<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. 2)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
AmeriQuest Technologies, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[X] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
$125.00
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
Preliminary Proxy Statement
-------------------------------------------------------------------------
(3) Filing Party:
AmeriQuest Technologies, Inc.
-------------------------------------------------------------------------
(4) Date Filed:
January 13, 1995
-------------------------------------------------------------------------
Notes:
<PAGE>
AMERIQUEST TECHNOLOGIES, INC.
3 IMPERIAL PROMENADE, STE. 300
SANTA ANA, CALIFORNIA 92707
(714) 437-0099
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MAY __, 1995
Dear Shareholder:
You are cordially invited to attend the Special Meeting of Shareholders of
AmeriQuest Technologies, Inc. ("AmeriQuest"), to be held at the offices of
AmeriQuest, 3 Imperial Promenade, Ste. 300, Santa Ana, California 92707, on May
__, 1995, at 10:00 a.m., local time.
Shareholders will be asked to consider and vote on (i) an increase in the
number of shares of Common Stock authorized for issuance by AmeriQuest from
30,000,000 shares to 65,000,000 shares and (ii) the issuance of shares of
AmeriQuest Common Stock and certain option rights to purchase additional shares
(the "Transaction") pursuant to an Investment Agreement between AmeriQuest and
Computer 2000 AG, a company organized under the laws of the Federal Republic of
Germany ("Computer 2000"), the third largest distributor worldwide of computer
products ($2.6 billion in sales in fiscal 1994). The Investment Agreement
provides for, among other things, an investment of up to $50 million by Computer
2000 in consideration for shares of AmeriQuest Common Stock which when added to
the shares already held by Computer 2000 will result in Computer 2000 owning up
to 51% of the issued and outstanding capital stock of AmeriQuest. This is
effectively a world-wide alliance between AmeriQuest (U.S. based) and Computer
2000 (world-wide except in the U.S.), which should allow AmeriQuest to
participate in the world-wide competition for market share in its industry. If
Computer 2000 acquires 51% of AmeriQuest's capital stock, it will be in a
position to elect a majority of AmeriQuest's Board of Directors. Details of the
proposed transaction are fully described in the accompanying Notice of Meeting,
Proxy Statement, and the documents attached thereto. You are requested to give
your prompt and careful consideration to the materials so provided in order that
you may make an informed decision concerning this matter.
In recommending the transaction with Computer 2000 to you, your Board of
Directors has considered the history of the industry, including the decreasing
profit margins and the resultant direction towards oligopoly in the industry,
the potential synergies that could exist between AmeriQuest and Computer 2000,
including, but not limited to (i) the possibility of a broader representation of
significant vendors, which could give rise to a high incremental volume of
business without an associated increment in costs of distribution (ii) the
possibility of improved margins through combined purchase discounts and soft-
dollar services, (iii) potential access to Computer 2000's transnational
customer base for AmeriQuest's value-added storage devices, (iv) potential
access to money markets worldwide, and (v) the potential of providing AmeriQuest
with up to $50 million in financing. Your Board of Directors believes that the
Transaction and the increase in the authorized number of shares of Common Stock
are in the best interests of AmeriQuest and its shareholders and strongly
recommends a vote FOR the proposals. An affirmative vote of the majority of the
outstanding shares of AmeriQuest is required for approval of the proposals.
The Board of Directors has fixed the close of business on March 30, 1995 as
the record date for determination of shareholders entitled to notice of and to
vote at the Meeting.
IN VIEW OF THE IMPORTANCE OF MATTERS TO BE ACTED UPON AT THE MEETING, YOU ARE
INVITED TO PERSONALLY ATTEND THE MEETING, BUT IF YOU DO NOT EXPECT TO BE PRESENT
IN PERSON, PLEASE DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES, WHETHER OR
NOT YOU INTEND TO BE PRESENT AT THE MEETING.
Sincerely yours,
Harold L. Clark,
Chief Executive Officer
Santa Ana, California
April __, 1995
<PAGE>
AMERIQUEST TECHNOLOGIES, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MAY __, 1995
TO THE SHAREHOLDERS OF AMERIQUEST TECHNOLOGIES, INC.:
Notice is hereby given that the Special Meeting of Shareholders of
AmeriQuest Technologies, Inc. will be held at the offices of AmeriQuest, 3
Imperial Promenade, Ste. 300, Santa Ana, California 92707, on May __, 1995, at
10:00 a.m., local time, for the following purposes:
1. To consider and vote upon a proposal to amend the Certificate of
Incorporation of AmeriQuest Technologies, Inc. ("AmeriQuest") to
increase the number of shares of Common Stock that is authorized for
issuance by AmeriQuest from 30,000,000 shares of Common Stock to
65,000,000 shares of Common Stock.
2. To consider and vote upon the approval of the issuance by AmeriQuest
of shares of AmeriQuest Common Stock and the granting of certain
option rights to Computer 2000 AG ("Computer 2000") pursuant to an
Investment Agreement dated as of November 14, 1994 by and between
AmeriQuest and Computer 2000, as it may be amended from time-to-time
(the "Investment Agreement") and the performance by AmeriQuest of all
transactions and acts contemplated by the Investment Agreement
(collectively, the "Transaction"). Pursuant to the Investment
Agreement, Computer 2000 has loaned $18 million to AmeriQuest and, if
the Transaction is approved by the AmeriQuest shareholders, may invest
up to $50 million in consideration for shares of AmeriQuest Common
Stock (including canceling AmeriQuest's obligations under the loan in
exchange for such shares), which shares when added to the shares
already held by Computer 2000, will result in Computer 2000 owning up
to 51% of the issued and outstanding capital stock of AmeriQuest. A
copy of the Investment Agreement is attached as Appendix I to the
accompanying Proxy Statement.
3. To transact such other business as may properly come before the
Meeting or any postponements or adjournments thereof.
The Board of Directors has fixed the close of business on March 30, 1995,
as the record date for the determination of shareholders entitled to notice of
and to vote at the Meeting.
By ORDER OF THE BOARD OF DIRECTORS
April __, 1995
IF YOU DO NOT EXPECT TO BE PRESENT AT THE MEETING OR IF YOU DO NOT PLAN TO
ATTEND BUT WISH TO VOTE BY PROXY, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED
PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
INTRODUCTION................................................................ 1
PURPOSES OF THE MEETING..................................................... 1
VOTING AND PRINCIPAL SHAREHOLDERS........................................... 1
COSTS OF SOLICITATION OF PROXIES............................................ 4
CAPITALIZATION.............................................................. 4
PROPOSAL 1 - TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK.............................. 5
PROPOSAL 2 - APPROVAL OF THE INVESTMENT AGREEMENT........................... 5
BACKGROUND TO AND REASONS FOR THE TRANSACTION
Background............................................................. 5
Reasons for the Transaction............................................ 8
Opinion of AmeriQuest's Financial Advisor.............................. 9
IMPACT OF THE TRANSACTION ON AMERIQUEST AND EXISTING SHAREHOLDERS......... 11
Voting and Other Rights of Shareholders................................ 11
Certain Tax Consequences............................................... 11
Shareholder's Derivative Action........................................ 12
THE INVESTMENT AGREEMENT.................................................. 12
Background for the $18 Million Loan.................................... 12
Computer 2000's Proposed Investment.................................... 13
$18 Million Secured Loan Exchangeable for Common Stock............ 13
$32 Million Additional Equity Infusion............................ 14
Stock Option A.................................................... 14
Stock Option B.................................................... 14
Other Negotiations................................................ 14
Board Representation.............................................. 15
Registration Rights............................................... 15
Certain Legal Matters.................................................. 16
Antitrust......................................................... 16
Stock Exchange Listing............................................ 16
Appraisal Rights.................................................. 16
SHAREHOLDER PROPOSALS....................................................... 16
OTHER MATTERS............................................................... 16
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE........................... 16
AVAILABLE INFORMATION....................................................... 17
APPENDIXES
Appendix I - Investment Agreement dated November 14, 1994 between
AmeriQuest and Computer 2000, as amended as of
March 30, 1995.......................................... I-1
Appendix II - Opinion of L.H. Friend, Weinress & Frankson, Inc. dated
December 14, 1994.......................................II-1
Appendix III - Proposed Amendment to the Certificate of Incorporation
of AmeriQuest..........................................III-1
</TABLE>
i
<PAGE>
PROXY STATEMENT
APRIL __, 1995.
AMERIQUEST TECHNOLOGIES, INC.
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MAY __, 1995
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of AmeriQuest Technologies, Inc., a Delaware corporation
("AmeriQuest"), of proxies to be voted at the Special Meeting of Shareholders of
AmeriQuest to be held on May __, 1995, and at any postponement or adjournments
thereof.
THIS PROXY STATEMENT AND THE ACCOMPANYING NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS AND PROXY WERE FIRST MAILED TO SHAREHOLDERS ON APRIL __, 1995.
PURPOSES OF THE MEETING
The shareholders of AmeriQuest will be asked to vote on and approve (i) an
increase in the number of authorized shares of AmeriQuest Common Stock and (ii)
the issuance of shares of AmeriQuest Common Stock and certain option rights to
Computer 2000 AG, a company organized under the laws of the Federal Republic of
Germany ("Computer 2000") upon the terms and conditions set forth in the
Investment Agreement dated as of November 14, 1995 between AmeriQuest and
Computer 2000 (the "Investment Agreement").
VOTING AND PRINCIPAL SHAREHOLDERS
Unless a shareholder specifies otherwise, a Proxy in the accompanying form
which is properly executed and duly returned by a shareholder of AmeriQuest will
be voted (i) in favor of amending the Certificate of Incorporation of AmeriQuest
to increase the number of shares of Common Stock that is authorized for issuance
by AmeriQuest from 30,000,000 shares of Common Stock to 65,000,000 shares of
Common Stock and (ii) for the approval of the issuance of shares of AmeriQuest
Common Stock and certain option rights pursuant to the Investment Agreement
(collectively, the "Transaction"), and (iii) on such other matters as may
properly come before the Meeting in the discretion of the persons named in the
Proxy. In each case where the shareholder has appropriately specified how the
Proxy is to be voted, it will be voted in accordance with the specifications so
made. Any shareholder has the power to revoke his Proxy at any time before it
is voted by giving written notice to the Secretary of AmeriQuest, by
substitution of a new Proxy bearing a later date, or by request for return of
the Proxy at the Meeting. A shareholder who votes in favor of the Proposals may
later be estopped from challenging the Transaction before the courts. The
address of AmeriQuest is 3 Imperial Promenade, Ste. 300, Santa Ana, California
92707.
On March 30, 1995, the record date for the determination of shareholders
entitled to notice of and to vote at the AmeriQuest Meeting, AmeriQuest had
outstanding 20,907,099 shares of Common Stock of $.01 par value, each share
being entitled to one vote. An affirmative vote of the holders of at least a
majority of the quorum present in person or by proxy at the meeting is necessary
to approve the increase in the number of authorized shares; and pursuant to the
rules of the New York Stock Exchange ("NYSE"), the affirmative vote of a
majority of the shares of Common Stock represented in person or by proxy and
entitled to vote at the Meeting is required to approve the Transaction, provided
that the total vote cast on the proposal represents
1
<PAGE>
a majority of the issued and outstanding shares of Common Stock of AmeriQuest.
Abstentions and broker non-votes are counted for purposes of determining the
presence of a quorum for the transaction of business. Abstentions may be
specified on the proposal with respect to the Transaction and will be counted as
present for purposes of the item on which the abstention is noted, and therefore
counted in the tabulation of the votes cast on the proposal with the effect of a
negative vote. Under applicable Delaware law, broker non-votes are not counted
for purposes of determining the votes cast on a proposal.
The following table sets forth, as of March 30, 1995, information relating to
the beneficial ownership of AmeriQuest's Common Stock by (i) each person known
to AmeriQuest to be the beneficial owner of more than five percent of the
outstanding shares of Common Stock of AmeriQuest, (ii) each director, (iii) each
of the named executive officers for which executive compensation information is
provided in AmeriQuest's Annual Report on Form 10-K/A for the fiscal year ended
June 30, 1994, and (iv) all directors and executive officers as a group.
AmeriQuest knows of no agreements among its shareholders which relate to voting
or investment power over its Common Stock.
<TABLE>
<CAPTION>
Beneficial Ownership as of March 30, 1995
-----------------------------------------
Number of Shares Percent of Class(13)
---------------- --------------------
<S> <C> <C>
Name and Address of Beneficial Owner
- ------------------------------------
DIRECTORS AND OFFICERS(11)(12)
- ------------------------------
Marc L. Werner 1,423,473(1) 6.70%
Eric J. Werner 1,349,473(1) 6.35%
Terren S. Peizer 1,096,000(2) 5.22%
William N. Silvis 15,000(3) *
William T. Walker, Jr. 35,000(4) *
Harold L. Clark 262,500(5) 1.25%
Robert H. Beckett 900,656 4.31%
Gregory A. White 882,302(6) 4.20%
Stephen G. Holmes 81,667(7) *
Peter D. Lytle 10,000(8) *
All officers and directors as
a group (25 persons)(11) 5,188,514(9) 23.91%
</TABLE>
- ------------------------------
* Denotes less than 1%
(1) The Board of Directors of Manufacturers Indemnity and Insurance Company of
America is vested with the voting and investment powers relating to the
shares of AmeriQuest's Common Stock held by Manufacturers Indemnity and
Insurance Company of America. Messrs. Marc L. Werner and Eric J. Werner are
also directors of Manufacturers Indemnity and Insurance Company of America,
and may accordingly be deemed to have shared voting and investment powers
over the 1,003,473 shares of AmeriQuest Common Stock held by Manufacturers
Indemnity and Insurance Company of America. In addition, Manufacturers
Indemnity and Insurance Company of America holds (i) a stock option that is
currently exercisable to acquire 150,000 shares of Common Stock at $4.50
per share through March 3, 1999, and (ii) a four-year warrant to purchase
190,000 shares of Common Stock at $3.50 per share from May 14, 1995 to
November 14, 1998. The exercise price is subject to downward adjustment
should AmeriQuest sell shares from November 14, 1994 to May 14, 1995 at a
price less than the exercise price. The Transaction with Computer 2000 may
be deemed to be such a "sale," in which event the exercise price would be
$2.22 per share. Such shares are reflected in the table under both Marc L.
Werner's and Mark J. Werner's names individually, but are not duplicated in
the caption relating to "All Officers and Directors as a Group."
(2) Mr. Terren S. Peizer is the sole shareholder of the corporate general
partner of Wendover Financial Company L.P., and may be deemed to have sole
voting and investment powers over the 596,000 shares of
2
<PAGE>
AmeriQuest Common Stock held by Wendover Financial Company L.P. In
addition, Wendover Financial Company L.P. holds a four-year warrant to
purchase 100,000 shares of Common Stock at $3.50 per share from May 14,
1995 to November 14, 1998. The exercise price is subject to downward
adjustment should AmeriQuest sell shares from November 14, 1994 to May 14,
1995 at a price less than the exercise price. Mr. Peizer personally holds
a stock option that is currently exercisable to acquire 400,000 shares of
Common Stock at $4.50 per share through March 3, 1999. All such shares are
included in the foregoing table.
(3) All of the shares reflected in the name of Mr. Silvis are issuable upon
exercise of currently exercisable options to purchase Common Stock at
$3.375 per share granted to Mr. Silvis on October 14, 1994.
(4) Of the shares reflected in the name of Mr. Walker, 20,000 shares are
issuable upon exercise of currently exercisable options to purchase Common
Stock at $1.50 per share granted to Walker Associates, of which Mr. Walker
is the President and Chairman. The shares subject to that option were
increased on December 3, 1993 from 10,000 shares to 20,000 shares, and were
afforded immediate vesting. The remaining 15,000 shares are issuable upon
exercise of currently exercisable options to purchase Common Stock at
$3.375 per share granted to Mr. Walker on October 14, 1994.
(5) Includes 200,000 shares issued to Mr. Clark on October 14, 1994 for which
Mr. Clark paid $2,000 in cash and tendered to AmeriQuest a one-year
Promissory Note in the amount of $498,000. The balance of the shares are
subject to currently exercisable stock options, exercisable at $1.75 per
share.
(6) Includes 82,500 shares of Common Stock subject to currently exercisable
stock options exercisable at $.05 per share through December 31, 1995.
(7) Includes 50,000 shares issued to Mr. Holmes on October 14, 1994 for which
Mr. Holmes paid $500 in cash and tendered to AmeriQuest a one-year
Promissory Note in the amount of $124,500. The balance of the shares are
subject to currently exercisable stock options, exercisable at $1.75 per
share.
(8) Includes 10,000 shares subject to currently exercisable stock options,
exercisable at $1.75 per share.
(9) Includes 958,767 shares subject to stock options and warrants currently
vested and issuable upon exercise of such options and warrants.
(10) The address for the executive officers and directors and proposed directors
is: 3 Imperial Promenade, Ste. 300, Santa Ana, California 92707.
(11) Each executive officer and director has sole voting and investment power
with respect to the shares listed, unless otherwise indicated.
(12) For purposes of determining the percentage of outstanding Common Stock held
by each person or group set forth in the table, the number of shares held
by a person or group is divided by the sum of the number of shares of
AmeriQuest's Common Stock outstanding on March 30, 1995 (20,907,099 shares)
plus the number of shares of Common Stock subject to outstanding stock
options and warrants exercisable currently or within 60 days of March 30,
1995 by such person or group, in accordance with Rule 13d-3(d)(1) under the
Securities Exchange Act of 1934, as amended. Percentages of less than 1%
are represented by an asterisk.
It is the intention of all officers and directors of AmeriQuest, expressed
orally but not in any legally binding document or otherwise, to vote or cause to
be voted the shares over which they have beneficial ownership, as set forth in
the above table, in favor of the Proposals.
3
<PAGE>
COSTS OF SOLICITATION OF PROXIES
This solicitation of Proxies is made by the Board of Directors of
AmeriQuest, and AmeriQuest will bear the costs of this solicitation, including
the expense of preparing, assembling, printing and mailing this Proxy Statement
and the material used in this solicitation of Proxies. It is contemplated that
Proxies will be solicited principally through the mails, but directors, officers
and regular employees of AmeriQuest may solicit Proxies personally or by
telephone. Although there is no formal agreement to do so, AmeriQuest may
reimburse banks, brokerage houses and other custodians, nominees and fiduciaries
for their reasonable expenses in forwarding these proxy materials to their
principals. AmeriQuest may also pay for and use the services of other companies
or individuals not regularly employed by AmeriQuest in connection with the
solicitation of Proxies if the Board of Directors of AmeriQuest determines that
it is advisable.
CAPITALIZATION
The following table sets forth the capitalization of AmeriQuest as of
December 30, 1994, and as adjusted to give effect to the exchange of the
Computer 2000 loan of $18 million into approximately 8.1 million shares of
AmeriQuest Common Stock.
<TABLE>
<CAPTION>
Historical Pro Forma
----------- ------------------------
AmeriQuest Adjustments Combined
----------- ------------ ---------
<S> <C> <C> <C>
Short-term debt $ 72.7 - $ 72.7
Subordinated notes payable 18.0 (18.0) -
------ ----------- ------
Total debt 90.7 - 72.7
Minority interest 1.2 - 1.2
Shareholders' Equity
Common Stock 0.2 0.1 0.3
Additional paid-in capital 48.1 17.9 66.0
Retained earnings (deficit) (20.6) - (20.6)
Receivables from affiliates (1.1) - (1.1)
------ ----------- ------
Total shareholders' equity 26.6 18.0 44.6
------ ----------- ------
Total capitalization $118.5 $ - $118.5
====== =========== ======
</TABLE>
______________________________________
4
<PAGE>
PROPOSAL 1
TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
On November 11, 1994, the Board of Directors unanimously approved the
Investment Agreement and Transaction with Computer 2000, recognizing that it
would be necessary to amend AmeriQuest's Certificate of Incorporation to
increase the number of shares of Common Stock that AmeriQuest is authorized to
issue. That same date, the Board of Directors of AmeriQuest resolved that the
increase should be from 30,000,000 shares to 65,000,000 shares in order to have
a sufficient number of shares authorized to consummate the Transaction and so
that AmeriQuest might have the flexibility to effect additional acquisitions in
the future, perhaps commencing in late 1995. The proposed Amendment to the
Certificate of Incorporation is attached as Appendix III and incorporated herein
by this reference.
AMERIQUEST'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS OF AMERIQUEST VOTE THEIR SHARES IN FAVOR OF THE PROPOSAL TO
INCREASE THE NUMBER OF SHARES OF COMMON STOCK THAT AMERIQUEST IS AUTHORIZED TO
ISSUE FROM 30,000,000 TO 65,000,000.
Pursuant to the terms and provisions of the Investment Agreement Computer
2000 loaned $18 million to AmeriQuest in November and December 1994. It is a
condition to the exchange of its $18 million loan into equity (as well as a
condition, among others, to Computer 2000's contemplated investment of an
additional $32 million in Common Stock of AmeriQuest) that this proposal be
approved by the shareholders of AmeriQuest. Absent approval of this proposal,
this condition will not be satisfied and AmeriQuest may be obligated to repay
the $18 million loan together with a "break-up fee" of $1.8 million or default
under the terms of that loan which may result in, among other things, the loss
of AmeriQuest's holdings in AmeriQuest/Kenfil Inc., Robec, Inc. and
AmeriQuest/NCD, Inc., the shares of which have been pledged to Computer 2000 to
secure the $18 million loan, and may result in a default under AmeriQuest's
other principal indebtedness. Additionally, it would not be possible for
AmeriQuest to pursue other acquisition candidates, which is an announced policy
of the Board of Directors, nor would AmeriQuest be able to issue additional
shares of its Common Stock beyond the 30,000,000 shares currently authorized to
secure additional financing. Such events would likely reduce AmeriQuest's
operations to sales levels below those which existed in December 1993, in which
event AmeriQuest would likely be unable to achieve a profitable level of
operations.
PROPOSAL 2
APPROVAL OF THE TRANSACTION
BACKGROUND TO AND REASONS FOR THE TRANSACTION
BACKGROUND
The computer hardware and software distribution industry in which
AmeriQuest competes has been dominated by Merisel and Ingram Micro, and certain
other significant competitors, all with sales and resources greater than those
available to AmeriQuest. Additionally, this industry has reflected trends in
the computer industry generally in that AmeriQuest has had a history of
decreasing profit margins. These conditions portend that the distribution
industry, of which AmeriQuest is a part, is becoming an oligopoly where only the
largest and best financed companies will survive. AmeriQuest must achieve a
sales level that will allow it to attain a profitable level of operations and
secure access to capital resources sufficient to adequately fund its ability to
successfully compete in such a market place.
In response to these factors, the Board of Directors of AmeriQuest decided
on December 3, 1993 to embark on a program of growth-by-acquisition coupled with
internal sales growth. The Board estimated that
5
<PAGE>
it would be necessary to reach at least $500 million in yearly sales just to
reach a break-even level of operations, and at least $800 million in yearly
sales to achieve a reasonable level of profit to materially benefit
shareholders. At the time that the Directors decided to embark on this
strategy, AmeriQuest's sales were averaging approximately $80 million per year,
and AmeriQuest was without cash resources to effect any acquisitions for cash
consideration.
From December 3, 1993 to September 26, 1994, in pursuing and responding to
rapidly occurring opportunities, AmeriQuest caused its wholly-owned subsidiary,
CDS Distribution, Inc., to merge with Romel Technology, Inc. d/b/a Management
Systems Group ("MSG") and Rhino Distribution Corporation. Further, it acquired
by exchange and merger with other subsidiaries the business and assets of Kenfil
Inc. ("Kenfil") [100%] and Robec, Inc. ("Robec") [50.1%]. The acquisition of
the balance of the outstanding shares of Robec, Inc. is pending a vote by
Robec's shareholders scheduled for mid-May 1995. Further, by September 1994,
AmeriQuest had contracted for the acquisition of Ross White Enterprises, Inc.
d/b/a National Computer Distributors ("NCD"). The total aggregate sales of all
such entities is running at approximately $750 million on an annualized basis,
of which NCD accounts for approximately $300 million. (For the year-ended June
30, 1994 the combined entity on a pro forma basis would have reflected $613.6
million in sales for which NCD would have accounted for $218.8 million.)
Mr. Harold L. Clark was first contacted by Mr. Stephen DeWindt, a Co-
President of Computer 2000, on or about June 7, 1994. Mr. DeWindt had earlier
been acquainted personally with Mr. Clark when Mr. Clark served as President of
Ingram Micro. Mr. DeWindt explained that Computer 2000 was looking to purchase
or invest in a U.S. company that would give it a presence in the U.S. market.
Mr. Clark took the opportunity to explain to Mr. DeWindt his view of the
industry and the goals of AmeriQuest, including the acquisition strategy adopted
by the Board of Directors. This meeting was followed with a meeting on June 16,
1994 where Mr. DeWindt was introduced to the other members of management and
certain members of the Board of Directors of AmeriQuest.
On July 21-23, 1994, a delegation from the Board of Directors of AmeriQuest
including Messrs. Clark, Marc L. Werner, Stephen G. Holmes and select legal
counsel with experience in dealing with German investors, visited with Computer
2000 in Germany to explain to Computer 2000 the opportunity represented by
AmeriQuest and to explore the synergies which might exist between the two
companies. It appeared that an investment from Computer 2000 would secure
AmeriQuest's position in the industry as a result of a world-wide alliance
between AmeriQuest and Computer 2000, and that the potential synergies could
include the following: (i) the possibility of a broader representation of
significant vendors, which could give rise to a high incremental volume of
business without an associated increment in costs of distribution, (ii) the
possibility of improved margins through combined purchase discounts and soft-
dollar services, (iii) potential access to Computer 2000's transnational
customer base for AmeriQuest's value-added storage devices, (iv) potential
access to money markets worldwide, and (v) the impact on AmeriQuest of receiving
an infusion of funds as a result of Computer 2000's investment in AmeriQuest.
They also discussed with Computer 2000 AmeriQuest's need for financing to meet
its obligations and to implement its planned growth by acquisition. In light of
these considerations, it was decided to move forward with discussions and
negotiations with Computer 2000 while continuing to implement the Board of
Directors' growth-by-acquisition business plan.
From August 9, 1994 to August 16, 1994, Holger Heims, Computer 2000's Head
of Investments, visited AmeriQuest's offices. The Computer 2000 representatives
discussed further with AmeriQuest the possibility of Computer 2000 investing in
AmeriQuest, and they began their due diligence investigation of AmeriQuest,
Kenfil, Robec and NCD. On August 31, 1994, Computer 2000 purchased from
AmeriQuest 532,000 shares of newly issued AmeriQuest Series C Preferred Stock
for $1,330,000 ($2.50 per share), which shares were later converted into shares
of Common Stock.
During September 1994, Mr. Heims continued to visit AmeriQuest's offices.
On September 2, 1994, Computer 2000's lawyers contacted legal counsel for
AmeriQuest to begin Computer 2000's legal due diligence investigation. From
September 12, 1994 to September 16, 1994, Klaus Laufen and Stephen DeWindt, two
of Computer 2000's Co-Presidents, joined Mr. Heims at AmeriQuest's offices in
due diligence discussions with
6
<PAGE>
representatives of AmeriQuest. On September 14, 1994, Messrs. Clark, Werner and
Holmes of AmeriQuest, and AmeriQuest's legal counsel, met with Messrs. Heims,
DeWindt and Laufen of Computer 2000, together with Computer 2000's legal
counsel, and discussed in broad terms Computer 2000's possible investment. On
September 23, 1994, Mr. Heims of Computer 2000 sent Mr. Clark of AmeriQuest a
proposed letter of intent outlining terms on which Computer 2000 might be
prepared to invest up to $45 million in AmeriQuest, 75% initially and with the
right to invest the balance over a period of up to two years, in return for 51%
of AmeriQuest's voting stock. The proposal was subject to further due diligence
and was conditioned upon the parties negotiating and closing a definitive
agreement. Computer 2000's proposal was not accepted by AmeriQuest, because,
among other things, the proposed pricing and the length of time over which
monies would be infused did not accommodate AmeriQuest's projected financial
needs, but discussions as to a possible investment by Computer 2000 continued.
On September 26, 1994, AmeriQuest executed a definitive Agreement and Plan
of Reorganization for the acquisition of NCD which required that the transaction
be closed on or before October 14, 1994. This accelerated closing date was
prompted by the need of NCD to secure an infusion of approximately $1.5 million
to comply with the provisions of its credit facility by October 30, 1994.
AmeriQuest then arranged on September 30, 1994 for a private placement of $11
million to fund its obligation to acquire NCD and certain other operational
requirements.
On October 3, 1994, the AmeriQuest Board of Directors resolved to reduce
the size of the private placement to approximately $3.9 million. In the
placement, AmeriQuest agreed to issue approximately 1,640,000 shares of Common
Stock at $2.40 per share and to issue warrants to purchase a like number of
shares of Common Stock at $3.50 per share. Jochen Tschunke, the Chairman of the
Board of Computer 2000, agreed to invest in the placement separately from and
not as a representative of Computer 2000. (He made the investment on October
17, 1994 at the closing of the placement, as indicated below.) AmeriQuest's
Board of Directors reduced the aggregate amount of the placement from $11
million to $3.9 million because it believed that by reducing the number of
shares to be issued in the placement, AmeriQuest would increase Computer 2000's
interest in investing a much larger sum in AmeriQuest, and because the Board
determined that AmeriQuest would need an infusion of substantially more than $11
million in order to meet its financial needs. The Board also believed that this
action was in the best interests of the shareholders of AmeriQuest because it
would have reduced the number of shares that AmeriQuest needed to issue in order
to acquire NCD if Computer 2000 could be persuaded to pay more than the private
placement investors were paying. The Board also believed there was a
possibility that a loan from Computer 2000 would be effected in sufficient time
to allow for the NCD closing. However, as time elapsed, it became clear that
the Computer 2000 investment could not be negotiated and closed before the
October 14, 1994 deadline for the NCD acquisition. This then placed the NCD
closing in jeopardy. The Board of Directors believed that the acquisition of
NCD was critical to AmeriQuest's business strategy. AmeriQuest ultimately
negotiated an extension of the NCD closing from October 14, 1994 to November 10,
1994 (later extended to November 14, 1994) in return for AmeriQuest's payment of
$2 million, which would be lost to AmeriQuest should it fail to close the NCD
transaction by that date. AmeriQuest procured such $2 million from the proceeds
of the private placement referred to above, which closed on October 17, 1994;
then at that time the private placement was changed from an equity placement to
a short-term (30 days) convertible debt placement, convertible to equity upon
the consummation of the acquisition of NCD.
Messrs. DeWindt and Heims met with all of AmeriQuest's Board of Directors
in an all-day meeting on October 21, 1994, held for the purpose of gathering
information and conducting negotiations. Computer 2000 indicated that it was
prepared to pay $50 million for additional shares, which when added to its then
current holdings, would total 51% of AmeriQuest's issued and outstanding shares.
AmeriQuest's Board of Directors expressed interest in Computer 2000's proposal,
but resolved to continue to seek additional financing to fund the NCD
acquisition rather than relying solely on the prospect of closing a definitive
agreement with Computer 2000 before the deadline for the NCD closing. After a
search for alternative financing sources, it became apparent to AmeriQuest that
such financing would not be available within the time frame necessary to close
the NCD acquisition. AmeriQuest was able to identify only one alternative
financing source, but the terms of the proposed financing ($.25 per share) were
unacceptable.
7
<PAGE>
Discussions between Computer 2000 and AmeriQuest proceeded on a daily basis
from October 21, 1994 through November 14, 1994, the date of the definitive
Investment Agreement . During this period, Mr. Heims of Computer 2000 worked
out of AmeriQuest's offices, conducting negotiations with AmeriQuest on behalf
of Computer 2000 and making arrangements for the proposed investment. Legal
counsel for Computer 2000 began preparing drafts of the Investment Agreement and
related documents on October 27, 1994. From October 28, 1994 through November
14, 1994, counsel for Computer 2000, Mr. Heims and Computer 2000's financial
advisor (joined by Mr. DeWindt from November 8, 1994 to November 14, 1994)
negotiated the terms of the proposed agreements with AmeriQuest's legal counsel
and representatives. During this period, numerous drafts of the proposed
agreements were prepared and exchanged.
AmeriQuest's Board of Directors was kept informed of the progress of the
negotiations. On November 11, 1994, AmeriQuest's Board met and approved the
proposed transactions with Computer 2000, and authorized AmeriQuest's management
to enter into the Investment Agreement and the related agreements with such
changes as might subsequently be negotiated. On November 14, 1994, those
agreements were signed, and Computer 2000 loaned $13 million to AmeriQuest
pursuant to the agreements. Computer 2000 loaned an additional $5 million at
the end of November and in early December 1994.
On March 30, 1995, Computer 2000 agreed to extend the due date of the $18
million loan from March 30, 1995 to June 30, 1995 in light of the fact that
AmeriQuest was required by the Staff of the Securities & Exchange Commission to
withhold use of this Proxy Statement (thereby delaying AmeriQuest's special
meeting of shareholders) until completion of the annual audit of Robec, Inc.
(whose Annual Report on Form 10-K for the year ended December 31, 1994 is
incorporated herein by reference) and the resolution of certain outstanding
comments of the Staff on AmeriQuest's periodic reports. In connection with such
extension, Computer 2000 required that the "break-up" fee be increased from $1.3
million to $1.8 million.
REASONS FOR THE TRANSACTION
In reaching its decision, the Board compared the proposed price of $2.22
per share under the agreements with Computer 2000 to the price at which it had
been able to attract capital in the most recent private placement, i.e. $2.40
per Unit, with each Unit comprised of one (1) share of Common Stock and (1)
four-year warrant to purchase an additional share at $3.50 per share, with the
exercise price to be reduced to a level equal to that at which AmeriQuest might
sell shares between November 14, 1994 and May 14, 1995, i.e. the $2.22 to be
paid by Computer 2000, and analyzed the possible benefits to be derived from the
potential synergies described above that could result from an alliance with
Computer 2000 and AmeriQuest's future prospects absent such an alliance. The
Board also considered the critically important nature of the NCD acquisition and
that a failure to close the NCD acquisition would have left AmeriQuest short of
its annual sales goal by approximately $300 million and lost to it the $2
million paid to secure an extension of the NCD closing date. The Computer 2000
transaction also provided a source of payment of the 30-day private placement
described above and a source of funds necessary to retire the loan facility for
Kenfil, Inc. In reaching its decision, the Board considered the fact that the
Investment Agreement contains a "fiduciary out" proviso to the "no shop" clause,
which enables the Board of Directors to consider alternative transactions if
required to do so by applicable fiduciary duties. The Board of Directors also
considered the fact that the Investment Agreement provided for a $1.3 million
"break up" fee, but does not contain other material "lock-up" provisions. The
$1.3 million "break-up" fee was increased to $1.8 million as consideration for
the extension of the due date of the $18 million loan from March 30, 1995 to
June 30, 1995.
THE BOARD OF DIRECTORS BELIEVES THAT THE TRANSACTION IS FAIR TO, AND IN THE
BEST INTERESTS OF, AMERIQUEST AND ITS SHAREHOLDERS AND HAS UNANIMOUSLY APPROVED
THE TRANSACTION AND UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF AMERIQUEST
VOTE "FOR" APPROVAL OF THE TRANSACTION.
IF THE TRANSACTION IS NOT APPROVED BY THE SHAREHOLDERS OF AMERIQUEST,
COMPUTER 2000 WILL HAVE THE RIGHT TO TERMINATE THE INVESTMENT AGREEMENT, AND
AMERIQUEST WILL BE OBLIGATED TO PAY COMPUTER 2000 ON JUNE 30, 1995, THE FULL
AMOUNT OF COMPUTER 2000'S $18 MILLION LOAN, TOGETHER WITH INTEREST, AND THE $1.8
8
<PAGE>
MILLION BREAK-UP FEE. COMPUTER 2000 WILL HAVE THE RIGHT, BUT NOT THE
----------------------------------------------
OBLIGATION, TO APPLY A PORTION OF AMERIQUEST'S INDEBTEDNESS TO PURCHASE FROM
- ----------------------------------------------------------------------------
AMERIQUEST, FOR $2.00 PER SHARE, A NUMBER OF SHARES OF AMERIQUEST COMMON STOCK
- ------------------------------------------------------------------------------
WHICH WHEN ADDED TO ITS CURRENT HOLDINGS WOULD BE EQUAL TO 19.9% OF ALL OF
- --------------------------------------------------------------------------
AMERIQUEST'S THEN OUTSTANDING SHARES OF AMERIQUEST COMMON STOCK, AND AMERIQUEST
- -------------------------------------------------------------------------------
WOULD BE OBLIGATED TO PAY IN EXCESS OF $12 MILLION TO COMPUTER 2000. AMERIQUEST
- --------------------------------------------------------------------
DOES NOT CURRENTLY HAVE THE FINANCIAL RESOURCES TO MEET THIS OBLIGATION.
AMERIQUEST WOULD NEED TO SEEK ADDITIONAL FINANCING TO RAISE THE NECESSARY FUNDS
BY JUNE 30, 1995 OR THE COMPUTER 2000 LOAN WOULD BE IN DEFAULT. IF SUCH A
DEFAULT OCCURS, COMPUTER 2000 COULD, IN ADDITION TO ITS OTHER REMEDIES, EXERCISE
ITS SECURITY INTEREST TO ACQUIRE AMERIQUEST'S OWNERSHIP OF KENFIL, ROBEC AND
NCD, WHICH WOULD NEGATE ALL EFFORTS TO DATE TO IMPLEMENT THE BUSINESS PLAN BY
REASON OF A LOSS OF APPROXIMATELY $550 MILLION IN ANNUAL SALES, WITHOUT WHICH
AMERIQUEST HAS NO REASONABLE EXPECTATION OF BEING ABLE TO ACHIEVE A PROFITABLE
LEVEL OF OPERATIONS. IN ADDITION, THE DEFAULT MAY CONSTITUTE AN EVENT OF
DEFAULT UNDER AMERIQUEST'S OTHER INDEBTEDNESS THEREBY CAUSING THAT INDEBTEDNESS
TO BECOME IMMEDIATELY DUE AND PAYABLE.
The funds advanced and which may be advanced to AmeriQuest from Computer
2000 are derived from its internally generated funds and existing credit
facilities. No special loan facility was created to fund its investment in
AmeriQuest.
OPINION OF AMERIQUEST'S FINANCIAL ADVISOR
L.H. Friend, Weinress & Frankson, Inc. ("L.H. Friend") has delivered a
written opinion to the Board of Directors of AmeriQuest that, as of December 14,
1994, the Investment Agreement and the Transaction with Computer 2000 was fair
to AmeriQuest and its shareholders, from a financial point of view. No
limitations were imposed by the Board of Directors of AmeriQuest upon L.H.
Friend with respect to the investigations made or procedures followed by L.H.
Friend in rendering its opinion.
THE FULL TEXT OF THE OPINION OF L.H. FRIEND, WHICH SETS FORTH THE
ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITS ON THE REVIEW UNDERTAKEN, IS
ATTACHED AS APPENDIX II TO THIS PROXY STATEMENT. AMERIQUEST SHAREHOLDERS ARE
URGED TO READ THIS OPINION IN ITS ENTIRETY FOR INFORMATION WITH RESPECT TO THE
PROCEDURES FOLLOWED, ASSUMPTIONS MADE AND MATTERS CONSIDERED BY L.H. FRIEND IN
RENDERING SUCH OPINION. THE SUMMARY OF THE OPINION OF L.H. FRIEND SET FORTH IN
THIS PROXY STATEMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT
OF SUCH OPINION.
In rendering its opinion, L.H. Friend, among other things, reviewed the
Investment Agreement and related documents, reviewed certain reports filed by
AmeriQuest with the SEC, examined certain operating information, financial
information and projections provided by the management of AmeriQuest, reviewed
the historical market prices and trading volume of AmeriQuest Common Stock,
analyzed publicly available financial and market data regarding certain
companies in the computer peripherals and software distribution industry and
compared them to AmeriQuest's financial and market data, conducted limited
interviews with certain members of AmeriQuest management and performed such
other studies, analyses, inquiries and investigations as it deemed appropriate.
In performing its analyses, L.H. Friend assumed that AmeriQuest was
receiving up to $50 million of cash from Computer 2000 in a two stage investment
that will result, assuming certain conditions are met, in Computer 2000
purchasing newly issued AmeriQuest Common Stock, at a per share price of
approximately $2.22.
L.H. Friend obtained and relied upon certain financial data on eight
companies, Arrow Electronics, Avnet, Inc., GBC Technologies Inc., Liuski
International Inc., Merisel Inc., Southern Electronics Corp., Tech Data Corp.,
and Western Micro Technology Inc., which because of their line of business or
financial and operating statistics, were considered generally comparable to
AmeriQuest, although no company was considered directly comparable in all
respects. All such information was obtained by L.H. Friend from public
9
<PAGE>
data, including, with respect to future earning projections, Wall Street
securities analysts' research reports. L.H. Friend derived certain valuation
multiples for these comparable companies, including multiples of revenue,
earnings before taxes, interest, depreciation, and amortization ("EBITDA"),
earnings, future earnings and book value. L.H. Friend determined that the range
of multiples for the comparable companies was 0.08 to 0.61 times revenue, 2.6 to
78.6 times EBITDA, 4.2 to 17.8 times earnings (for the seven companies that
produced positive earnings), 5.2 to 12.1 times projected 1995 earnings (for the
seven companies for which earnings projections were available), and 0.7 to 2.6
times book value. L.H. Friend calculated median multiples for the comparable
companies of 0.3 times revenue, 7.8 times EBITDA, 7.8 times earnings, 6.1 times
projected 1995 earnings and 1.8 times book value, and indicated that the most
likely range of multiple valuations for AmeriQuest, based on this comparable
company analysis and the fact that AmeriQuest did not produce positive EBITDA or
net income, was 0.2 to 0.4 times revenue, and 1.6 to 2.0 times book value. L.H.
Friend determined a valuation range for AmeriQuest by this range of valuation
multiples, to be $24 million to $58 million. L.H. Friend noted the assumed value
of AmeriQuest of approximately $100 million for the Transaction (based on
Computer 2000's investment of $50 million for a 51% interest) to be within the
valuation range.
L.H. Friend also identified a group of eight acquisitions of companies in
the computer peripherals and software distribution industry with which to
compare AmeriQuest; the acquisition of Hall-Mark Electronics Corp. by Avnet,
Inc. in April 1993; the acquisition of Corporate Software, Inc. by CS
Acquisition Group in October 1993; the acquisition of Egghead, Inc. by Investor
Group, Inc. in January 1994; the pending acquisition of Autronica AS by Whessoe
PLC in March 1994; the acquisition of MFP Technical Services Ltd. by Commoncorp
Financial Services in April 1994; the acquisition of Transmark Corp. Ltd. by
Siegen Investments in May 1994; the acquisition of Gates/FA Distributing, Inc.
by Arrow Electronics, Inc. in June 1994; and the acquisition of Anthem
Electronics, Inc. by Arrow Electronics, Inc. in September 1994; and reviewed
certain financial data with respect to those transactions. All of such
information was obtained by L.H. Friend from public data. L.H. Friend derived
certain valuation multiples for these comparable companies, including multiples
of revenue, EBITDA, earnings and book value. L.H. Friend determined that the
range of multiples for the comparable companies was 0.2 to 1.7 times revenue,
2.5 to 31.7 times EBITDA (for the seven companies for which EBITDA figures were
available), 8.1 to 25.3 times earnings, and 1.1 to 3.5 times book value. L.H.
Friend calculated median multiples for the comparable transactions of 0.5 times
revenue, 8.1 times EBITDA, 17.1 times earnings, 2.0 times book value, and
indicated that the most likely range of multiples for AmeriQuest, based on this
comparable transaction analysis and the fact that AmeriQuest did not produce
positive EBITDA or net income, was 0.4 to 0.6 times revenue and 1.8 to 2.2 times
book value. L.H. Friend determined the transaction range for AmeriQuest based
on this range of transaction multiples, to be $40 million to $70 million. L.H.
Friend noted the assumed value of AmeriQuest of approximately $100 million for
the Transaction (based on Computer 2000's investment of $50 milliion for a 51%
interest) to be within the valuation range.
The preparation of a fairness opinion is complex. L.H. Friend believes
that its analyses must be considered as a whole and that selecting portions of
its analyses and of the factors considered by it, without considering all
factors and analyses, could create an incomplete view of the processes
underlying its opinion. Estimates of values of companies do not purport to be
appraisals and do not necessarily reflect the prices at which companies may
actually be sold. The estimates of value were prepared solely for use in
determining whether the sale of AmeriQuest Common Stock to Computer 2000 is fair
to AmeriQuest and its shareholders from a financial point of view.
L.H. Friend relied upon and assumed, without independent verification, the
accuracy and completeness of the financial and other information provided to it
by the management of AmeriQuest, including financial projections for AmeriQuest.
These financial projections were based on assumptions AmeriQuest believes are
reasonable. Some assumptions inevitably will not materialize, and unanticipated
events and circumstances may occur subsequent to the date of such projections.
Accordingly, the actual results achieved during the period covered by these
projections may vary from the projections and the variations may be material and
adverse.
In the course of its review, L.H. Friend relied, without independent
verification, upon the accuracy and completeness of all the financial and other
information reviewed by it for purposes of the opinion.
10
<PAGE>
L.H. Friend was not requested to, and did not, solicit any indications of
interest from third parties with respect to the sale of AmeriQuest, but
discussed with AmeriQuest its history of raising capital and its prospects for
additional capital infusions. In addition, L.H. Friend did not participate in
the discussion or negotiations leading to execution of the Investment Agreement,
and its opinion is limited to the fairness from a financial point of view of the
consideration to be received for the shares of AmeriQuest and does not address
AmeriQuest's underlying business decision to effect the Transaction. L.H.
Friend assumed that Computer 2000 will have the financial capability to perform,
and will perform, its obligations under the Investment Agreement.
L.H. Friend is a firm specializing in institutional research and investment
banking services for middle market companies. The firm's focus is on all
aspects of traditional corporate finance transactions, including initial and
secondary public offering, institutional private placements, mergers and
acquisitions, evaluation and fairness opinions and related corporate advisory
services. The AmeriQuest Board of Directors selected L.H. Friend to provide the
fairness opinion as a result of the firm's familiarity and expertise with public
technology companies and its experience in analyzing such companies.
AmeriQuest paid L.H. Friend a fee of $96,000.00. AmeriQuest has also
agreed to indemnify L.H. Friend and certain related persons against certain
liabilities relating to or arising out of its engagement, including certain
liabilities under federal securities laws.
IMPACT OF THE TRANSACTION ON AMERIQUEST AND EXISTING SHAREHOLDERS
While the Board of Directors is of the opinion that the Transaction is fair
to, and its approval is advisable and in the best interests of AmeriQuest and
its shareholders, shareholders should consider the following possible effects in
evaluating the Transaction.
VOTING AND OTHER RIGHTS OF SHAREHOLDERS
The number of shares of Common Stock that could be issued to Computer 2000
in the Transaction could vest voting control of AmeriQuest in Computer 2000. In
such an event, Computer 2000 could effectively elect all directors and appoint
all officers of AmeriQuest, and only furnish existing shareholders with
Information Statements pursuant to Section 14 of the Securities Exchange Act of
1934, as amended, regarding such actions. Additionally, Computer 2000 would in
that event have the voting power necessary to take AmeriQuest "private" or merge
it with another entity without having to consult with the other shareholders; or
prevent the sale of AmeriQuest to other interested parties at a point in time
that minority shareholders might deem a sale to be advantageous to their
interests.
Although the foregoing represents possible actions that could be taken by
any shareholder having control of AmeriQuest, Computer 2000 has represented to
AmeriQuest that it has not historically interfered with the management of
companies that it has acquired; however, there can be no assurance that there
will be no changes in AmeriQuest management in the future. In addition, it may
be advantageous for Computer 2000 to maintain AmeriQuest as a public company so
as to obtain access to U.S. securities markets for additional funding of
AmeriQuest's future operations and growth, but is not obligated to do so.
CERTAIN TAX CONSEQUENCES
Under Section 382 of the Internal Revenue Code ("IRC"), the benefit of
AmeriQuest's net operating losses ("NOLs") can be reduced or eliminated if
AmeriQuest undergoes an "ownership change," as defined in Section 382.
Generally, an "ownership change" occurs if one or more shareholders, each of
whom owns five percent (5%) or more of a company's capital stock, and certain
"public groups" increase their aggregate ownership of the company by more than
50 percentage points over the lowest percentage of stock owned by such
shareholders or groups over the preceding three-year period (based on value).
The amount of taxable income in any year thereafter (or portion of a year) that
could be offset by NOLs or other carryovers existing
11
<PAGE>
(or "built-in") prior to such ownership change could not exceed the product
obtained by multiplying (i) the aggregate value of AmeriQuest's stock
immediately prior to the ownership change (with certain adjustments) by (ii) the
federal long-term rate (currently 6.25%).
In an earlier acquisition of Kenfil Inc. (June 1994) by AmeriQuest, an
"ownership change" occurred for purposes of Section 382. Another "ownership
change" will potentially occur upon the contemplated infusion of $32 million by
Computer 2000 in the third quarter of 1995.
The exact date of ownership changes and the value of AmeriQuest on those
dates is currently being determined. The impact of the successive ownership
changes and the amount of the pre-change NOLs are also being calculated.
AmeriQuest would incur a corporate-level tax (current maximum federal rate
of 35 percent) on any taxable income during a given year in excess of such
limitation. While the NOLs not used as a result of this limitation would remain
available to offset taxable income in future years, the effect of an ownership
change, under certain circumstances, would be to significantly defer the
utilization of the NOLs, accelerate the payment of the federal income tax, cause
a portion of the NOLs to expire prior to their use and reduce stockholders'
equity.
SHAREHOLDER'S DERIVATIVE ACTION
On November 17, 1994, three days after the announcement of the proposed
investment by Computer 2000 pursuant to the Investment Agreement, an action was
filed against the Board of Directors of AmeriQuest, Computer 2000 and AmeriQuest
styled Erica Hartman vs. Marc L. Werner, Harold L. Clark, Stephen G. Holmes,
---------------------------------------------------------------------
Eric J. Werner, Terren S. Peizer, William N. Silvis, William T. Walker, Jr. and
- -------------------------------------------------------------------------------
Computer 2000 AG, Defendants and AmeriQuest Technologies, Inc., Nominal
- -----------------------------------------------------------------------
Defendant, Court of Chancery of the State of Delaware, New Castle County, C.A.
- ---------
No. 13883. The Complaint seeks to have the Court either (i) enjoin the
consummation of the Investment Agreement or (ii) enter a monetary judgment for
damages in an unspecified amount against the Directors of AmeriQuest for an
alleged failure of the Board of Directors to discharge their fiduciary duties in
causing AmeriQuest to enter into the Investment Agreement. The director
Defendants filed a motion to dismiss the Complaint on January 15, 1995. Pending
resolution of that motion, discovery has been stayed. The Plaintiff has not
responded to the motion or taken any other action concerning same. The general
allegations of the Complaint relate solely to a comparison of the proposed sale
price with market value and book value and the sale of control without
extracting a premium and an allegation that the consideration to be paid by
Computer 2000 is inadequate. It is the opinion of the Board of Directors that
the Plaintiff fails to understand AmeriQuest's growth-by-acquisition strategy or
the synergies considered by the Board of Directors in approving the Transaction
and the value to AmeriQuest of a world-wide alliance with Computer 2000. In the
opinion of the Board of Directors, the proposed transaction with Computer 2000
is fair to and in the best interests of AmeriQuest and its shareholders for the
reasons set forth above. The Board of Directors and AmeriQuest intend to
vigorously defend against such litigation, and do not expect the litigation to
have a material adverse impact on AmeriQuest's financial condition or results of
operations, since AmeriQuest is only a nominal defendant.
POSSIBLE ADDITIONAL INDEBTEDNESS
AmeriQuest is currently negotiating a financing arrangement with IBM Credit
Corporation ("ICC") whereby AmeriQuest would be entitled to borrow up to $110
million (of which $30 million would be represented by AmeriQuest/NCD, Inc.
increasing its line from The Bank of Boston), subject to meeting certain
accounts receivable and inventory ratios, among other conditions. If the
proposed credit arrangements with ICC are entered into, AmeriQuest would use the
available proceeds to retire existing indebtedness, finance the purchase of
inventory and for working capital. AmeriQuest has an immediate need for
additional capital to finance its operations, and management believes that it
would be in AmeriQuest's best interests to consummate and maintain the proposed
ICC credit arrangements. Although the definitive terms of the ICC
12
<PAGE>
financing have not yet been determined, it would be an event of default under
the proposed financing terms if AmeriQuest's shareholders fail to approve the
Computer 2000 Transaction, and if, as a result, Computer 2000's $18 million loan
becomes due and payable.
THE INVESTMENT AGREEMENT
The following description of the Investment Agreement does not purport to
be complete and is qualified in its entirety by reference to the Investment
Agreement, a copy of which is attached hereto as Appendix I and incorporated
herein by reference. Shareholders of AmeriQuest are urged to read the
Investment Agreement in its entirety.
BACKGROUND FOR THE $18 MILLION LOAN
Rule 312.00 of the New York Stock Exchange ("NYSE") requires shareholder
approval of any issuance of Common Stock or securities convertible into Common
Stock if the resulting voting power will be equal to or in excess of 20% of the
voting power outstanding before the issuance of such securities. As indicated
above, the maximum number of shares that AmeriQuest will be obligated to issue
to Computer 2000 under the Investment Agreement will represent well in excess of
20% of AmeriQuest's outstanding voting power. Thus, under Rule 312.00, the vote
of AmeriQuest's shareholders is necessary to approve such issuance. The parties
recognized that preparing and processing the necessary paperwork for seeking
shareholder approval, together with the necessary notice periods, would take
several months. Since AmeriQuest's need for Computer 2000's initial investment
of $18 million was immediate, the parties decided to structure Computer 2000's
initial investment as a secured loan that will be exchanged for shares of
AmeriQuest Common Stock upon shareholder approval (and the fulfillment of
certain other conditions).
COMPUTER 2000'S PROPOSED INVESTMENT
Computer 2000 desires to secure, subject to the terms and conditions set
forth in the Investment Agreement, up to 51% ownership of AmeriQuest in exchange
for up to $50 million plus the $1,330,000 that it paid earlier for 532,000
shares of AmeriQuest Series C Preferred Stock on August 31, 1994 (which shares
were later converted into the same number of shares of Common Stock). Computer
2000 believes that the alliance with AmeriQuest will afford it an interest in
the U.S. marketplace on a favorable economic basis if the synergies of the
alliance can be realized.
$18 Million Secured Loan Exchangeable for Common Stock. The first tier of
-------------------------------------------------------
the proposed investment was structured as an $18 million secured loan to
AmeriQuest. The loan originally bore interest at the rate of 6.5% per annum,
which increased to 8.5% after February 1995 pursuant to the terms of the
original documents. The loan was originally due on the earlier of March 30,
1995 or 20 days after termination of the Investment Agreement. Computer 2000
agreed to extend the due date of the $18 million loan from March 30, 1995 to
June 30, 1995 in light of the fact that AmeriQuest was required by the Staff of
the Securities & Exchange Commission to withhold use of this Proxy Statement
(thereby delaying the notice of AmeriQuest's shareholders' meeting) until
completion of the annual audit of Robec, Inc. (whose Annual Report on Form 10-K
for the year ended December 31, 1994 is incorporated herein by reference) and
the resolution of certain outstanding comments of the staff on AmeriQuest's
periodic reports. In connection with such extension, Computer 2000 required that
the "break-up" fee be increased from $1.3 million to $1.8 million.
AmeriQuest pledged all of its ownership of Kenfil, Robec and NCD as
security for repayment of the loan. The loan will be exchanged for 8,108,108
shares of AmeriQuest Common Stock (subject to adjustment for changes in
capitalization) if (i) the AmeriQuest shareholders approve at the Meeting the
Transaction and the increase in the authorized number of shares of AmeriQuest
Common Stock from 30,000,000 shares to 65,000,000 shares as proposed herein, and
(ii) certain other conditions are met (the "General Conditions"), including the
conditions that the representations made by AmeriQuest in the Investment
Agreement and the related agreements will be true at the time of the exchange;
that AmeriQuest will have performed its
13
<PAGE>
obligations under the Investment Agreement and the related agreements; that
there be no adverse change in AmeriQuest's business, operations, financial
condition or prospects; and that the shares issued to Computer 2000 be approved
for listing on the New York Stock Exchange. If any of the General Conditions
are not met, Computer 2000 will not be required exchange the loan for shares of
AmeriQuest Common Stock, although Computer 2000 might, in its discretion, elect
to waive the condition(s) and cause the loan to be exchanged. In addition,
AmeriQuest will be required, before exchange, to increase the number of its
directors from 9 to 11 and appoint as directors two persons designated by
Computer 2000.
Upon receipt of shareholder approval of the proposals referred to herein
and satisfaction (or waiver) of the other closing conditions, the $18 million
loan will be exchanged for 8,108,108 shares of AmeriQuest Common Stock (subject
to certain adjustments). Based on the number of shares of AmeriQuest Common
Stock currently outstanding (and assuming the completion of the acquisition of
Robec), Computer 2000 would receive in the exchange shares representing
approximately 26.5% of the then outstanding shares of AmeriQuest Common Stock,
so that Computer 2000 would then own beneficially approximately __% of such
outstanding shares (including the 532,000 shares of Common Stock previously
purchased by it, but not including the shares owned by or subject to warrants
granted to Computer 2000's Chairman).
$32 Million Additional Equity Infusion. Computer 2000 will have the right
---------------------------------------
to purchase an additional $32 million of Common Stock at approximately $2.22 per
share commencing on September 1, 1995 until the later of September 30, 1995 or
45 days after its receipt from AmeriQuest of certain financial information for
the period ended June 30, 1995, if the following conditions are fulfilled:
(a) The Transaction and the increase in the number of authorized shares
proposed herein shall have been approved by the shareholders of
AmeriQuest and the $18 million loan exchanged for shares of AmeriQuest
Common Stock.
(b) The General Conditions shall have been satisfied or waived.
In its original form, the Investment Agreement would have obligated
Computer 2000 to invest the additional $32 million in AmeriQuest if AmeriQuest
met certain profitability criteria and other conditions. Since AmeriQuest did
not achieve the profit levels required under the Investment Agreement or meet
certain other conditions, Computer 2000 is no longer obligated to make the
investment. However, Computer 2000 continues to have the option (subject to the
shareholder vote referred to above) to purchase from AmeriQuest up to $32
million of Common Stock at approximately $2.22 per share, the same price
Computer 2000 would have paid had it been obligated to make the investment. The
option will be exercisable, in whole or in part, commencing on September 1, 1995
and until the later of September 30, 1995 or 45 days following its receipt from
AmeriQuest of the financial information for the period ended June 30, 1995.
If Computer 2000 invests the full $50 million referred to above (the
initial 18 million plus the additional $32 million), it will own a total of
approximately 23,000,000 shares of AmeriQuest Common Stock, representing
approximately 51% of the shares then outstanding.
Stock Option A. In the Investment Agreement, AmeriQuest granted Computer
---------------
2000, subject to the conditions referred to above, a Maintenance Option which
assures Computer 2000 that, should AmeriQuest issue additional shares pursuant
to outstanding options, warrants or otherwise, Computer 2000 would have the
right to acquire additional shares at any time prior to November 1, 1999 in
order to preserve its 51% ownership once it has acquired ownership of that
magnitude.
Stock Option B. Computer 2000 would also have the right to acquire an
---------------
additional 4,000,000 shares of Common Stock at $10.00 per share at any time
between June 30, 1996 and June 30, 1998; and at a price of $20.00 per share at
any time between July 1, 1998 and November 30, 1999. Notwithstanding the
foregoing, the investment of Computer 2000 under this option would be capped at
55% of the issued and outstanding Common Stock of AmeriQuest.
14
<PAGE>
Other Negotiations. The Investment Agreement, as amended, prohibits
-------------------
AmeriQuest until June 30, 1995 from directly or indirectly soliciting,
encouraging, initiating or participating in any discussions or negotiations
reasonably likely to facilitate the efforts of any person other than Computer
2000 relating to the possible acquisition of AmeriQuest or any of its
subsidiaries. AmeriQuest is also prohibited from providing non-public
information to such a party without providing the same information to Computer
2000. Notwithstanding the foregoing, however, should the Board of Directors
determine in good faith, after consultation with legal counsel and its financial
advisors, that any such action is required by the fiduciary duties imposed upon
the directors by Delaware law and is likely to result in a more favorable
transaction to the stockholders of AmeriQuest than the terms of the Investment
Agreement and provides for repayment in full of Computer 2000's $18 million loan
and payment to Computer 2000 of a $1.8 million break-up fee, then AmeriQuest is
free to pursue such a transaction, subject to AmeriQuest's obligation to keep
Computer 2000 informed as to any offer or request for information regarding such
transaction. If AmeriQuest's Board of Directors accepts any such offer or
recommends it to AmeriQuest's shareholders, or fails to recommend the
Transaction to the shareholders, either Computer 2000 or AmeriQuest may
terminate the Investment Agreement, in which event the $18 million loan will
become due and AmeriQuest will be required to pay the $1.8 million break-up fee.
Board Representation. Computer 2000 has the right to have an observer
---------------------
present at any meeting of the Board of Directors until the obligations of
AmeriQuest underlying the $18 million loan are extinguished. Such an observer
also has the right to address the Board with any concerns that Computer 2000 may
have, and to visit and inspect AmeriQuest facilities and examine its books and
records.
Upon the exchange of the $18 million loan for shares of AmeriQuest Common
Stock, AmeriQuest is obligated to appoint two new directors to the Board of
Directors as may be selected by Computer 2000; and Computer 2000 has the right
to require that the composition of the Board of Directors reflect its percentage
ownership of the issued and outstanding shares of AmeriQuest.
If Computer 2000 makes the $32 million investment in AmeriQuest referred to
above, it will hold a majority of AmeriQuest's voting stock and will be in a
position to elect all or a majority of AmeriQuest's directors.
Registration Rights. AmeriQuest is obligated to file a registration
--------------------
statement covering the shares of Common Stock to be issued to Computer 2000 upon
the receipt of requests for registration from persons holding 25% or more of
such shares. Additionally, should AmeriQuest proceed with a further public
offering of its shares for the benefit of AmeriQuest, Computer 2000 has the
right to "piggy-back" its shares on any such registration statement. All
expenses, other than underwriting discounts and commissions incurred in
connection with such registrations, are to be borne by AmeriQuest except for
expenses incurred in connection with a demand right which is subsequently
aborted or withdrawn.
CERTAIN LEGAL MATTERS
Antitrust. Pursuant to the requirements of the Hart-Scott-Rodino Antitrust
----------
Improvements Act of 1976, as amended (the "HSR Act"), on January 30, 1995,
Computer 2000 and AmeriQuest each filed a Notification and Report Form for
review under the HSR Act with the Federal Trade Commission (the "FTC") and the
Antitrust Division of the Department of Justice (the "Antitrust Division"). The
waiting period under the HSR Act with respect to such filing was terminated by
governmental action on February 10, 1995. Even though the HSR Act waiting
period has expired, the FTC or the Antitrust Division could take such action
under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking divestiture of substantial assets of AmeriQuest.
AmeriQuest does not believe that consummation of the Merger will result in a
violation of any applicable antitrust laws. However, there can be no assurance
that a challenge to the Merger on antitrust grounds will not be made or, if such
a challenge is made, of the result.
15
<PAGE>
Stock Exchange Listing. It is a condition to the issuance of shares to
-----------------------
Computer 2000 under the Investment Agreement that the shares of AmeriQuest
Common Stock to be issued in connection with the Investment Agreement be
authorized for listing on the NYSE.
Appraisal Rights. Under the General Corporation Law of the State of
-----------------
Delaware, the holders of AmeriQuest Common Stock are not entitled to any
appraisal rights with respect to the Transaction.
SHAREHOLDER PROPOSALS
Any AmeriQuest shareholder who wishes to submit a proposal for presentation
to AmeriQuest's 1995 Annual Meeting of Shareholders must submit the proposal to
AmeriQuest, 3 Imperial Promenade, Ste. 300, Santa Ana, California 92707,
Attention: Mr. Stephen G. Holmes, Secretary, not later than April __, 1995 for
inclusion, if appropriate, in AmeriQuest's proxy statement and form of proxy
relating to its 1995 Annual Meeting.
OTHER MATTERS
The accompanying form of Proxy is solicited by and on behalf of the
management of AmeriQuest whose Notice of Special Meeting is attached to this
Proxy Statement. AmeriQuest will bear the expenses of this solicitation of
Proxies. In addition to the use of the mails, Proxies may be solicited by
personal interview, telephone and by directors and officers and employees of
AmeriQuest. Arrangements may also be made with brokerage houses and other
custodians, nominees and fiduciaries for the forwarding of solicitation material
to the beneficial owners of stock held of record by such persons, and AmeriQuest
may reimburse them for reasonable out-of-pocket expenses incurred by them in
connection therewith.
The management of AmeriQuest has no information that other matters will be
brought before the Meeting. If, however, other matters are presented, the
accompanying Proxy will be voted in accordance with the best judgment of the
proxy holders.
(This Space Intentionally Left Blank)
16
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents are incorporated herein by this reference to
satisfy the requirements of Item 13(a) of Schedule 14A under the Securities
Exchange Act of 1934, as amended:
(1) AmeriQuest's Current Report on Form 8-K/A (Amendment No. 1) dated June
14, 1994 and filed February 8, 1995.
(2) AmeriQuest's Annual Report on Form 10-K/A (Amendment No. 5) for the
fiscal year ended June 30, 1994 and filed April 6, 1995.
(3) AmeriQuest's Current Report on Form 8-K/A (Amendment No. 1) dated July
18, 1994 and filed April 6, 1995.
(4) AmeriQuest's Current Report on Form 8-K/A (Amendment No. 3) dated
September 12, 1994 and filed April 6, 1995.
(5) AmeriQuest's Quarterly Report on Form 10-Q/A (Amendment No. 2) for the
three months ended September 30, 1994 and filed April 6, 1995.
(6) AmeriQuest's Current Report on Form 8-K/A (Amendment No. 3) dated
November 14, 1994 and filed April 6, 1995.
(7) AmeriQuest's Quarterly Report on Form 10-Q/A (Amendment No. 2) for the
six months ended December 30, 1994 and filed April 6, 1995.
(8) AmeriQuest's Registration Statement on Form S-4, SEC File No. 33-
57611.
(9) Robec, Inc.'s Annual Report on Form 10-K for the year ended December
31, 1994 (SEC File No. 0-18115) filed March 31, 1995.
(10) Kenfil Inc.'s Annual Report on Form 10-K for the year ended June 30,
1993 (SEC File No. 0-19905).
(11) Kenfil Inc.'s Quarterly Report on Form 10-Q for the three months ended
September 30, 1993.
(12) Kenfil Inc.'s Quarterly Report on Form 10-Q for the six months ended
December 31, 1993.
(13) Kenfil Inc.'s Quarterly Report on Form 10-Q for the nine months ended
March 31, 1994.
17
<PAGE>
AVAILABLE INFORMATION
AmeriQuest is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "SEC"). Reports, proxy statements and
other information filed by AmeriQuest can be inspected and copied at the public
reference facilities maintained by the SEC at 450 Fifth Street N.W., Washington,
D.C. 20549, and at the following Regional Offices of the SEC: New York Regional
Office, 7 World Trade Center, New York, New York 10048 and Chicago Regional
Office, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
such material can also be obtained from the Public Reference Section of the SEC,
450 Fifth Street N.W., Washington, D.C. 20549, at the SEC's prescribed rates.
Such material can also be inspected and copied at the offices of the New York
Stock Exchange, on which AmeriQuest's Common Stock is listed.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROXY STATEMENT IN CONNECTION WITH THE
MATTERS SUBJECT HEREOF, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY AMERIQUEST. THIS PROXY
STATEMENT DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES. THE DELIVERY OF THIS
PROXY STATEMENT AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
By Order of the Board of Directors
AmeriQuest Technologies, Inc.
Stephen G. Holmes,
Chief Financial Officer,
Secretary and Treasurer
Santa Ana, California
April __, 1995
18
<PAGE>
AMENDMENT TO APPENDIX I
AMENDMENT OF INVESTMENT AGREEMENT
This amendment is made effective as of March 30, 1995 to that certain
Investment Agreement (the "Investment Agreement") dated as of November 14, 1994
--------------------
by and between Computer 2000 AG, a company duly organized under the laws of the
Federal Republic of Germany ("Computer 2000"), and AmeriQuest Technologies,
-------------
Inc., a Delaware corporation ("AmeriQuest").
----------
RECITALS
--------
A. The Investment Agreement provides for a series of transactions whereby
Computer 2000 will acquire a majority ownership interest in AmeriQuest.
B. The Investment Agreement provides that Computer 2000 has the obligation
to invest in AmeriQuest the sum of $32 Million if certain conditions are met,
including the achievement by AmeriQuest of certain profitability objectives.
C. The Investment Agreement further provides that AmeriQuest and other
specified parties will not enter into negotiations with any party other than
Computer 2000 related to the possible sale or merger of AmeriQuest prior to the
earlier of the First Equity Closing (as defined therein) or March 30, 1995,
which is the latest date contemplated by the Investment Agreement for the
approval by the stockholders of AmeriQuest of the transactions described
therein.
D. AmeriQuest has determined that it will be unable to obtain stockholder
approval of the transactions described in the Investment Agreement prior to
March 30, 1995 and that it will not achieve the profitability objectives set
forth in the Investment Agreement for the months of February and March.
E. Computer 2000 and AmeriQuest wish to amend the Investment Agreement to
reflect the change in circumstances described above.
NOW, THEREFORE, the parties hereto hereby agree to make the following
amendments to the Investment Agreement:
(a) The last sentence of Section 2.2(d) shall be amended to read in its
entirety as follows:
"All of the financial information and data required under this
Section 2.2(d) shall be provided promptly to Purchaser and in no
event later than August 31, 1995."
(b) The first sentence of Section 2.3(b) shall be amended to read in its
entirety as follows:
"The foregoing option to purchase the Additional Option Shares may
be exercised from time to time commencing on September 1, 1995 and
continuing thereafter until the later of (i) September 30, 1995 or
(ii) forty-five (45) days after receipt by Purchaser of all of the
financial information and data to be delivered to Purchaser under
Sections 2.2(c) and (d) for the period ended June 30, 1995."
<PAGE>
(c) The first sentence of Section 5.2 shall be amended to change the
reference to "March 30, 1995" to "June 30, 1995".
(d) Section 7.3 shall be amended to read in its entirety as follows (the
amended language as underscored):
"If (i) the First Equity Closing does not occur by the close of
business on June 30, 1995 for any reason other than a material
breach by the Purchaser of its obligations hereunder or (ii) if
this Agreement is terminated by the Purchaser pursuant to Section
7.1(c)(i) or (e) or by either party pursuant to Section 7.1(c)(ii)
or (f), then the Company shall pay to the Purchaser (by wire
transfer or cashier's check) a fee of $1,800,000 on the earlier of
June 30, 1995 or 20 days after the date of termination and, if such
termination shall have occurred, then the Company shall also repay
the Loan or cause the Loan to be repaid within 20 days after such
termination."
(e) In as much as AmeriQuest has failed to meet the conditions to the
obligations of Purchaser to purchase Additional Shares (as defined in
the Investment Agreement) pursuant to Section 2.2 of the Investment
Agreement, the parties further agree that, notwithstanding anything to
the contrary in the Investment Agreement, Computer 2000 shall have the
option and right pursuant to and as provided in Section 2.3 of the
Investment Agreement to purchase up to the number of Additional Option
Shares (as defined in the Investment Agreement) and shall have no
obligation under Section 2.2 of the Investment Agreement to purchase
the Additional Shares.
Except as amended hereby, the Investment Agreement will continue in full
force and effect. This amendment will be deemed to be a part of the Investment
Agreement, and therefore subject to all of the other terms and conditions of the
Investment Agreement.
[THE REST OF THIS PAGE HAS INTENTIONALLY
BEEN LEFT BLANK]
2
<PAGE>
IN WITNESS WHEREOF, the parties have executed this amendment effective as of
the date and year first above written.
COMPUTER 2000 AG
- ----------------
By: /s/ STEVEN DEWINDT
----------------------------
Steven DeWindt
Co-President
By: /s/ KLAUS LAUFEN
----------------------------
Klaus Laufen
Co-President
AMERIQUEST 2000, INC.
- ---------------------
By: /s/ HAROLD CLARK
----------------------------
Harold Clark
President
3
<PAGE>
AMENDMENT OF LOAN AGREEMENT AND
EXCHANGEABLE PROMISSORY NOTES
This amendment is made effective as of March 30, 1995 to that certain Loan
Agreement (the "Loan Agreement") dated as of November 14, 1994 by and between
--------------
Computer 2000 AG, a company duly organized under the laws of the Federal
Republic of Germany ("Computer 2000"), and AmeriQuest 2000, Inc., a Delaware
-------------
corporation ("AmeriQuest 2000").
---------------
RECITALS
--------
A. Computer 2000 entered into an Investment Agreement dated as of November
14, 1994 with AmeriQuest Technologies, Inc. ("AmeriQuest"), of which AmeriQuest
----------
2000 is a wholly-owned subsidiary, which provides for a series of transactions
whereby Computer 2000 will acquire a majority ownership interest in AmeriQuest.
B. One of the transactions contemplated in the Investment Agreement was
the loan of $18 Million (the "Loan") by Computer 2000 to AmeriQuest 2000, which
----
is to be exchanged for shares of Common Stock of AmeriQuest upon the
satisfaction of certain conditions contained in the Investment Agreement.
Pursuant to the Loan and the Loan Agreement, AmeriQuest 2000 delivered two
Exchangeable Promissory Notes to Computer 2000 in the aggregate principal amount
of $18,000,000 (the "Exchangeable Promissory Notes").
-----------------------------
C. Section 6.5(a) of the Investment Agreement provides that the obligation
of Computer 2000 to exchange the Loan for shares of AmeriQuest Common Stock is
conditioned upon the approval by the stockholders of AmeriQuest of the
Stockholder Actions as described in the Investment Agreement prior to March 30,
1995, which is also the maturity date of the Loan.
D. AmeriQuest has determined that it will be unable to obtain requisite
stockholder approval of the Stockholder Actions described in the Investment
Agreement prior to March 30, 1995.
E. Computer 2000, AmeriQuest 2000 and AmeriQuest wish to extend the
maturity date of the Loan and make certain changes in the Exchangeable
Promissory Notes.
NOW, THEREFORE, the parties hereto hereby agree as follows:
(a) Section 1.2, part (ii) of the Loan Agreement is amended to change
"March 30, 1995" to "June 30, 1995".
(b) In order to clarify the parties intent, Section 4.1 of each of the
Exchangeable Promissory Notes is hereby amended as follows (the amended language
is in italics):
<PAGE>
"4.1 Exchange of Note . At any time after the earlier of (i) twenty days
----------------
after termination of the Investment Agreement or (ii) upon the closing by
AmeriQuest of any Acquisition Transaction (as defined in the Investment
Agreement), and so long as any principal or accrued interest remains outstanding
under this Note, Holder shall have the right, at the Holder's option and to the
extent provided herein, to exchange and assign all or a portion of the
outstanding principal and accrued interest on this Note for common stock of
AmeriQuest ("Exchange Shares") at an Exchange Price equal to $2.00 per share, as
---------------
adjusted hereunder ("Exchange Price"). The maximum number of shares of Exchange
--------------
Shares that Holder may acquire hereunder shall be that number of shares which,
when added to the number of shares of AmeriQuest Common Stock held by Holder and
purchased from AmeriQuest, equals 19.9% of the total number of shares of
AmeriQuest Capital Stock outstanding as of November 14, 1994; provided, however,
-----------------
that if additional shares of Capital Stock of AmeriQuest are issued after
November 14, 1994 (other than pursuant to the events described in Section 4.3),
the maximum number of Exchange Shares shall be adjusted so that, after such
issuance, when combined with any other shares acquired by Lender in exchange of
any other Exchangeable Promissory Note issued pursuant to the Loan Agreement,
and when added to the number of shares of AmeriQuest Common Stock held by Holder
and purchased from AmeriQuest, it equals 19.9% of the aggregate number of shares
of Capital Stock then issued and outstanding. In order to exercise the exchange
right hereunder, Holder shall provide written notice of an election to exchange
to Borrower and AmeriQuest setting forth the number of shares of Exchange Shares
it desires to acquire through such exchange and the date on which it desires the
exchange to take effect. Such exchange shall be deemed to have been made on the
date so requested by Holder. The amount of the principal and interest of the
Note exchanged with and assigned to AmeriQuest shall be equal to the number of
shares of Exchange Shares issuable upon such exchange multiplied by the then
applicable Exchange Price. In any exchange and assignment of a Note by Lender
with and to AmeriQuest, Lender shall be deemed to have assigned and exchanged
first the accrued interest and then all or a portion (as is required) of the
principal amount of the Note. If a portion of the Note is exchanged the
Borrower agrees to issue new promissory notes to Lender and AmeriQuest in
cancellation of the exchanged Note, in the same form as the exchanged Note
except with the appropriate principal balances reflecting the exchange and will
also acknowledge its obligation to pay any accrued interest under the exchanged
Note which was assigned."
2
<PAGE>
Except as amended hereby, the Loan Agreement and the Exchangeable
Promissory Notes will continue in full force and effect. This amendment will be
deemed to be a part of the Loan Agreement and the Exchangeable Promissory Notes,
and therefore subject to all of the other terms and conditions of the Loan
Agreement and the Exchangeable Promissory Notes.
IN WITNESS WHEREOF, the parties have executed this amendment effective as
of the date and year first above written.
COMPUTER 2000 AG
- ----------------
By: /s/ STEVEN DEWINDT
----------------------------
Steven DeWindt
Co-President
By: /s/ KLAUS LAUFEN
----------------------------
Klaus Laufen
Co-President
AMERIQUEST 2000, INC.
- ---------------------
By: /s/ HAROLD CLARK
----------------------------
Harold Clark
President
Agreed to and Accepted:
AMERIQUEST TECHNOLOGIES, INC.
- -----------------------------
By: /s/ HAROLD CLARK
----------------------------
Harold Clark
President
3
<PAGE>
PROXY
YOUR PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
AMERIQUEST TECHNOLOGIES, INC.
The undersigned hereby appoints Harold L. Clark and Stephen G. Holmes, and each
of them, the attorney and proxy of the undersigned, with full power of
substitution, to vote all the shares of Common Stock of AmeriQuest Technologies,
Inc. ("AmeriQuest"), which the undersigned is entitled to vote at the Special
Meeting of Shareholders of AmeriQuest to be held at the offices of AmeriQuest on
May __, 1995, at 10:00 a.m., local time, and at any and all adjournments
thereof, with all of the powers the undersigned would possess if personally
present, as follows:
For Against Abstain
---- ------- --------
[_] [_] [_] In favor of the proposal to amend the
Certificate of Incorporation of AmeriQuest
Technologies, Inc. to increase the number of
shares of Common Stock that is authorized for
issuance by AmeriQuest from 30,000,000 shares
of Common Stock to 65,000,000 shares of Common
Stock.
[_] [_] [_] In favor of the proposal to approve the
issuance by AmeriQuest to Computer 2000 AG of
shares and option rights (the "Transaction")
pursuant to an Investment Agreement dated
November 14, 1994 by and between AmeriQuest and
Computer 2000 AG, as it may be amended from
time-to-time (the "Investment Agreement") and
the performance by AmeriQuest of its
obligations under the Investment Agreement with
respect to the Transaction. Pursuant to the
Transaction Computer 2000 may invest up to $50
million in consideration for shares of
AmeriQuest Common Stock which when added to the
shares already held by Computer 2000 will
result in Computer 2000 owning up to 51% of the
outstanding shares of AmeriQuest.
TO VOTE IN ACCORDANCE WITH THE RECOMMENDATION OF THE BOARD OF DIRECTORS, JUST
SIGN AND DATE THIS PROXY FORM.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO
SPECIFICATION IS MADE, THE PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS (i) TO
AMEND THE ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES
OF COMMON STOCK AND (ii) TO APPROVE THE TRANSACTION WITH COMPUTER 2000.
If you expect to attend the Meeting, please check this box [_].
PLEASE SIGN EXACTLY AS NAME APPEARS ON THIS PROXY. When shares are held by
joint tenants, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized
person.
Dated:____________________, 1995
___________________________________
Signature
___________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY FORM PROMPTLY USING THE ENCLOSED
ENVELOPE.
