SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________
AMENDMENT NO. 3 TO
SCHEDULE 14D-1
Tender Offer Statement Pursuant To Section
14(d)(1) of the Securities Exchange Act of 1934
and
SCHEDULE 13D
Under the Securities Exchange Act of 1934
________________
BEST POWER TECHNOLOGY, INCORPORATED
(Name of Subject Company)
________________
GENERAL SIGNAL CORPORATION
G.S. NEWCO, INC.
(Bidder)
________________
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
________________
086548104
(CUSIP Number of Class of Securities)
________________
Edgar J. Smith, Jr., Esq.
Senior Vice President, General Counsel & Secretary
General Signal Corporation
One High Ridge Park
P.O. Box 10010
Stamford, Connecticut 06904
(203) 329-4100
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of Bidder)
________________
Copy to:
W. Leslie Duffy, Esq.
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
(212) 701-3000
<PAGE>
This Amendment No. 3 amends and supplements the
Tender Offer Statement on Schedule 14D-1 and Schedule 13D
originally filed with the Securities and Exchange Commission on
May 16, 1995, as previously amended (the "Schedule 14D-1"), by
G.S. Newco, Inc., a Delaware corporation (the "Purchaser") and
a wholly owned Subsidiary of General Signal Corporation, a New
York corporation ("Parent"), relating to the offer by the
Purchaser to purchase all of the outstanding shares of common
stock, par value $.01 per share (the "Shares") of Best Power
Technology, Incorporated, a Delaware corporation (the
"Company"), at a purchase 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, and the
related Letter of Transmittal (which, together with any
amendments or supplements thereto, collectively constitute the
"Offer"). Unless the context otherwise requires, capitalized
terms not otherwise defined herein have the meaning ascribed to
them in the Schedule 14D-1 and the Offer to Purchase.
ITEM 10. ADDITIONAL INFORMATION
Item 10 is hereby amended and supplemented by adding
thereto the following:
(e) On or about May 23, 1995, a putative class
action was filed in the Court of Chancery of the State of
Delaware, County of New Castle, on behalf of the Company's
shareholders, alleging causes of action arising out of the
Offer and the proposed Merger: Salvatore Vernace v. Steven J.
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Paul, et al. (C.A. No. 14303).
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The defendants in the action identified above are Parent,
the Company,and certain present directors and a past director
of the Company. The lawsuit alleges breaches of fiduciary
duty against the Company, certain present directors and a past
director of the Company, and alleges that Parent aided and
abetted those breaches of duty. The action seeks, inter alia,
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(i) to enjoin the proposed Merger on the grounds that (a) the
consideration to be paid is unfair and inadequate, (b) the
Board has failed to maximize shareholder value and (c) the
Schedules 14D-1 and 14D-9 filed by Parent and the Company,
respectively, are misleading and incomplete, (ii) to rescind
any transactions effectuated by defendants and (iii) monetary
damages. The foregoing disclosure is qualified in its entirety
by reference to the amended complaint, a copy of which is
attached hereto as exhibit (g)(1) and is incorporated herein by
reference.
ITEM 11 MATERIAL TO BE FILED AS EXHIBITS
(g)(1) Amended class action complaint in Salvatore
---------
Vernace v. Steven J. Paul, et al., (C.A. No. 14303).
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<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this
Statement is true, complete and correct.
G.S. NEWCO, INC.
By: /s/ Edgar J. Smith, Jr.
-------------------------------
Name: Edgar J. Smith, Jr.
Title: Vice President and
Secretary
GENERAL SIGNAL CORPORATION
By: /s/ Edgar J. Smith, Jr.
-------------------------------
Name: Edgar J. Smith, Jr.
Title: Vice President,
General Counsel and
Secretary
Dated: May 31, 1995
<PAGE>
EXHIBIT INDEX
EXHIBIT SEQUENTIAL
NO. DESCRIPTION PAGE NUMBER
(g)(1) -- Amended Class Action Complaint
in Salvatore Vernace v.
-----------------
Steve J. Paul, et al.
---------------------
(C.A. No. 14303).
EXHIBIT (g)(1)
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
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SALVATORE VERNACE, :
:
Plaintiff, :
:
- against - :
: C.A. No. 14303
STEVE J. PAUL, ROLAND D. PAMPEL, :
WILLARD S. PAUL, DENNIS E. BURKE, :
PAUL F. KOEPPE, MARGUERITE M. :
PAUL, SOREN RATHMANN, :
BEST POWER TECHNOLOGY, INCORPORATED :
and GENERAL SIGNAL CORPORATION, :
:
Defendants. :
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AMENDED CLASS ACTION COMPLAINT
------------------------------
Plaintiff, by his attorneys, alleges upon personal knowledge as
to his own acts and upon information and belief as to all other
matters, as follows:
1. Plaintiff brings this action individually and as a class
action on behalf of all persons, other than defendants, who own the
securities of Best Power Technology, Inc. ("Best Power" or the
"Company"), and who are similarly situated (the "Class"), for
injunctive and other relief. Plaintiff seeks the injunctive relief
herein, inter alia, to enjoin the consummation of the two-step merger
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(the "Merger"), which commenced on May 16, 1995, pursuant to which
General Signal Corp. ("General Signal") will acquire the Company for
about $200 million, or $21 per share. Alternatively, in the event
that the Merger is consummated, plaintiff seeks to
<PAGE>
recover damages caused by the breach of fiduciary duties owed by the
individual defendants.
2. The individual defendants gave and are giving their
authorization to engage in the Merger in breach of their fiduciary
duties owed to Best Power's stockholders to take all necessary steps
to ensure that the stockholders will receive the maximum value
realizable for their shares in any sale of the Company. In the
context of this action, defendants are and were required to take all
reasonable steps to assure the maximization of stockholder value,
including the implementation of a bidding mechanism to foster a fair
auction of the Company to the highest bidder or the exploration of
strategic alternatives that will return greater or equivalent short-
term value to plaintiff and the Class.
3. Further, the individual defendants were, and are, required
to take all necessary steps to ensure that the proxy materials filed
with the Securities and Exchange Commission (the "SEC") i.e., the
----
Schedule 14D-1, and disseminated to Company stockholders, i.e., the
----
Schedule 14D-9, were truthful and accurate so as to provide the
information necessary for stockholders to make an informed decision as
to whether to tender their shares during the first-step of the
transaction. In this regard, defendants have breached their duty of
candor owed to plaintiff and the Class.
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Parties
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4. Plaintiff is, and at all relevant times has been, the owner
of shares of Best Power common stock.
5. Best Power is a corporation duly organized and existing
under the laws of the State of Delaware. Best Power makes a
comprehensive line of power protection devices for use with computers,
telecommunications equipment, and other electronically sensitive
equipment. Its products prevent damage from electrical power
disturbances and include FERRUPS, uninterruptible power supply
systems, line conditioners, surge protectors and UBS engine driven
long-term back up power sources. Best Power's principal executive
office is located at P.O. Box 280, Necedah, Wisconsin 54646-9899. As
of December 31, 1994, Best Power had approximately 9,525,023 shares of
common stock outstanding and approximately 903 shareholders of record.
The common stock of Best Power trades on the NASDAQ.
6. Defendant Steve J. Paul ("Paul") was President and Chief
Executive Officer ("CEO") of the Company from May 11, 1994 to January
26, 1995. Paul serves as a member of the Board of Directors of Best
Power (the "Board"). His remuneration from Best Power in 1993 was
approximately $351,394.
7. Defendants Roland D. Pampel, Willard S. Paul, Dennis E.
Burke, Paul F. Koeppe ("Koeppe"), Marguerite M. Paul, and Soren
Rathmann are directors of Best Power.
8. Following the departure of Paul as President and CEO, Best
Power has been run by an Executive Committee of the Board
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(the "Executive Committee"). The Executive Committee is comprised of
defendants Paul F. Koeppe, Roland D. Pampel and Soren Rathmann, and
management director John Hickey.
9. The defendants named in paragraphs 7 through 9 are
hereinafter referred to as the "Individual Defendants."
10. Because of their positions as Executive Committee members
and/or directors of the Company, the Individual Defendants owe a
fiduciary duty of loyalty, due care, and candor to plaintiff and the
other members of the Class.
11. Defendant, General Signal is a corporation organized and
existing under the laws of the State of New York. Its principal
executive office is located at One High Ridge Park, P.O. Box 10010,
Stamford, Connecticut 06904. General Signal and its numerous
subsidiaries and affiliates are engaged in, inter alia, the process
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controls, electrical controls, and industrial technological
industries, within the United States and abroad. General Signal stock
trades on the New York Stock Exchange. General Signal is named as an
aider and abettor of the breaches of fiduciary duty complained of
herein.
12. Each defendant herein is sued individually and as a
conspirator and aider and abettor and, where relevant, in his capacity
as a director of the Company. The liability of each arises from the
fact that he has engaged in all or part of the unlawful acts, plans,
schemes, or transactions complained of herein.
CLASS ACTION ALLEGATIONS
------------------------
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13. Plaintiff brings this case on his own behalf and as a class
action, pursuant to Rule 23 of the Rules of the Court of Chancery, on
behalf of all stockholders of the Company who will be threatened with
injury arising from defendants' actions as is described more fully
below, except defendants herein and any person, firm, trust,
corporation, or other entity related to or affiliated with any of the
defendants.
14. This action is properly maintainable as a class action.
15. The Class is so numerous that joinder of all members is
impracticable. The Company has approximately 9,525,023 shares of
stock outstanding and approximately 903 stockholders of record.
16. There are questions of law and fact common to the Class
including, inter alia, whether:
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a. the Merger is grossly unfair to Best Power's public
stockholders;
b. defendants have engaged and are continuing to prevent
plaintiff and the Class from receiving the maximum value per share
that could be received in an unfettered market for control;
c. defendants are depriving plaintiff and the Class of the
opportunity to enjoy an increase in the value of their Best Power
stock in the years to come, as touted in the prospectus for Best
Power's initial public offering ("IPO") in 1993;
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<PAGE>
d. defendants distributed or aided and abetted the
distribution of a Schedule 14D-1 and a Schedule 14D-9 that failed to
disclose material facts and that were made false and misleading by
virtue of the same;
e. defendants have breached or aided and abetted the
breach of the fiduciary and other common law duties owed by them to
plaintiff and the members of the Class; and
f. plaintiff and the other members of the Class would be
irreparably damaged were the transaction complained of herein
consummated.
17. Plaintiff is committed to prosecuting this action and has
retained competent counsel experienced in litigation of this nature.
Plaintiff's claims are typical of the claims of the other members of
the Class and plaintiff has the same interests as the other members of
the Class. Plaintiff is an adequate representative of the Class.
18. The prosecution of separate actions by individual members of
the Class would create the risk of inconsistent or varying
adjudications with respect to individual members of the Class which
would establish incompatible standards of conduct for defendants, or
adjudications with respect to individual members of the Class which
would as a practical matter be dispositive of the interests of other
members not parties to the adjudications or substantially impair or
impede their ability to protect their interests.
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19. The defendants have acted, or refused to act, on grounds generally
applicable to, and causing injury to, the Class and, therefore, preliminary and
final injunctive relief on behalf of the Class as a whole is appropriate.
SUBSTANTIVE ALLEGATIONS
-----------------------
Early Overtures By General Signal
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20. In 1992, Best Power engaged Kemper Securities Group, Inc. to assist in
a possible sale of the Company. General Signal participated in this process,
visiting Best Power's facilities, meeting with its principal owners and officers
and receiving information about the Company. In June 1993, General Signal made
a conditional offer to acquire the Company at approximately $14 per share. Best
Power's then existing board rejected General Signal's offer.
21. On August 4, 1993, Best Power offered to the public, in an initial
public offering, 2,600,000 shares of common stock at $14.50 per share. Half of
these shares were offered by the Company and half by selling stockholders, a
large portion of whom are members of the Paul family. In the prospectus for the
IPO, the Company boasted of a business strategy focused on "continuing to
enhance its position as a leading worldwide manufacturer" and "expand[ing] its
product offerings into segments of the power protection market which the Company
believes have significant growth opportunities."
22. Not all the stock issued by the Company was sold pursuant to the
public offering. Thus, following the IPO, individuals previously involved with
the Company, including many members of the Paul family or individuals or
institutions affiliated with the Paul family, owned
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<PAGE>
more than 50% of Best Power's outstanding shares of common stock. As a result,
they exercised a concomitant influence on the Board, as well as on the Company's
policies and direction. At least three of these individuals, defendants Paul,
Willard S. Paul and Marguerite M. Paul, currently serve on Best Power's Board.
23. From August 1993 to January 1995, General Signal periodically
contacted certain members of Best Power's Board, purportedly to express
continued interest in forming a strategic alliance with the Company, though
Plaintiffs believe General Signal's interest was to take over Best Power and
deprive its stockholders of the right to share in the growth and profits of Best
Power, as they had been promised in the prospectus for the August 1993 public
offering. Best Power consistently responded that it was uninterested in
pursuing such matters with General Signal.
24. On May 11, 1994, defendant Paul was appointed President and CEO of
Best Power to replace William Paul. Defendant Paul stepped down from the office
on January 26, 1995, and since then Best Power has been run by the Executive
Committee.
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<PAGE>
Background of the Merger
------------------------
25. In February 1995, Philip A. Goodrich ("Goodrich"), Vice President-
Corporate Development of General Signal, called defendant Koeppe, Chairman of
the Executive Committee, to discuss a possible business combination between
General Signal and Best Power. Subsequent to that conversation, Goodrich sent
Koeppe public information about General Signal.
26. Later that month, Edmund M. Carpenter ("Carpenter"), Chairman and CEO
of General Signal, called Koeppe to discuss a possible business combination
between the two companies. Dennis E. Burke ("Burke"), Executive Vice President
and Secretary of Best Power returned Carpenter's call and discussed General
Signal's interest in acquiring the Company.
27. After consulting with the Executive Committee, Burke called Carpenter
and Goodrich to advise them that Best Power was not for sale.
28. On March 8, 1995, Carpenter sent a letter to Koeppe, Burke, and other
Best Power directors to explore a possible business combination of Best Power
and General Signal. In the letter, Carpenter stated that although General
Signal was not making a formal proposal, it believed, based on public
information, that an offer in the range of $18.50 to $20.00 per share would be
fair to Best Power's stockholders. In the letter, General Signal requested an
opportunity to "validate the indicated valuation" on a confidential and
exclusive basis.
29. On March 14, 1995, Best Power engaged the Chicago Corporation
("Chicago") as its investment advisor to assist in a review of strategic
alternatives, including the sale of the Company. Koeppe later called Carpenter
to apprise him of Chicago's retention and that the Board would meet and formally
review General Signal's proposal in greater detail.
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<PAGE>
30. Koeppe spoke with Carpenter on March 21, 1995, and informed him that
the Board had met to review among other things, General Signal's proposal.
Keoppe advised Carpenter that the Board would consider the proposal and that
such a review would take three to four weeks to complete. Koeppe also advised
Carpenter that, as Chairman of the Executive Committee, he was Best Power's
designated spokesman concerning all discussions between the Company and General
Signal, and that General Signal should not contact other directors of Best
Power.
31. At an April 9, 1995 meeting, Chicago presented an analysis of the
Company's strategic and financial alternatives, as well as a list of potential
strategic partners in addition to General Signal. At the meeting, the Board
decided to explore some of the alternatives, including the possible sale of the
Company. The Board also authorized Chicago to contact a limited number of
potential acquisition partners about their interest in a transaction with Best
Power.
32. Following the April 9, 1995 meeting of the Board, Chicago contacted
Carpenter. Carpenter indicated a willingness to proceed on a confidential and
non-exclusive basis. On April 13, 1995, General Signal signed a confidentiality
agreement and began a review of certain non-public information provided by Best
Power.
33. On April 24, 1995, General Signal provided a letter to Chicago
purporting to indicate that, while it was not yet prepared to present a formal
proposal to acquire Best Power, based on General Signal's analysis of the
confidential information provided by Best Power, General Signal was prepared to
begin contract negotiations to acquire all Best Power's
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<PAGE>
outstanding common stock at a cash price of $20.00 per share. General Signal
requested that it be allowed to proceed on an exclusive basis and indicated that
its interest in the Company remain confidential. On April 24, 1995, General
Signal and its financial advisor, Lazard Freres & Co. LLC ("Lazard Freres"),
indicated that they would provide to the Board a copy of the April 24, 1995
letter previously sent to Chicago.
34. After consulting with the Board on April 25, 1995, Chicago advised
General Signal that based on General Signal's proposal of $20.00 per share, Best
Power could not agree to an exclusivity provision, but that the Company would
continue to work with General Signal 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. Chicago further
indicated that the Board required any agreement concerning a transaction to be
made prior to Best Power's Annual Meeting of Shareholders on May 10, 1995
("Annual Meeting"). Thereafter, General Signal called Chicago and indicated its
willingness to continue working on a non-exclusive basis on the timetable
proposed. General Signal began due diligence efforts and meetings with the
management of Best Power during the following two weeks.
35. Notwithstanding Koeppe's earlier advice concerning the person at the
Company responsible for the negotiation of a merger transaction, on May 4, 1995,
Carpenter met with Koeppe and Paul, and individuals from the Chicago Corporation
to discuss General Signal's due diligence and its review of a proposed merger
agreement. General Signal said that it was prepared to make a firm proposal for
Best Power prior to the Annual Meeting.
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<PAGE>
36. During the last week of April and the first week of May, 1995, Best
Power held several meetings with another potential acquiror to discuss a
proposed transaction. A confidentiality agreement was executed and Best Power
provided non-public information about itself. However, for undisclosed reasons,
the potential acquiror never made a definitive offer for Best Power.
37. On May 8, 1995, General Signal provided a letter to Chicago offering
$21.00 per share in a tender offer followed by a cash-out merger to acquire all
of Best Power's outstanding common stock.
38. The offer also included additional terms designed to lock-up the
transaction from other potential bidders, such as a break-up fee and an expense
reimbursement provision.
39. On May 9, 1995, the Board purportedly directed Chicago to communicate
with Lazard Freres to determine if the terms
of the transaction proposed could be improved. As a result, the amount of the
breakup fee was reduced from $10 million to $6 million. General Signal declined
to increase the price any further. In breach of their fiduciary duties to
maximize shareholder value, defendants failed to negotiate with General Signal
for an increase in the consideration proposed. This is especially significant
given defendants' earlier statements made in the prospectus concerning the
future prospects of the Company.
40. Thereafter, the Board instructed Chicago to advise General Signal that
it was prepared to proceed with a transaction at $21.00 per share if the parties
could execute a
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<PAGE>
definitive merger agreement prior to the Annual Meeting. The parties agreed to
complete negotiation of the merger agreement within the time constraint set by
the Board.
41. On May 10, 1995, prior to the Annual Meeting, the Board met to approve
and execute the definitive merger agreement (the "Merger Agreement") and related
documents. The Board unanimously determined that the Merger was fair to and in
the best interests of Best Power's stockholders, and that it would recommend
that Best Power's stockholders accept the offer and tender their shares pursuant
to the first-step offer. Immediately following the May 10, 1995 board meeting,
the parties executed the Merger Agreement, and General Signal and Best Power
issued press releases announcing the Merger and the principal terms and
conditions thereof.
42. Defendants chose to pursue this transaction at a time when Best Power
has suffered some recent problems. Among others, these include a decline in net
income in the first quarter of 1995 due to, inter alia, the impact on margins of
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increased distributor sales, an increase in the level of advertising and
promotional expenditures, and an increase in Best Power's effective tax rate.
Defendants also chose to pursue the Merger at a time when Best Power's stock was
trading in the $12 to $13 range, off considerably from its 1994 high of $19.75
and its 1993 high of $29.75.
43. Though Best Power has suffered a recent decline in earnings, it is,
nevertheless, believed that Best Power is poised to significantly increase
future earnings. As a consequence, plaintiffs believe the value of the Company
is far in excess of the consideration offered in the
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<PAGE>
Merger. In this regard, Best Power's sales have increased significantly over
the last year. For example, Best Power's sales for the third quarter of 1994
were $41 million, up 16.7% from the third quarter of 1993. Sales for the first
and second quarters of 1994 were up by 13.6% and 15%, respectively, over the
previous year. Commenting on Best Power's third quarter results, defendant Paul
stated that "[the third] quarter represented an extremely significant milestone
in our company's growth. We have achieved additional market penetration in the
lower range product lines. . . [and will obtain] further market penetration in
mid and high power range applications."
44. Similarly, Best Power's sales for the first quarter of 1995 were up
6.9% over the same period in 1994. The sales totaled $35.3 million, the highest
sales level ever reported by the Company for its first quarter. In commenting
on the results, Best Power's Executive Vice President - Operations, John Hickey,
stated "we are especially pleased with the quarterly results . . . [and they]
are a positive first step for achieving our overall plan of improvements for the
year." Thus, the recent trading range of Best Power's stock has not been
reflective of its true value and earnings potential, and defendants have taken
advantage of that undervaluation. Further, any fairly valued offer must include
a significant premium for control of Best Power.
45. Defendants agreed to the Merger, because of, inter alia, the
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substantial influence exercised over them by stockholders who owned shares prior
to the 1993 public offering, many of them members of the Paul family, and
because these stockholders desire to sell their Best Power interest at this
time, at a substantial premium over their initial investment. In breach of
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their fiduciary duties, defendants failed to protect the interests of plaintiff
and the Class. Specifically, they failed to take account of the fact that
plaintiff and the Class have a higher average cost basis in their Best Power
stock than the pre-IPO stockholders and, thus, will not make anywhere near as
large a profit. Indeed, some Class members will suffer a loss. Further,
plaintiff and the Class were induced to buy their Best Power stock as a direct
and proximate result of the statements defendants made in the
prospectus concerning the Company's future prospects and the long-term benefit
of investing in the Company. Plaintiff and the Class are now being deprived of
their opportunity to hold Best Power stock for the long-term and to share in the
substantial capital appreciation that it is expected to enjoy.
46. Defendants' knowledge and economic power and that of the investing
public are unequal because defendants are in possession of material non-public
information concerning the Company's assets, businesses, and future prospects.
This disparity makes it inherently unfair for defendants to transfer ownership
of Best Power from its public stockholders to General Signal at such an unfair
and grossly inadequate price.
47. The consideration to be paid to the public stockholders in the Merger
is grossly unfair, inadequate, and substantially below the fair or inherent
value of the Company. The intrinsic value of the equity of Best Power is
materially greater than the consideration being considered, taking into account
Best Power's asset value, liquidation value, its expected growth, the strength
of its businesses, and its revenues and cash flow and earnings power.
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<PAGE>
48. Further, defendants started the first-step tender offer within one
week of the announcement -- on May 16, 1995 -- to lock up and preclude other
potential bidders from making an offer for the common stock or assets of Best
Power.
49. Defendants distributed, or caused to be distributed, a Schedule 14D-1
and a Schedule 14D-9 in conjunction with the
Merger. These schedules were materially deficient, inter alia, because they
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were incomplete and did not adequately disclose all material facts. As a
result, the schedules were materially false and misleading. It is believed that
defendants promulgated these false and misleading schedules or aided and abetted
in the promulgation of the same in an attempt to unfairly deprive plaintiff and
the Class of their investment in Best Power.
50. Specifically, the Schedules 14D-1 and 14D-9 were misleading and
incomplete for, among many others, the following reasons:
(a) They disclose that from August 1993, to January 1995, General
Signal periodically contacted members of Best Power's Board to express continued
interest in forming a "strategic alliance," and that Best Power consistently
responded that it was uninterested. However, they do not disclose who was
contacted, what "strategic alliance" was meant, and why Best Power consistently
responded that it was uninterested;
(b) They disclose that in late February 1995, the Executive Committee
advised General Signal that Best Power was not for sale but that Best Power
later changed course and on March 14, 1995 an investment advisor was retained to
consider General Signal's offer in
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<PAGE>
greater detail. However, they do not disclose what caused the change of heart
on the part of the Board and Best Power's directors and management;
(c) They disclose that Chicago advised General Signal that the Board
would review General Signal's March 8, 1995
letter, and with the assistance of "its financial advisor [review] a number of
strategic and financial alternatives" before responding within "three to four
weeks". However, they did not disclose what the strategic and financial
alternatives were or how they were to be reviewed and whether such alternatives
would enhance stockholder value above that which General Signal was proposing;
(d) They disclose that Koeppe advised Carpenter on March 21, 1995
that as Chairman of the Executive Committee he would be Best Power's spokesman
in all discussions with General Signal, and that on May 4, 1995 Carpenter met
with Koeppe and Paul to discuss General Signal's due diligence. However, they
do not disclose why Paul was present at the meeting, what had changed in the
intervening six weeks, and whether General Signal was privately negotiating with
the Paul family;
(e) They disclose that on May 9, 1995 the Board directed Chicago to
inquire of Lazard Freres to see if the terms of the offer could be increased.
However, they do not disclose the value defendants ascribed to Best Power, the
reasons for the request, why defendants failed to pursue the request, or why
defendants thought General Signal's offer was insufficient;
(f) They disclose that on May 10, 1995 prior to the Annual Meeting,
the Board met to approve and execute the Merger Agreement and related documents.
However,
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they do not disclose what discussion, if any, took place at the Annual Meeting
regarding the merger;
(g) They disclose that during the last week of April and the first
week of May, 1995, Best Power had several meetings with another potential
acquiror to discuss a transaction, that this potential acquiror executed a
confidentiality agreement, that Best Power provided non-public information
regarding itself, and that this other potential acquiror indicated, on May 8,
1995, that it was not in a position to respond definitely. However, they do not
disclose who the potential acquiror was, how much if anything it had offered or
was prepared to offer, whether the offer was higher than General Signal's, and
why the potential bidder was not in a position to respond definitively;
(h) They disclose that the Board instructed Chicago, at a March 20,
1995 meeting, to review Best Power's five year Strategic Business Plan.
However, they do not indicate what the five year plan was, how stockholder value
would be enhanced by continued implementation of the plan, what the value would
be, or anticipated earnings, revenues and cash flow;
(i) They disclose that at April 9, 1995 meeting, Chicago presented an
extensive analysis of Best Power's financial and strategic alternatives and a
preliminary framework for analyzing the value of the Company. However, they do
not disclose what those alternatives and framework were, or how those
alternatives would enhance stockholder value,
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or whether implementation of those alternatives would, in fact, represent
greater value to stockholders than a transaction with General Signal;
(j) They disclose that Chicago began to contact "potential strategic
partners" identified at the April 9 meeting. However, they do not disclose who
the "potential strategic partners" were, what was said to them, and what
interest, if any, they expressed in an acquisition of Best Power;
(k) They disclose that Chicago advised General Signal on April 25,
1995, that at the "preliminary evaluation level indicated in the April 24, 1995
letter," Best Power could not agree to an exclusivity provision. However, they
do not provide the reasons why, nor do they state what the "preliminary
evaluation level" was;
(l) They disclose that on the morning of May 9, 1995, at a Board
meeting, Chicago "updated" its earlier "valuation analysis" of the Company.
However, they do not disclose what the updated value of the Company was or what
the Board's reaction was to the same;
(m) They disclose that Heartland Advisors, Inc., of Milwaukee,
Wisconsin, owns 11.4% of Best Power's stock and that, as of December 31, 1994,
Heartland Advisors, Inc. held no voting power and sole dispositive power with
respect to those shares. However, they do not disclose the person or entity
that holds the voting power with respect to those shares.
51. The proposed Merger is, therefore, wrongful, unfair, and harmful to
Best Power public stockholders, and will deny Class members their right to share
proportionately in the true value of
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Best Power's valuable assets, profitable business, and future growth in profits
and earnings.
52. By reason of all of the foregoing, defendants herein have willfully
participated in unfair dealing toward plaintiff and the other members of the
Class and have engaged in and substantially assisted and aided and abetted each
other in breach of the fiduciary duties owed by them to the Class.
53. Defendants have violated fiduciary and other common law duties owed to
the plaintiff and the other members of the Class in that they have not and are
not exercising independent business judgment, and have acted and are acting to
the detriment of the Class.
54. As a result of defendants' actions, plaintiff and the Class have been
and will be damaged by the breaches of fiduciary duty and, therefore, plaintiff
and the Class will not receive the fair value of Best Power's assets and
businesses.
55. Unless enjoined by this Court, defendants will continue to breach
their fiduciary duties owed to plaintiff and the Class, and will succeed in
their plan to exclude plaintiff and the Class from the fair proportionate share
of Best Power's valuable assets and businesses, all to the irreparable harm of
the Class.
56. Plaintiff and the Class have no adequate remedy of law.
WHEREFORE, plaintiff prays for judgment and relief as follows:
a. declaring that this lawsuit is properly maintainable as a class
action and certifying plaintiff as representative of the Class;
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b. declaring that the defendants and each of them have committed or
aided and abetted a gross abuse of trust and have breached their fiduciary
duties to plaintiff and the other members of the Class;
c. preliminarily and permanently enjoining defendants and their
counsel, agents, employees, and all persons acting under, in concert with, or
for them, from proceeding with, consummating or closing the Merger;
d. in the event the Merger is consummated, rescinding it and setting
it aside;
e. ordering defendants to permit a stockholders' committee
consisting of Class members and their representatives to participate in any
process undertaken in connection with the sale of the Company in order to ensure
a fair procedure, adequate procedural safe-guards, and independent input by
plaintiff and the Class in connection with any transaction for the public shares
of Best Power;
f. awarding compensatory damages against defendants, jointly and
severally, in an amount to be determined at trial, together with prejudgment
interest at the maximum rate allowable by law;
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g. awarding plaintiff and the Class their costs and disbursements
and reasonable allowances for plaintiff's counsel and experts' fees and
expenses; and
h. granting such other and further relief as may be just and proper.
ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A.
By:
-------------------------------------------------------
First Federal Plaza, Suite 214
P.O. Box 1070
Wilmington, DE 19899-1070
(302) 656-4433
Attorneys for Plaintiff
OF COUNSEL:
WECHSLER SKIRNICK HARWOOD
HALEBIAN & FEFFER LLP
805 Third Avenue
New York, New York 10022
(212) 935-7400
FARUQI & FARUQI
415 Madison Avenue
New York, New York, 10022
(212) 986-1074
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