-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LacpNRlE8yj3vOill5GnpJteX4rtOH7bhod+tNVcLfizS9b4KkZeDNzKOw4AOw4n BD49fsFE2Gba3BfcNEM2Yg== 0000950144-99-008103.txt : 19990628 0000950144-99-008103.hdr.sgml : 19990628 ACCESSION NUMBER: 0000950144-99-008103 CONFORMED SUBMISSION TYPE: SC 14D1 PUBLIC DOCUMENT COUNT: 12 FILED AS OF DATE: 19990625 GROUP MEMBERS: NATIONAL SERVICE INDUSTRIES INC GROUP MEMBERS: NSI ENTERPRISES INC SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: HOLOPHANE CORP CENTRAL INDEX KEY: 0000911565 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC LIGHTING & WIRING EQUIPMENT [3640] IRS NUMBER: 311288751 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 SEC ACT: SEC FILE NUMBER: 005-48995 FILM NUMBER: 99652072 BUSINESS ADDRESS: STREET 1: 250 EAST BROAD ST STREET 2: STE 1400 CITY: COLUMBUS STATE: OH ZIP: 43215 BUSINESS PHONE: 6142243134 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: NATIONAL SERVICE INDUSTRIES INC CENTRAL INDEX KEY: 0000070538 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC LIGHTING & WIRING EQUIPMENT [3640] IRS NUMBER: 580364900 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: 1420 PEACHTREE ST NE CITY: ATLANTA STATE: GA ZIP: 30309 BUSINESS PHONE: 4048531000 MAIL ADDRESS: STREET 1: 1420 PEACHTREE ST NE CITY: ATLANTA STATE: GA ZIP: 30309 SC 14D1 1 HOLOPHANE CORPORATION 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------- SCHEDULE 14D-1 TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 --------------------- HOLOPHANE CORPORATION (Name of Subject Company) NSI ENTERPRISES, INC. NATIONAL SERVICE INDUSTRIES, INC. (Bidders) COMMON STOCK, PAR VALUE $.01 PER SHARE (Title of Class of Securities) 43645B10 (CUSIP Number of Class of Securities) KENYON W. MURPHY, ESQ. VICE PRESIDENT AND ASSOCIATE COUNSEL NATIONAL SERVICE INDUSTRIES, INC. NSI CENTER 1420 PEACHTREE STREET, N.E. ATLANTA, GEORGIA 30309-3002 TELEPHONE: (404) 853-1000 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Bidders) --------------------- COPY TO: RUSSELL B. RICHARDS, ESQ. KING & SPALDING 191 PEACHTREE STREET ATLANTA, GEORGIA 30303-1763 TELEPHONE: (404) 572-4600 --------------------- CALCULATION OF FILING FEE
- ---------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------- TRANSACTION VALUATION* AMOUNT OF FILING FEE** - ---------------------------------------------------------------------------------------------- $470,837,482.50 $94,165 - ---------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------
* Estimated solely for the purpose of determining the registration fee assuming that all holders of options and other rights to acquire shares of common stock, par value $.01 per share ("Common Stock"), of the Subject Company exercise such options and or rights and tender the shares of Common Stock thus acquired to the Purchaser pursuant to the Offer and based on the offer to purchase at $38.50 cash per share, net to the seller in cash, less any required withholding taxes and without interest thereon and (i) 10,564,265 shares of Common Stock outstanding, (ii) 1,432,330 shares of Common Stock reserved for issuance upon the exercise of outstanding stock options, (iii) up to 78,000 shares of Common Stock issuable under additional employee benefits plans and (iv) up to 154,590 shares of Common Stock potentially issuable pursuant to obligations under a previous acquisition agreement, as of June 15, 1999. ** The amount of the filing fee, calculated in accordance with Rule 0-11 under the Securities Exchange Act of 1934, as amended, equals 1/50 of one percent of the aggregate of the cash offered by the bidder. [ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. Amount Previously Paid: Form or Registration No.: Filing Party: Date Filed: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 SCHEDULE 14D-1 CUSIP NO. 43645B10 1. Name of Reporting Person NSI Enterprises, Inc. S.S. or I.R.S. Identification No. of above Person 582227500 - -------------------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (See Instructions) (a) [ ] (b) [ ] - -------------------------------------------------------------------------------- 3. SEC Use Only - -------------------------------------------------------------------------------- 4. Sources of Funds (See Instructions) AF - -------------------------------------------------------------------------------- 5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items 2(E) or 2(F) [ ] N/A - -------------------------------------------------------------------------------- 6. Citizenship or Place of Organization Delaware - -------------------------------------------------------------------------------- 7. Aggregate Amount Beneficially Owned by Each Reporting Person None - -------------------------------------------------------------------------------- 8. Check Box if the Aggregate Amount in Row 7 Excludes Certain Shares (See Instructions) [ ] N/A - -------------------------------------------------------------------------------- 9. Percent of Class Represented by Amount in Row 7 N/A - -------------------------------------------------------------------------------- 10. Type of Reporting Person (See Instructions) CO - -------------------------------------------------------------------------------- SCHEDULE 14D-1 CUSIP NO. 43645B10 1. Name of Reporting Person National Service Industries, Inc. S.S. or I.R.S. Identification No. of above Person 580364900 - -------------------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (See Instructions) (a) [ ] (b) [ ] - -------------------------------------------------------------------------------- 3. SEC Use Only - -------------------------------------------------------------------------------- 4. Sources of Funds (See Instructions) BK; WC - -------------------------------------------------------------------------------- 5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items 2(E) or 2(F) [ ] N/A - -------------------------------------------------------------------------------- 6. Citizenship or Place of Organization Delaware - -------------------------------------------------------------------------------- 7. Aggregate Amount Beneficially Owned by Each Reporting Person None - -------------------------------------------------------------------------------- 8. Check Box if the Aggregate Amount in Row 7 Excludes Certain Shares (See Instructions) [ ] N/A - -------------------------------------------------------------------------------- 9. Percent of Class Represented by Amount in Row 7 N/A - -------------------------------------------------------------------------------- 10. Type of Reporting Person (See Instructions) CO - -------------------------------------------------------------------------------- 2 3 THIS TENDER OFFER STATEMENT ON SCHEDULE 14D-1 RELATES TO THE OFFER BY NSI ENTERPRISES, INC., A DELAWARE CORPORATION (THE "PURCHASER"), A WHOLLY OWNED SUBSIDIARY OF NATIONAL SERVICE INDUSTRIES, INC., A DELAWARE CORPORATION ("PARENT"), TO PURCHASE ALL OF THE OUTSTANDING SHARES OF COMMON STOCK PAR VALUE, $.01 PER SHARE (THE "SHARES"), OF HOLOPHANE CORPORATION, A DELAWARE CORPORATION (THE "COMPANY"), AT A PURCHASE PRICE OF $38.50 PER SHARE, NET TO THE SELLER IN CASH, LESS ANY REQUIRED WITHHOLDING TAXES AND WITHOUT INTEREST THEREON, UPON THE TERMS AND SUBJECT TO THE CONDITIONS SET FORTH IN THE OFFER TO PURCHASE, DATED JUNE 25, 1999 (THE "OFFER TO PURCHASE"), A COPY OF WHICH IS ATTACHED HERETO AS EXHIBIT (A)(1), AND IN THE RELATED LETTER OF TRANSMITTAL (WHICH, TOGETHER WITH THE OFFER TO PURCHASE, AS AMENDED FROM TIME TO TIME, CONSTITUTE THE "OFFER"), A COPY OF WHICH IS ATTACHED HERETO AS EXHIBIT (A)(2). ITEM 1. SECURITY AND SUBJECT COMPANY. (a) The name of the subject company is Holophane Corporation. The information set forth in Section 7 ("Certain Information Concerning the Company") of the Offer to Purchase is incorporated herein by reference. (b) The exact title of the class of equity securities being sought in the Offer is the Common Stock, par value $.01 per share, of the Company. The information set forth in the Introduction (the "Introduction") of the Offer to Purchase is incorporated herein by reference. (c) The information set forth in Section 6 ("Price Range of Shares; Dividends") of the Offer to Purchase is incorporated herein by reference. ITEM 2. IDENTITY AND BACKGROUND. (a)-(d) and (g) This Statement is filed by the Purchaser and Parent. The information set forth in Section 8 ("Certain Information Concerning the Purchaser and Parent") of the Offer to Purchase and in Schedule I thereto is incorporated herein by reference. (e) and (f) During the last five years, neither the Purchaser nor Parent nor, to the best knowledge of the Purchaser or Parent, any of the persons listed in Schedule I to the Offer to Purchase (i) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting activities subject to, federal or state securities laws or finding any violation of such laws. ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY. (a) and (b) The information set forth in the Introduction, Section 8 ("Certain Information Concerning the Purchaser and Parent") and Section 10 ("Background of the Offer; Contacts with the Company") and Section 11 ("The Merger Agreement") of the Offer to Purchase and in Exhibit (c) (1) of this Schedule 14D-1 is incorporated herein by reference. ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. (a)-(c) The information set forth in Section 9 ("Source and Amount of Funds") of the Offer to Purchase is incorporated herein by reference. ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER. (a)-(e) The information set forth in the Introduction, Section 10 ("Background of the Offer; Contacts with the Company"), Section 11 ("The Merger Agreement"), Section 12 ("Purpose of the Offer; the Merger; Plans for the Company") and Section 13 ("Dividends and Distributions") of the Offer to Purchase is incorporated herein by reference. 3 4 (f) and (g) The information set forth in Section 14 ("Effect of the Offer on the Market for the Shares, Stock Exchange Listing and Exchange Act Registration") of the Offer to Purchase is incorporated herein by reference. ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY. (a) and (b) The information set forth in the Introduction and Section 8 ("Certain Information Concerning the Purchaser and Parent") of the Offer to Purchase and Schedule I to the Offer to Purchase is incorporated herein by reference. ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO THE SUBJECT COMPANY'S SECURITIES. The information set forth in the Introduction, Section 8 ("Certain Information Concerning the Purchaser and Parent"), Section 10 ("Background of the Offer; Contacts with the Company"), Section 11 ("The Merger Agreement") and Section 12 ("Purpose of the Offer; the Merger; Plans for the Company") of the Offer to Purchase is incorporated herein by reference. ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED. The information set forth in the Introduction and Section 17 ("Fees and Expenses") of the Offer to Purchase is incorporated herein by reference. ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS. The information set forth in Section 8 ("Certain Information Concerning the Purchaser and Parent") of the Offer to Purchase is incorporated herein by reference. ITEM 10. ADDITIONAL INFORMATION. (a) None. (b) and (c) The information set forth in Section 16 ("Certain Legal Matters and Regulatory Approvals") of the Offer to Purchase is incorporated herein by reference. (d) The information set forth in Section 14 ("Effect of the Offer on the Market for the Shares, Stock Exchange Listing and Exchange Act Registration") and Section 16 ("Certain Legal Matters and Regulatory Approvals") of the Offer to Purchase is incorporated herein by reference. (e) None. (f) The information set forth in the entire text of each of (i) the Offer to Purchase and (ii) the Letter of Transmittal is incorporated herein by reference. ITEM 11. MATERIAL TO BE FILED AS EXHIBITS. (a)(1) Offer to Purchase dated June 25, 1999. (a)(2) Letter of Transmittal. (a)(3) Notice of Guaranteed Delivery. (a)(4) Letter from the Dealer Manager to Brokers, Dealers, Commercial Banks, Trust Companies and Nominees. (a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Nominees. (a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (a)(7) Form of Summary Advertisement as published on June 25, 1999. (a)(8) Form of Press Release issued by Parent on June 21, 1999. 4 5 (b)(1) Credit Agreement, dated as of July 23, 1996 among National Service Industries, Inc., certain of its subsidiaries, certain listed banks, Wachovia Bank of Georgia, N.A., as Agent, and Nationsbank, N.A. (South) and SunTrust Bank, Atlanta as Co-Agents (incorporated herein by reference to Exhibit 10(i)A of the Quarterly Report on Form 10-Q of National Service Industries, Inc. for the fiscal quarter ended May 31, 1998). (b)(2) Commitment Letter regarding $250 million Credit Facility, dated June 18, 1999, among National Service Industries, Inc., The First National Bank of Chicago and Banc One Capital Markets, Inc. (b)(3) Commitment Letter regarding $250 million Credit Facility, dated June 18, 1999, between National Service Industries, Inc. and Wachovia Capital Markets, Inc. (c)(1) Agreement and Plan of Merger, dated as of June 20, 1999, among National Service Industries, Inc., NSI Enterprises, Inc. and Holophane Corporation. (d) Not applicable. (e) Not applicable. (f) Not applicable. 5 6 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. NATIONAL SERVICE INDUSTRIES, INC. By: /s/ JAMES S. BALLOUN ------------------------------------ Name: James S. Balloun Title: Chairman of the Board, President and Chief Executive Officer NSI ENTERPRISES, INC. By: /s/ JAMES S. BALLOUN ------------------------------------ Name: James S. Balloun Title: Chairman of the Board, President and Chief Executive Officer Date: June 25, 1999 6 EX-99.(A)(1) 2 OFFER TO PURCHASE DATED JUNE 25, 1999 1 Exhibit (a)(1) Offer to Purchase for Cash All Outstanding Shares of Common Stock of HOLOPHANE CORPORATION at $38.50 Net Per Share by NSI ENTERPRISES, INC. a wholly owned subsidiary of NATIONAL SERVICE INDUSTRIES, INC. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JULY 23, 1999, UNLESS THE OFFER IS EXTENDED. --------------------- THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST A MAJORITY OF THE SHARES OF COMMON STOCK(DETERMINED ON A FULLY DILUTED BASIS), OF HOLOPHANE CORPORATION (THE "COMPANY") AND (II) THE EXPIRATION OR TERMINATION OF ALL APPLICABLE WAITING PERIODS UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED (THE "HSR ACT"). THE OFFER IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS. SEE THE INTRODUCTION AND SECTIONS 1 AND 15. --------------------- THE OFFER IS BEING MADE PURSUANT TO THE AGREEMENT AND PLAN OF MERGER (THE "MERGER AGREEMENT"), DATED AS OF JUNE 20, 1999, BY AND AMONG PARENT, THE PURCHASER AND THE COMPANY. SEE SECTION 11. --------------------- THE BOARD OF DIRECTORS OF HOLOPHANE CORPORATION (I) HAS UNANIMOUSLY DETERMINED THAT THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING EACH OF THE OFFER AND THE MERGER, ARE ADVISABLE AND ARE FAIR TO AND IN THE BEST INTERESTS OF THE STOCKHOLDERS OF HOLOPHANE CORPORATION, (II) HAS APPROVED THE OFFER AND THE MERGER AND (III) RECOMMENDS THAT ALL HOLDERS OF SHARES ACCEPT THE OFFER AND TENDER THEIR SHARES TO THE PURCHASER. --------------------- IMPORTANT Any stockholder desiring to tender all or any portion of such stockholder's Shares (as defined herein) of Holophane Corporation should either (1) complete and sign the Letter of Transmittal (or a facsimile thereof) in accordance with the instructions in the Letter of Transmittal, mail or deliver the Letter of Transmittal (or such facsimile) and any other required documents to the Depositary (as defined herein), and either deliver the certificate(s) representing the tendered Shares and any other required documents to the Depositary or deliver an Agent's Message (as defined herein) and tender such Shares pursuant to the procedure for book-entry transfer set forth in Section 3, deliver an Agent's Message (as defined herein) and tender such Shares pursuant to the procedures for book-entry transfer set forth in Section 3 or (2) request such stockholder's broker, dealer, commercial bank, trust company or other nominee to effect the transaction for such stockholder. Stockholders having Shares registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact such broker, dealer, commercial bank, trust company or other nominee if they desire to tender Shares so registered. A stockholder who desires to tender Shares and whose certificates representing such Shares are not immediately available, or who cannot comply with the procedure for book-entry transfer on a timely basis, may tender such Shares by following the procedures for guaranteed delivery set forth in Section 3. Questions and requests for assistance may be directed to Wasserstein Perella & Co., Inc. (the "Dealer Manager") or to D. F. King & Co., Inc. (the "Information Agent") at their respective addresses and telephone numbers set forth on the back cover of this Offer to Purchase. Additional copies of this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may also be obtained from the Information Agent or the Dealer Manager, or from brokers, dealers, commercial banks or trust companies. --------------------- The Dealer Manager for the Offer is: WASSERSTEIN PERELLA & CO., INC. June 25, 1999 2 TABLE OF CONTENTS
PAGE ---- INTRODUCTION................................................ 1 THE TENDER OFFER............................................ 2 1. Term of the Offer, Expiration Date................... 2 2. Acceptance for Payment and Payment for Shares........ 3 3. Procedure for Tendering Shares....................... 4 4. Withdrawal Rights.................................... 7 5. Certain Federal Income Tax Consequences.............. 8 6. Price Range of Shares; Dividends..................... 9 7. Certain Information Concerning the Company........... 9 8. Certain Information Concerning the Purchaser and Parent............................................... 12 9. Source and Amount of Funds........................... 14 10. Background of the Offer; Contacts with the Company... 14 11. The Merger Agreement................................. 15 12. Purpose of the Offer; The Merger; Plans for the Company.............................................. 23 13. Dividends and Distributions.......................... 25 14. Effect of the Offer on the Market for the Shares, Stock Exchange Listing and Exchange Act Registration......................................... 25 15. Certain Conditions of the Offer...................... 26 16. Certain Legal Matters and Regulatory Approvals....... 27 17. Fees and Expenses.................................... 29 18. Miscellaneous........................................ 29 SCHEDULE I -- Directors and Executive Officers of the Purchaser and Parent...................................... S-1
i 3 TO THE STOCKHOLDERS OF HOLOPHANE CORPORATION: INTRODUCTION NSI Enterprises, Inc., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of National Service Industries, Inc., a Delaware corporation ("Parent"), hereby offers to purchase all of the outstanding shares of Common Stock, par value $.01 per share (the "Shares"), of Holophane Corporation, a Delaware corporation (the "Company"), at a purchase price of $38.50 per Share, net to the seller in cash, less any required withholding taxes and without interest thereon, upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal (which, as amended from time to time, together constitute the "Offer"). Tendering stockholders will not be obligated to pay brokerage fees or commissions or, subject to Instruction 6 of the Letter of Transmittal, stock transfer taxes on the transfer and sale of Shares pursuant to the Offer. The Purchaser will pay all fees and expenses of Wasserstein Perella & Co., Inc. ("Wasserstein Perella"), which is acting as Dealer Manager for the Offer (in such capacity, the "Dealer Manager"), First Chicago Trust Company of New York, which is acting as the Depositary (in such capacity, the "Depositary") and D.F. King & Co., Inc., which is acting as the Information Agent (in such capacity, the "Information Agent"), incurred in connection with the Offer. See Section 17. The Board of Directors of the Company (the "Board of Directors") (i) has unanimously determined that the Merger Agreement (as defined below) and the transactions contemplated thereby, including each of the Offer and the Merger (as defined below), are advisable and are fair to and in the best interests of the stockholders of the Company, (ii) has approved the Offer and the Merger and (iii) recommends that all holders of the Shares accept the Offer and tender their Shares to the Purchaser. The Board of Directors has received the written opinion dated June 20, 1999 of Salomon Smith Barney Inc. ("Salomon Smith Barney"), financial advisor to the Company, to the effect that, as of such date and based upon and subject to certain matters stated in such opinion, the $38.50 per Share cash consideration to be received in the Offer and the Merger by the holders of Shares (other than Parent and its affiliates) was fair, from a financial point of view, to such holders. A copy of Salomon Smith Barney's written opinion is attached to the Company's Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9") which is being distributed to the stockholders of the Company, and such stockholders are urged to read the opinion carefully in its entirety. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN SECTION 1) AT LEAST A MAJORITY OF THE SHARES OF COMMON STOCK (DETERMINED ON A FULLY DILUTED BASIS) OF THE COMPANY (THE "MINIMUM CONDITION") AND (II) THE EXPIRATION OR TERMINATION OF ALL APPLICABLE WAITING PERIODS UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED (THE "HSR ACT"). SEE SECTIONS 1 AND 15. IF THE PURCHASER PURCHASES NOT LESS THAN THAT NUMBER OF SHARES NEEDED TO SATISFY THE MINIMUM CONDITION, IT WILL BE ABLE TO EFFECT THE MERGER WITHOUT THE AFFIRMATIVE VOTE OF ANY OTHER STOCKHOLDER OF THE COMPANY. SEE SECTION 12. The Company has represented to Parent that, as of June 15, 1999, there were (i) 10,564,265 Shares issued and outstanding, (ii) 1,432,330 Shares reserved for issuance upon the exercise of outstanding stock options, (iii) up to 78,000 shares issuable under additional employee benefits plans and (iv) up to 154,590 shares potentially issuable pursuant to obligations under a previous acquisition agreement. Based upon the foregoing, the Purchaser believes that approximately 6,114,593 Shares constitute a majority of the outstanding Shares on a fully diluted basis. The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of June 20, 1999 (the "Merger Agreement"), among Parent, the Purchaser and the Company. The Merger Agreement provides, among other things, for the making of the Offer by the Purchaser, and further provides that, following the 4 completion of the Offer, upon the terms and subject to the conditions of the Merger Agreement and in accordance with the Delaware General Corporation Law (the "DGCL"), the Purchaser will be merged with and into the Company (the "Merger"). Following the Merger, the Company will continue as the surviving corporation (the "Surviving Corporation") and become a wholly owned subsidiary of Parent, and the separate corporate existence of the Purchaser will cease. Pursuant to the Merger Agreement, the Company has also agreed, if and to the extent permitted by law, at the request of the Purchaser and subject to the terms of the Merger Agreement, to take all necessary and appropriate actions to cause the Merger to become effective as soon as reasonably practicable after the purchase of the Shares pursuant to the Offer, without a meeting of the Company's stockholders in accordance with Section 253 of the DGCL. See Section 11. At the effective time of the Merger (the "Effective Time"), each Share outstanding immediately prior to the Effective Time (other than Shares held in the treasury of the Company and each Share, if any, owned by Parent, the Purchaser or any other direct or indirect subsidiary of the Company, of Parent or of the Purchaser, which shall be canceled, and other than Shares, if any (collectively, "Dissenting Shares"), held by stockholders who have not voted in favor of the Merger or consented thereto and who have perfected their appraisal rights in accordance with Section 262 of the DGCL) will be converted into the right to receive $38.50 in cash (the "Merger Consideration"), less any required withholding taxes and without interest thereon. The Merger Agreement is more fully described in Section 11. Certain federal income tax consequences of the sale of the Shares pursuant to the Offer and the exchange of Shares for the Merger Consideration pursuant to the Merger are described in Section 5. THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. THE TENDER OFFER 1. TERM OF THE OFFER, EXPIRATION DATE. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of such extension or amendment), the Purchaser will accept for payment and pay for all Shares validly tendered on or prior to the Expiration Date and not properly withdrawn as permitted by Section 4. The term "Expiration Date" means 12:00 midnight, New York City time, on Friday, July 23, 1999, unless and until the Purchaser (subject to the terms and conditions of the Merger Agreement), shall have extended the period during which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date at which the Offer, as so extended by the Purchaser, shall expire. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, SATISFACTION OF THE MINIMUM CONDITION AND THE EXPIRATION OR TERMINATION OF ALL WAITING PERIODS IMPOSED BY THE HSR ACT. SEE SECTION 15, WHICH SETS FORTH IN FULL THE CONDITIONS TO THE OFFER. SUBJECT TO THE PROVISIONS OF THE MERGER AGREEMENT AND THE APPLICABLE RULES AND REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION"), THE PURCHASER RESERVES THE RIGHT TO WAIVE THE MINIMUM CONDITION OR ANY OF THE OTHER CONDITIONS TO THE OFFER, TO INCREASE THE PRICE PER SHARE PAYABLE IN THE OFFER AND TO MAKE ANY OTHER CHANGE IN THE TERMS AND CONDITIONS OF THE OFFER. SUBJECT TO THE PROVISIONS OF THE MERGER AGREEMENT, INCLUDING THE PROVISIONS OF THE MERGER AGREEMENT SET FORTH IN THE NEXT PARAGRAPH, AND THE APPLICABLE RULES AND REGULATIONS OF THE COMMISSION, IF BY THE EXPIRATION DATE ANY OR ALL OF SUCH CONDITIONS TO THE OFFER HAVE NOT BEEN SATISFIED, THE PURCHASER RESERVES THE RIGHT (BUT SHALL NOT BE OBLIGATED) TO (I) TERMINATE THE OFFER AND RETURN ALL TENDERED SHARES TO TENDERING STOCKHOLDERS, (II) WAIVE SUCH 2 5 UNSATISFIED CONDITIONS AND PURCHASE ALL SHARES VALIDLY TENDERED OR (III) EXTEND THE OFFER AND, SUBJECT TO THE TERMS OF THE OFFER (INCLUDING THE RIGHTS OF STOCKHOLDERS TO WITHDRAW THEIR SHARES), RETAIN THE SHARES WHICH HAVE BEEN TENDERED, UNTIL THE TERMINATION OF THE OFFER, AS EXTENDED. Subject to the applicable rules and regulations of the Commission and the terms of the Merger Agreement, the Purchaser shall not (i) waive the Minimum Condition without the consent of the Board of Directors and (ii) without the consent of the Board of Directors, the Purchaser shall not make any change in the terms or conditions of the Offer which (A) changes the form of consideration to be paid, (B) decreases the price per Share payable in the Offer, (C) reduces the maximum number of Shares to be purchased in the Offer, (D) imposes additional conditions to the Offer, (E) extends the Expiration Date (except as required by law or the applicable rules and regulations of the Commission) or (F) amends any term of the Offer in any manner adverse to holders of Shares; provided that Purchaser shall have the right, in its sole discretion, to extend the Offer on up to two separate occasions for up to five business days each, notwithstanding the prior satisfaction of conditions set forth in the Merger Agreement, in order to attempt to satisfy the Minimum Condition or to satisfy the requirements of Section 253 of the DGCL. The Purchaser shall have no obligation to pay interest on the purchase price of tendered Shares, including in the event the Purchaser exercises its right to extend the period of time during which the Offer is open. The rights reserved by the Purchaser in this paragraph are in addition to the Purchaser's rights to terminate the Offer pursuant to Section 15. Any extension, delay, termination, waiver or amendment will be followed as promptly as practicable by public announcement thereof, and such announcement in the case of an extension will be made in accordance with Rule 14e-1(d) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), no later than 9:00 A.M., New York City time, on the next business day after the previously scheduled Expiration Date. Without limiting the manner in which the Purchaser may choose to make any public announcement, except as provided by applicable law (including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which require that material changes be promptly disseminated to holders of Shares), the Purchaser shall have no obligation to publish, advertise or otherwise communicate any such public announcement other than by issuing a release to the Dow Jones News Service. If the Purchaser makes a material change in the terms of the Offer or if it waives a material condition of the Offer, the Purchaser will disseminate additional tender offer materials and extend the Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum period during which an offer must remain open following material changes in the terms of the offer, other than a change in price or a change in the percentage of securities sought, will depend upon the facts and circumstances, including the materiality, of the changes. With respect to a change in price or, subject to certain limitations, a change in the percentage of securities sought, a minimum ten business day period from the day of such change is generally required to allow for adequate dissemination to stockholders. For purposes of the Offer, a "business day" means any day other than a Saturday, Sunday, or a federal holiday and consists of the time period from 12:01 A.M. through 12:00 midnight, New York City time. The Company has provided the Purchaser with the Company's stockholder list and security position listings for the purpose of disseminating the Offer to holders of Shares. This Offer to Purchase and the related Letter of Transmittal and other relevant materials will be mailed by the Purchaser to record holders of Shares and furnished to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the stockholder list or, if applicable, who are listed as participants in a clearing agency's security position listing, for subsequent transmittal to beneficial owners of Shares. 2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), the Purchaser will accept for payment and will pay for all Shares validly tendered and not properly withdrawn on or prior to the Expiration Date as soon as practicable after the later to occur of (i) the Expiration Date and (ii) the satisfaction or waiver of the conditions of the Offer set forth in Section 15, including without limitation the expiration or termination of the waiting period applicable to the acquisition of 3 6 Shares pursuant to the Offer under the HSR Act. In addition, subject to applicable rules of the Commission, the Purchaser expressly reserves the right to delay acceptance for payment of or payment for Shares pending receipt of any other regulatory approvals specified in Section 16. Any such delays will be effected in compliance with Rule 14e-1(c) under the Exchange Act. For information with respect to approvals required to be obtained prior to the consummation of the Offer, including under the HSR Act, see Section 16. In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates for such Shares ("Share Certificates") or timely confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such Shares into the Depositary's account at The Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the procedures set forth in Section 3, (ii) the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message (as defined below) in connection with a book-entry transfer and (iii) any other documents required by the Letter of Transmittal. The term "Agent's Message" means a message transmitted by the Book-Entry Transfer Facility to and received by the Depositary and forming a part of a Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has received an express acknowledgment from the participant in the Book-Entry Transfer Facility tendering the Shares that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that the Purchaser may enforce such agreement against such participant. For purposes of the Offer, the Purchaser will be deemed to have accepted for payment (and thereby purchased) Shares validly tendered and not properly withdrawn as, if and when the Purchaser gives oral or written notice to the Depositary of the Purchaser's acceptance for payment of such Shares pursuant to the Offer. Upon the terms and subject to the conditions of the Offer, payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the purchase price therefor with the Depositary, which will act as agent for tendering stockholders for the purpose of receiving payments from the Purchaser and transmitting such payments to stockholders whose Shares have been accepted for payment. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT. If for any reason whatsoever acceptance for payment of or payment for any Shares tendered pursuant to the Offer is delayed or the Purchaser is unable to accept for payment or pay for Shares tendered pursuant to the Offer, then without prejudice to the Purchaser's rights set forth herein, the Depositary may nevertheless, on behalf of the Purchaser and subject to Rule 14e-1(c) under the Exchange Act, retain tendered Shares and such Shares may not be withdrawn except to the extent that the tendering stockholder is entitled to and duly exercises withdrawal rights as described in Section 4. If any tendered Shares are not accepted for payment for any reason or if Share Certificates are submitted for more Shares than are tendered, Share Certificates evidencing unpurchased or untendered Shares will be returned without expense to the tendering stockholder (or, in the case of Shares tendered by book-entry transfer into the Depositary's account at the Book-Entry Transfer Facility pursuant to the procedures set forth in Section 3, such Shares will be credited to an account maintained at the Book-Entry Transfer Facility), as promptly as practicable following the expiration, termination or withdrawal of the Offer. The Purchaser reserves the right to transfer or assign, in whole or from time to time in part, to one or more of its affiliates the right to purchase all or any portion of the Shares tendered pursuant to the Offer, but any such transfer or assignment will not relieve the Purchaser of its obligations under the Offer and will in no way prejudice the rights of tendering stockholders to receive payment for Shares validly tendered and accepted for payment pursuant to the Offer. 3. PROCEDURE FOR TENDERING SHARES. Valid Tenders. Except as set forth below, in order for Shares to be validly tendered pursuant to the Offer, the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, together with any required signature guarantees, or an Agent's Message in connection with a book-entry delivery of Shares, and any other documents required by the Letter of Transmittal, must be received by the Depositary at one of 4 7 its addresses set forth on the back cover of this Offer to Purchase on or prior to the Expiration Date and either (i) Share Certificates evidencing tendered Shares must be received by the Depositary at such address or such Shares must be tendered pursuant to the procedure for book-entry transfer described below and a Book-Entry Confirmation must be received by the Depositary, in each case on or prior to the Expiration Date or (ii) the guaranteed delivery procedures described below must be complied with. Book-Entry Transfer. The Depositary will make a request to establish an account with respect to the Shares at the Book-Entry Transfer Facility for purposes of the Offer within two business days after the date of this Offer to Purchase. Any financial institution that is a participant in the system of the Book-Entry Transfer Facility may make book-entry delivery of Shares by causing the Book-Entry Transfer Facility to transfer such Shares into the Depositary's account at the Book-Entry Transfer Facility in accordance with the Book-Entry Transfer Facility's procedures for such transfer. However, although delivery of Shares may be effected through book-entry transfer at the Book-Entry Transfer Facility, the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, together with any required signature guarantees, or an Agent's Message in connection with a book-entry transfer, and any other documents required by the Letter of Transmittal, must in any case be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase on or prior to the Expiration Date, or the guaranteed delivery procedures described below must be complied with. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE OF BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. Signature Guarantees. Signatures on Letters of Transmittal must be guaranteed by a firm which is a bank, broker, dealer, credit union, savings association or other entity which is a member in good standing of the Securities Transfer Agents Medallion Program (each of the foregoing being referred to as an "Eligible Institution"), except in cases where Shares are tendered (i) by a registered holder of Shares who has not completed either the box labeled "Special Payment Instructions" or the box labeled "Special Delivery Instructions" on the Letter of Transmittal or (ii) for the account of an Eligible Institution. See Instructions 1 and 5 of the Letter of Transmittal. If the Share Certificates are registered in the name of a person other than the signer of the Letter of Transmittal, or if payment is to be made, or Share Certificates not accepted for payment or not tendered are to be returned, to a person other than the registered holder, the Share Certificates must be endorsed or accompanied by appropriate stock powers, in either case, signed exactly as the name of the registered holder appears on such certificates, with the signatures on such certificates or stock powers guaranteed as aforesaid. See Instructions 1 and 5 of the Letter of Transmittal. If Share Certificates are forwarded separately to the Depositary, a properly completed and duly executed Letter of Transmittal (or a facsimile thereof) must accompany each such delivery. 5 8 Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to the Offer and such stockholder's Share Certificates are not immediately available, or such stockholder cannot deliver the Share Certificates and all other required documents to reach the Depositary on or prior to the Expiration Date, or such stockholder cannot complete the procedure for delivery by book-entry transfer on a timely basis, such Shares may nevertheless be tendered, provided that all of the following conditions are satisfied: (i) such tender is made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery substantially in the form made available by the Purchaser is received by the Depositary as provided below on or prior to the Expiration Date; and (iii) the Share Certificates (or a Book-Entry Confirmation), representing all tendered Shares in proper form for transfer, together with the Letter of Transmittal (or a facsimile thereof) properly completed and duly executed, with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message) and any other documents required by the Letter of Transmittal are received by the Depositary within three New York Stock Exchange ("NYSE") trading days after the date of execution of such Notice of Guaranteed Delivery. The Notice of Guaranteed Delivery may be delivered by hand or transmitted by telegram, telex, facsimile transmission or mail to the Depositary and must include a guarantee by an Eligible Institution and a representation that the stockholder owns the Shares tendered within the meaning of, and that the tender of the Shares effected thereby complies with, Rule 14e-4 under the Exchange Act, each in the form set forth in such Notice of Guaranteed Delivery. Notwithstanding any other provision hereof, payment for Shares accepted for payment pursuant to the Offer will in all cases be made only after timely receipt by the Depositary of Share Certificates for, or of Book-Entry Confirmation with respect to, such Shares, a properly completed and duly executed Letter of Transmittal (or a facsimile thereof), together with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message), and any other documents required by the Letter of Transmittal. Accordingly, payment might not be made to all tendering stockholders at the same time and will depend upon when Share Certificates or Book-Entry Confirmations of such Shares are received into the Depositary's account at the Book-Entry Transfer Facility. Appointment as Proxy. By executing the Letter of Transmittal, a tendering stockholder irrevocably appoints designees of the Purchaser as such stockholder's proxies, with full power of substitution, in the manner set forth in the Letter of Transmittal, to the full extent of such stockholder's rights with respect to the Shares tendered by such stockholder and accepted for payment by the Purchaser (and with respect to any and all other Shares or other securities issued or issuable in respect of such Shares on or after June 20, 1999). All such proxies shall be considered irrevocable. Such appointment will be effective when, and only to the extent that, the Purchaser accepts such Shares for payment. Upon such acceptance for payment, all prior proxies given by such stockholder with respect to such Shares (and such other Shares and securities) will be revoked without further action, and no subsequent proxies may be given nor any subsequent written consents executed (and, if given or executed, will not be deemed effective). The designees of the Purchaser will, with respect to the Shares (and such other Shares and securities) for which such appointment is effective, be empowered to exercise all voting and other rights of such stockholder as they in their sole discretion may deem proper at any annual or special meeting of the Company's stockholders or any adjournment or postponement thereof, by written consent in lieu of any such meeting or otherwise. The Purchaser reserves the right to require that, in order for Shares to be deemed validly tendered, immediately upon the Purchaser's payment for such Shares, the Purchaser must be able to exercise full voting rights with respect to such Shares. Determination of Validity. All questions as to the validity, form, eligibility (including time of receipt) and acceptance for payment of any tender of Shares will be determined by the Purchaser in its sole discretion, which determination shall be final and binding on all parties. The Purchaser reserves the absolute right to reject any and all tenders determined by it not to be in proper form or the acceptance for payment of which may in the opinion of its counsel be unlawful. The Purchaser also reserves the absolute right to waive any 6 9 defect or irregularity in any tender of Shares of any particular stockholder whether or not similar defects or irregularities are waived in the case of other stockholders. No tender of Shares will be deemed to have been validly made until all defects and irregularities have been cured or waived. None of the Purchaser, Parent, any of their affiliates or assigns, the Dealer Manager, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification. The Purchaser's interpretation of the terms and conditions of the Offer (including the Letter of Transmittal and the instructions thereto) will be final and binding. Backup Federal Income Tax Withholding and Substitute Form W-9. Under the "backup withholding" provisions of Federal income tax law, the Depositary may be required to withhold 31% of the amount of any payments of cash pursuant to the Offer. In order to avoid backup withholding, each stockholder surrendering Shares in the Offer must, unless an exemption applies, provide the payor of such cash with such stockholder's correct taxpayer identification number ("TIN") on a substitute Form W-9 and certify, under penalties of perjury, that such TIN is correct and that such stockholder is not subject to backup withholding. If a stockholder does not provide its correct TIN or fails to provide the certifications described above, the Internal Revenue Service ("IRS") may impose a penalty on such stockholder and payment of cash to such stockholder pursuant to the Offer may be subject to backup withholding of 31%. All stockholders surrendering Shares pursuant to the Offer should complete and sign the substitute Form W-9 included in the Letter of Transmittal to provide the information and certification necessary to avoid backup withholding (unless an applicable exemption exists and is proved in a manner satisfactory to the Depositary). Certain stockholders (including among others all corporations and certain foreign individuals and entities) are not subject to backup withholding. Noncorporate foreign stockholders should complete and sign a Form W-8, Certificate of Foreign Status, a copy of which may be obtained from the Depositary, in order to avoid backup withholding. See Instruction 9 of the Letter of Transmittal. Other Requirements. The Purchaser's acceptance for payment of Shares tendered pursuant to any of the procedures described above will constitute a binding agreement between the tendering stockholder and the Purchaser upon the terms and subject to the conditions of the Offer, including the tendering stockholder's representation and warranty that the stockholder is the holder of the Shares within the meaning of, and that the tender of the Shares complies with, Rule 14e-4 under the Exchange Act. 4. WITHDRAWAL RIGHTS. Tenders of Shares made pursuant to the Offer are irrevocable, except that Shares tendered pursuant to the Offer may be withdrawn at any time on or prior to the Expiration Date and, unless theretofore accepted for payment by the Purchaser pursuant to the Offer, may also be withdrawn at any time after Monday, August 23, 1999. If the Purchaser extends the Offer, is delayed in its acceptance for payment of Shares or is unable to purchase Shares validly tendered pursuant to the Offer for any reason, then without prejudice to the Purchaser's rights under the Offer, the Depositary may nevertheless, on behalf of the Purchaser, retain tendered Shares and such Shares may not be withdrawn except to the extent that tendering stockholders are entitled to withdrawal rights as described in this Section 4. Any such delay in acceptance for payment will be accompanied by an extension of the Offer to the extent required by law. For a withdrawal to be effective, a written, telegraphic, telex or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase. Any notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder, if different from that of the person who tendered such Shares. If Share Certificates to be withdrawn have been delivered or otherwise identified to the Depositary, then prior to the physical release of such certificates, the serial numbers shown on such certificates must be submitted to the Depositary and the signatures on the notice of withdrawal must be guaranteed by an Eligible Institution unless such Shares have been tendered for the account of any Eligible Institution. If Shares have been tendered pursuant to the procedure for book-entry transfer as set forth in Section 3, any notice of withdrawal must specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares, in which case a notice of withdrawal will be 7 10 effective if delivered to the Depositary by any method of delivery described in the first sentence of this paragraph. All questions as to the form and validity (including time of receipt) of any notice of withdrawal will be determined by the Purchaser, in its sole discretion, whose determination will be final and binding. None of the Purchaser, Parent, any of their affiliates or assigns, the Dealer Manager, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notification. Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn will thereafter be deemed not to have been validly tendered for purposes of the Offer. However, withdrawn Shares may be re-tendered at any time prior to the Expiration Date by following one of the procedures described in Section 3. 5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The summary of tax consequences set forth below is for general information only and is based on current law. The tax treatment of each stockholder will depend in part upon such stockholder's particular situation. Special tax consequences not described herein may be applicable to particular classes of taxpayers, such as financial institutions, broker-dealers, persons who are not citizens or residents of the United States, stockholders who acquired their Shares through the exercise of an employee stock option or otherwise as compensation, and persons who received payments in respect of options to acquire Shares. ALL STOCKHOLDERS AND OPTION HOLDERS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES OF THE OFFER AND THE MERGER TO THEM, INCLUDING THE APPLICABILITY AND EFFECT OF THE ALTERNATIVE MINIMUM TAX AND ANY STATE, LOCAL OR FOREIGN INCOME AND OTHER TAX LAWS AND CHANGES IN SUCH TAX LAWS. The receipt of cash pursuant to the Offer or the Merger will be a taxable transaction for Federal income tax purposes under the Internal Revenue Code of 1986, as amended, and may also be a taxable transaction under applicable state, local or foreign income or other tax laws. Generally, for Federal income tax purposes, a stockholder will recognize gain or loss in an amount equal to the difference between the cash received by the stockholder pursuant to the Offer or the Merger and the stockholder's adjusted tax basis in the Shares sold pursuant to the Offer or converted into cash in the Merger. For Federal income tax purposes, such gain or loss will be a capital gain or loss if the Shares are a capital asset in the hands of the stockholder, and a long-term capital gain or loss if the stockholder's holding period is more than one year as of the date the Purchaser accepts such Shares for payment pursuant to the Offer or the effective date of the Merger, as the case may be. In the case of a stockholder who is not a corporation, long-term capital gain is eligible for a maximum Federal income tax rate of 20%. There are limitations on the deductibility of capital losses. Under the "backup withholding" rules, the Purchaser or the Depositary or exchange agent generally will be required to withhold, and will withhold, 31% of any cash payments to a stockholder pursuant to the Offer or the Merger unless the stockholder provides a TIN (which is, in the case of an individual, the taxpayer's social security number) and certifies that such number is correct and that such stockholder is not subject to backup withholding. Accordingly, unless an exemption to the backup withholding rules applies and is proved in a manner satisfactory to the Purchaser or the Depositary or exchange agent, each stockholder should complete the Substitute Form W-9 accompanying these materials to provide the information and certification that is necessary to avoid backup withholding. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules will be credited against a stockholder's regular Federal income tax liability (which may entitle the stockholder to a refund), provided that the required information is provided to the IRS. 8 11 6. PRICE RANGE OF SHARES; DIVIDENDS. According to the Company's Annual Report to Stockholders for the fiscal year ended December 31, 1998 (the "1998 Annual Report"), the Shares are listed and traded principally on the NYSE under the symbol "HLP." The following table sets forth, for the periods indicated, the high and low sales prices per Share on the NYSE as reported by the Dow Jones News Service. The Company did not pay any cash dividends during such periods.
HIGH LOW ---- --- 1997: First Quarter............................................. $22 18 3/4 Second Quarter............................................ 23 1/4 19 1/4 Third Quarter............................................. 24 1/4 18 3/8 Fourth Quarter............................................ 26 21 1/4 1998: First Quarter............................................. $25 3/4 22 3/4 Second Quarter............................................ 30 21 Third Quarter............................................. 30 20 1/4 Fourth Quarter............................................ 26 18 1999: First Quarter............................................. $26 22 Second Quarter (through June 24, 1999).................... 38 1/4 21 15/16
On June 18, 1999, the last full trading day prior to announcement of the Offer, the closing sale price per Share reported on the NYSE was $28.3125. On June 24, 1999, the last full trading day before commencement of the Offer, the closing sale price per Share reported on the NYSE was $38 3/16. STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES. 7. CERTAIN INFORMATION CONCERNING THE COMPANY. The information concerning the Company contained in this Offer to Purchase, including financial information, has been taken from or is based upon publicly available documents and records on file with the Commission and other public sources. The summary information concerning the Company in this Section 7 and elsewhere in this Offer to Purchase is derived from the 1998 Annual Report and other publicly available information. The summary information set forth below is qualified in its entirety by reference to such reports (which may be obtained and inspected as described below) and should be considered in conjunction with the more comprehensive financial and other information in such reports and other publicly available reports and documents filed by the Company with the Commission and other publicly available information. Although the Purchaser and Parent do not have any knowledge that would indicate that any statements contained herein based upon such reports are untrue, neither the Purchaser nor Parent assumes any responsibility for the accuracy or completeness of the information contained therein, or for any failure by the Company to disclose events that may have occurred and may affect the significance or accuracy of any such information but which are unknown to the Purchaser and Parent. General. The Company was incorporated under the laws of the State of Delaware in May 1989. The Company is listed on the NYSE and is a vertically integrated, international manufacturer and marketer of highly engineered lighting fixtures and systems for a wide range of industrial, commercial and outdoor applications. The Company provides standard and specialized fixtures for both interior and exterior lighting needs. The Company uses a factory sales force and markets its products worldwide for use in both new construction and retrofit applications. The Company employs approximately 2,050 employees. The Company's principal executive offices are located at 250 East Broad Street, Suite 1400, Columbus, Ohio 43215. The telephone number of the Company at such offices is (614) 224-3134. 9 12 Financial Information. Set forth below are certain selected consolidated financial data for the Company's last three fiscal years and the three months ended March 31, 1999, which were derived from the 1998 Annual Report and the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1999. Results for the three months ended March 31, 1999, are not necessarily indicative of the results to be expected for the full fiscal year. More comprehensive financial information (including management's discussion and analysis of financial condition and results of operations) is included in the reports and other documents filed by the Company with the Commission, and the following financial data are qualified in their entirety by reference to such reports and other documents including the financial information and related notes contained therein. Such reports and other documents may be examined and copies thereof may be obtained from the offices of the Commission and the NYSE in the manner set forth below under "Available Information." HOLOPHANE CORPORATION SELECTED CONSOLIDATED FINANCIAL DATA (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED FOR THE YEAR ENDED DECEMBER 31, MARCH 31, --------------------------------- 1999 1998 1997 1996 ------------ --------- --------- --------- INCOME STATEMENT DATA: Net sales.......................................... $52,773 $214,875 $205,327 $190,939 Gross margin....................................... 20,482 84,945 80,194 73,655 Operating income................................... 6,110 31,607 30,987 28,017 Interest expense, net.............................. 301 1,133 1,305 1,612 Income before income taxes, cumulative effect of accounting change and extraordinary item......... 5,915 30,474 29,682 26,405 Provision for income taxes......................... 2,130 11,265 11,059 9,937 Income before cumulative effect of accounting change and extraordinary item.................... 3,785 19,209 18,623 16,468 Net income (loss).................................. 3,785 19,209 18,623 16,468 Net income (loss) available to common stockholders..................................... 3,785 $ 19,209 $ 18,623 $ 16,468 BALANCE SHEET DATA: Cash............................................... $ 4,890 $ 5,535 $ 11,709 $ 8,072 Total assets....................................... 137,502 136,547 126,796 123,967 Debt............................................... 15,459 21,527 19,574 25,256 Stockholders' equity............................... 86,334 82,198 75,103 67,144 PER COMMON SHARE DATA: Basic net earnings before cumulative effect of accounting change and extraordinary items........ $ 0.36 $ 1.77 $ 1.65 $ 1.44 Basic net earnings................................. 0.36 1.77 1.65 1.44 Diluted net earnings............................... 0.35 1.72 1.60 1.40
Certain Financial Projections for the Company. Prior to entering into the Merger Agreement, Parent conducted a due diligence review of the Company and in connection with such review received certain non-public information provided by the Company, including certain projected financial information (the "Projections") for the four fiscal years ending December 31, 2002. The Company does not in the ordinary course publicly disclose projections and the Projections were not prepared with a view to public disclosure. The Company has advised Parent and the Purchaser that the Projections represent what the Company believes to be a reasonable estimate of the Company's future financial performance and reflect significant assumptions and subjective judgments by the Company's management regarding industry performance and general business and economic conditions. The Projections do not give effect to the Offer or the potential combined 10 13 operations of Parent and the Company. The Projections are set forth below in this Offer to Purchase for the limited purpose of giving the holders of the Shares access to financial projections prepared by the Company's management that were made available to Parent and the Purchaser in connection with the Merger Agreement and the Offer. HOLOPHANE CORPORATION PROJECTED FINANCIAL PERFORMANCE
YEAR ENDING DECEMBER 31, --------------------------------- 1999 2000 2001 2002 ------ ------ ------ ------ (IN MILLIONS) Net Sales................................................... $237.5 $263.2 $292.1 $324.1 EBIT(1)..................................................... 35.2 40.3 47.3 55.0 EBITDA(2)................................................... 44.5 50.6 57.5 65.4 Net Income.................................................. 21.6 25.3 30.4 36.1
- --------------- (1) EBIT means earnings before interest and income taxes. (2) EBITDA means earnings before interest, income taxes, depreciation and amortization. CAUTIONARY STATEMENTS CONCERNING FORWARD-LOOKING STATEMENTS Certain matters discussed and statements made herein may constitute forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995, 15 U.S.C.A. Section 77z-2 and 78u-5 (Supp. 1996). Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and actual results may differ materially from those contemplated by such forward-looking statements. Forward-looking statements include the information set forth above in "Certain Financial Projections for the Company." Forward-looking statements also include those preceded by, followed by or that include the words "believes", "expects", "anticipates" or similar expressions. Such statements should be viewed with caution. While presented with numerical specificity, the Projections are based upon a variety of estimates and hypothetical assumptions which may not be accurate, may not be realized, and are also inherently subject to significant business, economic and competitive uncertainties and contingencies, all of which are difficult to predict, and most of which are beyond the control of the Company, Parent or the Purchaser. Accordingly, there can be no assurance that any of the Projections will be realized and the actual results may vary materially from those shown above. In addition, the Projections were not prepared in accordance with generally accepted accounting principles, and neither the Company's nor Parent's independent accountants have examined or compiled any of the Projections or expressed any conclusion or provided any other form of assurance with respect to the Projections and accordingly assume no responsibility for the Projections. The Projections were prepared with a limited degree of precision, and were not prepared with a view to public disclosure or compliance with the published guidelines of the Commission or the guidelines established by the American Institute of Certified Public Accountants regarding projections, which could require a more complete presentation of data than as shown above. The inclusion of the Projections herein should not be regarded as a representation by Parent and the Purchaser or any other person that the projected results will be achieved. The Projections should be read in conjunction with the historical financial information of the Company included above and in the reports and other documents of the Company that may be obtained from the offices of the Commission and the NYSE in the manner set forth below under "Available Information." None of Parent, the Purchaser or any other person assumes any responsibility for the accuracy, completeness or validity of the foregoing Projections. 11 14 Available Information. The Shares are registered under the Exchange Act. Accordingly, the Company is subject to the informational filing requirements of the Exchange Act and in accordance therewith is obligated to file periodic reports, proxy statements and other information with the Commission relating to its business, financial condition and other matters. Information as of particular dates concerning the Company's directors and officers, their remuneration, options granted to them, the principal holders of the Company's securities and any material interest of such persons in transactions with the Company is required to be disclosed in such proxy statements and distributed to the Company's stockholders and filed with the Commission. Such reports, proxy statements and other information should be available for inspection at the public reference facilities of the Commission located in Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and may also be available for inspection and copying at prescribed rates at the regional offices of the Commission located at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and Seven World Trade Center, Suite 1300, New York, New York 10048. Such reports, proxy statements and other information may also be obtained at the Web site that the Commission maintains at http://www.sec.gov. Copies of this material may also be obtained by mail, upon payment of the Commission's customary fees, from the Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. Such material is also available for inspection at the offices of the NYSE, 20 Broad Street, New York, New York 10005. Except as otherwise noted in this Offer to Purchase, all of the information with respect to the Company set forth in this Offer to Purchase has been derived from publicly available information. 8. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT. The Purchaser, a Delaware corporation and a wholly owned subsidiary of Parent, was organized in 1996. The \Purchaser has not carried on any activities to date other than those incident to its formation and commencement of the Offer. The Purchaser has its principal executive offices at 1420 Peachtree Street, N.E., Atlanta, Georgia 30309-3002. The telephone number for the Purchaser at such offices is (404) 853-1000. Parent, a Delaware corporation formed in 1928, provides a wide variety of products and services through the following operating segments: Lighting Equipment, Textile Rental, Chemical and Envelope. Parent has its principal executive offices at 1420 Peachtree Street, N.E., Atlanta, Georgia 30309-3002. The telephone number for Parent at such offices is (404) 853-1000. The name, citizenship, business address, principal occupation or employment, and five-year employment history of each of the directors and executive officers of the Purchaser and Parent and certain other information are set forth in Schedule I hereto. 12 15 Set forth below are certain selected consolidated financial data relating to Parent and its subsidiaries for Parent's last three fiscal years which have been derived from the financial statements contained in Parent's Annual Report to Stockholders for the fiscal year ended August 31, 1998. More comprehensive financial information (including management's discussion and analysis of financial condition and results of operations) is included in the reports and other documents filed by Parent with the Commission, and the following financial data are qualified in its entirety by reference to such reports and other documents, including the financial information and related notes contained therein. Such reports and other documents may be examined and copies thereof may be obtained from the offices of the Commission and the NYSE in the manner set forth below under "Available Information." NATIONAL SERVICE INDUSTRIES, INC. SELECTED CONSOLIDATED FINANCIAL DATA (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
FOR THE YEAR ENDED AUGUST 31, ------------------------------------ 1998 1997 1996 ---------- ---------- ---------- SUMMARY OF OPERATIONS DATA: Net sales of products.................................... $1,718,564 $1,542,644 $1,482,937 Service revenues......................................... 312,746 493,535 530,625 ---------- ---------- ---------- Total revenues................................... 2,031,310 2,036,179 2,013,562 Cost of products sold.................................... 1,044,215 945,794 933,405 Cost of services......................................... 183,470 283,024 304,381 Selling and administrative expenses...................... 634,061 633,740 616,513 Interest expense, net.................................... 749 1,624 1,565 Gain on sale of businesses............................... (2,449) (75,097) (7,579) Restructuring expense, asset impairments, and other charges............................................... -- 63,091 -- Other (income) expense, net.............................. (1,857) 4,925 3,429 ---------- ---------- ---------- Income before taxes........................................ 173,121 179,078 161,848 Provision for income taxes................................. 64,401 71,800 60,700 ---------- ---------- ---------- Net income................................................. $ 108,720 $ 107,278 $ 101,148 ========== ========== ========== BALANCE SHEET DATA: Total assets............................................... $1,010,684 $1,106,352 $1,094,646 Net working capital........................................ 385,056 498,758 408,955 Total debt................................................. 86,073 32,086 31,662 Stockholders' equity....................................... 578,901 671,813 718,008 PER SHARE DATA: Basic earnings per share................................... $ 2.56 $ 2.37 $ 2.11 Diluted earnings per share................................. 2.53 2.36 2.10
Available Information. Parent is subject to the informational filing requirements of the Exchange Act and in accordance therewith is obligated to file periodic reports, proxy statements and other information with the Commission relating to its business, financial condition and other matters. Information as of particular dates concerning Parent's directors and officers, their remuneration, options granted to them, the principal holders of Parent's securities and any material interest of such persons in transactions with Parent is required to be disclosed in such proxy statements and distributed to Parent's stockholders and filed with the Commission. Such reports, proxy statements and other information should be available for inspection at the public reference facilities of the Commission located in Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and may also be available for inspection and copying at prescribed rates at the regional offices of the Commission located at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and Seven World Trade Center, Suite 1300, New York, New York 10048. Such reports, proxy statements and other information may also be obtained at the Web site that the Commission maintains at http:// www.sec.gov. Copies of this material may also be obtained by mail, upon payment of the Commission's customary fees, from the Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. 13 16 Such material is also available for inspection at the offices of the NYSE, 20 Broad Street, New York, New York 10005. None of the Purchaser, Parent nor, to the best knowledge of the Purchaser and Parent, any of the persons listed on Schedule I hereto or any associate or majority-owned subsidiary of the Purchaser, Parent or any of the persons so listed, beneficially owns or has a right to acquire directly or indirectly any Shares, and none of the Purchaser, Parent nor, to the best knowledge of the Purchaser and Parent, any of the persons or entities referred to above, or any of the respective executive officers, directors or subsidiaries of any of the foregoing, has effected any transactions in the Shares during the past 60 days. 9. SOURCE AND AMOUNT OF FUNDS. The Offer is not conditioned upon any financing arrangements. The total amount of funds required by the Purchaser to purchase all outstanding Shares (on a fully diluted basis) pursuant to the Offer and to pay fees and expenses related to the Offer and the Merger is estimated to be approximately $485,000,000. The Purchaser plans to obtain all funds needed for the Offer and the Merger through capital contributions or advances made by Parent. Parent plans to obtain certain of the funds for such capital contributions or advances from its available cash and from working capital and expects to obtain the balance of such funds required to purchase the Shares from (i) Parent's current loan facility (the "Credit Facility") which is provided by Wachovia Bank of Georgia, N.A., Bank of America and SunTrust Bank, Atlanta, and (ii) under a loan facility (the "New Facility") to be provided by The First National Bank of Chicago, Banc One Capital Markets, Inc. and Wachovia Capital Markets, Inc. (the "New Banks"). The Credit Facility will expire on July 22, 2001. Borrowings under the Credit Facility bear interest at one of the following: (i) a base rate (greater of the prime rate or the federal funds rate plus 50 basis points) (the "Base Rate"); (ii) a rate based on LIBOR divided by one minus the percentage prescribed by the Board of Governors of the Federal Reserve System for determining the maximum reserve requirement for a member bank of the Federal Reserve System in respect of "Eurocurrency Liabilities" (the "Eurodollar Rate"); (iii) a rate based on a quote delivered by the lending bank at the time of borrowing by Parent or one of its affiliates (the "Money Market Rate"); or (iv) a rate based, generally, on the offered rates for certain foreign currency deposits divided by a percentage equal to one minus the then stated maximum rate of all reserves requirements applicable to any member bank of the Federal Reserve System. Parent will use certain of the additional funds under the Credit Facility to finance the purchase of Shares by the Purchaser pursuant to the Offer. Parent has received commitment letters (the "Commitment Letter") from the New Banks pursuant to which the New Banks have agreed to lend to Parent and/or one or more of its affiliates up to $250 million. The New Facility will expire 364 days after execution of the agreement evidencing the New Facility. Borrowings under the New Facility will bear interest at a rate based on one of (i) the Base Rate, (ii) the Eurodollar rate or (iii) the Money Market rate, plus an applicable margin. Parent will use the funds from the New Facility to finance the purchase of Shares by Purchaser pursuant to the Offer. The foregoing summary of the Credit Facility is qualified in its entirety by reference to the text of the Credit Facility, a copy of which has been incorporated by reference as an exhibit to the Schedule 14D-1. The foregoing summary of the New Facility is subject to the preparation and completion of a definitive credit agreement for the New Facility and is qualified in its entirety by reference to the text of the Commitment Letter, a copy of which has been filed as an exhibit to the Schedule 14D-1. The Credit Facility and the Commitment Letter may be inspected at, and copies may be obtained from, the same places and in the manner set forth under the caption "Available Information" in Section 8. If and when definitive agreements relating to the New Facility are executed, copies will be filed as exhibits to an amendment to the Schedule 14D-1. 10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY. Over the past several years, the members of Parent's senior management have considered various potential transactions which could enhance the value of Parent for its stockholders including the possibility of a strategic acquisition of the Company. On March 31, 1999, Parent executed a confidentiality agreement and received a confidential memoranda distributed to the Parent and other potential purchasers in a limited auction of the Company. 14 17 First round indications of interest were due on April 28, 1999. Parent submitted a preliminary indication of interest and was invited to visit the Company's facilities in Newark, Ohio on May 19, 1999. Parent met with senior management and reviewed due diligence materials in a data room. Final bids were due on June 16, 1999. On June 11, 1999, Parent's Board of Directors met to discuss a possible bid for the Company. After reports from management and Parent's financial advisor, the Board approved the submission of a bid and authorized the officers of Parent to negotiate and execute the Merger Agreement if the Company accepted Parent's bid. Parent delivered a proposal to the Company together with a mark-up of a draft Merger Agreement distributed by the Company's counsel on June 16, 1999. On the afternoon of June 17, 1999, Salomon Smith Barney informed Parent and its financial advisor, Wasserstein Perella, that the Company's legal and financial advisors were authorized to negotiate with Parent and Wasserstein Perella terms and conditions (including price) within specific parameters. Salomon Smith Barney also informed Parent and Wasserstein Perella that it was authorized by the Company's Board of Directors to contact another bidder if Parent declined to improve certain terms and conditions of its offer. On June 18, King & Spalding, Parent's outside legal counsel, received a revised draft of the Merger Agreement from Vorys, Sater, Seymour and Pease LLP, the Company's outside legal counsel, for the consideration of Parent and its advisors. On June 18, 1999, Parent agreed to increase the Offer to $38.50 per Share, and Parent and its financial advisors communicated the revised offer price per Share to the Company's financial advisor, subject to the condition that Parent's revised proposal would not be valid if the final Merger Agreement was not negotiated promptly or if other potential purchasers were contacted. Over the weekend of June 19 and June 20, 1999, the Company and Parent, and their respective advisors, negotiated the terms of the Merger Agreement. On the afternoon of Sunday, June 20, 1999, the Board of Directors of the Company met in person and by telephone conference, and (i) unanimously determined that the Merger Agreement and the transactions contemplated thereby, including each of the Offer and the Merger are advisable and fair to, and in the best interests of, the stockholders of the Company, (ii) approved the Offer and the Merger and (iii) recommended that the stockholders of the Company accept the Offer and tender their Shares to the Purchaser. Following such actions, the Merger Agreement was executed and delivered by the parties thereto. On Monday, June 21, 1999, prior to the opening of trading on the NYSE, Parent and the Company jointly announced that the Merger Agreement had been signed and that the Purchaser intended to commence the Offer. On June 25, 1999, the Purchaser commenced the Offer. 11. THE MERGER AGREEMENT. The following is a summary of the material terms of the Merger Agreement, which summary is qualified in its entirety by reference to the Merger Agreement which is filed as an exhibit to the Tender Offer Statement on Schedule 14D-1. The Offer. The Merger Agreement provides for the commencement of the Offer as promptly as practicable, and in any event within five business days from the date of public announcement of the execution thereof. The obligation of Purchaser to accept for payment Shares tendered pursuant to the Offer is subject to (i) the Minimum Condition and (ii) the satisfaction or waiver of certain other conditions of the Offer. See Section 15. Under the Merger Agreement, the Purchaser expressly reserves the right to waive the Minimum Condition or any other conditions to the Offer, to increase the price per Share payable in the Offer and to make any other change in the terms or conditions of the Offer. The Minimum Condition of the Offer is that at the expiration of the Offer, at least a majority of the Shares (determined on a fully diluted basis) shall have been validly tendered and not properly withdrawn. Notwithstanding the above, under the terms of the Merger Agreement, the Purchaser shall not (i) waive the Minimum Condition without the consent of the Board of Directors or (ii) without the consent of the Board of Directors, make any change in the terms or conditions of the Offer which (A) changes the form of consideration to be paid, (B) decreases the price per Share payable in the Offer, (C) reduces the maximum number of Shares to be purchased in the Offer, (D) imposes additional conditions to the Offer, (E) extends the Expiration Date (except as required by law or the applicable rules and regulations of the Commission) or 15 18 (F) amends any term of the Offer in any manner adverse to holders of Shares; provided that the Purchaser shall have the right, in its sole discretion, to extend the Offer on up to two separate occasions for up to five business days each, notwithstanding the prior satisfaction of conditions to the Offer, in order to attempt to satisfy the Minimum Condition or to satisfy the requirements of Section 253 of the DGCL. The Purchaser shall have no obligation to pay interest on the purchase price of tendered Shares, including in the event the Purchaser exercises its right to extend the period of time during which the Offer is open. The rights reserved by the Purchaser in this paragraph are in addition to the Purchaser's rights to terminate the Offer pursuant to Section 15. The Merger. The Merger Agreement provides that subject to the terms and conditions thereof (and including those described in Section 15) and in accordance with the DGCL, at the Effective Time of the Merger, the Purchaser shall be merged with and into the Company. As a result of the Merger, the separate corporate existence of the Purchaser shall cease and the Company shall continue as the surviving corporation of the Merger (the "Surviving Corporation"). Pursuant to the Merger Agreement, each Share outstanding immediately prior to the Effective Time (unless otherwise provided for) shall be converted into the right to receive $38.50 in cash, less any required withholding taxes and without interest thereon (the "Merger Consideration"), upon surrender of the certificate formerly representing such Share in the manner described in the Merger Agreement. As soon as practicable following the date of the Merger Agreement, upon the written request of the Purchaser, the Company (or, if appropriate, any committee administering any stock option or compensation plan or arrangement) and the Purchaser shall take such actions as are reasonably required (including, if necessary, the provision of funds by the Purchaser to the Company) to provide that at the Effective Time, each holder of a then outstanding stock option and/or right to purchase Shares granted under any stock option or compensation plan or arrangement of the Company (a "Company Stock Option"), whether or not then exercisable, shall, upon surrender thereof to the Company or its designee, receive from the Company the difference between the Merger Consideration and the exercise price per Share for the Shares covered by such Company Stock Option, net of any applicable tax withholding. Subject to the terms and conditions set forth in the Merger Agreement, the Company and such committee shall further take all actions necessary to cause each Company Stock Option to be canceled at the Effective Time by virtue of the Merger and to cause the stock option or compensation plan or arrangements of the Company providing for the granting of Company Stock Options ("Option Plans") to terminate as of the Effective Time and the provisions in any other plan, program or arrangement providing for the issuance or grant by the Company or any of its subsidiaries of any interest in respect of the capital stock of the Company or any of such subsidiaries to be terminated as of the Effective Time. Without limiting the generality of the foregoing, the Company and such committee shall have given all requisite notices under all Option Plans and any agreements with respect to any Company Stock Option, accelerated the vesting of Company Stock Options and shall have given holders thereof the requisite opportunity to exercise as is required, in each case, such that following the Effective Time no holder of Options or any participant in the Option Plans or any other such plans, programs or arrangements shall have the right thereunder to acquire any equity securities of the Company or any of its subsidiaries. The Merger Agreement provides that, unless otherwise stipulated, Shares that are outstanding immediately prior to the Effective Time and which are held by stockholders who have not voted in favor of or consented to the Merger in writing and have demanded appraisal for such Shares in accordance with the DGCL shall not be converted into a right to receive the Merger Consideration, but shall be entitled to receive the consideration as shall be determined pursuant to Section 262 of the DGCL; provided that if such holder shall have failed to perfect or shall have withdrawn or otherwise lost his, her or its right to appraisal, such holder's Shares shall be treated as if they had been converted as of the Effective Time into a right to receive the Merger Consideration. The Merger Agreement also provides that at the Effective Time and without any further action on the part of the Company and the Purchaser, the (Second) Restated Certificate of Incorporation of the Company in effect at the Effective Time shall be the certificate of incorporation of the Surviving Corporation until amended in accordance with applicable law. At the Effective Time and without any further action on the part 16 19 of the Company and the Purchaser, the Bylaws of the Purchaser in effect at the Effective Time shall be the Bylaws of the Surviving Corporation until amended in accordance with applicable law. The Merger Agreement provides that from and after the Effective Time, until successors are duly elected or appointed and qualified in accordance with applicable law, (i) the directors of Purchaser at the Effective Time shall be the directors of the Surviving Corporation and (ii) the officers of the Company at the Effective Time shall be the officers of the Surviving Corporation. Stockholders' Meeting; Proxy Statement. The Merger Agreement provides that the Company shall cause a meeting of its stockholders (the "Company Stockholder Meeting") to be duly called and held as soon as reasonably practicable for the purpose of voting on the approval and adoption of the Merger Agreement and the Merger and the transactions contemplated by the Merger Agreement, unless a vote of stockholders of the Company is not required by the DGCL. The Board of Directors of the Company shall recommend approval and, to the extent required by the DGCL, adoption by the Company's stockholders of the Merger Agreement and the Merger and the transactions contemplated by the Merger Agreement. In connection with such meeting, the Company (i) will promptly prepare and file with the Commission, will use its reasonable efforts to have cleared by the Commission and will thereafter mail to its stockholders as promptly as practicable a proxy or information statement of the Company (the "Company Proxy Statement") and all other proxy materials for such meeting, (ii) will use its reasonable efforts to obtain the necessary approvals by its stockholders of the Merger Agreement and (iii) will otherwise comply with all legal requirements applicable to such meeting. Notwithstanding the foregoing, if the Purchaser acquires at least 90% of the outstanding Shares, the Company has agreed, at the request of the Purchaser, to take all necessary and appropriate action to cause the Merger to become effective as soon as reasonably practicable after such acquisition, without a meeting of the Company's stockholders, in accordance with Section 253 of the DGCL. Neither the Board of Directors nor any committee thereof will, except as expressly permitted by the Merger Agreement, (i) withdraw, qualify or modify, or propose publicly to withdraw, qualify or modify, in a manner adverse to Parent or the Purchaser, its approval or recommendation of the Merger or the Merger Agreement, (ii) approve or recommend, or propose publicly to approve or recommend, any transaction involving any offer or proposal for, or any indication of interest in, a merger or other business combination involving the Company or any of its material subsidiaries or the acquisition of any equity interest in, or substantial portion of the assets of, the Company or any of its material subsidiaries, other than the transactions contemplated by the Merger Agreement (an "Acquisition Proposal") from a party other than Parent or the Purchaser (an "Alternative Transaction") or (iii) cause the Company to enter into any letter of intent, agreement in principle, acquisition agreement or other similar agreement (each, an "Acquisition Agreement") related to any Alternative Transaction. Notwithstanding the foregoing, if, prior to the approval of the Merger Agreement by the stockholders of the Company, the Board of Directors determines in the exercise of its fiduciary duties, after it has received a Superior Proposal (as hereinafter defined) in compliance with the terms of the Merger Agreement, that it may (subject to this and the following sentences) inform the stockholders of the Company that it no longer believes that the Merger is advisable and no longer recommends approval (a "Subsequent Determination") and enter into an Acquisition Agreement with respect to a Superior Proposal, but only at a time that is after the fifth day following delivery to Parent of written notice advising Parent that the Board of Directors has received a Superior Proposal. Such written notice must specify the material terms and conditions of such Superior Proposal, identify the person making such Superior Proposal and state that the Board of Directors intends to make, or is considering making, a Subsequent Determination. During the five day period, the Company is obligated to provide an opportunity for Parent to propose such adjustments to the terms and conditions of the Merger Agreement as would enable the Board of Directors to proceed with its recommendation to the stockholders of the Company without a Subsequent Determination. A "Superior Proposal" means any proposal (on its most recently amended or modified terms, if amended or modified) made by any person other than Parent or its affiliates to enter into an Alternative Transaction which the Board of Directors determines in its good faith judgment to be more favorable to the stockholders of the Company than the Merger, taking into account all relevant factors, including, but not limited to, whether, in the good faith judgment of the Board of Directors, after consultation with the Company's independent 17 20 financial advisor, the third party is reasonably able to finance the transaction, and any proposed changes to the Merger Agreement that may be proposed by Parent in response to such Alternative Transaction. Designation of Directors. The Merger Agreement provides that, promptly upon the purchase by Purchaser of more than a majority of the outstanding Shares pursuant to the Offer, and from time to time thereafter, Purchaser will be entitled to designate up to such number of directors, rounded up to the next whole number, on the Board of Directors as shall give Purchaser representation on the Board of Directors equal to a majority of the Board of Directors, and that the Company will amend or cause to be amended its Bylaws as necessary to effect such representation and will, at such time, promptly take all action necessary to cause the Purchaser's designees to be so elected or appointed, including either increasing the size of the Board of Directors or securing the resignations of incumbent directors or both. The Company has also agreed to use its reasonable best efforts to cause persons designated by the Purchaser to constitute the same percentage as is on the Board of Directors on each committee of the Board of Directors. Following the election or appointment of the Purchaser's designees and prior to the Effective Time, the concurrence of a majority of the directors of the Company then in office who are neither designated by the Purchaser nor are employees of the Company (the "Disinterested Directors") shall be required to authorize any amendment, or waiver of any term or condition, of the Merger Agreement or the certificate of incorporation or bylaws of the Company, any termination of the Merger Agreement by the Company, any extension by the Company of the time for the performance of any of the obligations or other acts of the Purchaser or waiver or assertion of any of the Company's rights thereunder, and any other consent or action by the Board of Directors with respect to the Merger Agreement. The number of Disinterested Directors shall not be less than two. Access to Information; Confidentiality. From the date of the Merger Agreement until the Effective Time, upon reasonable, prior notice from Parent, the Company will give Parent and the Purchaser, their counsel, financial advisors, auditors and other authorized representatives reasonable access during normal business hours and without disrupting the orderly conduct of business by the Company and its subsidiaries to the offices, properties, books and records of the Company and its subsidiaries, will furnish to Parent and the Purchaser, their counsel, financial advisors, auditors and other authorized representatives such financial and operating data and other information as such persons may reasonably request and will instruct the Company's employees, counsel and financial advisors to reasonably cooperate with Parent and the Purchaser in their investigation of the business of the Company and its subsidiaries. The Merger Agreement further provides that Parent and the Purchaser will hold, and will cause their respective officers, directors, employees, accountants, lenders, counsel, consultants, advisors and agents to hold, in confidence, all confidential documents and information concerning the Company and its subsidiaries furnished to Parent or the Purchaser in connection with the transactions contemplated by the Merger Agreement in accordance with the confidentiality agreement, dated on or about March 31, 1999, between Parent and the Company. Other Offers. The Merger Agreement provides that the Company and its subsidiaries will not, nor shall the Company authorize or permit any officers, directors, employees, representatives or agents of the Company and its subsidiaries to, directly or indirectly, (i) take any action to solicit, initiate or encourage any Acquisition Proposal or (ii) engage in negotiations with, or disclose any nonpublic information relating to the Company or any of its subsidiaries or afford access to the properties, books or records of the Company or any of its subsidiaries to, any person that may be considering making, or has made, an Acquisition Proposal; provided, however, that nothing contained in the Merger Agreement prevents the Company or the Board of Directors from (a) furnishing nonpublic information to, or affording access to the properties, books or records of the Company or any of its subsidiaries to, or entering into discussions or an agreement with, any person in connection with an unsolicited Acquisition Proposal by such person, if and only to the extent that (x) the Company's Board of Directors determines in good faith after consultation with outside legal counsel that such action is necessary to comply with their fiduciary duties to the stockholders of the Company under applicable law, (y) prior to furnishing any such nonpublic information to, or entering into discussions or negotiations with, such person, the Board of Directors receives from such person an executed confidentiality agreement 18 21 with customary terms and (z) the Board of Directors concludes in the exercise of its fiduciary duties that the Acquisition Proposal is a Superior Proposal, or (b) taking and disclosing to the Company's stockholders any position, and making any related filings with the Commission, as required by Rules l4e-2 and 14d-9 under the Exchange Act with respect to any Alternative Transaction that is a tender offer; provided, that the Board of Directors shall not recommend that the stockholders of the Company tender their Shares in connection with any such tender offer unless the Board of Directors by majority vote determines in good faith that failing to take such action would constitute a breach of the Board of Directors' fiduciary duties under applicable law. The Company will promptly notify Parent after receipt of any Acquisition Proposal or any request for nonpublic information relating to the Company or any of its subsidiaries or for access to the properties, books or records of the Company or any of its subsidiaries by any person that has made an Acquisition Proposal and will keep Parent fully informed of the status and details of any such Acquisition Proposal, indication or request. The Company has agreed not to take any action with respect to such proposal or inquiry for five days after delivery of such notice to Parent and will negotiate exclusively and in good faith with Parent for such five day period to make such adjustments in the terms and conditions of the Merger Agreement as would enable Company to proceed with the transactions contemplated therein on such adjusted terms. Directors' and Officers' Indemnification and Insurance. The Merger Agreement provides that the certificate of incorporation of the Surviving Corporation shall contain provisions no less favorable with respect to indemnification than are set forth in the (Second) Restated Certificate of Incorporation of the Company and these provisions are not to be amended, repealed or otherwise modified for a period of six years from the Effective Time in any manner that would affect materially adversely the rights thereunder of individuals who at the Effective Time were directors or officers of the Company, with respect to any act or omission in their capacity as an officer or director of the Company occurring on or prior to the Effective Time, unless such modification shall be required by law. Parent has agreed to maintain the current policies of directors' and officers' liability insurance maintained by the Company (or substitute policies with substantially the same coverage and containing substantially comparable terms and conditions) for at least six years after the Effective Time, with respect to matters occurring prior to the Effective Time; provided that Parent will not be required to expend more than an amount per year equal to 400% of current annual premiums paid by the Company to maintain or procure such coverage. The Company will, to the fullest extent permitted under applicable law and regardless of whether the Merger becomes effective, indemnify and hold harmless, and after the Effective Time, the Surviving Corporation shall, to the fullest extent permitted under applicable law, indemnify and hold harmless each present and former director and officer of the Company (collectively, the "Indemnified Parties") against all costs and expenses (including reasonable attorneys' fees), judgments, fines, losses, claims, damages, liabilities and settlement amounts paid in connection with any claim, action, suit, proceeding or investigation (whether arising before or after the Effective Time), whether civil, criminal, administrative or investigative, arising out of or directly pertaining to any action or omission in their capacity as an officer or director of the Company occurring on or prior to the Effective Time, whether asserted or claimed prior to, at or after the Effective Time, for a period of six years after the Effective Time, in each case to the fullest extent permitted under applicable law (and shall pay any expenses in advance of the final disposition of such action or proceeding to each Indemnified Party to the fullest extent permitted under applicable law, upon receipt from the Indemnified Party to whom expenses are advanced of an undertaking to repay such advances required under applicable law). In the event of any such claim, action, suit, proceeding or investigation, (i) the Company or the Surviving Corporation, as the case may be, have agreed to pay the reasonable fees and expenses of counsel selected by the Indemnified Parties promptly after statements therefor are received and (ii) the Company and the Surviving Corporation shall cooperate in the defense of any such matter. In the event that any claim for indemnification is asserted or made within such six-year period, all rights to indemnification in respect of such claim shall continue until the final disposition of such claim. Conduct of Business Pending the Merger. Pursuant to the Merger Agreement, the Company and its subsidiaries have agreed to conduct their business in the ordinary course consistent with past practice and to 19 22 use their reasonable efforts to preserve intact their business organizations and relationships with third parties and to keep available the services of their present officers and employees. The Company and its subsidiaries will also refrain from taking various actions without Parent's consent, which consent shall not be unreasonably delayed, conditioned or withheld, pending consummation of the Merger. These limitations cover, among other things (subject to certain limitations): changes in governing documents; changes in capital stock; declaration or payment of dividends or other distributions; increases in the compensation or benefits of directors, officers and employees (except to the extent required under existing plans); adopting a plan of complete or partial dissolution; incurring debt above specified levels or entering into transactions other than in the ordinary course of business consistent with past practice; making capital expenditures beyond specified limits; entering into certain transactions; making any material tax election; changing any accounting principles in a material manner; and paying or discharging any claims, liabilities or obligations other than in the ordinary course of business consistent with past practice or as required pursuant to contracts or agreements existing as of the date of the Merger Agreement. Employee Benefits Matters. As of the Effective Time, the Surviving Corporation will employ all employees of the Company who desire employment. With respect to each individual who is employed by the Surviving Corporation as of the Effective Time, Parent may, at its option, either (i) cause the Surviving Corporation to continue to provide for such individual's participation in each medical, surgical, hospitalization and other "welfare" plan, fund or program (within the meaning of Section 3(1) of ERISA) of the Company on the same terms as immediately prior to the Effective Time or (ii) permit such individual to participate in an employee welfare plan sponsored by Parent or any affiliate of Parent (a "Purchaser Plan") which provides substantially similar benefits as prior to the Effective Time on the same terms and to the same extent as similarly situated employees of Parent's Lithonia Lighting unit; provided that if Parent elects to permit an employee to participate in a Purchaser Plan pursuant to clause (ii) above, such employee will (A) not be subject to any preexisting condition provision or waiting period under any Purchaser Plan which provides medical, dental, vision or prescription drug benefits and (B) to the extent permitted by applicable law, be credited with prior service with the Company for all purposes related to eligibility and vesting under any Purchaser Plan in which such employee participates. With respect to any employee of the Company as of the date of the Merger Agreement who is not employed by the Surviving Corporation as of the Effective Time, the Surviving Corporation will be responsible for providing continuation coverage to such employee (and his or her dependents), as required under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"). Further, with respect to any former employee of the Company (or their dependents) who is receiving continuation coverage under COBRA as of the Effective Time, the Surviving Corporation will maintain such continuation coverage in compliance with COBRA. Parent has agreed to cause the Surviving Corporation to continue each of the following plans and agreements for the remaining term thereof: (i) the Company's Second Amended and Restated Supplemental Executive Retirement Plan (the "SERP"); and (ii) certain Termination Benefit Agreements and Employment Agreements between the Company and its executive officers; provided that the Surviving Corporation shall not be obligated to make contributions to the SERP or to permit employees to defer compensation into the SERP for more than two years after the Effective Time. Parent has also agreed to cause the Surviving Corporation to continue for at least two years, or offer a comparable plan to the Company's bonus plans and educational assistance program. Any outstanding rights under the following plans will be fully satisfied in connection with the transactions contemplated by the Merger Agreement and, upon satisfaction of those rights, the plans shall be terminated: (i) the Company's Employee Stock Option (Purchase) Plan; and (ii) the Company's Performance Award Program. Under the Merger Agreement, Parent has agreed to assume and honor, and cause the Surviving Corporation to assume and to honor, in accordance with their terms all employment, severance and other compensation agreements and arrangements listed in the Disclosure Schedule delivered pursuant to the Merger Agreement. 20 23 Representations and Warranties. The Merger Agreement contains various customary representations and warranties of the parties thereto including representations and warranties by the Company concerning: the Company's capitalization; required filings and consents; the Board of Directors' approval of the Merger Agreement and the transactions contemplated thereby (including approvals so as to render inapplicable thereto the limitation on business combinations contained in Section 203 of the DGCL); Commission filings and financial statements; absence of certain changes or events; compliance with law; absence of litigation; employee benefit plans; environmental matters; tax matters; real estate matters; intellectual property; Year 2000 issues; and brokers. Some of the representations are qualified by a material adverse effect clause. "Material Adverse Effect," for the purposes of the Merger Agreement and this Offer to Purchase, means an effect that (A) is materially adverse to the financial condition, business, assets or results of operations of the Company and its subsidiaries taken as a whole, excluding in all cases: (i) events or conditions generally affecting the industry in which the Company and its subsidiaries operate or arising from changes in general business or economic conditions; (ii) any change or effect resulting from any change in law or generally accepted accounting principles, which generally affect entities such as the Company; and (iii) any change or effect resulting from the execution and/or announcement of the Merger Agreement or compliance by the Company with the terms of the Merger Agreement or any agreement contemplated by the Merger Agreement, or (B) would prevent or materially delay the consummation of the Offer or the Merger. Conditions of the Merger. Under the Merger Agreement, the respective obligations of Parent, the Purchaser and the Company to effect the Merger shall be subject to the satisfaction at or prior to the Effective Time of the following conditions: (i) the Merger Agreement and the transactions contemplated hereby shall have been approved and adopted by the stockholders of the Company, to the extent required by, and in accordance with, DGCL and the Company's (Second) Restated Certificate of Incorporation and Bylaws; (ii) no governmental entity shall have enacted, issued, promulgated, enforced or entered any law, rule, regulation, executive order, decree, injunction or other order (whether temporary, preliminary or permanent) which is then in effect and has the effect of making the Merger illegal or otherwise restricting, preventing or prohibiting consummation of the Merger; (iii) Purchaser shall have purchased all Shares validly tendered and not withdrawn pursuant to the Offer; and (iv) all actions by or in respect of or filings with any governmental body, agency, official or authority required shall have been obtained or made. Termination Events. The Merger Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time (notwithstanding any approval thereof by the stockholders of the Company, to the extent required by DGCL): (a) by mutual written consent of Parent and the Company; (b) by either the Company or Parent, if the Effective Time shall not have occurred on or before December 31, 1999 (provided that the right to terminate the Merger Agreement under this provision will not be available to any party whose breach of the Merger Agreement has been the primary cause of, or resulted in, the failure of the Effective Time to occur on or before such date); (c) by either the Company or Parent, if any governmental entity shall have issued an order, decree or ruling or taken any other action (which order, decree, ruling or other action the parties shall use their reasonable efforts to lift), in each case permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by the Merger Agreement and such order, decree, ruling or other action shall have become final and non-appealable; (d) by Parent: (i) if the Purchaser terminates the Offer without the Purchaser having purchased any Shares by reason of the failure to satisfy any condition set forth in Annex I to the Merger Agreement; (ii) if the Board of Directors (A) fails to include in the Schedule 14D-9 or the Company Proxy Statement its recommendation without modification or qualification that the stockholders of the Company accept the Offer and approve the Merger Agreement and the Merger, (B) approves or recommends any other Acquisition Proposal, (C) withdraws, modifies or qualifies its recommenda- 21 24 tion of the Offer, the Merger Agreement or the Merger in a manner adverse to the interests of Parent or the Purchaser or (D) resolves to do any of the foregoing; or (e) by the Company: (i) if the Purchaser fails to commence the Offer within 5 business days following the date of the initial public announcement of the Offer; (ii) if the Purchaser terminates the Offer without having accepted any Shares for payment by reason of the failure to satisfy any condition set forth in Annex I to the Merger Agreement (unless such failure results from the failure of the Company to perform in any material respect any of its covenants or agreements contained in the Merger Agreement or the material breach by the Company of any of its representations and warranties contained in the Merger Agreement); (iii) if the Purchaser fails to pay for Shares within 90 days following the commencement of the Offer, unless the failure to pay for Shares is the result of the failure of the Company to perform in any material respect any of its covenants or agreements contained in the Merger Agreement or the material breach by the Company of any representation or warranties contained in the Merger Agreement; (iv) if any of Parent's or the Purchaser's representations or warranties contained in the Merger Agreement are not true and correct in any material respect, as if such representation or warranty was made as of such time on or after the date of the Merger Agreement; or Parent or the Purchaser fails to perform in any material respect any obligation or to comply in any material respect with any agreement or covenant of Parent or the Purchaser to be performed or complied with by it under the Merger Agreement and which, in any such case, is not cured within 5 business days following receipt of notice thereof; or (v) if, prior to the purchase of Shares pursuant to the Offer and after it has received a Superior Proposal in compliance with the Merger Agreement, the Company's Board of Directors determines that it is obligated by its fiduciary duties under applicable law to terminate the Merger Agreement, provided that such termination will not be deemed effective under the Merger Agreement until the Company pays the Termination Fee (as defined below) and reimburses certain of Parent's and the Purchaser's expenses. Fees and Expenses. If (i) Parent terminates the Merger Agreement because the Board of Directors (A) fails to include its recommendation of the Offer or the Merger in the Schedule 14D-9 or Company Proxy Statement, (B) approves or recommends any other Acquisition Proposal, (C) withdraws, modifies or qualifies its recommendation of the Offer or the Merger in a manner adverse to the interests of Parent or the Purchaser or (D) resolves to do any of the foregoing, or (ii) the Company terminates the Merger Agreement prior to the purchase of Shares pursuant to the Offer and after it has received a Superior Proposal in compliance with the Merger Agreement because its Board of Directors determines that such termination is obligated by its fiduciary duties under applicable law, then in each such case the Company has agreed to pay to Parent and the Purchaser, within five business days of such termination, a fee, in cash, in an amount of $20,000,000 (the "Termination Fee"). In addition, the Company has agreed to reimburse Parent, the Purchaser and their affiliates (not later than five business days after submission of valid statements therefor) for all actual documented out-of-pocket fees and expenses incurred by any of them or on their behalf in connection with the Offer and the Merger and the consummation of all transactions contemplated by the Merger Agreement (including, without limitation, fees and disbursements payable to financing sources, investment bankers, counsel to Purchaser or Parent or any of the foregoing, and accountants) up to a maximum amount of $3 million. If within 12 months after termination of the Merger Agreement, the Company consummates an Acquisition Proposal with a person other than Parent or the Purchaser, then immediately prior to, and as a condition of, consummation of such transaction the Company shall pay to Parent upon demand an amount in cash equal to the Termination Fee to reimburse Parent for its time, expense and lost opportunity costs of pursuing the Merger, unless the Termination Fee is payable or has been paid in accordance with the Merger 22 25 Agreement or if the Merger Agreement is terminated by the Company as a result of Parent's failure in any material respect to perform its obligations under the Merger Agreement or as a result of a material breach of any of its representations or a warranties. 12. PURPOSE OF THE OFFER; THE MERGER; PLANS FOR THE COMPANY. The purpose of the Offer is to acquire control of, and the entire equity interest in, the Company. The Offer is being made pursuant to the Merger Agreement. As promptly as practicable following the purchase of Shares pursuant to the Offer and after satisfaction or waiver of all conditions to the Merger set forth in the Merger Agreement, the Purchaser intends to acquire the remaining equity interest in the Company not acquired in the Offer by consummating the Merger. Vote Required to Approve the Merger. The Board of Directors has approved and adopted the Merger and the Merger Agreement in accordance with the DGCL. The Board of Directors will be required to submit the Merger Agreement to the Company's stockholders for approval at a stockholders' meeting convened for that purpose in accordance with the DGCL. The Merger must be approved by the affirmative vote of the holders of at least a majority of the outstanding Shares. The Minimum Condition requires that there shall have been validly tendered and not properly withdrawn, together with the Shares owned, directly or indirectly, by Parent, a majority of the Shares (determined on a fully diluted basis). Upon consummation of the Offer and assuming the Minimum Condition is satisfied, the Purchaser will own sufficient Shares to enable it to effect stockholder approval of the Merger with the affirmative vote of the Shares owned by it. The Purchaser intends to exercise its ability in such case to approve the Merger without the affirmative vote of any other stockholder. The Board of Directors has approved the Merger Agreement and the transactions contemplated thereby, so as to render inapplicable the limitation on business combinations contained in Section 203 of the DGCL. Pursuant to the Merger Agreement, the Company has agreed, if and to the extent permitted by law, at the request of the Purchaser and subject to the terms of the Merger Agreement, to take all necessary and appropriate actions to cause the Merger to become effective as soon as reasonably practicable after the purchase of the Shares pursuant to the Offer, without a meeting of the Company's stockholders in accordance with Section 253 of the DGCL. THE OFFER IS CONDITIONED UPON THE MINIMUM CONDITION BEING SATISFIED. THIS OFFER TO PURCHASE DOES NOT CONSTITUTE A SOLICITATION OF A PROXY, CONSENT OR AUTHORIZATION FOR OR WITH RESPECT TO THE ANNUAL MEETING OR ANY SPECIAL MEETING OF THE COMPANY'S STOCKHOLDERS OR ANY ACTION IN LIEU THEREOF. ANY SUCH SOLICITATION WHICH THE PURCHASER MAY MAKE WILL BE MADE ONLY PURSUANT TO SEPARATE PROXY MATERIALS IN COMPLIANCE WITH THE REQUIREMENTS OF SECTION 14(A) OF THE EXCHANGE ACT. Appraisal Rights in Connection with the Offer. Stockholders do not have appraisal rights as a result of the Offer. However, if the Merger is consummated, stockholders of the Company at the time of the Merger who do not vote in favor of the Merger will have the right under the DGCL to dissent and demand appraisal of, and receive payment in cash of the fair value of, their Shares outstanding immediately prior to the Effective Time in accordance with Section 262 of the DGCL. Under the DGCL, dissenting stockholders who comply with the applicable statutory procedures will be entitled to receive a judicial determination of the fair value of their Shares (exclusive of any element of value arising from the accomplishment or expectation of such merger or similar business combination) and to receive payment of such fair value in cash. Any such judicial determination of the fair value of such Shares could be based upon considerations other than or in addition to the price paid in the Offer and the Merger and the market value of the Shares. In Weinberger v. UOP, Inc., the Delaware Supreme Court stated, among other things, that "proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court" should be considered in an appraisal proceeding. Stockholders should recognize that the value so determined could be higher or lower than the price per Share paid pursuant to the Offer or the Merger Consideration per Share. 23 26 In addition, several decisions by Delaware courts have held that in certain circumstances a controlling stockholder of a corporation involved in a merger has a fiduciary duty to other stockholders that requires that the merger be fair to other stockholders. In determining whether a merger is fair to minority stockholders, Delaware courts have considered, among other things, the type and amount of the consideration to be received by the other stockholders and whether there was fair dealing among the parties. The Delaware Supreme Court stated in Weinberger and Rabkin v. Philip A. Hunt Chemical Corp. that the remedy ordinarily available to minority stockholders in a cash-out merger is the right to appraisal described above. However, a damages remedy or injunctive relief may be available if a merger is found to be the product of procedural unfairness, including fraud, misrepresentation or other misconduct. THE FOREGOING SUMMARY OF THE RIGHTS OF OBJECTING STOCKHOLDERS DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY STOCKHOLDERS DESIRING TO EXERCISE ANY AVAILABLE APPRAISAL RIGHTS. THE PRESERVATION AND EXERCISE OF APPRAISAL RIGHTS REQUIRE STRICT ADHERENCE TO THE APPLICABLE PROVISIONS OF THE DGCL. The foregoing description of the DGCL is not necessarily complete and is qualified in its entirety by reference to the DGCL. Rule 13e-3. The Commission has adopted Rule 13e-3 under the Exchange Act which is applicable to certain "going private" transactions and which may under certain circumstances be applicable to the Merger following the purchase of Shares pursuant to the Offer in which the Purchaser seeks to acquire any remaining Shares. Rule 13e-3 should not be applicable to the Merger if the Merger is consummated within one year after the expiration or termination of the Offer and the price paid in the Merger is not less than the per Share price paid pursuant to the Offer. However, in the event that the Purchaser is deemed to have acquired control of the Company pursuant to the Offer and if the Merger is consummated more than one year after completion of the Offer or an alternative acquisition transaction is effected whereby stockholders of the Company receive consideration less than that paid pursuant to the Offer, in either case at a time when the Shares are still registered under the Exchange Act, the Purchaser may be required to comply with Rule 13e-3 under the Exchange Act. If applicable, Rule 13e-3 would require, among other things, that certain financial information concerning the Company and certain information relating to the fairness of the Merger or such alternative transaction and the consideration offered to minority stockholders in the Merger or such alternative transaction, be filed with the Commission and disclosed to stockholders prior to consummation of the Merger or such alternative transaction. The purchase of a substantial number of Shares pursuant to the Offer may result in the Company being able to terminate its Exchange Act registration. See Section 14. If such registration were terminated, Rule 13e-3 would be inapplicable to any such future Merger or such alternative transaction. Plans for the Company. Subject to certain matters described below, it is currently expected that, following the Merger, the business and operations of the Company will generally continue as they are currently being conducted. Parent intends to conduct the Company's operations as a part of its current Lighting division and to cause the Company's operations to continue to be run and managed by, among others, certain of the Company's existing executive officers. Parent believes that the Company conducts complementary operations and has complementary products and customers, and thus does not anticipate any significant Merger-related terminations or facilities closings. Parent will, however, continue to evaluate all aspects of the business, operations, capitalization and management of the Company during the pendency of the Offer and after the consummation of the Offer and the Merger and will take such further actions as it deems appropriate under the circumstances then existing. Parent intends to seek additional information about the Company during this period. Thereafter, Parent intends to review such information as part of a comprehensive review and integration of the Company's business, operations, capitalization and management. Except as described in this Offer to Purchase, none of the Purchaser, Parent nor, to the best knowledge of the Purchaser and Parent, any of the persons listed on Schedule I has any present plans or proposals that would relate to or result in an extraordinary corporate transaction such as a merger, reorganization or liquidation involving the Company or any of its subsidiaries or a sale or other transfer of a material amount of 24 27 assets of the Company or any of its subsidiaries, any material change in the capitalization or dividend policy of the Company or any other material change in the Company's corporate structure or business or the composition of the Board of Directors or management. 13. DIVIDENDS AND DISTRIBUTIONS. If the Company should, on or after the date of the Merger Agreement, split, combine or otherwise change the Shares or its capitalization, or disclose that it has taken any such action, then without prejudice to the Purchaser's rights under Section 15, the Purchaser may make such adjustments to the purchase price and other terms of the Offer as it deems appropriate to reflect such split, combination or other change. If, on or after the date of the Merger Agreement, the Company should declare or pay any cash or stock dividend or other distribution on, or issue any rights with respect to, the Shares that is payable or distributable to stockholders of record on a date prior to the transfer to the name of the Purchaser or the nominee or transferee of the Purchaser on the Company's stock transfer records of such Shares that are purchased pursuant to the Offer, then without prejudice to the Purchaser's rights under Section 15, (i) the purchase price payable per Share by the Purchaser pursuant to the Offer will be reduced to the extent any such dividend or distribution is payable in cash and (ii) any non-cash dividend, distribution (including additional Shares) or right received and held by a tendering stockholder shall be required to be promptly remitted and transferred by the tendering stockholder to the Depositary for the account of the Purchaser, accompanied by appropriate documentation of transfer. Pending such remittance or appropriate assurance thereof, the Purchaser will, subject to applicable law, be entitled to all rights and privileges as owner of any such non-cash dividend, distribution or right and may withhold the entire purchase price or deduct from the purchase price the amount or value thereof, as determined by the Purchaser in its sole discretion. Pursuant to the terms of the Merger Agreement, the Company is prohibited from taking any of the actions described in the preceding paragraphs except as permitted, required or specifically contemplated by the Merger Agreement and nothing herein shall constitute a waiver by Parent or the Purchaser of any of its rights under the Merger Agreement or a limitation of remedies available to Parent or the Purchaser for any breach of the Merger Agreement, including termination thereof. 14. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, STOCK EXCHANGE LISTING AND EXCHANGE ACT REGISTRATION. The purchase of Shares pursuant to the Offer will reduce the number of Shares that might otherwise trade publicly and will reduce the number of holders of Shares, which could adversely affect the liquidity and market value of the remaining Shares held by the public. Following the purchase of Shares pursuant to the Offer, at least a majority of the outstanding Shares will be owned by Purchaser. According to the NYSE's published guidelines, the NYSE would consider delisting the Shares if, among other things, the number of record holders of at least 100 Shares should fall below 1,200, the number of publicly held Shares (exclusive of holdings of officers, directors and their families and other concentrated holdings of 10% or more ("NYSE Excluded Holdings")) should fall below 600,000 or the aggregate market value of publicly held Shares (exclusive of NYSE Excluded Holdings) should fall below $5,000,000. If, as a result of the purchase of Shares pursuant to the Offer or otherwise, the Shares no longer meet the requirements of the NYSE for continued listing and the listing of the Shares is discontinued, the market for the Shares could be adversely affected. If the NYSE were to delist the Shares, it is possible that the Shares would continue to trade on another securities exchange or in the over-the-counter market and that price or other quotations would be reported by such exchange or through the National Association of Securities Dealers Automated Quotation System ("NASDAQ") or other sources. The extent of the public market therefor and the availability of such quotations would depend, however, upon such factors as the number of stockholders and/or the aggregate market value of such securities remaining at such time, the interest in maintaining a market in the Shares on the part of the securities firms, the possible termination of registration under the Exchange Act as described below and other factors. The Purchaser cannot predict whether the reduction in the number of Shares that might otherwise trade publicly would have an adverse or beneficial effect on the market price for or marketability of the Shares or whether it would cause future market prices to be greater or less than the Offer price. 25 28 The Shares are currently registered under the Exchange Act. The purchase of Shares pursuant to the Offer may result in the Shares becoming eligible for deregistration under the Exchange Act. Registration of the Shares may be terminated upon application of the Company to the Commission if the Shares are not listed on a national securities exchange and there are fewer than 300 record holders. The termination of the registration of the Shares under the Exchange Act would substantially reduce the information required to be furnished by the Company to holders of the Shares and would make certain provisions of the Exchange Act, such as the short-swing profit recovery provisions of Section 16(b), the requirement of furnishing a proxy statement in connection with stockholders' meetings and the requirements of Rule 13e-3 under the Exchange Act with respect to "going private" transactions, no longer applicable to the Shares. Furthermore, "affiliates" of the Company and persons holding "restricted securities" of the Company may be deprived of the ability to dispose of the securities pursuant to Rule 144 under the Securities Act of 1933, as amended. If registration of the Shares under the Exchange Act were terminated, the Shares would no longer be eligible for NASDAQ reporting. The Shares are currently "margin securities" under the rules of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"), which has the effect, among other things, of allowing brokers to extend credit on the collateral of such Shares for the purpose of buying, carrying, or trading in securities. Depending upon factors similar to those described above with respect to listing and market quotations, it is possible that, following the Offer, the Shares might no longer constitute "margin securities" for the purposes of the Federal Reserve Board's margin regulations and therefore could no longer be used as collateral for purpose credits made by brokers. In any event, the Shares will cease to be "margin securities" if registration of the Shares under the Exchange Act is terminated. 15. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other term or provision of the Offer, the Purchaser will not be required to accept for payment or, subject to any applicable rules and regulations of the Commission, to pay for any Shares tendered pursuant to the Offer and may postpone the acceptance for payment or, subject to any applicable rules and regulations of the Commission, payment for any Shares tendered pursuant to the Offer, and, in its good faith discretion, may amend or terminate the Offer, to the extent provided in the Merger Agreement, unless the Minimum Condition shall have been satisfied or waived in accordance with the terms thereof. Furthermore, notwithstanding any other term or provision of the Offer, the Purchaser will not be required to accept for payment or, subject as aforesaid, to pay for any Shares not theretofore accepted for payment or paid for, and may postpone the acceptance for payment or, subject to any applicable rules and regulations of the Commission, payment for any Shares tendered pursuant to the Offer, and, in its good faith discretion, may terminate or amend the Offer, to the extent provided in the Merger Agreement, if, at any time on or after June 20, 1999, and before the acceptance of such Shares for payment or, subject to any applicable rules and regulations of the Commission, the payment therefor, any of the following conditions exists: (a) an order shall have been entered (or any governmental entity shall have threatened in writing to seek an order) in any action or proceeding before any federal or state court or governmental agency or other regulatory body or a permanent injunction by any federal or state court of competent jurisdiction in the United States shall have been issued and remain in effect (i) making illegal the purchase of, or payment for, any Shares by the Purchaser, Parent or any of Parent's other subsidiaries; (ii) otherwise preventing the consummation of the Offer or the Merger; (iii) imposing limitations on the ability of the Purchaser, Parent or any of Parent's other subsidiaries to exercise effectively full rights of ownership of any Shares, including, without limitation, the right to vote any Shares acquired by Purchaser pursuant to the Offer on all matters properly presented to the Company's stockholders; (iv) prohibiting or materially limiting the ownership or operation by the Company or any of its subsidiaries, or Parent or any of its subsidiaries, of all or any material portion of the business or assets of the Company and its subsidiaries, or Parent and its subsidiaries, or compelling Parent or any of its subsidiaries to dispose of all or any material portion of the businesses or assets of the Company or its subsidiaries or Parent or its subsidiaries, as a result of transactions contemplated by the Offer or the Merger Agreement; or (v) requiring divestiture by Parent or the Purchaser of any Shares; 26 29 (b) there shall have been any federal or state statute, rule or regulation enacted, enforced, promulgated, amended or made applicable to the Company, the Purchaser, Parent or any other affiliate of Parent or the Company or the Offer or the Merger on or after June 25, 1999 by any governmental entity that could reasonably be expected to result, directly or indirectly, in any of the consequences referred to in clauses (i) through (v) of paragraph (a) above; (c) (i) the Company shall have breached or failed to perform in any material respect any of its covenants or agreements under the Merger Agreement, which breach shall not have been cured or waived within the earlier of (A) five business days after receipt of notice thereof by the Company or (B) two business days prior to the date on which the Offer expires; provided that if notice of such breach is received by the Company within such two business day period, the Purchaser will extend the Offer by at least two business days, or (ii) any of the representations and warranties of the Company set forth in the Merger Agreement (disregarding any qualifications contained therein regarding materiality or Material Adverse Effect) shall not be true when made or at any time prior to consummation of the Offer as if made at and as of such time, except to the extent that such breach would not be reasonably likely to have a Material Adverse Effect; (d) the Merger Agreement is terminated in accordance with its terms or the Offer is terminated with the consent of the Company; (e) any event occurs that is reasonably likely to result in a Material Adverse Effect; (f) (i) the Board of Directors or any committee thereof withdraws or modifies in a manner adverse to Parent or the Purchaser the approval or recommendation of the Offer, the Merger or the Merger Agreement, or approves or recommends any Alternative Transaction, (ii) any person or group enters into a definitive agreement or an agreement in principle with the Company with respect to an Alternative Transaction or (iii) the Board of Directors or any committee thereof resolves to do any of the foregoing; (g) any waiting periods under the HSR Act applicable to the purchase of Shares pursuant to the Offer shall not have expired or been terminated; or (h) any consent required to be filed or obtained in connection with the Offer, the failure of which to be so filed or obtained would have a Material Adverse Effect, shall not have been obtained. 16. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS. General. Except as set forth below, based upon its examination of publicly available filings by the Company with the Commission and other publicly available information concerning the Company, neither the Purchaser nor Parent is aware of any licenses or other regulatory permits that appear to be material to the business of the Company and its subsidiaries, taken as a whole, that might be adversely affected by the Purchaser's acquisition of Shares (and the indirect acquisition of the stock of the Company's subsidiaries) as contemplated herein, or of any filings, approvals or other actions by or with any domestic (Federal or state), foreign or supranational governmental authority or administrative or regulatory agency that would be required prior to the acquisition of Shares (or the indirect acquisition of the stock of the Company's subsidiaries) by the Purchaser pursuant to the Offer as contemplated herein. Should any such approval or other action be required, it is the Purchaser's present intention to seek such approval or action. However, the Purchaser does not presently intend to delay the purchase of Shares tendered pursuant to the Offer pending the receipt of any such approval or the taking of any such action (subject to the Purchaser's right to delay or decline to purchase Shares if any of the conditions in Section 15 shall have occurred). There can be no assurance that any such approval or other action, if needed, would be obtained without substantial conditions or that adverse consequences might not result to the business of the Company, Parent or the Purchaser or that certain parts of the businesses of the Company, Parent or the Purchaser might not have to be disposed of or held separate or other substantial conditions complied with in order to obtain such approval or other action or in the event that such approval was not obtained or such other action was not taken, any of which could cause the Purchaser to elect to terminate the Offer without purchasing the Shares thereunder. The Purchaser's obligation under the Offer to accept for payment and pay for Shares is subject to certain conditions, including conditions relating to the legal matters discussed in this Section 16. 27 30 State Takeover Laws. A number of states have adopted takeover laws and regulations which purport to varying degrees to be applicable to attempts to acquire securities of corporations which are incorporated in such states or which have or whose business operations have substantial economic effects in such states, or which have substantial assets, security holders, principal executive offices or principal places of business therein. To the extent that certain provisions of certain of these state takeover statutes purport to apply to the Offer, the Purchaser believes that such laws conflict with federal law and constitute an unconstitutional burden on interstate commerce. In 1982, the Supreme Court of the United States, in Edgar v. Mite Corp., invalidated on constitutional grounds the Illinois Business Takeovers Act, which as a matter of state securities law made takeovers of corporations meeting certain requirements more difficult, and the reasoning in such decision is likely to apply to certain other state takeover statutes. However, in 1987, in CTS Corp. v. Dynamics Corp. of America, the Supreme Court of the United States held that the State of Indiana could, as a matter of corporate law and in particular those aspects of corporate law concerning corporate governance, constitutionally disqualify a potential acquiror from voting on the affairs of a target corporation without the prior approval of the remaining stockholders, provided that such laws were applicable only under certain conditions. Subsequently, in TLX Acquisition Corp. v. Telex Corp., a federal district court in Oklahoma ruled that the Oklahoma statutes were unconstitutional insofar as they applied to corporations incorporated outside Oklahoma in that they would subject such corporations to inconsistent regulations. Similarly, in Tyson Foods, Inc. v. McReynolds, a federal district court in Tennessee ruled that four Tennessee takeover statutes were unconstitutional as applied to corporations incorporated outside Tennessee. This decision was affirmed by the United States Court of Appeals for the Sixth Circuit. Except as described herein, the Purchaser has not attempted to comply with any state takeover statutes in connection with the Offer. The Purchaser reserves the right to challenge the validity or applicability of any state law allegedly applicable to the Offer and nothing in this Offer to Purchase nor any action taken in connection herewith is intended as a waiver of that right. In the event that any state takeover statute is found applicable to the Offer, the Purchaser might be unable to accept for payment or purchase Shares tendered pursuant to the Offer or be delayed in continuing or consummating the Offer. In such case, the Purchaser may not be obligated to accept for purchase or pay for, any Shares tendered. See Section 15. In connection with the regulation of control bids by tender offer in Ohio, the Purchaser filed a Form 041 on June 25, 1999 with the Ohio Division of Securities pursuant to R.C.1707.041 of the Ohio Securities Act. Antitrust. Under the HSR Act and the rules that have been promulgated thereunder by the Federal Trade Commission (the "FTC"), certain acquisition transactions may not be consummated unless certain information has been furnished to the Antitrust Division of the Department of Justice (the "Antitrust Division") and the FTC and certain waiting period requirements have been satisfied. The acquisition of Shares pursuant to the Offer is subject to such requirements. See Section 2. Parent has filed, on June 23, 1999, with the FTC and the Antitrust Division a Premerger Notification and Report Form in connection with the purchase of Shares pursuant to the Offer. Under the provisions of the HSR Act applicable to the Offer, the purchase of Shares pursuant to the Offer may not be consummated until the expiration of a 15-calendar day waiting period following the filing by Parent. Accordingly, the waiting period under the HSR Act applicable to such purchases of Shares pursuant to the Offer will expire at 11:59 p.m., New York City time, on July 8, 1999, unless such waiting period is terminated or is extended by a request from the FTC or the Antitrust Division for additional information or documentary material prior to the expiration of the waiting period. If either the FTC or the Antitrust Division were to request additional information or documentary material from Parent, the waiting period would expire at 11:59 p.m., New York City time, on the tenth calendar day after the date of substantial compliance by Parent with such request. Thereafter, the waiting period could be extended only by court order or agreement of the parties. If the acquisition of Shares is delayed pursuant to a request by the FTC or the Antitrust Division for additional information or documentary material pursuant to the HSR Act, the Offer may, but need not, be extended and in any event the purchase of and payment for Shares will be deferred until ten days after the request is substantially complied with, unless the waiting period is sooner terminated by the FTC and the Antitrust Division. See Section 2. Only one extension of such waiting period pursuant to a request for additional information is authorized by the HSR Act and the rules promulgated thereunder, except by court order or 28 31 agreement of the parties. Any such extension of the waiting period will not give rise to any withdrawal rights not otherwise provided for by applicable law. See Section 4. The FTC and the Antitrust Division frequently scrutinize the legality under the antitrust laws of transactions such as the proposed acquisition of Shares by the Purchaser pursuant to the Offer. At any time before or after the purchase by the Purchaser of Shares pursuant to the Offer, either of the FTC and the Antitrust Division could take such action under the antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the purchase of Shares pursuant to the Offer or seeking the divestiture of Shares purchased by the Purchaser or the divestiture of substantial assets of Parent, its subsidiaries or the Company. Private parties and state attorneys general may also bring legal action under federal or state antitrust laws under certain circumstances. Margin Credit Regulations. Federal Reserve Board Regulations T, U and X (the "Margin Credit Regulations") restrict the extension or maintenance of credit for the purpose of buying or carrying margin stock, including the Shares, if the credit is secured directly or indirectly thereby. Such secured credit may not be extended or maintained in an amount that exceeds the maximum loan value of the margin stock. Under the Margin Credit Regulations, the Shares are presently margin stock and the maximum loan value thereof is generally 50% of their current market value. The definition of "indirectly secured" contained in the Margin Credit Regulations provides that the term does not include an arrangement with a customer if the lender in good faith has not relied upon margin stock as collateral in extending or maintaining the particular credit. 17. FEES AND EXPENSES. Wasserstein Perella is acting as Dealer Manager in connection with the Offer and serving as financial advisor to Parent in connection with the Offer and the Merger. Parent has agreed to pay to Wasserstein Perella a fee of $2,800,000 upon the consummation of a merger or other business combination with, or acquisition of 50% or more of the outstanding Shares or at least 50% of the assets of the Company. Parent will also reimburse Wasserstein Perella for reasonable out-of-pocket expenses and has also agreed to indemnify Wasserstein Perella against certain liabilities and expenses in connection with the Offer and the Merger. The Purchaser has retained D.F. King & Co., Inc. to act as the Information Agent and First Chicago Trust Company of New York to act as the Depositary in connection with the Offer. The Information Agent may contact holders of Shares by mail, telephone, telex, telegraph and personal interview and may request brokers, dealers and other nominee stockholders to forward the Offer materials to beneficial owners. The Information Agent and the Depositary will receive reasonable and customary compensation for services relating to the Offer and will be reimbursed for certain out-of-pocket expenses. The Purchaser and Parent have also agreed to indemnify the Information Agent and the Depositary against certain liabilities and expenses in connection with the Offer, including certain liabilities under the federal securities laws. The Purchaser will not pay any fees or commissions to any broker or dealer or any other person for soliciting tenders of Shares pursuant to the Offer (other than to the Dealer Manager, the Information Agent and the Depositary). Brokers, dealers, commercial banks and trust companies will, upon request, be reimbursed by the Purchaser for customary mailing and handling expenses incurred by them in forwarding offering materials to their customers. 18. MISCELLANEOUS. The Offer is being made solely by this Offer to Purchase and the related Letter of Transmittal and is being made to all holders of Shares. The Purchaser is not aware of any state where the making of the Offer is prohibited by administrative or judicial action pursuant to any valid state statute. If the Purchaser becomes aware of any valid state statute prohibiting the making of the Offer or the acceptance of Shares pursuant thereto, the Purchaser will make a good faith effort to comply with any such state statute. If after such good faith effort, the Purchaser cannot comply with such state statute, the Offer will not be made to nor will tenders be accepted from or on behalf of the holders of Shares in such state. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Purchaser by the Dealer Manager or one or more registered brokers or dealers that are licensed under the laws of such jurisdiction. 29 32 The Purchaser and Parent have filed with the Commission a Schedule 14D-1 (including exhibits) pursuant to Rule 14d-3 under the Exchange Act, furnishing certain additional information with respect to the Offer. Such statement and any amendments thereto, including exhibits, may be inspected and copies may be obtained from the offices of the Commission (except that they will not be available at the regional offices of the Commission) in the manner set forth in Section 8 of this Offer to Purchase. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION ON BEHALF OF THE PURCHASER OR PARENT NOT CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. NSI ENTERPRISES, INC. June 25, 1999 30 33 SCHEDULE I DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER AND PARENT 1. DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER. The name and position with the Purchaser of each director and executive officer of the Purchaser are set forth below. Unless otherwise indicated, the business address of each such director and executive officer is: c/o National Service Industries, Inc., NSI Center, 1420 Peachtree Street, N.E., Atlanta, Georgia 30309. The other required information with respect to each such person is set forth under "Directors and Executive Officers of Parent" below. Except as set forth below, all directors and executive officers listed below are citizens of the United States.
NAME POSITION WITH THE PURCHASER - ---- --------------------------- James S. Balloun.............. Director, Chairman of the Board, Chief Executive Officer and President of Purchaser. Brock A. Hattox............... Director, Executive Vice President and Chief Financial Officer of Purchaser. David Levy.................... Director, Executive Vice President, Administration and Counsel of Purchaser. Stewart A. Searle III*........ Senior Vice President of Purchaser. *Canadian citizenship
2. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. The name, business address, present principal occupation or employment and material occupations, positions, offices or employments during the last five years of each director and executive officer of Parent and certain other information are set forth below. Unless otherwise indicated, the business address of each such director and executive officer is: c/o National Service Industries, Inc., NSI Center, 1420 Peachtree Street, N.E., Atlanta, Georgia 30309. Unless otherwise indicated, each occupation set forth opposite an individual's name refers to employment with Parent. Except as set forth below, all directors and executive officers listed below are citizens of the United States.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL OCCUPATIONS, POSITIONS, OFFICES OR EMPLOYMENT HELD NAME AND ADDRESS DURING THE LAST FIVE YEARS - ---------------- ------------------------------------------------------------ James S. Balloun.............. Director of Parent (since 1996); Chairman of the Board of Parent (since 2/96); Chief Executive Officer of Parent (since 2/96); President of Parent (since 10/96); Director of McKinsey & Co. (6/76 through 1/96). Director of Georgia-Pacific Corporation, Radiant Systems, Inc. and Wachovia Corporation. John L. Clendenin............. Director of Parent (since 1996); Chairman of BellSouth 1873 Flagler Estates Drive Corporation (1983 through 12/97); Chairman, President and West Palm Beach, Florida Chief Executive Officer of BellSouth (1983 through 12/96). 33411 Director of Coca-Cola Enterprises Inc., Equifax Inc., The Home Depot, Inc., The Kroger Company, Nabisco Group Holdings, Powerwave Technologies, Springs Industries, Inc. and Wachovia Corporation. Director of Parent from 1984 until 1995. Thomas C. Gallagher........... Director of Parent (since 1997); President and Chief Genuine Parts Company Operating Officer of Genuine Parts Company (since 1990); 2999 Circle 75 Parkway Chairman and Chief Executive Officer of S.P. Richards Atlanta, Georgia 30339 Company (various positions since 1970). Director of Genuine Parts Company and Oxford Industries, Inc.
S-1 34
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL OCCUPATIONS, POSITIONS, OFFICES OR EMPLOYMENT HELD NAME AND ADDRESS DURING THE LAST FIVE YEARS - ---------------- ------------------------------------------------------------ George H. Gilmore, Jr......... Executive Vice President and Group President of Parent (since 6/99); President and Chief Operating Officer of Calmat Co. (1998 to 6/99); President of Moore Department Solutions (1995 to 1997) and President of Moore Business Systems (1994 to 1995) of Moore Corporation. Brock A. Hattox............... Executive Vice President and Chief Financial Officer of Parent (since 1996); President of Engineering and Construction Group (1/95 through 9/96) and Chief Financial Officer of McDermott International, Inc. (3/91 through 9/96). Robert M. Holder, Jr.......... Director of Parent (since 1974); Chairman of the Board of The RMH Group Holder Corporation (1960 through 3/97); Chief Executive 3333 Riverwood Parkway, S.E. Officer of Holder Corporation (1960 through 1994); Suite 500 Chairman of the Board of The RMH Group (since 4/97). Atlanta, Georgia 30339 James C. Kennedy.............. Director of Parent (since 1993); Chairman and Chief Cox Enterprises, Inc. Executive Officer of Cox Enterprises, Inc. (various P.O. Box 105357 positions since 1972). Director of Cox Communications, Atlanta, Georgia 30348 Inc. and Cox Radio, Inc. David Levy.................... Director of Parent (since 1984); Executive Vice President, Administration and Counsel of Parent (since 9/92); Senior Vice President, Secretary and Counsel of Parent (1982 through 9/92). Bernard Marcus................ Director of Parent (since 1990); Chairman of the Board of The Home Depot, Inc. The Home Depot, Inc. (since 1978) and Chief Executive 2455 Paces Ferry Road Officer (1978 through 1997); Chairman of the Board and Atlanta, Georgia 30339 President of Handy Dan Improvement Centers, Inc. (1972 through 1978). Director of DBT Online, Inc. and Westfield America, Inc. John G. Medlin, Jr............ Director of Parent (since 1988); Chairman Emeritus of Wachovia Corporation Wachovia Corporation; Non-executive Chairman of the Board 100 North Main Street Wachovia (1994 through 1998); Chief Executive Officer of Winston-Salem, North Wachovia (1977 through 1993). Director of BellSouth Carolina Corporation, Burlington Industries, Inc., Media General, 27150 Inc., USAirways Group, Inc., and Wachovia Corporation. Sam Nunn...................... Director of Parent (since 1997); Senior Partner in King & King & Spalding Spalding, Attorneys, Atlanta, Georgia (since 1997); United 191 Peachtree Street, N.W. States Senator (1973 through 1996). Director of The Atlanta, Georgia 30303 Coca-Cola Company, General Electric Company, Scientific-Atlanta, Inc., Texaco, Inc. and Total System Services, Inc. Herman J. Russell............. Director of Parent (since 1996); Chairman of the Board H.J. Russell & Company (since 1959) and Chief Executive Officer (since 1998) of 504 Fair Street, S.W. H.J. Russell & Company; Chief Executive Officer of H.J. Atlanta, Georgia 30313 Russell & Company (1959 through 1996). Director of Georgia Power Company. Stewart A. Searle III*........ Senior Vice President -- Planning and Development of Parent (since 1996); Senior Vice President of Development of Equifax Inc. (1992 through 1996). *Canadian citizenship
S-2 35
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL OCCUPATIONS, POSITIONS, OFFICES OR EMPLOYMENT HELD NAME AND ADDRESS DURING THE LAST FIVE YEARS - ---------------- ------------------------------------------------------------ Betty L. Siegel............... Director of Parent (since 1988); President of Kennesaw State Kennesaw State University University (since 1981). Director of AGL Resources, Inc. 1000 Chastain Road and Equifax Inc. Kennesaw, Georgia 30144 Barrie A. Wigmore............. Director of Parent (since 1997); Limited Partner of Goldman Goldman, Sachs & Co. Sachs Group, LP (since 1988). Director of Potash Corporation 85 Broad Street -- 2nd Floor of Saskatchewan. New York, New York 10004
3. OWNERSHIP OF SUBJECT COMPANY'S SECURITIES BY DIRECTORS AND EXECUTIVE OFFICES OF PARENT AND PURCHASER. To the best knowledge of the Purchaser and Parent, none of the persons listed on this Schedule I beneficially owns or has a right to acquire directly or indirectly any Shares, and none of the persons listed on this Schedule I has effected any transactions in the Shares during the past 60 days. S-3 36 The Letter of Transmittal, certificates for Shares and any other required documents should be sent or delivered by each stockholder of the Company or his broker, dealer, commercial bank, trust company or other nominee to the Depositary as follows: The Depositary for the Offer is: FIRST CHICAGO TRUST COMPANY OF NEW YORK
By Mail: By Overnight Courier: By Hand: First Chicago Trust Company First Chicago Trust Company First Chicago Trust Company of New York of New York of New York ATTN: Corporate Actions ATTN: Corporate Actions ATTN: Corporate Actions Suite 4660 Suite 4680 c/o Securities Transfer P.O. Box 2569 14 Wall Street and Reporting Services, Inc. Jersey City, NJ 07303-2569 Eighth Floor 100 William Street -- Galleria New York, NY 10005 New York, NY 10038
By Facsimile Transmission: Confirm by Telephone: (201) 222-4720 (201) 222-4707 or or (201) 222-4721 (800) 446-2617
Any questions and requests for assistance may be directed to the Information Agent or the Dealer Manager at their respective telephone numbers and addresses listed below. Additional copies of this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may also be obtained from the Information Agent. You may also contact your broker, dealer, commercial bank or trust company for assistance concerning the Offer. The Information Agent for the Offer is: D.F. KING & CO., INC. 77 Water Street New York, NY 10005 Banks and Brokers Call Collect: (212) 269-5550 All Others Call Toll-Free: 1-800-207-3155 The Dealer Manager for the Offer is: WASSERSTEIN PERELLA & CO., INC. 31 West 52nd Street New York, NY 10019 Call Collect (212) 969-2700 EX-99.(A)(2) 3 LETTER OF TRANSMITTAL 1 Exhibit (a)(2) LETTER OF TRANSMITTAL To Tender Shares of Common Stock of HOLOPHANE CORPORATION Pursuant to the Offer to Purchase dated June 25, 1999 by NSI ENTERPRISES, INC. A WHOLLY OWNED SUBSIDIARY OF NATIONAL SERVICE INDUSTRIES, INC. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JULY 23, 1999, UNLESS THE OFFER IS EXTENDED. The Depositary for the Offer is: FIRST CHICAGO TRUST COMPANY OF NEW YORK
By Mail: By Overnight Courier: By Hand: First Chicago Trust Company First Chicago Trust Company First Chicago Trust Company of New York of New York of New York ATTN: Corporate Actions ATTN: Corporate Actions ATTN: Corporate Actions Suite 4660 Suite 4680 c/o Securities Transfer P.O. Box 2569 14 Wall Street and Reporting Services, Inc. Jersey City, NJ 07303-2569 Eighth Floor 100 William Street -- Galleria New York, NY 10005 New York, NY 10038
By Facsimile Transmission Confirm Facsimile by Telephone (for Eligible Institutions only): (201) 222-4720 (201) 222-4707 or or (201) 222-4721 (800) 446-2617
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. This Letter of Transmittal is to be completed by stockholders, either if certificates for Shares (as defined below) are to be forwarded herewith or, unless an Agent's Message (as defined in the Offer to Purchase) is utilized, if tenders of Shares are to be made by book-entry transfer into the account of First Chicago Trust Company of New York, as Depositary (the "Depositary"), at The Depository Trust Company ("DTC" or the "Book-Entry Transfer Facility") pursuant to the procedures set forth in Section 3 of the Offer to Purchase (as defined below). Stockholders who tender Shares by book-entry transfer are referred to herein as "Book-Entry Stockholders". Holders of Shares whose certificates for such Shares (the "Share Certificates") are not immediately available or who cannot deliver their Share Certificates and all other required documents to the Depositary prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase), or who cannot complete the procedure for book-entry transfer on a timely basis, must tender their Shares according to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. 2 NOTE: SIGNATURES MUST BE PROVIDED BELOW PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY Ladies and Gentlemen: The undersigned hereby tenders to NSI Enterprises, Inc., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of National Service Industries, Inc., a Delaware corporation ("Parent"), the below-described shares of Common Stock, par value $.01 per share (the "Shares"), of Holophane Corporation, a Delaware corporation (the "Company"), at a purchase price of $38.50 per Share, net to the seller in cash, less any required withholding taxes and without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase dated June 25, 1999 (the "Offer to Purchase") and in this Letter of Transmittal (which, as amended from time to time, together constitute the "Offer"). The undersigned understands that the Purchaser reserves the right to transfer or assign in whole or from time to time in part, to one or more of its affiliates, the right to purchase all or any portion of the Shares tendered pursuant to the Offer, receipt of which is hereby acknowledged. Subject to, and effective upon, acceptance for payment for the Shares tendered herewith in accordance with the terms of the Offer, the undersigned hereby sells, assigns and transfers to, or upon the order of, the Purchaser all right, title and interest in and to all of the Shares that are being tendered hereby and any and all non-cash dividends, distributions (including additional Shares) or rights declared, paid or issued with respect to the tendered Shares on or after June 20, 1999 and payable or distributable to the undersigned on a date prior to the transfer to the name of the Purchaser or nominee or transferee of the Purchaser on the Company's stock transfer records of the Shares tendered herewith (collectively, a "Distribution"), and appoints the Depositary the true and lawful agent and attorney-in-fact of the undersigned with respect to such Shares (and any Distribution) with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest) to (a) deliver such Share Certificates (as defined herein) (and any Distribution), or transfer ownership of such Shares (and any Distribution) on the account books maintained by the Book-Entry Transfer Facility, together in either case the appropriate evidences of transfer, to the Depositary for the account of the Purchaser, (b) present such Shares (and any Distribution) for transfer on the books of the Company and (c) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares (and any Distribution), all in accordance with the terms and subject to the conditions of the Offer. The undersigned irrevocably appoints designees of the Purchaser as such stockholder's proxy, with full power of substitution, to the full extent of such stockholder's rights with respect to the Shares tendered by such stockholder and accepted for payment by the Purchaser and with respect to any and all other Shares or other securities issued or issuable in respect of such Shares on or after June 20, 1999. Such appointment will be effective when, and only to the extent that, the Purchaser accepts such Shares for payment. Upon such acceptance for payment, all prior proxies given by such stockholder with respect to such Shares (and such other Shares and securities) will be revoked without further action, and no subsequent proxies may be given nor any subsequent written consents executed (and, if given or executed, will not be deemed effective). The designees of the Purchaser will be empowered to exercise all voting and other rights of such stockholder as they in their sole discretion may deem proper at any annual or special meeting of the Company's stockholders or any adjournment or postponement thereof, by written consent in lieu of any such meeting or otherwise. The Purchaser reserves the right to require that, in order for Shares to be deemed validly tendered, immediately upon the Purchaser's payment for such Shares the Purchaser must be able to exercise full voting rights with respect to such Shares. The undersigned hereby represents and warrants that (a) the undersigned has full power and authority to tender, sell, assign and transfer the Shares (and any Distribution) tendered hereby and (b) when the Shares are accepted for payment by the Purchaser, the Purchaser will acquire good, marketable and unencumbered title to the Shares (and any Distribution), free and clear of all liens, restrictions, charges and encumbrances, and the same will not be subject to any adverse claim. The undersigned, upon request, will execute and deliver any additional documents deemed by the Depositary or the Purchaser to be necessary or desirable to complete the sale, assignment and transfer of the Shares tendered hereby (and any Distribution). In addition, the undersigned shall promptly remit and transfer to the Depositary for the account of the Purchaser any and all Distributions in respect of the Shares tendered hereby, accompanied by appropriate documentation of transfer, and pending such remittance or appropriate assurance thereof, the Purchaser will be, subject to applicable law, entitled to all rights and privileges as owner of any such Distribution and may withhold the entire purchase price or deduct from the purchase price the amount or value thereof, as determined by the Purchaser in its sole discretion. 3 All authority herein conferred or agreed to be conferred shall not be affected by and shall survive the death or incapacity of the undersigned and any obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Tenders of Shares made pursuant to the Offer are irrevocable, except that Shares tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date (as defined in the Offer to Purchase) and, unless theretofore accepted for payment by the Purchaser pursuant to the Offer, may also be withdrawn at any time after August 23, 1999. See Section 4 of the Offer to Purchase. The undersigned understands that tenders of Shares pursuant to any of the procedures described in Section 3 of the Offer to Purchase and in the instructions hereto will constitute a binding agreement between the undersigned and the Purchaser upon the terms and subject to the conditions set forth in the Offer, including the undersigned's representation that the undersigned owns the Shares being tendered. Unless otherwise indicated herein under "Special Payment Instructions", please issue the check for the purchase price and/or issue or return any certificate(s) for Shares not tendered or not accepted for payment in the name(s) of the registered holder(s) appearing under "Description of Shares Tendered". Similarly, unless otherwise indicated herein under "Special Delivery Instructions", please mail the check for the purchase price and/or any certificate(s) for Shares not tendered or not accepted for payment (and accompanying documents, as appropriate) to the address(es) of the registered holder(s) appearing under "Description of Shares Tendered". In the event that both the Special Delivery Instructions and the Special Payment Instructions are completed, please issue the check for the purchase price and/or any certificate(s) for Shares not tendered or accepted for payment in the name of, and deliver such check and/or such certificates to, the person or persons so indicated. The undersigned recognizes that the Purchaser has no obligation, pursuant to the Special Payment Instructions, to transfer any Shares from the name(s) of their registered holder(s) thereof if the Purchaser does not accept for payment any of the Shares so tendered. 4 - ------------------------------------------------------------------------------------------------------------------------ DESCRIPTION OF SHARES TENDERED - ------------------------------------------------------------------------------------------------------------------------ NAME(S) & ADDRESS(ES) OF REGISTERED HOLDER(S) (PLEASE FILL IN, IF BLANK, EXACTLY AS SHARE CERTIFICATE(S) AND SHARE(S) TENDERED (ATTACH NAME(S) APPEAR(S) ON CERTIFICATE(S) ADDITIONAL SIGNED LIST IF NECESSARY) --------------------------------------------------------------- TOTAL NUMBER OF SHARES NUMBER OF SHARE CERTIFICATE REPRESENTED BY SHARES NUMBER(S)* CERTIFICATE(S)* TENDERED** - ------------------------------------------------------------------------------------------------------------------------ --------------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------- TOTAL SHARES - ------------------------------------------------------------------------------------------------------------------------ * Need not be completed by Book-Entry Stockholders. ** Unless otherwise indicated, all Shares represented by certificate delivered to the Depositary will be deemed to have been tendered. See Instruction 4. - ------------------------------------------------------------------------------------------------------------------------
[ ] CHECK HERE IF SHARES ARE BEING TENDERED BY BOOK-ENTRY TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER): Name of Tendering Institution ----------------------------------------------------------------------------- Check box of Book-Entry Transfer Facility: [ ] The Depository Trust Company Account Number ----------------------------------------------------------------------------- Transaction Code Number ----------------------------------------------------------------------------- [ ] CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING: Name(s) of Registered Owner(s): ----------------------------------------------------------------------------- Window Ticket Number (if any): ----------------------------------------------------------------------------- Date of Execution of Notice of Guaranteed Delivery: --------------------------------------------------------------- Name of Institution that Guaranteed Delivery: --------------------------------------------------------------------- (If delivered by Book-Entry Transfer provide the following): The Depository Trust Company Account Number ------------------------------------------------------------------ Transaction Code Number ----------------------------------------------------------------------------- 5 ------------------------------------------------------------ SPECIAL PAYMENT INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7) To be completed ONLY if certificate(s) for Shares not tendered or not accepted for payment and/or the check for the purchase price of Shares accepted for payment are to be issued in the name of someone other than the undersigned. Issue: [ ] Check and/or [ ] Certificate(s) to: Name ------------------------------------------------------------ (Please Print) Address ----------------------------------------------------------- ------------------------------------------------------------ (Include Zip Code) ------------------------------------------------------------ (Tax ID, or Social Security No.) (See Substitute Form W-9 included herein) ------------------------------------------------------------ ------------------------------------------------------------ SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7) To be completed ONLY if certificate(s) for Shares not tendered or not accepted for payment and/or the check for the purchase price of Shares accepted for payment are to be sent to someone other than the undersigned or to the undersigned at an address other than that shown above. Mail: [ ] Check and/or [ ] Certificate(s) to: Name ------------------------------------------------------------ (Please Print) Address ----------------------------------------------------------- ------------------------------------------------------------ (Include Zip Code) ------------------------------------------------------------ ------------------------------------------------------------ 6 SIGN HERE AND COMPLETE SUBSTITUTE FORM W-9 X - -------------------------------------------------------------------------------- X - -------------------------------------------------------------------------------- (SIGNATURE(S) OF HOLDER(S)) Dated: , 1999 - -------------------------------------------------------------------------------- (Must be signed by the registered holder(s) exactly as name(s) appear(s) on Share Certificate(s) or on a security position listing or by person(s) authorized to become registered holder(s) by certificates and documents transmitted herewith. If signature is by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, please provide the following information and see Instruction 5.) Name(s) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (PLEASE PRINT) Capacity (full title) - -------------------------------------------------------------------------------- Address - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (INCLUDE ZIP CODE) Area Code and Telephone Number - -------------------------------------------------------------------------------- Tax Identification or Social Security No. - -------------------------------------------------------------------------------- COMPLETE SUBSTITUTE FORM W-9 GUARANTEE OF SIGNATURE(S) (SEE INSTRUCTIONS 1 AND 5) Authorized Signature - -------------------------------------------------------------------------------- Name - -------------------------------------------------------------------------------- Name of Firm - -------------------------------------------------------------------------------- (PLEASE PRINT) Address - -------------------------------------------------------------------------------- (INCLUDE ZIP CODE) Area Code and Telephone Number - -------------------------------------------------------------------------------- Dated: , 1999 - -------------------------------------------------------------------------------- 7 - ----------------------------------------------------------------------------------------------------------------------- PAYER'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK - ----------------------------------------------------------------------------------------------------------------------- SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN THE BOX AT Social Security Number FORM W-9 THE RIGHT AND CERTIFY BY SIGNING AND DATING --------------------------- BELOW. or --------------------------- Employer Identification Number - ----------------------------------------------------------------------------------------------------------------------- PART 2 -- Certification -- Under penalties of perjury, I certify that: (1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me) and DEPARTMENT OF THE (2) I am not subject to backup withholding because: (a) I am exempt from backup TREASURY withholdings, or (b) I have not been notified by the Internal Revenue Service INTERNAL REVENUE (the "IRS") that I am subject to backup withholding as a result of a failure SERVICE to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding. PAYER'S REQUEST FOR Certification Instructions -- You must cross out item (2) above if you have been TAXPAYER IDENTIFICATION notified by the IRS that you are currently subject to backup withholding because NUMBER ("TIN") of under-reporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding you received another notification from the IRS that you are no longer subject to backup withholding, do not cross out such Item (2). --------------------------------- SIGN HERE Signature PART 3 -- Date , 1999 Awaiting TIN [ ] - -----------------------------------------------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9. CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (1) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office, or (2) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number by the time of payment, 31% of all reportable payments made to me will be withheld. Signature ________________________________ Date __________________ , 1999 8 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this Letter of Transmittal (a) if this Letter of Transmittal is signed by the registered holder(s) of Shares tendered herewith, unless such holder(s) has completed either the box entitled "Special Payment Instructions" or the box entitled "Special Delivery Instructions" above, or (b) if such Shares are tendered for the account of a firm which is a bank, broker, dealer, credit union, savings association or other entity which is a member in good standing of the Securities Transfer Agents Medallion Program (each of the foregoing being referred to as an "Eligible Institution"). In all other cases, all signatures on this Letter of Transmittal must be guaranteed by an Eligible Institution. See Instruction 5 of this Letter of Transmittal. 2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed by stockholders either if certificates are to be forwarded herewith or, unless an Agent's Message it utilized, if tenders are to be made pursuant to the procedure for tender by book-entry transfer set forth in Section 3 of the Offer to Purchase. Share Certificates, or timely confirmation (a "Book-Entry Confirmation") of a transfer of such Shares into the Depositary's account at the Book-Entry Transfer Facility, as well as this Letter of Transmittal (or a facsimile hereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message in connection with a book-entry transfer, and any other documents required by this Letter of Transmittal, must be received by the Depositary at one of its addresses set forth herein prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase). Stockholders whose Share Certificates are not immediately available or who cannot deliver their Share Certificates and all other required documents to the Depositary prior to the Expiration Date or who cannot complete the procedure for delivery by book-entry transfer on a timely basis may tender their Shares by properly completing and duly executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. Pursuant to such procedure: (i) such tender must be made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form made available by the Purchaser, must be received by the Depositary prior to the Expiration Date; and (iii) the Share Certificates (or a Book-Entry Confirmation) representing all tendered Shares, in proper form for transfer, in each case together with the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message) and any other documents required by this Letter of Transmittal, must be received by the Depositary within three New York Stock Exchange trading days after the date of execution of such Notice of Guaranteed Delivery. THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATE AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. No alternative, conditional or contingent tenders will be accepted and no fractional Shares will be purchased. All tendering stockholders, by execution of this Letter of Transmittal (or a facsimile hereof), waive any right to receive any notice of the acceptance of their Shares for payment. 3. INADEQUATE SPACE. If the space provided herein is inadequate, the certificate numbers and/or the number of Shares and any other required information should be listed on a separate signed schedule attached hereto. 4. PARTIAL TENDERS (NOT APPLICABLE TO BOOK-ENTRY STOCKHOLDERS). If fewer than all the Shares evidenced by any Share Certificate submitted are to be tendered, fill in the number of Shares which are to be tendered in the box entitled "Number of Shares Tendered". In such cases, new Share Certificates for the Shares that were evidenced by your old Share Certificates, but were not tendered by you, will be sent to you, unless otherwise provided in the appropriate box on this Letter of Transmittal, as soon as practicable after the Expiration Date. All Shares represented by Share Certificates delivered to the Depositary will be deemed to have been tendered unless otherwise indicated. 5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, the signature(s) must correspond with the name(s) as written on the face of the certificate(s) without alteration, enlargement or any change whatsoever. If any of the Shares tendered hereby are owned of record by two of more joint owners, all such owners must sign this Letter of Transmittal. 9 If any of the tendered Shares are registered in different names on several certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of certificates. If this Letter of Transmittal or any certificates or stock powers are signed by trustees, executors, administrators, guardian attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and proper evidence satisfactory to the Purchaser of their authority so to act must be submitted. If this Letter of Transmittal is signed by the registered holder(s) of the Shares listed and transmitted hereby, no endorsements of certificates or separate stock powers are required unless payment is to be made to or certificates for Shares not tendered or not purchased are to be issued in the name of a person other than the registered holder(s). Signatures on such certificates or stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal is signed by a person other than the registered holder(s) of the certificate(s) listed, the certificate(s) must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear(s) on the certificate(s). Signatures on such certificates or stock powers must be guaranteed by an Eligible Institution. 6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction 6, the Purchaser will pay any stock transfer taxes with respect to the transfer and sale of Shares to it or its order pursuant to the Offer. If, however, payment of the purchase price is to be made to, or if certificate(s) for Shares not tendered or accepted for payment are to be registered in the name of, any person other than the registered holder(s), or if tendered certificate(s) are registered in the name of any person other than the person(s) signing this Letter of Transmittal, the amount of any stock transfer taxes (whether imposed on the registered holder(s) or such person) payable on account of the transfer to such person will be deducted from the purchase price unless satisfactory evidence of the payment of such taxes or an exemption therefrom, is submitted. EXCEPT AS OTHERWISE PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATE(S) LISTED IN THIS LETTER OF TRANSMITTAL. 7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued in the name of, and/or certificates for Shares not tendered or not accepted for payment are to be issued or returned to, a person other than the signer of this Letter of Transmittal or if a check and/or such certificates are to be returned to a person other than the person(s) signing this Letter of Transmittal or to an address other than that shown in this Letter of Transmittal, the appropriate boxes on this Letter of Transmittal must be completed. 8. WAIVER OF CONDITIONS. Subject to the terms and conditions of the Agreement and Plan of Merger, dated as of June 20, 1999, by and among Purchaser, Parent and the Company, the conditions of the Offer (other than the Minimum Condition (as defined in the Offer to Purchase)) may be waived by the Purchaser in whole or in part at any time and from time to time in its sole discretion. 9. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under U.S. Federal income tax law, a stockholder whose tendered Shares are accepted for payment is required to provide the Depositary with such stockholder's correct taxpayer identification number ("TIN") on Substitute Form W-9 below. If the Depositary is not provided with the correct TIN, the Internal Revenue Service may subject the stockholder or other payee to a $50 penalty. In addition, payments that are made to such stockholder or other payee with respect to Shares purchased pursuant to the Offer may be subject to 31% backup withholding. Certain stockholders (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. In order for a foreign individual to qualify as an exempt recipient, the stockholder must submit a Form W-8, signed under penalties of perjury, attesting to that individual's exempt status. A Form W-8 can be obtained from the Depositary. See the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for more instructions. If backup withholding applies, the Depositary is required to withhold 31% of any such payments made to the stockholder or other payee. Backup withholding is not an additional tax. Rather, the tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service. 10 The box in Part 3 of the Substitute Form W-9 may be checked if the tendering stockholder has not been issued a TIN and has applied for a TIN or intends to apply for a TIN in the near future. If the box in Part 3 is checked, the stockholder or other payee must also complete the Certificate of Awaiting Taxpayer Identification Number in order to avoid backup withholding. Notwithstanding that the box in Part 3 is checked and the Certificate of Awaiting Taxpayer Identification Number is completed, the Depositary will withhold 31% of all payments made prior to the time a properly certified TIN is provided to the Depositary. The stockholder is required to give the Depositary the TIN (e.g., social security number or employer identification number) of the record owner of the Shares or of the last transferee appearing on the transfers attached to, or endorsed on, the Shares. If the Shares are in more than one name or are not in the name of the actual owner, consult the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for additional guidance on which number to report. 10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions or requests for assistance may be directed to the Dealer Manager or the Information Agent at their respective addresses and telephone numbers set forth below. Additional copies of the Offer to Purchase, this Letter of Transmittal and the Notice of Guaranteed Delivery may also be obtained from the Information Agent or the Dealer Manager or from brokers, dealers, commercial banks or trust companies. 11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate representing Shares has been lost, destroyed or stolen, the stockholder should promptly notify the Depositary. The stockholder will then be instructed as to the steps that must be taken in order to replace the certificate. This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost or destroyed certificates have been followed. 11 The Information Agent for the Offer is: D.F. KING & CO., INC. 77 Water Street New York, New York 10005 Banks and Brokers Call Collect: (212) 269-5550 All Others Call Toll-Free: 1-800-207-3155 The Dealer Manager for the Offer is: WASSERSTEIN PERELLA & CO., INC. 31 West 52nd Street New York, NY 10019 Call Collect (212) 969-2700 IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE HEREOF), PROPERLY COMPLETED AND DULY EXECUTED, TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES AND SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER OR THE NOTICE OF GUARANTEED DELIVERY, AND ALL OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE (AS DEFINED IN THE OFFER TO PURCHASE). EX-99.(A)(3) 4 NOTICE OF GUARANTEED DELIVERY 1 Exhibit (a)(3) Notice of Guaranteed Delivery to Tender Shares of Common Stock of HOLOPHANE CORPORATION (NOT TO BE USED FOR SIGNATURE GUARANTEES) As set forth in Section 3 of the Offer to Purchase described below, this instrument or one substantially equivalent hereto must be used to accept the Offer (as defined below) if certificates for Shares (as defined below) are not immediately available or the certificates for Shares and all other required documents cannot be delivered to the Depositary prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase) or if the procedure for delivery by book-entry transfer cannot be completed on a timely basis. This instrument may be delivered by hand or mail or transmitted by facsimile transmission to the Depositary. The Depositary for the Offer is: FIRST CHICAGO TRUST COMPANY OF NEW YORK
By Mail: By Overnight Courier: By Hand: First Chicago Trust Company First Chicago Trust Company First Chicago Trust Company of New York of New York of New York ATTN: Corporate Actions ATTN: Corporate Actions ATTN: Corporate Actions Suite 4660 Suite 4680 c/o Securities Transfer P.O. Box 2569 14 Wall Street and Reporting Services, Inc. Jersey City, NJ 07303-2569 Eighth Floor 100 William Street -- Galleria New York, NY 10005 New York, NY 10038
By Facsimile Transmission (for Eligible Institutions only): Confirm by Telephone: (201) 222-4720 (201) 222-4707 or or (201) 222-4721 (800) 446-2617
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. This form is not to be used to guarantee signatures. If a signature on a Letter of Transmittal is required to be guaranteed by an Eligible Institution under the instructions thereto, such signature guarantee must appear in the applicable space provided in the signature box in the Letter of Transmittal. 2 Ladies and Gentlemen: The undersigned hereby tender(s) to NSI Enterprises, Inc., a Delaware corporation and a wholly owned subsidiary of National Service Industries, Inc., a Delaware corporation, upon the terms and subject to the conditions set forth in the Offer to Purchase dated June 25, 1999 (the "Offer to Purchase"), and in the related Letter of Transmittal (which, as amended from time to time, together constitute the "Offer"), receipt of which is hereby acknowledged, the number of shares of Common Stock, par value $.01 per share (the "Shares"), of Holophane Corporation, a Delaware corporation, pursuant to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. Certificate Nos. (If Available) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Signature(s) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Address(es) Dated: , 1999 - ------------------------------------------------------------------------------- (Check the box below if Shares will be tendered by book-entry transfer through The Depository Trust Company) [ ] Account Number - ------------------------------------------------------------ Name(s) of Record Holders - -------------------------------------------------------------------------------- Please Type or Print - -------------------------------------------------------------------------------- Number of Shares - -------------------------------------------------------------------------------- Address(es) - -------------------------------------------------------------------------------- (Include Zip Code) - -------------------------------------------------------------------------------- Area Code and Telephone Number 3 GUARANTEE (Not to be used for signature guarantee) The undersigned, a firm which is a bank, broker, dealer, credit union, savings association or other entity which is a member in good standing of the Securities Transfer Agents Medallion Program, (a) represents that the above named person(s) "own(s)" the Shares tendered hereby within the meaning of Rule 14e-4 under the Securities Exchange Act of 1934, as amended ("Rule 14e-4"), (b) represents that such tender of Shares complies with Rule 14e-4, and (c) guarantees to deliver to the Depositary either the certificates evidencing all tendered Shares, in proper form for transfer, or to deliver Shares pursuant to the procedure for book-entry transfer into the Depositary's account at The Depository Trust Company (the "Book-Entry Transfer Facility"), in either case together with the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees or an Agent's Message (as defined in the Offer to Purchase) in the case of a book-entry delivery, and any other required documents, all within three New York Stock Exchange trading days after the date hereof. - --------------------------------------------------------------------------------------------- Name of Firm: (Authorized Signature) Address: Name: (Please Type or Print) (Zip Code) Title: Area Code and Tel. No.: Dated: , 1999
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL. EX-99.(A)(4) 5 LETTER 1 Exhibit (a)(4) OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF HOLOPHANE CORPORATION AT $38.50 NET PER SHARE BY NSI ENTERPRISES, INC. A WHOLLY OWNED SUBSIDIARY OF NATIONAL SERVICE INDUSTRIES, INC. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JULY 23, 1999, UNLESS THE OFFER IS EXTENDED. June 25, 1999 To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: We have been appointed by NSI Enterprises, Inc., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of National Service Industries, Inc., a Delaware corporation ("Parent"), to act as Dealer Manager in connection with the Purchaser's offer to purchase for cash all the outstanding shares of Common Stock, par value $.01 per share (the "Shares"), of Holophane Corporation, a Delaware corporation (the "Company"), at a purchase price of $38.50 per Share, net to the seller in cash, less any required withholding taxes and without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated June 25, 1999 (the "Offer to Purchase"), and in the related Letter of Transmittal (which, as amended from time to time, together constitute the "Offer") enclosed herewith. Holders of Shares whose certificates for such Shares (the "Share Certificates") are not immediately available or who cannot deliver their Share Certificates and all other required documents to the Depositary (as defined below) prior to the Expiration Date (as defined in the Offer to Purchase), or who cannot complete the procedures for book-entry transfer on a timely basis, must tender their Shares according to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. Please furnish copies of the enclosed materials to those of your clients for whose accounts you hold Shares registered in your name or in the name of your nominee. Enclosed herewith for your information and forwarding to your clients are copies of the following documents: 1. The Offer to Purchase, dated June 25, 1999. 2. The Letter of Transmittal to tender Shares for your use and for the information of your clients. Facsimile copies of the Letter of Transmittal may be used to tender Shares. 3. The Notice of Guaranteed Delivery for Shares to be used to accept the Offer if Share Certificates are not immediately available or if such certificates and all other required documents cannot be delivered to First Chicago Trust Company of New York (the "Depositary") by the Expiration Date or if the procedure for book-entry transfer cannot be completed by the Expiration Date. 4. The Letter to Stockholders of the Company from the Chairman of the Board, President and Chief Executive Officer of the Company, accompanied by the Company's Solicitation/Recommendation Statement on Schedule 14D-9. 2 5. A printed form of letter which may be sent to your clients for whose accounts you hold Shares registered in your name or in the name of your nominee, with space provided for obtaining such clients' instructions with regard to the Offer. 6. Guidelines of the Internal Revenue Service for Certification of Taxpayer Identification Number on Substitute Form W-9. 7. A return envelope addressed to First Chicago Trust Company of New York, the Depositary. YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JULY 23, 1999, UNLESS THE OFFER IS EXTENDED. In order to take advantage of the Offer, (i) a duly executed and properly completed Letter of Transmittal and any required signature guarantees, or an Agent's Message (as defined in the Offer to Purchase) in connection with a book-entry delivery of Shares, and other required documents should be sent to the Depositary, and (ii) either Share Certificates representing the tendered Shares should be delivered to the Depositary or such Shares should be tendered by book-entry transfer into the Depositary's account maintained at the Book-Entry Transfer Facility (as described in the Offer to Purchase), all in accordance with the instructions set forth in the Letter of Transmittal and the Offer to Purchase. If holders of Shares wish to tender, but it is impracticable for them to forward their Share Certificates or other required documents on or prior to the Expiration Date or to comply with the book-entry transfer procedures on a timely basis, a tender may be effected by following the guaranteed delivery procedures specified in Section 3 of the Offer to Purchase. The Purchaser will not pay any commissions or fees to any broker, dealer or other person (other than the Dealer Manager, the Depositary and D.F. King & Co., Inc. (the "Information Agent") (as described in the Offer to Purchase)) for soliciting tenders of Shares pursuant to the Offer. The Purchaser will, however, upon request, reimburse you for customary clerical and mailing expenses incurred by you in forwarding any of the enclosed materials to your clients. The Purchaser will pay or cause to be paid any stock transfer taxes payable on the transfer of Shares to it, except as otherwise provided in Instruction 6 of the Letter of Transmittal. Any inquiries you may have with respect to the Offer should be addressed to Wasserstein Perella & Co., Inc., as Dealer Manager, or the Information Agent, at their respective addresses and telephone numbers set forth on the back cover of the Offer to Purchase. Additional copies of the enclosed materials may be obtained from the Information Agent. Very truly yours, WASSERSTEIN PERELLA & CO., INC. NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER PERSON THE AGENT OF THE PURCHASER, PARENT, THE DEALER MANAGER, THE COMPANY, THE DEPOSITARY OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN. 2 EX-99.(A)(5) 6 LETTER TO CLIENTS 1 Exhibit (a)(5) Offer to Purchase for Cash All Outstanding Shares of Common Stock of HOLOPHANE CORPORATION at $38.50 Net Per Share by NSI ENTERPRISES, INC. a wholly owned subsidiary of NATIONAL SERVICE INDUSTRIES, INC. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JULY 23, 1999, UNLESS THE OFFER IS EXTENDED. To Our Clients: Enclosed for your consideration is an Offer to Purchase, dated June 25, 1999 (the "Offer to Purchase"), and the related Letter of Transmittal relating to an offer by NSI Enterprises, Inc., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of National Service Industries, Inc., a Delaware corporation ("Parent"), to purchase all of the outstanding shares of Common Stock, par value $.01 per share (the "Shares"), of Holophane Corporation, a Delaware corporation (the "Company"), at a purchase price of $38.50 per Share, net to the seller in cash, less any required withholding taxes and without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase and in the related Letter of Transmittal (which, as amended from time to time, together constitute the "Offer"). We are the holder of record of Shares held by us for your account. A tender of such Shares can be made only by us as the holder of record and pursuant to your instructions. The Letter of Transmittal is furnished to you for your information only and cannot be used by you to tender Shares held by us for your account. We request instructions as to whether you wish to have us tender on your behalf any or all of such Shares held by us for your account, pursuant to the terms and subject to the conditions set forth in the Offer to Purchase. Your attention is directed to the following: 1. The tender price is $38.50 per share, net to the seller in cash, less any required withholding taxes and without interest thereon. 2. The Offer is made for all of the outstanding Shares. 3. The Board of Directors of the Company has determined that the Merger Agreement (as defined below) and the transactions contemplated thereby, including each of the Offer and the Merger (as defined below), are advisable and are fair to and in the best interests of the stockholders of the Company, has approved the Offer and the Merger and recommends that holders of the Shares accept the Offer and tender their Shares to the Purchaser. 4. The Offer is being made pursuant to the Agreement and Plan of Merger, dated as of June 20, 1999 (the "Merger Agreement"), which provides that subsequent to the consummation of the Offer, the Purchaser will merge with and into the Company (the "Merger"). At the effective time of the Merger (the "Effective Time"), each Share outstanding immediately prior to the Effective Time (other than Shares held in the treasury of the Company and Shares, if any, owned by the Purchaser, Parent or any direct or indirect subsidiary of Parent, of the Purchaser or of the Company and other than Shares, if any, held by stockholders who have not voted in favor of the Merger Agreement or consented thereto in writing and have demanded appraisal of such Shares in accordance with the Delaware General Corporation Law) shall be converted into the right to receive $38.50 in cash without interest. 2 5. The Offer and withdrawal rights will expire at 12:00 midnight, New York City time, on Friday, July 23, 1999, unless the Offer is extended. 6. Tendering stockholders will not be obligated to pay brokerage fees or commissions or, except as set forth in Instruction 6 of the Letter of Transmittal, stock transfer taxes on the purchase of Shares pursuant to the Offer. 7. The Offer is conditioned upon, among other things, (i) there being validly tendered and not properly withdrawn at least a majority of the Shares (determined on a fully diluted basis) of the Company and (ii) the expiration or termination of all applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The Offer is being made solely by the Offer to Purchase and the related Letter of Transmittal and is being made to all holders of Shares. The Purchaser is not aware of any State where the making of the Offer is prohibited by administrative or judicial action pursuant to any valid State statute. If the Purchaser becomes aware of any valid State statute prohibiting the making of the Offer or the acceptance of Shares pursuant thereto, the Purchaser will make a good faith effort to comply with any such State statute. If, after such good faith effort, the Purchaser cannot comply with such State statute, the Offer will not be made to nor will tenders be accepted from or on behalf of the holders of Shares in such State. In any jurisdiction where the securities, "blue sky" or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Purchaser by the Dealer Manager or one or more registered brokers or dealers that are licensed under the laws of such jurisdiction. If you wish to have us tender any or all of the Shares held by us for your account, please instruct us by completing, executing and returning to us the instruction form contained in this letter. If you authorize a tender of your Shares, all such Shares will be tendered unless otherwise specified in such instruction form. Your instructions should be forwarded to us in ample time to permit us to submit a tender on your behalf prior to the expiration of the Offer. 2 3 INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF HOLOPHANE CORPORATION The undersigned acknowledge(s) receipt of your letter enclosing the Offer to Purchase dated June 25, 1999 (the "Offer to Purchase"), and the related Letter of Transmittal pursuant to an offer by NSI Enterprises, Inc., a Delaware corporation and a wholly owned subsidiary of National Service Industries, Inc., a Delaware corporation, to purchase all outstanding shares of Common Stock, par value $.01 per share (the "Shares"), of Holophane Corporation, a Delaware corporation. This will instruct you to tender the number of Shares indicated below (or, if no number is indicated below, all Shares) which are held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer to Purchase and in the related Letter of Transmittal furnished to the undersigned. Dated: , 1999 --------------------------- Number of Shares to be Tendered:* ------------------ Shares SIGN HERE - -------------------------------------------------------------------------------- Signature(s) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Please print name(s): - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Address - -------------------------------------------------------------------------------- Area Code and Telephone Number - -------------------------------------------------------------------------------- Tax Identification or Social Security Number * Unless otherwise indicated, it will be assumed that all of your Shares held by us for your account are to be tendered. EX-99.(A)(6) 7 GUIDELINES FOR CERTIFICATION OF TAXPAYER ID NO 1 Exhibit (a)(6) GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER. -- Social Security numbers have nine digits separated by two hyphens: 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: 00-0000000. The table below will help determine the number to give the payer.
- ---------------------------------------------------------- GIVE THE SOCIAL SECURITY FOR THIS TYPE OF ACCOUNT NUMBER OF - ---------------------------------------------------------- 1. An individual's account The individual 2. Two or more individuals The actual owner of the (joint account) account or, if combined funds, the first individual on the account(1) 3. Husband and wife (joint The actual owner of the account) account or, if joint funds, either person(1) 4. Custodian account of a The minor(2) minor (Uniform Gift to Minors Act) 5. Adult and minor (joint The adult, or if the account) minor is the only contributor, the minor(1) 6. Account in the name of The ward, minor, or guardian or committee for a incompetent person(1) designated ward, minor, or incompetent person 7. a. The usual revocable The grantor-trustee(1) savings trust account (grantor is also trustee) b. So-called trust account The actual owner(1) that is not a legal or valid trust under State law 8. Sole proprietorship account The owner(3)
- ---------------------------------------------------------- GIVE THE EMPLOYER IDENTIFICATION FOR THIS TYPE OF ACCOUNT NUMBER OF - ---------------------------------------------------------- 9. A valid estate or pension The legal entity (Do not trust furnish the identifying number of the personal representative or trustee unless the legal entity itself is not designated in the account title.)(4) 10. Corporate account The corporation 11. Religious, charitable or The organization educational organization account 12. Partnership account held in The partnership the name of the partnership 13. Association, club, or other The organization tax-exempt organization 14. A broker or registered The broker or nominee nominee 15. Account with the Department The public entity of Agriculture in the name of a public entity (such as a State or local government, school district or prison) that receives agricultural program payments
- --------------- (1) List first and circle the name of the person whose number you furnish. (2) Circle the minor's name and furnish the minor's social security number. (3) Show the name of the owner. (4) List first and circle the name of the legal trust, estate, or pension trust. Do not furnish the taxpayer identification number of the personal representative or trustee unless the legal entity itself is not designated in the account title. NOTE: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. 2 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 OBTAINING A NUMBER If you do not have a taxpayer identification number or you do not know your number, obtain Form SS-5, Application for a Social Security Number Card (for individuals), or Form SS-4, Application for Employer Identification Number (for business and all other entities), at the local office of the Social Security Administration or the Internal Revenue Service. PAYEES EXEMPT FROM BACKUP WITHHOLDING Payees specifically exempted from backup withholding on ALL payments include the following: - A corporation. - A financial institution. - An organization exempt from tax under section 501 (a), or an individual retirement plan. - The United States or any agency or instrumentality thereof. - A State, the District of Columbia, a possession of the United States, or any subdivision or instrumentality thereof. - A foreign government, a political subdivision of a foreign government, or any agency or instrumentality thereof. - An international organization or any agency, or instrumentality thereof. - A registered dealer in securities or commodities registered in the U.S. or a possession of the U.S. - A real estate investment trust. - A common trust fund operated by a bank under section 584 (a). - An exempt charitable remainder trust, or a non-exempt trust described in section 4947 (a)(1). - An entity registered at all times under the Investment Company Act of 1940. - A foreign central bank of issue. Payments of dividends and patronage dividends not generally subject to backup withholding including the following: - Payments to nonresident aliens subject to withholding under section 1441. - Payments to partnerships not engaged in a trade or business in the U.S. and which have at least one non-resident partner. - Payments of patronage dividends where the amount received is not paid in money. - Payments made by certain foreign organizations. - Payments made to a nominee. Payments of interest not generally subject to backup withholding include the following: - Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not provided your correct taxpayer identification number to the payer. - Payments of tax-exempt interest (including exempt-interest dividends under section 852). - Payments described in section 6049 (b)(5) to non-resident aliens. - Payments on tax-free covenant bonds under section 1451. - Payments made by certain foreign organizations. - Payments made to a nominee. Exempt payees described above should file Form W-9 to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER, ALSO SIGN AND DATE THE FORM. Certain payments other than interest, dividends, and patronage dividends, that are not subject to information reporting are also not subject to backup withholding. For details, see the regulations under sections 6041, 6041A(a), 6045 and 6050A. PRIVACY ACT NOTICE -- Section 6019 requires most recipients of dividend, interest, or other payments to give taxpayer identification numbers to payers who must report the payments to the IRS. The IRS uses the numbers for identification purposes. Payers must be given the numbers whether or not recipients are required to file tax returns. Payers must generally withhold 31% of taxable interest, dividends, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply. PENALTIES (1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER -- If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to a reasonable cause and not to willful neglect. (2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING -- If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500. (3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION -- Falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE. EX-99.(A)(7) 8 FORM OF SUMMARY ADVERTISEMENT 1 Exhibit (a)(7) This announcement is neither an offer to purchase nor a solicitation of an offer to sell Shares (as defined below). The Offer (as defined below) is made solely by the Offer to Purchase dated June 25, 1999 and the related Letter of Transmittal (and any amendments or supplements thereto), and is being made to all holders of Shares. The Purchaser (as defined below) is not aware of any state where the making of the Offer is prohibited by administrative or judicial action pursuant to any valid state statute. If the Purchaser becomes aware of any valid state statute prohibiting the making of the Offer or the acceptance of Shares pursuant thereto, the Purchaser shall make a good faith effort to comply with such statute or seek to have such statute declared inapplicable to the Offer. If, after such good faith effort, the Purchaser cannot comply with such state statute, the Offer will not be made to (nor will tenders be accepted from or on behalf of) holders of Shares in such state. In those jurisdictions where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer is being made on behalf of the Purchaser by Wasserstein Perella & Co., Inc. or one or more registered brokers or dealers licensed under the laws of such jurisdictions. NOTICE OF OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF HOLOPHANE CORPORATION AT $38.50 NET PER SHARE BY NSI ENTERPRISES, INC. A WHOLLY OWNED SUBSIDIARY OF NATIONAL SERVICE INDUSTRIES, INC. NSI Enterprises, Inc., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of National Service Industries, Inc., a Delaware corporation ("Parent"), is offering to purchase all of the outstanding shares of Common Stock, $.01 par value per share (the "Shares"), of Holophane Corporation, a Delaware corporation (the "Company"), at a purchase price of $38.50 per Share, net to the seller in cash, less any required withholding taxes and without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase dated June 25, 1999 (the "Offer to Purchase") and in the related Letter of Transmittal (which, as amended from time to time, together constitute the "Offer"). ---------------------------------------------------------------------- THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JULY 23, 1999, UNLESS THE OFFER IS EXTENDED ---------------------------------------------------------------------- THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED BELOW) AT LEAST A MAJORITY OF THE SHARES (DETERMINED ON A FULLY DILUTED BASIS) OF THE COMPANY (THE "MINIMUM CONDITION") AND (II) THE EXPIRATION OR TERMINATION OF ALL APPLICABLE WAITING PERIODS UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED. The purpose of the Offer is to acquire control of, and the entire equity interest in, the Company. Following the consummation of the Offer, the Purchaser intends to effect the Merger described below. The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of June 20, 1999 (the "Merger Agreement"), among Parent, the Purchaser and the Company. The Merger Agreement provides, among other things, for the making of the Offer by the Purchaser, and further provides that, following the completion of the Offer, upon the terms and subject to the conditions of the Merger Agreement and the Delaware General Corporation Law ("DGCL"), the Purchaser will be merged with and into the Company (the "Merger"), and each Share outstanding immediately prior to the effective time of the Merger (other than Shares held in the treasury of the Company and each Share, if any, owned by Parent, the Purchaser or any other direct or indirect subsidiary of Parent, of the Purchaser or of the Company, which shall be cancelled, and other than Shares, if any, held by stockholders who have not voted in favor of or consented to the Merger and who have perfected their appraisal rights in accordance with the DGCL) will be converted into the right to receive $38.50 in cash, less any required withholding taxes and without interest thereon. The Merger Agreement is more fully described in Section 11 of the Offer to Purchase. THE BOARD OF DIRECTORS OF THE COMPANY (I) HAS UNANIMOUSLY DETERMINED THAT THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING EACH OF THE OFFER AND THE MERGER, ARE ADVISABLE AND ARE FAIR TO AND IN THE BEST INTERESTS OF THE STOCKHOLDERS OF THE COMPANY, (II) HAS APPROVED THE OFFER AND THE MERGER AND (III) RECOMMENDS THAT ALL HOLDERS OF THE SHARES ACCEPT THE OFFER AND TENDER THEIR SHARES TO THE PURCHASER. For purposes of the Offer, the Purchaser will be deemed to have accepted for payment (and thereby purchased) Shares validly tendered and not properly withdrawn, if and when the Purchaser gives oral or written notice to First Chicago Trust Company of New York (the "Depositary") of the Purchaser's acceptance for payment of such Shares pursuant to the Offer. Upon the terms and subject to the conditions of the Offer, payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the purchase price therefor with the Depositary, which will act as agent for tendering stockholders for the purpose of receiving payments from the Purchaser and transmitting such payments to stockholders whose Shares have been accepted for payment. Under no circumstances will interest on the purchase price for Shares be paid by the Purchaser, regardless of any extension of the Offer or any delay in making such payment. In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates for such Shares (the "Share Certificates") or timely confirmation of a book-entry transfer of such Shares into the Depositary's account at The Depositary Trust Company (the "Book-Entry Transfer Facility") pursuant to the procedures set forth in Section 3 of the Offer to Purchase, (ii) the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message (as defined in Section 2 of the Offer to Purchase) in connection with a book-entry transfer, and (iii) any other documents required by the Letter of Transmittal. Subject to the applicable rules and regulations of the Securities and Exchange Commission (the "Commission"), the Purchaser expressly reserves the right to waive the Minimum Condition or any of the other conditions to the Offer described in Section 15 of the Offer to Purchase, to increase the price per Share payable in the Offer and to make any other change in the terms or conditions of the Offer, provided that (i) the Purchaser shall not waive the Minimum Condition without the consent of the Board of Directors of the Company and (ii) without the consent of the Board of Directors of the Company, the Purchaser shall not make any change in the terms or conditions of the Offer which (A) changes the form of consideration to be paid, (B) decreases the price per Share payable in the Offer, (C) reduces the maximum number of Shares to be purchased in the Offer, (D) imposes conditions to the Offer in addition to those set forth in the Merger Agreement, (E) extends the Expiration Date (except as required by law or the applicable rules and regulations of the Commission) or (F) amends any term of the Offer in any manner adverse to holders of Shares; provided that the Purchaser shall have the right, in its sole discretion, to extend the Offer on up to two separate occasions for up to five business days each, notwithstanding the prior satisfaction of conditions set forth in the Merger Agreement, in order to attempt to satisfy the Minimum Condition or to satisfy the requirements of Section 253 of the DGCL. Any extension, delay, termination, waiver or amendment will be followed as promptly as practicable by public announcement to be made no later than 9:00 A.M., New York City time, on the next business day after the previously scheduled Expiration Date. During any such extension all Shares previously tendered and not properly withdrawn will remain subject to the Offer, subject to the rights of a tendering stockholder to withdraw such stockholder's Shares. The term "Expiration Date" means 12:00 Midnight, New York City time, on Friday, July 23, 1999 unless and until the Purchaser, (subject to the terms and conditions of the Merger Agreement), shall have extended the period during which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date at which the Offer, as so extended by the Purchaser, shall expire. Tenders of Shares made pursuant to the Offer are irrevocable, except that Shares tendered pursuant to the Offer may be withdrawn at any time on or prior to the Expiration Date and, unless theretofore accepted for payment by the Purchaser pursuant to the Offer, may also be withdrawn at any time after Monday, August 23, 1999. For a withdrawal to be effective, a written, telegraphic, telex or facsimile transmission note of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of the Offer to Purchase. Any notice of withdrawal must specify the name of the person who tendered such Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder, if different from that of the person who tendered such Shares. If Share Certificates to be withdrawn have been delivered or otherwise identified to the Depositary, then prior to the physical release of such certificates, the serial numbers shown on such certificates must be submitted to the Depositary and the signature(s) on the notice of withdrawal must be guaranteed by an Eligible Institution (as defined in Section 3 of the Offer to Purchase) unless such Shares have been tendered for the account of an Eligible Institution. If Shares have been tendered pursuant to the procedure for book-entry transfer as set forth in Section 3 of the Offer to Purchase, any notice of withdrawal must specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares, in which case a notice of withdrawal will be effective if delivered to the Depositary by any method of delivery described in the second sentence of this paragraph. All questions as to the form and validity (including time of receipt) of any notice of withdrawal will be determined by the Purchaser, in its sole discretion, whose determination will be final and binding. The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, is contained in the Offer to Purchase and is incorporated herein by reference. The Company has provided the Purchaser with the Company's stockholder list and security position listings for the purpose of disseminating the Offer to holders of Shares. The Offer to Purchase and the related Letter of Transmittal and other relevant materials will be mailed by the Purchaser to record holders of Shares and furnished to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the stockholder list or, if applicable, who are listed as participants in a clearing agency's security position listing for subsequent transmittal to beneficial owners of Shares. THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. Questions and requests for assistance may be directed to the Dealer Manager or the Information Agent as set forth below. Requests for copies of the Offer to Purchase and the related Letter of Transmittal and all other tender offer materials may be directed to the Information Agent or the Dealer Manager, and copies will be furnished promptly at the Purchaser's expense. The Purchaser will not pay any fees or commissions to any broker or dealer or any other person (other than the Dealer Manager and the Information Agent) for soliciting tenders of Shares pursuant to the Offer. The Information Agent for the Offer is: D.F. KING & CO., INC. 77 Water Street New York, New York 10005 Banks and Brokers Call Collect (212) 259-5550 All Others Call Toll Free (800) 207-3155 The Dealer Manager for the Offer is: WASSERSTEIN PERELLA & CO., INC. 31 West 52nd Street New York, NY 10019 Call Collect (212) 969-2700 June 25, 1999 EX-99.(A)(8) 9 FORM OF PRESS RELEASE 1 Exhibit (a)(8) Monday June 21, 6:01 am Eastern Time Company Press Release SOURCE: National Service Industries, Inc. NSI to Acquire Holophane Corporation for $38.50 Per Share in Cash Strategic Acquisition Extends NSI's Position in North American Lighting Equipment Business ATLANTA and COLUMBUS, Ohio, June 21 /PRNewswire/ -- National Service Industries (NYSE: NSI - news) and Holophane Corporation (NYSE: HLP - news) today announced they have signed a definitive agreement under which NSI will acquire Holophane for $38.50 per share in cash, or a total of approximately $450 million. The transaction has been approved by the boards of directors of both companies and is expected to be completed in the fourth quarter of NSI's fiscal 1999. "Holophane is an excellent business with complementary products and customers that make it an ideal strategic fit with Lithonia Lighting," said James S. Balloun, NSI's chairman, president, and chief executive officer. The combination will increase the scale and capabilities of NSI's lighting equipment segment. With annual revenues of more than $1.1 billion, NSI's Lithonia Lighting is currently the largest company in the highly fragmented North American lighting equipment business. Holophane, with 1998 sales of $215 million, has a strong presence in outdoor and industrial lighting equipment. This acquisition will give NSI the leadership position in these growth segments. Holophane brings to NSI a widely recognized brand, an innovative product development program, significant manufacturing expertise, and a 225-person factory sales force that is unique in the lighting equipment industry. Holophane will also expand NSI's international lighting presence with more than $40 million in non-U.S. sales. NSI will commence a cash tender offer for all of Holophane's outstanding common shares by June 25, 1999. The transaction is subject to antitrust clearance, a majority of Holophane's shares being 2 tendered in the offer, and customary closing conditions. NSI will initially finance the transaction with short-term debt. NSI plans to manage this debt and its operating cash flow in a way that returns the company to its targeted 30-40% debt-to-capital ratio before the end of fiscal year 2001. NSI expects to achieve annual cost synergies of approximately $13 million by 2002 and to accelerate its lighting revenue growth as a result of sharing capabilities between the companies. On a reported earnings basis, the acquisition is expected to be dilutive by approximately $.13 per share in the first fiscal year after closing and accretive by approximately $.13 per share in the second year and approximately $.25-$.30 per share in the third year. Further synergies and cost savings are expected beyond 2002. "In such a fragmented market, the combined strengths of Lithonia and Holophane will create a real powerhouse, second to none," continued Balloun. "Holophane has built a strong reputation and widely recognized brand by providing high-quality, reliable, and energy-efficient products. Lithonia will also benefit from Holophane's product development expertise, especially in the area of optical design, and its superb factory sales force, which is unusually effective in understanding application requirements for its products and identifying value-added solutions for its customers. All in all, Holophane's vertically integrated manufacturing operations, strong market position in industrial and outdoor lighting, extensive business with utilities and energy service companies, and international capabilities will strengthen NSI's leadership position in the lighting equipment business. At the same time, Holophane can benefit from Lithonia's strengths, including extensive sales and marketing capabilities, a broad product line, and recognized expertise in information systems. This acquisition demonstrates our commitment to delivering long-term value to our shareholders." Said John R. DallePezze, chairman, president, and chief executive officer of Holophane Corporation, "We are very pleased with this transaction, which provides a full and fair price for Holophane shareholders while affording our employees the opportunity to become part of a larger, more diversified organization. I look forward to assisting in what I am sure will be a smooth transition." Holophane's board has recommended that Holophane shareholders tender their shares. 3 NSI expects to realize the planned $13 million in cost synergies through reductions in raw materials, components, and overhead. NSI has established a post-acquisition team headed by John K. Morgan, executive vice president of Lithonia, who will become general manager of Holophane. The post-acquisition team, which will be comprised of senior executives of both companies, will oversee the steps necessary to bring Holophane into NSI's lighting segment and implement cost-saving and revenue-enhancement synergies. The work is expected to be completed by the end of fiscal year 2000. Wasserstein Perella & Co. served as financial advisor to NSI in this transaction and will be dealer-manager for the tender offer. Salomon Smith Barney served as financial advisor to Holophane in this transaction. Holophane Corporation is a leading international manufacturer and marketer of premium quality, highly engineered lighting fixtures and systems for a wide range of industrial, commercial, and outdoor applications. National Service Industries, Inc., with fiscal year 1998 sales of $2.0 billion, has four business segments -- lighting equipment, chemicals, textile rental, and envelopes. NSI has reported increased income and earnings per share in 35 of the last 37 years. Dividends have been increased for 37 consecutive years and paid for the past 63 years without a decrease. Certain information contained in this press release is forward-looking information based on current expectations and plans that involve risks and uncertainties. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. Statements herein that may be considered forward looking include: (a) statements made regarding the effect of the Holophane acquisition on NSI's current business, growth expectations, and market position; (b) statements made regarding the effect from Holophane's operations on earnings per share; (c) statements made regarding the expectation of sales and cost synergies resulting from the Holophane acquisition; (d) statements made concerning targeted debt-to-capital ratios; and (e) statements made concerning the process of bringing Holophane into the NSI organization. The following factors, in addition to those discussed in the company's Annual Report on Form 10-K for the year ended August 31, 1998 and subsequent securities filings, could cause results to differ materially from management's expectations 4 as suggested by such forward-looking information: (a) the uncertainty of general business and economic conditions, particularly the potential for a slowdown in non-residential construction awards; (b) unforeseen competitive reactions to the acquisition; and (c) loss of key sales and management personnel due to the acquisition. EX-99.(B)(2) 10 COMMITTMENT LETTER REGARDING $250M CREDIT FACILITY 1 Exhibit (b)(2) June 18, 1999 National Service Industries, Inc. 1420 Peachtree Street, NE Atlanta, Georgia 30309-3002 Attn: Chester J. Popkowski Vice President, Treasurer RE: COMMITMENT LETTER Gentlemen/Ladies: National Service Industries, Inc., (the "Borrower"), has requested a credit facility (the "Facility") in the aggregate principal amount of $250,000,000 (the "Aggregate Commitment"). The First National Bank of Chicago is pleased to offer to act as Syndication Agent (the "Syndication Agent") under the Facility and to commit to make loans to the Borrower in the amount of up to $125,000,000 (the "Syndication Agent Commitment") as part of the Facility and Banc One Capital Markets, Inc. ("BOCM") is pleased to offer to act as arranger (the "Arranger"), all on the terms and subject to the conditions set forth herein and in the term sheet attached hereto (the "Term Sheet"). As Arranger, BOCM will use its best efforts to form a syndicate of lenders (collectively, including the Syndication Agent in its capacity as a lender, the "Lenders") to provide the additional commitments required to complete the Facility. In the event that commitments in excess of the Aggregate Commitment are received, the Arranger reserves the right to reduce the Syndication Agent Commitment and to allocate commitments among the Lenders. The Arranger, in consultation with the Borrower, will manage all aspects of the syndication, including, without limitation, the timing of all offers to potential Lenders, the acceptance of commitments and the amounts accepted. The Borrower agrees to participate actively in the preparation of an information package regarding the operations and prospects of the Borrower and the presentation of the information to prospective Lenders. The obligation of the Syndication Agent and the other Lenders to make loans under the Facility is subject to the following: (i) the preparation, execution and delivery of a credit agreement ("Credit Agreement") and other loan documents (collectively, together with the Credit Agreement the "Loan Documents") mutually acceptable to the Borrower and the Lenders incorporating, without limitation, substantially the terms and conditions outlined herein and in the Term Sheet; (ii) receipt of commitments from other Lenders on the terms and conditions of the attached Term Sheet for the balance of the Aggregate Commitment; (iii) the Syndication Agent's determination that there is no material adverse change in the business, condition (financial or otherwise), operations, performance, properties or prospects of the Borrower or any of its subsidiaries from February 28, 1999; and (iv) the absence of any material adverse change prior to closing in primary and secondary loan syndication markets or capital markets generally. 2 COMMITMENT LETTER JUNE 18, 1999 PAGE 2 The Syndication Agent and the other Lenders have not had the opportunity to complete their due diligence review, inspection and evaluation of the assets and liabilities of the Borrower and its subsidiaries and their respective financial condition and prospects. The Lenders' obligation to make loans under the Facility is subject to their satisfaction with the foregoing and their satisfaction with such other due diligence investigation as may be necessary for the Lenders' credit evaluation. The Borrower hereby agrees to reimburse the Syndication Agent and the Arranger for all out-of-pocket expenses (including the reasonable fees, time charges and expenses of attorneys for the Syndication Agent and the Arranger, which attorneys may be employees of the Syndication Agent or the Arranger) incurred in connection with the preparation, negotiation, execution, syndication and enforcement of this commitment letter, the Term Sheet, any fee letter delivered with the commitment, the Loan Documents and any other documentation contemplated hereby or thereby. The Borrower hereby further agrees to indemnify and hold harmless the Syndication Agent, the Arranger, the Lenders, and their respective officers, employees, Syndication Agents and directors (each an "indemnified party") against any and all losses, claims, damages, costs, expenses (including the reasonable fees, time charges and expenses of attorneys for the indemnified parties, which attorneys may be employees of the indemnified parties) or liabilities of every kind whatsoever (collectively, the "Indemnified Obligations") to which each of the indemnified parties may become subject in connection in any way with the transaction which is the subject of this commitment letter, including, without limitation, expenses incurred in connection with investigating or defending against any liability or action (whether or not such indemnified party is a party thereto), except that the Borrower shall not be liable for any Indemnified Obligations of any indemnified party to the extent any of the foregoing resulted from such indemnified party's gross negligence or willful misconduct. Neither the Arranger, the Syndication Agent nor any other Lender shall be liable under this commitment letter or any Loan Document or in respect of any act, omission or event relating to the transaction contemplated hereby or thereby, on any theory of liability, for any special, indirect, consequential or punitive damages. The Borrower's obligations under the immediately preceding paragraph shall continue and are and shall remain absolute obligations of the Borrower, unless and until superseded by the indemnity provisions of definitive Loan Documents, whether or not Loan Documents are executed or any loan is made by the Lenders or any conditions of lending are met. The obligations of the Arranger, the Syndication Agent and the other Lenders under this commitment letter shall be enforceable solely by the Borrower and may not be relied upon by any other person. This commitment letter, the Term Sheet and any fee letter delivered with the commitment are for the Borrower's confidential use only and may not be disclosed by it to any person other than its employees, attorneys and financial advisors (but not commercial lenders), and then only in connection with the proposed transaction and on a confidential basis, except where (in the Borrower's judgment) disclosure is required by law or where the Syndication Agent or the Arranger consents to the proposed disclosure, which consent shall not be unreasonably withheld. Officers, directors, employees and agents of each of the Arranger and the Syndication Agent shall at all times have the right to share information received from the Borrower and its affiliates and their respective officers, directors, employees and agents. The Syndication Agent reserves the right to assign some or all of its rights and delegate some or all of its responsibilities hereunder to one of its affiliates. This commitment letter and the Term Sheet supersede any and all prior versions hereof or thereof. This commitment letter may only be amended by a writing signed by all parties hereto. Please indicate the Borrower's acceptance of the commitment herein contained in the space indicated below and return a copy of this commitment letter so executed to the Arranger. By its acceptance hereof, the Borrower agrees to pay the Syndication Agent and the Arranger the fees described in the Term Sheet and any fee letter delivered therewith. This commitment will expire at 5 p.m. on the fifth business day following the date hereof (where a "Business Day" is a day other than a Saturday or Sunday when banks are generally open 3 COMMITMENT LETTER JUNE 18, 1999 PAGE 3 in Chicago), unless on or prior to such time the Arranger shall have received a copy of this commitment letter executed by the Borrower, together with any required fee. Notwithstanding timely acceptance of this commitment letter pursuant to the preceding sentence, the commitment herein contained will automatically terminate unless definitive Loan Documents are executed on or before July 30, 1999. IF THIS COMMITMENT LETTER, THE TERM SHEET, ANY FEE LETTER, OR ANY ACT, OMISSION OR EVENT HEREUNDER OR THEREUNDER BECOMES THE SUBJECT OF A DISPUTE, THE BORROWER, THE SYNDICATION AGENT AND THE ARRANGER EACH HEREBY WAIVE TRIAL BY JURY. THIS COMMITMENT LETTER SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS. Sincerely, THE FIRST NATIONAL BANK OF CHICAGO, individually and as Syndication Agent By: /s/ David T. McNeela --------------------------------- Title: Vice President ------------------------------- BANC ONE CAPITAL MARKETS, INC., as Arranger By: /s/ Nancy Dugan --------------------------------- Title: Director ------------------------------- ACCEPTED AND AGREED TO: /s/ Brock A. Hattox - ----------------------------------------- NATIONAL SERVICE INDUSTRIES, INC. By: Brock A. Hattox -------------------------------------- Title: Executive Vice President, CFO ----------------------------------- 4 NATIONAL SERVICE INDUSTRIES, INC. TERM SHEET June 18, 1999 This Term Sheet is delivered with a commitment letter of even date herewith (the "Commitment Letter") from The First National Bank of Chicago ("First Chicago") and Banc One Capital Markets, Inc. ("BOCM") to the Borrower. Capitalized terms used herein and not otherwise defined herein shall have the meanings attributed to such terms in the Commitment Letter. - -------------------------------------------------------------------------------- GENERAL TERMS BORROWER: National Service Industries, Inc., a Delaware corporation ("NSI") and domestic subsidiaries of NSI designated in writing by NSI prior to execution of the Credit Agreement (collectively, the "Borrower"). SYNDICATION AGENT: First Chicago (the "Syndication Agent"). ADMINISTRATIVE AGENT: Wachovia Bank (the "Administrative Agent", and with First Chicago, the "Agents") LEAD ARRANGER AND BOOK RUNNER: BOCM (the "Arranger") CO-LEAD ARRANGER: Wachovia Capital Markets (the "Co-Lead Arranger"). LENDERS: A group of lenders selected by the Borrower in consultation with the Arranger (collectively, together with the Agents in their capacity as lenders, the "Lenders"). DOCUMENTATION: The Facility will be evidenced by a credit agreement (the "Credit Agreement"), notes and other legal documentation (collectively, together with the Credit Agreement, the "Loan Documents") mutually satisfactory to the Borrower and the Lenders, with terms similar to the Borrower's existing credit agreement dated as of July 23, 1996, as amended (the "Existing Agreement"). 5 SYNDICATION MANAGEMENT: The Arranger, in consultation with the Borrower, will manage all aspects of the syndication including, without limitation, the timing of offers to potential Lenders, the amounts offered to potential Lenders, the acceptance of commitments, and the compensation provided. Without limiting the foregoing, upon the Arranger's acceptance of any such commitment from a Lender, each Agent shall be relieved of its commitment to fund a pro rata share of such amount. The Arranger shall, in its sole discretion, allocate the commitments received from the Lenders. FACILITY TYPE: 364-day revolving credit facility (the "Facility") in a maximum amount of up to $250,000,000 (the "Aggregate Commitment"). PURPOSE: For commercial paper backup and other general corporate purposes. MATURITY: Final maturity shall be 364 days from the Closing Date (as hereinafter defined), with an option to extend the Facility for additional 364-day periods with the consent of the Lenders. If any Lender (a "Non-Extending Lender") does not consent to the Borrower's request to extend the Facility for an additional 364-day period, the Borrower shall have the right to require the Non-Extending Lender to assign its commitment and loans to another financial institution, subject to the assignment provisions of the Credit Agreement. INTEREST RATES RATE OPTIONS: At the Borrower's option, all as defined in the Borrower's Existing Agreement: -Base Rate -Eurodollar plus the Applicable Margin as set forth in the Pricing Schedule attached hereto. -Money Market Rate The Credit Agreement will include customary provisions (a) protecting the Lenders against increased costs or loss of yield resulting from changes in reserve, tax, capital adequacy and other requirements of law and (b) indemnifying the Lenders for breakage costs incurred in connection with among other things, any prepayment of an Eurodollar loan on a day other than the last day of an interest period Page 2 6 with respect thereto. After maturity or default, the interest rate will be equal to the Base Rate plus 2% per annum. PROVISIONS RELATING TO INTEREST RATES: Similar to the Existing Agreement. FEES FACILITY FEE: A facility fee equal to the per annum percentage identified as the applicable Facility Fee in the Pricing Schedule attached hereto multiplied by the Aggregate Commitment, payable to the Administrative Agent for the ratable benefit of the Lenders on the date of execution of the Credit Agreement (the "Closing Date") and quarterly in arrears. UTILIZATION FEE: For any quarter in which the average daily utilization of the Facility exceeds $62,500,000 (25% of the Aggregate Commitment), a utilization fee equal to the per annum percentage identified as the applicable Utilization Fee in the Pricing Schedule attached hereto multiplied by the average daily utilization of the Facility, payable to the Administrative Agent for the ratable benefit of the Lenders quarterly in arrears from the Closing Date until termination of the Facility. SYNDICATION AGENT AND ARRANGER FEES: Such additional fees payable to the Syndication Agent and the Arranger as are specified in the fee letter dated June 18, 1999 among the Syndication Agent, the Arranger and the Borrower. ADMINISTRATIVE AGENT FEE: Such additional fees payable to the Administrative Agent specified in the fee letter dated June 18, 1999 among the Administrative Agent and the Borrower. PREPAYMENTS AND COMMITMENT REDUCTIONS VOLUNTARY COMMITMENT REDUCTIONS: Similar to the Existing Agreement Page 3 7 VOLUNTARY PREPAYMENTS: Similar to the Existing Agreement CREDIT SUPPORT GUARANTIES: Similar to Existing Agreement CONDITIONS PRECEDENT CONDITIONS TO EACH LOAN: The Credit Agreement will contain customary conditions to each loan (including absence of default or unmatured default, absence of material litigation and lack of material adverse change from the Borrower's financial condition and operations as reflected in the Borrower's consolidated financial statements as of February 28, 1999 as previously delivered to the Syndication Agent). CONDITIONS TO INITIAL LOAN: Additional conditions precedent to initial loan will include, without limitation: (i) the delivery of satisfactory loan and other closing documents, including but not limited to the Credit Agreement, appropriate resolutions, good standing certificates, incumbency certificates and opinions of counsel, and (ii) the delivery of written information reasonably satisfactory to the Agent and the Lenders regarding the Borrower's plan for addressing Year 2000 issues and (iv) a compliance certificate from the chief financial officer of the Borrower. REPRESENTATIONS AND WARRANTIES, COVENANTS AND DEFAULTS REPRESENTATIONS AND WARRANTIES: The Credit Agreement will contain customary representations and warranties to be made as of the Closing Date and in connection with each loan similar to representations and warranties contained in the Existing Agreement, plus a reasonably required representation regarding Year 2000 issues. COVENANTS: The Credit Agreement will contain customary covenants similar to the covenants contained in the Existing Agreement, plus reasonably required Year 2000 compliance, and furnishing of quarterly and annual financial statements, quarterly compliance certificates and other financial information. The Credit Agreement will also contain customary restrictive covenants similar to the restrictive covenants contained in the Existing Agreement. Page 4 8 FINANCIAL COVENANTS: The Credit Agreement will contain certain financial covenants, similar to the financial covenants contained in the Existing Agreement, including, a covenant pertaining to the following: -leverage ratio DEFAULTS: The Credit Agreement will contain customary events of default similar to the events of default contained in the Existing Agreement OTHER PROVISIONS ASSIGNMENTS AND PARTICIPATIONS: Each Lender may, in its sole discretion, sell participations in the loans and in its commitment. Additionally, each of the Lenders will have the right to sell assignments (and the Borrower shall release the assignor Lender for the amount so assigned). The consent of the Borrower and the Administrative Agent shall be required for an assignee which is not a Lender or an affiliate thereof (such consent not to be unreasonably withheld or delayed); provided, however, that if a default has occurred and is continuing, the consent of the Borrower shall not be required. Each such assignment shall be in an amount not less than the lesser of (i) $10,000,000 or (ii) the remaining amount of the assigning Lender's commitment (calculated as at the date of such assignment). An assignment fee of $3,000 will be payable to the Administrative Agent for each assignment. Each Lender may disclose information to prospective participants and assignees. REQUIRED LENDERS: 51% (Similar to Existing Agreement) GOVERNING LAW: This Term Sheet and any related commitment letters and fee letters are governed by the internal laws of the State of Georgia. EXPENSES: The expenses of the Agents and the Arranger, whether incurred prior to or subsequent to closing, in investigation, preparation, negotiation, documentation, syndication, administration and collection will be for the account of the Borrower, including expenses of and fees for attorneys for the Agents and the Arranger (who may or may not be employees of the Agents or the Arranger) and other advisors and professionals engaged by either the Agents or the Arranger. * * * This Term Sheet is intended as an outline only and does not purport to summarize all the conditions, covenants, representations, warranties and other provisions which would be contained in definitive legal documentation for the financing Page 5 9 contemplated hereby. Any commitment of the Syndication Agent and Administrative Agent and the other Lenders is subject to negotiation and execution of definitive Loan Documents in form and substance satisfactory to the Lenders and their respective counsel. Page 6 10 PRICING SCHEDULE
LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V STATUS STATUS STATUS STATUS STATUS Eurodollar margin 20.5 bps 32 bps 40 bps 47.5 bps 64 bps Utilization Fee 10 bps 10 bps 15 bps 15 bps 20 bps (usage >25%) Facility Fee 7 bps 8 bps 10 bps 12.5 bps 16 bps
For the purposes of this Schedule, the following terms have the following meanings, subject to the final paragraph of this Schedule: RATING-BASED PRICING Pricing levels will be tied to the higher of the Company's senior unsecured ratings from Moody's or Standard & Poors. In the event of a differential of two or more levels between the rating agencies, the rating one below the higher rating will be used to determine the pricing level. "Level I Status" exists at any date if, on such date, the Borrower's Moody's Rating is A2 or better the Borrower's S&P Rating is A or better. "Level II Status" exists at any date if, on such date, (i) the Borrower has not qualified for Level I Status and (ii) the Borrower's Moody's Rating is A3 or better or the Borrower's S&P Rating is A- or better. "Level III Status" exists at any date if, on such date, (i) the Borrower has not qualified for Level I Status or Level II Status and (ii) the Borrower's Moody's Rating is Baa1 or better or the Borrower's S&P Rating is BBB+ or better. "Level IV Status" exists at any date if, on such date, (i) the Borrower has not qualified for Level I Status or Level II Status or Level III Status and (ii) the Borrower's Moody's Rating is Baa2 or better or the Borrower's S&P Rating is BBB or better. Page 7 11 "Level V Status" exists at any date if, on such date, the Borrower has not qualified for Level I Status, Level II Status, Level III Status, Level IV or Level V Status. "Moody's Rating" means, at any time, the rating issued by Moody's Investors Service, Inc. and then in effect with respect to the Borrower's senior unsecured long-term debt securities without third-party credit enhancement. "S&P Rating" means, at any time, the rating issued by Standard and Poor's Rating Services, a division of The McGraw Hill Companies, Inc., and then in effect with respect to the Borrower's senior unsecured long-term debt securities without third-party credit enhancement. "Status" means Level I Status, Level II Status, Level III Status or Level IV Status. The Applicable Margin and Applicable Fee Rate shall be determined in accordance with the foregoing table based on the Borrower's Status as determined from its then-current Moody's and S&P Ratings. The credit rating in effect on any date for the purposes of this Schedule is that in effect at the close of business on such date. If at any time the Borrower has no Moody's Rating or no S&P Rating, Level V Status shall exist. Page 8 EX-99.(B)(3) 11 COMMITTMENT LETTER REGARDING $250M CREDIT FACILITY 1 Exhibit (b)(3) June 18, 1999 Mr. Chester J. Popkowski Vice President, Treasurer National Service Industries, Inc. NSI Center 1420 Peachtree Street, NE Atlanta, GA 30309-3002 Dear Chet, Re: $250 Million, 364-day Credit Facility Reference is made to our numerous telephone conversations in recent days and BOCM's Term Sheet, attached. Wachovia Bank is pleased to advise a commitment to join BOCM/First Chicago with a $125 million underwriting of the Facility. As is customary, our commitment is subject to satisfactory documentation. We would appreciate your acknowledging acceptance of our commitment by signing and returning a copy of this letter to my attention by Friday, June 25, 1999. We appreciate the opportunity to play a significant role in this transaction and look forward to working with you. Sincerely, /s/ Thomas L. Gleason - --------------------- Thomas L. Gleason Senior Vice President Accepted - National Service Industries, Inc. /s/ Brock A. Hattox ------------------------------------------- Signature/Date EX-99.(C)(1) 12 AGREEMENT & PLAN OF MERGER 1 Exhibit (C)(1) AGREEMENT AND PLAN OF MERGER dated as of June 20, 1999 among HOLOPHANE CORPORATION NATIONAL SERVICE INDUSTRIES, INC. and NSI ENTERPRISES, INC. 2 TABLE OF CONTENTS -----------------
PAGE ---- ARTICLE I - THE OFFER.............................................................................................1 SECTION 1.01. The Offer.......................................................................................1 SECTION 1.02. Company Action..................................................................................2 ARTICLE II - THE MERGER...........................................................................................3 SECTION 2.01. The Merger......................................................................................3 SECTION 2.02. Conversion of Shares............................................................................4 SECTION 2.03. Surrender and Payment...........................................................................4 SECTION 2.04. Dissenting Shares...............................................................................5 SECTION 2.05. Stock Options...................................................................................5 ARTICLE III - THE SURVIVING CORPORATION...........................................................................6 SECTION 3.01. Certificate of Incorporation....................................................................6 SECTION 3.02. Bylaws..........................................................................................6 SECTION 3.03. Directors and Officers..........................................................................6 ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................................................6 SECTION 4.01. Corporate Existence and Power...................................................................6 SECTION 4.02. Corporate Authorization.........................................................................7 SECTION 4.03. Governmental Authorization......................................................................7 SECTION 4.04. Non-Contravention...............................................................................7 SECTION 4.05. Capitalization..................................................................................8 SECTION 4.06. Subsidiaries....................................................................................8 SECTION 4.07. SEC Filings.....................................................................................9 SECTION 4.08. Financial Statements............................................................................9 SECTION 4.09. No Material Undisclosed Liabilities.............................................................9 SECTION 4.10. Absence of Certain Changes......................................................................9 SECTION 4.11. Litigation.....................................................................................10 SECTION 4.12. Employee Benefit Plans.........................................................................10 SECTION 4.13. Taxes..........................................................................................12 SECTION 4.14. Title to Properties; Encumbrances..............................................................13 SECTION 4.15. Environmental Laws.............................................................................13 SECTION 4.16. Intellectual Property..........................................................................14 SECTION 4.17. Year 2000 Compliance...........................................................................14 SECTION 4.18. Labor Matters..................................................................................15 SECTION 4.19. Employment Matters.............................................................................15 SECTION 4.20. Compliance with Laws...........................................................................16 SECTION 4.21. Contracts......................................................................................16
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SECTION 4.22. Insurance.....................................................................................16 SECTION 4.23. Transactions with Affiliates..................................................................16 SECTION 4.24. Finders'Fees..................................................................................16 SECTION 4.25. Confidentiality Agreements....................................................................17 ARTICLE V - REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER..........................................................................................17 SECTION 5.01. Corporate Existence and Power..................................................................17 SECTION 5.02. Corporate Authorization........................................................................17 SECTION 5.03. Governmental Authorization.....................................................................17 SECTION 5.04. Non-Contravention..............................................................................17 SECTION 5.05. Finders'Fees...................................................................................18 SECTION 5.06. Financing......................................................................................18 ARTICLE VI - COVENANTS OF THE COMPANY............................................................................18 SECTION 6.01. Conduct of the Company.........................................................................18 SECTION 6.02. Stockholder Meeting; Proxy Material............................................................20 SECTION 6.03. Disclosure Documents...........................................................................21 SECTION 6.04. Access to Information..........................................................................22 SECTION 6.05. Other Offers...................................................................................22 SECTION 6.06. Company Board Representation; Section 14(f)....................................................23 ARTICLE VII - COVENANTS OF PARENT AND PURCHASER..................................................................24 SECTION 7.01. Confidentiality................................................................................24 SECTION 7.02. Obligations of Purchaser.......................................................................24 SECTION 7.03. Disclosure Documents...........................................................................24 SECTION 7.04. Employee Matters...............................................................................25 ARTICLE VIII - COVENANTS OF PARENT, PURCHASER AND THE COMPANY....................................................26 SECTION 8.01. Reasonable Efforts.............................................................................26 SECTION 8.02. Certain Filings................................................................................26 SECTION 8.03. Public Announcements...........................................................................27 SECTION 8.04. Further Assurances.............................................................................27 SECTION 8.05. Notices of Certain Events......................................................................27 SECTION 8.06. Directors'and Officers'Indemnification and Insurance...........................................28 ARTICLE IX - CONDITIONS TO THE MERGER............................................................................29 SECTION 9.01. Conditions to the Obligations of Each Party....................................................29
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ARTICLE X - TERMINATION..........................................................................................30 SECTION 10.01. Termination...................................................................................30 SECTION 10.02. Effect of Termination.........................................................................31 SECTION 10.03. Fees and Expenses.............................................................................32 ARTICLE XI - MISCELLANEOUS.......................................................................................32 SECTION 11.01. Definitions...................................................................................32 SECTION 11.02. Notices.......................................................................................37 SECTION 11.03. Survival of Representations and Warranties....................................................38 SECTION 11.04. Amendments; No Waivers........................................................................38 SECTION 11.05. Successors and Assigns........................................................................38 SECTION 11.06. Governing Law.................................................................................39 SECTION 11.07. Severability..................................................................................39 SECTION 11.08. Counterparts; Effectiveness...................................................................39 Annex I - Conditions to the Offer
iii 5 AGREEMENT AND PLAN OF MERGER AGREEMENT AND PLAN OF MERGER dated as of June 20, 1999 among HOLOPHANE CORPORATION, a Delaware corporation (the "Company"), NATIONAL SERVICE INDUSTRIES, INC., a Delaware corporation ("Parent"), and NSI ENTERPRISES, INC., a Delaware corporation and a wholly owned subsidiary of Parent ("Purchaser"). WHEREAS, the respective Boards of Directors of the Company, Parent and Purchaser have determined that the merger of Purchaser with and into the Company (the "Merger"), upon the terms and subject to the conditions set forth in this Agreement, would be advisable and in the best interests of their respective stockholders, and have approved the Merger, pursuant to which each Share issued and outstanding immediately prior to the Effective Time, will, except as otherwise provided herein, be converted into the right to receive $38.50 per Share in cash; WHEREAS, the Board of Directors of the Company has resolved to recommend that the holders of such Shares accept the Offer and approve this Agreement and, to the extent required by Delaware Law, the Merger and the consummation of the transactions contemplated hereby upon the terms and subject to the conditions set forth herein; WHEREAS, in furtherance thereof, the Boards of Directors of Parent, Purchaser and the Company have approved this Agreement, the Offer and the Merger in accordance with Delaware Law and upon the terms and subject to the conditions set forth herein; WHEREAS, the Company, Parent and Purchaser desire to make certain representations, warranties, covenants and agreements in connection with the Offer and the Merger. NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements set forth herein, intending to be legally bound hereby, the parties hereto agree as follows: ARTICLE I THE OFFER SECTION 1.01. The Offer. (a) Provided that this Agreement shall not have been terminated in accordance with Section 10.01 and that none of the events set forth in Annex I hereto shall have occurred and are existing, Purchaser shall, as promptly as practicable after the date hereof, but in no event later than five business days following the public announcement of the terms of this Agreement, commence an offer (the "Offer") to purchase any and all of the outstanding shares of common stock, $.01 par value (the "Shares"), of the Company at a price of $38.50 per Share, net to the seller in cash, less any required withholding taxes. The Offer shall be subject to the condition that at least a majority of the Shares (on a fully diluted basis) shall have been validly tendered in accordance with the terms of the Offer prior to the expiration date of the Offer and not withdrawn (the "Minimum Tender Condition") and to the other conditions set forth 6 in Annex I hereto. Purchaser expressly reserves the right to waive the Minimum Tender Condition or any of the other conditions to the Offer, to increase the price per Share payable in the Offer and to make any other change in the terms or conditions of the Offer; provided that (i) the Purchaser shall not waive the Minimum Tender Condition without the consent of the Board of Directors of the Company and (ii) without the consent of the Board of Directors of the Company, the Purchaser shall not make any change in the terms or conditions of the Offer which (A) changes the form of consideration to be paid or (B) decreases the price per Share payable in the Offer or (C) reduces the maximum number of Shares to be purchased in the Offer or (D) imposes conditions to the Offer in addition to those set forth in Annex I hereto or (E) extends the expiration date of the Offer (except as required by law or the applicable rules and regulations of the SEC) or (F) amends any term of the Offer in any manner adverse to holders of Shares; provided that Purchaser shall have the right, in its sole discretion, to extend the Offer on up to two separate occasions for up to five business days each, notwithstanding the prior satisfaction of conditions set forth on Annex I hereto, in order to attempt to satisfy the Minimum Tender Condition or to satisfy the requirements of Section 253 of the Delaware General Corporation Law. (b) Promptly upon commencement of the Offer, Parent and the Purchaser shall file the Offer Documents with the SEC. Parent, the Purchaser and the 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 been found to be or become false or misleading in any material respect. Parent and the Purchaser 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, in each case as and to the extent required by applicable federal securities laws. The Company and its counsel shall be given an opportunity to review and comment on the Schedule 14D-l prior to the filing thereof with the SEC. Parent and the Purchaser shall provide the Company and its counsel a copy of any written comments or telephonic notification of any oral comments Parent or the Purchaser may receive from the SEC or its staff with respect to the Offer Documents promptly after the receipt thereof and shall provide the Company and its respective counsel with a copy of any written responses thereto and telephonic notification of any oral responses thereto of Parent or the Purchaser or their counsel. SECTION 1.02. Company Action. (a) The Company hereby consents to the Offer and represents that its Board of Directors, at a meeting duly called and held, has (i) determined that this Agreement and the transactions contemplated hereby, including the Offer and the Merger, are fair to and in the best interest of the Company's stockholders; (ii) approved this Agreement and the transactions contemplated hereby, including the Offer and the Merger; and (iii) resolved to recommend acceptance of the Offer and approval and adoption of this Agreement and the Merger by its stockholders. The Company further represents that the Company's financial adviser has delivered to the Company's Board of Directors its opinion to the effect that, as of the date of this Agreement, the consideration to be received in the Offer and the Merger by the holders of Shares (other than Parent, Purchaser or any Affiliate thereof) is fair, from a financial point of view, to such holders. The Company has been authorized by its financial advisor to permit, subject to prior review and consent by such financial advisor (such consent not to be unreasonably withheld), the inclusion of such opinion (or a reference thereto) in the Offer Documents. The Company hereby 2 7 consents to the inclusion in the Offer Documents of the recommendation of the Company's Board of Directors described in this Section 1.02. The Company will promptly furnish Parent and Purchaser with a list of its stockholders, mailing labels and any available listing or computer file containing the names and addresses of all record holders of Shares and lists of securities positions of Shares held in stock depositories, in each case true and correct in all material respects as of the most recent practicable date, and will provide to Parent and Purchaser such additional information (including, without limitation, updated lists of stockholders, mailing labels and lists of securities positions) and such other assistance as Parent and Purchaser may reasonably request, from time to time in connection with the Offer. (b) Promptly upon commencement of the Offer, the Company will file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9") which shall reflect the recommendations of the Company's Board of Directors referred to above. The Company, Parent and Purchaser each agree promptly to correct any information provided by it for use in the Schedule 14D-9 if and to the extent that it shall have been found to be or become false or misleading in any material respect. The Company agrees to take all steps reasonably necessary to cause the Schedule 14D-9 as so corrected to be filed with the SEC and to be disseminated to holders of Shares, other than the Purchaser, Parent and Parent's other subsidiaries, in each case as and to the extent required by applicable federal securities laws. Parent and Purchaser and their counsel shall be given an opportunity to review and comment on the Schedule 14D-9 prior to its being filed with the SEC. ARTICLE II THE MERGER SECTION 2.01. The Merger. (a) Subject to the terms and conditions of this Agreement and in accordance with Delaware Law, at the Effective Time, the Purchaser shall be merged with and into the Company, whereupon the separate existence of Purchaser shall cease, and the Company shall be the surviving corporation (the "Surviving Corporation"). (b) As soon as practicable after satisfaction or, to the extent permitted hereunder, waiver of all conditions to the Merger, the Company and Purchaser will file a certificate of merger or, as appropriate, a certificate of ownership and merger (either, a "Certificate of Merger") with the Secretary of State of the State of Delaware and make all other filings or recordings required by Delaware Law in connection with the Merger. The Merger shall become effective at such time as the certificate of merger is duly filed with the Secretary of State of the State of Delaware or at such later time as is specified in the certificate of merger (the "Effective Time"). (c) From and after the Effective Time, the Surviving Corporation shall possess all the rights, privileges, powers and franchises and be subject to all of the restrictions, disabilities and duties of the Company and Purchaser, all as provided under Delaware Law. 3 8 SECTION 2.02. Conversion of Shares. At the Effective Time: (a) each Share held by the Company as treasury stock or owned by the Company, Purchaser, Parent or any of such parties' direct or indirect subsidiaries immediately prior to the Effective Time shall be cancelled, and no payment shall be made with respect thereto; (b) each issued and outstanding share of common stock of Purchaser outstanding immediately prior to the Effective Time shall be converted into and become that number of shares of common stock of the Surviving Corporation that equals the number of shares of common stock of the Company issued and outstanding immediately prior to the Effective Time divided by the number of shares of common stock of Purchaser issued and outstanding immediately prior to the Effective Time; and (c) each Share outstanding immediately prior to the Effective Time shall, except as otherwise provided in Section 2.02(a) or as provided in Section 2.04 with respect to Dissenting Shares (as defined herein), be converted into the right to receive $38.50 in cash, without interest (the "Merger Consideration"). SECTION 2.03. Surrender and Payment. (a) Prior to the Effective Time, Parent shall appoint an agent who shall be reasonably acceptable to the Company (the "Exchange Agent") for the purpose of exchanging certificates representing Shares for the Merger Consideration. Promptly, when and as needed, Parent will make available to the Exchange Agent the Merger Consideration to be paid in respect of the Shares. Promptly after the Effective Time, Parent will send, or will cause the Exchange Agent to send, to each holder of Shares at the Effective Time a letter of transmittal for use in such exchange (which shall specify that the delivery shall be effected, and risk of loss and title shall pass, only upon proper delivery of the certificates representing Shares to the Exchange Agent). (b) Each holder of Shares that have been converted into a right to receive the Merger Consideration, upon surrender to the Exchange Agent of a certificate or certificates representing such Shares, together with a properly completed letter of transmittal covering such Shares, will be entitled to receive the Merger Consideration payable in respect of such Shares, less any required withholding taxes. Until so surrendered, each such certificate shall, after the Effective Time, represent for all purposes only the right to receive such Merger Consideration. (c) If any portion of the Merger Consideration is to be paid to a Person other than the registered holder of the Shares represented by the certificate or certificates surrendered in exchange therefor, it shall be a condition to such payment that the certificate or certificates so surrendered shall be properly endorsed or otherwise be in proper form for transfer and that the Person requesting such payment shall pay to the Exchange Agent any transfer or other taxes required as a result of such payment to a Person other than the registered holder of such Shares or establish to the satisfaction of the Exchange Agent that such tax has been paid or is not payable. (d) After the Effective Time, there shall be no further registration of transfers of Shares. If, after the Effective Time, certificates representing Shares are presented to the Surviving 4 9 Corporation, they shall be cancelled and exchanged for the consideration provided for, and in accordance with the procedures set forth, in this Article II. (e) Any portion of the Merger Consideration made available to the Exchange Agent pursuant to Section 2.03(a) that remains unclaimed by the holders of Shares six months after the Effective Time shall be returned to Parent, upon demand, and any such holder who has not exchanged his Shares for the Merger Consideration in accordance with this Section prior to that time shall thereafter look only to Parent for payment of the Merger Consideration in respect of his Shares. Notwithstanding the foregoing, Parent shall not be liable to any holder of Shares for any amount paid to a public official pursuant to applicable abandoned property laws. (f) Any portion of the Merger Consideration made available to the Exchange Agent pursuant to Section 2.03(a) to pay for Dissenting Shares for which appraisal rights have been perfected shall be returned to Parent, upon demand. SECTION 2.04. Dissenting Shares. Notwithstanding Section 2.02, Shares outstanding immediately prior to the Effective Time and held by a holder who has not voted in favor of the Merger or consented thereto in writing and who has demanded appraisal for such Shares in accordance with Delaware Law ("Dissenting Shares") shall not be converted into a right to receive the Merger Consideration, unless such holder fails to perfect or withdraws or otherwise loses his right to appraisal. If after the Effective Time such holder fails to perfect or withdraws or loses his right to appraisal, such Shares shall be treated as if they had been converted as of the Effective Time into a right to receive the Merger Consideration. The Surviving Corporation shall give Parent prompt notice of any demands received by the Company for appraisal of Shares, and Parent shall have the right to participate in all negotiations and proceedings with respect to such demands. The Surviving Corporation shall not, except with the prior written consent of Parent, make any payment with respect to, or settle or offer to settle, any such demands. SECTION 2.05. Stock Options. As soon as practicable following the date of this Agreement, upon the written request of the Purchaser, the Company (or, if appropriate, any committee administering any stock option or compensation plan or arrangement) and the Purchaser shall take such actions as are reasonably required (including, if necessary, the provision of funds by the Purchaser to the Company) to provide that at the Effective Time, each holder of a then outstanding stock option and/or right to purchase Shares granted under any stock option or compensation plan or arrangement of the Company (a "Company Stock Option"), whether or not then exercisable, shall, upon surrender thereof to the Company or its designee, receive from the Company the difference between the Merger Consideration and the exercise price per Share for the Shares covered by such Company Stock Option, net of any applicable tax withholding. Subject to the terms and conditions set forth herein, the Company and such committee shall further take all actions necessary to cause each Company Stock Option to be canceled at the Effective Time by virtue of the Merger and to cause the stock option or compensation plan or arrangements of the Company providing for the granting of Company Stock Options ("Option Plans") to terminate as of the Effective Time and the provisions in any other plan, program or arrangement providing for the issuance or grant by the Company or any of its Subsidiaries of any interest in respect of the capital stock of the Company or any of such Subsidiaries to be 5 10 terminated as of the Effective Time. Without limiting the generality of the foregoing, the Company and such committee shall have given all requisite notices under all Option Plans and any agreements with respect to any Company Stock Option, accelerated the vesting of Company Stock Options and given holders thereof the requisite opportunity to exercise as is required, in each case, such that following the Effective Time no holder of Options or any participant in the Option Plans or any other such plans, programs or arrangements shall have the right thereunder to acquire any equity securities of the Company or any of its Subsidiaries. The holders of Company Stock Options shall be entitled to enforce this Section 2.05 against the Company, the Surviving Corporation and the Purchaser. ARTICLE III THE SURVIVING CORPORATION SECTION 3.01. Certificate of Incorporation. Subject to Section 8.06 hereof, the certificate of incorporation of the Company in effect at the Effective Time shall be the certificate of incorporation of the Surviving Corporation until amended in accordance with applicable law. SECTION 3.02. Bylaws. Subject to Section 8.06 hereof, the bylaws of Purchaser in effect at the Effective Time shall be the bylaws of the Surviving Corporation until amended in accordance with applicable law. SECTION 3.03. Directors and Officers. From and after the Effective Time, until successors are duly elected or appointed and qualified in accordance with applicable law, (i) the directors of Purchaser at the Effective Time shall be the directors of the Surviving Corporation, and (ii) the officers of the Company at the Effective Time shall be the officers of the Surviving Corporation. If at the Effective Time, a vacancy shall exist on the Board of Directors of the Company or in any office of the Surviving Corporation, such vacancy may thereafter be filled in the manner provided by applicable law. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY Except as set forth in the disclosure schedule prepared and signed by the Company and delivered to Purchaser simultaneously with the execution hereof (the "Disclosure Schedule"), the Company represents and warrants to Parent and Purchaser that, as of the date hereof (or, if made as of a specified date, as of such date): SECTION 4.01. Corporate Existence and Power. (a) The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware, and has all requisite corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted. The Company is duly 6 11 qualified to do business as a foreign corporation and is in good standing in each jurisdiction where the character of the property owned or leased by it or the nature of its activities makes such qualification necessary, except for those jurisdictions where the failure to be so qualified would not, individually or in the aggregate, have or be reasonably likely to have a Material Adverse Effect. (b) The Company has heretofore made available to Parent and Purchaser true and complete copies of the Company's certificate of incorporation and bylaws as currently in effect. Such certificate of incorporation and bylaws are in full force and effect, and no other organizational documents are applicable or binding on the Company. The Company is not in violation in any material respect of any of the provisions of its certificate of incorporation or bylaws. SECTION 4.02. Corporate Authorization. The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby are within the Company's corporate powers and, except for any required approval by the Company's stockholders in connection with the consummation of the Merger, have been duly authorized by all necessary corporate action. This Agreement has been duly and validly executed and delivered by the Company and constitutes a valid and binding agreement of the Company. The Board of Directors of the Company has expressly approved this Agreement (including as it may be amended from time to time) with the purpose of rendering inapplicable hereto and to the Offer and the Merger the limitation on business combinations contained in Section 203 of Delaware Law. SECTION 4.03. Governmental Authorization. The execution, delivery and performance by the Company of this Agreement and the consummation of the Merger by the Company require no action by or in respect of, or filing with, any Governmental Entity other than (i) the filing of the Certificate of Merger in accordance with Delaware Law, (ii) the applicable requirements of the HSR Act and (iii) compliance with any applicable requirements of the Securities Act and the Exchange Act and the rules and regulations promulgated thereunder. SECTION 4.04. Non-Contravention. Except as set forth in Section 4.04 of the Disclosure Schedule and without giving effect to any change in the form of the Merger as permitted by Section 8.07, the execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby do not and will not (i) contravene or conflict with the certificate of incorporation or bylaws of the Company or any of its Subsidiaries, (ii) assuming compliance with the matters referred to in Section 4.03, contravene or conflict with or constitute a violation of any provision of any law, regulation, judgment, injunction, order or decree binding upon or applicable to the Company or any of its Subsidiaries, (iii) constitute a default under or give rise to a right of termination, cancellation or acceleration of any right or obligation of the Company or any of its Subsidiaries or to a loss of any benefit to which the Company or any of its Subsidiaries is entitled under any provision of any agreement, contract or other instrument binding upon the Company or any of its Subsidiaries or any license, franchise, permit or other similar authorization held by the Company or any of its Subsidiaries, or (iv) result in the creation or imposition of any Lien on any asset of 7 12 the Company or any of its Subsidiaries, except, in the case of clauses (ii), (iii) and (iv), for such exceptions which would not, individually or in the aggregate, have or be reasonably likely to have a Material Adverse Effect. SECTION 4.05. Capitalization. The authorized capital stock of the Company consists of one million (1,000,000) shares of preferred stock, par value $.01 per share (the "Preferred Stock"), and twenty million (20,000,000) shares of Common Stock, par value $.01 per share. As of June 15, 1999, there were (a) no shares of Preferred Stock and 10,564,265 shares of Common Stock outstanding (excluding 1,331,595 shares of Common Stock held in treasury), (b) outstanding Company Stock Options to purchase an aggregate of 1,432,330 Shares (of which Company Stock Options to purchase an aggregate of 914,430 Shares were exercisable), (c) up to 69,000 Shares issuable under the Company's Employee Stock Option (Purchase) Plan, (d) up to 9,000 Shares issuable under the Company's Performance Award Plan and (e) up to 154,590 Shares issuable pursuant to Section 2.02 of the MetalOptics Stock Purchase Agreement. All outstanding shares of capital stock of the Company have been duly authorized and validly issued and are fully paid and nonassessable and were issued free of any preemptive or similar rights. Except as set forth in this Section 4.05, and except for changes since June 15, 1999 resulting from the exercise of Company Stock Options outstanding on such date, there are outstanding (i) no shares of capital stock or other voting securities of the Company, (ii) no securities of the Company convertible into or exchangeable for shares of capital stock or voting securities of the Company, and (iii) no options or other rights to acquire from the Company, and no obligation of the Company to issue, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of the Company (the items in clauses (i), (ii) and (iii) being referred to collectively as the "Company Securities"). There are no outstanding obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any Company Securities. SECTION 4.06. Subsidiaries. (a) Each Subsidiary of the Company is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted and is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where the character of the property owned or leased by it or the nature of its activities makes such qualification necessary, except for those jurisdictions where failure to be so qualified would not, individually or in the aggregate, have a Material Adverse Effect. All of the Company's Subsidiaries and their respective jurisdictions of incorporation are identified in Exhibit 21 to the Company's annual report on Form 10-K for the fiscal year ended December 31, 1998 . (b) All of the outstanding capital stock of, or other ownership interests in, each of the Company's Subsidiaries, is, unless otherwise required by applicable law, owned by the Company, directly or indirectly, free and clear of any Lien and free of any other limitation or restriction (including any restriction on the right to vote, sell or otherwise dispose of such capital stock or other ownership interests). There are no outstanding (i) securities of the Company or any of its Subsidiaries convertible into or exchangeable for shares of capital stock or other voting securities or ownership interests in any Subsidiary, and (ii) options or other rights to acquire from the 8 13 Company or any of its Subsidiaries, and no other obligation of the Company or any of its Subsidiaries to issue, any capital stock, voting securities or other ownership interests in, or any securities convertible into or exchangeable for any capital stock, voting securities or ownership interests in, any Subsidiary (the items in clauses (i) and (ii) being referred to collectively as the "Subsidiary Securities"). There are no outstanding obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any outstanding Subsidiary Securities. SECTION 4.07. SEC Filings. (a) The Company has filed with the SEC and made available to Parent and Purchaser (i) the annual reports on Form 10-K for its fiscal years ended December 31, 1998, 1997 and 1996 and its quarterly report on Form l0-Q for its fiscal quarter ended March 31, 1999 (the income statements, balance sheets and other financial statements, and the notes thereto, included in such filings being referred to herein as the "Financial Statements"), (ii) its proxy or information statements relating to meetings of, or actions taken without a meeting by, the stockholders of the Company held since January 1, 1996 and (iii) all other reports, statements, schedules and registration statements required to be filed with the SEC since January 1, 1996. (b) As of its filing date, each such report, statement or schedule filed with the SEC did not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. SECTION 4.08. Financial Statements. The Financial Statements fairly present, in all material respects, in conformity with GAAP (except as may be indicated in the notes thereto), the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and their consolidated results of operations and changes in financial position for the periods then ended (subject to normal year-end adjustments and the absence of notes thereto in the case of any unaudited interim Financial Statements). SECTION 4.09. No Material Undisclosed Liabilities. Except (a) as disclosed in the Financial Statements or the other documents referred to in Section 4.07 or in the Company SEC Documents and (b) liabilities incurred in connection with the Offer or the Merger which, to the extent they have been incurred or were known prior to the date hereof, are disclosed in Section 4.09 of the Disclosure Schedule, neither the Company nor any of its Subsidiaries has any liabilities or obligations of any nature, whether or not accrued, contingent or otherwise, that have, or would be reasonably likely to have, a Material Adverse Effect. SECTION 4.10. Absence of Certain Changes. Since the Balance Sheet Date, except as disclosed in the Company SEC Documents filed prior to the date hereof or as disclosed in Section 4.10 of the Disclosure Schedule, the Company and each Subsidiary has conducted its respective business only in the ordinary and usual course, and there has not occurred (i) any event or change having or reasonably likely to have a Material Adverse Effect; (ii) any material change by the Company in its accounting methods, principles or practices; (iii) any revaluation by the Company of any of its material assets; (iv) any declaration, setting aside or payment of any dividends or distributions in respect of the Shares; (v) any increase in or establishment of any bonus, insurance, 9 14 severance, defined compensation, pension, retirement, profit sharing, stock option (including the granting of stock options, stock appreciation rights, performance awards or restricted stock awards), stock purchase or other employee benefit plan or agreement or arrangement, or any other increase in the compensation payable or to become payable to any present or former directors, officers or employees of the Company or any of its Subsidiaries, other than merit or equity increases in the ordinary course of business consistent with past practice with respect to employees who are not directors or officers of the Company or any of its Subsidiaries; or (vi) any other action which, if it had been taken after the date hereof, would have required the consent of Parent under Section 6.01 hereof. SECTION 4.11. Litigation. Except as disclosed in Section 4.11 of the Disclosure Schedule, as of the date hereof, there is no action, suit, inquiry, proceeding or investigation by or before any court or governmental or other regulatory or administrative agency or commission pending or, to the knowledge of the Company, threatened against or involving the Company or any of its Subsidiaries which, if determined or resolved adversely to the Company or such Subsidiary, would be reasonably likely to have a Material Adverse Effect. Except as disclosed in Section 4.11 of the Disclosure Schedule, neither the Company nor any of its Subsidiaries is subject to any material judgment, order or decree. SECTION 4.12. Employee Benefit Plans. (a) Section 4.12(a) of the Disclosure Schedule contains a true and complete list of each deferred compensation and each incentive compensation, stock purchase, stock option and other equity compensation plan, program, agreement or arrangement (the "Company Stock Plans"); each severance or termination pay, medical, surgical, hospitalization, life insurance and other "welfare" plan, fund or program (within the meaning of Section 3(1) of the ERISA); each profit-sharing, stock bonus or other "pension" plan, fund or program (within the meaning of Section 3(2) of ERISA); each employment, termination or severance agreement; and each other employee benefit plan, fund, program, agreement or arrangement, in each case, that is sponsored, maintained or contributed to or required to be contributed to by the Company or by any ERISA Affiliate, or to which the Company or an ERISA Affiliate is party, whether written or oral, for the benefit of any employee or former employee of the Company or any Subsidiary (each, a "Plan"). Neither the Company, any Subsidiary nor any ERISA Affiliate has any commitment or formal plan or announced intention to create, any additional employee benefit plan or modify or change any existing Plan that would affect any employee or former employee of the Company or any Subsidiary, except for modifications or changes contemplated herein or required by law as a condition of obtaining or retaining the Company's intended ERISA, tax, securities or accounting treatment with respect to such Plan. (b) The Company has heretofore delivered to Parent true and complete copies of each Plan currently in effect and any and all amendments thereto (or if a Plan is not a written Plan, a description thereof), any related trust or other funding vehicle, any reports or summaries required under ERISA or the Code and the most recent determination letter received from the Internal Revenue Service with respect to each Plan intended to qualify under Section 401 of the Code. (c) No liability under Title IV or Section 302 of ERISA has been incurred by the Company or any ERISA Affiliate that has not been satisfied in full, and no condition exists 10 15 that presents a material risk to the Company or any ERISA Affiliate of incurring any such liability, other than liability for premiums due the PBGC (which premiums have been paid when due). Insofar as the representation made in this Section 4.12(c) applies to Sections 4064, 4069 or 4204 of Title IV of ERISA, it is made with respect to any employee benefit plan, program, agreement or arrangement subject to Title IV of ERISA to which the Company or any ERISA Affiliate made, or was required to make, contributions during the five year period ending on the last day of the most recent plan year ended prior to the Closing Date and any part of a plan year ending on the Closing Date. (d) The PBGC has not instituted proceedings to terminate any Title IV Plan and no condition exists that presents a material risk that such proceedings will be instituted. (e) With respect to each Title IV Plan, the present value of accrued benefits under such plan, based upon the actuarial assumptions used for funding purposes in the most recent actuarial report prepared by such plan's actuary with respect to such plan, did not exceed, as of its latest valuation date, the then current value of the assets of such plan allocable to such accrued benefits. Except as set forth in Section 4.12(e) of the Disclosure Schedule, the fair market value of the assets of each other Plan as of the end of its most recent plan year at least equaled it liabilities or, as for a Plan which is unfunded, its liabilities are shown on the Financial Statements. (f) No Title IV Plan or any trust established thereunder has incurred any "accumulated funding deficiency" (as defined in Section 302 of ERISA and Section 412 of the Code), whether or not waived, as of the last day of the most recent fiscal year of each Title IV Plan ended prior to the Closing Date. All contributions required to be made with respect to any Plan on or prior to the Closing Date have been timely made. (g) No Title IV Plan is a "multi-employer pension plan," as defined in Section 3(37) of ERISA, nor is any Title IV Plan a plan described in Section 4063(a) of ERISA. Neither the Company nor any ERISA Affiliate has made or suffered a "complete withdrawal" or a "partial withdrawal," as such terms are respectively defined in Sections 4203 and 4205 of ERISA (or any liability resulting therefrom has been satisfied in full). (h) Neither the Company or any Subsidiary, any Plan, any trust created thereunder, nor any trustee or administrator thereof has engaged in a transaction in connection with which the Company or any Subsidiary, any Plan, any such trust, or any trustee or administrator thereof, or any party dealing with any Plan or any such trust could reasonably be expected to be subject to either a civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a tax imposed pursuant to Section 4975 or 4976 of the Code. (i) Each Plan has been operated and administered in all material respects in accordance with its terms and applicable law, including, but not limited to, ERISA and the Code, except where the failure to so operate or administer such Plan would not be reasonably likely to have a Material Adverse Effect. (j) Each Plan intended to be "qualified" within the meaning of Section 401(a) of the Code is so qualified, and the trusts maintained thereunder are exempt from taxation under Section 501(a) of the Code. Each Plan intended to satisfy the requirements of Section 501(c)(9) has satisfied such requirements. 11 16 (k) No Plan provides medical, surgical, hospitalization, death or similar benefits (whether or not insured) for employees or former employees of the Company or any Subsidiary for periods extending beyond their retirement or other termination of service, other than (i) coverage mandated by applicable law, (ii) death benefits under any "pension plan," or (iii) benefits the full cost of which is borne by the current or former employee (or his beneficiary). (l) Except as set forth in Section 4.12(l) of the Disclosure Schedule, no amounts payable under the Plans will fail to be deductible for federal income tax purposes by virtue of Section 280G of the Code. (m) Except as set forth in Section 4.12(m) of the Disclosure Schedule or as expressly provided in this Agreement, the consummation of the Merger will not, either alone or in combination with another event, (i) entitle any current or former employee or officer of the Company or any ERISA Affiliate to severance pay, unemployment compensation or any other payment or (ii) accelerate the time of payment or vesting, or increase the amount of compensation due any such employee or officer. (n) There are no pending or, to the knowledge of the Company, threatened claims by or on behalf of any Plan, by any employee or beneficiary covered under any such Plan, or otherwise involving any such Plan (other than routine claims for benefits). SECTION 4.13 Taxes. (a) The Company and its Subsidiaries (and any consolidated, combined, unitary or aggregate group for tax purposes of which the Company or any of its Subsidiaries is a member) timely filed (or have had timely filed on their behalf) with the appropriate Tax Authorities all material Tax Returns required to be filed by Company and its Subsidiaries and such Tax Returns are true, correct, and complete in all material respects; (b) The Company and its Subsidiaries have paid, or where payment is not yet due, have established (or have had established on their behalf and for their sole benefit and recourse) an adequate accrual in accordance with GAAP for the payment of, all Taxes (as hereinafter defined) for all periods ending through the Closing Date; (c) There are no material Liens for Taxes upon any property or assets of the Company or any of its Subsidiaries, except for Liens for Taxes not yet due or being contested in good faith and for which adequate reserves have been established in accordance with GAAP; (d) Except as set forth in Section 4.13(d) of the Disclosure Schedule, no federal, state, local or foreign audits, investigations, claims or other administrative proceedings ("Audits") are presently pending with regard to any material Taxes or material Tax Returns of the Company or any of its Subsidiaries, and to the knowledge of the Company, no Audit is threatened. 12 17 SECTION 4.14. Title to Properties; Encumbrances. Each of the Company and its Subsidiaries has good, valid and marketable title to all the material properties and assets which it purports to own (real, personal and mixed, tangible and intangible), including, without limitation, all the properties and assets reflected in the Balance Sheet (except for property disposed of since the Balance Sheet Date in the ordinary course of business and consistent with past practice), and all the material properties and assets purchased by the Company and the Company Subsidiaries since the Balance Sheet Date, which subsequently acquired material properties and assets (other than inventory and short term investments) are listed in Section 4.14 of the Disclosure Schedule. All properties and assets reflected in the Balance Sheet are free and clear of all Liens except, with respect to all such properties and assets, (a) Liens shown on the Balance Sheet and Liens incurred in connection with the purchase of such property and/or assets, if such purchase was effected after the date of the Balance Sheet, with respect to which no default exists; (b) Liens which do not materially detract from the value or impair the use of the property subject thereto, or materially impair the operations of the Company or any of its Subsidiaries; and (c) Liens for current Taxes not yet due. SECTION 4.15. Environmental Laws. Except as disclosed in the Company SEC Documents filed prior to the date hereof, (a) the Company and each of its Subsidiaries are, and within the period of all applicable statutes of limitations have been, in compliance with all Environmental Laws, including, but not limited to, compliance with any permits or other governmental authorizations or any Governmental Entity decrees, orders or judgments or the terms and conditions thereof except where the failure to so comply would not be reasonably likely to have a Material Adverse Effect or otherwise require disclosure in the Company SEC Documents; (b) neither the Company nor any of its Subsidiaries has received any communication or notice, whether from a Governmental Entity or otherwise, alleging any violation of or noncompliance with any Environmental Laws by the Company or any of its Subsidiaries or for which the any of them is responsible, and there is no pending or, to the Company's knowledge, threatened Environmental Claim, except where such Environmental Claim would not be reasonably likely to have a Material Adverse Effect or otherwise require disclosure in the Company SEC Documents; and (c) to the Company's knowledge, there are no past or present facts or circumstances that could form the basis of any Environmental Claim against the Company or any of its Subsidiaries or against any person or entity whose liability for any Environmental Claim the Company or any of its Subsidiaries has retained or assumed either contractually or by operation of law, except where such Environmental Claim, if made, would not be reasonably likely to have a Material Adverse Effect or otherwise require disclosure in the Company SEC Documents. All material permits and other governmental authorizations currently held or required to be held by the Company and its Subsidiaries pursuant to any Environmental Laws are identified in Section 4.15 of the Disclosure Schedule. The Company has provided to Parent all material assessments, reports, data, results of investigations or audits, correspondence and other information that is in the possession of the Company regarding environmental matters pertaining to, or the environmental condition of the business, property or assets of, the Company and its Subsidiaries, or the compliance (or noncompliance) by the Company or any of its Subsidiaries with any Environmental Laws. 13 18 SECTION 4.16. Intellectual Property. (a) The Company owns or has the right to use all the Company's Intellectual Property, free and clear of all Liens, except where the failure to own or possess such Intellectual Property would not be reasonably likely to have a Material Adverse Effect. The Company or one of its Subsidiaries is listed in the records of the appropriate United States, state or foreign agency as the sole owner of record for all material applications, registrations or patents included in the Company's Intellectual Property, and all of the foregoing are listed on Section 4.16(a) of the Disclosure Schedule and are validly subsisting. (b) Section 4.16(b) of the Disclosure Schedule sets forth a list of all license agreements under which the Company or any of its Subsidiaries has granted the right to use the Company's Intellectual Property or received the right to use any Intellectual Property of any third party. (c) Except as set forth in Section 4.16(c) of the Disclosure Schedule, no person has a right to receive a royalty or similar payment in respect of any item of the Intellectual Property pursuant to any contractual arrangements entered into by the Company or otherwise. To the knowledge of the Company, no former or present employees, officers or directors of the Company hold any right, title or interest, directly or indirectly, in whole or in part, in or to any of the Company's Intellectual Property. (d) To the knowledge of the Company, the conduct of the business of the Company does not materially violate or infringe upon any Intellectual Property right of any third party, and there is no pending or threatened opposition, interference, re-examination, cancellation, claim of invalidity or other legal or governmental proceeding in any jurisdiction involving any of the Company's Intellectual Property. There are no claims or suits pending or, to the knowledge of the Company, threatened, and the Company has received no written notice of any claim or suit (i) alleging that the conduct of the Company's business infringes upon or constitutes the unauthorized use of the proprietary rights of any third party or (ii) challenging the ownership, use, validity or enforceability of the Company's Intellectual Property which, if adversely determined, would be reasonably likely to have a Material Adverse Effect. Except as set forth in Section 4.16(d) of the Disclosure Schedule, to the knowledge of the Company, none of the Intellectual Property of the Company is being violated or infringed upon by any third party. There are no settlements, consents, judgments, orders or other agreements which restrict the Company's rights to use any of its Intellectual Property. SECTION 4.17. Year 2000 Compliance. Except as set forth in Section 4.17 of the Disclosure Schedule, the Company has taken commercially reasonable steps to ensure that all Date Data and Date-Sensitive Systems of the Company and its Subsidiaries will be Year 2000 Compliant by December 31, 1999. Except as set forth in Section 4.17 of the Disclosure Schedule, all statements made by the Company since January 1, 1997 in the Company SEC Documents concerning the Year 2000 Compliant status of its Date Data and Date-Sensitive Systems did not contain a material misstatement of fact or omit to state a material fact necessary to be stated therein in order to make the statements therein, in light of the circumstances under which they were made, not misleading. As used herein: (i) "Date Data" means any data of any type that includes date information or which is otherwise derived from, dependent on or related to date 14 19 information, (ii) "Date-Sensitive System" means any software, microcode or hardware system or component, including any electronic or electronically controlled system or component, that processes any Date Data and that is installed, in development or on order by the Company or any of its Subsidiaries for its internal use, or which the Company or any of its Subsidiaries sells, leases, licenses, assigns or otherwise provides, or the provision or operation of which the Company or any of its Subsidiaries provides the benefit, to its customers, vendors, suppliers, affiliates or any other third party, and (iii) "Year 2000 Compliant" means (A) with respect to Date Data, that such data is in proper format and accurate for all dates in the twentieth and twenty-first centuries, and (B) with respect to Date-Sensitive Systems, that each such system accurately processes all Date Data, including for the twentieth and twenty-first centuries, without loss of any functionality, including but not limited to calculating, comparing, sequencing, storing and displaying such Date Data (including all leap year considerations), when used as a stand-alone system or in combination with other software or hardware. SECTION 4.18. Labor Matters. Section 4.18 of the Disclosure Schedule sets forth each collective bargaining or similar agreement between the Company or any of its Subsidiaries with any labor organization or employee association. Except as set forth in Section 4.18 of the Disclosure Schedule, none of the employees of the Company or any of its Subsidiaries is represented by any labor organization or covered by any collective bargaining or similar agreement. Except as set forth in Section 4.18 of the Disclosure Schedule, within the past 12 months, neither the Company nor any of its Subsidiaries has received notice from any union of its desire to terminate any collective bargaining agreements or of its intention to seek to organize any employees of the Company or its Subsidiaries. Except as set forth in Section 4.18 of the Disclosure Schedule, there is no unfair labor practice charge or complaint against the Company or any of its Subsidiaries pending or, to the knowledge of the Company, threatened before the National Labor Relations Board. There is no labor strike, dispute, slowdown, stoppage or lockout actually pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries and, except as set forth in Section 4.18 of the Disclosure Schedule, during the past five years there has not been any such action. There is no grievance or arbitration proceeding which would be reasonably likely to have a Material Adverse Effect. SECTION 4.19. Employment Matters. Section 4.19 of the Disclosure Schedule sets forth a list of all employment contracts or severance agreements with any employees of the Company or any of its Subsidiaries. The Company has provided each of such contracts or agreements, as well as all written personnel policies, rules or procedures applicable to employees of the Company or any of its Subsidiaries, to Parent. Except as set forth in Section 4.19 of the Disclosure Schedule, the Company and its Subsidiaries are not parties to, or bound by, any employment agreement or any other arrangement or understanding with any Person that provides for the payment of any consideration by the Company or any of its Subsidiaries or the Surviving Corporation to such Person or creates any other rights or obligations as a result of a change in control of the Company or the consummation of any of the transactions contemplated by this Agreement. SECTION 4.20. Compliance with Laws. The Company and its Subsidiaries are in compliance with, and have not violated any applicable law, rule or regulation of any United States federal, state, local, or foreign government or agency thereof except where such non-compliance 15 20 or violation would not be reasonably likely to have a Material Adverse Effect, and no notice, charge, claim, action or assertion has been received by the Company or any of its Subsidiaries or has been filed, commenced or, to the Company's knowledge, threatened against the Company or any of its Subsidiaries alleging any such violation, except for any matter which is not reasonably likely to have a Material Adverse Effect. All licenses, permits and approvals required under such laws, rules and regulations are in full force and effect except where the failure to be in full force and effect would not be reasonably likely to have a Material Adverse Effect. SECTION 4.21. Contracts. Each Company Agreement is valid, binding and enforceable and in full force and effect, except where failure to be valid, binding and enforceable and in full force and effect would not be reasonably likely to have a Material Adverse Effect, and there are no defaults thereunder, except those defaults that would not be reasonably likely to have a Material Adverse Effect. Section 4.21 of the Disclosure Schedule sets forth a true and complete list of all material Company Agreements entered into by the Company or any of the Company Subsidiaries since December 31, 1998 and all amendments to any Company Agreements included as an exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998. SECTION 4.22. Insurance. Section 4.22 of the Disclosure Schedule contains an accurate and complete description of all material policies of fire, liability, workmen's compensation and other forms of insurance owned or held by the Company or any of its Subsidiaries. All such policies are in full force and effect, all premiums due and payable have been paid, and no notice of cancellation or termination has been received with respect to any such policy. SECTION 4.23. Transactions with Affiliates. Except to the extent disclosed in the Company SEC Documents filed prior to the date of this Agreement or as disclosed in Section 4.23 of the Disclosure Schedule, since December 31, 1998, there have been no transactions, agreements, arrangements or understandings between the Company and any Person that would be required to be disclosed under Item 404 of Regulation S-K under the Securities Act. SECTION 4.24. Finders' Fees. Except for Salomon Smith Barney Inc., the fees of which have been disclosed to Parent and Purchaser, there is no investment banker, broker, finder or other intermediary which has been retained by, or is authorized to act on behalf of, the Company or any of its Subsidiaries, and which might be entitled to any fee or commission from Purchaser, Parent or any of Parent's other subsidiaries upon consummation of the transactions contemplated by this Agreement. SECTION 4.25. Confidentiality Agreements. Each prospective purchaser, other than Parent, that has received materials from Salomon Smith Barney Inc. or the Company within the past six months with respect to a potential business combination has executed a confidentiality agreement (each, an "Other Confidentiality Agreement"). Each of the Other Confidentiality Agreements executed by such prospective purchasers includes "standstill" provisions for a duration of at least 12 months from the execution thereof. 16 21 ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER Parent and Purchaser jointly and severally represent and warrant to the Company that: SECTION 5.01. Corporate Existence and Power. Parent is a corporation duly incorporated under the laws of the State of Delaware, Purchaser is a corporation duly organized under the laws of the State of Delaware, and each of them is validly existing and in good standing under the laws of its jurisdiction of incorporation and has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted. Since the date of its incorporation, Purchaser has not engaged in any activities other than in connection with or as contemplated by this Agreement. SECTION 5.02. Corporate Authorization. The execution, delivery and performance by Parent and Purchaser of this Agreement and the consummation by Parent and Purchaser of the transactions contemplated hereby are within the corporate powers of Parent and Purchaser and have been duly authorized by all necessary corporate action. This Agreement constitutes a valid and binding agreement of Parent and Purchaser. SECTION 5.03. Governmental Authorization. The execution, delivery and performance by Parent and Purchaser of this Agreement and the consummation by Parent and Purchaser of the transactions contemplated by this Agreement require no action by or in respect of, or filing with, any governmental body, agency, official or authority other than (i) the filing of the Certificate of Merger in accordance with Delaware Law, (ii) the applicable requirements of the HSR Act and (iii) compliance with any applicable requirements of the Securities Act and the Exchange Act and the rules and regulations promulgated thereunder. SECTION 5.04. Non-Contravention. The execution, delivery and performance by Parent and Purchaser of this Agreement and the consummation by Parent and Purchaser of the transactions contemplated hereby do not and will not (i) contravene or conflict with the articles or certificate of incorporation or bylaws of Parent and Purchaser, (ii) assuming compliance with the matters referred to in Section 5.03, contravene or conflict with any provision of law, regulation, judgment, order or decree binding upon Parent and Purchaser, or (iii) constitute a default under or give rise to any right of termination, cancellation or acceleration of any right or obligation of Parent or Purchaser or to a loss of any benefit to which Parent or Purchaser is entitled under any agreement, contract or other instrument binding upon Parent or Purchaser, except, in the case of clauses (ii) and (iii), for any contraventions, conflicts, defaults or other occurrences which are not, individually or in the aggregate, reasonably likely to prevent or materially delay the consummation of the Offer or the Merger. SECTION 5.05. Finders' Fees. Except for Wasserstein Perella & Co., Inc., whose fees will be paid by Parent, there is no investment banker, broker, finder or other intermediary who 17 22 might be entitled to any fee or commission from the Company or any of its affiliates upon consummation of the transactions contemplated by this Agreement. SECTION 5.06. Financing. Parent has or will have available, prior to the expiration of the Offer, and will provide to Purchaser on a timely basis, sufficient funds to enable Purchaser to consummate the Offer, the Merger and the other transactions contemplated hereby and to pay all related fees and expenses. ARTICLE VI COVENANTS OF THE COMPANY SECTION 6.01. Conduct of the Company. From the date hereof until the Effective Time, except as required to effect this Agreement or as set forth in Section 6.01 of the Disclosure Schedule and except with the prior written consent of Parent, which consent shall not be unreasonably delayed, conditioned or withheld, the Company and its Subsidiaries shall conduct their business in the ordinary course consistent with past practice and shall use their reasonable efforts to preserve intact their business organizations and relationships with third parties and to keep available the services of their present officers and employees. Without limiting the generality of the foregoing, from the date hereof until the Effective Time: (a) neither the Company nor any of its Subsidiaries will adopt or propose any change in its certificate of incorporation or bylaws; (b) neither the Company nor any of its Subsidiaries will adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries (other than the Merger); (c) neither the Company nor any of its Subsidiaries will adopt or (except as required pursuant to any Plan) pay, grant, issue, accelerate or accrue salary or other payments or benefits pursuant to any pension, profit-sharing, bonus, extra compensation, incentive, deferred compensation, stock purchase, stock option, stock appreciation right, group insurance, severance pay, retirement or other employee benefit plan, agreement or arrangement, or any employment or consulting agreement with or for the benefit of any director, officer, employee, agent or consultant, whether past or present; or, except as required by law, amend in any material respect any such existing plan, agreement or arrangement in a manner inconsistent with the foregoing; (d) neither the Company nor any of its Subsidiaries shall enter into any contract or transaction relating to the purchase of material assets other than in the ordinary course of business consistent with prior practices; (e) neither the Company nor any of its Subsidiaries will (i) materially change any of the accounting methods used by it unless required by GAAP or (ii) make any material election relating to Taxes or change any material election relating to Taxes already made; 18 23 (f) neither the Company nor any of its Subsidiaries will issue, deliver, sell, pledge, dispose of or encumber, or authorize or commit to the issuance, sale, pledge, disposition or encumbrance of, (i) any shares of capital stock of any class, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of capital stock, or any other ownership interest (including, but not limited to, stock appreciation rights or phantom stock), of the Company or any of its Subsidiaries (except for the issuance of up to approximately 1,001,785 shares of Company Common Stock required to be issued pursuant to outstanding grants, awards and elections under the terms of the Company's Stock Option Plans, Performance Award Plan, Employee Stock Option (Purchase) Plan and phantom stock programs as of June 15, 1999) or (ii) any assets of the Company or any of its Subsidiaries, except for sales of inventory in the ordinary course of business. (g) neither the Company nor any of its Subsidiaries shall declare, set aside, make or pay any dividend or other distribution, whether payable in cash, stock, property or otherwise, with respect to its capital stock; (h) neither the Company nor any of its Subsidiaries shall reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (i) neither the Company nor any of its Subsidiaries shall (i) acquire (by merger, consolidation or acquisition of stock or assets) any corporation, partnership or other business organization or division thereof; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any Person, or make any loans, advances or capital contributions to, or investments in any other Person, in each case other than in the ordinary course of business consistent with past practice under the Company's existing Revolving Credit Agreement with National City Bank in an amount such that the aggregate outstanding balance under the Revolving Credit Agreement shall not exceed $40 million; (iii) enter into any contract or agreement other than in the ordinary course of business consistent with past practice that is material to the Company and its Subsidiaries, taken as a whole; or (iv) authorize any single capital expenditure which is in excess of $500,000 or capital expenditures which are, in the aggregate, in excess of $5 million for the Company and its Subsidiaries taken as a whole; (j) except to the extent required under existing employee and director benefit plans, agreements or arrangements as in effect as of the date of this Agreement, neither the Company nor any of its Subsidiaries shall increase the compensation or fringe benefits of any of its directors, officers or employees, except for increases in salary or wages of employees of the Company or its Subsidiaries who are not officers of the Company in the ordinary course of business in accordance with past practice, or grant any severance or termination pay not currently required to be paid under existing severance plans to, or enter into any employment, consulting or severance agreement or arrangement with, any present or former director, officer or other employee of the Company or any of its Subsidiaries; 19 24 (k) neither the Company nor any of its Subsidiaries shall settle or compromise any pending or threatened suit, action or claim which is material or which relates to the transactions contemplated hereby; (l) neither the Company nor any of its Subsidiaries shall pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction (i) in the ordinary course of business and consistent with past practice of liabilities reflected or reserved against in the Financial Statements or incurred in the ordinary course of business and consistent with past practice and (ii) of liabilities required to be paid, discharged or satisfied pursuant to the terms of any contract or agreement in existence on the date hereof; (m) the Company will not, and will not permit any of its Subsidiaries to, (i) take or agree or commit to take any action that would make any representation and warranty of the Company hereunder inaccurate in any material respect at or as of any time prior to the Effective Time or (ii) omit or agree or commit to omit to take any action necessary to prevent any such representation or warranty from being inaccurate in any material respect at any such time; and (n) the Company will not, and will not permit any of its Subsidiaries to, (i) take or agree or commit to take any action that would cause any of the conditions to the Offer set forth in Annex I hereto not to be satisfied, (ii) omit or agree or commit to omit to take any action necessary to cause any of the conditions to the Offer set forth in Annex I hereto to be satisfied or (iii) take, omit to take or agree to take or omit to take any action described in Sections 6.01(a) through 6.01(m) above. SECTION 6.02. Stockholder Meeting; Proxy Material. (a) The Company shall cause a meeting of its stockholders (the "Company Stockholder Meeting") to be duly called and held as soon as reasonably practicable for the purpose of voting on the approval and adoption of this Agreement and the Merger and the transactions contemplated by this Agreement, unless a vote of stockholders of the Company is not required by Delaware Law. The Board of Directors of the Company shall recommend approval and, to the extent required by Delaware Law, adoption by the Company's stockholders of this Agreement and the Merger and the transactions contemplated by this Agreement. In connection with such meeting, the Company (i) will promptly prepare and file with the SEC, will use its reasonable efforts to have cleared by the SEC and will thereafter mail to its stockholders as promptly as practicable the Company Proxy Statement (as defined below) and all other proxy materials for such meeting, (ii) will use its reasonable efforts to obtain the necessary approvals by its stockholders of this Agreement, and (iii) will otherwise comply with all legal requirements applicable to such meeting. Notwithstanding the foregoing, in the event that Purchaser shall acquire at least 90% of the outstanding Shares, the Company agrees, at the request of Purchaser, to take all necessary and appropriate action to cause the Merger to become effective as soon as reasonably practicable after such acquisition, without a meeting of the Company's stockholders, in accordance with Section 253 of Delaware Law. (b) Neither the Board of Directors of the Company nor any committee thereof will, except as expressly permitted by this Section 6.02(b) or Section 6.05, (i) withdraw, qualify or 20 25 modify, or propose publicly to withdraw, qualify or modify, in a manner adverse to Parent or Purchaser, the approval or recommendation of such Board of Directors or such committee of the Merger or this Agreement, (ii) approve or recommend, or propose publicly to approve or recommend, any transaction involving an Acquisition Proposal (as hereinafter defined) from a party other than Parent or Purchaser (an "Alternative Transaction"), or (iii) cause the Company to enter into any letter of intent, agreement in principle, acquisition agreement or other similar agreement (each, an "Acquisition Agreement") related to any Alternative Transaction. Notwithstanding the foregoing, if prior to the approval of this Agreement by the stockholders of the Company, the Board of Directors of the Company determines in the exercise of its fiduciary duties, after it has received a Superior Proposal (as hereinafter defined) in compliance with Section 6.05, the Board of Directors of the Company may (subject to this and the following sentences) inform stockholders of the Company that it no longer believes that the Merger is advisable and no longer recommends approval (a "Subsequent Determination") and enter into an Acquisition Agreement with respect to a Superior Proposal, but only at a time that is after the fifth day following delivery to Parent of written notice advising Parent that the Board of Directors of the Company has received a Superior Proposal. Such written notice shall specify the material terms and conditions of such Superior Proposal, identify the Person making such Superior Proposal and state that the Board of Directors of the Company intends to make, or is considering making, a Subsequent Determination. During such five day period, the Company shall provide an opportunity for Parent to proposed such adjustments to the terms and conditions of this Agreement as would enable the Board of Directors of the Company to proceed with its recommendation to the stockholders of the Company without a Subsequent Determination; provided, however, that any such proposed adjustments shall be at the discretion of the parties hereto at the time. SECTION 6.03. Disclosure Documents. (a) Each Company Disclosure Document, including, without limitation, the Schedule 14D-9, the Company Proxy Statement and any amendments or supplements thereto will, when filed, comply as to form in all material respects with the applicable requirements of the Exchange Act. (b) At the time the Company Proxy Statement or any amendment or supplement thereto is first mailed to stockholders of the Company, at the time such stockholders vote on adoption of this Agreement and at the Effective Time, the Company Proxy Statement, as supplemented or amended, if applicable, will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. At the time of the filing of any Company Disclosure Document other than the Company Proxy Statement and at the time of any distribution thereof, such Company Disclosure Document will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. The obligations of the Company contained in this Section 6.03(b) will not apply to statements or omissions included in the Company Disclosure Documents based upon information furnished to the Company in writing by Parent or Purchaser specifically for use therein. 21 26 (c) The information with respect to the Company or any of its Subsidiaries that the Company furnishes to Parent or Purchaser in writing specifically for use in the Offer Documents will not, at the time of the filing thereof, at the time of any distribution thereof and at the time of the consummation of the Offer, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. SECTION 6.04. Access to Information. From the date hereof until the Effective Time, upon reasonable, prior notice from Parent, the Company will give Parent and Purchaser, their counsel, financial advisors, auditors and other authorized representatives reasonable access during normal business hours and without disrupting the orderly conduct of business by the Company and its Subsidiaries to the offices, properties, books and records of the Company and its Subsidiaries, will furnish to Parent and Purchaser, their counsel, financial advisors, auditors and other authorized representatives such financial and operating data and other information as such Persons may reasonably request and will instruct the Company's employees, counsel and financial advisors to reasonably cooperate with Parent and Purchaser in their investigation of the business of the Company and the Subsidiaries. SECTION 6.05. Other Offers. From the date hereof until the termination hereof, the Company and its Subsidiaries will not, nor shall the Company authorize or permit any officers, directors, employees, representatives or other agents of the Company and its Subsidiaries to, directly or indirectly, (i) take any action to solicit, initiate or encourage any Acquisition Proposal or (ii) engage in negotiations with, or disclose any nonpublic information relating to the Company or any of its Subsidiaries or afford access to the properties, books or records of the Company or any Subsidiary to, any Person that may be considering making, or has made, an Acquisition Proposal; provided, however, that nothing contained in this Agreement shall prevent the Company or the Board of Directors of the Company from (a) furnishing nonpublic information to, or affording access to the properties, books or records of the Company or any of its Subsidiaries to, or entering into discussions or an agreement with, any Person in connection with an unsolicited Acquisition Proposal by such Person, if and only to the extent that (i) the Company's Board of Directors determines in good faith after consultation with outside legal counsel that such action is necessary to comply with their fiduciary duties to the stockholders of the Company under applicable law; (ii) prior to furnishing any such nonpublic information to, or entering into discussions or negotiations with, such Person, the Company's Board of Directors receives from such Person an executed confidentiality agreement with customary terms and (iii) the Board of Directors of the Company concludes in the exercise of its fiduciary duties that the Acquisition Proposal is a Superior Proposal, or (b) taking and disclosing to the Company's stockholders any position, and making any related filings with the SEC, as required by Rules14e-2 and 14d-9 under the Exchange Act with respect to any Alternative Transaction that is a tender offer; provided, that the Company's Board of Directors shall not recommend that the stockholders of the Company tender their Shares in connection with any such tender offer unless the Board by majority vote shall have determined in good faith that failing to take such action would constitute a breach of the Board's fiduciary duties under applicable law. The Company will promptly notify Parent after receipt of any Acquisition Proposal or any request for nonpublic information relating to the Company or any Subsidiary or for access to the properties, books or records of the Company or 22 27 any Subsidiary by any Person that has made an Acquisition Proposal and will keep Parent fully informed of the status and details of any such Acquisition Proposal, indication or request. The Company will take no action with respect to such proposal or inquiry for five days after delivery of such notice to Parent and will negotiate exclusively in good faith with Parent for such five day period to make such adjustments in the terms and conditions of this Agreement as would enable the Company to proceed with the transactions contemplated herein on such adjusted terms; provided, however, that any such proposed adjustments shall be at the discretion of the parties hereto at the time. Without limiting the foregoing, it is understood that any violations of the restrictions set forth in the first sentence of this Section 6.05 by any officer or director of the Company or any of its Subsidiaries or any employee, representative or other agent of the Company or any of its Subsidiaries, acting on behalf of or at the request of the Board of Directors of the Company, shall be deemed to be a breach of this Section 6.05 by the Company. SECTION 6.06. Company Board Representation; Section 14(f). (a) Promptly upon the purchase by Purchaser of more than a majority of the outstanding Shares pursuant to the Offer, and from time to time thereafter, Purchaser shall be entitled to designate up to such number of directors, rounded up to the next whole number, on the Board of Directors of the Company as shall give Purchaser representation on the Board of Directors equal to a majority of the Board of Directors, and the Company shall amend, or cause to be amended its bylaws to provide for each of the matters set forth in this Section 6.06 and shall, at such time, promptly take all action necessary to cause Purchaser's designees to be so elected or appointed, including either increasing the size of the Board of Directors or securing the resignations of incumbent directors or both. At such times, the Company will use its reasonable best efforts to cause persons designated by Purchaser to constitute the same percentage as is on the Board of each committee of the Board of Directors. (b) The Company's obligations to appoint designees to its Board of Directors shall be subject to Section 14(f) of the Exchange Act and Rule 14F-1 promulgated thereunder. At the request of Parent, the Company shall promptly take all actions required pursuant to Section 14(f) and Rule 14F-1 in order to fulfill its obligations under this Section 6.06 and shall include in the Schedule 14D-9 or a separate Rule14F-1 information statement provided to stockholders of the Company such information with respect to the Company and its officers and directors as is required under Section 14(f) and Rule 14F-1 to fulfill its obligations under this Section 6.06. Parent or Purchaser will supply to the Company and be solely responsible for any information with respect to either of them and their nominees, officers, directors and Affiliates required by Section 14(f) and Rule 14F-1. (c) Following the election or appointment of Purchaser's designees pursuant to this Section 6.06 and prior to the Effective Time, the concurrence of a majority of the directors of the Company then in office who are neither designated by Purchaser nor are employees of the Company (the "Disinterested Directors") will be required to authorize any amendment, or waiver of any term or condition, of this Agreement or the certificate of incorporation or bylaws of the Company, any termination of this Agreement by the Company, any extension by the Company of the time for the performance of the obligations or other acts of Purchaser or waiver or assertion of any of the Company's rights hereunder, and any other consent or action by the Board of 23 28 Directors with respect to this Agreement. Notwithstanding Section 6.06(a) hereof, the number of Disinterested Directors shall not be less than two. (d) Prior to the Effective Time, the Company shall cause each of the incumbent directors of the Company (other than Purchaser's designees pursuant to this Section 6.06) to deliver letters of resignation from the Board of Directors of the Company, such resignations to be effective as of the Effective Time. ARTICLE VII COVENANTS OF PARENT AND PURCHASER SECTION 7.01. Confidentiality. Prior to the Effective Time and after any termination of this Agreement, Parent and Purchaser will hold, and will cause their respective officers, directors, employees, accountants, lenders, counsel, consultants, advisors and agents to hold, in confidence, all confidential documents and information concerning the Company and its Subsidiaries furnished to Parent or Purchaser in connection with the transactions contemplated by this Agreement in accordance with the provisions of the Confidentiality Agreement. SECTION 7.02. Obligations of Purchaser. Parent will take all action necessary to cause Purchaser to perform its obligations under this Agreement and to consummate the Merger on the terms and conditions set forth in this Agreement. SECTION 7.03. Disclosure Documents. (a) The information with respect to Parent and its subsidiaries that Parent furnishes to the Company in writing specifically for use in any Company Disclosure Document will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading (i) in the case of the Company Proxy Statement at the time the Company Proxy Statement or any amendment or supplement thereto is first mailed to stockholders of the Company, at the time the stockholders vote on adoption of this Agreement and at the Effective Time, and (ii) in the case of any Company Disclosure Document other than the Company Proxy Statement, at the time of the filing thereof, at the time of any distribution thereof and at the time of the consummation of the Offer. (b) The Offer Documents, when filed, will comply as to form in all material respects with the applicable requirements of the Exchange Act and will not at the time of the filing thereof, at the time of any distribution thereof or at the time of consummation of the Offer, contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading, provided, that this Section 7.04(b) will not apply to statements or omissions in the Offer Documents based upon information furnished to Parent or Purchaser in writing by the Company specifically for use therein. SECTION 7.04. Employee Matters. (a) As of the Effective Time, the Surviving Corporation shall employ all employees of the Company who desire employment with the 24 29 Surviving Corporation. With respect to each individual who is employed by the Surviving Corporation as of the Effective Time, Parent shall, at its option, either (i) cause the Surviving Corporation to continue to provide for such individual's participation in each medical, surgical, hospitalization and other "welfare" plan, fund or program (within the meaning of Section 3(l) of ERISA) of the Company on the same terms as immediately prior to the Effective Time or (ii) permit such individual to participate in an employee welfare plan sponsored by Parent or any Affiliate of Parent (a "Purchaser Plan") which provides substantially similar benefits as prior to the Effective Time, on the same terms and to the same extent as similarly situated employees of Parent's Lithonia Lighting unit; provided, that if Parent elects to permit such employee to participate in a Purchaser Plan pursuant to clause (ii) above, such employee shall (A) not be subject to any preexisting condition provision or waiting period under any Purchaser Plan which provides medical, dental, vision or prescription drug benefits; and (B) to the extent permitted by applicable law, be credited with prior service with the Company for all purposes related to eligibility and vesting under any Purchaser Plan in which such employee participates. (b) With respect to any employee of the Company as of the date hereof who is not employed by the Surviving Corporation as of the Effective Time, the Surviving Corporation shall be responsible for providing continuation coverage to such employee (and his or her dependents), as required under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"). Further, with respect to any former employee of the Company (or their dependents) who is receiving continuation coverage under COBRA as of the Effective Time, the Surviving Corporation shall be responsible to maintain such continuation coverage in compliance with COBRA. (c) Parent shall cause the Surviving Corporation to continue each of the following plans and agreements in full force and effect in accordance with their respective terms for the remaining term thereof: the Company's Supplemental Executive Retirement Plan, as amended (the "SERP"); and the Termination Benefit Agreements and Employment Agreements set forth in Section 4.12(a) of the Disclosure Schedule; provided, that the Surviving Corporation shall not be obligated to make contributions pursuant to Section 3 of the SERP or to allow participating employees of the Surviving Corporation to defer a portion of their compensation pursuant to Section 4 of the SERP for more than two years after the Effective Time; provided, further, that for purposes of such Termination Benefits Agreements and Employment Agreements the Option Plans shall be deemed to continue in full force and effect notwithstanding that such Option Plans shall be terminated for all other purposes at the Effective Time. For at least two years, Parent shall cause the Surviving Corporation to continue, or shall offer a comparable plan to the following: the Company's bonus plans and educational assistance program. Any outstanding rights under the following plans will be fully satisfied in connection with the transactions contemplated hereby and, upon satisfaction of those rights, the plans shall be terminated: the Company's Employee Stock Option (Purchase) Plan and the Company's Performance Award Program (assuming payment in full of the performance award with respect to 1999). Furthermore, Parent and the Company shall negotiate in good faith with Paolo Minissi and Michele Seghers with respect to the effect of the Offer and the Merger on the provisions of Section 2.02 of the MetalOptics Stock Purchase Agreement. 25 30 (d) As of the Effective Time, Parent shall assume and honor, and shall cause the Surviving Corporation to assume and to honor, in accordance with their terms all employment, severance and other compensation agreements and arrangements listed in Section 4.19 of the Disclosure Schedule. ARTICLE VIII COVENANTS OF PARENT, PURCHASER AND THE COMPANY SECTION 8.01. Reasonable Efforts. Subject to the terms and conditions of this Agreement, each party will use reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate the transactions contemplated by this Agreement. SECTION 8.02. Certain Filings. (a) The Company, Parent and Purchaser shall cooperate with one another (i) in connection with the preparation of the Company Disclosure Documents and the Offer Documents, and (ii) in determining whether any action by or in respect of, or filing with, any governmental body, agency or official, or authority is required, or any actions, consents, approvals or waivers are required to be obtained from parties to any material contracts, in connection with the consummation of the transactions contemplated by this Agreement and (iii) in seeking any such actions, consents, approvals or waivers or making any such filings, furnishing information required in connection therewith or with the Company Disclosure Documents or the Offer Documents and seeking timely to obtain any such actions, consents, approvals or waivers. Notwithstanding any provision of this Agreement to the contrary, Parent and Purchaser shall not be required under the terms hereof to dispose of or hold separate all or any material portion of the businesses or assets of Parent or any of its Subsidiaries or of the Company or any of its Subsidiaries in order to remedy or otherwise address the written concerns of any Governmental Entity under the HSR Act of any other antitrust statute or regulations. (b) The Company and Parent shall file as soon as practicable notifications under the HSR Act and respond as promptly as practicable to any inquiries received from the Federal Trade Commission and the Antitrust Division of the Department of Justice for additional information or documentation and respond as promptly as practicable to all inquiries and requests received from any State Attorney General or other Governmental Entity in connection with antitrust matters. Concurrently with the filing of notifications under the HSR Act or as soon thereafter as practicable, the Company and Parent shall each request early termination of the HSR Act waiting period. SECTION 8.03. Public Announcements. The initial press release with respect to the execution of this Agreement shall be a joint press release acceptable to Parent and the Company. Thereafter, Parent, Purchaser and the Company will consult with each other before issuing any press release or making any public statement with respect to this Agreement and the transactions contemplated hereby and, except as may be required by applicable law or any listing agreement 26 31 with any national securities exchange, will not issue any such press release or make any such public statement prior to such consultation. SECTION 8.04. Further Assurances. At and after the Effective Time, the officers and directors of the Surviving Corporation will be authorized to execute and deliver, in the name and on behalf of the Company or Purchaser, any deeds, bills of sale, assignments or assurances and to take and do, in the name and on behalf of the Company or Purchaser, any other actions and things to vest, perfect or confirm of record or otherwise in the Surviving Corporation any and all right, title and interest in, to and under any of the rights, properties or assets of the Company acquired or to be acquired by the Surviving Corporation as a result of, or in connection with, the Merger. SECTION 8.05. Notices of Certain Events. Each of the Company and Parent shall promptly notify the other of: (a) any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement; (b) any notice or other communication from any governmental or regulatory agency or authority in connection with the transactions contemplated by this Agreement; (c) any actions, suits, claims, investigations or proceedings commenced or, to its knowledge threatened against, relating to or involving or otherwise affecting Parent, Purchaser, the Company or any of its Subsidiaries which relate to the consummation of the transactions contemplated by this Agreement; (d) any event the occurrence or non-occurrence of which would be reasonably likely to cause any representation or warranty contained in this Agreement to be untrue in any material respect; and (e) any failure of the Company, Parent or Purchaser, as the case may be, to comply with or satisfy in any material respect any covenant, condition or agreement herein. SECTION 8.06. Directors' and Officers' Indemnification and Insurance. (a) The Certificate of Incorporation of the Surviving Corporation shall contain provisions no less favorable with respect to indemnification than are set forth in Article ELEVENTH of the (Second) Restated Certificate of Incorporation of the Company, which provisions shall not be amended, repealed or otherwise modified for a period of six years from the Effective Time in any manner that would affect materially adversely the rights thereunder of individuals who at the Effective Time were directors or officers of the Company, with respect to any act or omission in 27 32 their capacity as an officer or director of the Company occurring on or prior to the Effective Time, unless such modification shall be required by law. (b) The Company shall, to the fullest extent permitted under applicable law and regardless of whether the Merger becomes effective, indemnify and hold harmless, and after the Effective Time, the Surviving Corporation shall, to the fullest extent permitted under applicable law, indemnify and hold harmless each present and former director and officer of the Company (collectively, the "Indemnified Parties") against all costs and expenses (including reasonable attorneys' fees), judgments, fines, losses, claims, damages, liabilities and settlement amounts paid in connection with any claim, action, suit, proceeding or investigation (whether arising before or after the Effective Time), whether civil, criminal, administrative or investigative, arising out of or directly pertaining to any action or omission in their capacity as an officer or director of the Company occurring on or prior to the Effective Time, whether asserted or claimed prior to, at or after the Effective Time, for a period of six years after the later of the Effective Time and the date hereof, in each case to the fullest extent permitted under applicable law (and shall pay any expenses in advance of the final disposition of such action or proceeding to each Indemnified Party to the fullest extent permitted under applicable law, upon receipt from the Indemnified Party to whom expenses are advanced of an undertaking to repay such advances required under applicable law). In the event of any such claim, action, suit, proceeding or investigation, (i) the Company or the Surviving Corporation, as the case may be, shall pay the reasonable fees and expenses of counsel selected by the Indemnified Parties promptly after statements therefor are received and (ii) the Company and the Surviving Corporation shall cooperate in the defense of any such matter. In the event that any claim for indemnification is asserted or made within such six-year period, all rights to indemnification in respect of such claim shall continue until the final disposition of such claim. (c) Parent shall maintain in effect for the benefit of the Indemnified Parties for six years after the Effective Time the current directors' and officers' liability insurance policies maintained by the Company to cover acts and omissions of the Indemnified Parties occurring prior to the Effective Time; provided, that Parent may substitute therefor policies of substantially the same coverage containing substantially comparable terms and conditions with respect to matters occurring prior to the Effective Time; provided, further, that in no event shall Parent be required to expend more than an amount per year equal to 400% of current annual premiums paid by the Company (which the Company represents and warrants to be not more than $40,000) to maintain or procure such coverage. (d) In the event the Company or the Surviving Corporation or any of their respective successors or assigns (i) consolidates with or merges into any other person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers all or substantially all of its properties and assets to any person, then, and in each such case, proper provision shall be made so that the successors and assigns of the Company or the Surviving Corporation, as the case may be, or at Parent's option, Parent, shall assume the obligations set forth in this Section 8.06. 28 33 (e) The Indemnified Parties are each intended third-party beneficiaries of the provisions of this Section 8.06, and may enforce this Section 8.06 against the Company, the Surviving Corporation or Parent, as the case may be, as fully and effectively as if each were a party to this Agreement. ARTICLE IX CONDITIONS TO THE MERGER SECTION 9.01. Conditions to the Obligations of Each Party. The obligations of the Company, Parent and Purchaser to consummate the Merger are subject to the satisfaction of the following conditions: (a) this Agreement and the transactions contemplated hereby shall have been approved and adopted by the stockholders of the Company to the extent required by, and in accordance with, Delaware Law and the (Second) Restated Certificate of Incorporation and Bylaws of the Company; (b) Purchaser or its permitted assignee shall have purchased all Shares validly tendered and not withdrawn pursuant to the Offer; provided, however, that this condition shall not be applicable to the obligations of Parent or Purchaser if, in breach of this Agreement or the terms of the Offer, Purchaser fails to purchase any Shares validly tendered and not withdrawn pursuant to the Offer; (c) all actions by or in respect of or filings with any governmental body, agency, official, or authority required to permit the consummation of the Merger shall have been obtained or made; and (d) no Governmental Entity shall have enacted, issued, promulgated, enforced or entered any law, rule, regulation, executive order, decree, injunction or other order (whether temporary, preliminary or permanent) which is then in effect and has the effect of making any the Merger illegal or otherwise restricting, preventing or prohibiting consummation of the Merger. ARTICLE X TERMINATION SECTION 10.01. Termination. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time (notwithstanding any approval of this Agreement by the stockholders of the Company, to the extent required by Delaware Law): (a) by mutual written consent of Parent and the Company; 29 34 (b) by either the Company or Parent, if the Effective Time shall not have occurred on or before December 31, 1999; provided, however, that the right to terminate this Agreement under this Section 10.01(b) shall not be available to any party whose breach of this Agreement has been the primary cause of, or resulted in, the failure of the Effective Time to occur on or before such date; (c) by either the Company or Parent, if any Governmental Entity shall have issued an order, decree or ruling or taken any other action (which order, decree, ruling or other action the parties hereto shall use their reasonable efforts to lift), in each case permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement and such order, decree, ruling or other action shall have become final and non-appealable; (d) by Parent: (i) if Purchaser shall have terminated the Offer without Purchaser having purchased any Shares thereunder by reason of the failure to satisfy any condition set forth in Annex I hereto; or (ii) if the Company's Board of Directors shall have (A) failed to include in the Schedule 14D-9 or the Company Proxy Statement, its recommendation without modification or qualification that the stockholders of the Company accept the Offer and approve this Agreement and the Merger, (B) approved or recommended any other Acquisition Proposal, (C) withdrawn, modified or qualified its recommendation of the Offer, this Agreement or the Merger in a manner adverse to the interests of Parent or Purchaser or (D) resolved to do any of the foregoing. (e) by the Company: (i) if Purchaser shall have failed to commence the Offer within five business days following the date of the initial public announcement of the Offer; (ii) if Purchaser shall have terminated the Offer without having accepted any Shares for payment thereunder by reason of the failure to satisfy any condition set forth in Annex I hereto (unless such failure shall have been the result of the failure of the Company to perform in any material respect any covenant or agreement of it contained in this Agreement or the material breach by the Company of any representation or warranty of it contained in this Agreement); (iii) if Purchaser shall have failed to pay for Shares pursuant to the Offer within 90 days following the commencement of the 30 35 Offer, unless such failure to pay for Shares shall have been the result of the failure of the Company to perform in any material respect any covenant or agreement of it contained in this Agreement or the material breach by the Company of any representation or warranty of it contained in this Agreement; (iv) if any representation or warranty of Parent and Purchaser in this Agreement shall not be true and correct in any material respect, as if such representation or warranty was made as of such time on or after the date of this Agreement; or Parent or Purchaser shall have failed to perform in any material respect any obligation or to comply in any material respect with any agreement or covenant of Parent or Purchaser to be performed or complied with by it under this Agreement and which, in any such case, shall not have been cured within five business days following receipt of notice thereof; or (v) if, prior to the purchase of Shares pursuant to the Offer, after it has received a Superior Proposal in compliance with Section 6.05, the Company's Board of Directors determines that it is obligated by its fiduciary duties under applicable law to terminate this Agreement; provided, that such termination under this clause (v) shall not be effective until the Company has made payment of the Termination Fee and the expense reimbursement required by Section 10.03. SECTION 10.02. Effect of Termination. If this Agreement is terminated pursuant to Section 10.01, written notice thereof shall forthwith be given to the other party or parties specifying the provisions hereof pursuant to which such termination is made, and this Agreement shall become void and of no effect with no liability on the part of any party hereto, except that (a) the agreements contained in Sections 7.01 and 10.03 shall survive the termination hereof and (b) nothing herein shall relieve any party from liability for any breach hereof. SECTION 10.03. Fees and Expenses. (a) If Parent shall terminate this Agreement pursuant to Section 10.01(d)(ii) hereof or the Company shall terminate this Agreement pursuant to Section 10.01(e)(v), then the Company shall pay to Parent, within five business days of such termination, a fee, in cash, in the amount of $20,000,000 (the "Termination Fee"). In addition, the Company shall reimburse Parent, Purchaser and their Affiliates (not later than five business days after submission of valid statements therefor) for all actual, documented out-of-pocket fees and expenses actually incurred by any of them or on their behalf in connection with the Offer and the Merger and the consummation of all transactions contemplated by this Agreement (including, without limitation, fees and disbursements payable to financing sources, investment bankers, counsel to Purchaser or Parent or any of the foregoing, and accountants) up to a maximum amount of $3,000,000. 31 36 (b) If within 12 months after termination of this Agreement, the Company shall consummate an Acquisition Proposal with a Person other than Parent or Purchaser, then immediately prior to, and as a condition of, consummation of such transaction the Company shall pay to Parent upon demand an amount in cash equal to the Termination Fee to reimburse Parent for its time, expense and lost opportunity costs of pursuing the Merger; provided, that no such amount shall be payable if the Termination Fee shall have become payable or have been paid in accordance with Section 10.03(a) of this Agreement or if this Agreement shall have been terminated by the Company in accordance with Section 10.01(e)(iv). (c) Except as otherwise specifically provided in this Section 10.03, each party shall bear its own expenses in connection with this Agreement and the transactions contemplated hereby. (d) Notwithstanding anything to the contrary in this Agreement, in no event shall there be more than one payment of the Termination Fee by the Company or Parent. ARTICLE XI MISCELLANEOUS SECTION 11.01. Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context clearly requires otherwise: "Affiliate" shall have the meaning set forth in Rule 12b-2 of the Exchange Act. "Acquisition Proposal" shall mean any offer or proposal for, or any indication of interest in, a merger or other business combination involving the Company or any of its material Subsidiaries or the acquisition of any equity interest in, or a substantial portion of the assets of, the Company or any of its material Subsidiaries, other than the transactions contemplated by this Agreement. "Alternative Transaction" shall have the meaning set in Section 6.02 hereof. "Associate" shall have the meaning set forth in Rule 12b-2 of the Exchange Act. "Balance Sheet" shall mean the most recent balance sheet of the Company and its consolidated subsidiaries included in the Financial Statements. "Balance Sheet Date" shall mean the date of the Balance Sheet. "Company Agreement" shall mean any note, bond, mortgage, indenture, ease, license, contract, agreement or other instrument or obligation to which the Company or any of its Subsidiaries is a party or by which any of them or any of their properties or assets may be bound. "Code" shall mean the Internal Revenue Code of 1986, as amended. 32 37 "Company Disclosure Documents" shall mean each document required to be filed by the Company with the SEC in connection with the transactions contemplated by this Agreement. "Company's knowledge" or "knowledge of the Company" shall mean the actual knowledge of the executive officers of the Company. "Company Proxy Statement" shall mean the proxy or information statement of the Company, if any, to be filed with the SEC in connection with the Merger. "Company SEC Documents" shall mean each form, report, schedule, statement and other document required to be filed by the Company since January 1, 1996 under the Exchange Act or the Securities Act, including any amendment to such document, whether or not such amendment is required to be so filed. "Company Stock Option" shall have the meaning set forth in Section 2.05 hereof. "Confidentiality Agreement" shall mean the letter agreement dated as of March 31, 1999, between the Company and Parent. "Copyrights" shall mean U.S. and foreign registered and unregistered copyrights (including, but not limited to, those in computer software and databases), rights of publicity and all registrations and applications to register the same. "Delaware Law" shall mean the General Corporation Law of the State of Delaware. "Dissenting Shares" shall have the meaning set forth in Section 2.04 hereof. "Environmental Claim" shall mean any claim, action, investigation or notice by any person or entity alleging potential liability for investigatory, cleanup or governmental or third party response costs, or natural resources or property damages, or personal injuries, attorneys' and consultants' fees and expenses or penalties relating to (i) the presence, or release into the environment, of any Hazardous Materials at any location owned or operated by the Company or any of its Subsidiaries, now or in the past, or (ii) any violation, or alleged violation, of any Environmental Law. "Environmental Law" shall mean each federal, state, local and foreign law and regulation relating to pollution, protection or preservation of public or employee health or the environment, including, without limitation, ambient air, surface water, ground water, land surface or subsurface strata, and natural resources, and including, without limitation, each law and regulation relating to emissions, discharges, releases or threatened releases of Hazardous Materials, or otherwise relating to the generation, storage, treatment, containment (whether above ground or underground), disposal, transport or handling of Hazardous Materials, or the preservation of the environment or mitigation of adverse effects thereon and each law and regulation with regard to 33 38 record keeping, notification, disclosure and reporting requirements respecting Hazardous Materials. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended. "ERISA Affiliate" shall mean any trade or business, whether or not incorporated, that together with the Company would be deemed a "single employer" within the meaning of Section 4001(b) of ERISA. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Exchange Agent" shall have the meaning set forth in Section 2.03 hereof. "GAAP" shall mean United States generally accepted accounting principles, applied on a consistent basis. "Governmental Entity" shall mean a court, arbitral tribunal, administrative agency or commission or other governmental or other regulatory authority or agency. "Hazardous Materials" shall mean pollutants, contaminants, toxic or hazardous substances, materials and wastes, petroleum and petroleum products, asbestos and asbestos-containing materials, polychlorinated biphenyls, radon and lead or lead-based paints and materials or any other material regulated by or subject to Environmental Laws. "HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. "Intellectual Property" shall mean all of the following: material Trademarks, Patents, Copyrights, Trade Secrets and Licenses. "Lien" shall mean, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset. "Material Adverse Effect" shall mean an effect that (A) is materially adverse to the financial condition, business, assets or results of operations of the Company and its Subsidiaries taken as a whole, excluding in all cases: (i) events or conditions generally affecting the industry in which the Company and the Company's Subsidiaries operate or arising from changes in general business or economic conditions; (ii) any change or effect resulting from any change in law or generally accepted accounting principles, which generally affect entities such as the Company; and (iii) any change or effect resulting from the execution and/or announcement of this Agreement or compliance by the Company with the terms of this Agreement or any agreement contemplated hereby, or (B) would prevent or materially delay the consummation of the Offer or the Merger. "Merger" shall mean the merger of the Purchaser into the Company referred to in the Recitals. 34 39 "Merger Consideration" shall have the meaning set forth in Section 2.02(c) hereof. "MetalOptics Stock Purchase Agreement" means the Stock Purchase Agreement dated as of August 31, 1996 between the Company and Paolo Minissi and Michele Seghers. "Minimum Tender Condition" shall have the meaning set forth in Section 1.01 hereof. "Offer Documents" shall mean a Tender Offer Statement on Schedule 14D-l which will contain the offer to purchase and the form of the related letter of transmittal, together with any supplements or amendments thereto. "Option Plans" shall have the meaning set forth in Section 2.05 hereof. "Patents" shall mean issued U.S. and foreign patents and pending patent applications, patent disclosures, and any and all divisions, continuations, continuations-in-part, reissues, reexaminations, and extension thereof, any counterparts claiming priority therefrom, utility models, patents of importation/confirmation, certificates of invention and like statutory rights. "PBGC" shall mean the Pension Benefit Guaranty Corporation. "Person" shall mean a natural person, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Entity or other entity or organization. "Plan" shall have the meaning set forth in Section 4.12(a). "SEC" shall mean the United States Securities and Exchange Commission. "Securities Act" shall mean the Securities Act of 1933, as amended. "Shares" shall have the meaning set forth in Section 1.01 hereof. "Subsequent Determination" shall have the meaning set forth in Section 6.02 hereof. "Subsidiary" shall mean, as to any Person, any corporation or other entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are directly or indirectly owned by such Person. "Superior Proposal" shall mean any proposal (on its most recently amended or modified terms, if amended or modified) made by any Person other than Parent or its Affiliates to enter into an Alternative Transaction which the Company's Board of Directors determines in its good faith judgment to be more favorable to the Company's stockholders than the Merger, taking into account all relevant factors, including, but not limited to, whether, in the good faith judgment of 35 40 the Board of Directors of the Company, after consultation with the Company's independent financial advisor, the third party is reasonably able to finance the transaction, and any proposed changes to this Agreement that may be proposed by Parent in response to such Alternative Transaction. "Tax" or "Taxes" shall mean all taxes, charges, fees, duties, levies, penalties or other assessments imposed by any federal, state, local or foreign Tax Authority. "Tax Authority" shall mean any Governmental Authority responsible for the imposition of Taxes. "Tax Return" shall mean any return, declaration, report, claim for refund, or information return or other statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof. "Termination Fee" shall have the meaning set forth in Section 10.03 hereof. "Title IV Plan" shall mean a Plan that is subject to Section 302 or Title IV of ERISA or Section 412 of the Code. "Trademarks" shall mean U.S. and foreign registered and unregistered trademarks, trade dress, service marks, logos, trade names, corporate names and all registrations and applications to register the same. "Trade Secrets" shall mean all categories of trade secrets as defined in the Uniform Trade Secrets Act, including, but not limited to, business information. SECTION 11.02. Notices. All notices, requests and other communications to any party hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by telecopy or by registered or certified mail (postage prepaid, return receipt requested), to the respective parties at the following addresses (or at such other address as shall be specified in a notice given in accordance with this Section 11.02): if to Parent or Purchaser, to: National Service Industries, Inc. NSI Center 1420 Peachtree Street, NE Atlanta, Georgia 30309-3002 Attn: Stewart A. Searle, III Telecopy: (404) 853-1211 with a copy to: Kenyon W. Murphy, Esq. 36 41 National Service Industries, Inc. NSI Center 1420 Peachtree Street, NE Atlanta, Georgia 30309-3002 Telecopy: (404) 853-1015 with an additional copy to: Russell B. Richards King & Spalding 191 Peachtree Street Atlanta, Georgia 30303-1763 Telecopy: (404) 572-5100 if to the Company, to: Holophane Corporation 250 E. Broad Street, 14th Floor Columbus, Ohio 43215 Attn: John R. DallePezze Telecopy: (614) 341-2142 37 42 with a copy to: Ronald A. Robins, Jr. Vorys, Sater, Seymour and Pease LLP 52 E. Gay Street Columbus, Ohio 43215 Telecopy: (614) 719-4296 SECTION 11.03. Survival of Representations and Warranties. The representations and warranties and agreements contained herein and in any certificate or other writing delivered pursuant hereto shall not survive the Effective Time or the termination of this Agreement pursuant to Section 10.01, except that (a) the agreements and obligations set forth in Sections 7.01 and 10.03 shall survive any termination hereof and (b) the agreements and obligations set forth in Articles II and XI and Sections 7.04 and 8.06 shall survive the Effective Time in accordance with their respective terms. SECTION 11.04. Amendments; No Waivers. (a) Any provision of this Agreement may be amended prior to the Effective Time if, and only if, such amendment is in writing and signed by the Company, Parent and Purchaser; provided, that after the approval and adoption of this Agreement by the stockholders of the Company, to the extent required by Delaware Law, no such amendment shall be made which would reduce the amount or change the type of consideration into which each Share shall be converted upon consummation of the Merger, would amend the certificate of incorporation of the Surviving Corporation, would impose conditions to the Merger other than those set forth in Sections 9.01 and 9.02 hereof or would otherwise amend or change the terms and conditions of the Merger in a manner adverse to the holders of the Shares; provided, further, that any amendment shall be approved by a majority of the Company's Board of Directors. (b) At any time prior to the Effective Time, any party hereto may (i) extend the time for the performance of any obligation or other act of any other party hereto, (ii) waive any inaccuracy in any representation or warranty contained herein or in any document delivered pursuant hereto or (iii) waive compliance with any agreement or condition contained herein. Any such extension or waiver shall be valid if set forth in an instrument in writing signed by the party to be bound thereby and, in the case of any extension or waiver by which the Company is to be bound, only if approved by a majority of Company's Board of Directors. (c) No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. SECTION 11.05. Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, provided that no party may assign, delegate or otherwise transfer any of its rights or 38 43 obligations under this Agreement without the consent of the other parties hereto except that Purchaser may transfer or assign, in whole or from time to time in part, to one or more of its subsidiaries, the right to purchase Shares pursuant to the Offer, but any such transfer or assignment will not relieve Purchaser of its obligations under the Offer or prejudice the rights of tendering stockholders to receive payment for Shares validly tendered and accepted for payment pursuant to the Offer. SECTION 11.06. Governing Law. This Agreement shall be construed in accordance with and governed by the law of the State of Delaware without giving effect to the principles of conflicts of laws thereof. SECTION 11.07. Severability. Any term or provision of this Agreement that is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. If the final judgment of a court of competent jurisdiction or other authority declares that any term or provision hereof is invalid, void or unenforceable, the parties agree that the court making such determination shall have the power to reduce the scope, duration, area or applicability of the term or provision, to delete specific words or phrases, or to replace any invalid, void or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision. SECTION 11.08. Counterparts; Effectiveness. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. [Signature page follows] 39 44 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. HOLOPHANE CORPORATION By: /s/ John R. DallePezze --------------------------------------- Name: John R. DallePezze Title: Chairman, President and CEO NATIONAL SERVICE INDUSTRIES, INC. By: /s/ Stewart A. Searle III --------------------------------------- Name: Stewart A. Searle III Title: Senior Vice President, Planning and Development NSI ENTERPRISES, INC. By: /s/ Stewart A. Searle III --------------------------------------- Name: Stewart A. Searle III Title: Senior Vice President 40 45 ANNEX I Notwithstanding any other term or provision of the Offer, the Purchaser will not be required to accept for payment or, subject to any applicable rules and regulations of the SEC, to pay for any Shares tendered pursuant to the Offer and may postpone the acceptance for payment or, subject to any applicable rules and regulations of the SEC, payment for any Shares tendered pursuant to the Offer, and, in its good faith discretion, may amend or terminate the Offer, to the extent provided in this Agreement, unless the Minimum Tender Condition shall have been satisfied or waived in accordance with the terms hereof. Furthermore, notwithstanding any other term or provision of the Offer, the Purchaser will not be required to accept for payment or, subject as aforesaid, to pay for any Shares not theretofore accepted for payment or paid for, and may postpone the acceptance for payment or, subject to any applicable rules and regulations of the SEC, payment for any Shares tendered pursuant to the Offer, and, in its good faith discretion, may terminate or amend the Offer, to the extent provided in this Agreement, if, at any time on or after the date of this Agreement, and before the acceptance of such Shares for payment or, subject to any applicable rules and regulations of the SEC, the payment therefor, any of the following conditions exists: (a) an order shall have been entered (or any Governmental Entity shall have threatened in writing to seek an order) in any action or proceeding before any federal or state court or governmental agency or other regulatory body or a permanent injunction by any federal or state court of competent jurisdiction in the United States shall have been issued and remain in effect (i) making illegal the purchase of, or payment for, any Shares by Purchaser, Parent or any of Parent's other subsidiaries; (ii) otherwise preventing the consummation of the Offer or the Merger; (iii) imposing limitations on the ability of Purchaser, Parent or any of Parent's other subsidiaries to exercise effectively full rights of ownership of any Shares, including, without limitation, the right to vote any Shares acquired by Purchaser pursuant to the Offer on all matters properly presented to the Company's stockholders; (iv) prohibiting or materially limiting the ownership or operation by the Company or any of its Subsidiaries, or Parent or any of its subsidiaries, of all or any material portion of the business or assets of the Company and its Subsidiaries, or Parent and its subsidiaries, or compelling Parent or any of its subsidiaries to dispose of all or any material portion of the businesses or assets of the Company or its Subsidiaries, or Parent or its subsidiaries, as a result of the transactions contemplated by the Offer or this Agreement; or (v) requiring divestiture by Parent or Purchaser of any Shares. (b) there shall have been any federal or state statute, rule or regulation enacted, enforced, promulgated, amended or made applicable to the Company, Purchaser, Parent or any other Affiliate of Parent or the Company or the Offer or the Merger on or after the date of the Offer by any Governmental Entity that could reasonably be expected to result, directly or indirectly, in any of the consequences referred to in clauses (i) through (v) of paragraph (a) above; (c) (i) the Company shall have breached or failed to perform in any material respect any of its covenants or agreements under the Agreement, which breach shall not have been cured or waived within the earlier or (A) five business days after receipt of notice thereof by the 46 Company or (B) two business days prior to the date on which the Offer expires; provided, that if notice of such breach is received by the Company within such two business day period, Purchaser agrees to extend the Offer by at least two business days or (ii) any of the representations and warranties of the Company set forth in the Agreement (disregarding any qualifications contained therein regarding materiality or Material Adverse Effect) shall be not be true and correct when made or at any time prior to consummation of the Offer as if made at and as of such time, except to the extent that such breach would not be reasonably likely to have a Material Adverse Effect; or (d) this Agreement shall have been terminated in accordance with its terms or the Offer shall have been terminated with the consent of the Company; (e) there shall have occurred any event that is reasonably likely to result in a Material Adverse Effect; (f) (i) the Board of Directors of the Company or any committee thereof shall have withdrawn or modified in a manner adverse to Parent or Purchaser the approval or recommendation of the Offer, the Merger or the Merger Agreement, or approved or recommended any Alternative Transaction, (ii) any person or group shall have entered into a definitive agreement or an agreement in principle with the Company with respect to an Alternative Transaction, or (iii) the Board of Directors of the Company or any committee thereof shall have resolved to do any of the foregoing; (g) any waiting period under the HSR Act applicable to the purchase of Shares pursuant to the Offer shall not have expired or been terminated; or (h) any consent required to be filed or obtained in connection with the Offer, the failure or which to be so filed or obtained would have a Material Adverse Effect, shall not have been obtained. which, in the reasonable judgment of Purchaser in any such case, and regardless of the circumstances (including any action or inaction by Purchaser, Parent or any of Parent's other subsidiaries) giving rise to any such condition, makes it inadvisable to proceed with the Offer and/or with such acceptance for payment or payment. The foregoing conditions are for the sole benefit of Purchaser and may be asserted by Purchaser regardless of the circumstances giving rise to any condition (including any action or inaction by Purchaser or any of its Affiliates) or may be waived by Purchaser in whole or in part at any time and from time to time in its sole discretion. The failure by Purchaser at any time to exercise any of the foregoing rights shall not be deemed a waiver of such right, the waiver of any such right with respect to particular facts and other circumstances shall not be deemed a waiver with respect to any other facts and circumstances and each such right shall be deemed an ongoing right that may be asserted at any time from time to time. 06/21/99 - 8501691.6 I-2 -----END PRIVACY-ENHANCED MESSAGE-----