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[Letterhead of The ASK Group, Inc.]
May 25, 1994
Dear Stockholder:
As you may be aware, on May 18, 1994, ASK entered into a merger agreement
with Computer Associates International, Inc. ("CA") and its wholly owned
subsidiary, Speedbird Merge, Inc. ("Speedbird"), pursuant to which CA agreed to
commence as promptly as practicable a tender offer for ASK common stock for a
cash price of $13.25 per share. The agreement provides that, following
completion of the offer, CA will cause Speedbird to merge into ASK and any ASK
shares that are not acquired through the tender offer will be converted in the
merger into the right to receive the same consideration as is paid in the tender
offer.
YOUR BOARD HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE TRANSACTIONS
CONTEMPLATED BY THE MERGER AGREEMENT ARE FAIR TO, AND IN THE BEST INTERESTS OF,
THE COMPANY AND ITS STOCKHOLDERS. THE BOARD RECOMMENDS THAT YOU ACCEPT THE OFFER
AND TENDER YOUR SHARES PURSUANT TO THE OFFER.
In arriving at its recommendation, the Board gave careful consideration to
a number of factors as described in the enclosed Schedule 14D-9, including the
opinion of Bear, Stearns & Co. Inc., ASK's financial advisor, that the
consideration to be received pursuant to the merger agreement is fair to ASK's
stockholders from a financial point of view. We urge you to read the enclosed
Schedule 14D-9 and the related CA tender offer materials carefully.
On behalf of ASK's Board of Directors, I thank you for the support you have
given to the Company over the years.
Sincerely,
Paul C. Ely, Jr.
Chairman
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(D)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
THE ASK GROUP, INC.
(NAME OF SUBJECT COMPANY)
THE ASK GROUP, INC.
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, $.01 PAR VALUE
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
(TITLE OF CLASS OF SECURITIES)
001903103
(CUSIP NUMBER OF CLASS OF SECURITIES)
PAUL C. ELY, JR.
CHAIRMAN OF THE BOARD
THE ASK GROUP, INC.
2880 SCOTT BLVD.
SANTA CLARA, CALIFORNIA 95052
(408) 562-8800
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE
NOTICE AND COMMUNICATIONS ON BEHALF OF PERSON(S) FILING STATEMENT)
COPY TO:
LARRY W. SONSINI, ESQ.
DOUGLAS H. COLLOM, ESQ.
JOHN A. FORE, ESQ.
WILSON, SONSINI, GOODRICH & ROSATI
650 PAGE MILL ROAD
PALO ALTO, CALIFORNIA 94304-1050
(415) 493-9300
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ITEM 1. SECURITY AND SUBJECT COMPANY
The name of the subject company is The ASK Group, Inc., a Delaware
corporation (the "Company"), and the address of the principal executive offices
of the Company is 2880 Scott Boulevard, Santa Clara, California 95052-8013. The
title and the class of equity securities to which this statement relates is the
Common Stock, $0.01 par value per share (the "Shares"), including associated
Common Stock Purchase Rights (the "Rights") issued pursuant to the Common Shares
Rights Agreement, dated as of August 15, 1990, as amended (the "Rights
Agreement"), between the Company and The First National Bank of Boston, as
Rights Agent. Unless the context indicates otherwise, all references herein to
the Shares shall include the associated Rights.
ITEM 2. TENDER OFFER OF THE BIDDER
This statement relates to the tender offer (the "Offer") disclosed in a
Tender Offer Statement on Schedule 14D-1, dated May 25, 1994 (the "Schedule
14D-1"), of Speedbird Merge, Inc. ("Merger Subsidiary"), a Delaware corporation
and wholly owned subsidiary of Computer Associates International, Inc., a
Delaware corporation (the "Buyer"), to purchase all of the outstanding Shares at
a price of $13.25 per Share, net to the Seller in cash without interest, subject
to certain conditions set forth therein. The Offer is being made by Merger
Subsidiary pursuant to the Agreement and Plan of Merger, dated as of May 18,
1994 (the "Merger Agreement"), among the Company, the Buyer and Merger
Subsidiary, a copy of which is filed as Exhibit 1 to this statement and is
incorporated herein by reference. Subject to certain terms and conditions of the
Merger Agreement, the merger (the "Merger") of Merger Subsidiary and the Company
is expected to be consummated as soon as practicable after the expiration of the
Offer. The Schedule 14D-1 states that the address of the principal executive
offices of the Buyer and Merger Subsidiary is 1 Computer Associates Plaza,
Islandia, New York 11788. A copy of the press release issued by the Company and
Buyer on May 19, 1994 is filed as Exhibit 2 to this statement and is
incorporated herein by reference.
ITEM 3. IDENTITY AND BACKGROUND
(a) The name and business address of the Company, which is the entity
filing this statement, are set forth in Item 1 above.
(b) Certain contracts, agreements, arrangements and understandings between
the Company and certain of its directors, executive officers and affiliates are
described in the Company's Information Statement attached hereto as Annex A
which is incorporated herein by reference. Certain contracts, agreements,
arrangements and understandings between the Company and certain of its
directors, executive officers and affiliates are described on pages 2-13 in
sections entitled "Security Ownership of Principal Stockholders, Directors and
Executive Officers", "Employee Benefit Plans", "Director Compensation",
"Executive Compensation" and "Management Transactions" of the Company's Proxy
Statement dated October 22, 1993 for the Annual Meeting of Stockholders held on
November 22, 1993, copies of which pages are filed as Exhibit 3 to this
statement and are incorporated by reference herein. Certain contracts,
agreements, arrangements and understandings relating to the Company's directors,
executive officers and affiliates are contained in the Merger Agreement, and
certain other agreements affected thereby or to be entered into in connection
therewith, are described below under "Merger Agreement," "Stockholder Option
Agreement" and "Additional Agreements, Arrangements and Understandings".
MERGER AGREEMENT
The following summary of the Merger Agreement is qualified in its entirety
by reference to the complete text of the Merger Agreement, which is attached
hereto as Exhibit 1 and incorporated herein by reference.
The Offer is being made pursuant to the Merger Agreement. Pursuant to the
Merger Agreement, Buyer has agreed to cause Merger Subsidiary to accept Shares
validly tendered pursuant to the Offer as soon as legally permitted and to pay
for all such Shares as promptly as practicable thereafter, following the
satisfaction or waiver of the conditions to the Offer (which conditions are
described below); provided, that Buyer may
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extend the Offer for a period of time of not more than 15 business days to meet
the objective (but not the condition) that there shall be validly tendered,
prior to the expiration date of the Offer (as so extended) and not withdrawn a
number of Shares, which, together with the Shares then owned by Buyer and Merger
Subsidiary, represents at least 90% of the Shares on a fully diluted basis (as
defined below). The Merger Agreement provides that the obligation of Merger
Subsidiary to purchase Shares tendered pursuant to the Offer shall be subject to
there being tendered and not withdrawn a number of Shares such that upon
consummation of the Offer, Buyer and Merger Subsidiary would beneficially own,
in the aggregate, a majority of the number of outstanding Shares on a fully
diluted basis (the "Minimum Condition") and to the other conditions set forth in
the Offer. Buyer and Merger Subsidiary expressly reserve the right to waive any
of the conditions to the Offer (other than the Minimum Condition) and to make
any change in the terms of the Offer; provided, that no change may be made which
changes the form of consideration to be paid for the Shares or decreases the
price per Share or number of Shares sought in the Offer or which imposes
additional conditions to the Offer or which materially adversely (from the
holders' of the Shares point of view) changes the conditions to the Offer. For
the purposes hereof, "on a fully diluted basis" means the number of outstanding
Shares, assuming the exercise of all outstanding options, rights and convertible
securities (if any) and the issuance of all Shares that the Company is obligated
to issue.
Consideration to be Paid in the Merger. The Merger Agreement provides that,
following the purchase of Shares pursuant to the Offer and upon the terms (but
subject to the conditions) set forth in the Merger Agreement, Merger Subsidiary
will be merged with and into the Company (the "Merger"). In the Merger, each
outstanding Share not held, directly or indirectly, by Buyer, Merger Subsidiary
or any of their respective subsidiaries or by the Company (other than Shares as
to which appraisal rights have been exercised pursuant to Section 262 of the
Delaware Law ("Dissenting Shares")) will be converted into the right to receive
$13.25 in cash. Each share of common stock of Merger Subsidiary issued and
outstanding immediately prior to the time of the Merger will be converted into
and become one share of common stock of the surviving corporation of the Merger,
which will thereupon become a wholly owned subsidiary of Buyer. The Merger
Agreement provides that the Merger will be consummated as soon as practicable
after the satisfaction or waiver of the conditions to the Merger and shall
become effective upon filing of a certificate of merger with the Secretary of
State of Delaware or at such later time specified in the certificate (the
"Effective Time").
Board Representation. The Merger Agreement provides that, effective upon
the acceptance for payment by the Merger Subsidiary pursuant to the Offer of
Shares in an amount not less than the Minimum Condition, Buyer shall be entitled
to designate the number of directors, rounded up to the nearest whole number, on
the Company's Board of Directors, as will make the percentage of the Company's
directors designated by Buyer equal to the percentage of outstanding Shares then
owned (or accepted for payment) by Buyer and Merger Subsidiary. The Company has
agreed that it will take all necessary and appropriate action in accordance with
applicable law and its Certificate of Incorporation and By-Laws to cause Buyer's
designees to be elected or appointed to the Company's Board of Directors,
including increasing the number of directors and seeking and accepting
resignations of incumbent directors. Following the appointment of Buyer's
designees to the Board, and prior to the Effective Time, any amendment or
termination of the Merger Agreement, extension for the performance or waiver of
the obligations or other acts of Buyer or Merger Subsidiary or waiver of the
Company's rights under the Merger Agreement shall require the approval of a
majority of the directors who are neither designees of Buyer nor employees of
the Company.
The Merger Agreement provides that the directors and officers of Merger
Subsidiary immediately prior to the Effective Time will be the initial directors
and officers of the surviving corporation, each to hold office until his or her
respective successors are duly elected and qualified. As provided in the Merger
Agreement, the Certificate of Incorporation of Merger Subsidiary (except for a
change in the name of the corporation) and the By-Laws of Merger Subsidiary, as
in effect immediately prior to the Effective Time, will be the Certificate of
Incorporation and By-Laws of the surviving corporation.
Stockholder Meeting. The Merger Agreement provides that, if required by
applicable law, the Company will call a meeting of its stockholders to be held
as promptly as practicable after the consummation of the Offer for the purpose
of obtaining any stockholder approvals required in connection with the
transactions contemplated by the Merger Agreement. Under the Merger Agreement,
at any such meeting Buyer and
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Merger Subsidiary will vote all Shares acquired or beneficially owned by them in
favor of approval of the Merger Agreement and the Merger.
If the Minimum Condition is satisfied pursuant to the Offer, Merger
Subsidiary will hold at least a majority of the outstanding Shares on a fully
diluted basis and will be able to assure that the requisite number of
affirmative votes in favor of approval of the Merger Agreement will be received,
even if no other stockholder votes in favor thereof. If Merger Subsidiary
obtains at least 90% of the outstanding Shares, it may effect the Merger without
any notice to and without the authorization of the stockholders of the Company
pursuant to the "short-form" merger provisions of Delaware law.
Representations and Warranties. The Merger Agreement contains various
representations and warranties of the parties thereto. These include
representations and warranties by the Company with respect to, among other
things, corporate existence and power, corporate authorization, governmental
authorization, non-contravention, capitalization, subsidiaries, Securities and
Exchange Commission ("SEC") filings, financial statements, disclosure documents,
absence of certain changes, material liabilities, litigation, taxes, employee
benefits, compliance with laws, finders' fees, environmental matters, material
contracts, intellectual property and insurance coverage.
Buyer and Merger Subsidiary have also made certain representations and
warranties with respect to, among other things, corporate existence and power,
corporate authorization, governmental authorization, non-contravention, finders'
fees and financing.
Conduct of Business Pending the Merger. The Company has agreed that during
the period from the date of the Merger Agreement to the Effective Time, except
as otherwise provided in the Merger Agreement or consented to by Buyer (which
consent shall not be unreasonably withheld), the Company and its subsidiaries
will conduct their business in the ordinary course consistent with past practice
and will use their best efforts to preserve intact their business organizations
and maintain satisfactory relationships with third parties with whom they have
business relationships. The Company has further agreed that, until the Effective
Time, without prior approval of Buyer (which approval shall not be unreasonably
withheld), neither the Company nor any of its subsidiaries will, among other
things: (i) except as expressly contemplated by the Merger Agreement, amend or
otherwise change its charter or by-laws or the Rights Agreement, (ii) enter into
any material commitment or transaction (including, but not limited to, any
material borrowing, capital expenditure or sale of assets), other than in the
ordinary course of business, (iii) grant any increase in the compensation
payable or to become payable by the Company or any of its subsidiaries to any of
their officers or employees or any increase in any bonus, insurance, pension or
other employee benefit plan, payment or arrangement (including, but not limited
to, the granting of stock options, stock appreciation rights or restricted stock
awards made to, for or with such officers or employees, (iv) enter into any
employment agreement or, except in accordance with the Company's existing
written policy, grant any severance or termination pay with or to any officer,
director or employee of the Company or any of its subsidiaries, (v) except as
expressly contemplated by the Merger Agreement, amend any of its stock option or
stock purchase plans, including any options or rights thereunder, (vi) enter
into any foreign currency trading transactions, other than in the ordinary
course of business consistent with past practices and not, in the aggregate, in
excess of $500,000, (vii) enter into any customer sale or license agreements
with non-standard terms or at discounts from list prices in excess of 20%,
(viii) pay commissions to sales employees except on the basis of executed
customer contracts with respect to products actually delivered to customers,
(ix) enter into any contracts or series of related contracts involving amounts
in excess of $50,000 for any transaction or $150,000 for any series of
transactions, (x) enter into any customer agreements providing for product
replacements, or (xi) (A) take any action, or agree or commit to take any action
that would make any representation and warranty of the Company under the Merger
Agreement inaccurate in any respect at, or as of any time prior to, the
Effective Time or (B) omit or agree or commit to omit to take any action
necessary to prevent any such representation or warrant from being inaccurate in
any respect at any such time.
The Company has agreed to give Buyer and its representatives full access to
the offices, properties, books and records, of the Company and its subsidiaries,
and to furnish Buyer with other information concerning its business, properties
and personnel as Buyer may reasonably request.
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Subject to the terms and conditions of the Merger Agreement, each of Buyer,
Merger Subsidiary and the Company has agreed to use its 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 the Merger Agreement.
Agreements With Respect to Employee Matters. The Company has agreed to
cause each of its subsidiaries to cause each officer and director of such
subsidiary to deliver resignations to such subsidiary effective at the Effective
Time. The Company has further agreed under the Merger Agreement to terminate its
1992 Overseas Employee Stock Purchase Plan and its 1993 Employee Stock Purchase
Plan and to amend its 401(k) plan prior to the Effective Time to permit employer
matching contributions thereunder to be made in cash. In the Merger Agreement,
Buyer stated that it intends to terminate or discontinue contributions to the
Company's 401(k) plan or merge it into Buyer's 401(k) plan, and that it intends
to make its 401(k) plan available after the Effective Time to employees of the
Company.
Under the Merger Agreement, stock option vesting of Company employee stock
options will be treated in two ways. First, with respect to all outstanding
stock options granted under the Company's 1991 Stock Plan (including options
issued in the Company's previously announced option repricing exchange program,
but excluding options under the Company's 1991 United Kingdom Stock Option
Plan), options will have their vesting automatically fully accelerated
immediately upon the acceptance of Shares pursuant to the Offer. Second, with
respect to all outstanding stock options granted under the Company's other
option plans, options will only have their vesting accelerated if (i) Buyer
directs the Company to cause such options to terminate prior to the Effective
Time or (ii) Buyer designates such options as options to be assumed and cashed
out upon exercise at a per Share price equal to the excess, if any, of the
Merger consideration ($13.25) over the applicable option exercise price,
provided that options under the 1991 United Kingdom Stock Option Plan will not
in any event have their vesting accelerated.
With respect to how the options will be treated by Buyer (other than as to
vesting, which is described immediately above), Buyer has three choices with
respect to all outstanding stock options granted under the Company's various
stock option plans. First, Buyer may designate such options that it will cash
out when exercised by making a per Share cash payment equal to the excess, if
any, of the Merger consideration over the applicable option exercise price with
respect to all Shares subject to such option (without regard to vesting).
Second, Buyer may direct the Company to cause such options to terminate prior to
the Effective Time in a manner consistent with the provisions of the plan under
which such options were granted. Third, Buyer may assume outstanding options.
Buyer has agreed, in the Merger Agreement, that all outstanding options not
designated by Buyer to be cashed out by Buyer on exercise or terminated will be
assumed by converting them into options to buy an amount of common stock of
Buyer based on the average closing price of Buyer common stock for the five
trading days preceding the Effective Time, while preserving the aggregate
exercise price (except that the aggregate exercise price might increase slightly
as any exercise price fraction arising from the conversion will be increased to
the next whole cent).
The Company and Buyer have agreed to take all actions necessary so that the
stock options previously granted to Paul C. Ely, Jr., Chairman of the Board of
Directors of the Company, for 75,000 Shares, to Robert H. Waterman, Jr., Vice
Chairman of the Board of Directors of the Company, for 50,000 Shares, to Gary B.
Filler, Executive Vice President of Operations and Chief Financial Officer of
the Company, for 250,000 Shares and to Eric D. Carlson, President and Chief
Executive Officer of the Company, for 250,000 Shares, will be amended by the
Company's Board of Directors (and the 1991 Stock Plan amended by the Company's
Board of Directors as necessary) prior to the Effective Time, to provide for
their cancellation in exchange for a 1995 cash payment equal to the per Share
Merger consideration minus the exercise price relating to such options.
Other Offers. Pursuant to the Merger Agreement, the Company has agreed that
the Company and its subsidiaries and the officers, directors, employees or other
agents of the Company and its subsidiaries will not, directly or indirectly (i)
take any action to solicit, initiate or encourage any Acquisition Proposal (as
defined below) or (ii) subject to the fiduciary duties of the Board of Directors
under applicable law upon the advice of counsel to the Company, and in response
to an unsolicited request therefor by a person whom a majority of the
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Company's Board of Directors believes intends to submit a Superior Acquisition
Proposal (as defined below), 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. The Company has agreed to promptly notify Buyer after
receipt of any Acquisition Proposal or any indication that any Person is
considering making an 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 may be considering making, or has made, an Acquisition Proposal
and has agreed to keep Buyer fully informed of the status and details of any
such Acquisition Proposal, indication or request. "Acquisition Proposal" means
any offer or proposal for, or any indication of interest in, a merger or other
business combination involving the Company or any of its subsidiaries or the
acquisition of any equity interest in, or a substantial portion of the assets
of, the Company or any of its subsidiaries, other than the transactions
contemplated by the Merger Agreement. "Superior Acquisition Proposal" means an
Acquisition Proposal which a majority of the disinterested directors determines
in its good faith judgment (based on advice of the Company's independent
financial advisor) to be more favorable to the Company's stockholders than the
Offer or the Merger, and for which financing, to the extent required, is then
committed. Nothing in the Merger Agreement shall be deemed to prohibit the
Company and its Board of Directors from (i) taking and disclosing a position
with respect to a tender offer by a third party pursuant to Rules 14d-9 and
14e-2(a) promulgated under the Securities Exchange Act of 1934 (the "Exchange
Act") and (ii) making such disclosures to the Company's stockholders which, in
the judgment of and subject to the fiduciary duties of the Board of Directors of
the Company, with the advice of counsel to the Company, may be required under
applicable law. Under certain circumstances, the Merger Agreement may be
terminated and certain fees may be payable by the Company to Buyer if, prior to
the purchase of any Shares under the Offer, the Company shall have received any
Acquisition Proposal which the Board of Directors of the Company has determined
is more favorable to the Company's stockholders than the transactions
contemplated by the Merger Agreement. See "Termination" and "Fees and Expenses"
below.
Agreement With Respect to Director and Officer Indemnification and
Insurance. Pursuant to the Merger Agreement, Buyer has agreed, subject to any
limitation imposed under applicable law, that all rights to indemnification now
existing in favor of the directors and officers of the Company as provided in
the Company's Certificate of Incorporation or By-Laws in effect on the date of
the Merger Agreement shall survive the Merger and shall continue in effect for a
period of six years from the consummation of the Merger. Buyer has further
agreed that it will cause the surviving corporation to use its reasonable
efforts to maintain in effect for three years after the Effective Time,
officers' and directors' liability insurance covering those persons currently
covered by the Company's officers' and directors' liability insurance policy on
terms with respect to coverage and amount no less favorable than those policies
in effect at May 18, 1994 with respect to acts or omissions occurring before the
Effective Time, except that the surviving corporation will not be required to
pay premiums for any year an amount exceeding the Company's premium cost for its
policy for the fiscal year ended June 30, 1993. The foregoing agreements with
respect to director and officer indemnification and insurance inure to the
benefit of those persons who were or are officers or directors of the Company
prior to the Effective Time.
Rights Agreement. The Company has amended the Rights Agreement to make it
and the Rights thereunder inapplicable to the Offer, the Merger and the
Stockholder Option Agreement (as defined below). A copy of the amendment to the
Rights Plan is filed as Exhibit 4 to this statement and is incorporated herein
by reference. See Item 8 of this statement. The Rights will expire upon
consummation of the Merger.
Other Agreements. Buyer has agreed that it will take all action necessary
to cause Merger Subsidiary to perform its obligations under the Merger Agreement
(including providing Merger Subsidiary with sufficient funds to pay the
aggregate purchase price of Shares accepted for purchase pursuant to the Offer)
and to consummate the Merger on the terms and conditions set forth in the Merger
Agreement. In addition, Buyer has agreed to vote all Shares beneficially owned
by it in favor of adoption of the Merger Agreement after consummation of the
Offer. Buyer also made certain agreements regarding confidentiality, including
its
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agreement to hold, and use its best efforts to cause its officers, directors,
employees, accountants, counsel, consultants, advisors and agents to hold, in
confidence (subject to certain exceptions), unless compelled to disclose by
judicial or administrative process or by other requirements of law, certain
confidential documents and information concerning the Company and its
subsidiaries furnished to Buyer in connection with the transactions contemplated
by the Merger Agreement.
Conditions to the Merger. Pursuant to the Merger Agreement, the respective
obligations of each party to consummate the Merger are subject to the
satisfaction or waiver, where permissible, at or before the Effective Time of
the following conditions: (i) Merger Subsidiary shall have accepted for payment
and paid for Shares tendered pursuant to the Offer in an amount equal to at
least the Minimum Condition, (ii) the approval of the Merger Agreement by the
affirmative vote of the stockholders by requisite vote in accordance with
applicable law, if such vote is required by applicable law, (iii) no provision
of any applicable law or regulation and no judgment, injunction, order or decree
shall prohibit the consummation of the Merger, (iv) the applicable waiting
period (and any extension thereof) under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act") shall have expired or been terminated,
and (v) all actions by or in respect of or filing with any governmental body,
agency, official or authority required to consummate the Merger shall have been
obtained. In addition, the obligations of Buyer and Merger Subsidiary to
consummate the Merger are subject to the satisfaction of the further conditions
that no court, arbitrator or governmental body, agency or official shall have
issued any order, and there shall not be any statute, rule or regulation,
restraining or prohibiting the consummation of the Merger or the effective
operation of the business of the Company and its subsidiaries after the
Effective Time, and no proceeding challenging the Merger Agreement or the
transactions contemplated thereby or seeking to prohibit, alter, prevent or
materially delay the Merger shall have been instituted by any person before any
court, arbitrator or governmental body, agency or official and be pending.
Termination. The Merger Agreement may be terminated by (i) the mutual
written consent of Buyer and the Company, (ii) by either the Company or Buyer,
(A) if the Merger has not been consummated by December 31, 1994, (B) if there
shall be any law or regulation that makes consummation of the Merger illegal or
otherwise prohibited or if any judgment injunction, order or decree enjoining
Buyer or the Company from consummating the Merger is entered and such judgment,
injunction, order or decree shall become final and nonappealable, (C) if the
Offer expires without any Shares having been purchased promptly thereafter
pursuant to the Offer (unless the party proposing to so terminate is in material
breach of its representations and warranties, covenants or other obligations
under the Merger Agreement) or (D) prior to the purchase of Shares pursuant to
the Offer, if there has been a willful breach by the other party of any
representation, warranty, covenant or agreement set forth in the Merger
Agreement, (iii) by Buyer, upon the occurrence of any Trigger Event (as defined
under "Fees and Expenses" below), (iv) by the Company, if Merger Subsidiary
shall have failed to commence the Offer in accordance with the Merger Agreement,
or (v) by the Company, prior to the purchase of any Shares pursuant to the
Offer, if the Company receives an Acquisition Proposal which the Company's Board
of Directors determines is more favorable to the Stockholders than the Offer and
the Merger.
Conditions of the Offer. Notwithstanding any other provision of the Offer,
Merger Subsidiary shall not be required to accept for payment or pay for any
Shares, and may terminate the Offer, if (i) by the expiration of the Offer, the
Minimum Condition shall not have been satisfied, (ii) by the expiration of the
Offer, the applicable waiting period (and any extension thereof) under the HSR
Act shall not have expired or been terminated or (iii) at any time on or after
May 18, 1994 and prior to the acceptance for payment of Shares pursuant to the
Offer, any of the following conditions exist:
1. there shall be instituted or pending any action or proceeding by
any government or governmental authority or agency, domestic or foreign, or
by any other person, domestic or foreign, before any court or governmental
authority or agency, domestic or foreign, (i) challenging or seeking to
make illegal, to delay materially or otherwise directly or indirectly to
restrain or prohibit the acquisition by Merger Subsidiary or any of its
affiliates of Shares pursuant to the Stockholder Option Agreement (as
defined below), the making of the Offer, the acceptance for payment of or
payment for some of or all the Shares by Buyer or Merger Subsidiary or the
consummation by Buyer or Merger Subsidiary of the Merger, seeking to obtain
material damages or otherwise directly or indirectly relating to the
transactions contemplated by the
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Stockholder Option Agreement, the Merger Agreement, the Offer or the
Merger, (ii) seeking to restrain or prohibit Buyer's or Merger Subsidiary's
ownership or operation (or that of their respective subsidiaries or
affiliates) of all or any material portion of the business or assets of the
Company and its subsidiaries, taken as a whole, or of Buyer and its
subsidiaries, taken as a whole, or to compel Buyer or any of its
subsidiaries or affiliates to dispose of or hold separate all or any
material portion of the business or assets of the Company and its
subsidiaries, taken as a whole, or of Buyer and its subsidiaries, taken as
a whole, (iii) seeking to impose or confirm material limitations on the
ability of Buyer or any of its subsidiaries or affiliates effectively to
exercise full rights of ownership of the Shares, including, without
limitation, the right to vote any Shares acquired or owned by Buyer or any
of its subsidiaries or affiliates on all matters properly presented to the
Company's stockholders, (iv) seeking to require divestiture by Buyer or any
of its subsidiaries or affiliates of any Shares, or (v) that otherwise, in
the judgment of Buyer, is likely to materially adversely affect the Company
and its subsidiaries, taken as a whole, or Buyer and its subsidiaries,
taken as a whole; or
2. there shall be any action taken, or any statute, rule, regulation,
injunction, order or decree proposed, enacted, enforced, promulgated,
issued or deemed applicable to the Stockholder Option Agreement, the Merger
Agreement, the Offer or the Merger, by any court, government or
governmental authority or agency, domestic or foreign other than the
application of the waiting period provisions of the HSR Act to the
Stockholder Option Agreement, the Merger Agreement, the Offer or the
Merger, that, in the judgment of Buyer, is substantially likely, directly
or indirectly, to result in any of the consequences referred to in clauses
(i) through (v) of paragraph (a) above; or
3. any change shall have occurred or been threatened (or any
development shall have occurred or been threatened involving a prospective
change) in the business, assets, liabilities, financial condition,
capitalization, operations, results of operations or prospects of the
Company or any of its subsidiaries that, in the reasonable judgment of
Buyer, is or is likely to be materially adverse to the Company and its
subsidiaries, taken as a whole; or
4. a tender or exchange offer for some or all of the Shares shall have
been publicly proposed to be made or shall have been made by another
person, or it shall have been publicly disclosed or Buyer shall have
otherwise learned that (i) any person or "group" (as defined in Section
13(d)(3) of the Exchange Act) shall have acquired or proposed to acquire
beneficial ownership of more than 25% of any class or series of capital
stock of the Company (including the Shares), through the acquisition of
stock, the formation of a group or otherwise, or shall have been granted
any option, right or warrant, conditional or otherwise, to acquire
beneficial ownership of more than 25% of any class or series of capital
stock of the Company (including the Shares) other than acquisitions for
bona fide arbitrage purposes only and other than as disclosed in a Schedule
13D or 13G on file with the Commission on May 18, 1994, (ii) any such
person or group which, prior to May 18, 1994, had filed such a Schedule
with the Commission shall have acquired or proposed to acquire beneficial
ownership of additional shares of any class or series of capital stock of
the Company (including the Shares), through the acquisition of stock, the
formation of a group or otherwise, which, together with such ownership as
is reflected on such Schedule, shall constitute 25% or more of any such
class or series, or shall have been granted any option, right or warrant,
conditional or otherwise, to acquire beneficial ownership of additional
shares of any class or series of capital stock of the Company (including
the Shares) which, together with such ownership as is reflected on such
Schedule, shall constitute 25% or more of any such class or series or (iii)
any person shall have filed a Notification and Report Form under the HSR
Act or made a public announcement reflecting an intent to acquire the
Company or any material portion of assets of the Company or securities of
the Company which, together with such ownership as is reflected on any such
Schedule, shall constitute 25% or more of any such class of securities; or
5. the Company shall have breached or failed to perform in any
material respect any of its material covenants or agreements under this
Agreement, or any of the material representations and warranties of the
Company set forth in this Agreement shall not be true in any material
respect when made or at any time prior to consummation of the Offer as if
made at and as of such time; or
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6. any party to the Stockholder Option Agreement other than Merger
Subsidiary or Buyer shall have breached or failed to perform in any
material respect any of its agreements under the Stockholder Option
Agreement or any of the representations and warranties of any such party
set forth in the Stockholder Option Agreement shall not be true in any
material respect, in each case, when made or at any time prior to the
consummation of the Offer as if made at and as of such time, or the
Stockholder Option Agreement shall have been invalidated or terminated with
respect to any Shares subject thereto; or
7. the Merger Agreement or the Stockholder Option Agreement shall have
been terminated in accordance with its terms; or
8. the Board of Directors of the Company shall have withdrawn or
materially modified in a manner adverse to Buyer or the Merger Subsidiary
its approval or recommendation of the Offer, the Merger or the Merger
Agreement or its approval of the entry by Buyer into the Stockholder Option
Agreement; or
9. the Company shall have entered into, or shall have publicly
announced its intention to enter into, an agreement or agreement in
principle with respect to any Acquisition Proposal;
which, in the sole judgment of Buyer in any such case, and regardless of the
circumstances (including any action or omission by Buyer) giving rise to any
such condition, makes it inadvisable to proceed with such acceptance for payment
or payment.
Fees and Expenses. Each party to the Merger Agreement has agreed to pay its
own fees and expenses and, except as described below, there are no provisions
for payment by the Company of the fees and expenses of Buyer or Merger
Subsidiary or vice versa, if the Merger Agreement is terminated. The Company has
agreed to pay Buyer a fee in immediately available funds equal to $12,500,000
promptly, but in no event later than two business days, after the termination of
the Merger Agreement as a result of the occurrence of any of the following
events (each, a "Trigger Event"): (i) the Company shall have entered into, or
shall have publicly announced its intention to enter into, an agreement or an
agreement in principle with respect to any Acquisition Proposal, (ii) any person
or group (as defined in Section 13(d)(3) of the Exchange Act (other than Buyer
of any of its affiliates) shall have become the beneficial owner (as defined in
Rule 13d-3 promulgated under the Exchange Act) of at least 25% of the
outstanding Shares or shall have acquired, directly or indirectly, at least 25%
of the assets of the Company, (iii) any person or group shall have commenced, or
shall have publicly announced an intention to commence, a tender or exchange
offer for at least majority of the outstanding Shares for a consideration per
Share greater than the consideration per Share offered under the Offer, (iv) any
representation or warranty made by the Company in, or pursuant to, the Merger
Agreement shall not have been true and correct in all material respects when
made and any such failures to be true and correct could reasonably be expected
to have, individually or in the aggregate, a material adverse effect on the
condition (financial or otherwise), business, assets, results of operations or
prospects of the Company and its subsidiaries taken as a whole (except that
reductions or delays in orders of products in the Company or its subsidiaries
due solely to any rumors, speculation or announcement of a potential merger
involving the Company or the execution of the Merger Agreement and the Merger
shall be excluded for consideration for purposes of the effect of an action or
inaction on the Company and its subsidiaries taken as a whole) (a "Modified
Material Adverse Effect"), or the Company shall have failed to observe or
perform in any material respect any of its obligations under the Merger
Agreement, (v) the Board of Directors of the Company shall have withdrawn or
materially modified in a manner adverse to Buyer or Merger Subsidiary its
approval or recommendation of the Offer, the Merger or the Merger Agreement or
its approval of the entry by Buyer into the Stockholder Option Agreement, in any
such case whether or not such withdrawal or modification is required by the
fiduciary duties of the Board of Directors of the Company, or (vi) prior to the
purchase of any Shares under the Offer, the Company shall have received an
Acquisition Proposal which the Company's Board of Directors determines is more
favorable to the stockholders than the Offer and the Merger, whether or not such
determination is required by the fiduciary duties of the Board of Directors of
the Company.
The Company also has agreed to assume and pay, or reimburse Buyer for, all
reasonable fees payable and expenses incurred by Buyer (including the fees and
expenses of its counsel and the fees and expenses of
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institutions that are considering making or have made a commitment to provide
financing for the transactions contemplated by the Merger Agreement) in
connection with the Merger Agreement and the transactions contemplated thereby,
in an aggregate amount not to exceed $2,500,000, whether or not the Offer or the
Merger is consummated.
Timing. The exact timing and details of the Merger will depend upon legal
requirements and a variety of other factors, including the number of Shares
acquired by Merger Subsidiary pursuant to the Offer. Although Buyer has agreed
to cause the Merger to be consummated on the terms set forth above, there can be
no assurance as to the timing of the Merger.
Delaware Law. The Board of Directors of the Company has approved the Merger
Agreement and the transactions contemplated thereby, including the Offer, the
Merger and the Stockholder Option Agreement, and the entry by Merger Subsidiary
into the Stockholder Option Agreement for purposes of Section 203 of the
Delaware General Corporation Law. Accordingly, the restrictions of Section 203
do not apply to the transactions contemplated by the Offer or by the Stockholder
Option Agreement. Section 203 of the Delaware General Corporation Law prevents
an "interested stockholder" (generally, a stockholder owning 15% or more of a
corporation's outstanding voting stock or an affiliate or associate thereof)
from engaging in a "business combination" (defined to include a merger and
certain other transactions) with a Delaware corporation for a period of three
years following the date on which such stockholder became an interested
stockholder unless (i) prior to such date the corporation's board of directors
approved either the business combination or the transaction which resulted in
such stockholder becoming an interested stockholder, (ii) upon consummation of
the transaction which resulted in such stockholder becoming an interested
stockholder, the interested stockholder owned at least 85% of the corporation's
voting stock outstanding at the time the transaction commenced (excluding shares
owned by certain employee stock plans and persons who are directors and also
officers of the corporation) or (iii) on or subsequent to such date the business
combination is approved by the corporation's board of directors and authorized
at an annual or special meeting of stockholders, and not by written consent, by
the affirmative vote of at least 66 2/3% of the outstanding voting stock not
owned by the interested stockholder.
Stockholder Option Agreement
The following description of the Stockholder Option Agreement (the
"Stockholder Option Agreement") dated as of May 18, 1994 among Merger Subsidiary
and the Stockholders named therein (each a "Principal Stockholder") is qualified
in its entirety by reference to the complete text of the Stockholder Option
Agreement which is filed as Exhibit 5 to this statement and is incorporated
herein by reference. The Principal Stockholders, along with the Shares of each
subject to the Stockholder Option Agreement as of May 17, 1994, are Electronic
Data Systems Corporation ("EDS"), with 4,008,535 Shares; Hewlett-Packard Company
("HP"), with 2,004,268 Shares; Paul C. Ely, Jr., the Company's Chairman of the
Board with 5,000 Shares; Eric D. Carlson, the Company's Chief Executive Officer
and President, with 10,000 Shares; Robert H. Waterman, Jr., the Company's Vice
Chairman of the Board, with 6,000 Shares; and Thomas I. Unterberg, a director on
the Company's Board of Directors, with no Shares. In August 1990, each of EDS
and HP entered into an agreement to acquire Common Stock of the Company which
continues to be in effect. See "Additional Agreements, Arrangements and
Understandings" below. Robert N. Sharpe, a director on the Company's Board of
Directors, is a Corporate Vice President of EDS. The outstanding Shares held by
the Principal Stockholders represent approximately 26% of the Company's
outstanding Shares as of May 17, 1994.
Under the Stockholder Option Agreement, each Principal Stockholder has
granted Merger Subsidiary the option (the "Stock Option") to purchase, subject
to the terms and conditions set forth in the Stockholder Option Agreement, such
Principal Stockholder's Shares for a price of $13.25 per Share in cash, or to
cause to be tendered pursuant to the Offer such Principal Stockholder's Shares.
In addition, if the price to be paid by Merger Subsidiary pursuant to the Offer
is increased, the purchase price payable upon exercise of the Stock Option shall
similarly be increased. The Stockholder Option Agreement also provides that the
number and kind of Shares subject to the Stock Option and the purchase price
therefor shall be appropriately and equitably adjusted in the event of changes
in the Company's capital stock.
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Subject to the terms of the Stockholder Option Agreement, Merger Subsidiary
has the right to exercise the Stock Option, in whole or in part, at any time up
to 30 business days after the termination of the Merger Agreement. If Merger
Subsidiary acquires any Shares pursuant to the Offer, it must purchase all of
the Shares subject to the Stockholder Option Agreement.
Each Principal Stockholder has also agreed, that upon receipt of
instructions from Merger Subsidiary, it will deliver to the depositary
designated in the Offer (the "Depositary") (i) a Letter of Transmittal with
respect to such Principal Stockholder's Shares complying with the terms of the
Offer together with instructions directing the Depositary to make payment for
such Shares directly to the Principal Stockholder (but if such Shares are not
accepted for payment and are to be returned pursuant to the Offer, to return
such Shares to such Principal Stockholder whereupon they shall continue to be
held by such Principal Stockholder subject to the terms and conditions of the
Stockholder Option Agreement), (ii) the certificates evidencing such Principal
Stockholder's Shares and (iii) all other documents or instruments required to be
delivered pursuant to the terms of the Offer. Each Principal Stockholder has
further agreed that it will not (without prior written notice to Merger
Subsidiary) withdraw the tender effected thereby and that any withdrawn Shares
shall continue to be held by such Principal Stockholder subject to the terms and
conditions of the Stockholder Option Agreement.
The Principal Stockholders' obligations to sell their respective Shares
(other than tendering pursuant to the Offer) under the Stockholder Option
Agreement are subject to satisfaction of the following conditions: (i) the
representations and warranties of Merger Subsidiary set forth in the Stockholder
Option Agreement shall be true and correct in all material respects on the date
of sale, (ii) the applicable waiting period under the HSR Act to the exercise of
the Stock Option shall have expired or been terminated, (iii) no provision of
any applicable law or regulation and no judgment, injunction, order or decree
shall prohibit or otherwise restrain the exercise of the Stock Option, (iv)
Merger Subsidiary shall have commenced the Offer, Merger Subsidiary shall not
have materially breached any of its material covenants and agreements in the
Merger Agreement, and the Merger Agreement shall not have been terminated, and
(v)(A) a tender or exchange offer for any Shares shall have been made or
publicly proposed to be made by another person (B) it shall have been publicly
disclosed (or Merger Subsidiary shall have learned) that any person, entity or
group (as that term is used in Section 13(d)(3) of the Exchange Act) shall have
acquired or proposed to acquire more than 25% of the Shares, or shall have
granted any option or right, conditional or otherwise, to acquire more than 25%
of the Shares, other than acquisitions for bona fide arbitrage purposes, or a
group shall have been formed the members of which hold in the aggregate more
than 25% of the Shares, (C) any person other than Merger Subsidiary or an
affiliate of Merger Subsidiary shall have entered into an agreement in principle
providing for a merger, consolidation or other business combination with, or a
purchase of all or substantially all the assets of, the Company or of any
subsidiary or division of the Company the business of which could constitute a
"significant subsidiary" as that term is used in Rule 1.02 of Regulation S-X of
the SEC, (D) the Board of Directors of the Company shall have failed to make, or
has revoked or modified, its unqualified recommendation in favor of the Offer
and the Merger or its approval of the entry by Merger Subsidiary into the
Stockholder Option Agreement, or (E) the Company shall have committed a material
breach of any provision of the Merger Agreement.
Each Principal Stockholder has further agreed to not, directly or
indirectly, solicit, initiate or encourage any (i) inquiry, proposal or offer
from any person to acquire the business property or capital stock of the Company
or any subsidiary thereof, or any acquisition of a substantial equity interest
in, or a substantial amount of the assets of, the Company or any subsidiary
thereof, or (ii) subject to a Principal Stockholder's fiduciary duty as a
director of the Company (if applicable), participate in any discussion or
negotiations regarding, or furnish to any other person any information with
respect to, or otherwise cooperate in any way with, or participate in,
facilitate or encourage any effort or attempt by any other person to make or
seek any of the foregoing. Each Principal Stockholder has agreed to promptly
advise Merger Subsidiary of the terms of any communication it may receive
relating to any of the foregoing.
In entering into the Stockholder Option Agreement, each Principal
Stockholder granted Merger Subsidiary a proxy to vote, express consent or
dissent, or otherwise to utilize such voting power, in such manner and upon such
matters as Merger Subsidiary shall, in its sole discretion, deem proper with
respect to
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such Principal Stockholder's Shares. The proxy will be automatically revoked
upon termination of the Stockholder Option Agreement.
Additional Agreements, Arrangements and Understandings
Indemnification of Directors and Officers. Section 145 of Delaware General
Corporation Law authorizes a court to award, or a corporation's Board of
Directors to grant, indemnity to directors and officers in terms sufficiently
broad to permit such indemnification under certain circumstances for liabilities
(including reimbursement for expenses incurred) arising under the Securities Act
of 1933. Further, in accordance with the Delaware General Corporation Law, the
Company's Certificate of Incorporation eliminates the liability of a director to
the Company or its stockholders for monetary damages for breaches of his or her
fiduciary duty of care, provided that such liability does not arise from certain
proscribed conduct (including intentional misconduct and breach of duty of
loyalty). The Company's By-Laws provide for indemnification of certain officers,
directors, employees and other agents to the maximum extent permitted by the
Delaware General Corporation Law. In addition, the Company has entered into
indemnification agreements with its officers and directors by which the Company
provides such persons with the maximum indemnification allowed under applicable
law. These agreements also resolve certain procedural and substantive matters
which are not covered, or are covered in less detail, in the By-Laws. A copy of
a form of such indemnification agreement is filed as Exhibit 6 to this statement
and incorporated herein by reference.
Eric D. Carlson. In July 1993, Dr. Carlson was granted an option to
purchase 20,000 Shares at an exercise price of $10.75 per share, vesting over a
period of four years. In February 1994, the Board of Directors of the Company
promoted Dr. Carlson to the position of President and Chief Executive Officer of
the Company. In connection with the promotion, the Board's Compensation
Committee granted to Dr. Carlson options to purchase 250,000 Shares with an
exercise price of $7.875 per Share. All of the aforementioned options were
granted under the Company's 1991 Stock Plan. All stock options granted under the
1991 Stock Plan would vest in full as a result of the acceptance of Shares
pursuant to the Offer. In March 1994, shortly after Dr. Carlson's promotion, the
Company entered into an agreement with Dr. Carlson (the "Carlson Severance
Agreement") which provided that Dr. Carlson would be entitled, following a
change of control of the Company, to full acceleration of vesting with respect
to any unvested stock options or restricted stock. The acceptance of Shares
pursuant to the Offer will result in a "change of control" for purposes of the
Carlson Severance Agreement, and thus, the stock options granted to Dr. Carlson
as described above would also vest in full pursuant to the Carlson Severance
Agreement as a result of the purchase of Shares pursuant to the Offer. The
Carlson Severance Agreement also provides for benefits to Dr. Carlson, if,
following a change of control, (i) Dr. Carlson's position is terminated, (ii)
his duties and responsibilities are significantly reduced, or (iii) his
employment terminates by mutual agreement. In any such event, Dr. Carlson would
be eligible to receive a lump sum severance payment equal to one year's salary
if the severance occurs within one year following the change of control, nine
months' salary if the severance occurs during the second year following the
change of control, and six months' salary if the severance occurs thereafter.
Dr. Carlson would also then be entitled to receive all benefits for the extent
of his severance period as well as executive outplacement counseling. Also, as a
result of his promotion, pursuant to an agreement between Dr. Carlson and the
Company (the "Carlson Incentive Bonus Agreement"), Dr. Carlson will be entitled
to an incentive bonus of $300,000 which can be earned if certain earnings
targets are achieved for calendar 1994. As a result of the Offer, such bonus may
be payable to Dr. Carlson earlier during calendar 1994 if Dr. Carlson's
employment terminates for any reason following the acceptance of Shares pursuant
to the Offer.
As an inducement for Buyer to enter into the Merger Agreement and the
transactions contemplated thereunder, Dr. Carlson entered into an agreement (the
"Excise Tax Agreement") with the Company to reduce benefits payable to him to a
level such that the golden parachute excise tax provisions of the Internal
Revenue Code would not be triggered. A copy of the Carlson Severance Agreement
is filed as Exhibit 7 to this statement and is incorporated herein by reference.
A copy of the Carlson Incentive Bonus Agreement is filed as Exhibit 8 to this
statement and is incorporated herein by reference. A copy of the Excise Tax
Agreement is filed as Exhibit 9 to this statement and is incorporated herein by
reference. The foregoing summaries of each
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of the Carlson Severance Agreement, the Carlson Incentive Bonus Agreement and
the Excise Tax Agreement are qualified in their respective entireties by
reference to the complete texts of such agreements.
Gary B. Filler. In February 1994, the Board appointed Mr. Filler to the
position of Executive Vice President of Operations and Chief Financial Officer
of the Company. Pursuant to an offer letter (the "Filler Offer Letter") from the
Company to Mr. Filler, Mr. Filler's initial base salary was set at $215,000,
together with a target incentive bonus for calendar 1994 of $100,000. One-half
of the target bonus will be earned if the Company reports operating income for
the quarter ending June 30, 1994; the other half will be earned if the Company
attains certain financial performance targets for the first half of fiscal 1995.
In addition, Mr. Filler was granted options to purchase a total of 250,000
Shares with an exercise price of $7.875 per Share. Except as a result of the
Offer, options to purchase 50,000 of those Shares would not be exercisable
unless the Company reports operating income for the quarter ending June 30,
1994.
In March 1994, shortly after Mr. Filler's hire, the Company entered into an
agreement with Mr. Filler (the "Filler Severance Agreement") providing Mr.
Filler with benefits in the event of (i) termination of employment, (ii)
termination of employment following a change of control, and (iii) change of
control without regard to termination of employment. Under the Filler Severance
Agreement, Mr. Filler is entitled, following a change of control, to full
acceleration of vesting with respect to any unvested stock options or restricted
stock regardless of whether his employment subsequently terminates. For purposes
of the Filler Severance Agreement, "change of control" is defined as (i) the
acquisition by any person or group of persons of 50% or more of the Company's
common stock or (ii) a transaction requiring shareholder approval involving
either the sale of all or substantially all of the assets of the Company or the
merger of the Company with or into a previously unaffiliated entity. All of the
options granted to Mr. Filler were granted under the Company's 1991 Stock Plan
and will vest in full as a result of the purchase of Shares pursuant to the
Offer. The Filler Severance Agreement also provides that if Mr. Filler is
terminated by the Company for any reason other than cause or voluntary
resignation he will receive: (i) a severance payment equal to six months' base
salary, (ii) six months of health care benefits, and (iii) executive
outplacement services. The Filler Severance Agreement also provides for
increased benefits if, following a change of control, (i) Mr. Filler's position
is terminated, (ii) his duties and responsibilities are significantly reduced,
or (iii) his employment terminates by mutual agreement. In any such event, Mr.
Filler would be eligible to receive a lump sum severance payment equal to one
year's salary if the severance occurs within one year following the change of
control, nine months' salary if the severance occurs during the second year
following the change of control, and six months' salary if the severance occurs
thereafter. Mr. Filler would also then be entitled to receive all benefits for
the extent of his severance period as well as executive outplacement counseling.
The foregoing summary of the Filler Offer Letter and the Filler Severance
Agreement is qualified in its entirety by reference to the complete texts of the
Filler Offer Letter and the Filler Severance Agreement, respectively, copies of
which are filed as Exhibits 10 and 11, respectively, to this statement and are
incorporated herein by reference.
Paul C. Ely, Jr. On March 10, 1994, the Board authorized the Company to
retain Mr. Ely, the Company's Chairman of the Board since February 1994, as a
consultant for the purpose of advising senior management on operational and
management issues as the Company developed and implemented a new business plan.
Mr. Ely is paid a fee of $13,333.33 per month as compensation for such
consulting services. In connection with that engagement, the Board also granted
Mr. Ely options to purchase 75,000 Shares pursuant to its 1991 Stock Plan. The
options have an exercise price of $8.125 per share and were granted as fully
exercisable options. On that date, the Board also increased the annual fee
payable to Mr. Ely in his role as Chairman of the Board to $40,000. Such fee is
paid in quarterly installments.
Robert H. Waterman, Jr. On March 10, 1994, the Board authorized the Company
to retain Mr. Waterman, the Company's Vice Chairman of the Board since February
1994, as a consultant for the purpose of advising senior management on
operational and management issues as the Company developed and implemented a new
business plan. Mr. Waterman is paid a fee of $13,333.33 per month as
compensation for such consulting services. In connection with that engagements
the Board also granted Mr. Waterman an option to purchase 50,000 Shares pursuant
to its 1991 Stock Plan. The options have an exercise price of $8.125 per share
and were granted as fully exercisable options. On that date, the Board also
increased the annual fee
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payable to Mr. Waterman in his role as Vice Chairman of the Board to $35,000.
Such amount is paid in quarterly installments.
Thomas I. Unterberg. By letter dated January 27, 1994, the Company engaged
Unterberg Harris to serve as the Company's financial advisor in connection with
a possible sale of all or a part of the Company. Mr. Unterberg, a director on
the Company's Board of Directors, is a principal with Unterberg Harris. See Item
5 of this statement below.
Electronic Data Systems Corporation; Hewlett-Packard Company. On August 31,
1990, the Company entered into a Common Stock Purchase Agreement (the "Purchase
Agreement") with Electronic Data Systems Corporation, a Texas corporation
("EDS"), and Hewlett-Packard Company, a California corporation ("HP"), a copy of
which is filed as Exhibit 12 to this statement and is incorporated by reference
herein. Under the Purchase Agreement, EDS and HP acquired 3,710,575 shares and
1,855,288 shares, respectively, of the Company's Common Stock, representing
approximately 19.7% and 9.8%, respectively, of the then outstanding voting stock
of the Company. The shares were sold to EDS and HP at a cash purchase price of
$10.78 per share, for an aggregate purchase price of $60,000,003. The Purchase
Agreement contains a number of covenants and agreements of the parties,
including (i) the right of each of EDS and HP, upon request, to membership on
the Board of Directors of the Company so long as each purchaser maintained a
specified minimum level of ownership interest in the Company; (ii) the right of
each of EDS and HP to maintain its percentage interest in the Company (the
"Right to Maintain") in the event of future sales by the Company of its voting
stock at the price specified in the Purchase Agreement relating to such issuance
or at the average market price of the stock; (iii) the limitation on ownership
by EDS and HP of shares of Common Stock in excess of 22% and 11%, respectively,
of the total voting stock of the Company, for a period of seven years from the
date of the Purchase Agreement, except on the occurrence of a tender offer for
40% or more, or an acquisition of 20% or more, of the total voting power of the
Company; (iv) the voting of the shares held by EDS and HP in accordance with
specified requirements; and (v) certain restrictions on transfer of the shares
held by each of EDS and HP. Pursuant to the Purchase Agreement, the Company
entered into certain marketing and technology sharing agreements with each of
EDS and HP. In connection with the transactions contemplated by the Merger
Agreement and the Stockholder Option Agreement, the Company consented to EDS and
HP entering into the Stockholder Option Agreement; in addition, each of EDS and
HP waived its Right to Maintain for so long as the Merger Agreement has not been
terminated. Copies of the Company's consents relating to EDS and HP,
respectively, are filed as Exhibits 13 and 14, respectively, and are
incorporated herein by reference. Copies of the waivers of each of the Rights to
Maintain of EDS and HP, respectively, are filed as Exhibits 15 and 16,
respectively, and are incorporated herein by reference.
Robert N. Sharpe, a director of the Company, is a Corporate Vice President
of EDS. Mr. Sharpe has various agreements with EDS relating to compensation,
benefits and the like, including provision for indemnification in respect of his
service as a director of the Company. Mr. Sharpe serves as EDS' representative
on the Board of Directors of the Company pursuant to the rights granted to EDS
under the Purchase Agreement.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
(a) Recommendation. The Board of Directors of the Company (the "Board") at
a special meeting held on May 18, 1994 unanimously determined that the Offer is
fair to and in the best interest of the Company and its stockholders and
recommended that stockholders accept the Offer and (if required by applicable
law or otherwise) approve the Merger Agreement and the Merger. A copy of the
Company's letter to stockholders dated May 25, 1994 is filed as Exhibit 17 to
this statement and is incorporated herein by reference.
Reference is made to the Schedule 14D-1 for a summary of Buyer's contacts
with the Company leading to the execution of the Merger Agreement.
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(b) Reasons for the Board's Conclusions. In reaching its determination
described in paragraph (a) above, the Board considered a number of factors,
including, without limitation, the following:
(i) The financial condition, results of operations, business and
strategic objectives of the Company, as well as the risks involved in
achieving those objectives;
(ii) The projected financial condition and results of operations of
the Company, including projections reflecting the restructuring announced
by the Company in April 1994;
(iii) A review of the possible alternatives to the Offer and the
Merger including the possibility of continuing to operate the Company as an
independent entity, various financing alternatives involving the possible
sale of the Company's equity or convertible debt securities, the sale of
one or more of the Company's businesses, including the sale of the Company
as a whole, or entering into a strategic transaction with another company,
and, in respect of each alternative, the range of possible benefits to the
Company's stockholders of such alternative and the timing and the
likelihood of actually accomplishing such alternative;
(iv) Reports from Bear, Stearns & Co. Inc. ("Bear Stearns") and
Unterberg Harris, financial advisors to the Company, regarding the
likelihood of other potential acquirors of the Company and the results of
their efforts on behalf of the Company seeking indications of interest;
(v) The detailed financial and valuation analyses presented to the
Board by Bear Stearns and Unterberg Harris, including market prices and
financial data relating to other companies engaged in businesses considered
comparable to the Company and the prices and premiums paid in recent
selected acquisitions of companies engaged in businesses considered
comparable to those of the Company;
(vi) The relationship of the Offer price to historical market prices
of the Shares and to the Company's book value and net asset value per
Share;
(vii) The written opinion of Bear Stearns, financial advisor to the
Company, that the Offer and the Merger, collectively, are fair, from a
financial point of view, to the stockholders of the Company. A copy of the
written opinion of Bear Stearns which sets forth the assumptions made,
matters considered and basis of their review is attached as Annex B, and
filed as Exhibit 18 to this statement;
(viii) The terms and conditions of the Merger Agreement and related
agreements;
(ix) The likelihood that the proposed acquisition would be
consummated, including the experience, reputation and financial condition
of the Buyer and the risks to the Company if the acquisition were not
consummated; and
(x) The availability of dissenters' rights in the Merger under
applicable law.
In view of the wide variety of factors considered in connection with its
evaluation of the Offer and the Merger, the Board did not find it practicable
to, and did not, quantify or otherwise attempt to assign relative weights to the
specific factors considered in reaching its respective determinations. Because
of the engagement of Bear Stearns, the Board did not consider it necessary to
retain an unaffiliated representative to act solely on behalf of the public
stockholders of the Company for the purpose of negotiating the terms of the
Merger Agreement.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The Company and Unterberg Harris entered into a letter agreement dated
January 27, 1994 (the "Unterberg Harris Engagement Agreement") pursuant to which
Unterberg Harris was retained as the Company's exclusive financial advisor in
connection with a possible sale of all or part of the Company. Pursuant to the
Unterberg Harris Engagement Agreement, the Company has made initial payments to
Unterberg Harris totaling $100,000 and has agreed to pay an additional amount
equal to 0.65% of the total consideration involved (defined as including any
amounts paid to holders of unexercised options or the fair market value of
shares or options substituted for Company options) to Unterberg Harris upon
consummation of the sale of all or a part of the Company. The scope of Unterberg
Harris' engagement included providing
14
<PAGE> 17
valuation analyses of the Company, assisting the Company in structuring and
negotiating a possible transaction and, if requested, rendering its opinion with
respect to the fairness of the consideration to be paid to the Company or its
stockholders. In addition to the foregoing compensation, the Company has agreed
to reimburse Unterberg Harris for its reasonable out-of-pocket expenses and to
indemnify Unterberg Harris against certain claims or liabilities arising from or
relating to the services rendered under the Unterberg Harris Engagement
Agreement, including those arising under federal securities laws. The Unterberg
Harris Engagement Agreement also provides that in the event of a sale of all or
a part of the Company during the 18 months following the engagement, Unterberg
Harris would receive the same consideration as outlined above (0.65% of the
total consideration involved). Based upon the foregoing, if the transactions
contemplated by the Merger Agreement are consummated, the Company estimates that
in connection therewith a total fee of approximately $2.3 million will be
payable to Unterberg Harris. Thomas I. Unterberg, a member of the Board of
Directors of the Company, is a principal of Unterberg Harris. A copy of the
Unterberg Harris Engagement Letter is filed as Exhibit 19 to this statement.
The Company has also entered into a letter agreement dated March 25, 1994
(the "Bear Stearns Engagement Letter") with Bear, Stearns & Co. Inc. ("Bear
Stearns") pursuant to which Bear Stearns was retained by the Company to render
financial advisory services in connection with a (i) a possible sale of the
Company or (ii) a possible sale of assets or operations or capital stock or
securities convertible into capital stock of the Company (collectively, a
"Transaction"). The engagement letter also obligates the Company to retain Bear
Stearns as lead manager of any public or private offering of its capital stock
or debt securities within 12 months of the date of the engagement letter. For
any privately placed debt or equity securities, the engagement letter provides
that Bear Stearns will be paid, with certain exceptions, a fee of 3.0% of the
aggregate principal amount of the securities sold, and for any public offered
debt or equity securities, the engagement letter will receive customary
underwriting fees. The Bear Stearns Engagement Letter provides for payments for
an aggregate of $100,000 in connection with the signing of the engagement
letter.
The Bear Stearns Engagement Letter provides that upon execution by the
Company of an agreement with respect to a Transaction, the Company will pay Bear
Stearns an additional fee of $250,000, and, that upon rendering a fairness
opinion with respect to a Transaction, the Company will pay Bear Stearns a fee
of $750,000. In addition, the Bear Stearns Engagement Letter provides that upon
consummation of a Transaction, the Company will pay Bear Stearns a fee
calculated as a percentage of the total consideration paid by a purchaser in the
transaction as follows: (i) 1.5% of the first $75,000,000 of aggregate
consideration; plus (ii) 0.75% of the next $125,000,000 of aggregate
consideration; plus (iii) 0.5% of the aggregate consideration in excess of
$200,000,000 (any such fee to be reduced by any fees paid or payable as
described in the preceding sentence). Based on the foregoing, if the
transactions contemplated by the Merger Agreement are consummated, the Company
estimates that in connection therewith a total fee of approximately $2.8 million
(including the $100,000 payable in initial fees already paid) will be payable to
Bear Stearns. The Bear Stearns Engagement Letter further provides that
irrespective of whether a Transaction is consummated, the Company will reimburse
Bear Stearns for all out-of-pocket expenses incurred in connection therewith,
including reasonable fees and expenses, and that the Company will indemnify Bear
Stearns and certain related persons against certain claims and liabilities,
including those arising under federal securities laws. The Company has been
advised by Bear Stearns that after payment in full of the fees payable in
connection with the transactions contemplated by the Merger Agreement, no
further fees will be payable under the Bear Stearns Engagement Letter.
The engagement of Bear Stearns may be terminated at any time without
liability or continuing obligation upon the part of the Company, provided that
the obligations in the Bear Stearns Engagement Letter to retain Bear Stearns as
lead manager of any public or private offering of its capital stock or debt
securities within 12 months of the date of the engagement letter, the payment
provisions described in the previous paragraph and the indemnification and
reimbursement provisions referred to in the preceding paragraph will survive any
such termination.
Unterberg Harris is an investment banking firm that provides a full range
of financial advisory services for mergers and acquisitions as well as public
and private financings, primarily in the technology industry.
15
<PAGE> 18
Bear Stearns, as a customary part of its investment banking business, is
engaged in the evaluation of businesses and their securities in connection with
mergers and acquisitions, underwriting and secondary distributions of
securities, private placements and evaluations for estate, corporate and other
purposes.
Other than as described in this Item 5, neither the Company nor any person
acting on its behalf intends to employ, retain or compensate any other person to
make solicitations or recommendations to stockholders on its behalf concerning
the Merger or the Offer.
ITEM 6. PRESENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) On April 5, 1994, Thomas Unterberg sold an aggregate of 65,100 Shares
for $8.00 per Share. Mr. Unterberg, currently a director of the Company, was not
a director at the time of such sale. In addition, in order to induce Buyer to
enter the Merger Agreement with the Company, certain stockholders of the Company
entered into the Stockholder Option Agreement. See Item 3(b) of this statement.
Other than as set forth in this paragraph (a), to the best of the Company's
knowledge, no transaction in the Shares has been effected during the past 60
days by the Company or any executive officer, director, affiliate or subsidiary
of the Company.
(b) Except for Shares subject to the Stockholder Option Agreements as
described under Item 3(b) of this statement, to the best of the Company's
knowledge, each of the executive officers, directors, affiliates and
subsidiaries presently intends to tender all Shares which are held of record or
beneficially owned by them pursuant to the Offer, except for those Shares, if
any, which if tendered, could cause them to incur liability under the provisions
of Section 16(b) of the Exchange Act and except for Shares purchasable upon
exercise of the employee stock options to the extent such employee stock options
will be cancelled in lieu of cash payments pursuant to the Merger Agreement as
referred to in Item 3(b) of this statement.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) No negotiation is underway or is being undertaken by the Company in
response to the Offer which relates to or would result in (1) an extraordinary
transaction, such as a merger or reorganization, involving the Company or any of
its subsidiaries; (2) a purchase, sale or transfer of a material amount of
assets by the Company or any of its subsidiaries; (3) a tender offer for or
other acquisition of securities by or of the Company; or (4) any material change
in the present capitalization or dividend policy of the Company.
(b) There is no transaction, board resolution, agreement in principle or
signed contract in response to the tender offer than as disclosed in Item 3(b)
of this statement, which relates to or would result in (1) an extraordinary
transaction, such as a merger or reorganization, involving the Company or any of
its subsidiaries; (2) a purchase, sale or transfer of a material amount of
assets by the Company or any of its subsidiaries; (3) a tender offer for or
other acquisition of securities by or of the Company; or (4) any material change
in the present capitalization or dividend policy of the Company.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
Amendment to Rights Plan. Under the terms of the Merger Agreement, the
Company's Board of Directors was required to amend the Rights Agreement,
concurrently with the execution of the Merger Agreement, to terminate, modify or
redeem the Rights so as to make the Rights inapplicable to the Offer, the Merger
and the Stockholder Option Agreement. In accordance with this requirement, the
Company entered into an Amendment to Common Shares Rights Agreement dated May
18, 1994 (the "Rights Amendment") with the Rights Agent, a copy of which is
attached as Exhibit 4 hereto. The Rights Amendment renders the Rights Agreement
and the Rights inapplicable to the transactions contemplated by the Offer or the
Merger. As long as the Buyer or Merger Subsidiary is not in material breach of
the Merger Agreement and the Merger Agreement has not been terminated in
accordance with its terms, the provisions of the Rights Amendment may not be
amended or modified without the consent of the Buyer and Merger Subsidiary. The
discussion of the Rights Plan below describes the Rights Plan without taking
into account the effect of the Rights Amendment.
16
<PAGE> 19
Rights. On August 14, 1990, the Board of Directors of the Company declared
a dividend of one common share purchase right (a "Right") for each outstanding
share of Common Stock, $0.01 par value (the "Common Shares"), of the Company.
Each Right entitles the registered holder to purchase from the Company one
Common Share at a price of $45 (the "Purchase Price"), subject to adjustment.
The description and terms of the Rights are set forth in a Common Shares Rights
Agreement dated August 15, 1990, as amended (the "Rights Agreement"), between
the Company and The First National Bank of Boston, as Rights Agent (the "Rights
Agent"), a copy of which is filed as Exhibit 1 to the Company's Current Report
on Form 8-A, as filed with the Securities and Exchange Commission on August 17,
1990, as amended by Amendment No. 1 thereto on Form 8, filed on December 3,
1990. The following general description is subject to the terms and conditions
of the Rights Agreement, and is qualified in its entirety by reference to the
complete text thereof.
The Rights will separate from the Common Shares, Rights Certificates will
be issued and the Rights will become exercisable upon the earlier of: (i) 10
days (or such later date as may be determined by a majority of the Board of
Directors, excluding directors affiliated with the Acquiring Person, as defined
below, (the "Continuing Directors")) following a public announcement that a
person or group of affiliated or associated persons (an "Acquiring Person") has
acquired, or obtained the right to acquire, beneficial ownership of 25% or more
of the outstanding Common Shares or (ii) 10 business days (or such later date as
may be determined by a majority of the Continuing Directors) following the
commencement or announcement of a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 25% or more of the outstanding Common Shares. The earlier of such dates
is referred to as the "Distribution Date".
As soon as practicable following the Distribution Date, separate Rights
Certificates will be mailed to holders of record of the Common Shares as of the
close of business on the Distribution Date and such separate Rights Certificates
alone will evidence the Rights from and after the Distribution Date. All Common
Shares issued prior to the Distribution Date will be issued with Rights. Except
as otherwise determined by the Board of Directors, no other Common Shares issued
after the Distribution Date will be issued with Rights. The Rights will expire
on August 31, 2000 (the "Final Expiration Date"), unless the Final Expiration
Date is extended or unless the Rights are earlier redeemed or exchanged by the
Company or expire upon consummation of certain mergers, consolidations or sales
of assets, as described below. Following the Distribution Date, and until the
occurrence of one of the subsequent events described below, holders of the
Rights will be entitled to receive, upon exercise and the payment of $45, one
Common Share per Right. At any time after an event triggering the flip-in or
flip-over rights (as described in the Rights Plan) and prior to the acquisition
by such Acquiring Person of 50% or more of the outstanding Common Shares, the
Board of Directors of the Company may exchange the Rights (other than Rights
owned by the Acquiring Person or its affiliates), in whole or in part, at an
exchange ratio of one Common Share per Right (subject to adjustment).
Unless the Rights are earlier redeemed or exchanged, in the event that (i)
the Company becomes the surviving corporation in a merger with an Acquiring
Person and the Common Shares are not changed or exchanged, or (ii) a person
becomes the beneficial owner of 25% or more of the Common Shares then
outstanding (other than pursuant to a tender offer which is (a) made for all of
the outstanding shares of Common Stock and (b) approved by a majority of the
Continuing Directors -- referred to herein as a "Permitted Offer") then proper
provision will be made so that each holder of a Right which has not theretofore
been exercised (other than Rights beneficially owned by the Acquiring Person or
its affiliates, which will thereafter be void) will thereafter have the right to
receive, upon exercise, Common Shares having a value equal to two times the
Purchase Price. In the event that the Company does not have sufficient Common
Shares available for all Rights to be exercised, or the Board decides that such
action is necessary and not contrary to the interests of Rights holders, the
Company may instead substitute cash, assets or other securities for the Common
Shares into which the Rights would have otherwise been exchangeable.
Similarly, unless the Rights are earlier redeemed or exchanged, in the
event that, after there is an Acquiring Person, (i) the Company is acquired in a
merger or other business combination, or (ii) 50% or more of the Company's
consolidated assets or earning power are sold (other than through transactions
in the ordinary course of business), proper provision must be made so that each
holder of a Right which has not
17
<PAGE> 20
theretofore been exercised (other than Rights beneficially owned by the
Acquiring Person or its affiliates, which will thereafter be void) will
thereafter have the right to receive, upon exercise, shares of Common Stock of
the acquiring or surviving company (as applicable) having a value equal to two
times the Purchase Price (unless the transaction satisfies certain conditions
and is consummated with a person who acquired shares pursuant to a Permitted
Offer, in which case the Rights will expire).
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
<S> <C> <C>
Exhibit 1 Agreement and Plan of Merger, dated as of May 18, 1994, by and among Buyer,
Merger Subsidiary and the Company.
Exhibit 2 Form of Press Release issued by the Company and Buyer on May 19, 1994.
Exhibit 3 Pages 2-13 of the Company's Proxy Statement, dated October 22, 1993, for
the Company's Annual Meeting of Stockholders held on November 18, 1993.
Exhibit 4 Amendment to Common Shares Rights Agreement, dated May 18, 1994.
Exhibit 5 Stockholder Option Agreement, dated May 18, 1994.
Exhibit 6 Form of Indemnity Agreement between the Company and certain of its officers
and directors.
Exhibit 7 Agreement between Dr. Carlson and the Company, dated March 18, 1994 (the
"Carlson Severance Agreement").
Exhibit 8 Agreement between Dr. Carlson and the Company, dated February 26, 1994 (the
"Carlson Incentive Bonus Agreement")
Exhibit 9 Excise Tax Agreement, dated May 18, 1994.
Exhibit 10 Agreement between Mr. Filler and the Company, dated February 26, 1994 (the
"Filler Offer Letter")
Exhibit 11 Agreement between Mr. Filler and the Company, dated March 3, 1994 (the
"Filler Severance Agreement").
Exhibit 12 The Common Stock Purchase Agreement among the Company, EDS and HP, dated
August 31, 1990.
Exhibit 13 Consent Letter Agreement between the Company and EDS, dated May 18, 1994.
Exhibit 14 Consent Letter Agreement between the Company and HP, dated May 18, 1994.
Exhibit 15 Waiver Letter Agreement between the Company and EDS, dated May 18, 1994.
Exhibit 16 Waiver Letter Agreement between the Company and HP, dated May 18, 1994.
Exhibit 17 Form of Letter to Stockholders, dated May 25, 1994.*
Exhibit 18 Opinion of Bear, Stearns & Co. Inc., dated May 18, 1994.*
Exhibit 19 Engagement Letter between the Company and Unterberg Harris, dated January
27, 1994.
</TABLE>
- ---------------
* Included in materials being distributed to stockholders of the Company.
18
<PAGE> 21
SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
THE ASK GROUP, INC.
Dated: May 25, 1994
By:
Paul C. Ely, Jr.
Chairman of the Board
19
<PAGE> 22
ANNEX A
[ASK LOGO]
THE ASK GROUP, INC.
2880 SCOTT BLVD.
SANTA CLARA, CALIFORNIA 95052-8013
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
------------------------
This Information Statement is being mailed on or about May 25, 1994 as part
of the Company's Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") to the holders of record at the close of business on May 23,
1994 of the Shares. Capitalized terms used and not otherwise defined herein
shall have the meaning set forth in the Schedule 14D-9. You are receiving this
Information Statement in connection with the possible election of persons
designated by Buyer to a majority of the seats on the Board of Directors of the
Company. The Merger Agreement requires the Company, effective upon the
acceptance for payment by Merger Subsidiary of such number of shares that
satisfy the minimum condition (as defined in the Merger Agreement) and at the
request of Buyer, to take all action necessary to cause Buyer's designees
("Designees") to be elected to the number of seats on the Board which is
proportionate to the number of Shares owned by Buyer. This Information Statement
is required by Section 14(f) of the Exchange Act and Rule 14f-1 thereunder. You
are urged to read this Information Statement carefully. You are not, however,
required to take any action.
Pursuant to the Merger Agreement, on May 25, 1994, Buyer commenced the
Offer. The Offer is scheduled to expire on June 22, 1994. Buyer has agreed to
cause Merger Subsidiary to accept Shares validly tendered pursuant to the Offer
as soon as legally permitted and to pay for all such Shares as promptly as
practicable thereafter, following the satisfaction or waiver of the conditions
to the Offer; provided, that Buyer may extend the Offer for a period of time of
not more than 15 business days to meet the objective (but not the condition)
that there shall be validly tendered, prior to the expiration date of the Offer
(as so extended) and not withdrawn a number of Shares, which, together with the
Shares then owned by Buyer and Merger Subsidiary, represents at least 90% of the
Shares on a fully diluted basis.
The information contained in this Information Statement (including
information incorporated by reference) concerning Buyer, Merger Subsidiary and
Designees has been furnished to the Company by Buyer and the Company assumes no
responsibility for the accuracy or completeness of such information.
BOARD OF DIRECTORS
GENERAL
The Common Stock, $.01 par value per share ("Common Stock"), is the only
class of voting securities of the Company outstanding. Each share of Common
Stock has one vote. As of May 17, 1994, there were 23,479,624 shares of Common
Stock outstanding. The Board currently consists of four members and there is
currently one vacancy on the Board. Each director holds office until his
successor is elected and qualified or until his earlier resignation or removal.
BUYER DESIGNEES
Pursuant to the Merger Agreement, Buyer is entitled to designate the number
of directors (the "Designees"), rounded up to the next whole number, on the
Board that equals the product of (i) the total
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<PAGE> 23
number of directors on the Board (giving effect to the election of any
additional directors pursuant to the Merger Agreement) and (ii) the percentage
that the number of Shares owned by Buyer or Merger Subsidiary (including Shares
accepted for payment) bears to the total number of Shares outstanding. Upon the
purchase of the Shares pursuant to the Offer, the Company shall take all actions
necessary to cause the Designees to be elected or appointed to the Board
including, without limitation, increasing the number of directors and seeking
and accepting resignations of incumbent directors.
Buyer has informed the Company that it will choose the Designees from the
directors and executive officers listed in Schedule I to Buyer's Offer to
Purchase, a copy of which is being mailed to the Company's stockholders together
with this Schedule 14D-9. Buyer has informed the Company that each of the
directors and executive officers listed in Schedule I to the Offer to Purchase
has consented to act as a director, if so designated. The information on such
Schedule I is incorporated herein by reference. The business address of Buyer is
One Computer Associates Plaza, Islandia, New York, 11788-7000.
It is expected that the Designees may assume office at any time following
the purchase by Buyer of a specified minimum number of Shares pursuant to the
Offer, which purchase cannot be earlier than June 23, 1994, and that upon
assuming office, the Designees will thereafter constitute at least a majority of
the Board.
DIRECTORS OF THE COMPANY
The names of the current directors, their ages as of May 16, 1994 and
certain other information about them are set forth below. As indicated above,
some of the current directors may resign effective immediately following the
purchase of Shares by Buyer pursuant to the Offer.
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION(S)
- ------------------------- --- ---------------------------------------
<S> <C> <C>
Paul C. Ely, Jr. 62 Partner, Alpha Partners
Robert N. Sharpe 50 Corporate Vice President, Electronic
Data Systems Corporation
Thomas I. Unterberg 63 Partner, Unterberg Harris
Robert H. Waterman, Jr. 57 Chairman, The Waterman Group, Inc.
</TABLE>
Except as set forth below, each of the directors has been engaged in the
principal occupation(s) described above during the past five years. There are no
family relationships among any of the directors or executive officers of the
Company.
Mr. Ely, who serves as the Company's Chairman, is a general partner of
Alpha Partners, a venture capital fund. From December 1988 until July 1989, Mr.
Ely served as an Executive Vice President and a director of Unisys Corporation,
a computer manufacturer. Mr. Ely served as the Chief Executive Officer of
Convergent, Inc., a computer manufacturer, from January 1985 until it was
acquired by Unisys in December 1988. Mr. Ely is also a director of Parker
Hannifin Corporation and Tektronix Inc.
Mr. Sharpe is a Corporate Vice President of EDS and has served as its Vice
President, Business Development since October 1989. He has been employed by EDS
in various management capacities since 1972. Pursuant to the Common Stock
Purchase Agreement among the Company, EDS and Hewlett-Packard, Mr. Sharpe is
EDS' designee to ASK's Board of Directors.
Mr. Unterberg is a managing director of the investment banking firm of
Unterberg Harris. From January 1987 to January 1989, Mr. Unterberg was an
executive officer of the investment banking firm of Shearson Lehman Hutton Inc.
Mr. Unterberg is also a director of AES Corporation, Electronics for Imaging,
Inc., Systems and Computer Technology Corporation, Tandem Computers Corporation,
and Xyvision, Inc.
Mr. Waterman, who serves as the Company's Vice Chairman, is the chairman of
The Waterman Group, Inc., a research, writing, consulting and venture management
company he started in 1986. He is the co-author of In Search of Excellence, and
is the author of The Renewal Factor and Adhocracy: The Power to Change. Mr.
Waterman also serves on the boards of AES Corporation, Boise Cascade
Corporation, Inc. and McKesson, Inc.
A-2
<PAGE> 24
BOARD MEETINGS, COMMITTEES AND COMPENSATION
The Board held a total of 7 meetings and took one action by unanimous
written consent during the fiscal year ended June 30, 1993. All members of the
Board attended at least 75% of all meetings of the Board (held during the period
for which each was a director) and of each of the committees of the Board on
which he served (during the periods that each served) during fiscal 1993. The
Company has both standing Audit and Compensation Committees. There is no
nominating committee nor any committee performing such function.
The Audit Committee of the Board consisting of Mr. Paul C. Ely, Jr., Mr.
Robert N. Sharpe and Mr. Thomas I. Unterberg, met twice during the fiscal year
ended June 30, 1993. Among the committee's functions are recommending engagement
of the Company's independent auditors and meeting with such auditors to consider
the scope and results of the annual audit, and to receive and consider the
auditors' comments on internal controls, accounting staff and similar matters.
The Board's Compensation Committee, consisting of Mr. Ely and Mr. Robert H.
Waterman, Jr., held one meeting and took 13 actions by unanimous written consent
during the fiscal year ended June 30, 1993. Ms. Sandra L. Kurtzig was a member
of the Compensation Committee from June 1993 until her resignation as Chairman
of the Company in September 1993.
Effective March 10, 1994, the Company pays non-management members of the
Board the following annual fees: Chairman, $40,000; Vice Chairman, $30,000;
other directors, $17,500. Directors are also eligible for reimbursement in
accordance with Company policy for their expenses incurred in connection with
attending meetings of the Board of Directors and the Audit and Compensation
Committees. In 1986, the Company adopted a stock option plan under which options
for a total of 150,000 shares of Common Stock may be granted to non-employee
directors of the Company. Options granted under this plan are issued as
nonstatutory options at a price equal to the fair market value on the date of
grant and generally have a term of six years. Options are generally exercisable
over five years from the grant date.
Deferred Compensation Plan for Directors: In August 1981, the Board of
Directors adopted the Deferred Compensation Plan for Directors. Pursuant to this
plan, directors' fees otherwise payable to a participating director are placed
in an account under the plan for such director. At the end of each quarter, the
amount in the director's account is converted into an equivalent number of stock
units based upon the fair market value of the Company's Common Stock on the last
business day of the quarter. Distributions of Common Stock from the director's
account to the director are generally to be made in ten equal annual
installments commencing within 60 days after the close of the first fiscal year
after the earliest of the date such person ceases to be a director of the
Company, the date such person retires or otherwise ceases to engage in his or
her principal occupation, or the date of termination of the plan. At the
election of the participant made at least six months prior to the occurrence of
an event triggering distribution, the participant may receive distributions in
five equal annual installments. Furthermore, the Company may at its option make
a single distribution and/or distribute cash representing the fair market value
of the Common Stock corresponding to the stock units in the participant's
account, in lieu of making a distribution of Common Stock. The plan may at any
time be amended or terminated by the Board of Directors, but may not affect
amounts previously credited to a participant's deferred compensation account. As
of September 27, 1993, there were 8,884 share units in the account established
under the plan for Mr. Unterberg.
1986 Director Option Plan. The Company's 1986 Director Option Plan (the
"1986 Plan") was adopted by the Board of Directors in October 1986 and was
approved by the stockholders of the Company at the 1987 Annual Meeting. A total
of 150,000 shares of Common Stock have been reserved for issuance thereunder.
The 1986 Plan generally provides that each director who is not also an employee
of the Company (a "Non-Employee Director") shall automatically be granted an
option to purchase 10,000 shares of the Company's Common Stock when such
Non-Employee Director first becomes a director of the Company. At the time of
adoption of the 1986 Plan, existing Non-Employee Directors who had been
directors continuously since January 1, 1986, received options for 6,000 shares
and other Non-Employee Directors received options to purchase 10,000 shares.
During each year following the initial grants described above, each Non-Employee
Director will automatically be granted an additional option to purchase 3,000
shares under the 1986 Plan. The exercise price of the options granted under the
1986 Plan is equal to the fair market value of the Company's
A-3
<PAGE> 25
Common Stock on the date of grant. During the fiscal year ended June 30, 1993,
options covering 3,000 shares having an exercise price of $12.875 were granted
to each of Messrs. Ely, Sharpe, Unterberg and Waterman under the 1986 Plan. Mr.
Unterberg was the only director to exercise options granted under the 1986 Plan
during the fiscal year ended June 30, 1993 and he purchased 16,600 shares on
such exercise with an aggregate Value Realized of $245,738. The term "Value
Realized" is the difference between the fair market value of the Company's
Common Stock on the date of exercise and the exercise price. As of June 30,
1993, there were 52,200 shares covered by options outstanding under the 1986
Plan held by four non-employee directors with an average weighted exercise price
of $7.9037 per share.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Directors Ely and Waterman are the two present members of the Compensation
Committee of the Company's Board of Directors. Sandra L. Kurtzig was a member of
the Compensation Committee from June 1993 until her resignation as Chairman of
the Company in September 1993. During Ms. Kurtzig's tenure as a member of the
Compensation Committee, no matters came before the Committee regarding her
compensation.
No interlocking relationship exists between the Company's Board of
Directors or Compensation Committee and the board of directors or compensation
committee of any other company.
EXECUTIVE OFFICERS OF THE COMPANY
The following individuals currently serve as executive officers of the
Company:
<TABLE>
<CAPTION>
AGE EMPLOYMENT HISTORY
---- ------------------------------------------------------
<S> <C> <C>
Eric D. Carlson 49 Dr. Carlson has held a number of senior executive
President and Chief positions within the Company since joining the Company
Executive Officer in 1990. He has been serving since February 1994 as
its President and Chief Executive Officer. Prior to
that he served as an Executive Vice President in
charge of the two principal product businesses of the
Company -- Ingres relational database and development
tools and ASK manufacturing information systems
application software. From 1988 until joining the
Company, Dr. Carlson served as vice president and
general manager of the UNIX Systems Group of Unisys
Corporation. For eight years before that, he was
employed by Convergent Technologies, Inc. in senior
management roles, most recently as senior vice
president and general manager of its Distributed
Systems Division.
Gary B. Filler 53 Mr. Filler joined the Company as its Executive Vice
Executive Vice President of Operations and Chief Financial Officer in
President of Operations February 1994. During 1991 and 1992, Mr. Filler served
and Chief Financial as Chairman of Seagate Technology, Inc., a disk drive
Officer manufacturer. During 1988 and 1989, he was Executive
Vice President of Mountain Computer, a manufacturer of
computer tape back-up systems. From 1972 through 1987,
Mr. Filler was employed by Xidex Corporation, a
microfilm and floppy disk manufacturer, in a variety
of senior financial management positions.
</TABLE>
A-4
<PAGE> 26
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS, DIRECTORS AND
EXECUTIVE OFFICERS
The following table sets forth the beneficial ownership of Common Stock of
the Company as of May 17, 1994 by (i) each person known by the Company to be the
beneficial owner of more than 5% of the Company's Common Stock, (ii) each
current director, (iii) each current executive officer, and (iv) all current
directors and executive officers as a group as of May 17, 1994:
<TABLE>
<CAPTION>
NAME OF INDIVIDUAL OR GROUP PERCENTAGE OF
(NUMBER IN GROUP) NUMBER OF SHARES(1) COMMON STOCK(1)
-------------------------------------- -------------------- ----------------
<S> <C> <C>
Electronic Data Systems Corporation 4,008,535(2) 17.1%
7171 Forest Lane
Dallas, TX 75230
The Capital Group, Inc. 2,271,000(3) 9.7%
333 South Hope Street
Los Angeles, CA 90071
Hewlett-Packard Company 2,004,268(2) 8.5%
3000 Hanover Street
Palo Alto, CA 94304
Paul C. Ely, Jr. 90,400 *
Eric D. Carlson 88,815 *
Robert H. Waterman, Jr. 66,400 *
Thomas I. Unterberg 12,821 *
Robert N. Sharpe 6,600(4) *
Gary B. Filler 0
All current directors and executive 265,136(4) 1.1%
officers as a group (6 persons)
</TABLE>
- ---------------
* Less than 1 percent.
(1) Includes the following Shares subject to outstanding options which were
exercisable at May 17, 1994 or within 60 days of such date: Mr. Ely, 85,400;
Dr. Carlson, 78,437; Mr. Waterman, 60,400; Mr. Unterberg, 3,000; Mr. Sharpe,
6,600; all current directors and executive officers as a group, 233,837.
Also includes 378 shares held in trust for Dr. Carlson under the Company's
401(k) Plan and 9,821 Shares held in a deferred compensation account for Mr.
Unterberg by the Company. Does not include shares subject to outstanding
options which may become exercisable as a result of a change of control upon
the acceptance of Shares pursuant to the Offer.
(2) Pursuant to a Common Stock Purchase Agreement entered into in August 1990
between the Company, Electronic Data Systems Corporation ("EDS") and
Hewlett-Packard Company ("HP"), EDS and HP have rights to maintain their
respective percentage ownership interests in the Company, to nominate a
person to the Board and to have shares acquired pursuant to the agreement
registered for sale under applicable securities laws. In addition, that
agreement gives the Company a right of first refusal to purchase any of
these shares and the right to approve or reject a proposed sale of all or
part of such shares. In connection with the Merger, EDS and HP have waived
their rights to maintain their percentage ownership and each has given Buyer
an option to purchase the shares owned by each of EDS and HP. The Company
has waived its rights under the Common Stock Purchase Agreement as to these
options.
(3) Based on a Schedule 13G filed for the calendar year ended December 31, 1993,
in which it reported sole dispositive power as to 2,271,000 shares.
Represents shares owned by accounts under the discretionary investment
management of one or more of six investment management companies of which
The Capital Group, Inc. is the parent company. The Capital Group, Inc. has
disclaimed beneficial ownership of these shares.
(4) Excludes 4,008,535 shares owned by EDS. Mr. Sharpe is a corporate officer of
EDS; in that capacity he does not have sole, but may have shared, investment
or voting power with respect to the shares. Mr. Sharpe disclaims beneficial
ownership as to such shares.
A-5
<PAGE> 27
In connection with the Merger Agreement certain stockholders of the Company
(each, a "Principal Stockholder") entered into a Stockholder Option Agreement
with Merger Subsidiary. The Principal Stockholders, along with the Shares of
each subject to the Stockholder Option Agreement as of May 17, 1994, are EDS,
with 4,008,535 Shares; HP, with 2,004,268 Shares; Paul C. Ely, Jr., the
Company's Chairman of the Board with 5,000 Shares; Eric D. Carlson, the
Company's Chief Executive Officer and President, with 10,000 Shares; Robert H.
Waterman, Jr., the Company's Vice Chairman of the Board, with 6,000 Shares; and
Thomas I. Unterberg, a director on the Company's Board of Directors, with no
Shares. The outstanding Shares held by the Principal Stockholders represent
approximately 26% of the Company's outstanding Shares as of May 17, 1994. Under
the Stockholder Option Agreement, each Principal Stockholder has granted Merger
Subsidiary the option (the "Stock Option") to purchase, subject to the terms and
conditions set forth in the Stockholder Option Agreement, such Principal
Stockholder's Shares for a price of $13.25 per Share in cash, or to cause to be
tendered pursuant to the Offer such Principal Stockholder's Shares. In addition,
if the price to be paid by Merger Subsidiary pursuant to the Offer is increased,
the purchase price payable upon exercise of the Stock Option shall similarly be
increased. The Stockholder Option Agreement also provides that the number and
kind of Shares subject to the Stock Option and the purchase price therefor shall
be appropriately and equitably adjusted in the event of changes in the Company's
capital stock.
In April 1994, a derivative lawsuit was filed by a holder of 100 Shares in
the Superior Court of California against ten current and former directors and
executive officers of the Company, including Messrs. Carlson, Ely, Sharpe,
Unterberg and Waterman. Because a derivative suit is an action filed on behalf
of and for the benefit of the Company, the Company is required to be a party and
was, therefore, named as a "nominal defendant." The plaintiff claims that,
during the period from October 22, 1992 through April 2, 1993, the individual
defendants breached their fiduciary duties, mismanaged the Company, unjustly
enriched themselves and violated California's insider trading laws by selling
Shares during the period. The Company has notified its directors' and officers'
liability carriers of the claim and has retained counsel, and anticipates filing
a response to the complaint within the next thirty days. The complaint does not
seek damages or any form of relief from the Company.
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS
The following is a brief summary of certain plans in effect during the
fiscal year ended June 30, 1993 under which officers and employees of the
Company received benefits.
Incentive Bonus Plan. The Board has adopted an incentive bonus plan
pursuant to which officers and other key employees can earn annual cash bonuses,
conditional on achievement of specified Company and business unit goals as well
as personal and departmental objectives.
Employee Stock Option Plans. The Company's 1982 Incentive Stock Option Plan
(the "1982 Plan") was adopted by the Board and approved by the stockholders in
1982. A total of 3,400,000 shares of Common Stock were reserved for issuance
upon exercise of options. As a result of the expiration of the 1982 Plan in
August 1992, no further options may be granted thereunder.
In connection with the 1990 acquisition of Ingres Corporation ("Ingres"),
the Company assumed all of the options granted to employees of Ingres and its
subsidiaries pursuant to Ingres' 1984 Incentive Stock Option Plan and 1986
Supplemental Stock Option Plan (collectively, the "Ingres Plans").
In August 1991, the Board adopted the 1991 Stock Plan (the "1991 Plan")
under which the Board or its designated committee is authorized to grant
incentive or nonstatutory stock options, stock appreciation rights, restricted
stock, stock bonus or long-term performance stock awards to employees and
consultants of the Company and its subsidiaries. Stockholders of the Company
approved the 1991 Plan in November 1991. A total of 3,200,000 shares have been
reserved under this plan. The grant of options or other awards under the 1991
Plan to employees is subject to the discretion of the administrator of the Plan
(i.e., the Board or its Compensation Committee). As of the date hereof, there
has been no determination by the Administrator with
A-6
<PAGE> 28
respect to future awards under the 1991 Plan. Non-employee directors are not
eligible to participate in the 1991 Plan. The following table sets forth
information with respect to the grant of options to (i) the persons who were
executive officers of the Company as of June 30, 1993 named in the Summary
Compensation Table below (the "Named Executive Officers"), (ii) all then current
executive officers as a group, and (iii) to all employees as a group, during the
fiscal year ended June 30, 1993. Since June 30, 1993, Messrs. Falotti, Wright
and Laven have terminated their employment with the Company. Their respective
termination dates were: Mr. Falotti, February 8, 1994, Mr. Wright, May 2, 1994
and Mr. Laven, January 31, 1994.
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
EXERCISE PRICE
NAME OF INDIVIDUAL OR PER SHARES
IDENTITY OF GROUP AND POSITION OPTIONS GRANTED(#) ($/SH)
------------------------------------------------- ------------------- ----------------
<S> <C> <C>
Pier Carlo Falotti, President and CEO............ 250,000 $ 10.000
Leslie E. Wright, Executive VP and Chief
Financial and Administrative Officer........... 30,000 12.875
Eric D. Carlson, Executive VP.................... 25,000 12.875
Michael A. Laven, Executive VP................... 25,000 12.875
All then current executive officers as a group... 330,000 10.697
All other employees as a group................... 677,200 14.148
</TABLE>
Under each of these option plans, options are granted at exercise prices
equal to the fair market value on the date of grant, have 10-year terms and
generally become exercisable over a four-year period. Under all of these plans,
as of June 30, 1993, options to purchase an aggregate of 2,843,080 shares of
Common Stock had been exercised, options to purchase 2,907,722 shares were
outstanding (including 573,171 shares covered by options assumed by the Company
in the Ingres acquisition) and held by 1,406 employees at exercise prices
ranging from $0.4247 to $23.75, and 458,234 shares remained available for future
grant. On April 26, 1994, the Board granted all holders of options on that date
(other than executive officers and directors) with an exercise price greater
than $8.625 per share the right to cancel such options and to receive new
options covering two-thirds the number of unexercised shares under the canceled
option with an exercise price of $8.625 per share. The new options will have the
same vesting commencement date as the canceled options, and were granted under
the 1991 Stock Plan.
Employee Stock Purchase Plans. In May 1990, the Board adopted the 1990
Employee Stock Purchase Plan (the "1990 ESPP"). Stockholders approved the 1990
ESPP in November 1990. Under the 1990 ESPP, 750,000 shares were reserved for
issuance. The 1990 ESPP permitted a participant to purchase shares of the
Company's Common Stock at 85% of the lesser of (i) the fair market value of such
stock at the beginning of a two-year offering period or (ii) the fair market
value of such stock at the end of each six-month purchase period within the
two-year offering period. Generally, all full-time officers and employees of the
Company and any of its U.S. subsidiaries are eligible to participate in the 1990
ESPP. The 1990 ESPP terminated on May 31, 1993 as all shares authorized for
issuance thereunder had been issued. In March 1993, the Board adopted the 1993
Employee Stock Purchase Plan (the "1993 Plan"). Stockholders approved the 1993
Plan in November 1993. The 1993 Plan, under which 500,000 shares have been
reserved for issuance, is identical to the 1990 Plan except that offering
periods are only six months in duration and are coincident with purchase
periods. As a result, the purchase price is reset every six months. As of June
30, 1993, approximately 1,374 persons were eligible to participate in the 1993
Plan, of whom 658 were participating.
In January 1992, the Board adopted the 1992 Overseas Employee Stock
Purchase Plan (the "1992 ESPP"). Stockholder approval was not required for the
1992 ESPP. The 1992 ESPP is now in all material respects identical to the 1993
Plan, except that only persons who are employees of the Company's foreign
subsidiaries at the time of enrollment are eligible to participate. At June 30,
1993, 938 persons were eligible to participate in the 1992 ESPP, of whom 154
were participating.
A-7
<PAGE> 29
Participation in the 1992 ESPP and the 1993 Plan is voluntary and is
dependent on each eligible employee's election to participate and his or her
determination as to the level of payroll deductions. Accordingly, neither future
purchasers nor purchases under the 1993 Plan are determinable. Non-employee
directors are not eligible to participate in the 1993 Plan. No purchases were
made under the 1993 Plan during the fiscal year ended June 30, 1993. Purchases
were made under the 1990 ESPP, which was a similar plan. The following table
sets forth certain information regarding shares purchased under the 1990 ESPP
during the fiscal year ended June 30, 1993 and the payroll deductions
accumulated at the end of that fiscal year in accounts under the 1993 Plan for
each of the Named Executive Officers who participated in the 1990 ESPP or the
1993 Plan, for all then current executive officers as a group and for all other
employees who participated in either of the purchase plans as a group during
that fiscal year:
<TABLE>
<CAPTION>
PAYROLL
NUMBER DEDUCTIONS
NAME OF INDIVIDUAL OR OF SHARES DOLLAR AS OF FISCAL
IDENTITY OF GROUP AND POSITION PURCHASED(#) VALUE($)(1) YEAR END($)
--------------------------------------------------- ------------ ----------- ------------
<S> <C> <C> <C>
Pier Carlo Falotti, President and CEO.............. 131 $ 228 $ 7,500
David Sohm, Vice President......................... 631 6,722 1,000
All then current executive officers as a group..... 762 6,950 8,500
All other employees as a group..................... 280,340 2,418,644 290,952
</TABLE>
The Board has agreed to terminate the 1992 ESPP and the 1993 Plan effective
for any offering period starting after May 31, 1994 prior to the Effective Time
of the Merger.
The ASK Group 401(k) Plan: The Company has established The ASK Group 401(k)
Plan (the "401(k) Plan") which is a qualified profit sharing plan and salary
deferral program under the Federal tax laws and is administered by the Company.
All employees of the Company (except certain specifically excluded
classifications as defined in the plan) are eligible to participate after
meeting certain minimum employment conditions. Participants may defer up to 15%
of their eligible salary and contribute to the 401(k) Plan through payroll
deductions. At the end of each quarter starting with the quarter ended March 31,
1992, the Company has agreed to contribute shares of its Common Stock to the
plan. For the 1992 calendar year, shares of Common Stock were contributed in an
amount equal to 50% of the first 3% of each participant's compensation
contributed to the plan, up to a maximum Company contribution of $1,500 per
participant per plan year. Effective January 1, 1993, the Company contributes
shares of Common Stock having a value equal to 50% of a participant's
contribution to the 401(k) Plan, up to a number of shares having a maximum value
of $1,500 per participant per plan year. The Company contribution to a
participant's 401(k) Plan account vests over the five-year period starting from
his or her hire date; however, Company contributions made from January 1, 1992
through June 30, 1992 are fully vested. Each participant is fully vested in the
portion of his or her account which he or she contributed. The Board has agreed
to amend the 401(k) Plan prior to the Effective Time of the Merger to provide
that employer matching contributions may be made in cash.
A-8
<PAGE> 30
EXECUTIVE COMPENSATION
CASH COMPENSATION
The following table shows, as to the Chief Executive Officer and each of
the four other most highly compensated executive officers whose salary plus
bonus exceeded $100,000 in fiscal 1993, information concerning compensation paid
for services to the Company in all capacities during the fiscal year ended June
30, 1993, as well as total compensation paid to each such individual for the
Company's two previous fiscal years (if such person was the Chief Executive
Officer or an executive officer, as the case may be, during any part of such
fiscal year). The principal positions are those held by the named individual as
a corporate officer of the Company on June 30, 1993. Since June 30, 1993,
Messrs. Falotti, Wright and Laven have terminated their employment with the
Company. Their respective termination dates were: Mr. Falotti, February 8, 1994,
Mr. Wright, May 2, 1994 and Mr. Laven, January 31, 1994.
SUMMARY COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------------------------------- LONG-TERM COMPENSATION
OTHER --------------------------------------
ANNUAL AWARDS RESTRICTED ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS(#) STK($) COMPENSATION
- ---------------------------------- ---- --------- -------- --------------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Pier Carlo Falotti................ 1993 $500,000 $100,000 $42,000(2) 250,000 $1,750,000(3) $861,500(4)
President and Chief Executive
Officer
Leslie E. Wright.................. 1993 209,167 0 N/A 30,000 N/A
Executive Vice President........ 1992 200,000 0 20,000 --
and Chief Financial and......... 1991 186,875 60,000 50,000 --
Administrative Officer
Eric D. Carlson................... 1993 220,001 0 1,421 25,000 N/A
Executive Vice President........ 1992 200,000 0 20,000 N/A
1991 195,960 60,000 200,000(6) N/A --
Michael A. Laven.................. 1993 198,000 42,000 34,490(7) 25,000 N/A
Executive Vice President
David Sohm........................ 1993 148,000 0 57,498(8) 0 N/A
Vice President.................. 1992 147,000 0 -- 10,000 N/A
1991 134,167 35,000 -- 27,500 N/A
</TABLE>
- ---------------
(1) Information for fiscal 1992 and 1991 is excluded from the "Other Annual
Compensation" and "All Other Compensation" columns pursuant to the SEC's
transition rules.
(2) Other Annual Compensation represents reimbursements for automobiles outside
the Company's standard relocation policy as agreed to in Mr. Falotti's offer
of employment. See also "Certain Relationships, Transactions and
Arrangements" below.
(3) At June 30, 1993, Mr. Falotti held 175,000 shares of restricted stock having
a value of $1,881,250. Such shares vest in five equal annual installments on
the anniversary of the date of grant. Accordingly, of such shares, 70,000
will vest in under three years from their date of grant. Restricted stock is
entitled to receive any dividends paid to holders of Common Stock generally,
which dividends are held in escrow until the related shares vest. See also
"Certain Relationships, Transactions and Arrangements" below.
(4) "All Other Compensation" represents $1,500 in value of Common Stock
contributed by the Company pursuant to its 401(k) Plan and $860,000 as the
aggregate amount the Company has agreed to provide Mr. Falotti under his
employment offer over the first five years of his employment to partially
cover the cost of obtaining certain disability and retirement benefits
similar to those provided him by his prior employer and related taxes. See
also "Certain Relationships, Transactions and Arrangements" below.
(5) Represents $1,500 in value of Common Stock contributed by the Company
pursuant to its 401(k) Plan.
(6) Includes options to purchase 100,000 shares that were granted and canceled
in fiscal 1991 in connection with a regrant.
(7) Represents provisions of certain amounts and reimbursements of certain
expenses (including property management fees) outside the Company's standard
relocation policy in connection with Mr. Laven's relocation to the U.S.
A-9
<PAGE> 31
(8) Represents (i) $40,450 in reimbursements of certain mortgage payment
obligations of Mr. Sohm and his wife outside the Company's standard
relocation policy and (ii) tax reimbursement payments on his relocation
assistance.
COMPENSATION PURSUANT TO PLANS
The following table sets forth, as to the Named Executive Officers named in
the compensation table above and all executive officers at June 30, 1993, as a
group, information with respect to options to purchase shares of Common Stock
granted and exercised during the fiscal year ended June 30, 1993. As noted
above, Messrs. Falotti, Wright and Laven terminated employment with the Company
on February 8, 1994, May 2, 1994 and January 31, 1994, respectively. Eric D.
Carlson and Gary B. Filler have been granted options since June 30, 1993.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
------------------------------------------------ POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED
OPTIONS ANNUAL RATES OF STOCK
GRANTED TO PRICE APPRECIATION
OPTIONS EMPLOYEES IN EXERCISE FOR OPTION TERM(2)
GRANTED FISCAL PRICE EXPIRATION -----------------------
NAME (#) YEAR(3) ($/SH)(4) DATE 5%($) 10%($)
- ------------------------------ ------- ------------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Pier Carlo Falotti............ 250,000 24.8% 10.000 07/09/02 $1,572,250 $3,984,250
Leslie E. Wright.............. 30,000 3.0 12.875 07/30/02 242,911 615,583
Eric D. Carlson............... 25,000 2.5 12.875 07/30/02 202,425 512,986
Michael A. Laven.............. 25,000 2.5 12.875 07/30/02 202,425 512,986
</TABLE>
- ---------------
(1) The material terms of the options described in this table are as follows:
The exercise price is determined by the Board of Directors or its
Compensation Committee (the "Administrator") and may not be less than 100%
of the fair market value of the Common Stock on the date the option is
granted. The term of the option is 10 years from the grant date and may be
exercised only while the optionee is an employee or a consultant to the
Company and for 30 days after termination of the employment or consulting
agreement (six months or one year after termination if termination is due to
the optionee's permanent disability or death, respectively). The option
becomes exercisable as to 25% of the shares covered by the option on the
first anniversary of the grant date and as to the balance in 36 monthly
installments thereafter. The option becomes fully vested and exercisable in
the event of a "change of control", unless the Administrator determines
otherwise. A "change of control," for the purposes of this footnote, occurs
if a "person" as defined in the Securities Exchange Act of 1934 becomes the
direct or indirect beneficial owner of 50% or more of the outstanding Common
Stock or the stockholders approve the sale of all or substantially all of
the assets of the Company or the merger of the Company with or into another
corporation.
(2) The 5% and 10% assumed rates of appreciation are mandated by the rules of
the Securities and Exchange Commission and do not represent the Company's
estimate or projection of the future Common Stock price.
(3) Based on options to purchase an aggregate of 1,007,200 shares of Common
Stock granted during fiscal 1993 to all employees.
(4) The Administrator of the Option Plan has broad discretion to amend or
exchange outstanding options, including repricing options.
The following table shows, as to the Named Executive Officers, information
concerning stock options exercised during the fiscal year ended June 30, 1993.
As noted above, Messrs. Falotti, Wright and Laven terminated employment with the
Company on February 8, 1994, May 2, 1994 and January 31, 1994, respectively.
A-10
<PAGE> 32
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
SHARES
ACQUIRED NUMBER OF VALUE OF UNEXERCISED
ON VALUE UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
EXERCISE REALIZED(1) FISCAL YEAR-END(#) FISCAL YEAR-END($)(2):
--------- ----------- --------------------------- ---------------------------
NAME ($) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------ --------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Pier Carlo Falotti............ 0 N/A 0 250,000 $ 0 $ 187,500
Leslie E. Wright.............. 29,000 $ 512,750 46,927 50,073 238,960 94,165
Eric D. Carlson............... 27,000 396,563 42,688 60,312 214,321 165,304
Michael A. Laven.............. 23,900 421,112 11,724 51,464 35,971 81,271
David Sohm.................... 15,000 166,250 64,271 13,229 282,911 36,933
</TABLE>
- ---------------
(1) Value realized is equal to the fair market value of the Company's Common
Stock on the date of exercise, minus the exercise price.
(2) Value of unexercised options is equal to the fair market value of the
Company's Common Stock at the end of fiscal 1993 ($10.75 per share) minus
the exercise price.
On May 20, 1994, the closing sales price reported on the Nasdaq National
Market for a share of the Company's Common Stock was $12.9375.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act ("Section 16(a)") requires the Company's
officers and directors, and persons who own more than ten percent of the
Company's Common Stock, to file reports of initial ownership on Form 3 and
changes in ownership on Form 4 or 5 with the Securities and Exchange Commission
(the "SEC"). Such officers, directors and ten percent stockholders are also
required by SEC rules to furnish the Company with copies of all such forms that
they file.
The Company has historically prepared and filed the Section 16(a) forms for
its officers and directors, based on responses to informational requests sent to
such officers and directors at the end of each month. Based on a review of the
copies of the Section 16(a) forms received by the Company and written
representations from certain officers and directors that no Form 5 was required,
the Company believes that, during the period July 1, 1992 through June 30, 1993,
all Section 16(a) filing requirements applicable to the Company's officers and
directors were complied with, except that the Company filed the following forms
late on behalf of the identified officer and director: the Form 4 required of
Eric Carlson for the month of November 1992 reporting six transactions was filed
two days late; and the Form 4 for Paul C. Ely, Jr. for the month of December
1992 reporting one transaction was filed 17 days late.
CERTAIN RELATIONSHIPS, TRANSACTIONS AND ARRANGEMENTS
Pier Carlo Falotti: In June 1992, the Company gave Pier Carlo Falotti an
employment offer letter pursuant to which he would become the President and
Chief Executive Officer of the Company. Until such time as Mr. Falotti obtained
U.S. work permits, he provided services as a consultant. Under the employment
arrangement, Mr. Falotti was to be paid as follows: $600,000 base annual salary
and a $200,000 bonus during his first year of employment (payable $100,000 in
fiscal 1993 on his first day of employment and $100,000 at the end of his first
year of employment which occurred in fiscal 1994); minimum $800,000 base annual
salary and bonus during his second year of employment; and a minimum combined
base annual salary and bonus of $700,000 during his third and subsequent years
of employment. Under the Company's 1991 Stock Plan, the Board granted Mr.
Falotti 175,000 shares of the Company's Common Stock as a stock bonus award (the
"Restricted Shares") and options to purchase 250,000 shares of Common Stock. The
Restricted Shares vest in five equal annual installments on each of the first
five anniversary dates of the grant. The options have standard vesting; i.e.,
they vest and become exercisable to the extent of 25% of the shares on the first
anniversary of the grant, with the balance vesting in 36 monthly installments
thereafter. Mr. Falotti was
A-11
<PAGE> 33
entitled to participate in all of the Company's benefit plans, including its
employee stock purchase plan, medical programs and relocation packages. In
addition, the Company provided Mr. Falotti interim housing and paid him $42,000
as a one-time automobile allowance. The Company also agreed to provide Mr.
Falotti with a payment of $172,000 for each of the first five years of his
employment with the Company toward the costs of obtaining disability and
retirement benefits similar to those provided under his prior employer's defined
benefit pension program and related taxes. The Company also agreed to pay Mr.
Falotti an additional sum to reimburse him for the additional U.S. and
California income taxes incurred as a result of the reimbursement of relocation
expenses and the automobile allowance.
The Company agreed that if Mr. Falotti's employment with the Company (or a
subsidiary of the Company) is terminated other than by his voluntary resignation
and other than within one year following a change of control, it would pay
severance on regular pay dates at a rate based on the average of the prior two
years' annual base salary and incentive bonus (such average referred to as the
"Severance Base"). These severance payments would continue from the date of such
termination until the earlier of the date he becomes reemployed or the following
anniversaries of his employment termination date: the third anniversary, if
termination occurs during his first year of employment; the second anniversary,
If termination occurs during his second or third year of employment; and the
first anniversary, If the termination occurs thereafter. If Mr. Falotti's
employment is terminated within a year following a change of control, the
Company, or its successor, will pay him the Severance Base. In addition, in the
event of a change of control, the Restricted Shares and the Stock Options will
be fully vested on the date of the change of control. A "change of control" for
purposes of the arrangements with Mr. Falotti, and for Messrs. Wright and
Carlson described below, is defined as the acquisition by a person or group of
50% or more of the Company's Common Stock or a transaction requiring stockholder
approval and involving either the sale of all or substantially all of the assets
of the Company or the merger of the Company with or into another company.
Mr. Falotti resigned from the Company in February 1994. The Company made no
severance payments to Mr. Falotti and cancelled 140,000 Restricted Shares, which
represented all of the unvested Restricted Shares.
Leslie Wright: In November 1989, the Board agreed that all options granted
and to be granted to Mr. Wright would become fully exercisable in the event of a
change of control. Mr. Wright's employment with the Company terminated on May 2,
1994. No severance payments were made to Mr. Wright.
Eric Carlson: In July 1993, Dr. Carlson was granted an option covering
20,000 shares at an exercise price of $10.75, vesting over a period of four
years. In February 1994, the Board promoted Dr. Carlson to the position of
President and Chief Executive Officer. Pursuant to this promotion, the Board
established a $300,000 target incentive bonus for calendar 1994 which would be
earned if the Company was profitable. The incentive bonus will be earned earlier
during calendar 1994 if Dr. Carlson's employment terminates other than
voluntarily or for cause, or if it terminates for any reason following a change
of control. For purposes of these arrangements, a change of control means (i)
the acquisition by any person or group of persons of 50% or more of the
Company's Common Stock, (ii) a transaction requiring shareholder approval and
involving either the sale of all or substantially all of the assets of the
Company or the merger, consolidation or other combination of the Company with or
into a previously unaffiliated entity. The purchase of at least 50% of the
Shares pursuant to the Offer will result in a change of control for this
purpose. The targeted bonus will also be earned if the Company sells either its
Ingres or MANMAN businesses, in which event 50% or 100%, respectively, of the
targeted bonus will be earned. Pursuant to his promotion, Dr. Carlson was also
granted a stock option covering 250,000 shares with an exercise price of $7.875
per share. This option will vest, on the earliest of (i) March 7, 1999, (ii) on
the attainment of certain market valuation or earnings per share levels, or
(iii) as to 50% or 100% of the previously unexercised shares upon the sale of
Ingres or MANMAN business, respectively. All options described above were
granted under the Company's 1991 Stock Plan.
In March 1994, shortly after Dr. Carlson's promotion, the Company entered
into an agreement (the "Carlson Severance Agreement") with Dr. Carlson,
providing benefits in the event of (i) termination of employment, (ii)
termination of employment following a change of control, and (iii) change of
control without regard to termination of employment. The Carlson Severance
Agreement provides that if Dr. Carlson is terminated by the Company for any
reason other than cause or voluntary resignation he will receive: (i) a
A-12
<PAGE> 34
severance payment equal to six months' base salary, (ii) six months of health
care benefits, and (iii) executive outplacement services. The Carlson Severance
Agreement also provides for increased benefits if, following a change of
control, (i) Dr. Carlson's position is terminated, (ii) his duties and
responsibilities are significantly reduced, or (iii) his employment terminates
by mutual agreement. In such event, Dr. Carlson is eligible to receive a lump
sum severance payment equal to one year's salary if the severance occurs within
one year following the change of control, nine months' salary if the severance
occurs during the second year following the change of control, and six months'
salary if the severance occurs thereafter. Dr. Carlson is also then entitled to
receive all benefits for the extent of his severance period as well as executive
outplacement counseling. Under the Carlson Severance Agreement, Dr. Carlson is
also entitled, following a change of control, to full acceleration of vesting
with respect to any unvested stock options or restricted stock regardless of
whether his employment subsequently terminates. For purposes of the Carlson
Severance Agreement, "change of control" is defined as (i) the acquisition by
any person or group of persons of 50% or more of the Company's Common Stock or
(ii) a transaction requiring shareholder approval involving either the sale of
all or substantially all of the assets of the Company or the merger of the
Company with or into a previously unaffiliated entity. Because the purchase of
at least 50% of the shares of the Company's Common Stock pursuant to the Offer
will result in a change of control for purposes of the Carlson Severance
Agreement, the stock options granted to Dr. Carlson as described above will vest
in full as a result of the purchase of shares of the Company's Common Stock
pursuant to the Offer.
As an inducement for the Buyer to enter into the Merger Agreement and the
transactions contemplated thereunder, Dr. Carlson entered into an agreement with
the Company to reduce benefits payable to him by virtue of the Carlson Severance
Agreement to a level such that the severance excise tax provisions of the
Internal Revenue Code will not be triggered.
David Sohm: In fiscal 1993, the Company paid Mr. Sohm $43,556 of relocation
expense reimbursement and resettlement allowances associated with a relocation
to manage the Company's Data 3 business unit; these payments were in accordance
with standard employee relocation policy. In addition, the Company reimbursed
Mr. Sohm $57,498 of certain mortgage payment obligations of Mr. Sohm and his
wife on the mortgage of his prior residence and on a second mortgage on his new
residence and of federal and state taxes resulting from the relocation
assistance. During fiscal 1993, the Company stopped the reimbursement of those
mortgage payments when it loaned Mr. Sohm $375,000. Mr. Sohm used the proceeds
of the loan to repay the second mortgage on his new residence. The $375,000
loan, which bore interest at 5% and matured no later than December 31, 1993, was
repaid in full in April 1993 when Mr. Sohm's prior residence was sold. Mr. Sohm
ceased being an executive officer of the Company in fiscal 1994.
Sandra Kurtzig: In August 1992, the Board fully vested all stock options
granted to Ms. Kurtzig when she stepped down as the Company's President and
Chief Executive Officer. At that time, the Board also agreed to provide to Ms.
Kurtzig and her sons during her lifetime all medical, dental and vision care
benefits provided generally to employees of the Company. Ms. Kurtzig has entered
into a noncompete agreement with the Company for a two-year period ending August
31, 1994. In September 1993, Ms. Kurtzig resigned from the Board and
relinquished her position as Chairman. In September 1993, the Board agreed to
provide Ms. Kurtzig at the Company's expense with a secretary and an office at a
mutually agreeable location for at least three years.
Dennis McGinn: Mr. McGinn was an executive officer of the Company until his
employment termination in June 1993. In connection with his termination, the
Company paid him six months' base salary and forgave the balance of principal
($80,000) and accrued interest under a five-year $120,000 loan bearing interest
at the rate of 8.5% made to him as part of the Company's employment offer in
December 1990. The largest amount outstanding under this loan during fiscal 1993
was $80,000.
Michael Laven: Mr. Laven's employment with the Company was terminated in
January 1994. In connection with the termination, the Company agreed to (a) pay
him severance equal to 6 months salary less advances, (b) forgive all principal
and interest under his $40,000 note to the Company, (c) continue to reimburse
through August 1994 certain of his mortgage interest payments, and (d) continue
medical, dental and vision benefits through August 3, 1994.
A-13
<PAGE> 35
Paul C. Ely, Jr.: On March 10, 1994, the Board authorized the Company to
retain Mr. Ely, the Company's Chairman of the Board since February 1994, as a
consultant for the purpose of advising senior management on operational and
management issues as the Company developed and implemented its new business
plan. Mr. Ely is paid a fee of $13,333.33 per month as compensation for such
consulting services. In connection with that engagement the Board also granted
Mr. Ely an option to purchase 75,000 shares of the Company's Common Stock
pursuant to its 1991 Stock Plan. The options have an exercise price of $8.125
per share and were granted as fully exercisable options. On that date, the Board
also increased the annual fee payable to Mr. Ely in his role as Chairman to
$40,000, payable in quarterly installments.
Robert H. Waterman, Jr.: On March 10, 1994, the Board authorized the
Company to retain Mr. Waterman, the Company's Vice Chairman of the Board since
February 1994, as a consultant for the purpose of advising senior management on
operational and management issues as the Company developed and implemented its
new business plan. Mr. Waterman is to be paid a fee of $13,333.33 per month as
compensation for such consulting services. In connection with that engagement
the Board also granted Mr. Waterman an option to purchase 50,000 shares of the
Company's Common Stock pursuant to its 1991 Stock Plan. The options have an
exercise price of $8.125 per share and were granted as fully exercisable
options. On that date, the Board also increased the annual fee payable to Mr.
Waterman in his role as Vice Chairman to $30,000, payable in quarterly
installments.
Gary B. Filler: In February 1994, the Board appointed Mr. Filler to the
position of Executive Vice President of Operations and Chief Financial Officer.
Mr. Filler's initial base salary was set at $215,000 and he was approved a
target incentive bonus for calendar 1994 of $100,000. One-half of the targeted
bonus will be earned if the Company reports operating income for the quarter
ending June 30, 1994; the other half will be earned if the Company attains
certain financial performance targets for the first half of fiscal 1995. In
addition, Mr. Filler was granted two stock options (one covering 200,000 shares,
the other covering 50,000 shares) covering a total of 250,000 shares with an
exercise price of $7.875 per share. These options were scheduled to vest on the
earliest of (i) March 7, 1999, (ii) on the attainment of certain market
valuation or earnings per share levels, or (iii) as to 50% or 100% of the
previously unexercised shares upon the sale of MANMAN or Ingres business,
respectively. Except as a result of the Offer, the stock option covering 50,000
shares will not be exercisable unless the Company reports at least one dollar of
operating income for the quarter ending June 30, 1994.
In March 1994, shortly after Mr. Filler's hire, the Company entered into an
agreement with Mr. Filler (the "Filler Severance Agreement") providing Mr.
Filler with benefits in the event of (i) termination of employment, (ii)
termination of employment following a change of control, and (iii) change of
control without regard to termination of employment. The Filler Severance
Agreement provides that if Mr. Filler is terminated by the Company for any
reason other than cause or voluntary resignation he will receive: (i) a
severance payment equal to six months' base salary, (ii) six months of health
care benefits, and (iii) executive outplacement services. The Filler Severance
Agreement also provides for increased benefits if, following a change of
control, (i) Mr. Filler's position is terminated, (ii) his duties and
responsibilities are significantly reduced, or (iii) his employment terminates
by mutual agreement. In such event, Mr. Filler is eligible to receive a lump sum
severance payment equal to one year's salary if the severance occurs within one
year following the change of control, nine months' salary if the severance
occurs during the second year following the change of control, and six months'
salary if the severance occurs thereafter. Mr. Filler is also then entitled to
receive all benefits for the extent of his severance period as well as executive
outplacement counseling. Under the Filler Severance Agreement, Mr. Filler is
also entitled, following a change of control, to full acceleration of vesting
with respect to any unvested stock options or restricted stock regardless of
whether his employment subsequently terminates. For purposes of the Filler
Severance Agreement, "change of control" is defined as (i) the acquisition by
any person or group of persons of 50% or more of the Company's Common Stock or
(ii) a transaction requiring shareholder approval involving either the sale of
all or substantially all of the assets of the Company or the merger of the
Company with or into a previously unaffiliated entity. All of the options
granted to Mr. Filler were granted under the Company's 1991 Stock Plan and will
vest in full as a result of the purchase of at least 50% of the shares of the
Company's Common Stock pursuant to the Offer described in this Information
Statement.
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<PAGE> 36
Thomas I. Unterberg: Unterberg Harris, one of the Company's investment
banking firms, will be entitled to a fee of .65% of the total consideration paid
by Buyer in connection with the Offer and the Merger. Mr. Unterberg, a director
on the Company's Board of Directors, is a principal in Unterberg Harris.
Electronic Data Systems Corporation ("EDS"): The Company has entered into
an agreement with EDS pursuant to which EDS provides the Company and its
subsidiaries with certain information systems services. Each of the Company and
Ingres have also entered into agreements pursuant to which each gives EDS the
right to relicense certain software products in return for the payment of
license fees.
Hewlett-Packard Company ("HP"): The Company and HP have entered into
agreements permitting the Company to resell certain hardware and software
products of HP in conjunction with the license by the Company of certain of its
MANMAN software products.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
During fiscal 1993, directors Ely and Waterman served on the Compensation
Committee of the Board of Directors (the "Committee"). Neither was an employee
of the Company. Ms. Kurtzig served on the Committee from June 1993 until her
resignation as Chairman of the Company in September 1993. Acting under authority
of the Board of Directors, the Committee is responsible for:
- Determining compensation levels for the Company's chief executive officer
("CEO") and the other executive officers.
- Establishing the Company's general compensation policy for all executive
officers.
- Administering the various stock plans of the Company, including the grant
of stock options and other securities under those plans.
- Administering the Company's Incentive Bonus Plan for the Company's
U.S.-based employees (the "Bonus Plan"), including approving target bonus
amounts, performance criteria and actual payment of bonuses to the
Company's officers.
The objectives of the Company's executive compensation program are to
motivate senior employees to perform at optimal levels to achieve and exceed
Company goals, to align the interests of executive officers with successful
performance by the Company, and to attract and retain highly productive and
qualified personnel. The Committee believes that the compensation of the CEO and
other executive officers should be significantly influenced by performance.
Accordingly, a substantial portion of each executive's compensation is
contingent on attainment of certain internal financial targets by the Company
and the particular business unit for which the executive officer is responsible,
as well as on meeting specific performance goals.
COMPENSATION OF EXECUTIVE OFFICERS
For fiscal 1993, the Company's compensation program for executive officers
was comprised of base salary, annual cash bonuses, stock options under the
Company's 1991 Stock Plan and various other benefits, including benefits
generally available to all employees of the Company. See "Information Concerning
the Company -- Employee Benefit Plans" above. This program provided an overall
level of compensation designed to be competitive within the high technology
industry.
At the start of fiscal 1993, the Company's human resources department, with
the assistance of an independent consulting firm selected by the Company's human
resources department, gathered and analyzed executive compensation data for a
group of companies in the same industry segment and with similar revenue levels
to those of the Company. Executive level positions for the Company were matched
to comparable survey positions and competitive market levels were determined for
base salary, targeted incentives and targeted total cash compensation. The CEO
and human resources management personnel reviewed that competitive market data,
together with each executive's performance and contribution during the prior
fiscal year, his performance targets for fiscal 1994 and the performance by the
Company and individual business units against targets for the prior fiscal year.
A-15
<PAGE> 37
The Bonus Plan for fiscal 1993 was reviewed with the full Board of
Directors. For fiscal 1994, the Bonus Plan was reviewed by the Committee. The
Bonus Plan is designed to provide a direct incentive to executive officers and
other participants to achieve the fiscal year financial goals established for
the Company and their respective business units, together with their respective
individual performance objectives (e.g., meeting specific product release
schedules). Individual performance objectives are weighted by relative
importance and have minimum performance thresholds which must be met before any
portion of the bonus for that objective will be paid. For fiscal 1993, the
Company and business unit performance measures were based on operating income
and gross margin targets.
At the beginning of fiscal 1993, the CEO recommended base salaries and
target bonus levels for each executive officer (other than the CEO) to the Board
of Directors. The Board reviewed the recommendations, performance and market
data and established base salary levels and target bonuses for each executive
officer. (A similar process was followed with respect to fiscal 1994, except
that the Committee reviewed and established the base salary and targets.)
At the close of fiscal 1993, the CEO evaluated the performance of each
executive officer against the officer's objectives and recommended to the
Committee the amount of the bonus based on attainment of those objectives.
During fiscal 1993, the Committee granted stock options to the executive
officers pursuant to the Company's 1991 Stock Plan. Some options were granted at
the beginning of the fiscal year in connection with establishing the officer's
compensation package for fiscal 1993, some were granted as a result of the
promotion of an officer and others were granted at the end of fiscal 1993 during
the Committee's review of fiscal 1993 performance. The 1991 Stock Plan is
designed to further align the interests of executives and stockholders by
creating a link between executive compensation and stockholder return and to
give optionees the opportunity to develop an ownership position in the Company's
Common Stock. Factors considered in determining whether to grant an option to an
executive officer and the size of the grant include practices of the Company's
competitors, the performance, contribution and responsibility levels of the
executive officer, the level of vested and unvested options held by that person
before and after the grant, and the estimated value of the options as a percent
of the overall compensation package for the executive officer. Stock options are
exercisable at a price equal to the fair market value of the Company's Common
Stock at the date of grant, generally vest 25% on the first anniversary of the
grant date and the balance monthly thereafter, are fully exercisable on the
fourth anniversary of the grant date and have a maximum term of ten years.
CEO COMPENSATION
Mr. Falotti's compensation for fiscal 1993 was established pursuant to an
offer letter executed in July 1993 and approved by the Board of Directors. The
offer provided that his fiscal 1993 compensation included a base salary at the
annual rate of $600,000 and a $200,000 hiring bonus; the bonus was payable
one-half on his first day of employment by the Company and the balance on the
last day of his first year of employment. Pursuant to the offer, Mr. Falotti
received 175,000 shares of Common Stock and options to purchase 250,000 shares
of Common Stock, both under the 1991 Stock Plan. The 175,000 restricted shares
are subject to vesting at the rate of 20% on each anniversary of their grant.
Mr. Falotti was also provided certain assistance in connection with the
relocation of him and his family from Switzerland to the United States,
including interim housing allowances and the provision of $42,000 for
automobiles. Pursuant to the offer letter, Mr. Falotti was to have been paid an
additional $172,000 during each of his first five years of employment by The ASK
Group. This additional amount was to partially cover the cost of obtaining
certain disability and retirement benefits similar to those provided him by his
prior employer and related taxes. In accordance with the offer letter, Mr.
Falotti's compensation package for fiscal 1994 was to have been a $600,000
annual base salary plus an incentive bonus. The incentive bonus has quarterly
and annual elements. Mr. Falotti could earn up to $100,000 in quarterly bonuses,
depending on the number of quarters in which specified minimum operating income
levels are met. In addition, Mr. Falotti was to have been paid 5% of the
Company's fiscal 1994 operating
A-16
<PAGE> 38
income in excess of a specified minimum level. In accordance with his offer
letter, Mr. Falotti was guaranteed to be paid a minimum of $200,000 of these
incentive bonuses for fiscal 1994.
MEMBERS OF THE COMPENSATION COMMITTEE
Paul C. Ely, Jr.
Robert H. Waterman, Jr.
DATED: September 24, 1993
COMPANY STOCK PRICE PERFORMANCE GRAPH
The following graph shows a five-year comparison of cumulative total
stockholder return, calculated on a dividend reinvested basis, for The ASK
Group, Inc., the NASDAQ Composite (U.S. only) index, and the NASDAQ (Computer &
Data Processing Stocks). The graph assumes that $100 was invested in the
Company's Common Stock and in the other two indices on June 30, 1988 (the last
trading day of fiscal 1988). The stock price performance shown on the graph
following is not necessarily indicative of future price performance.
In accordance with the provisions of Section 232.304 of Regulation S-T, a
paper copy of the stock price performance graph which appears here has been
furnished to the SEC under cover of Form SE dated May 25, 1994.
A-17
<PAGE> 39
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NO. EXHIBIT NAME NO.
- ------------ ------------------------------------------------------------------------- -----
<S> <C> <C>
Exhibit 1 Agreement and Plan of Merger, dated as of May 18, 1994, by and among
Buyer, Merger Subsidiary and the Company.................................
Exhibit 2 Form of Press Release issued by the Company and Buyer on May 19, 1994....
Exhibit 3 Pages 2-13 of the Company's Proxy Statement, dated October 22, 1993, for
the Company's Annual Meeting of Stockholders held on November 18, 1993...
Exhibit 4 Amendment to Common Shares Rights Agreement, dated May 18, 1994..........
Exhibit 5 Stockholder Option Agreement, dated May 18, 1994.........................
Exhibit 6 Form of Indemnity Agreement between the Company and certain of its
officers and directors...................................................
Exhibit 7 Agreement between Dr. Carlson and the Company, dated March 18, 1994 (the
"Carlson Severance Agreement")...........................................
Exhibit 8 Agreement between Dr. Carlson and the Company, dated February 26, 1994
(the "Carlson Incentive Bonus Agreement")
Exhibit 9 Excise Tax Agreement, dated May 18, 1994.................................
Exhibit 10 Agreement between Mr. Filler and the Company, dated February 26, 1994
(the "Filler Offer Letter")
Exhibit 11 Agreement between Mr. Filler and the Company, dated March 3, 1994 (the
"Filler Severance Agreement")............................................
Exhibit 12 The Common Stock Purchase Agreement among the Company, EDS and HP, dated
August 31, 1990..........................................................
Exhibit 13 Consent Letter Agreement between the Company and EDS, dated May 18,
1994.....................................................................
Exhibit 14 Consent Letter Agreement between the Company and HP, dated May 18,
1994.....................................................................
Exhibit 15 Waiver Letter Agreement between the Company and EDS, dated May 18,
1994.....................................................................
Exhibit 16 Waiver Letter Agreement between the Company and HP, dated May 18, 1994...
Exhibit 17 Form of Letter to Stockholders, dated May 25, 1994*......................
Exhibit 18 Opinion of Bear, Stearns & Co. Inc., dated May 18, 1994*.................
Exhibit 19 Engagement Letter between the Company and Unterberg Harris, dated January
27, 1994.................................................................
</TABLE>
- ---------------
* Included in materials being distributed to stockholders of the Company.
<PAGE> 40
ANNEX B
May 18, 1994
Board of Directors
The ASK Group, Inc.
2880 Scott Boulevard
Santa Clara, California 95050
Dear Sirs:
We understand that Computer Associates International, Inc. ("Computer
Associates") has offered to acquire all of the outstanding shares of common
stock (the "Shares") of The ASK Group, Inc. ("ASK"). You have provided us with
the merger agreement among ASK, Computer Associates, and Speedbird Merge, Inc.
("Merger Subsidiary") in substantially final form (the "Merger Agreement").
Pursuant to the Merger Agreement, Merger Subsidiary will promptly commence a
tender offer for all of the Shares at a cash price of $13.25 per share, to be
followed as promptly as practical by a cash merger at the same price
(collectively, the "Transaction").
You have asked us to render our opinion as to whether the Transaction is
fair, from a financial point of view, to the shareholders of ASK.
In the course of our analysis for rendering this opinion, we have:
1. reviewed the Merger Agreement;
2. reviewed ASK's Annual Reports to Shareholders and Annual Reports on
Form 10-K for the years ended June 30, 1991 through 1993, and its Quarterly
Reports on Form 10-Q for the periods ended September 30, 1993, December 31,
1993, and March 31, 1994;
3. reviewed certain operating and financial information, including
projections, provided to us by ASK's management relating to its business
prospects;
4. met with certain members of ASK's senior management to discuss its
operations, historical financial statements and future prospects;
5. considered our discussions with certain potential buyers for all or
part of ASK;
6. met with certain members of ASK's senior management to discuss the
contacts made by Unterberg Harris and ASK to potential buyers for all or
part of ASK;
7. reviewed historical market prices and trading volume of the Shares;
8. reviewed publicly available financial information and stock market
performance data of other publicly held companies which we deemed generally
comparable to ASK;
9. reviewed the financial terms of certain other recent acquisitions
of companies which we deemed generally comparable to ASK; and
10. conducted such other studies, analyses, inquiries and
investigations as we deemed appropriate.
In the course of our review, we have relied upon and assumed, without
independent verification, the accuracy and completeness of the financial data
and other information provided to us by ASK, and we have further relied upon the
assurances of management of ASK that they are unaware of any facts that would
make the information provided to us incomplete or misleading. In arriving at our
opinion, we have not performed or obtained any independent appraisal of the
assets of ASK.
Based on the foregoing, it is our opinion that the Transaction is fair,
from a financial point of view, to the shareholders of ASK.
Very truly your,
BEAR, STEARNS & CO. INC.
By: /s/ Michael Grimes
<PAGE> 1
[EXECUTION COPY]
Exhibit 1
________________________________________________________________________________
AGREEMENT AND PLAN OF MERGER
dated as of
May 18, 1994
among
THE ASK GROUP, INC.
COMPUTER ASSOCIATES INTERNATIONAL, INC.
and
SPEEDBIRD MERGE, INC.
________________________________________________________________________________
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I - THE OFFER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. The Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Company Action . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3. Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II - THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1. The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2. Conversion of Shares . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3. Surrender and Payment . . . . . . . . . . . . . . . . . . . . . . . 4
2.4. Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.5. Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III - THE SURVIVING CORPORATION . . . . . . . . . . . . . . . . . . . . . . . 7
3.1. Certificate of Incorporation . . . . . . . . . . . . . . . . . . . . 7
3.2. Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.3. Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . . . . . . 7
4.1. Corporate Existence and Power . . . . . . . . . . . . . . . . . . . 7
4.2. Corporate Authorization . . . . . . . . . . . . . . . . . . . . . . 8
4.3. Governmental Authorization . . . . . . . . . . . . . . . . . . . . . 8
4.4. Non-Contravention . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.5. Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.6. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.7. SEC Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.8. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 10
4.9. Disclosure Documents . . . . . . . . . . . . . . . . . . . . . . . . 11
4.10. Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . 11
4.11. No Undisclosed Material Liabilities . . . . . . . . . . . . . . . . 13
4.12. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.13. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.14. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.15. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . 15
4.16. Finders' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
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4.17. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.18. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . 16
4.19. Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . 17
4.20. Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.21. Insurance Coverage . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . . . . . 18
5.1. Corporate Existence and Power . . . . . . . . . . . . . . . . . . . 18
5.2. Corporate Authorization . . . . . . . . . . . . . . . . . . . . . . 18
5.3. Governmental Authorization . . . . . . . . . . . . . . . . . . . . . 18
5.4. Non-Contravention . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.5. Disclosure Documents . . . . . . . . . . . . . . . . . . . . . . . . 19
5.6. Finders' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.7. Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VI - COVENANTS OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . 19
6.1. Conduct of the Company . . . . . . . . . . . . . . . . . . . . . . . 19
6.2. Stockholder Meeting; Proxy Material . . . . . . . . . . . . . . . . 21
6.3. Access to Information . . . . . . . . . . . . . . . . . . . . . . . 21
6.4. Other Offers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.5. Notices of Certain Events . . . . . . . . . . . . . . . . . . . . . 22
6.6. Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.7. Fair Price Structure . . . . . . . . . . . . . . . . . . . . . . . . 22
6.8. Subsidiary Officers and Directors . . . . . . . . . . . . . . . . . 23
6.9. Employee Stock Purchase Plans . . . . . . . . . . . . . . . . . . . 23
ARTICLE VII - COVENANTS OF BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.1. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.2. Obligations of Merger Subsidiary . . . . . . . . . . . . . . . . . . 24
7.3. Voting of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.4. Director and Officer Liability . . . . . . . . . . . . . . . . . . . 24
7.5. Assumed Options . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE VIII - COVENANTS OF BUYER AND THE COMPANY . . . . . . . . . . . . . . . . . . 25
8.1. Reasonable Efforts . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.2. Certain Filings . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.3. Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . 26
8.4. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . 26
8.5. Section 16 Stock Options . . . . . . . . . . . . . . . . . . . . . . 26
</TABLE>
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ARTICLE IX - CONDITIONS TO THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . 26
9.1. Conditions to the Obligations of Each Party . . . . . . . . . . . . 26
9.2. Conditions to the Obligations of Buyer and Merger Subsidiary . . . . 27
ARTICLE X - TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.2. Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE XI - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.1. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.2. Survival of Representations and Warranties . . . . . . . . . . . . . 29
11.3. Amendments; No Waivers . . . . . . . . . . . . . . . . . . . . . . . 29
11.4. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.5. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . 31
11.6. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.7. Counterparts; Effectiveness . . . . . . . . . . . . . . . . . . . . 31
ANNEX I Conditions
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AGREEMENT AND PLAN OF MERGER, dated as of May 18, 1994, among
The ASK Group, Inc., a Delaware corporation (the "Company"), Computer
Associates International, Inc., a Delaware corporation ("Buyer"), and Speedbird
Merge, Inc., a Delaware corporation and a wholly owned subsidiary of Buyer
("Merger Subsidiary").
The parties hereto agree as follows:
ARTICLE I
THE OFFER
SECTION 1.1. The Offer. (a) Provided that nothing shall
have occurred that would result in a failure to satisfy any of the conditions
set forth in Annex I hereto, Merger Subsidiary shall, and Buyer shall cause
Merger Subsidiary to, 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, $0.01 par value (the "Shares"),
including the associated Rights (as defined in Section 4.5), of the Company at
a price of $13.25 per Share (including such associated Rights), net to the
seller in cash. The Offer shall be subject to the condition that there shall
be validly tendered in accordance with the terms of the Offer prior to the
expiration date of the Offer and not withdrawn a number of Shares which,
together with the Shares then owned by Buyer and Merger Subsidiary, represents
at least a majority of the total number of outstanding Shares, assuming the
exercise of all outstanding options, rights and convertible securities (if any)
and the issuance of all Shares that the Company is obligated to issue (such
total number of outstanding Shares being hereinafter referred to as the "Fully
Diluted Shares") (the "Minimum Condition") and to the other conditions set
forth in Annex I hereto. Buyer and Merger Subsidiary expressly reserve the
right to waive any of the conditions to the Offer (other than the Minimum
Condition) and to make any change in the terms or conditions of the Offer;
provided that no change may be made which changes the form of consideration to
be paid or decreases the price per Share or the number of Shares sought in the
Offer or which imposes conditions to the Offer in addition to those set forth
in Annex I or which materially adversely (from the holders of the Shares' point
of view) changes the conditions to the Offer set forth in Annex I. Assuming
the prior satisfaction or waiver of the conditions to the Offer, Buyer shall
cause Merger Subsidiary to accept for payment, in accordance with the terms of
the Offer, all Shares tendered pursuant to the Offer as soon as legally
permitted after the commencement thereof and to pay for all such Shares as
promptly as practicable after acceptance; provided, however, that Buyer may
extend the Offer for a period of time of not more than 15 Business Days to meet
the objective (but not the condition) that there shall be validly tendered, in
accordance with the terms of the Offer, prior to the expiration date of the
Offer (as so extended) and not withdrawn a number of Shares, which, together
with Shares then owned by Buyer and Merger Subsidiary, represents at least 90%
of the Fully Diluted Shares.
(b) As soon as practicable on the date of commencement of the
Offer, Buyer and Merger Subsidiary shall file with the SEC (as defined in
Section 4.7) a Tender Offer Statement on
<PAGE> 6
Schedule 14D-l with respect to the Offer which will contain the offer to
purchase and form of the related letter of transmittal (together with any
supplements or amendments thereto, collectively the "Offer Documents"). Buyer,
Merger Subsidiary 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 become false or misleading in any material respect. Buyer
and Merger Subsidiary 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 a
reasonable opportunity to review and comment on the Schedule 14D-l prior to its
being filed with the SEC. Buyer and Merger Subsidiary agree to provide the
Company and its counsel with any comments that Buyer or Merger Subsidiary or
their counsel may receive from the SEC or the staff of the SEC with respect to
such document promptly after receipt thereof. 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), Merger Subsidiary
will purchase by accepting for payment and will pay for Shares validly tendered
and not properly withdrawn, as promptly as practicable after the expiration
date of the Offer.
SECTION 1.2. Company Action. (a) The Company hereby
consents to the Offer and represents that its Board of Directors, at a meeting
duly called and held and acting on the unanimous recommendation of the Board of
Directors of the Company, has (i) unanimously determined that this Agreement
and the transactions contemplated hereby, including the Offer and the Merger
(as defined in Section 2.1) and the Stockholder Option Agreement dated as of
May 18, 1994 (the "Stockholder Option Agreement") among the Stockholders of the
Company that are named therein (the "Stockholders"), are fair to and in the
best interest of the Company's stockholders, (ii) unanimously approved this
Agreement and the transactions contemplated hereby, including the Offer and the
Merger and the Stockholder Option Agreement, which approval satisfies in full
the requirements of the General Corporation Law of the State of Delaware (the
"Delaware Law"), and (iii) unanimously 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 Bear, Stearns & Co. Inc. has
delivered to the Company's Board of Directors its written opinion that the
Offer and the Merger, collectively, are fair from a financial point of view, to
the shareholders of the Company. The Company has been advised that all of its
directors and executive officers intend either to tender their Shares (other
than Shares subject to the Stockholder Option Agreement) pursuant to the Offer
(unless to do so would subject such person to liability under Section 16(b) of
the Exchange Act) or to vote in favor of the Merger. The Company will promptly
furnish Buyer and Merger Subsidiary 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 as of the most
recent practicable date, and will provide to Buyer and Merger Subsidiary such
additional information (including, without limitation, updated lists of
stockholders, mailing labels and lists of securities positions) and such other
assistance as Buyer or Merger Subsidiary may reasonably request in connection
with the Offer.
(b) As soon as practicable on the day that the Offer is
commenced, 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, Buyer and Merger Subsidiary each agrees promptly to correct any
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information provided by it for use in the Schedule 14D-9 if and to the extent
that it shall have become false or misleading in any material respect. The
Company agrees to take all steps necessary to cause the Schedule 14D-9 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. Buyer and its counsel shall be given a reasonable opportunity to review
and comment on the Schedule 14D-9 prior to its being filed with the SEC. The
Company agrees to provide Buyer and Merger Subsidiary and their counsel with
any comments that the Company or its counsel may receive from the SEC or the
staff of the SEC with respect to such document promptly after receipt thereof.
SECTION 1.3. Directors. (a) Effective upon the acceptance
for payment by Merger Subsidiary of such number of Shares which satisfies the
Minimum Condition, Buyer shall be entitled to designate the number of
directors, rounded up to the next whole number, on the Company's Board of
Directors that equals the product of (i) the total number of directors on the
Company's Board of Directors (giving effect to the election of any additional
directors pursuant to this Section) and (ii) the percentage that the number of
Shares owned by Buyer or Merger Subsidiary (including Shares accepted for
payment) bears to the total number of Shares outstanding, and the Company shall
take all action necessary to cause Buyer's designees to be elected or appointed
to the Company's Board of Directors, including, without limitation, increasing
the number of directors, and seeking and accepting resignations of incumbent
directors. At such times, the Company will use its best efforts to cause
individuals designated by Buyer to constitute the same percentage as such
individuals represent on the Company's Board of Directors of (x) each committee
of the Board (other than any committee of the Board established to take action
under this Agreement), (y) each board of directors of each Subsidiary (as
defined in Section 4.6) and (z) each committee of each such board.
Notwithstanding the foregoing, until such time as Buyer or Merger Subsidiary
acquires a majority of the outstanding Shares on a fully diluted basis, the
Company shall use its best efforts to ensure that all of the members of the
Board of Directors and such boards and committees as of the date hereof who are
not employees of the Company shall remain members of the Board of Directors and
such boards and committees until the Effective Time (as defined in Section
2.1). Following the election or appointment of Buyer's designees pursuant to
this Section 1.3 and prior to the Effective Time, any amendment or termination
of this Agreement, extension for the performance or waiver of the obligations
or other acts of Buyer or Merger Subsidiary or waiver of the Company's rights
hereunder, shall require the approval of a majority of the directors who are
neither designees of Buyer nor employees of the Company.
(b) The Company's obligations to appoint designees to the
Board of Directors shall be subject to Section 14(f) of the Exchange Act (as
defined in Section 4.3) and Rule 14f-l promulgated thereunder. The Company
shall promptly take all actions required pursuant to Section 14(f) and Rule
14f-l in order to fulfill its obligations under this Section and shall include
in the Schedule 14D-9 such information with respect to the Company and its
officers and directors as is required under Section 14(f) and Rule 14f-l to
fulfill its obligations under this Section 1.3. Buyer will supply to the
Company in writing and be solely responsible for any information with respect
to itself and its nominees, officers, directors and affiliates required by
Section 14(f) and Rule 14f-1.
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ARTICLE II
THE MERGER
SECTION 2.1. The Merger. (a) At the Effective Time,
Merger Subsidiary shall be merged (the "Merger") with and into the Company in
accordance with the Delaware Law, whereupon the separate existence of Merger
Subsidiary shall cease, and the Company shall be the surviving corporation (the
"Surviving Corporation"). At the election of Buyer, the Merger may be
structured so that the Company shall be merged with and into Merger Subsidiary
with the result that Merger Subsidiary shall be 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 Merger Subsidiary will file 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 Merger Subsidiary, all as provided under Delaware Law.
SECTION 2.2. Conversion of Shares. At the Effective Time:
(a) each Share held by the Company as treasury stock or owned,
directly or indirectly, by Buyer, Merger Subsidiary or any subsidiary
of either of them immediately prior to the Effective Time shall be
cancelled, and no payment shall be made with respect thereto;
(b) each share of common stock of Merger Subsidiary
outstanding immediately prior to the Effective Time shall be converted
into and become one share of common stock of the Surviving Corporation
with the same rights, powers and privileges as the shares so converted
and shall constitute the only outstanding shares of capital stock of
the Surviving Corporation; and
(c) each Share outstanding immediately prior to the Effective
Time shall, except as otherwise provided in Section 2.2(a) or as
provided in Section 2.4 with respect to Shares as to which appraisal
rights have been exercised, be converted into the right to receive
$13.25 in cash or any higher price paid for each Share in the Offer,
without interest (the "Merger Consideration").
SECTION 2.3. Surrender and Payment. (a) Prior to the
Effective Time, Buyer shall appoint an agent (the "Exchange Agent") for the
purpose of exchanging certificates representing Shares for the Merger
Consideration. Buyer will make available to the Exchange Agent, as needed, the
Merger Consideration to be paid in respect of the Shares. For purposes of
determining the
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Merger Consideration to be made available, Buyer shall assume that no holder of
Shares will perfect his right to appraisal of his Shares. Promptly after the
Effective Time, Buyer 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 and such other
documents as may be requested, will be entitled to receive the Merger
Consideration payable in respect of such Shares. Until so surrendered, each
such certificate shall, after the Effective Time, represent for all purposes,
only the right to receive such Merger Consideration. No interest shall be paid
or accrue on the 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. For purposes of
this Agreement, "Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or any agency or instrumentality thereof.
(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 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 2.3(a) that remains unclaimed by the
holders of Shares six months after the Effective Time shall be returned to
Buyer, 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 Buyer for payment of the Merger Consideration in
respect of his Shares. Notwithstanding the foregoing, Buyer shall not be
liable to any holder of Shares for any amount paid to a public official
pursuant to applicable abandoned property laws. Any amounts remaining
unclaimed by holders of Shares two years after the Effective Time (or such
earlier date immediately prior to such time as such amounts would otherwise
escheat to or become property of any governmental entity) shall, to the extent
permitted by applicable law, become the property of Buyer free and clear of any
claims or interest of any Person previously entitled thereto.
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(f) Any portion of the Merger Consideration made available to
the Exchange Agent pursuant to Section 2.3(a) to pay for Shares for which
appraisal rights have been perfected shall be returned to Buyer, upon demand.
SECTION 2.4. Dissenting Shares. Notwithstanding Section
2.2, 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 Section 262
of the Delaware Law ("Dissenting Shares") shall not be converted into a right
to receive the Merger Consideration, but instead (unless such holder fails to
perfect or withdraws or otherwise loses his right to appraisal) the holders of
Dissenting Shares shall be entitled to receive such consideration as shall be
determined pursuant to Section 262 of the Delaware Law. 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 Company shall give
Buyer prompt notice of any demands received by the Company for appraisal of
Shares, and Buyer shall have the right to participate in all negotiations and
proceedings with respect to such demands. The Company shall not, except with
the prior written consent of Buyer, make any payment with respect to, or settle
or offer to settle, any such demands.
SECTION 2.5. Stock Options.
(a) The Company agrees to cause stock options under its
1991 United Kingdom Stock Option Plan not to become exercisable as to Optioned
Stock (within the meaning of such plan) not yet exercisable as of the date of
the notification prescribed in Rule 12(c) of such plan. Upon the acceptance of
shares in the Offer, stock options and stock purchase rights under its 1991
Stock Plan shall accelerate and become vested in full. Upon Buyer's written
request, the Company agrees to cause stock options and stock purchase rights
under its 1991 Stock Plan not to be terminated in exchange for a cash payment.
(b) Prior to the Effective Time, Buyer shall designate in
writing to the Company those employee and director stock options and stock
purchase rights to purchase Shares ("Plan Options"), or portions thereof, that
Buyer desires be terminated prior to the Effective Time. Buyer's designation
of options or portions thereof to be so terminated shall be by uniform
classification on the basis of the particular plan under which the option was
granted. To the extent so designated by Buyer, the Company will exercise any
rights under its stock option or compensation plans or arrangements to
accelerate then outstanding Plan Options and cause them to expire prior to the
Effective Time consistent with the plans under which such Plan Options were
granted.
(c) With respect to Plan Options which the Buyer does not
designate for termination pursuant to Section 2.5(b), the Company shall take
such action as shall be necessary to provide for the Buyer's assumption of such
options as set forth in Section 7.5 hereof.
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ARTICLE III
THE SURVIVING CORPORATION
SECTION 3.1. Certificate of Incorporation. The
certificate of incorporation of Merger Subsidiary in effect at the Effective
Time shall be the certificate of incorporation of the Surviving Corporation
until amended in accordance with applicable law, except that the name of the
Surviving Corporation shall be changed to the name of the Company.
SECTION 3.2. Bylaws. The bylaws of Merger Subsidiary in
effect at the Effective Time shall be the bylaws of the Surviving Corporation
until amended in accordance with applicable law.
SECTION 3.3. 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 Merger Subsidiary 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
Merger Subsidiary.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants to Buyer that except, in
the case of any representation and warranty below, to the extent described
under a caption identifying such representation and warranty in the Company
Disclosure Letter dated the date of this Agreement and furnished by the Company
to Buyer on the date of this Agreement (the "Company Disclosure Letter"):
SECTION 4.1. Corporate Existence and Power. The Company
is a corporation duly incorporated, validly existing and in good standing under
the laws of the State of Delaware, and has all corporate powers and all
material governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted. The Company 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 the failure to be so qualified would not, individually or in the
aggregate, have a material adverse effect on the condition (financial or
otherwise), business, assets, results of operations or prospects of the Company
and the Subsidiaries (as defined in Section 4.6) taken as a whole except that
occurrences due solely to a disruption of the Company's or its Subsidiary's
businesses solely as a result of any rumors, speculation, or announcement of a
potential merger involving the Company or the execution of this Agreement and
the Merger shall be excluded from consideration for purposes of the effect of
an action or inaction on the Company and its Subsidiaries, taken as a whole (a
"Material Adverse Effect"). The Company has heretofore delivered
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to Buyer true and complete copies of the certificate of incorporation and
bylaws as currently in effect of the Company and each of its Subsidiaries.
SECTION 4.2. 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 constitutes a
valid and binding agreement of the Company.
SECTION 4.3. 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 federal, state, local or foreign governmental body, agency, official
or authority other than (i) the filing of a certificate of merger in accordance
with Delaware Law; (ii) compliance with any applicable requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"); (iii)
compliance with any applicable requirements of the Securities Exchange Act of
1934 and the rules and regulations promulgated thereunder (the "Exchange Act");
and (iv) such notices, reports, registrations, declarations, filings, waivers,
consents, approvals, orders, or authorizations, the absence of which would not,
individually or in the aggregate, have a Material Adverse Effect or adversely
affect Buyer or its subsidiaries.
SECTION 4.4. Non-Contravention. 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, (ii) assuming compliance with the matters referred to in Section 4.3,
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 Subsidiary, (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 Subsidiary or to a loss of any
benefit to which the Company or any Subsidiary is entitled under any provision
of any agreement, contract or other instrument binding upon the Company or any
Subsidiary or any license, franchise, permit or other similar authorization
held by the Company or any Subsidiary, or (iv) result in the creation or
imposition of any Lien on any asset of the Company or any Subsidiary (other
than in the case of clauses (iii) and (iv) above and with respect to
agreements, instruments, contracts, permits or similar authorizations (other
than debt instruments or agreements, licenses of assets to the Company or any
Subsidiary, exclusive licenses or distribution agreements or arrangements, or
licenses or distribution agreements or arrangements which, by their terms,
provide for payments to the Company or any Subsidiary of $2,000,000 or more per
annum), such defaults, breaches, losses, rights of termination, cancellation or
acceleration, or Liens as to which requisite waivers have been obtained or
which individually or in aggregate could not reasonably be expected to have a
Material Adverse Effect). For purposes of this Agreement, "Lien" means, with
respect to any asset, any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind in respect of such asset.
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SECTION 4.5. Capitalization. The authorized capital stock
of the Company consists of 40,000,000 shares of Common Stock, par value of
$0.01 per share ("Common Stock"). As of May 17, 1994, 23,479,624 shares of
Common Stock are issued and outstanding, including associated Common Stock
Purchase Rights (the "Rights") issued pursuant to the Rights Agreement, dated
as of August 15, 1990, as amended (the "Rights Agreement"), between the Company
and Bank of Boston, as Rights Agent. As of the date hereof, (A) 3,400,000
shares are reserved for issuance pursuant to the 1982 Stock Option Plan (the
"1982 Option Plan"), of which options to purchase 594,299 shares are
outstanding and no shares remain available for future grant; (B) 3,200,000
shares are reserved for issuance pursuant to the 1991 Stock Plan (the "1991
Stock Plan"), of which options to purchase 1,827,012 shares are outstanding and
1,337,307 shares remain available for future grant; (C) 150,000 shares are
reserved for issuance to non-employee directors of the Company pursuant to the
1986 Directors Stock Option Plan (the "1986 Director Plan"), of which options
to purchase 64,200 shares are outstanding and options to purchase 49,800 shares
remain available for future grant; (D) 500,000 shares are reserved for issuance
pursuant to the 1993 Employee Stock Purchase Plan (the "1993 ESPP"), of which
344,567 shares remain available for future grant; (E) 250,000 shares are
reserved for issuance pursuant to the 1992 Overseas Employee Stock Purchase
Plan (the "1992 ESPP"), of which 133,179 shares remain available for future
grant; and (F) options to purchase 437,754 shares are outstanding under the
Ingres Option Plans and no shares remain available for future grant. All
outstanding shares of capital stock of the Company have been duly authorized
and validly issued and are fully paid and nonassessable. Except as set forth
in this Section and except for changes since May 17, 1994 resulting from the
exercise of employee 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 Subsidiary to repurchase, redeem or otherwise
acquire any Company Securities.
SECTION 4.6. Subsidiaries. (a) Each Subsidiary is a
corporation duly incorporated, 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. For purposes of this Agreement, "Subsidiary" means
any domestic or foreign 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 the Company. All Subsidiaries and their
respective jurisdictions of incorporation are identified in the Company's
annual report on Form 10-K for the fiscal year ended June 30, 1993 (the
"Company 10-K").
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(b) All of the outstanding capital stock of, or other
ownership interests in, each Subsidiary, is 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 Subsidiary 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 Company or any Subsidiary, and no other obligation of the
Company or any Subsidiary 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 Subsidiary to repurchase, redeem or otherwise
acquire any outstanding Subsidiary Securities.
SECTION 4.7. SEC Filings. (a) The Company has filed with
the Securities and Exchange Commission (the "SEC") all required reports,
schedules, forms, statements and other documents from April 1, 1991 through the
date hereof, including (i) the annual reports on Form 10-K for its fiscal years
ended June 30, 1991, 1992, and 1993, (ii) its quarterly reports on Form 10-Q
for its fiscal quarters September 30, 1993, December 31, 1993 and March 31,
1994, (iii) its proxy or information statements relating to meetings of, or
actions taken without a meeting by, the stockholders of the Company held since
April 1, 1991, and (iv) all of its other reports, statements, schedules and
registration statements filed with the Securities and Exchange Commission (the
"SEC") since April 1, 1991.
(b) As of its filing date, each such report or statement filed
pursuant to the Exchange Act 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.
(c) Each such registration statement, as amended or
supplemented, if applicable, filed pursuant to the Securities Act of 1933 as of
the date such statement or amendment became effective did not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading.
SECTION 4.8. Financial Statements. The audited
consolidated financial statements and unaudited consolidated interim financial
statements of the Company included in its annual reports on Form 10-K and the
quarterly reports on Form 10-Q referred to in Section 4.7 fairly present, in
conformity with generally accepted accounting principles applied on a
consistent basis (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 cash flows for the periods then ended (subject to normal
year-end adjustments in the case of any unaudited interim financial statements,
none of which would be materially adverse). For purposes of this Agreement,
"Balance Sheet" means the consolidated balance sheet of the Company as of June
30, 1993 set forth in the Company 10-K and "Balance Sheet Date" means June 30,
1993.
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SECTION 4.9. Disclosure Documents. (a) Each document
required to be filed by the Company with the SEC in connection with the
transactions contemplated by this Agreement (the "Company Disclosure
Documents"), including, without limitation, the Schedule 14D-9, the proxy or
information statement of the Company (the "Company Proxy Statement"), if any,
to be filed with the SEC in connection with the Merger, 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 representations and warranties contained in this Section
4.9(b) will not apply to statements or omissions included in the Company
Disclosure Documents based upon information furnished to the Company in writing
by Buyer or Merger Subsidiary specifically for use therein.
(c) The information with respect to the Company or any
Subsidiary that the Company furnishes to Buyer or Merger Subsidiary 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 4.10. Absence of Certain Changes. Since the
Balance Sheet Date (or, in the case of clauses (d) and (e) below, since March
31, 1994), the Company and Subsidiaries have conducted their business in the
ordinary course consistent with past practice and there has not been:
(a) any event, occurrence or development of a state of
circumstances or facts which has had or reasonably could be expected to have a
Material Adverse Effect;
(b) any declaration, setting aside or payment of any dividend
or other distribution with respect to any shares of capital stock of the
Company, or any repurchase, redemption or other acquisition by the Company or
any Subsidiary of any outstanding shares of capital stock or other securities
of, or other ownership interests in, the Company or any Subsidiary;
(c) any amendment of any material term of any outstanding
security of the Company or any Subsidiary;
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<PAGE> 16
(d) any incurrence, assumption or guarantee by the Company or
any Subsidiary of any indebtedness for borrowed money other than in the
ordinary course of business and in amounts and on terms consistent with past
practices, but in no event in the amount of more than $50,000 in any one
transaction or $150,000 in the aggregate;
(e) any creation or assumption by the Company or any
Subsidiary of any Lien on any material asset other than in the ordinary course
of business consistent with past practices but in no event in respect of any
obligation of more than $50,000 in any one transaction or $150,000 in the
aggregate;
(f) any making of any loan, advance or capital contributions
to or investment in any Person other than (i) loans, advances or capital
contributions to or investments in Subsidiaries made in the ordinary course of
business consistent with past practices and (ii) investments in cash
equivalents made in the ordinary course of business consistent with past
practices;
(g) any damage, destruction or other casualty loss (whether or
not covered by insurance) affecting the business or assets of the Company or
any Subsidiary which, individually or in the aggregate, has had or would
reasonably be expected to have a Material Adverse Effect;
(h) any transaction or commitment made, or any contract or
agreement entered into, by the Company or any Subsidiary relating to its assets
or business (including the acquisition or disposition of any assets) or any
relinquishment by the Company or any Subsidiary of any contract or other right,
in either case, material to the Company and the Subsidiaries taken as a whole,
other than transactions and commitments in the ordinary course of business
consistent with past practice and those contemplated by this Agreement, but in
no event representing commitments on behalf of the Company or any Subsidiary of
more than $50,000 for any transaction or $150,000 for any series of
transactions;
(i) any change in any method of accounting or accounting
practice by the Company or any Subsidiary, except for any such change required
by reason of a concurrent change in generally accepted accounting principles;
(j) any (i) grant of any severance or termination pay to any
director, officer or employee of the Company or any Subsidiary, (ii) entering
into of any employment, deferred compensation or other similar agreement (or
any amendment to any such existing agreement) with any director, officer or
employee of the Company or any Subsidiary, (iii) increase in benefits payable
under any existing severance or termination pay policies or employment
agreements or (iv) increase in compensation, bonus or other benefits payable to
directors, officers or employees of the Company or any Subsidiary, other than
in the ordinary course of business consistent with past practice; or
(k) any labor dispute, other than routine individual
grievances, or any activity or proceeding by a labor union or representative
thereof to organize any employees of the Company or any Subsidiary, which
employees were not subject to a collective bargaining agreement at the Balance
Sheet Date, or any lockouts, strikes, slowdowns, work stoppages or threats
thereof by or with respect to such employees.
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<PAGE> 17
SECTION 4.11. No Undisclosed Material Liabilities. There
are no liabilities of the Company or any Subsidiary of any kind whatsoever,
whether accrued, contingent, absolute, determined, determinable or otherwise,
and there is no existing condition, situation or set of circumstances which
could reasonably be expected to result in such a liability, other than:
(i) liabilities disclosed in the Company Disclosure
Letter under the caption "Section 4.11";
(ii) liabilities disclosed or provided for in the Balance
Sheet;
(iii) liabilities incurred in the ordinary course of
business consistent with past practice, which could not reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect; and
(iv) liabilities under this Agreement.
SECTION 4.12. Litigation. Except as set forth in the
quarterly reports on Form 10-Q for the quarter ended March 31, 1994, there is
no action, suit, investigation or proceeding (or any basis therefor) pending
against, or to the knowledge of the Company threatened against or affecting,
the Company or any Subsidiary or any of their respective properties before any
court or arbitrator or any governmental body, agency or official which, if
determined or resolved adversely to the Company or any Subsidiary in accordance
with the plaintiff's demands, would reasonably be expected to have a Material
Adverse Effect or which in any manner challenges or seeks to prevent, enjoin,
alter or materially delay the Offer or the Merger or any of the other
transactions contemplated hereby.
SECTION 4.13. Taxes. (a) The Company and each Subsidiary
have timely filed all material tax returns, statements, reports and forms
required to be filed with any tax authority ("Tax Returns") and have paid when
due all taxes owed by the Company and any Subsidiary (whether or not shown on
any such Tax Returns). There are no liens on any of the assets of the Company
or any Subsidiary that arose in connection with any failure (or alleged
failure) to pay any tax except for liens that would in the aggregate not have a
Material Adverse Effect.
(b) No dispute or claim concerning any tax liability of the
Company or any Subsidiary has been claimed or raised by any authority in
writing.
(c) Neither the Company nor any Subsidiary has waived any
statute of limitations in respect of taxes or agreed to any extension of time
with respect to a tax assessment or deficiency.
(d) Neither the Company nor any Subsidiary has filed a consent
under Section 341(f) of the Internal Revenue Code of 1986, as amended ("the
Code") concerning collapsible corporations. Neither the Company nor any
Subsidiary has any liability for the taxes of any person (other than the
Company and any Subsidiary) under Treas. Reg. Section 1.1502-6 (or any similar
provision of state, local, or foreign law), as a transferee or successor, by
contract, or otherwise.
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<PAGE> 18
(e) As of the Balance Sheet Date, the unpaid income taxes of
the Company and Subsidiaries did not exceed the liability for income taxes
(rather than any reserve for deferred taxes established to reflect timing
differences between book and tax income) set forth on the face of the Balance
Sheet.
SECTION 4.14. ERISA. (a) The Company has provided Buyer
with a list identifying each "employee benefit plan", as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), which (i) is subject to any provision of ERISA and (ii) is
maintained, administered or contributed to by the Company or any affiliate (as
defined below) and covers any employee or former employee of the Company or any
affiliate or any beneficiary of such employee or former employee or under which
the Company or any affiliate has any liability. Copies of such plans (and, if
applicable, related trust agreements) and all amendments thereto and written
interpretations thereof have been made available to Buyer together with (x) the
three most recent annual reports (Form 5500 including, if applicable, Schedule
B thereto) prepared in connection with any such plan and (y) the most recent
actuarial valuation report prepared in connection with any such plan. Such
plans are referred to collectively herein as the "Employee Plans". For
purposes of this Section, "affiliate" of any Person means any other Person
which, together with such Person, would be treated as a single employer under
Section 414 of the Code. The only Employee Plans which individually or
collectively would constitute an "employee pension benefit plan" as defined in
Section 3(2) of ERISA (the "Pension Plans") are identified as such in the list
referred to above.
(b) No Employee Plan constitutes a "multiemployer plan", as
defined in Section 3(37) of ERISA (a "Multiemployer Plan"), no Employee Plan is
maintained in connection with any trust described in Section 501(c)(9) of the
Code and no Employee Plan is subject to Title IV of ERISA (a "Retirement
Plan"). The Company knows of no "reportable event", within the meaning of
Section 4043 of ERISA, and no event described in Section 4041, 4041A, 4042,
4062, 4063, or 4064 of ERISA has occurred in connection with any Employee Plan,
other than a "reportable event" that will not have a Material Adverse Effect.
Nothing done or omitted to be done and no transaction or holding of any asset
under or in connection with any Employee Plan has or will make the Company or
any Subsidiary, any officer or director of the Company or any Subsidiary
subject to any liability under Title I of ERISA or liable for any tax pursuant
to Section 4975 or Section 4980B of the Code that could have a Material Adverse
Effect.
(c) Each Employee Plan which is intended to be qualified under
Section 401(a) of the Code is so qualified and has been so qualified during the
period from its adoption to date, and each trust forming a part thereof is
exempt from tax pursuant to Section 501(a) of the Code. Each such Plan has
been determined by the Internal Revenue Service in writing to be so qualified,
no such determination letter has been withdrawn and the Company has made
available to the Buyer copies of the most recent Internal Revenue Service
determination letters with respect to each such Plan. To the Company's
knowledge, each Employee Plan has been maintained in compliance with its terms
and with the requirements prescribed by any and all statutes, orders, rules and
regulations, including but not limited to ERISA and the Code, which are
applicable to such Plan.
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<PAGE> 19
(d) There is no contract, agreement, plan or arrangement
covering any employee or former employee of the Company or any affiliate that,
individually or collectively, could give rise to the payment of any amount that
would not be deductible pursuant to the terms of Sections 162(a)(1), 162(m),
162(n) or 280G of the Code.
(e) The Company has provided Buyer with a list of each
employment, severance or other similar contract, arrangement or policy and each
plan or arrangement (written or oral) providing for insurance coverage
(including any self insured arrangements), workers' compensation, disability
benefits, supplemental unemployment benefits, vacation benefits, retirement
benefits or for deferred compensation, profit-sharing, bonuses, stock options,
stock appreciation or other forms of incentive compensation or post-retirement
insurance, compensation or benefits which (i) is not an Employee Plan, (ii) is
entered into, maintained or contributed to, as the case may be, by the Company
or any of its affiliates and (iii) covers any employee or former employee of
the Company or any of its affiliates or any beneficiary of such employee. Such
contracts, plans and arrangements as are described above, copies or
descriptions of all of which have been furnished previously to Buyer are
referred to collectively herein as the "Benefit Arrangements". To the
Company's knowledge each Benefit Arrangement has been maintained in substantial
compliance with its terms and with the requirements prescribed by any and all
statutes, orders, rules and regulations that are applicable to such Benefit
Arrangement.
(f) The excess of the present value of the projected liability
in respect of post-retirement health and medical benefits for retired employees
of the Company and its affiliates, determined using assumptions that are
reasonable in the aggregate, over the fair market value of any fund, reserve or
other assets segregated for the purpose of satisfying such liability (including
for such purposes any fund established pursuant to Section 401(h) of the Code)
does not in the aggregate exceed $200,000. Except as required by law or
individual contract no condition exists that would prevent the Company or any
Subsidiary from amending or terminating any Employee Plan or Benefit
Arrangement providing health or medical benefits in respect of any active
employee of the Company or any Subsidiary.
(g) Except as disclosed in writing to Buyer prior to the date
hereof, there has been no amendment to, written interpretation or announcement
(whether or not written) by the Company or any of its affiliates relating to,
or change in employee participation or coverage under, any Employee Plan or
Benefit Arrangement which would increase materially the expense of maintaining
such Employee Plan or Benefit Arrangement above the level of the expense
incurred in respect thereof for the fiscal year ended on the Balance Sheet
Date.
(h) Neither the Company nor any Subsidiary is a party to a
collective bargaining agreement. No labor union has been certified or has
commenced proceedings for certification by the National Labor Relations Board
to represent employees of the Company or any Subsidiary. No work stoppage has
commenced or been threatened by employees of the Company or any Subsidiary.
SECTION 4.15. Compliance with Laws. Neither the Company
nor any Subsidiary (a) is in violation of, or has violated, any applicable
provisions of any laws, statutes, ordinances or regulations or (b) has received
any notice from any governmental body, agency, official or authority
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<PAGE> 20
or any other person that either the Company or any Subsidiary is in violation
of, or has violated, any applicable provisions of any laws, statutes,
ordinances or regulations except for violations which, individually or in the
aggregate, do not and insofar as reasonably can be foreseen in the future would
not have a Material Adverse Effect.
SECTION 4.16. Finders' Fees. Except for fees to Bear,
Stearns & Co., Inc. and Unterberg Harris in respect of the Offer and Merger, a
copy of whose engagement agreement has been provided to Buyer, 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 Subsidiary who
might be entitled to any fee or commission from the Company, any Subsidiary,
Buyer or any of Buyer's affiliates upon consummation of the transactions
contemplated by this Agreement or thereafter.
SECTION 4.17. Other Information. None of the documents or
information delivered to Buyer in connection with the transactions contemplated
by this Agreement contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained
therein not misleading.
SECTION 4.18. Environmental Matters. Neither the Company
nor any Subsidiaries, nor any of their respective officers, employees,
representatives or agents, nor, to the best of their knowledge, any other
Person, has treated, stored, processed, discharged, spilled, or otherwise
disposed of, any substance defined as hazardous or toxic by any applicable
federal, state or local law, rule, regulation, order or directive, or any waste
or by-product thereof, at any real property or any other facility owned, leased
or used by the Company or any Subsidiaries, in violation of any applicable
statutes, regulations, ordinances or directives of any governmental authority
or court, which violations may result in liability to the Company or any
Subsidiaries or any of their respective officers, employees, representatives,
agents or shareholders in an amount exceeding $5,000,000 (net of any insurance
proceeds received by the Company with respect to such violations or of any
amounts received by the Company under any indemnification rights of the Company
with respect to such violations) for all such violations; and the unresolved
violations set forth in the Company Disclosure Letter under the caption
"Section 4.18" will not result in liability to the Company or any Subsidiaries
or any of their respective officers, employees, representatives, agents or
shareholders in an amount exceeding $5,000,000 (net of any insurance proceeds
received by the Company with respect to such violations or of any amounts
received by the Company under any indemnification rights of the Company with
respect to such violations) for all such unresolved violations. No employee or
other Person has ever made a claim or demand against the Company or any
Subsidiaries based on alleged damage to health caused by any such hazardous or
toxic substance or by any waste or by-product thereof; and the unsatisfied
claims or demands against the Company or any Subsidiaries set forth in the
Company Disclosure Letter under the caption "Section 4.18" will not result in
uninsured liability to the Company or any Subsidiaries or any of their
respective officers, employees, representatives, agents or shareholders in an
amount exceeding $5,000,000 (net of any insurance proceeds received by the
Company with respect to such claims or demands or of any amounts received by
the Company under any indemnification rights of the Company with respect to
such claims or demands) for all such unsatisfied claims or demands. Neither
the Company nor any Subsidiaries has been charged by any governmental authority
with improperly using, handling, storing, discharging or disposing of any such
hazardous or toxic
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<PAGE> 21
substance or waste or by-product thereof or with causing or permitting any
pollution of any body of water; and the outstanding charges set forth in the
Company Disclosure Letter under the caption "Section 4.18" will not result in
liability to the Company or any Subsidiaries or any of their respective
officers, employees, representatives, agents or shareholders in an amount
exceeding $5,000,000 (net of any insurance proceeds received by the Company
with respect to such charges or of any amounts received by the Company under
any indemnification rights of the Company with respect to such charges) for all
such outstanding charges.
SECTION 4.19. Intellectual Property. (a) The Company or a
Subsidiary has exclusive ownership of or rights to use each material patent,
patent application, trademark (whether or not registered), trademark
application, trade name, service mark, copyright and other trade secret or
proprietary intellectual property (collectively "Intellectual Property") owned
by or used in and material to the business of the Company and the Subsidiaries,
taken as a whole, and the current use by a Company or Subsidiary of such
Intellectual Property does not infringe the rights of any other person, except
for any such infringements that could not reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect. To the knowledge of
the Company and the Subsidiaries, no other person is infringing the rights of
the Company or any Subsidiary in any such Intellectual Property, except for any
such infringements that could not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect.
SECTION 4.20. Material Contracts. (a) Except for
agreements, contracts, plans, leases, arrangements or commitments disclosed in
the Company's SEC filings referred to in Section 4.7, neither the Company nor
any Subsidiary is a party to or subject to:
(i) any contract or other document that substantially
limits the freedom of the Company or any Subsidiary to compete in any
line of business or with any person or in any area or which would so
limit the freedom of the Company or any Subsidiary after the Effective
Time; or
(ii) any other contract or any commitment not made in the
ordinary course of business which is material to the Company and the
Subsidiaries taken as a whole.
(b) All agreements, contracts, plans, leases, arrangements and
commitments disclosed in the Company's SEC filings referred to in Section 4.7
(the "Material Contracts") are valid and binding agreements of the Company or a
Subsidiary, are in full force and effect (other than those that have expired in
accordance with their terms in the ordinary course of business, which
expirations have not had and could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect), and neither the
Company, any Subsidiary nor, to the knowledge of the Company, any other party
thereto is in default under the terms of any such agreement, contract, plan,
lease, arrangement or commitment, except for any such defaults that have not
had and could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. Neither the Company nor any Subsidiary
is in default under the terms of any exclusive license or distribution
agreement or arrangement, any license of assets to the Company or any
Subsidiary, any distribution agreement or arrangement that, by its terms,
provides for payments to the Company or any Subsidiary of $2,000,000 or more
per annum or any other material license or distribution
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<PAGE> 22
agreement or arrangement, true and complete copies or descriptions of all of
which have been delivered to Buyer.
SECTION 4.21. Insurance Coverage. The properties and the
conduct of the business of the Company and its Subsidiaries are insured by
insurers of recognized responsibility in such amounts and against such risks
and losses as are adequate for such business in accordance with customary
industry practices.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF BUYER
Buyer represents and warrants to the Company that:
SECTION 5.1. Corporate Existence and Power. Each of Buyer
and Merger Subsidiary is a corporation duly incorporated, 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.
SECTION 5.2. Corporate Authorization. The execution,
delivery and performance by Buyer and Merger Subsidiary of this Agreement and
the consummation by Buyer and Merger Subsidiary of the transactions
contemplated hereby are within the corporate powers of Buyer and Merger
Subsidiary and have been duly authorized by all necessary corporate action.
This Agreement constitutes a valid and binding agreement of Buyer and Merger
Subsidiary.
SECTION 5.3. Governmental Authorization. The execution,
delivery and performance by Buyer and Merger Subsidiary of this Agreement and
the consummation by Buyer and Merger Subsidiary 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 a certificate of merger in accordance with Delaware Law, (ii)
compliance with any applicable requirements of the HSR Act; (iii) compliance
with any applicable requirements of the Exchange Act and (iv) compliance with
applicable requirements of state or foreign securities laws.
SECTION 5.4. Non-Contravention. The execution, delivery
and performance by Buyer and Merger Subsidiary of this Agreement and the
consummation by Buyer and Merger Subsidiary of the transactions contemplated
hereby do not and will not contravene or conflict with the certificate of
incorporation or bylaws of Buyer or Merger Subsidiary, (ii) assuming compliance
with the matters referred to in Section 5.3, contravene or conflict with any
provision of law, regulation, judgment, order or decree binding upon Buyer or
Merger Subsidiary, or (iii) constitute a default under or give rise to any
right of termination, cancellation or acceleration of any right or obligation
of Buyer or Merger Subsidiary or to a loss of any benefit to which Buyer or
Merger Subsidiary is entitled under any agreement, contract or other instrument
binding upon Buyer or Merger Subsidiary.
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SECTION 5.5. Disclosure Documents. (a) The information
with respect to Buyer and its subsidiaries that Buyer furnished 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 and at the
time of any distribution thereof and at the expiration 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 representation and warranty
will not apply to statements or omissions in the Offer Documents based upon
information furnished to Buyer or Merger Subsidiary in writing by the Company.
SECTION 5.6. Finders' Fees. There is no investment
banker, broker, finder or other intermediary engaged by or on behalf of Buyer
or Merger Affiliate who might be entitled to any fee or commission from the
Company upon consummation of the transactions contemplated by this Agreement.
SECTION 5.7. Financing. Buyer has or has available to it
sufficient funds to purchase all of the Shares outstanding and to pay all
related fees and expenses on a fully diluted basis pursuant to the Offer.
ARTICLE VI
COVENANTS OF THE COMPANY
The Company agrees that:
SECTION 6.1. Conduct of the Company. Except as disclosed
in the Company Disclosure Letter under the caption "Section 6.1," and except
for such actions as to which Buyer shall have given its consent (which consent
shall not be unreasonably withheld) from the date hereof until the Effective
Time, the Company and the Subsidiaries shall conduct their business in the
ordinary course consistent with past practice and shall use their best efforts
to preserve intact their business organizations and maintain satisfactory
relationships with third parties having business relationships with them 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,
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neither the Company nor any of its Subsidiaries will, without the prior
approval (which approval shall not be unreasonably withheld) of Buyer:
(a) except as expressly contemplated by this Agreement, amend
or otherwise change its certificate of incorporation or bylaws or, in the case
of the Company, the Rights Plan (as defined in Section 6.6);
(b) enter into any material commitment or transaction
(including, but not limited to, any material borrowing, capital expenditure or
sale of assets), other than in the ordinary course of business;
(c) grant any increase in the compensation payable or to
become payable by the Company or any of its Subsidiaries to any of their
officers or employees or any increase in any bonus, insurance, pension or other
employee benefit plan, payment or arrangement (including, but not limited to,
the granting of stock options, stock appreciation rights or restricted stock
awards) made to, for or with such officers or employees;
(d) enter into any employment agreement or, except in
accordance with the Company's existing written policy, a copy of which has
previously been delivered by the Company to Buyer, grant any severance or
termination pay with or to any officer, director or employee of the Company or
any of its Subsidiaries;
(e) except as expressly contemplated by this Agreement, amend
any of its stock option or stock purchase plans, including any options or
rights thereunder;
(f) enter into any foreign currency trading transactions,
other than in the ordinary course of business consistent with past practices
and not, in the aggregate, in excess of $500,000;
(g) enter into any customer sale or license agreements with
non-standard terms or at discounts from list prices in excess of 20%;
(h) pay commissions to sales employees except on the basis of
executed customer contracts with respect to products actually delivered to
customers;
(i) enter into any contracts or series of related contracts
involving amounts in excess of $50,000 for any transaction or $150,000 for any
series of transactions;
(j) enter into any customer agreements providing for product
replacements; or
(k) (i) take any action, or agree or commit to take any action
that would make any representation and warranty of the Company hereunder
inaccurate in any 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 warrant from being inaccurate in any respect at any
such time.
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SECTION 6.2. 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 after
consummation of the Offer for the purpose of voting on the approval and
adoption of this Agreement and the Merger unless a vote of stockholders of the
Company is not required by Delaware Law. The Directors of the Company shall,
subject to their fiduciary duties as advised by counsel, recommend approval and
adoption of this Agreement and the Merger by the Company's stockholders. In
connection with such meeting, after consummation of the Offer 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 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 the transactions
contemplated hereby and (iii) will otherwise comply with all legal requirements
applicable to such meeting.
(b) Notwithstanding the foregoing, in the event that Merger
Subsidiary shall acquire at least ninety percent (90%) of the outstanding
Shares, the parties hereto agree, at the request of Merger Subsidiary, subject
to Article IX, to take all necessary and appropriate action to cause the Merger
to become effective as soon as reasonably practicable after such acquisition
(subject to Section 2.5(b)), without a meeting and without a vote of the
Company's stockholders, in accordance with the Delaware Law.
SECTION 6.3. Access to Information. From the date hereof
until the Effective Time, the Company will give Buyer, its counsel, financial
advisors, auditors and other authorized representatives full access to the
offices, properties, books and records of the Company and the Subsidiaries,
will furnish to Buyer, its 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 and the Subsidiaries' employees, counsel and financial advisors to
cooperate with Buyer in its investigation of the business of the Company and
the Subsidiaries; provided that no investigation pursuant to this Section shall
affect any representation or warranty given by the Company to Buyer hereunder.
SECTION 6.4. Other Offers. (a) From the date hereof until
the termination hereof, the Company and the Subsidiaries and the officers,
directors, employees or other agents of the Company and the Subsidiaries will
not, directly or indirectly, (i) take any action to solicit, initiate or
encourage any Acquisition Proposal or (ii) subject to the fiduciary duties of
the Board of Directors under applicable law upon the advice of Wilson, Sonsini,
Goodrich & Rosati, P.C., counsel to the Company, and in response to an
unsolicited request therefor by a person who a majority of the Company's Board
of Directors believes intends to submit a Superior Acquisition Proposal, engage
in negotiations with, or disclose any nonpublic information relating to the
Company or any Subsidiary 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. The Company will promptly notify Buyer
after receipt of any Acquisition Proposal or any indication that any Person is
considering making an 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 any Subsidiary by any Person
that may be considering making, or has made, an
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<PAGE> 26
Acquisition Proposal and will keep Buyer fully informed of the status and
details of any such Acquisition Proposal, indication or request. For purposes
of this Agreement, "Acquisition Proposal" means any offer or proposal for, or
any indication of interest in, a merger or other business combination involving
the Company or any Subsidiary or the acquisition of any equity interest in, or
a substantial portion of the assets of, the Company or any Subsidiary, other
than the transactions contemplated by this Agreement. "Superior Acquisition
Proposal" means an Acquisition Proposal which a majority of the disinterested
directors determines in its good faith judgment (based on advice of the
Company's independent financial advisor) to be more favorable to the Company's
stockholders than the Offer or the Merger, and for which financing, to the
extent required, is then committed. Nothing in this Section 6.4 shall be
deemed to prohibit the Company and its Board of Directors from (i) taking and
disclosing a position with respect to a tender offer by a third party pursuant
to Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act and (ii) making
such disclosures to the Company's stockholders which, in the judgment of and
subject to the fiduciary duties of the Board of Directors of the Company, with
the advice of Wilson, Sonsini, Goodrich & Rosati, P.C., counsel to the Company,
may be required under applicable law.
SECTION 6.5. Notices of Certain Events. The Company
shall, within 24 hours, notify Buyer of:
(i) 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;
(ii) any notice or other communication from any
governmental or regulatory agency or authority in connection with the
transactions contemplated by this Agreement; and
(iii) any actions, suits, claims, investigations or
proceedings commenced or, to the best of its knowledge threatened
against, relating to or involving or otherwise affecting the Company
or any Subsidiary which, if pending on the date of this Agreement,
would have been required to have been disclosed pursuant to Section
4.12 or 4.14 or which relate to the consummation of the transactions
contemplated by this Agreement.
SECTION 6.6. Rights Agreement. Effective upon execution
of this Agreement, the Board of Directors of the Company shall have amended the
Rights Agreement on terms satisfactory to Buyer to terminate, modify or redeem
the Rights issued thereunder so as to make the Rights inapplicable to the Offer
or the Merger or the Stockholder Option Agreement. After such amendment and
assuming that neither Buyer nor Merger Subsidiary is in material breach of this
Agreement, the Company will not thereafter amend the Rights Plan so as to make
the Rights applicable to the Offer or the Merger.
SECTION 6.7. Fair Price Structure. If any "fair price" or
"control share acquisition" statute or other similar statute or regulation or
any state "blue sky" statute shall become applicable to the transactions
contemplated hereby or by the Stockholder Option Agreement, the Company and the
members or the Board of Directors of the Company shall grant such approvals and
take such actions as are necessary so that the transactions contemplated hereby
and thereby may be
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consummated as promptly as practicable on the terms contemplated hereby and
thereby and otherwise act to minimize the effects of such statute or regulation
on the transactions contemplated hereby or thereby.
SECTION 6.8. Subsidiary Officers and Directors. The
Company will cause each Subsidiary to cause each officer and director of such
Subsidiary to tender resignations to the respective Subsidiary effective upon
the Effective Date.
SECTION 6.9. Employee Stock Purchase Plans. The Company
agrees to terminate its 1992 ESPP and 1993 ESPP prior to the Effective Time.
The Company agrees to amend Section 4.2(a) of the Company's 401(k) Plan prior
to the Effective Time to permit Employer Matching Contributions (as defined
therein) in cash. Buyer intends to terminate or discontinue contributions to
the Company's 401(k) Plan or merge it into the Buyer's 401(k) Plan and intends
that thereafter employees of the Company will be eligible to participate in
Buyer's 401(k) Plan.
ARTICLE VII
COVENANTS OF BUYER
Buyer agrees that:
SECTION 7.1. Confidentiality. (a) Prior to the Effective
Time and after any termination of this Agreement, Buyer will hold, and will use
its best efforts to cause its officers, directors, employees, accountants,
counsel, consultants, advisors and agents to hold, in confidence, unless
compelled to disclose by judicial or administrative process or by other
requirements of law, all confidential documents and information concerning the
Company and the Subsidiaries furnished to Buyer in connection with the
transactions contemplated by this Agreement, including, without limitation, the
stockholder lists furnished by the Company pursuant to Section 1.2, except to
the extent that such information can be shown to have been (i) previously known
on a nonconfidential basis by Buyer, (ii) in the public domain through no fault
of Buyer or (iii) later lawfully acquired by Buyer from sources other than the
Company; provided that Buyer may disclose such information to its officers,
directors, employees, accountants, counsel, consultants, advisors and agents in
connection with the transactions contemplated by this Agreement and to its
lenders in connection with obtaining the financing for the transactions
contemplated by this Agreement so long as such Persons are informed by Buyer of
the confidential nature of such information and are directed by Buyer to treat
such information confidentially. Buyer's obligation to hold any such
information in confidence shall be satisfied if it exercises the same care with
respect to such information as it would take to preserve the confidentiality of
its own similar information. It is agreed that such information has been and
is being provided solely for the purposes of the Offer and the Merger and not
to affect, in any way, the parties' competitive position relative to each other
or to other entities. If this Agreement is terminated, Buyer will, and will
use its best efforts to cause its officers, directors, employees, accountants,
counsel, consultants, advisors and agents to, destroy or deliver to the
Company, upon request, all documents and other materials, and all copies
thereof, obtained by Buyer or on its behalf from the Company in connection with
this Agreement that are subject to such
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confidence. This confidentiality provision supersedes and replaces in its
entirety, any prior confidentiality agreements signed by Buyer or any affiliate
of Buyer in favor of the Company or any Subsidiary.
(b) In the event that Buyer or Merger Subsidiary is requested
or required (by oral questions, interrogatories, requests for information or
documents in legal proceedings, subpoena, civil investigative demand or other
similar process to disclose any of the information required to be kept
confidential under paragraph (a), such party shall provide the Company with
prompt notice of any such request or requirement so that the Company may seek a
protective order or other appropriate remedy and/or waive compliance with the
provisions of this paragraph. If, in the absence of a protective order or
other remedy or the receipt of a waiver by Company, the party requested or
required to make the disclosure should nonetheless, in the opinion of counsel,
disclose such information, the party requested or required to make the
disclosure may, without liability hereunder, disclose only that portion of the
information which such counsel advises is legally required to be disclosed,
provided that the party requested or required to make the disclosure exercises
its reasonable efforts to preserve the confidentiality of the information,
including, without limitation, by cooperating with the Company to obtain an
appropriate protective order or other reliable assurance that confidential
treatment will be accorded the information.
SECTION 7.2. Obligations of Merger Subsidiary. Buyer will
take all action necessary to cause Merger Subsidiary to perform its obligations
under this Agreement (including providing Merger Subsidiary with sufficient
funds to pay the aggregate purchase price of Shares accepted for purchase
pursuant to the Offer) and to consummate the Merger on the terms and conditions
set forth in this Agreement.
SECTION 7.3. Voting of Shares. Buyer agrees to vote all
Shares beneficially owned by it in favor of adoption of this Agreement at the
Company Stockholder Meeting.
SECTION 7.4. Director and Officer Liability. For six
years after the Effective Time, Buyer will cause the Surviving Corporation to
indemnify and hold harmless the officers and directors of the Company in
respect of acts or omissions occurring prior to the Effective Time to the
extent provided under the Company's certificate of incorporation and bylaws in
effect on the date hereof; provided that such indemnification shall be subject
to any limitation imposed from time to time under applicable law. For three
years after the Effective Time, Buyer will cause the Surviving Corporation to
use its reasonable efforts to provide officers' and directors' liability
insurance in respect of acts or omissions occurring prior to the Effective Time
covering each such Person currently covered by the Company's officers' and
directors' liability insurance policy on terms with respect to coverage and
amount no less favorable than those of such policy in effect on the date
hereof, provided that in satisfying its obligation under this Section, Buyer
shall not be obligated to cause the Surviving Corporation to pay premiums in
excess of the amount per annum the Company paid in its last full fiscal year,
which amount has been disclosed to Buyer. This Section 7.4 shall inure to the
benefit of those Persons who were or are officers and directors of the Company
prior to the Effective Time.
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SECTION 7.5. Assumed Options. (a) Buyer agrees to take
such actions as shall be necessary to assume the Plan Options, if any,
specified in Section 2.5(c). Prior to the Effective Time, the Buyer shall
designate in writing those Plan Options which it desires to assume at the
Effective Time by agreeing to pay the amount of the Merger Consideration with
respect to the full amount of Shares subject to each option (without regard to
vesting) (without interest) in lieu of issuing Shares. All other Plan Options
assumed by Buyer shall be converted into stock options ("Buyer Options") to
purchase from Buyer the number of shares of common stock of Buyer ("Buyer
Common Stock") equal to the product obtained by multiplying the number of
shares of Company common stock subject to each Company Option by the quotient
arrived at by dividing the Merger Consideration per Share by the average of the
closing sales prices for the Buyer Common Stock on the New York Stock Exchange
for the five (5) trading days ending on the trading day immediately prior to
the date of the Effective Time (such quotient being referred to herein as the
"Exchange Ratio") rounded down to the nearest whole integer, and the exercise
price per share for Buyer Common Stock under each option so assumed shall be
the original exercise price per share of the Company Option divided by the
Exchange Ratio, rounded up to the nearest whole cent, all in accordance with
Section 424(a) of the Code and the regulations promulgated thereunder, without
regard to whether the Company Option qualifies as an incentive stock option
within the meaning of Section 422 of the Code.
(b) The provisions of Section 7.5(a) may be amended as
reasonably required so that the assumption of Company Options thereunder
complies with the requirements of Section 424(a) of the Code and the
regulations promulgated thereunder. After the Effective Time, Buyer will
deliver to each holder of a Company Option a document evidencing the foregoing
assumption by the Buyer. Buyer will take all corporate and other action
necessary to reserve and make available sufficient shares of Buyer Common Stock
for issuance upon the exercise of the Buyer Options, will prepare and file with
the SEC registration statements on the appropriate forms (or amendments to
existing registration statements) relating to the issuance of Buyer Common
Stock upon exercise of the Buyer Options and will use its reasonable efforts to
have registration statements declared effective as of, or a reasonable time
after, the Effective Time and shall maintain the effectiveness of such
registration statements until exercise or termination of all Buyer Options.
ARTICLE VIII
COVENANTS OF BUYER AND THE COMPANY
The parties hereto agree that:
SECTION 8.1. Reasonable Efforts. Subject to the terms and
conditions of this Agreement, each party will use its 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 8.2. Certain Filings. The Company and Buyer shall
cooperate with one another (a) in connection with the preparation of the
Company Disclosure Documents and the Offer
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Documents, and (b) 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 (c) 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.
SECTION 8.3. Public Announcements. Buyer, Merger
Subsidiary 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 with any national securities exchange,
will not issue any such press release or make any such public statement prior
to such consultation.
SECTION 8.4. 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
Merger Subsidiary, any deeds, bills of sale, assignments or assurances and to
take and do, in the name and on behalf of the Company or Merger Subsidiary, 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 8.5. Section 16 Stock Options. The Company and
Buyer agree to take all actions necessary, notwithstanding Section 2.5(a) and
Section 7.5 of this Agreement, so that the stock options previously granted to
Paul C. Ely for 75,000 Shares, to Robert H. Waterman, Jr. for 50,000 Shares,
to Gary B. Filler for 250,000 Shares and to Eric D. Carlson for 250,000 Shares
shall be amended by the Company's Board of Directors (and the 1991 Stock Plan
amended by the Company's Board of Directors as necessary) prior to the
Effective Date, to be cancelled in exchange for a cash payment equal to the
Merger Consideration per Share minus the exercise price relating to such
options. The Buyer shall make such payment on the later of (i) the date six
months and one day following the amendment of the option agreements, or (ii)
January 5, 1995.
ARTICLE IX
CONDITIONS TO THE MERGER
SECTION 9.1. Conditions to the Obligations of Each Party.
The obligations of the Company, Buyer and Merger Subsidiary to consummate the
Merger are subject to the satisfaction of the following conditions:
(i) if required by Delaware Law, this Agreement
shall have been adopted by the stockholders of the Company in
accordance with such Law;
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(ii) any applicable waiting period (and any
extension thereof) under the HSR Act relating to the Merger
shall have expired;
(iii) no provision of any applicable law or
regulation and no judgment, injunction, order or decree shall
prohibit the consummation of the Merger;
(iv) Buyer shall have purchased Shares in an
amount equal to at least the Minimum Condition pursuant to the
Offer; and
(v) 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 including
those set forth in Sections 4.3 and 5.3 shall have been
obtained.
SECTION 9.2. Conditions to the Obligations of Buyer and
Merger Subsidiary. The obligations of Buyer and Merger Subsidiary to
consummate the Merger are subject to the satisfaction of the further conditions
that no court, arbitrator or governmental body, agency or official shall have
issued any order, and there shall not be any statute, rule or regulation,
restraining or prohibiting the consummation of the Merger or the effective
operation of the business of the Company and the Subsidiaries after the
Effective Time, and no proceeding challenging this Agreement or the
transactions contemplated hereby or seeking to prohibit, alter, prevent or
materially delay the Merger shall have been instituted by any Person before any
court, arbitrator or governmental body, agency or official and be pending.
ARTICLE X
TERMINATION
SECTION 10.1. 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):
(a) by mutual written consent of the Company and Buyer;
(b) by either Buyer or the Company,
(i) if the Offer shall expire without any Shares
having been purchased promptly thereafter pursuant to the
Offer; provided, however, that a party shall not be entitled
to terminate this Agreement pursuant to this Section
10.1(b)(i) if it is in material breach of its representations
and warranties, covenants or other obligations under this
Agreement; or
(ii) prior to the purchase of Shares pursuant to
the Offer, if there has been a willful breach by the other
party of any representation, warranty, covenant or agreement
set forth in the Agreement; or
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<PAGE> 32
(iii) if the Merger has not been consummated by
December 31, 1994; or
(iv) if there shall be any law or regulation that
makes consummation of the Merger illegal or otherwise
prohibited or if any judgment, injunction, order or decree
enjoining Buyer or the Company from consummating the Merger is
entered and such judgment, injunction, order or decree shall
become final and nonappealable;
(c) by the Company, if Merger Subsidiary shall have failed to
commence the Offer in accordance with Section 1.1(a);
(d) by Buyer, upon the occurrence of any Trigger Event
described in clauses (i) through (vi) of Section 11.4(b); or
(e) by the Company, upon the occurrence of the Trigger Event
described in clause (vi) of Section 11.4(b).
SECTION 10.2. Effect of Termination. If this Agreement is
terminated pursuant to Section 10.1, this Agreement shall become void and of no
effect with no liability on the part of any party hereto, except that the
agreements contained in Sections 7.1 and 11.4, and any claim for breach of this
Agreement prior to such termination, shall survive the termination hereof.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including telecopy
or similar writing) and shall be given,
if to Buyer or Merger Subsidiary, to:
Computer Associates International, Inc.
1 Computer Associates Plaza
Islandia, NY 11788
Attn: President
Telecopy: (516) 342-4866
with a copy to:
John P. Gourary
Howard, Darby & Levin
1330 Avenue of the Americas
New York, NY 10019
Telecopy: (212) 841-1010
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if to the Company, to:
The ASK Group, Inc.
2880 Scott Boulevard
Santa Clara, CA 95052-8013
Attn: Legal Department
Telecopy: (408) 562-8810
with a copy to:
Larry W. Sonsini
Wilson, Sonsini, Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, CA 94304
Telecopy: (415) 496-4084
or such other address or telecopy number as such party may hereafter specify
for the purpose by notice to the other parties hereto. Each such notice,
request or other communication shall be effective when delivered at the address
specified in this Section.
SECTION 11.2. 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 except for the
representations, warranties and agreements set forth in Sections 7.1 and 11.4.
SECTION 11.3. Amendments; No Waivers. (a) Any provision of
this Agreement may be amended or waived prior to the Effective Time if, and
only if, such amendment or waiver is in writing and signed, in the case of an
amendment, by the Company, Buyer and Merger Subsidiary or in the case of a
waiver, by the party against whom the waiver is to be effective; provided that
after the adoption of this Agreement by the stockholders of the Company, no
such amendment or waiver shall, without the further approval of such
stockholders, alter or change (i) the amount or kind of consideration to be
received in exchange for any shares of capital stock of the Company, (ii) any
term of the certificate of incorporation of the Surviving Corporation or (iii)
any of the terms or conditions of this Agreement if such alteration or change
would adversely affect the holders of any shares of capital stock of the
Company.
(b) 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.
-29-
<PAGE> 34
SECTION 11.4. Fees and Expenses.
(a) Except as otherwise provided in this Section, all
costs and expenses incurred in connection with this Agreement shall be paid by
the party incurring such cost or expense. No professional fees and expenses
payable by the Company in connection with the transactions contemplated hereby
(other than the finder fees described in Section 4.16) shall be based on terms
other than regular hourly rates and actual out-of-pocket expenses.
(b) The Company agrees to pay the Buyer a fee in
immediately available funds equal to $12,500,000 promptly, but in no event
later than two business days, after the termination of this Agreement as a
result of the occurrence of any of the events set forth below (a "Trigger
Event"):
(i) the Company shall have entered into, or shall have
publicly announced its intention to enter into, an agreement or an
agreement in principle with respect to any Acquisition Proposal;
(ii) any person or group (as defined in Section 13(d)(3)
of the 1934 Act) (other than Buyer or any of its affiliates) shall
have become the beneficial owner (as defined in Rule 13d-3 promulgated
under the 1934 Act) of at least 25% of the outstanding Shares or shall
have acquired, directly or indirectly, at least 25% of the assets of
the Company;
(iii) any person or group shall have commenced, or shall
have publicly announced an intention to commence, a tender or exchange
offer for at least majority of the outstanding Shares for a
consideration per Share greater than the consideration per Share
offered under the Offer;
(iv) any representation or warranty made by the Company
in, or pursuant to, this Agreement shall not have been true and
correct in all material respects when made and any such failures to be
true and correct could reasonably be expected to have, individually or
in the aggregate, a material adverse effect on the condition
(financial or otherwise), business, assets, results of operations or
prospects of the Company and the Subsidiaries taken as a whole (except
that reductions or delays in orders of products of the Company or the
Subsidiaries due solely to any rumors, speculation or announcement of
a potential merger involving the Company or the execution of this
Agreement and the Merger shall be excluded for consideration for
purposes of the effect of an action or inaction on the Company and its
Subsidiaries taken as a whole (a "Modified Material Adverse Effect"),
or the Company shall have failed to observe or perform in any material
respect any of its obligations under this Agreement;
(v) the Board of Directors of the Company shall have
withdrawn or materially modified in a manner adverse to Buyer or
Merger Subsidiary its approval or recommendation of the Offer, the
Merger or this Agreement or its approval of the entry by Buyer into
the Stockholder Option Agreement, in any such case whether or not such
withdrawal or modification is required by the fiduciary duties of the
Board of Directors; or
-30-
<PAGE> 35
(vi) prior to the purchase of any Shares under the Offer,
the Company shall have received any Acquisition Proposal which the
Board of Directors has determined is more favorable to the Company's
shareholders than the transactions contemplated by this Agreement,
whether or not such determination is required by the fiduciary duties
of the Board of Directors.
(c) The Company shall assume and pay, or reimburse Buyer
for, all reasonable fees payable and expenses incurred by Buyer (including the
fees and expenses of its counsel and the fees and expenses of institutions that
are considering making or have made a commitment to provide financing for the
transactions contemplated hereby) in connection with this Agreement and the
transactions contemplated hereby, in an aggregate amount not to exceed
$2,500,000, whether or not the Offer or the Merger is consummated.
SECTION 11.5. 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 obligations under
this Agreement without the consent of the other parties hereto except that
Merger Subsidiary may transfer or assign, in whole or from time to time in
part, to one or more of its affiliates, the right to purchase shares pursuant
to the Offer, but any such transfer or assignment will not relieve Merger
Subsidiary 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 11.6. Governing Law. This Agreement shall be
construed in accordance with and governed by the law of the State of New York.
SECTION 11.7. 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. This Agreement shall become effective when each
party hereto shall have received counterparts hereof signed by all of the other
parties hereto.
-31-
<PAGE> 36
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.
THE ASK GROUP, INC.
By /s/ Paul C. Ely, Jr.
Name: Paul C. Ely, Jr.
Title: Chairman of the Board
By /s/ Robert H. Waterman, Jr.
Name: Robert H. Waterman, Jr.
Title: Vice Chairman of the Board
By /s/ Eric D. Carlson
Name: Eric D. Carlson
Title: Chief Executive Officer and President
COMPUTER ASSOCIATES INTERNATIONAL, INC.
By /s/ Belden A. Frease
Name: Belden A. Frease
Title: Senior Vice President and Secretary
SPEEDBIRD MERGE, INC.
By /s/ Belden A. Frease
Name: Belden A. Frease
Title: Vice President and Secretary
-32-
<PAGE> 37
ANNEX 1
Conditions
Notwithstanding any other provision of the Offer, Merger
Subsidiary shall not be required to accept for payment or pay for any Shares,
and may terminate the Offer, if (i) by the expiration of the Offer, the Minimum
Condition shall not have been satisfied, (ii) by the expiration of the Offer,
the applicable waiting period (and any extension thereof) under the HSR Act
shall not have expired or been terminated or (iii) at any time on or after May
18, 1994 and prior to the acceptance for payment of Shares pursuant to the
Offer, any of the following conditions exist:
(a) there shall be instituted or pending any action or
proceeding by any government or governmental authority or agency,
domestic or foreign, or by any other person, domestic or foreign,
before any court or governmental authority or agency, domestic or
foreign, (i) challenging or seeking to make illegal, to delay
materially or otherwise directly or indirectly to restrain or prohibit
the acquisition by Merger Subsidiary or any of its affiliates of
Shares pursuant to the Company Stock Option Agreement or the
Stockholder Option Agreement, the making of the Offer, the acceptance
for payment of or payment for some of or all the Shares by Buyer or
Merger Subsidiary or the consummation by Buyer or Merger Subsidiary of
the Merger, seeking to obtain material damages or otherwise directly
or indirectly relating to the transactions contemplated by the
Stockholder Option Agreement, this Agreement, the Offer or the Merger,
(ii) seeking to restrain or prohibit Buyer's or Merger Subsidiary's
ownership or operation (or that of their respective subsidiaries or
affiliates) of all or any material portion of the business or assets
of the Company and its subsidiaries, taken as a whole, or of Buyer and
its subsidiaries, taken as a whole, or to compel Buyer or any of its
subsidiaries or affiliates to dispose of or hold separate all or any
material portion of the business or assets of the Company and its
subsidiaries, taken as a whole, or of Buyer and its subsidiaries,
taken as a whole, (iii) seeking to impose or confirm material
limitations on the ability of Buyer or any of its subsidiaries or
affiliates effectively to exercise full rights of ownership of the
Shares, including, without limitation, the right to vote any Shares
acquired or owned by Buyer or any of its subsidiaries or affiliates on
all matters properly presented to the Company's stockholders, (iv)
seeking to require divestiture by Buyer or any of its subsidiaries or
affiliates of any Shares, or (v) that otherwise, in the judgment of
Buyer, is likely to materially adversely affect the Company and its
subsidiaries, taken as a whole, or Buyer and its subsidiaries, taken
as a whole; or
(b) there shall be any action taken, or any statute, rule,
regulation, injunction, order or decree proposed, enacted, enforced,
promulgated, issued or deemed applicable to the Stockholder Option
Agreement, this Agreement, the Offer or the Merger, by any court,
government or governmental authority or agency,
<PAGE> 38
domestic or foreign other than the application of the waiting period
provisions of the HSR Act to the Stockholder Option Agreement, this
Agreement, the Offer or the Merger, that, in the judgment of Buyer,
is substantially likely, directly or indirectly, to result in any of
the consequences referred to in clauses (i) through (v) of paragraph
(a) above; or
(c) any change shall have occurred or been threatened (or any
development shall have occurred or been threatened involving a
prospective change) in the business, assets, liabilities, financial
condition, capitalization, operations, results of operations or
prospects of the Company or any of its subsidiaries that, in the
reasonable judgment of Buyer, is or is likely to be materially adverse
to the Company and its subsidiaries, taken as a whole; or
(d) a tender or exchange offer for some or all of the Shares
shall have been publicly proposed to be made or shall have been made
by another person, or it shall have been publicly disclosed or Buyer
shall have otherwise learned that (i) any person or "group" (as
defined in Section 13(d)(3) of the Exchange Act) shall have acquired
or proposed to acquire beneficial ownership of more than 25% of any
class or series of capital stock of the Company (including the
Shares), through the acquisition of stock, the formation of a group or
otherwise, or shall have been granted any option, right or warrant,
conditional or otherwise, to acquire beneficial ownership of more than
25% of any class or series of capital stock of the Company (including
the Shares) other than acquisitions for bona fide arbitrage purposes
only and other than as disclosed in a Schedule 13D or 13G on file with
the Commission on May 18, 1994, (ii) any such person or group which,
prior to May 18, 1994, had filed such a Schedule with the Commission
shall have acquired or proposed to acquire beneficial ownership of
additional shares of any class or series of capital stock of the
Company (including the Shares), through the acquisition of stock, the
formation of a group or otherwise, which, together with such ownership
as is reflected on such Schedule, shall constitute 25% or more of any
such class or series, or shall have been granted any option, right or
warrant, conditional or otherwise, to acquire beneficial ownership of
additional shares of any class or series of capital stock of the
Company (including the Shares) which, together with such ownership as
is reflected on such Schedule, shall constitute 25% or more of any
such class or series or (iii) any person shall have filed a
Notification and Report Form under the HSR Act or made a public
announcement reflecting an intent to acquire the Company or any
material portion of assets of the Company or securities of the Company
which, together with such ownership as is reflected on any such
Schedule, shall constitute 25% or more of any such class of
securities; or
(e) the Company shall have breached or failed to perform in
any material respect any of its material covenants or agreements under
this Agreement, or any of the material representations and warranties
of the Company set forth in this Agreement shall not be true in any
material respect when made or at any time prior to consummation of the
Offer as if made at and as of such time; or
-2-
<PAGE> 39
(f) any party to the Stockholder Option Agreement other than
Merger Subsidiary or Buyer shall have breached or failed to perform in
any material respect any of its agreements under the Stockholder
Option Agreement or any of the representations and warranties of any
such party set forth in the Stockholder Option Agreement shall not be
true in any material respect, in each case, when made or at any time
prior to the consummation of the Offer as if made at and as of such
time, or the Stockholder Option Agreement shall have been invalidated
or terminated with respect to any Shares subject thereto; or
(g) this Agreement or the Stockholder Option Agreement
shall have been terminated in accordance with its terms; or
(h) the Board of Directors of the Company shall have
withdrawn or materially modified in a manner adverse to Buyer or the
Merger Subsidiary its approval or recommendation of the Offer, the
Merger or this Agreement or its approval of the entry by Buyer into
the Stockholder Option Agreement; or
(i) the Company shall have entered into, or shall have
publicly announced its intention to enter into, an agreement or
agreement in principle with respect to any Acquisition Proposal;
which, in the sole judgment of Buyer in any such case, and regardless of the
circumstances (including any action or omission by Buyer) giving rise to any
such condition, makes it inadvisable to proceed with such acceptance for
payment or payment.
-3-
<PAGE> 1
EXHIBIT 2
Contacts: Bob Gordon, (CA), 516-342-2391
Deborah Coughlin, (CA), 516-342-2173
Margaret Epperheimer, (ASK), 408-562-8545
Gary Filler, (ASK), 408-562-8472
COMPUTER ASSOCIATES TO ACQUIRE THE ASK GROUP
ISLANDIA, N.Y., May 19, 1994 -- Computer Associates International, Inc. and The
ASK Group, Inc. have entered into a definitive agreement providing for CA's
acquisition of the ASK Group through a cash tender offer. A wholly-owned
subsidiary of CA will offer to purchase all outstanding shares of The ASK Group
Group's common stock at $13.25 per share. The definitive agreement has been
unanimously approved by the Boards of Directors of the ASK Group and Computer
Associates.
The tender offer, which will commence shortly, will involve the offer to
purchase an amount of shares such that, upon consummation, CA will own at least
a majority of the outstanding shares. It will also be conditioned, among other
things, on the expiration or termination of any applicable antitrust waiting
period and the receipt of all regulatory approvals.
"We're excited to have the opportunity to include the ASK people, products and
clients in the CA family," said CA Chairman and CEO Charles B. Wang. "Not
only will it add to our own rapidly-growing client/server offerings, but we
expect the product synergy to pay real dividends to all our clients and
shareholders."
"The thousands of customers committed to the ASK products, including Open
INGRES, Open ROAD, ManMan/X, and SIM/400 manufacturing software, will now have
the assurance of an association with the leading force in mission-critical
client/server computing," said ASK CEO Eric Carlson, "The ASK/CA combination is
the best possible outcome for the employees, shareholders and customers of ASK,
and we look forward to working with CA."
Following completion of the tender offer, it is expected that the subsidiary of
CA will be merged into the ASK Group and all of the ASK Group's shares not
owned by CA will be converted into the right to receive $13.25 per share in
cash.
In entering into the definitive agreement, the ASK Group has amended its
outstanding stockholder rights plan to provide that the acquisition can be
completed without causing outstanding stock purchase rights to become
exercisable. The rights will be acquired by CA as part of the $13.25 per share
price.
(more)
<PAGE> 2
Computer Associates To Acquire The ASK Group, page 2
EDS and Hewlett-Packard, the two largest shareholders of the ASK Group, have
agreed to tender their shares, representing an aggregate of 27 percent of the
outstanding shares, to CA.
Computer Associates International, Inc. (NYSE: CA), with 7,000 employees around
the world, is the leading software company for integrated systems, database
management, business applications and application development solutions. These
programs operate across a full spectrum of mainframe, midrange and desktop
computers. Founded in 1976, CA became a public company in 1981 and now serves
most of the world's major business, government, research and educational
organizations. Calendar year 1993 revenues exceeded $2 billion.
The ASK Group, Inc. is the leading developer and integrator of strategic
business software, providing corporations with the technologies to build,
connect, manage and maintain information systems. With revenues of $426
million for the fiscal year ended June 30, 1993, the company employs 2,000
people in 82 offices who serve customers worldwide.
###
All referenced product names are trademarks of their respective companies.
<PAGE> 1
Exhibit 3
INFORMATION CONCERNING THE COMPANY
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS, DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the beneficial ownership of Common
Stock of the Company by (i) each person known by the Company to be the
beneficial owner of more than 5% of the Company's Common Stock, (ii) each
current director, (iii) each executive officer named in the Summary
Compensation Table below, and (iv) all current directors and executive officers
as a group as of September 27, 1993:
<TABLE>
<CAPTION>
Percent of
Name of Individual or Group (Number in Group) Number of Shares(1) Outstanding(1)
--------------------------------------------- ------------------- --------------
<S> <C> <C>
Electronic Data Systems Corporation . . . . . . . . . . . 4,008,535(2) 17.5%
7171 Forest Lane
Dallas, TX 75230
Hewlett-Packard Company . . . . . . . . . . . . . . . . . 2,004,268(2) 8.7%
3000 Hanover Street
Palo Alto, CA 94304
The Capital Group, Inc. . . . . . . . . . . . . . . . . . 1,322,000(3) 5.8%
333 South Hope Street
Los Angeles, CA 90071
Sandra L. Kurtzig . . . . . . . . . . . . . . . . . . . . 1,181,394(4) 5.1%
2440 W. El Camino Real
Mt. View, CA 94039-7640
Pier Carlo Falotti . . . . . . . . . . . . . . . . . . . 263,464(5) *
Thomas I. Unterberg . . . . . . . . . . . . . . . . . . . 117,500(6) *
David Sohm . . . . . . . . . . . . . . . . . . . . . . . 76,675 *
Eric D. Carlson . . . . . . . . . . . . . . . . . . . . . 67,787 *
Leslie E. Wright . . . . . . . . . . . . . . . . . . . . 65,090 *
Michael A. Laven . . . . . . . . . . . . . . . . . . . . 26,240 *
Paul C. Ely, Jr. . . . . . . . . . . . . . . . . . . . . 14,800
Robert H. Waterman, Jr. . . . . . . . . . . . . . . . . . 13,800
Robert N. Sharpe . . . . . . . . . . . . . . . . . . . . 4,600(7)
All current directors and executive officers
as a group (10 persons) . . . . . . . . . . . . . . . . 1,831,350(4,5,6,7)
</TABLE>
- ------------------------
* Less than 1 percent.
(1) Includes the following shares subject to outstanding options which
were exercisable at September 27, 1993 or within 60 days of such date:
Mr. Falotti, 83,333; Mr. Unterberg, 2,400; Mr. Sohm, 68,959; Dr.
Carlson, 60,605; Mr. Wright, 64,896; Mr. Laven, 260,036; Mr. Ely,
9,800; Mr. Waterman, 7,800; Mr. Sharpe, 4,600; all current directors
and executive officers as a group, 328,429. Also includes
<PAGE> 2
shares held in trust pursuant to the Company's 401(k) Plan as
follows: Ms. Kurtzig, 182; Mr. Falotti, 78; Mr. Sohm, 209;
Mr. Wright, 195; Mr. Carlson, 182; Mr. Laven, 204.
(2) Pursuant to a Common Stock Purchase Agreement entered into in August
1990 between the Company, Electronic Data Systems Corporation ("EDS")
and Hewlett-Packard Company ("HP"), EDS and HP have the rights to
maintain their respective percentage ownership interests in the
Company, to nominate a person to the Company's Board of Directors and
to have these shares registered for sale under applicable securities
laws. In addition, that agreement gives the Company a right of first
refusal to purchase any of these shares and the right to approve or
reject a proposed sale of all or part of those shares.
(3) Based on a Schedule 13G filed for the calendar year ended December 31,
1992. Represents shares owned by accounts under the discretionary
investment management of one or more of six investment management
companies of which The Capital Group, Inc. is the parent company. The
Capital Group, Inc. has disclaimed beneficial ownership of these
shares.
(4) Includes 48,656 shares held in custodial accounts or trusts for her
sons and 35,600 shares held in a foundation trust, as to which shares
Ms. Kurtzig disclaims beneficial ownership.
(5) Includes 175,000 shares granted in July 1992 as a stock bonus award
pursuant to the Company's 1991 Stock Plan. These shares are subject
to vesting at the rate of 20% per year on each anniversary of the date
he became a consultant of the Company (July 9, 1992); however all
shares become fully vested if, within one year following a change of
control, Mr. Falotti's employment is involuntarily terminated or there
is a significant reduction in his job responsibilities or
compensation. Unvested shares are subject to reacquisition by the
Company at no cost to the Company on termination of Mr. Falotti's
employment prior to vesting.
(6) Includes 3,000 shares owned by Mr. Unterberg's spouse, as to which
shares he disclaims beneficial ownership.
(7) Excludes 4,008,535 shares owned by EDS. Mr. Sharpe is a corporate
officer of EDS; in that capacity he does not have sole, but may have
shared, investment or voting power with respect to the shares. Mr.
Sharpe disclaims beneficial ownership as to such shares.
EMPLOYEE BENEFIT PLANS
The following is a brief summary of certain plans in effect during the
fiscal year ended June 30, 1993 under which officers and employees of the
Company received benefits.
Incentive Bonus Plan. The Board of Directors has adopted an incentive
bonus plan pursuant to which officers and other key employees can earn annual
cash bonuses, conditioned on achievement of specified Company and business unit
goals as well as personal and departmental objectives.
Employee Stock Option Plans. The Company's 1982 Incentive Stock
Option Plan (the "1982 Plan") was adopted by the Board of Directors and
approved by the stockholders in 1982. A total of 3,400,000 shares of Common
Stock were reserved for issuance upon exercise of options. As a result of the
expiration of the 1982 Plan in August 1992, no further options may be granted
thereunder.
In connection with the 1990 acquisition of Ingres Corporation
("Ingres"), the Company assumed all of the options granted to employees of
Ingres and its subsidiaries pursuant to Ingres' 1984 Incentive Stock Option
Plan and 1986 Supplemental Stock Option Plan (collectively, the "Ingres
Plans").
In August 1991, the Board adopted the 1991 Stock Plan (the "1991
Plan") under which the Board or its designated committee is authorized to grant
incentive or nonstatutory stock options, stock appreciation rights,
<PAGE> 3
restricted stock, stock bonus or long-term performance stock awards to
employees and consultants of the Company and its subsidiaries. Stockholders
of the Company approved the 1991 Plan in November 1991. A total of 3,200,000 s
hares have been reserved under this plan, including the 1,200,000 shares for
which stockholder approval is being sought at this meeting. The grant of
options or other awards under the 1991 Plan to employees, including the
executive officers named in the Summary Compensation Table appearing in this
Proxy Statement (the "Named Officers"), is subject to the discretion of the
administrator of the Plan (i.e., the Board of Directors or its Compensation
Committee). As of the date of this Proxy Statement, there has been no
determination by the Administrator with respect to future awards under the 1991
Plan. Non-employee directors are not eligible to participate in the 1991 Plan.
The following table sets forth information with respect to the grant of options
to the Named Officers, to all current executive officers as a group and to all
employees as a group during the fiscal year ended June 30, 1993:
<TABLE>
<CAPTION>
Name of Individual or Weighted Average Exercise Price
Identity of Group and Position Options Granted(#) Per Share ($/sh)
--------------------------------------------------- ------------------ -------------------------------
<S> <C> <C>
Pier Carlo Falotti, President and CEO . . . . . . . 250,000 $10,000
Leslie E. Wright, Executive VP and Chief Financial $12,875
and Administrative Officer . . . . . . . . . . . . 30,000
Eric D. Carlson, Executive VP . . . . . . . . . . . 25,000 $12,875
Michael A. Laven, Executive VP . . . . . . . . . . 25,000 $12,875
All current executive officers as a group . . . . . 330,000 $10,697
All other employees as a group . . . . . . . . . . 677,200 $14,148
</TABLE>
Under each of these option plans, options are granted at exercise
prices equal to the fair market value on the date of grant, have 10-year terms
and generally become exercisable over a four-year period. Under all of these
plans, as of June 30, 1993, options to purchase an aggregate of 2,843,080
shares of Common Stock had been exercised, options to purchase 2,907,722 shares
were outstanding (including 573,171 shares covered by options assumed by the
Company in the Ingres acquisition) and held by 1,406 employees at exercise
prices ranging from $0.4247 to $23.75, and 458,234 shares remained available
for future grant.
Employee Stock Purchase Plans. In May 1990, the Board adopted the
1990 Employee Stock Purchase Plan (the "1990 ESPP"). Stockholders approved the
1990 ESPP in November 1990. Under the 1990 ESPP, 750,000 shares were reserved
for issuance. The 1990 ESPP permitted a participant to purchase shares of the
Company's Common Stock at 85% of the lessor of (i) the fair market value of
such stock at the beginning of a two-year offering period or (ii) the fair
market value of such stock at the end of each six-month purchase period within
the two-year offering period. Generally, all full-time officers and employees
of the Company and any of its U.S. subsidiaries are eligible to participate in
the 1990 ESPP. The 1990 ESPP terminated on May 31, 1993 as all shares
authorized for issuance thereunder had been issued. In March 1993, the Board
adopted the 1993 Employee Stock Purchase Plan (the "1993 Plan"), subject to
stockholder approval (which approval is being sought at this meeting). The
1993 Plan, under which 500,000 shares have been reserved for issuance, is
identical to the 1990 Plan except that offering periods are only six months in
duration and are coincident with purchase periods. As a result, the purchase
price is reset every six months. As of June 30, 1993, approximately 1,374
persons were eligible to participate in the 1993 Plan, of whom 658 were
participating.
-3-
<PAGE> 4
In January 1992, the Board adopted the 1992 Overseas Employee Stock
Purchase Plan (the "1992 ESPP"). Stockholder approval was not required for the
1992 ESPP. The 1992 ESPP is now in all material respects identical to the 1993
Plan, except that only persons who are employees of the Company's foreign
subsidiaries at the time of enrollment are eligible to participate. At June
30, 1993, 938 persons were eligible to participate in the 1992 ESPP, of whom
154 were participating.
Participation in the 1993 Plan is voluntary and is dependent on each
eligible employee's election to participate in his or her determination as to
the level of payroll deductions. Accordingly, future purchases under the 1993
Plan are not determinable. Non-employee directors are not eligible to
participate in the 1993 Plan. No purchases have been made under the 1993 Plan
since its adoption by the Board. Purchases were made under the 1990 ESPP,
which was a similar plan. The following table sets forth certain information
regarding shares purchased under the 1990 ESPP during the last fiscal year and
the payroll deductions accumulated at the end of the last fiscal year in
accounts under the 1993 Plan for each of the Named Officers who participated in
the 1990 ESPP or the 1993 Plan, for all current executive officers as a group
and for all other employees who participated in either of the purchase plans as
a group:
<TABLE>
<CAPTION>
Name of Individual or Number of Shares Dollar Payroll Deductions at
Identity of Group and Position Purchased(#) Values($)(1) of Fiscal Year End($)
----------------------------------------------- ---------------- --------------- ---------------------
<S> <C> <C> <C>
Pier Carlo Falotti, President and CEO . . . . . 131 $ 228 $ 7,500
David Sohm, Vice President . . . . . . . . . . 631 $ 6,722 $ 1,000
All current executive officers as a group . . . 762 $ 6,950 $ 8,500
All other employees as a group . . . . . . . . 280,340 $2,418,644 $290,952
</TABLE>
The ASK Group 401(k) Plan: The Company has established The ASK Group
401(k) Plan (the "401(k) Plan") which is a qualified profit sharing plan and
salary deferral program under the Federal tax laws and is administered by the
Company. All employees of the Company (except certain specifically excluded
classifications as defined in the plan) are eligible to participate after
meeting certain minimum employment conditions. Participants may defer up to
15% of their eligible salary and contributes to the 401(k) Plan through payroll
deductions. At the end of each quarter starting with the quarter ended March
31, 1992, the Company has agreed to contribute shares of its Common Stock to
the plan. For the 1992 calendar year, shares of Common Stock were contributed
in an amount equal to 50% of the first 3% of each participant's compensation
contributed to the plan, up to a maximum Company contribution of $1,500 per
participant per plan year. Effective January 1, 1993, the Company contributes
shares of Common Stock having a value equal to 50% of a participant's
contribution to the 401(k) Plan, up to a number of shares having a maximum
value of $1,500 per participant per plan year. The Company contribution to a
participant's 401(k) Plan account vests over the five-year period starting from
his or her hire date; however, Company contributions made from January 1, 1992
through June 30, 1992 are fully vested. Each participant is fully vested in
the portion of his or her account which he or she contributed.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act ("Section 16(a)") requires the
Company's officers and directors, and persons who own more than ten percent of
the Company's Common Stock, to file reports of initial ownership on Form 3 and
changes in ownership on Form 4 or 5 with the Securities and Exchange Commission
(the
-4-
<PAGE> 5
"SEC"). Such officers, directors and ten percent stockholders are also
required by SEC rules to furnish the Company with copies of all such forms that
they file.
The Company has historically prepared and filed the Section 16(a)
forms for its officers and directors, based on responses to informational
requests sent to such officers and directors at the end of each month. Based
on a review of the copies of the Section 16(a) forms received by the Company
and written representations from certain officers and directors that no Form 5
was required, the Company believes that, during the period July 1, 1992 through
June 30, 1993, all Section 16(a) filing requirements applicable to the
Company's officers and directors were complied with, except that the Company
filed the following forms late on behalf of the identified officer and
director: the Form 4 required of Eric Carlson for the month of November 1992
reporting six transactions was filed two days late; and the Form 4 for Paul C.
Ely, Jr. for the month of December 1992 reporting one transaction was filed 17
days late.
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<PAGE> 6
PROPOSAL NO. 1
ELECTION OF DIRECTORS
A Board of five directors is to be elected at the meeting. Unless
otherwise instructed, the proxy holders will vote the Proxies received by them
for the Company's five nominees named below, all of whom are presently
directors of the Company. In the event that any nominee of the Company is
unable or declines to serve as a director at the time of the Annual Meeting,
the proxies will be voted for any nominee who shall be designated by the
present Board of Directors to fill the vacancy. In the event that additional
persons are nominated for election as directors, the proxy holders intend to
vote all proxies received by them in such a manner in accordance with
cumulative voting as will assure the election of as many of the nominees listed
below as possible, and, in such event, the specific nominees to be voted for
will be determined by the proxy holders. The Company is not aware of any
nominee who will be unable or will decline to serve as a director. The term of
office of each person elected as a director will continue until the next Annual
Meeting of Stockholders or until his or her successor has been elected and
qualified.
Vote Required. The five nominees for director receiving the highest
number of affirmative votes of the shares present or represented and entitled
to be voted for them shall be elected as directors, whether or not such
affirmative votes constitute a majority of the shares voted. Votes withheld
from any director are counted for purposes of determining the presence or
absence of a quorum for the transaction of business, but have no other legal
effect under Delaware law.
Nominees. The names of the nominees, and certain information about
them, are set forth in the following table.
<TABLE>
<CAPTION>
Director
Name of Nominee Principal Occupation Since
--------------- -------------------- --------
<S> <C> <C>
Paul C. Ely, Jr. . . . . . . . . . . . Partner, Alpha Partners 1989
Pier Carlo Falotti . . . . . . . . . . President and Chief Executive Officer, The ASK 1992
Group
Robert N. Sharpe . . . . . . . . . . . Corporate Vice President, Electronic Data Systems 1991
Corporation
Thomas I. Unterberg . . . . . . . . . . Partner, Unterberg Harris 1980
Robert H. Waterman, Jr. . . . . . . . . Chairman, The Waterman Group, Inc. 1990
</TABLE>
The following is a summary of the principal occupations of each
nominee during the past five years. There is no family relationship between
any director or executive officer of the Company.
In September 1992, Mr. Falotti became President and Chief Executive
Officer of the Company. For more than 23 years before joining The ASK Group,
Mr. Falotti, 51, worked for Digital Equipment Corporation's European
operations, where he served for the last nine years as the President and Chief
Executive Officer of Digital Equipment Corporation International -- Europe, a
major computer manufacturer.
-6-
<PAGE> 7
Mr. Ely, 61, is a general partner of Alpha Partners, a venture capital
fund. From December 1988 until July 1989, Mr. Ely served as an Executive Vice
President and a director of Unisys Corporation, a computer manufacturer. Mr.
Ely served as the Chairman and Chief Executive Officer of Convergent, Inc., a
computer manufacturer, from October 1986 until it was acquired by Unisys in
December 1988. Mr. Ely is also a director of Parker Hannifin Corporation and
Tektronix Inc.
Mr. Sharpe, 49, is a Corporate Vice President of EDS and has served as
its Vice President, Business Development since October 1989. He has been
employed by EDS in various management capacities since 1972. Pursuant to the
Common Stock Purchase Agreement among ASK, EDS and Hewlett-Packard, Mr. Sharpe
is EDS' designee to ASK's Board of Directors.
Mr. Unterberg, 62, is a managing director of the investment banking
firm of Unterberg Harris. From January 1987 to January 1989, Mr. Unterberg was
an executive officer of the investment banking firm of Shearson Lehman Hutton
Inc. Mr. Unterberg is also a director of AES Corporation, Electronics for
Imaging, Inc., Systems and Computer Technology Corporation, Tandem Computers
Corporation, and Xyvision, Inc.
Mr. Waterman, 56, is the chairman of The Waterman Group, Inc., a
research, writing, consulting and venture management company he started in
1986. He is the co-author of In Search of Excellence, and is the author of The
Renewal Factor and Adhocracy: The Power to Change. Mr. Waterman also serves
on the boards of AES Corporation, Boise Cascade Corporation, Inc. and McKesson,
Inc.
BOARD AND COMMITTEE MEETINGS
The Board of Directors held a total of seven meetings and took one
action by unanimous written consent during the fiscal year ended June 30, 1993.
The Board of Directors has two committees: the Audit Committee and
the Compensation Committee. The Audit Committee of the Board of Directors
currently consists of Messrs. Ely, Sharpe and Unterberg. The Audit Committee
met twice during the fiscal year ended June 30, 1993. The Audit Committee
recommends engagement of the Company's independent accountants, and is
primarily responsible for approving the scope of the services performed by such
accountants, as well as reviewing and evaluating the Company's accounting
principles and its system of internal accounting controls. The Compensation
Committee of the Board of Directors, currently consisting of Messrs. Ely and
Waterman, held one meeting and took 13 actions by unanimous written consent
during the fiscal year ended June 30, 1993. The Compensation Committee grants
options and other benefits under the Company's stock plans and makes
recommendations to the Board of Directors regarding annual compensation levels
for each of the Company's executive officers.
No director served during the 1993 fiscal year attended fewer than 75%
of the aggregate number of meetings of the Board of Directors and of the
committees of the Board on which he served.
DIRECTOR COMPENSATION
Standard Fees: Directors who are not employees of the Company are
paid a fee of $1,500 per meeting attended and an annual retainer of $17,500
paid in quarterly installments.
-7-
<PAGE> 8
Deferred Compensation Plan for Directors: In August 1981, the Board
of Directors adopted the Deferred Compensation Plan for Directors. Pursuant to
this plan, directors' fees otherwise payable to a participating director are
placed in an account under the plan for such director. At the end of each
quarter, the amount in the director's account is converted into an equivalent
number of stock units based upon the fair market value of the Company's Common
Stock on the last business day of the quarter. Distributions of Common Stock
from the director's account to the director are generally to be made in ten
equal annual installments commencing within 60 days after the close of the
first fiscal year after the earliest of the date such person ceases to be a
director of the Company, the date such person retires or otherwise ceases to
engage in his or her principal occupation, or the date of termination of the
plan. At the election of the participant made at least six months prior to the
occurrence of an event triggering distribution, the participant may receive
distributions in five equal annual installments. Furthermore, the Company may
at its option make a single distribution and/or distribute cash representing
the fair market value of the Common Stock corresponding to the stock units in
the participant's account, in lieu of making a distribution of Common Stock.
The plan may at any time be amended or terminated by the Board of Directors,
but may not affect amounts previously credited to a participant's deferred
compensation account. As of September 27, 1993, there are 8,884 share units in
the account established under the plan for Mr. Unterberg.
1986 Director Option Plan. The Company's 1986 Director Option Plan
(the "1986 Plan") was adopted by the Board of Directors in October 1986 and was
approved by the stockholders of the Company at the 1987 Annual Meeting. A
total of 150,000 shares of Common Stock have been reserved for issuance
thereunder. The 1986 Plan generally provides that each director who is not
also an employee of the Company (a "Non- Employee Director") shall
automatically be granted an option to purchase 10,000 shares of the Company's
Common Stock when such Non-Employee Director first becomes a director of the
Company. At the time of adoption of the 1986 Plan, existing Non-Employee
Directors who had been directors continuously since January 1, 1986, received
options for 6,000 shares and other Non-Employee Directors received options to
purchase 10,000 shares. During each year following the initial grants
described above, each Non-Employee Director will automatically be granted an
additional option to purchase 3,000 shares under the 1986 Plan. The exercise
price of the options granted under the 1986 Plan is equal to the fair market
value of the Company's Common Stock on the date of grant. During the fiscal
year ended June 30, 1993, options covering 3,000 shares having an exercise
price of $12.875 were granted to each of Messrs. Ely, Sharpe, Unterberg and
Waterman under the 1986 Plan. Mr. Unterberg was the only director to exercise
options granted under the 1986 Plan during the fiscal year ended June 30, 1993
and he purchased 16,600 shares on such exercise with an aggregate Value
Realized of $245,738. The term "Value Realized" is the difference between the
fair market value of the Company's Common Stock on the date of exercise and the
exercise price. As of June 30, 1993, there were 52,200 shares covered by
options outstanding under the 1986 Plan held by four non-employee directors
with an average weighted exercise price of $7.9037 per share.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Directors Paul C. Ely, Jr. and Robert H. Waterman, Jr. are the two
present members of the Compensation Committee of the Company's Board of
Directors. Sandra L. Kurtzig was a member of the Compensation Committee from
June 1993 until her resignation as Chairman of the Company in September 1993.
During Ms. Kurtzig's tenure as a member of the Compensation Committee, no
matters came before the Committee regarding her compensation.
No interlocking relationship exists between the Company's Board of
Directors or Compensation Committee and the board of directors or compensation
committee of any other company.
-8-
<PAGE> 9
PROPOSAL NO. 2
RATIFICATION OF THE 1993 EMPLOYEE STOCK PURCHASE PLAN
In March 1993, the Board of Directors adopted the 1993 Employee Stock
Purchase Plan (the "1993 Plan") under which 500,000 shares of Common Stock were
reserved for issuance. The Plan took effect on June 1, 1993 and is designed to
replace the Company's 1990 Employee Stock Purchase Plan, which terminated on
May 31, 1993.
The Board of Directors believes that the 1993 Plan is important to
attract, motivate and retain domestic employees essential for the success of
the Company and its subsidiaries, particularly in an industry whose
participants continue to expand and develop innovative benefits programs. An
employee stock purchase plan is a common employee benefit program which all of
the Company's principal competitors offer to their respective employees and the
Board believes that the 1993 Plan, together with the other benefit programs the
Company offers it eligible employees, provides a competitive benefits program.
Vote Required: The affirmative vote of a majority of the Votes Cast
on this proposal is required to ratify the adoption of the 1993 Plan.
Summary of the Provisions of the 1993 Plan. The provisions of the
1993 Plan and the federal income tax consequences relating to the 1993 Plan are
summarized in Appendix A to this Proxy Statement.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE
"FOR" ADOPTION OF THE 1993 EMPLOYEE STOCK PURCHASE PLAN.
PROPOSAL NO. 3
APPROVAL OF INCREASE IN SHARES RESERVED UNDER THE 1991 STOCK PLAN
In August 1991, the Board of Directors adopted the 1991 Stock Plan
(the "1991 Plan"). The Company's stockholders approved the 1991 Plan in
November 1991. In July 1993, the Board amended the 1991 Plan to increase the
number of shares reserved for issuance thereunder by 1,200,000. The Board is
seeking stockholder approval of this increase.
Vote Required: The affirmative vote of a majority of the Votes Cast
on this proposal is required to ratify the increase in the shares reserved
under the 1991 Plan.
Summary of the Provisions of the 1991 Plan: Summaries of the
provisions of the 1991 Plan and of the federal income tax consequences relating
to the plan are set forth in Appendix B to this Proxy Statement.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE
"FOR" APPROVAL OF THE INCREASE TO THE SHARES RESERVED UNDER
THE 1991 STOCK PLAN.
-9-
<PAGE> 10
PROPOSAL NO. 4
APPROVAL OF AUTOMATIC ANNUAL INCREASE IN SHARES RESERVED
UNDER THE 1991 STOCK PLAN
The Board of Directors approved an amendment to the 1991 Plan in July
1993 by which the number of shares reserved for issuance under the 1991 Plan
will automatically increase on July 1 of each year commencing with July 1,
1996, by a number of shares equal to 4% of the Company's outstanding shares on
the immediately preceding June 30. All of the additional shares will be
eligible for issuance as incentive stock options, nonstatutory options or other
awards under the 1991 Plan.
The purpose of this amendment is to provide a mechanism to ensure the
availability of sufficient shares for options and other grants under the 1991
Plan in order to attract and retain qualified employees. The Board believes
that the share increase under Proposal No. 3, together with the shares
remaining available for grant under the 1991 Plan as of the date hereof, are
sufficient to cover the expected use of shares through fiscal 1996.
Summary of the Provisions of the 1991 Stock Plan: The essential
features of the 1991 Plan (other than the automatic increase which is the
subject of this Proposal No. 4) are set forth in Appendix B to this Proxy
Statement.
Vote Required: The affirmative vote of a majority of the Votes Cast
on this proposal is required to ratify the adoption of the 1993 Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE
"FOR" APPROVAL OF THE AUTOMATIC ANNUAL INCREASE IN THE
SHARE RESERVE UNDER THE 1991 STOCK PLAN.
PROPOSAL NO. 5
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young to act as its
independent auditors with respect to the financial statements of the Company
for the fiscal year ending June 30, 1994. Representatives of Ernst & Young are
expected to be present at the meeting with the opportunity to make a statement
if they desire to do so, and are expected to be available to respond to
appropriate questions.
The affirmative vote of the holders of a majority of the Votes Cast on
this proposal is required to ratify the appointment of Ernst & Young.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE
"FOR" THE APPOINTMENT OF ERNST & YOUNG AS INDEPENDENT AUDITORS.
-10-
<PAGE> 11
COMPENSATION OF EXECUTIVE OFFICERS
EXECUTIVE COMPENSATION
The Securities and Exchange Commission has promulgated new rules
significantly changing the disclosure requirements relating to executive
compensation since the Company's last proxy statement. Therefore, the
following tables and narrative description of executive compensation are
substantially different from those contained in the Company's previous proxy
statements.
The following table shows, as to the Chief Executive Officer and each
of the four other most highly compensated executive officers whose salary plus
bonus exceeded $100,000 in fiscal 1993, information concerning compensation
paid for services to the Company in all capacities during the fiscal year ended
June 30, 1993, as well as total compensation paid to each such individual for
the Company's two previous fiscal years (if such person was the Chief Executive
Officer or an executive officer, as the case may be, during any part of such
fiscal year). The principal positions are those held by the named individual
as a corporate officer of The ASK Group, Inc. on June 30, 1993.
SUMMARY COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
Annual Compensation Compensation
----------------------------------------- -------------------------
Other Annual Awards Restricted All Other
Name and Principal Position Year Salary($) Bonus($) Compensation($) Options(#) Stk($) Compensation($)
---------------------------- ---- --------- ---------- --------------- ---------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Pier Carlo Falotti . . . . 1993 $500,000 $100,000 $42,000(2) 250,000 $1,750,000(3) $861,500(4)
President and Chief
Executive Officer
Leslie E. Wright . . . . . 1993 $209,167 $ 0 N/A 30,000 N/A $ 1,500(5)
Executive Vice President 1992 $200,000 $ 0 -- 20,000 N/A --
and Chief Financial 1991 $186,875 $ 60,000 -- 50,000 N/A --
Administrative Officer
Eric D. Carlson . . . . . . 1993 $220,001 $ 0 $ 1,421 25,000 N/A $ 1,500(5)
Executive Vice President 1992 $200,000 $ 0 -- 20,000 N/A --
1991 $195,960 $ 60,000 -- 200,000(6) N/A --
Michael A. Laven . . . . . 1993 $198,000 $ 42,490 $34,490(7) 25,000 N/A $ 1,500(5)
Executive Vice President
David Sohm . . . . . . . . 1993 $148,000 $ 0 $57,498(8) 0 N/A $ 1,500(5)
Vice President 1992 $147,000 $ 0 -- 10,000 N/A --
1991 $134,167 $ 35,000 -- 27,500 N/A --
</TABLE>
(1) Information for fiscal 1992 and 1991 is excluded from the "Other
Annual Compensation" and "All Other Compensation" columns pursuant to
the SEC's transition rules.
(2) Other Annual Compensation represents reimbursements for automobiles
outside the Company's standard relocation policy as agreed to in Mr.
Falotti's offer of employment. See also "Management Transactions"
below.
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<PAGE> 12
(3) At June 30, 1993, Mr. Falotti held 175,000 shares of restricted stock
having a value of $1,881,250. Such shares vest in five equal annual
installments on the anniversary of the date of grant. Accordingly, of
such shares, 70,000 will vest in under three years from their date of
grant. Restricted stock is entitled to receive any dividends paid to
holders of Common Stock generally, which dividends are held in escrow
until the related shares vest. See also "Management Transactions"
below.
(4) "All Other Compensation" represents $1,500 in value of Common Stock
contributed by the Company pursuant to its 401(k) plan and $860,000 as
the aggregate amount the Company has agreed to provide Mr. Falotti
under his employment offer over the first five years of his employment
to partially cover the cost of obtaining certain disability and
retirement benefits similar to those provided him by his prior
employer and related taxes. See also "Management Transactions" below.
(5) Represents $1,500 in value of Common Stock contributed by the Company
pursuant to its 401(k) plan.
(6) Includes options to purchase 100,000 shares that were granted and
canceled in fiscal 1991 in connection with a regrant.
(7) Represents provisions of certain amounts and reimbursements of certain
expenses (including property management fees) outside the Company's
standard relocation policy in connection with Mr. Laven's relocation
in the U.S.
(8) Represents (i) $40,450 in reimbursements of certain mortgage payment
obligations of Mr. Sohm and his wife outside the Company's standard
relocation policy and (ii) tax reimbursement payments on his
relocation assistance.
The Company's 1991 Stock Plan provides for the grant of options to
employees and consultants of the Company. The following table shows, as to the
individuals named in the Summary Compensation Table above who were granted
options during the fiscal year ended June 30, 1993, information concerning
stock options granted during that fiscal year.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
------------------------------------------------------
% of Total
Options
Granted to POTENTIAL REALIZABLE VALUE AT ASSUMED
Employees Exercise ANNUAL RATES OF STOCK PRICE
Options in Fiscal Price Expiration APPRECIATION FOR OPTION TERM(2)
Name Granted (#) Year(3) ($/Sh)(4) Date 5%($) 10%($)
----------------------- ------------ ------------ ----------- ------------ ------------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Pier Carlo Falotti . . 250,000 24.8% 10,000 07/09/02 $1,572,250 $3,984,250
Leslie E. Wright . . . 30,000 3.0% 12,875 07/30/02 $ 242,911 $ 615,583
Eric D. Carlson . . . . 25,000 2.5% 12,875 07/30/02 $ 202,425 $ 512,986
Michael A. Laven . . . 25,000 2.5% 12,875 07/30/02 $ 202,425 $ 512,986
</TABLE>
(1) The material terms of the options described in this table are as
follows: The exercise price is determined by the Board of Directors
or its Compensation Committee (the "Administrator") and may not be
less than 100% of the fair market value of the Common Stock on the
date the option is granted. The term of the option is 10 years from
the grant date and may be exercised only while the optionee is an
employee or a consultant to the Company and for 30 days after
termination of the employment or consulting
-12-
<PAGE> 13
arrangement (six months or one year after termination if termination
is due to the optionee's permanent disability or death, respectively).
The option becomes exercisable as to 25% of the shares covered by the
option on the first anniversary of the grant date and as to the
balance in 36 monthly installments thereafter. The option becomes
fully vested and exercisable in the event of a "change of control",
unless the Administrator determines otherwise. A "change of control"
occurs if a person as defined in the Securities Exchange Act of 1934
becomes the direct or indirect beneficial owner of 50% or more of the
outstanding Common Stock or the stockholders approve the sale of all
or substantially all of the assets of the Company or the merger of the
Company with or into another corporation.
(2) The 5% and 10% assumed rates of appreciation are mandated by the rules
of the Securities and Exchange Commission and do not represent the
Company's estimate or projection of the future Common Stock price.
(3) Based on options to purchase an aggregate of 1,077,200 shares of
Common Stock granted during fiscal 1993 to all employees.
(4) The Administrator of the Option Plan has broad discretion to amend or
exchange outstanding options, including repricing options.
The following table shows, as to the individuals named in the Summary
Compensation Table above, information concerning stock options exercised during
the fiscal year ended June 30, 1993:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Shares Value of Unexercised
Acquired Value Number of Unexercised In-the-Money Options at
on Exercise Realized(1) Options at Fiscal Year-End(#) Fiscal Year-End($)(2):
------------- ------------ ----------------------------- ---------------------------
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
-------------------- ------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
0 N/A 0 250,000 $ 0 $187,500
Leslie E. Wright . . 29,000 $512,750 46,927 53,073 $238,960 $ 94,165
Eric D. Carlson . . 27,000 $396,563 42,688 60,312 $214,321 $165,304
Michael A. Laven . . 23,900 $421,112 11,724 51,464 $ 35,971 $ 81,271
David Sohm . . . . . 15,000 $166,250 64,271 13,229 $282,911 $ 36,933
</TABLE>
(1) Value realized is equal to the fair market value of the Company's
Common Stock on the date of exercise, minus the exercise price.
(2) Value of unexercised options is equal to the fair market value of the
Company's Common Stock at the end of fiscal 1993 ($10.75 per share)
minus the exercise price.
MANAGEMENT TRANSACTIONS
Pier Carlo Falotti: In June 1992, the Company gave Pier Carlo Falotti
an employment offer letter pursuant to which he would become the President and
Chief Executive Officer of The ASK Group. Until such time as Mr. Falotti
obtained U.S. work permits, he provided services as a consultant. Under the
employment arrangement, Mr. Falotti was to be paid as follows: $600,000 base
annual salary and a $200,000 bonus during his first year of employment (payable
$100,000 in fiscal 1993 on his first day of employment and $100,000) at the end
of his first year of employment which occurred in fiscal 1994);
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<PAGE> 14
minimum $800,000 base annual salary and bonus during his second year of
employment; and a minimum combined base annual salary and bonus of $700,000
during his third and subsequent years of employment.
Under the Company's 1991 Stock Plan, the Board granted Mr. Falotti
175,000 shares of the Company's Common Stock as a stock bonus award (the
"Restricted Shares") and options to purchase 250,000 shares of Common Stock.
The Restricted Shares vest in five equal annual installments on each of the
first five anniversary dates of the grant. The options have standard vesting;
i.e., they vest and become exercisable to the extent of 25% of the shares on
the first anniversary of the grant, with the balance vesting in 36 monthly
installments thereafter.
Mr. Falotti is entitled to participate in all of the Company's benefit
plans, including its employee stock purchase plan, medical programs and
relocation packages. In addition, the Company provided Mr. Falotti interim
housing and paid him $42,000 as a one-time automobile allowance. The Company
has also agreed to provide Mr. Falotti with a payment of $172,000 for each of
the first five years of his employment with The ASK Group toward the costs of
obtaining disability and retirement benefits similar to those provided under
his prior employer's defined benefit pension program and related taxes.
The Company also will pay Mr. Falotti an additional sum to reimburse
him for the additional U.S. and California income taxes incurred as a result of
the reimbursement of relocation expenses and the automobile allowance.
The Company has agreed that if Mr. Falotti's employment with the
Company (or a subsidiary of the Company) is terminated other than by his
voluntary resignation and other than within one year following a change of
Control, it will pay severance on regular pay dates at a rate based on the
average of the prior two years' annual base salary and incentive bonus (such
average referred to as the "Severance Base"). These severance payments will
continue from the date of such termination until the earlier of the date he
becomes reemployed or the following anniversaries of his employment termination
date: the third anniversary, if termination occurs during his first year of
employment; the second anniversary, if termination occurs during his second or
third year of employment; and the first anniversary, if the termination occurs
thereafter. If Mr. Falotti's employment is terminated within a year following
a Change of Control, the Company, or its successor, will pay him the Severance
Base. In addition, in the event of a Change of Control, the Restricted Shares
and the Stock Options will be fully vested on the date of the Change of
Control. A "Change of Control" for purposes of the arrangements with Mr.
Falotti, and for Messrs. Wright and Carlson described below, is defined as the
acquisition by a person or group of 50% or more of the Company's Common Stock
or a transaction requiring stockholder approval and involving either the sale
of all or substantially all of the assets of the Company or the merger of The
ASK Group with or into another company.
Leslie Wright: In November 1989, the Board agreed that all options
granted and to be granted to Mr. Wright would become fully exercise in the
event of a Change of Control.
Eric Carlson: Under the employment offer letter to Eric D. Carlson,
the Company has agreed to pay him the greater of six months' salary or the
severance amount then in effect for executive officers if termination occurs
other than following a Change of Control. If termination occurs within one
year following a Change of Control because the position is eliminated or the
officer's duties and responsibilities are significantly reduced, the officer
will receive twelve months' salary. If a Change of Control occurs, the stock
options granted Dr. Carlson will become fully vested and exercisable.
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<PAGE> 15
David Sohm: In Fiscal 1993, the Company paid Mr. Sohm $43,556 of
relocation expense reimbursement and resettlement allowances associated with
his move to Santa Rosa to manage the Company's Data 3 business unit; these
payments were in accordance with standard employee relocation policy. In
addition, the Company reimbursed Mr. Sohm $57,498 of certain mortgage payment
obligations of Mr. Sohm and his wife on the mortgage of his prior residence and
on a second mortgage on his new residence and of federal and state taxes
resulting from the relocation assistance. During fiscal 1993, the Company
stopped the reimbursement of those mortgage payments when it loaned Mr. Sohm
$375,000. Mr. Sohm used the proceeds of the loan to repay the second mortgage
on his new residence. The $375,000 loan, which bore interest at 5% and matured
no later than December 31, 1993, was repaid in full in April 1993 and Mr.
Sohm's prior residence was sold.
Sandra Kurtzig: In August 1992, the Board fully vested all stock
options granted to Ms. Kurtzig when she stepped down as the Company's president
and chief executive officer. At that time, the Board also agreed to provide to
Ms. kurtzig and her sons during her lifetime all medical, dental and vision
care benefits provided generally to employees of the Company. Ms. Kurtzig has
entered into a noncompete agreement with the Company for a two-year period
ending August 31, 1994. In September 1993, Ms. Kurtzig resigned from the Board
of Directors and relinquished her position as Chairman. In September 1993, the
Board agreed to provide Ms. Kurtzig at the Company's expense with a secretary
and an office at a mutually agreeable location for at least three years.
Dennis McGinn: Mr. McGinn was an executive officer of the Company
until his employment termination in June 1993. In connection with his
termination, the Company paid him six months' base salary and forgave the
balance of principal ($80,000) and accrued interest under a five- year $120,000
loan bearing interest at the rate of 8.5% made to him as part of the Company's
employment offer in December 1990. The largest amount outstanding under the
loan during fiscal 1993 was $80.000.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
During fiscal 1993, directors Ely and Waterman served on the
Compensation Committee of the Board of Directors (the "Committee"). Neither
were employees of the Company. Ms. Kurtzig served on the Committee from June
1993 until her resignation as Chairman of the Company in September 1993.
Acting under authority of the Board of Directors, the Committee is responsible
for:
. Determining compensation levels for the Company's chief
executive officer (CEO") and the other executive officers.
. Establishing the Company's general compensation policy for all
executive officers.
-15-
<PAGE> 1
Exhibit 4
AMENDMENT TO COMMON SHARES RIGHTS AGREEMENT
This Amendment (the "Amendment") is made effective as of May 18, 1994
to the Common Shares Rights Agreement (the "Agreement") dated as of August 15,
1990, as amended November 15, 1990, between ASK Group, Inc., a Delaware
corporation (the "Company"), and The First National Bank of Boston (the "Rights
Agent").
The Company has entered into an Agreement and Plan of Merger (the
"Merger Agreement") dated as of May 18, 1994 among the Company, Computer
Associates International, Inc., a Delaware corporation ("Parent") and Speedbird
Merge, Inc., a Delaware corporation ("Purchaser"), pursuant to which it is
proposed that Purchaser shall make a cash tender offer (the "Offer") to acquire
all of the issued and outstanding shares of Common Stock of the Company,
including the associated Common Stock purchase rights (the "Rights") issued
pursuant to the Agreement (all issued and outstanding shares of Common Stock of
the Company together with the Rights being referred to herein collectively as
the "Shares") for $13.25 per Share. In furtherance of such acquisition, the
Boards of Directors of Parent, Purchaser and the Company have each approved the
merger of Purchaser with and into the Company or, at the election of Purchaser
and Parent, the merger of the Company with and into Purchaser (the "Merger")
following consummation of the Offer.
<PAGE> 2
In connection with its approval of the Offer and the Merger, the
Company's Board of Directors, on May 18, 1994, authorized the taking of such
action by the Company as is necessary to make the provisions of the Agreement
inapplicable to the Offer, the Merger and the Stockholder Option Agreement,
dated as of May 18, 1994 among Purchaser and certain stockholders of the
Company with respect to 6,098,903 shares of Common Stock of the Company (the
"Stockholder Option Agreement"). Accordingly, the Company and the Rights Agent
desire to amend the Agreement as set forth herein in accordance with Section 27
of the Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby amend the Agreement and agree
as follows:
1. Amendment to Section 1(c). Section 1(c) of the Agreement is
hereby amended to add an additional paragraph immediately following
subparagraph (iii) thereof:
"Notwithstanding anything in this Section 1(c) to the
contrary, Parent, Purchaser and their Affiliates and Associates shall not be
deemed the "Beneficial Owner" of or to "beneficially own" pursuant to Sections
1(c)(i), 1(c)(ii), 1(c)(iii) above any securities which any of them may
acquire, or may have or be deemed to have the right to acquire or vote, or as a
result of any action taken, pursuant to or in compliance with, and on or after
the date of, the Merger Agreement and the Stockholder Option Agreement."
2. Amendment to Section 1(s). Section 1(s) of the Agreement is
hereby amended to add the following clause at the end thereof:
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", other than the Merger (as defined in the Merger Agreement)."
3. Amendment to Add Sections 1(y), 1(z), 1(aa) and (bb). Section
1 of the Agreement is hereby amended to add additional subsections (y), (z),
and (aa) to read in their entirety as follows:
"(y) "Merger Agreement" shall mean the Agreement
and Plan of Merger dated as of May 18, 1994 among Parent, Purchaser and the
Company, as the same may hereafter be amended.
(z) "Parent" shall mean Computer Associates
International, Inc., a Delaware corporation.
(aa) "Purchaser" shall mean Speedbird Merge,
Inc., a Delaware corporation and a wholly owned subsidiary of Parent."
(bb) "Stockholder Option Agreement" shall mean
the Stockholder Option Agreement dated as of May 18, 1994 among Purchaser and
certain stockholders of the Company with respect to 6,098,903 shares of
Common Stock of the Company, as the same may hereafter be amended.
4. Amendment to Add Section 13(g). Section 13 of the Agreement
is hereby amended to add additional subsection (g) to read in its entirety as
follows:
"(g) Notwithstanding anything in this Agreement to
the contrary, Section 13 shall not be applicable to the Merger
(as defined in the Merger Agreement). Upon consummation of
the Merger, all Rights hereunder shall expire."
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<PAGE> 4
5. Consent Required to Amend. As long as neither Parent nor
Purchaser is in material breach of the Merger Agreement and the Merger
Agreement has not been terminated in accordance with its terms, the provisions
of this Amendment and their substantive effect may not be amended or modified
without the consent of Parent and Merger Subsidiary.
6. Effect of Amendment. Except as expressly modified herein, the
Agreement shall remain in full force and effect.
7. Counterparts. This Amendment may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed, all as of the day and year first above written.
ASK GROUP, INC.
a Delaware corporation
By: ________________________________
Title: _____________________________
THE FIRST NATIONAL BANK OF BOSTON
By: ________________________________
Title: _____________________________
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<PAGE> 1
EXHIBIT 5
STOCKHOLDER OPTION AGREEMENT
AGREEMENT, dated as of May 18, 1994 among Speedbird Merge,
Inc., a Delaware corporation ("Buyer"), and the holders (the "Stockholders") of
the shares of common stock, $0.01 par value (the "Shares") of The ASK Group,
Inc., a Delaware corporation (the "Company"), listed on the signature pages
hereof.
In order to induce Buyer and certain of its affiliates to
enter into an agreement and plan of merger (the "Merger Agreement") with the
Company, Buyer has requested the Stockholders, and the Stockholders have
agreed, to enter into this Agreement.
The parties hereto agree as follows:
ARTICLE I
STOCK OPTION
SECTION 1.1. Grant of Stock Option. Each of the Stockholders
hereby grants to Buyer an irrevocable option (the "Option") to purchase all
Shares (including the associated Rights, as defined in Section 4.5 of the
Merger Agreement) presently owned by them as set forth on the signature pages
hereto and any additional Shares (including such associated Rights) acquired by
such Stockholder (whether by purchase or otherwise) after the date of this
Agreement (such "Stockholder's Shares" and, collectively, the "Stockholder
Shares") at a purchase price of $13.25 per Stockholder Share (including such
associated Rights) (as adjusted pursuant to Section 1.5, the "Purchase Price").
SECTION 1.2. Exercise of Option. (a) Subject to the
conditions set forth in Section 1.4 hereof, the Option may be exercised by
Buyer, in whole or in part, at any time or from time to time after the date
hereof and prior to the 30th business day after the termination of the Merger
Agreement in accordance with the terms thereof. In the event Buyer wishes to
exercise the Option for all or some of the Stockholder Shares other than
pursuant to the Offer (as defined in the Merger Agreement), Buyer shall send a
written notice (the "Exercise Notice") to the Stockholders specifying the total
number of Stockholder Shares it wishes to purchase pursuant to such exercise
(and the corresponding number of each such Stockholder's Shares) and the place,
the date (not less than one nor more than 20 business days from the date of the
Exercise Notice), and the time for the closing of such purchase, provided that
such date and time may be earlier than one day after the Exercise Notice if
reasonably practicable. Each closing of a purchase of Stockholder Shares
pursuant to this Section 1.2(a) (a "Closing") shall take place at the place, on
the date and at the time designated by Buyer in its Exercise Notice, provided
that if, at the date of the Closing herein provided for, the conditions set
forth in Section 1.4 shall not have been satisfied (or waived), Buyer may
postpone the Closing until a date within five business days after such
conditions are satisfied.
(b) Upon receipt of instructions from the Buyer, each
Stockholder shall deliver to the depositary (the "Depositary") designated in
the Offer (i) a letter of transmittal with respect to such
<PAGE> 2
Stockholder's Shares complying with the terms of the Offer together with
instructions directing the Depositary to make payment for such Shares
directly to the Stockholder (but if such Shares are not accepted for payment
and are to be returned pursuant to the Offer, to return such Shares to such
Stockholder whereupon they shall continue to be held by such Stockholder
subject to the terms and conditions of this Agreement), (ii) the Certificates
and (iii) all other documents or instruments required to be delivered pursuant
to the terms of the Offer (such documents in clauses (i) through (iii)
collectively being hereinafter referred to as the "Tender Documents").
(c) Each Stockholder will deliver (x) the Certificates to the
Buyer (in accordance with Buyer's instructions) upon receipt of the notice
provided for paragraph (a) above or (y) the Tender Documents to the Depositary
upon receipt of the instructions provided for in paragraph (b) above and will
not (without prior written notice to the Buyer) withdraw the tender effected
thereby, in each case in accordance with this Section 1.2. Any withdrawn
Shares shall continue to be held by such Stockholder subject to the terms and
conditions of this Agreement.
(d) Except to the extent otherwise provided in Section 1.2(e)
below, Buyer shall not be under any obligation to deliver any Exercise Notice
and may allow the Option to terminate without purchasing any Stockholder Shares
hereunder; provided however that once Buyer has delivered to the Stockholders
an Exercise Notice, subject to the terms and conditions of this Agreement,
Buyer shall be bound to effect the purchase as described in such Exercise
Notice.
(e) Buyer agrees that, if Buyer shall have accepted Shares for
payment and purchased Shares pursuant to the Offer, Buyer shall, within ten
business days of such purchase, exercise the Option in its entirety (or any
remaining portion of the Option). This paragraph (e) shall inure to the
benefit of the Company.
SECTION 1.3. Closing. At the Closing, (a) each Stockholder
shall deliver to Buyer (in accordance with Buyer's instructions) a certificate
or certificates (the "Certificates") representing such Stockholder's Shares,
duly endorsed or accompanied by stock powers duly executed in blank and (b)
Buyer shall deliver to such Stockholder a certified or bank cashier's check or
checks payable to or upon the order of such Stockholder in an amount equal to
(i) the number of such Stockholder's Shares being purchased at such Closing
multiplied by (ii) the Purchase Price (the "Purchase Amount").
SECTION 1.4. Conditions. The obligation of each Stockholder
to sell Stockholder Shares at any Closing is subject to the following
conditions:
(i) The representations and warranties of Buyer
contained in Article IV shall be true and correct in all material
respects on the date thereof as if made on such date.
(ii) All waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and
regulations promulgated thereunder (the "HSR Act") applicable to such
exercise of the Option shall have expired or been terminated.
(iii) There shall be no preliminary or permanent
injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or
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<PAGE> 3
administrative agency or commission, nor any statute, rule, regulation
or order promulgated or enacted by any governmental authority,
prohibiting or otherwise restraining such exercise of the Option.
(iv) The Buyer shall have commenced the Offer, the Buyer
shall not have materially breached any of its material covenants and
agreements in the Merger Agreement, and the Merger Agreement shall not
have been terminated.
(v) (A) A tender or exchange offer for any Shares shall
have been made or publicly proposed to be made by another person, (B)
it shall have been publicly disclosed (or Buyer shall have learned)
that any person, entity or group (as that term is used in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended) shall
have acquired or proposed to acquire more than 25% of the Shares, or
shall have granted any option or right, conditional or otherwise, to
acquire more than 25% of the Shares, other than acquisitions for bona
fide arbitrage purposes, or a group shall have been formed the members
of which hold in the aggregate more than 25% of the Shares, (C) any
person other than Buyer or an affiliate of Buyer has entered into an
agreement or an agreement in principle providing for a merger,
consolidation or other business combination with, or a purchase of all
or substantially all the assets of, the Company or of any subsidiary
or division of the Company the business of which could constitute a
"significant subsidiary" as that term is used in Rule 1.02 of
Regulation S-X of the Securities and Exchange Commission, (D) the
Board of Directors of the Company has failed to make, or has revoked
or modified, its unqualified recommendation in favor of the Offer and
the Merger or its approval of the entry by Buyer into this Agreement,
or (E) the Company has committed a material breach of any provision of
the Merger Agreement.
SECTION 1.5. Adjustment Upon Changes in Capitalization or
Merger. (a) In the event of any change in the Company's capital stock by
reason of stock dividends, stock splits, mergers, consolidations,
recapitalizations, combinations, conversions, exchanges of shares,
extraordinary or liquidating dividends, or other changes in the corporate or
capital structure of the Company which would have the effect of diluting or
changing the Buyer's rights hereunder, the number and kind of shares or
securities subject to the Option and the purchase price per Stockholder Share
(but not the total purchase price) shall be appropriately and equitably
adjusted so that the Buyer shall receive upon exercise of the Option the number
and class of shares or other securities or property that the Buyer would have
received in respect of the Stockholder Shares purchasable upon exercise of the
Option if the Option had been exercised immediately prior to such event. Each
Stockholder shall take such steps in connection with such consolidation,
merger, liquidation or other such action as may be necessary to assure that the
provisions hereof shall thereafter apply as nearly as possible to any
securities or property thereafter deliverable upon exercise of the Option.
(b) In the event the consideration per Share to be paid by
Buyer pursuant to the Offer is increased, the Purchase Price shall be similarly
increased and in the event the Closing hereunder shall have occurred, Buyer
shall promptly pay to each Stockholder the product of the amount of such
increase in the Purchase Price multiplied by the number of such Stockholder's
Shares as to which the Option has been exercised.
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<PAGE> 4
ARTICLE II
GRANT OF PROXY
Each Stockholder hereby revokes any and all previous proxies
granted with respect to such Stockholder's Shares. By entering into this
Agreement, each Stockholder hereby grants a proxy appointing Buyer as such
Stockholder's attorney-in-fact and proxy, with full power of substitution, for
and in such Stockholder's name, to vote, express consent or dissent, or
otherwise to utilize such voting power in such manner and upon such matters as
Buyer or its proxy or substitute shall, in Buyer's sole discretion, deem proper
with respect to such Stockholder's Shares. The proxy granted by each
Stockholder pursuant to this Article II is irrevocable and is granted in
consideration of Buyer's entering into this Agreement and the Merger Agreement;
provided, however, that such proxy shall be revoked upon termination of this
Agreement in accordance with its terms.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDERS
Each of the Stockholders severally represents and warrants to
the Buyer that:
SECTION 3.1. Valid Title. Such Stockholder is the sole, true,
lawful and beneficial owner of such Stockholder's Shares with no restrictions
on such Stockholder's voting rights or rights of disposition pertaining
thereto. At any Closing, such Stockholder will convey good and valid title to
such Stockholder's Shares being purchased free and clear of any and all claims,
liens, charges, encumbrances and security interests. None of such
Stockholder's Shares is subject to any voting trust or other agreement or
arrangement with respect to the voting of such Shares.
SECTION 3.2. Non-Contravention. The execution, delivery and
performance by such Stockholder of this Agreement and the consummation of the
transactions contemplated hereby (i) are within such Stockholder's powers, have
been duly authorized by all necessary action (including any consultation,
approval or other action by or with any other person), (ii) require no action
by or in respect of, or filing with, any governmental body, agency, official or
authority (except as required under the HSR Act), and (iii) do not and will not
contravene or constitute a default under, or give rise to a right of
termination, cancellation or acceleration of any right or obligation of such
Stockholder or to a loss of any benefit of such Stockholder under, any
provision of applicable law or regulation or of any agreement, judgment,
injunction, order, decree, or other instrument binding on such Stockholder or
result in the imposition of any lien on any asset of such Stockholder.
SECTION 3.3. Binding Effect. This Agreement has been duly
executed and delivered by such Stockholder and is the valid and binding
agreement of such Stockholder, enforceable against such Stockholder in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, moratorium or other similar laws relating to creditors' rights
generally. If this
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<PAGE> 5
Agreement is being executed in a representative or fiduciary capacity, the
person signing this Agreement has full power and authority to enter into and
perform such Agreement.
SECTION 3.4. Total Shares. Except as disclosed under Section
4.5 of the Company Disclosure Letter that accompanies the Merger Agreement, the
number of Shares set forth on the signature pages hereto are the only Shares
beneficially owned by such Stockholder and, except as set forth on such
signature pages, the beneficial owner or owners of such Stockholder's Shares
own no options to purchase or rights to subscribe for or otherwise acquire any
securities of the Company and has or have no other interest in or voting rights
with respect to any securities of the Company.
SECTION 3.5. Finder's Fees. No investment banker, broker or
finder is entitled to a commission or fee from Buyer or the Company in respect
of this Agreement based upon any arrangement or agreement made by or on behalf
of such Stockholder.
ARTICLE IV
REPRESENTATIONS AND
WARRANTIES OF BUYER
The Buyer represents and warrants to each of the Stockholders:
SECTION 4.1. Corporate Power and Authority. Buyer has all
requisite corporate power and authority to enter into this Agreement and to
perform its obligations hereunder. The execution, delivery and performance by
Buyer of this Agreement and the consummation by Buyer of the transactions
contemplated hereby have been duly authorized by the board of directors of
Buyer and no other corporate action on the part of Buyer is necessary to
authorize the execution, delivery or performance by Buyer of this Agreement and
the consummation by Buyer of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Buyer and is a valid and
binding agreement of Buyer, enforceable against it in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights generally.
SECTION 4.2. Acquisition for Buyer's Account. Any Stockholder
Shares to be acquired upon exercise of the Option will be acquired by Buyer for
its own account and not with a view to the public distribution thereof and will
not be transferred except in compliance with the Securities Act of 1933.
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<PAGE> 6
ARTICLE V
COVENANTS OF THE STOCKHOLDERS
Each of the Stockholders hereby covenants and agrees that:
SECTION 5.1. No Proxies for or Encumbrances on Stockholder
Shares. Except pursuant to the terms of this Agreement, such Stockholder shall
not, without the prior written consent of Buyer, directly or indirectly, (i)
grant any proxies or enter into any voting trust or other agreement or
arrangement with respect to the voting of any Shares or (ii) acquire, sell,
assign, transfer, encumber or otherwise dispose of, or enter into any contract,
option or other arrangement or understanding with respect to the direct or
indirect acquisition or sale, assignment, transfer, encumbrance or other
disposition of, any Shares during the term of this Agreement. Such Stockholder
shall not seek or solicit any such acquisition or sale, assignment, transfer,
encumbrance or other disposition or any such contract, option or other
arrangement or assignment or understanding and agrees to notify Buyer promptly
and to provide all details requested by Buyer if such Stockholder shall be
approached or solicited, directly or indirectly, by any person with respect to
any of the foregoing.
SECTION 5.2. No Shopping. Such Stockholder shall not directly
or indirectly (i) solicit, initiate or encourage (or authorize any person to
solicit, initiate or encourage) any inquiry, proposal or offer from any person
to acquire the business, property or capital stock of the Company or any direct
or indirect subsidiary thereof, or any acquisition of a substantial equity
interest in, or a substantial amount of the assets of, the Company or any
direct or indirect subsidiary thereof, whether by merger, purchase of assets,
tender offer or other transaction or (ii) subject to the fiduciary duty of such
Stockholder as a director of the Company under applicable law (if such
Stockholder is such a director), participate in any discussion or negotiations
regarding, or furnish to any other person any information with respect to, or
otherwise cooperate in any way with, or participate in, facilitate or encourage
any effort or attempt by any other person to do or seek any of the foregoing.
Such Stockholder shall promptly advise Buyer of the terms of any communications
it may receive relating to any of the foregoing.
SECTION 5.3. Conduct of Stockholders. Such Stockholder will
not (i) take, agree or commit to take any action that would make any
representation and warranty of such Stockholder hereunder inaccurate in any
respect as of any time prior to the termination of this Agreement 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 respect at any such
time.
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ARTICLE VI
MISCELLANEOUS
SECTION 6.1. Expenses. All costs and expenses incurred in
connection with this Agreement shall be paid by the party incurring such cost
or expense.
SECTION 6.2. Further Assurances. In the event the Buyer
exercises the Option, the Buyer and the Stockholders will each execute and
deliver or cause to be executed and delivered all further documents and
instruments and use its best efforts to secure such consents and take all such
further action as may be reasonably necessary in order to consummate the
transactions contemplated hereby or to enable the Buyer and any assignee to
exercise and enjoy all benefits and rights of the Stockholders with respect to
the Option and the Stockholder Shares.
SECTION 6.3. Additional Agreements. Subject to the terms and
conditions of this Agreement, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations and which may be required under any agreements, contracts,
commitments, instruments, understandings, arrangements or restrictions of any
kind to which such party is a party or by which such party is governed or
bound, to consummate and make effective the transactions contemplated by this
Agreement.
SECTION 6.4. Specific Performance. The parties hereto agree
that the Buyer may be irreparably damaged if for any reason any Stockholder
failed to sell such Stockholder's Shares (or other securities deliverable
pursuant to Section 1.5) upon exercise of the Option or to perform any of its
other obligations under this Agreement, and that the Buyer would not have an
adequate remedy at law for money damages in such event. Accordingly, the Buyer
shall be entitled to specific performance and injunctive and other equitable
relief to enforce the performance of this Agreement by each Stockholder. This
provision is without prejudice to any other rights that the Buyer may have
against any Stockholder for any failure to perform its obligations under this
Agreement.
SECTION 6.5. Notices. All notices, requests, claims, demands
and other communications hereunder shall be deemed to have been duly given when
delivered in person, by telecopy, or by registered or certified mail (postage
prepaid, return receipt requested) to such party at its address set forth on
the signature page hereto.
SECTION 6.6. Survival of Representations and Warranties. All
representations and warranties contained in this Agreement shall survive
delivery of and payment for the Stockholder Shares.
SECTION 6.7. Amendments; Termination. This Agreement may not
be modified, amended, altered or supplemented, except upon the execution and
delivery of a written agreement executed by the parties hereto. This Agreement
may be terminated by any of the parties hereto upon written notice to the other
parties hereto on or after the 30th business day after the termination of the
Merger Agreement in accordance with its terms.
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SECTION 6.8. 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 Buyer may assign its
rights and obligations to any affiliate of Buyer and provided, further, that no
Stockholder may assign, delegate or otherwise transfer any of its rights or
obligations under this Agreement without the consent of the Buyer.
SECTION 6.9. Governing Law. This Agreement shall be construed
in accordance with and governed by the law of New York without giving effect to
the principles of conflicts of laws thereof.
SECTION 6.10. 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. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by all of the other parties hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
<TABLE>
<S> <C> <C>
SPEEDBIRD MERGE, INC.
By /s/ Belden A. Frease
---------------------------
One Computer Associates Plaza
Islandia, NY 11788-7000
ELECTRONIC DATA SYSTEMS CORPORATION
Class of Shares
Stock Owned By /s/ Robert N. Sharpe
------- ------ ---------------------------
Vice President
common 4,008,535 7117 Forest Lane
Dallas, TX 75230
HEWLETT-PACKARD COMPANY
Class of Shares
Stock Owned By /s/ D. Craig Nordlund
------- ------ ---------------------------
Associate General Counsel
and Secretary
common 2,004,268 3000 Hanover Street
Palo Alto, CA 94304
THOMAS I. UNTERBERG
Class of Shares
Stock Owned /s/ Thomas I. Unterberg
------- ------ ------------------------------
common 0 c/o The ASK Group, Inc.
2880 Scott Boulevard
Santa Clara, CA 95052
</TABLE>
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<PAGE> 10
<TABLE>
<S> <C> <C>
ROBERT H. WATERMAN, JR.
Class of Shares
Stock Owned /s/ Robert H. Waterman, Jr.
------- ------ -----------------------------
common 6,000 c/o The ASK Group, Inc.
2880 Scott Boulevard
Santa Clara, CA 95052
PAUL C. ELY, JR.
Class of Shares
Stock Owned /s/ Paul C. Ely, Jr.
------- ------ -----------------------------
common 5,000 c/o The ASK Group, Inc.
2880 Scott Boulevard
Santa Clara, CA 95052
ERIC CARLSON
Class of Shares
Stock Owned /s/ Eric Carlson
------- ------ -----------------------------
common 10,000 c/o The ASK Group, Inc.
2880 Scott Boulevard
Santa Clara, CA 95052
</TABLE>
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<PAGE> 1
EXHIBIT 6
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is effective as of this
____day of , 199_ by and between The ASK Group, Inc., a Delaware corporation
(the "Company"), and ___________________________________ ("Indemnitee").
WHEREAS, the Company and Indemnitee recognize the continued difficulty
in obtaining directors' and officers' liability insurance, the significant
increases in the cost of such insurance and the general reductions in the
coverage of such insurance;
WHEREAS, the Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting officers and directors
to expensive litigation risks at the same time as the availability and coverage
of liability insurance has been severely limited;
WHEREAS, Indemnitee does not regard the current protection available
as adequate under the present circumstances, and the Indemnitee and other
officers and directors of the Company may not be willing to continue to serve
as officers and directors without additional protection;
WHEREAS, the Company desires to attract and retain the services of
highly qualified individuals, such as Indemnitee, to serve as officers and
directors of the Company and to indemnify its officers and directors so as to
provide them with the maximum protection permitted by law; and
WHEREAS, in view of the considerations set forth above, Indemnitee
shall be indemnified by the Company as set forth herein.
NOW THEREFORE, the Company and Indemnitee hereby agree as follows:
1. Indemnification.
(a) Third Party Proceedings. The Company shall indemnify
Indemnitee if Indemnitee was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the Company) by reason of the fact that Indemnitee is or was a
director, officer, employee or agent of the Company, or any subsidiary of the
Company, by reason of any action or inaction on the part of Indemnitee while
serving as a director, officer, employee or agent or by reason of the fact that
Indemnitee is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including attorneys' fees),
judgements, fines and amounts paid in settlement (if such settlement is
approved in advance by the Company, which approval shall not be unreasonably
withheld) actually and reasonably incurred by Indemnitee in connection with
such action, suit or proceeding, if Indemnitee acted in good faith and in a
manner Indemnitee reasonably believed to be in or not opposed to the best
interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe Indemnitee's conduct was
<PAGE> 2
unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that Indemnitee did not
act in good faith and in a manner which Indemnitee reasonably believed to be in
or not opposed to the best interests of the Company, or, with respect to any
criminal action or proceeding, that Indemnitee had reasonable cause to believe
that Indemnitee's conduct was unlawful.
(b) Proceedings by or in the Right of the Company. The Company
shall indemnify Indemnitee if Indemnitee was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Company or any subsidiary of the Company to procure a judgment
in its favor by reason of the fact that Indemnitee is or was a director,
officer, employee or agent of the Company, or any subsidiary of the Company, by
reason of any action or inaction on the part of Indemnitee while serving as a
director, officer, employee or agent, or by reason of the fact that Indemnitee
is or was serving at the request of the Company as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees) and, to the
fullest extent permitted by law, amounts paid in settlement, in each case to
the extent actually and reasonably incurred by Indemnitee in connection with
the defense or settlement of such action or suit, if Indemnitee acted in good
faith and in a manner Indemnitee reasonably believed to be in or not opposed to
the best interests of the Company, except that no indemnification shall be made
in respect of any claim, issue or matter as to which Indemnitee shall have been
adjudged to be liable to the Company unless and only to the extent that the
Court of Chancery of the State of Delaware or the court in which such action or
suit is brought shall determine upon application that, in view of all the
circumstances of the case, Indemnitee is fairly and reasonably entitled to
indemnity for expenses which the Court of Chancery of the State of Delaware or
such other court shall deem proper.
(c) Mandatory Payment of Expenses. To the extent that Indemnitee
has been successful on the merits or otherwise in defense of any action, suit
or proceeding referred to in Sections (1) (a) or (b) hereof or in the defense
of any claim, issue or matter therein, Indemnitee shall be indemnified against
expenses (including attorney's fees) actually and reasonably incurred by
Indemnitee in connection therewith.
2. Agreement to Serve. In consideration of the protection afforded
by this Agreement, if Indemnitee is a director of the Company, Indemnitee
agrees to serve at least for the balance of the current term as a director and
not to resign voluntarily during such period without the written consent of a
majority of the Board of Directors. In Indemnitee is an officer of the Company
not serving under under an employment contract, he agrees to serve in such
capacity at least for the balance of the current fiscal year of the Company and
not to resign voluntarily during such period without the written consent of a
majority of the Board of Directors. Following the applicable period set forth
above, Indemnitee agrees to continue to serve in such capacity at the will of
the Company (or under separate agreement, if such agreement exists) so long as
Indemnitee is duly appointed or elected and qualified in accordance with the
applicable provisions of the Bylaws of the Company or any subsidiary of the
Company or until such time as
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<PAGE> 3
Indemnitee tenders Indemnitee's resignation in writing. Nothing contained in
this Agreement is intended to create in Indemnitee any right to continued
employment.
3. Expenses; Indemnification Procedure.
(a) Advancement of Expenses. The Company shall advance all
expenses incurred by Indemnitee and to the fullest extent permitted by law,
amounts paid in settlement by Indemnitee in connection with the investigation,
defense, settlement or appeal of any civil or criminal action, suit or
proceeding referenced in Sections 1(a) or (b) hereof. Indemnitee hereby
undertakes to repay such amounts advanced only if, and to the extent that, it
shall ultimately be determined that Indemnitee is not entitled to be
indemnified by the Company as authorized hereby. The advances to be made
hereunder shall be paid by the Company to Indemnitee within twenty (20) days
following delivery of a written request therefor by Indemnitee to the Company.
(b) NOTICE/Cooperation by Indemnitee. Indemnitee shall, as a
condition precedent to his right to be indemnified under this Agreement, give
the Company notice in writing as soon as practicable of any claim made against
Indemnitee for which indemnification will or could be sought under this
Agreement. Notice to the Company shall be directed to the Chief Executive
Officer of the Company at the address shown on the signature page of this
Agreement (or such other address as the Company shall designate in writing to
Indemnitee). Notice shall be deemed received three business days after the
date postmarked if sent by domestic certified or registered mail, properly
addressed; otherwise notice shall be deemed received when such notice shall
actually be received by the Company. In addition, Indemnitee shall give the
Company such information and cooperation as it may reasonably require and as
shall be within Indemnitee's power.
(c) Procedure. Any Indemnification and advances provided for in
Section 1 and this Section 3 shall be made no later than forty-five (45) days
after receipt of the written request of Indemnitee. If a claim under this
Agreement, under any statute, or under any provision of the Company's
Certificate of Incorporation or Bylaws providing for indemnification, is not
paid in full by the Company within forty-five (45) days after a written request
for payment thereof has first been received by the Company, Indemnitee may, but
need not, at any time thereafter bring an action against the Company to recover
the unpaid amount of the claim and, subject to Section 13 of this Agreement,
Indemnitee shall also be entitled to be paid for the expenses (including
attorneys' fees) of bringing such action. It shall be a defense to any such
action (other than an action brought to enforce a claim for expenses incurred
in connection with any action, suit or proceeding in advance of its final
disposition) that Indemnitee has not met the standards of conduct which make it
permissible under applicable law for the Company to indemnify Indemnitee for
the amount claimed, but the burden of proving such defense shall be on the
Company and Indemnitee shall be entitled to receive interim payments of
expenses pursuant to Section 3(a) unless and until such defense may be finally
adjudicated by court order or judgment from which no further right of appeal
exists. It is the parties' intention that if the Company contests Indemnitee's
right to indemnification, the question of Indemnitee's right to indemnification
shall be for the court to decide, and neither the failure of the Company
(including its Board of Directors, any committee
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<PAGE> 4
or subgroup of the Board of Directors, independent legal counsel, or its
stockholders) to have made a determination that indemnification of Indemnitee
is proper in the circumstances because Indemnitee has met the applicable
standard of conduct required by applicable law, nor an actual determination by
the Company (including its Board of Directors, any committee or subgroup of the
Board of Directors, independent legal counsel, or its stockholders) that
Indemnitee has not met such applicable standard of conduct, shall create a
presumption that Indemnitee has or has not met the applicable standard of
conduct.
(d) Notice to Insurers. If, at the time of the receipt of a notice of
a claim pursuant to Section 3(b) hereof, the Company has officers' and
directors' liability insurance in effect, the Company shall give prompt notice
of the commencement of any action, suit or proceeding to the insurers in
accordance with the procedures set forth in the respective policies. The
Company shall thereafter take all necessary or desirable action to cause such
insurers to pay, on behalf of the Indemnitee, all amounts payable as a result
of such action, suit or proceeding in accordance with the terms of such
policies.
(e) Selection of Counsel. In the event the Company shall be obligated
under Section 3(a) hereof to pay the expenses of any action, suit or proceeding
against Indemnitee, the Company, if appropriate, shall be entitled to assume
the defense of such action, suit or proceeding, with counsel approved by
Indemnitee, upon the delivery to Indemnitee of written notice of its election
so to do. After delivery of such notice, approval of such counsel by
Indemnitee and the retention of such counsel by the Company, the Company will
not be liable to Indemnitee under this Agreement for any fees of counsel
subsequently incurred by Indemnitee with respect to the same action, suit or
proceeding, provided that (i) Indemnitee shall have the right to employ
Indemnitee's counsel in any such action, suit or proceeding at Indemnitee's
expense; and (ii) if (A) the employment of counsel by Indemnitee has been
previously authorized by the Company, (B) Indemnitee shall have reasonably
concluded that there may be a conflict of interest between the Company and
Indemnitee in the conduct of any such defense, or (C) the Company shall not, in
fact, have employed counsel to assume the defense of such action, suit or
proceeding, then the fees and expenses of Indemnitee's counsel shall be at the
expense of the Company.
4. Additional Indemnification Rights; Nonexclusivity.
(a) Scope. Notwithstanding any other provision of this Agreement,
the Company hereby agrees to indemnify the Indemnitee to the fullest extent
permitted by law, notwithstanding that such indemnification is not specifically
authorized by the other provisions of this Agreement, the Company's Certificate
of Incorporation, the Company's Bylaws or by statute. In the event of any
change after the date of this Agreement in any applicable law, statute or rule
which expands the right of a Delaware corporation to indemnify a member of its
board of directors or an officer, such change shall be, ipso facto, within the
purview of Indemnitee's rights and the Company's obligations under this
Agreement. In the event of any change in any applicable law, statute or rule
which narrows the right of a Delaware corporation to indemnify a member of its
board of directors or an officer, such change, to the extent not otherwise
required by such law, statute or rule to be applied to this Agreement, shall
have no effect on this Agreement or the parties' rights and obligations
hereunder.
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<PAGE> 5
(b) Nonexclusivity. The indemnification provided by this
Agreement shall not be deemed exclusive of any rights to which Indemnitee may
be entitled under the Company's Certificate of Incorporation, its Bylaws, any
agreement, any vote of stockholders or disinterested Directors, the General
Corporation Law of the State of Delaware, or otherwise, both as to action in
Indemnitee's official capacity and as to action in another capacity while
holding such office. The indemnification provided under this Agreement shall
continue as to Indemnitee for any action taken or not taken while serving in an
indemnified capacity even though Indemnitee may have ceased to serve in such
capacity at the time of any covered action, suit or proceeding.
5. Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses, judgments, fines or settlement payments actually or
reasonably incurred by him in the investigation, defense, appeal or settlement
of any civil or criminal action, suit or proceeding, but not, however, for the
total amount thereof, the Company shall nevertheless indemnify Indemnitee for
the portion of such expenses, judgments, fines or settlement payments to which
Indemnitee is entitled.
6. Mutual Acknowledgement. Both the Company and Indemnitee
acknowledge that in certain instances, Federal Law or applicable public policy
may prohibit the Company from indemnifying its directors and officers under
this Agreement or otherwise. Indemnitee understands and acknowledges that the
Company has undertaken or may be required in the future to undertake with the
Securities and Exchange Commission to submit the question of indemnification to
a court in certain circumstances for a determination of the Company's right
under public policy to indemnify Indemnitee.
7. Officers' and Directors' Liability Insurance. The Company shall,
from time to time, make the good faith determination whether or not it is
practicable for the Company to obtain and maintain a policy or policies of
insurance with reputable insurance companies providing the officers and
directors of the Company with coverage for losses from wrongful acts, or to
ensure the Company's performance of its indemnification obligations under this
Agreement. Among other considerations, the Company will weigh the costs of
obtaining such insurance coverage against the protection afforded by such
coverage. In all policies of officers' and directors' liability insurance,
Indemnitee shall be named as an insured in such a manner as to provide
Indemnitee the same rights and benefits as are accorded to the most favorably
insured of the Company's directors, if Indemnitee is a director; or of the
Company's officers, if Indemnitee is not a director of the Company but is an
officer; or of the Company's key employees, if Indemnitee is not an officer or
director but is a key employee. Notwithstanding the foregoing, the Company
shall have no obligation to obtain or maintain such insurance if the Company
determines in good faith that such insurance is not reasonably available, if
the premium costs for such insurance are disproportionate to the amount of
coverage provided, if the coverage provided by such insurance is limited by
exclusions so as to provide an insufficient benefit, or if Indemnitee is
covered by similar insurance maintained by a subsidiary or parent of the
Company.
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<PAGE> 6
8. Severability. Nothing in this Agreement is intended to require or
shall be construed as requiring the Company to do or fail to do any act in
violation of applicable law. The Company's inability, pursuant to court order,
to perform its obligations under this Agreement shall not constitute a breach
of this Agreement. The provisions of this Agreement shall be severable as
provided in this Section 8. If this Agreement or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Company shall nevertheless indemnify Indemnitee to the full extent permitted by
any applicable portion of this Agreement that shall not have been invalidated,
and the balance of this Agreement not so invalidated, and the balance of this
Agreement not so invalidated shall be enforceable in accordance with its terms.
9. Exceptions. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:
(a) Claims Initiated by Indemnitee. To indemnify or advance
expenses to Indemnitee with respect to proceedings or claims initiated or
brought voluntarily by Indemnitee and not by way of defense, except with
respect to proceedings brought to establish or enforce a right to
indemnification under this Agreement or any other statute or law or otherwise
as required under Section 145 of the Delaware General Corporation Law, but such
indemnification or advancement of expenses may be provided by the Company in
specific cases if the Board of Directors finds it appropriate; or
(b) Lack of Good Faith. To indemnify Indemnitee for any expenses
incurred by the Indemnitee with respect to any proceeding instituted by
Indemnitee to enforce or interpret this Agreement, if a court of competent
jurisdiction determines that each of the material assertions made by the
Indemnitee in such proceeding was not made in good faith or was frivolous; or
(c) Insured Claims. To indemnify Indemnitee for expenses or
liabilities of any type whatsoever (including, but not limited to, judgments,
fines, ERISA excise taxes or penalties, and amounts paid in settlement) which
have been paid directly to Indemnitee by an insurance carrier under a policy of
officers' and directors' liability insurance maintained by the Company; or
(d) Claims Under Section 16(b). To indemnify Indemnitee for
expenses and the payment of profits arising from the purchase and sale by
Indemnitee of securities in violation of Section 16(b) of the Securities
Exchange Act of 1934, as amended, or any similar successor statute.
10. Construction of Certain Phrases.
(a) For purposes of this Agreement, references to the "Company"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, employees or
agents, so that if Indemnitee is or was a director, officer, employee or agent
of such constituent corporation, or is or was serving at the request of such
constituent corporation as a director,
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<PAGE> 7
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, Indemnitee shall stand in the same position under
the provisions of this Agreement with respect to the resulting or surviving
corporation as Indemnitee would have with respect to such constituent
corporation if its separate existence had continued.
(b) For purposes of this Agreement, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on Indemnitee with respect to an employee
benefit plan; and references to "serving at the request of the Company" shall
include any service as a director, officer, employee or agent of the Company
which imposes duties on, or involves services by, such director, officer,
employee or agent with respect to an employee benefit plan, its participants or
its beneficiaries; and if Indemnitee acted in good faith and in a manner
Indemnitee reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan, Indemnitee shall be deemed to have
acted in a manner "not opposed to the best interests of the Company" as
referred to in this Agreement.
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.
12. Successors and Assigns. This Agreement shall be binding upon
the Company and its successors and assigns, and shall inure to the benefit of
Indemnitee and Indemnitee's estate, heirs, legal representatives and assigns.
13. Attorneys' Fees. In the event that any action is instituted
by Indemnitee under this Agreement to enforce or interpret any of the terms
hereof, Indemnitee shall be entitled to be paid all court costs and expenses,
including reasonable attorneys' fees, incurred by Indemnitee with respect to
such action, unless as a part of such action the court of competent
jurisdiction determines that each of the material assertions made by Indemnitee
as a basis for such action were not made in good faith or were frivolous. In
the event of an action instituted by or in the name of the Company under this
Agreement to enforce or interpret any of the terms of this Agreement,
Indemnitee shall be entitled to be paid all court costs and expenses, including
attorneys' fees, incurred by Indemnitee in defense of such action (including
costs and expenses incurred with respect to Indemnitee's counterclaims and
cross-claims made in such action), unless as a part of such action the court
determines that each of Indemnitee's material defenses to such action were made
in bad faith or were frivolous.
14. Notice. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and receipted for by the party addressee, on the date of such
receipt, or (ii) if mailed by domestic certified or registered mail with
postage prepaid, on the third business day after the date postmarked.
Addresses for notice to either party are as shown on the signature page of this
Agreement, or as subsequently modified by written notice.
15. Consent to Jurisdiction. The Company and Indemnitee each hereby
irrevocably consent to the jurisdiction of the courts of the State of
California for all purposes in connection with any action or proceeding which
arises out of or relates to this Agreement and agree
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<PAGE> 8
that any action instituted under this Agreement shall be brought only in the
state courts of the State of California.
16. Choice of Law. This Agreement shall be governed by and its
provisions construed in accordance with the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
THE ASK GROUP, INC. INDEMNITEE
By:________________________________ __________________________________
Signature
Printed: __________________________ __________________________________
Title: ____________________________ __________________________________
(Address)
Address: 2880 Scott Boulevard
Santa Clara, CA 95052-8013
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<PAGE> 1
Exhibit 7
ASK Group Telephone: 408-562-8200
Facsimile: 408-562-8282
The ASK Group, Inc.
2880 Scott Boulevard
P.O. Box 58013
Santa Clara, CA 95052-8013
March 3, 1994
Eric Carlson
109 Vista Del Campo
Los Gatos, CA 95032
Dear Eric:
Your contribution is essential to our success as we continue to work
to restore our business to profitability. To held ensure your focused
attention, we are pleased to tell you that you will participate in the
following Executive Retention Program. This program defines severance
eligibility, in termination situations where no Change of Control is involved,
as well as severance and Stock Option treatment where a "Change of Control" in
the ownership of the ASK Group, Inc. (the "ASK Group") occurs. This letter
will confirm and detail these arrangements. For the purposes of this letter
"Company" means the ASK Group or its subsidiary which employs you.
(a) Termination (No Change of Control). If your employment is terminated
for any reason other than Cause or voluntary resignation, you shall be
entitled to receive a severance payment from the Company in an amount
equal to six month's base salary. Health Care Benefits will continue
for the length of your severance period. Executive outplacement
service will also be provided.
For purposes of this Program "Cause" shall mean those items set out in
the Company's policies including, without limitation, your willful
misconduct, conviction of a felony, or repeated failure to diligently
carry out your employment duties, provided the Company has complied
with its usual and customary policies, procedures and practices
regulating employee discipline and termination.
(b) Change of Control. In the event of a Change of Control (defined
below), all unvested Stock Options and Restricted Stock (if any) will
become fully vested and exercisable. All Benefits will continue for
the length of your severance period. Executive outplacement service
will also be provided. In addition, if within one year of a Change of
Control (i) your position is terminated or (ii) your duties and
responsibilities are significantly reduced or (iii) your employment
terminates by mutual agreement, you shall be entitled to receive a
lump sum severance payment from the Company in an amount equal to one
year's salary; nine month's base salary if termination occurs during
the second year of employment; and six month's base salary after the
second year of employment.
<PAGE> 2
For this purpose, the term "Change of Control" of the ASK Group means
(i) the acquisition by any person or persons of 50% or more of the
ASK Group's Common Stock, or (ii) a transaction that requires
shareholder approval and involves the sale of all or substantially all
the assets of the ASK Group or the merger of the ASK Group with or
into another previously unaffiliated corporation.
(c) Severance. Any severance payment to which you become entitled under
Section (a) or (b) above (The "Severance Payment") will be subject to
applicable tax withholding and will be paid a lump sum. The Severance
Payment shall be in lieu of any further payments to you. The
Severance Payment may be subject to a U.S. excise tax (currently 20%)
or to a reduction in the minimum amount as the Company believes is
necessary to avoid such excise tax. Notwithstanding the foregoing,
the Severance Payment will not reduce or offset any benefits you may
be entitled to under the specific terms of any Company benefits plans
during the severance payment period.
(d) Successors. The Company will require any successor (whether direct or
indirect by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to
expressly assume and agree to perform the Company's obligations
hereunder in the same manner and to the same extent as if no such
succession had taken place.
(e) Entire Agreement. No agreements, representations or understandings
(whether oral or written and whether expressed or implied) which are
not expressly set forth in this letter have been made or entered into
by either party with respect to the subject matter hereof.
We are pleased to present you with this package. We know we can count on your
continued contribution and support.
Sincerely,
/s/ Scott Neely
____________________________________
Scott Neely
Vice President & General Counsel
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Exhibit 8
ASK Group Telephone: 408-562-8200
Facsimile: 408-562-8282
The ASK Group, Inc.
2880 Scott Boulevard
P.O. Box 58013
Santa Clara, CA 95052-8013
February 26, 1994
Eric D. Carlson
109 Vista Del Campo
Los Gatos, CA 95032
Dear Eric:
This will confirm the compensation arrangement recently agreed to by
the Board of Directors for you in your new role as president and chief
executive officer of The ASK Group, Inc. (the "Company").
1. ANNUAL BASE SALARY: Your annual base salary will continue to
be $225,000. This salary will be adjusted on the earlier of the date (i) the
executive staff salary cut instituted in February 1994 ends and (ii) your
fiscal 1995 base salary to be approved by the Company's Board of Directors or
Compensation Committee becomes effective.
2. INCENTIVE BONUS TARGET FOR CALENDAR 1994: Your target
incentive bonus for calendar 1994 will be $300,000 and will be payable as
follows:
(a) 50% if the Company is profitable for the quarter
ending June 30, 1994 and 50% if the Company is profitable for the 6 months
ending December 31, 1994. Profitability will be determined as $1.00 or more of
operating income determined in accordance with generally accepted accounting
principles;
(b) 100% if, during calendar 1994, your employment is
terminated other than for cause or voluntarily or if your employment is
terminated for any reason following a Change of Control;
Because the Board recognizes that the ability to meet operating income targets
can be negatively impacted by the sale of certain of its businesses and to
reflect the importance of certain aspects of the Company business to you, the
Board has agreed that 50% and 100% of the target incentive bonus will be earned
if, during calendar 1994 all or substantially all of the shares of stock or
assets of the entity or entities representing the INGRESS database,
connectivity and tools business or the MANMAN application software business,
respectively, are sold to a previously unaffiliated third party. The remaining
50% of the bonus would be earned as provided in 2(a) and (b) above.
<PAGE> 2
3. Stock Option Grant: You will be recommended for a grant of
stock options to purchase 250,000 shares of the Company's common stock. The
option will vest as follows: (i) in full on the fifth anniversary of the grant
date, or (ii) earlier based on the achievement of the same Company market
valuation and/or net income targets which serve as the basis for excelerating
the vesting of the options granted to Gary Filler in connection with his
joining the Company. The detailed provisions of the options will be contained
in related agreements to be sent to you following the option grant.
4. Change of Control: For purposes of this letter, a Change of
Control means (i) the acquisition by any person or persons of 50% or more of
the Company's common stock or (ii) a transaction that requires shareholder
approval and involves the sale of all or substantially all of the Company's
assets or the merger, consolidation or other combination of the ASK Group with
or into another previously unaffiliated entity.
The other terms of your employment shall be governed by your offer
letter, the Company's policies and procedures from time to time in effect and
such other agreements as from time to time may be made between you and the
Company and approved by the Board of Directors.
Sincerely,
/s/ Paul C. Ely
Paul C. Ely
Chairman
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Exhibit 9
AGREEMENT
AGREEMENT, dated May 18, 1994, between Eric D. Carlson (the
"Employee") and The ASK Group, Inc., a Delaware corporation, (the "Company")
(hereinafter the "Agreement").
To induce Computer Associates International, Inc. (the "Buyer") to
enter into certain agreements and transactions with the Company of even date,
the Employee and the Company agree, for the benefit of the Buyer, as follows:
1. In the event that any payment, property, or benefit received
or to be received by the Employee from the Company or from any corporation
which is a member of the Company's affiliated group (a "Related Corporation")
within the meaning of Section 280G(d)(5) of the Internal Revenue Code of 1986,
as amended (the "Code"), would (i) constitute a "parachute payment" within the
meaning of Section 280G of the Code and (ii) but for this Agreement, be subject
to the excise tax imposed by Section 4999 of the Code (the "Excise Tax"), then
such payment, property, or benefit (hereinafter collectively referred to as the
"Parachute Payments") shall be reduced or otherwise adjusted to the largest
amount that would result in no portion of the Parachute Payments being subject
to the Excise Tax. Such adjustment shall be determined, as set forth herein,
promptly after the signing of this Agreement, and the parties hereto shall use
their best efforts to ensure that such
<PAGE> 2
adjustment shall be made prior to any change in control of the Company.
2. If, notwithstanding the reduction or adjustment, if any,
described in Section 1 hereof, the Internal Revenue Service (the "IRS")
determines that the Employee is liable for the Excise Tax as a result of the
receipt of a Parachute Payment, then the Employee shall, subject to the
provisions of this Agreement, be obligated to pay to the Company (the
"Repayment Obligation") an amount of money equal to the "Repayment Amount."
The Repayment Amount with respect to a Parachute Payment shall be the smallest
amount, if any, as shall be required to be repaid to the Company so that the
Excise Tax imposed on such Parachute Payment shall be eliminated.
Notwithstanding the foregoing, the Repayment Amount with respect to a Parachute
Payment shall be zero if performance of the Repayment Obligation would not
eliminate the Excise Tax imposed on such Parachute Payment. If the Excise Tax
is not eliminated through the performance of the Repayment Obligation, the
Employee shall pay the Excise Tax. The Repayment Obligation shall be performed
within 90 days of either: (i) the Employee's entering into a binding agreement
with the IRS as to the amount of the Employee's Excise Tax liability or (ii) a
final determination by the IRS or a court decision requiring the Employee to
pay the Excise Tax with respect to such a Parachute Payment from which no
appeal is available or is timely taken. Except for the Employee's Repayment
Obligation, neither the Company nor any Related Corporation shall have any
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<PAGE> 3
claim against the Employee on account of a disallowance of any income tax
deduction on account of a Parachute Payment. The Employee shall have no claim
against the Buyer, the Company or any Related Corporation on account of any
Excise Tax imposed on the Employee.
3. Unless the Company and the Employee otherwise agree in
writing, the determination of (i) the amount of any required reduction or other
adjustment in a Parachute Payment pursuant to this Agreement, and (ii) the
amount of any Repayment Obligation shall be made in writing by Ernst & Young
whose determination shall be conclusive and binding upon the Employee, the
Company, and any Related Corporation for all purposes. Provided that Ernst &
Young determines that such choice is consistent with the elimination of any
Excise Tax on Parachute Payments, the Employee shall have the right to choose
which specific Parachute Payments shall be reduced or adjusted. The payor of a
Parachute Payment shall reduce or otherwise adjust a Parachute Payment in
accordance with this Agreement only upon written notice to the Employee
indicating such reduction or adjustment, if any, and (if applicable) enclosing
a copy of the written determination described in the immediately preceding
sentence. The Company and the Employee shall furnish to Ernst & Young such
information and documents as Ernst & Young reasonably requests in order to make
a determination under this Agreement.
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<PAGE> 4
4. This Agreement constitutes the entire agreement and
understanding among the parties hereto and supersedes any and all prior
agreements and understandings, oral or written, (including, without limitation,
any employee compensation, stock option, stock purchase, pension, or benefit
plan) relating to the subject matter hereof. 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.
This Agreement shall become effective upon its execution by each of the
Employee and the Company. This Agreement may be amended only by means of a
writing signed by both parties hereto and by the Buyer.
5. This Agreement is for the benefit of, and may be enforced by,
the Buyer.
-4-
<PAGE> 5
6. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
Employee:
/s/ Eric D. Carlson
________________________________ Date: _______________
Eric D. Carlson
The ASK Group, Inc.
/s/ Scott Neeley
________________________________ Date: _______________
Signature
Vice President & General Counsel
________________________________
Print Name and Title
-5-
<PAGE> 1
February 26, 1994 Exhibit 10
Mr. Gary Filler
45 Chestnut Place
Danville, CA 94506
Dear Gary:
I am pleased to confirm our offer to you for the position of Executive Vice
President, Operations and Chief Financial Officer reporting to me. Your
starting salary will be $215,000 per year. Your current base salary will
increase to $235,000 when the current Executive Salary Reduction program is
rescinded, which is currently anticipated to occur on 7/1 94. Pay periods are
semi-monthly. You will be eligible for a Bonus, at the rate of $50,000,
payable at the end of Q4 '94 and $50,000 at the end of 1H '95 based upon the
achievement of certain performance criteria to be determined by the Chairman
and CEO within two weeks of your start date. The Board will review your
compensation package at the beginning of FY '95, when other Executives are
reviewed as part of our Executive Salary Review Program.
You will be recommended for stock options covering 200,000 and 50,000 shares of
ASK Group common stock. The exercise price per share will be the closing price
of ASK Group common stock on the NASD National Market System on the date of
grant, which generally occurs within one month following your start date.
These stock options will vest as follow: (i) in full on the fifth
anniversary of the grant date or, (ii) earlier based on the achievement of
certain ASK Group market valuation and/or net income target which targets will
be established by the Board or its Compensation Committee at the time the
options are granted. Additionally, the 50,000 share option will not be
exercisable at all unless the ASK Group has $1.00 or more of Operating Income
(determined in accordance with GAAP) for the quarter ending June 30, 1994.
Annually, The ASK Group, Inc. has a Focal Option Review in which employees'
stock option positions are reviewed.
As long as your employment is not terminated due to a violation of Company
policies, or otherwise for cause, or due to your voluntary termination, you
will be entitled to receive payment equal to six months of your base salary, as
of your date of termination.
As an employee of the The ASK Group, Inc. you will participate in a benefits
program which includes Company paid medical, dental, vision and life insurance
for you. In addition, you will participate in a short-term disability program,
receive Company paid long-term disability insurance, ten days of vacation, and
ten days of sick leave per year. Detailed information regarding The ASK
Group's employee benefits including the application forms to join the programs
will be provided at your orientation.
<PAGE> 2
You are eligible to participate in the Company's 401(k) Plan as of your first
day of employment. This plan includes a Company matching contribution, which
is effective immediately upon enrollment. New employees with funds from
another qualified plan may roll these funds into The ASK Group 401(k) Plan (to
be sent under separate cover).
Your employment with The ASK Group, Inc. is contingent with your compliance
with the Federal Immigration Control and Reform Act of 1986. This act requires
that we, as an employer, verify the employment eligibility of all new employees
within your first three (3) days of employment with us.
A copy of The ASK Group's Proprietary Agreement will be sent to you for your
review and signature. Please return this with your offer letter.
In addition, an employee benefits brochure which highlights the many benefits
of working at The ASK Group, Inc., including a prospectus in our Employee Stock
Purchase Plan will be mailed to you.
This offer letter sets forth the entire agreement between you and The ASK
Group, Inc., concerning your employment. Neither you nor The ASK Group Inc.
shall be bound by any term or condition of your employment, other than as
expressly provided in this letter or in writing dated subsequent to the date of
this letter and signed by you and an officer of The ASK Group, Inc.. This
offer constitutes employment at-will, which may be terminated at any time by
you ar The ASK Group, Inc. for any reason , with or without cause. This offer
of employment is contingent upon your ability to provide satisfactory proof
that you are authorized for employment in the United States as required by
Federal Law.
Gary, I recognize this is an important decision for you in your career. I
believe that the position is an excellent opportunity for you, and we are
confident that The ASK Group will provide you with the challenges and
opportunities that you seek.
The enclosed copy of this letter is for your personal records. Should you have
any questions, please do not hesitate to call me or Ron Rudolph, Vice
President, Human Resources at 408-562-8750.
Sincerely,
/s/ Eric D. Carlson
Eric D. Carlson
President & Chief Executive Officer
I am pleased to accept this offer. I will report to work on 2/28/94.
/s/ Gary Filler
<PAGE> 1
Exhibit 11
Signature: /s/ Gary Filler Date: 3/28/94
--------------------------- ---------
March 3, 1994
Gary Filler
45 Chestnut Place
Black Hawk, CA 94506
Dear Gary:
Your contribution is essential to our success as we continue to restore our
business to profitability. To help ensure your focused attention, we are
pleased to tell you that you will participate in the following Executive
Retention Program. This program defines severance edibility, in termination
situations where no Change of Control is involved, as well as severance and
Stock Option treatment where a "Change of Control" in the ownership of the ASK
Group, Inc. ("the ASK Group") occurs. This letter will confirm and detail
these arrangements. For the purpose of this letter "Company" means the ASK
Group or its subsidiary which employs you.
(a) Termination (No Change of Control). If your employment is
terminated for any reason other than Cause or voluntary resignation, you shall
be entitled to receive a severance payment from the Company in an amount equal
to sic month's base salary. Health Care Benefits will continue for the length
of your severance period. Executive outplacement service will also be
provided.
For purposes of this program "Cause" shall mean those items set out in
the Company's policies including, without limitation, your willful misconduct,
conviction of a felony, or repeated failure to diligently carry out your
employment duties, provided the Company has complied with its usual and
customary policies, procedures and practices regulating employee discipline and
termination.
(b) Change of Control. In the event of a Change of Control (defined
below), all unvested Stock Options and Restricted Stock (if any) will become
fully vested and exercisable. All Benefits will continue for the length of
your severance period. Executive outplacement service will also be provided.
In addition, if within one year of a Change in Control (i) your position is
terminated or (ii) your duties and responsibilities are significantly reduced
of (iii) your employment terminates by mutual agreement, you shall be entitled
to receive a lump sum severance payment from the Company in an amount equal to
one year's salary; nine month's base salary if termination occurs during the
second year of employment; and six month's base salary after the second year of
employment.
<PAGE> 2
For this purpose, the term "Change of Control" of the ASK Group means (i) the
acquisition by any person or persons of 50% or more of the ASK Group's Common
Stock, or (ii) a transaction that requires shareholder approval and involves
the sale of all or substantially all the assets of the ASK Group or the merger
of the ASK Group with or into another previously unaffiliated corporation.
(c) Severance. Any severance payment to which you become entitled
under Section (a) or (b) above (the "Severance Payment") will be subject to
applicable tax withholding and will be paid as a lump sum. The Severance
Payment shall be in lieu of any further payments to you. The Severance Payment
may be subject to a U.S. excise tax (currently 20%) or to a reduction in the
minimum amount as the Company believes is necessary to avoid such excise tax.
Notwithstanding the foregoing, the Severance Payment will not reduce or offset
any benefits you may be entitled to under the specific terms of any Company
benefits plans during the severance payment.
(d) Successors. The Company will require any successor (whether
direct or indirect by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform the Company's obligations hereunder in the same
manner and to the same extent as if no such succession had taken place.
(e) Entire Agreement. No agreements, representations or
understandings (whether oral or written and whether expressed or implied) which
are not expressly set forth in this letter have been made or entered into by
either party with respect to the subject matter hereof.
We are pleased to present you with this package. We know we can continue on
your continued contribution and support.
Sincerely,
/s/ Eric D. Carlson
- ---------------------------------
Eric D. Carlson
President & CEO
<PAGE> 1
Exhibit 12
____________________________________
COMMON STOCK PURCHASE AGREEMENT
Dated as of August 31, 1990
Among
ASK COMPUTER SYSTEMS, INC.,
ELECTRONIC DATA SYSTEMS CORPORATION
and
HEWLETT-PACKARD COMPANY
___________________________________
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 1 - Initial Sale of Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
----------------------------
1.1 Sale of Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Legend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2 - Representations and Warranties of the Company . . . . . . . . . . . . . . . . . . 3
2.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4 No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.5 Accuracy of Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.6 Financial Statements and Changes . . . . . . . . . . . . . . . . . . . . . . 7
2.7 Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.8 Governmental Consent, etc . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.9 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.10 Amendment to Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3 - Representations and Warranties of the Purchasers . . . . . . . . . . . . . . . . . 10
3.1 Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.2 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.3 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.4 Government Consents, etc . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.5 Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.6 Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 4 - Conditions to Obligations of Purchasers . . . . . . . . . . . . . . . . . . . . . 13
4.1 Representations and Warranties Correct . . . . . . . . . . . . . . . . . . . 13
4.2 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.3 Opinion of Company's Counsel . . . . . . . . . . . . . . . . . . . . . . . . 13
4.4 No Order Pending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.5 HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.6 No Law Prohibiting or Restricting Such Sale . . . . . . . . . . . . . . . . . 14
4.7 Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.8 Notification Regarding Contingent Event . . . . . . . . . . . . . . . . . . . 15
SECTION 5 - Conditions to Obligations of Company . . . . . . . . . . . . . . . . . . . . . . . 15
5.1 Representations and Warranties Correct . . . . . . . . . . . . . . . . . . . 15
5.2 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.3 No Order Pending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C>
5.4 HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.5 No Law prohibiting or Restricting Such Sale . . . . . . . . . . . . . . . . . 16
5.6 Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 6 - Covenants of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.1 No Objection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.2 Notice of Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.3 Sale of Additional Shares. . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.4 Membership on the Board of Directors . . . . . . . . . . . . . . . . . . . . 18
6.5 Equity Method Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.6 Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 7 - Covenants of the Purchasers . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.1 Limitation on Ownership of Voting Stock . . . . . . . . . . . . . . . . . . . 23
7.2 Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.3 Voting Trust, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.4 Solicitation of Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.5 Acts in Concert with Others . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.6 Restrictions on Transfer of Voting Stock . . . . . . . . . . . . . . . . . . 27
7.7 Confidential Information . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.8 Right to Maintain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.9 Acquisition of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 8 - Company Right of First Refusal . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.1 Right of First Refusal . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.2 Tender Offer Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.3 Assignment of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 9 - Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.1 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.2 Termination of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.4 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.6 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.7 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.8 Entire Agreement; Amendment . . . . . . . . . . . . . . . . . . . . . . . . . 47
9.9 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
9.10 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
9.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
9.12 Injunctive Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
9.13 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
9.14 Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
9.15 No Third Party Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
9.16 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
</TABLE>
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<PAGE> 4
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
----
<S> <C>
Exhibits
A Registration Rights Agreement
B Opinion of Wilson, Sonsini, Goodrich & Rosati
C Company Compliance Certificate
D Purchaser's Compliance Certificate
</TABLE>
-iii-
<PAGE> 5
COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT (this "Agreement") is made as of
this 31st day of August, 1990, among ASK Computer Systems, Inc., a Delaware
corporation (the "Company"), and Electronic Data Systems Corporation, a Texas
corporation ("EDS" or "Purchaser"), and Hewlett-Packard Company, a California
corporation ("HP" or "Purchaser") (collectively, the "Purchasers").
SECTION 1
Initial Sale of Common Stock
1.1 Sale of Common Stock. Subject to the terms and conditions
hereof, the Company will issue and sell to EDS and HP, and EDS and HP will
purchase from the Company, at the Closing as defined below, 3,710,575 shares
(the "EDS Shares") and 1,855,288 shares (the "HP Shares"), respectively, of
Common Stock, $.01 par value, of the Company (the "Common Stock") for an
aggregate of 5,565,863 shares (the "Shares") at a purchase price of $10.78 per
share, for a purchase price of $39,999,998.50 for the EDS Shares and a purchase
price of $20,000,004.64 for the HP Shares, and an aggregate purchase price of
$60,000,003.14; provided, however, that if the notification to be delivered by
the Company to the Purchasers pursuant to Section 4.8 states that the
Contingent Event will not occur, (i) the Company shall have no obligation to
sell to HP, and HP shall have no obligation to purchase, the HP Shares, and
(ii) the Company shall have the obligation to sell to EDS, and EDS shall have
the right (but not the obligation) to purchase, up to one-half of the EDS
Shares, which right must be exercised (if at
<PAGE> 6
all) by written notice to the Company within sixty (60) days following the
Company's notification with respect to the Contingent Event. In the event EDS
provides such notice of exercise, the sale and purchase of shares contemplated
thereby shall take place no later than five (5) days following delivery of such
notice. For purposes of this Agreement, "EDS Shares" shall mean the number of
shares of Common Stock actually purchased by EDS under this Section 1.1.
1.2 Closing Date. The closing of the purchase and sale of the
Shares (the "Closing") shall be held at the law offices of Wilson, Sonsini,
Goodrich & Rosati, P.C., Two Palo Alto Square, Suite 900, Palo Alto, California
at 10:00 a.m. on the third business day following expiration or early
termination of all waiting periods imposed by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act") and satisfaction of all closing
conditions set forth in Sections 4 and 5 hereof or at such other time and place
upon which the Company and the Purchasers shall mutually agree (the date of the
Closing is hereinafter referred to as the "Closing Date").
1.3 Delivery. At the Closing, the Company will deliver to each of
the Purchasers a certificate or certificates representing that portion of the
Shares purchased by such Purchasers, against payment of the purchase price
therefor, by wire transfer in same day funds.
1.4 Legend. The certificate or certificates for the Shares shall
be subject to a legend restricting transfer under the Securi-
-2-
<PAGE> 7
ties Act of 1933, as amended (the "Securities Act"), and referring to
restrictions on transfer and rights of first refusal herein, such legend to be
substantially as follows:
"The shares represented by this certificate have been acquired
for investment and have not been registered under the Securities Act
of 1933. Such shares may not be sold or transferred in the absence of
such registration or an opinion of counsel satisfactory to the Company
as to the availability of an exemption from registration.
"The shares represented by this certificate are subject to
restrictions on transfer, including any sale, pledge or other
hypothecation, and rights of first refusal set forth in an agreement
dated as of August 31, 1990 among the Company and the other parties
identified therein, a copy of which agreement may be obtained at no
cost by written request made by the holder of record of this
certificate to the secretary of the Company at the Company's principal
executive offices."
SECTION 2
Representations and Warranties of the Company.
The Company hereby represents and warrants to each of the Purchasers
as follows:
2.1 Organization. The Company is a corporation duly organized and
validly existing under the laws of the State of Delaware and is in good
standing under such laws. The Company has all requisite corporate power and
authority to own, lease and operate its properties and assets, and to carry on
its business as presently conducted and as proposed to be conducted. The
Company is qualified to do business as a foreign corporation in each
jurisdiction in which the ownership of its property or the nature of its
business requires such qualification, except where failure to so qualify would
not have a material adverse effect on the Company. The Company has furnished
to the Purchasers true and correct copies
-3-
<PAGE> 8
of its Certificate of Incorporation and By-laws, as amended, and will furnish
upon request to the Purchasers true and correct copies of any amendments
thereto through the term of this Agreement.
2.2 Capitalization. The authorized capital stock of the Company
consists of 40,000,000 shares of Common Stock, $.01 par value, of which at
August 23, 1990, 13,274,107 shares were issued and outstanding. All such
issued and outstanding shares have been duly authorized and validly issued and
are fully paid and nonassessable. As of August 23, 1990, the Company has
reserved a total of 3,152,537 shares of its Common Stock for issuance under its
1982 Incentive Stock Option Plan, of which 2,868,139 shares are reserved for
issuance upon exercise of outstanding options; a total of 149,400 shares for
issuance under its 1986 Director Option Plan, of which 68,600 shares are
reserved for issuance upon exercise of outstanding options; a total of 250,000
shares for issuance under its 1990 Employee Stock Purchase Plan; and a total of
6,314 shares for issuance under its 1981 Deferred Compensation Plan for
Directors. On August 14, 1990, the Company entered into a Common Shares Rights
Agreement (the "Rights Agreement") with The First National Bank of Boston, and
has announced the distribution of rights under the Rights Agreement to all
stockholders of record as of August 31, 1990. Except as provided or described
in this Agreement, there are no other options, warrants, conversion privileges
or other contractual rights presently outstanding to purchase or otherwise
acquire any authorized but unissued shares of the Company's capital stock or
other securities.
-4-
<PAGE> 9
2.3 Authorization. The Company has all corporate right, power and
authority to enter into this Agreement and the Registration Rights Agreement
set forth in Exhibit A hereto and to consummate the transactions contemplated
hereby and thereby. All corporate action on the part of the Company, its
directors and stockholders (other than stockholder approval, if required, under
the requirements of the National Association of Securities Dealers, Inc. (the
"NASD") for the issuance of the Shares where the only effect of the failure to
obtain stockholder approval is a loss of status of the Voting Stock as a
National Market System-designated security) necessary for the authorization,
execution, delivery and performance of this Agreement and the Registration
Rights Agreement by the Company, the authorization, sale, issuance and delivery
of the Shares and the performance of the Company's obligations hereunder and
under the Registration Rights Agreement has been taken. This Agreement and the
Registration Rights Agreement have been duly executed and delivered by the
Company and constitute legal, valid and binding obligations of the Company
enforceable in accordance with their respective terms, subject to laws of
general application relating to bankruptcy, insolvency and the relief of
debtors and rules of law governing specific performance, injunctive relief or
other equitable remedies, and to limitations of public policy as they may apply
to Section 4 of the Registration Rights Agreement. Upon their issuance and
delivery pursuant to this Agreement, the Shares will be validly issued, fully
paid and nonassessable. The issuance and sale of the Shares will not give rise
to any preemp-
-5-
<PAGE> 10
tive rights or rights of first refusal on behalf of any person in existence
either on the date hereof or immediately prior to the Closing.
2.4 No Conflict. Subject to compliance with the HSR Act, and
except for the failure to obtain stockholder approval, if required, of the
issuance of the Shares in accordance with the policies of the NASD, the
execution and delivery of this Agreement and the Registration Rights Agreement
do not, and the consummation of the transactions contemplated hereby and
thereby will not, conflict with, or result in any violation of, or default
(with or without notice or lapse of time, or both), or give rise to a right of
termination, cancellation or acceleration of any obligation or to a loss of a
material benefit, under, any provision of the Certificate of Incorporation or
By-laws of the Company or any mortgage, indenture, lease or other agreement or
instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to the Company, its
properties or assets, the effect of which would have a material adverse effect
on the Company or materially impair or restrict its power to perform its
obligations as contemplated hereby or thereby.
2.5 Accuracy of Reports. All reports (the "SEC Reports") required
to be filed by the Company during the period from June 30, 1989 to the date of
this Agreement under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), copies of which have been furnished to the Purchasers, have
been duly filed, were in substantial compliance with the requirements of their
respective
-6-
<PAGE> 11
forms, were complete and correct in all material respects as of the dates at
which the information was furnished, and none contained (as of such dates) any
untrue statement of a material fact nor omitted to state a material fact
necessary in order to make the statements made therein, in light of the
circumstances in which made, not misleading.
2.6 Financial Statements and Changes. The Company has delivered
to the Purchasers consolidated balance sheets as of June 30, 1989 and 1990 and
the related statements of operations, stockholders' equity and changes in
financial position and notes thereto for the fiscal years ended on June 30,
1988, 1989 and 1990, all of which are accompanied by the related audit opinion
of the Company's independent certified public accountants, Ernst & Young (or
its predecessor) (collectively, the "Financial Statements"). The Financial
Statements, with the notes thereto, have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the fiscal years covered by such statements (except as may be stated
in the notes to such statements or the related report of independent
accountants) and present fairly the Company's financial condition and results
of operations and changes in financial position as of the dates and for the
fiscal years indicated. Except as otherwise disclosed herein, in the Financial
Statements or in the SEC Reports, since June 30, 1990, there has not been:
(a) any change in the assets, liabilities, financial
condition or operations of the Company from that reflected in the
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Financial Statements except changes in the ordinary course of business which
have not been, either in any individual case or in the aggregate, materially
adverse;
(b) any change, except in the ordinary course of
business, in the contingent obligations of the Company, whether by way of
guaranty, endorsement, indemnity, warranty or otherwise;
(c) any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the properties or
business of the Company;
(d) any declaration or payment of any dividend (other
than the rights distribution described in Section 2.2 hereof) or other
distribution of the assets of the Company;
(e) any labor organization activity; or
(f) to the best of the Company's knowledge, any other
event or condition of any character which has materially and adversely affected
the Company's assets, liabilities, financial condition or operations.
2.7 Registration Rights. Except as set forth in this Agreement or
the Registration Rights Agreement, and except for the continuing practice of
the Company to register its employee stock plans on Form S-8, the Company is
not under any obligation to register any of its presently outstanding
securities or any of its securities which may hereafter be issued.
2.8 Governmental Consent, etc. No consent, approval or
authorization of or designation, declaration or filing with any governmental
authority on the part of the Company is required in
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connection with the valid execution and delivery of this Agreement, or the
offer, sale or issuance of the Shares, or the consummation of any other
transaction contemplated hereby, except the filing of such forms with the
United States Department of Justice and the Federal Trade Commission as shall
be required by the HSR Act and the expiration of any waiting periods thereunder
and such filings as may be required to be made with the Securities and Exchange
Commission ("SEC") and the NASD and filings, if any, to be made in compliance
with applicable blue sky requirements.
2.9 Disclosure. No representation or warranty of the Company
contained in this Agreement or the exhibits attached hereto (when read together
and taken as a whole) contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements contained
herein or therein, in light of the circumstances under which they were made,
not misleading.
2.10 Amendment to Rights Agreement. All action required under the
Rights Agreement to amend the Rights Agreement has been taken (or will have
been taken prior to the Closing) so that the issuance of the Shares shall not
cause either of the Purchasers to become an "Acquiring Person" or cause a
"Shares Acquisition Date", "Distribution Date" or "Triggering Event" to occur
(each as defined in the Rights Agreement).
SECTION 3
Representations and Warranties of the Purchasers
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Each of the Purchasers hereby represents and warrants to the Company,
as to itself alone and not jointly with the other Purchaser, as follows:
3.1 Investment. The Purchaser will acquire the Shares and any
other shares purchased from the Company pursuant to this Agreement for
investment for its own account, not as a nominee or agent, and not with a view
to, or for resale in connection with, any distribution thereof. Purchaser
understands that the Shares and any other shares purchased by it from the
Company pursuant to this Agreement have not been, and will not be, registered
(unless sold in connection with a public offering by the Company) under the
Securities Act by reason of a specific exemption from the registration
provisions of the Securities Act which depends upon, among other things, the
bona fide nature of the Purchaser's investment intent and the accuracy of the
Purchaser's representations as expressed herein.
3.2 Organization. The Purchaser is a corporation duly organized
and validly existing and in good standing under the laws of the state of its
incorporation, with all requisite corporate power and authority to own, lease
and operate its properties and assets and to carry on its business as presently
conducted and as proposed to be conducted.
3.3 Authority. The Purchaser has all corporate right, power and
authority to enter into this Agreement and the Registration Rights Agreement
and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement
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and the Registration Rights Agreement by the Purchaser and the consummation by
the Purchaser of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate action on behalf of the Purchaser.
This Agreement and the Registration Rights Agreement have been duly executed
and delivered by the Purchaser and constitute legal, valid and binding
obligations of the Purchaser, enforceable in accordance with their respective
terms, subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and rules of law governing specific
performance, injunctive relief or other equitable remedies, and to limitations
of public policy as they may apply to Section 4 of the Registration Rights
Agreement. Subject to compliance with the HSR Act and such filings as may be
required to be made with the SEC and any exchange or quotation system on which
the Purchaser's securities are listed or designated, the execution and delivery
of this Agreement and the Registration Rights Agreement do not, and the
consummation of the transactions contemplated hereby and thereby will not,
conflict with or result in any violation of any obligation under any provision
of the Certificate or Articles of Incorporation or By-laws of the Purchaser or
any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Purchaser.
3.4 Government Consents, etc. No consent, approval or
authorization of or designation, declaration or filing with any governmental
authority on the part of the Purchaser is required in connection with the valid
execution and delivery of this Agreement,
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or the offer, sale or issuance of the Shares or the consummation of any other
transaction contemplated hereby, except the filing of such forms with the
United States Department of Justice and the Federal Trade Commission as shall
be required by the HSR Act and the expiration of any waiting periods thereunder
and such filings as may be required to be made with the SEC and any exchange or
quotation system on which the Purchaser's securities are listed or principally
traded.
3.5 Investigation. The Purchaser has had a reasonable opportunity
to discuss the Company's business, management and financial affairs with the
Company's management and the Purchaser has received satisfactory responses from
management of the Company to the Purchaser's inquiries.
3.6 Financing. The Purchaser has the funds, or has written
commitments from responsible financial institutions, to provide the Company
with the funds necessary to consummate the transactions to occur at the
Closing.
SECTION 4
Conditions to Obligations of Purchasers
The obligation of each Purchaser to purchase its portion of the Shares
at the Closing is subject to the fulfillment on or prior to the Closing Date of
the following conditions, any or all of which may be waived at the option of
such Purchaser:
4.1 Representations and Warranties Correct. The representations
and warranties made by the Company in Section 2 hereof shall be true and
correct in all material respects when made, and shall
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<PAGE> 17
be true and correct in all material respects on the Closing Date with the same
force and effect as if they had been made on and as of said date.
4.2 Covenants. All covenants, agreements and conditions contained
in this Agreement to be performed by the Company on or prior to the Closing
Date shall have been performed or complied with in all material respects.
4.3 Opinion of Company's Counsel. Each of the Purchasers shall
have received from Wilson, Sonsini, Goodrich & Rosati, P.C., counsel to the
Company, an opinion addressed to it, dated the Closing Date, in substantially
the form of Exhibit B.
4.4 No Order Pending. There shall not then be in effect any order
enjoining or restraining the transactions contemplated by this Agreement.
4.5 HSR Act. The Purchasers and the Company shall have filed such
forms with the United States Department of Justice and the Federal Trade
Commission as shall be required by the HSR Act and the applicable waiting
periods under such HSR Act shall have expired without notice from such
governmental agencies that additional inquiries are being made.
4.6 No Law Prohibiting or Restricting Such Sale. There shall not
be in effect any law, rule or regulation prohibiting or restricting such sale,
or requiring any consent or approval of any person which shall not have been
obtained to issue the Shares (except as otherwise provided in this Agreement).
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4.7 Compliance Certificate. The Company shall have delivered to
each of the Purchasers a certificate in the form of Exhibit C hereto, executed
on behalf of the Company by the Chief Executive Officer of the Company, dated
the Closing Date, and certifying to the fulfillment of the conditions specified
in Sections 4.1 and 4.2.
4.8 Notification Regarding Contingent Event. The Company shall
have provided written notice to each of the Purchasers stating that the
Contingent Event either will or will not occur.
SECTION 5
Conditions to Obligations of Company
The Company's obligation to sell and issue the Shares at the Closing
is subject to the fulfillment on or prior to the Closing Date of the following
conditions, any or all of which may be waived at the option of the Company:
5.1 Representations and Warranties Correct. The representations
and warranties made by the Purchasers in Section 3 hereof shall be true and
correct in all material respects when made, and shall be true and correct in
all material respects on the Closing Date with the same force and effect as if
they had been made on and as of said date.
5.2 Covenants. All covenants, agreements and conditions contained
in this Agreement to be performed by the Purchasers on or prior to the Closing
Date shall have been performed or complied with in all material respects.
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5.3 No Order Pending. There shall not then be in effect any order
enjoining or restraining the transactions contemplated by this Agreement.
5.4 HSR Act. The Purchasers and the Company shall have filed such
forms with the United States Department of Justice and the Federal Trade
Commission as shall be required by the HSR Act and the applicable waiting
periods under such HSR Act shall have expired without notice from such
governmental agencies that additional inquiries are being made.
5.5 No Law prohibiting or Restricting Such Sale. There shall not
be in effect any law, rule or regulation prohibiting or restricting such sale,
or requiring any consent or approval of any person which shall not have been
obtained to issue the Shares (except as otherwise provided in this Agreement).
5.6 Compliance Certificate. Each of the Purchasers shall have
delivered to the Company a certificate in the form of Exhibit D hereto,
executed on behalf of each of the Purchasers by a Vice President of such
Purchaser, dated the Closing Date, and certifying to the fulfillment of the
conditions specified in Section 5.1 and 5.2 of this Agreement.
SECTION 6
Covenants of the Company
Until the termination of this Agreement in accordance with Section 9.2
hereof or the particular covenant, as the case may be:
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6.1 No Objection. In the case of either Purchaser, provided the
Purchaser is in compliance with and has performed all covenants, agreements and
conditions contained in this Agreement to be performed by the Purchaser, the
Company shall not interpose any objection or take any legal action as a
plaintiff in connection with the acquisition by the Purchaser of such number of
shares of Common Stock as is permitted to be owned by the Purchaser pursuant to
this Agreement.
6.2 Notice of Acquisition.
(a) The Company shall give the Purchasers prompt notice
of the receipt by the Company of (i) any written notice from any person or
group couched in such terms as to put the Company reasonably on notice of the
likelihood that such person or group has acquired or is proposing to acquire
any shares of Voting Stock which results in, or, if successful, would result
in, such person or group owning or having the right to acquire more than 5% of
the Total Voting Power of the Company, (ii) any notice under the HSR Act, and
(iii) any statement on Schedule 13D or Schedule 14D-1 (or any successor
schedule or form to such schedules) under the Exchange Act.
(b) In the event the Company should engage or propose to
engage in any significant discussions of any proposed offer from any person
relating to any merger, consolidation or acquisition involving the sale or
transfer of all or substantially all of the assets of, or any substantial
equity interest in, the Company, the Company will advise the Purchaser of such
discussions at the
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earliest opportunity, but only to the extent the giving of such advice, in the
opinion of legal counsel to the Company, is not inconsistent with the fiduciary
obligations of the Company's Board of Directors.
6.3 Sale of Additional Shares. The Company shall take such action
as is reasonably necessary, subject to compliance with applicable law, to issue
and sell to the Purchasers any additional shares which the Purchasers shall be
entitled to purchase from the Company pursuant to this Agreement.
6.4 Membership on the Board of Directors.
(a) Upon the Closing of the transactions contemplated
hereby, the Company shall permit each of the Purchasers, upon its request, to
have an observer designated by the Purchaser, reasonably satisfactory to the
Company, present at all meetings of the Company's Board of Directors, including
any meetings of any committee designated by the Board. The Company's
obligation to so permit an observer designated by a Purchaser shall terminate
if such Purchaser's percentage interest in the Total Voting Power of the
Company, after adjustment for the exercise, or failure to exercise, of the
right to maintain by such Purchaser pursuant to Section 7.8 below (except in
the event of a delaying notice pursuant to Section 7.8(e)), is less than 5%
(even if such Purchaser's percentage interest should subsequently increase for
any reason to 5% or more). A Purchaser may not exercise its right to
representation on the Company's Board of Directors under paragraph (b) below
for so
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long as the Purchaser shall have designated an observer as permitted herein.
(b) Upon the Closing of the transactions contemplated
hereby, the Company shall cause to be appointed to the Company's Board of
Directors, upon the request of a Purchaser, any person designated by such
Purchaser and approved by the Company, which approval shall not unreasonably be
withheld. Any such person shall serve until his successor has been duly
elected and qualified. Thereafter, the Company shall include in the slate of
nominees recommended by the Company's Board of Directors or management to
stockholders for election as directors at each annual meeting of stockholders
of the Company any person designated pursuant to this paragraph, or such
substitute as may be designated by a Purchaser and who is reasonably acceptable
to the Company, and the Company shall use its best efforts to cause the shares
for which the Company's management or directors hold proxies or are otherwise
entitled to vote to be voted in favor of the election of such designee to the
extent necessary to ensure his election assuming that all Voting Stock
beneficially owned by the Purchaser is voted for such designee. In the event
that any such designee shall cease to serve as a director for any reason, the
Company shall use its best efforts to fill such vacancy by a designee of the
Purchaser reasonably acceptable to the Company. The Company shall not
unreasonably withhold its acceptance of any such designee. Notwithstanding the
foregoing, the Company's obligation under this paragraph shall terminate as to
a Purchaser if the percentage
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interest of such Purchaser in the Total Voting Power of the Company, after
adjustment for the exercise, or failure to exercise, of the right to maintain
by such Purchaser pursuant to Section 7.8 below (except in the event of a
delaying notice pursuant to Section 7.8(e)) is less than 8% (even if such
Purchaser's percentage interest should subsequently increase for any reason to
8% or more). A Purchaser may not exercise its right to have an observer attend
meetings of the Company's Board of Directors under paragraph (a) above for so
long as the Purchaser shall have exercised the right to Board representation as
permitted herein.
(c) Any designee of a Purchaser, whether acting as an
observer or as a director on the Board of Directors, shall be entitled to
except himself from all discussions and deliberations of the Board of Directors
of the Company (or any committee constituted by the Board) concerning
competitors of the Purchaser or relationships between the Company and either of
the Purchasers. Upon notice to a Purchaser's designee, the Company may refrain
from sending or providing to the Purchaser, or the Purchaser may refuse to
receive, any information otherwise disseminated to the directors of the Company
concerning competitors of the Purchaser or relationships between the Company
and either of the Purchasers. The Company shall not be obligated to compensate
a designee-director of a Purchaser on the same terms as other outside directors
(except for any designee-director of the other Purchaser) but shall provide all
rights and benefits of indemnity to such designee-director as are provided such
other directors.
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6.5 Equity Method Accounting. If either of the Purchasers desires
at some date after the Closing to account for its investment in the Company
pursuant to the equity method, the Company shall furnish to such Purchaser all
information that is required by generally accepted accounting principles to
enable such Purchaser so to account, to the extent reasonably available to the
Company. To the extent requested by such Purchaser, the Company shall provide
information, to the extent reasonably available, regarding the Company to, and
otherwise cooperate with, such Purchaser so as to enable such Purchaser to
prepare financial statements in accordance with generally accepted accounting
principles and to comply with its reporting requirements under applicable
United States securities laws and regulations.
6.6 Registration Rights. The Company will comply with the
provisions regarding registration rights contained in the Registration Rights
Agreement attached as Exhibit A hereto.
6.7 HP Marketing Agreement. On or before the execution date
hereof, the Company will have entered in to a marketing agreement with HP on
terms mutually acceptable to the Company and HP.
6.8 EDS Agreements. On or before the execution date hereof, "the
Company shall have executed and delivered to EDS an amendment to that certain
Software License and Services Agreement dated March 29, 1990 between the
Company and EDS on terms mutually acceptable to the Company and EDS, which
amendment will include agreements regarding EDS' designation by the Company as
a preferred systems integrator of Company software products. In addition, the
Company
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and EDS agree to continue negotiating in good faith and expeditiously the terms
of a facilities management contract as contemplated by that certain letter of
intent dated August 8, 1990 between the Company and EDS, it being understood
that such contract will be executed by October 15, 1990.
6.9 Inspection Rights.
(a) Between the date hereof and the Closing, upon the
request of a Purchaser, the Company shall permit the Purchaser and any of its
authorized agents, at the Purchaser's expense, to visit and inspect any of the
properties of the Company, to examine its books of account and records relating
to the business and affairs of the Company, and to discuss the affairs,
finances and accounts with the Company's officers and other principal
executives, all at such reasonable times as may be reasonably requested.
(b) Until the termination of this Agreement in accordance
with Section 9.2 hereof, the Company shall furnish to each of the Purchasers,
promptly upon filing thereof with the SEC, copies of all reports and documents
required to be filed by the Company with the SEC (other than preliminary
material) under the Securities Act and Exchange Act and the rules and
regulations thereunder.
SECTION 7
Covenants of the Purchasers
Until the termination of this Agreement in accordance with Section 9.2
hereof:
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7.1 Limitation on Ownership of Voting Stock. Neither of the
Purchasers shall (and neither Purchaser shall permit any of its subsidiaries
to) acquire, directly or indirectly, beneficial ownership of any Voting Stock,
any securities convertible into or exchangeable for Voting Stock, or any other
right to acquire Voting Stock (except, in any case, as provided herein or by
way of stock dividends or other distributions or offerings made available to
holders of any Voting Stock generally) or authorize or make a tender, exchange
or other offer, without the written consent of the Company, if the effect of
such acquisition or offer would be to increase the Voting Power of all Voting
Stock then owned by such Purchaser or which it has a right to acquire to more
than the percentage of the Total Voting Power of the Company which such
Purchaser is entitled to hold at such time as provided in this Section 7.1:
(a) EDS and HP shall be entitled to hold Voting Stock up
to, and not to exceed except as permitted by this Agreement, 22% and 11%,
respectively, of the Total Voting Power of the Company. Subject to such
limitation, shares of Voting Stock not acquired by a Purchaser from the Company
under Section 7.8 may be acquired by such Purchaser in the open market or from
third parties.
(b) Either of the Purchasers may acquire Voting Stock
without regard to the limitations in this Section 7.1 if a tender offer is made
(as evidenced by the filing with the SEC of a Schedule 14D-1 (or any successor
schedule or form promulgated or adopted for such purpose by the SEC) and the
actual dissemination
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of tender offer materials to security holders) by another person or group to
purchase or exchange for cash or other consideration any Voting Stock which, if
successful, would result in such person or group owning or having the right to
acquire shares of Voting Stock with aggregate Voting Power of at least 40% of
the Total Voting Power of the Company then in effect; provided, however, that
this provision shall not be effective until such time as the Purchaser in the
exercise of the reasonable judgment of its Board of Directors, after
consultation with its investment bankers and those of the Company (who shall
make themselves promptly available) shall reasonably conclude that such tender
offeror can finance such tender offer. If an offer or proposed acquisition is
made by any person or group which pursuant to this Section 7.1(b) releases a
Purchaser from the limitations set forth herein, which offer or proposed
acquisition subsequently expires, is enjoined or terminated prior to any
purchases thereunder or is otherwise withdrawn, then the limitations of this
Section 7.1(b) shall be reimposed, except that the Purchaser shall not be
obligated to dispose of any Voting Stock acquired of record or beneficially
during the pendency of such offer or proposed acquisition.
(c) Either of the Purchasers may acquire Voting Stock (or
rights to acquire Voting Stock) without regard to the limitations in this
Section 7.1 if it is publicly disclosed or such Purchaser otherwise learns that
another person or group has acquired any Voting Stock (or rights to acquire
Voting Stock), without the affirmative support of the Company's Board of Direc-
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tors, which results in such person or group owning or having the right to
acquire Voting Stock with Total Voting Power of not less than 20%; provided,
however, that the Purchasers shall have no rights under this paragraph if the
person acquiring Voting Stock (or rights to acquire Voting Stock) is the
Affiliate.
(d) No Purchaser will be obligated to dispose of any
shares of Voting Stock if the aggregate percentage ownership of such Purchaser
in the Total Voting Power of the Company is increased as a result of a
recapitalization of the Company or a repurchase of securities by the Company or
any other action taken by the Company or its affiliates, but the Purchasers
shall not acquire any additional Voting Stock unless such acquisition would
otherwise be permitted under this Agreement. If, after either or both of the
Purchasers have acquired Voting Stock in response to the acquisition of Voting
Stock by another person or group, as permitted by this Section 7.1, then such
Purchasers shall not be obligated to dispose of any shares of Voting Stock if
the aggregate percentage ownership of such third party or group is thereafter
reduced.
7.2 Voting. Each Purchaser shall take such action as may be
required so that all shares of Voting Stock owned by the Purchasers are voted
for nominees to the Board of Directors of the Company in accordance with the
recommendation of the Board of Directors consistent with the provisions of
Section 6.4. Unless the Company otherwise consents in writing, each Purchaser
shall take such action as may be required so that all shares of Voting Stock
owned
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by the Purchaser are voted in accordance with the recommendations of the Board
of Directors on all other matters to be voted on by holders of Voting Stock in
not less than the same proportion as the votes cast by the other holders of
Voting Stock (other than the other Purchasers) with respect to such matters;
provided, however, that Voting Stock owned by a Purchaser may be voted as the
Purchaser determines in its sole discretion on any Significant Event (as
defined in Section 9.1 below) presented to be voted on by the holders of Voting
Stock. Each Purchaser, as the holder of shares of Voting Stock, shall be
present, in person or by proxy, at all meetings of stockholders of the Company
so that all shares of Voting Stock beneficially owned by the Purchasers may be
counted for the purposes of determining the presence of a quorum at such
meetings.
7.3 Voting Trust, etc. No Purchaser shall deposit any shares of
Voting Stock in a voting trust or, except as otherwise provided herein, subject
any Voting Stock to any arrangement or agreement with respect to the voting of
such Voting Stock.
7.4 Solicitation of Proxies. Without the Company's prior written
consent, no Purchaser shall solicit proxies with respect to any Voting Stock,
or become a "participant" in any "election contest" (as such terms are used in
Rule 14a-11 of Regulation 14A under the Exchange Act relating to the election
of directors of the Company); provided, however, that a Purchaser shall not be
deemed to be a "participant" by reason of the exercise of any right permitted
by Section 6.4.
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7.5 Acts in Concert with Others. No Purchaser shall join a
partnership, limited partnership, syndicate or other group, or otherwise act in
concert with any third person, for the purpose of acquiring, holding, or
disposing of Voting Stock.
7.6 Restrictions on Transfer of Voting Stock. No Purchaser shall,
directly or indirectly, sell or transfer any Voting Stock except (i) to the
Company or any person or group approved by the Company; or (ii) to any
subsidiary of the Purchaser, all of the Voting Stock of which is owned by the
Purchaser (a "Wholly Owned Subsidiary"); or (iii) pursuant to a bona fide
public offering (which shall be structured to distribute such shares or rights
through an underwriter or otherwise in such a manner, to the best ability of
the Purchaser or Purchasers, as will not result in a sale or sales, by either
or both of the Purchasers, of beneficial ownership of Voting Stock with
aggregate Voting Power of 5% or more of the Total Voting Power of the Company
then in effect being transferred to a single person or group) registered under
the Securities Act of either Voting Stock or securities exchangeable or
exercisable for Voting Stock or pursuant to a rights offering or a dividend or
other ratable distribution to shareholders of the Purchaser; or (iv) pursuant
to Rule 144 under the Securities Act (but only to the extent the sale or
transfer of Voting Stock at any time is in compliance with the volume
limitations under paragraph (e) thereunder); or (v) subject to the Company's
right of first refusal as set forth in Section 8.1 hereof, in transactions not
otherwise described herein so long as such transactions do not,
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directly or indirectly, result, to the best knowledge of the Purchaser, after
reasonable inquiry, in any single person or group owning or having the right to
acquire Voting Stock with aggregate Voting Power of 5% or more of the Total
Voting Power of the Company then in effect; or (vi) in response to (1) an offer
to purchase or exchange for cash or other consideration any Voting Stock (a)
which is made by or on behalf of the Company or (b) which is made by another
person or group and is not opposed by the Board of Directors of the Company
within the time such Board is required, pursuant to regulations under the
Exchange Act, to advise the Company's stockholders of such Board's position on
such offer, or (2) subject to the Company's right of first refusal as set forth
in Section 8.2, any other offer made by another person or group to purchase or
exchange for cash or other consideration any Voting Stock which, if successful,
would result in such person or group owning or having the right to acquire
Voting Stock with aggregate Voting Power of more than 40% of the Total Voting
Power of the Company then in effect.
7.7 Confidential Information. The Company may from time to time
pursuant to this Agreement (including pursuant to Section 6.4 hereof) disclose
to a Purchaser certain strategic, technical, financial or other information
which the Company deems to be confidential. The Purchaser agrees that all such
confidential information will be kept confidential unless such information (i)
is already lawfully in the Purchaser's possession, (ii) becomes generally
available to the public other than as a result of a
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disclosure by the Purchaser or any of its directors, officers, employees,
agents or advisors, (iii) becomes available to the Purchaser on a
non-confidential basis from a source other than the Company or its advisors,
provided that such source is not known to the Purchaser to be bound by a
confidentiality agreement with or other obligation of secrecy to the Company or
another party, (iv) is required to be disclosed by the Purchaser by operation
of law, (v) is disclosed by the Purchaser with the Company's prior written
approval, or (vi) has been held by the Purchaser for not less than three (3)
years from the date of receipt, provided, that the confidentiality of
confidential information furnished to an individual designated by the Purchaser
as an observer or director on the Company's Board of Directors (and not
additionally furnished to other representatives of the Purchaser) shall not
lapse by virtue of this clause. Notwithstanding anything to the contrary, the
Purchaser may disclose such confidential information to its directors,
officers, employees, agents or advisors so long as it takes appropriate
measures to protect the confidentiality thereof, which measures shall include
at least the same degree of care that the Purchaser uses to protect its own
confidential information of a similar nature. In the event that a Purchaser or
any of its representatives is requested or required to disclose any of the
confidential information referred to above, the Purchaser will provide the
Company with prompt notice of such request or requirement so that the Company
may seek a protective order or waive the Purchaser's compliance with this
Section 7.7, as
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appropriate. Each Purchaser further acknowledges and understands that any
information so obtained which may be considered "insider" non-public
information will not be utilized by the Purchaser in connection with purchases
and/or sales of the Company's securities except in compliance with applicable
state and federal securities laws.
7.8 Right to Maintain.
(a) If the percentage interest of a Purchaser in the
Total Voting Power of the Company is at or less than the Standstill Limit and
is reduced as a result of an issuance by the Company of any Voting Stock
(including any issuance following conversion of any security convertible into
or exchangeable for Voting Stock or upon exercise of any option, warrant or
other right to acquire any Voting Stock), the Purchaser shall have the right to
purchase from the Company for cash upon the terms set forth in this Section 7.8
that number of shares of Voting Stock which, if purchased by the Purchaser,
would result in the Purchaser's retaining the percentage interest in the Total
Voting Power of the Company held by the Purchaser immediately prior to such
reduction of the Purchaser's interest.
(b) The purchase price per share at which the Purchaser
shall be entitled to purchase Voting Stock under this Section 7.8 shall be
determined as follows:
(i) If the event giving rise to the Purchaser's
rights is one or more issuances of Voting Stock (including any issuance
resulting from the conversion or exercise of any security
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or other right to acquire Voting Stock) pursuant to the Company's present or
future stock option, stock purchase or other stock plans for the benefit of
employees, directors, consultants or others, the price shall be the Average
Market Price per share of Voting Stock determined as of the date of the
issuance and sale of such Voting Stock.
(ii) If the event giving rise to the Purchaser's
rights is a sale or issuance of Voting Stock for cash or property, including
without limitation, for securities or assets or by way of merger in connection
with the acquisition of another company, and is not treated under paragraph
7.8(b)(i) above, the price shall be the price per share specified in the
agreement relating to such issuance or, if no such price is specified, the
Average Market Price per share of Voting Stock determined as of the date of
issuance and sale of such Voting Stock;
(iii) If the event giving rise to the Purchaser's
right is an issuance of Common Stock upon conversion of any security
convertible into or exchangeable for Common Stock or upon exercise of any
option, warrant or right to acquire any Common Stock, and is not treated under
paragraph 7.8(b)(i) or (ii) above, the price shall be the Average Market Price
per share of Common Stock determined as of the date of such conversion or
exercise.
(iv) If the event giving rise to the Purchaser's
rights is an underwritten public offering or an institutional private
placement, the price shall be the price per share at which the Voting Stock was
sold by the Company.
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(v) In all other cases, the price shall be the
Average Market Price per share of Voting Stock determined as of the date of the
issuance and sale of such Voting Stock.
(c) The Company shall notify the Purchaser by written,
dated notice not later than ten (10) business days after an issuance giving
rise to the Purchaser's rights under this Section 7.8 and, if such offer is
accepted in writing within thirty (30) days of such offer (except as provided
in the next sentence), effect the sale of the securities to the Purchaser in
accordance with this paragraph. If the event giving rise to the Purchaser's
rights is an underwritten public offering or an institutional private placement
of securities by the Company, and if the Company gives the Purchaser notice of
such offering at least fifteen (15) days in advance of the effective date of
the offering, then unless the Purchaser notifies the Company of its irrevocable
acceptance of such offer within the first ten (10) days of such 15-day period
(for the purpose of permitting the Company to disclose the fact of the
Purchaser's intention in the prospectus relating to such underwritten public
offering or institutional private placement), the Company shall be under no
obligation to sell securities to the Purchaser under this Section 7.8 as a
result of such underwritten public offering or institutional private placement.
(d) The purchase and sale of any shares of Voting Stock
pursuant to any offer made under this Section 7.8 that is accepted by the
Purchaser shall take place at 10:00 a.m. on the third business day following
the expiration or early termination of all
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waiting periods imposed on such purchase and sale by the HSR Act and the
receipt of all other applicable regulatory approvals, or, if no waiting period
is imposed on such purchase and sale by the HSR Act, on the third business day
following the Purchaser's acceptance of such offer and compliance with
applicable laws and regulations, at the offices of the Company located at the
address set forth in this Agreement, or at such other time and place as the
Company and the Purchaser may agree. The purchase price shall be payable by
wire transfer in same day funds. The Company and the Purchaser shall comply
with all federal and state laws and regulations and requirements of the NASD
(subject to the right of the Company to elect to decline to comply with any
applicable stockholder approval requirement if the only effect thereof is a
loss of status of the Voting Stock as a National Market System-designated
security), or any securities exchange on which the Company's securities may
then be listed, applicable to any purchase and sale of shares of Voting Stock
under this Section 7.8.
(e) Notwithstanding the foregoing, if any issuance of
securities requiring the Company to make an offer of Voting Stock to a
Purchaser under this Section 7.8 shall be for a number of securities
representing less than 2% of the Total Voting Power of the Company immediately
following such issuance, the Company shall have the right to delay giving the
notice otherwise required by Section 7.8(c) until the earlier of (i) the next
issuance which, together with all issuances after which notice was delayed
pursuant to this sentence, shall represent an aggregate of 2% or more of the
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Total Voting Power of the Company then in effect or (ii) the 45th calendar day
preceding the last day of the Company's fiscal year for accounting purposes,
and, thereupon, the Company shall give such notice with respect to all shares
of Voting Stock which it shall be obligated to offer to sell to the Purchaser
at the price determined in Section 7.8(b) hereof and which shall not have been
the subject of a previous notice pursuant to Section 7.8(c); provided, however,
that the Purchaser shall have the right to request the purchase of all shares
of Voting Stock which the Purchaser has a right to acquire under this Section
7.8 at any time (a) if a bona fide tender or exchange offer is made by another
person or group to purchase or exchange for cash or other consideration any
Voting Stock from the Company's stockholders generally, or (b) upon the
Company's publication or setting of a record date of its stockholders; and, in
either such event and upon the receipt of such request, the Company shall use
its reasonable efforts to issue all such shares to the Purchaser pursuant to
the provisions of this Section 7.8.
(f) If a Purchaser sells any Voting Stock, or fails to
exercise its right to acquire additional Voting Stock as permitted in this
Section 7.8 within the time period prescribed, the percentage ownership in the
Total Voting Power of the Company which such Purchaser is then entitled to
maintain under this Section 7.8 shall be reduced to the Purchaser's percentage
ownership that results immediately following such sale or failure to exercise.
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(g) The Purchaser shall forfeit all rights under this
Section 7.8 if at any time the Purchaser's Voting Stock represents less than
five percent (5%) (inclusive of the shares the Purchaser is entitled to
purchase under an outstanding offer pursuant to this Section 7.8) of the Total
Voting Power the Company (even if such Purchaser's percentage interest should
subsequently increase for any reason to 5% or more).
7.9 Acquisition of Stock. Each Purchaser shall advise management
of the Company as to the Purchaser's general plans to acquire any additional
shares of Voting Stock, or rights thereto, reasonably in advance of any such
acquisitions; provided, however, that if advance notice of acquisitions of
Voting Stock, or rights thereto, in the open market is not reasonably
practicable, notice of any such acquisition shall be made promptly following
such acquisition. All of such Purchaser's purchases of Voting Stock shall be
in compliance with applicable laws and regulations and the provisions of this
Agreement.
SECTION 8
Company Right of First Refusal
8.1 Right of First Refusal. Prior to making any sale or transfer
of Voting Stock of the Company pursuant to Section 7.6(v), each Purchaser shall
give the Company the opportunity to purchase such Voting Stock in the following
manner:
(a) The Purchaser shall give notice (the "Transfer
Notice") to the Company in writing of such intention specifying the
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names of the proposed purchasers or transferees, the amount of Voting Stock
proposed to be sold or transferred, the proposed price per share therefor (the
"Transfer Price") and the other material terms upon which such disposition is
proposed to be made.
(b) The Company shall have the right, exercisable by
written notice given by the Company to the Purchaser within twenty (20) days
after receipt of such Transfer Notice, to purchase all but not part (unless
otherwise agreed) of the Voting Stock specified in such Transfer Notice for
cash per share equal to the Transfer Price.
(c) If the Company exercises its right of first refusal
hereunder, the closing of the purchase of the Voting Stock with respect to
which such right has been exercised shall take place within ninety (90) days
after the Company gives notice of such exercise, which period of time shall be
extended if necessary to comply with applicable securities laws and
regulations. Upon exercise of its right of first refusal, the Company and the
Purchaser shall be legally obligated to consummate the purchase contemplated
thereby and shall use their best efforts to secure any approvals required in
connection therewith.
(d) If the Company does not exercise its right of first
refusal hereunder within the time specified for such exercise, the Purchaser
shall be free, during the period of 90 days following the expiration of such
time for exercise, to sell the Voting Stock specified in such Transfer Notice
on terms no less favorable to the Purchaser than the terms specified in such
Transfer Notice. The
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transferee shall acquire such Voting Stock free from any of the provisions of
this Agreement, provided, however, such Voting Stock shall be subject to any
restrictions imposed under applicable securities laws and regulations.
8.2 Tender Offer Sale. Prior to making any sale or exchange of
Voting Stock pursuant to Section 7.6(vi)(2) in response to a tender or exchange
offer, each Purchaser shall give the Company the opportunity to purchase such
Voting Stock in the following manner:
(a) The Purchaser shall give notice (the "Tender Notice")
to the Company in writing of such intention no later than ten (10) days prior
to the latest time (as the same may be extended) by which Voting Stock must be
tendered in order to be accepted pursuant to such offer or to qualify for any
proration applicable to such offer (the "Tender Date"), specifying the amount
of Voting Stock proposed to be tendered. For purposes hereof, a tender offer
to purchase Voting Stock shall be deemed to be an offer at the price specified
therein, without regard to any provisions thereof with respect to proration or
conditions to the offeror's obligation to purchase (assuming such conditions
are not impossible of performance when the offer is made, without giving effect
to the Company's right of first refusal).
(b) If the Tender Notice is given, the Company shall have
the right, exercisable by giving notice (the "Purchase Notice") to the
Purchaser at least three (3) business days prior to the Tender Date, to
purchase all but not part of the Voting Stock specified in the Tender Notice
for cash. If the Company exercises
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such right by giving such notice, the closing of the purchase of such Voting
Stock shall take place on the fifth business day after the tender offer is
consummated, or such earlier time as the Company shall agree; provided that the
Company's obligation to purchase such shares of Voting Stock following delivery
of any Purchase Notice shall be contingent on consummation of the tender offer
referred to in the corresponding Tender Notice. As a condition to the
effectiveness of any exercise by the Company of its rights to purchase under
this Section 8.2, at the time the Company delivers a Purchase Notice, it shall
have provided for the payment to the Purchaser of the purchase price for such
shares by an escrow of funds, letter of credit facility, bank guarantee or
similar arrangement reasonably acceptable to the Purchaser. If the purchase
price specified in the tender offer includes any property other than cash, the
value of any property included in the purchase price, for purposes of
determining the amount to be provided for by the Company pursuant to the
preceding sentence only, shall be determined by a nationally recognized
investment banking firm selected by the Company. Upon exercise of the right of
first refusal (including provision for payment as described above), the Company
and the Purchaser shall be legally obligated to consummate the purchase
contemplated thereby and shall use their best efforts to secure any approvals
required in connection therewith, subject only to consummation of the tender
offer referred to in the corresponding Tender Notice.
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(c) The purchase price to be paid by the Company pursuant
to this Section 8.2, if such tender offer is consummated, shall be the purchase
price that the Purchaser would have received if it had tendered the Voting
Stock purchased by the Company and all such Voting Stock had been purchased in
such tender offer, including any increases in the price paid by the tender
offeror after exercise by the Company of its right of first refusal hereunder.
If the purchase price paid by the tender offeror includes any property other
than cash, the value of such property shall be jointly determined by a
nationally recognized investment banking firm selected by the Company and the
Purchaser or, in the event such firms are unable to agree, a third nationally
recognized investment banking firm to be selected by such two firms. The
Company and the Purchaser shall use their best efforts to cause any
determination of the value of any such property included in the purchase price
to be made within two (2) business days after consummation of the tender offer.
If the firms selected by the Company and the Purchaser are unable to agree upon
the value of any such securities within such 2-day period, the firms shall
promptly select a third firm whose determination shall be made promptly and
shall be conclusive. The Company and the Purchaser shall each bear the cost of
its own investment banking firm and shall share equally the costs of any third
firm selected hereunder.
(d) If the Company does not exercise such right by giving
such notice or fails to complete the purchase, then the
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Purchaser shall be free to accept the tender offer with respect to which the
Tender Notice was given.
8.3 Assignment of Rights. In the event that the Company elects to
exercise a right of first refusal under this Section 8, the Company may specify
prior to closing such purchase another person as its designee to purchase all
or part of the Voting Stock to which such notice relates. Any such designee
shall be subject to the approval of the Purchaser proposing to sell or tender,
as the case may be, any of its Shares, which approval shall not unreasonably be
withheld. If the Company shall designate another person as the purchaser
pursuant to this Section 8, the giving of notice of acceptance of the right of
first refusal by the Company shall constitute a legally binding obligation of
the Company to complete such purchase if such person shall fail to do so.
SECTION 9
Miscellaneous.
9.1 Certain Definitions. As used in this Agreement:
(a) The term "Total Voting Power of the Company" means
the total number of votes which may be cast in the election of directors of the
Company at any meeting of stockholders of the Company if all securities
entitled to vote in the election of directors of the Company were present and
voted at such meeting (other than votes that may be cast only upon the
happening of a contingency).
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(b) The term "Voting Stock" means the Common Stock and
any other securities issued by the Company having the ordinary power to vote in
the election of directors of the Company (other than securities having such
power only upon the happening of a contingency).
(c) The term "Significant Event" means (i) any proposed
amendment to the Certificate of Incorporation or By-laws of the Company (other
than a proposal to create an authorized class of Preferred Stock or increase
the number of authorized shares of Common Stock or Preferred Stock, provided
such creation or increase is not contrary to clauses (v) or (vi) of this
Section 9.1(c)), (ii) disposition of the Company (by way of merger, disposition
of all or substantially all assets or otherwise), (iii) recapitalization, (iv)
liquidation or dissolution, (v) any vote pursuant to any provision of law or
the Company's Certificate of Incorporation or By-laws requiring or permitting
stockholders to approve any business combination proposed by or with another
person or its affiliates which have acquired a certain percentage of the
Company's shares or to grant voting rights to such person or to waive or adopt
provisions requiring such a vote, or (vi) any action, including a change in the
size, structure or membership of the Company's Board of Directors which the
Purchaser, in its sole discretion, determines would be materially adverse to
the Purchaser's interest in the Company (other than actions contemplated by
this Agreement).
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(d) The term "Contingent Event" means the payment
(including the incurrence of an unconditional obligation to make payment) by
the Company of such consideration as may be agreed to acquire (whether by way
of offer to purchase outstanding shares or statutory merger) a controlling
position in Ingres Corporation.
(e) The term "Affiliate" means Sandra L. Kurtzig,
including any family members or trusts for the benefit of such members, but
only for so long as Ms. Kurtzig continues as a director or employee of the
Company.
(f) "Average Market Price" of the Voting Stock at any
date shall be the average, based on the 20 consecutive trading days ending on
the trading date last preceding the date of determination of such price (the
"Average"), of the closing prices for a share of such security on the principal
national securities exchange on which such security is listed, or, if such
security is not listed on any national securities exchange, the Average of the
closing prices for a share of such security on the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") or, if such closing
prices shall not be reported on NASDAQ, the Average of the mean between the
closing bid and asked prices of a share of such security in such case as
reported by The Wall Street Journal, or, if such prices shall not be so
reported, as the same shall be reported by the National Quotation Bureau
Incorporated, or, in all other cases, the value as determined by a single
nationally recognized investment banking firm jointly selected by the Company
and the Purchaser or Purchasers. For this purpose, the parties shall
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use their best efforts to cause any determination of the value to be made
within ten (10) business days after the date on which the value is to be
measured. The determination by the investment banking firm selected in the
manner set forth above shall be conclusive.
(g) The terms "beneficial ownership" or "beneficial
owner" refer to the meaning of such terms as provided in Rule 13d-3 promulgated
under the Exchange Act. References to the acquiring, holding or ownership of
Voting Stock hereunder mean beneficial ownership.
(h) The term "group" shall have the meaning comprehended
by Section 13(d)(3) of the Exchange Act and the rules and regulations
promulgated thereunder.
(i) The term "person" shall mean any person, individual,
corporation, partnership, trust or other nongovernmental entity or any
governmental agency, court, authority or other body (whether foreign, federal,
state, local or otherwise).
9.2 Termination of Agreement. This Agreement may be terminated at
any time:
(a) As to EDS, by the mutual consent of the Company and
EDS, or as to HP, by the mutual consent of the Company and HP;
(b) As to either Purchaser, by the Company, if such
Purchaser violates any of the covenants or agreements of the Purchaser under
this Agreement; provided, however, that the Company shall not be entitled to
terminate this Agreement pursuant to this sentence unless it shall have
delivered written notice of such default to
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the Purchaser and such default shall not have been cured within thirty (30)
days after delivery of such notice;
(c) As to the Company, by either Purchaser, if the
Company violates or fails to perform any of the covenants or agreements of the
Company under this Agreement; provided, however, that the Purchaser may not
terminate this Agreement pursuant to this sentence unless it shall have
delivered written notice of such default to the Company and such default shall
not have been cured within thirty (30) days after delivery of such notice;
(d) As to either of the Purchasers and the Company, by
such Purchaser or the Company if the Closing shall not have taken place on or
before December 31, 1990;
(e) As to either of the Purchasers and the Company, by
the Company or such Purchaser if the Purchaser at any time after the Closing
owns less than five percent (5%) of the Total Voting Power of the Company;
(f) As to either of the Purchasers, by such Purchaser in
the event of the sale of all or substantially all of the Company's assets to
another party, or other acquisition of the Company by another party in which
50% or more of the Voting Stock of the Company is sold or transferred to such
party or an affiliate thereof;
(g) As to either of the Purchasers and the Company, by
such Purchaser or the Company on or after August 31, 1997; and
(h) As to HP and the Company, by HP or the Company, if at
the Closing HP does not purchase the HP Shares.
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9.3 Effect of Termination.
(a) From and after the termination of this Agreement, the
covenants, obligations and agreements of the parties set forth herein shall be
of no further force or effect and the parties shall be under no further
obligation with respect thereto; provided, however, that in the event of such
termination, to the extent the terms thereof continue to be applicable, (i) the
covenant of the Company and EDS set forth in the second sentence of Section 6.8
shall continue in full force and effect, and (ii) the obligations of the
Purchasers as set forth in the letter agreements, as to HP dated July 6, 1990,
and, as to EDS, dated June 25, 1990, shall continue in full force and effect.
(b) In addition, notwithstanding the provisions of
Section 9.3(a), the rights and obligations of the parties set forth in the
Registration Rights Agreement shall survive any termination of this Agreement.
9.4 Best Efforts. The Company and each of the Purchasers shall
use their respective best efforts to take all actions required under the HSR
Act and under any law, rule or regulation adopted subsequent to the date hereto
in order that the Company may sell the full amount of Shares to the Purchasers
and the Purchasers may purchase the full amount of Shares and any Voting Stock
it may wish to purchase in the future and to ensure that the conditions to the
Closing set forth herein are satisfied on or before the scheduled date of such
Closing.
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9.5 Governing Law. This Agreement shall be governed in all
respects by the laws of the State of California as applied to contracts entered
into solely between residents of, and to be performed entirely within, such
state.
9.6 Survival. The representations and warranties in Sections 2
and 3 of this Agreement shall survive any investigation made by the Purchasers
or the Company.
9.7 Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. This Agreement may not be assigned by a party
without the prior written consent of the other party; provided, however, that a
Purchaser shall have the right, upon prior notice to the Company, to assign
this Agreement to any Wholly Owned Subsidiary of such Purchaser.
9.8 Entire Agreement; Amendment. This Agreement and the other
documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the subject
matter hereof and thereof and supersede all prior agreements and understandings
among the parties relating to the subject matter hereof. Neither this
Agreement nor any term hereof may be amended, waived, discharged or terminated
other than by a written instrument signed by the party against whom enforcement
of any such amendment, waiver, discharge or termination is sought.
9.9 Notices and Dates. Any notice or other communication given
under this Agreement shall be sufficient if in writing and sent by registered
or certified mail, return receipt requested,
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postage prepaid, to a party at its address set forth below (or at such other
address as shall be designated for such purpose by such party in a written
notice to the other party hereto):
(a) if to the Company, to it at:
2440 West El Camino Real
Mountain View, CA 94039-7640
Attn: General Counsel
with a copy to:
Douglas H. Collom, Esq.
Wilson, Sonsini, Goodrich & Rosati
Two Palo Alto Square
Palo Alto, CA 94306
(b) if to EDS, to it at:
7171 Forest Lane
Dallas, TX 75230
Attn: President, Manufacturing and
Distribution Division
with a copy to:
General Counsel
Electronic Data Systems Corporation
7171 Forest Lane
Dallas, TX 75230
(c) if to HP, to it at:
3000 Hanover Street
Palo Alto, CA 94304
Attn: Director, Corporate Development
with a copy to:
General Counsel
Hewlett-Packard Company
3000 Hanover Street
Palo Alto, CA 94304
All such notices and communications shall be effective when received by the
addressee. In the event that any date provided for
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in this Agreement falls on a Saturday, Sunday or legal holiday, such date shall
be deemed extended to the next business day.
9.10 Brokers.
(a) The Company has not engaged, consented to or
authorized any broker, finder or intermediary, except Unterberg Harris DeSantis
("UHD"), to act on its behalf, directly or indirectly, as a broker, finder or
intermediary in connection with the transactions contemplated by this
Agreement. All fees, commissions and other payments owing to UHD as a result
of its or its employees' participation, negotiations, or other actions, taken
in connection with this Agreement are the sole responsibility and obligation of
the Company. The Company hereby agrees to indemnify and hold harmless each of
the Purchasers from and against all fees, commissions or other payments owing
to UHD or any other party acting on behalf of the Company hereunder.
(b) Neither of the Purchasers has engaged, consented to
or authorized any broker, finder or intermediary to act on its behalf, directly
or indirectly, as a broker, finder or intermediary in connection with the
transactions contemplated by this Agreement. Each of the Purchasers hereby
agrees to indemnify and hold harmless the Company from and against all fees,
commissions or other payments owing to any party acting on its behalf.
9.11 Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restriction of this Agreement
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shall remain in full force and effect and shall in no way be affected, impaired
or invalidated.
9.12 Injunctive Relief. Each of the Purchasers, on the one hand,
and the Company, on the other, acknowledge and agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent or cure breaches of the provisions of this Agreement and
to enforce specific performance of the terms and provisions hereof in any court
of the United States or any state thereof having jurisdiction, this being in
addition to any other remedy to which they may be entitled at law or equity.
9.13 Attorneys' Fees. The prevailing party in any litigation
between a Purchaser and the Company involving this Agreement or the
Registration Rights Agreement shall be entitled to recover from the other party
its reasonable attorneys' fees and costs.
9.14 Costs and Expenses. Each party hereto shall pay its own costs
and expenses incurred in connection herewith, including the fees of its
counsel, auditors and other representatives, whether or not the transactions
contemplated herein are consummated.
9.15 No Third Party Rights. Nothing in this Agreement shall
create or be deemed to create any rights in any person or entity not a party to
this Agreement.
9.16 Publicity. The Purchasers and the Company shall not, without
the prior approval of each other party hereto, make or
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cause to be made any press release or other public statement concerning the
transactions contemplated from time to time by this Agreement, except as and to
the extent that any party hereto is so obligated by law or the regulations of
any stock exchange or the NASD (but only after the Company or the Purchaser or
Purchasers, as the case may be, shall have consulted with the other party in
advance regarding the form and substance of such press release or public
statement).
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective authorized officers as of the date aforesaid.
"COMPANY" ASK COMPUTER SYSTEMS, INC.
By: ________________________________
Name:
Title:
Attest:
By: ________________________________
Name:
Title:
"PURCHASERS" ELECTRONIC DATA SYSTEMS CORPORATION
By: ________________________________
Name:
Title:
HEWLETT-PACKARD COMPANY
By:_________________________________
Name:
Title:
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<PAGE> 1
Exhibit 13
THE ASK GROUP, INC.
2880 SCOTT BOULEVARD
P.O. BOX 58013
SANTA CLARA, CA 95052-8013
May 18, 1994
Electronic Data Systems Corporation
7171 Forest Lane
Dallas, TX 75230
Attn: President, Manufacturing and
Distribution Division
Ladies & Gentlemen:
This letter is being delivered to you in connection with the
transactions contemplated by the Stockholder Option Agreement, dated as of May
18, 1994, among Speedbird Merge, Inc. ("Merger Sub") and certain holders of the
shares of Common Stock of The ASK Group, Inc. (the "Company"), including
Electronic Data Systems Corporation ("EDS"). Reference is made to that certain
Agreement and Plan of Merger, dated as of May 18, 1994 (the "Merger
Agreement"), among Computer Associates International, Inc., Merger Sub and the
Company. This letter shall serve as the Company's consent to the execution and
delivery by EDS of the Stockholder Option Agreement as well as consent to the
performance by EDS in accordance with the requirements of the Stockholder
Option Agreement, notwithstanding any prohibition thereof contained in, or
conflict with, the Common Stock Purchase Agreement, dated as of August 31, 1990
(the "Purchase Agreement") among the Company, EDS and Hewlett-Packard Company,
including without limitation, any conflict with the provisions of Sections 7.2,
7.3, 7.5, 7.6 and 8.2 thereof. In addition, you acknowledge the Company's
performance under the Purchase Agreement, including without limitation, under
Section 6.2 thereof.
Very truly yours,
The ASK Group, Inc.
By: ________________________________
Title: _____________________________
cc: General Counsel,
Electronic Data Systems Corporation
<PAGE> 1
Exhibit 14
THE ASK GROUP, INC.
2880 SCOTT BOULEVARD
P.O. BOX 58013
SANTA CLARA, CALIFORNIA 95052-8013
May 18, 1994
Hewlett-Packard Company
3000 Hanover Street
Palo Alto, California 94304
Attn: Director, Corporate Development
Ladies & Gentlemen:
This letter is being delivered to you in connection with the
transactions contemplated by the Stockholder Option Agreement, dated as of May
18, 1994, among Speedbird Merge, Inc. ("Merger Sub") and certain holders of the
shares of Common Stock of The ASK Group, Inc. (the "Company"), including
Hewlett-Packard Company ("HP"). Reference is made to that certain Agreement
and Plan of Merger, dated as of May 18, 1994 (the "Merger Agreement"), among
Computer Associates International, Inc., Merger Sub and the Company. This
letter shall serve as the Company's consent to the execution and delivery by HP
of the Stockholder Option Agreement as well as consent to the performance by HP
of the Stockholder Option Agreement in accordance with its terms,
notwithstanding any prohibition thereof contained in, or conflict with, the
Common Stock Purchase Agreement, dated as of August 31, 1990 (the "Purchase
Agreement") among the Company, HP and Electronic Data Systems Corporation,
including without limitation, any conflict with the provisions of Sections 7.2,
7.3, 7.5, 7.6 and 8.2 thereof. In addition, you acknowledge the Company's
performance of its obligations under the Purchase Agreement, including without
limitation, under Section 6.2 thereof.
ACKNOWLEDGED AND ACCEPTED Very truly yours,
HEWLETT-PACKARD COMPANY THE ASK GROUP, INC.
By: ______________________________ By: ________________________________
Title: ___________________________ Title: _____________________________
cc: General Counsel,
Hewlett-Packard Company
<PAGE> 1
Exhibit 15
THE ASK GROUP, INC.
2880 SCOTT BOULEVARD
P.O. BOX 58013
SANTA CLARA, CA 95052-8013
May 18, 1994
Electronic Data Systems Corporation
7171 Forest Lane
Dallas, Texas 75230
Attn: President, Manufacturing and
Distribution Division
Ladies & Gentlemen:
This letter is being delivered to you in connection with the
transactions contemplated by the Stockholder Option Agreement, dated as of May
18, 1994, among Speedbird Merge, Inc. ("Merger Sub") and certain holders of the
shares of Common Stock of The ASK Group, Inc. (the "Company"), including
Electronic Data Systems Corporation ("EDS"). Reference is also made to that
certain Agreement and Plan of Merger, dated as of May 18, 1994 (the "Merger
Agreement"), among Computer Associates International, Inc. ("CA"), Merger Sub
and the Company.
As an inducement to CA and Merger Sub to enter into the Merger
Agreement, you agree that, effective upon the execution and delivery of the
Stockholder Option Agreement and the Merger Agreement and for as long as the
Merger Agreement has not been terminated in accordance with its terms, all
rights that you have under Section 7.8 of the Common Stock Purchase Agreement,
dated as of August 31, 1990 (the "Purchase Agreement") among the Company, EDS
and Hewlett-Packard Company, whether presently existing or arising as a result
of the transactions contemplated by the Merger Agreement, are hereby waived and
released.
Very truly yours,
The ASK Group, Inc.
By: ________________________________
Title: _____________________________
AGREED as of May 18, 1994:
ELECTRONIC DATA SYSTEMS CORPORATION
By: _______________________________
<PAGE> 1
Exhibit 16
THE ASK GROUP, INC.
2880 SCOTT BOULEVARD
P.O. BOX 58013
SANTA CLARA, CA 95052-8013
May 18, 1994
Hewlett-Packard Company
3000 Hanover Street
Palo Alto, California 94304
Attn: Director, Corporate Development
Ladies & Gentlemen:
This letter is being delivered to you in connection with the
transactions contemplated by the Stockholder Option Agreement, dated as of May
18, 1994, among Speedbird Merge, Inc. ("Merger Sub") and certain holders of the
shares of Common Stock of The ASK Group, Inc. (the "Company"), including
Hewlett-Packard Company ("HP"). Reference is also made to that certain
Agreement and Plan of Merger, dated as of May 18, 1994 (the "Merger
Agreement"), among Computer Associates International, Inc. ("CA"), Merger Sub
and the Company.
As an inducement to CA and Merger Sub to enter into the Merger
Agreement, you agree that, effective upon the execution and delivery of the
Stockholder Option Agreement and the Merger Agreement and for as long as the
Merger Agreement has not been terminated in accordance with its terms, all
rights that you have under Section 7.8 of the Common Stock Purchase Agreement,
dated as of August 31, 1990 (the "Purchase Agreement") among the Company, HP
and Electronic Data Systems Corporation, whether presently existing or arising
as a result of the transactions contemplated by the Merger Agreement, are
hereby waived and released.
Very truly yours,
The ASK Group, Inc.
By: ________________________________
Title: _____________________________
AGREED as of May 18, 1994:
HEWLETT-PACKARD COMPANY
By: _______________________________
<PAGE> 1
EXHIBIT 17
[Letterhead of The ASK Group, Inc.]
May 25, 1994
Dear Stockholder:
As you may be aware, on May 18, 1994, ASK entered into a merger agreement
with Computer Associates International, Inc. ("CA") and its wholly owned
subsidiary, Speedbird Merge, Inc. ("Speedbird"), pursuant to which CA agreed to
commence as promptly as practicable a tender offer for ASK common stock for a
cash price of $13.25 per share. The agreement provides that, following
completion of the offer, CA will cause Speedbird to merge into ASK and any ASK
shares that are not acquired through the tender offer will be converted in the
merger into the right to receive the same consideration as is paid in the tender
offer.
YOUR BOARD HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE TRANSACTIONS
CONTEMPLATED BY THE MERGER AGREEMENT ARE FAIR TO, AND IN THE BEST INTERESTS OF,
THE COMPANY AND ITS STOCKHOLDERS. THE BOARD RECOMMENDS THAT YOU ACCEPT THE OFFER
AND TENDER YOUR SHARES PURSUANT TO THE OFFER.
In arriving at its recommendation, the Board gave careful consideration to
a number of factors as described in the enclosed Schedule 14D-9, including the
opinion of Bear, Stearns & Co. Inc., ASK's financial advisor, that the
consideration to be received pursuant to the merger agreement is fair to ASK's
stockholders from a financial point of view. We urge you to read the enclosed
Schedule 14D-9 and the related CA tender offer materials carefully.
On behalf of ASK's Board of Directors, I thank you for the support you have
given to the Company over the years.
Sincerely,
Paul C. Ely, Jr.
Chairman
<PAGE> 1
EXHIBIT 18
BEAR STEARNS
Bear, Stearns & Co. Inc.
Citicorp Center
One Sansome Street
San Francisco, California 94104
(415) 772-2900
Atlanta - Boston
Chicago - Dallas - Los Angeles
New York - San Francisco
Frankfurt - Geneva - Hong Kong
London - Paris - Tokyo
May 18, 1994
Board of Directors
The ASK Group, Inc.
2880 Scott Boulevard
Santa Clara, California 95050
Dear Sirs:
We understand that Computer Associates International, Inc. ("Computer
Associates'') has offered to acquire all of the outstanding shares of common
stock (the "Shares'') of The ASK Group, Inc. ("ASK''). You have provided us
with the merger agreement among ASK, Computer Associates, and Speedbird Merge,
Inc. ("Merger Subsidiary'') in substantially final form (the "Merger
Agreement''). Pursuant to the Merger Agreement, Merger Subsidiary will promptly
commence a tender offer for all of the Shares at a cash price of $13.25 per
share, to be followed as promptly as practical by a cash merger at the same
price (collectively, the "Transaction'').
You have asked us to render our opinion as to whether the Transaction is
fair, from a financial point of view, to the shareholders of ASK.
In the course of our analyses for rendering this opinion, we have:
1. reviewed the Merger Agreement;
2. reviewed ASK's Annual Reports to Shareholders and Annual Reports on
Form 10-K for the years ended June 30, 1991 through 1993, and its
Quarterly Reports on Form 10-Q for the periods ended September 30,
1993, December 31, 1993, and March 31, 1994;
3. reviewed certain operating and financial information, including
projections, provided to us by ASK's management relating to its
business prospects;
4. met with certain members of ASK's senior management to discuss its
operations, historical financial statements and future prospects;
5. considered our discussions with certain potential buyers for all
or part of ASK;
6. met with certain members of ASK's senior management to discuss the
contacts made by Unterberg Harris and ASK to potential buyers for
all or part of ASK;
<PAGE> 2
7. reviewed the historical market prices and trading volume of the
Shares;
8. reviewed publicly available financial information and stock market
performance data of other publicly held companies which we deemed
generally comparable to ASK;
9. reviewed the financial terms of certain other recent acquisitions of
companies which we deemed generally comparable to ASK; and
10. conducted such other studies, analyses, inquiries and investigations
as we deemed appropriate.
In the course of our review, we have relied upon and assumed, without
independent verification, the accuracy and completeness of the financial and
other information provided to us by ASK, and we have further relied upon the
assurances of management of ASK that they are unaware of any facts that would
make the information provided to us incomplete or misleading. In arriving at
our opinion, we have not performed or obtained any independent appraisal of
the assets of ASK.
Based on the foregoing, it is our opinion that the Transaction is fair,
from a financial point of view, to the shareholders of ASK.
Very truly yours,
BEAR, STEARNS & CO. INC.
By: MICHAEL GRIMES
<PAGE> 1
Exhibit 19
UNTERBERG HARRIS
275 Battery Street, 29th Floor
San Francisco, California 94111
(415) 399-1500 Fax (415) 399-1113
January 27, 1994
HIGHLY CONFIDENTIAL
- ------ ------------
Mr. Pier Carlo Falotti
President and Chief Executive Officer
The ASK Group, Inc.
2440 W. El Camino Real
Mountain View, CA 94039-7640
Dear Pier Carlo:
This letter is to confirm our understanding of the basis upon which
Unterberg Harris is being engaged to provide investment banking advice and
services to The ASK Group, Inc. (the "Company") in connection with the possible
sale of all or part of the Company.
1. Services
--------
Unterberg Harris will be engaged as the Company's sole and
exclusive financial advisor in the performance of the following
functions:
(a) Assist the Company in evaluating the business and the
prospects of Delphi, including conducting business due
diligence.
(b) Provide valuation and transaction analyses of the Company,
Delphi and the combined company, as appropriate.
(c) Assist the Company in (i) structuring a Transaction, (ii)
negotiating with Delphi, and (iii) carrying through to
settlement any letter of intent or definitive agreement that
may be reached regarding the Transaction.
(d) Render our opinion with respect to the fairness of the
consideration to be paid to the Company or its shareholders,
if requested.
(e) Assist in the preparation of any documents required to execute
a Transaction and meet with shareholders of the Company, if
appropriate.
<PAGE> 2
Mr. Pier Carlo Falotti
November 8, 1993
Page 2
2. Compensation
------------
As compensation for the financial advisory work rendered by
Unterberg Harris, the Company shall reimburse Unterberg Harris
as follows:
(a) A retainer fee of $100,000, payable upon the signing of this
agreement, with the amount of this fee being credited
against any fee incurred pursuant to Section 2(b).
(b) In the event of a sale involving all or part of the Company,
Unterberg Harris would receive compensation equal to 0.65%
of the total consideration involved.
In calculating our fee, consideration shall include any
amounts paid to holders of unexercised options or the fair
market value of shares or options substituted for Company
option shares. If such aggregate consideration may be
increased by contingent or other payments over time, the
portion of our fee relating thereto shall be calculated and
paid when and as such payments are made.
(c) The Company shall reimburse Unterberg Harris, upon billing,
for its reasonable out-of-pocket expenses, including fees
and disbursements of counsel incurred by Unterberg Harris
in carrying out its duties under this engagement.
3. Indemnification
---------------
The Company agrees to indemnify and hold Unterberg Harris harmless
against any and all claims or liabilities arising from or
relating to its performance hereunder unless our conduct has been
found to constitute gross negligence or willful misconduct in a
final judgment by a court of competent jurisdiction, and will
reimburse Unterberg Harris for all legal and other expenses
as incurred in connection therewith.
4. Term of the Engagement
----------------------
The term of this engagement shall be six (6) months from the
execution of this agreement and shall automatically renew on a
month-to-month basis until terminated in writing by either party.
In the event of a transaction involving the Company during the
eighteen (18) months following this engagement, then Unterberg
Harris shall receive the same consideration as set forth in
Section 2(b) above.
<PAGE> 3
Mr. Pier Carlo Falotti
November 8, 1993
Page 3
If the foregoing letter is in accordance with your understanding of the terms of
our engagement, please sign and return to us the enclosed duplicate hereof. We
look forward to working with you on this important assignment.
Very truly yours,
Unterberg Harris
By: /s/ Thomas I. Unterberg
Thomas I. Unterberg
Managing Director
Accepted and agreed as of the date hereof:
The ASK Group, Inc.
By:____________________________
