of yours (the "Merger") and the offer to
purchase all outstanding shares of common stock, par value $.01 per share (the
"Company Common Stock"), of the Company (the "Offer").
The undersigned hereby represents and warrants to, and covenants and
agrees with, Parent as follows:
a. Your and the undersigned's obligations hereunder shall be subject to
the condition that the Merger, the Offer and this letter agreement shall have
been approved by the Board of Directors of the Company with the effect that
Parent will not be subject to the restrictions of Section 203 of the Delaware
General Corporation Law.
b. The undersigned is the beneficial and/or record holder of 1,500
shares of Company Common Stock (the "Shares") and/or has the right to acquire
5,000 shares of Company Common Stock, free and clear of all liens and security
interests whatsoever.
c. The undersigned will tender all of the Shares to Merger Sub pursuant
to the Offer, as the Offer may be amended by its terms or in accordance with
the Merger Agreement. Such tender shall be made promptly after (but in no
event later than May 26, 1995) the
1
<PAGE>
undersigned has received the Offer in the form of an Offer to Purchase. The
undersigned further agrees not to withdraw such tendered Shares, unless the
Offer is extended beyond December 31, 1995 or unless the Merger Agreement is
terminated.
d. The undersigned will not, except pursuant to the Offer, assign, sell,
transfer or otherwise dispose of, including by way of pledge, hypothecation or
grant of any security interest, any of the Shares, or enter into any direct or
indirect agreement or arrangement to effect any of the foregoing, on or before
December 31, 1995 or, if earlier, the termination of the Merger Agreement or
the termination of the Offer in accordance with their respective terms,
provided, however, the undersigned may transfer Shares to a trust created by
the undersigned provided the trustee of the trust agrees to be bound by this
letter agreement to the same extent as the undersigned.
e. Subject to paragraph (f) below, the undersigned agrees that, prior to
the earlier of the Effective Time (as defined in the Merger Agreement), the
termination of the Merger Agreement in accordance with its terms and December
31, 1995, the undersigned shall not, directly or indirectly, solicit, initiate
or encourage (including by way of furnishing information) inquiries or
proposals concerning any Acquisition Transaction (as defined in the Merger
Agreement) or negotiate, explore or otherwise communicate with any third party
(other than Parent or its affiliates) regarding any Acquisition Transaction.
f. Parent and Merger Sub each acknowledge that the undersigned has
entered into this letter agreement solely in his/her capacity as a stockholder
of the Company and that by entering into this letter agreement the undersigned
has not limited in any way his/her ability to discharge or perform his/her
fiduciary duty, to the extent applicable, as a director of the Company and
subject to the terms and conditions of the Merger Agreement.
g. If Parent, Merger Sub or any subsidiary of Parent purchases the
Shares pursuant to the Offer and does not acquire a majority of the outstanding
shares of Company Common Stock pursuant to the Offer, Parent will pay promptly
to the undersigned in immediately available funds, in the event that it,
directly or indirectly, disposes of the Shares within 12 months of the date of
this letter agreement, any amount realized on such disposition of the Shares in
excess of the amount previously paid to the undersigned pursuant to the Offer.
This letter agreement shall be governed by the laws of the State of
Delaware applicable to contracts made and performed wholly in such state.
Very truly yours,
/s/ Roland D. Pampel
2
<PAGE>
Agreed to:
GENERAL SIGNAL CORPORATION
By: /s/ Philip A. Goodrich
-------------------------
Name: Philip A. Goodrich
Title: Vice President -
Corporate Development
G. S. NEWCO INC.
By: /s/ Edgar J. Smith, Jr.
-------------------------
Name: Edgar J. Smith, Jr.
Title: Vice President
Approved:
BEST POWER TECHNOLOGY, INCORPORATED
By: /s/ Dennis E. Burke
-------------------------
Name: Dennis E. Burke
Title: Executive Vice President -
Administration
3
EXHIBIT 8
May 10, 1995
General Signal Corporation
G.S. Newco Inc.
Stamford, CT
Gentlemen:
This letter is being delivered to you in connection with, and to induce
you to enter into, the Agreement and Plan of Merger by and among General Signal
Corporation ("Parent"), G.S. Newco Inc. ("Merger Sub") and Best Power
Technology, Incorporated dated as of May 10, 1995 (the "Merger Agreement"), a
copy of which is attached hereto as Annex 1.
You and the undersigned prior to the delivery hereof had no agreement,
arrangement or understanding to acquire the Shares (as defined hereinafter) or
for the purpose of acquiring, holding, voting or disposing of the Shares.
Prior to the delivery hereof, the Board of Directors of Best Power Technology,
Incorporated, a Delaware corporation ("the Company"), has approved you and the
undersigned entering into this letter agreement and the transactions
contemplated by this letter agreement, as well as the execution and delivery by
the Company of the Merger Agreement providing for the merger of the Company
with a direct wholly-owned subsidiary of yours (the "Merger") and the offer to
purchase all outstanding shares of common stock, par value $.01 per share (the
"Company Common Stock"), of the Company (the "Offer").
The undersigned hereby represents and warrants to, and covenants and
agrees with, Parent as follows:
a. Your and the undersigned's obligations hereunder shall be subject to
the condition that the Merger, the Offer and this letter agreement shall have
been approved by the Board of Directors of the Company with the effect that
Parent will not be subject to the restrictions of Section 203 of the Delaware
General Corporation Law.
b. The undersigned is the beneficial and/or record holder of 11,693
shares of Company Common Stock (the "Shares") and/or has the right to acquire
11,436 shares of Company Common Stock, free and clear of all liens and security
interests whatsoever.
1
<PAGE>
c. The undersigned will not, except pursuant to the Offer, Merger or the
exercise of dissenters' rights with respect to the Merger, assign, sell,
transfer or otherwise dispose of, including by way of pledge, hypothecation or
grant of any security interest, any of the Shares, or enter into any direct or
indirect agreement or arrangement to effect any of the foregoing, on or before
December 31, 1995 or, if earlier, the termination of the Merger Agreement or
the termination of the Offer in accordance with their respective terms,
provided, however, the undersigned may transfer Shares to a trust created by
the undersigned provided the trustee of the trust agrees to be bound by this
letter agreement to the same extent as the undersigned.
d. Subject to paragraph (e) below, the undersigned agrees that, prior to
the earlier of the Effective Time (as defined in the Merger Agreement), the
termination of the Merger Agreement in accordance with its terms and December
31, 1995, the undersigned shall not, directly or indirectly, solicit, initiate
or encourage (including by way of furnishing information) inquiries or
proposals concerning any Acquisition Transaction (as defined in the Merger
Agreement) or negotiate, explore or otherwise communicate with any third party
(other than Parent or its affiliates) regarding any Acquisition Transaction.
e. Parent and Merger Sub each acknowledge that the undersigned has
entered into this letter agreement solely in his/her capacity as a stockholder
of the Company and that by entering into this letter agreement the undersigned
has not limited in any way his/her ability to discharge or perform his/her
fiduciary duty, to the extent applicable, as a director of the Company and
subject to the terms and conditions of the Merger Agreement.
f. If Parent, Merger Sub or any subsidiary of Parent purchases the
Shares pursuant to the Offer and does not acquire a majority of the outstanding
shares of Company Common Stock pursuant to the Offer, Parent will pay promptly
to the undersigned in immediately available funds, in the event that it,
directly or indirectly, disposes of the Shares within 12 months of the date of
this letter agreement, any amount realized on such disposition of the Shares in
excess of the amount previously paid to the undersigned pursuant to the Offer.
This letter agreement shall be governed by the laws of the State of
Delaware applicable to contracts made and performed wholly in such state.
Very truly yours,
/s/ John R. Hickey
2
<PAGE>
Agreed to:
GENERAL SIGNAL CORPORATION
By: /s/ Philip A. Goodrich
-------------------------
Name: Philip A. Goodrich
Title: Vice President -
Corporate Development
G. S. NEWCO INC.
By: /s/ Edgar J. Smith, Jr.
-------------------------
Name: Edgar J. Smith, Jr.
Title: Vice President
Approved:
BEST POWER TECHNOLOGY, INCORPORATED
By: /s/ Dennis E. Burke
-------------------------
Name: Dennis E. Burke
Title: Executive Vice President -
Administration
3
EXHIBIT 9
May 10, 1995
General Signal Corporation
G.S. Newco Inc.
Stamford, CT
Gentlemen:
This letter is being delivered to you in connection with, and to induce
you to enter into, the Agreement and Plan of Merger by and among General Signal
Corporation ("Parent"), G.S. Newco Inc. ("Merger Sub") and Best Power
Technology, Incorporated dated as of May 10, 1995 (the "Merger Agreement"), a
copy of which is attached hereto as Annex 1.
You and the undersigned prior to the delivery hereof had no agreement,
arrangement or understanding to acquire the Shares (as defined hereinafter) or
for the purpose of acquiring, holding, voting or disposing of the Shares.
Prior to the delivery hereof, the Board of Directors of Best Power Technology,
Incorporated, a Delaware corporation ("the Company"), has approved you and the
undersigned entering into this letter agreement and the transactions
contemplated by this letter agreement, as well as the execution and delivery by
the Company of the Merger Agreement providing for the merger of the Company
with a direct wholly-owned subsidiary of yours (the "Merger") and the offer to
purchase all outstanding shares of common stock, par value $.01 per share (the
"Company Common Stock"), of the Company (the "Offer").
The undersigned hereby represents and warrants to, and covenants and
agrees with, Parent as follows:
a. Your and the undersigned's obligations hereunder shall be subject to
the condition that the Merger, the Offer and this letter agreement shall have
been approved by the Board of Directors of the Company with the effect that
Parent will not be subject to the restrictions of Section 203 of the Delaware
General Corporation Law.
b. The undersigned is the beneficial and/or record holder of 10,133
shares of Company Common Stock (the "Shares") and/or has the right to acquire
5,000 shares of Company Common Stock, free and clear of all liens and security
interests whatsoever.
c. The undersigned will not, except pursuant to the Offer,
1
<PAGE>
Merger or the exercise of dissenters' rights with respect to the Merger,
assign, sell, transfer or otherwise dispose of, including by way of pledge,
hypothecation or grant of any security interest, any of the Shares, or enter
into any direct or indirect agreement or arrangement to effect any of the
foregoing, on or before December 31, 1995 or, if earlier, the termination of
the Merger Agreement or the termination of the Offer in accordance with their
respective terms, provided, however, the undersigned may transfer Shares to a
trust created by the undersigned provided the trustee of the trust agrees to be
bound by this letter agreement to the same extent as the undersigned.
d. Subject to paragraph (e) below, the undersigned agrees that, prior to
the earlier of the Effective Time (as defined in the Merger Agreement), the
termination of the Merger Agreement in accordance with its terms and December
31, 1995, the undersigned shall not, directly or indirectly, solicit, initiate
or encourage (including by way of furnishing information) inquiries or
proposals concerning any Acquisition Transaction (as defined in the Merger
Agreement) or negotiate, explore or otherwise communicate with any third party
(other than Parent or its affiliates) regarding any Acquisition Transaction.
e. Parent and Merger Sub each acknowledge that the undersigned has
entered into this letter agreement solely in his/her capacity as a stockholder
of the Company and that by entering into this letter agreement the undersigned
has not limited in any way his/her ability to discharge or perform his/her
fiduciary duty, to the extent applicable, as a director of the Company and
subject to the terms and conditions of the Merger Agreement.
f. If Parent, Merger Sub or any subsidiary of Parent purchases the
Shares pursuant to the Offer and does not acquire a majority of the outstanding
shares of Company Common Stock pursuant to the Offer, Parent will pay promptly
to the undersigned in immediately available funds, in the event that it,
directly or indirectly, disposes of the Shares within 12 months of the date of
this letter agreement, any amount realized on such disposition of the Shares in
excess of the amount previously paid to the undersigned pursuant to the Offer.
This letter agreement shall be governed by the laws of the State of
Delaware applicable to contracts made and performed wholly in such state.
Very truly yours,
/s/ Paul F. Koeppe
2
<PAGE>
Agreed to:
GENERAL SIGNAL CORPORATION
By: /s/ Philip A. Goodrich
-------------------------
Name: Philip A. Goodrich
Title: Vice President -
Corporate Development
G. S. NEWCO INC.
By: /s/ Edgar J. Smith, Jr.
-------------------------
Name: Edgar J. Smith, Jr.
Title: Vice President
Approved:
BEST POWER TECHNOLOGY, INCORPORATED
By: /s/ Dennis E. Burke
-------------------------
Name: Dennis E. Burke
Title: Executive Vice President -
Administration
3
EXHIBIT 10
[THE CHICAGO CORPORATION LETTERHEAD]
April 13, 1995
Confidential
- ------------
General Signal Corp.
One High Ridge Park
P. O. Box 10010
Stamford, Connecticut 06904-2010
Attention: Mr. Philip A. Goodrich
Vice President-Corporate Development
Gentlemen:
This confidentiality agreement is sent to you on behalf of Best Power
Technology, Incorporated ("Best" or the "Company"). We have been authorized to
enter into this agreement on behalf of the Company.
In connection with your considering the possibility of participating in a joint
venture or partnership, partial or other business combination, or investment or
other transaction with respect to Best, you have requested certain financial
information and projections and other information concerning the Company. As a
condition to the Company furnishing to you and your Representatives (as defined
herein) the Evaluation Material (as defined herein) that has not heretofore
been made available to the public, you agree that for a period of two (2) years
from the receipt of any Evaluation Material hereunder, you will (i) treat the
Evaluation Material furnished to you by the Company, or the Company's
Representatives, at any time in connection with such transaction, in accordance
with the provisions of this letter agreement, and (ii) take or abstain from
taking certain other actions herein set forth.
As used herein, the term "Evaluation Material" refers to any and all data,
reports, analyses, compilations, studies, projections, forecasts, records and
all other financial, technical, commercial or other information concerning the
business and affairs of the Company (whether prepared by the Company, its
advisors or otherwise) that may be provided to you, irrespective of the form of
the communication, by or on behalf of the Company. The term "Evaluation
Material" also includes all analyses, compilations, studies or other material
prepared by you or your partners, directors, employees, agents, advisory,
representatives of your advisors and any commercial or investment banks
participating in the financing of any transaction (collectively, your
"Representatives") containing or based on in whole or in part, any information
furnished by the Company or any of its representatives. The term
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<PAGE>
"Evaluation Material" does not include information which (i) is already in your
or your Representative's possession, provided that such information is not
known by you or your Representatives to be the subject of another
confidentiality agreement with, or other obligation of secrecy to, the Company,
(ii) becomes generally available to the public other than as a result of a
disclosure by you or your Representatives in violation of this Agreement, or
(iii) becomes available to you or your Representatives from a source other than
the Company or its Representatives, provided that such source is not known by
you or the party receiving such information to be bound by a confidentiality
agreement with, or other obligation of secrecy to, the Company which would
prohibit such source from making such information available to the party
receiving the same, or (iv) is independently developed by you without any use
of the Evaluation Material.
In connection with the Evaluation Material:
(1) You hereby recognize and acknowledge the competitive value and
confidential nature of the Evaluation Material and the damage that could
result to Best if information contained therein is disclosed to any third
party.
(2) You hereby agree that the Evaluation Material will be used solely for the
purpose of evaluating a possible transaction between you and Best as set
forth on the first page of this letter agreement. You also hereby agree
that you will not, without the prior written consent of Best or the
Company's authorized representative, disclose any of the Evaluation
Material now or hereafter received or obtained from Best or Best's
representatives to any person unless otherwise permitted by this agreement
or unless you are required to do so by applicable law or legal process;
provided, however, that any such information may be disclosed to your
Representatives who need to know such information for the purpose of
evaluating your possible participation in a transaction with Best (it
being understood that such persons shall be informed by you of the
confidential nature of such information and shall agree to treat such
information confidentially). You agree to be responsible for any breach
of this Agreement by any of your representatives. The term "person", as
used in this confidentiality agreement, shall be broadly construed to
include, without limitation, any corporation, limited liability company,
partnership or individual.
(3) In addition, without the prior written consent of Best or
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General Signal Corp.
April 13, 1995
Page 3
Best's authorized representative, you will not and you will direct your
Representatives not to disclose to any person (i) either the fact that
discussions or negotiations are taking place concerning such a possible
transaction or any of the terms, conditions or other facts with respect to
any such possible transaction, including the status thereof or the
termination of discussions or negotiations with the Company or (ii) the
fact that this Agreement exists or that Evaluation Material has been made
available to you; provided, however, that the foregoing shall not apply to
such disclosures as are required by law or legal process.
(4) If you determine not to proceed with a transaction or any transaction
contemplated by this confidentiality agreement is not consummated: (a)
neither you nor your Representatives shall, without the prior written
consent of Best or Best's authorized representatives, use any of the
Evaluation Material now or hereafter received or obtained from Best or
Best's representatives, for any purpose; and (b) you shall redeliver to
the Company or destroy all tangible Evaluation Material and any other
tangible material containing, prepared on the basis of, or reflecting any
information in the Evaluation Material (whether prepared by the Company,
its advisors or otherwise) and will not retain any copies, extracts or
other reproductions in whole or in part of such tangible material.
(5) You agree that Best shall be entitled to equitable relief, including
injunction and specific performance, in the event of any breach of this
agreement, in addition to all other remedies available to Best at law or
in equity.
(6) If you are advised by your counsel that facts (a) disclosed in the
Evaluation Material or (b) not permitted to be disclosed pursuant to
paragraphs (2) or (3) above (other than pursuant to the provisos in those
paragraphs), must be disclosed in accordance with applicable law or legal
process, including disclosures necessary for you to comply with the
Securities Exchange Act of 1934, as amended, (the "Exchange Act") and the
rules and regulations thereunder, including any disclosures required to be
made in accordance with Schedule 13D of the Exchange Act, such disclosures
shall contain only those disclosures which you are legally compelled to
disclose and shall be made at the latest time practicable consistent, in
the opinion of your counsel, with your obligations under the Exchange Act;
and provided that
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General Signal Corp.
April 13, 1995
Page 4
any disclosure required to be made by law or legal process shall first be
disclosed to the Company in the form proposed to be otherwise disclosed at
least one business day prior to making such disclosure and you shall
cooperate with the Company in order that the necessary disclosures may be
made in a manner minimizing any risk to the Company and its business.
(7) If you or anyone to whom you supply the Evaluation Material receives a
request to disclose all or any part of the information contained in the
Evaluation Material or the matters referred to in the preceding paragraphs
under the terms of a subpoena, order, civil investigative demand or
similar process issued by a court of competent jurisdiction or by a
governmental body, you agree to (i) immediately notify Best of the
existence, terms and circumstances surrounding such request; (ii) take
reasonable steps to consult with Best on the advisability of taking
legally available steps to resist or narrow such request; and (iii) if
disclosure of such information is required, furnish only that portion of
the Evaluation Material which, in the opinion of your counsel, you are
legally compelled to disclose and exercise your efforts at the expense of
the Company to obtain an order or other reliable assurance that
confidential treatment will be accorded to such portion of the disclosed
information which the Company so designates.
(8) You hereby acknowledge that you are aware, and that you will advise each
of your Representatives who are aware of the matters which are the subject
of this letter, that the United States securities laws prohibit any person
who has received from an issuer material, non-public information
concerning the matters which are the subject of this letter from
purchasing or selling securities of such issuer or from communicating such
information to any other person under circumstances in which it is
reasonably foreseeable that such person is likely to purchase or sell such
securities.
(9) You understand and agree that neither we nor Best makes any representation
or warranty as to the accuracy or completeness of the Evaluation Material.
The Evaluation Material is not intended to provide the sole basis for any
investment or other decision and you understand that you must determine
the relevance of the Evaluation Material and any decision should be based
on such investigation as you may conclude is appropriate. In addition,
you agree that
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General Signal Corp.
April 13, 1995
Page 5
neither we nor Best, nor Best's representatives, shall have any liability
to you, your Representatives or any other third party resulting from the
use of the Evaluation Material by you or your Representatives, except as
may be hereinafter agreed to in a definitive agreement against which
liability may be claimed.
(10) You agree that, for a period of two (2) years from the date of this
Agreement, unless such action shall have been specifically requested in
writing by the Board of Directors of the Company, neither you nor any of
your Representatives, affiliates or associates (as such terms are defined
under the Exchange Act) will in any manner, directly or indirectly, (a)
effect or seek, offer or propose (whether publicly or otherwise) to
effect, or cause or participate in (i) any acquisition of any securities
(or beneficial ownership thereof) or assets of the Company or any of its
subsidiaries; (ii) any tender or exchange offer or merger or other
business combination involving the Company or any of its subsidiaries;
(iii) any recapitalization, restructuring, liquidation, dissolution or
other extraordinary transaction with respect to the Company or any of its
subsidiaries; or (iv) any "solicitation" of "proxies" (as such terms are
used in the proxy rules of the Securities and Exchange Commission) or
consents to vote any voting securities of the Company, (b) form, join or
in any participate in a "group" (as defined under the Exchange Act), (c)
otherwise act, alone or in concert with others, to seek to control or
influence the management, Board of Directors or policies of the Company,
(d) take any action which might force the Company to make a public
announcement regarding any of the types of matters set forth in (a) above,
or (e) enter into any discussions or arrangements with any third party
with respect to any of the foregoing. You also agree during any such
period not to request the Company (or its directors, officers, employees
or agents), directly or indirectly, to amend or waive any provision of
this paragraph. Nothing contained in this paragraph 10 shall restrict you
from taking any action in the event the Company publicly announces that it
is considering a specific transaction with respect to, or has entered into
any arrangement or understanding with respect to, the sale of all or any
substantial portion of the Company (other than any such arrangement or
understanding with you), or from making a tender offer for all of the
outstanding capital stock of the Company after such time as a third party
has commenced,
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General Signal Corp.
April 13, 1995
Page 6
within the meaning of Rule 14d-2 of the Exchange Act, a tender offer for
the company at a lower value.
(11) You hereby agree that prior to consummation of a transaction contemplated
by the first paragraph of this letter, without the prior written consent
of the Company, neither you nor your affiliates or associates shall
directly or indirectly, initiate, or engage or participate in any
discussions or negotiations or enter into any agreement or arrangements
regarding the sale of any assets of the Company except with respect to
agreements with lenders providing financing for such transaction and
provided that a definitive agreement then exists.
(12) You agree that if the transaction contemplated by this Agreement is not
consummated, without the prior express written consent of the Company,
neither you nor your agents shall directly or indirectly initiate any
discussions or negotiations regarding the hiring of any officer or
employee of the Company or its subsidiaries so employed at the time.
Nothing contained herein shall preclude general solicitation of
employment, through advertisements or similar means.
(13) You hereby represent that, as of the date hereof, you and your Affiliates
and Associates and any other person or entity with whom you are acting in
concert in connection with this matter or have formed a "group" within the
meaning of Section 13(d)(3) of the Exchange Act do not beneficially own
any shares of Common Stock of the Company for which we have any Securities
or Exchange Act reporting responsibilities.
(14) You understand that (i) the Company and The Chicago Corporation ("TCC")
shall conduct the process for a possible transaction as they in their sole
discretion shall determine, (ii) the Company shall have the right to
reject or accept any potential buyer, proposal or offer, for any reason
whatsoever, in its sole discretion, and (iii) neither you nor any of your
Representatives shall have any claims whatsoever against the Company or
TCC or any of their respective directors, officers, stockholders, owners,
affiliates or agents arising out of or relating to the transaction (other
than those against the parties to a definitive agreement with you in
accordance with the terms thereof).
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General Signal Corp.
April 13, 1995
Page 7
(15) It is further understood and agreed that TCC will arrange for appropriate
contacts for due diligence purposes. It is also understood and agreed
that all (i) communications regarding a possible transaction, (ii)
requests for additional information, (iii) requests for facility tours or
management meetings and (iv) discussions or questions regarding
procedures, will be submitted or directed exclusively to TCC, and that
none of you or your Representatives who are aware of the Evaluation
Material and/or the possibility of a transaction will initiate or cause to
be initiated any communication with any director, officer or employee of
the Company concerning the Evaluation Material, a transaction or any other
aspect of the business, governance or direction of the Company.
(16) You agree that unless and until a definitive agreement between the Company
and you with respect to any transaction has been executed and delivered,
neither the Company nor you will be under any legal obligation of any kind
whatsoever with respect to such transaction, other than as specifically
set forth therein.
(17) This agreement may be executed in two or more counterparts, each of which
shall be deemed to be an original, but all of which shall constitute the
same agreement. This agreement shall expire two (2) years from the date
of signing at which time you shall return any Evaluation Materials in your
possession.
(18) The agreement evidenced by this confidentiality agreement shall be
governed by the laws of the State of New York.
Please indicate your agreement with the terms of this confidentiality agreement
by signing and returning to us the enclosed copy of this confidentiality
agreement.
Sincerely,
THE CHICAGO CORPORATION
By: /s/ Frederic D. Floberg
----------------------------
ACCEPTED AND AGREED
This 13th day of April, 1995
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General Signal Corp.
April 13, 1995
Page 8
GENERAL SIGNAL CORP.
By: /s/ Philip A. Goodrich
-------------------------
Title: Vice President
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EXHIBIT 11
THE CHICAGO CORPORATION
May 10, 1995
Board of Directors
Best Power Technology, Incorporated
N9246 Highway 80
P. O. Box 280
Necedah, Wisconsin 54646
Members of the Board:
You have asked us to advise you with respect to the fairness to the
stockholders of Best Power Technology, Incorporated (the "Company"), from a
financial point of view, of the consideration to be received by such holders
pursuant to the terms of the Agreement and Plan of Merger, dated as of May 10,
1995, (the "Merger Agreement") by and among the Company, General Signal
Corporation ("General Signal"), and G.S. Newco, Inc. ("Merger Sub"), a direct
wholly-owned subsidiary of General Signal. The Merger Agreement provides for a
cash tender offer (the "Offer") by Merger Sub to acquire all of the issued
and outstanding shares of Common Stock, par value $.01 per share, (the "Common
Stock") of Company, at $21.00 per share, net to the seller in cash, and for the
subsequent merger of the Merger Sub with and into the Company, pursuant to
which each outstanding share of Common Stock not purchased in the Offer will be
converted into the right to receive $21.00 in cash (the "Merger", and together
with the Offer, the "Transaction").
In arriving at our opinion, we have reviewed certain publicly available
business and financial information relating to the Company and General Signal,
in addition to the Merger Agreement. We have also reviewed certain other
information, including financial forecasts for the Company, provided to
us by the Company, and have met with the Company's management to discuss the
business and prospects of the Company.
We have also considered certain financial and stock market data of the Company,
we compared that data with similar data for other publicly held companies in
businesses similar to those of the Company, and we have considered the
financial terms of certain other business combinations which have recently been
effected. We also considered such other information, financial studies,
analyses and investigations and financial, economic and market criteria which
we deemed relevant.
In connection with our review, we have not assumed any responsibility for
independent verification of any of the foregoing
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208 South LaSalle Street
Chicago, Illinois 60604
312.855.7600
INVESTMENT BANKING / INVESTMENT ADVICE / MEMBER OF ALL PRINCIPAL EXCHANGES
<PAGE>
information and have relied on its being complete and accurate in all material
respects. With respect to the financial forecasts, we have assumed that they
have been reasonably prepared on bases reflecting the best currently available
estimates and judgments of the Company's management as to the future financial
performance of the Company. In addition, we have not made an independent
evaluation or appraisal of the assets of the Company, nor have we been
furnished with any such evaluations or appraisals. There has been no public
solicitation of indications of interest in a possible acquisition of the
Company. However, in connection with our engagement, we have made several
inquiries of third parties concerning their possible interest in a transaction
with the Company.
We have acted as financial advisor to the Company in connection with the
Transaction and will receive a fee for our services, including rendering this
opinion, a significant portion of which is contingent upon the consummation of
the Transaction.
In the past, The Chicago Corporation has separately performed certain
investment banking services for the Company and received customary fees for
such services. In the ordinary course of our business, The Chicago Corporation
and its affiliates may actively trade securities of both the Company and
General Signal for their own account and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
It is understood that this letter is solely for the benefit and use of the
Board of Directors of the Company in its consideration of the Transaction and
may not be relied upon by any other person, used for any other purpose or
reproduced, disseminated, quoted or referred to at any time, in any manner or
for any purpose without our prior written consent. This letter does not
constitute a recommendation to any stockholder with respect to whether to
tender shares of Common Stock pursuant to the Offer or whether to vote in favor
of the Merger.
Based upon and subject to the foregoing, it is our opinion that, as of the date
hereof, the consideration to be received by the stockholders of the Company in
the Offer and the Merger is fair to such stockholders from a financial point of
view.
Very truly yours,
THE CHICAGO CORPORATION
/s/ The Chicago Corporation
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EXHIBIT 12
FOR IMMEDIATE RELEASE
For further information contact:
Dennis E. Burke
Executive Vice President-Administration
Best Power Technology, Incorporated
(800) 365-6145
BEST POWER TECHNOLOGY, INCORPORATED TO BE ACQUIRED
BY GENERAL SIGNAL CORPORATION
NECEDAH, WI, May 10, 1995 ... Best Power Technology, Incorporated (NASDAQ:
BPTI) announced today that it has entered into a definitive agreement with
General Signal Corporation (NYSE:GSX) under which General Signal will acquire
Best Power for $200 million, or $21.00 per share, in cash.
The agreement, which was unanimously approved by Best's Board of Directors
today, provides for General Signal to make a cash tender offer for all
outstanding shares of common stock of Best Power at a price of $21.00 per
share. The tender offer is scheduled to commence early next week. The tender
offer will be followed as soon as possible by a second-step merger in which
each share of Best Power not acquired in the tender offer will be converted
into the right to receive $21.00 in cash.
The tender offer is subject to customary terms and conditions, including
the valid tender of a majority of the outstanding shares and the expiration or
termination of any applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976.
"The Board of Directors views this tender offer as a distinct positive for
our shareholders, employees and customers and we are pleased that General
Signal recognized the value and strength of our market position," said Paul
Koeppe, Chairman of Best's Executive Committee. "The combination of Best with
General Signal's Sola/Hevi-Duty division will bring a series of benefits to the
marketplace, including a breadth of manufacturing technology and a critical
mass resulting in expanded value and quality for our customers' power
protection needs," Koeppe added.
Best Power Technology, Incorporated, founded in 1977, is a recognized
leader in the design and manufacture of systems to protect computers and other
sensitive equipment from power irregularities. Headquartered in Necedah,
Wisconsin, with 1994 sales of $149.4 million, the company has sales offices
worldwide and employs over 1,000 people.
General Signal Corporation, with 1994 sales of $1.53 billion, is a leading
supplier of equipment and instrumentation for the process control, electrical,
and industrial technology industries.
1
EXHIBIT 13
[BEST POWER LETTERHEAD]
May 16, 1995
To Our Stockholders:
On behalf of the Board of Directors of Best Power Technology, Incorporated
(the "Company"), we are pleased to inform you that on May 10, 1995, the Company
entered into an Agreement and Plan of Merger (the "Merger Agreement") with
General Signal Corporation and G. S. Newco, Inc., its wholly-owned subsidiary,
pursuant to which G. S. Newco, Inc. has today commenced a cash tender offer
(the "Offer") to purchase all of the outstanding Shares (the "Shares") of the
Common Stock of the Company at $21 per share. Under the Merger Agreement, the
Offer will be followed by a merger (the "Merger") in which any remaining shares
of the Common Stock of the Company not tendered pursuant to the Offer will be
converted into the right to receive $21 per share in cash, without interest
(except any Shares as to which the holder has properly exercise dissenter's
rights of appraisal). Stockholders owning approximately 21.2% of the
Company's outstanding Shares have agreed to tender their Shares in the Offer.
Your Board of Directors has unanimously determined that the Offer and
Merger are fair and in the best interests of the Company and its stockholders
and has approved the Offer and Merger; and the Board of Directors recommends
that the stockholders of the Company accept the Offer and tender their Shares
pursuant to the Offer.
In arriving at its recommendation, the Board of Directors gave careful
consideration to the factors described in the attached Schedule 14D-9, which is
being filed today with the Securities and Exchange Commission, including, among
other things, the opinion of The Chicago Corporation, the Company's financial
advisor, that the consideration to be received by the holders of Shares in the
Offer and Merger is fair to such holders from a financial point of view.
We urge you to read the information contained in our Schedule 14D-9, as
well as the materials provided to you by G. S. Newco, Inc. and General Signal
Corporation, carefully in making your decision with respect to tendering your
shares pursuant to the Offer.
On behalf of the Board of Directors,
/s/ Paul F. Koeppe
Paul F. Koeppe
Chairman, Executive Committee
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