Notice and Information Statement Dated May , 2000
TO THE STOCKHOLDERS OF COMPUTER POWER INC.:
In accordance with the provisions of Section 14A:5-6 of the New Jersey
Business Corporation Act ("NJBCA"), notice is hereby given that Public Access
Lighting, L.L.C. ("PAL") as the holder of 2,102,114 shares (57%) of the issued
and outstanding common stock of Computer Power Inc., a New Jersey corporation
("CPI"), having not less than the minimum number of votes that would be
necessary to authorize or take such action, as described below has, by written
consent without a meeting and without a vote, on ____________, 2000, (the
"Written Consent"), in lieu of any meeting taken the following shareholder
actions:
The election of Maureen Mulholland to serve as a member of the
Board of Directors of CPI to fill a vacancy on the Board of Directors
and to serve until the next annual meeting of shareholders and until
her successor has been elected and qualified.
To approve a merger of CPI into CPI Acquisition Corp. ("CAC"),
an entity specifically organized under Delaware law for this purpose
and owned by PAL. Minority CPI shareholders will receive payment of
$.28 for each share of CPI stock beneficially owned on _____________,
2000 ( the "Merger"), plus interest thereon from May _____, 2000
through the date the Merger is consummated, as provided by New Jersey
law.
These actions of electing Ms. Mulholland and approving the Merger
become effective on __________, 2000 [20 days from date of this notice].
Only holders of record of CPI's stock at the close of business on
_______, 2000, are entitled to receive notice of the informal action by the
shareholders in accordance with Section 14A:5-6 of the NJBCA. This Information
Statement is being sent on or about _______________, 2000 to such holders of
record. No response is being requested from you and you are requested not to
respond to this Information Statement. In accordance with Section 14A:5-6 of the
NJBCA, this Notice and Information Statement is notice of the taking of the
corporate action without a meeting by less than unanimous written consent to
those shareholders who have not consented in writing.
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY.
CPI: PAL:
Computer Power Inc. Public Access Lighting, L.L.C.
124 West Main Street 13603 South Halsted Street
High Bridge, New Jersey 08829 Riverdale, Illinois 60827
908.638.8000 708.841.3800
COMPUTER POWER INC.
INFORMATION STATEMENT
FOR
SHAREHOLDERS
Summary Term Sheet
o Election of Maureen Mulholland to the CPI Board of Directors to approve
the annual report, Form 10-KSB for the year ended December 31, 1999 of
CPI; to recommend a cash merger with CAC, and such other matters as
before the Board of Directors.
o Payment: $.28 per share of CPI common stock plus interest from May
_____, 2000 to the date the merger is to be consummated, to be paid to
all CPI shareholders other than PAL.
o Merger of CPI into CAC.
o Merger occurs on or about _____________________, 2000.
o Shareholders will be instructed by mail regarding payment for their
shares of CPI.
o After Merger, CPI will be wholly owned by PAL.
Election of Maureen Mulholland to the Board of Directors
In January, 1999, PAL purchased certain CPI promissory notes, warrants
and 1,000,000 shares of common stock. Immediately after that transaction, Susan
Larson, the Manager of PAL, was elected to CPI's Board of Directors. PAL has
loaned $260,000 to CPI. On May 25, 1999, PAL exercised the warrants and
purchased 1,102,114 shares of common stock at a purchase price of $.25 per
share. It paid for those shares by surrendering approximately $275,000 in
principal amount of the promissory notes of CPI which PAL held. In conjunction
with the purchase, PAL agreed to forgive the remaining principal notes and
accrued interest, totaling $1,770,000.
Currently, the Board of Directors of CPI consists of two persons. Roger
Love who has served as a director since 1972 and is the owner of approximately
13% of CPI and Susan M. Larson who has served as a director since 1999 and is
the managing member of PAL, which owns approximately 57% of the outstanding
shares of CPI.
At the present time, the Board of Directors of CPI (Ms. Larson and Mr.
Love) is unable to reach agreement on a number of matters, including among
others, the future direction of CPI, the filing of CPI's annual report with the
Securities and Exchange Commission on Form 10-KSB and the proposed cash out
Merger of CPI into CAC. The cause of this deadlock on CPI's Board of Directors
is Mr. Love's ongoing objection to PAL's acquisition of stock warrants and notes
of CPI. Independent counsel, after reviewing all the documentation and hearing
from Mr. Love, has determined that PAL properly purchased the stock, warrants
and notes and properly exercised the warrants. As a result of a lack of
consensus, CPI is faced with substantial obstacles to continue as a going
concern. In addition, due to the failure to timely file with the Securities and
Exchange Commission the CPI annual report for 1999 on Form 10-KSB, CPI common
stock has been delisted from the Nasdaq OTC Bulletin Board and is now only
listed in the National Quotation Bureau's "pink sheets."
PAL as the majority shareholder of CPI, believes that it is in the best
interests of CPI to expand the current Board of Directors by the election of
Maureen Mulholland to resolve these matters.
Maureen Mulholland is the treasurer of PAL, having served in that
position since 1988. Prior to her employment at PAL, Ms. Mulholland was a
consultant to Information Resources Inc. and was employed by The First National
Bank of Chicago for fifteen years. Ms. Mulholland graduated in 1977 from Butler
University, Indianapolis, Indiana with a B.S. in accounting. Ms. Mulholland is a
certified public accountant.
Upon her election, Maureen Mulholland has advised she intends to
approve and sign the 1999 annual report (together with Ms. Larson) so that it
may be filed in accordance with the securities laws. A copy of the Form 10-KSB
for the year ended December 31, 1999, as proposed to be filed when signed by a
majority of directors of CPI, including audited financial statements of CPI, is
attached to this Information Statement as Exhibit A.
Ms. Mulholland has further advised that upon the effective date of her
election as a director, she intends to vote in favor of the proposed Merger,
thereby providing the majority vote of the directors of CPI in favor of the
Merger in support of the majority consent of the shareholders of CPI (PAL) to
accomplish the Merger, as required by New Jersey law.
On [twenty days from the date of notice], 2000, the Board of Directors
approval of annual report for CPI, on Form 10-KSB,and the cash-out Merger will
be effective.
The Merger
PAL currently owns 2,102,114 shares of common stock of CPI, which
represents approximately 57% of the total outstanding common stock. PAL intends
to merge CPI into CAC, an entity specifically created for purposes of this
Merger and wholly owned by PAL, by paying all shareholders of CPI other than PAL
$.28 plus interest thereon from ____________, 2000 through the Merger Date
defined below for each share of common stock owned by them on the date the
Merger is effective under the laws of the state of New Jersey. The date of the
Merger is presently intended to be _______________, 2000 ("Merger Date").
Following the Merger, CPI will be wholly owned by PAL and will cease being a
publicly traded company.
Pursuant to Section 14A:5-6 of the NJBCA, as a majority shareholder of
CPI, upon approval of the Merger by the Board of Directors, PAL has voted by
written consent in favor of the Merger to be effective immediately following
approval of the Merger by the CPI Board of Directors. PAL is providing the funds
to CAC for payment to the minority CPI shareholders for their shares.
The Merger is intended to reduce the costs of CPI associated with being
a publicly traded company and to make capital more likely available to CPI for
other business purposes. According to the proposed CPI annual report at December
31, 1999, CPI had 113 shareholders of record and approximately 600 beneficial
shareholders.
The written consents of PAL to elect Ms. Mulholland a director and to
approve the Merger, as CPI's majority shareholder, are attached as Exhibit B to
this Information Statement. The proposed Agreement and Plan of Merger is
attached as Exhibit C.
Payment to CPI Shareholders
Each shareholder of CPI (other than PAL) on the Merger Date will
receive payment of $.28 for each share of common stock owned plus interest
thereon from ____________, 2000 through the Merger Date. PAL will not receive
any payment for its shares. This amount per share is based upon the public
inside bid price for CPI's common stock as reported in the National Quotation
Bureau's "pink sheets" for the 30 days before the Merger was publicly announced,
in accordance with New Jersey law. On March 30, 2000, the last day CPI shares
appear to have been publicly traded, the closing price for CPI's common stock on
the Nasdaq OTC Bulletin Board was $.38. On April 27, 2000, the CPI common stock
was "delisted" from the Nasdaq OTC Bulletin Board and to the best of PAL's
knowledge, CPI shares have not traded since March 30, 2000. See "Price Range of
Common Stock" for other historical reported prices.
Method of Payment to CPI Shareholders
As soon as practicable after the Merger, CAC or CAC's appointed
exchange agent will send to each former shareholder of CPI a letter of
transmittal which is to be completed and returned in exchange for payment for
CPI shares owned. The transmittal letter will also contain instructions
explaining the procedure for surrendering CPI's stock certificates.
Shareholders Should Not Return Any Stock Certificates Now.
Only those holders of CPI's common stock who surrender their stock
certificates to the exchange agent or CAC with the properly completed
transmittal letter will receive payment for their shares. Holders of unexchanged
stock certificates will not be entitled to receive any payment until they
surrender their stock certificates. Shares which are held by a broker/dealer,
should be handled and exchanged by the broker/dealer and a credit in the amount
exchanged should be made to such shareholders' accounts. The exchange agent will
provide instructions concerning lost, misplaced or destroyed certificates, as
provided in the Agreement and Plan of Merger.
No Solicitation of Votes
Under Section 14A:5-6 of the NJBCA, in lieu of a meeting, shareholder
action may be taken by written consent of a majority of the outstanding shares
necessary to authorize the transaction. PAL owns 2,102,114 shares of common
stock of CPI, which represents approximately 57% of the total number of
outstanding shares of CPI eligible to vote. Therefore, other than PAL's vote, no
vote of any other shareholder of CPI is required to authorize the election of
Maureen Mulholland to the Board of Directors or to approve the Merger. As such,
on __________, 2000, PAL has voted in favor of the election of Maureen
Mulholland to the Board of Directors. On __________, 2000, the effective date of
Ms. Mulholland's election, the Board of Directors will approve the CPI 1999
annual report on Form 10-KSB for filing with the Securities and Exchange
Commission and will formally recommend the Merger. Immediately thereafter, PAL's
vote by written consent in favor of the Merger will be effective.
PAL is not required to solicit and is not soliciting votes or consents
from any of CPI's other shareholders.
Notice of completion of the Merger will be sent to all shareholders
(other than PAL) after the Merger occurs along with a letter describing how to
receive payment for CPI shares.
No Appraisal Rights
CPI's shareholders do not have any appraisal rights under NJBCA in
connection with the Merger. Under the New Jersey Shareholders Protection Act,
however, CAC is obligated to pay at least $.28 per share for the shares of CPI
other than those owned by PAL.
Business of CPI
CPI designs, manufactures, markets and services products in three
distinct market categories: energy efficient lighting, power protection systems
and emergency lighting. The Astralite brand is focused on the energy efficient
lighting market. The power protection business is concentrated on the power
protection market and emergency lighting market.
Power protection systems condition and supply electrical power to
computers, electronic equipment and lighting systems when utility power fails or
is contaminated. These systems serve as a temporary bridge between the
termination of utility power and the commencement of power from generators, the
restoration of utility power, or provide time for an orderly computer system
shutdown without damage or loss of data. Products are automatically activated
and provide electrical power to the protected equipment for periods of time
ranging from 10 minutes to 8 hours.
CPI concentrates on three niches of the power protection market: (1)
Emergency Lighting, (2) Custom Products, and (3) Standard Products. CPI's main
focus is the emergency lighting market, where it offers a line of power
protection devices (lighting inverters) which backup lighting fixtures. Required
by fire code, all public buildings must provide for a minimum of 90 minutes of
emergency lighting. This can be accomplished via generator, battery powered unit
lights, or Inverters.
CPI's power protection equipment can be divided into four
sub-categories: double conversion, on-line uninterruptible power systems (UPS),
ferroresonant on-line uninterruptible systems (UPS), fast transfer backup power
systems, and Standard transfer backup power systems.
The lighting retrofit market is driven by demands for energy
conservation and related pollution reductions and cost savings from numerous
sources including the Federal Government, utility power companies and consumers.
Numerous enterprises, including both Fortune 500 and small start-up companies,
continue to enter the marketplace with various product offerings, ranging from
energy efficient lamp replacements to lighting dimmers and controls.
Furthermore, utility-sponsored energy management firms and contractors (DSMs and
ESCOs) have entered the marketplace offering complete turnkey services to reduce
energy consumption in commercial, industrial and public facilities. Most
recently the Environmental Protection Agency (EPA) has launched several major
campaigns to promote energy efficient lighting products.
In 1993, CPI, under the brand name Astralite, developed a 1.8-watt
solid state Light Emitting Diode (LED) illuminating light source to retrofit the
high energy consuming standard incandescent lamps used in Exit Signs. Since
1993, Astralite has expanded its product line to include both LED retrofit kits
and complete LED-based Exit Signs. In December of 1997, in compliance with the
revised UL code, CPI introduced a new LED based retrofit kit and became the
first universally listed supplier of this product. This kit represents an
advance in product design taking advantage of new superbright LED's from
Hewlett-Packard.
No Regulatory Approvals Needed
No federal or state regulatory requirements or approvals are required
to be completed or obtained in connection with the Merger. CAC and CPI will file
all appropriate notifications in New Jersey and in Delaware to consummate the
Merger as of the Merger Date.
Federal Income Tax Consequences
The following summarizes the material federal income tax consequences
of the Merger. This discussion is based upon the Internal Revenue Code of 1986,
as amended.
Each shareholder of CPI will be required to recognize a gain or a loss
to be measured by the difference between the amount of cash received and the tax
basis of each shareholder's CPI shares. This gain or loss will be considered
"capital" gain or loss provided the shares were held as a capital asset. The
capital gain or loss may be a long term capital gain or loss if the CPI shares
had been, on the Merger Date, held for more than one year.
This discussion does not address all aspects of federal income taxation
that may be important to a CPI shareholder in light of each shareholder's
particular circumstances or to a shareholder subject to special rules.
This discussion of material federal income tax consequences is intended
to provide a general summary and does not address tax consequences that may vary
with individual circumstances. Accordingly, we urge each shareholder to consult
his or her own tax advisor to determine the particular federal, state or local
tax consequences.
PRICE RANGE OF COMMON STOCK
Until April 27, 2000, CPI's common stock was traded on the Nasdaq OTC
Bulletin Board. The following table shows the high and low last reported closing
price per share of CPI's common stock for the calendar quarters indicated based
on published financial sources.
DATE HIGH LOW
- ---------------------------------------------------------------
1998
1st Quarter 0.375 0.1875
2nd Quarter 0.1875 0.1875
3rd Quarter 0.1875 0.125
4th Quarter 0.25 0.09375
- ---------------------------------------------------------------
1999
1st Quarter 0.34375 0.23
2nd Quarter 0.34375 0.21875
3rd Quarter 0.24 0.21875
4th Quarter 0.28125 0.22
- ---------------------------------------------------------------
2000
1st Quarter 0.625 0.22
- ---------------------------------------------------------------
To the best of PAL's knowledge, the last trade in CPI common stock
occurred on March 30, 2000 at $.38 per share. Since that time, PAL believes that
the National Quotation Bureau "pink sheets" have published $.28 bid and $.31
asked price per share, but it is unaware of any trades having been consummated.
SELECTED FINANCIAL DATA
The following table shows selected historical audited financial
information for CPI for the years ended December 31, 1998 and 1999, and
unaudited for the three months ended March 31, 2000. This information is only a
summary and you should read it in conjunction with CPI's historical financial
statements and related notes as well as Management's Discussion and Analysis of
Financial Condition and Results of Operations contained in CPI's annual reports,
quarterly reports and other information previously filed with The Securities and
Exchange Commission (the "SEC").
CPI's annual report for the year ended December 31, 1999, in the form
proposed to be filed with the SEC on Form 10-KSB, is attached to this
Information Statement as Exhibit A.
1999 1998
----------- -----------
Net Sales $5,960,595 $8,443,473
Net Income (Loss) 1,998,949* 6,078
Total Assets 2,335,380 2,666,501
Total Liabilities 2,335,380 5,289,271
Shareholders' Deficit (348,293) (2,622,770)
* Including $1,770,000 forgiveness of indebtedness by PAL and $182,000
forgiveness of indebtedness by a former officer of CPI. Operating income for
1999 amounted to $46,754, with $1,952,195 recognized as extraordinary income.
MORE INFORMATION
CPI files annual, quarterly and special reports and proxy statements
and other information with the Securities and Exchange Commission. You may read
and copy any reports, statements or other information CPI files at the SEC's
public reference room at 450 Fifth Street N.W., Washington, D.C. 20549, or on
the SEC's website, http://www.sec.gov.
You may call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. You may also obtain copies of the filings CPI has made with SEC
directly from CPI by requesting them in writing or by telephone at the following
address:
Computer Power Inc.
124 West Main Street
High Bridge, New Jersey 08829
908.638.8000
Payment of Expenses of this Information Statement
All of the costs and expenses associated with the preparation, filing
and dissemination of this Notice and Information Statement are being borne by
PAL and not CPI.